RELEASENOW COM CORP, S-1/A, 2000-04-05

RELEASENOW COM CORP
S-1/A, 2000-04-05
BUSINESS SERVICES, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on April 5, 2000
Registration No. 333-95559

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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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AMENDMENT NO. 4
To
FORM S-1
REGISTRATION STATEMENT
Under The Securities Act of 1933

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RELEASENOW.COM CORPORATION
(Exact name of Registrant as Specified in its Charter)

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Delaware 7373 13-3763161
(Primary standard (I.R.S. Employer
(State or other industrial Identification No.)
jurisdiction classification code
of incorporation or number)
organization)

990 Commercial Street
San Carlos, CA 94070
(650) 622-1000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

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MICHAEL J. MAULICK
President and Chief Executive Officer
RELEASENOW.COM CORPORATION
990 Commercial Street
San Carlos, CA 94070
(650) 622-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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Please send copies of all communications to:

WARREN T. LAZAROW, ESQ. JORGE DEL CALVO, ESQ.
VALERIE L. RUSSELL, ESQ. STANTON D. WONG, ESQ.
COLBY R. GARTIN, ESQ. GABRIELLA A. LOMBARDI, ESQ.
MARY A. HELVEY, ESQ.
BENJAMIN H. DEBERRY, ESQ.
Brobeck, Phleger & Harrison LLP Pillsbury Madison & Sutro LLP
Two Embarcadero Place 2550 Hanover Street
2200 Geng Road Palo Alto, CA 94304
Palo Alto, CA 94303 (650) 233-4500
(650) 424-0160

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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

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

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

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

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

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

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

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to Completion, dated April 5, 2000

PROSPECTUS

3,250,000 Shares

[LOGO OF RELEASENOW.COM]

Common Stock

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This is our initial public offering of shares of common stock. We are
offering 3,250,000 shares. No public market currently exists for our shares.

We propose to list the shares on the Nasdaq National Market under the symbol
"RNOW." We anticipate the initial public offering price will be between $14.00
to $16.00 per share.

Investing in the shares involves numerous risks. Risk Factors begin on page
5.

<TABLE>
<CAPTION>
Per
Share Total
----- -----
<S> <C> <C>
Public Offering Price............................................... $ $
Underwriting Discount............................................... $ $
Proceeds to ReleaseNow.com Corporation.............................. $ $
</TABLE>

The underwriters have a 30-day option to purchase up to an additional 487,500
shares of which up to 97,500 shares may be purchased from an existing
stockholder to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is accurate or complete. Any representation to the contrary is
a criminal offense.

Lehman Brothers expects to deliver the shares on or about , 2000.

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Lehman Brothers

CIBC World Markets

Wit SoundView

, 2000
<PAGE>

Inside front cover

The inside front cover of the prospectus depicts an oval with eleven spokes
pointing outward. Enclosed in the oval is the ReleaseNow.com logo and the text:
"your e-commerce department." At the end of each spoke is text and an icon
illustrating the corresponding text. Each spoke represents a service that
ReleaseNow.com offers. The services shown include: Bank Clearance, Goods
Delivery (both Digital and Physical), Upgrades, e-Merchandising, 24x7 Customer
Support, Storefront Experience, e-Marketing, Fraud Control, Returns Processing,
Digital Packaging and Transaction Processing.

Left page of inside of gate fold

The inside front cover has a header with the ReleaseNow.com logo to left and,
centered across the gatefold, the slogan, "Outsourced e-Commerce for the
Marketing, Sale and Delivery of Digital Goods Online."

Below this header, along the left hand side of the page, under the header
"Customers," are seven logos of customers, including: Macromedia, Inc., Day-
Timers, Inc., Verity, Inc., Inxight Software, Inc., Caere Corporation, Network
ICE Corporation and WebTrends Corporation. On the right hand are two images of
Web sites we created for our customers, Newsoft America, Inc. and Network ICE.
The Web screens include various elements typical of the Web-based stores and
marketing materials we create for our customers to sell our digital goods to
end-users including product descriptions, pricing and purchase options.

Right page of inside of gate fold

On the page are four images of Web sites we created for our customers,
Macromedia, Inc., H.E.A.R. and Managemark, Inc. The Web screens include various
elements typical of the Web-based stores and marketing materials we create for
our customers to sell our digital goods to end-users including product
descriptions, pricing and purchase options.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................. 1
Risk Factors........................ 5
Use of Proceeds..................... 20
Dividend Policy..................... 20
Capitalization...................... 21
Dilution............................ 23
Selected Financial Data............. 25
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 26
Business............................ 34
Management.......................... 53
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Certain Relationships and Related
Transactions...................... 66
Recent Developments................ 69
Principal Stockholders............. 70
Description of Capital Stock....... 73
Shares Eligible for Future Sale.... 77
Underwriting....................... 80
Legal Matters...................... 83
Experts............................ 83
Available Information.............. 83
Index to Consolidated Financial
Statements........................ F-1
</TABLE>

ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We and the selling stockholder are offering to
sell, and seeking offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or of any sale of the common stock.

All trademarks and trade names appearing in this prospectus are the property
of their respective holders. The inclusion of other companies' brand names,
products and Web sites in this prospectus is not an endorsement of
ReleaseNow.com. These companies are not involved with the offering of our
securities.

Until , 2000, all dealers selling shares of common stock, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.

i
<PAGE>

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and our financial statements and notes to those statements appearing
elsewhere in this prospectus. This prospectus contains forward-looking
statements that involve risks and uncertainties. These forward-looking
statements include, but are not limited to, statements about our plans,
objectives, expectations and intentions and other statements contained in this
prospectus that are not historical facts. When used in this prospectus, the
words "expects," "anticipates," "intends," "plans," "believes," "seeks" and
"estimates" and similar expressions are generally intended to identify forward-
looking statements.

Except as otherwise indicated, all information in this prospectus assumes:

. that the underwriters will not exercise the option granted by us and a
selling stockholder to purchase additional shares in this offering;

. the conversion of all of our preferred stock into common stock on a one-
to-one basis upon the closing of this offering; and

. the effectiveness of a two-for-one reverse stock split to be effected
prior to the consummation of this offering.

ReleaseNow.com

We have developed an e-commerce infrastructure that we call our
PowerCommerce platform. We use this infrastructure to market, sell and deliver
digital goods online, including business-to-consumer software, business-to-
business software licenses, music and documents. We obtain digital goods, such
as software titles, from publishers who choose to outsource all or a portion of
their online marketing, sales and delivery needs. We believe our technology is
a best-of-class, one-stop method for selling digital goods online. On this
basis, we believe we are well positioned in three converging Internet markets:
Internet infrastructure, outsourced e-commerce and the online sale of digital
goods.

Using our PowerCommerce platform, we sell digital products to end-users
through our customers' Web sites, provide reporting, and process credit card
and purchase order transactions. We also build, host and manage the e-commerce
portion of our customers' Web sites, reflecting their brand identity and
providing marketing, merchandising and digital distribution capabilities. We
believe our expertise in systems integration will allow us to coordinate the e-
commerce capabilities we provide for our customers with their internal
information systems, such as accounting and inventory management.

To date, we have focused on selling software, rather than other digital
goods. We have currently deployed hundreds of Web-based software stores and
try-and-buy software products, referred to as e-commerce points of sale, for
our software publisher and retailer customers. We developed the PowerCommerce
platform to be able to run thousands of points of sale and to use off-the-shelf
servers that can be easily deployed to handle increased traffic at those points
of sale. We currently generate revenue primarily from the sale of third-party
software. Fees charged for the construction, hosting and management of the e-
commerce portion of software publishers' Web sites accounted for less than 5%
of net revenue for the year ended December 31, 1999. Our four largest customers
by revenue for the year ended December 31, 1999, were Macromedia, Inc., Network
ICE Corporation, WebTrends Corporation and GameSpot, a unit of Ziff-Davis Inc.

1
<PAGE>

eliminate the need for physical shipments and makes it possible for corporate
personnel to obtain access to software almost immediately, at almost any time
of the day or night, we believe the PowerCommerce e-Business Center will allow
us to address the needs of the large and rapidly growing business-to-business
software market. To date, we have not generated any revenue from our
PowerCommerce e-Business Center.

We intend to use our expertise in the marketing, sale and delivery of
digital goods online to pursue other digital content opportunities such as
music, documents, images and video. For example, in January 2000, we launched a
prototype store for the H.E.A.R. Foundation which permits end-users to download
standard digital music, or mp3 files. Additionally, we currently maintain a
store permitting download of digital documents in the form of game guides,
which are reference documents that provide tips and strategies for popular
computer games. We believe that the delivery of other digital goods can be
similarly implemented using the PowerCommerce platform. However, we are only
now entering these markets and have no current expectation as to when we will
generate revenue, if at all, from digital goods other than software and
documents.

The worldwide packaged software market, which according to International
Data Corporation, or IDC, reached $135.1 billion in 1998, has emerged as one of
the first digital goods e-commerce markets to experience widespread adoption of
digital delivery. IDC estimates that the market for the online sale of software
reached $1.6 billion in 1998 and will grow to approximately $32.9 billion by
2003. IDC also estimates that the market for the sale of electronic licenses
for corporate software reached $20.1 billion in 1998 and will grow to over
$174.5 billion by 2003.

Risks of Investment

Our net revenues were $12.7 million for the year ended December 31, 1999,
and our net loss was $19.4 million. Since inception and as of December 31,
1999, we incurred net losses of an aggregate of $32.4 million. We anticipate
continuing to incur losses in the foreseeable future. Also, we derived 73% of
our net revenues in 1999 from two clients, Macromedia, which accounted for 57%,
and Network ICE, which accounted for 16%. Macromedia may terminate its
relationship with us upon 60 days notice and, similarly, Network ICE may
terminate its relationship with us upon 60 days notice, each with little or no
penalty. In addition, investors should note that our officers, directors,
principal stockholders and their respective affiliates will beneficially own
approximately 50.5% of the outstanding shares of our common stock following
completion of this offering. As such, they will be able to exert substantial
influence over the election of directors and other matters requiring
stockholder approval. Please also review each of the risk factors beginning on
page 5 of this prospectus.

2
<PAGE>

Corporate History

We incorporated in Delaware on March 28, 1994 under the name Digital Money,
Inc. In February 1996, we changed our name to Release Software Corporation, and
on May 20, 1999 we changed our name to ReleaseNow.com Corporation. We
incorporated a wholly-owned subsidiary in Canada as a technical development
center, ReleaseNow.com Canada, Inc., in July 1999. We acquired Client Server
Designs, Inc. in May 1999 and substantially all of the assets of Get
Software.com in February 2000. References to "us," "we," "our company" and
"ReleaseNow.com" include ReleaseNow.com Corporation, ReleaseNow.com Canada,
Inc. and Client Server Designs, Inc. Our principal executive offices are
located at 990 Commercial Street, San Carlos, California 94070. Our telephone
number is 650-622-1000. Our Web site address is www.releasenow.com. Information
contained on our Web site does not constitute a part of this prospectus.

The Offering

<TABLE>
<S> <C>
Common stock offered by
ReleaseNow.com.................. 3,250,000 shares
Common stock outstanding after
the offering.................. 15,226,814 shares
Use of proceeds.................. We expect to use the net proceeds of the
offering for general corporate purposes,
including working capital and capital
expenditures, enhancing our product
development efforts, expanding our sales and
marketing efforts, acquiring or licensing
technology, products or businesses and
expanding internationally. See "Use of
Proceeds."
Proposed Nasdaq National Market
symbol........................... RNOW
</TABLE>

The common stock to be outstanding after the offering is based on the number
of shares outstanding as of February 29, 2000 and includes the 174,321 shares
we issued in connection with the Get Software asset acquisition. It also
reflects the automatic conversion into common stock upon completion of this
offering of all outstanding shares of preferred stock. This excludes the
following issuances which we may make pursuant to plans or arrangements entered
into prior to February 29, 2000:

. 1,083,699 shares of common stock issuable upon exercise of outstanding
stock options at a weighted average exercise price of $6.56 per share;
and

. 73,147 shares of common stock issuable upon conversion of preferred stock
issuable upon the exercise of outstanding warrants at a weighted average
exercise price of $2.40 per share.

In addition, this excludes the following issuances which we may make
pursuant to plans or arrangements entered into subsequent to February 29, 2000:

. 3,750,000 shares of common stock available for grant under our 2000 Stock
Incentive Plan; and

. 450,000 shares of common stock reserved for issuance under our 2000
Employee Stock Purchase Plan.

3
<PAGE>

Summary Financial Data

The following table summarizes the financial data of our business. You
should read this information together with the financial statements and the
related notes and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this prospectus. See also Note
1 to the financial statements for an explanation of the determination of the
number of shares used in computing per share data.

<TABLE>
<CAPTION>
Period from
March 28, 1994
(inception)
Through Year Ended December 31,
December 31, ------------------------------------
1995 1996 1997 1998 1999
-------------- ------- ------- ------- ---------
(in thousands, except share and per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenues............. $ 19 $ 160 $ 2,349 $ 6,573 $ 12,749
Gross profit............. 7 36 450 691 1,666
Net loss................. (33) (1,637) (3,625) (7,856) (19,354)
Net loss available to
common stockholders..... (33) (1,637) (3,625) (7,856) (23,194)
Basic and diluted net
loss per share available
to common stockholders.. $ (33) $ (5.09) $ (5.66) $ (7.92) $ (15.96)
Shares used in per share
calculation............. 1,000 321,495 639,908 981,526 1,453,631
Unaudited pro forma basic
and diluted net loss per
share available to
common stockholders..... $ (2.64)
Shares used in pro forma
per share calculation... 7,329,908
</TABLE>

The unaudited pro forma net loss information above gives effect on a one-
for-one basis to the conversion into common stock of all preferred stock
outstanding as of December 31, 1999.
<TABLE>
<CAPTION>
As of December 31, 1999
-----------------------------
Pro Forma
Actual Pro Forma As Adjusted
------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents......................... $14,435 $22,129 $66,067
Short-term investments............................ 2,200 2,200 2,200
Working capital................................... 11,528 19,228 63,160
Total assets...................................... 21,849 32,479 76,457
Long-term debt.................................... 861 861 861
Stockholders' equity.............................. 15,363 25,993 69,931
</TABLE>

The pro forma information reflects:

. the net proceeds of $8.2 million from the sale of 824,999 shares of
Series F preferred stock on January 19, 2000;

. the issuance of an additional 94,540 shares of common stock;

. the cash payment of $496,000 and the issuance of 174,321 shares of common
stock in connection with the Get Software acquisition; and

. the automatic conversion on a one-for-one basis of all outstanding shares
of preferred stock into common stock upon completion of this offering.

The pro forma as adjusted information gives effect to the receipt of the
estimated net proceeds of $43.9 million from the sale of 3,250,000 shares of
common stock in this offering at an assumed public offering price of $15.00 per
share after deducting the estimated underwriting discount and estimated
offering expenses. See "Use of Proceeds" and "Capitalization."

4
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RISK FACTORS

You should carefully consider the risks described below before making a
decision to buy our common stock. The risks and uncertainties described below
are not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks actually occur, our business and
financial results could be harmed. In that case, the trading price of our
common stock could decline and you might lose all or part of your investment.
You should also refer to the other information set forth in this prospectus,
including our financial statements and the related notes.

Our prospects are difficult to evaluate because we only made our first
electronic software sale in June 1996 and have only recently implemented some
essential technology and begun expansion of our sales force and marketing
capabilities

We conducted our first electronic sale of software in June 1996, introduced
our first generation of online stores in 1997, began offering stores capable of
displaying images and providing dynamic pricing in 1998 and only implemented
our PowerCommerce platform in the third quarter of 1999. As our PowerCommerce
platform enables our development of electronic stores for our customers and our
ability to market, sell and deliver digital goods through these stores, it is
essential to the success of our current business model. In addition, in 1999 we
began expanding our sales force, hiring our current Vice President of Sales and
increasing our sales force by 40%, and in the first quarter of 2000 we
implemented our PowerCommerce e-Business Center to provide enhanced marketing
capabilities. As a result, our historical results are not necessarily
indicative of our future performance and your ability to evaluate our business
and future prospects is limited. Further, our revenue growth to date may not be
indicative of our future operating results.

We have experienced losses, we expect continued losses and we may never achieve
or maintain profitability

We have not yet been profitable. We have incurred significant losses since
inception and, as of December 31, 1999, we had experienced net losses of an
aggregate of approximately $32.4 million. We have made a significant investment
to develop our technology and to establish our sales and marketing
capabilities. We believe that our success depends, among other things, on our
ability to maintain and expand our existing relationships with publishers of
digital goods and to develop new relationships, both domestically and
internationally. Accordingly, we intend to continue to expend significant
financial resources on the expansion of our sales and marketing efforts and
continued development of our technology. As such, we do not believe that we
will reach a sufficient size to average our fixed costs over a large enough
revenue base to become profitable for at least the next several years, if at
all.

Investors should take into account that future operating expenses depend
upon a variety of factors, including, among other things, estimates for planned
operations and future sales, many of which are outside of our control. As a
result, in the long term, our operating expenses are difficult to forecast and
could increase significantly from current levels. In addition, investors should
note that approximately 75% of our expenses in the short term are fixed. Thus,
we may be unable to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall. In addition, we cannot be certain that our
revenues will grow at a rate that will allow us to achieve or maintain
profitability or generate cash from operations in future periods. Any
significant shortfall in revenues relative to our planned expenditures would
harm our business.

Our operating results may fluctuate significantly and may be below investor
expectations, which may adversely affect our stock price

Our annual and quarterly operating results have fluctuated significantly in
the past. Our net revenues for the years ended 1997, 1998 and 1999 were $2.3
million, $6.6 million and $12.7 million, respectively. We incurred increasing
net losses of $3.6 million, $7.9 million and $19.4 million in each of these
years. Additionally, net revenue in the fourth quarter of 1998 and each of the
quarters in 1999 comprised 26%, 16%,

5
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19%, 20% and 45% of our total net revenue for that year. Because approximately
75% of our short term costs are fixed, fluctuations in net revenue result in
fluctuations in operating results. We expect these annual and quarterly
fluctuations to continue. If our annual or quarterly operating results fall
below the expectations of securities analysts, should analysts cover our stock
in the future, the trading price of our common stock would decline. Among the
most significant factors that have in the past and will likely continue to
affect our operating results are:

. the acceptance and security of digital delivery methods, and
particularly how quickly broadband access is widely adopted, if at all,
and how the perception of the security of Internet transactions is
viewed by end-users over time;

. the number of digital goods providers and PowerCommerce e-Business
Center clients that we are able to attract and retain as customers;

. the number of software products and other digital goods that our
customers permit us to sell, particularly in relation to the number of
similar products available from other sources, including brick-and-
mortar stores and other online retailers;

. the mix of software products and other digital goods that we sell in any
given period, and their relative margins;

. delays by our customers in the introduction of their products or market
acceptance of those products that falls below our expectations;

. our ability to implement in a timely manner new online stores or
purchasing programs that attract end-users and make it easy for them to
purchase products;

. unexpected increases in operating expenses, especially relating to
expansion and product development; and

. fluctuations in levels of product returns, credit card fraud and
customer service calls, which end-users may perceive to be easier to
accomplish online than with traditional stores.

Due to the rapidly evolving nature of our business and our limited operating
history, we believe that period-to-period comparisons of our operating results
are not meaningful and should not be relied upon as an indication of future
performance. For a discussion of our past results of operations, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Our success depends on widespread acceptance of online distribution of software
and other digital goods

Sales of software through digital delivery are not currently a large portion
of industry-wide business-to-business and business-to-consumer software sales.
The market for electronic delivery of other digital goods is even less
developed. As 91% of our net revenues for the year ended December 31, 1999
derived from the electronic delivery of third-party software, our future
revenues and any future profits, should they develop, are substantially
dependent upon the widespread acceptance and use of the Internet as a method to
deliver digital goods to businesses and consumers. Difficulties experienced by
end-users in downloading software products or other digital goods, such as slow
or interrupted delivery and files that are difficult to locate following
delivery, may prevent end-users from undertaking subsequent electronic
downloads. Factors that may continue to influence market acceptance of
electronic delivery include:

. availability and affordability of bandwidth sufficient to enable end-
users to rapidly and reliably download digital goods;

. rate of adoption of electronic delivery by existing producers and
retailers of digital goods;

. level of end-user comfort with, and the relative ease of, the electronic
downloading process; and

. quantity and quality of products that are available for electronic
delivery as compared to those available through physical delivery.

6
<PAGE>

We believe that, because of current bandwidth limitations, end-users using
modems running at speeds of 56 kilobytes per second or less will not be willing
to purchase software or other digital goods through electronic delivery if the
file size is greater than approximately 20 megabytes. We also believe that the
size of new digital goods will continue to increase and that these products may
not be suitable for electronic delivery in the absence of significant increases
in bandwidth availability. If electronic delivery does not achieve widespread
market acceptance for any reason, our business and results will be negatively
impacted. Even if widespread acceptance occurs, we might not overcome
substantial existing and future technical challenges associated with reliable
and consistent digital delivery.

Our success depends on the growth of the Internet as a commercial medium

If commerce on the Internet does not continue to grow or grows more slowly
than expected, our business would be seriously harmed as the number of
potential purchasers of digital goods online would not grow rapidly enough to
meet our forecasted sales. Although use of the Internet is growing rapidly, the
Internet may fail to become a viable medium of commerce for a number of
reasons, including:

. end-user concerns regarding Internet speed, bandwidth availability,
reliability, difficulty of use, cost, security risks and quality or
availability of service;

. inadequate development of the necessary network infrastructure; and

. increased governmental regulation and taxation.

Alternatively, if use of the Internet continues to grow exponentially, this
growth may overwhelm the existing Internet infrastructure, rendering e-commerce
unreliable. In particular, some current technologies available to access the
Internet, such as analog transmission over traditional copper phone lines,
create network bottlenecks as they cannot transmit data fast enough for current
Internet applications. For example, assuming continued operation at maximum
possible speeds, a 20 megabyte file takes almost one hour to download using a
28.8 kilobyte per second modem. A number of different new technologies are
emerging to address download delays by providing broadband access to the
Internet. For example, and again assuming continued operation at maximum
possible speeds, using a 56 kilobyte per second modem, the same file takes only
approximately one-half hour to download, using an ISDN line, the same file
takes just under 15 minutes to download and using a T1 line, the same file
takes only approximately two minutes to download. However, if broadband access
is not widely accepted or adopted, or if it becomes overwhelmed in the future
by increasing numbers of Internet users, it could become difficult or
impossible for users to access desired Web sites or for users to interact with
the Web site once there. As we are almost entirely dependent on being able to
transmit data over the Internet, this could significantly harm our business and
results of operations. Similarly, delays in the development or adoption of new
standards and protocols required to handle increased levels of Internet
activity could impede the growth of the Internet as a commercial medium and
have an adverse affect on our business.

Our customer base is concentrated, and we could lose customers because our
contracts are for a short time period and can be terminated on short notice

Our three largest customers accounted for approximately 55% of our net
revenues in 1998, and our two largest customers accounted for approximately 73%
of our net revenues in 1999. We expect that a small number of our customers
will continue to account for a substantial portion of our sales for the
foreseeable future. In addition, all of our contracts are short term in nature
and are generally terminable for any reason on 30 or 60 days notice. Any of
these contracts might not be renewed or could otherwise end on short notice,
generally with no penalty. As a result of competition or fluctuations in
demand, we could be required to compromise with our customers with respect to
various contractual provisions in order to obtain additional business or
maintain our customer relationships. In addition, many of our principal
customers are now and may in the future be affected by rapid consolidation in
the Internet and software industries. Loss of any principal customer would
adversely affect our results. It is important that we maintain our customer
relationships and at the same time develop new relationships with third-party
suppliers of digital goods.

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We depend on Macromedia and Network ICE, and the termination of these
relationships would have a substantial and immediate adverse effect on our
business

For the year ended December 31, 1999 we generated approximately 57% of our
net revenues from services provided to Macromedia and the sale of Macromedia
software titles and approximately 16% of our net revenues from services
provided to Network ICE and the sale of Network ICE software titles. We cannot
assure you that Macromedia or Network ICE will continue to provide us with
software to sell, and if either of them limited or discontinued selling
software to us, our business would be significantly and immediately adversely
affected. Macromedia and Network ICE have the right to terminate their
agreements with us upon 60 days notice, with little or no penalty. We cannot
assure you that Macromedia or Network ICE will not terminate their agreements
or that they will renew them on satisfactory terms at the end of their current
term. Macromedia's current term will end on June 28, 2000, subject to
continuing automatic renewal for one year terms, again subject to earlier
termination upon 60 days notice. Network ICE's current term will end in
September 2000, subject to continuing automatic renewal for one year terms,
again subject to earlier termination upon 60 days notice.

Macromedia has indicated to us that they intend to bring electronic
distribution of some of their products in-house. Macromedia has been developing
its own e-commerce capabilities relating to buy-and-download software sales. In
the fourth quarter of 1999, we created a buy-and-download store for Macromedia.
This store represented 10% of our total net revenues in the year ended December
31, 1999. Macromedia has indicated that it intends to bring the buy-and-
download store in-house in the second quarter of 2000. As a result, we will
lose future revenues that may have been generated from this store. We have no
assurance that Macromedia will not choose to bring all of its electronic
distribution in-house, and that we will not lose 100% of Macromedia's business.
If Macromedia chooses to bring in-house all or a significant portion of their
electronic software delivery sales or if Macromedia or Network ICE chooses to
use a competitor's e-commerce capabilities, it would have a substantial and
immediate adverse effect on our business, results of operations and financial
condition.

Our success depends on software and digital goods providers supplying titles
for us to sell

If we cannot obtain sufficient quantity and quality of commercially popular
software titles, we may fail to attract new customers or end-users, either of
which could cause our business or operating results to suffer. The software
publishers that currently supply software to us may not continue to produce new
titles, and may not supply new or old titles to us. We have no long-term or
exclusive contracts or arrangements with any software publisher that guarantee
the availability of software products to us. In addition, end-users may not
like our product selection, particularly if it is limited by any of the
foregoing factors, and this too could harm our business or operating results.
We face these same risks with respect to selling digital goods other than
software.

We depend on third parties for information, forecasting and marketing

We depend on our customers to accurately forecast the schedule for
development and delivery of their products to the market and to us. If their
products are delayed, end-users could lose interest, and we could potentially
lose anticipated sales. In addition, we rely on our customers to successfully
market their software and generate demand for their products. If market
interest is insufficient, we could lose anticipated sales. Further, we rely on
our customers' forecasts relating to the demand for and longevity of their
products. If their forecasts are wrong, and we do not adjust our forecasts for
their inaccuracies, we might not meet our anticipated sales. Any of the
foregoing could harm our business and results of operations.

We have a new management team, and if they are unable to work together
effectively, our business may be harmed

Most of our management team was hired in 1999, and the group has only been
working together for a short time. For example, our Chief Financial Officer,
Joan P. Walsh, joined us in January 1999, our Vice President of Marketing and
Chief Marketing Officer, David A. Roman, joined us in February 1999, our

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President, Michael J. Maulick, joined us in May 1999 and became Chief Executive
Officer in November 1999 and our Vice President of Sales, Frank D. Maylett,
joined us in June 1999. In addition, our prior Chief Executive Officer, Carolyn
A. Rogers, was appointed Chairman of the Board in November 1999. Moreover,
several other key employees were hired in 1999. Because many of our officers
and key employees are new, there is a risk that our management team will not be
able to work together effectively, especially in the short term, to address the
challenges to our business. We also expect to add additional key personnel in
the near future, who will also need to be integrated into our management team.
If our management team is unable to work together, our operations could be
disrupted and our business harmed.

Intense competition in our industry could reduce or eliminate demand for our
services

Competition in the market for providers of outsourced e-commerce systems for
digital goods is intense, and we expect competition to increase in the future.
If we are not able to compete successfully, our business and financial results
will suffer. We face competition from the following sources:

. in-house development of e-commerce capabilities;

. software publishers and online retailers who have or may choose to make
substantial initial and ongoing investments in order to develop and
manage their own e-commerce sites, who may decide to market this
capability to others;

. other providers of outsourced e-commerce systems, including Digital
River, Inc. and NetSales, Inc.;

. other providers of tools and services enabling one or more of the
functions of e-commerce, such as transaction control, data security,
customer interaction, database marketing and electronic software
delivery, such as BroadVision Corporation and Preview Systems, Inc.;

. companies that sell and distribute software products over the Internet,
such as Intraware, Inc.;

. high-traffic, branded Web sites that derive a substantial portion of
their revenues from e-commerce and may themselves offer, or provide means
for others to offer, software products;

. start-up companies that are developing product offerings; and

. traditional channels and methods of retail and corporate software sales,
such as mail order catalogs and retail superstores.

Several of our competitors are pursuing alliances, partnerships and business
combinations to increase product offerings. We have not yet developed a
significant number of strategic alliances, and we believe that we may therefore
be at a competitive disadvantage to those companies. In addition, it is
possible that current or potential competitors may establish alliances or
cooperative relationships, or that new competitors may emerge and rapidly
acquire market share.

Many of our competitors have longer operating histories, substantially
greater financial, technical, marketing or other resources, and greater name
recognition than we do. We cannot be sure that we will have the resources or
expertise to compete successfully in the future. Our competitors may be able
to:

. respond more quickly than we can to new or emerging technologies and
changes in customer requirements;

. adopt more aggressive pricing policies and impede our ability to sell
additional services on terms favorable to us;

. develop and market new technologies that render our existing or future
services obsolete, unmarketable or less competitive;

. make strategic acquisitions or establish cooperative relationships among
themselves or with other providers of outsourced e-commerce systems which
strengthen their ability to address the needs of our potential customers;
and

. provide customers with additional benefits at lower overall costs.

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<PAGE>

Our international business exposes us to additional risks

Software purchased by end-users in countries outside the United States
accounted for approximately 40% of our net revenues in 1998 and approximately
39% of our net revenues in 1999. Part of our strategy is to continue to
electronically distribute digital products to end-users in countries outside
the United States and to increase our international presence in the future.
Conducting business outside of the United States subjects us to risks,
including:

. higher instances of credit card fraud and difficulties in accounts
receivable collection;

. burdensome compliance with a variety of export restrictions and foreign
laws;

. changes in regulatory requirements, taxes and tariffs;

. foreign currency exchange rate fluctuations;

. difficulties in protecting intellectual property rights and evolving
piracy laws;

. difficulties and additional costs associated with international
operations; and

. political or economic instability or constraints on international trade.

Legislation relating to privacy concerns in the U.S. and Europe could damage
our marketing strategy and negatively affect our business

United States. The United States Federal Trade Commission, or the FTC, is
considering adopting regulations regarding the collection and use of personal
identifying information obtained from individuals when accessing Web sites,
with particular emphasis on access by minors. These regulations may include
requirements that companies establish certain procedures to, among other
things:

. give adequate notice to consumers regarding information collection and
disclosure practices;

. provide consumers with the ability to have personal identifying
information deleted from a company's database;

. provide consumers with access to their personal information and with the
ability to rectify inaccurate information;

. clearly identify affiliations or a lack thereof with third parties that
may collect information or sponsor activities on a company's Web site;
and

. obtain express parental consent prior to collecting and using personal
identifying information obtained from children under 13 years of age.

These regulations may also include enforcement and redress provisions. Our
business model is, in part, based upon our ability to obtain information about
our users and to use this information to authorize transactions, perform fraud
screenings, deliver products and offer complementary products to end-users who
agree to receive promotional information. If new regulations are adopted that
limit or eliminate our ability to use this information, or that generate
potential liabilities as a result of misuse of this type of information,
whether intentional or not, our business, results of operations and financial
condition could be significantly harmed. Even in the absence of these
regulations, the FTC has begun investigations into the privacy practices of
companies that collect information on the Internet. The FTC's regulatory and
enforcement efforts alone may adversely affect the ability to collect
demographic and personal information from users, which similarly could have an
adverse effect on our ability to provide targeted e-mail campaigns.

It is also possible that "cookies," or information keyed to a specific
server, file pathway or directory location that is stored on a user's hard
drive, possibly without the user's knowledge, which are used to track
demographic information and to target advertising, may become subject to laws
limiting or prohibiting their use. We use cookies to remember end-users' names
and purchasing information, except credit card numbers, so that items can be
added to the end-user's "shopping cart" and subsequent purchases are quicker
and easier. A

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number of Internet commentators, advocates and governmental bodies in the
United States and other countries have urged the passage of laws limiting or
abolishing the use of cookies. Limitations on or elimination of our use of
cookies could make use of our purchasing methods more cumbersome or could
prevent their use at all, either of which could harm our business, results of
operations and financial condition.

Europe. The European Union, or EU, has adopted a directive that imposes
restrictions on the collection and use of personal data. Under the directive,
EU citizens are guaranteed rights to access their data, rights to know where
the data originated, rights to have inaccurate data rectified, rights to
recourse in the event of unlawful processing and rights to withhold permission
to use their data for direct marketing. The directive could, among other
things, affect companies that collect information over the Internet from
individuals in EU member countries, and may impose restrictions that are more
stringent than Internet privacy standards in the United States. In particular,
companies with offices located in EU countries will not be allowed to send
personal information to countries that do not maintain adequate standards of
privacy. The directive does not, however, define what standards of privacy are
adequate. As a result, the directive may inhibit or prohibit the collection and
use of personal information from users in EU member countries. This could
inhibit the globalization of Internet commerce and limit the feasibility of our
expansion in Europe.

Potential system failures or inability to scale our system could negatively
affect or reduce demand for our services

Our operating results and the success of our business depend on the
efficient and uninterrupted operation of our computer and communications
systems. Our services require the reliable online marketing, delivery, payment
processing and data gathering that these systems and the underlying network
infrastructure are designed to provide.

Currently, our system is operating at approximately 8-12% of its maximum
capacity, as measured in our ability to provide an almost immediate response to
shoppers accessing our e-commerce stores. We have developed internal controls
and monitoring systems which measure, among other things, items such as the
number of users accessing our system at any one time, the amount of time users
spend on our system, the number of purchases made, bandwidth use and hard disk
utilization. No one of these factors alone generally causes system failure, but
there is a risk that unexpected increases in one or more of these factors may
impact performance or reliability, resulting in system disruptions or delays,
slower than expected response times, degradation in levels of customer service
and impaired quality and speed of order fulfillment. We intend, according to
generally accepted industry practice, to increase our system capacity when our
average usage rate reaches approximately 30% of the maximum system capacity.
Despite our monitoring systems, we may be unable to accurately project the rate
or timing of increases, if any, in the use of our systems or we may be unable
to procure or license required third-party servers, routers and other products
needed to scale our systems. Similarly, additional network capacity could be
unavailable when we need it. Our reputation and ability to attract and retain
clients and maintain adequate customer service levels depend on the reliability
and performance of our systems. Our systems and operations are also vulnerable
to damage or interruption from:

. power loss, computer systems failures, Internet and telecommunications or
data network failures;

. operator negligence, improper operation by or supervision of employees,
physical and electronic break-ins, misappropriation, computer viruses and
similar events; and

. earthquake, fire, flood and other natural disasters.

Any of the foregoing could lead to interruptions, delays, security breaches,
loss of data or the inability to accept and fulfill end-user orders. Any
reduced order fulfillment performance would reduce the volume of goods sold and
the attractiveness of our product and service offerings to software publishers,
online retailers and end-users. We presently have limited system redundancy at
our principal site and carry limited business interruption insurance to
compensate for losses that may occur. We currently have no geographical system
redundancy. We have experienced periodic interruptions, affecting all or a
portion of our systems, which could continue to occur from time to time.

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<PAGE>

Our system has in the past been down as a result of the following:

. software defects;

. service interruptions from third-party service providers such as our
server co-location providers or our credit card processing service
providers; and

. Internet communications outages due to unpredictable events.

In the above cases, service was interrupted for periods ranging from several
minutes to two hours. The impact on our business was revenue loss proportional
to downtime, as well as possible future business loss due to damage to our
reputation. In the future, any of these or the other factors discussed above
could cause even longer interruptions.

