NETCREATIONS INC, 424B1, 1999-11-15

NETCREATIONS INC
424B1, 1999-11-15
BUSINESS SERVICES, NEC

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<PAGE>
Filed pursuant to Rule 424(b)(1)
Registration No. 333-84019

PROSPECTUS

3,300,000 SHARES

[LOGO]

COMMON STOCK
------------------

This is NetCreations, Inc.'s initial public offering. The common stock has
been approved for quotation on the Nasdaq National Market under the symbol
"NTCR."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF FACTORS THAT YOU
SHOULD CONSIDER BEFORE YOU INVEST IN THE COMMON STOCK BEING SOLD WITH THIS
PROSPECTUS.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PER SHARE TOTAL
<S> <C> <C>
Public Offering Price..................................... $13.00 $42,900,000
Underwriting Discount and Commissions..................... $ 0.91 $ 3,003,000
Proceeds to NetCreations.................................. $12.09 $39,897,000
</TABLE>

In connection with this offering, the underwriters have reserved up to
330,000 shares of the common stock being offered for sale at the initial public
offering price to our directors, officers, employees and friends.

The underwriters may purchase up to an additional 495,000 shares from us at
the public offering price, less underwriting discounts, solely to cover
over-allotments.

FRIEDMAN BILLINGS RAMSEY

C.E. UNTERBERG, TOWBIN

FBR.COM

FIDELITY CAPITAL MARKETS
----------------

THIS PROSPECTUS IS DATED NOVEMBER 12, 1999
<PAGE>
[Inside front cover page]

[Description of Artwork]

The top of the inside front cover contains the centered captioned statement
"Samples of NetCreations Network of Web sites."

The inside front cover contains a sample of mostly third-party Web sites
comprising the NetCreations Network such as CMPnet, PostMasterDirect.com,
Regards.com, etc. The bottom left corner of the page contains a NetCreations
logo graphic. The bottom right corner of the page contains the captioned
statements "The above Web sites are among the top 25 suppliers of email
addresses for our database" and "Each Web site in the NetCreations Network
receives commissions when marketers use our services to deliver email messages
to the addresses provided by that Web site." The bottom of the page contains the
captioned statement "Service marks, trademarks and tradenames referred to on
this page are the property of their respective owners."

[Gatefold]

[Description of Artwork]

The top of the gatefold contains the centered captioned statement "NetCreations,
Inc. Double Opt-In Email Marketing Services."

The center of the gatefold contains a large circle. Within the circle and
towards the top is the NetCreations logo. In the middle of the circle and
directly below the NetCreations logo is the captioned statement "Email Address
Database." Below that captioned statement are the captioned statements
"4+Million Names" and "3000+Topical Categories."

Above the circle is the captioned statement "Internet User." Extending from the
left side of the captioned statement "Internet User" is a long horizontal arrow
that first extends out towards the left and then down towards the left center of
the gatefold. Directly above the arrow is the captioned statement "Opt In Via
Sign-Up Form on Web." In between the circle and the captioned statement
"Internet User" are two vertical arrows. The left arrow, which points up to the
captioned statement "Internet User," has the captioned statement "Request for
Opt-in Confirmation" on the left of it. The right arrow, which points down to
the circle, has the captioned statement "Opt-in Confirmation" on the right of
it.

Directly below the circle is a semi-circle. The left side of the semi-circle
contains the captioned statement "Web Site Owner Support." The right side of the
semi-circle contains the captioned statements "Email Direct Marketing Campaign
Support." Directly below the semi-circle is the captioned statement
"PostMasterDirect.com" with a vertical arrow pointing down to a captioned
statement "Email List Member." To the right of the arrow is the captioned
statement "Delivery of Email Message."

To the left side of the semi-circle is a picture of a desktop computer with a
monitor sitting on top. The monitor screen contains the captioned statement "Web
site." Directly above the monitor, and below the down pointed arrow that
extended from the left side of the captioned statement "Internet User" is the
captioned statement "NetCreations Network: 175+Websites." In between the left
side of the semi-circle and the monitor are two horizontal arrows. Directly
above the top arrow, which extends from the monitor and points to the captioned
statement on the left side semi-circle, is the captioned statement "Email
Addresses." Directly below the bottom arrow, which extends from the left side of
the semi-circle pointing to the monitor, is the captioned statement "Report
Address Use."

The right side of the semi-circle is also a picture of a desktop computer with a
monitor sitting on top. This monitor screen contains the captioned statement
"Marketing Customers." Directly above this monitor is the captioned statement
"Marketer/Reseller." In between the right side of the semi-circle and this
monitor are two horizontal arrows. Directly above the top arrow, which extends
from this monitor and points to the right semi-circle, is the captioned
statement "Order Email & Submit Message." Directly below the bottom arrow, which
extends from the right side of the semi-circle pointing to the monitor, is the
captioned statement "Confirm Delivery Optional Tracking."
<PAGE>
You may rely only on the information contained in this prospectus. We have
not authorized anyone to provide information different from that contained in
this prospectus. Neither the delivery of this prospectus nor the sale of common
stock means that information contained in this prospectus is correct after the
date of this prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy common stock in any circumstances under which
the offer or solicitation is unlawful.

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

TABLE OF CONTENTS

Prospectus Summary.......................................... 3

Risk Factors................................................ 8

Cautionary Notice Regarding Forward-Looking Statements...... 21

Termination of S Corporation Status......................... 21

Use of Proceeds............................................. 22

Dividend Policy............................................. 22

Capitalization.............................................. 23

Dilution.................................................... 24

Selected Financial Data..................................... 25

Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 27

Business.................................................... 37

Management.................................................. 47

Principal Shareholders...................................... 53

Description of Capital Stock................................ 54

Shares Eligible For Future Sale............................. 59

Underwriting................................................ 60

Legal Matters............................................... 63

Experts..................................................... 63

Where You Can Find More Information......................... 63

Index To Financial Statements............................... F-1
</TABLE>
<PAGE>
[This page has been left blank intentionally]
<PAGE>
PROSPECTUS SUMMARY

YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS APPEARING
ELSEWHERE IN THIS PROSPECTUS.

EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS: (1) REFLECTS
A 117,000 FOR 1 STOCK SPLIT OF OUR COMMON STOCK, EFFECTIVE SEPTEMBER 14, 1999
AND (2) ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION WILL NOT BE
EXERCISED.

OUR COMPANY

We provide Internet-based opt-in email direct marketing services that enable
direct marketers to target promotional campaigns to consumers who have given
their permission to receive email messages in any of over 3,000 topical
categories. Our technology allows real-time, online email address selection and
ordering by direct marketers, as well as response-tracking. We have, as of
September 30, 1999, over 4.3 million email addresses in our database, which is
currently growing at the average net rate of more than 20,000 email addresses
per day.

Through our WWW.POSTMASTERDIRECT.COM Web site and through third-party Web
sites whose email address lists we manage, we have collected the email addresses
in our database from consumers who have elected to receive promotional email
messages, and have not subsequently opted out. We refer to these third-party Web
sites and our own Web site as our NetCreations Network because they provide us
email addresses for our database. We charge direct marketers a fee each time we
send marketing materials on their behalf to an email address they have selected
from our database. We pay a percentage of that fee to the third-party Web sites
in our network each time an email address they own is used for a particular
email marketing campaign. We generate substantially all of our revenues from the
fees obtained from our direct marketing customers.

There are currently over 175 third-party Web sites in the NetCreations
Network, including sites such as Internet.com, NetZero, Entrepreneur Magazine,
CMPnet, LinkExchange, CDROM Guide, Regards.com and Volition. On November 3,
1999, we entered into an email list management agreement with ICQ, Inc., an
instant messaging subsidiary of America Online, Inc., to be the newest
third-party Web site in the NetCreations Network. Each Web site in the
NetCreations Network accumulates email addresses by placing a sign-up template
on one or more of its Web pages which allows consumers to elect to receive email
pertaining to a selection of topical categories. We believe that the aggregation
of topically targeted, opt-in email addresses collected from third-party Web
sites is an element of the attractiveness of our services to direct marketers.

As of September 30, 1999, we have sent email messages on behalf of more than
1,500 direct marketers. Our direct marketing customers range from large
companies, such as Dell, Compaq, Ziff-Davis and J. Crew, to small retailers
selling items over the Internet, such as Vermont Nutrition, Cyberswap, Inc.,
Technology Marketing Corp., and Intratech Alliance Corp. We also sell use of
email addresses in our database to email address list brokers for use by their
direct marketing customers. For the years ended December 31, 1996, 1997 and
1998, we generated net revenues of $476,000, $1.1 million and $3.4 million,
respectively, and during those same periods we generated a net loss of $9,000 in
1996 and net income of $260,000 and $606,000 in 1997 and 1998, respectively. For
the nine months ended September 30, 1999, we delivered approximately 68 million
email messages in email marketing campaigns for our customers using email
addresses in our database, which generated over 95% of our net revenues for the
period. During that period, we generated net revenues of $10.2 million and net
income of $2.6 million, as compared with net revenues of $2.1 million and net
income of $357,000 for the nine months ended September 30, 1998.

