BUSYBOX COM INC, SB-2/A, 2000-02-07

BUSYBOX COM INC
SB-2/A, 2000-02-07
BUSINESS SERVICES, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 2000.

REGISTRATION NO. 333-80315
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

AMENDMENT NO. 3
To

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

BUSYBOX.COM, INC.

(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 7371 94-3233035
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

701 BATTERY STREET
THIRD FLOOR
SAN FRANCISCO, CA 94111
(415) 283-1811

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

701 BATTERY STREET
THIRD FLOOR
SAN FRANCISCO, CA 94111
(415) 283-1811

(ADDRESS OF PRINCIPAL PLACE OF BUSINESS OR INTENDED PRINCIPAL PLACE OF BUSINESS)

PATRICK A. GROTTO, CHAIRMAN AND CHIEF EXECUTIVE OFFICER
701 BATTERY STREET
THIRD FLOOR
SAN FRANCISCO, CA 94111
(415) 283-1811

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
--------------------------

COPIES TO:

<TABLE>
<S> <C>
THOMAS T. PROUSALIS, JR., ESQ. DAVID A. CARTER, P.A.
1919 Pennsylvania Avenue, N.W. 2300 Glades Road
Suite 200 Suite 210W
Washington, D.C. 20006 Boca Raton, FL 33431
(202) 296-9400 (561) 750-6999
(202) 296-9403 Fax (561) 367-0960 Fax
COUNSEL TO ISSUER COUNSEL TO UNDERWRITER
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------------

IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434, CHECK
THE FOLLOWING BOX. /X/

CALCULATION OF REGISTRATION FEE

<TABLE>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SECURITY OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 Par Value(1).......... 2,300,000 $5.00 $11,500,000 $ 3,966
Warrants(2).............................. 2,300,000 $ .125 $ 287,500 $ 99
Common Stock Underlying Warrants(3)...... 2,300,000 $5.50 $12,650,000 $ 4,362
Underwriter's Common Stock Option(4)..... 200,000 -- -- --
Common Stock Underlying Underwriter's
Common Stock Option(5).................. 200,000 $8.25 $ 1,650,000 $ 569
Underwriter's Warrant Option(6).......... 200,000 -- -- --
Warrants Underlying Underwriter's Warrant
Option(7)............................... 200,000 $ .20625 $ 41,250 $ 14
Common Stock Underlying Underwriter's
Warrant Option(8)....................... 200,000 $9.075 $ 1,815,000 $ 626
Total Registration and Fee(9).......... $27,943,750 $ 9,636
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(1) Includes 300,000 shares reserved for the option, exercisable within 45 days
after the date on which the Securities and Exchange Commission (the
"Commission") declares this Registration Statement effective, to cover
over-allotments, if any (the "Over-Allotment Option"), granted by the
Company to Barron Chase Securities, Inc. ("Underwriter"). See
"Underwriting."

(2) Includes 300,000 Redeemable Common Stock Purchase Warrants ("Purchase
Warrants" or the "Warrants") reserved for the Over-Allotment Option. The
Warrants (a) may be purchased separately from the Common Stock in the
offering, (b) are exercisable during a five-year period commencing on the
effective date of this Registration Statement, and (c) shall be redeemable,
at the option of the Company, at $.05 per Warrant upon 30 days' prior
written notice, (i) if the closing bid price, as reported on the Nasdaq
SmallCap Market-SM-, or the closing sale price, as reported on a national or
regional securities exchange, as applicable, of the shares of the
Registrant's Common Stock for 30 consecutive trading days ending within ten
days of the notice of redemption of the Warrants averages in excess of
$10.00 per share, subject to adjustment, and (ii) after a then current
registration statement has been declared effective by the Commission with
regard to the shares of Common Stock to be received by the holder upon
exercise, but (iii) during the one-year period after the effective date of
this Registration Statement, only with the written consent of the
Underwriter. Pursuant to Rule 416 under the Securities Act of 1933, as
amended ("Securities Act"), such additional number of these securities are
also being registered to cover any adjustment resulting from stock splits,
stock dividends or similar transactions. The indeterminate number of
additional shares shall be issuable pursuant to Rule 416 to prevent dilution
resulting from stock splits, stock dividends or similar transactions.

(3) Reserved for issuance upon exercise of the Warrants. Pursuant to Rule 416
under the Securities Act, such additional number of shares of Common Stock
subject to the Warrants are also being registered to cover any adjustment
resulting from stock splits, stock dividends or similar transactions. The
indeterminate number of additional shares shall be issuable pursuant to
Rule 416 to prevent dilution resulting from stock splits, stock dividends or
similar transactions.

(4) To be issued to the Underwriter or persons related to the Underwriter.
Pursuant to Rule 416 under the Securities Act, such additional number of
Underwriter stock options ("Common Stock Underwriter Warrants") are also
being registered to cover any adjustment resulting from stock splits, stock
dividends or similar transactions. The indeterminate number of additional
shares shall be issuable pursuant to Rule 416 to prevent dilution resulting
from stock splits, stock dividends or similar transactions.

(5) Reserved for issuance upon exercise of the Common Stock Underwriter
Warrants. Pursuant to Rule 416 under the Securities Act, such additional
number of shares of Common Stock subject to the Common Stock Underwriter
Warrants are also being registered to cover any adjustment resulting from
stock splits, stock dividends or similar transactions. The indeterminate
number of additional shares shall be issuable pursuant to Rule 416 to
prevent dilution resulting from stock splits, stock dividends or similar
transactions.

(6) To be issued to the Underwriter or persons related to the Underwriter.
Pursuant to Rule 416 under the Securities Act, such additional number of
Underwriter warrant options ("Warrant Underwriter Warrants") are also being
registered to cover any adjustment resulting from stock splits, stock
dividends or similar transactions. The indeterminate number of additional
shares shall be issuable pursuant to Rule 416 to prevent dilution resulting
from stock splits, stock dividends or similar transactions.

(7) Reserved for issuance upon exercise of the Warrant Underwriter Warrants.
Pursuant to Rule 416 under the Securities Act, such additional number of
warrants to purchase shares of Common Stock subject to the Warrant
Underwriter Warrants ("Underwriter Underlying Warrants") are also being
registered to cover any adjustment resulting from stock splits, stock
dividends or similar transactions.

(8) Reserved for issuance upon exercise of the Underwriter Underlying Warrants.
Pursuant to Rule 416 under the Securities Act, such additional number of
shares of Common Stock subject to the Underwriter Underlying Warrants are
also being registered to cover any adjustment resulting stock splits, stock
dividends or similar transactions. The indeterminate number of additional
shares shall be issuable pursuant to Rule 416 to prevent dilution resulting
from stock splits, stock dividends or similar transactions.

(9) The requisite fee has been paid in connection with this Registration
Statement.

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

ii
<PAGE>
BUSYBOX.COM, INC.

CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B)
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM SB-2

<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM CAPTION IN PROSPECTUS
- --------------------------- ---------------------------------------------
<C> <S> <C>
1. Front of
Registration
Statement
and Outside
Front Cover
of
Prospectus... Facing Page; Cross-Reference Sheet;
Prospectus Cover Page

2. Inside Front
and Outside
Back Cover
Pages of
Prospectus... Prospectus Cover Page; Prospectus Back Cover
Page

3. Summary
Information
and Risk
Factors... Prospectus Summary; The Company; Risk Factors

4. Use of
Proceeds... Use of Proceeds

5. Determination
of Offering
Price... Risk Factors; Underwriting

6. Dilution... Dilution and Other Comparative Data

7. Selling
Security-holders....... Description of Securities

8. Plan of
Distribution....... Prospectus Cover Page; Underwriting

9. Legal
Proceedings....... Legal Proceedings

10. Directors,
Executive
Officers,
Promoters
and Control
Persons... Management; Principal Shareholders

11. Security
Ownership of
Certain
Beneficial
Owners and
Management... Principal Shareholders

12. Description
of
Securities... Description of Securities

13. Interest of
Named
Experts and
Counsel... Legal Matters; Experts

14. Disclosure of
Commission
Position on
Indemnification for
Securities Act
Liabilities........ Certain Relationships and Related
Transactions

15. Organization
Within Five
Years... Prospectus Summary; Business

16. Description
of
Business... Business

17. Management's
Discussion
and Analysis
or Plan of
Operation... Management's Discussion and Analysis or Plan
of Operation

18. Description
of
Property... Business

19. Certain
Relations
and Related
Transactions........ Certain Relationships and Related
Transactions

20. Market for
Common
Equity and
Related
Stockholder
Matters... Description of Securities

21. Executive
Compensation....... Management

22. Financial
Statements... Financial Statements

23. Changes in
and
Disagreements
With
Accountants
on
Accounting
and
Financial
Disclosure... Not applicable
</TABLE>

iii
<PAGE>

FILED PURSUANT TO RULE 424(b)(1)
REGISTRATION NO. 333-70717

SUBJECT TO COMPLETION, DATED FEBRUARY 4, 2000

2,000,000 SHARES
2,000,000 WARRANTS

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

COMMON STOCK
WARRANTS

-----------

Prior to this offering, there has been no public market for our common stock
and warrants. The initial public offering price of our common stock is $5.00 per
share and $.125 per warrant. We have recently applied for the inclusion of our
common stock and warrants on the Nasdaq SmallCap Market ("Nasdaq") under the
symbols "BUSY" and "BUSYW."

The underwriter has an option to purchase a maximum of 300,000 additional
shares of our common stock and 300,000 additional warrants to cover
over-allotments of our shares and warrants.

INVESTING IN OUR COMMON STOCK AND WARRANTS INVOLVES RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS
PUBLIC COMMISSIONS TO BUSYBOX.COM
-------------- -------------- --------------
<S> <C> <C> <C>
Per Share............................................ $5.00 $.50 $4.50
Per Warrant.......................................... $.125 $.0125 $.1125
Total................................................ $10,250,000 $1,025,000 $9,225,000
</TABLE>

Neither the Securities and Exchange Commission nor any other state
securities commission has approved these securities or determined that this
prospectus is accurate or complete. Any representation to the contrary is
illegal.

[LOGO]

The date of this Prospectus is , 2000.
<PAGE>
--------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.................. 3
Risk Factors........................ 5
Use of Proceeds..................... 9
Dilution............................ 10
Capitalization...................... 11
Dividend Policy..................... 11
Management's Discussion and Analysis
or Plan of Operation.............. 12
Business............................ 16
Management.......................... 29
Principal Stockholders.............. 35
</TABLE>

<TABLE>

Certain Relationships and Related
Transactions...................... 36
<CAPTION>
PAGE
--------
<S> <C>
Description of Securities........... 38
Underwriting........................ 41
Legal Proceedings................... 44
Legal Matters....................... 44
Experts............................. 44
Where You Can Find More
Information....................... 44
Index to Financial Statements....... F-1
Report of Independent Certified
Public Accountants................ F-2
</TABLE>

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

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY BE ACCURATE ONLY
ON THE DATE OF THIS DOCUMENT.

Delivery of the securities will be made on or about , 2000
against payment in immediately available funds.

DEALER PROSPECTUS DELIVERY OBLIGATION

UNTIL , 2000 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING),
ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

ATTENTION CALIFORNIA RESIDENTS

OFFERS AND SALES OF THE COMMON STOCK AND WARRANTS OF BUSYBOX.COM, INC. TO
CALIFORNIA RESIDENTS PURSUANT TO THIS PROSPECTUS ARE RESTRICTED TO INDIVIDUALS
WHO MEET SUITABILITY STANDARDS OF NOT LESS THAN $250,000 LIQUID NET WORTH (A NET
WORTH EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILE), PLUS $65,000 GROSS
ANNUAL INCOME OR A $500,000 LIQUID NET WORTH (A NET WORTH EXCLUSIVE OF HOME,
HOME FURNISHINGS AND AUTOMOBILE).

2
<PAGE>
PROSPECTUS SUMMARY

BUSYBOX.COM, INC.

busybox designs, develops, maintains, services, markets, sells and
distributes digital imagery, including black and white and color still
photographs, film footage and video, over the Internet to our business customers
in the technology, media, entertainment, government, corporate and sports
industries. We believe that our proprietary Java-based technology, combined with
our component-based content programming, uniquely enables busybox to catalogue,
manage, transact, deliver and reconcile digital images and video on the
Internet. We also believe that our component-based programming is unique in the
industry and provides a significant business opportunity for busybox when
combined with the emerging and rapidly developing business-to-business Internet
e-commerce marketplace.

busybox was incorporated in Delaware in October 1995. In this prospectus, we
will refer to busybox.com, inc. as "busybox," "we" and "us." Our principal
executive offices are located at 701 Battery Street, Third Floor, San Francisco,
California 94111, and our telephone number is (415) 283-1811. Our principal
Internet Web site address is www.busybox.com. The information on our Web site is
not part of this prospectus.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered......................... 2,000,000 Shares
Warrants Offered............................. 2,000,000 Warrants
Common Stock Outstanding:
Before the Offering........................ 6,210,000 Shares
After the Offering......................... 8,210,000 Shares
Warrants Outstanding:
Before the Offering........................ None
After the Offering......................... 2,000,000
Estimated Net Proceeds....................... $8,225,000
Use of Proceeds.............................. Operations and development, capital
equipment, marketing and sales, mergers and
acquisitions and working capital.
Proposed Nasdaq Symbols:
Common Stock............................... BUSY
Warrants................................... BUSYW
Internet Web Site Address.................... www.busybox.com
</TABLE>

3
<PAGE>
SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------- NINE MONTHS ENDED
1997 1998 SEPTEMBER 30, 1999
----------- ----------- ------------------
<S> <C> <C> <C>
Statement of Earnings Data:
Net sales........................................ $ 833,797 $1,170,022 $ 332,706
Operating profit (loss).......................... $ 61,160 $ 4,662 $(3,723,505)
Earnings (loss) before income taxes.............. $ 62,087 $ 8,238 $(3,583,991)
Net earnings (loss).............................. $ 61,287 $ 7,438 $(3,583,991)
Earnings (loss) per share........................ $ .02 $ -- $ (.71)
Weighted average shares outstanding.............. 2,870,000 3,113,630 5,015,659
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
--------------------------------------------
PRO FORMA
HISTORICAL PRO FORMA (1) AS ADJUSTED (2)
---------- ------------- ---------------
<S> <C> <C> <C>
Balance Sheet Data:
Working capital..................................... $ (824,181) $ 484,319 $ 7,209,319
Total assets........................................ $1,635,260 $3,138,760 $ 9,668,760
Total liabilities................................... $1,875,413 $2,070,413 $ 1,875,413
Stockholders' equity (deficiency)................... $ (240,153) $1,068,347 $ 7,793,347
</TABLE>

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

(1) Gives effect to the pro forma adjustments for the: (i) cash proceeds from
the sale of 350,000 shares of our common stock for $700,000, consisting of
$3,500 in cash and $696,500 in promissory notes, in a private placement
transaction in October 1999, and (ii) net cash proceeds of $1,305,000 from
the borrowings of $1,500,000 pursuant to 8% promissory notes, and the grant
of options to purchase 375,000 shares of the Company's common stock, in a
private placement transaction in December 1999. Additional paid-in capital
has been credited with the fair value of the options of $1,305,000.

(2) Adjusted to reflect the sale of our securities in this offering, less
underwriting discounts and commissions and the payment of expenses of this
offering estimated at $1,000,000. Also adjusted to reflect the repayment of
the $1,500,000 promissory notes and the related accretion of the discount on
the notes of $1,305,000 and the write-off of deferred debt issuance costs of
$195,000.

4
<PAGE>
RISK FACTORS

INVESTING IN OUR COMMON STOCK INVOLVES RISK. YOU SHOULD CAREFULLY CONSIDER
THE RISKS AND UNCERTAINTIES DESCRIBED BELOW BEFORE MAKING AN INVESTMENT
DECISION. THESE RISKS AND UNCERTAINTIES ARE ALL OF THE MATERIAL RISKS AND
UNCERTAINTIES WHICH MAY ADVERSELY AFFECT OUR BUSINESS. IF ANY OF THE FOLLOWING
RISKS OR UNCERTAINTIES ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS MAY BE MATERIALLY ADVERSELY AFFECTED. IN THIS EVENT, THE
TRADING PRICE OF OUR COMMON STOCK MAY DECLINE, AND YOU MAY LOSE ALL OR PART OF
YOUR INVESTMENT. THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER FROM THOSE
DESCRIBED IN THE FORWARD-LOOKING STATEMENTS. THIS MAY OCCUR BECAUSE OF THE RISKS
DESCRIBED BELOW AND ELSEWHERE IN THIS PROSPECTUS.

OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED OPERATING
HISTORY.

We were incorporated in Delaware in October 1995 and have a limited
operating history. We face the risks and problems associated with new businesses
and have a limited operating history upon which to base an evaluation of our
future prospects. Such prospects should be considered in light of the risks,
expenses and difficulties frequently encountered in the expansion of a new
business in an industry characterized by a significant number of market entrants
and intense competition. The market for our products, systems and services is
relatively new, intensely competitive, rapidly evolving and subject to rapid
change. Many of our current and potential competitors have longer operating
histories, greater name recognition, larger installed customer bases and
significantly greater financial, technical and marketing resources than we have.
Therefore, it is difficult to evaluate our business and prospects.

WE EXPECT TO CONTINUE TO INCUR LOSSES AND EXPERIENCE NEGATIVE CASH FLOWS.

We expect to have significant operating losses and to record significant net
cash outflow before financing in the near term. Our business has not generated
sufficient cash flow to fund our operations without resorting to external
sources of capital. Starting up our company and building our business required
substantial capital and other expenditures. As a result, we reported an
operating loss before interest of approximately $3,573,505 for the period ending
September 30, 1999, and net cash flows used in operating activities of
approximately ($2,069,544) for the same period. Further developing our
operations and expanding our business will require significant additional
capital and other expenditures.

WE ARE CURRENTLY DEPENDENT ON TWO SIGNIFICANT CUSTOMERS FOR OUR REVENUES.

For the year ended December 31, 1998, Visual Communications Group Limited
accounted for 47 percent of our revenues and Corbis Corporation accounted for 28
percent of our revenues; for this same period, Visual Communications Group
Limited accounted for 81 percent of our accounts receivable. Although we are
seeking to expand our customer base so as to reduce our dependency on our
significant customers, there is no assurance that we will be successful in our
efforts. Moreover, our maintenance agreement with Corbis Corporation was
concluded by mutual agreement in October 1999. Our relationship with Corbis
Corporation remains good and, in October 1999, we began negotiations with Corbis
Corporation relating to a more comprehensive business relationship. However, we
can make no assurance that our negotiations will result in any business
relationship with Corbis Corporation. A loss of either significant customer may
have a material adverse effect on our business, operating results and financial
condition.

WE MAY NEED ADDITIONAL CAPITAL TO FUND OUR OPERATIONS AND FINANCE OUR GROWTH,
AND WE MAY NOT BE ABLE TO OBTAIN IT ON TERMS ACCEPTABLE TO US OR AT ALL.

We intend to fund our operations and other capital needs for the next
12 months substantially from the proceeds of this offering, but there can be no
assurance that such funds will be sufficient for these purposes. We may require
substantial amounts of the proceeds of this offering for our future expansion,
operating costs and working capital. We have made no arrangements to obtain
future additional financing, if required, and there can be no assurance that
such financing will be available, or that it will be available on terms
acceptable to us.

5
<PAGE>
WE HAVE A REQUIREMENT TO KEEP OUR PROSPECTUS AND STATE BLUE SKY REGISTRATION
CURRENT, AND OUR FAILURE TO DO SO MAY LIMIT YOUR ABILITY TO RESELL OUR
SECURITIES.