We depend on third parties to maintain and provide components for our
infrastructure

We, and our customers, depend upon Internet service providers to connect us
and the end-users who purchase software from us to the Internet and to provide
sufficient bandwidth. In 1999, we electronically sold and delivered software
representing over 90% of our net revenues, rather than using traditional
physical fulfillment methods. As a result, we would be significantly harmed if
we were unable to obtain reliable Internet access. We also rely on a number of
suppliers to provide components of our infrastructure, such as credit card
processing services, access to databases and encryption technology. If the cost
of the components or services third parties provide is increased, the
operational integrity of their networks is compromised or if these services are
otherwise unavailable, our reputation could be harmed, our business could
suffer and we could lose our customers to competitors. Although we believe we
could find alternative sources to supply necessary infrastructure components,
we would need to develop new working relationships and train our personnel in
the use of these alternatives, either or both of which could cause delay or
interruption of our services.

Our business could be harmed if online security risks or credit card fraud
occur

We rely on encryption and authentication technology licensed from third
parties to provide secure transmission of confidential information, such as
credit card numbers. Advances in computer capabilities, new discoveries in the
field of cryptography or other events or developments may compromise or breach
the algorithms we use, including SalesAgent, our proprietary technology for
encryption and limiting use of software based on the payment option chosen. We
possess financial and other information with respect to our customers and end-
users. If security with respect to this data is breached and proprietary
information about our customers or end-users is misappropriated, it could
damage our reputation, hurt our business and expose us to liability. We also
assume the credit risk of loss associated with the sale and delivery of digital
goods. Fraudulent credit card data, even if payment is authorized by associated
financial institutions or credit organizations, expose us to liability. In
addition, if we incur significant instances of credit card fraud over an
extended period of time it may result in penalties and termination of our
credit card acceptance privileges. Loss of the credit card acceptance
privileges would severely impact our ability to process the sale of digital
goods where the payment method is by credit card. We may be required to expend
significant capital and other resources to protect against these security
breaches or fraudulent transactions.

If our technology and systems do not keep up with technological changes in the
e-commerce industry, our ability to compete effectively may be harmed

The Internet and e-commerce industries are characterized by rapid changes in
user requirements and preferences, new product and service introductions and
evolving industry standards. We sell software and other digital goods for a
number of companies, each of which may respond differently to these factors.
Our technology must nonetheless be able to communicate effectively with each of
our customers' technology. In addition, because we sell goods without a
physical location and deliver those goods electronically, we are more dependent
on technology than traditional vendors. We must:

. keep up with changes in how digital files are created and stored;

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. keep up with changing digital delivery technologies like modems, digital
subscriber lines, or DSL, and cable;

. be able to accommodate various and new software platforms like computers,
cellular phones and personal digital devices;

. be able to respond to changes in how consumers expect online stores to
operate; and

. keep up with changes in payment technology like credit card processing
and online cash substitutes.

Our success depends, in part, on our ability to create an environment in which
the ease and flexibility of downloading digital goods online overcomes the
tendency to buy digital goods by more traditional means. To be competitive, we
must continue to enhance and improve the responsiveness, functions and features
of our electronic packaging, transaction processing and client management
systems, as well as our underlying network infrastructure. In order to create,
maintain and improve this environment, we must either internally develop or
license technologies, enhance existing services and develop new services that
address the increasingly sophisticated and varied needs of customers, and
respond to technological advances and emerging industry standards and
practices. If we are unable to successfully use new technologies or adapt our
proprietary technology and transaction-processing systems to customer
requirements or emerging industry standards, our business could be harmed. Our
proprietary technology development entails promoting new or complementary sales
methods, including our PowerCommerce stores, expanding the breadth and depth of
products and services offered and expanding our market presence through
relationships with, or acquisitions of, third parties. All of the foregoing
expose us to increased risks, including risks associated with the costs of
system modifications or additional development and the diversion of resources
from our existing businesses and technologies.

We may not be able to adequately protect our proprietary technology from
infringement or misappropriation

Our success depends in part on our proprietary technology which includes:

. our PowerCommerce architecture;

. our SalesAgent software code, which allows us to produce encrypted
versions of software for try-before-you-buy and rental transactions;

. the recently acquired intellectual property of Get Software.com, which
includes software code for running an e-commerce Web site that sells
shareware and other computer programs; and

. trade secrets relating to our accumulated knowledge with respect to
solving the complex problems of trial-enabling software, digital
encryption and electronic delivery of digital goods.

We have filed five patents with respect to our proprietary technology, and
rely on copyright and trademark law, trade secret protection and
confidentiality and/or license agreements with our employees, customers and
others to protect our proprietary rights. Our pending patents may never be
issued and, even if issued, may not provide us with any significant protection.
We seek registration of our trademarks and service marks in the United States
and, based upon anticipated use, internationally. The laws of some foreign
countries may not protect our intellectual property rights to the same extent
as do the laws of the United States. Third parties could obtain and use our
technology without authorization or remuneration. Other parties may also
independently develop substantially equivalent intellectual property. If we
become involved in litigation to defend our intellectual property rights, we
could have to spend significant amounts of money, regardless of the outcome,
and the litigation could divert our management's time and efforts.

We also cannot assure you that third parties will not claim our current or
future services infringe upon their rights. We have not conducted any search to
determine whether any of our services or technologies may be infringing upon
rights of third parties. As the number of services in our market increases and
capabilities increasingly overlap, companies such as ours may become
increasingly subject to infringement claims. In the past, we have received
correspondence with respect to claims alleging our infringement of proprietary
rights of

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<PAGE>

third parties, and we may receive other notices in the future. As a result of
an infringement dispute, we may experience product delivery delays, and we may
need to develop non-infringing technology or enter into royalty or licensing
agreements which may be unavailable on acceptable terms. Any infringement
claims, with or without merit, could result in costly litigation and could
absorb significant management time. We could also be made a party to lawsuits
relating to the infringement by our customers of others' intellectual property
rights.

Sale, delivery and support of our products may entail the risk of legal claims

Our business includes the sale of the software and other digital goods of
our customers. Because we did not create these software products or other
digital goods, we are not generally in a position to know the quality of or the
nature of the content of the digital goods. However, because we sell the
digital goods, claims may be made against us for:

. negligence;

. breach of warranty;

. system failures;

. breach of contract;

. copyright or trademark infringement;

. defamation;

. obscenity;

. violation of privacy and personality rights; or

. other theories based on the nature and content of software products and
other materials and information delivered electronically.

These claims would be expensive and time-consuming to defend, distract
management and delay product deliveries even if we were ultimately successful
in the defense of these claims. Our insurance may not cover potential claims of
this type or may not be adequate to cover all defense costs or to indemnify us
for all liability that may be imposed. If any claims are asserted against us
and we are unable to promptly dispose of those claims or develop or license
non-offending or non-infringing technology, it could disrupt our business and
divert management and technical resources.

If we become subject to new sales and other taxes, our business may be harmed

We currently collect sales or other similar taxes from end-users based on
information provided by our publishers and online retailers, but do not
typically collect sales tax for products purchased by end-users residing
outside California. The application of sales tax to interstate and
international sales over the Internet is unclear and evolving. Local, state or
foreign jurisdictions may seek to impose sales tax collection obligations on us
and other out-of-state or foreign companies selling products online. Should
these or other tax laws change or be applied retroactively to past sales, it
would harm our business and financial condition.

Increased government regulation could decrease our revenues and increase our
costs

A number of proposals have been made at the federal, state and local level
that would impose additional regulations or taxes on the sale of goods and
services over the Internet. The adoption of any of these proposals could
substantially impair our growth or the growth of e-commerce, or could adversely
affect our financial condition. While few laws or regulations currently apply
directly to Internet access or e-commerce, a number of laws and regulations may
be adopted with respect to the Internet, covering issues such as:

. end-user privacy;

. defamation and content regulation;

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<PAGE>

. pricing and taxation;

. quality of products and services; and

. intellectual property ownership and infringement.

The applicability to the Internet of the existing laws governing issues such
as property ownership, copyright, defamation, obscenity and personal privacy is
also uncertain, and we may be subject to claims that our services violate such
laws. It may also require significant time and management resources to respond
to any changes in these laws.

We may not be able to effectively attract, manage and retain qualified
personnel as our business expands and changes

Since inception, and particularly in the last twelve months, we have
experienced substantial change, expansion and disruption in our business and
operations, and we expect to continue to experience periods of rapid change.
Our past expansion has placed, and any future expansion would continue to
place, significant strains on our administrative, operational, financial and
other resources. From January 1, 1998 to February 29, 2000, we increased our
net number of employees from 37 to 101. We expect operating expenses and
staffing levels to increase substantially in the future. In particular, we
intend to hire a significant number of additional personnel in 2000 and
thereafter. In the Silicon Valley, where our headquarters are located, skilled
technical employees are in extremely high demand and recruiting and retention
are severely constrained. Based on current market conditions, we expect that
the costs for recruiting new employees will at least double from last year. In
addition, we expect that retention of management-level employees may require
significant salary or bonus increases, as the limited supply of experienced
managers in the Silicon Valley has caused compensation levels to increase
substantially over the last two years. In addition, any future expansion will
continue to challenge our ability to train, motivate and manage our employees,
and to attract and retain qualified senior managers and technical persons, such
as software designers and developers. The loss of the services or diminished
performance of any of our executive officers or other key employees could hurt
our ability to successfully develop our business. We do not have life insurance
on any member of management, and no member of management is subject to any
agreement pursuant to which he or she would be prohibited from competing with
us after termination of employment.

Managing our growth effectively may be difficult

Our ability to successfully expand our business in rapidly evolving markets
requires an effective planning and management process. We have limited
experience in managing rapid growth. Recently, we have added engineering,
sales, marketing, administrative and other management personnel. In the last
two years, we increased our headcount by more than 170%. In addition, in
December 1998 we moved into our present location and currently have minimal
unused space. As a result, we are now required to find additional office space.
Moreover, from 1997 to 1999, our annual net revenues increased over 450%. Our
growth so far has placed strains on our managerial, financial and personnel
resources. We expect these strains to continue in the future. To reach our
goals, we will need to:

. continue hiring at a rapid pace, while at the same time investing in our
infrastructure;

. increase the scale of our operations;

. implement an effective cash management system;

. establish and improve our financial and accounting systems, procedures,
controls and structures; and

. adopt and staff an investor relations program.

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<PAGE>

Several factors may inhibit our ability to fulfill any or all of these
requirements. As discussed above, recruiting and retention of skilled personnel
is difficult and expensive in the Silicon Valley. Similarly, the vacancy rate
in the Silicon Valley is currently very low and reasonably-priced office space
is often unavailable. In addition, the cost of office space has increased
significantly in the Silicon Valley since the beginning of 1999 and we expect
these increases will continue. If we are unable to anticipate the changing
demands that our location or our growth, if any, may impose on our systems,
procedures and controls, or if the systems and programs we implement are
inadequate to accommodate our future growth, if any, our results of operations
and business may suffer.

Any acquisitions or investments we make could be disruptive to our business,
have adverse accounting consequences or be dilutive to our investors

Since inception, we have made two acquisitions, Client Server Designs, Inc.,
and the assets of a partnership, Get Software.com. We acquired the Get Software
assets, including their intellectual property, in February 2000 and must now
assimilate the Get Software business into ours. We may not be able to do this
easily or at all. The assistance of the principals of Get Software, who are now
our employees, is essential in this undertaking. Any of them could decide not
to continue working for us. Similarly, we may not recognize the benefit of the
purchase of the Get Software technology if it proves too difficult to integrate
their systems with ours or adapt their intellectual property to our
methodology.

In the future, we may wish to acquire or invest in other companies, products
or technologies. Good candidates for acquisitions in the high-tech industry are
particularly difficult to assess because of rapidly changing technological
standards. If we make any acquisitions, we will be required to assimilate the
personnel, operations and products of the acquired businesses, and train,
retain and motivate key personnel from the acquired businesses. Key personnel
of any acquired company may decide not to work for us. Further, acquisitions
may cause disruptions in our operations and divert management's attention from
day-to-day operations, which could impair our relationships with our current
employees, customers and strategic allies. Moreover, acquisitions may result in
a variety of accounting charges which would increase our reported expenses,
including amortization of goodwill and acquired technology. We may also incur
debt or issue dilutive equity securities to pay for any future acquisitions or
investments. As a result, any future acquisitions or investments could have an
adverse effect on our business and results of operations.

Future sales by existing stockholders may cause our stock price to decline

If our existing stockholders, and members of management in particular, sell
our common stock in the public market following this offering, the market price
for our common stock could decline due to market perception of a sell-off by
key or informed stockholders. In addition, these sales might make it more
difficult for us to sell equity or debt securities in the future at a time and
a price that we deem appropriate.

Upon completion of this offering, we will have outstanding 15,226,814 shares
of common stock, based upon shares outstanding as of February 29, 2000 and
assuming no exercise of outstanding options or warrants after that date. Of
these shares, all of the shares sold in this offering will be freely tradable,
without restriction, in the public market. Holders of 11,976,814 of these
shares are subject to agreements with us or our underwriters pursuant to which
the holders have agreed not to sell their shares for 180 days after the
effective date of the registration statement of which this prospectus is a
part. After these lock-up agreements expire 180 days from the effective date of
this offering, 8,976,272 of the shares outstanding as of February 29, 2000 will
be eligible for sale in the public market. Lehman Brothers may, in its sole
discretion, waive the restrictions of the lock-up agreements at an earlier time
without prior notice or announcement and allow one or more stockholders to sell
all or any portion of their shares. If there were no lock-up agreements or the
underwriters chose to waive the restrictions in all of the lock-up agreements,
6,254,177 shares would be immediately eligible for sale in the public markets,
subject to the requirements of Rule 144 promulgated under the Securities Act,
including manner of sale and share volume limitations.

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<PAGE>

In addition, as of February 29, 2000, there were 1,083,699 shares subject to
outstanding options, 73,147 shares subject to outstanding warrants and
4,200,000 shares that are or, upon effectiveness of our year 2000 equity plans,
will be reserved for issuance under our equity plans. None of these shares may
be sold in the public market until at least 180 days after the effective date
of this offering. Assuming an effective date of April 15, 2000, 281,918 of the
1,083,699 option shares outstanding as of February 29, 2000 will be vested and
eligible for sale when the 180 day lock-up agreements expire. In addition, at
that time, all of the shares underlying the warrants will be eligible for sale
in the public market.

We may not be able to secure additional future financing necessary to achieve
our business objectives

We have experienced negative cash flow from operations since inception and
expect to continue to experience significant negative cash flow from operations
through at least 2002. We believe that the net proceeds from this offering,
anticipated gross cash from operations and funds from equipment leases,
together with existing capital resources, will be sufficient to meet our
anticipated capital requirements for the next 12 months. However, our capital
requirements depend on several factors, including:

. the rate of market acceptance of e-commerce in general and our services
in particular;

. the costs of developing new products, services and technology; and

. the level of expansion of our sales, marketing and promotional efforts.

If our capital requirements exceed those currently planned, we may need
additional financing sooner than anticipated. Additional financing may not be
available when needed on favorable terms or at all. If additional funds are
raised through equity issuances, our stockholders will experience dilution, and
these securities may have rights, preferences and privileges senior to those of
our common stock. If adequate funds are not available or are not available on
acceptable terms, we may be unable to develop or enhance our services, take
advantage of future opportunities or respond to competitive pressures, or we
may have to sell or license our assets and technologies.

Existing stockholders may exert significant control over us

Our executive officers, directors and principal stockholders (greater than
5%) and their respective affiliates will beneficially own approximately 50.5%
of the outstanding shares of our common stock following the completion of this
offering. As a result, acting together, they may have the ability to direct our
affairs and business, including the election of directors and approval of
significant corporate transactions. This concentration of ownership may also
have the effect of delaying, deferring or preventing a change in control of our
company.

No public market for our common stock previously existed and the price of our
stock may be volatile

Prior to this offering, our common stock has never been sold in a public
market. We have filed an application for the quotation of our common stock on
the Nasdaq National Market. However, an active trading market for our common
stock may not develop or be maintained. If a market does not develop or is not
sustained, it may be difficult for you to sell your shares of common stock at a
price that is attractive to you or at all. The initial public offering price of
the common stock will be determined through negotiations between the
representatives of the underwriters and us and may not be representative of the
price that will prevail in the open market. Technology companies, and Internet-
based companies in particular, have been experiencing extreme fluctuations in
the values of their stock over the past year. As our business is dependent on
the Internet, any downturn in technology stocks generally and Internet stocks
specifically will likely have a negative effect on our stock price.

In addition, the trading price of our common stock will be highly volatile
and could be subject to wide fluctuations in response to factors such as:

. actual or anticipated variations in quarterly operating results;

. announcements of technological innovations or new services by us or our
competitors;

17
<PAGE>

. changes in financial estimates by securities analysts, should analysts
cover our stock in the future;

. general market conditions and conditions or trends in the Internet and e-
commerce industries;

. announcements by us or our competitors of significant acquisitions;

. development or maintenance of our strategic alliances, joint ventures or
capital commitments;

. additions or departures of key personnel; and

. sales of common stock.

These factors and many others could affect our stock price. In addition, the
stock market in general, the Nasdaq National Market and the market for
technology and Internet-related companies in particular, have been experiencing
extreme price and volume fluctuations. These fluctuations have often been
unrelated or disproportionate to the operating performance of such companies.
In the past, securities class-action litigation has often been brought against
a company following periods of volatility in the market price of its stock. If
we become a target of similar litigation, it could result in substantial costs
and a diversion of management's attention and resources.

Additional shares of our common stock subject to registration rights may be
sold to the public

After this offering, based on our capitalization as of February 29, 2000,
the holders of approximately 8,562,914 shares of common stock and warrants to
purchase common stock are entitled to rights with respect to registration of
such shares under federal securities laws.

In order for stockholders to effectively invoke their demand registration
rights, the holders of at least 30% of the outstanding shares carrying
registration rights must request us to register their shares. The request must
be made after the earlier of May 4, 2001 or six months after this offering.
Furthermore, the following thresholds must be satisfied:

. the request must include at least 20% of the stock carrying registration
rights; or

. the anticipated proceeds of the sale must exceed $10,000,000.

By exercising their registration rights, subject to the registration of
their shares with the Securities and Exchange Commission, participating
stockholders will receive registered shares of our common stock which they will
be free to sell into the public market. A large sale of stock at one time could
have the effect of reducing our stock price. In addition, large sales might
also make it more difficult for us to sell equity securities in the future at a
price acceptable to us. As a result, we could be unable to raise desired funds
when needed.

Anti-takeover provisions in our certificate of incorporation, Delaware law and
our benefit plans could adversely affect the rights of our common stockholders

Anti-takeover provisions of Delaware law and in our certificate of
incorporation, bylaws and equity benefit plans may make a change in control of
our company more difficult, even if a change in control would be beneficial to
our stockholders. These provisions may allow our board of directors to prevent
or make changes in the management and control of our company. In particular,
our certificate of incorporation and bylaws will provide, among other things,
that:

. our board of directors will be able to issue up to 2,500,000 shares of
preferred stock with rights and privileges that might be senior to our
common stock, without the consent of the holders of the common stock;

. our authorized but unissued common stock is available for future issuance
without stockholder approval;

. our board of directors will be divided into three classes which will
serve staggered three year terms and the board of directors will be
authorized to fill vacancies, including newly created directorships;

18
<PAGE>

. directors may be removed by the stockholders only for cause and only upon
a two-thirds vote of the outstanding shares of voting stock;

. stockholder actions must be effected at a duly called meeting and may not
be effected by written consent; and

. only the board of directors is permitted to call a special meeting of
stockholders, 120 days' advance written notice will be required for
stockholders to bring business or to nominate candidates for election as
directors before an annual meeting of stockholders and a two-thirds vote
of the stockholders is required to amend our certificate of incorporation
or our bylaws.

In addition, under Delaware law, our board of directors may adopt additional
anti-takeover measures in the future. Accordingly, the rights of holders and
the price of our common stock could be adversely affected by these anti-
takeover provisions. See "Description of Capital Stock" for further information
on these anti-takeover provisions.

We may apply the proceeds of this offering to uses that do not increase our
operating results or market value

As of the date of this prospectus, we can only estimate the particular uses
for the net proceeds to be received upon completion of the offering. We
currently have no formal plan for use of the expected offering proceeds, nor
have we sought the advice of or received reports from any of our professional
advisors regarding the use of the offering proceeds.

You will incur immediate and substantial dilution

The initial public offering price is expected to be substantially higher
than the pro forma net book value per share of our outstanding common stock. As
a result, investors purchasing common stock in this offering will incur
immediate and substantial dilution in the amount of $10.49 per share. In
addition, we have issued options and warrants to acquire our common stock at
prices significantly below the initial public offering price. To the extent
these options and warrants are exercised, there will be further dilution to
investors in this offering.

We have not verified any forward-looking statements of third parties in this
prospectus

This prospectus contains forward-looking statements attributed to third
parties, for example IDC, relating to their estimates regarding growth of e-
commerce, electronic software delivery, software and related service markets
and spending. These forward-looking statements reflect third-party estimates,
and we have not independently verified the information provided by the third-
party reports.

19
<PAGE>

USE OF PROCEEDS

We estimate the net proceeds to ReleaseNow.com from the sale of the
3,250,000 shares of common stock offered by this prospectus to be approximately
$43.9 million or $49.4 million if the underwriters exercise the over-allotment
option in full, at an assumed initial public offering price of $15.00 per share
and after deducting the estimated underwriting discount and estimated offering
expenses. We are conducting this offering primarily to increase our equity
capital, to create a public market for our common stock and to facilitate our
future access to public equity markets. As of the date of this prospectus, we
can only estimate the particular uses for the net proceeds to be received upon
completion of the offering. We currently estimate that we will use the net
proceeds of the offering as follows:

. 35% for sales and marketing activities;

. 25% for various product development incentives;

. 10% for capital expenditures; and

. 30% for working capital and other general corporate purposes, such as
expenditures made in the day to day operation of our business.

In addition, we may use a portion of the net proceeds to acquire or invest
in complementary businesses or products or to obtain the right to use
complementary technologies. We have no current agreements or commitments with
respect to any future acquisition or investment, and we are not currently
involved in any negotiations with respect to any similar transaction. However,
acquisitions of technology are an element of our business plan for the future.

Pending use, the net proceeds of the offering will be invested in short-
term, interest-bearing, investment-grade instruments. We currently have no
formal plan for use of the expected offering proceeds, nor have we sought the
advice of or received reports from any of our professional advisors regarding
the use of the offering proceeds. As a result, our use of the offering proceeds
is entirely subject to our management's sole discretion.

DIVIDEND POLICY

We have never declared nor paid any dividends on our capital stock. We
currently intend to retain all available funds for use in the operation and
expansion of our business and do not anticipate paying any cash dividends in
the foreseeable future. Any future determination to pay dividends will be at
the discretion of our board of directors and will depend on our results of
operations, financial condition, contractual and legal restrictions and other
factors it deems relevant.

20
<PAGE>

CAPITALIZATION

The following table sets forth our actual short-term debt and total
capitalization as of December 31, 1999. Additionally, our capitalization is
presented:

. on pro forma basis to reflect:

. the net proceeds of approximately $8.2 million from the sale of 824,999
shares of Series F preferred stock on January 19, 2000;

. the issuance of 94,540 shares of common stock in January 2000;

. the issuance of 174,321 shares of common stock in connection with the
Get Software acquisition in February 2000; and

. the automatic conversion on a one-for-one basis of all outstanding
shares of preferred stock into common stock upon completion of this
offering.

. on a pro forma as adjusted basis to also give effect to the receipt of
the estimated net proceeds of $43.9 million from the sale of 3,250,000
shares of common stock in this offering at an assumed initial public
offering price of $15.00 per share after deducting the estimated
underwriting discount and estimated offering expenses.

<TABLE>
<CAPTION>
As of December 31, 1999
-------------------------------
Pro Pro Forma
Actual Forma As Adjusted
-------- -------- -----------
(in thousands, except share
and per share data)
<S> <C> <C> <C>
Short-term debt................................ $ 509 $ 509 $ 509
======== ======== ========
Long-term debt, less current portion........... $ 861 $ 861 $ 861
Stockholders equity:
Convertible preferred stock, $0.001 par
value; 8,854,828 shares authorized,
7,664,768 shares issued and outstanding,
actual; 2,500,000 shares authorized, no
shares issued and outstanding pro forma and
pro forma as adjusted....................... 8 -- --
Common stock, $0.001 par value; 16,145,172
shares authorized, 2,748,734 shares issued
and outstanding, actual; 50,000,000 shares
authorized, 11,507,362 shares issued and
outstanding, pro forma, and 14,757,362
shares issued and outstanding, pro forma as
adjusted.................................... 2 12 15
Additional paid-in capital..................... 56,809 68,761 112,696
Employee notes receivable...................... (5,283) (5,283) (5,283)
Unearned stock compensation.................... (3,740) (3,740) (3,740)
Accumulated deficit............................ (32,433) (33,757) (33,757)
-------- -------- --------
Total stockholders' equity................... 15,363 25,993 69,931
-------- -------- --------
Total capitalization....................... $ 16,224 $ 26,854 $ 70,792
======== ======== ========
</TABLE>

The common stock to be outstanding after the offering is based on the number
of shares outstanding as of December 31, 1999. This excludes the following
issuances which we may make pursuant to plans or arrangements entered into
prior to December 31, 1999:

. 1,021,641 shares of common stock issuable upon exercise of outstanding
stock options at a weighted average exercise price of $5.06 per share;
and

. 73,147 shares of common stock issuable upon conversion of preferred stock
issuable upon the exercise of outstanding warrants as of December 31,
1999 at a weighted average exercise price of $2.40 per share.

21
<PAGE>

In addition, this excludes the following issuances which we may make
pursuant to plans or arrangements entered into subsequent to December 31, 1999:

. 547,250 shares of common stock issuable upon exercise of outstanding
stock options at a weighted average exercise price of $10.63 per share;

. 3,750,000 shares of common stock available for grant under our 2000 Stock
Incentive Plan; and

. 450,000 shares of common stock reserved for issuance under our 2000
Employee Stock Purchase Plan.

Please read the capitalization table together with the sections of this
prospectus entitled "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and related notes appearing elsewhere in this prospectus.

22
<PAGE>

DILUTION

If you invest in our common stock your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock after this offering. Our pro forma net tangible book value at
December 31, 1999, was approximately $22.6 million, or $1.97 per share of
common stock. Pro forma net tangible book value per share represents our total
tangible assets less total liabilities, divided by the number of shares of
common stock outstanding at December 31, 1999 after giving effect to:

. the sale of shares of Series F preferred stock subsequent to December 31,
1999;

. the automatic conversion of all outstanding shares of preferred stock
into common stock on a one-for-one basis upon completion of this
offering; and

. the issuance of 268,861 shares of common stock.

After giving effect to the sale of 3,250,000 shares of our common stock, at
an assumed initial public offering price of $15.00 per share, and after
deducting the estimated, underwriting discount and estimated offering expenses,
our pro forma as adjusted net tangible book value at December 31, 1999 would
have been $66.6 million, or $4.51 per share. This represents an immediate
increase in net tangible book value of $2.54 per share to existing stockholders
and an immediate and substantial dilution of $10.49 per share to new investors
purchasing shares of common stock in this offering. The following table
illustrates this dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............... $15.00
Pro forma net tangible book value per share as of February
29, 2000................................................... $1.97
Increase per share attributable to new investors............ 2.54
-----
Pro forma net tangible book value per share after the
offering..................................................... 4.51
------
Dilution per share to new investors........................... $10.49
======
</TABLE>

Assuming the exercise in full of the underwriters' over-allotment option,
our pro forma as adjusted net tangible book value at December 31, 1999 would
have been approximately $4.76 per share, representing an immediate increase in
net tangible book value of $2.79 per share to our existing stockholders and an
immediate and substantial dilution in net tangible book value of $10.24 per
share to new investors.

The following tables summarize, on a pro forma basis as of December 31,
1999, the differences between the total consideration paid and the average
price per share paid by the existing stockholders and the new investors with
respect to the number of shares of common stock purchased from us based on an
assumed initial public offering price of $15.00 per share. The first table
assumes the underwriters' over-allotment option is not exercised and the second
table assumes that the underwriters' over-allotment option is exercised in
full.

<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 11,507,362 78.0% $41,740,000 46.1% $ 3.63
New investors.............. 3,250,000 22.0 48,750,000 53.9 15.00
---------- ----- ----------- -----
Total.................... 14,757,362 100.0% $90,490,000 100.0%
========== ===== =========== =====
</TABLE>

<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.... 11,507,362 76.0% $41,740,000 43.3% $ 3.63
New investors............ 3,250,000 21.4 48,750,000 50.6 15.00
Exercise of underwriters'
over-allotment option... 390,000 2.6 5,850,000 6.1 15.00
---------- ----- ----------- -----
Total.................. 15,147,362 100.0% $96,340,000 100.0%
========== ===== =========== =====
</TABLE>

23
<PAGE>

. 1,021,641 shares of common stock issuable upon exercise of outstanding
stock options at a weighted average exercise price of $5.06 per share;
and

. 73,147 shares of common stock issuable upon conversion of preferred stock
issuable upon the exercise of outstanding warrants at a weighted average
exercise price of $2.40 per share.

In addition, this excludes the following issuances which we may make
pursuant to plans or arrangements entered into subsequent to December 31, 1999:

. 547,250 shares of common stock issuable upon exercise of outstanding
stock options at a weighted average exercise price of $10.63 per share;

. 3,750,000 shares of common stock available for grant under our 2000 Stock
Incentive Plan; and

. 450,000 shares of common stock reserved for issuance under our 2000
Employee Stock Purchase Plan.

24
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with our
financial statements and related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
in this prospectus. The statement of operations data for each of the three
years ended December 31, 1997, 1998 and 1999 and the balance sheet data as of
December 31, 1998 and 1999 are derived from financial statements that
PricewaterhouseCoopers LLP, independent accountants, have audited and are
included elsewhere in this prospectus. The balance sheet data as of December
31, 1995, 1996 and 1997 and the statement of operations data for the period
from March 28, 1994 (inception) through December 31, 1995 and for the year
ended December 31, 1996 are derived from audited financial statements not
included in this prospectus. Historical results are not necessarily indicative
of the results to be expected in the future.

<TABLE>
<CAPTION>
Period From
March 28, 1994
(inception)
Through Year Ended December 31,
December 31, ------------------------------------
1995 1996 1997 1998 1999
-------------- ------- ------- ------- ---------
(in thousands, except share and per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenues.............. $ 19 $ 160 $ 2,349 $ 6,573 $ 12,749
Cost of net revenues...... 12 124 1,899 5,882 11,083
--------- ------- ------- ------- ---------
Gross profit.............. 7 36 450 691 1,666
Operating expenses:
Sales and marketing
(excluding stock based
compensation of $0, $0,
$0, $42 and $677)....... 16 541 1,685 3,802 7,574
Product development and
operations (excluding
stock based compensation
of $0, $0, $0, $89 and
$700)................... 17 681 1,305 3,216 5,946
General and
administrative
(excluding stock based
compensation of $0, $4,
$45, $58 and $3,122).... 7 390 1,049 1,432 2,902
Stock compensation
expense................. -- 4 45 189 4,499
Amortization of acquired
technology.............. -- -- -- -- 382
--------- ------- ------- ------- ---------
Total operating
expenses............... 40 1,616 4,084 8,639 21,303
--------- ------- ------- ------- ---------
Loss from operations...... (33) (1,580) (3,634) (7,948) (19,637)
Interest income........... -- 15 85 230 453
Interest expense.......... -- (72) (76) (60) (170)
Other loss................ -- -- -- (78) --
--------- ------- ------- ------- ---------
Net loss.................. (33) (1,637) (3,625) (7,856) (19,354)
Deemed preferred stock
dividend................. -- -- -- -- (3,840)
--------- ------- ------- ------- ---------
Net loss available to
common stockholders...... $ (33) $(1,637) $(3,625) $(7,856) $ (23,194)
========= ======= ======= ======= =========
Basic and diluted net loss
per share available to
common stockholders...... $ (33.00) $ (5.09) $ (5.66) $ (7.92) $ (15.96)
Shares used in per share
calculation.............. 1,000 321,495 639,908 991,526 1,453,631
Unaudited pro forma basic
and diluted net loss per
share.................... $ (2.64)
Shares used in pro forma
per share calculation.... 7,329,908
</TABLE>

<TABLE>
<CAPTION>
December 31,
-----------------------------------
1995 1996 1997 1998 1999
----- ------ ------ ------ -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.................. $ 1 $ 933 $2,773 $3,198 $14,435
Short-term investments..................... -- -- -- 2,100 2,200
Working capital (deficit).................. (48) 858 2,007 3,101 11,528
Total assets............................... 16 1,355 4,064 7,760 21,849
Long-term debt............................. -- 151 264 400 861
Total stockholders' equity (deficit)....... (33) 908 2,826 4,853 15,363
</TABLE>

25
<PAGE>

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

The following discussion of our financial condition and results of
operations should be read together with the financial statements and related
notes that are included elsewhere in this prospectus. Our actual results may
differ materially from those anticipated in these forward-looking statements as
a result of various factors, including those set forth under "Risk Factors" or
in other parts of this prospectus.

Overview

We use our PowerCommerce platform to market, sell and deliver software and
other digital goods online. We obtain digital goods from software publishers
who choose to outsource all or a portion of their online marketing, sales and
delivery needs. To date, we have focused on selling software, rather than other
digital goods. From our inception in March 1994 through the first half of 1996,
we devoted substantially all of our efforts to developing our electronic
packaging technology, and in particular, our proprietary SalesAgent technology
for encrypting and limiting use of software based on the payment option chosen;
building sales momentum; creating marketing programs; recruiting personnel; and
raising capital. In 1996, we also began selling software with advanced delivery
options, which include the sale of software products over the Internet in
secure download-and-buy and try-and-buy formats. In 1997, we introduced our
first generation of online stores for software vendors to display a limited
number of products. In the first quarter of 1998, we began offering online
stores with more flexible database driven or dynamic pricing and display of
images. In the third quarter of 1999, we introduced our PowerCommerce platform.
In the first quarter of 2000, we introduced the PowerCommerce e-Business
Center. The PowerCommerce e-Business Center is our name for Web-based stores
that we host and manage permitting corporate purchasers to buy and download
software licenses using purchase-orders, as well as providing them volume
licensing and custom pricing over the Internet. Because downloading software
licenses helps eliminate the need for physical shipments and makes it easier
for corporate personnel to obtain access to software almost immediately, at
almost any time, we believe the PowerCommerce e-Business Center will allow us
to address the needs of the large and rapidly growing business-to-business
software market.

We currently generate revenue primarily from sales of third-party software.
When we act as the principal in a transaction, the software publisher grants us
a license to distribute one or more of its software products. Under our
standard reseller license agreement, we are responsible for setting the price
of the software, processing the order, performing credit card authorization
procedures, delivering the software product and collecting the proceeds from
the transaction. We assume credit risk with respect to the end-user and we are
responsible for returns. We recognize the full sale amount as revenue upon the
electronic delivery of the software. We provide for estimated returns at the
time of delivery based upon historical data. Net revenues from sales of third
party software accounted for approximately 95% and 96% of our net revenues in
1998 and 1999, respectively. Electronic delivery accounted for 91% and 95% of
these revenues in 1998 and 1999, respectively. Although we are able to ship
physical software products, this form of delivery does not represent a
significant portion of our software sales. We expect utilization of electronic
delivery for third-party software sales will remain high and, perhaps, increase
with the proliferation of high-speed Internet access and the expanding base of
experienced Internet end-users, the decrease in distribution costs and the
shortening of software product cycles. When we act as the agent in a
transaction, our role is limited to processing information on behalf of the
software publisher. We provide the software publisher with our encrypted
technology, provide customer service and help functions and process returns.
Proceeds from the transactions are collected directly by the software
publisher. We recognize the processing fee received from services rendered as
revenue upon electronic delivery of the product.