At September 30, 1999, we had $275,000 of outstanding borrowings under a
line of credit and no other borrowings, although we did have capital lease
obligations of $202,510. However, pursuant to the agreement with ICQ, we
incurred an obligation to advance to ICQ $5.0 million. $1.0 million of those
advances was paid on signing. An additional $2.0 million is payable upon the
consummation of this offering. The remaining $2.0 million is payable in
installments over time. We are entitled to offset the advances against fees that
may become due to ICQ under the email address list management

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agreement, to the extent any fees are earned by ICQ. If the agreement terminates
before May 3, 2000, all of the advances other than the first $1.0 million will
be refunded to us. The remaining $4.0 million of the advances will also become
non-refundable in increments with the passage of time, with the first
$1.0 million increment becoming non-refundable on May 3, 2000. In connection
with paying the first advance, we borrowed $1.0 million under our line of
credit.

MARKET OPPORTUNITY

The Direct Marketing Association, or DMA, estimates that approximately
$221.5 billion will be spent on direct marketing in the United States in 2003.
Direct marketing includes postal direct mail, credit card offers and other
solicitations that encourage consumers to buy products or services.

The emergence of the Internet as a global communication and commerce medium
has led traditional and e-commerce businesses to direct increasing portions of
their marketing budgets to the Internet. Forrester Research projects that
worldwide Internet advertising expenditures are expected to reach $24.1 billion
in 2003. Currently, the most popular form of Internet advertising is banner
advertising. We believe that, while banners provide marketers with the ability
to reach broad audiences and establish brand awareness, banners have proven less
than effective as vehicles for generating consumer response. Forrester Research
reports that response rates, or click-throughs, from banner advertising averaged
approximately 0.7% as of March 1999.

Businesses seek to maximize the impact of their advertising campaigns.
Drawbacks to traditional direct mail include the high costs involved, the delay
in response and the difficulty in tracking responses. Banner advertising is not
cost-effective because of the relatively low click-through rate it generates.
Finally, unsolicited email advertising is not desirable because of privacy
concerns and potential damage to marketers' reputations.

OUR BUSINESS

Our opt-in email direct marketing business offers direct marketers three key
advantages over postal direct marketing and banner advertising:

- SPEED. Opt-in email campaigns can be sent out immediately and generate
results in a shorter period of time than direct mail or banner
advertising.

- RESPONSIVENESS. We believe that opt-in email campaigns typically generate
response rates ranging from 5% to 15%, although Forrester Research
estimates that opt-in email campaigns generated average response rates of
18% as of March 1999. This greatly exceeds the typical banner advertising
response rate of 0.7% and typical postal direct mail response rates, which
we believe to be approximately 2%.

- COST. Forrester Research estimates that opt-in email marketing campaigns
typically cost 25% to 75% less than postal direct mail campaigns.

OUR STRATEGY

Our goal is to become the leader in opt-in direct marketing on the Internet.
The key elements of our strategy include:

- maintain and extend market leadership in opt-in email direct marketing;

- enrich our database with opt-in transaction data;

- develop new Internet marketing products and services;

- expand our sales channels; and

- leverage our scaleable technology platform.

4
<PAGE>
RISK FACTORS

An investment in our common stock involves certain risks associated with our
business, including:

- the difficulty you may have in evaluating our business and prospects or
projecting our future operating results because we have a relatively
limited operating history and we are an early-stage company;

- the unpredictability of our future revenues and financial results quarter
to quarter and otherwise;

- the possibility that we may incur losses in the future;

- the possibility that changes in our sales and pricing policies may result
in reduced margins or negative impacts on our cash flow;

- the possibility that we may be unable to replace lost revenues if our
marketing customers cease to do business with us, as they may do at any
time;

- our dependence on third parties, who may terminate their agreements with
us any time, for collection of email addresses for our database;

- the ability of Internet users to remove their names from our database or
to change their email addresses at any time;

- our need to expand and retain our marketing customer base;

- our reliance on resellers to increase the orders for use of opt-in email
addresses in our database;

- the strain we are experiencing and the additional strains which we
anticipate our planned growth will place upon our management systems and
resources;

- uncertainties associated with possible overseas expansion;

- our dependence upon Rosalind Resnick, Ryan Scott Druckenmiller, and our
employees;

- the difficulty of preventing others from using our intellectual property;

- following this offering, Rosalind Resnick and Ryan Scott Druckenmiller
will control us, and their interests may conflict with yours; and

- uncertainty concerning our ability to obtain additional financing if we
need it.

In addition, investing in our common stock involves certain risks associated
with our industry in general, including:

- our dependence on growth in use of, and perceived effectiveness of, the
Internet for email direct marketing and e-commerce;

- our exposure to Internet, software or hardware failures or shortcomings
and to Year 2000 risks;

- the potential for damage to our business due to privacy concerns of
Internet users;

- the competition we face;

- our need to adapt to rapid changes in technology, industry standards, and
product offerings;

- the damaging impact that increasing governmental regulation may have upon
us; and

- our exposure to product liability claims and claims due to the activities
of our customers.

For a fuller discussion of these and other risk factors affecting us and our
business, see "Risk Factors."

5
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THE OFFERING

<TABLE>
<S> <C>
Common stock offered by NetCreations......... 3,300,000 shares

Common stock to be outstanding after the
offering................................... 15,000,000 shares(1)

Use of proceeds.............................. To fund expansion of our network of
third-party Web sites, to increase
expenditures on sales, marketing, research
and development and other costs of expanding
our business, to repay indebtedness under our
line of credit, for working capital and for
other general corporate purposes, which may
include payment of the second, third and
fourth advances of fees to ICQ and which may
also include acquiring or investing in
companies, technologies or expertise
complementary to our business.

Nasdaq National Market symbol................ NTCR
</TABLE>

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

(1) The number of shares to be outstanding after the offering excludes 1,170,000
shares of common stock reserved for issuance under our 1999 Stock Option
Plan. We have granted options, effective as of September 14, 1999 and as of
November 11, 1999, to purchase 247,000 shares of common stock at an exercise
price of $5.00 per share. In addition, we have granted options, effective as
of October 8, 1999, to purchase 100,000 shares of common stock to each of
our non-management directors, Messrs. Michael Levy, Gregory W. Slayton and
Mitchell York, at an exercise price of $10.00 per share.

CORPORATE INFORMATION

We are a New York corporation. We were originally incorporated in Florida in
1995 and we reincorporated in New York in January 1996. Our principal executive
offices are located at 379 West Broadway, Suite 202, New York, New York 10012
and our telephone number is (212) 625-1370. Our corporate Web site is located at
WWW.NETCREATIONS.COM. We provide our services on our other Web site,
WWW.POSTMASTERDIRECT.COM. Information on our Web sites does not constitute part
of this prospectus.

NETCREATIONS, POSTMASTER and 100% OPT-IN are registered trademarks of
NetCreations, Inc. We have filed applications to register POSTMASTERDIRECT.COM
and POSTMASTER DIRECT RESPONSE. Other service marks, trademarks and tradenames
referred to in this prospectus are the property of their respective owners.

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SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
-----------------------------------------------
PRO FORMA
ACTUAL PRO FORMA (3) AS ADJUSTED (3)(4)
---------- ------------- ------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash................................................ $ 798,135 $ -- $38,122,000
Working capital (deficiency)........................ 179,445 (710,190) 37,686,810
Total assets........................................ 4,576,265 3,778,130 41,900,130
Long-term debt (including current portion).......... 477,510 477,510 202,510
Total stockholders' equity.......................... 1,112,994 223,359 38,620,359
</TABLE>

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

(1) Net revenues represent revenues earned for our services less volume and
broker discounts.

(2) We have elected to be taxed as an S corporation for federal and state income
tax purposes since our inception. Accordingly, no provision has been made
for federal or certain state income taxes. Pro forma net income has been
computed as if we had been fully subject to federal, state and city taxes.
Immediately prior to the consummation of this offering, we will terminate
the S corporation election and, thereafter, become a C corporation.

(3) We intend to pay to Ms. Resnick and Mr. Druckenmiller final S corporation
distributions based on current year earnings, to the extent of available
cash balances. At September 30, 1999, this amount would have been $798,135.
Pro forma adjustments reflect (a) our pro forma S corporation distributions
for this amount and (b) the deferred tax liability resulting from the
termination of our S corporation election.

(4) As adjusted to reflect the sale of 3,300,000 shares of common stock offered
at the initial public offering price of $13.00 per share and the application
of the estimated net proceeds from this offering.

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<PAGE>
RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE YOU DECIDE TO BUY
OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS MAY SUFFER. AS A RESULT, THE
TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF
THE MONEY YOU PAID TO BUY OUR COMMON STOCK.

WE DEPEND ON CONTINUED GROWTH IN USE OF THE INTERNET FOR EMAIL DIRECT MARKETING
AND E-COMMERCE.

The business of email direct marketing and e-commerce is new and rapidly
evolving. Our business would be adversely affected if Internet usage for the
exchange of information and for commerce does not continue to grow because
advertisers might feel less compelled to use our services as opposed to more
traditional advertising services. Internet usage may be inhibited for a number
of reasons, such as:

- inadequate network infrastructure;

- security concerns;

- inconsistent quality of service; and

- lack of availability of cost-effective, high-speed service.

THE ACCEPTANCE AND EFFECTIVENESS OF INTERNET OPT-IN EMAIL DIRECT MARKETING IS
RELATIVELY UNPROVEN.