We will be able to issue shares of our common stock upon the exercise of the
warrants and the underwriter's purchase option only if there is a current
prospectus relating to the securities offered hereby under an effective
registration statement filed with the Securities and Exchange Commission, and
such common stock is then qualified for sale or exempt therefrom under
applicable state securities laws of the jurisdictions in which the various
holders of warrants reside. Although we intend to maintain a current
registration statement, there can be no assurance, however, that we will be
successful in maintaining a current registration statement. After a registration
statement becomes effective, it may require updating by the filing of a
post-effective amendment. A post-effective amendment is required when facts or
events have occurred which represent a material change in the information
contained in the registration statement. We intend to qualify the sale of the
warrants in a limited number of states, although certain exemptions under
certain state securities laws may permit the warrants to be transferred to
purchasers in states other than those in which the warrants were initially
qualified. Qualification for the exercise of the warrants in the states is
essential for the establishment of a trading market in the securities. We can
make no assurances that we will be able to qualify our securities in any state.
We will be prevented, however, from issuing common stock upon exercise of the
warrants in those states where exemptions are unavailable and we have failed to
qualify the common stock issuable upon exercise of the warrants. We may decide
not to seek, or may not be able to obtain qualification of the issuance of such
common stock in all of the states in which the ultimate purchasers of the
warrants reside. In such a case, the warrants of those purchasers will expire
and have no value if such warrants cannot be exercised or sold.

A PRIOR MARKET DOES NOT EXIST FOR OUR SECURITIES AND IT IS UNCERTAIN THAT A
MARKET WILL DEVELOP FOLLOWING THIS OFFERING.

No prior market exists for the securities being offered in this prospectus
and no assurance can be given that a market will develop subsequent to this
offering. The underwriter may make a market in our securities upon the closing
of this offering, but there is no assurance that it will do so, or if a market
develops that it will be sustained.

THE WARRANTS OFFERED FOR SALE IN THIS OFFERING ARE SUBJECT TO REDEMPTION AT $.05
PER WARRANT UNDER CERTAIN CONDITIONS, WHICH MAY BE LESS THAN THE VALUE OF THE
WARRANTS.

We are offering 2,000,000 shares of common stock, $.01 par value per share,
and 2,000,000 warrants. The common stock and the warrants are being offered
separately and not as units, and each are separately transferable. Each warrant
entitles the holder to purchase one share of common stock at $5.50 per share
during the five-year period commencing on the date of this prospectus. The
warrants are redeemable by busybox for $.05 per warrant, on not less than 30
days nor more than 60 days written notice if the closing bid price for the
common stock equals or exceeds $10.00 per share during any 30 consecutive
trading day period ending not more than 15 days prior to the date that the
notice of redemption is mailed, provided there is then a current effective
registration statement under the Securities Act of 1933, as amended, with
respect to the issuance and sale of common stock upon the exercise of the
warrants. Any redemption of the warrants during the one-year period commencing
on the date of this prospectus shall require the written consent of the
underwriter.

We intend to qualify the sale of the securities in a limited number of
states, although certain exemptions under certain state securities laws may
permit the warrants to be transferred to purchasers in states other than those
in which the warrants were initially qualified. We will be prevented, however,
from issuing common stock upon exercise of the warrants in those states where
exemptions are unavailable and we have failed to qualify the common stock
issuable upon exercise of the warrants. We may decide not to seek, or may not be
able to obtain qualification of the issuance of such common stock in all of the
states in which the ultimate purchasers of the warrants reside. In such case,
the warrants of those purchasers will expire and have no value if such warrants
cannot be exercised or sold.

6
<PAGE>

Accordingly, the market for the warrants may be limited because of our
obligation to fulfill these requirements.

NASDAQ HAS CERTAIN MARKET ELIGIBILITY AND MAINTENANCE REQUIREMENTS IN ORDER TO
MAINTAIN OUR INCLUSION ON THE NASDAQ SMALLCAP MARKET, WHICH WE MAY NOT BE ABLE
TO SUSTAIN.

Under the current rules relating to the listing of securities on the Nasdaq
SmallCap Market a company must have (a) at least $4,000,000 in net tangible
assets, or $750,000 in net income in two of the last three years, or a market
capitalization of at least $50,000,000, (b) public float of at least 1,000,000
shares, (c) market value of public float of at least $5,000,000, and (d) a
minimum bid price of $4.00 per share, among other requirements. For a continued
listing, a company must maintain (a) at least $2,000,000 in net tangible assets,
or $500,000 in net income in two of the last three years, or a market
capitalization of at least $35,000,000, (b) public float of at least 500,000
shares, (c) market value of public float of at least $1,000,000 and (d) a
minimum bid price of $1.00 per share; among other requirements.

Our common stock and the warrants are expected to be eligible for initial
listing on the Nasdaq SmallCap Market under the current rules upon the closing
of this offering. If at any time after issuance the common stock and warrants
are not listed on the Nasdaq SmallCap Market, and no other exclusion from the
definition of a "penny stock" under the Exchange Act were available,
transactions in the securities would become subject to the penny stock
regulations which impose additional sales practice requirements on
broker-dealers who offer and sell such securities.

If we should experience losses from operations, we may be unable to maintain
the standards for a continued listing and the securities may be subject to
delisting from the Nasdaq SmallCap Market. Trading, if any, in the securities
would thereafter be conducted in the over-the-counter market on an electronic
bulletin board established for securities that do not meet the Nasdaq SmallCap
Market listing requirements or in what are commonly referred to as the pink
sheets. As a result, an investor may find it more difficult to dispose of or to
obtain accurate quotations as to the price of our securities.

THE SECURITIES AND EXCHANGE COMMISSION MAY IMPOSE CERTAIN RESTRICTIONS ON THE
MARKETABILITY OF LOW-PRICED SECURITIES, WHICH MAY MATERIALLY ADVERSELY AFFECT
YOUR ABILITY TO RESELL YOUR SECURITIES.

The Securities and Exchange Commission has adopted regulations which
generally define penny stock to be any equity security that has a market price
less than $5.00 per share, subject to certain exceptions. Upon authorization of
the securities offered hereby for quotation, such securities will initially be
exempt from the definition of penny stock. If the securities offered hereby fall
within the definition of a penny stock following the effective date, our
securities may become subject to rules that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse). For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a risk disclosure document mandated by the Commission relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the penny stock rules may restrict
the ability of broker-dealers to sell our securities and may affect the ability
of purchasers in this offering to sell our securities in the secondary market.

7
<PAGE>

WE MAY HAVE ISSUED UNREGISTERED SECURITIES WITHOUT AN AVAILABLE EXEMPTION UNDER
THE FEDERAL SECURITIES LAWS, WHICH MAY SUBJECT BUSYBOX TO LIABILITY.

During the pendency of our registration statement before the Securities and
Exchange Commission, busybox sold unregistered securities in September 1999,
October 1999 and December 1999, aggregating $3,400,000 in cash and notes. We
believe that the unregistered securities were issued pursuant to available
exemptions under the Federal securities laws. However, we may have issued such
unregistered securities without an available exemption under the Federal
securities laws, which may subject busybox to liability, including rescission of
the securities transactions. If we are required to offer a rescission of the
securities transactions, it may have a material adverse effect on our business,
operating results and financial condition.

8
<PAGE>
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING
TO US, OUR INDUSTRY AND TO OTHER U.S. AND INTERNATIONAL INTERNET BUSINESSES.
THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF OUR MANAGEMENT, AS
WELL AS ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE TO OUR
MANAGEMENT. WHEN USED IN THIS PROSPECTUS, THE WORDS "ESTIMATE," "PROJECT,"
"BELIEVE," "ANTICIPATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED
TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT OUR CURRENT
VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES
THAT MAY CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED
IN OUR FORWARD-LOOKING STATEMENTS. WE CAUTION YOU NOT TO PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THIS
PROSPECTUS. WE DO NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY RELEASE ANY REVISIONS
TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE
DATE OF THIS PROSPECTUS OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

USE OF PROCEEDS

We will receive net proceeds of approximately $8,225,000 upon the sale of
the securities in this offering, after deducting the underwriting discounts and
estimated offering expenses. These net proceeds do not include the exercise of
the underwriter's over-allotment option. We intend to use these proceeds
approximately as follows:

<TABLE>
<CAPTION>
APPROXIMATE AMOUNT
OF NET PROCEEDS %
------------------ --------
<S> <C> <C>
- Operations and Development............................ $1,500,000 18.24
- Capital Equipment..................................... 1,500,000 18.24
- Marketing and Sales................................... 1,500,000 18.24
- Web Site Development.................................. 750,000 9.11
- Mergers and Acquisitions.............................. 750,000 9.11
- Working Capital....................................... 725,000 8.82
- Repayment of Promissory Notes(1)...................... 1,500,000 18.24
---------- ------
Total................................................. $8,225,000 100.00
========== ======
</TABLE>

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

(1) In December 1999, the Company borrowed $1,500,000 from 26 persons in a
private placement transaction pursuant to eight percent promissory notes,
payable upon the closing of this offering, or upon the one-year anniversary
of the notes, whichever occurs first.

The amounts and timing of our actual expenditures will depend upon numerous
factors, including the status of our product development efforts, marketing and
sales activities, the amount of cash generated by our operations and
competition. Actual expenditures may vary substantially from these estimates.
Working capital will be utilized by us to enhance and, otherwise, stabilize cash
flow during the initial 12 months of operations following the closing of this
offering, such that any shortfalls between cash generated by operating revenues
and costs will be covered by working capital. Although we prefer to retain our
working capital in reserve, we may be required to expand part or all of these
proceeds as financial demands dictate. We may find it necessary or advisable to
use portions of the proceeds for other purposes. Pending application of the net
proceeds as described above, we intend to invest the net proceeds of this
offering in insured, short-term, investment-grade, interest-bearing securities.

9
<PAGE>
DILUTION

As of September 30, 1999, we had a pro forma net tangible book value of
$754,805 or $0.12 per share. Net tangible book value per share means the
tangible assets of busybox, less all liabilities, divided by the number of
shares of common stock outstanding. After giving effect to the sale of the
common stock in this offering at an assumed price of $5.00 per share after
deducting underwriting discounts and estimated offering expenses, adjusted pro
forma net tangible book value would be $7,479,805 or $0.91 per share. The result
will be an immediate increase in net tangible book value per share of $0.79
(approximately 658%) to existing shareholders and an immediate dilution to new
investors of $4.09 (approximately 82%) per share. As a result, investors in this
offering will bear most of the risk of loss since their shares are being
purchased at a cost substantially above the price that existing shareholders
acquired their shares. "Dilution" is determined by subtracting net tangible book
value per share after the offering from the offering price to investors. The
following table illustrates this dilution assuming no exercise of the
underwriter's over-allotment option:

<TABLE>
<S> <C> <C>
Public offering price per share of the common stock offered
hereby..................................................... $5.00
Net tangible book value per share before pro forma
adjustments............................................. $(.09)
Increase per share attributable to pro forma
adjustments............................................. $ .21
-----
Pro forma net tangible book value per share, before the
offering................................................ $ .12
Increase per share attributable to the sale by busybox of
the shares offered hereby............................... $ .79
-----
Pro forma net tangible book value per share, after the
offering................................................... $ .91
-----
Dilution per share to new investors......................... $4.09
=====
</TABLE>

The above table assumes no exercise of the warrants, the underwriter's
over-allotment option or the purchase option.

The following table summarizes the investments of all existing stockholders
and new investors after giving effect to the sale of the shares in this offering
assuming no exercise of the underwriter's over-allotment option:

<TABLE>
<CAPTION>
PERCENTAGE PERCENT OF AVERAGE
SHARES OF TOTAL AGGREGATE TOTAL PRICE PER
PURCHASED SHARES CONSIDERATION INVESTED SHARE
--------- ---------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Present Stockholders.................... 6,210,000 75.64% $ 6,193,482 38.25% $1.00
=====
Public Stockholders..................... 2,000,000 24.36% $10,000,000 61.75% $5.00
--------- ------ ----------- ------ =====
Total............................... 8,210,000 100.00% $16,193,482 100.00% $1.97
========= ====== =========== ====== =====
</TABLE>

If the over-allotment option is exercised in full, the investors in this
offering will have paid $11,500,000 and will hold 2,300,000 shares of common
stock, representing 65.00% percent of the total consideration and 27.03% percent
of the total number of outstanding shares of common stock.

10
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of busybox, as of
September 30, 1999 and as adjusted for the sale of the securities in this
offering. The table should be read in conjunction with the Financial Statements,
and the Notes, beginning on page F-1.

<TABLE>
<CAPTION>
SEPTEMBER 30, PRO FORMA
1999 PRO FORMA(2) AS ADJUSTED(3)
------------- ------------ --------------
<S> <C> <C> <C>
Long-term debt (1)................................... $ 5,122 $ 5,122 $ 5,122
---------- ----------- -----------
Stockholders' equity
Common Stock, $.01 par value, 25,000,000 shares
authorized, 5,260,000 shares outstanding;
6,210,000 shares outstanding, pro forma;
8,210,000 shares outstanding, pro forma as
adjusted......................................... $ 58,600 $ 62,100 82,100
Additional paid-in capital......................... 5,734,882 8,786,382 16,991,382
Notes and accounts receivable from stockholders.... (2,437,750) (3,134,250) (3,134,250)
Retained earnings.................................. (3,595,885) (4,645,885) (6,145,885)
---------- ----------- -----------
Total stockholders' equity....................... (240,153) 1,068,347 7,793,347
---------- ----------- -----------
Total capitalization............................. $ (235,031) $ 1,073,469 $ 7,798,469
========== =========== ===========
</TABLE>

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

(1) Long-term debt consists primarily of capital lease obligations with
non-related parties. See Note D to the accompanying "Financial Statements,"
on page F-10.

(2) As adjusted to reflect the: (i) cash proceeds from the sale of 350,000
shares of our common stock for $700,000, consisting of $3,500 in cash and
$696,500 in promissory notes, in a private placement transaction in October
1999, and adjusted to reflect compensation expense of $1,050,000 which
represents the difference between the $2 price per share and fair value, and
(ii) cash proceeds from the borrowings of $1,500,000 pursuant to 8%
promissory notes, and the grant of options to purchase 375,000 shares of the
Company's common stock, in a private placement transaction in December 1999.
Additional paid-in capital has been credited with the fair value of the
options of $1,305,000.

(3) As adjusted to reflect the net proceeds of this offering. Assumes no
exercise of (a) the warrants; (b) the underwriter's over-allotment option to
purchase up to 300,000 shares of common stock and 300,000 warrants; or
(c) the underwriter's purchase option to purchase up to 200,000 shares of
common stock and 200,000 warrants. Also adjusted to reflect the repayment of
the $1,500,000 promissory notes and the related accretion of the discount of
the notes of $1,305,000 and the write-off of deferred debt issuance costs of
$195,000.

DIVIDEND POLICY

We have never paid cash dividends on our common stock and have no plans to
do so in the foreseeable future. The declaration and payment of any dividends in
the future will be determined by the board of directors and will depend on a
number of factors including our earnings, capital requirements and overall
financial condition.

11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH THE
FINANCIAL STATEMENTS AND RELATED NOTES OF BUSYBOX INCLUDED IN THIS PROSPECTUS,
BEGINNING ON PAGE F-1. THE DISCUSSION IN THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS
STATEMENTS OF OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THE CAUTIONARY
STATEMENTS MADE IN THIS PROSPECTUS APPLY TO ALL RELATED FORWARD-LOOKING
STATEMENTS WHEREVER THEY APPEAR IN THIS PROSPECTUS. OUR ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS.
FACTORS THAT MAY CAUSE OR CONTRIBUTE TO DIFFERENCES INCLUDE THOSE DISCUSSED IN
"RISK FACTORS," AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS. THE
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS ARE MADE AS OF THE DATE
OF THIS PROSPECTUS, AND WE ASSUME NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING
STATEMENTS OR TO UPDATE THE REASONS ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS.

OVERVIEW

We believe that several challenges must be overcome to realize
cost-effective Internet broadcasting: aggregating diverse and compelling
content, scaling Internet broadcasts from small to large audiences, deploying
new transmission and streaming technologies in a timely manner and providing
multimedia advertisements and services. In order to aggregate content, Internet
broadcasters must rapidly identify and secure licensing opportunities by
demonstrating to content providers broad based distribution and the ability to
deliver associated traffic. Successful Internet broadcasters serving a large
number of simultaneous users around the clock also need to design, develop and
integrate complex network elements, which include extensive bandwidth, streaming
licenses, equipment and technical expertise. The rapid evolution of streaming
media technologies requires Internet broadcasters to support multiple vendors,
an investment which few companies have made. We believe, therefore, that a
successful Internet business must develop a well-branded Web site which offers
compelling content, a network capable of streaming video programming to large
audiences 24 hours a day, seven days a week, and an organization which can
deliver quality services to advertisers and businesses.

We believe that our proprietary Java-based technology, together with our
component-based content programming, will enable us to be a leading aggregator,
distributor and broadcaster of digital streaming media programming on the Web
with the network infrastructure and expertise to deliver or "stream" live and
on-demand video programs over the Internet. Our Web site will offer a selection
of both streaming and downloadable broadcast quality film footage and video
programming, including aerials, archival, beauty, destinations, lifestyle,
locations, nature, sports, extreme sports, time lapse, underwater and wildlife.
Our proprietary Java-based technology, together with our component-based content
programming, allows users to efficiently and effectively find, retrieve, view,
transact and download digital media. We believe we will establish a significant
brand for our broadcasts and services on the Internet due to our technologically
unique content distribution capabilities. In addition, our Web sites will
provide an attractive platform for advertisers seeking to target specific users
with compelling advertising solutions.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998.

For the nine months ended September 30, 1999, we reported revenue of
$332,706 from the sale of our products, systems and services, a 65% decrease
compared to the same period ending September 30, 1998, where we reported revenue
of $961,186 on the sale of our products, systems and services. The decrease was
primarily attributable to a $130,000 reduction in technology licensing, and a
$425,000 reduction in internet services. These reductions were the result of our
reallocation of resources away from technology licensing and development
services provided to our customers in the on-line stock photography market to
development of our own on-line stock video products and services. These

12
<PAGE>
products and services were made available for sale to customers in the third
quarter of 1999. We expect revenues from customers in the on-line stock
photography market segment to remain below those of 1998. Our gross margin on
sales in the nine months ended September 30, 1999 decreased to 62% as compared
to 71% for the nine months ended September 30, 1998. The decrease was primarily
attributable to reduced technology licensing which is our highest gross margin
line of business.

Selling, general and administrative expenses increased to $3,720,896 in the
nine months ended September 30, 1999 from $387,224 in the nine months ended
September 30, 1998.

This increase of $3,333,672 was primarily due to the following:

- We hired new executive management in December 1998 to provide an increased
level of managerial experience for our operations. We also expanded our
management, administrative and sales staff to develop and launch our
on-line stock video products and services and to expand our customer sales
and support capabilities. As a result, our wages and related payroll
costs, travel and general administrative expenses increased by
approximately $2,180,000 as compared to the nine months ended
September 30, 1998; and,

- We significantly increased our advertising, marketing and promotion
activities in anticipation of, and following the third quarter 1999 launch
of, our on-line stock video products and services. This resulted in an
increase of approximately $1,153,000 in advertising, marketing and
promotional expenses as compared to the nine months ended September 30,
1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO DECEMBER 31, 1997.

For the year ended December 31, 1998, we reported revenues of $1,170,022
from the sale of our products, systems and services, as compared to the year
ended December 31, 1997 where we reported revenues of $833,797 on the sale of
our products, systems and services. The increase was primarily in Internet
development and support services provided to our customers. Our gross margin on
sales for the year ended December 31, 1998, increased to 64% from 61% in 1997
due to an increase in markup achieved on costs and wages related to Internet
development and support services.

Selling, general and administrative expenses increased to $491,446 for the
year ended December 31, 1998 from $362,031 for the year ended December 31, 1997.
The increase was due primarily to increases in management, administrative and
sales, as well as professional fees and advertising, required to generate and
support higher revenues.