For transactions in which our role is limited to providing processing
services and we are not responsible for collecting the proceeds from the sale,
we recognize the net processing fees as revenue upon delivery of the

26
<PAGE>

product. In addition, we generate revenue from one-time start-up fees related
to deploying stores and marketing fees. Net processing fees and deployment fees
accounted for approximately 5% and 4% of our net revenues in 1998 and 1999. We
have not generated any revenues to date from consulting fees.

We intend to generate revenue from our PowerCommerce e-Business Centers and
further intend to use our expertise in the marketing, sale and delivery of
digital goods online to pursue other digital content opportunities such as
music, documents, images and video. To date, however, we have derived no
significant revenue from any of these sources.

We expect that sales of software will continue to represent the majority of
our net revenues for the foreseeable future. We expect that revenues from these
sales will grow in absolute dollars, but will decrease as a percentage of net
revenues as deployment fees and consulting fees increase as a percentage of net
revenues. We expect that the latter fees will be generated by both business-to-
consumer customers, which to a limited extent has already begun occurring, and
business-to-business customers using our new PowerCommerce e-Business Center,
which was introduced in the first quarter of 2000 and has not yet generated any
revenues.

Historically, a significant portion of our revenues has been derived from
customers outside of the United States, and we expect this trend to continue.
International revenues accounted for approximately 40% of net revenues in the
year ended December 31, 1998 and approximately 39% of net revenues in the year
ended December 31, 1999. Our revenues are denominated in United States dollars.

During the year ended December 31, 1999 we generated 57% of our net revenues
from the sale of Macromedia software products. While we believe that the
percentage of our net revenues derived from the sale of Macromedia products may
decline, we expect these sales to continue to represent a significant
percentage of our net revenues for at least the next 12 months. Please be
advised that Macromedia is a public company and investors can review
Macromedia's financial data and other information in its public filings with
the Commission, including but not limited to its annual and quarterly reports
on Form 10-K and Form 10-Q. These filings can be found at www.sec.gov.
Macromedia is traded under the symbol "MACR" and its file number under the
Exchange Act of 1934 is 000-22688. The information contained in any filings by
Macromedia is not a part of this prospectus. We have no assurance that
Macromedia will continue to permit us to sell their software products.
Macromedia has been developing its own e-commerce capabilities relating to buy-
and-download software sales. In the fourth quarter of 1999, we created a buy-
and-download store for Macromedia. This store represented 10% of our total net
revenues in the year ended December 31, 1999. Macromedia has indicated that it
intends to bring the buy-and-download store in-house in the second quarter of
2000. As a result, we will lose future revenues that may have been generated
from this store. Additionally, we have no assurance that Macromedia will not
choose to bring all of its electronic distribution in-house at a later date and
that we will not lose 100% of Macromedia's business. However, Macromedia has
indicated to us that it currently intends to continue outsourcing to us other
online business, including try-and-buy points of sale. In this regard, we are
currently working with Macromedia to study the factors affecting end-user
purchase behavior at try-and-buy points of sale. In order to offset some of the
decrease in revenues that the loss of Macromedia's buy-and-download store will
represent, we intend to continue to attempt to expand any try-and-buy or other
business Macromedia permits us to keep. In addition, we intend to continue to
establish relationships with new and more varied vendors of software and other
digital goods in order to decrease our dependence on any one provider. During
the year ended December 31, 1999, we derived 16% of our net revenues from the
sale of Network ICE software products. As with Macromedia, we have no assurance
that Network ICE will continue to permit us to sell their software products.
Our contracts with Macromedia and Network ICE are terminable by either party
with little or no penalty on 60 days notice. If we were to stop selling
Macromedia or Network ICE products, there would be a material adverse effect on
our net revenues, operating results and financial position.

In May 1999, we acquired all of the capital stock of Client Server Designs,
a provider of systems integration and consulting services, in exchange for
150,000 shares of our common stock and the assumption of certain liabilities.
Client Server Designs was not generating material revenues prior to the
acquisition. Through this acquisition we acquired a proprietary software tool
designed to facilitate rapid application development,

27
<PAGE>

design and system enhancements. This acquisition may allow us to develop new
systems and integrate third-party technologies more quickly than prior to the
Client Server Designs acquisition.

In January 2000, we agreed to settle a dispute and issued a total of 94,540
shares of common stock. As a result of this settlement, we will record an
expense of approximately $1.3 million in the first quarter of 2000. In
addition, we sold 824,999 shares of Series F preferred stock at a price of
$10.00 per share. Because the offering price was lower than the deemed fair
market value of the common stock on the date of the transaction, generally
accepted accounting principles require us to record a preferred dividend of
approximately $3.3 million in the first quarter of 2000. We also granted
options to purchase 547,250 shares of common stock to employees and consultants
at a weighted average exercise price of $10.63 per share. In connection with
these grants, we will recognize stock compensation expense of $1.8 million over
the vesting periods of the related options. On February 18, 2000, we acquired
substantially all of the assets, including the intellectual property, of Get
Software.com. In connection with this asset acquisition, we issued 174,321
shares of our common stock, paid cash at closing of $496,330 and are obligated
to pay an additional $200,000 over calendar year 2000 if the acquired business
meets predetermined revenue goals.

Since inception, we have incurred significant losses. As of December 31,
1999, we have incurred cumulative losses of $32.4 million. We have a limited
operating history upon which investors may evaluate our business and prospects.
We intend to continue to expend significant financial and management resources
on the development of additional services, sales and marketing, improved
technology, expanded operations and improved financial systems. As a result, we
expect to incur additional losses and have continued negative cash flow from
operations for at least the next several years. Our revenues may not increase
or even continue at their current levels, and we may not achieve or maintain
profitability or generate cash from operations in future periods. Our prospects
must be considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stages of development, particularly
companies in new and rapidly evolving markets such as digital commerce. We may
not be successful in addressing these risks, and our failure to do so would
harm our business.

Results of Operations

The following table sets forth our statement of operations data for the
periods indicated and is expressed as a percentage of net revenues:

<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Statement of Operations
Data:
Net revenues.............. 100% 100% 100%
Cost of net revenues...... 81 89 87
------- ------- -------
Gross profit.............. 19 11 13
Operating expenses:
Sales and marketing...... 72 58 59
Product development and
operations.............. 55 49 47
General and
administrative.......... 45 22 23
Stock compensation
expense................. 2 3 35
Amortization of acquired
technology.............. -- -- 3
------- ------- -------
Total operating
expenses............... 174 132 167
------- ------- -------
Loss from operations...... (155) (121) (154)
Interest income........... 4 3 3
Interest expense.......... (3) (1) (1)
Other loss................ 0 (1) 0
------- ------- -------
Net loss.................. (154)% (120)% (152)%
======= ======= =======
</TABLE>

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<PAGE>

Years Ended December 31, 1997, 1998 and 1999

Net Revenues. Net revenues increased from $2.3 million to $6.6 million to
$12.7 million for the years ended December 31, 1997, 1998 and 1999,
respectively. Third-party software revenue increased from $2.0 million to $6.3
million to $12.2 million for the years ended December 31, 1997, 1998 and 1999,
respectively. Net processing fees and deployment fees increased from $360,000
to $321,000 to $554,000 for the years ended December 31, 1997, 1998 and 1999,
respectively. The increase was attributable primarily to growth in sales volume
with some of our existing customers, the increasing market acceptance of
digital delivery and growth in the number of our software publisher and online
retailer customers, particularly as the technology preceding our PowerCommerce
platform was improved during 1997 and 1998 and the PowerCommerce platform was
introduced in the third quarter of 1999. Two customers, Webtrends and Computer
Associates International, Inc., accounted for 37% of net revenues, two
customers, Egghead.com and Macromedia, accounted for 45% of net revenues and
two customers, Macromedia and Network ICE, accounted for 73% of net revenues
for the years ended December 31, 1997, 1998 and 1999, respectively. Macromedia
represented 5%, 34% and 57% of net revenues in the year ended December 31,
1997, 1998 and 1999, respectively. Network ICE became a customer during the
year ended December 31, 1999 and represented 16% of net revenues in that year.
No other customer who represented over 10% of our net revenues in either 1997
or 1998 continued to represent over 10% of our net revenues in 1999.

Cost of Net Revenues. Cost of net revenues consists primarily of the amounts
payable to the software publishers and online retailers for products sold to
the end-user. Cost of net revenues increased from $1.9 million to $5.9 million
to $11.1 million for the years ended December 31, 1997, 1998 and 1999,
respectively, reflecting our growth in sales. Our gross profit margin decreased
from 19% in 1997 to 11% in 1998 and increased to 13% in 1999. We have
contractual relationships with our software publishers which provide for the
purchase of software products at a discount to the software publishers'
established price. We typically have higher margins on software with lower
average selling prices and lower margins on higher cost software. In the last
half of 1997 and 1998, our sales mix was disproportionately weighted to higher
cost, lower margin software which has a negative impact on our margins. The
introduction of software products in 1999 with lower average selling prices
contributed to margin improvement.

Sales and Marketing. Sales and marketing expense consists primarily of
personnel and related expenses, advertising and promotional expenses, credit
card transaction fees, customer service costs and an allocation of our
facilities costs. Sales and marketing expense increased from $1.7 million to
$3.8 million to $7.6 million for the years ended December 31, 1997, 1998 and
1999, respectively. The increases from period to period were primarily due to
the expenses associated with the addition of sales and marketing personnel and
increased advertising and marketing expenditures. We expect that sales and
marketing expense will continue to increase in absolute dollars in the
foreseeable future compared to prior periods.

Product Development and Operations. Product development and operations
expense consists primarily of personnel and related expenses and consulting
associated with developing, enhancing and maintaining internal systems,
telecommunications infrastructure and an allocation of our facilities costs.
Product development and operations expense increased from $1.3 million to $3.2
million to $5.9 million for the years ended December 31, 1997, 1998 and 1999,
respectively. The increases from period to period were primarily due to
increased personnel and consultants required to enhance and maintain our
existing service offerings and also to develop new service offerings. We expect
that product development and operations expense will continue to increase in
absolute dollars in the foreseeable future compared to prior periods.

General and Administrative. General and administrative expense consists
primarily of compensation for personnel for general corporate functions,
including accounting, human resources, general management and fees for
professional and consulting services, as well as bad debt expense and an
allocation of our facilities costs. General and administrative expense
increased from $1.0 million to $1.4 million to $2.9 million for the years ended
December 31, 1997, 1998 and 1999, respectively. The increases from period to
period were primarily due to increases in the number of personnel and
consultants and increased use of professional

29
<PAGE>

services. We expect that these expenses will increase in absolute dollars in
the foreseeable future compared to prior periods as we continue to hire new
employees, incur additional professional expenses relating to the development
of our business and incur costs associated with increased infrastructure and
obligations as a public company.

Stock Compensation Expense. Stock compensation expense is mainly
attributable to the difference between the fair market value of our common
stock and the exercise price of options to purchase that common stock on the
dates of the grants, and is being recognized on an accelerated basis over the
vesting periods of the related options, usually four years. We recognized nil,
$189,000 and $2.2 million of total stock compensation expenses related to
amortization of unearned compensation expense for the years ended December 31,
1997, 1998 and 1999, respectively. Additional compensation expense of
$2.2 million for the year ended December 31, 1999 was recognized in connection
with severance agreements and the transition of our former Chief Executive
Officer to Chairman of the Board. We expect quarterly amortization related to
those options to be between $390,000 and $670,000 per quarter during 2000,
between $200,000 and $350,000 per quarter during 2001 and annual amortization
to be $520,000 during 2002 and $120,000 during 2003. These future compensation
charges would be reduced if any employee terminates employment prior to the
expiration of the employee's option vesting period.

Amortization of Acquired Technology. Amortization of acquired technology
expense relates to the technology that we purchased as a result of the Client
Server Designs acquisition in May 1999. The technology is being amortized on a
straight-line basis over the estimated period of benefit, which is two years.
We amortized $382,000 of acquired technology in the year ended December 1999.

Interest Income. Interest income consists of earnings on our cash, cash
equivalents and short-term investments. Interest income increased from $85,000
to $230,000 to $453,000 for the years ended December 31, 1997, 1998 and 1999,
respectively. The increase resulted from changes in average cash and cash
equivalent balances over the respective periods. The increase was attributable
to interest earned on higher average cash and cash equivalent balances
resulting from the private sales of preferred stock and interest earned on
stock notes receivable.

Interest Expense. Interest expense consists of expenses related to our
financing obligations, which include primarily borrowings under equipment loans
and capital lease obligations. Interest expense decreased from $76,000 for the
year ended December 31, 1997 to $60,000 for the year ended December 31, 1998
and increased to $170,000 for the year ended December 31, 1999. The interest
expense for 1997 was primarily due to higher average financing obligations
resulting from borrowings under equipment loans and capital leases. The
decrease in 1998 was primarily due to lower average balances on our borrowings
under our equipment loans. The increase in 1999 was primarily due to additional
borrowings under our equipment leases.

Other Loss. In 1998, we relocated to our current facility and abandoned
leasehold improvements related to the vacated premises. A $78,000 loss for the
remaining capitalized leasehold improvements was recognized for the year ended
December 31, 1998.

Income Taxes. We incurred losses for the years ended December 31, 1997, 1998
and 1999. Accordingly, there were no provisions for income taxes. As of
December 31, 1999 we had $28.0 million of federal and $14.7 million of state
net operating loss carryforwards available to offset future taxable income,
which will expire in varying amounts beginning in 2011 and 2002 for federal and
state, respectively.

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<PAGE>

Quarterly Results of Operations

The following table sets forth statement of operations data for the past
five quarters, including the quarter ended December 31, 1999. The information
for each of these quarters has been prepared on substantially the same basis as
the audited financial statements included elsewhere in this prospectus and, in
our opinion, includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results of operation for
these periods. Historical results are not necessarily indicative of the results
to be expected in the future, and results of the interim periods are not
necessarily indicative of our results of operations for the entire year.

<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------
December 31, March 31, June 30, September 30, December 31,
1998 1999 1999 1999 1999
------------ --------- -------- ------------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net revenues............ $ 1,726 $ 2,037 $ 2,408 $ 2,599 $ 5,705
Cost of net revenues... 1,577 1,773 2,020 2,299 4,991
------- ------- ------- ------- -------
Gross profit.......... 149 264 388 300 714
Operating expenses:
Sales and marketing.... 1,193 1,362 1,452 2,191 2,569
Product development and
operations............ 1,262 1,460 1,165 1,466 1,855
General and
administrative........ 434 546 617 925 814
Stock compensation
expense............... 119 288 825 738 2,648
Amortization of
acquired technology... -- -- 53 165 164
------- ------- ------- ------- -------
Total operating
expenses............. 3,008 3,656 4,112 5,485 8,050
------- ------- ------- ------- -------
Loss from operations.... (2,859) (3,392) (3,724) (5,185) (7,336)
Interest income......... 85 42 62 194 155
Interest expense........ (10) (31) (45) (59) (35)
------- ------- ------- ------- -------
Net loss................ $(2,784) $(3,381) $(3,707) $(5,050) $(7,216)
======= ======= ======= ======= =======
</TABLE>

Our quarterly and annual operating results will continue to fluctuate
significantly in the future due to a variety of factors, many of which are
outside our control. Additionally, as a result of our limited operating history
and the emerging nature of the online digital goods market in which we compete,
it is difficult for us to forecast our revenues or earnings accurately. Our
current and future expense levels are based largely on our investment plans and
estimates of future revenues and are, to a large extent, fixed. We may be
unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall. Any significant shortfall in revenues relative to our
planned expenditures would harm our business. Due to these factors, our
quarterly revenues and operating results are difficult to forecast. We believe
that period to period comparisons of our operating results may not be
meaningful and should not be relied upon as an indication of future
performance. In addition, it is likely that in one or more future quarters our
operating results will fall below the expectations of securities analysts,
should analysts cover our stock in the future. In either event, the trading
price of our common stock would likely fall.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through the
private placement of our preferred stock and equipment financings. As of
December 31, 1999, we had raised $41.6 million through the sale of our
preferred stock and had approximately $14.4 million of cash and cash
equivalents. In January 2000, we raised an additional $8.2 million through the
sale of our preferred stock.

Net cash used in operating activities in the years ended December 31, 1997,
1998 and 1999 was $2.9 million, $5.9 million and $10.9 million, respectively.
Net cash used in operating activities in each of

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<PAGE>

these periods was primarily a result of net losses, offset in part by increases
in accounts payable, accrued expenses and non-cash expenses.

Net cash used in investing activities in the years ended December 31, 1997,
1998 and 1999 was $979,000, $3.6 million and $2.6 million, respectively. Net
cash used in investing activities was primarily related to the acquisition of
property and equipment and the purchase of short term investments.

Net cash provided by financing activities in the years ended December 31,
1997, 1998 and 1999 was $5.7 million, $9.9 million and $24.7 million,
respectively. Net cash provided by financing activities was due primarily to
the sale of shares of our preferred stock. We also entered into a capital
equipment loan with Venture Lending & Leasing, Inc. of up to an aggregate of
$1.0 million, bearing interest at an effective rate of 14.5% per annum, of
which $398,000 was drawn down in 1997 and $58,000 remained outstanding as of
December 31, 1999. The loan is collateralized by all of our assets, excluding
our intellectual property. As of December 31, 1997 and 1998 we were in default
of the reporting covenants under this loan, for which waivers were obtained. We
are currently compliant with the covenants under this loan. Net cash in 1998
was also provided by proceeds from a note agreement in aggregate principal
amount of $492,000 for the purchase of software. This note accrues interest at
a rate of 13.6% per annum and is collateralized by the purchased software.
Borrowings are due in 12 quarterly installments of $49,525, with the remaining
balance due October 1, 2001. As of December 31, 1999, we maintained an
equipment lease line with Comdisco Ventures for up to an aggregate of $1.4
million. As of December 31, 1999, we had approximately $970,000 of outstanding
borrowings on this equipment lease line made in several separate installments
beginning in July 1999. Borrowings are due in 42 equal monthly installments
beginning on their respective draw-down dates and accrue interest at a rate of
8.3% per annum. Our equipment lease line has no material financial or non-
financial covenants.

We anticipate that we will continue to add computer hardware and software
resources, deploy additional commerce servers worldwide, expand our primary
office facility and hire additional personnel during the next 12 months. We may
also use cash to acquire or license technology, products or businesses, but
have no current commitments or agreements to do so. Investors should note,
however, that we may acquire technologies, products or businesses in order to
help grow our business and improve or supplement our technology and we expect
to evaluate potential candidates for these purposes whenever circumstances
warrant. In addition, we expect to continue to experience significant increases
in our operating expenses for the foreseeable future and believe that the
funding of our operating expenses will be a significant use of our cash
resources.

We believe that our current cash and cash equivalents and equipment lease
financing will be sufficient to fund our operations for the next 12 months and,
thus, we are not dependent on the proceeds of this offering. Without the
proceeds from the offering, however, we believe it would likely be necessary to
reduce currently anticipated spending, particularly with respect to anticipated
growth. Thereafter, we believe that the net proceeds of the offering will be
sufficient to fund our operations for an additional 12 months. If, however, our
operations expand more quickly than we anticipate, or if that expansion were to
cost significantly more than we anticipate, because of increased personnel or
facilities costs for example, we would consider raising additional funds
through a follow-on offering. The sale of additional equity or convertible debt
securities could result in additional dilution to our stockholders. Financing
may not be available in amounts or on terms acceptable to us, if at all.

Market Risk Disclosure

At December 31, 1999, we had an investment portfolio of money market funds,
commercial securities and United States government bonds, including those
classified as short-term investments, of $2.2 million. These instruments, like
all fixed income instruments, are subject to interest rate risk. Our fixed
income portfolio will fall in value if interest rates increase. However, if
market interest rates were to increase immediately and uniformly by as much as
10% from levels as of December 31, 1999, the decline of the fair value of the
fixed income portfolio would not be material.

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<PAGE>

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 requires that all
derivative instruments be recorded on the balance sheet at their fair market
value and that the corresponding derivative gains or losses be either reported
in the statement of operations or as a deferred item, depending on the type of
hedge relationship that exists with respect to such derivatives. In July 1999,
the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 137, "Accounting for Derivative Instruments and
Hedging Activities--Deferral of the effective date of FASB Statement No. 133"
("SFAS No. 137"). SFAS No. 137 deferred the effective date until the quarter
ending June 30, 2000. We will adopt SFAS No. 133 in the quarter ending June 30,
2000 and do not expect the adoption of this pronouncement to have a material
impact on our financial statements.

In December 1999, the Securities and Exchange Commission, or SEC, issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition," which
provides guidance on the recognition, presentation, and disclosure of revenue
in financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosures
related to revenue recognition policies. Management believes that the impact of
SAB 101 would have no material effect on the financial position or results of
operations of the Company. In addition, we believe that SAB 101 will not have
an impact on whether we record revenues gross or net.

Year 2000 Compliance

Prior to January 1, 2000, there was a great deal of concern regarding the
ability of computers to adequately recognize 21st century dates from 20th
century dates due to the two-digit date fields used by many systems. Most
reports to date, however, are that computer systems are functioning normally
and the compliance and remediation work accomplished leading up to 2000 was
effective to prevent any problems. Computer experts have warned that there may
still be residual consequences of the change in centuries. Any difficulties
could result in a decrease in our sales, an increase in allocation of resources
to address Year 2000 problems of our customers without additional revenue
commensurate with such dedication of resources, or an increase in litigation
costs relating to losses suffered by our customers due to such Year 2000
problems.

Because our internal systems utilize third party hardware and software,
residual Year 2000 problems affecting third parties' hardware and software
could cause our internal systems to fail. If residual Year 2000 problems cause
the failure of any of the technology, software or systems necessary to use our
products or operate our business, we could lose customers, suffer significant
disruptions in our business, lose revenues and incur substantial liabilities
and expenses. We could also become involved in costly litigation resulting from
Year 2000 problems. This could harm our business, financial condition and
result of operations.

33
<PAGE>

BUSINESS

Using our PowerCommerce platform, we sell digital products to end-users
through our customers' Web sites, provide reporting and process credit card and
purchase order transactions. We also build, host and manage the e-commerce
portion of our customers' Web sites, reflecting their brand identity and
providing marketing, merchandising and digital distribution capabilities. We
believe our expertise in systems integration will allow us to coordinate the e-
commerce capabilities we provide for our customers with their internal
information systems, such as accounting and inventory management. To date, we
have focused on selling software, rather than other digital goods.

We have used our expertise in business-to-consumer software to move into the
business-to-business software market, announcing the PowerCommerce e-Business
Center in the first quarter of 2000. The PowerCommerce e-Business Center is our
name for Web-based stores that we build, host and manage, permitting corporate
purchasers to buy and download software licenses using purchase orders, as well
as providing volume licensing and custom pricing over the Internet. Because
downloading software licenses helps eliminate the need for physical shipments
and makes it possible for corporate personnel to obtain access to software
almost immediately, at almost any time of the day or night, we believe the
PowerCommerce e-Business Center will allow us to address the needs of the large
and rapidly growing business-to-business software market. To date, we have not
generated any revenue from our PowerCommerce e-Business center.

Industry Background

E-Commerce and the Online Sale and Delivery of Digital Goods

With the rapid growth of the Internet, vendors and consumers have
increasingly sold and bought goods and services online. IDC forecasts that the
number of online buyers worldwide will expand from approximately 30.8 million
in 1998 to approximately 182.6 million in 2003. IDC also estimates that the
total e-commerce market will increase from approximately $50.4 billion in 1998
to over $1.3 trillion by 2003. The Internet can provide many compelling
benefits as a medium for commerce, including:

. almost instantaneous seller and buyer interaction on a global scale, 24
hours a day, seven days a week;

. reduced investment in physical retail locations;

. reduced sales and marketing costs;

. increased ability to sell directly to consumers; and

. cost-effective one-to-one marketing and relationships with end-users.

The Internet is also well-suited for the sale and delivery of goods such as
software, business-to-business software licenses, music, documents, images and
video that can be delivered in digital form. Benefits to both buyers and
sellers of digital goods extend beyond those associated with the online sales
of physical goods such as toys, groceries and flowers. Some of these additional
benefits include:

. almost immediate delivery and end-user gratification;

. reduction of physical inventory, physical fulfillment and related costs;

34
<PAGE>

. cost-effective rental and subscription-based business models for digital
goods; and

. ability to shorten distribution times associated with new products and
enhancements, thereby reducing time-to-market.

The Challenge of Implementing e-Commerce for Digital Goods

E-commerce is more complex to implement for digital goods than physical
goods, as both the sale and delivery of digital goods take place online. In
addition to the basic building blocks necessary for traditional e-commerce,
digital e-commerce entails a number of requirements, including:

Electronic Packaging. For vendors to take full advantage of digital e-
commerce, it is necessary to properly electronically package digital content to
prevent piracy and provide flexible purchasing options. This result is achieved
by attaching encryption algorithms to digital content, which requires highly-
specialized technologies and expertise. In addition to protecting digital
content, electronic packaging enables the separation of the content from the
authorization to use it, enabling a variety of purchase options, such as
download-and-buy, try-and-buy, rental, pay-per-use and subscription.

Digital Delivery. Digital e-commerce requires the flexible management of
digital goods distribution to provide secure, automated and reliable
fulfillment of licenses or products and to track sales and customer data during
the sales process. In addition, download management capabilities should allow
resumption of a digital download after an interruption in the download process
as well as re-installation of software for licensed users.

Real-time Fraud Detection. The electronic delivery of digital goods requires
that transaction processing, credit card authorization and fraud detection be
conducted in the seconds between the time of customer payment and the
commencement of download of the digital good. By contrast, fraud prevention and
payment processing for physical goods can be conducted in the period of time
between online order receipt and product shipment. We refer to this almost
instantaneous, concurrent processing as being done in "real-time."

Systems with the technological sophistication to perform all of these
functions have only recently been fully enabled for use on the Internet. Thus,
although the sale of digital goods online contributed to a small portion of the
$50 billion e-commerce market in 1998, advances in electronic delivery
techniques for digital goods are expected to drive the rapid adoption of e-
commerce for digital goods. The worldwide packaged software market has emerged
as one of the first digital goods e-commerce markets to experience widespread
adoption of digital delivery. IDC estimates that the market for the online sale
of software reached $1.6 billion in 1998 and will grow to approximately $32.9
billion by 2003. IDC also estimates that the market for the sale of electronic
licenses for corporate software reached $20.1 billion in 1998 and will grow to
over $174.5 billion by 2003.

The Traditional Software Markets

The traditional software markets, which include the sale of both retail and
corporate software products, are large and continue to exhibit strong growth.
IDC estimates that the worldwide packaged software market will grow from
approximately $135.1 billion in 1998 to approximately $270.5 billion by 2003.
However, despite this strong growth, traditional sales channels have inherent
limitations and disadvantages for software publishers, retailers and end-users.

Retail Software. Traditional retail software sales channels include regional
and national superstore retail chains, catalog companies and small single
location stores. The limitations and disadvantages of traditional sales
channels include:

. length of time required to distribute physical products to end-users;

. intense competition for limited retail shelf space;

. costs associated with the return of products;

. investments in inventory and physical distribution infrastructure;

. packaging, sales and distribution expenses;

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<PAGE>

. limited flexibility to rapidly implement pricing, availability and
product changes; and

. low end-user registration rates and limited ability to gather end-user
information.

Corporate Software. The purchase, sale and delivery of business-to-business
software licenses is currently a multi-step process which can span several
days, if not weeks. This process entails administrative and distribution costs
and can result in reduced customer satisfaction from long lead times and lost
revenue potential over the product life-cycle. Moreover, physical delivery of
software product fixes and product upgrades add to the potential lag-time and
expense.

Opportunity for Outsourcing the Marketing, Sale and Delivery of Software and
Other Digital Goods

We believe that there are significant opportunities for outsourcing the
marketing, sale and delivery of software and other digital goods such as music,
documents, images and video. E-commerce capabilities require substantial
technical expertise and involve substantial investment in e-commerce server
software and Web and online store development tools. According to the Gartner
Group, the average cost of developing an e-commerce site from scratch is
approximately $1 million and can be substantially higher. The average site
takes five months to complete and may take as long as a year, with labor
constituting 79% of the budget. In addition to these up-front costs, there are
also ongoing costs associated with the operation and maintenance of e-commerce
sites, including credit card transaction fees and fraud risks, site hosting
costs and personnel costs. Moreover, there are opportunity costs associated
with revenues lost during the time to develop and establish e-commerce
capabilities. As a result, vendors must choose to buy or internally develop and
manage their own e-commerce systems at great cost, or look to third-party
providers with core competencies in digital commerce, who have already made the
required sizeable investment in infrastructure, personnel and maintenance
costs.

The graphic depicts an oval with eleven spokes pointing outward. Enclosed in
the oval is the ReleaseNow.com logo and the text: "your e-commerce department."
At the end of each spoke is text and an icon illustrating the corresponding
text. Each spoke represents a service that ReleaseNow.com offers. The services
shown include: Bank Clearance, Goods Delivery (both Digital and Physical),
Upgrades, e-Merchandising, 24x7 Customer Support, Storefront Experience, e-
Marketing, Fraud Control, Returns Processing, Digital Packaging and Transaction
Processing.

Building a complete e-commerce system requires the
integration of multiple capabilities as depicted in
the illustration above.

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<PAGE>

More importantly, vendors of digital goods increasingly need to be able to
effectively market and merchandise products and services in a way that
differentiates their product offerings and attracts new end-users. Successful
online merchandising requires an engaging end-user interface to simplify and
improve the purchasing experience as well as sophisticated marketing
techniques. In addition, the sale and delivery of digital goods is complex and
requires special electronic packaging, encryption and licensing capabilities
with up-front and ongoing investments in secure, reliable and scalable systems.
Accordingly, we believe successful outsourcing of digital commerce must address
the following needs:

Digital Delivery Capabilities

. Security of Digital Downloads. E-commerce systems should be secure to
prevent unauthorized use and reproduction of digital goods.

. Download Management. Download management must provide a reliable and
easy-to-use download process. These functions should include customer
tracking applications to allow the reinstallation of purchased software
on demand.

E-Merchandising Capabilities

. Flexible Purchasing Options. Purchasing options should support multiple
business models such as online business-to-business software licensing,
download-and-buy, try-and-buy, rental, subscription and pay-per-use.

. Sophisticated e-Commerce Marketing Techniques. To effectively compete
online, vendors must stay current with evolving and sophisticated e-
commerce marketing techniques which establish direct end-user
relationships. These e-merchandising techniques may include tracking end-
user preferences and cross-selling and up-selling, as well as coupons,
discounts and gift certificates.

. Quality Product Presentation. Online display of products should be both
informative and attractive. This presentation requires high-quality
product imaging capabilities and expertise in the development of
editorial content for product descriptions and reviews.

E-Commerce Functions

. Established e-Commerce Transaction Processing and Infrastructure. E-
commerce systems must address costly logistic requirements for e-commerce
presence, including dedicated high speed Internet access, transaction
support infrastructure, bank clearing, fraud screening, encryption and
security. These systems should also ensure compliance with tax and export
regulations and territorial distribution agreements and track
transactions through an electronic audit trail.

Our Solution

We provide outsourced e-commerce capabilities to vendors of software and
other digital goods. We provide the basic building blocks of traditional e-
commerce, including storefront creation, transaction processing, fraud control
and end-user customer support, as well as functions specific to the e-commerce
of digital goods, such as electronic packaging, digital delivery for order
fulfillment and real-time fraud detection. Using our PowerCommerce platform, we
sell digital products, provide reporting and process credit card and purchase
order transactions. We also build, host and manage e-commerce sites that
reflect our customers' brand identity and provide marketing, merchandising and
digital distribution capabilities. We believe our solution to the digital
commerce challenge provides the following benefits to our customers:

Outsourced e-Commerce for Digital Goods. Our PowerCommerce platform provides
outsourced e-commerce capabilities for selling digital goods online. Our
technology provides all the necessary components for the marketing, transaction
processing, systems integration, packaging and distribution of digital goods.
By

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outsourcing with us, our customers can avoid the complexities involved with
managing an e-commerce system and provide secure and reliable downloads. As a
result, our customers can focus on their core competencies, including product
development, brand recognition and attracting end-users to their Web sites.

Intuitive Purchasing Experience. We believe that we provide end-users with
an intuitive online shopping and purchasing experience. We have designed our
PowerCommerce stores to help end-users as they search for, evaluate, purchase
and download digital goods. Features of our PowerCommerce stores include
graphical product displays, detailed product descriptions, a prominent shopping
cart and an easily managed download process. We believe these features make the
purchasing experience user friendly and help drive product sales and build end-
user loyalty.

Web-based Marketing Programs. We believe we are able to increase sales by
providing creative online marketing programs. For example, we design product
and promotional campaigns and provide access to a range of online marketing
services. We also offer multiple purchasing options such as online business-to-
business software licensing, download-and-buy, try-and-buy, rental,
subscription and pay-per-use. We believe the additional online marketing
services we provide, such as digital coupons, discounts and gift certificates,
create incentives for end-users to buy our digital goods. We believe our Web-
based marketing capabilities efficiently build direct relationships with end-
users.

Rapid and Cost-Effective Development of Customized e-Commerce
Sites. According to the Gartner Group, an e-commerce site built in-house costs
on average $1 million and takes an average of five months to complete. Our
PowerCommerce platform allows us to develop e-commerce sites that can be
customized to our customers' specific needs, at a lower cost and faster rate
than the Gartner Group estimates. We are able to develop a customized e-
commerce site in less than a month with minimal up-front investment.

Our Strategy

Our objective is to be the outsourced e-commerce solutions provider of
choice to meet the challenges associated with the marketing, sale and delivery
of digital goods online. We seek to achieve this objective through the
following key elements of our strategy:

Leverage Our Expertise in Digital Goods. Our current focus on the digital
sale and delivery of software provides us with expertise to address the unique
and complex requirements of digital goods delivery. We offer e-commerce
capabilities for all aspects of the online sale and delivery of digital goods.
This specialization enables us to provide solutions for the most difficult
aspects of e-commerce such as electronic packaging and delivery. We believe
this specialization brings valuable expertise to our customers. We have used
our expertise in business-to-consumer software to move into the business-to-
business software market, announcing our new PowerCommerce e-Business Center
capability in the first quarter of 2000. In addition, we intend to pursue other
digital content opportunities such as music, documents, images and video.

Enhance the End-User Experience. We are committed to improving the end-user
online shopping and purchasing experience in order to promote greater online
sales for our customers. For our customers' online stores, we develop and
streamline the presentation, selection, purchase and delivery of goods. Our
modular interface can quickly customize an end-user environment to meet a
customer's needs for the display of a few or many products, digital or physical
delivery and a variety of selling options. We intend to continually improve the
end-user experience by providing new capabilities such as better navigation and
search functionality, enhanced content and using the Internet connection to
provide text and voice access to customer support representatives.

Extend Technology Leadership. We invest in technology in order to deliver a
set of outsourced e-commerce services to our customers. Our PowerCommerce
platform is flexible and allows us to integrate new tools and technologies and
adapt to new trends and requirements of online shoppers. We intend to add to
our suite of electronic packaging and delivery options to solidify our focus on
digital commerce. In addition to

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in-house development of technical capabilities, we actively monitor
technological advances in our industry. We
work with third parties and plan to pursue acquisitions in order to quickly add
new technologies and capabilities. We believe this plan for adoption and
development of new technologies will allow us to attract new customers and
penetrate new markets.

Establish Relationships to Extend Services. We are establishing
relationships with a variety of technology and service companies, including
developers of e-commerce, Internet and digital delivery technologies, providers
of complementary services, producers of enterprise software systems, systems
integrators, manufacturers of computer hardware, distributors and online
retailers. In addition, we can beneficially co-exist with traditional sales
channels by providing complementary services which leverage their distribution
capabilities with our expertise in e-commerce infrastructure. Our experienced
management team has strong ties to a variety of industries. Through these
industry connections, we intend to continue developing relationships with
complementary businesses with the following goals:

. securing new technologies and capabilities in order to extend our service
offerings;

. providing enhanced distribution through indirect channels;

. enhancing integration with customers' in-house services and applications;

. extending our geographic and market penetration; and

. providing the means to move into other markets.