Our future success will depend on an increase in the use of the Internet as
an opt-in marketing medium or for opt-in email generally. The opt-in email
direct marketing industry is new and rapidly evolving. Consequently, current
indications of its effectiveness compared to traditional postal direct marketing
may not be supported as the industry matures. As a result, there generally is
significant uncertainty about the demand and market acceptance for opt-in email
marketing solutions or Internet advertising solutions.

Many of our current or potential customers may have little or no experience
using the Internet for direct marketing purposes. The adoption of Internet
direct marketing, particularly by those entities that have historically relied
upon traditional media and mailings for marketing, requires the acceptance of a
new way of conducting business. These companies may find email direct marketing
to be less effective for promoting their products and services as compared to
traditional mass media and postal marketing.

We cannot assure you that the market for email direct marketing will
continue to emerge, or will become sustainable.

INTERNET, SOFTWARE OR HARDWARE FAILURES OR SHORTCOMINGS COULD ADVERSELY AFFECT
OUR BUSINESS IN DIVERSE WAYS.

We depend on software, hardware, and the Internet to collect, store,
retrieve and process email addresses and other data and to send email for our
direct marketing customers. The third-party Web sites which we rely upon to
collect email addresses are less likely to collect additional email addresses
for us if their operations are disrupted or slowed by Internet, software or
hardware failures or shortcomings or if such occurrences discourage potential
visitors from using the Internet or visiting their sites. Direct marketers are
less likely to utilize our services if potential customers are prevented or
discouraged from using the Internet and receiving promotional messages due to
Internet, software, or hardware failures or shortcomings.

Many of the Internet service providers and Web site operators on whom we
depend have experienced significant service slowdowns, malfunctions, outages and
capacity limitations. We also depend upon the reliability, speed, data capacity,
ease of use, accessibility and security of the Internet as well as its continued
development and acceptance for commercial use generally.

The Internet infrastructure may not be able to support the increasing
demands placed on it at acceptable service levels as Internet usage grows. An
individual's satisfactory Internet experience may also depend on the proper
functioning and the continued development of equipment such as high speed modems
and personal computers. Not all software and equipment protocols and standards
are compatible. Users may experience difficulties due to computer-related,
telecommunications, or

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other equipment, software, or system failures or shortcomings unrelated to our
services.

In addition, some of our systems' infrastructure is not yet supported by
redundant servers. Any failure in our system that is not backed up by redundant
servers could cause significant delays in our business operations.

If we experience a temporary or permanent business interruption, whether due
to casualty, an operating malfunction, a power outage or otherwise, we may have
to reconfigure our software, hardware and Internet infrastructure to address our
customers' needs and orders. We may be unable to do so effectively or rapidly
enough to avoid loss of business or damage to our reputation. Any interruption
of service would be potentially harmful to our business and reputation because
even a short interruption in the midst of performing a time-sensitive project
for a customer could be very damaging to our relationship with that customer. In
certain instances, such as power outages or Internet service provider outages,
we may be unable to do anything other than wait for the restoration of service
and suffer the consequences of business interruption.

OUR BUSINESS COULD BE NEGATIVELY AFFECTED BY YEAR 2000 ISSUES.

Historically, most computer databases, as well as embedded microprocessors
in computer systems and industrial equipment, were designed with date data using
only two digits of the year. Most computer programs, computers and embedded
microprocessors controlling equipment were programmed to assume that all two
digit dates were preceded by "19," causing "00" to be interpreted as the year
1900. This formerly common practice now could result in a computer system or
embedded microprocessor which fails to recognize properly a year that begins
with "20," rather than "19." This in turn could result in computer system
miscalculations or failures, as well as failures of equipment controlled by date
sensitive microprocessors, and is generally referred to as the "Year 2000"
issue.

It is uncertain what impact the Year 2000 issue will have on the Internet,
but major disruption is possible. We rely on telecommunications carriers to
transmit our Internet traffic over local and long distance networks, on Internet
service providers for access to the Internet, and on electric utilities for
power for our systems and the operation of our business. We may not be able to
operate if the networks and systems of the telecommunications carriers, Internet
service providers, or electric utilities on which we rely fail due to the Year
2000 issue. There is no assurance that we would be able to make alternative
arrangements effectively, in timely fashion, or at all to avoid loss of business
or damage to our reputation in the event of any such failure.

The third-party Web sites upon which we rely for collection of email
addresses rely upon those same types of utility and service providers, and upon
the operation of hardware and software for their operations. Our direct
marketing clients depend upon services and equipment of that type for their own
operations and for access to our online services. The Web site visitors whose
email addresses we seek to collect and to whom we seek to send email for our
customers depend on services and equipment of that type in order to access and
utilize the Internet. Web sites would not be able to collect email addresses,
direct marketing clients would not be able to access our online services and
might be unable to operate and generate revenues to pay for our services, and
consumers might be unable to visit Web sites or receive email or otherwise
utilize the Internet if the networks and systems of the telecommunications
carriers, Internet service providers, electric utilities, hardware or software
on which any of them rely fail due to the Year 2000 issue. Any occurrence of
that type would adversely affect our business.

Our own software was designed to be Year 2000 compliant when configured and
used in accordance with the related documentation and provided that the
underlying operating system of the host machine and any other software used with
or in the host machine or our service are Year 2000 compliant. However, we have
not yet tested our software or software obtained from third parties for Year
2000 compliance. We are seeking assurances from our vendors that licensed
software is Year 2000 compliant but

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have not yet received them. Even with such assurances the software may contain
undetected errors or defects associated with Year 2000 date functions.

We are evaluating our material internal information technology systems,
including both our software products and third-party software and hardware
technology, to determine whether that software is Year 2000 compliant. We have
not yet initiated a similar assessment of our non-information technology systems
although we expect to complete a Year 2000 compliance evaluation of that
software before the end of 1999. We may experience significant unanticipated
problems and costs caused by undetected errors or defects in the technology used
in our internal information technology and non-information technology systems.

We estimate that we have incurred nominal costs to date in connection with
our Year 2000 plan which we have funded from cash balances and for which we have
not separately accounted. We currently estimate the total costs of completing
our Year 2000 plan, including costs incurred to date, to be less than $250,000,
but the costs of implementing and developing any plan may be significant if we
discover that problems have been overlooked by ourselves or by our vendors or
suppliers. We expect to be unable to develop any contingency plan to deal with
Year 2000-related service outages by the telecommunications carriers, Internet
service providers, and electric utilities upon which we rely. We plan to develop
contingency plans to deal with Year 2000 compliance issues which we may discover
in our internal systems after we complete our evaluations for Year 2000
compliance, but there can be no assurance that we will be able to develop and
implement effective contingency plans in timely fashion or at all, and failure
to address Year 2000 compliance problems could materially adversely affect us.
We estimate that our evaluation will be completed by December 1, 1999.

There is considerable risk of litigation arising due to Year 2000 compliance
issues. Because of the unprecedented nature of litigation of that type, it is
uncertain whether or to what extent we may be affected by litigation in the
event that our service is interrupted or experiences other problems due to Year
2000 issues.

YOU MAY HAVE DIFFICULTY EVALUATING OUR BUSINESS AND PROSPECTS OR PROJECTING OUR
FUTURE OPERATING RESULTS BECAUSE WE HAVE A RELATIVELY LIMITED OPERATING HISTORY
AND WE WILL ENCOUNTER RISKS AND DIFFICULTIES AS AN EARLY-STAGE COMPANY IN A NEW
AND RAPIDLY EVOLVING MARKET.

We have been in the business of providing Internet marketing services since
we commenced operations in 1995. During 1996, our principal service offerings
transitioned from that of Web site design and promotion to opt-in email
marketing services. It is unlikely that the growth rates we have experienced are
sustainable as our business and the market for opt-in email marketing services
mature and more competitors enter the field.

We will encounter risks and difficulties frequently experienced by
early-stage companies in new and rapidly evolving markets, including our ability
to:

- anticipate and adapt to our evolving market;

- implement sales and marketing initiatives;

- develop and introduce new products and services;

- enhance our brands;

- attract, retain and motivate qualified personnel;

- respond to actions taken by our competitors;

- effectively manage our growth by building a solid base of management,
operations and technology; and

- integrate acquired businesses, technologies and services.

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We may not successfully address any of these risks.

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SEASONALLY SO THE RESULTS OF ONE
QUARTER ARE NOT NECESSARILY INDICATIVE OF RESULTS IN THE SUCCEEDING QUARTER AND
THE PRICE OF OUR SECURITIES MAY FLUCTUATE IN RESPONSE TO THOSE FLUCTUATIONS.

The traditional postal direct marketing industry tends to have higher
revenues in the fourth quarter of the year, when direct marketers send out
holiday promotions, and somewhat lower revenues during the summer, when direct
marketing activity is reduced overall. To date, because of the rapid growth of
the email direct marketing industry, our revenues have grown sequentially from
quarter to quarter. Therefore, our revenues have not followed the seasonal
patterns of the traditional postal direct marketing industry. We anticipate,
however, that as our business matures, our revenues will track more closely the
seasonal patterns experienced in the traditional postal direct marketing
industry.

OUR FUTURE REVENUES ARE UNPREDICTABLE, AND OUR FINANCIAL RESULTS MAY FLUCTUATE.