LIQUIDITY AND CAPITAL RESOURCES

Our operations to date have concentrated on continuing the development of
our products and systems, establishing acceptance of our products and systems in
our industry, providing technical service to our existing customer base and the
expansion of our business. We have historically financed these activities
through internally generated cash flows from operations and financing through
short-term obligations (see Note C to our Financial Statements). We also have a
line of credit with a commercial bank. The facility expired on November 30, 1999
and became a demand note and the interest rate is 12.5 percent. Repayment is
guaranteed by one of our stockholders. As of September 30, 1999, we owed $99,172
on this line of credit. We believe that the cash flow provided by our operations
and the net proceeds of this offering will be sufficient to sustain our
operations for the remainder of fiscal 1999 and fiscal 2000. Additional
financing may be necessary to provide for the continued product development and
operations in fiscal 2001.

For the nine months ended September 30, 1999, net cash used in operations
was $(2,069,544) as a result of the $3,733,991 net loss incurred in the period.

13
<PAGE>

We incurred $338,915 in development and production of our digital video
inventory and is related directly to our on-line stock video products and
services that were launched in the third quarter of 1999. Digital video
inventory consists of capitalized digital video production costs including costs
for production, acquisition and preparation for on-line distribution. These
costs will be amortized by specific video subject category based upon actual
future sales of products using the gross profit method. Accounts receivable
increased by $51,157, despite a decline in sales in 1999, due primarily to the
decrease in technology licensing and Internet services revenues that have
historically had a shorter collection period than our other revenue streams.

We invested $76,209 in new property and equipment, most of which was
directly associated with the new on-line stock video products and services.
Additionally, we prepaid $257,875 of costs and expenses related to our proposed
initial public offering of securities.

We financed our operations, purchases, development and offering costs
primarily through a $1,708,274 increase in credit extended by our suppliers and
vendors, net proceeds $2,207,432 from the private placement of our common stock
in April 1999 and $99,172 in borrowing on our line of credit. At September 30,
1999, we had a cash balance of $40,452, a $90,259 decrease from December 31,
1998.

For the year ended December 31, 1998, our operations provided $60,147 of
cash as a result of the $7,438 net income for the period, which result included
$94,519 of non-cash expenses. $29,614 of the cash provided by operations was
invested in new property and equipment purchases and $4,742 was used to reduce
capital lease obligations. At December 31, 1998, we had a cash balance of
$130,711, a $25,791 increase from December 31, 1997.

At December 31, 1998 and for the nine months ending September 30, 1999, we
had no material commitments for capital expenditures.

In March 1999, we entered into a letter of intent with the underwriter in
connection with this public offering. The net proceeds of this offering,
totalling approximately $8,225,000, should provide adequate working capital for
us to enhance and, otherwise, stabilize cash flow during at least the 12 months
of operations following the closing of this offering, such that any shortfalls
between cash generated by operating revenues and costs will be covered by
working capital. Although we prefer to retain our working capital in reserve, we
may be required to expend part or all of these proceeds as financial demands
dictate.

Although it is uncertain that the market price of our shares of common stock
will rise to a level at which the warrants may be exercised, in the event
investors in this offering elect to exercise the warrants (not including the
underwriter's over-allotment option or the underwriter's purchase option), we
will receive proceeds of up to $11,000,000. We anticipate that the proceeds from
the exercise of the warrants would be contributed to working capital.
Nonetheless, we may at the time of exercise allocate a portion of the proceeds
to any other corporate purposes. Accordingly, investors who exercise their
warrants will entrust their funds to us.

We are unable to predict the precise period for which this offering will
provide financing, although we believe that we should have sufficient working
capital to meet our cash requirements for the 12 months period following the
date of this offering. Accordingly, we may need to seek additional funds through
loans or other financing arrangements during this period of time. No such
arrangements exist or are currently contemplated and we cannot be sure that they
may be obtained in the future should the need arise.

Pending utilization, we intend to make temporary investment of the net
proceeds of this offering in insured, short-term, investment-grade,
interest-bearing securities.

14
<PAGE>
IMPACT OF INFLATION

We do not believe that inflation has had a material adverse effect on our
income since our inception. Increases in supplies or other operating costs may
adversely affect our operations; however, we believe we may increase the prices
of our products, systems and services to offset increases in operating costs.

SEASONALITY

Based on our experience to date, we believe that our future operating
results will not be subject to seasonal changes. Such effects, should they
occur, may be apparent in our operating results during a period of expansion.
However, we are not sure that our business and operations can be significantly
expanded.

RECENTLY ISSUED ACCOUNTING PRINCIPLES

See Note 1 of Notes to Financial Statements for recently issued accounting
standards.

15
<PAGE>
BUSINESS

BUSYBOX.COM INC.

For the years ending December 31, 1997 and 1998, and for the nine months
ending September 30, 1998 and 1999, all of our revenues were derived, directly
or indirectly, from the Internet.

For the years ending December 31, 1997 and 1998, and for the nine months
ending September 30, 1998 and 1999, we spent $83,000, $258,242, $142,733 and
$358,242, respectively, on research and development activities.

We intend to principally use the proceeds of this offering for operating
costs and working capital, including business development, capital equipment,
marketing and sales and mergers and acquisitions with complementary companies in
an effort to significantly expand our business and operations. We also intend to
use approximately $750,000 of the proceeds of this offering to further design
and develop our principal Internet Web site into a state-of-the-art, enhanced
fully interactive Web site to manage our emerging e-commerce on the Internet. We
believe that our state-of-the-art, enhanced and fully interactive principal Web
site will be implemented and fully operational within the approximately six
months following the closing of this offering. We are not sure that the proceeds
of this offering will enable us to expand our business and operations.

INTERNET STRATEGY

WORLD WIDE WEB SITE WWW.BUSYBOX.COM

The Internet enables millions of people worldwide to have access to current
news, media and information, create community among individuals with similar
professional or personal interests and conduct business electronically. With
this growth in the number of Internet users, the Internet is emerging as a mass
communication and commerce medium, which offers advertisers and vendors certain
advantages. The Internet permits advertisers to target specific demographic
groups, measure the effectiveness of their advertising campaigns and revise them
in response to real-time feedback. The Internet provides online merchants with
the ability to reach a global audience and to operate with minimal
infrastructure, reduced overhead and greater economies of scale, while providing
customers with broad selection, increased pricing information and unparalleled
convenience.

We believe that our emphasis on the World Wide Web will enable us to realize
significant savings in our operations. We believe that the proceeds of this
offering combined with our value-added approach and expertise will allow us to
compete effectively with other technology providers on the Internet by:

- providing competitive prices and product inventory availability; and

- enhancing and simplifying access to information, products and services.

The Internet and commercial online services are emerging as significant
global communications media enabling millions of people to share information and
conduct business electronically. A number of factors have contributed to the
growth in the Internet and commercial online services usage, including the large
and growing installed base of advanced personal computers in the home and

16
<PAGE>
workplace, improvements in network infrastructure, easier, faster and cheaper
access to the Internet and commercial online services, the introduction of
alternative Internet access devices and increased awareness of the Internet and
commercial online services among consumer and business users.

The functionality and accessibility of the Internet and commercial online
services have made them an increasingly attractive commercial medium by
providing features that historically have been unavailable through traditional
channels. For example, the Internet and commercial online services provide users
with convenient access to large volumes of dynamic data to support their
investment, purchase and other decisions.

Online retailers are able to communicate effectively with customers by
providing frequent updates of featured selections, content, pricing and visual
presentations and provide tailored services by capturing valuable data on
customer tastes, preferences, shopping and buying patterns. Unlike most
traditional distribution channels, online retailers do not have the burden of
managing and maintaining numerous local facilities to provide their services on
a global scale. In contrast, online retailers benefit from the relatively low
cost of reaching and electronically serving customers worldwide from a central
location. Because of these advantages, an increasingly broad base of products
and services are being sold online.

Moreover, as the number of online content, commerce and service providers
has expanded, strong brand recognition and strategic alliances have become
critical to the success of such companies. Brand development is especially
important for online retailers due to the need to establish trust and loyalty
among consumers in the absence of face-to-face interaction. In addition, some
online retailers have begun to establish long-term strategic partnerships and
alliances with content, commerce and service providers to rapidly build brand
recognition and trust, enhance their service offerings, stimulate traffic, build
repeat business, take advantage of cross-marketing opportunities and create
barriers to entry.

In October 1999, busybox entered into a Business Advisory Agreement with
Cascade Partners, L.L.C., a Santa Monica, California based investment firm which
is principally owned and controlled by Matt Ward, a co-founder of Go2Net, Inc.
(Nasdaq: GNET), a network of branded, technology- and community-driven Web
sites. Go2Net, Inc. is principally owned and controlled by Vulcan Ventures,
Inc., a Bellevue, Washington based investment firm owned and controlled by Paul
Allen, a co-founder of Microsoft Corporation. Cascade Partners, L.L.C. provides
business advisory and consulting services that include, but are not limited to:
corporate structuring; e-commerce planning, development and operations; general
business planning, development and operations; and mergers and acquisitions, and
other business combinations. In September 1999, in consideration of its business
advisory and consulting services, busybox issued 100,000 shares of its common
stock to Cascade Partners, L.L.C. In addition, in September 1999, Matt Ward
purchased 100,000 shares of the common stock of busybox for $200,000, or $2 per
share.

BUSINESS OPPORTUNITY

Internet-delivered media content, including still photographs, film footage
and video, offers certain business opportunities that are not generally
available with respect to traditionally delivered media content. These business
opportunities exist with respect to both information technology systems and
non-IT systems, or more specifically, digital asset management systems and
delivery systems, respectively. Traditional media content is analog, and is
created, edited and archived using traditional analog systems. For example,
traditional media content is produced with traditional film cameras, the film is
edited manually by cutting and splicing, and the film is archived in storage
facilities such as cabinets and climatized vaults. Internet-delivered media
content is digital, and is created, edited and archived using recently developed
digital information systems, also known as digital asset management systems. For
example, Internet-delivered media content is produced with digital cameras not
requiring film, the digital media is edited with editing software applications
on both desktop and non-desktop computer systems and the media content is
archived in computer data bases. Our use of newly

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developed information systems, or digital asset management systems, allows us to
more efficiently and cost effectively create, edit and archive our media
content. Traditional media content is delivered via traditional analog delivery
systems such as film and video cassette. Internet-delivered media content is
digital, and is delivered via digital delivery systems such as via the Internet
and by satellite. Our use of the Internet allows us to more efficiently,
cost-effectively and expediently deliver our media content to our customers.

Currently available analog non-IT systems and government regulations limit
the ability of television stations to broadcast beyond certain geographic areas.
Televisions are not widely used in office buildings and other workplaces, where
Internet access has become commonplace. Traditional business communication tools
such as videoconferencing can be costly, non-targeted and inconvenient. In
addition, traditional broadcasters are limited in their ability to measure or
identify in real time the viewers of a program. By using the Internet, targeted
streaming media content can be offered to a geographically dispersed audience of
customers, suppliers, employees and stockholders at relatively low costs.
Internet users can interact with the media content by responding to online
surveys, voting in pools and obtaining additional information. In addition,
Internet broadcasters can provide highly specific information about a program's
audience to content providers, advertisers and users of Internet business
services. The convergence of the Internet's capabilities and attributes has
accelerated its acceptance as a business tool, leading to rapidly growing
economic opportunities in Web-based advertising and business service offerings,
including electronic commerce and real-time streaming video transmission, among
others. Ultimately, in our view, the broadcasting of media content over the
Internet will usher in the technological convergence of the computer and the
television into a seamless multimedia medium.

The Internet has grown rapidly in recent years, spurred by developments such
as easy-to-use Web browsers, the availability of multimedia-enhanced personal
computers, the adoption of more robust network architectures and the emergence
of compelling Web-based content and commerce applications. The broad acceptance
of the Internet Protocol standard has also led to the emergence of intranets and
the development of a wide range of non-PC devices that allow users to access the
Internet and intranets.

The Internet's rapid evolution towards becoming a mass medium of information
technology may be attributed to the accelerated pace of technological
innovation, which has expanded the Web's capabilities and improved users'
experiences. Most notably, the Internet has evolved from a mass of static,
text-oriented Web pages and e-mail services to a much richer information
environment, capable of delivering graphical, interactive and multimedia content
information. Prior to the development of streaming media technologies, users
could not playback video clips until the content was downloaded in its entirety.
As a result, live Internet broadcasts were not possible. The development of
streaming media products from companies such as Microsoft and RealNetworks,
among others, enables the simultaneous transmission and playback of continuous
"streams" of video content over the Internet and intranets. These technologies
have evolved to deliver video over widely used narrow bandwidth modems, yet can
scale in quality to take advantage of higher speed access that is expected to be
provided by emerging broadband technologies.

Our executive management team has more then 50 years of combined management
experience in the digital media technology industry. Following the closing of
this offering, we intend to grow internally and through acquisitions by
capitalizing upon the significant consolidation opportunities available in the
fragmented digital media technology industry. We will seek to make acquisitions
that complement our established strengths and are likely to enhance our presence
or allow us to establish a presence in a new market.

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DIGITAL MEDIA TECHNOLOGY INDUSTRY

The digital media technology industry supplies digital images to a varied
and growing customer base, ranging from individual consumers to major
multinational corporations. Digital images are used to communicate messages in a
wide variety of applications, including print, electronic and broadcast
advertising, direct mail and marketing brochures, educational and training
publications, books, magazines, newspapers, corporate communications and annual
reports, motion pictures, broadcasting, CD-ROM products, Web sites, other
on-line uses, sales and in-house presentations and various consumer uses.

Visual content can be broadly divided into commissioned digital imagery and
non-commissioned digital imagery. Commissioned images are commissioned from
photographers and cinematographers by particular clients for a single
predetermined application. Non-commissioned images are provided by agencies that
maintain libraries of selected images which can be licensed for use by different
customers for different purposes.

We will be primarily active in the non-commissioned sector of the visual
content industry. We believe that the market share of non-commissioned imagery
has been increasing as the quality of images available from non-commissioned
agencies has become comparable to the quality of commissioned images.
Non-commissioned imagery typically offers the advantages of lower cost,
immediate availability and the ability to preview an image for appropriateness
prior to license.

Non-commissioned images are commercially available from two types of
providers:

- agencies that license images for specific uses. These agencies offer and
negotiate licenses that can be tailored for each image and customer
application. Licenses typically grant a degree of exclusivity of use to
licensees and impose restrictions on the permissible number of copies that
can be made, the medium of reproduction or publication, uses by other
parties and other factors, including the geographic area, duration and
purpose of use; and

- agencies that license images on a standard fee basis for multiple uses.
These agencies offer images that can be used on a non-exclusive basis for
virtually any purpose, pursuant to non-negotiable, shrink-wrap or
point-and-click license agreements. Royalty-free agencies typically
deliver imagery via CD-ROM products and, in some cases, the Internet.

The visual content industry consists of several different types of still
image content. The categories of content currently commercially available in the
non-commissioned sector of the industry generally falls under contemporary or
archival stock photography. Contemporary stock photography covers a wide variety
of contemporary subjects, including lifestyles, families, business, science,
health and beauty, sports, transportation, travel and the environment. Four
major contemporary stock photography businesses include Corbis Corporation,
Getty Images, The Image Bank, a division of Eastman Kodak, and Visual
Communications Group. These businesses have historically supplied images to a
customer base of commercial users. Archival photography consists of collections
of images and illustrations covering well-known historic moments, people and
places up to the present day, as well as images reflecting the history of
society, entertainment, travel, industry and culture. Hulton Getty and the
Bettmann Archive are two of the world's two largest privately owned collections
of archival photography, owned by Getty Images and Corbis Corporation,
respectively. Contemporary stock and archival footage are the film equivalents
of contemporary stock photography and archival photography. These categories
currently form growing, but still relatively small parts of, the visual content
industry. Energy Film Library, owned by Getty Images, and The Image Bank are the
two leading contemporary stock footage providers on a worldwide basis. News,
current affairs, features and celebrity material consists of photographs or
footage of specific events or the activities of well-known people. Participants
in this segment of the industry include wire services and several general and
specialist news and reportage agencies, including Gamma Liaison.

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The visual content market supplies imagery to creative professionals in the
visual communications industry, including graphic designers, art directors and
art buyers at advertising agencies, marketing and communications professionals,
Web and new media designers, newspaper, magazine, book, music and video
publishers and broadcast and media production companies. In addition, new market
segments are emerging, including business users, who are not graphic designers
or other professional users of images, such as managerial and sales
professionals, and small office/home office users, and potentially consumers.

These customers use imagery in a variety of applications, including print,
electronic and broadcast advertising, direct mail and marketing brochures,
educational and training publications, books, magazines, newspapers, corporate
communications and annual reports, motion pictures, broadcasting, CD-ROM
products, web sites, other online uses, sales and in-house presentations and
various consumer uses.

We believe that there have been significant increases in recent years in the
numbers of users and uses of images, partly as a result of a greater
appreciation of the value of images for conveying, symbolizing and reinforcing
marketing and editorial messages and partly as a result of a proliferation in
communication channels, particularly via the Internet and in the cable and
satellite broadcasting industry.

We expect that the film footage and video sectors will continue to grow as
technological developments in cable and satellite broadcasting and new media
industries lead to a major increase in demand for stock and archival film
footage and video, particularly on the Internet.

PLANS AND OPERATIONS

The principal technologies utilized by busybox are those related to the
digitization of images, the enhancement and compression of digitized images, the
organization and management of our database of digitized images and customer
profiles and technologies associated with customer interaction with Web sites
including search functions, transaction-processing and downloading of images,
which generate our current revenues. Our e-commerce systems can manage a large
number of concurrent customer searches, as well as the process of accepting,
authorizing and charging customer credit cards or accounts. We use a combination
of our own proprietary technologies and commercially available equipment and
licensed technologies. Our current plan is to license commercially available
technology whenever possible rather than seek internally developed solutions. We
have focused our internal development efforts on creating and enhancing the
specialized software and processes related to enhancement and delivery of
digitized still photography, film footage and video.

Our Web sites and e-commerce systems are supported by a combination of
software provided by Sun Microsystems, Apple Computer and others, as well as
user interface software and other technologies developed by us. Our library of
still photographs, film footage and video is managed in a Microsoft database
environment. Image search tools employed by customers include technologies
supplied by America Online and others.

A group of system administrators and network managers monitor and operate
our Web sites, network operations and transactions-processing systems. The
reliable operation of our Web sites and transaction-processing systems is
essential to sales over the Internet, and it is the job of the site operation
staff to ensure, to the greatest extent possible, the uninterrupted operation of
the Web sites and transaction-processing systems. We use the services of several
Internet service providers, including AboveNet, ConXion, Exodus, Savvis and
@Home, among others, to obtain connectivity to the Internet.

Each still photograph added to our Web site is digitized at the highest
practical resolution. Film footage and video added to our Web site is digitized
at broadcast quality resolution at our facilities. Our digital media assets,
including still photographs, film footage and video, are edited and processed
for editorial and intellectual property attribution using our innovative
application of widely accepted

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Internet protocol standards. This pioneering approach to digital media asset
management enhances the commercial and intellectual property value of the
digital assets.

From our Web sites, customers can access a variety of value-added products
and services, including searchable catalogues, shopping carts, service and
support functions, promotions, community features and personalized service
areas.

To purchase and download still photographs, film footage and video from our
Web sites, customers are guided through a proven and user-friendly secure
e-commerce process starting with "checkout" and concluding with "order
confirmation and receipt." A typical first-time customer is guided through three
steps including:

- checkout;

- account creation; and

- review order.

The first step, checkout, allows the customer to view the items selected for
purchase. The second step, account creation, allows the user to securely set up
a credit card account. Account information is encrypted while in transit using
industry-standard SSL protocol. The third step, review order, is the customer's
final opportunity to review order information prior to purchase. Once an order
is processed, the customer receives an e-mail confirmation and receipt with the
order number and respective download options. As an added benefit, all customers
have secure access to their transaction history.

Our product offering is downloaded or streamed electronically from our Web
sites. Compressed high-resolution photographs at an average file size of 2.5
megabytes require a download time of approximately six minutes with a standard
56Kb modem and approximately 13 seconds with a T-1 access line. Uncompressed
broadcast quality film footage clips at an average file size of 100 megabytes
require a download time of approximately 9.4 minutes with a T-1 access line.
Consumer video is compressed and streamed real-time at varying bandwidth
depending on user preferences based on the speed of the customer's Internet
connection.