Integrate with Customers' In-House Operations. We provide a flexible e-
commerce environment which allows our customers to monitor, manage and control
their business-critical content. We strive to continually improve the frequency
and depth of our customer reports, which contain sales and end-user
information. In addition, our systems integration consulting capabilities will
allow integration from our PowerCommerce platform to our customers' internal
accounting, marketing or inventory systems. We intend to continue providing our
customers with more advanced integration and control of their e-commerce
capabilities.

The PowerCommerce Platform

Our PowerCommerce platform serves as an infrastructure for the marketing,
sale and delivery of digital goods over the Internet. Using this proprietary
technology, we build, host and manage the e-commerce portion of our customers'
Web sites. The PowerCommerce platform includes:

. a sophisticated database for tracking products, pricing, customers and
transactions;

. an electronic shopping cart;

. electronic and physical fulfillment capabilities;

. shipping and tax calculation;

. credit card processing;

. order security through Secure Socket Layer, a standard protocol for
encrypted communications on the Internet;

. auto-confirmation receipts;

. capability to assign and report on serial numbers for each transaction;
and

. end-user customer service related to sale and delivery.

The PowerCommerce platform serves as a foundation for a range of e-commerce
stores and services, from basic to sophisticated. We call our entry-level
offerings "PowerCommerce Instant Stores." Our more powerful stores are called
"PowerCommerce Plus Stores." Our stores supporting purchase orders and
electronic license delivery for corporate purchasers are called the
"PowerCommerce e-Business Centers." We support each of these

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different types of stores with customized marketing programs to complement our
customers' own marketing efforts. We call these services our "e-Marketing
Services." A detailed description of each of these offerings follows.

PowerCommerce Instant Stores

PowerCommerce Instant Stores provide customers with a rapid e-commerce
presence, enabling a fully developed e-commerce site, usually within five days.
The PowerCommerce Instant Stores include e-commerce Web-site design, order-
processing capabilities, credit card processing capabilities, fraud-screening
and digital and/or physical product fulfillment, as well as tracking
capabilities for sales data and customer service for purchasers. In other
words, we provide the systems and services a vendor would otherwise need to
develop in-house to fully enable the sale of a digital product over the
Internet. We charge a nominal fee to build a store and we remit to software
publishers a percentage of revenues generated through the sale of software.
PowerCommerce Instant Stores include:

. e-Button is a graphical link on a customer's site that leads an end-user
to a Web-based order form. We process the order for digital or physical
distribution. The e-Button is used for the sale of a single product.

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. e-Store is a store that is specifically designed to reflect our
customers' brand identity and enables the display of up to 20 products.
We build, host and manage the store and conduct the sale for digital or
physical distribution. An example of an e-Store focusing on software for
handheld devices for one of our top ten customers by revenue in the
fourth quarter of 1999 follows.

A picture of a computer screen that displays a PowerCommerce Store designed by
ReleaseNow.com. The top of the screen displays the Advanced Recognition
Technologies logo. Below the logo are links to specific areas of the store and
a graphic that shows the customer how many products are in the shopping cart.
The screen displays two products as well as short descriptions and pricing
information for each.

We built, host and manage an online store for
Advanced Recognition Technology, known as ART,
providing e-commerce capabilities from online
store design and creation to online delivery
capabilities. The Web-based store enables end-
users not only to order products online, but also
to download products directly to their desktops,
eliminating the need to wait for a physical
shipment.

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PowerCommerce Plus Stores

PowerCommerce Plus Stores build upon the PowerCommerce Instant Stores with
additional capabilities for the marketing, sale and delivery of digital goods.
PowerCommerce Plus Stores are for customers who want the flexibility to display
a large number of products. We believe these stores can display up to 10,000
different products. In addition, the capabilities of the PowerCommerce Plus
Stores include:

. definable search categories and subcategories which can be readily
revised;

. advanced search capabilities that provide multiple search options,
including search by keywords and titles, to find products easily;

. coupons and gift certificates for flexible, one-to-one marketing to
support sales promotions;

. advanced reporting to allow our customers to quickly measure responses to
campaigns and promotions; and

. cross-selling and up-selling at point of purchase to enable our customers
to offer enhanced or complementary products to end-users.

An example of a PowerCommerce Plus Store, which was the first we launched
and was for one of our top ten customers by revenue in the fourth quarter of
1999 follows.

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A picture of a computer screen showing a PowerCommerce Plus Store created for
NewSoft. Along the left side of the graphic are internet links to other areas
of the store including a shopping cart, categories of software, solution
centers within the store and resources available to the customer. The top of
the main screen shows browser fields that enable customers to search the site
using various parameters. Below the search fields are pictures and
descriptions of five featured products, including a special of the month.

We created and host a PowerCommerce Plus Store for NewSoft
America, Inc., a publisher of multimedia software, including the
Presto! product line of document imaging, photo/video editing and
optical character recognition, or OCR, software, as well as OCR
development toolkits.

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PowerCommerce e-Business Center

The PowerCommerce e-Business Center, a Web-based store supporting purchase
order based transactions and electronic license delivery, is for business-to-
business software sales requirements. The PowerCommerce e-Business Center
allows corporate purchasers to download software applications and software
licenses, reducing the need for physical shipments. The PowerCommerce e-
Business Center provides key e-commerce functionality such as intuitive
navigation, product catalogs, transaction processing, order tracking and
customer service. It integrates with a software publisher's Web site to
provide a seamless e-commerce experience customized to the needs of corporate
customers. For example, a publisher can offer a storefront that welcomes
business software purchasers by name and displays their unique pricing and
account history.

e-Marketing Services

e-Marketing Services support our PowerCommerce Stores with customized
marketing programs such as:

. e-Campaign provides complete e-mail campaign management services,
including customized e-mail campaigns to promote our customers' brand
identities, campaign administration that includes tracking e-mail
responses and sales and use of a dedicated high capacity broadband e-mail
server. We use e-mail lists supplied by customers and/or third party list
providers. The third-party lists are compiled on an "opt-in" basis,
meaning that the addressees have given explicit permission to receive e-
mail promotions. An example of an e-Campaign, which was one of our first
and was for one of our top ten customers by revenue in the fourth quarter
of 1999, follows.

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The graphic depicts a computer screen shot of an e-mail message typical of an
e-Campaign for Verity, Inc. The top of the screen shows the Verity logo as well
as a slogan, "Connecting people with information." Below the logo is a picture
of the box for KeyView Pro, the product promoted in the e-mail. The text is a
letter addressed to a current owner of KeyView Pro advising her of the
availability of an upgrade at a special price.
We provide e-marketing services to Verity, Inc. Using our
e-Campaign, Verity communicates with its KeyView Pro installed base
through personalized e-mail messages that contain interactive call-
to-action buttons. For example, Verity uses e-Campaign to alert
KeyView Pro users about software upgrades. A call-to-action button
connects the users directly to the KeyView Pro online store, hosted
by us, enabling users to instantly purchase and download the upgrade
over the Internet.

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. e-Packaging is the process of preparing digital goods for download or
delivery. e-Packaging produces secure products with flexible purchasing
options, including the ability to try or rent a product before buying.
Our customers can offer these same options for digital goods delivered
over the Internet or on CDs or DVDs. An example of our e-Packaging
capabilities, implemented for one of Macromedia's products, follows.

The graphic depicts a computer screen shot for Macromedia which gives the user
the option of buying the product or trying before the user buys. The top of the
screen shows the Macromedia Flash 4 logo. Below the logo is a box with text
describing Flash 4.

Macromedia uses our e-Packaging technology to
offer 30-day trials for some of their products,
including Flash.

. e-Store On Disk gives vendors the option to deliver a complete or partial
Web-based store containing locked versions of their software on a CD or
DVD. This option allows the distribution of large amounts of content
directly to the end-user's desktop, offering an alternative to digital
downloads. The end-user is automatically connected to the online version
of the store to complete the purchase transaction and receive a key or
unlock code.

. Five Free Days is designed to launch new software products. It enables
end-users to try a new software title for five days free of charge, sends
out a series of e-mails to encourage purchases, includes a publishers's
promotional e-coupon discount, gathers market data and generates new
leads through a tell-a-friend option. The tell-a-friend option allows end
users to send e-mail messages with a link to the trial software.

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. The Updater is used to launch an upgrade campaign for existing software
products over the Internet. An introductory e-mail is sent to the current
users of a software product describing the upgrade and providing an
optional e-coupon and a direct link to a specially created store that
enables purchase and download of the upgrade. A second e-mail is
automatically sent out a week later to those who have not purchased the
product, reminding them of the upgrade and the promotional offer. An
example of an upgrade campaign which was used by one of our top ten
customers by revenue in the fourth quarter of 1999 follows.

A picture of a computer screen showing a web shot from the On
The Go web site. The bottom left of the screen shows the On
The Go logo, the left side contains a picture of their
packaged product, ExpensAble and the right side contains a
description of the ExpensAble product. The bottom of the
picture shows a link to the web page where the ExpensAble
product may be purchased for a discount.

We built, host and manage an online store for On The Go
Software that enables its installed base of desktop product
users to purchase and download versions of its software
products for hand-held mobile devices. On The Go Software
recently changed its name to Managemark, Inc.

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. Boxed Delivery provides our customers the option for outsourced physical
fulfillment. We have an integrated Web connection to Bindco Corporation,
a physical fulfillment warehouse, that allows us to electronically
connect to Bindco's in-house computer to advise Bindco of an order at the
time it is made. Bindco then fills the order for us.

. Consulting/Integration Services provide our customers with systems
integration and engineering services to help them integrate their stores
with their in-house systems.

Operations

We believe our efficient and technologically-advanced operational
capabilities provide advantages to our customers, as well as to their end-
users, including:

Electronic Packaging and Distribution Services. We are experienced in
packaging, tracking and delivering digital products from online stores or on
CDs or DVDs. Our production department packages digital products rapidly in
multiple formats, including compressed or "zipped" files, as well as versions
for download-and-buy, try-and-buy, rental, subscription or pay-per-use. In
addition, although over 91% of our net revenues in the year ended December 31,
1999 were made using digital delivery over the Internet, we are also able to
perform physical fulfillment in two ways. First, we contract with Bindco and
second, we can contact the vendor for direct shipment.

Design and Merchandising Services. We provide content design, merchandising
services and product and promotional campaigns. We maintain a staff of Web
designers and content editors who design stores and develop the product
descriptions and images for display.

Secure Datacenters. We host all PowerCommerce data operations with a co-
location service provider, AboveNet Communications, Inc., that has direct
access to the Internet backbone and high-speed connectivity to Europe and
Japan. AboveNet provides fully redundant power, networking support and physical
security, and can provide us with additional bandwidth on demand. The facility
is rated to withstand an 8.0 earthquake and is directly connected with
automatic failover to a second facility on the East Coast, where we intend to
locate a second, redundant PowerCommerce system. PowerCommerce uses Sun Netras
and a clustered group of Sun Enterprise servers running an Oracle database.

In addition, in order to reduce downtime, our system is designed to minimize
single points of failure. Multiple redundant fiberchannel RAID 0+1 disk arrays
house the database. Load-balancing routers provide redundant routing of the
network. All servers are automatically backed up using a dedicated system, and
backup data is stored in facilities off-site. Our PowerCommerce platform has
interfaces to multiple bank payment networks for credit card processing, which
provides redundancy and flexibility. We have also integrated Web site
monitoring in each of our servers with automated paging capabilities. Further,
we have implemented an escalation policy to notify operations staff, management
and customers of store operational issues.

Our Technology

Our e-commerce infrastructure is based on three main suites of technologies:
our proprietary PowerCommerce platform, which is used to implement online
stores; our complementary suite of electronic packaging and delivery
technologies, which provide advanced purchase and security capabilities; and
our proprietary integrated development and operations tools, which we believe
will allow us to efficiently and securely manage thousands of online stores. In
addition, supporting our entire technology infrastructure are advanced security
measures. These technologies are described below.

Online Store Technology. We developed our PowerCommerce platform
specifically to support an outsourced e-commerce business model for our
customers. We designed PowerCommerce to build and maintain thousands of stores
hosting hundreds of thousands of products in aggregate, while offering advanced
merchandising capabilities. We can efficiently create custom stores for our
customers, including not only the typical custom graphics and text, but also
customized layout, store features and site navigation. Moreover, PowerCommerce
enables our design and merchandising team to implement online store
customizations directly with only limited engineering oversight. We believe
these capabilities represent a competitive advantage.

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PowerCommerce's proprietary "Micro-Module" architecture enables us to add
and integrate new features without disrupting existing functionality, even
while the system is running. PowerCommerce enables us to implement our strategy
of incrementally integrating new best of breed technologies, developed in-house
or obtained from third parties, thereby reducing the number of time-consuming,
and often error-prone major new version releases. This rapid integration can
mean more nimble response to market conditions.

We use industry standard technologies including a Sun Unix operating system,
an Oracle database and a Netscape Web server. We have also selected our
development environments to optimize different capabilities and functions,
including Perl for rapid development, integration and reliability, Java for
multi-threading capabilities and database support and C/C ++ where we consider
speed to be critical. PowerCommerce has been specifically designed to be
scalable by adding hardware to increase capacity, generally without the need
for software changes.

Electronic Packaging Technologies. We have substantial experience in
electronically packaging titles as a service. We can provide customers with
production services to electronically package titles and deployment services to
put electronically packaged titles in online stores or on physical media such
as CDs, DVDs or PC hard drives. Our proprietary SalesAgent technology uses
encryption technologies to ensure protection of the software, including RSA
Security, Inc. and triple DES, as well as an evolving suite of proprietary
piracy-prevention technologies. We can also customize our electronic packaging
technology when required. Our broad offering allows us to quickly adapt to new
requirements or custom needs and facilitates rapid time to market.

Advanced Software Development and Operations Tools. We use our proprietary
Rapid Application Development environment to build the integrated, in-house
tools we use to run our business and run our PowerCommerce system. These
software tools are capable of automatically generating complete software
applications from industry-standard, object-oriented models by assembling pre-
built software components. Our tools allow for creating, changing and
maintaining applications many times faster than traditional hand coding.

In addition, these proprietary software tools play a key role in our systems
integration services. We are able to provide integration into our clients'
accounting, inventory or marketing systems to give them access, control and use
of their own transactional and end-user data. In addition to connecting into
our customers' internal information systems, this integration may also require
custom business logic. Traditionally, business logic to meet specific customer
requirements has been manually coded, resulting in time-consuming and error-
prone projects. We can capture the business logic specifications in an object-
oriented diagram and automatically generate the software code for
implementation. Our tools allow for reuse of standard interface and business
components and can speed time to market with reduced probability of human
error, thereby allowing greater scale in integration capabilities.

Because we serve the needs of a broad and diversified client base, we need
to be able to reliably manage the functionality of many disparate businesses
accommodating different and evolving requirements. We have developed an
integrated in-house application that enables our operations to scale by
efficiently running our complex network of online stores, tracking production
and deployment of stores and content and accessing detailed customer and end-
user data. The system allows our employees to access and control all aspects of
our services, including contract terms, e-packaging production, store
deployments, merchandising, promotions, end-user customer service and payment
and remittance processing and reporting.

Security Measures. We maintain security at every level of our
infrastructure. The Oracle database, the Web servers, the firewall and the
network routers are all restrictively programmed for permission-based access.
All customer and credit card information is transmitted in encrypted format
over the Internet using standard Secure Socket Layer and then stored in our
secure Oracle database. Only authorized individuals who need access to credit
card information, such as customer service personnel, can obtain access through
proprietary software tools.

Cost of Development. Our technology has developed over time. In 1997, we
introduced our first generation of online stores for software vendors to
display a limited number of products. In 1998, we upgraded

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these stores to permit dynamic pricing and display of images. In 1999, we
introduced our PowerCommerce platform. In 1997, 1998 and 1999, we spent $1.0
million, $2.5 million and $5.2 million, respectively, on research and
development.

Sales and Marketing

Our sales and marketing efforts are focused on signing up vendors of digital
goods for our outsourced e-commerce stores and services. We sign-up software
publishers and vendors of other digital goods through a sales organization of
20 people. These employees are primarily located at our headquarters in Silicon
Valley, as well as in other targeted metropolitan areas throughout the United
States.

Our sales force consists of a team of experienced sales professionals
supported by systems engineers and account managers.

Our marketing team is divided into three groups. The corporate marketing
group employs a variety of programs to create market awareness and generate
demand for our services. Our corporate marketing activities include print
advertising, participation in key industry shows and events, speaking
engagements at relevant conferences, direct marketing, media and investor
relations and extensive Web marketing aimed at bringing new prospects to our
Web site. Our product marketing group defines market needs and introduces
appropriate services to meet these needs. Our marketing services group works
directly with our customers to create and run online marketing programs that
are intended to increase the sales of their products. Finally, our business
development team is focused on creating relationships and alliances with other
organizations in the areas of technology, distribution, international presence,
original equipment manufacturing and complementary e-commerce services.

Customers

We sell software through a network of software publishers and online
retailers. As of February 29, 2000, a representative sampling of customers who
accounted for more than $15,000 in revenue in the fourth quarter of 1999 or who
provide an example of the breadth of our e-commerce capabilities includes:

. Caere Corporation . Managemark, Inc. (formerly On The
Go Software)

. Day-Timers, Inc. . Miacomet, Inc.

. DeLorme Publishing Company, Inc. . Network ICE Corporation

. GameSpot, a unit of Ziff-Davis Inc. . NewSoft America, Inc.

. Verity, Inc.
. The H.E.A.R. Foundation

. Macromedia, Inc. . WebTrends Corporation

Of these customers, all but Miacomet, Inc., Caere Corporation and the
H.E.A.R. Foundation accounted for more than $15,000 in revenue for the fourth
quarter of 1999. Miacomet is an example of a customer using our PowerCommerce
Store to sell both software and hardware products, with the software delivered
digitally and the hardware delivered by drop shipment. Caere is an example of a
customer for whom we built, host and manage a PowerCommerce Store and have
developed an integrated marketing program, including the ability to send
targeted e-mails to Caere registered end-users. The H.E.A.R. Foundation is an
example of a customer for whom we built, host and manage a PowerCommerce Store
for downloading digital music.

Intellectual Property

We regard trademarks, copyrights, trade secrets and other intellectual
property as critical to our success, and rely on copyright, trademark, trade
secret protection and confidentiality and/or license agreements with employees,
clients, partners and others to protect our proprietary rights.

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We consider our proprietary technology to include:

. our PowerCommerce architecture;

. our SalesAgent software code, which allows us to produce encrypted
versions of software for try-before-you buy and rental transactions;

. our Rapid Application Development environment and its associated
development and operations tools for generating software applications
that we use to run our business, and, in some cases, integrate into the
PowerCommerce platform;

. the recently acquired intellectual property of Get Software.com, which
includes software code for running an e-commerce Web site that sells
shareware and other computer programs; and

. trade secrets relating to our accumulated knowledge with respect to
solving the complex problems of trial-enabling software, digital
encryption and electronic delivery of digital goods.

Proprietary rights relating to our technologies will be protected from
unauthorized use by third parties only to the extent that they are covered by
valid and enforceable trade secrets. In addition, the laws of certain foreign
countries do not protect our intellectual property rights to the same extent as
do the laws of the United States. Furthermore, independently developed similar
or equivalent technologies may duplicate any technology we develop. We have
received a trademark in the United States, the European Community and Tunisia
for "SALESAGENT." In addition, we have filed applications in the United States,
Canada, the European Community, Japan and Tunisia for additional trademarks.
Effective trademark and trade secret protection may not be available in every
country in which our products and services are made available online. We have
also filed five patent applications in connection with our proprietary
technology. Litigation may be necessary in the future to enforce our
intellectual property rights, to protect our trade secrets or to determine the
validity and scope of the proprietary rights of others. Litigation could result
in substantial costs and diversion of management resources. From time to time,
we may receive notice of claims of infringement of other parties' proprietary
rights. The defense of any such claims, whether such claims are with or without
merit, could be time-consuming, result in costly litigation and diversion of
technical and management personnel, cause product delivery delays or require us
to develop non-infringing technology or enter into royalty or licensing
agreements. These royalty or licensing agreements, if required, may not be
available on terms acceptable to us, or at all.

Competition

The market for outsourced e-commerce systems for digital goods is intensely
competitive and subject to rapid technological change. To date, we have focused
on offering our services to software publishers and online retailers and have
been competing against other companies in this vertical market. As we leverage
our e-commerce expertise into other digital goods markets, including corporate
software licenses, we expect to experience similar competitive dynamics.

Our primary source of competition comes from software publishers and online
retailers who have made or may choose to make substantial initial and ongoing
investments in order to develop and manage their own e-commerce sites,
including our potential customers or strategic alliances. We also face
competition from other providers of outsourced e-commerce systems, including
Digital River and NetSales. Further, we compete with companies such as
BroadVision that provide tools and services enabling one or more of the
transaction processing functions of electronic commerce, such as transaction
control, data security, customer interaction, database marketing and electronic
software delivery. In addition to these in-house and outsourced providers, we
also indirectly compete with companies that sell and distribute software
products over the Internet, such as Intraware, Inc., as well as with high-
traffic, branded Web sites that derive a substantial portion of their revenues
from e-commerce and may themselves offer, or provide means for others to offer,
software products. We also face competition from new start up companies that
are developing new product offerings. Finally, we compete with traditional
channels and methods of retail and corporate software sales, such as mail order
catalogs and retail superstores. Other competitors may enter the market for our
services.

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<PAGE>

Many of our competitors have longer operating histories, substantially
greater financial, technical, marketing or other resources, or greater name
recognition than we do. Our competitors may be able to respond more quickly
than we can to new or emerging technologies and changes in customer
requirements. Competition could seriously impede our ability to sell
additional services on terms favorable to us. Our current and potential
competitors may develop and market new technologies that render our existing
or future services obsolete, unmarketable or less competitive. Our current and
potential competitors have made and may continue to make strategic
acquisitions or establish cooperative relationships among themselves or with
other providers of outsourced e-commerce systems, thereby increasing the
ability of their services to address the needs of our prospective customers.
Our current or potential competitors may also establish cooperative
relationships with our current or future channel partners, limiting or
eliminating our ability to sell through these channels. Competitive pressures
could reduce our market share or require the reduction of the prices of our
services, either of which could materially and adversely affect our business,
results of operations or financial condition.

We believe that, in addition to the foregoing, the primary competitive
factors in our market are as follows:

. comprehensiveness of the digital commerce systems and services available;

. product design and technology that is adaptable to changing customer
requirements;

. strength of customer relationships;

. pricing;

. technology infrastructure capacity, reliability, security, speed and
accessibility;

. customer service;

. convenience and speed of fulfillment; and

. technical expertise to integrate our e-commerce systems with customers'
existing information technology infrastructure.

We believe that we presently compete favorably with respect to each of
these factors. However, the market for our services is still rapidly evolving
and we may not be able to compete successfully against current or potential
competitors. See "Risk Factors--Intense competition in our industry could
reduce or eliminate demand for our services."

Employees

As of February 29, 2000, we had 101 full-time employees, including 42 in
sales, marketing and customer service, 49 in product development and
operations and 10 in finance and administration. Our employees are not covered
by any collective-bargaining arrangements, and we consider our relations with
our employees to be good.

Facilities

Our principal executive offices are located in San Carlos, California,
where we lease 15,363 square feet. The lease term extends to October 15, 2004
with one five-year renewal at our option. In addition, we lease an office
suite in Alameda, California on a month-to-month basis. We are currently
looking for additional office space. Given the extreme limitations on
available office space in the Silicon Valley and the continuing increases in
costs for this space over the past several years, we believe that locating
space for expansion may be difficult and may cost more than we currently
anticipate.

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<PAGE>

MANAGEMENT

Executive Officers, Directors and Key Employees

The following table sets forth the names, ages and positions of our
executive officers, directors and key employees as of February 29, 2000:

<TABLE>
<CAPTION>
Name Age Position(s)
- ---- --- -----------
<S> <C> <C>
Executive Officers and
Directors
Michael J. Maulick...... 44 President, Chief Executive Officer and Director
Eric J. Holstege........ 42 Vice President of Engineering and Chief Technology Officer
Frank D. Maylett........ 37 Vice President of Sales
David A. Roman.......... 45 Vice President of Marketing and Chief Marketing Officer
Joan P. Walsh........... 45 Vice President of Finance and Chief Financial Officer
Carolyn A. Rogers....... 40 Chairman of the Board
Clydene Bultman......... 41 Director
Asad Jamal.............. 40 Director
Steven T. Jurvetson..... 32 Director
Douglas Lindgren........ 38 Director
David Shrigley.......... 51 Director

Key Employees
Calisa A. Cole.......... 39 Vice President of Marketing Services
Scott Howard............ 41 Vice President of Human Resources
</TABLE>

Executive Officers and Directors

Mr. Maulick joined ReleaseNow.com in May 1999 as President and became our
Chief Executive Officer and a director in November 1999. Prior to joining
ReleaseNow.com, Mr. Maulick served in various positions having increasingly
higher levels of responsibility in engineering management in the New York State
development laboratories of IBM Corporation from July 1977 to October 1987.
From October 1987 to May 1999, Mr. Maulick served IBM in various sales
management positions, his final position with IBM being Vice President of
Americas of High End Server Growth Initiatives. Mr. Maulick holds a BS degree
from Marquette University and completed post baccalaureate studies at Syracuse
University and the University of Pennsylvania's Wharton School of Business.

Mr. Holstege joined ReleaseNow.com in November 1998 as Vice President of
Engineering and Chief Technology Officer. From April 1993 to November 1998, Mr.
Holstege served in various positions at Broderbund Software, Inc., a subsidiary
of Mattel, Inc., most recently as its Vice President and Internet Business Unit
Manager for their Blue Banner Division. Prior to Broderbund, Mr. Holstege was
Vice President of Engineering at Calera Recognition Systems, an optical
character recognition company. Mr. Holstege holds BS and MS degrees from the
California Institute of Technology.

Mr. Maylett joined ReleaseNow.com in June 1999 as Regional Director of Sales
and in October 1999 was promoted to Vice President of Sales. Prior to joining
ReleaseNow.com, from January 1996 to June 1999, Mr. Maylett was an executive at
IBM, serving most recently as regional sales manager for the Western United
States and Canada for a start-up organization within IBM. From June 1992 to
January 1996, Mr. Maylett was a Senior Account Manager at Novell, Inc. Mr.
Maylett holds a BS degree from the University of Phoenix.

Mr. Roman joined ReleaseNow.com in February 1999 as Vice President of
Marketing and in September 1999 became the Chief Marketing Officer. From
December 1997 to December 1998, he was the Vice President

53
<PAGE>

of Marketing for Preview Systems, Inc., an electronic software distribution e-
commerce company. From March 1983 to November 1997, Mr. Roman was at Apple
Computer, Inc., where he held positions managing various marketing operations
in the United States, Europe, Japan and Australia, most recently as Vice
President of Worldwide Advertising. Mr. Roman holds a degree in Architecture
and Industrial Design from Queensland Institute of Technology in Australia. He
also completed post baccalaureate studies at the Polytechnic of Turin, Italy
and holds an executive MBA degree from INSEAD in France.

Ms. Walsh joined ReleaseNow.com in January 1999 as Vice President of Finance
and Chief Financial Officer. From May 1998 to December 1998, Ms. Walsh was
Corporate Controller at Kestrel Solutions Inc., a telecommunications company.
From May 1996 to April 1998, Ms. Walsh served as an independent financial
consultant for various Internet startups. From May 1993 to May 1996, Ms. Walsh
was Corporate Controller at PicoPower Technology, Inc., a producer of power
managed systems controller chips for the notebook PC market. Prior to that, Ms.
Walsh served as Vice President and Corporate Controller at Credence Systems
Corporation, a semiconductor equipment manufacturer. Ms. Walsh holds a BS
degree from University of Oregon and completed post baccalaureate studies at
Portland State University.

Ms. Rogers joined ReleaseNow.com in July 1998 as Chief Operating Officer and
Chief Financial Officer and served in those roles until September 1998. She
served as Chief Executive Officer from September 1998 to November 1999 and as a
director from November 1998 to November 1999 and has served as our Chairman of
the Board since November 1999. Prior to that, Ms. Rogers was a Vice President
and Investment Officer with J. & W. Seligman & Co. Incorporated, a financial
services company, from March 1996 to July 1998. From October 1992 to March
1995, Ms. Rogers served as Director of Strategic Marketing and Chief Financial
Officer at PicoPower Technology, Inc. Prior to that, Ms. Rogers was a Senior
Technology Analyst at Chase H&Q (formerly Hambrecht & Quist). Ms. Rogers holds
an MBA degree from the University of Pennsylvania's Wharton School of Business
and a BS degree from the University of Colorado at Boulder.

Ms. Bultman has served as a director since May 1999. Ms. Bultman has served
as a Technology Analyst at Galleon Management Group, an investment fund. From
1992 to January 2000, Ms. Bultman served as a technology and marketing
consultant working with a variety of companies in the Silicon Valley. Prior to
this, she served in several executive positions at Applied Materials Inc., a
semiconductor capital equipment company. Ms. Bultman holds a BS degree from San
Jose State University and an MS degree from the Sloan School of Management at
Stanford School of Business.

Mr. Jamal has served as a director since January 2000. Mr. Jamal has served
as the Chief Operating Officer of Draper Fisher Jurvetson ePlanet Partners,
Ltd., a venture capital firm, since September 1999. Prior to joining Draper
Fisher, from January 1996 to August 1999, he served as the Chief Executive
Officer of Saudi Investments Ltd., another venture capital firm. Mr. Jamal also
served as the Managing Director of Peregrine Investments Ltd., an investment
bank, from August 1994 to December 1995. Mr. Jamal holds a BS degree from the
London School of Economics and an ACA degree from the Institute of Chartered
Accountants in England and Wales.

Mr. Jurvetson has served as a director since February 1996. Mr. Jurvetson
has served as a Managing Director of Draper Fisher Jurvetson, a venture capital
firm, since June 1995. Prior to joining Draper Fisher Jurvetson, from September
1993 to June 1995, Mr. Jurvetson attended the Stanford University Graduate
School of Business. From July 1990 to September 1993, Mr. Jurvetson served as a
consultant with Bain & Company, a management consulting firm. Mr. Jurvetson
serves on the board of directors of Kana Communications, Inc., a provider of
online customer communications software and services for e-business marketing,
sales and services. Mr. Jurvetson holds BS and MS degrees from Stanford
University and an MBA degree from the Stanford Graduate School of Business.

Mr. Lindgren has served as a director since November 1998. Since April 1995,
Mr. Lindgren has served in various capacities with United States Trust Company
of New York, where he is currently a Managing Director. Mr. Lindgren has also
been the Chief Investment Officer of Excelsior Private Equity Fund II, Inc., a
private

54
<PAGE>

equity fund managed by United States Trust Company of New York, since its
inception in March 1997. Mr. Lindgren serves on the board of directors of
LifeMinders.com Inc., an online direct marketing company that provides
personalized content and advertisements via e-mail to its members. From January
1988 to March 1995, he served in various capacities for Inco Venture Capital
Management, Inc., including as President and Managing Principal from January
1993 through March 1995. Prior to joining Inco, Mr. Lindgren was employed at
Salomon Brothers Inc. and Smith Barney, Harris Upham & Co. Inc. Since 1993, he
has also been an Adjunct Professor of Finance at Columbia University's Graduate
School of Business, teaching courses on venture capital. Mr. Lindgren holds BA
and MBA degrees from Columbia University.

Mr. Shrigley has served as a director since January 2000. Mr. Shrigley
serves as an employee of Sevin Rosen Bayless Management, the operating
management company for each of the Sevin Rosen funds and entities. From
November 1996 to April 1999, Mr. Shrigley served as the Executive Vice
President of Sales, Marketing and Service at the BayNetworks division of Nortel
Networks Corporation, a provider of telephony, data, wireless and wireline
solutions for the Internet. Prior to joining Nortel Networks, from December
1978 to November 1996, Mr. Shrigley served as the Vice President of Marketing
at Intel Corporation. Mr. Shrigley also serves on the board of directors of
SonicWALL, Inc., a provider of Internet security for small and medium size
companies. Mr. Shrigley holds a BS degree from Franklin University.

Key Employees

Ms. Cole joined ReleaseNow.com in January 1999 as Director of Marketing and
in October 1999 was promoted to Vice President of Marketing Services. From
March 1997 to December 1998, Ms. Cole was the Director of Marketing Programs
for Infinity, a financial services company, where she managed a worldwide team
responsible for marketing financial risk management software to global banking
institutions. In July 1990, Ms. Cole founded Cole Communications, a Silicon
Valley marketing and public relations agency focused on emerging high-
technology companies and served as a principal of that agency until March 1997.
Ms. Cole holds a BA degree from Wellesley College and an MA degree from
Stanford University.

Mr. Howard joined ReleaseNow.com in August of 1999 as Vice President of
Human Resources. Prior to that, Mr. Howard served in various positions of
increasingly higher levels of responsibility in human resources management at
3COM Corp. from October 1994 to August 1999. He has a BS degree from UC Davis
and an MA degree from Michigan State University.

Board Composition

We have seven directors. Immediately following the offering, our board of
directors will consist of seven directors divided into three classes, with each
class serving for a term of three years, except for the first two classes who
will serve for one and two year terms, respectively, as follows:

<TABLE>
<CAPTION>
Class Expiration Member
- ----- ---------- ------
<S> <C> <C>
Class I........... 2001 Clydene Bultman, David Shrigley
Class II.......... 2002 Asad Jamal, Steven T. Jurvetson, Douglas Lindgren
Class III......... 2003 Michael J. Maulick, Carolyn A. Rogers
</TABLE>

At each annual meeting of stockholders, directors will be elected by the
holders of common stock to succeed directors whose terms are expiring. Our
officers serve at the discretion of the board of directors. There are no family
relationships among any of our directors or officers.

55
<PAGE>

Board Committees

The audit committee was formed in July 1999 to review, act on and report to
the board of directors with respect to various auditing and accounting matters,
including the selection of our independent auditors, the scope of the annual
audits, fees to be paid to the independent auditors and our accounting
practices. The audit committee is currently composed of Clydene Bultman,
Douglas Lindgren and David Shrigley.

The compensation committee was formed in July 1999 to review and approve all
forms of compensation and benefits for our executive officers and directors,
administer our stock purchase and stock option plans and make recommendations
to the board of directors regarding such matters. The compensation committee is
currently composed of Clydene Bultman, Steven T. Jurvetson and Douglas
Lindgren.

Director Compensation

Our directors receive no cash remuneration for serving on the board of
directors or on any committee, but are reimbursed for expenses incurred in
attending board and committee meetings. We do not provide additional
compensation for committee participation or special assignments of the board of
directors.

Directors who are also our employees are eligible to receive options and be
issued shares of common stock under our 2000 Stock Incentive Plan. Each
individual who first becomes a non-employee director after this offering will
receive an option grant for 7,500 shares of common stock on the date the
director joins the board, subject to vesting in three equal yearly
installments. In addition, at each annual stockholders' meeting, each non-
employee director who has been a director for at least six months will
automatically be granted an option to purchase 2,500 shares of common stock,
subject to vesting in one lump sum at the end of one year from the date of the
grant. See "--2000 Stock Incentive Plan."

Arrangements with Directors

Pursuant to a voting agreement, which terminates upon the consummation of
this offering, entered into by ReleaseNow.com and the holders of our preferred
stock, Draper Fisher Jurvetson, Sevin Rosen funds, Admirals, L.P., Excelsior
Private Equity Fund and Draper Fisher Jurvetson ePlanet Ventures each have the
right to designate one member to the board of directors. In addition, the
agreement states that our chief executive officer shall also be a director. The
designees are as stated below:

<TABLE>
<S> <C>
Draper Fisher Jurvetson Steven T. Jurvetson
Sevin Rosen funds David Shrigley
Admirals, L.P. Clydene Bultman
Excelsior Private Equity Fund Douglas Lindgren
Draper Fisher Jurvetson ePlanet Ventures Asad Jamal
Chief Executive Officer Michael J. Maulick
Common stockholders Carolyn A. Rogers
</TABLE>

Compensation Committee Interlocks and Insider Participation

No interlocking relationship exists between our board of directors or
compensation committee and the board of directors or compensation committee of
any other company.