Our historical financial data is not reliable as a basis upon which to
predict our future revenues or operating expenses for a number of reasons,
including our limited operating history, the emerging nature of our industry
category, and our growth strategy. Furthermore, there is no guarantee that the
seasonal fluctuations that we have experienced in our operating results to date
will continue as before as our business and the industry evolve and grow.

Our financial results may fluctuate significantly because of several
factors, such as the following, all of which are beyond our control except for
the incurrence of expenses:

- Revenues in any quarter are substantially dependent on orders booked and
delivered in that quarter;

- Demand by direct marketers for use of opt-in email addresses in our
database may fluctuate due to seasonal and cyclical marketing campaigns;

- The market in which we compete is relatively new and rapidly evolving;

- We expect to increase our expense levels in the near future in an attempt
to grow our database and our market share more rapidly. As a result, any
delay in generating or recognizing revenues could cause significant
variations in our operating results from quarter to quarter and could
result in operating losses;

- The relatively new industry in which we are engaged has not been tested in
a recessionary economic environment where budget constraints and
contraction in income available for discretionary purchases could reduce
the use of our services;

- Competition is increasing in our industry, and we anticipate that this
could result in changes in our sales, pricing policies or expenses or
those of our competitors; and

- General economic conditions and economic conditions specific to the
Internet and the online direct marketing industry may vary.

THERE IS NO ASSURANCE THAT WE WILL CONTINUE TO BE PROFITABLE, AND WE MAY INCUR
LOSSES IN THE FUTURE.

We had net income of $605,863 in 1998 and $260,349 in 1997. On a pro forma
basis, to adjust net income as if it had been fully subject to Federal, state
and city taxes as a C corporation, rather than an S corporation, we had net
income of $362,091 in 1998 and $154,377 in 1997. As of September 30, 1999, we
had retained earnings of $976,619 and shareholder's equity of 1,112,994. We had
net income of $2,597,569 ($1,557,924 pro forma) for the nine months ended
September 30, 1999, as compared with net income of $357,330 ($213,930 pro forma)
for the nine months ended September 30, 1998. We may not be able to sustain our
current levels of profitability and may incur losses in the future.

We expect to increase our expenditures on sales and marketing, research and
development, and general and administrative expenses in order to expand our
business. If we acquire other businesses in connection with our planned

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expansion, we may have to write off goodwill and/or other intangibles associated
with any such acquisition. Increased competition in our industry may also
adversely affect our profitability as may other conditions which may be beyond
our control. In addition, many of our direct marketing customers are not
profitable and may not have resources available in the future to rent our lists
or pay for our services.

CHANGES IN OUR COMMISSION POLICIES MAY RESULT IN REDUCED MARGINS OR NEGATIVE
IMPACTS ON OUR CASH FLOW.

In connection with the email address list management agreement with ICQ,
Inc., we have made an initial advance of $1.0 million of commissions that is
non-refundable if the agreement is terminated. We have agreed to make additional
advances of $4.0 million of commissions to ICQ that will become non-refundable
in increments with the passage of time. Our net income would be negatively
affected if advanced commissions that become non-refundable are not earned by
ICQ. Advances of commissions also burden our cash flow and might prevent us from
making other expenditures that might generate revenues or growth for us.

We do not typically make such advances to Web site owners, but we would
experience risk of that sort if we made advances to any other Web site owner. We
also do not typically pay any Web site owner commissions of more than 50% of the
revenue we earn, less volume discounts, if applicable, each time we send an
email message to any email address list owned by that Web site owner. However,
competitive pressures or strategic or other reasons may cause us to make such
advances or pay commissions of more than 50% of the revenue from sending email
messages to email address list owners in the future. If we pay to our Web site
owners a higher rate of commissions, our margins will be reduced. We may have
reduced profits or may become unprofitable if any increase in the rate of
commissions paid to Web site owners, and the consequent decrease in our margins,
is not offset by lower general and administrative costs as a percentage of
revenues or increased revenues from other sources.

IF OUR DIRECT MARKETING CUSTOMERS CEASE TO DO BUSINESS WITH US, WE MIGHT BE
UNABLE TO REPLACE LOST REVENUES.

We have no long-term contracts with any of our direct marketing customers.
There is no guarantee that any of the direct marketers who have previously used
our services will use our lists in any particular quarter or that they will
continue to use our lists in the future. Substantially all of the contracts with
our direct marketing customers can be terminated on short notice without
penalty.

WE ARE DEPENDENT ON THIRD PARTIES TO GENERATE A SUFFICIENT NUMBER OF EMAIL
ADDRESSES AND, IF THEY TERMINATE THEIR AGREEMENTS WITH US, OUR BUSINESS COULD BE
SERIOUSLY HARMED.

We depend on our network of third-party Web sites to post sign-up forms on
their sites and encourage visitors to their sites to sign up to receive
commercial email messages from our direct marketing customers about topics of
interest. Several high-traffic sites with which we signed agreements in the past
have not been successful in generating significant numbers of opt-in email
addresses for our database. Furthermore, the sites in the network:

- are not within our control;

- may incorporate into their Web sites the sign-up forms of other email
marketing companies in addition to or in place of our sign-up form; and

- are not obligated to continue to build lists for us.

Less than five Web sites have left our network. We have terminated our
relationship with four Web sites with which we did not desire to continue to do
business. We intend to increase the size of our database through partnership
agreements with high-traffic Web sites, but there is no assurance that we will
do so in timely fashion or at all. Our increasing expenditures to develop this
channel could materially adversely affect our operating margins and our cash
flow. If we fail to successfully implement this strategy, our business,
financial condition and results of operations could be materially adversely
affected.

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THE INTERNET USERS WHO SIGN UP TO RECEIVE OUR MAILINGS CAN OPT OUT, OR REMOVE
THEMSELVES FROM OUR LISTS, OR MAY CHANGE THEIR EMAIL ADDRESSES AT ANY TIME.

We provide detailed instructions at the top of every email message we send
out allowing Internet users to remove themselves from our lists. Because this is
a new business model, we do not know how long the average Internet user will
stay on our lists or how many mailings they will accept before opting out.
Currently, the opt-out rate is less than one percent on any given mailing.
However, as more and more marketers use our lists and send out offers, the
number of mailings sent to names on our lists also increases and the number of
those opting out may increase as well. If the rate of list removal requests were
to increase substantially, our fees for the use of our lists could decrease and
our business, financial condition, and results of operations could be materially
adversely affected.

In addition, it is possible that some of the Internet users in our database
could change their email addresses, thus making some of our direct marketing
customers' messages undeliverable. If a message sent to an Internet user is
returned to us because the email address is invalid, we remove that email
address from our database. If a large number of Internet users in our database
change their email addresses and do not update the information in our database,
or if they delay before opting in again or do not opt in again, then our
business, financial condition or results of operations could be materially
adversely affected.

OUR BUSINESS COULD BE SERIOUSLY AFFECTED BY THE PRIVACY CONCERNS OF INTERNET
USERS.

Our opt-in email direct marketing service collects consumer preference and
profile information each time an Internet user visits a participating Web site
and volunteers information in response to survey questions. Privacy concerns may
cause users to resist signing up for our lists and providing the personal data
necessary to support the growth and expansion of our database. More importantly,
even the perception of privacy concerns, whether or not valid, may indirectly
inhibit market acceptance of our service.

WE DEPEND ON ADDING TO AND RETAINING OUR MARKETING CUSTOMER BASE.

We have sent email messages for direct marketing campaigns to email
addresses in our database on behalf of over 1,500 email direct marketing
customers. However, 15 customers accounted for approximately 45% of our net
revenues in the first nine months of 1999. On July 5, 1999, we terminated our
email list management agreement to manage opt-in email addresses collected from
YesMail.com's Web site. We also terminated our email list brokerage agreement
whereby we agreed that YesMail.com would earn brokerage discounts on orders for
use of opt-in email addresses in our database by YesMail.com's email direct
marketing customers. YesMail.com, using the email addresses in the NetCreations
database, resold use of certain of those lists to its own email direct marketing
customers to account for approximately 7% of our net revenues in 1998 and
approximately 11% of our net revenues for the first nine months of 1999. In
addition, 3.3% and 0.8% of our net revenues in 1998 and the first nine months of
1999, respectively, were generated by selling use of opt-in email addresses
collected from the YesMail.com Web site, of which YesMail.com is the email list
owner, to our email direct marketing customers. Our ability to attract new
marketing customers will depend on a variety of factors, including the
responsiveness, scalability, reliability and cost-effectiveness of our email
marketing services and our ability to effectively market these services.

Many of our current marketing customers initially use a small number of our
lists for testing purposes. If such a test mailing is successful, the customer
may repeat his mailing to a much larger universe of lists and continue to use
our lists in the future. If we fail to generate repeat and expanded business
from our current and future customers, our business, financial condition and
results of operations would be seriously harmed.

WE RELY ON RESELLERS AND INTEND TO INCREASE OUR RELIANCE ON RESELLERS.

We intend to increase the proportion of our marketing customers obtained
through our reseller channels, which include email address

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list brokers, interactive advertising agencies, Web design firms and Web sites
that attract small business owners. Such parties are typically referred to as
"resellers" because they place orders in their own names for use of opt-in email
addresses in our database on behalf of their email direct marketing customers.
We bill the reseller our customary fees for use of opt-in email addresses in our
database by their email direct marketing customers, less any applicable volume
discounts, but we also grant a brokerage discount to the reseller. In 1998,
resellers were responsible for approximately 38% of our net revenues and
represented approximately 44% of our net revenues for the first nine months of
1999.