We intend to establish a key accounts sales force that targets video and
communications professionals in the technology, media, entertainment,
government, corporate and sports industries. We maintain domestic direct sales
personnel in San Francisco and New York. The key accounts sales force also
includes technical support staff and trainers who assist with both pre- and
post-sales support.

We believe that our ability to establish and maintain long-term
relationships with our customers and encourage repeat visits and purchases
depends, in part, on the strength of our customer service and technical support
teams. We also believe that a consistent and high level of support is central to
the adoption and successful utilization of our products and services. Our
customer service and technical support center is based out of our San Francisco
headquarters and consists of a team with a broad knowledge of our product
offering, as well as expertise in digital content creation. Our customer service
and technical support group provides assistance in several languages and offers
support via telephone, electronic mail, facsimile and the Internet.

We believe that a number of technological advances have contributed to
recent developments in the digital visual content industry and to increased
demand for digital black and white and color still photographs, film footage and
video. There have been significant increases in the use of the Internet, both as
a medium for communications and as a platform for commercial transactions. This
increased use of the Internet has resulted in growth in commercial promotion and
advertising in Websites and other online communications, which, in turn, has
contributed to an increase in demand for and use of digital photographs, film
footage and video. In addition, the Internet provides a new more efficient means
of marketing and distributing digital photographs, film footage and video. The
significant increase in the availability of high-speed and broadband Internet
connectivity makes customized access to multimedia content readily available and
affordable for commercial and residential customers.

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Faster, low-cost desktop computers, color displays, storage and memory devices,
and related compression technologies have made it possible for users to create,
edit and distribute high-quality digital photographs, film footage and video.
Developments in software applications and tools for complete digital content
creation and playback have enabled personal computer users to create, enhance,
manipulate, edit and view digital content.

We believe that the digital visual content industry will continue to develop
and significantly expand as a result of several factors, including:

- continuing proliferation of digital content creation and playback
applications and the increasing use of digital media to communicate and
convey messages in the publishing, film, video and broadcast industries;

- the continuing shift in broadcast economics from single purpose
commissioned media to centralized non-commissioned repositories of digital
content which continues to drive down the price of digital content to
within reach of the consumer;

- continued evolution in Internet use and commerce and the development and
commercialization of new technologies in the areas of digital content
creation and playback, facilitating use by both professionals and
consumers; and

- continuing consolidation in the industry, which will benefit well
capitalized, technology-enabled companies with a global reach.

We currently generate licensing revenues only from the digital visual
content professional market. However, we expect to generate significant
additional advertising and e-commerce revenues by providing digital video
entertainment programming over the Internet. We intend to license entertainment
programming from studios, broadcast networks, cable networks, syndicators and
others for replay on the Internet. The nature of the programming we intend to
license will be targeted to specific viewing audiences, i.e., specific
demographics and psychographics. We will offer this programming within a video
on demand and near video on demand environment. We intend to license this
programming on a barter basis. Barter licensing involves a reciprocal exchange
of advertising spots between the licensee and licensor. We are currently in
discussions with Interpublic Group and Pearson TV for such programming under
these terms. We intend to fill our advertising spot inventory with sponsorships
with those products and services specific to the programming content.

An additional revenue channel unique to Internet-delivered entertainment
programming is e-commerce. Through our proposed licensing of "hot-spot"
technology together with our fulfillment capabilities used in our professional
digital content business, we expect to offer an end-to-end solution whereby
viewers of Internet-delivered entertainment programming can purchase products
featured in the programming. We expect to receive a commission against the gross
purchase price of all such purchases.

This interactive entertainment programming will be post-produced at our
facilities in San Francisco, where we will create e-commerce enabled interactive
versions of the programs we license. By using hot-spot technology we will
activate objects in the streaming video, which when activated by the viewer at
his personal computer allows the viewer to click directly on the video program
to navigate from segment to segment, stop the program to get additional
information on a featured product or service and make secure online purchases
using the same technology employed in our professional digital content
businesses. This technology will provide us with a vehicle to produce and
distribute a new kind of interactive viewing experience. Viewers will have
access to a unique video and content not available in the television version of
the program.

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MARKETING AND SALES

A principal customer of busybox is Corbis Corporation, a Bellevue,
Washington based interactive, digital image company owned by William H. Gates,
III, a co-founder of Microsoft Corporation. Corbis Corporation owns one of the
world's largest collections of digitized visual content, with approximately 1.3
million photos, prints and other images reproduced in digital form, and is one
of the world's preeminent commercial providers of digital content. In May 1998,
busybox entered into an agreement for services with Corbis Corporation whereby
we were responsible for the design, development and implementation of a digital
image catalogue within the Corbis Internet Web site (www.corbisimages.com) for
the sum of $165,000. Also, in May 1998, busybox entered into an automatically
renewable maintenance agreement with Corbis Corporation whereby we were
responsible to operate, maintain, monitor and service the digital image
catalogue that we designed and developed for Corbis Corporation, on a 24-hour
basis, including, but not limited to:

- Internet operations;

- e-commerce operations;

- image processing;

- image and product updates;

- bug fixes;

- Corbis-requested changes; and

- enhancements and backup options.

Corbis Corporation paid us $10,000 per month for our maintenance and services,
plus $150 per hour for development services, $75 per hour for non-development
services, plus our expenses. Our maintenance agreement with Corbis Corporation
was concluded by mutual agreement in October 1999 when the Corbis royalty-free
catalogue that busybox designed, developed and implemented was integrated into
Corbis' Web site www.corbisimages.com. Our relationship with Corbis Corporation
remains good and, in October 1999, busybox began negotiations with Corbis
Corporation relating to a more comprehensive business relationship with Corbis,
which may include certain of our business-to-business Internet e-commerce
digital video technologies and services. However, we can make no assurances that
our negotiations will result in any business relationship with Corbis
Corporation.

Other principal customers of busybox include Visual Communications Group
Limited and its subsidiary FPG International LLC (Freelance Photographers'
Guild), which are owned by United News & Media plc, a major London, England
based media firm with interests in business services, consumer publishing,
broadcasting and entertainment. Visual Communications Group is a major worldwide
producer and distributer of stock photography for the advertising, design,
press, publishing and business-to-business markets. Visual Communications
Group's catalogue offers more than six million images. FPG International is one
of the largest and most recognized stock photography agencies in the world. FPG
International's collection contains millions of images of all subjects and
styles and adds approximately 100,000 new images every year. In June 1996,
busybox and Visual Communications Group entered into a master agreement for
services, and in April 1998 the parties entered into a revised master agreement
for services. Pursuant to these agreements busybox provides Web development,
hosting and maintenance services to Visual Communications Group and its
subsidiary FPG International. These services included the development of online,
e-commerce enabled digital image catalogues and directories for sites including
www.stockdirect.com and www.fpg.com. Busybox continues to provide monitoring,
hosting, and maintenance services for these sites, for which busybox receives
$38,350 per quarter, plus expenses. In October 1998, busybox and Visual
Communications Group entered into a representation agreement for busybox to
represent on the Internet a digital image and video catalogue of Visual
Communications Group at www.planet-earth-pictures.com, the prototype of which
was launched in January 1998, the commercial release of which is expected in
early 2000. Busybox receives 40% of the receipts from the sale and licensing of
digital images and video through www.planet-earth-pictures.com.

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Another principal customer of busybox is the National Basketball Association
("NBA"), for whom we have developed a proprietary agent technology which
monitors Web related intellectual property rights, among other services. The NBA
pays us $300 per hour, plus our expenses, for our technical development,
operations and maintenance services of its Internet Web site on a requirements
basis pursuant to an oral agreement. The NBA has been a customer of ours since
1996, and our relationship with the NBA remains good.

In October 1999, busybox began negotiations with United Wildlife, a wholly
owned division of United News & Media plc, for busybox to exclusively represent
on the Internet a digital video catalogue comprised of footage from Partridge
Films and Survival Anglia, two of the world's preeminent wildlife footage
archives. However, we can make no assurances that these negotiations will result
in any business relationship with United Wildlife.

In December 1999, busybox began negotiations with Apple Computer, Inc.
(Nasdaq NMS: AAPL) a Cupertino, California based computer company, to provide
digital video content to Apple's consumer and business user base through an
online catalog using our technology and architecture. The proposed online
catalogue will offer Apple's users a searchable library of digital video clips
for online purchase and download, as well as online purchase of digital video
compact disc and digital video disc titles. However, we can make no assurances
that these negotiations will result in any business relationship with Apple
Computer. Inc.

In January 2000, busybox entered into an agreement with M2 Software Equity,
LLC, a Los Angeles, California based digital video distribution company, for the
distribution of our digital video library through M2's distribution network.
busybox shall receive up to 40 percent of the revenues generated under the
distribution agreement in the use of our content. M2's distribution network
includes leading digital media software and content providers including Corbis
Corporation, Avid, Eyewire, Hot Shots, Cool Cuts, Digital Vision, among others.
The length of the distribution agreement is unspecified and the revenue stream
is expected to begin in the first quarter of 2000.

For the year ended December 31, 1998, Visual Communications accounted for 47
percent of our revenues and Corbis Corporation accounted for 28 percent of our
revenues. Visual Communications accounted for 81 percent of our accounts
receivable for this same period.

We currently market and sell black and white and color digital photographs
to our customers in the technology, media, entertainment, government, corporate
and sports industries. We will additionally market and sell digital film footage
and video over the Internet to our customers in the technology, media,
entertainment, government, corporate and sports industries. We currently drive
traffic to our Web site through a combination of promotional strategies
including advertising, direct and electronic mail, promotional bundles and
public relations. We have engaged a public relations firm to achieve the
following: (i) gain market advantage by establishing the perception that we are
a significant segment leader in digital content, (ii) position our executives as
significant leaders, thinkers and influencers in the digital content market; and
(iii) leverage our status to extend and enhance relationships with our
customers.

We intend to build points of presence by cross-promoting the entertainment
programming available through busybox in the cable and broadcast distribution
channels and networks. We expect by means of this cross-promotion to drive
traffic to and build brand awareness of our Web site. We believe that through
this cross-promotion strategy we will create awareness and build a significant
entertainment programming portal and entertainment network.

Our sales and marketing efforts are also designed to promote the busybox
brand and our digital media programming and services. We intend to utilize
traditional media vehicles for marketing and promotional purposes, including
television and print advertisements, as well as marketing arrangements with
other leading Web sites, gateway ads on our Web sites and e-mail newsletters.

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We also intend to exchange banner ads with high traffic Web sites such as
Infoseek, Tripod, Talk Cities, Go2Net, CBS SportsLine, Music Boulevard, Games
Domain and Lycos. We currently have not entered into any agreements to exchange
banner ads with such companies. We intend to use these opportunities to
highlight our special programming events and drive traffic to revenue generating
opportunities. The banner ads would also be used to promote business services
customers' events in order to attract larger audiences. We intend to extend
brand awareness on the Web by requiring that our logo and distinctive "view
button" be placed prominently on the Web pages of broadcast partners. We also
intend to use a number of search engines and live events guides such as CNET
Events, Yahoo! Events, NetGuide Live, Microsoft's Netshow Gallery and Your
Personal Net. We currently have not entered into any agreements to use the
search engines and live events guides with such companies.

INTELLECTUAL PROPERTY RIGHTS

We intend to file patent, trademark and copyright applications related to
certain aspects of our technology, products and services, as appropriate. If
patents, trademarks or copyrights were to be issued, there can be no assurance
as to the extent of the protection that will be granted to us as a result of
having such patents, trademarks or copyrights or that we will be able to afford
the expenses of any complex litigation which may be necessary to enforce our
proprietary rights. Failure of our patent, trademark and copyright applications
may have a material adverse impact on our business. Except as may be required by
the filing of patent, trademark and copyright applications, we will attempt to
keep all other proprietary information secret and to take such actions as may be
necessary to insure the results of our development activities are not disclosed
and are protected under the common law concerning trade secrets. Such steps will
include the execution of nondisclosure agreements by key personnel and may also
include the imposition of restrictive agreements on customers of our technology
and services. We are not sure that the execution of such agreements will be
effective to protect us, that we will be able to enforce the provisions of such
nondisclosure agreements, or that technology and services and other information
acquired by us pursuant to its development activities will be deemed to
constitute trade secrets by any court of competent jurisdiction.

GOVERNMENT REGULATION

Although there are currently few Federal and state laws and regulations
directly applicable to the Internet, it is likely that new laws and regulations
will be adopted in the United States and elsewhere covering issues such as
licensing, broadcast license fees, copyrights, privacy, pricing, sales taxes and
characteristics and quality of Internet services. It is possible that
governments will enact legislation that may be applicable to us in areas such as
content, network security, encryption and the use of key escrow, data and
privacy protection, electronic authentication or "digital" signatures, illegal
and harmful content, access charges and retransmission activities. Moreover, the
applicability to the Internet of existing laws governing issues such as property
ownership, content, taxation, defamation and personal privacy is uncertain. The
majority of such laws were adopted before the widespread use and
commercialization of the Internet and, as a result, do not contemplate or
address the unique issues of the Internet and related technologies. Any such
export or import restrictions, new legislation or regulation or governmental
enforcement of existing regulations may limit the growth of the Internet,
increase our cost of doing business or increase our legal exposure, which may
have a material adverse effect on our business, results of operations and
financial condition.

By distributing content over the Internet, we face potential liability for
claims based on the nature and content of the materials that we distribute,
including claims for defamation, negligence or copyright, patent or trademark
infringement, which claims have been brought, and sometimes successfully
litigated, against Internet companies. Our general liability insurance may not
cover potential claims of this type or may not be adequate to indemnify us for
any liability that may be imposed. Any liability not covered by insurance or in
excess of insurance coverage may have a material adverse effect on our business,
operating results and financial condition.

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COMPETITION

The market for Internet technologies and services is highly competitive and
we expect that competition will continue to intensify. We compete with:

- other Web sites, portals and Internet companies to acquire and provide
content to attract users;

- Internet broadcasters;

- online services, other Web site operators and advertising networks, as
well as traditional media such as television and print, for a share of
advertisers' total advertising budgets; and

- local television stations and national television networks for sales of
advertising spots. We are not sure that we will be able to compete
successfully or that the competitive pressures faced by us, including
those described below, will not have a material adverse effect on our
business, operating results and financial condition.

Competition among Web sites and portals that provide compelling content,
including digital media content, is intense and is expected to increase
significantly in the future. We compete with a variety of businesses that
provide media content through one or more mediums, such as print, television,
cable television and the Internet. Traditional media companies that have not
established a significant presence on the Internet may expend resources to
establish such a presence in the future. We compete generally with other content
providers for the time and attention of users and for advertising revenues. To
compete successfully, we must license and then provide sufficiently compelling
and popular content to generate users, support advertising intended to reach
such users and attract business and other organizations seeking Internet and
distribution services. We believe that the principal competitive factors in
attracting Internet users include the quality of service and the relevance,
timeliness, depth and breadth of content and services offered. In the market for
Internet distribution of radio and television broadcasts, we compete with ISPs,
television stations and networks that originate their own Internet broadcasts.
We also compete for the time and attention of Internet users with thousands of
Web sites operated by businesses and other organizations, individuals,
governmental agencies and educational institutions. For example, certain Web
sites may provide a collection of links to other Web sites with digital
streaming media content. We expect competition to intensify and the number of
competitors to increase significantly in the future. In addition, as we expand
the scope of our content and services, we will compete directly with a greater
number of Web sites and other media companies. Because the operations and
strategic plans of existing and future competitors are undergoing rapid change,
it is extremely difficult for us to anticipate which companies are likely to
offer competitive technologies and services in the future.

We also compete with companies that provide Internet services to businesses
and other organizations. Principal competitive factors include price,
transmission quality, transmission speed, reliability of service, ease of
access, ease of use, customer support, brand recognition and operating
experience. Our current and potential competitors may have significantly greater
financial, technical and marketing resources, longer operating histories and
greater brand recognition. Companies that provide media streaming software may
also enter the market for Internet services. If media streaming technology and
backbone bandwidth becomes more readily available to companies at low prices,
our customers may decide to broadcast their own programming. In particular,
local exchange carriers, ISPs and other data communication service providers may
compete in the future with a portion of or all of our business services as
technological advancements facilitate the ability of these providers to offer
effectively these services. We are not sure that we will be able to compete
successfully against current or future competitors for Internet services.

We also compete with online services, other Web site operators and
advertising networks, as well as traditional media such as television and print
for a share of advertisers' total advertising budgets. We believe that the
principal competitive factors for attracting advertisers include the number of
users accessing our Web sites, the demographics of our users, our ability to
deliver focused advertising and

26
<PAGE>
interactivity through our Web sites and the overall cost-effectiveness and value
of advertising offered by us. There is intense competition for the sale of
advertising on high-traffic Web sites, which has resulted in a wide range of
rates quoted by different vendors for a variety of advertising services, making
it difficult to project levels of Internet advertising that will be realized
generally or by any specific company. Any competition for advertisers among
present and future Web sites, as well as competition with other traditional
media for advertising placements, could result in significant price competition.
We believe that the number of companies selling Web-based advertising and the
available inventory of advertising space have recently increased substantially.
Accordingly, we may face increased pricing pressure for the sale of
advertisements. Reduction in our Web advertising revenues may have a material
adverse effect on our business, operating results and financial condition.

We also compete for traditional media advertising sales with national
television networks, as well as local television stations. Television content
providers and national television networks may have larger and more established
sales organizations than us. These companies may have greater name recognition
and more established relationships with advertisers and advertising agencies
than us. Such competitors may be able to undertake more extensive marketing
campaigns, obtain a more attractive inventory of ad spots, adopt more aggressive
pricing policies and devote substantially more resources to selling advertising
inventory. Our traditional media advertising sales efforts depend on our ability
to obtain an inventory of ad spots across the television markets. If we are
unable to obtain such inventory, it may have a material adverse effect on our
business, operating results and financial condition.

EMPLOYEES

As of the date of this prospectus, we have a total of 19 employees, all of
whom are full time employees. Of the total number of employees, three are
engaged in our management, two are engaged in administrative and technical
support and services, seven are engaged in technology and product development,
six are engaged in marketing and sales and one is engaged in administration and
finance. Following the closing of this offering, we intend to hire approximately
five additional employees, three in technology and product development, one in
marketing and sales and one in administration and finance. Our future success
depends in significant part upon the continued service of our key technical and
senior management personnel and our continuing ability to attract and retain
qualified technical and managerial personnel. Competition for qualified
technical personnel is highly intense and there can be no assurance that we will
be able to retain our technical and managerial employees or that we will be able
to attract and retain additional qualified technical and managerial personnel in
the future. None of our employees is represented by labor union. We have not
experienced any work stoppages and consider our relations with our employees to
be good.

The rapid execution necessary for us to fully exploit the market window for
our products and services requires an effective planning and management process.
Our growth has placed, and is expected to continue to place, a significant
strain on our managerial, operational and financial resources. To manage our
growth, we must continue to implement and improve our operational and financial
systems and to expand, train and manage our technical employee base. For
example, we are currently in the process of building our internal technical
product development and support organization. Although we believe that we have
made adequate allowances for the costs and risks associated with this expansion,
there can be no assurance that our systems, procedures or controls will be
adequate to support our operations or that our management will be able to
achieve the rapid execution necessary to fully exploit the market window for our
products and services. If we are unable to manage growth effectively, our
business, operating results and financial condition may be materially adversely
affected.

27
<PAGE>
FACILITIES

Our principal executive offices currently occupy approximately 4,000 square
feet of an office building located at 701 Battery Street, Third Floor, San
Francisco, California 94111, and our telephone number is (415) 283-1811. We
currently lease our offices pursuant to a two-year lease agreement, which
expires in December 2000, for approximately $6,000 per month. The lease
agreement also requires us to pay certain taxes and expenses associated with the
offices. We believe that our facilities are suitable and adequate for our
current operations. We intend to increase our leased office space to
approximately 10,000 square feet under a multi-year lease agreement for
approximately $25,000 per month following the closing of this offering.