56
<PAGE>

Executive Compensation

The following table sets forth information concerning the compensation
earned during the fiscal year ended December 31, 1999 by our former Chief
Executive Officer, our current Chief Executive Officer, each of our four other
most highly compensated executive officers whose total compensation during such
fiscal year exceeded $100,000 and one former executive officer whose total
compensation during such fiscal year exceeded $100,000. These individuals are
referred to in this prospectus as "named executive officers."

<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------------------- ------------
All Other Securities
Name and Principal Annual Underlying All Other
Position Salary Bonus Compensation Options Compensation
- ------------------------ -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Carolyn A. Rogers,
Chairman of the Board
and
Former Chief Executive
Officer ............... $175,000 $35,000 $33,449(1) -- --

Michael J. Maulick (2),
President, Chief
Executive Officer and
Director............... 121,970 58,333 -- 350,000 --
Eric J. Holstege,
Vice President of
Engineering and
Chief Technology
Officer................ 174,000 39,991 -- -- --
David A. Roman (2),
Vice President of
Marketing and Chief
Marketing Officer...... 142,577 20,833 -- 175,000 --
Joan P. Walsh (2),
Vice President of
Finance and Chief
Financial Officer ..... 134,199 25,000 -- 125,000 --
Frank D. Maylett (2),
Vice President of Sales
....................... 140,324(3) -- -- 87,500 --
Michael Vanneman (4),
Former Vice President
of Sales............... 161,417(5) -- -- -- $52,988(6)
</TABLE>
- --------
(1) Consists of forgiveness of loans and related payment of interest and taxes.
(2) Salary and bonus reflect less than one full year of compensation, as Mr.
Maulick joined us in May 1999, Ms. Walsh joined us in January 1999, Mr.
Roman joined us in February 1999 and Mr. Maylett joined us in June 1999.
(3) Includes $81,760 earned as commissions.
(4) No longer employed by us as of October 1999.
(5) Includes $36,300 earned as commissions.
(6) Consists of severance and accrued but unused vacation payments.

Subsequent to December 31, 1999, we issued the following option grants to
our executive officers:

. Mr. Maulick received an option to purchase 100,000 shares of common stock
at an exercise price of $10.80 per share;

. Mr. Holstege received an option to purchase 5,000 shares of common stock
at an exercise price of $10.80 per share;

. Mr. Roman received an option to purchase 75,000 shares of common stock at
an exercise price of $10.80 per share;

57
<PAGE>

. Ms. Walsh received on option to purchase 50,000 shares of common stock at
an exercise price of $10.00 and a second option to purchase 60,000 shares
of common stock at an exercise price of $10.80 per share; and

. Mr. Maylett received an option to purchase 25,000 shares of common stock
at an exercise price of $10.80 per share.

Options Granted in Fiscal Year Ended December 31, 1999

The percentage of total options granted is based on an aggregate of
1,600,750 options granted during the fiscal year ended December 31, 1999 under
our 1996 and 1998 plans. All options were granted at an exercise price equal to
the fair market value of our common stock as determined by our board of
directors on the dates of grant. The following table provides information
regarding options to purchase common stock granted to our named executive
officers:

<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------
Potential Realizable
Percent of Value at Assumed
Number of Total Options Annual Rates of Stock
Securities Granted to Price Appreciation
Underlying Employees in Exercise for Option Term
Options Fiscal Price Expiration ----------------------
Name Granted Year 1999 Per Share Date 5% 10%
- ---- ---------- ------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Carolyn A. Rogers....... -- -- -- -- -- --
Michael J. Maulick...... 350,000 21.86% $5.00 5/27/09 $6,801,697 $11,867,148
Eric J. Holstege........ -- -- -- -- -- --
David A. Roman.......... 150,000 9.37 3.50 4/14/09 3,140,013 5,310,921
25,000 1.56 8.00 8/11/09 410,835 772,653
Joan P. Walsh........... 112,500 7.03 3.50 1/4/09 2,355,010 3,983,190
12,500 0.78 8.00 8/11/09 205,418 386,327
Frank D. Maylett........ 25,000 1.56 5.00 7/7/09 485,835 847,653
62,500 3.90 8.00 10/13/09 1,027,089 1,931,634
Michael Vanneman (1).... -- -- -- -- -- --
</TABLE>
- --------
(1) No longer employed by us as of October 1999.

The options shown in the table were immediately exercisable upon grant and
are subject to vesting and a repurchase option in favor of the company. See "--
Stock Plans." The options held by Messrs. Maulick, Roman and Maylett and Ms.
Walsh are subject to special acceleration of vesting upon a change of control.
See "--Employment Agreements and Change of Control Arrangements."

Potential realizable values represent hypothetical gains if the options were
exercised at the end of their respective terms. The potential realizable values
are computed by:

. multiplying the number of shares of common stock subject to a given
option by $15.00 per share, representing the midpoint of the filing
range;

. assuming that the aggregate stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table for the entire
ten-year term of the option; and

. subtracting from that result the aggregate option exercise price.

The 5% and 10% assumed annual rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent our
estimate or projection of our future common stock prices. Actual gains, if any,
on stock option exercises are dependent on the future performance of the common
stock and overall stock market conditions. The amounts reflected in the table
may not necessarily be achieved.

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<PAGE>

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

The following table provides summary information concerning stock option
holdings of and exercises by our named executive officers during the fiscal
year ended December 31, 1999. The values of unexercised in-the-money options
have been calculated by subtracting the exercise price from the assumed initial
public offering price of $15.00.

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Number of Value Realized Options at Fiscal Year- In-the-Money Options at
Shares (Market Price End Fiscal Year-End
Acquired on at Exercise ------------------------- -------------------------
Name Exercise Less Exercise Price) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carolyn A. Rogers (1)... 351,311 $526,966 -- -- -- --
Michael J. Maulick...... 350,000 -- -- -- -- --
Eric J. Holstege........ 253,885 380,828 -- -- -- --
David A. Roman.......... 37,500 56,250 137,500 -- $1,468,750 --
Joan P. Walsh........... 62,500 93,750 62,500 -- 662,500 --
Frank D. Maylett........ -- -- 87,500 -- 687,500 --
Michael Vanneman (2).... 29,967 165,459 11,374 -- 130,801 --
</TABLE>
- --------
(1) The vesting of shares held by Ms. Rogers was accelerated and Ms. Rogers is
fully vested as of November 1999.
(2) No longer employed by us as of October 1999.

Employment Agreements and Change of Control Arrangements

Michael J. Maulick, Eric J. Holstege, David A. Roman, Joan P. Walsh and
Frank D. Maylett are each employed pursuant to employment letter agreements
setting forth generally the terms of their respective job responsibilities,
salary, bonus and equity compensation. Each option held by Ms. Walsh and
Messrs. Roman and Maylett contains provisions with respect to the acceleration
of vesting on 50% of each of their then unvested option shares upon a change of
control of ReleaseNow.com. Mr. Holstege's offer letter provides for two option
grants, one of which vested in November 1999 and the other of which vests over
the standard four year period. This grant and all subsequent option grants are
subject to acceleration of the vesting on 50% of the then unvested option
shares upon a change of control of ReleaseNow.com. Mr. Maulick's offer letter
provides for acceleration of the vesting on 50% of his then unvested option
shares upon a change of control of ReleaseNow.com and, additionally, severance
pay and the acceleration of a portion of his then unvested option shares if he
is terminated without cause or constructively terminated. In addition, Mr.
Maulick's bonus is guaranteed for his first year of service. If Mr. Maulick is
terminated for cause or voluntarily resigns, he is entitled to receive his
earned but unpaid salary and pro-rated accrued bonus. In connection with our
prior Chief Executive Officer's appointment as Chairman of the Board, we
entered into a revised employment agreement with our Chairman, Ms. Rogers,
pursuant to which she will earn an annual salary of $175,000 as an employee-
director and has received an extension of the payment terms of her $1,378,170
promissory note used to purchase 345,597 shares of our common stock. In
addition, the vesting of all shares currently held by Ms. Rogers was fully
accelerated, and future share issuances will not be subject to vesting.
Further, we forgave a $20,000 promissory note used to purchase 5,714 shares of
our common stock and paid $13,449 in taxes accrued on that forgiveness. If
Ms. Rogers' employment is terminated, we will pay Ms. Rogers, subject to
specified conditions, a severance payment of six months of her then-current
salary. In addition to the foregoing named executive officers, five other
employees have been granted options subject to acceleration of the vesting on
50% of their then unvested option shares upon a change of control of
ReleaseNow.com. In addition, our 1998 Stock Option/Stock Issuance Plan provides
that in the event of a change of control each outstanding option grant or
purchase right shall vest in full immediately prior to the consummation of the
transaction unless the successor corporation assumes the outstanding option or
purchase right.

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<PAGE>

Limitation of Liability and Indemnification Matters

Our certificate of incorporation limits the liability of directors and
officers to the maximum extent permitted by Delaware law. Delaware law provides
that a corporation's certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director or officer for
monetary damages for breach of their fiduciary duties as directors or officers,
except for liability resulting from:

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

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

. unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; or

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

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

Our bylaws provide that we shall indemnify our directors and officers and
may indemnify our employees and agents to the fullest extent permitted by law.
We believe that indemnification under our bylaws covers at least negligence and
gross negligence on the part of indemnified parties. Our bylaws also permit us
to secure insurance on behalf of any officer, director, employee or other agent
for any liability arising out of his or her actions on our behalf, regardless
of whether the bylaws permit indemnification under those circumstances.

We have entered into agreements to indemnify our directors and officers, in
addition to the indemnification provided for in our bylaws and certificate of
incorporation and by Delaware law. These agreements, among other things,
indemnify our directors and officers for certain expenses (including attorneys'
fees), judgments, fines and settlement amounts incurred by the director or
officer in any action or proceeding, including any action by or in the right of
ReleaseNow.com, arising out of services as a director or officer of
ReleaseNow.com, any subsidiary of ReleaseNow.com or any other company or
enterprise to which the person provides services at our request. We believe
that these provisions and agreements are necessary to attract and retain
qualified directors and officers.

Stock Plans

1996 Stock Plan

Our 1996 stock plan was adopted by the board of directors and approved by
the stockholders in April 1996 and has been amended from time to time. As of
February 29, 2000, 466,206 shares of common stock have been issued upon
exercise of options granted under the 1996 plan, options to purchase 71,317
shares of common stock were outstanding, 116,386 shares of common stock have
been issued upon exercise of stock purchase rights, net of repurchase, and no
shares of our common stock remain available for future issuance under the 1996
plan. Unless terminated sooner, the 1996 plan will terminate according to its
terms in April 2006. The 1996 plan provided for the granting of incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, to employees, officers and employee directors and the granting of
nonstatutory stock options and stock purchase rights to employees, officers,
directors (including non-employee directors) and consultants. The administrator
determined the term of options, which was prohibited from exceeding 10 years
(five years in the case of an incentive stock option granted to a stockholder
holding more than 10% of the voting shares of our company). To the extent an
optionee would have the right in any calendar year to exercise for the first
time one or more incentive stock options for shares having an aggregate fair
market value in excess of $100,000, any such excess options shall be treated as
nonstatutory stock options.

No option may be transferred by the optionee other than by will or the laws
of descent or distribution. Each option may be exercised during the lifetime of
the optionee only by such optionee. Options granted under

60
<PAGE>

the 1996 plan generally become exercisable at the rate of 1/4 of the total
number of shares subject to the options twelve months after the vesting
commencement date, and 1/48 of the total number of shares subject to the
options each month thereafter.

The restricted stock purchase agreements reflecting stock purchase rights
issued pursuant to the 1996 plan provide that the right must be exercised and
the shares must be paid for within no more than 30 days of the grant and the
purchase price for the stock must be at least 85% of the fair market value of
our common stock as of the date of grant (except in the case of a 10%
stockholder, in which case the purchase price must be at least 100% of the fair
market value). The stock purchase rights also generally provide that we shall
have a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment for any reason (including death or
disability), unless the administrator determines otherwise. Our repurchase
right generally lapses at a rate of 1/4 of the total number of shares subject
to the repurchase right twelve months after the vesting commencement date, and
1/48 of the total number of shares subject to the repurchase right each month
thereafter.

The 1996 plan provides that in the event of a merger of our company with or
into another corporation or a sale of all or substantially all of our assets,
each outstanding option or purchase right shall be assumed or an equivalent
option or right substituted by the successor corporation. If the successor
corporation refuses to assume or substitute, each outstanding option and
purchase right shall terminate if unexercised upon consummation of the
transaction.

1998 Stock Option/Stock Issuance Plan.

Our 1998 plan was adopted by the board of directors and approved by the
stockholders in December 1998 and has been amended from time to time. As of
February 29, 2000, 1,493,218 shares of common stock have been issued upon
exercise of options granted under the 1998 plan, options to purchase 1,012,382
shares of common stock were outstanding, 28,000 shares of common stock have
been issued upon direct issuances of stock and no shares of our common stock
remain available for further issuance under the 1998 plan, as all such shares
will have been carried over into our successor equity plan, the 2000 plan,
described below. Unless terminated sooner, the 1998 plan will terminate
according to its terms in December 2008. The 1998 plan provided for the
granting of incentive stock options and nonstatutory stock options as in the
1996 plan, and stock issuances to employees, officers, directors (including
non-employee directors) and consultants. The administration of the 1998 plan,
term of options, transfer restrictions, generally-used vesting schedule and
limitations on exercise of over $100,000 in any calendar year for options under
the 1998 plan are substantially the same as under the 1996 plan.

The stock issuance agreements reflecting stock issued pursuant to the 1998
plan provide that the shares must be paid for concurrently with the grant and
the purchase price for such restricted stock must be at least 85% of the fair
market value as of the date of grant (except in the case of a 10% stockholder,
in which case the purchase price must be at least 110% of the fair market
value) and generally provide that we shall have a repurchase option exercisable
on substantially the same terms as the repurchase option on restricted stock
purchases under the 1996 plan.

The 1998 plan provides that in the event of a merger of our company with or
into another corporation or a sale of all or substantially all of our assets,
each outstanding option or purchase right shall be assumed or an equivalent
option or right substituted by the successor corporation. If the successor
corporation refuses to assume or substitute, each outstanding option and
purchase right shall vest in full immediately prior to the consummation of the
transaction and, thereafter, shall terminate upon consummation of the
transaction, except as may otherwise be determined by the administrator.

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<PAGE>

2000 Stock Incentive Plan

Introduction. The 2000 Stock Incentive Plan is intended to serve as the
successor program to our 1996 plan and 1998 plan. The 2000 plan was adopted by
the board in January 2000 and approved by the stockholders in March 2000. The
2000 plan will become effective when the underwriting agreement for this
offering is signed. At that time, all outstanding options under our existing
1996 plan and 1998 plan will be transferred to the 2000 plan, and no further
option grants will be made under the 1996 plan or the 1998 plan. The
transferred options will continue to be governed by their existing terms,
unless our compensation committee decides to extend one or more features of the
2000 plan to those options.

Shares Reserved. 3,750,000 shares of our common stock have been reserved for
future issuance and grant under the 2000 plan, and approved by the board in
connection with the approval of the 2000 plan, including shares that will be
carried over from the 1996 plan and 1998 plan reserves plus an additional
increase of a sufficient number of shares to bring the total reserve to
3,750,000 shares. The share reserve under our 2000 plan will automatically
increase on the first trading day in January each year, beginning with calendar
year 2001, by an amount equal to 4% of the total number of shares of our common
stock outstanding on the last trading day of December in the prior year. In no
event will any such annual increase exceed 1,500,000 shares. No participant in
the 2000 plan may be granted stock options or direct stock issuances for more
than 500,000 shares of common stock in total in any calendar year.

Programs. Our 2000 plan has five separate programs, some of which may be put
into effect by the board at some later date:

. the discretionary option grant program, under which options may be
granted to purchase shares of our common stock at an exercise price not
less than the fair market value of those shares on the grant date;

. the stock issuance program, under which shares of common stock which may
be issued will vest upon the attainment of performance milestones or
completion of a period of service or which are fully vested at issuance
as a bonus for past services;

. the salary investment option grant program, under which our executive
officers and other highly compensated employees may be given the
opportunity to apply a portion of their base salary to the acquisition of
special below market stock option grants;

. the automatic option grant program, under which option grants will
automatically be made at intervals to eligible non-employee board members
to purchase shares of common stock at an exercise price equal to the fair
market value of those shares; and

. the director fee option grant program, under which our non-employee board
members may be given the opportunity to apply a portion of any retainer
fee for the year to the acquisition of special below-market option
grants. No such retainer fee is currently being paid to any board member.

Eligibility. The individuals eligible to participate in our 2000 plan
include our officers and other employees, our board members and any consultants
we hire.

Administration. The discretionary option grant and stock issuance programs
will be administered by our compensation committee. This committee will
determine which eligible individuals are to receive option grants or stock
issuances under those programs, the time or times when the grants or issuances
are to be made, the number of shares subject to each grant or issuance, the
status of any granted option as either an incentive stock option or a
nonstatutory stock option, the vesting schedule to be in effect for the option
grant or stock issuance and the term for any granted option. The compensation
committee will also have the authority to select the executive officers and
other highly compensated employees who may participate in the salary investment
option grant program in the event that program is put into effect.

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<PAGE>

Plan Features. Our 2000 plan will include the following features:

. The exercise price for any options granted under the 2000 plan may be
paid in cash or in shares of our common stock valued at fair market value
on the exercise date. The option may also be exercised through a same-day
sale program without any cash outlay by the optionee.

. The compensation committee will have the authority to cancel outstanding
options under the discretionary option grant program, including any
transferred options from our 1996 plan and 1998 plan, in return for the
grant of new options for the same or different number of option shares
with an exercise price per share based upon the fair market value of our
common stock on the new grant date.

. Stock appreciation rights may be issued under the discretionary option
grant program. These rights will provide the holders with the election to
surrender their outstanding options for a payment from us equal to the
fair market value of the shares subject to the surrendered options less
the exercise price payable for those shares. None of the options under
our 1996 plan or 1998 plan have any stock appreciation rights.

Change in Control. The 2000 plan will include the following change in
control provisions which may result in the accelerated vesting of outstanding
option grants and stock issuances:

. In the event that we are acquired by merger or asset sale, each
outstanding option under the discretionary option grant program which is
not to be assumed by the successor corporation will immediately become
exercisable for all the option shares, and all outstanding unvested
shares will immediately vest, except to the extent our repurchase rights
with respect to those shares are to be assigned to the successor
corporation.

. The compensation committee will have complete discretion to grant one or
more options which will become exercisable for all the option shares in
the event those options are assumed in the acquisition but the optionee's
service with us or the acquiring entity is subsequently terminated. The
vesting of any outstanding shares under our 2000 plan may be accelerated
upon similar terms and conditions.

. The compensation committee may grant options and structure repurchase
rights so that the shares subject to those options or repurchase rights
will immediately vest in connection with a successful tender offer for
more than 50% of our outstanding voting stock or a change in the majority
of our board through one or more contested elections. Such accelerated
vesting may occur either at the time of such transaction or upon the
subsequent termination of the individual's service.

. The options currently outstanding under our 1996 plan will terminate in
the event we are acquired and the acquiring company does not assume those
options.

. The options currently outstanding under our 1998 plan will immediately
vest in the event we are acquired and the acquiring company does not
assume those options or stock purchase rights. Some of those options and
stock purchase rights, however, contain an additional vesting
acceleration feature which will result in the immediate vesting of those
options and, upon consummation of the acquisition, any of these options
remaining unexercised will terminate.

Salary Investment Option Grant Program. In the event the compensation
committee decides to put this program into effect for one or more calendar
years, each of our executive officers and other highly compensated employees
may elect to reduce his or her base salary by an amount not less than $10,000
nor more than $50,000. Each selected individual who makes such an election will
automatically be granted, on the first trading day in January for which his or
her salary reduction is to be in effect, an option to purchase that number of
shares of common stock determined by dividing the salary reduction amount by
two-thirds of the fair market value per share of our common stock on the grant
date. The option will have an exercise price per share equal to one-third of
the fair market value of the option shares on the grant date. As a result, the
option will be structured so that the fair market value of the option shares on
the grant date less the exercise price payable for those shares will be equal
to the amount of the salary reduction. The option will become exercisable in a
series of 12 equal monthly installments over the calendar year for which the
salary reduction is to be in effect.

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<PAGE>

Automatic Option Grant Program. Each individual who first becomes a non-
employee board member at any time after the effective date of this offering
will receive an option grant for 7,500 shares of common stock on the date such
individual joins the board. In addition, on the date of each annual
stockholders' meeting held after the effective date of this offering, each non-
employee board member who is to continue to serve as a non-employee board
member, including each of our current non-employee board members, will
automatically be granted an option to purchase 2,500 shares of common stock,
provided such individual has served on the board for at least six months.

Each automatic grant will have an exercise price per share equal to the fair
market value per share of our common stock on the grant date and will have a
term of 10 years, subject to earlier termination following the optionee's
cessation of board service. All options granted under this program will be
immediately exercisable for all of the option shares; however, we may
repurchase, at the exercise price paid per share, any shares purchased under
the option which are not vested at the time of the optionee's cessation of
board service. The 2,500 shares subject to each annual automatic grant will
vest one year after the date of grant. The shares subject to each initial 7,500
share automatic option grant will vest in a series of three installments upon
the optionee's completion of each 12 months of board service over the 36-month
period measured from the grant date. However, the shares will immediately vest
in full upon certain changes in control or ownership or upon the optionee's
death or disability while a board member.

Director Fee Option Grant Program. If this program is put into effect in the
future, then each non-employee board member may elect to apply all or a portion
of any cash retainer fee for the year to the acquisition of a below-market
option grant. No retainer fee is currently being paid to any board member. The
option grant will automatically be made on the first trading day in January in
the year for which the non-employee board member would otherwise be paid the
cash retainer fee in the absence of his or her election. The option will have
an exercise price per share equal to one-third of the fair market value of the
option shares on the grant date, and the number of shares subject to the option
will be determined by dividing the amount of the retainer fee applied to the
program by two-thirds of the fair market value per share of our common stock on
the grant date. As a result, the option will be structured so that the fair
market value of the option shares on the grant date less the exercise price
payable for those shares will be equal to the portion of the retainer fee
applied to that option. The option will become exercisable in a series of 12
equal monthly installments over the calendar year for which the election is in
effect. However, the option will become immediately exercisable for all the
option shares upon the death or disability of the optionee while serving as a
board member.

Additional Program Features. Our 2000 plan will also have the following
features:

. Outstanding options under the salary investment and director fee option
grant programs will immediately vest if we are acquired by a merger or
asset sale or if there is a successful tender offer for more than 50% of
our outstanding voting stock or a change in the majority of our board
through one or more contested elections.

. Limited stock appreciation rights will automatically be included as part
of each grant made under the salary investment option grant program and
the automatic and director fee option grant programs, and these rights
may also be granted to one or more officers as part of their option
grants under the discretionary option grant program. Options with this
feature may be surrendered to us upon the successful completion of a
hostile tender offer for more than 50% of our outstanding voting stock.
In return for the surrendered option, the optionee will be entitled to a
cash distribution from us in an amount per surrendered option share based
upon the highest price per share of our common stock paid in that tender
offer.

The board may amend or modify the 2000 plan at any time, subject to any
required stockholder approval. The 2000 plan will terminate no later than
September 2010.

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<PAGE>

2000 Employee Stock Purchase Plan

Introduction. Our 2000 Employee Stock Purchase Plan was adopted by the board
in January 2000 and approved by the stockholders in March 2000. The plan will
become effective immediately upon the signing of the underwriting agreement for
this offering. The plan is designed to allow our eligible employees and the
eligible employees of our participating subsidiaries to purchase shares of our
common stock, at semi-annual intervals, with their accumulated payroll
deductions.

Shares Reserved. 450,000 shares of our common stock will initially be
reserved for issuance. The reserve will automatically increase on the first
trading day in January each year, beginning in calendar year 2001, by an amount
equal to 1% of the total number of outstanding shares of our common stock on
the last trading day in December in the prior year. In no event will any such
annual increase exceed 300,000 shares.

Offering Periods. The plan will have a series of successive offering
periods, each with a maximum duration of 24 months. The initial offering period
will start on the date the underwriting agreement for the offering is signed
and will end on the last business day in January 2002. The next offering period
will start on the first business day in February 2002, and subsequent offering
periods will be set by our compensation committee.

Eligible Employees. Individuals scheduled to work more than 20 hours per
week for more than five calendar months per year may join an offering period on
the start date or any semi-annual entry date within that period. Semi-annual
entry dates will occur on the first business day of February and August each
year. Individuals who become eligible employees after the start date of an
offering period may join the plan on any subsequent semi-annual entry date
within that offering period.

Payroll Deductions. A participant may contribute up to 15% of his or her
cash earnings through payroll deductions, and the accumulated deductions will
be applied to the purchase of shares on each semi-annual purchase date. The
purchase price per share will be equal to 85% of the fair market value per
share on the participant's entry date into the offering period or, if lower,
85% of the fair market value per share on the semi-annual purchase date. Semi-
annual purchase dates will occur on the last business day of July and January
each year. In no event may any participant purchase more than 1,500 shares on
any purchase date, and not more than 112,500 shares may be purchased in total
by all participants on any purchase date.

Reset Feature. If the fair market value per share of our common stock on any
purchase date is less than the fair market value per share on the start date of
the two-year offering period, then that offering period will automatically
terminate, and a new two-year offering period will begin on the next business
day. All participants in the terminated offering will be transferred to the new
offering period.

Change in Control. Should we be acquired by merger or sale of all or
substantially all of our assets or more than 50% of our voting securities, then
all outstanding purchase rights will automatically be exercised immediately
prior to the effective date of the acquisition. The purchase price will be
equal to 85% of the market value per share on the participant's entry date into
the offering period in which an acquisition occurs or, if lower, 85% of the
fair market value per share immediately prior to the acquisition.

Plan Provisions. The following provisions will also be in effect under the
plan:

. The plan will terminate no later than the last business day of January
2010.

. The board may at any time amend, suspend or discontinue the plan.
However, certain amendments may require stockholder approval.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We issued, in separate private placement transactions, the following shares
of preferred stock:

. 1,000,000 shares of Series A preferred stock at $1.00 per share in
February 1996 (as adjusted for 2-for-1 stock split in June 1996) for an
aggregate purchase price of $1,000,000 and which is valued at
$15,000,000 at a price per share of $15.00 representing the midpoint of
the filing range;

. an aggregate of 1,101,424 shares of Series B preferred stock at $1.40
per share in November 1996 for an aggregate purchase price of $1,541,998
and which is valued at $16,521,360 at a price per share of $15.00
representing the midpoint of the filing range;

. an aggregate of 1,472,227 shares of Series C preferred stock at $3.736
per share in July and August 1997 for an aggregate purchase price of
$5,500,251 and which is valued at $22,083,405 at a price per share of
$15.00 representing the midpoint of the filing range;

. an aggregate of 1,391,120 shares of Series D preferred stock at $6.98
per share in June 1998 for an aggregate purchase price of $9,710,032 and
which is valued at $20,866,800 at a price per share of $15.00
representing the midpoint of the filing range;

. an aggregate of 1,499,997 shares of Series E preferred stock at $8.00
per share in May 1999 for an aggregate purchase price of $12,000,000 and
which is valued at $22,499,955 at a price per share of $15.00
representing the midpoint of the filing range; and

. an aggregate of 2,024,999 shares of Series F Preferred Stock at $10.00
per share in December 1999 and January 2000 for an aggregate purchase
price of $20,249,990 and which is valued at $30,374,985 at a price per
share of $15.00 representing the midpoint of the filing range.

Upon the closing of this offering, each share of preferred stock will
automatically convert into one share of common stock. As of February 29, 2000,
the purchasers of the preferred stock included, among others, the following
directors, officers and holders of more than 5% of a class of our capital
stock, and persons and entities associated with them:

<TABLE>
<CAPTION>
Percentage
Series A Series B Series C Series D Series E Series F of Capital
Preferred Preferred Preferred Preferred Preferred Preferred Stock
Investor Stock Stock Stock Stock Stock Stock Owned(1)
- -------- --------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Draper Fisher Jurvetson
funds (2).............. 895,000 357,142 490,974 14,326 12,499 1,050,000 20.6%
Steven T. Jurvetson
(2).................... 895,000 357,142 490,974 14,326 12,499 1,050,000 20.6
Asad Jamal (3).......... -- -- -- -- -- 1,000,000 8.4
Sevin Rosen family of
funds (4).............. -- 714,285 669,232 286,532 62,499 -- 11.8
David Shrigley (4)...... -- 714,285 669,232 286,532 62,499 -- 11.8
Star Ventures funds
(5).................... -- -- 401,498 186,246 249,999 -- 7.0
Excelsior Private Equity
Fund II, Inc. (6)...... -- -- -- 838,114 57,500 50,000 7.9
Douglas Lindgren (6).... -- -- -- 838,114 57,500 50,000 7.9
Michael J. Maulick...... -- -- -- -- 2,500 -- *
Carolyn A. Rogers....... -- -- -- -- 2,500 -- *
</TABLE>
- --------

* Represents less than 1% capital stock owned.

(1) Percentage of capital stock owned is based upon 11,976,814 shares of common
stock outstanding as of February 29, 2000.

(2) Consists of 840,405 Series A shares, 335,357 Series B shares, 125,669
Series C shares, 13,452 Series D shares, 11,737 Series E shares and 46,950
Series F shares purchased by Draper Fisher Associates Fund III, L.P., and
54,595 Series A shares, 21,785 Series B shares, 8,163 Series C shares, 874
Series D shares, 762 Series E shares and 3,050 Series F shares purchased by
Draper Fisher Partners, LLC and 1,000,000 Series F shares purchased by
Draper Fisher Jurvetson ePlanet Ventures, L.P. Mr. Jurvetson, a director of
our company, is a managing director of each of Draper Fisher Associates
Fund III, L.P. and Draper Fisher

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Partners, LLC and is a member of the investment committee for Draper Fisher
Jurvetson ePlanet Ventures, L.P., and shares voting and dispositive power
with respect to all shares held by such entities.

(3) Consists of 1,000,000 shares held by Draper Fisher Jurvetson ePlanet
Ventures, L.P. Mr. Jamal, a director of our company, is a member of the
investment committee for Draper Fisher Jurvetson ePlanet Ventures, L.P.

(4) Consists of 681,575 Series B shares, 639,869 Series C shares, 274,784
Series D shares and 59,937 Series E shares purchased by Sevin Rosen Fund V
L.P., 29,139 Series B shares, 27,356 Series C shares, 11,748 Series D
shares and 2,562 Series E shares purchased by Sevin Rosen V Affiliates
Fund L.P. and 3,571 Series B shares and 2,007 Series C shares purchased by
Sevin Rosen Bayless Management Company. Mr. Shrigley, a principal of our
company, is an employee of Sevin Rosen Bayless Management Company, the
operating management company for each of the Sevin Rosen family of funds
and entities. Mr. Shrigley does not have voting or dispositive power with
respect to the shares held by such entities.

(5) Consists of 327,680 Series C shares and 164,756 Series D shares purchased
by SVE Star Ventures Enterprises No. V, a German Civil Law Partnership
(with limitation of liability), 21,490 Series D shares and 62,500 Series E
shares purchased by SVM Star Ventures Managementgesellschaft mbH Nr. 3,
172,212 Series E shares purchased by SVE Star Ventures Enterprises No.
VII, a German Civil Law Partnership (with limitation of liability) and
73,818 Series C shares and 15,287 Series E shares purchased by SVM Star
Ventures Managementgesellschaft mbH Nr. 3 and Co. Beteiligungs KG Nr. 2.

(6) Consists of 838,114 Series D shares, 57,500 Series E shares and 50,000
Series F shares purchased by Excelsior Private Equity Fund II, Inc. Mr.
Lindgren, a director of our company, is the Chief Investment Officer of
Excelsior Private Equity Fund II, Inc., and shares voting and dispositive
power with respect to the shares held by this entity.

Investors' Rights Agreement. In connection with the issuance and sale of
our Series F preferred stock, we entered into an amended and restated
Investors' Rights Agreement with all of the holders of our preferred stock and
warrants to purchase our preferred stock. Pursuant to this agreement, these
holders are provided with registration rights and information rights. See
"Description of Capital Stock--Registration Rights." In addition, this
agreement provides that in the event we create a separate entity to operate in
Europe or Asia and that entity proposes to sell securities for equity
financing purposes, we will give Draper Fisher Jurvetson ePlanet Ventures,
L.P., referred to as ePlanet, a right of first offer to purchase up to 40% of
those shares, subject to various exclusions. ePlanet will be prohibited from
owning more than 49% of any such entity. In addition, ePlanet's right will
terminate upon the earliest to occur of an initial public offering of the
foreign entity, a sale of all or substantially all of the assets of the
foreign entity, a merger or other series of transactions in which the holders
of the capital stock of the foreign entity immediately prior to the
transaction cease to own more than 50% of the voting power of the foreign
entity or ePlanet ceases to own more than 40% of the common stock issuable
upon conversion of the Series F preferred stock purchased from us by ePlanet
in December 1999. ePlanet's right will also terminate upon the sale of all or
substantially all of the assets of ReleaseNow.com or a merger or other series
of transactions in which our stockholders immediately prior to the transaction
cease to own more than 50% of our voting power.

Indemnification Agreements. We have entered into indemnification agreements
with our officers and directors and their related funds containing provisions
which may require us, among other things, to indemnify our officers and
directors and their related funds against certain liabilities that may arise
by reason of their status or service as officers or directors or deemed
controlling persons (other than liabilities arising from willful misconduct of
a culpable nature) and to advance their expenses, including tax payments,
incurred as a result of any proceeding against them as to which they could be
indemnified. We also intend to execute such agreements with our future
directors and executive officers. See "Management--Limitation of Liability and
Indemnification Matters."

Employment Agreements. We have entered into employment agreements and
option acceleration agreements with each of Eric J. Holstege, Michael J.
Maulick, Frank D. Maylett, Carolyn A. Rogers, David A. Roman and Joan P.
Walsh. For more information on these agreements, see "Management--Employment
Agreements and Change of Control Arrangements."

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We have permitted each of our executive officers and certain other employees
the ability to exercise their stock options prior to vesting in the underlying
shares. All such exercises are subject, if not otherwise accelerated, to
repurchase at cost upon an employee's termination of providing us services.

Promissory Notes. In June 1999 and February 2000, we entered into notes with
some of our executive officers and our Chairman of the Board to allow them to
exercise options and purchase shares of our common stock in the following
amounts with the current values based on a price per share of $15.00
representing the midpoint of the filing range:

<TABLE>
<CAPTION>
June 1999
---------
Number Current
Note of Shares Value of
Officer Name Amount Purchased Shares
------------ ---------- --------- ----------
<S> <C> <C> <C>
Eric J. Holstege............................. $1,008,408 253,885 $3,808,275
Michael J. Maulick........................... 1,750,000 350,000 5,250,000
Carolyn A. Rogers............................ 1,378,170 345,597 5,183,955
David A. Roman............................... 151,191 37,500 562,500
Joan P. Walsh................................ 236,792 62,500 937,500

<CAPTION>
February 2000
-------------
Number Current
Note of Shares Value of
Officer Name Amount Purchased Shares
------------ ---------- --------- ----------
<S> <C> <C> <C>
Michael J. Maulick........................... 1,080,000 100,000 $1,500,000
Frank D. Maylett............................. 597,319 67,500 1,012,500
David A. Roman............................... 1,645,751 212,500 3,187,500
</TABLE>

Each note is secured by a pledge of the stock purchased with the proceeds of
the note, and the shares so purchased may not be transferred until released
from the pledge. In connection with Ms. Rogers' appointment as Chairman of the
Board in November 1999, we amended her note to provide that it will become
immediately due and payable one year after the earliest to occur of the end of
her employment with us, our initial public offering or our acquisition by
another company. The June 1999 and February 2000 notes accrue interest at a
rate of 5.37% and 6.56% per annum, respectively, compounded annually. All of
the notes become payable in one lump sum in June 2004 and February 2005,
respectively. In addition, all of the notes are subject to acceleration in the
event the maker:

. fails to pay principal or interest when due;

. ceases employment with us, except that Ms. Rogers' repayment terms in
such event are extended as described above; or

. becomes insolvent.