While we intend to expand our own sales force, we believe that we can grow
our business more rapidly by relying on the larger aggregate sales force
represented by those reseller channels. If we fail to grow our business,
competitors may be able to enter our industry or find ways to compete more
effectively with us for our customers. Consequently, if we fail to increase the
proportion of our marketing customers obtained through reseller channels, our
business, financial condition and results of operations could be materially
adversely affected.

Because we give resellers discounts, any sales through resellers will have
lower gross margins than direct sales of the same email addresses. To the extent
we increase the proportion of sales through resellers, our net revenues and
gross profits could decrease. Our agreements with such resellers are generally
not exclusive and, in many cases, may be terminated by either party without
cause. These resellers do not have minimum purchase or resale requirements. Many
of these resellers market email lists that are competitive with our email lists.
These resellers may not give a high priority to the marketing of our lists or
may not continue to carry our lists. They may give a higher priority to other
lists, including their own lists or the lists of our competitors. We may not
retain any of our current resellers or successfully recruit new resellers.

THE PLANNED EXPANSION OF OUR BUSINESS WILL STRAIN OUR MANAGEMENT SYSTEMS AND
OTHER RESOURCES.

Since inception, our net revenues have grown from $102,000 in 1995, to
$3.4 million in 1998, to $10.2 million for the first nine months of 1999. We had
two employees in 1995, 10 at the end of 1998 and 29 on September 30, 1999. In
addition, the pursuit of our business strategy will continue to place a
significant strain upon our managerial, operational and financial resources.

We will need to improve our financial and management controls, reporting
systems and procedures. We will also have to continue to expand, train and
manage our work force for marketing, sales and technical support, product
development, and infrastructure management, and manage multiple relationships
with customers and other third parties. We also plan to expand the geographic
scope of our customer base and operations. We will need to continually expand
and upgrade our technology infrastructure and systems and ensure continued high
levels of service, speedy operation, and reliability. To achieve our objectives,
we may acquire technologies or products or enter into strategic alliances or
acquisitions, although we have no plans or agreements to do so at the present
time.

Our senior management is not experienced in managing the kind of rapid
growth that we currently envision. In addition, three members of our management
team, our Chief Financial Officer, our Vice President of Sales, and our Vice
President of Business Development, have joined us in the past three months and
therefore have a short history of working together.

WE FACE INTENSE COMPETITION AND MAY BE UNABLE TO COMPETE SUCCESSFULLY.

The market for our service is intensely competitive, evolving and subject to
rapid technological change. We expect the intensity of competition to increase
in the future. We believe that we must rapidly expand our business and market
share. If we fail to do so, competitors may copy our business strategy or take
other steps to prevent us from achieving our goals.

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Our competitors include other email direct marketing companies;
incentive-based direct marketers; providers of permission-based outsourced email
solutions; email list owners that manage their own email lists in-house; banner
advertising companies; and postal direct marketing companies. In addition,
because there are relatively low barriers to entry in the email direct marketing
business, we expect additional competition from other established and emerging
companies as the email direct marketing business continues to develop and
expand. We expect to face competition in the future from other companies
entering the field as email address list owners, managers and brokers. Companies
that operate banner advertising networks have entered the email marketing
business through acquisitions of competing email marketing companies.

Many of our competitors have longer operating histories; significantly
greater financial, technical, marketing and other resources; significantly
greater name recognition; and a larger installed base of customers than we have.
In addition, many of our competitors have well-established relationships with
our current and potential customers, have extensive knowledge of our industry
and are capable of offering complementary services and products that are beyond
the scope of our current business operations but might be attractive to
customers seeking to purchase services in addition to email direct marketing
services. As a result, our competitors may be able to respond more quickly to
new or emerging technologies and changes in customer requirements, or to devote
greater resources to the development, promotion and sale of their services than
we can.

In addition, current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties to
increase the ability of their services to address customer needs. Accordingly,
it is possible that new competitors or alliances among competitors may emerge
and rapidly acquire significant market share. We also expect that competition
will increase as a result of industry consolidations.

OUR MARKET IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE.

Our future success depends on our ability to:

- adapt to rapidly changing technologies;

- adapt our services to evolving industry standards; and

- improve the performance, features and reliability of our service and
product offerings in response to competitive product and service offerings
and evolving demands of the marketplace.

We cannot assure you that we will succeed in addressing these issues. Our
efforts to upgrade our software or introduce new software may not be completed
in a timely fashion or at all and may result in errors which could seriously
harm us. In addition, the widespread adoption of new Internet networking
technologies or other technological changes could require us to expend
substantial amounts of capital to change our services or infrastructure.
Moreover, these changes may involve new technologies which may not be measurable
by our current methods.

WE EXPECT TO EXPAND OUR OPERATIONS OVERSEAS BUT YOU WILL NOT BE ABLE TO QUANTIFY
THE RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION.

We intend to pursue international expansion during the next 12 months but do
not have a specific geographic focus, detailed plan for implementation or
schedule to do so at this time. International operations are subject to risks
that may materially adversely affect our business, results of operations and
financial condition. In particular, opt-in email direct marketing might not
become an acceptable form of advertising internationally. In addition, privacy
regulations in some other countries, including the European Union, are more
stringent than in the United States. These regulations could hinder our ability
to collect demographic data on potential consumers, which could have a material
adverse affect on our business. Other risks of international operations are:

- regulatory requirements;

- reduced protection for intellectual property rights in some countries;

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- difficulties and costs of staffing and managing foreign operations;

- political and economic instability; and

- fluctuations in currency exchange rates.

WE ARE HIGHLY DEPENDENT UPON ROSALIND RESNICK AND RYAN SCOTT DRUCKENMILLER, OUR
FOUNDERS, AND OUR OTHER EMPLOYEES AND THE LOSS OF THEIR SERVICES COULD HARM US.

Rosalind Resnick, our Chief Executive Officer, President and Chairman of our
board of directors, and Ryan Scott Druckenmiller, our Chief Technology Officer
and a member of our board of directors, founded us and are essential to the
continued viability of the business. We have key man life insurance in the
amount of $5 million each, and disability insurance in the amount of $3 million
each, on Ms. Resnick and on Mr. Druckenmiller. We cannot assure you that this
coverage will be adequate to compensate us for the loss of services of either
one of our founders.

Our future success depends on the continued service of our senior
management, sales, marketing, customer service, administrative, and technology
personnel. Both our management team and our work force are currently small. As
of September 30, 1999, we had 29 employees. The loss of the services of one or
more of our key personnel could seriously harm our business, financial condition
and results of operations. Although Ms. Resnick and Mr. Druckenmiller, as well
as our Chief Financial Officer, our Vice President of Sales and our Vice
President of Business Development have all executed and delivered employment
contracts with us which will expire on December 31, 2002, the employees may
terminate the contracts at any time. In addition, the balance of our work force
are employed on an at-will and short-term basis.

Our future success also depends on our continuing ability to attract, hire,
train and retain other highly skilled managerial, technical, sales, marketing
and customer service personnel in order to accommodate the growth of our
business. In addition, we are likely to need to recruit additional senior
management personnel as our business grows, particularly in the international
arena. Competition for such personnel is intense, and we may fail to retain our
key employees, or attract, assimilate or retain other highly qualified personnel
in the future.

WE MAY NOT BE ABLE TO SUCCESSFULLY PROTECT OUR INTELLECTUAL PROPERTY.

Although we are a marketing company, we also depend heavily on technology to
operate our business. We have developed proprietary technology to enable Web
site visitors to opt in to receive targeted advertising information from our
direct marketing customers. The software also enables our direct marketing
customers and email address list brokers to target email addresses in our
database associated with persons with specific demographics, and allows direct
marketers to track the response rates to their mailings. We have developed a
double opt-in confirmation system which sends Internet users a confirmation
email message after they have signed up their email address in our database and
requires them to verify that they would like to begin receiving commercial email
messages from our marketing clients. We have filed a patent application for this
technology. We also have know-how and trade secrets, including the identities
and other information concerning our direct marketing customers and the
information in our email address database, which we seek to protect. If we do
not adequately protect our intellectual property, our business, financial
condition and results of operations will be materially adversely affected.

While we are unable to determine the extent to which piracy of our
technology exists, software piracy can be expected to be a persistent problem.
In addition, the laws of some foreign countries do not protect our proprietary
rights to as great an extent as do the laws of the United States. Our means of
protecting our proprietary rights may not be adequate. Our competitors may
independently develop similar technology, duplicate our technology design around
patents issued to us or our other intellectual property, attempt to copy aspects
of our service, or obtain and use our proprietary information that we regard as
proprietary.

There has been a substantial amount of litigation in the software industry
regarding

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intellectual property rights. It is possible that, in the future, third parties
may claim that our current or potential future technologies infringe upon their
intellectual property. We have not performed any comprehensive analysis of
patents of others that may limit our ability to do business.

We expect that as the number of products and competitors in our industry
segment grows and the functionality of products in different industry segments
overlaps infringement claims will be made more frequently. Any such claims, with
or without merit, could be time-consuming, result in costly litigation and
diversion of management resources, cause product shipment delays or require us
to enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to us or at
all, which could seriously harm our business, financial condition and results of
operations.