28
<PAGE>
MANAGEMENT

The officers and directors of busybox are as follows:

<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------- -----------------------------------------
<S> <C>
Patrick A. Grotto Chairman of the Board, Chief Executive
Officer

Robert S. Sherman President, Chief Operating Officer,
Director

Rosanne Esposito Executive Vice President

Todd L. Carter Vice President, Chief Technology Officer

Jon M. Bloodworth, Esq. Vice President, General Counsel,
Secretary, Director

Mark B. Leffers, C.P.A. Vice President, Treasurer, Controller,
Chief Financial Officer

Peter A. Seligmann, Ph.D. (hon.) Director

Michael H. Glawe, Esq. Director
</TABLE>

Each of our directors hold office for a period expiring December 2000. At
present, our By-laws provide for not less than one director nor more than nine
directors. Currently, there are five directors. The By-laws permit the board of
directors to fill any vacancy and such director may serve until the next annual
meeting of shareholders or until his successor is elected and qualified.
Officers serve at the discretion of the board of directors. There are no family
relationships among any officers or directors. The officers devote full time to
our business.

The principal occupation and business experience for each officer and
director of busybox for at least the last five years are as follows:

PATRICK A. GROTTO, 51, has been chairman of the board and chief executive
officer of busybox since April 1999, and from December 1998 to April 1999 was
president, chief executive officer and a director of busybox. Mr. Grotto has
substantial executive management, marketing and sales, and investment banking
experience. From 1990 to 1992, Mr. Grotto was president of EDT, Incorporated, a
Maryland based network software company. In 1991, GTE named Mr. Grotto
"Entrepreneur of the Year" in connection with his business relationship with
such firm. From 1992 to 1997, Mr. Grotto was president and chief executive
officer of AGS Financial Corporation, a New York based investment banking firm
that was sold to a Fortune 1000 company in 1997. From 1997 to 1998, Mr. Grotto
was president and chief executive officer of Royal Oak Holdings, LLC, a Maryland
based investment banking firm. Since December 1998, Mr. Grotto has been
instrumental in the organization, development and promotion of busybox. Mr.
Grotto holds a B.S. degree from Loyola University (Chicago).

ROBERT S. SHERMAN, 45, has been president. chief operating officer and a
director of busybox since November 1999. Mr. Sherman has substantial executive
management, international business development, digital media and media
licensing experience. From 1990 to 1994, Mr. Sherman was vice president of
operations for the JLR Group, Inc., a Massachusetts based software consulting
firm specializing in retail software development, documentation and multimedia
production for major technology companies. From 1994 to 1997, Mr. Sherman was
vice president of business development for Energy Film Library, a Los Angeles
based leading global stock footage licensing and production company. Mr. Sherman
was instrumental in Energy Film's pioneering on-line media initiative with
Pacific Bell and Sprint. In 1997, Mr. Sherman was a key participant in the
preparation and sale of Energy Film to Getty Images, Inc. (Nasdaq: GETY), a
Seattle based leader in e-commerce and one of

29
<PAGE>
the largest international providers of visual content. From 1997 to 1999, Mr.
Sherman continued as vice president of business development for the Energy Film
brand at Getty Images directing broadcast and corporate sales, international
development, new product development and business affairs. Mr. Sherman was also
a member of Getty Images' corporate strategic relations team and was active in
corporate mergers and acquisitions. Since November 1999, Mr. Sherman has been
instrumental in the organization, development and promotion of busybox.

ROSANNE ESPOSITO, 44, is a co-founder of busybox and has been an executive
officer and a director of busybox since 1995. Since October 1999, Ms. Esposito
has been executive vice president of busybox. Ms. Esposito has substantial
executive management, image-based software development and marketing and sales
experience. From 1991 to 1995, Ms. Esposito was a founder and product manager of
Digital Arts and Science, Inc., an Alameda, California based software developer
of image-based archiving applications. Since 1995, Ms. Esposito has been
instrumental in the organization, development and promotion of busybox.
Ms. Esposito holds a B.S. degree from Temple University and a M.A. degree
(equivalent) from Trinity College (Ireland).

TODD L. CARTER, 36, is a co-founder of busybox and has been vice president
and chief technology officer of busybox since 1995. Mr. Carter has substantial
image-based software development and digital technology experience. From 1993 to
1994, Mr. Carter was the technology development director of PressLink, Inc., a
Washington, D.C. area based Knight-Ridder digital content distribution company.
Since 1995, Mr. Carter has been instrumental in the organization, development
and promotion of busybox. Mr. Carter is fluent in French. Mr. Carter attended
the Universities of Michigan and Massachusetts and the University of Dijon
(France).

JON M. BLOODWORTH, ESQ., 41, has been a vice president, general counsel,
secretary and a director of busybox since 1995. Mr. Bloodworth has substantial
executive management, finance and corporate legal experience. From 1994 to 1998,
Mr. Bloodworth was president and chief executive officer of Koyosha Graphics of
America, Inc., a San Francisco, California based software graphics company.
Since 1995, Mr. Bloodworth has been instrumental in the organization,
development and promotion of busybox. Mr. Bloodworth is fluent in German and
Japanese. Mr. Bloodworth holds a B.A. degree from the University of California
(Berkeley) and a J.D. degree from Golden Gate University School of Law.

MARK B. LEFFERS, C.P.A., 38, has been a vice president, treasurer,
controller and chief financial officer of busybox since December 1998. From 1993
to 1997, Mr. Leffers was a manager of Beatty, Satchell and Company, LLC, a
Maryland based independent certified public accounting firm. From 1997 to 1998,
Mr. Leffers was a vice president and chief financial officer of NewsReal,Inc., a
Maryland based Soros Fund Management Company, where he lead the buy-out of the
business news and information division from Infoseek, a Top Five Internet search
engine and Nasdaq-listed company. Since December 1998, Mr. Leffers has been
instrumental in the organization, development and promotion of busybox. Mr.
Leffers holds a B.S. degree from the University of Virginia.

PETER A. SELIGMANN, PH.D. (HON.), 48, has been a director of busybox since
December 1998. Mr. Seligmann has substantial executive management and
international advisory experience. Since 1987, Mr. Seligmann has been a
co-founder, chairman of the board and chief executive officer of Conservation
International, one of the world's leading conservation organizations, based in
Washington, D.C., which pioneers innovative conservation policies that are
economically sound, scientifically based and culturally sensitive, with private
and public projects and partnerships in more than 20 regions of the world.
Mr. Seligmann is a member of the advisory councils of the Jackson Hole Land
Trust, Ecotrust and the Japanese Keidanren's Nature Conservation Fund.
Mr. Seligmann holds a B.S. degree from Rutgers University, a M.S. degree from
Yale University and a Ph.D. (hon.) degree from Michigan State University.

30
<PAGE>
MICHAEL H. GLAWE, ESQ., 51, has been a director of busybox since December
1998. Mr. Glawe has substantial executive management, international corporate
advisory and legal experience. Since 1995, Mr. Glawe has been a member of the
board of directors of UAL Corp., the Chicago based parent company of United
Airlines, Inc., the world's largest airline and the largest employee owned
company in the world, and chairman of the Air Line Pilot's Association. Mr.
Glawe is a United Airlines DC-10 captain and has been a pilot for United since
1978. Mr. Glawe is a former decorated commissioned officer and aviator in the
U.S. Air Force. Mr. Glawe is also a member of the board of directors of
Conservation International, one of the world's leading conservation
organizations. Mr. Glawe holds a B.S. degree from the United States Military
Academy (West Point) and a J.D. degree from Northern Illinois University College
of Law.

31
<PAGE>
REMUNERATION

EXECUTIVE COMPENSATION

The following table sets forth remuneration in excess of $100,000 that we
paid in fiscal years ended December 31, 1999, 1998 and 1997 to the officers and
directors of busybox:

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (1)(2)(3)
---------------------------------------------
OTHER
NAME OF INDIVIDUAL OR NUMBER ANNUAL
OF PERSONS IN GROUP POSITION WITH BUSYBOX YEAR SALARY BONUS COMPENSATION
- ---------------------------- ------------------------------------------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Patrick A. Grotto Chairman of the Board, Chief Executive 1999 $175,000 $87,500 --
Officer 1998 -- -- --
1997 -- -- --

Robert S. Sherman President, Chief Operating Officer, 1999 $ 29,167 $14,503 --
Director 1998 -- -- --
1997 -- -- --

Rosanne Esposito Executive Vice President 1999 $125,000 $62,500 --
1998 $ 57,905 $10,000 $ 6,000
1997 $ 6,000 -- $49,000

Todd L. Carter Vice President, Chief Technology Officer 1999 $125,000 $62,500 --
1998 $ 68,514 $10,000 --
1997 $ 7,000 -- $42,800

Jon M. Bloodworth, Esq. Vice President, General Counsel, Secretary, 1999 $150,000 $75,000 --
Director 1998 $ 1,800 -- $38,000
1997 -- -- --

Mark B. Leffers, C.P.A. Vice President, Treasurer, Controller, 1999 $125,000 $62,500 --
Chief Financial Officer 1998 -- -- --
1997 -- -- --
</TABLE>

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

(1) busybox has agreed to purchase key-man term life insurance on Messrs.
Grotto, Sherman, Esposito and Carter in the amount of $1 million each prior
to the closing of this offering. busybox will be the owner and beneficiary
of such life insurance policies.

(2) In the fiscal year ended December 31, 1999, the officers of busybox received
additional remuneration as part of an overall group insurance plan providing
health, life and disability insurance benefits for employees of busybox. The
amount allocable to each individual officer cannot be specifically
determined, but, in any event, did not exceed $25,000 as to each individual.

(3) The officers of busybox are each entitled to an annual bonus equal to
50 percent of the salary provided under an employment agreement. Each
outside director is entitled to receive a fee of $2,500 plus expenses
incurred in personally attending meetings of the board of directors. The
members of the board of directors intend to meet at least quarterly during
our fiscal year, and at such other times duly called. We presently have two
outside directors.

EMPLOYMENT AGREEMENTS

busybox has entered into employment agreements ("Agreements") with Messrs.
Grotto, Esposito, Carter, Bloodworth and Leffers dated as of January 1, 1999.
busybox has also entered into an Agreement with Robert Sherman dated as of
October 20, 1999. The Agreements will expire on December 31, 2001. The current
annual salaries under the Agreements are $175,000, $175,000, $125,000, $125,000,
$150,000 and $125,000, respectively. The salaries under the Agreements may be

32
<PAGE>
increased to reflect annual cost of living increases and may be supplemented by
discretionary merit and performance increases as determined by the board of
directors. Messrs. Grotto, Sherman, Esposito, Carter, Bloodworth and Leffers are
each entitled to an annual bonus equal to 50 percent of the salary provided
under his Agreement.

The Agreements provide, among other things, fringe benefits for
participation in an equitable manner in any profit-sharing, retirement plan or
insurance benefits for employees or executives and for participation in other
employee benefits applicable to employees and executives. The Agreements also
contain benefits in the event of disability that provide for the payment of 60
percent of salary and bonus during the balance of the employment term. The
Agreements also contain non-compete provisions that provide that the employee
may not compete, directly or indirectly, with busybox during the employment term
and for a period of two years thereafter. However, state courts may determine
not to enforce, or only partially enforce, non-compete clauses in emploent
agreements.

Employment under the Agreements may be terminated with cause or by the
executive with or without good reason. Termination by busybox without cause, or
by the executive for good reason, would subject us to liability for liquidated
damages in an amount equal to the terminated executive's current salary and a
PRO RATA portion of their bonus for the remaining term of the Agreement, payable
in a lump sum cash payment, without any set-off for compensation received from
any new employment. In addition, the terminated executive would be entitled to
continue to participate in and accrue benefits under all employee benefit plans
and to receive supplemental retirement benefits to replace benefits under any
qualified plan for the remaining term of the Agreement to the extent permitted
by law.

LIMITATION ON LIABILITY OF DIRECTORS

As permitted by Delaware law, our certificate of incorporation includes a
provision which provides that a director of busybox shall not be personally
liable to busybox or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for:

- any breach of the director's duty of loyalty to busybox or its
stockholders;

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

- the unlawful payment of dividends or the unlawful repurchase or redemption
of stock; or

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

This provision is intended to afford directors protection against, and to
limit their potential liability for monetary damages resulting from, suits
alleging a breach of the duty of care by a director. As a consequence of this
provision, stockholders of busybox will be unable to recover monetary damages
against directors for action taken by them that may constitute negligence or
gross negligence in performance of their duties unless such conduct falls within
one of the foregoing exceptions. The provision, however, does not alter the
applicable standards governing a director's fiduciary duty and does not
eliminate or limit the right of busybox or any stockholder to obtain an
injunction or any other type of nonmonetary relief in the event of a breach of
fiduciary duty. Our management believes this provision will assist us in
securing and retaining qualified persons to serve as directors. We are unaware
of any pending or threatened litigation against us or our directors that would
result in any liability for which such director would seek indemnification or
similar protection.

Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase our ability to attract and retain
qualified persons to serve as directors. We currently maintain a liability
insurance policy for the benefit of our directors. We believe that the
substantial increase in the number of lawsuits being threatened or filed against
corporations and their directors and the general unavailability of directors
liability insurance to provide protection against the increased risk of personal
liability resulting from such lawsuits have combined to result in a growing
reluctance

33
<PAGE>
on the part of capable persons to serve as members of boards of directors of
public companies. We also believe that the increased risk of personal liability
without adequate insurance or other indemnity protection for its directors may
result in overcautious and less effective direction and management of busybox.

The provisions affecting personal liability do not abrogate a director's
fiduciary duty to busybox and its shareholders, but eliminate personal liability
for monetary damages for breach of that duty. The provisions do not, however,
eliminate or limit the liability of a director for failing to act in good faith,
for engaging in intentional misconduct or knowingly violating a law, for
authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty, which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of busybox and those
of the director, or for violations of the Federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of busybox.

The provisions regarding indemnification provide, in essence, that busybox
will indemnify our directors against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with any action, suit or proceeding arising out of the director's
status as a director, including actions brought by or on behalf of busybox. The
provisions do not require a showing of good faith. Moreover, they do not provide
indemnification for liability arising out of willful misconduct, fraud or
dishonesty, for short-swing profits violations under the Federal securities
laws, or for the receipt of illegal remuneration. The provisions also do not
provide indemnification for any liability to the extent such liability is
covered by insurance. One purpose of the provisions is to supplement the
coverage provided by such insurance.

The provisions diminish the potential rights of action which might otherwise
be available to shareholders by limiting the liability of officers and directors
to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
in connection with any shareholders derivative action. However, the provisions
do not have the effect of limiting the right of a shareholder to enjoin a
director from taking actions in breach of his fiduciary duty, or to cause
busybox to rescind actions already taken, although as a practical matter courts
may be unwilling to grant such equitable remedies in circumstances in which such
actions have already been taken. Although we have procured directors liability
insurance coverage, there is no assurance that it will provide coverage to the
extent directors would be indemnified and, in such event, we may be forced to
bear a portion or all of the cost of the director's claims for indemnification.
If we are forced to bear the costs for indemnification, the value of our stock
may be adversely affected. In the opinion of the Securities and Exchange
Commission, indemnification for liabilities arising under the Securities Act of
1933 is contrary to public policy and, therefore, is unenforceable.

busybox intends to indemnify its officers and directors to the full extent
permitted by Delaware law. Under Delaware law, a corporation may indemnify its
agents for expenses and amounts paid in third party actions and, upon court
approval in derivative actions, if the agents acted in good faith and with
reasonable care. A majority vote of the board of directors, approval of the
shareholders or court approval is required to effectuate indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling busybox, we have been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities, other than the payment by
busybox of expenses incurred or paid by an officer, director or controlling
person of busybox in the successful defense of any action, suit or proceeding,
is asserted by such officer, director or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in such Act and will be governed by the final
adjudication of such issue.

34
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding our common
stock owned on the date of this prospectus and, as adjusted, to reflect the sale
of shares offered by this prospectus, by (i) each person who is known by busybox
to own beneficially more than five percent of our common stock; (ii) each of our
officers and directors; and (iii) all officers and directors as a group:

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
-----------------------
NUMBER BEFORE AFTER
NAME AND ADDRESS (1) POSITION WITH BUSYBOX OF SHARES OFFERING OFFERING (2)
- -------------------- -------------------------- --------- -------- ------------
<S> <C> <C> <C> <C>
Patrick A. Grotto.............................. Chairman of the Board, 325,000 5.23 3.96
Chief Executive Officer

Robert S. Sherman.............................. President, Chief Operating 200,000 3.22 2.44
Officer, Director

Rosanne Esposito............................... Executive Vice President 900,000 14.49 10.96

Todd L. Carter................................. Vice President, Chief 900,000 14.49 10.96
Technology Officer

Jon M. Bloodworth, Esq......................... Vice President, General 450,000 7.25 5.48
Counsel, Secretary,
Director

Mark B. Leffers, C.P.A......................... Vice President, Treasurer, 200,000 3.22 2.44
Controller, Chief
Financial Officer

Peter A. Seligmann, Ph.D. (hon.)............... Director 100,000 1.61 1.22

Michael H. Glawe, Esq.......................... Director 100,000 1.61 1.22

All Officers and Directors
as a Group (8 persons)....................... 3,175,000 51.13 38.67
</TABLE>

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

(1) c/o busybox.com, inc., 701 Battery Street, Third Floor, San Francisco,
California 94111.

(2) Does not include the exercise of up to 2,000,000 warrants in this offering.
Each warrant entitles the holder to purchase one share of common stock at
$5.50 per share during the five-year period commencing on the date of this
prospectus. The warrants are redeemable upon certain conditions. If the
warrants are exercised, we will receive proceeds of up to $11,000,000.

35
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

busybox was incorporated in Delaware in October 1995. We have authorized
capital of 25,000,000 shares of common stock, $.01 par value. We have
6,210,000 shares of common stock issued and outstanding prior to this offering.

In December 1995, busybox issued 2,450,000 shares of common stock to four
sophisticated persons, including three officers (Rosanne Esposito, Todd L.
Carter and Jon M. Bloodworth, Esq.) of busybox, in a private placement
transaction in consideration of $24,500, consisting of $1,000 in cash and
$23,500 in services rendered, pro rata, or $.01 per share. See "Principal
Stockholders."

In July 1997, busybox issued 300,000 shares of common stock to two persons
in a private placement transaction in consideration of $174,167, consisting of
property and services rendered, or $.58 per share.

In July 1998, busybox issued 100,000 shares of common stock to one person in
a private placement transaction in consideration of $58,385, consisting of
services rendered, or $.58 per share.

In October 1998, busybox amended its Certificate of Incorporation to
increase the number of authorized shares of common stock from 3,000,000 shares
to 6,000,000 shares.

In December 1998, busybox issued 1,225,000 shares of common stock to eight
persons, including two officers (Patrick A. Grotto and Mark B. Leffers, C.P.A.),
two outside directors (Peter A. Seligmann, Ph.D. (hon.) and Michael H. Glawe,
Esq.) and legal counsel (Thomas T. Prousalis, Jr., Esq.) of busybox, in a
private placement transaction in consideration of $2,450,000, consisting of
$24,500 in cash and $2,425,500 in promissory notes, pro rata, or $2 per share.
See "Principal Stockholders."

In March 1999, busybox amended its Certificate of Incorporation to change
the par value of its common stock from no par value to $.01 par value per share,
and to increase the number of authorized shares from 6,000,000 shares to
25,000,000 shares. busybox then approved a 2,000-for-1 stock split for all
shares issued and outstanding. All references to number of shares and amounts
per share in this prospectus have been adjusted to reflect the effect of the
stock split and change in par value.

In April 1999, busybox issued 1,185,000 shares of common stock to 45 persons
in a private placement transaction in consideration of $2,370,000, or $2 per
share.

In September 1999, busybox issued 500,000 shares of common stock to 29
persons in a private placement transaction in consideration of $1,000,000, or $2
per share.