All of the notes accelerate one year after the date we or substantially all
of our assets are acquired, subject to a reduced time frame in the event of a
pooling acquisition.

The holders of common stock issued upon conversion of our preferred stock
upon consummation of this offering and the holders of warrants are entitled to
registration rights. See "Description of Capital Stock--Registration Rights"
for more information on these registration rights.

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RECENT DEVELOPMENTS

The Get Software Asset Acquisition

On February 18, 2000, we acquired substantially all of the assets of Get
Software.com, a partnership that provides international and domestic end-users
the ability to electronically purchase, register, upgrade and download software
from publishers registered with Get Software within a secure online
environment. The total consideration of approximately $3,012,000 consisted of
174,321 shares of our common stock with an estimated fair value of $2,440,000,
$496,000 in cash and an estimated $76,000 in acquisition costs. In addition, we
are obligated to pay an additional $200,000 over calendar year 2000 if the
acquired business meets predetermined revenue goals. Upon completion of the
offering, the shares of our common stock issued and reserved for issuance in
connection with the asset acquisition will constitute approximately 1.14% of
our common stock. To secure the indemnification obligations under the asset
purchase agreement, 27,778 of the shares of our common stock issued to Get
Software are being held in escrow until August 18, 2001. In connection with the
Get Software asset acquisition, each of the partners of Get Software entered
into a non-competition agreement with us.

Recent Option Grants

In January 1999 and February 1999, we granted options to purchase our common
stock and direct stock issuances to employees and consultants as follows:

. in January, 100,000 shares subject to options with four year vesting and
7,500 shares subject to a fully-vested direct stock issuance; and

. in February, 412,250 shares subject to four year vesting and 17,500
shares subject to fully-vested direct stock issuance.

Deferred compensation associated with these options is approximately $1.8
million. This amount will be amortized to expense on an accelerated basis over
the vesting periods of the applicable grants, generally four years.

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<PAGE>

PRINCIPAL STOCKHOLDERS

The following table indicates beneficial ownership of our common stock as of
February 29, 2000, assuming the conversion of preferred stock, by:

. each stockholder whom we know to beneficially own 5% or more of our
outstanding common stock;

. each of our directors and the named executive officers; and

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

Unless otherwise indicated, the address of each beneficial owner listed
below is c/o ReleaseNow.com Corporation, 990 Commercial Street, San Carlos,
California, 94070. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and generally includes voting
or dispositive power with respect to securities. Except as indicated by the
footnotes below, we believe, based on information furnished to us, that the
persons and entities named in the table below have sole voting and dispositive
power with respect to all shares of common stock shown as beneficially owned by
them, subject to community property laws, where applicable. The percentage of
shares beneficially owned is based on 11,976,814 shares of common stock
outstanding as of February 29, 2000 and 15,226,814 shares of common stock
outstanding after the completion of this offering. In computing the number of
shares of common stock beneficially owned by a person and their percentage
ownership, options held by that person that are currently exercisable or
exercisable within 60 days of February 29, 2000 are deemed to be outstanding.
These option shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other stockholder.

<TABLE>
<CAPTION>
Percentage of
Shares
Beneficially
Number of Owned
Shares -----------------
Beneficially Before After
Name or Group of Beneficial Owners Owned Offering Offering
- ----------------------------------------------- ------------ -------- --------
<S> <C> <C> <C>
Draper Fisher Jurvetson funds (1).............. 2,462,799 20.6% 16.2%
400 Seaport Court, Suite 250
Redwood City, CA 94063
Sevin Rosen funds (2).......................... 1,792,548 15.0 11.8
550 Lytton Avenue
Palo Alto, CA 94301
Excelsior Private Equity Fund II, Inc. (3)..... 945,614 7.9 6.2
c/o U.S. Trust Corporation
114 West 47th Street
New York, NY 10036
Star Ventures funds (4)........................ 837,743 7.0 5.5
Possartstr 9
81679 Munchen Germany
Steven T. Jurvetson (1)........................ 2,462,799 20.6 16.2
David Shrigley (2)............................. 1,792,548 15.0 11.8
Asad Jamal (5)................................. 1,000,000 8.4 6.6
Douglas A. Lindgren (3)........................ 945,614 7.9 6.2
Michael J. Maulick (6)......................... 452,500 3.8 3.0
Carolyn A. Rogers (7).......................... 341,597 2.9 2.2
Clydene Bultman................................ -- -- --
Eric J. Holstege (8)........................... 258,885 2.2 1.7
David A. Roman (9)............................. 250,000 2.1 1.6
Joan P. Walsh (10)............................. 235,000 1.9 1.5
Frank D. Maylett (11).......................... 112,500 * *
Michael Vanneman (12).......................... 42,841 * *
All current directors and executive officers as
a group (11 persons) (13)..................... 6,851,443 56.2 43.7
</TABLE>
- --------
* Represents beneficial ownership of less than 1% of our common stock.

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<PAGE>

(1) Consists of 1,373,570 shares held by Draper Fisher Associates Fund III,
L.P. and 89,229 shares held by Draper Fisher Partners, LLC and 1,000,000
shares held by Draper Fisher Jurvetson ePlanet Ventures, L.P. Mr.
Jurvetson, a director of our company, is a managing director of each of
Draper Fisher Associates Fund III, L.P. and Draper Fisher Partners, LLC
and is a member of the investment committee for Draper Fisher Jurvetson
ePlanet Ventures, L.P., shares voting and dispositive power with respect
to the shares held by such entities and disclaims beneficial ownership of
these shares except to the extent of his pecuniary interest therein. Mr.
Jamal, a director of our company, is a member of the investment committee
for Draper Fisher Jurvetson ePlanet Ventures, L.P., shares voting and
dispositive power with respect to these shares and disclaims beneficial
ownership of these shares except to the extent of his pecuniary interest
therein.
(2) Consists of 1,713,705 shares held by Sevin Rosen Fund V L.P., 73,265
shares held by Sevin Rosen V Affiliates Fund L.P. and 5,578 shares held by
Sevin Rosen Bayless Management Company. Mr. Shrigley, a director of our
company, is an employee of Sevin Rosen Bayless Management Company, the
operating management company for each of the Sevin Rosen funds and
entities. Mr. Shrigley does not have voting and dispositive power with
respect to the shares held by these entities.
(3) Consists of 945,614 shares held by Excelsior Private Equity Fund II, Inc.,
for which Mr. Lindgren, a director of our company, serves as Chief
Investment Officer. Mr. Lindgren disclaims beneficial ownership of these
shares except to the extent of his pecuniary interest therein.
(4) Consists of 492,436 shares held by SVE Star Ventures Enterprises No. V, a
German Civil Law Partnership (with limitation of liability), 172,212
shares held by SVE Star Ventures Enterprises No. VII, a German Civil Law
Partnership (with limitation of liability), 89,105 shares held by SVM Star
Ventures Managementgesellschaft mbH Nr. 3 & Co. Beteiligungs KG Nr.2, and
83,990 shares held by SVM Star Ventures Managementgesellschaft mbH Nr. 3.
(5) Consists of 1,000,000 shares held by Draper Fisher Jurvetson ePlanet
Ventures L.P. Mr. Jamal, a director of our company, is a member of the
investment committee for Draper Fisher Jurvetson ePlanet Ventures, L.P.,
shares voting and dispositive power with respect to these shares and
disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest therein.

(6) Includes 450,000 shares of common stock subject to a right of repurchase
held by our company, of which 16,000 shares are held by Mr. Maulick's
children. This repurchase right currently lapses with respect to, and Mr.
Maulick and his children acquire, a vested interest in 2,083 shares per
month, will acquire a vested interest in an additional 87,500 shares on
May 27, 2000, and will acquire a vested interest in 9,375 shares per month
thereafter, so long as Mr. Maulick continues to provide services to our
company.
(7) Consists of 9,000 shares held by Ms. Rogers' children, and 332,597 held by
Ms. Rogers.
(8) Includes 253,885 shares of common stock subject to a right of repurchase
held by our company. This repurchase right has lapsed with respect to and
Mr. Holstege has acquired a vested interest in 115,751 shares as of
February 29, 2000, and Mr. Holstege will continue to acquire a vested
interest in an additional 4,455 shares per month, so long as he continues
to provide services to our company. Also includes 5,000 shares of common
stock issuable upon exercise of stock options exercisable within 60 days
of February 29, 2000. These options have a weighted average exercise price
of $10.80. These options vest in 48 equal monthly installments.
(9) Includes 250,000 shares of common stock subject to a right of repurchase
held by our company. This repurchase right has lapsed with respect to and
Mr. Roman has acquired a vested interest in 42,187 shares as of February
29, 2000, and Mr. Roman will continue to acquire a vested interest in an
additional 5,208 shares per month, so long as Mr. Roman continues to
provide services to our company.
(10) Includes 62,500 shares of common stock subject to a right of repurchase
held by our company. This repurchase right has lapsed with respect to and
Ms. Walsh has acquired a vested interest in 30,468 shares as of February
29, 2000, and Ms. Walsh will continue to acquire a vested interest in an
additional 2,343 shares per month, so long as Ms. Walsh continues to
provide services to our company. Also includes 172,500 shares of common
stock issuable upon the exercise of stock options exercisable within 60
days of February 29, 2000. These options have an average weighted exercise
price of $8.25. These options vest in 48 equal monthly installments.

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<PAGE>

(11) Includes 67,500 shares of common stock subject to a right of repurchase
held by our company. This repurchase right has lapsed with respect to and
Mr. Maylett has acquired a vested interest in 5,208 shares as of February
29, 2000, and Mr. Maylett will continue to acquire a vested interest in
1,302 shares per month, will acquire a vested interest in 1,250 shares on
June 16, 2000 and an additional 1,406 per month thereafter, so long as he
continues to provide services to our company. Also includes 45,000 shares
of common stock issuable upon exercise of stock options exercisable within
60 days of February 29, 2000. These options have an average weighted
exercise price of $8.22. These options vest as to 520 shares per month, as
to 5,000 shares on June 16, 2000 and an additional 416 per month
thereafter.
(12) Mr. Vanneman is no longer an employee as of October 1999.
(13) Includes 1,083,885 shares subject to a right of repurchase held by our
company. Also includes 222,500 shares of common stock issuable upon the
exercise of stock options exercisable within 60 days of February 29, 2000.
These options have an average weighted exercise price of $8.30.

The total number of outstanding shares used to calculate the percentages in
the above table does not include the exercise of the over-allotment option. If
the over-allotment option to purchase up to an additional 487,500 shares is
exercised in full, the selling stockholder, Matthew Klein, may sell up to
97,500 shares, and we will sell the remaining shares. Mr. Klein beneficially
owns 4.3% of our common stock before the offering and upon completion of the
sale of the shares subject to the over-allotment option, will beneficially own
2.7% of our common stock. During the past three years Mr. Klein has served as a
director, President, acting Chief Executive Officer, Treasurer and Secretary of
ReleaseNow.com. He no longer holds any of these positions.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

General

The following description of our securities and provisions of our amended
and restated certificate of incorporation and bylaws is only a summary. You
should also refer to the copies of our restated certificate and bylaws which
have been filed with the Securities and Exchange Commission as exhibits to our
registration statement, of which this prospectus forms a part, and to the
provisions of Delaware law.

Upon the closing of this offering and amendment of our restated certificate,
our authorized capital stock will consist of 50,000,000 shares of common stock,
par value $0.001, and 2,500,000 shares of preferred stock, par value $0.001.

Common Stock

As of February 29, 2000, there were 11,976,814 shares of common stock
outstanding and held of record by 130 stockholders, assuming conversion of all
shares of preferred stock into common stock. Based on the number of shares
outstanding as of that date and giving effect to the issuance of shares of
common stock in this offering, there will be 15,226,814 shares of common stock
outstanding upon the closing of the offering, assuming no exercise of
outstanding options and warrants.

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of the stockholders. Holders of common stock are
entitled to receive dividends ratably, if any, as may be declared by the board
of directors out of legally available funds, subject to any preferential
dividend rights of any outstanding preferred stock. Upon our liquidation,
dissolution or winding up, the holders of common stock are entitled to receive
ratably our net assets available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding preferred stock.
Holders of common stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of common stock are, and the shares
offered by us in this offering will be, upon receipt of payment for the shares,
fully paid and nonassessable. The rights, preferences and privileges of holders
of common stock are subject to, and may be adversely affected by, the rights of
holders of shares of any series of preferred stock which we may designate and
issue in the future without further stockholder approval.

Preferred Stock

Upon the closing of this offering, all outstanding shares of our preferred
stock will automatically convert into shares of common stock. Pursuant to our
restated certificate, the board of directors will be authorized, without
further stockholder approval, to issue from time to time up to an aggregate of
2,500,000 shares of preferred stock in one or more series and to fix or alter
the designations, preferences, rights and any qualifications, limitations or
restrictions of the shares of each series, including the dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption,
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designations of these series. The board of
directors, without further stockholder approval, can issue preferred stock with
voting, conversion or other rights that could adversely affect the voting power
and other rights of common stockholders, including the loss of voting control
to others. The issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control. The issuance of preferred stock
may have the effect of decreasing the market price of the common stock. Upon
the closing of the offering, there will be no shares of preferred stock
outstanding, and we have no present plans to issue any shares of preferred
stock.

Warrants

As of February 29, 2000, we had warrants outstanding to purchase up to an
aggregate of 73,147 shares of our stock, exercisable as follows:

. up to 21,000 shares of Series A preferred stock at an exercise price of
$1.00 per share (as adjusted to reflect a 2-for-1 stock split in June
1996), which expires on July 31, 2003;

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<PAGE>

. up to 35,000 shares of Series B preferred stock at an exercise price of
$1.40 per share, which expires on July 31, 2003;

. up to 6,692 shares of Series C preferred stock at an exercise price of
$3.736 per share, which expires on July 10, 2002;

. up to 6,142 shares of Series D preferred stock at an exercise price of
$7.49 per share, which expires on April 16, 2006; and

. up to 4,313 shares of Series F preferred stock at an exercise price of
$8.00 per share, which expires September 9, 2006.

Registration Rights

We have entered into a registration rights agreement with some of our
stockholders. After this offering, based on our capitalization as of February
29, 2000, the holders of approximately 8,562,914 shares of common stock
issuable upon conversion of the outstanding preferred stock and issuable upon
the exercise of warrants will be entitled to registration rights with respect
to their shares. Any group of holders of at least 30% of the securities with
registration rights can require us to register all or part of their shares at
any time following six months after this offering, so long as certain
thresholds are met with respect to the amount of securities to be sold. After
we have completed two such registrations we are no longer subject to these
demand registration rights. In addition, holders of registrable securities may
also require us to include their shares in future registration statements that
we file, subject to a cutback at the option of any underwriter of such an
offering. Except in the case of our initial public offering, in which a full
cutback is permissible, the underwriters must permit holders of registrable
securities to sell at least 30% of the shares being offered. Holders of
registrable securities may also require us, twice in any 12 month period, to
register their shares with the Securities and Exchange Commission. Upon any of
these registrations, these shares will be freely tradable in the public market
without restriction.

Anti-Takeover Effects of Provisions of Delaware Law and our Certificate of
Incorporation and Bylaws

Delaware Law. We are subject to the provisions of Section 203 of the
Delaware General Corporation Law. Subject to exceptions, Section 203 prohibits
a publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years from the date of
the transaction in which the person became an interested stockholder, unless
the interested stockholder attained this status with the approval of the board
of directors or unless the business combination is approved in a prescribed
manner. A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to exceptions, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years did own, 15% or
more of the corporation's voting stock. This statute could prohibit or delay
the accomplishment of mergers or other takeovers or change in control attempts
with respect to us and, accordingly, may discourage attempts to acquire us.

Charter Documents. Provisions of our restated certificate and bylaws may be
deemed to have an antitakeover effect and may delay, defer or prevent a tender
offer or takeover attempt that a stockholder might consider to be in his best
interest, including those attempts that might result in a premium over the
market price for the shares held by our stockholders. Our certificate of
incorporation also provides that all stockholder action must be effected at a
duly called meeting of stockholders and not by written consent. In addition,
our certificate of incorporation and bylaws do not permit our stockholders to
call a special meeting of stockholders. Only the board of directors is
permitted to call a special meeting of stockholders.

Advance Notice Requirements for Stockholder Proposals and Director
Nominations. Our bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual meeting of stockholders, must provide timely
notice thereof in writing. To be timely, a stockholder's notice must be
delivered to or mailed and received at our principal executive offices

74
<PAGE>

not less than 120 days prior to the date of our annual meeting. Our bylaws also
specify requirements as to the form and content of a stockholder's notice.
These provisions may preclude stockholders from bringing matters before an
annual meeting of stockholders or from making nominations for directors at an
annual meeting of stockholders.

Authorized But Unissued Shares. The authorized but unissued shares of common
stock and preferred stock are available for future issuance without stockholder
approval. These additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional capital, stock
splits corporate, acquisitions, employee benefit plans and stockholder rights
plans. The existence of authorized but unissued shares of common stock and
preferred stock could render more difficult or discourage an attempt to obtain
control of us by means of a proxy contest, tender offer, merger or otherwise.

Classified Board of Directors; Removal. Upon the closing of this offering,
our directors will be divided into three classes. The number of directors will
be distributed among the three classes so that each class will consist of one-
third of the board of directors. The classification of the board of directors
will have the effect of requiring at least two annual stockholder meetings,
instead of one, to replace a majority of the directors which could have the
effect of delaying or preventing a change in control of ReleaseNow.com. Our
restated certificate will authorize only the board of directors to fill
vacancies, including newly created directorships. Our restated certificate will
also provide that directors may be removed by stockholders only for cause and
only by the affirmative vote of holders of two-thirds of the outstanding shares
of voting stock.

Supermajority Vote to Amend Charter and Bylaws. Upon the closing of this
offering, our restated certificate and bylaws will each provide that our bylaws
may only be amended by a two-thirds vote of the outstanding shares. In
addition, our restated certificate will provide specifically that its
provisions related to bylaw amendments, staggered board, calling of special
meetings of stockholders, procedure for stockholder actions and indemnification
may only be amended by a two-thirds vote of the outstanding shares.

Compliance with California law

We are currently subject to Section 2115 of the California General
Corporation Law. Section 2115 provides that, regardless of a company's legal
domicile, certain provisions of California corporate law will apply to that
company if more than 50% of its outstanding voting securities are held of
record by persons having addresses in California and the majority of the
company's operations occur in California. As an example of Section 2115's
effects, while we are subject to Section 2115, stockholders may cumulate votes
in electing directors. This means that each stockholder may vote the number of
votes equal to the number of candidates multiplied by the number of votes to
which the stockholder's shares are normally entitled in favor of one candidate.
This potentially allows minority stockholders to elect some members of the
board of directors. When we are no longer subject to Section 2115, cumulative
voting will not be allowed, unless it is specifically permitted in our
certificate of incorporation, and a holder of more than 50% of our voting stock
will be able to control the election of all directors. In addition to this
difference, Section 2115 has the following additional effects:

. enables removal of directors with or without cause with majority
stockholder approval;

. places limitations on the distribution of dividends;

. extends additional rights to dissenting stockholders in any
reorganization, including a merger, sale of assets or exchange of shares;
and

. provides for information rights and required filings in the event we
effect a sale of assets or complete a merger.

We anticipate that our common stock will be qualified for trading as a
national market security on the Nasdaq National Market and that we may have at
least 800 stockholders of record by the record date for our

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<PAGE>

2001 annual meeting of stockholders. If these two conditions occur, then we
will no longer be subject to Section 2115 as of the record date for our 2001
annual meeting of stockholders.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Equiserve LLP.

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<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering there has been no public market for our common stock.
As described below, only a limited number of shares will be available for sale
shortly after this offering due to contractual and legal restrictions on
resale. Nevertheless, sales of substantial amounts of our common stock in the
public market following the offering could cause the market price of our common
stock to decline and could affect our ability to raise capital on terms
favorable to us.

Upon completion of the offering, based on shares outstanding as of February
29, 2000 and assuming no exercise of outstanding options or warrants after that
date, we will have 15,226,814 shares of common stock outstanding. Of this
amount, all of the shares offered by this prospectus will be freely tradable,
without restrictions, in the public market. The remaining 11,976,814 shares are
"restricted" under the Securities Act of 1933, which means they were originally
sold in offerings that were not subject to a registration statement filed with
the Securities and Exchange Commission. These restricted shares may be resold
only through registration under the Securities Act of 1933 or an exemption from
registration, such as provided through Rule 144 or Rule 701.

In addition to the 11,976,814 shares discussed above, as of February 29,
2000, there were outstanding options to purchase 1,083,699 shares of common
stock under our stock plans, warrants to purchase 73,147 shares of common stock
and 4,200,000 shares that are or, upon effectiveness of our year 2000 equity
plans, will be reserved for issuance under our equity plans. At an assumed
effective date for this offering of April 15, 2000, 281,918 of the 1,083,699
outstanding option shares will be vested. The shares issuable upon exercise of
the options and warrants are also restricted, and may be sold only upon
registration under the Securities Act of 1933 or an exemption from
registration, such as provided through Rule 144 or Rule 701.

Lock-up Agreements

The holders of 11,976,814 shares of common stock, the holders of all of the
warrants and the holders of options which will be vested 180 days after an
assumed effective date of this offering of April 15, 2000 are subject to a 180-
day "lock-up" with respect to these shares. This generally means that they
cannot sell these shares during the 180 days following the date of this
prospectus, even if they are otherwise freely saleable pursuant to Rule 144,
Rule 701 or an effective registration statement. Lehman Brothers may, in its
sole discretion, waive the restrictions of the lock-up agreements at an earlier
time without prior notice or announcement and allow one or more stockholders to
sell all or any portion of their shares. After the 180-day lock-up period
expires, these shares may be sold in accordance with Rule 144, Rule 701 or
pursuant to an effective registration statement.

Rule 144

Generally

In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares for at least one year, including the holding period
of any prior owner who is not an affiliate, is entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

. 1% of the then outstanding shares of our common stock (approximately
shares immediately after this offering); or

. the average weekly trading volume of our common stock on the Nasdaq
National Market during the four calendar weeks preceding the date on
which notice of sale is filed with the Securities and Exchange
Commission.

Sales under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current information about us.

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<PAGE>

Rule 144(k)

A person who is not an "affiliate" of ours for at least 90 days immediately
preceding his or her sale of our stock and who has beneficially owned his or
her shares for at least two years, including the holding period of any prior
owner who is not an affiliate, is entitled to freely sell these shares under
Rule 144(k) without regard to the limitations described above.

Rule 701

Any of our employees or consultants who purchased shares under a written
compensatory plan or contract is entitled to rely on the resale provisions of
Rule 701, which permits nonaffiliates to resell their Rule 701 shares starting
90 days after the date of this prospectus without having to comply with the
public information, holding period, volume limitation or notice provisions of
Rule 144. However, the 180-day lock-up will preclude their sale until the end
of the lock-up period. We intend to register these shares on a Form S-8.

Affiliates

Persons deemed to be our affiliates may rely on Rule 144 to resell their
shares but are prohibited from using Rule 144(k). Affiliates may resell their
shares under Rule 701 beginning 90 days after the date of this prospectus by
complying with all aspects of Rule 144 except the holding period requirement.
However, the 180-day lock-up will preclude affiliates' resales until the end of
the lock-up period.

Registration Rights

We are bound by a registration rights agreement, pursuant to which the
holders of up to 8,489,767 shares outstanding as of February 29, 2000 and
73,147 shares subject to warrants held by Venture Lending & Leasing Inc.,
Imperial Bank and Comdisco, Inc. may require us to register their shares. Of
these, excluding the warrant shares which are discussed below, all but
3,524,996 shares are freely saleable immediately upon completion of the
offering without exercising these registration rights, subject to the
requirements of Rule 144, including manner of sale and volume limitations. In
addition, following this offering, we intend to register all outstanding option
shares, whether vested or unvested, plus an additional 4,200,000 shares that
are or, upon effectiveness of the offering, will be reserved for issuance under
our equity and employee stock purchase plans. Upon effectiveness of that
registration statement, the vested option shares will be freely tradable in the
public market. If the warrantholders net-exercise their shares, which is the
process of using the gain in value of the underlying common stock to pay for
the exercise of the warrants and thus reducing the number of shares received
upon exercise, the acquired shares would be freely saleable immediately upon
completion of the offering. If the warrantholders do not net-exercise, their
shares would not be freely saleable under Rule 144. However, as discussed
above, the holders of the warrants are entitled to require us to register the
shares underlying the warrants pursuant to the registration rights agreement.
See "Capital Stock--Registration Rights."

Application of Rules

Pursuant to one or more of the above rules, the following securities
outstanding as of February 29, 2000 will be freely saleable upon expiration of
the 180-day lock-up period:

.8,976,272 shares of common stock;

. 73,147 shares of common stock issuable upon the exercise of warrants held
by Venture Lending & Leasing, Inc., Imperial Bank and Comdisco, Inc.,
assuming the warrantholders net-exercise the warrants, and subject to
reduction by the numbers of shares used as the exercise price; and

. 281,918 shares of common stock issuable upon the exercise of stock
options which are vested 180 days after an assumed effective date for
this offering of April 15, 2000.

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<PAGE>

Of the remaining 3,000,542 shares of common stock outstanding as of February
29, 2000, 801,222 are subject to vesting and repurchase by us and therefore are
not permitted to be sold until vested, 1,200,000 will be eligible for sale
pursuant to Rule 144 as of December 30, 2000, 824,999 will be eligible for sale
pursuant to Rule 144 as of January 19, 2001 and 174,321 will be eligible for
sale pursuant to Rule 144 as of February 18, 2001.

If there were no lock-up agreements or the underwriters chose to waive the
restrictions in all of the lock-up agreements, 6,254,177 of the shares
outstanding as of February 29, 2000 would be immediately eligible for sale into
the public markets, subject to the requirements of Rule 144, including manner
of sale and share volume limitations.

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UNDERWRITING

Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, the underwriters named
below, for whom Lehman Brothers Inc., CIBC World Markets Corp. and Wit
SoundView Corporation are acting as representatives, have each agreed to
purchase from us and the selling stockholder the respective number of shares of
common stock shown opposite its name below:

<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Lehman Brothers Inc.........................................
CIBC World Markets Corp.....................................
Wit SoundView Corporation...................................
----
Total.....................................................
====
</TABLE>

The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement and that, if any of the shares of
common stock are purchased by the underwriters under the underwriting
agreement, all of the shares of common stock that the underwriters have agreed
to purchase under the underwriting agreement must be purchased. The conditions
contained in the underwriting agreement include the requirement that the
representations and warranties made by us to the underwriters are true, that
there is no material change in the financial markets and that we deliver to the
underwriters customary closing documents.

The representatives have advised us that the underwriters propose to offer
the shares of common stock directly to the public at the public offering price
set forth on the cover page of this prospectus, and to dealers, who may include
the underwriters, at this public offering price less a selling concession not
in excess of $ per share. The underwriters may allow, and the dealers may
reallow, a concession not in excess of $ per share to brokers and dealers.
After the offering, the underwriters may change the offering price and other
selling terms.

We and the selling stockholder have granted to the underwriters an option to
purchase up to a total of 487,500 additional shares of common stock,
exercisable to cover over-allotments, if any, at the public offering price less
the underwriting discount shown on the cover page of this prospectus. The
underwriters may exercise this option at any time until 30 days after the date
of the underwriting agreement. If this option is exercised, each underwriter
will be committed, so long as the conditions of the underwriting agreement are
satisfied, to purchase a number of additional shares of common stock
proportionate to the underwriter's initial commitment, as indicated in the
table above and we will be obligated, under the over-allotment option, to sell
the shares of common stock to the underwriters.

The following table shows the per share and total underwriting discounts and
commissions to be paid to the underwriters by us and the selling stockholder.
The underwriting fee is expected to be approximately 7% of the public offering
price. The underwriting fee amounts are shown assuming both no exercise and
full exercise of the underwriters' option to purchase additional shares.

<TABLE>
<CAPTION>
Paid by the
Paid by ReleaseNow.com Selling Stockholder
------------------------- -------------------------
No Exercise Full Exercise No Exercise Full Exercise
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Per share................ $ $ $ $
Total.................... $ $ $ $
</TABLE>

80
<PAGE>

We will pay the expenses of the offering on behalf of the selling
stockholder, excluding underwriting discounts and commissions. We estimate that
the total expenses of the offering, excluding underwriting discounts and
commissions, will be approximately $1,400,000.

We and the selling stockholder have agreed that, without the prior consent
of Lehman Brothers, we will not, directly or indirectly, offer, sell or
otherwise dispose of any shares of common stock or any securities that may be
converted into or exchanged for any shares of common stock for a period of 180
days from the date of this prospectus, except that we may, without their
consent, grant options and sell shares under our incentive and purchase plans,
although the shares may not be resold in the public market during the lock-up
period. All of our executive officers, directors and stockholders holding all
of the shares of our capital stock, including all of the holders of the
preferred stock and the warrants, have agreed under lock-up agreements that,
without prior written consent, they will not, directly or indirectly, offer,
sell or otherwise dispose of any shares of common stock or any securities that
may be converted into or exchanged for any shares of common stock for the
period ending 180 days after the date of this prospectus. Lehman Brothers may,
in its sole discretion, waive the restrictions of the lock-up agreements at an
earlier time without prior notice or announcement and allow one or more
stockholders to sell all or any portion of their shares. See "Shares Eligible
for Future Sale."

Prior to the offering, there has been no public market for the shares of
common stock. The initial public offering price will be negotiated between the
representatives and us. In determining the initial public offering price of the
common stock, the representatives will primarily consider, among other things
and in addition to prevailing market conditions:

. our historical performance and capital structure;

. estimates of our business potential and earning prospects;

. an overall assessment of our management; and

. the consideration of the above factors in relation to market valuations
of companies in related businesses.

Application will be made to have our common stock approved for quotation on
the Nasdaq National Market under the symbol "RNOW."

We and the selling stockholder have agreed to indemnify the underwriters
against liabilities, including liabilities under the Securities Act and
liabilities arising from breaches of the representations and warranties
contained in the underwriting agreement, and to contribute to payments that the
underwriters may be required to make for these liabilities.

Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purposes of pegging, fixing or
maintaining the price of the common stock.

The underwriters may create a short position in the common stock in
connection with the offering, which means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create
a short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.

The representatives also may impose a penalty bid on underwriters and
selling group members. This means that, if the representatives purchase shares
of common stock in the open market to reduce the underwriters' short position
or to stabilize the price of the common stock, they may reclaim the amount of
the selling concession from the underwriters and selling group members that
sold those shares as part of the offering.

81
<PAGE>

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of these purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the securities by purchasers
in an offering.

Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the
representatives will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.

Wit Soundview Corporation intends to distribute shares electronically by use
of a prospectus in electronic format that will be made available on an Internet
Web site maintained by Wit SoundView Corporation's affiliate, Wit Capital
Corporation.

Entities affiliated with Draper Fisher Jurvetson, a stockholder of
ReleaseNow.com, are stockholders of Wit Capital Group, Inc. Other than this
relationship and its participation in this offering, Wit Capital Group, Inc.
has no relationship with ReleaseNow.com or any of its founders or significant
stockholders.

Fidelity Capital Markets, a division of National Financial Services
Corporation, is acting as an underwriter in this offering, and will be
facilitating electronic distribution through the Internet, intranet and other
proprietary electronic technology. A prospectus in electronic format is being
made available on an Internet Web site maintained by Fidelity Capital Markets.

Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
the sale is made.

Purchasers of the shares of common stock offered in this prospectus may be
required to pay stamp taxes and other charges under the laws and practices of
the country of purchase, in addition to the offering price listed on the cover
page of this prospectus.

The representatives have informed us that they do not intend to confirm the
sales of shares of common stock offered by this prospectus to any accounts over
which they exercise discretionary authority in excess of 5% of the shares
offered by them.

At our request, the underwriters have reserved up to 350,000 shares of the
common stock offered by this prospectus for sale to our officers, directors,
employees and their family members and to our business associates at the
initial public offering price set forth on the cover page of this prospectus.
Business associates include individuals who work for entities that provide us
with services or consulting expertise. These shares will not be subject to the
180-day lock-up agreement. These persons must commit to purchase no later than
the close of business on the day following the date of this prospectus. The
number of shares available for sale to the general public will be reduced to
the extent these persons purchase the reserved shares.

82
<PAGE>

LEGAL MATTERS

Certain legal matters with respect to the legality of the issuance of the
shares of common stock offered hereby will be passed upon for ReleaseNow.com by
Brobeck, Phleger & Harrison LLP, Palo Alto, California. As of the date of this
prospectus, attorneys employed by Brobeck, Phleger & Harrison LLP and funds
associated with the firm beneficially own an aggregate of 88,572 shares of our
common stock. Pillsbury Madison & Sutro LLP, Palo Alto, California, is acting
as counsel for the underwriters in connection with various legal matters
relating to the shares of common stock offered by this prospectus.

EXPERTS

The financial statements of ReleaseNow.com as of December 31, 1998 and 1999
and for each of the three years in the period ended December 31, 1999 included
in this prospectus have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given upon the authority
of said firm as experts in auditing and accounting.

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act of 1933 with respect to the
shares to be sold in the offering. This prospectus, which is a part of the
registration statement, does not contain all of the information contained in
the registration statement. For further information with respect to
ReleaseNow.com and the shares to be sold in the offering, reference is made to
the registration statement and the exhibits and schedules filed with the
registration statement. However, statements contained in this prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. As a result, you should refer to the copy of the
contract, agreement or other document filed as an exhibit to the registration
statement, each statement being qualified in all respects by this reference.

You may read and copy all or any portion of the registration statement or
any reports, statements or other information that we file at the Securities and
Exchange Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents, upon payment
of a duplicating fee, by writing to the Securities and Exchange Commission.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the operation of the public reference rooms. Our filings
with the Securities and Exchange Commission, including the registration
statement, are also available to you without charge on their Web site
(http://www.sec.gov).

This prospectus contains statistical data regarding Internet usage and other
industry estimates that we obtained from industry publications, including
reports generated by the International Data Corporation and The Gartner Group.
These industry publications generally indicate that they have obtained their
information from sources believed to be reliable, but we do not guarantee the
accuracy and completeness of their information and we have not independently
verified their data.

83
<PAGE>

RELEASENOW.COM CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................................... F-2

Consolidated Balance Sheet................................................. F-3

Consolidated Statement of Operations....................................... F-4

Consolidated Statement of Stockholders' Equity............................. F-5

Consolidated Statement of Cash Flows....................................... F-6

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

F-1
<PAGE>

RELEASENOW.COM CORPORATION

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
ReleaseNow.com Corporation

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash
flows present fairly, in all material respects, the financial position of
ReleaseNow.com at December 31, 1998 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.