INCREASING GOVERNMENT REGULATION COULD LIMIT THE MARKET FOR OUR SERVICE, WHICH
COULD SERIOUSLY HARM OUR BUSINESS.

As Internet marketing and commerce evolves, we expect that federal, state or
foreign governments will increasingly adopt laws and regulations which could
hinder the acceptance of the Internet as a communications and commercial medium
or otherwise harm our business. We expect that laws or regulations will be
enacted in various jurisdictions covering issues such as:

- the transmission of unsolicited email marketing messages;

- user privacy;

- content of email messages;

- quality of products and services; and

- the solicitation, collection, processing and distribution of
personal/customer information,

which could adversely affect our business. Such laws and regulations could
adversely affect the demand for our services if direct marketers perceive that
we will be hindered from reaching a substantial targeted audience or that
substantial liability might arise due to technical breaches of such
restrictions, such as limitations on content or transmission. Our own business
exposure might increase substantially if we were to be held responsible for the
content or quality of email messages which we transmit on behalf of our direct
marketing customers. If we are forced to bear additional administrative burdens
in collecting, storing or maintaining data, our expenses would increase and
market conditions might preclude us from passing our increased costs on to our
direct marketing customers. While we seek to respect Web site visitor privacy
and do not send unsolicited email messages to our database, user privacy laws
and regulations might be designed so restrictively as to make it increasingly
difficult to obtain opt-in email addresses or sell the use of those addresses to
our direct marketing customers.

Laws and regulations regulating the transmission of unsolicited email
marketing messages are being considered by many jurisdictions. Legislation of
that type has recently been adopted by the States of California, Virginia and
Washington, and similar legislation is pending in the State of New York and in
Congress. The Telecommunications Act of 1996 prohibits some types of information
and content from being transmitted over the Internet. The prohibition's scope
and the liability associated with a Telecommunications Act violation are
currently unsettled. In addition, although substantial portions of the
Communications Decency Act were held to be unconstitutional, we cannot be
certain that similar legislation will not be enacted and upheld in the future.
The European Union adopted a Directive on Privacy, effective on October 24,
1998, which establishes minimum standards for the collection and use of personal
identifying information in the European Union and prohibits the transfer of this
information to countries whose privacy standards are deemed inadequate.

ROSALIND RESNICK AND RYAN SCOTT DRUCKENMILLER CONTROL US, AND THEIR INTERESTS
MAY CONFLICT WITH YOUR INTERESTS.

We anticipate that after we complete this offering, Rosalind Resnick will
beneficially own 5,967,000 shares, or approximately 39.8% of our outstanding
common stock, and Ryan Scott Druckenmiller will beneficially own 5,733,000
shares, or approximately 38.2% of our common

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stock. In addition to being our founders, as well as executive officers and
members of our board of directors, Ms. Resnick and Mr. Druckenmiller have chosen
to be partners in life. Ms. Resnick and Mr. Druckenmiller disclaim beneficial
ownership of each other's shares. However, if Ms. Resnick and Mr. Druckenmiller
were to act in concert they would be able to exercise control over all matters
requiring approval by our shareholders, including the election of directors and
approval of significant corporate transactions. This concentration of ownership
may also have the effect of delaying or preventing a change in control of our
company and of giving Ms. Resnick and Mr. Druckenmiller the opportunity to
substantially impact all matters requiring approval by our shareholders even if
Ms. Resnick and Mr. Druckenmiller do not act in concert.

WE FACE UNCERTAINTY OF ADDITIONAL FINANCING FOR OUR CAPITAL NEEDS.

We currently anticipate that the net proceeds from this offering, together
with our funds from operations, will be sufficient to meet our anticipated need
for working capital, capital expenditures and business expansion for at least
the next twelve months. If we are unable to increase our revenues as
anticipated, we will need to raise additional funds. We may need more money
sooner if we:

- decide to expand faster than planned;

- develop new or enhanced services or products ahead of schedule;

- need to respond to competitive pressures; or

- need to acquire complementary products, businesses or technologies.

We currently do not have any commitments for additional financing. We cannot
be certain that additional financing will be available when and to the extent
required or that, if available, it will be on acceptable terms. If adequate
funds are not available on acceptable terms, we may not be able to fund our
expansion, develop or enhance our products or services or respond to competitive
pressures.

WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS.

Errors, omissions or defects in or other performance problems with our
service could result in financial or other damages to our marketing customers
because our marketing customers use our service for time-critical communications
with their prospective customers. Our marketing customers could seek damages for
losses from us. Our license agreements typically contain provisions designed to
limit our exposure to such claims, but the protection afforded by such
provisions is dependent upon the solvency of the parties to our licensing
agreements and existing or future laws or unfavorable judicial decisions could
negate such limitation of liability provisions. We have not experienced any
liability claims to date. However, a liability claim brought against us, even if
not successful, would likely be time-consuming and costly. A liability claim
could materially adversely affect our business, financial condition and results
of operations.

WE MAY BE SUBJECT TO CLAIMS DUE TO THE ACTIVITIES OF OUR CUSTOMERS.

We cannot predict whether our role in facilitating our customers' promotion
of products and services would expose us to liability. If that should occur, we
could be required to expend significant management and financial resources to
address any such claim or to pay any fines or penalties which might result or we
could be required to alter or discontinue certain methods of doing business or
take other steps which could be materially adverse to our business, financial
condition, or results of operations. Our current insurance may not provide
adequate coverage against claims which could have an adverse effect on our
business.

THE FUTURE SALE OF SHARES OF OUR COMMON STOCK MAY NEGATIVELY AFFECT OUR STOCK
PRICE.

The 3,300,000 shares of common stock that we are offering will be freely
tradable without restriction except for any shares purchased by our "affiliates"
as defined in Rule 144 under the Securities Act. Ms. Resnick and
Mr. Druckenmiller are our only affiliates at this time although other persons
may be deemed to be our affiliates in the future. In addition, if the
underwriters exercise their over-allotment option

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in part or in full, up to 495,000 additional shares will be issued and freely
tradable, except for shares purchased by our "affiliates." 11,700,000 of our
outstanding shares of common stock are "restricted securities" as defined in
Rule 144. We have also granted options to purchase 247,000 of our shares of
common stock to our employees other than Ms. Resnick and Mr. Druckenmiller. In
addition, we have granted options, effective as of October 8, 1999, to purchase
100,000 shares of common stock to each of Messrs. Levy, Slayton and York, our
non-management directors. Our stock option plan permits the issuance of options
to purchase up to 1,170,000 shares of our common stock.

Those shares may only be resold if there is an effective registration
statement under the Securities Act covering those shares or an exemption from
registration under Rule 144 or otherwise is available. Ms. Resnick and
Mr. Druckenmiller, the holders of all of our currently outstanding shares, have
agreed that they will not sell any shares without the prior consent of the
representative of the underwriters for a period of 180 days from the effective
date of this prospectus.

The market price of our common stock could decline as a result of sales by
Ms. Resnick or Mr. Druckenmiller and optionholders of a large number of shares
of our common stock in the market after this offering or because of the
perception that such sales could occur. We intend to register all shares of our
common stock reserved for issuance under our stock option plan. Shares covered
by such registration will be eligible for resale in the public market, subject
to Rule 144 limitations applicable to "affiliates" and to the lock-up agreements
described above. These sales also might make it more difficult for us to sell
equity securities in the future at a time and at a price that we deem
appropriate.

YOU WILL SUFFER DILUTION IN THE VALUE OF YOUR SHARES.

Investors purchasing shares in this offering will incur immediate and
substantial dilution in net tangible book value per share in the amount of
$10.47 per share. We have granted to our employees options to purchase
247,000 shares of our common stock that are exercisable at $5.00 per share. In
addition, we have granted options, effective as of October 8, 1999, to purchase
100,000 shares of common stock to each of Messrs. Levy, Slayton and York, our
non-management directors, at an exercise price of $10.00 per share. To the
extent outstanding options to purchase common stock are exercised at less than
the initial public offering price, there will be further dilution.

THE MARKET PRICE OF OUR STOCK MAY BE ADVERSELY AFFECTED BY MARKET VOLATILITY.

The stock market has experienced extreme price and volume fluctuations,
particularly with respect to Internet-related stocks. The trading price of our
common stock could be subject to wide fluctuations in response to a various
factors, such as the following:

- fluctuations in our quarterly or annual results of operations;

- changes in published earnings estimates by analysts and whether our
earnings meet or exceed such estimates;

- announcement of significant developments, such as the gain or loss of
contracts or relationships or innovations or product introductions by us
or our competitors;

- additions or departures of key personnel;

- changes in the rating or price targets of investment research analysts;
and

- changes in overall stock market conditions, including the stock prices of
other Internet companies.

In the past, companies that have experienced volatility in the market price
of their stock have been the object of securities class action litigation. If we
were subject to securities class action litigation, it could result in
substantial costs and a diversion of our management's attention and resources.

OUR OFFERING PRICE DOES NOT NECESSARILY RELATE TO ANY ESTABLISHED CRITERIA OF
VALUE, AND SO OUR STOCK MAY TRADE AT MARKET PRICES BELOW THE OFFERING PRICE.

The initial public offering price for the shares was determined by
negotiations among us

19
<PAGE>
and the representative of the underwriters. This initial price may not be
indicative of prices that will prevail in the trading market.