In September 1999, busybox issued 100,000 shares of common stock to one
person (Cascade Partners, L.L.C.) in a private placement transaction in
consideration of services rendered.

In October 1999, busybox issued 200,000 shares of common stock to an officer
and director (Robert S. Sherman) of busybox in a private placement transaction
in consideration of $400,000, consisting of $2,000 in cash and $398,000 in a
promissory note, or $2 per share.

In October 1999, busybox issued 150,000 shares of common stock to four
sophisticated persons (employees) in a private placement transaction in
consideration of $300,000, consisting of $1,500 in cash and $298,500 in
promissory notes, or $2 per share.

In December 1999, the Company borrowed $1,500,000 from 26 persons in a
private placement transaction pursuant to eight percent promissory notes,
payable upon the closing of this offering or upon the one year anniversary date
of the notes, whichever occurs first. Also, in connection with the issuance of
the notes, the Company granted five-year options to the noteholders, on a pro
rata basis, to purchase 375,000 shares of the Company's common stock at $2.00
per share, vesting on the date of this offering. The underlying shares of common
stock to the options are restricted securities and may not be sold, transferred,
assigned or otherwise disposed of for a period of 24 months following the date
of issuance, absent registration.

36
<PAGE>

All unregistered securities issued by busybox prior to this offering are
deemed restricted securities within the meaning of that term as defined in
Rule 144 of the Securities Act of 1933, as amended ("Act") and have been issued
pursuant to certain private placement exemptions under Section 4(2) and Rule 506
of Regulation D of the Act, as promulgated by the Securities and Exchange
Commission, such that the sales of the securities were to sophisticated or
accredited investors, as that latter term is defined in Rule 215 and Rule 501 of
Regulation D of the Act, and were transactions by an issuer not involving any
public offering. Such sophisticated or accredited investors had access to
information on busybox necessary to make an informed investment decision. Also,
under terms of the Underwriting Agreement or subscription agreement, the current
stockholders of busybox have agreed not to sell, transfer, assign or otherwise
dispose of any restricted securities of busybox for a period of 24 months
following the date of this prospectus.

Any future transactions with affiliates will be on terms no less favorable
than could be obtained from nonaffiliated parties and will be approved by a
majority of the independent and disinterested directors, as required by a
resolution of the board of directors. Any future loans to officers, directors,
affiliates and/or shareholders of busybox will be approved by a majority of the
independent and disinterested directors, as required by a resolution of the
board of directors.

37
<PAGE>
DESCRIPTION OF SECURITIES

COMMON STOCK

The authorized capital stock of busybox consists of 25,000,000 shares of
common stock, $.01 par value. busybox has 6,210,000 shares of common stock
issued and outstanding prior to this offering. Holders of the common stock do
not have preemptive rights to purchase additional shares of common stock or
other subscription rights. The common stock carries no conversion rights and is
not subject to redemption or to any sinking fund provisions. All shares of
common stock are entitled to share equally in dividends from sources legally
available therefor when, as and if declared by the board of directors and, upon
liquidation or dissolution of busybox, whether voluntary or involuntary, to
share equally in the assets of busybox available for distribution to
stockholders. All outstanding shares of common stock are validly authorized and
issued, fully paid and nonassessable, and all shares to be sold and issued as
contemplated hereby, will be validly authorized and issued, fully paid and
nonassessable. The board of directors is authorized to issue additional shares
of common stock, not to exceed the amount authorized by our certificate of
incorporation, and to issue options and warrants for the purchase of such
shares, on such terms and conditions and for such consideration as the board may
deem appropriate without further stockholder action. The above description
concerning the common stock of busybox does not purport to be complete.
Reference is made to our certificate of incorporation and By-laws which are
available for inspection upon proper notice at our offices, as well as to the
applicable statutes of Delaware for a more complete description concerning the
rights and liabilities of stockholders.

Prior to this offering, there has been no market for the common stock of
busybox, and no predictions can be made of the effect, if any, that market sales
of shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of significant amounts of the
common stock of busybox in the public market may adversely affect prevailing
market prices, and may impair our ability to raise capital at that time through
the sale of our equity securities.

Each holder of common stock is entitled to one vote per share on all matters
on which such stockholders are entitled to vote. Since the shares of common
stock do not have cumulative voting rights, the holders of more than 50 percent
of the shares voting for the election of directors can elect all the directors
if they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the board of directors.

WARRANTS

Prior to this offering, there were no warrants issued and outstanding. The
warrants will be issued in registered form under a warrant agreement dated on
the date of this prospectus, between busybox and American Securities Transfer,
Inc., Denver, Colorado, as warrant agent. The following discussion of certain
terms and provisions of the warrants is qualified in its entirety by reference
to the warrant agreement. A form of the certificate representing the warrants
which forms a part of the warrant agreement has been filed as an exhibit to the
registration statement of which this prospectus forms a part.

Each of the warrants entitles the registered holder to purchase one share of
common stock. The warrants are exercisable at a price of $5.50, which exercise
price has been arbitrarily determined by busybox and the Underwriter, subject to
certain adjustments. The warrants are entitled to the benefit of adjustments in
their exercise prices and in the number of shares of common stock or other
securities deliverable upon the exercise thereof in the event of a stock
dividend, stock split, reclassification, reorganization, consolidation or
merger.

The warrants may be exercised at any time and continuing thereafter until
the close of five years from the date hereof, unless such period is extended by
busybox. After the expiration date, warrant holders shall have no further
rights. Warrants may be exercised by surrendering the certificate

38
<PAGE>

evidencing such warrant, with the form of election to purchase on the reverse
side of such certificate properly completed and executed, together with payment
of the exercise price and any transfer tax, to the warrant agent. If less than
all of the warrants evidenced by a warrant certificate are exercised, a new
certificate will be issued for the remaining number of warrants. Payment of the
exercise price may be made by cash, bank draft or official bank or certified
check equal to the exercise price.

Warrant holders do not have any voting or any other rights as shareholders
of busybox. busybox has the right at any time to redeem the warrants, at a price
of $.05 per warrant, by written notice to the registered holders thereof, mailed
not less than thirty (30) nor more than sixty (60) days prior to the redemption
date. busybox may exercise this right only if the closing bid price for the
common stock equals or exceeds $10 per share during a thirty (30) consecutive
trading day period ending no more than fifteen (15) days prior to the date that
the notice of redemption is mailed, provided there is then a current
registration statement under the Securities Act of 1933, as amended, with
respect to the issuance and sale of common stock upon the exercise of the
warrants. If busybox exercises its right to call warrants for redemption, such
warrants may still be exercised until the close of business on the day
immediately preceding the redemption date. If any warrant called for redemption
is not exercised by such time, it will cease to be exercisable, and the holder
thereof will be entitled only to the repurchase price. Notice of redemption will
be mailed to all holders of warrants or record at least thirty (30) days, but
not more than sixty (60) days, before the redemption date. The foregoing
notwithstanding, busybox may not call the warrants at any time that a current
registration statement under the Act is not then in effect. Any redemption of
the warrants during the one-year period commencing on the date of this
prospectus shall require the written consent of the underwriter.

The warrant agreement permits busybox and the warrant agent, without the
consent of warrant holders, to supplement or amend the warrant agreement in
order to cure any ambiguity, manifest error or other mistake, or to address
other matters or questions arising thereafter that busybox and the warrant agent
deem necessary or desirable and that do not adversely affect the interest of any
warrant holder. busybox and the warrant agent may also supplement or amend the
warrant agreement in any other respect with the written consent of holders of
not less than a majority in the number of warrants then outstanding; however, no
such supplement or amendment may:

- make any modification of the terms upon which the warrants are exercisable
or may be redeemed; or

- reduce the percentage interest of the holders of the warrants without the
consent of each warrant holder affected thereby.

In order for the holder to exercise a warrant, there must be an effective
registration statement, with a current prospectus on file with the Securities
and Exchange Commission covering the shares of common stock underlying the
warrants, and the issuance of such shares to the holder must be registered,
qualified or exempt under the laws of the state in which the holder resides. If
required, busybox will file a new registration statement with the Securities and
Exchange Commission with respect to the securities underlying the warrants prior
to the exercise of such warrants and will deliver a prospectus with respect to
such securities to all holders thereof as required by Section 10(a)(3) of the
Securities Act of 1933, as amended.

SHARES ELIGIBLE FOR FUTURE SALE

All of our currently outstanding shares of common stock are restricted
securities and, in the future, may be sold upon compliance with Rule 144,
adopted under the Securities Act of 1933, as amended. Rule 144 provides, in
essence, that a person holding restricted securities for a period of one year
may sell only an amount every three months equal to the greater of:

- one percent of our issued and outstanding shares; or

39
<PAGE>

- the average weekly volume of sales during the four calendar weeks
preceding the sale.

The amount of restricted securities which a person who is not an affiliate
of busybox may sell is not so limited, since nonaffiliates may sell without
volume limitation their shares held for two years if there is adequate current
public information available concerning busybox. Upon the sale of the
securities, and assuming that there is no exercise of any issued and outstanding
warrants, busybox will have 8,210,000 shares of its common stock issued and
outstanding, of which 6,210,000 shares will be restricted securities. Therefore,
during each three month period, a holder of restricted securities who has held
them for at least the one year period may sell under Rule 144 a number of shares
up to 82,100 shares. Non-affiliated persons who hold for the two-year period
described above may sell unlimited shares once their holding period is met.
However, under terms of the underwriting agreement or subscription agreement,
the current stockholders of busybox have agreed not to sell, transfer, assign or
otherwise dispose of any restricted securities of busybox for a period of
24 months following the date of this prospectus.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our securities is American Securities
Transfer & Trust, Inc., 12039 W. Alameda Parkway, Lakewood, Colorado 80228.

REPORTS TO SECURITY-HOLDERS

We will furnish to holders of our securities annual reports containing
audited financial statements. We may issue other unaudited interim reports to
our security-holders as we deem appropriate.

Contemporaneously, with this offering, we intend to register our securities
with the Securities and Exchange Commission under the provisions of
Section 12(g) of the Securities Exchange Act of 1934, as amended, and, in
accordance therewith, we will be required to comply with certain reporting,
proxy solicitation and other requirements of the Exchange Act.

40
<PAGE>
UNDERWRITING

Subject to the material terms and conditions of the Underwriting Agreement,
all of which are included herein, Barron Chase Securities, Inc., the
underwriter, has agreed to purchase from busybox an aggregate of 2,000,000
shares of common stock and 2,000,000 warrants. The securities are offered by the
underwriter subject to prior sale, when, as and if delivered to and accepted by
counsel and certain other conditions. The underwriter is committed to purchase
all of the securities offered by this prospectus, if any are purchased, other
than those covered by the over-allotment option described below.

We have been advised by the underwriter that the underwriter proposes to
offer the securities to the public at the offering prices set forth on the cover
page of this prospectus. The underwriter has advised us that the underwriter
proposes to offer the securities through members of the National Association of
Securities Dealers, Inc., and may allow concessions, in its discretion, to
certain selected dealers who are members of the NASD and who agree to sell the
securities in conformity with the NASD's Conduct Rules. Such concessions will
not exceed the amount of the underwriting discount that the underwriter is to
receive.

We have granted to the underwriter an over-allotment option, exercisable for
45 days from the effective date of the offering, to purchase up to an additional
300,000 shares of common stock and an additional 300,000 warrants at the
respective public offering prices less the underwriting discounts set forth on
the cover page of this prospectus. The underwriter may exercise this option
solely to cover overallotments in the sale of the securities being offered by
this prospectus.

Our officers and directors may introduce the underwriter to persons to
consider this offering and to purchase securities either through the underwriter
or through participating dealers. In this connection, no securities have been
reserved for those purchases and officers and directors will not receive any
commissions or any other compensation.

We have agreed to pay to the underwriter a commission of ten percent of the
gross proceeds of this offering which is the underwriting discount, including
the gross proceeds from the sale of the over-allotment option, if exercised. In
addition, we have agreed to pay to the underwriter the non-accountable expense
allowance of three percent of the gross proceeds of this offering, including
proceeds from any securities purchased pursuant to the over-allotment option. We
have paid to the underwriter a $50,000 advance with respect to the
non-accountable expense allowance. The underwriter's expenses in excess of the
non-accountable expense allowance will be paid by the underwriter. To the extent
that the expenses of the underwriter are less than the amount of the non-
accountable expense allowance received, such excess shall be deemed to be
additional compensation to the underwriter. The underwriter has informed us that
it does not expect sales of discretionary accounts to exceed five percent (5%)
of the total number of securities offered by us.

We have agreed to engage the underwriter of the offering as a financial
advisor for a fee of $108,000, which is payable to the underwriter on the
closing date. Under the terms of a financial advisory agreement, the underwriter
has agreed to provide, at our request, advice to us concerning potential merger
and acquisition and financing proposals, whether by public financing or
otherwise. With regard to the underwriter's engagement to locate mergers or
acquisitions for us, the underwriter does not have any current plans, proposals,
arrangements or understandings in this regard. We have also agreed that if we
participate in any transaction which the underwriter has introduced in writing
to us during a period of five years after the closing, including mergers,
acquisitions, joint ventures and any other business transaction for us
introduced in writing by the underwriter, and which is consummated after the
closing, including an acquisition of assets or stock for which it pays, in whole
or in part, with shares or other securities of busybox, or if we retain the
services of the underwriter in connection with any such transaction, then we
will pay for the underwriter's services an amount equal to 5% of up to one
million dollars of value paid or received in the transaction, 4% of the next one
million dollars of

41
<PAGE>

such value, 3% of the next one million dollars of such value, 2% of the next one
million dollars of such value, and 1% of the next million dollars of such value
and of all such value above $4,000,000.

Prior to this offering, there has been no public market for the shares of
common stock or the warrants. Consequently, the initial public offering prices
for the securities, and the terms of the warrants, including the exercise price
of the warrants, have been determined by negotiation between busybox and the
underwriter. Among the factors considered in determining the public offering
prices were the history of, and the prospects for, our business, an assessment
of our management, our past and present operations, our development and the
general condition of the securities market at the time of this offering. The
initial public offering prices do not necessarily bear any relationship to our
assets, book value, earnings or other established criteria of value. Such prices
are subject to change as a result of market conditions and other factors, and no
assurance can be given that a public market for the shares or the warrants will
develop after the closing, or if a public market in fact develops, that such
public market will be sustained, or that the shares or the warrants can be
resold at any time at the offering or any other price.

At the closing, we will issue to the underwriter and/or persons related to
the underwriter, for nominal consideration, the common stock underwriter
warrants to purchase up to 200,000 shares of common stock and the warrant
underwriter warrants to purchase up to 200,000 warrants. The common stock
underwriter warrants, the warrant underwriter warrants and the underlying
warrants are registered pursuant to this offering and are sometimes referred to
in this prospectus as the underwriter warrants. The common stock underwriter
warrants and the warrant underwriter warrants will be exercisable for a
five-year period commencing on the effective date. The initial exercise price of
each common stock underwriter warrant shall be $8.25 per underlying share (165%
of the public offering price). The initial exercise price of each warrant
underwriter warrant shall be $.20625 per underlying warrant (165% of the public
offering price). Each underlying warrant will be exercisable for a five-year
period commencing on the effective date to purchase one share of common stock at
an exercise price of $9.075 per share (165% of the public offering price) of
common stock. The underwriter warrants will be restricted from sale, transfer,
assignment or hypothecation for a period of twelve months from the effective
date by the holder, except to officers of the underwriter and members of the
selling group and officers and partners thereof, by will or by operation of law.

The common stock underwriter warrants and the warrant underwriter warrants
contain provisions providing for appropriate adjustment in the event of any
merger, consolidation, recapitalization, reclassification, stock dividend, stock
split or similar transaction. The underwriter warrants contain net issuance
provisions permitting the holders thereof to elect to exercise the underwriter
warrants in whole or in part and instruct busybox to withhold from the
securities issuable upon exercise, a number of securities, valued at the current
fair market value on the date of exercise, to pay the exercise price. Such net
exercise provision has the effect of requiring busybox to issue shares of common
stock without a corresponding increase in capital. A net exercise of the
underwriter warrants will have the same dilutive effect on the interests of our
shareholders as will a cash exercise. The underwriter warrants do not entitle
the holders thereof to any rights as a shareholder of busybox until such
underwriter warrants are exercised and shares of common stock are purchased
thereunder.

The underwriter warrants and the securities issuable thereunder may not be
offered for sale except in compliance with the applicable provisions of the
Securities Act. We have agreed that if we shall cause a post-effective
amendment, a new registration statement or similar offering document to be filed
with the Commission, the holders shall have the right, for seven years from the
effective date, to include in such registration statement or offering statement
the underwriter warrants and/or the securities issuable upon their exercise at
no expense to the holders. Additionally, we have agreed that, upon request by
the holders of 50% or more of the underwriter warrants during the period
commencing one year from the effective date and expiring four years thereafter,
we will, under certain

42
<PAGE>

circumstances, register the underwriter warrants and/or any of the securities
issuable upon their exercise.

In order to facilitate the offering of the common stock and warrants, the
underwriter may engage in transactions that stabilize, maintain or otherwise
affect the price of the common stock and warrants. Specifically, the underwriter
may overallot in connection with the offering, creating a short position in the
common stock and warrants for its own account. In addition, to cover
overallotments or to stabilize the price of the common stock and warrants, the
underwriter may bid for, and purchase, shares of common stock and warrants in
the open market. Finally, the underwriter may reclaim selling concessions
allowed to a dealer for distributing the common stock and warrants in the
offering, if the underwriter repurchases previously distributed common stock or
warrants in transactions to cover the underwriter's short position in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the common stock and warrants above independent
market levels. The underwriter is not required to engage in these activities and
may end any of these activities at any time.

We have agreed to indemnify the underwriter against any costs or liabilities
incurred by the underwriter by reason of misstatements or omissions to state
material factors in connection with the statements made in the registration
statement filed by busybox with the Commission under the Securities Act and this
prospectus. The underwriter has in turn agreed to indemnify busybox against any
costs or liabilities by reason of misstatements or omissions to state material
facts in connection with the statements made in the registration statement and
this prospectus, based on information relating to the underwriter and furnished
in writing by the underwriter. To the extent that these provisions may purport
to provide exculpation from possible liabilities arising under the federal
securities laws, in the opinion of the Securities and Exchange Commission, such
indemnification is contrary to public policy and therefore unenforceable.

The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to copies
of each such agreement which are filed as exhibits to the registration
statement.

43
<PAGE>
LEGAL PROCEEDINGS

From time to time, we may be involved in litigation that arises in the
normal course of business operations. On January 28, 2000, busybox was named a
defendant in a breach of contract dispute with an advertising vendor in the
Superior Court of the State of California, alleging damages of $150,000 per
month since June 1999 up to a maximum of $1,800,000 under a contract for
services, plus costs and attorneys' fees. We believe that this suit is
substantially without merit and we intend to vigorously defend the suit,
including a counterclaim for substantial damages. However, because litigation is
uncertain, an adverse decision against us in this suit may have a material
adverse effect on our business operating results and financial condition.

LEGAL MATTERS

The validity of the securities being offered hereby will be passed upon for
busybox by Thomas T. Prousalis, Jr., Esq., 1919 Pennsylvania Avenue, N.W., Suite
200, Washington, D.C. 20006. Mr. Prousalis is the beneficial owner of 300,000
shares of common stock of busybox. Certain legal matters will be passed upon for
the underwriter by David A. Carter, P.A., 2300 Glades Road, Suite 210W, Boca
Raton, Florida 33431.