PricewaterhouseCoopers LLP

San Jose, California
January 21, 2000, except as to
Note 12 which is as of
February 29, 2000

F-2
<PAGE>

RELEASENOW.COM CORPORATION

CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share data)

<TABLE>
<CAPTION>
Pro Forma
Stockholder's
December 31, Equity at
------------------ December 31,
1998 1999 1999
-------- -------- -------------
(unaudited)
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents................... $ 3,198 $ 14,435
Accounts receivable, net of allowance of $72
and $89, respectively...................... 102 153
Short-term investments...................... 2,100 2,200
Other current assets........................ 208 365
-------- --------
Total current assets....................... 5,608 17,153
-------- --------
Property and equipment, net.................. 1,858 2,999
Acquired technology, net..................... -- 928
Other non-current assets..................... 294 769
-------- --------
$ 7,760 $ 21,849
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable............................ $ 1,662 $ 3,440
Accrued liabilities......................... 490 1,676
Equipment loan, current..................... 205 58
Note payable, current....................... 150 160
Capital lease obligation, current........... -- 291
-------- --------
Total current liabilities.................. 2,507 5,625
Equipment loan............................... 58 --
Note payable................................. 342 182
Capital lease obligation..................... -- 679
-------- --------
2,907 6,486
-------- --------
Commitments (Note 13)

Stockholders' equity:
Convertible preferred stock, issuable in
series, $0.001 par value; 8,854,828 shares
authorized; 4,964,771 and 7,664,768 shares
issued and outstanding, respectively,
actual; 2,500,000 shares authorized, no
shares issued and outstanding, pro forma... 5 8 $ --
Common Stock, $0.001 par value; 16,145,172
shares authorized, actual; 1,136,229 and
2,748,734 shares issued and outstanding,
respectively, actual; 50,000,000 shares
authorized, 10,413,502 shares issued and
outstanding, pro forma (unaudited)......... 1 2 10
Additional paid-in capital.................. 19,811 56,809 56,809
Employee notes receivable................... -- (5,283) (5,283)
Unearned stock compensation................. (1,885) (3,740) (3,740)
Accumulated deficit......................... (13,079) (32,433) (32,433)
-------- -------- --------
Total stockholders' equity................. 4,853 15,363 $ 15,363
======== ======== ========
$ 7,760 $ 21,849
======== ========
</TABLE>

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

F-3
<PAGE>

RELEASENOW.COM CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)

<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1997 1998 1999
------- ------- ---------
<S> <C> <C> <C>
Net revenues...................................... $ 2,349 $ 6,573 $ 12,749
Cost of net revenues.............................. (1,899) (5,882) (11,083)
------- ------- ---------
Gross profit...................................... 450 691 1,666

Operating expenses:
Sales and marketing (exclusive of non-cash stock-
based compensation of $0 in 1997, $42 in 1998
and $677 in 1999)............................... 1,685 3,802 7,574
Product development and operations (exclusive of
non-cash stock-based compensation of $0 in 1997,
$89 in 1998 and $700 in 1999)................... 1,305 3,216 5,946
General and administrative (exclusive of non-cash
stock-based compensation of $45 in 1997, $58 in
1998 and $3,122 in 1999)........................ 1,049 1,432 2,902
Stock compensation expense....................... 45 189 4,499
Amortization of acquired technology.............. -- -- 382
------- ------- ---------
Total operating expenses........................ 4,084 8,639 21,303
------- ------- ---------
Loss from operations.............................. (3,634) (7,948) (19,637)
Interest income................................... 85 230 453
Interest expense.................................. (76) (60) (170)
Other loss........................................ -- (78) --
------- ------- ---------
Net loss.......................................... (3,625) (7,856) (19,354)
Deemed preferred stock dividend................... -- -- (3,840)
------- ------- ---------
Net loss available to common stockholders......... $(3,625) $(7,856) $ (23,194)
======= ======= =========
Net loss per share available to common
stockholders:
Basic and diluted................................ $ (5.66) $ (7.92) $ (15.96)
======= ======= =========
Weighted average shares.......................... 639,908 991,526 1,453,631
======= ======= =========
Pro forma net loss per share available to common
stockholders:
Basic and diluted (unaudited).................... $ (2.64)
=========
Weighted average shares (unaudited).............. 7,329,908
=========
</TABLE>

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

F-4
<PAGE>

RELEASENOW.COM CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share and per share data)

<TABLE>
<CAPTION>
Convertible
Preferred Stock Common Stock Additional Unearned Total
---------------- ----------------- Note Paid-In Stock Accumulated Stockholders'
Shares Amount Shares Amount Receivable Capital Compensation Deficit Equity
--------- ------ --------- ------ ---------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1996................... 2,101,424 $ 2 1,002,500 $ 1 $ -- $ 2,503 $ -- $ (1,598) $ 908
Issuance of common stock
subject to repurchase.. -- -- 379,993 -- (51) 53 -- -- 2
Issuance of common stock
pursuant to exercise of
stock options.......... -- -- 9,583 -- -- 1 -- -- 1
Repurchase of common
stock.................. -- -- (309,933) 51 (43) -- -- 8
Stock compensation
expense................ -- -- -- -- -- 35 -- -- 35
Issuance of Series C
convertible preferred
stock at $3.736 per
share.................. 1,472,227 2 -- -- -- 5,482 -- -- 5,484
Issuance of Series C
warrants............... -- -- -- -- -- 13 -- -- 13
Net loss................ -- -- -- -- -- -- -- (3,625) (3,625)
--------- --- --------- --- ------- ------- ------- -------- --------
Balance at December 31,
1997................... 3,573,651 4 1,082,143 1 -- 8,044 -- (5,223) 2,826
Issuance of common stock
subject to repurchase.. -- -- 8,200 -- -- 3 -- -- 3
Issuance of common stock
pursuant to exercise of
stock options.......... -- -- 45,885 -- -- 6 -- -- 6
Repurchase of common
stock.................. -- -- -- -- -- -- -- -- --
Issuance of Series D
convertible preferred
stock at $6.98 per
share.................. 1,391,120 1 -- -- -- 9,684 -- -- 9,685
Unearned stock
compensation........... -- -- -- -- -- 2,074 (2,074) -- --
Amortization of unearned
stock compensation..... -- -- -- -- -- -- 189 -- 189
Net loss................ -- -- -- -- -- -- -- (7,856) (7,856)
--------- --- --------- --- ------- ------- ------- -------- --------
Balance at December 31,
1998................... 4,964,771 5 1,136,228 1 -- 19,811 (1,885) (13,079) 4,853
Issuance of common stock
subject to repurchase.. -- -- 1,259,447 1 (5,321) 5,320 -- -- --
Stock compensation
expense................ -- -- -- -- 2,313 -- -- 2,313
Issuance of common stock
pursuant to exercise of
stock options.......... -- -- 203,059 -- -- 127 -- -- 127
Repayments of
stockholder notes
receivable............. -- -- -- -- 38 -- -- -- 38
Issuance of Series E
convertible preferred
stock at $8.00 per
share.................. 1,499,997 2 -- -- -- 11,930 -- -- 11,932
Issuance of Series F
convertible preferred
stock at $10.00 per
share.................. 1,200,000 1 -- -- -- 11,999 -- -- 12,000
Issuance of Series D
warrants............... -- -- -- -- -- 38 -- -- 38
Issuance of Series F
warrants............... -- -- -- -- -- 30 -- -- 30
Issuance of common stock
in conjunction with the
purchase of Client
Server Designs......... -- -- 150,000 -- -- 1,200 -- -- 1,200
Allocation of discount
on preferred stock..... -- -- -- -- -- 3,840 -- -- 3,840
Deemed preferred stock
dividend............... -- -- -- -- -- (3,840) -- -- (3,840)
Unearned stock
compensation........... -- -- -- -- -- 4,041 (4,041) -- --
Amortization of unearned
stock compensation..... -- -- -- -- -- -- 2,186 -- 2,186
Net loss................ -- -- -- -- -- -- -- (19,354) (19,354)
--------- --- --------- --- ------- ------- ------- -------- --------
Balance at December 31,
1999................... 7,664,768 $ 8 2,748,734 $ 2 $(5,283) $56,809 $(3,740) $(32,433) $ 15,363
========= === ========= === ======= ======= ======= ======== ========
</TABLE>

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

F-5
<PAGE>

RELEASENOW.COM CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.......................................... $(3,625) $(7,856) $(19,354)
Adjustments to reconcile net loss to net cash used
in operating activities:
Allowance for doubtful accounts.................. -- 72 17
Loss on abandonment of fixed asset............... -- 78 --
Depreciation and amortization.................... 188 549 1,592
Warrant expenses................................. 13 -- 68
Stock compensation expense....................... 45 189 4,499
Changes in assets and liabilities, excluding
effect of acquisition:
Accounts receivable.............................. (122) (26) (68)
Other current assets............................. 165 (174) (157)
Other assets..................................... (120) (175) (147)
Accounts payable................................. 310 1,193 1,778
Accrued liabilities.............................. 247 231 858
------- ------- --------
Net cash used in operating activities............ (2,899) (5,919) (10,914)
------- ------- --------
Cash flows from investing activities:
Purchase of short-term investments................ -- (2,100) (2,200)
Sale of short-term investments.................... -- -- 2,100
Purchase of property and equipment, net........... (979) (1,486) (2,278)
Cash used in acquisition of Client Server Designs,
Inc.............................................. -- -- (183)
------- ------- --------
Net cash used in investing activities............ (979) (3,586) (2,561)
------- ------- --------
Cash flows from financing activities:
Proceeds from issuance of convertible preferred
stock, net of issuance costs..................... 5,484 9,685 23,932
Proceeds from (repayment of) related party note
payable.......................................... (13) (35) --
Proceeds from equipment loan...................... 398 -- --
Repayment of equipment loan....................... (151) (212) (205)
Proceeds from notes payable....................... -- 492 --
Repayment of notes payable........................ -- -- (150)
Proceeds from line of credit...................... 300 -- --
Repayments on line of credit...................... (300) -- --
Proceeds from capital leases...................... -- -- 1,089
Repayment of capital lease obligations............ -- -- (119)
Repayment of stockholder notes.................... -- -- 38
Proceeds from issuance of common stock............ -- -- 127
------- ------- --------
Net cash provided by financing activities........ 5,718 9,930 24,712
------- ------- --------
Increase in cash and cash equivalents............. 1,840 425 11,237
Cash and cash equivalents at beginning of period.. 933 2,773 3,198
------- ------- --------
Cash and cash equivalents at end of period........ $ 2,773 $ 3,198 $ 14,435
======= ======= ========
Supplemental cash flow information:
Cash paid for interest............................ $ 43 $ 35 $ 118
Supplemental disclosure on non-cash investing and
financing activities:
Issuance of restricted common stock in exchange
for services..................................... $ 2 $ -- --
Issuance of restricted common stock pursuant to
the exercise of options in exchange for note
receivable....................................... $ 51 $ -- $ 5,210
Repurchase of restricted common stock pursuant to
cancellation of note receivable.................. $ (42) $ -- $ --
Issuance of common stock pursuant to the exercise
of options in exchange for employee receivable... $ -- $ 9 $ 111
Issuance of employee receivable to employees for
taxable stock compensation....................... $ -- $ -- $ 328
Issuance of common stock for acquisition of Client
Server Designs, Inc.............................. $ -- $ -- $ 1,200
</TABLE>

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

F-6
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

ReleaseNow.com Corporation (the "Company") has developed an e-commerce
infrastructure which is used to market, sell and deliver software and other
digital goods over the Internet. The Company also builds, hosts and manages the
e-commerce portion of its customers' web sites. Currently, the Company
generates revenue primarily from the sale of third-party software. The Company
was incorporated in Delaware in March 1994.

Principles of consolidated and basis of presentation

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, ReleaseNow.com Canada, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.

Use of estimates

The preparation of consolidated 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 consolidated
financial statements and reported amounts of revenues and expenses during the
reporting period. Such estimates include the allowance for doubtful accounts,
the economic life of the intangible assets, the valuation of deferred tax
assets and the value of the Company's common stock. Actual results could differ
from those estimates.

Revenue recognition

The Company derives its revenue primarily from sales of third-party software
and conducts its operations in two primary business models, either the
"principal sales" model or the "agent sales" model.

Principal Sales

When the Company acts as the principal in a transaction, the software
publisher grants the Company a license to distribute one or more of the
publisher's software products. The Company is responsible for setting the price
of the software, processing the order, performing credit card authorization
procedures, delivering the software product and collecting the proceeds from
the transaction. The Company also assumes credit risk with respect to the end-
user and is responsible for returns. The Company recognizes the full sale
amount as revenue upon the electronic delivery of the software. Under the
principal sales model, the Company is contractually obligated to pay to the
software publisher a specified percentage of the full sales amount as a royalty
payment. The amount payable to the software publisher is recorded as cost of
net revenues. The Company provides for estimated returns at the time of
delivery based upon historical data.

Agent Sales

When the Company acts as an agent in a transaction, the Company's role is
limited to processing information on behalf of the software publisher. The
Company provides the software publisher with its encrypted technology, provides
customer service and help functions and processes returns. Proceeds from the
transactions are collected directly by the software publisher. Under the agent
sales model, the software

F-7
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

publisher bears all the risks of rewards and ownership. The Company recognizes
the processing fee received for services rendered as revenue upon electronic
delivery of the software products. Net processing revenue has not been
significant to date.

Cash and cash equivalents

All highly liquid investments with a maturity of three months or less from
their date of purchase are considered to be cash equivalents.

Restricted cash

At December 31, 1999, the Company had a cash balance totaling $382,000 in
the form of certificates of deposit which were restricted from withdrawal. An
amount of $132,000 served as collateral to letters issued by the bank to the
Company's lessors as security deposits on long term leases and is included in
other non-current assets. The remaining $250,000 was held by the bank to serve
as collateral for charge-backs to the Company's merchant account, and is
included in cash and cash equivalents.

Short-term investments

The Company's short-term investments consist of debt securities with
maturities greater than three months at the time of issuance. The Company
classifies all short-term investments as available-for-sale in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS No. 115"). Accordingly, the
Company's short-term investments are carried at fair value as of the balance
sheet date. Unrealized gains and losses are reported net of related taxes as a
separate component of stockholder's equity. Additionally, the cost of
securities to be sold is based upon the specific identification method. At
December 31, 1998 and 1999, amortized cost approximated fair value and
unrealized gains and losses were insignificant.

The portfolio of short-term investments (including cash and cash
equivalents) consisted of the following:

<TABLE>
<CAPTION>
December 31,
--------------
1998 1999
------ -------
(in thousands)
<S> <C> <C>
Cash......................................................... $ 400 $ 22
Money market and money funds................................. 1,548 14,163
Certificates of deposits..................................... -- 250
Commercial paper............................................. 1,250 --
Bonds........................................................ 2,100 2,200
------ -------
$5,298 $16,635
====== =======
</TABLE>

Concentration of credit risk

Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash, cash equivalents, accounts
receivable and short-term investments. The Company's cash and cash equivalents
are invested in high credit quality financial institutions. The Company's
accounts receivable are primarily derived from software sales from customers
located in the United States, Canada and Europe. International sales accounted
for approximately 40% and 39% of total net revenues for the years ended
December 31, 1998 and 1999, respectively. The Company maintains reserves for
potential credit losses; historically such losses have not been significant
and within management's expectations.

F-8
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following table summarizes the revenue from customers in excess of 10%
of total revenue:

<TABLE>
<CAPTION>
December 31,
----------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Company A..................................................... 20% 10% --
Company B..................................................... 17% -- --
Company C..................................................... -- 34% 57%
Company D..................................................... -- 11% --
Company E..................................................... -- -- 16%
</TABLE>

At December 31, 1998, one customer represented 21% of gross accounts
receivable. At December 31, 1999, one customer represented 16% of gross
accounts receivable.

Fair value of financial instruments

The Company's financial instruments, including cash and cash equivalents,
short-term investments, accounts receivable and accounts payable are carried at
cost, which approximates their fair value because of the short-term maturity of
these instruments. The equipment loan and notes payable are also carried at
cost which approximates their fair value as the implicit rates for these
instruments approximate prevailing market rates.

Advertising costs

Advertising costs are recorded as an expense when incurred. The following
table sets forth advertising costs:

<TABLE>
<CAPTION>
December 31,
--------------
1997 1998 1999
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Advertising costs................................................ $206 $203 $323
</TABLE>

Product development and operations

Product development and operations expenses include expenses incurred to
develop, enhance, manage, monitor and operate the Company's electronic software
distribution systems. Effective January 1, 1999, the Company adopted the
provisions of Statement of Position No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP No. 98-1"). In
accordance with SOP No. 98-1, the costs to develop and enhance the Company's
electronic distribution systems incurred during the preliminary project stage
and the post implementation stage are expensed as incurred. Costs incurred
during the application and development stage, such as costs incurred in
connection with software configuration, development of interfaces, coding and
testing are capitalized and amortized on a straight-line basis-line over the
estimated periods of benefit, which is 2 years.

Property and equipment

Property and equipment including leasehold improvements, are stated at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally three to five years, or the lease term of
the respective asset, whichever is shorter.

F-9
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Intangible assets

Intangible assets resulting from the acquisition of Client Server Designs,
Inc. ("CSD") were estimated by management to be primarily associated with the
acquired technology (see Note 2). The recorded acquired technology is amortized
on a straight-line basis over the estimated periods of benefit, which is 2
years.

Impairment of long-lived assets

The Company continually monitors events and changes in circumstance that
could indicate that the carrying balances of long-lived assets, including
intangible assets, may not be recoverable in accordance with the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
When such events or changes in circumstances are present, the Company assesses
the recoverability of long-lived assets by determining whether the carrying
value of such assets will be recovered through undiscounted expected future
cash flows. If the total of the future cash flows is less than the carrying
amount of those assets, the Company recognizes an impairment loss based on the
excess of the carrying amount over the fair value of the assets.

Stock-based compensation

The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25") and Financial
Accounting Standards Board Interpretation No. 28, "Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award Plans," ("FIN No.
28") and complies with the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"). Under APB No. 25, compensation expense is based on the difference,
if any, on the date of the grant, between the fair value of the Company's stock
and the exercise price. SFAS No. 123 defines a "fair value" based method of
accounting for an employee stock option or similar equity investment. The pro
forma disclosures of the difference between compensation expense included in
net loss and the related cost measured by the fair value method are presented
in Note 9. The Company accounts for equity instruments issued to non-employees
in accordance with the provisions of SFAS No. 123 and Emerging Issues Task
Force No. 96-18, "Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling Goods or Services"
("EITF 96-8").

Stock split

In December 1996, the Board of Directors authorized a two-for-one share
split of the Company's common stock and preferred stock. All references in the
consolidated financial statements to the number of shares and per share amounts
of the Company's common stock and preferred stock have been retroactively
restated to reflect the increased number of common stock and preferred stock.

Pro forma stockholders' equity (unaudited)

Upon consummation of the offering, the conversion rate for all outstanding
shares of Series A, Series B, Series C, Series D, Series E and Series F
preferred stock will be a ratio of one share of common stock for each share of
preferred stock. Simultaneously, the shares of preferred stock will convert
into shares of common stock at such one-for-one conversion rate. The pro forma
effects of these transactions are unaudited and have been reflected in the
accompanying pro forma Stockholders' Equity at December 31, 1999.

F-10
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Net loss per share

The Company computes net loss per share available to common stockholders in
accordance with Statement of Financial Accounting Standards No. 128, "Earnings
per Share" ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98 ("SAB
98"). Under the provisions of SFAS No. 128 and SAB 98, basic and diluted net
loss per share available to common stockholders is computed by dividing the net
loss available to common stockholders for the period by the weighted average
number of common shares outstanding during the period. The calculation of
diluted net loss per share available to common stockholders excludes potential
common stock if the effect is anti-dilutive. Potential common shares are
comprised of unvested restricted common stock, incremental common shares
issuable upon the exercise of stock options and warrants and upon conversion of
Series A, Series B, Series C, Series D, Series E and Series F convertible
preferred stock. For the year ended December 31, 1999, net loss per share
available to common stockholders includes a charge of $3,840,000 to reflect the
deemed preferred stock dividend recorded in connection with the Series F
financing.

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

<TABLE>
<CAPTION>
December 31,
--------------------------------
1997 1998 1999
--------- --------- ----------
<S> <C> <C> <C>
Numerator
Net loss................................... $ (3,625) $ (7,856) $ (19,354)
Deemed preferred stock dividend............ -- -- (3,840)
--------- --------- ----------
Net loss available to common stockholders.. $ (3,625) $ (7,856) $ (23,194)

Denominator
Weighted average shares.................... 1,287,993 1,100,066 1,988,466
Weighted average unvested common shares
subject to repurchase..................... (648,085) (108,540) (534,835)
--------- --------- ----------
Denominator for basic and diluted
calculation................................ 639,908 991,526 1,453,631
========= ========= ==========
Net loss per share available to common
stockholders basic and diluted............. $ (5.66) $ (7.92) $ (15.96)
========= ========= ==========
</TABLE>

The following table sets forth common stock equivalents that are not
included in the diluted net loss per share calculation above because to do so
would be antidilutive for the periods below:

<TABLE>
<CAPTION>
December 31,
-----------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Weighted average effect of common stock
equivalents:
Unvested common stock subject to repurchase.... 648,085 108,540 534,835
Options outstanding............................ 306,021 645,988 1,215,938
Shares resulting from the conversion of the
Series A convertible preferred stock.......... 1,000,000 1,000,000 1,000,000
Series B convertible preferred stock.......... 1,101,424 1,101,424 1,101,424
Series C convertible preferred stock.......... 601,034 1,472,227 1,472,227
Series D convertible preferred stock.......... -- 727,957 1,391,120
Series E convertible preferred stock.......... -- -- 908,219
Series F convertible preferred stock.......... -- -- 3,287
Warrants to purchase convertible preferred
stock........................................ 59,190 62,692 68,385
--------- --------- ---------
Total common equivalents excluded from the
computation of earning per share as their
effect was antidilutive..................... 3,715,754 5,118,828 7,695,435
========= ========= =========
</TABLE>

F-11
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Pro forma net loss per share (unaudited)

Pro forma net loss per share available to common stockholders for the years
ended December 31, 1999 is computed using the weighted average number of common
shares outstanding, including the pro forma effects of the conversion of the
Company's Series A, Series B, Series C, Series D, Series E and Series F
convertible preferred stock into shares of the Company's common stock effective
upon the closing of the Company's initial public offering (the "Offering") as
if such conversion occurred on January 1, 1999, or at the date of original
issuance, if later. The resulting pro forma adjustment includes an increase in
the weighted average shares used to compute basic and diluted net loss per
share of 5,876,286 for the years ended December 31, 1999. The calculation of
diluted net loss per share available to common stockholders excludes potential
common shares as the effect would be anti-dilutive. Pro forma common equivalent
shares are comprised of unvested restricted common stock and additional common
shares issuable upon the exercise of stock options and warrants.

Income taxes

Income taxes are accounted for using an asset and liability approach, which
requires the recognition of taxes payable or refundable for the current year
and deferred tax liabilities and assets for the future tax consequences of
events that have been recognized in the Company's consolidated financial
statements or tax returns. The measurement of current and deferred tax
liabilities and assets are based on provisions of the enacted tax law; the
effects of future changes in tax laws or rates are not anticipated. The
measurement of deferred tax assets is reduced, if necessary, by the amount of
any tax benefits that, based on available evidence, are not expected to be
realized.

The Company elected to be taxed as a Subchapter S Corporation from its
inception through February 28, 1996, whereby the tax effects of the Company's
activities were accrued directly to its stockholders. Effective March 1, 1996,
the Company elected to terminate its status as a Subchapter S Corporation for
income tax purposes. As a result, deferred income taxes were established on the
date the Subchapter S Corporation status was terminated. Additionally, the
Company offset its accumulated deficit on the date of Subchapter S election
termination against its additional paid-in-capital as reflected in the
statement of changes in Stockholders' Equity.

Segment information

Effective January 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("SFAS No. 131"). The Company identifies
its operating segments based on business activities, management responsibility
and geographical location. The Company has organized its operations in a single
operating segment providing e-commerce solutions enabling the instant delivery
of digital goods over the Internet.

Comprehensive income

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

F-12
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

New accounting pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes a new model for
accounting for derivatives and hedging activities and supercedes and amends a
number of existing accounting standards. SFAS No. 133 requires that all
derivatives be recognized in the balance sheet at their fair market value and
the corresponding derivative gains or losses be either reported in the
statement of operations or as a deferred item depending on the type of hedge
relationship that exists with respect to such derivatives. In July 1999, the
Financial Accounting Standards Board issued SFAS No. 137 "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB statement No. 133" ("SFAS No. 137"). SFAS No. 137 deferred the
effective date until the first quarter ending June 30, 2000. The Company will
adopt SFAS No. 133 in its quarter ending June 30, 2000 and does not expect the
adoption of this pronouncement to have a material impact on its financial
condition or results of operations.

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition," which
provides guidance on the recognition, presentation, and disclosure of revenue
in financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosures
related to revenue recognition policies. Management believes that the impact of
SAB 101 would have no material effect on the financial position or results of
operations of the Company. In addition, the Company believes that SAB 101 will
not have an impact on whether the Company records gross or net revenues.

NOTE 2--ACQUISITION

As discussed in Note 1, the Company completed the acquisition of all
outstanding capital stock of CSD. The transaction was completed pursuant to the
Agreement and Plan of Reorganization, dated as of May 18, 1999 among the
Company, CSD and certain shareholders of CSD. Through this acquisition, the
Company acquired a proprietary software tool which allows for systematic
application development, rapid interactive design cycles and integration of
third-party technologies. The acquisition was accounted for using the purchase
method of accounting and accordingly, the net assets acquired and results of
operations of CSD have been included in the Company's consolidated financial
statements since the acquisition date. The total purchase price of $1,239,000
consisted of 150,000 shares of the Company's common stock valued at $1,200,000
and other acquisition related expenses totaling approximately $39,000. The
total purchase price was allocated to assets acquired, including tangible and
intangible assets, and liabilities assumed, based on their respective estimated
fair values at the acquisition date. The total purchase price was allocated as
follows (in thousands):

<TABLE>
<S> <C>
Fair value of tangible assets........................................ $ 73
Acquired technology.................................................. 1,310
Fair value of liabilities assumed.................................... (144)
------
$1,239
======
</TABLE>

The acquisition was structured as a tax-free exchange of stock, and
therefore, the differences between the recognized fair values of acquired net
assets, and their historical tax bases are not deductible for tax purposes.
Accordingly, a deferred tax liability has been recognized for the difference
between the assigned value of intangible assets for book purposes and the tax
basis of such assets in accordance with Statement of Accounting Standards No.
109, "Accounting for Income Taxes."

F-13
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following table presents the unaudited pro forma net revenues and net
loss available to common stockholders for the years ended December 31, 1998 and
1999 as if the acquisition had been consummated as of January 1, 1998 and 1999,
respectively.

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1998 1999
--------------- ---------------
(in thousands, except share and
per share amounts)
<S> <C> <C>
Net revenue.............................. $ 6,940 $ 12,762
Net loss available to common
stockholders............................ (8,124) (23,265)
Net loss per share available to common
stockholders
Basic and diluted...................... $ (7.12) $ (15.40)
Weighted average shares................ 1,141,526 1,510,344
</TABLE>

The unaudited pro forma results of operations do not necessarily reflect the
results that would have occurred had the acquisition occurred at the beginning
of the period presented or the results which may occur in the future.

NOTE 3--DETAILS OF BALANCE SHEET COMPONENTS

<TABLE>
<CAPTION>
December 31,
---------------
1998 1999
------ -------
(in thousands)
<S> <C> <C>
Property and equipment:
Equipment.................................................. $1,624 $ 3,085
Furniture and fixtures..................................... 182 349
Leasehold improvements..................................... 94 119
Software................................................... 724 1,408
------ -------
2,624 4,961
Less: Accumulated depreciation and amortization .......... (766) (1,962)
------ -------
$1,858 $ 2,999
====== =======
Intangible assets:
Acquired technology........................................ $ -- $ 1,310
Less: Accumulated amortization............................ -- (382)
------ -------
$ -- $ 928
====== =======
Accrued liabilities:
Accrued bonuses............................................ $ 172 $ 365
Accrued sales commission................................... 63 266
Accrued vacation........................................... 129 210
Accrued interest........................................... 62 46
Accrued legal and audit expenses........................... -- 295
Other...................................................... 64 494
------ -------
$ 490 $ 1,676
====== =======
</TABLE>

F-14
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

NOTE 4--RELATED PARTY TRANSACTIONS

From inception (March 1994), through early 1996, two of the Company's
significant stockholders provided certain advances to the Company for working
capital and property and equipment purchases totaling $55,000. In February
1996, the stockholders converted approximately $8,000 of such advances into
749,000 shares of restricted common stock. The Company entered into note
agreements with the stockholders for the remaining amounts due. The notes bore
interest at 5.32% per annum with principal and interest. One note was repaid
in 1997 for an amount of $13,000. The remaining note, which totaled $35,000 at
December 31, 1997, was repaid in full during 1998.

NOTE 5--BORROWINGS

Equipment loan

In June 1996, the Company obtained a capital equipment financing line (the
"Equipment Loan") which provides for the purchase of fixed assets of up to
$1,000,000. The Equipment Loan bears interest at 8% per annum with an
additional 1% commitment fee on borrowing up to a maximum of $10,000.
Additionally, upon execution of a draw-down, the Company is committed to an
additional interest payment in the amount of 12% of the draw-down amount. The
additional interest is due as a final payment at the end of the term of each
borrowing under the line. Additional interest totaled $62,000 and $46,000 at
December 31, 1998 and 1999, respectively. The Company is required to repay the
borrowings in equal monthly installments of principal plus interest over a 36
month period. The Company is required to maintain certain reporting and non-
financial covenants. At December 31, 1997 and 1998, the Company was in default
of the reporting covenants for which waivers were obtained. The loan is
collateralized by all of the Company assets, excluding intellectual property.

Note payable

In 1998, the Company entered into a note agreement with a bank for $492,000
to finance the purchase of software equipment. Borrowings under the note are
repayable in quarterly installments of $49,525 with the remaining balance due
October 1, 2001. The note bears interest at 13.602% per annum. The note is
collateralized by the software.

Future maturities for the note payable and the Equipment Loan as of
December 31, 1999 are as follows:

F-15
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 6--INCOME TAXES

The Company elected to be taxed as a Subchapter S Corporation from its
inception through February 28, 1996. Upon termination of its Subchapter S
Corporation status, the Company established deferred tax assets for the tax
effect of the cumulative difference between book and tax basis of assets and
liabilities. The net deferred tax assets at that date was fully off-set by a
valuation allowance as there was no carry-back potential and ultimate
realization was uncertain. The statement of operations and the effective tax
rate for the year ended December 31, 1996 would not have been different if the
Company had been a C Corporation for the twelve months ended December 31, 1996
because the Company was in a loss position in 1996. Accordingly, no pro forma
information has been provided. Significant components of the Company's deferred
tax assets were as follows:

<TABLE>
<CAPTION>
December 31,
--------------------------
1997 1998 1999
------- ------- --------
(in thousands)
<S> <C> <C> <C>
Net operating loss carryforwards................. $ 1,973 $ 4,707 $ 10,659
Depreciation and amortization.................... -- (25) (198)
Accruals and reserves............................ 37 93 122
Purchased technology, net........................ -- -- (371)
------- ------- --------
Total deferred tax assets........................ 2,010 4,775 10,212
Valuation allowance.............................. (2,010) (4,775) (10,212)
------- ------- --------
Net deferred tax assets.......................... $ -- $ -- $ --
======= ======= ========
</TABLE>

At December 31, 1999, the Company had approximately $28,000,000 of federal
and $14,700,000 of state net operating loss carryforwards available to offset
future taxable income which expire in varying amounts beginning in 2011 and
2002 for federal and state, respectively. Under the Tax Reform Act of 1986, the
amounts of benefits from net operating loss carryforwards may be impaired or
limited in certain circumstances. Events which cause limitations in the amount
of net operating losses that the Company may utilize in any one year include,
but are not limited to, a cumulative ownership change of more than 50%, as
defined, over a three year period.

NOTE 7--CONVERTIBLE PREFERRED STOCK

The Company's Certificate of Incorporation, as amended, authorized 8,854,828
shares of convertible preferred stock. Convertible preferred stock at December
31, 1999 consists of the following:

<TABLE>
<CAPTION>
Shares Proceeds Net
Date of ---------------------- Liquidation of Issuance
Series Issuance Authorized Outstanding Amount Costs
------ ------------- ---------- ----------- ----------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
A............. February 1996 1,021,000 1,000,000 $ 1,000 $ 991
B............. November 1996 1,136,427 1,101,424 1,542 1,521
C............. July 1997 1,478,921 1,472,227 5,500 5,484
D............. June 1998 1,468,480 1,391,120 9,710 9,685
E............. May 1999 1,500,000 1,499,997 12,000 11,932
F............. December 1999 2,250,000 1,200,000 12,000 12,000
--------- --------- ------- -------
8,854,828 7,664,768 $41,752 $41,613
========= ========= ======= =======
</TABLE>

F-16
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The difference between the offering price of $10.00 for Series F convertible
preferred stock and the deemed fair value of the stock on the date of the
transaction resulted in a beneficial conversion feature in the amount of
$3,840,000. The beneficial conversion feature was reflected as a preferred
dividend in the consolidated statement of operations. The holders of preferred
stock have various rights and preferences as follows:

Voting

Each share of Series A, B, C, D, E and F has voting rights equal to an
equivalent number of shares of common stock into which it is convertible.

Dividends

Holders of Series A, B, C, E and F convertible preferred stock are entitled
to receive non-cumulative dividends of $0.08, $0.112, $0.298, $0.64 and $0.80
per share, respectively, when and if declared by the Board of Directors.
Holders of Series D convertible preferred stock are entitled to receive
cumulative dividends at $0.558 per share, when and if declared by the Board of
Directors. The holders of Series D, Series E and Series F convertible preferred
stock are also entitled to receive dividends on common stock, when and if
declared by the Board of Directors, based on the number of shares of common
stock held, assuming conversion of all preferred shares into common stock on an
as-if converted basis. No dividends have been declared to date.

Liquidation

In the event of any liquidation, or sale of the Company, the holders of
Series D, E and F convertible preferred stock are entitled to receive an amount
of $6.98, $8.00 and $10.00 per share, respectively, plus all accrued but unpaid
dividends, prior to and in preference to any distributions to Series A, Series
B and Series C convertible preferred stock. In the event funds are sufficient
to make a complete distribution to the holders of Series D, E and F, the
holders of Series A, B and C convertible preferred stock are entitled to
receive $1.00, $1.40 and $3.736 per share, respectively, plus any declared but
unpaid dividends, prior to and in preference to any distribution to the holders
of common stock.

If a liquidation, dissolution, merger or acquisition occurs prior to January
31, 2001, the remaining assets after the aforementioned distribution, if any,
shall be distributed among the holders of Series A, B, C, D, E and F preferred
stock and common stock pro rata based on the number of common stock held by
each, (assuming conversion of all such preferred stock).

If a liquidation or dissolution occurs on or subsequent to January 31, 2001,
the remaining assets after the aforementioned distributions, if any, shall be
distributed among the holders of Series D, E and F preferred stock and common
stock pro rata based on the number of shares of stock held by each holder
(assuming conversion of all such preferred stock).

Conversion

Each share of Series A, B, C, D, E and F convertible preferred stock is
convertible into one share of common stock, subject to adjustment for dilution.
Such conversion is automatic upon either the completion of a public offering of
common stock for which the aggregate proceeds exceed $30,000,000 and a per
share price of $12.00, the completion of a public offering of common stock for
which the aggregate proceeds exceed $30,000,000 and a per share price of $9.60
and consent of at least 70% of the then outstanding preferred stock or by the
consent of the holders of 70% of the then outstanding convertible preferred
stock and 50% of the then outstanding Series D, E and F preferred stock.

F-17
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 8--COMMON STOCK

The Company's Certificate of Incorporation, as amended, authorizes the
Company to issue 16,145,171 shares of common stock. The Company has the right
to repurchase, at the original issue price, a declining percentage of certain
of the shares of common stock issued to the individuals under written
agreements with such individuals. Shares subject to repurchase totaled 25,782
and 786,936 as of December 31, 1998 and 1999, respectively.

In 1997, the Company entered into several severance agreements with
employees who were also stockholders. Under these agreements, the Company
waived its rights to repurchase a total of 385,811 shares of which 135,108
shares were not vested at the termination date and permitted accelerated
vesting of the shares. Accordingly the Company recognized additional
compensation expense of approximately $35,000 as of December 31, 1997.