WE DO NOT PLAN TO PAY CASH DIVIDENDS EVEN THOUGH WE MADE DISTRIBUTIONS TO OUR
SHAREHOLDERS WHEN WE WERE A PRIVATE COMPANY.

From the date of commencement of our business, we have elected to be taxed
as an S corporation under United States federal and state laws. In connection
with that election, we typically have made large distributions of income to our
shareholders each year, who were subject to all federal and substantially all
state taxes levied in respect of our earnings. Our shareholders paid taxes at
their personal tax rates on that income and we did not pay federal corporate
income taxes on that income. Upon consummation of this offering, we will cease
to be an S corporation and we will be taxed as a C corporation. As a result, we,
rather than our shareholders, will be taxed on income that we earn after the
date on which we cease to be an S corporation. We do not currently intend to pay
any cash dividends from or after that date.

CERTAIN ANTI-TAKEOVER PROVISIONS MAY ADVERSELY AFFECT OUR SHARE PRICE AND IMPEDE
"CHANGE OF CONTROL" TRANSACTIONS.

Our restated certificate of incorporation includes provisions (1) requiring
advance notice to us before nominating any person to be elected a director or
concerning any other matter to be voted upon by our shareholders,
(2) precluding shareholders from taking actions by written consent in lieu of a
meeting, (3) requiring a majority of our shareholders or our president, chairman
of our board of directors or a majority of our board to call a special meeting
of shareholders, and (4) requiring the affirmative vote of at least two-thirds
of our shareholders to amend these provisions. Our bylaws include corresponding
provisions, as well as a provision permitting our board of directors to fill
vacant directorships or increase the size of our board of directors.
Section 912 of the New York Business Corporation Law prohibits an "interested
shareholder" from engaging in a "business combination" with us for a period of
five years from the date that person first became an interested shareholder
unless certain conditions are met. Those provisions could, together or
separately:

- discourage potential acquisition proposals;

- delay or prevent a change in control; and

- limit the price that certain investors might be willing to pay in the
future for shares of our common stock.

In particular, our restated certificate of incorporation permits our board
of directors to issue up to 5,000,000 shares of preferred stock with rights and
privileges that might be senior to our common stock, without the consent of the
holders of common stock. Those rights and privileges could include voting rights
that could effectively eliminate the rights of common shareholders to control us
and direct our affairs.

20
<PAGE>
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus contains forward-looking
statements within the meaning of the federal securities laws. These statements
are not historical facts, but rather are based on our current expectations,
assumptions, estimates and projections about us and our industry, and certain
beliefs and assumptions. Words including "may," "could," "would," "will,"
"anticipates," "expects," "intends," "plans," "projects," "believes," "seeks,"
"estimates," and similar expressions are intended to identify forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and other factors, some of which are
beyond our control, are difficult to predict and could cause actual results to
differ materially from those expressed or forecasted in the forward-looking
statements. These risks and uncertainties are described in "Risk Factors" and
elsewhere in this prospectus. We caution you not to place undue reliance on
these forward-looking statements, which reflect our management's view only as of
the date of this prospectus.

TERMINATION OF S CORPORATION STATUS

At our founding, we elected to be taxed as an S corporation. An S
corporation is exempt from federal and certain state and local taxes with the
owners being taxed instead of the business entity. As a result, our shareholders
during this period, Ms. Resnick and Mr. Druckenmiller, were subject to all
federal and certain state taxes levied on our earnings.

Immediately prior to the consummation of this offering, we will terminate
the S corporation election and, thereafter, become a C corporation. Adjustments
were necessary to reflect income tax expense in our pro forma statements of
operations to show the tax expense that would have been recorded had we been
taxed as a C corporation.

We agreed with Ms. Resnick and Mr. Druckenmiller that, if any adjustment is
made to our taxable income for any period through the date on which the S
corporation election is terminated that increases their tax liability, we will
reimburse them to the extent our tax liability is decreased. If an adjustment
during that period increases our tax liability, they will reimburse us to the
extent their tax liability is decreased. These reimbursements to Ms. Resnick and
Mr. Druckenmiller must also compensate them for any taxes due as a result of our
reimbursement to them.

We intend to pay to Ms. Resnick and Mr. Druckenmiller final S corporation
distributions based on current year earnings, to the extent of available cash
balances. At September 30, 1999, this amount would have been $798,135.

21
<PAGE>
USE OF PROCEEDS

The net proceeds from the sale of the shares of common stock in this
offering will be approximately $38.4 million. If the underwriters fully exercise
the over-allotment option, the net proceeds of the shares sold by NetCreations
will be approximately $44.4 million. Net proceeds is the amount NetCreations
expects to receive after paying the underwriting discount and other expenses
related to the offering.

We intend to use the net proceeds as follows:

- approximately $7.5 million to expand our NetCreations Network of
third-party Web sites and our database of email addresses. Although we
have no commitments or agreements with any third-party at this time, we
may explore this expansion through the acquisition of, or partnership
with, other Web sites or through other means that we may consider from
time to time;

- approximately $7.0 million to expand the sales and marketing functions
of our business;

- approximately $4.0 million to expand and continue to upgrade our
hardware to support the rapid growth of our business, including
co-locating our servers and increasing the redundancy of our networks
and database storage systems;

- approximately $1.3 million to repay the outstanding balance under our
line of credit;

- approximately $1.0 million to pursue continued research and development
of our systems to improve the services we provide to our list owners
and marketers as well as to ensure the quality of the delivery of
messages to our subscribers; and

- approximately $17.6 million to fund general corporate purposes,
including working capital.

To achieve our expansion and growth plans, we may also use a portion of the
net proceeds to acquire or invest in companies, technologies or expertise
complementary to our business. From time to time, we evaluate potential
acquisitions of companies, technologies and expertise. We have no agreements for
acquisitions or investments of that nature at this time. We may use a portion of
the net proceeds to pay any portion of the additional $4.0 million of advance
commissions we have agreed to pay to ICQ, Inc. in the future that we do not
(1) pay out of borrowings or our operating cash flow or (2) offset against fees
earned by ICQ under our email address list management agreement.

The timing and amount of NetCreations' actual expenditures will be based on
many factors, including changes in technology, the availability of human
resources and cash flow from operations. The proposed use of the net proceeds of
the offering represents our management's best estimate of the expected
utilization of funds to finance our activities in accordance with our
management's current objectives and market conditions. Our management and board
of directors may actually allocate the funds in significantly different
proportions depending upon their assessment of our needs at that time.

Until NetCreations uses the net proceeds of the offering, NetCreations will
invest the funds in short-term, investment-grade, interest-bearing securities.

DIVIDEND POLICY

We have made distributions to our shareholders during the time we were
deemed an S corporation. Immediately prior to the consummation of this offering,
we will change our status to a C corporation. At that same time, we intend to
pay to Ms. Resnick and Mr. Druckenmiller final S corporation distributions based
on current year earnings, to the extent of available cash balances. At
September 30, 1999, this amount would have been $798,135. We anticipate that we
will retain earnings to support operations and to finance the growth and
development of our business. Therefore, we do not expect to pay cash dividends
in the foreseeable future. Any future determination to pay cash dividends will
be at the discretion of our board of directors and will be dependent on the
financial condition, operating results, capital requirements and other factors
that our board deems relevant.

22
<PAGE>
CAPITALIZATION

The following table should be read in conjunction with our financial
statements and the notes included elsewhere in this prospectus. The following
table shows the capitalization of NetCreations as of September 30, 1999. Our
capitalization is presented (1) on an actual basis, (2) on a pro forma basis and
(3) on an as adjusted basis.

The number of issued and outstanding shares in the following table excludes
1,170,000 shares of common stock reserved for issuance under our stock option
plan of which options to purchase (1) 247,000 shares have been granted,
effective as of September 14, 1999 and as of November 11, 1999, at an exercise
price of $5.00 per share and (2) 100,000 shares have been granted, effective as
of October 8, 1999, to each of our three non-management directors at an exercise
price of $10.00 per share.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------------------------------------
PRO FORMA
ACTUAL PRO FORMA (1) AS ADJUSTED (1)(2)
----------- ------------- ------------------
<S> <C> <C> <C>
Short-term debt, including current portion of
long-term debt............................... $ 357,261 $ 357,261 $ 82,261
=========== =========== ===========
Long-term debt, less current portion........... 120,249 120,249 120,249
----------- ----------- -----------
Stockholders' equity:
Preferred Stock, no par value; no shares
authorized, issued or outstanding, actual
and pro forma; 5,000,000 shares authorized,
no shares issued and outstanding, as
adjusted................................... -- -- --
Common Stock, $.01 par value; 50,000,000
shares authorized, 11,700,000 shares issued
and outstanding, actual and pro forma;
50,000,000 shares authorized, 15,000,000
shares issued and outstanding, as
adjusted................................... 117,000 117,000 150,000
Additional paid-in capital(1)................ 1,395,000 1,481,984 39,845,984
Deferred compensation........................ (1,375,625) (1,375,625) (1,375,625)
Retained earnings(1)......................... 976,619 -- --
----------- ----------- -----------
Total stockholders' equity................. 1,112,994 223,359 38,620,359
----------- ----------- -----------
Total capitalization..................... $ 1,233,243 $ 343,608 $38,740,608
=========== =========== ===========
</TABLE>

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

(1) Pro forma adjustments reflect:

- Our final S corporation distribution. We intend to pay to Ms. Resnick and
Mr. Druckenmiller final S corporation distributions based on current year
earnings, to the extent of available cash balances. At September 30, 1999,
this amount would have been $798,135;

- An additional deferred tax liability of $91,500 resulting from the
termination of our status as an S corporation; and

- Reclassification of balance in retained earnings to additional paid in
capital, after the distribution to shareholders upon conversion to a
C corporation.