EXPERTS

The financial statements of busybox as of and for the two years ended
December 31, 1998, included in the registration statement and this prospectus
have been included herein in reliance on the report of Grant Thornton LLP,
independent certified public accountants, given on the authority of Grant
Thornton LLP as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act of 1933, as amended, with
respect to the securities offered in this prospectus. This prospectus does not
contain all of the information contained in the registration statement and the
exhibits and schedules to the registration statement. Some items are omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. For further information about busybox and the securities offered
under this prospectus, you should review the registration statement and the
exhibits and schedules filed as a part of the registration statement.
Descriptions of contracts or other documents referred to in this prospectus are
not necessarily complete. If the contract or document is filed as an exhibit to
the registration statement, you should review that contract or document. You
should be aware that when we discuss these contracts or documents in the
prospectus we are assuming that you will read the exhibits to the registration
statement for a more complete understanding of the contract or document. The
registration statement and its exhibits and schedules may be inspected without
charge at the public reference facilities maintained by the Securities and
Exchange Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and the Securities and Exchange Commission's regional offices located at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies may be obtained from
the Securities and Exchange Commission after payment of fees prescribed by the
Securities and Exchange Commission. The Securities and Exchange Commission also
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants, including busybox, that file
electronically with the Securities and Exchange Commission. The address of this
Web site is www.sec.gov. You may also contact the Securities and Exchange
Commission by telephone at (800) 732-0330.

44
<PAGE>
INDEX TO FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants.......... F-2

Financial Statements

Balance Sheets............................................ F-3

Statements of Operations.................................. F-4

Statements of Stockholders' Equity (Deficiency)........... F-5

Statements of Cash Flows.................................. F-6

Notes to Financial Statements............................. F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
busybox.com, inc.

We have audited the accompanying balance sheet of busybox.com, inc.
("Company") as of December 31, 1998, and the related statements of operations,
stockholders' equity (deficiency) and cash flows for the years ended
December 31, 1997 and 1998. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of
December 31, 1998, and the results of its operations and its cash flows for the
years ended December 31, 1997 and 1998 in conformity with generally accepted
accounting principles.

GRANT THORNTON LLP

San Francisco, California
March 24, 1999 (except for Note K, as to
which the date is December 31, 1999)

F-2
<PAGE>
BUSYBOX.COM, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 130,711 $ 40,452
Accounts receivable, net of allowance for doubtful
accounts of $12,050
and $0, respectively.................................... 145,383 196,540
Inventory................................................. -- 338,915
Other current assets...................................... 24,353 470,203
----------- -----------
Total current assets.................................. 300,447 1,046,110

PROPERTY AND EQUIPMENT, net................................. 80,048 129,343

INTEREST RECEIVABLE......................................... -- 146,265

OFFERING COSTS.............................................. -- 257,875

OTHER ASSETS, net........................................... 64,613 55,667
----------- -----------
$ 445,108 $ 1,635,260
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable.......................................... $ 47,269 $ 1,531,901
Accrued liabilities....................................... 5,751 229,393
Line of credit............................................ -- 99,172
Income taxes payable...................................... 1,600 1,600
Capital leases payable, current........................... 7,282 8,225
----------- -----------
Total current liabilities............................. 61,902 1,870,291

LONG-TERM DEBT
Capital leases payable, long-term......................... 11,550 5,122
----------- -----------
Total liabilities..................................... 73,452 1,875,413
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $.01 par value, 25,000,000 shares
authorized;
4,075,000 and 5,860,000 shares issued and outstanding in
1998 and 1999, respectively............................. 40,750 58,600
Additional paid-in capital................................ 2,642,800 5,734,882
Retained earnings (accumulated deficit)................... 138,106 (3,595,885)
----------- -----------
2,821,656 2,197,597
Less notes and accounts receivable from stockholders...... (2,450,000) (2,437,750)
----------- -----------
Total stockholders' equity (deficiency)............... 371,656 (240,153)
----------- -----------
$ 445,108 $ 1,635,260
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>
BUSYBOX.COM, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------- ------------------------
1997 1998 1998 1999
---------- ---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenue.................................. $ 833,797 $1,170,022 $ 961,186 $ 332,706
Cost of revenue.............................. 327,606 415,672 287,074 127,073
---------- ---------- ---------- -----------
Gross profit............................. 506,191 754,350 674,112 205,633
Operating expenses
Selling, general and administrative
expenses................................. 362,031 491,446 387,224 (3,720,896)
Research and development................... 83,000 258,242 142,733 358,242
---------- ---------- ---------- -----------
Total operating expenses................. 445,031 749,688 529,957 4,079,138
---------- ---------- ---------- -----------
Operating profit (loss).................. 61,160 4,662 144,155 (3,873,505)
Other income
Interest income on stockholders' notes
receivable............................... -- -- -- 146,265
Interest income (expense), net............. 927 3,576 1,848 (6,751)
---------- ---------- ---------- -----------
Net income (loss) before income taxes.... 62,087 8,238 146,003 (3,733,991)
Income taxes................................. 800 800 -- --
---------- ---------- ---------- -----------
NET INCOME (LOSS)........................ $ 61,287 $ 7,438 $ 146,003 $(3,733,991)
========== ========== ========== ===========
Basic and diluted net income (loss) per
share...................................... $ .02 $ -- $ .05 $ (.71)
========== ========== ========== ===========
Shares used in calculation of net income
(loss) per share........................... 2,870,000 3,113,630 3,020,000 5,015,659
========== ========== ========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>
BUSYBOX.COM, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>
RETAINED STOCKHOLDERS'
COMMON STOCK EARNINGS NOTES AND
-------------------- ADDITIONAL (ACCUMULATED ACCOUNTS
SHARES AMOUNT PAID-IN CAPITAL DEFICIT) RECEIVABLE TOTAL
--------- -------- --------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997.... 2,450,000 $24,500 $ (23,500) $ 69,381 $ -- $ 70,381
Issuance of common stock for
services and software....... 300,000 3,000 171,167 -- -- 174,167
Net income.................... -- -- -- 61,287 -- 61,287
--------- ------- ---------- ----------- ----------- -----------
Balance at December 31,
1997........................ 2,750,000 27,500 147,667 130,668 -- 305,835
Issuance of common stock for
services.................... 100,000 1,000 57,383 -- -- 58,383
Issuance of common stock...... 1,225,000 12,250 2,437,750 -- (2,450,000) --
Net income.................... -- -- -- 7,438 -- 7,438
--------- ------- ---------- ----------- ----------- -----------
Balance at December 31,
1998........................ 4,075,000 40,750 2,642,800 138,106 (2,450,000) 371,656
Issuance of Common Stock
(unaudited)................. 1,785,000 17,850 3,092,082 -- -- 3,092,082
Net loss (unaudited).......... -- -- -- (3,733,991) -- (3,733,991)
Repayments of stockholders'
accounts receivable
(unaudited)................. -- -- -- -- 12,250 12,250
--------- ------- ---------- ----------- ----------- -----------
Balance at September 30, 1999
(unaudited)................. 5,860,000 $58,600 $5,734,882 $(3,595,885) $(2,437,750) $ (240,153)
========= ======= ========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of this statement.

F-5
<PAGE>
BUSYBOX.COM, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------- -----------------------
1997 1998 1998 1999
-------- ---------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in cash
Cash flows from operating activities:
Net income (loss)............................. $ 61,287 $ 7,438 $ 146,003 $(3,733,991)
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization............. 21,796 36,136 25,997 35,860
Common stock issued for services.......... 90,667 58,383 58,383 500,000
Loss on retirement of assets.............. -- 1,067 -- --
Change in assets and liabilities
Accounts receivable, net................ (92,034) (44,199) (60,836) (51,157)
Inventory............................... -- -- -- (338,915)
Other current assets.................... (12,500) (11,740) (3,946) (43,350)
Interest receivable..................... -- -- -- (146,265)
Accounts payable........................ 10,413 7,172 (734) 1,484,632
Income taxes payable.................... (8,044) 800 -- --
Other accrued liabilities............... (17,334) 5,090 5,726 223,642
-------- ---------- --------- -----------
Net cash provided by (used in) operating
activities............................ 54,251 60,147 170,593 (2,069,544)
Cash flows from investing activities
Purchases of property and equipment........... (10,556) (29,614) (34,091) (76,209)
-------- ---------- --------- -----------
Net cash used in investing activities... (10,556) (29,614) (34,091) (76,209)
-------- ---------- --------- -----------
Cash flows from financing activities
Repayment of capital leases................... -- (4,742) 8,161 (5,485)
Repayment of note payable..................... (3,234) -- -- --
Proceeds from line of credit.................. -- -- -- 99,172
Proceeds from stockholders accounts
receivable.................................. -- -- -- 12,250
Costs associated with initial public offering
of securities............................... -- -- -- (257,875)
Net proceeds from private placement
transaction................................. -- -- -- 2,207,432
-------- ---------- --------- -----------
Net cash (used in) provided by financing
activities............................ (3,234) (4,742) 8,161 2,055,494
-------- ---------- --------- -----------
NET INCREASE (DECREASE) IN CASH......... 40,461 25,791 144,663 (90,259)
Cash at beginning of period..................... 64,459 104,920 104,920 130,711
-------- ---------- --------- -----------
Cash at end of period........................... $104,920 $ 130,711 $ 249,583 $ 40,452
======== ========== ========= ===========
Supplemental cash flow disclosures
Cash paid for
Interest.................................... $ 64 $ 2,721 $ 828 $ 5,321
Income taxes................................ $ 8,844 $ -- $ -- $ --
Noncash transactions
Shares of common stock issued in exchange for
services.................................... $ 90,667 $ 58,383 $ 58,383 $ 500,000
Capital lease obligation incurred............. $ -- $ 23,574 $ 12,358 $ --
Shares of common stock issued to stockholders
for notes and accounts receivable........... $ -- $2,450,000 $ -- $ --
Shares of common stock issued in exchange for
software.................................... $ 83,500 $ -- $ -- $ --
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

busybox.com, inc. ("Company") designs, develops, maintains, services,
markets, sells and distributes digital imagery, including black and white and
color still photographs, film footage and video, as well as the sale and
licensing of Company developed software over the Internet to its customers in
the technology, media, entertainment, government, corporate and sports
industries.

In December 1998, the Company amended its Certificate of Incorporation to
change its name from "Get Smart, Inc." to "Busy Box, Inc." In March 1999, the
Company further amended its Certificate of Incorporation to change its name to
"busybox.com, inc."

REVENUE RECOGNITION

Revenues are derived from digital image processing and services, Web site
hosting, maintenance and support, on-line sales of software and non-refundable
licensing of the Company-developed software. Web site service revenues are
recognized as services are provided. The Company recognizes the revenue
allocable to perpetual software licenses upon delivery of the software product
to the end-user, unless the fee is not fixed or determinable or collectibility
is not probable. The Company considers all arrangements with payment terms
extending beyond twelve months not to be fixed or determinable. If the fee is
not fixed or determinable, revenue is recognized as payments become due from the
customer. If collectibility is not considered probable, revenue is recognized
when the fee is collected. The Company recognizes the revenue allocable to
fixed-term software licenses ratably over the license term.

CASH AND CASH EQUIVALENTS

All liquid instruments with an original maturity of three months or less are
considered cash equivalents.

The Company maintains cash balances at financial institutions which are
insured by the Federal Deposit Insurance Corporation up to $100,000. The Company
has not experienced any losses in such accounts and believes it is not exposed
to significant risk or loss.

INVENTORY

Inventory consists of digital video production costs. This includes costs
for production, acquisition and preparation for on-line distribution. Digital
video costs are amortized by specific video subject category over the expected
life of the video using the gross profit method. Inventory is carried at the
lower of cost or market. Market is determined based upon recent and expected
sales revenue within each video subject category. Estimates of total gross
revenues are reviewed periodically and estimated losses, if any, are fully
recognized in the current period.

OTHER CURRENT ASSETS

At September 30, 1999, other assets are comprised primarily of approximately
$402,000 of stock subscriptions receivable related to the September 1999
issuance of 500,000 shares of common stock in a private placement transaction
(see Note E).

F-7
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of the assets.
Equipment is depreciated over estimated useful lives of three to seven years.
Leasehold improvements are amortized over the estimated useful life of the asset
or the related lease term, whichever is shorter.

RESEARCH AND DEVELOPMENT

Research and development expenditures are generally charged to operations as
incurred. Statement of Financial Accounting Standards ("SFAS") No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," requires the capitalization of certain software development costs
subsequent to the establishment of technological feasibility. In the Company's
case, capitalization would begin upon completion of a working model as the
Company does not prepare detail program designs as part of the development
process. Included in other assets at December 31, 1998 and September 30, 1999,
were capitalized costs of $64,613 and $55,667, net of amortization, which
represent purchased software. Technological feasibility was established in
July 1997, and the costs are amortized using the straight-line method over its
estimated useful life of 7 years.

INCOME TAXES

The Company follows the liability method in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax basis of assets and
liabilities and on the expected future tax benefit to be derived from the tax
loss carryforwards, if any. Additionally, deferred tax items are measured using
current tax rates. A valuation allowance is established if it is more likely
than not that some portion or all of the deferred tax assets will not be
realized.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of cash and cash equivalents, accounts receivable and
accounts payable approximates carrying value due to the short-term nature of
such instruments. The fair value of the stockholders' notes receivable cannot be
determined as no market exists for such instruments.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

F-8
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

BASIC AND DILUTED INCOME/(LOSS) PER SHARE

Basic income/(loss) per share is calculated by dividing net income (loss) by
the weighted average shares outstanding. The Company did not have any common
equivalent shares for the years ended December 31, 1997 and 1998, or the nine
months ended September 30, 1999.

COMPREHENSIVE INCOME

The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("FAS 130"). FAS 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. There was no difference between the
Company's net income (loss) and its total comprehensive income (loss) for 1997
and 1998.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which defines derivatives, requires that
all derivatives be carried at fair value, and provides for hedge accounting when
certain conditions are met. SFAS No. 133, as amended by SFAS No. 137, is
effective for the Company in fiscal 2001. Although the Company has not fully
assessed the implications of SFAS No. 133, the Company does not believe that
adoption of this statement will have a material impact on the Company's
financial position or results of operations.

UNAUDITED INTERIM FINANCIAL INFORMATION

The financial information as of September 30, 1999 and for the nine months
ended June 30, 1998 and 1999 is unaudited, but includes all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for fair presentation of the financial position at such dates and the
results of operations and cash flows for the periods then ended. Operating
results for the nine months ended September 30, 1999 are not necessarily
indicative of results that may be expected for the entire year.

F-9
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE B--PROPERTY AND EQUIPMENT

Components of property and equipment are:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Equipment........................................... $ 34,924 $ 50,697
Computers........................................... 84,160 129,699
Leasehold improvements.............................. 9,059 23,956
-------- --------
128,143 204,352
Accumulated depreciation and amortization........... (48,095) (75,009)
-------- --------
$ 80,048 $129,343
======== ========
</TABLE>

NOTE C--LINE OF CREDIT

The Company has a $100,000 line of credit with a commercial bank. The
facility expires in November 1999 and the interest rate is 12.5%. Repayment is
guaranteed by one of the Company's stockholders. At December 31, 1998, there was
no balance owed. At September 30, 1999, the balance was $99,172.

NOTE D--PROPERTY HELD UNDER CAPITAL LEASE

The Company leases equipment under capital leases expiring in various years
through 2001. Assets and liabilities under capital leases are recorded at the
lower of the present value of the minimum lease payments or the fair value of
the assets. The assets are amortized over five years. Amortization expense for
assets held under capital leases was $3,291 in 1998, and $4,638 for the period
ended September 30, 1999.

The following is a summary of equipment held under capital lease:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Equipment........................................... $23,574 $23,574
Accumulated amortization............................ (3,291) (7,929)
------- -------
$20,283 $15,645
======= =======
</TABLE>

F-10
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE D--PROPERTY HELD UNDER CAPITAL LEASE (CONTINUED)

Minimum future lease payments under the capital lease as of December 31,
1998 for each of the next three years and in the aggregate are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -----------------------
<S> <C>
1999.................................................... $10,160
2000.................................................... 10,160
2001.................................................... 2,931
-------
Total minimum lease payments............................ 23,251
Less amount representing interest....................... 4,419
-------
Total................................................... $18,832
=======
Presented on the balance sheet as of December 31, 1998, as
follows:
Current portion........................................... $ 7,282
Long-term debt............................................ 11,550
-------
Total................................................... $18,832
=======
</TABLE>

The capital lease obligations have implicit interest rates of 10.92% to
25.65%.

NOTE E--COMMON STOCK

In July 1997, the Company issued 300,000 shares of common stock to two
persons in a private placement transaction in consideration of $174,167,
consisting of property and services rendered, or $.58 per share. The related
expense is included in the accompanying Statements of Operations for 1997.

In July 1998, the Company issued 100,000 shares of common stock to one
person in a private placement transaction in consideration of $58,385,
consisting of services rendered, or $.58 per share. The related expense is
included in the accompanying Statements of Operations for 1998.

In December 1998, the Company amended its Certificate of Incorporation to
increase the number of authorized no par value common shares from 3,000,000
shares to 6,000,000 shares. Also, in December 1998, the Company issued 1,225,000
shares of common stock to eight persons, including two officers and directors
and two outside directors of the Company, in a private placement transaction in
consideration of $2,450,000, consisting of $12,250 in accounts receivable and
$2,437,750 in promissory notes, or $2 per share. The promissory notes bear
interest at eight percent and are due and payable in December 2003, together
with accrued interest.

In March 1999, the Company amended its Certificate of Incorporation to
change the par value of its common stock from no par value to $.01 par value per
share, and to increase the number of authorized shares from 6,000,000 shares to
25,000,000 shares. The Company then approved a 2,000-for-1 stock split for all
shares issued and outstanding. All references to number of shares and amounts
per share herein have been adjusted to reflect the effect of the stock split and
change in par value for all periods presented.

F-11
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE E--COMMON STOCK (CONTINUED)

In March 1999, the Company entered into a letter of intent with Barron Chase
Securities, Inc. ("Underwriter"), a broker dealer firm and NASD member, to
represent the Company in an initial public offering of its common stock and
warrants on a "firm commitment" basis. The letter of intent requires that the
Company pay certain expenses of the Underwriter in advance, and provides for
ongoing investment banking services by the Underwriter and a right of first
refusal to act as manager on future sales of the Company's securities for a
period of five years.

In April 1999, the Company issued 1,185,000 shares of common stock to 45
persons in a private placement transaction in consideration of $2,370,000, or
$2.00 per share, and net proceeds to the Company were $1,814,932.

In September 1999, the Company issued 500,000 shares of common stock to 29
persons in a private placement transaction in consideration of $1,000,000, or $2
per share, and net proceeds to the Company were $795,000, $402,500 of which, was
recorded as a receivable and included in other current assets at September 30,
1999. Such amounts were collected in October 1999.

In September 1999, the Company issued 100,000 shares of common stock in a
private placement transaction in consideration of services rendered. As a result
of this transaction, the Company recorded expense of $500,000 for the nine
months ended September 30, 1999, which represents the fair value of the shares
issued.

NOTE F--INCOME TAXES

No provision for Federal and state income taxes has been recorded as the
Company incurred net operating losses in years prior to 1997. A reconciliation
of the statutory income tax rate with the Company's effective tax rate for the
year ended December 31 is as follows:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Statutory rate.............................................. 34.0% 34.0%
Nondeductible expenses...................................... 1.2 33.8
State income tax............................................ 1.3 9.7
Utilization of net operating losses......................... (35.2) (67.8)
----- -----
1.3% 9.7%
===== =====
</TABLE>

F-12
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE F--INCOME TAXES (CONTINUED)

The following table sets forth the primary components of deferred tax assets
and liabilities at December 31:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Net operating loss carryforward......................... $ 34,000 $ 43,000
Valuation allowance..................................... (9,000) (9,000)
-------- --------
Net deferred tax assets................................. 25,000 34,000
Receivables and accruals................................ (25,000) (34,000)
-------- --------
$ -- $ --
======== ========
</TABLE>

As of December 31, 1998, the Company has approximately $105,000 in loss
carryforwards to offset Federal taxable income in future years, subject to
limitations due to changes in ownership. The loss carryforwards expire in
various years from 2012 to 2013.