In 1999, the Company entered into a severance agreement with an employee
who was also a stockholder. Under the severance agreement, the Company
permitted the accelerated vesting of a total of 28,563 unvested options.
Accordingly, the Company recognized additional compensation expense of
approximately $222,000. Additionally, the Company permitted the accelerated
vesting of a total of 247,401 options as part of the transition of the
Company's Chief Executive Officer to Chairman of the Board. Additional
compensation expense of $1,958,000 was recognized at December 31, 1999 based
on the difference between the intrinsic value of the options at the date of
grant and the intrinsic value of the options at the vesting modification date.

At December 31, 1999, the Company had reserved shares of common stock for
future issuance as follows:

<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Conversion of Series A preferred stock.......................... 1,021,000
Conversion of Series B preferred stock.......................... 1,136,427
Conversion of Series C preferred stock.......................... 1,478,921
Conversion of Series D preferred stock.......................... 1,468,480
Conversion of Series E preferred stock.......................... 1,500,000
Conversion of Series F preferred stock.......................... 2,250,000
Exercise of options under stock option plans.................... 1,978,288
----------
10,833,116
==========
</TABLE>

Preferred Stock Warrants

In connection with the Equipment Loan, the Company issued warrants to
purchase 21,000 and 35,000 shares of Series A and Series B preferred stock,
respectively, at $1.00 and $1.40 per share, respectively. The warrants expire
seven years from the date of issuance. The fair market value of the warrants
on the issuance date was approximately $16,000 and $38,000 as determined using
the Black-Scholes option pricing model and is recognized as additional
interest expense over the term of the equity financing line.

In connection with the Equipment Loan and the capital lease line ("Lease
Line"), the Company issued a warrant to purchase 6,692 shares of Series C
preferred stock at $3.736 per share, a warrant to purchase 6,142 shares of
Series D preferred stock at $7.49 per share and a warrant to purchase 4,313
shares of Series F preferred stock at $8.00 per share, respectively. The
warrants expire five, seven and seven years from the date of issuance,
respectively. The fair market value of the warrants on the issuance date was
$13,000, $38,000 and $30,000, respectively, as determined using the Black-
Scholes option pricing model and is recognized as interest expense over the
terms of the Equipment Loan and Lease Line. The weighted average fair value of
the warrants granted in 1996, 1997 and 1999 was $0.96, $1.94, and $6.50,
respectively.

F-18
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company estimated the fair value of each warrant using the Black-Scholes
option pricing model using the following assumptions:

<TABLE>
<CAPTION>
Year Ended
December 31,
------------------
1997 1998 1999
---- ---- --------
<S> <C> <C> <C>
Risk-free interest rate................................. 6.7% 5.9% 5.7-6.2%
Expected lives.......................................... term term term
Dividend yield.......................................... 0.0 0.0 0.0
Expected volatility..................................... 80% 80% 80%
</TABLE>

NOTE 9--STOCK OPTION PLANS

The Company has two stock option plans, the 1996 Stock Plan ("1996 Plan")
and the 1998 Stock Option/Stock Issuance Plan ("1998 Plan"). The Plans provide
for the granting of stock options to employees, officers, non-employees, Board
members and consultants of the Company. Options granted under the Plans may be
either incentive stock options or nonstatutory stock options. Incentive stock
options ("ISO") may be granted only to Company employees, officers, non-
employees, Board members and officers. Nonqualified stock options ("NSO") may
be granted to Company employees and consultants. The Company has reserved
3,612,646 shares of common stock for issuance under the Plans.

Options under the Plans may be granted for periods of up to ten years and at
prices no less than 85% of the estimated fair value of the shares on the date
of grant as determined by the Board of Directors, provided, however, that (i)
the exercise price of an ISO and NSO shall not be less than 100% and 85% of the
estimated fair value of the shares on the date of grant, respectively, and (ii)
the exercise price of an ISO and NSO granted to a 10% shareholder shall not be
less than 110% of the estimated fair value of the shares on the date of grant,
respectively. Options granted under the Plans vest at a rate of at least 20%
per year over no more than five years from the date the option is granted with
the initial vesting to occur no later than one year after the option grant
date. In the event that any of the shares issued upon exercise of an option is
subject to a right of repurchase in the Company's favor, such a repurchase
right shall lapse at the rate of at least 20% per year over five years (1996
Plan) and 25% per year over four years (1998 Plan) from the date the option is
granted.

F-19
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following table summarizes activity under the Plans for the years ended
December 31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
Options Outstanding
--------------------
Weighted
Options Average
Available Exercise
for Grant Shares Price
---------- ---------- --------
<S> <C> <C> <C>
Balance at December 31, 1996................ 384,000 113,500 $0.10
Additional shares authorized................ 360,118 -- --
Options granted at fair value............... (749,676) 749,676 0.18
Options exercised........................... -- (389,576) 0.14
Options canceled............................ 69,667 (69,667) 0.10
Options repurchased......................... 274,308 -- --
---------- ---------- -----
Balance at December 31, 1997................ 338,417 403,933 0.20
Additional shares authorized................ 777,528 -- --
Options granted at fair value............... (113,200) 113,200 0.66
Options granted below fair value............ (1,030,447) 1,030,447 3.20
Options exercised........................... -- (54,085) 0.18
Options canceled............................ 205,804 (205,804) 0.88
---------- ---------- -----
Balance at December 31, 1998................ 178,102 1,287,691 2.57
Additional shares authorized................ 1,975,000 -- --
Options granted below fair value............ (1,600,750) 1,600,750 5.24
Options exercised........................... -- (1,462,505) 3.72
Options canceled............................ 404,295 (404,295) 2.62
---------- ---------- -----
Balance at December 31, 1999................ 956,647 1,021,641 $5.06
========== ========== =====
</TABLE>

The following table summarizes information about stock options outstanding
and stock options vested and exercisable at December 31, 1999:

<TABLE>
<CAPTION>
Options
Options Outstanding Vested and
at December 31, 1999 Exercisable
--------------------- -----------
Weighted
Average
Remaining
Number Contractual
of Life Number of
Exercise Prices Shares (years) Shares
--------------- --------- ----------- -----------
<S> <C> <C> <C>
$0.14...................................... 28,500 7.5 17,593
0.36...................................... 16,511 7.9 7,812
1.00...................................... 15,833 8.3 4,584
1.50...................................... 5,417 8.5 989
3.50...................................... 376,380 9.1 28,813
5.00...................................... 273,000 9.5 --
8.00...................................... 306,000 9.7 3,124
--------- --- ------
1,021,641 9.3 62,915
========= === ======
</TABLE>

F-20
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Fair value disclosures

Had compensation cost for the Company's stock-based compensation plan been
determined based on the fair value at the grant dates for the awards under a
method prescribed by SFAS No. 123, the Company's net loss would have been
increased to the pro forma amounts indicated below (in thousands, except per
share data):

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Net loss available to common stockholders:
As reported................................... $(3,625) $(7,856) $(23,194)
======= ======= ========
Pro forma..................................... $(3,634) $(7,911) $(23,702)
======= ======= ========
Net loss per share available to common
stockholders:
As reported................................... $ (5.66) $ (7.92) $ (15.96)
======= ======= ========
Pro forma..................................... $ (5.68) $ (7.98) $ (16.31)
======= ======= ========
</TABLE>

The weighted average fair value of options granted with exercise prices at
fair value in 1997 and 1998 was $0.04 and $0.10, respectively. The weighted
average fair value of options granted with exercise prices below fair value in
1998 and 1999 was $1.30 and $4.00, respectively.

The Company calculated the fair value of each option grant on the date of
grant using the minimum-value method with the following assumptions:

<TABLE>
<CAPTION>
Year Ended
December 31,
-------------------------
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Risk-free interest rates.......................... 6.0-6.5% 4.3-5.6% 5.0-6.3%
Expected lives (in years)......................... 4.0 4.0 4.0
Dividend yield.................................... 0.0% 0.0% 0.0%
Expected volatility............................... 0.0% 0.0% 0.0%
</TABLE>

Because the determination of the fair value of all options granted after the
Company becomes a public entity will include an expected volatility factor in
addition to the factors described in the preceding paragraph and because
additional option grants are expected to be made each year, the above pro forma
disclosures are not representative of the pro forma effects of option grants on
reported net loss for future years.

Stock-based compensation

In connection with certain stock option grants during the years ended
December 31, 1998 and 1999, the Company recognized unearned compensation
totaling $2,074,000 and $4,041,000, respectively, which is being recognized
over the vesting periods of the related options, generally four years, using an
appropriate accelerated method. Amortization expense recognized during the
years ended December 31, 1998 and 1999 totaled approximately $189,000 and
$2,186,000, respectively.

The Company recorded $62,000 of stock-based compensation expense for the
fair value of options granted to non-employees during the year ended December
31, 1999. The fair value of the options granted to non-employees was determined
using the Black-Scholes option pricing model, assuming a weighted average risk-
free rate of 5.73%, the term life of the options of 10 years and a price
volatility of 80%. No dividend yield was assumed as the Company has not paid
dividends and has no intention to do so.

F-21
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 10--EMPLOYEE BENEFIT PLANS

Effective January 1, 1997, the Company adopted its 401(k) Profit Sharing
Plan (the "Plan"). All full-time employees who are at least 21 years old and
have completed three months of service are eligible to participate in the Plan.
Participants may contribute their earnings up to a maximum allowed under the
law. A discretionary profit sharing contribution may be made by the Company.
The Company has not made any contributions since inception.

NOTE 11--COMMITMENTS

Operating Lease

The Company leases office space and equipment under non-cancelable operating
leases expiring through the year 2004. Total rent expense was $100,000,
$196,000 and $371,000 for the years ended December 31, 1997, 1998 and 1999,
respectively.

Capital Lease

In April 1999, the Company obtained the Lease Line which provides for the
purchase of fixed assets up to $1,400,000. Borrowings are due in 42 equal
monthly installments beginning on their respective draw-down dates and accrue
interest at a rate of 8.296% per annum.

Future annual minimum lease payments under all noncancelable operating and
capital leases as of December 31, 1999 were as follows:

<TABLE>
<CAPTION>
Year Ending December 31, Capital Operating
------------------------ ---------- ----------
<S> <C> <C>
2000................................................. $ 384,000 $ 428,000
2001................................................. 384,000 443,000
2002................................................. 385,000 445,000
2003................................................. 34,000 434,000
2004................................................. -- 374,000
---------- ----------
Total minimum lease payments......................... 1,187,000 $2,124,000
==========
Less: amount representing interest.................. (217,000)
----------
Present value of capital lease payments............. 970,000
Less: current portion............................... (291,000)
----------
Capital lease obligations, non-current portion...... $ 679,000
==========
</TABLE>

Total rent expense for the years ended December 31, 1997, 1998 and 1999 was
approximately $100,000, $194,000 and $371,000, respectively.

NOTE 12--SUBSEQUENT EVENTS

Offering of Series F Preferred Stock

In January 2000, the Company completed an offering of additional shares of
Series F preferred stock. Pursuant to this offering, a total of 824,999 shares
of Series F preferred stock were sold at a price of $10.00 per share, for net
proceeds to the Company of approximately $8.2 million. The difference between
the offering price and the deemed fair value of the common stock on the date of
the transaction resulted in a beneficial conversion feature in the amount of
approximately $3.3 million. The beneficial conversion feature will be

F-22
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

reflected as a preferred dividend in the consolidated statement of operations
in the first quarter of fiscal year 2000. The holders of these shares of Series
F preferred stock have the same rights as those holders of the Series F shares
issued prior to December 31, 1999 as discussed in Note 7.

Initial Public Offering

In January 2000, the Company's Board of Directors authorized management to
file a registration statement with the Securities and Exchange Commission to
permit the Company to sell shares of its common stock to the public.

2000 Stock Option Plan

In January 2000, the Company's Board of Directors authorized the adoption of
the 2000 Stock Option Plan. The plan is intended to serve as the successor
program to the 1996 and 1998 Stock Option Plans, "The Plans". The 2000 plan
will become effective upon consummation of the offering. At that time, all
outstanding options under The Plans will be transferred to the 2000 plan, and
no further option grants will be made under The Plans.

2000 Employee Stock Purchase Plan

In January 2000, the Company's Board of Directors authorized the adoption of
the 2000 Employee Stock Purchase Plan. The plan will become effective
immediately upon consummation of this offering. The plan is designed to allow
the Company's eligible employees to purchase shares of the Company's stock, at
semi-annual intervals, with their accumulated payroll deductions.

Participants may contribute up to 15% of their earnings through payroll
deductions, and the accumulated deductions will be applied to the purchase of
shares on each semi-annual purchase date. The purchase price per share will be
equal to 85% of the fair market value per share on the participants' entry date
into the offering period or, if lower, 85% of the fair market value per share
on the semi-annual purchase date. Semi-annual purchase dates will occur on the
last business day of April and October each year. In no event may any
participant purchase more than 500 shares on any purchase date, and not more
than 50,000 shares may be purchased in total by all participants on any
purchase date.

Dispute Settlement

In January 2000, the Company agreed to a settlement of a shareholder dispute
resulting in the issuance of a total of 94,540 shares of common stocks. As a
result, the Company recorded an expense of $1.3 million during the first
quarter 2000.

Acquisition of Get Software.com

On February 28, 2000, the Company entered into an Asset Purchase Agreement
(the "Agreement") with Get Software.com (the "Acquired Company"), pursuant to
which the Company agreed to purchase assets from the Acquired Company. The
total consideration of approximately $3,012,000 consisted of 174,321 shares of
the Company's common stock with an estimated fair value of $2,440,000, $496,000
in cash and an estimated $76,000 in acquisition costs. The Agreement also
provides for the Company to pay contingent consideration of up to $200,000. The
additional consideration, due in $50,000 installments at the end of each
calendar quarter in 2000, is contingent upon attainment of certain revenue
objectives. The acquisition will be accounted for using the purchase method of
accounting, and accordingly, the purchase price will be allocated to
identifiable assets acquired, including intangible assets and liabilities
assumed, on the basis of their fair values.

F-23
<PAGE>

RELEASENOW.COM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Reverse Stock Split

On February 16, 2000, the Board of Directors authorized a two-for-one
reverse stock split of the Company's common stock and preferred stock. All
references in the consolidated financial statements to the number of shares and
per share amounts of the Company's common stock and preferred stock have been
retroactively restated to reflect the decrease number of common stock and
preferred stock.

Issuance of Stock Options (Unaudited)

During January and February 2000, the Company granted options to purchase
547,250 shares of common stock to existing and new employees at a weighted
average exercise price of $10.63 per share. In connection with these grants,
the Company recognized $1.8 million in unearned compensation that will be
recognized over the related vesting period.

F-24
<PAGE>

Inside back cover

Centered on the inside of the back cover of the prospectus is our logo.
<PAGE>

3,250,000 Shares

[LOGO OF RELEASENOW.COM]

Common Stock

-----------

PROSPECTUS
, 2000

-----------

Lehman Brothers

CIBC World Markets

Wit SoundView
<PAGE>

PART II

Information not Required in Prospectus

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of common stock being registered. All amounts are estimates
except the SEC registration fee, the NASD filing fee and The Nasdaq National
Market listing fee.

<TABLE>
<CAPTION>
Amount
To Be Paid
----------
<S> <C>
SEC registration fee............................................. $ 15,788
NASD filing fee.................................................. 5,500
Nasdaq National Market listing application fee................... 17,500
Printing and shipping fees....................................... 250,000
Legal fees and expenses.......................................... 750,000
Accounting fees and expenses..................................... 500,000
Blue Sky qualification fees and expenses......................... 15,000
Transfer agent and registrar fees................................ 20,000
Miscellaneous fees............................................... 76,212
----------
Total.......................................................... $1,400,000
==========
</TABLE>

Item 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, 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
Securities Act and is, therefore, unenforceable. Article VII, Section 6, of the
Registrant's Bylaws provides for mandatory indemnification of its directors and
officers and permissible indemnification of employees and other agents to the
maximum extent permitted by the Delaware General Corporation Law. The
Registrant's Restated Certificate of Incorporation (the "Certificate of
Incorporation") provides that, pursuant to Delaware law, its directors shall
not be liable for monetary damages for breach of the directors' fiduciary duty
as directors to the Company or its stockholders. This provision in the
Certificate of Incorporation does not eliminate the directors' fiduciary duty,
and in appropriate circumstances equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Company for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment
of dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws. The Registrant has entered into
Indemnification Agreements with its officers and directors, a form of which is
attached as Exhibit 10.1 hereto and incorporated herein by reference. The
Indemnification Agreements provide the Registrant's officers and directors with
further indemnification to the maximum extent permitted by the Delaware General
Corporation Law. The Registrant intends to purchase and maintain directors and
officers liabilities insurance. Reference is made to Section of the
Underwriting Agreement contained in Exhibit 1.1 hereto, indemnifying officers
and directors of the Registrant against certain liabilities.

II-1
<PAGE>

Item 15. Recent Sales of Unregistered Securities

Since February 29, 1997, Registrant has issued and sold the following
securities:

1. Since February 28, 1997, Registrant has issued and sold 576,842 shares of
common stock to directors, employees and consultants at prices ranging from
$0.14 to $3.50 per share, upon exercise of stock options and stock purchase
rights pursuant to the Registrant's 1996 Stock Plans for an aggregate purchase
price upon exercise of $619,578.14.

2. From July 25, 1997 through August 4, 1997, Registrant issued and sold an
aggregate of 1,472,227 shares of Series C preferred stock to investors
affiliated with Star Ventures, Draper Fisher Associates and Sevin Rosen funds
and to Graystone Venture Direct Equity, L.P. at $3.736 per share, for an
aggregate purchase price of $5,500,240.07.

3. On July 10, 1997, Registrant issued a warrant to purchase 6,692 shares of
Series C preferred stock to Imperial Bank at $3.736 per share for an aggregate
purchase price upon exercise of $25,001.31.

4. Since December 17, 1998, Registrant has issued and sold 1,521,218 shares
of common stock to directors, employees and consultants at prices ranging from
$3.50 to $10.80 per share, upon exercise of stock options and stock purchase
rights pursuant to the Registrant's 1998 Stock Plans for an aggregate purchase
price upon exercise of $8,377,027.00.

5. On June 23, 1998, Registrant issued and sold an aggregate of 1,391,120
shares of Series D preferred stock to investors affiliated with Star Ventures,
Draper Fisher Associates and Sevin Rosen funds and to Graystone Venture Direct
Equity, L.P. and Excelsior Private Equity Fund II, Inc. at $6.98 per share, for
an aggregate purchase price of $9,710,017.60.

6. On April 16, 1999, Registrant issued a warrant to purchase 6,142 shares
of Series D preferred stock to Comdisco, Inc. at $7.49 per share for an
aggregate purchase price upon exercise of $46,003.58.

7. On May 18, 1999, Registrant issued in exchange for all capital stock of
Client Server Designs, Inc., a California corporation, an aggregate of 150,000
shares of common stock to the acquired company's stockholders in connection
with the merger of Client Server Designs, Inc. with and into Registrant.

8. On May 24, 1999, Registrant issued and sold an aggregate of 1,499,997
shares of Series E preferred stock to investors affiliated with Star Ventures,
Draper Fisher Associates, Jon Gruber, Wheatley Partners and Sevin Rosen funds
and to Graystone Venture Direct Equity, L.P., Seligman Communications and
Information Fund, Inc., Admirals, L.P., Excelsior Private Equity Fund II, Inc.,
Seth I. Merrin and Anne E. Heyman, the Merrin Limited Partnership, Michael
Maulick, Carolyn Rogers, Lagunitas Partners, L.P., J. Patterson McBaine, Eric
Swergold and Isabelle Rogers Stepien at $8.00 per share for an aggregate
purchase price of $11,999,976.

9. On September 9, 1999, Registrant issued a warrant to purchase 4,313
shares of Series F preferred stock to Comdisco, Inc. at $8.00 per share for an
aggregate purchase price upon exercise of $34,504.

10. On December 30, 1999, and January 19, 2000 Registrant issued and sold an
aggregate of 2,024,999 shares of Series F preferred stock to investors
affiliated with Star Ventures, Draper Fisher Associates, Diserio Partners, Jon
Gruber, Wheatley Partners and Sevin Rosen funds, to Graystone Venture Direct
Equity, L.P., Seligman Communications and Information Fund, Inc., Excelsior
Private Equity Fund II, Inc., a trust controlled by Michael O. Maulick,
Lagunitas Partners, L.P., J. Patterson McBaine, Eric Swergold, Scott F. Wilson,
Milbank Wilson Capital Partners, the Harris Family 1998 Trust, Westport Asset
Fund Inc., Harron Capital RN Investment, LP, Silicon Valley Bancshares, the
ESOR & CO c/o Associated Trust Company, N.A., Wyon F. Wiegratz as a custodian,
Mark & Jeannette Harris, Dan Case and Dan Ho and to Brobeck, Phleger & Harrison
LLP and its employees at $10.00 per share for an aggregate purchase price of
$20,249,990.

II-2
<PAGE>

11. On January 26, 2000, Registrant issued 94,540 shares of common stock to
Jeffrey Mendellsohn in settlement of a dispute.

12. On February 18, 2000, Registrant issued in exchange for the assets of
Get Software.com, a California partnership, an aggregate of 174,321 shares of
common stock to the partners of Get Software.

The sales of the above securities referenced in numbers 2, 3 and 5 through
12 were deemed to be exempt from registration under the Securities Act in
reliance upon Section 4(2) of the Securities Act. The sales of the above
securities referenced in numbers 1 and 4 were deemed exempt from registration
under the Securities Act in reliance on Rule 701 promulgated under Section 3(b)
of the Securities Act as transactions by an issuer not involving any public
offering or transactions pursuant to compensation benefit plans and contracts
relating to compensation as provided under such Rule 701. The recipients of
securities in each such transaction represented their intentions to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof, and appropriate legends were affixed to the
share certificates issued in such transactions. All recipients had adequate
access, through their relationships with the Registrant, to information about
the Registrant.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Restated Certificate of Incorporation of Registrant.
3.2** Bylaws of Registrant.
4.1 Form of Registrant's Common Stock Certificate.
4.2** Form of Amended and Restated Investors' Rights Agreement dated
January 28, 2000.
4.3** Warrant to Purchase 21,000 shares of Series A preferred stock
dated as of July 31, 1996 granted by Registrant to Venture Lending
& Leasing Inc. at an exercise price of $1.00.
4.4** Warrant to Purchase 35,000 shares of Series B preferred stock
dated as of July 31, 1996 granted by Registrant to Venture Lending
& Leasing Inc. at an exercise price of $1.40.
4.5** Warrant to Purchase 6,692 shares of Series C preferred stock dated
as of July 10, 1997 granted by Registrant to Imperial Bank at an
exercise price of $3.736.
4.6** Warrant to Purchase 6,142 shares of Series D preferred stock dated
as of April 16, 1999 granted by Registrant to Comdisco, Inc. at an
exercise price of $7.49.
4.7** Warrant to Purchase 4,313 shares of Series F preferred stock dated
as of September 9, 1999 granted by Registrant to Comdisco, Inc. at
an exercise price of $8.00.
5.1 Opinion of Brobeck, Phleger & Harrison LLP regarding legality of
the securities being issued.
10.1** Form of Indemnification Agreement entered into by and between
Registrant and its directors and officers.
10.2** 1996 Stock Plan and related agreements, as amended.
10.3** 1998 Stock Option/Stock Issuance Plan, as amended, and related
agreements.
10.4** 2000 Stock Incentive Plan and related agreements.
10.5** 2000 Employee Stock Purchase Plan and related agreements.
10.6** Standard Industrial/Commercial Multi-Tenant Lease dated as of
August 10, 1998 by and between W.F. Batton Company, Inc. and
Registrant, as amended.
10.7+** Electronic Software Distribution Agreement dated as of June 28,
1999 by and between Macromedia, Inc. and Registrant, as amended.
10.8** Loan Agreement dated June 26, 1996 as amended, by and between
Venture Lending & Leasing, Inc. and Registrant.
10.9** Master Lease Agreement and Addendum dated April 16, 1999 by and
between Comdisco, Inc. and Registrant.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10.10** Letter Agreement dated November 10, 1999 by and between Carolyn A.
Rogers and Registrant, Stock Purchase Agreement and promissory
note secured by Stock Pledge Agreement.
10.11** Employment Letter Agreement dated September 29, 1998 by and
between Eric J. Holstege and Registrant.
10.12** Employment Letter Agreement dated June 9, 1999 by and between
Frank D. Maylett and Registrant.
10.13** Employment Letter Agreement dated May 20, 1999 by and between
Michael J. Maulick and Registrant.
10.14** Employment Letter Agreement dated December 7, 1998 by and between
Joan P. Walsh and Registrant.
10.15** Employment Letter Agreement dated February 17, 1999 by and between
David A. Roman and Registrant.
10.16** Form of Stock Purchase Agreement, Promissory Note and Stock Pledge
Agreement by and between Registrant and Messrs. Holstege, Maulick,
Roman and Ms. Walsh.
10.17+** Electronic Software Distribution Agreement by and between Network
ICE and Registrant.
21.1** Subsidiaries of Registrant.
23.1** Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit
5.1).
23.2 Consent of PricewaterhouseCoopers, LLP, Independent Accountants.
24.1** Power of Attorney.
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment will be requested for certain portions which have
been blacked out in the copy of the exhibit to be filed with the Securities
and Exchange Commission. The omitted information will be filed separately
with the Securities and Exchange Commission pursuant to the application for
confidential treatment.

(b) Financial Statement Schedule

<TABLE>
<S> <C>
Schedule II--Valuation and Qualifying Accounts........................... S-2
</TABLE>

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
consolidated financial statements or notes thereto.

Item 17. Undertakings

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Registrant's
Restated Certificate of Incorporation, the Registrant's Bylaws, the
Registrant's indemnification agreements 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 Securities 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 hereunder, 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 Securities Act and will be governed
by the final adjudication of such issue.

II-4
<PAGE>

The undersigned Registrant hereby undertakes that:

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

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

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Carlos, State of California, on this 5th day of April, 2000.

ReleaseNow.Com Corporation

/s/ Joan P. Walsh
By: _________________________________
Joan P. Walsh
Vice President, Finance and Chief
Financial Officer

Pursuant to 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
--------- ----- ----

<S> <C> <C>
* Chief Executive Officer, April 5, 2000
______________________________________ President and Director
(Michael J. Maulick) (Principal Executive
Officer)

/s/ Joan P. Walsh Vice President, Finance April 5, 2000
______________________________________ and Chief Financial
(Joan P. Walsh) Officer (Principal
Financial and Accounting
Officer)

* Director April 5, 2000
______________________________________
(Clydene Bultman)

* Director April 5, 2000
______________________________________
(David Shrigley)

* Director April 5, 2000
______________________________________
(Steven T. Jurvetson)

* Director April 5, 2000
______________________________________
(Asad Jamal)

* Director April 5, 2000
______________________________________
(Douglas Lindgren)

* Chairman of the Board April 5, 2000
______________________________________
(Carolyn A. Rogers)
</TABLE>

/s/ Joan P. Walsh
By: ___________________________
Joan P. Walsh
Attorney-in-Fact

* Signing under the Authority of a Power of Attorney previously filed with the
Securities and Exchange Commission.

II-6
<PAGE>

SCHEDULE I

To the Stockholders and Board of
ReleaseNow.com Corporation

In connection with our audits of the consolidated financial statements of
ReleaseNow.com Corporation as of December 31, 1998 and 1999 and for each of the
three years in the period ended December 31, 1999, which financial statements
are included in the Registration Statement, we have also audited the financial
data schedule listed in Item 16 herein.

In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents in all
material respects, the information required to be included therein.

PricewaterhouseCoopers LLP

San Jose, California
January 21, 2000

S-1
<PAGE>

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
Allowance Deferred
for Tax Asset
Doubtful Valuation
Accounts Account
--------- -----------
<S> <C> <C>
Balance, December 31, 1996.............................. -- 680,000
Increase to allowance................................. -- 1,330,000
Decrease to allowance................................. -- --
-------- -----------
Balance, December 31, 1997.............................. -- 2,010,000
Increase to allowance................................. 183,000 2,765,000
Decrease to allowance................................. (111,000) --
-------- -----------
Balance, December 31, 1998.............................. 72,000 4,775,000
Increase to allowance................................. 17,000 5,437,000
Decrease to allowance................................. -- --
-------- -----------
Balance, December 31, 1999.............................. $ 89,000 $10,212,000
======== ===========
</TABLE>

S-2
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.

3.1** Restated Certificate of Incorporation of Registrant.

3.2** Bylaws of Registrant.

4.1 Form of Registrant's Common Stock Certificate.

4.2** Form of Amended and Restated Investors' Rights Agreement dated
January 28, 2000.

4.3** Warrant to Purchase 21,000 shares of Series A preferred stock
dated as of July 31, 1996 granted by Registrant to Venture Lending
& Leasing Inc. with an exercise price of $1.00.

4.4** Warrant to Purchase 35,000 shares of Series B preferred stock
dated as of July 31, 1996 granted by Registrant to Venture Lending
& Leasing Inc. with an exercise price of $1.40.

4.5** Warrant to Purchase 6,692 shares of Series C preferred stock dated
as of July 10, 1997 granted by Registrant to Imperial Bank with an
exercise price of $3.736.

4.6** Warrant to Purchase 6,142 shares of Series D preferred stock dated
as of April 16, 1999 granted by Registrant to Comdisco, Inc. with
an exercise price of $7.49.

4.7** Warrant to Purchase 4,313 shares of Series F preferred stock dated
as of September 9, 1999 granted by Registrant to Comdisco, Inc.
with an exercise price of $8.00.

5.1 Opinion of Brobeck, Phleger & Harrison LLP regarding legality of
the securities being issued.

10.1** Form of Indemnification Agreement entered into by and between
Registrant and each of its directors and executive officers.

10.2** 1996 Stock Plan and related agreements, as amended.

10.3** 1998 Stock Option/Stock Issuance Plan, as amended, and related
agreements.

10.4** 2000 Stock Incentive Plan and related agreements.

10.5** 2000 Employee Stock Purchase Plan and related agreements.

10.6** Standard Industrial/Commercial Multi-Tenant Lease dated as of
August 10, 1998 by and between W.F. Batton Company, Inc. and
Registrant, as amended.

10.7+** Electronic Software Distribution Agreement dated as of June 28,
1999 by and between Macromedia, Inc. and Registrant, as amended.

10.8** Loan Agreement, dated June 26, 1996 as amended, by and between
Venture Lending and Leasing, Inc. and Registrant.

10.9** Master Lease Agreement and Addendum dated April 16, 1999 by and
between Comdisco, Inc. and Registrant.

10.10** Letter Agreement dated November 10, 1998 by and between Carolyn A.
Rogers and Registrant, Stock Purchase Agreement and promissory
note secured by Stock Pledge Agreement.

10.11** Employment Letter Agreement dated September 29, 1998 by and
between Eric J. Holstege and Registrant.

10.12** Employment Letter Agreement dated June 9, 1999 by and between
Frank D. Maylett and Registrant.

10.13** Employment Letter Agreement dated May 21, 1999 by and between
Michael J. Maulick and Registrant.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10.14** Employment Letter Agreement dated December 7, 1998 by and between
Joan P. Walsh and Registrant.

10.15** Employment Letter Agreement dated February 17, 1999 by and between
David A. Roman and Registrant.

10.16** Form of Stock Purchase Agreement, Promissory Note and Stock Pledge
Agreement by and between Registrant and Messrs. Holstege, Maulick,
Roman and Ms. Walsh.

10.17+** Electronic Software Distribution Agreement by and between Network
ICE and Registrant.

21.1** Subsidiaries of Registrant.

23.1** Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit
5.1).

23.2 Consent of PricewaterhouseCoopers, LLP, Independent Accountants.

24.1** Power of Attorney.

27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment will be requested for certain portions which have been
blacked out in the copy of the exhibit to be filed with the Securities and
Exchange Commission. The omitted information will be filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.

<PAGE>

EXHIBIT 4.1
================================================================================
[LOGO OF RELEASENOW.COM]

INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE

COMMON STOCK COMMON STOCK
NUMBER SHARES
RNOW

THIS CERTIFICATE IS TRANSFERABLE IN THE CITY OF CUSIP 75941Y 10 9
NEW YORK, N.Y. OR BOSTON, MA
SEE REVERSE FOR
CERTAIN DEFINITIONS

THIS CERTIFIES THAT

IS THE REGISTERED HOLDER OF

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK,
PAR VALUE OF $.001 PER SHARE OF

RELEASENOW.COM CORPORATION

transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.

WITNESS the facsimile signatures of its duly authorized officers.

Dated:

/s/ Joan P. Walsh [SEAL OF RELEASENOW.COM] /s/ Michael J. Maulick
- ----------------------- -----------------------
Chief Financial Officer President and
and Secretary Chief Executive Officer

COUNTERSIGNED AND REGISTERED:
EQUISERVE TRUST COMPANY, N.A.

TRANSFER AGENT AND REGISTRAR
By: /s/ (illegible signature)
AUTHORIZED SIGNATURE

================================================================================

RELEASENOW.COM CORPORATION

THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER UPON WRITTEN REQUEST TO ITS
PRINCIPAL OFFICE, AND WITHOUT CHARGE, A FULL STATEMENT OF THE DESIGNATIONS,
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OF
AUTHORIZED STOCK, AND OF THE VARIATIONS IN THE RELATIVE RIGHTS AND PREFERENCES
BETWEEN THE SHARES OF EACH PREFERRED OR SPECIAL CLASS IN SERIES, SO FAR AS THE
SAME HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF THE BOARD OF DIRECTORS
TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES.

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED
THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE
OF A REPLACEMENT CERTIFICATE.

<PAGE>

The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common UNIF TRF MIN ACT ______ Custodian (until age __)
TEN ENT - as tenants by the (cust)
entireties _______ under Uniform Transfer
JI TEN - as joint tenants with (Minor)
right of survivorship to Minors Act ________________
and not as tenants in (State)
common

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, ___________________________ hereby sell, assign and
transfer unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

_______________________________

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

_________________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

______________________________________________________________________ Attorney,
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated ________________________

X ____________________________________

X ____________________________________
NOTICE: The signature(s) to this assignment must correspond with the name(s)
written upon the face of the Certificate in every particular, without
alteration or enlargement or any change whatsoever.

Signatures(s) Guaranteed

BY _________________________________
THE SIGNATURE(S) MUST BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE>

EXHIBIT 5.1

[BROBECK, PHLEGER & HARRISON LLP LETTERHEAD]

April 5, 2000

ReleaseNow.com Corporation
990 Commercial Street
San Carlos, CA 94070

Re: ReleaseNow.com Corporation Registration Statement on Form S-1
for 3,737,500 Shares of Common Stock

Ladies and Gentlemen:

We have acted as counsel to ReleaseNow.com Corporation, a Delaware
corporation (the "Company"), in connection with the proposed issuance and sale
by the Company of up to 3,737,500 shares of the Company's Common Stock (the
"Shares") pursuant to the Company's Registration Statement on Form S-1 (the
"Registration Statement") filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").

This opinion is being furnished in accordance with the requirements of
Item 16(a) of Form S-1.

We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the issuance and sale of the
Shares. Based on such review, we are of the opinion that the Shares have been
duly authorized, and if, as and when issued in accordance with the Registration
Statement and the related prospectus (as amended and supplemented through the
date of issuance) will be legally issued, fully paid and nonassessable.

We consent to the filing of this opinion letter as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus which is part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act, the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
<PAGE>

Page 2

This opinion letter is rendered as of the date first written above.
Our opinion is expressly limited to the matters set forth above and we render no
opinion, whether by implication or otherwise, as to any other matters relating
to the Company or the Shares.

Very truly yours,

/s/ Brobeck, Phleger & Harrison LLP

BROBECK, PHLEGER & HARRISON LLP

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
our reports dated January 21, 2000, relating to the consolidated financial
statements and financial statement schedule of ReleaseNow.com Corporation,
which appear in such Registration Statement. We also consent to the references
to us under the headings "Experts" and "Selected Financial Data" in such
Registration Statement.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

San Jose, California

April 5, 2000