Deferred taxes arise from the differences in carrying values of certain
assets and liabilities for tax and financial reporting purposes. The differences
are primarily related to the Company's use of the cash basis of accounting for
income tax purposes, use of accelerated depreciation methods for income tax
purposes and the tax effect of net operating loss carryforwards. The valuation
allowance for deferred tax assets did not change in 1997 and 1998.

NOTE G--COMMITMENTS

The Company leases office space under operating leases expiring in 2000 with
a three year option to renew. Minimum future lease payments under noncancelable
operating leases having remaining terms in excess of one year for each of the
next five years are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
- ------------------------ --------
<S> <C>
1999........................................................ $ 68,500
2000........................................................ 72,000
--------
Total....................................................... $140,500
========
</TABLE>

Rent expense was $43,000 and $36,025 for the year ended December 31, 1997
and 1998, respectively.

NOTE H--RETIREMENT PLAN

In January 1998, the Company established a qualified 401(k) Profit Sharing
Plan for the benefit of all employees who have worked for the Company for at
least three months. Employees may defer up to 20% of their annual compensation
for individual income tax purposes through contributions to the plan. Employee
contributions are fully vested when made. Company matching or discretionary
contributions to the plan for the benefit of participating or all employees,
respectively, may be made at the discretion of the board of directors of the
Company. Employees begin vesting in employer

F-13
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE H--RETIREMENT PLAN (CONTINUED)

contributions after two years of service and are fully vested after six years of
service. The Company made no discretionary contributions to the plan in 1998.
The Company pays all costs of administering the plan.

NOTE I--RELATED PARTY TRANSACTIONS

The Company presently holds notes receivable from two officers of the
Company for $5,000 each, which are included in other current assets in the
accompanying balance sheets. The notes bear interest at the rate of 8% per year
and are due and payable on or before December 31, 1999.

At September 30, 1999, the Company has interest receivable of $146,265 from
related parties in connection with the issuance of common stock for notes
receivable. (See Note E.)

NOTE J--CONCENTRATION OF CREDIT AND GEOGRAPHIC INFORMATION

In 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which was
adopted by the Company in 1998. SFAS No. 131 requires companies to report
financial information about its reportable operating segments, including segment
profit and loss, certain revenue and expense items and segment assets, as well
as information about revenues and major customers.

The Company distributes digital media over the Internet. The Company grants
credit to customers in the United States and Europe. Such credit is generally
granted without requiring collateral. Consequently, the Company's ability to
collect amounts due from customers is affected by the economic fluctuations in
those industries and geographic regions, and is dependent on each customer's
financial condition.

Information as to the Company's revenue in different geographical areas is
as follows:

<TABLE>
<CAPTION>
1997 1998
-------- ----------
<S> <C> <C>
United States......................................... $466,918 $ 620,112
United Kingdom........................................ 366,879 549,910
-------- ----------
$833,797 $1,170,022
======== ==========
</TABLE>

The Company had sales to three significant customers which accounted for 44%
and 24% of revenue in 1997 and 47% and 28% of revenue in 1998. One of these
customers accounted for 81% of accounts receivable at December 31, 1998.

NOTE K--SUBSEQUENT EVENTS

In October 1999, the Company issued 200,000 shares of common stock to an
employee in a private placement transaction in consideration of $400,000,
consisting of $2,000 in cash and $398,000 in a promissory note, or $2 per share.
As a result of this transaction, the company has recorded compensation expense
of $600,000 which represents the difference between the $2 price per share and
fair value.

F-14
<PAGE>
BUSYBOX.COM, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

(INFORMATION RELATING TO SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)

NOTE K--SUBSEQUENT EVENTS (CONTINUED)

In October 1999, the Company issued 150,000 shares of common stock to three
employees in a private placement transaction in consideration of $300,000,
consisting of $1,500 in cash and $298,500 in promissory notes, or $2 per share.
As a result of this transaction, the company has recorded compensation expense
of $450,000 which represents the difference between the $2 price per share and
fair value.

In December 1999, the Company borrowed $1,500,000 ($1,305,000 net cash
proceeds) from 26 persons in a private placement transaction pursuant to eight
percent promissory notes, payable upon the closing of this offering, or upon the
one year anniversary of the notes, whichever occurs first. Also, in connection
with the issuance of the notes, the Company granted 5-year options to the note
holders on a pro rata basis to purchase 375,000 shares of the Company's common
stock at $2.00 per share, vesting on the closing date of this offering. The
underlying shares of common stock to the options are restricted securities and
may not be sold, transferred, assigned, or otherwise disposed of for a period of
24 months following the date of issuance, absent registration. Management
estimated that the fair value of the options, using the Black Scholes
option-pricing model is $1,305,000. This value will be recorded as additional
interest expense over the life of the notes.

CONTINGENT LIABILITY

During the pendency of the Company's registration statement before the
Securities and Exchange Commission, the Company issued unregistered securities
in September 1999, October 1999 and December 1999, aggregating $3,400,000 in
cash and notes. The Company believes that the unregistered securities were
issued pursuant to available exemptions under the Federal securities laws.
However, the Company may have issued such unregistered securities without an
available exemption under the Federal securities laws, which may subject the
Company to liability, including rescission of the securities transactions.
Should the Company be required to offer a rescission of the securities
transactions, it may have a material adverse effect on the Company's business,
operating results and financial condition.

LITIGATION

In January 2000, the Company was named a defendant in a breach of contract
dispute with an advertising vendor in the Superior Court of the State of
California alleging damages of $150,000 per month since June 1999 up to a
maximum of $1,800,000 under a contract for services, plus costs and attorneys'
fees. The Company believes that the suit is substantially without merit and
intends to vigorously defend the suit, including a counterclaim for substantial
damages. Accounts payable includes approximately $844,000 and $1,600,000 for
this vendor at September 30, 1999 and December 31, 1999, respectively, in
connection with this dispute.

F-15
<PAGE>
[LOGO]
<PAGE>
PART TWO
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As permitted by Delaware law, the Company's Certificate of Incorporation
includes a provision which provides that a director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for a
breach of fiduciary duty as a director, except (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware, which prohibits the unlawful payment of dividends or the
unlawful repurchase or redemption of stock, or (iv) for any transaction from
which the director derives an improper personal benefit. This provision is
intended to afford directors protection against, and to limit their potential
liability for monetary damages resulting from, suits alleging a breach of the
duty of care by a director. As a consequence of this provision, stockholders of
the Company will be unable to recover monetary damages against directors for
action taken by them that may constitute negligence or gross negligence in
performance of their duties unless such conduct falls within one of the
foregoing exceptions. The provision, however, does not alter the applicable
standards governing a director's fiduciary duty and does not eliminate or limit
the right of the Company or any stockholder to obtain an injunction or any other
type of nonmonetary relief in the event of a breach of fiduciary duty.
Management of the Company believes this provision will assist the Company in
securing and retaining qualified persons to serve as directors. The Company is
unaware of any pending or threatened litigation against the Company or its
directors that would result in any liability for which such director would seek
indemnification or similar protection.

Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Because directors liability
insurance is only available at considerable cost and with low dollar limits of
coverage and broad policy exclusions, the Company does not currently maintain a
liability insurance policy for the benefit of its directors although the Company
may attempt to acquire such insurance in the future. The Company believes that
the substantial increase in the number of lawsuits being threatened or filed
against corporations and their directors and the general unavailability of
directors liability insurance to provide protection against the increased risk
of personal liability resulting from such lawsuits have combined to result in a
growing reluctance on the part of capable persons to serve as members of boards
of directors of public companies. The Company also believes that the increased
risk of personal liability without adequate insurance or other indemnity
protection for its directors could result in overcautious and less effective
direction and management of the Company. Although no directors have resigned or
have threatened to resign as a result of the Company's failure to provide
insurance or other indemnity protection from liability, it is uncertain whether
the Company's directors would continue to serve in such capacities if improved
protection from liability were not provided.

The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its shareholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.

II-1
<PAGE>
The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, the Company does not currently
provide such insurance to its directors, and there is no guarantee that the
Company will provide such insurance to its directors in the near future although
the Company may attempt to obtain such insurance.

The provisions diminish the potential rights of action which might otherwise
be available to shareholders by limiting the liability of officers and directors
to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any shareholders derivative action. However,
the provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause the Company to rescind actions already taken, although as a practical
matter courts may be unwilling to grant such equitable remedies in circumstances
in which such actions have already been taken. Also, because the Company does
not presently have directors liability insurance and because there is no
assurance that the Company will procure such insurance or that if such insurance
is procured it will provide coverage to the extent directors would be
indemnified under the provisions, the Company may be forced to bear a portion or
all of the cost of the director's claims for indemnification under such
provisions. If the Company is forced to bear the costs for indemnification, the
value of the Company stock may be adversely affected. In the opinion of the
Securities and Exchange Commission, indemnification for liabilities arising
under the Securities Act of 1933 is contrary to public policy and, therefore, is
unenforceable.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is an itemization of expenses, payable by the Company from the
proceeds of this offering, incurred by the Company in connection with the
issuance and distribution of the securities of the Company being offered hereby.
All expenses are estimated except the SEC, NASD and Nasdaq Registration and
Filing Fees. See "Use of Proceeds."

<TABLE>
<S> <C>
SEC Registration and Filing Fee(1).......................... $ 9,579
NASD Registration and Filing Fee(1)......................... 3,278
Nasdaq Registration and Filing Fee(1)....................... 10,000
Transfer Agent Fees......................................... 1,500
Financial Printing.......................................... 75,000
Accounting Fees and Expenses................................ 75,000
Legal Fees and Expenses..................................... 375,000
Blue Sky Fees and Expenses.................................. 25,000
Underwriter's Nonaccountable Expense Allowance(2)........... 307,500
Underwriter's Advisory Fee.................................. 108,000
Miscellaneous............................................... 10,143
----------
TOTAL................................................... $1,000,000
==========
</TABLE>

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

(1) Paid upon initial filing of this Registration Statement and related
Prospectus.

(2) Includes $50,000 paid to date.

II-2
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The Company was incorporated in the State of Delaware on October 26, 1995.
The Company has authorized capital of 25,000,000 shares of common stock,
$.01 par value. The Company has 6,210,000 shares of common stock issued and
outstanding prior to this offering.

In December 1995, the Company issued 2,450,000 shares of common stock to
four persons, including three officers (Rosanne Esposito, Todd L. Carter and Jon
M. Bloodsworth, Esq.) of busybox, in a private placement transaction in
consideration of $24,500, consisting of $1,000 in cash and $23,500 in services
rendered, pro rate, or $.01 per share. Such securities were issued pursuant to a
private placement exemption under Section 4(2) of the Act.

In July 1997, the Company issued 300,000 shares of common stock to two
persons in a private placement transaction in consideration of $174,167,
consisting of property and services rendered, or $.58 per share. Such securities
were issued pursuant to a private placement exemption under Section 4(2) of the
Act.

In July 1998, the Company issued 100,000 shares of common stock to one
person in a private placement transaction in consideration of $58,383,
consisting of services rendered, or $.58 per share. Such securities were issued
pursuant to a private placement exemption under Section 4(2) of the Act.

In October 1998, the Company amended its Certificate of Incorporation to
increase the number of authorized shares of common stock from 3,000,000 shares
to 6,000,000 shares. Such securities were issued pursuant to a private placement
exemption under Section 4(2) of the Act.

In December 1998, the Company issued 1,225,000 shares of common stock to
eight persons, including two officers (Patrick A. Grotto and Mark B. Leffers,
C.P.A.), two outside directors (Peter A. Seligmann, Ph.D. (hon.) and Michael H.
Glawe, Esq.) and legal counsel (Thomas T. Prousalis, Jr., Esq.) of the Company,
in a private placement transaction in consideration of $2,450,000, consisting of
$24,500 in cash and $2,425,500 in promissory notes, or $2 per share. Such
securities were issued pursuant to a private placement exemption under Rule 506
of Regulation D.

In April 1999, the Company issued 1,185,000 shares of common stock to 45
persons, in a private placement transaction in consideration of $2,370,000, or
$2 per share. Such securities were issued pursuant to a private placement
exemption under Rule 506 of Regulation D.

In September 1999, the Company issued 500,000 shares of common stock to 29
persons in a private placement transaction in consideration of $1,000,000, or $2
per share. Such securities were issued pursuant to a private placement exemption
under Rule 506 of Regulation D.

In September 1999, the Company issued 100,000 shares of common stock to one
person (Cascade Partners, L.L.C.) in a private placement transaction in
consideration of services rendered. Such securities were issued pursuant to a
private placement exemption under Rule 506 of Regulation D.

In October 1999, the Company issued 200,000 shares of common stock to an
officer and director (Robert S. Sherman) of busybox in a private placement
transaction in consideration of $400,000, consisting of $2,000 in cash and
$398,000 in a promissory note, or $2 per share. Such securities were issued
pursuant to a private placement exemption under Rule 506 of Regulation D.

II-3
<PAGE>

In October 1999, the Company issued 150,000 shares of common stock to four
persons (employees) in a private placement transaction in consideration of
$300,000, consisting of $1,500 in cash and $298,500 in promissory notes, or $2
per share. Such securities were issued pursuant to a private placement exemption
under Rule 506 of Regulation D.

All unregistered securities issued by the Company prior to this offering are
deemed "restricted securities" within the meaning of that term as defined in
Rule 144 of the Securities Act of 1933, as amended ("Act") and have been issued
pursuant to certain "private placement" exemptions under Section 4(2) and
Rule 506 of Regulation D of the Act, as promulgated by the Securities and
Exchange Commission, Washington, D.C. 20549, such that the sales of the
securities were to sophisticated or accredited investors, as that latter term is
defined in Rule 215 and Rule 501 of Regulation D of the Act, and were
transactions by an issuer not involving any public offering. Such sophisticated
or accredited investors had access to information on the Company necessary to
make an informed investment decision. Also, under terms of the Underwriting
Agreement or subscription agreement, the current stockholders of busybox have
agreed not to sell, transfer, assign or otherwise dispose of any restricted
securities of busybox for a period of 24 months following the date of this
prospectus.

Reference is also made hereby to "Dilution," "Principal Stockholders,"
"Certain Transactions" and "Description of Securities" in the Prospectus for
more information with respect to the previous issuance and sale of the Company's
securities.

All of the aforesaid securities have been appropriately marked with a
restricted legend and are "restricted securities," as defined in Rule 144 of the
rules and regulations of the Securities and Exchange Commission, Washington,
D.C. 20549. All of the aforesaid securities were issued for investment purposes
only and not with a view to redistribution, absent registration. All of the
aforesaid persons have been fully informed and advised concerning the
Registrant, its business, financial and other matters. Transactions by the
Registrant involving the sales of these securities set forth above were issued
pursuant to the "private placement" exemptions under the Securities Act of 1933,
as amended, as transactions by an issuer not involving any public offering. The
Registrant has been informed that each person is able to bear the economic risk
of his investment and is aware that the securities were not registered under the
Securities Act of 1933, as amended, and cannot be re-offered or re-sold until
they have been so registered or until the availability of an exemption
therefrom. The transfer agent and registrar of the Registrant will be instructed
to mark "stop transfer" on its ledgers to assure that these securities will not
be transferred absent registration or until the availability of an exemption
therefrom is determined.

II-4
<PAGE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following is a list of Exhibits filed herewith by busybox.com, inc. as
part of the SB-2 Registration Statement and related Prospectus:

<TABLE>
<C> <S>
1.0 Form of Underwriting Agreement.
1.1 Selected Dealer Agreement.
3.0 Certificate of Incorporation (Delaware), dated
October 1995.
3.1 Certificate of Amendment of Certificate of Incorporation,
dated December 1998.
3.2 Amended and Restated Certificate of Incorporation
(Delaware), dated December 1998.
3.3 By-laws, as amended.
4.0 Specimen Copy of Common Stock Certificate.
4.1 Form of Warrant Certificate.
4.2 Form of Underwriter's Warrant Agreement.
5.0 Opinion of Thomas T. Prousalis, Jr., Esq. for Registrant.
10.0 Employment Agreement, Patrick A. Grotto, dated
January 1999.
10.1 Employment Agreement, Rosanne Esposito, dated January 1999.
10.2 Employment Agreement, Todd L. Carter, dated January 1999.
10.3 Employment Agreement, Jon M. Bloodworth, Esq., dated
January 1999.
10.4 Employment Agreement, Mark B. Leffers, C.P.A., dated
January 1999.
10.5 Employment Agreement, Robert S. Sherman, dated October 1999.
10.6 Financial Advisory Agreement.
10.7 Merger and Acquisition Agreement.
10.8 Revised Master Agreement for Services, Corbis Corporation,
dated May 1998.
10.9 Maintenance Agreement, Corbis Corporation, dated May 1998.
10.10 Master Agreement for Services, Visual Communications
Limited, dated April 1998.
10.11 Business Advisory Agreement, dated October 1999.
10.12 Term Sheet for Distribution Agreement, dated January 2000.
23.0 Consent of Thomas T. Prousalis, Jr., Esq. is contained on
page II-8 of the Registration Statement.
24.0 Consent of Grant Thornton LLP is contained on page II-9 of
the Registration Statement.
24.1 Power of Attorney appointing Patrick A. Grotto is contained
on page II-7 of the Registration Statement.
</TABLE>

ITEM 28. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to participating
broker-dealers, at the closing, certificates in such denominations and
registered in such names as required by the participating broker-dealers, to
permit prompt delivery to each purchaser.

The undersigned Registrant also undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

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

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement:

(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

II-5
<PAGE>
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-6
<PAGE>
This Registration Statement consists of the following:

<TABLE>
<C> <S>
1. Facing page.
2. Cross-Reference Sheet.
3. Prospectus.
4. Complete text of Items 24-28 in Part Two of Registration
Statement.
5. Exhibits.
6. Signature page.
7. Consents of:
Thomas T. Prousalis, Jr., Esq.
Grant Thornton LLP
</TABLE>

II-7
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Washington, District of Columbia, on February 4,
2000.

<TABLE>
<C> <S> <C>
By: PATRICK A. GROTTO
-----------------------------------------------
Patrick A. Grotto
Chairman of the Board
</TABLE>

In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
PATRICK A. GROTTO
--------------------------------- Chairman of the Board, Chief Executive Officer February 4, 2000
Patrick A. Grotto

ROBERT S. SHERMAN
--------------------------------- President, Chief Operating Officer, Director February 4, 2000
Robert S. Sherman

ROSANNE ESPOSITO
--------------------------------- Executive Vice President February 4, 2000
Rosanne Esposito

TODD L. CARTER
--------------------------------- Vice President, Chief Technology Officer February 4, 2000
Todd L. Carter

JON M. BLOODWORTH, ESQ.
--------------------------------- Vice President, General Counsel, Secretary, February 4, 2000
Jon M. Bloodworth, Esq. Director

MARK B. LEFFERS, C.P.A.
--------------------------------- Vice President, Treasurer, Controller, Chief February 4, 2000
Mark B. Leffers, C.P.A. Financial Officer

PETER A. SELIGMANN, PH.D. (HON.)
--------------------------------- Director February 4, 2000
Peter A. Seligmann, Ph.D. (hon.)

MICHAEL H. GLAWE, ESQ.
--------------------------------- Director February 4, 2000
Michael H. Glawe, Esq.

By: PATRICK A. GROTTO
---------------------------------
Patrick A. Grotto
ATTORNEY-IN-FACT
</TABLE>

II-8
<PAGE>
CONSENT OF COUNSEL

The consent of Thomas T. Prousalis, Jr., Esq., 1919 Pennsylvania
Avenue, N.W., Suite 200, Washington, D.C. 20006, to the use of his name in this
Form SB-2 Registration Statement, and related Prospectus, as amended, of
busybox.com, inc. is contained in his opinion filed as Exhibit 5.0 hereto.

II-9
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated March 24, 1999 (except for Note K as to
which the date is December 31, 1999) accompanying the financial statements of
busybox.com, inc. contained in the Registration Statement and Prospectus. We
consent to the use of the aforementioned report in the Registration Statement
and Prospectus, and to the use of our name as it appears under the caption
"Experts."

GRANT THORNTON LLP

San Francisco, California
February 4, 2000

II-10