(2) As adjusted to reflect:

- The sale of 3,300,000 shares of common stock offered at $13.00 per share,
and

- The application of the estimated net proceeds from this offering.

23
<PAGE>
DILUTION

Purchasers of the common stock in this offering will experience immediate
and substantial dilution in the pro forma net tangible book value of the common
stock from the initial public offering price. NetCreations' net tangible book
value on September 30, 1999 was approximately $492,357, or $0.04 per share, and
$(397,278), or $(0.03) per share, on a pro forma basis after giving effect to
the final S corporation distribution and the deferred tax liability resulting
from the termination of our S corporation election. "Net tangible book value" is
total assets minus the sum of liabilities and intangible assets. "Net tangible
book value per share" is net tangible book value divided by the total number of
shares outstanding before the offering.

After giving effect to adjustments relating to the offering, NetCreations'
pro forma net tangible book value on September 30, 1999, would have been
$37,999,722 or $2.53 per share. The adjustments made to determine pro forma net
tangible book value per share are the following:

- An increase in total assets to reflect the net proceeds of the offering as
described under "Use of Proceeds."

- The addition of the number of shares offered by this prospectus to the
number of shares outstanding.

The following table illustrates the pro forma increase in net tangible book
value of $2.56 per share and the dilution (the difference between the offering
price per share and net tangible book value per share) to new investors:

<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $13.00
Net tangible book value per share as of September 30,
1999...................................................... $0.04
Pro forma S corporation distribution and deferred tax
liability................................................. (0.07)
-----
Pro forma net tangible book value per share as of
September 30, 1999........................................ (0.03)
Increase in net tangible book value per share attributable
to this offering.......................................... 2.56
-----
Pro forma net tangible book value per share as of
September 30, 1999 after giving effect to this
offering.................................................. 2.53
------
Dilution per share to new investors......................... $10.47
======
</TABLE>

The following table shows the difference between existing stockholders and
new investors with respect to the number of shares purchased from NetCreations,
the total consideration paid and the average price paid per share.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------------- -------------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------------- -------- --------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 11,700,000 78.0% $ 1,000 0.0% $0.00
New investors................ 3,300,000 22.0 42,900,000 100.0 13.00
---------- ---- ----------- ----- -----
Total...................... 15,000,000 100.0% $42,901,000 100.0% $2.86
========== ==== =========== ===== =====
</TABLE>

24
<PAGE>
SELECTED FINANCIAL DATA

This section presents selected historical financial data of NetCreations.
The data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
you should read carefully the financial statements included in this prospectus,
including the notes to the financial statements. The selected data in this
section is not intended to replace the financial statements.

NetCreations derived the statement of operations data for the years ended
December 31, 1996, 1997 and 1998, and balance sheet data as of December 31, 1997
and 1998 from the audited financial statements in this prospectus. Those
financial statements were audited by Grant Thornton LLP, independent certified
public accountants. NetCreations derived the balance sheet data as of
December 31, 1996 from audited financial statements that are not included in
this prospectus. NetCreations derived the statement of operations data for the
period from NetCreations' inception to December 31, 1995 and the balance sheet
data as of December 31, 1995 from unaudited financial statements prepared by
management. In the opinion of management, such information has been prepared on
the same basis as the audited financial statements included elsewhere in this
prospectus. NetCreations derived the statement of operations data for the nine
months ended September 30, 1998 and 1999 and balance sheet data as of
September 30, 1999 from the unaudited financial statements included in this
prospectus. NetCreations' management believes that the unaudited historical
financial statements contain all adjustments needed to present fairly the
information included in those statements, and that the adjustments made consist
only of normal recurring adjustments. Historical results are not necessarily
indicative of the results to be expected in the future. The results of
operations for the nine months ended September 30, 1999 are not necessarily
indicative of the results to be expected for the entire year.

25
<PAGE>

<TABLE>
<CAPTION>
PERIOD FROM NINE MONTHS ENDED
INCEPTION TO YEAR ENDED DECEMBER 31, SEPTEMBER 30,
DECEMBER 31, ---------------------------------- ------------------------
1995 1996 1997 1998 1998 1999
------------- -------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Net revenues............... $101,652 $476,190 $1,100,781 $3,446,539 $2,062,333 $10,202,614
Cost of revenues........... 8,213 43,090 173,124 1,509,776 812,547 4,961,667
-------- -------- ---------- ---------- ---------- -----------
Gross profit............... 93,439 433,100 927,657 1,936,763 1,249,786 5,240,947
-------- -------- ---------- ---------- ---------- -----------
Operating expenses:
Selling and marketing.... 29,482 195,451 289,904 492,004 332,164 1,118,883
Technology, support and
development............ 28,275 177,923 193,554 373,746 232,429 339,515
General and
administrative......... 12,893 60,734 151,307 369,508 268,587 802,869
Depreciation and
amortization........... -- 554 9,515 23,414 16,676 79,756
-------- -------- ---------- ---------- ---------- -----------
Total operating expenses... 70,650 434,662 644,280 1,258,672 849,856 2,341,023
-------- -------- ---------- ---------- ---------- -----------
Income (loss) before income
tax provision............ 22,789 (1,562) 283,377 678,091 399,930 2,899,924
Income tax provision....... -- 7,434 23,028 72,228 42,600 302,355
-------- -------- ---------- ---------- ---------- -----------
Net income (loss).......... $ 22,789 $ (8,996) $ 260,349 $ 605,863 $ 357,330 $ 2,597,569
======== ======== ========== ========== ========== ===========
Net income (loss) per
share-basic and
diluted.................. $ 0.00 $ (0.00) $ 0.02 $ 0.05 $ 0.03 $ 0.22
======== ======== ========== ========== ========== ===========
Shares used in per share
computation (000's
omitted)................. 11,700 11,700 11,700 11,700 11,700 11,700
PRO FORMA DATA: (1)
Historical income (loss)
before income tax
provision................ $ 22,789 $ (1,562) $ 283,377 $ 678,091 $ 399,930 $ 2,899,924
Pro forma income tax
provision (benefit)...... 3,500 (1,000) 129,000 316,000 186,000 1,342,000
-------- -------- ---------- ---------- ---------- -----------
Pro forma net income
(loss)................... $ 19,289 $ (562) $ 154,377 $ 362,091 $ 213,930 $ 1,557,924
======== ======== ========== ========== ========== ===========
Pro forma basic and diluted
net income (loss) per
share.................... $ 0.00 $ (0.00) $ 0.01 $ 0.03 $ 0.02 $ 0.13
======== ======== ========== ========== ========== ===========
Shares used in per share
computation (000's
omitted)................. 11,700 11,700 11,700 11,700 11,700 11,700
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1999
------------------------------ --------------------------
1996 1997 1998 ACTUAL PRO FORMA(2)
-------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash...................................... $ 32,981 $ 54,002 $ 96,855 $ 798,135 --
Working capital (deficiency).............. (16,593) 68,698 339,981 179,445 (710,190)
Total assets.............................. 59,372 233,489 943,804 4,576,265 3,778,130
Long-term debt (including current
portion)................................ -- -- 44,511 477,510 477,510
Total stockholders' equity (deficiency)... (5,459) 121,129 476,992 1,112,994 223,359
</TABLE>

- ------------------------------
(1) We have elected to be taxed as an S corporation for federal and state income
tax purposes, since our inception. Accordingly, no provision has been made
for federal and certain state income taxes. Pro forma net income has been
computed as if the Company had been fully subject to federal, state and city
income taxes. Immediately prior to the consummation of this offering, we
will terminate the S corporation election and, thereafter, become a C
corporation.
(2) We intend to pay to Ms. Resnick and Mr. Druckenmiller final S corporation
distributions based on current year earnings, to the extent of available
cash balances. At September 30, 1999, this amount would have been $798,135.
Pro forma adjustments reflect our (a) pro forma S corporation distributions
for this amount and (b) the deferred tax liability resulting from the
termination of our S corporation election.

26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

YOU SHOULD READ THIS DISCUSSION TOGETHER WITH THE FINANCIAL STATEMENTS AND
OTHER FINANCIAL INFORMATION INCLUDED ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We provide Internet-based opt-in email direct marketing services that enable
direct marketers to target promotional campaigns to consumers who have given
their permission to receive email messages regarding selected topical
categories. In addition, our technology provides direct marketers, as well as
list brokers who purchase use of our email address lists on behalf of their
customers, with real-time, online email address selection and ordering as well
as response-tracking.

As of September 30, 1999, we had over 4.3 million email addresses in our
database. The email addresses in our database were collected from consumers who
opted in through our Web site or a third-party Web site, and have not
subsequently opted out or been removed from our database because an email to
that address had been returned as undeliverable. We currently manage opt-in
email address lists for over 175 Web sites. Each Web site in the NetCreations
Network accumulates email addresses by placing a sign-up template on one or more
of its Web pages which allows consumers to opt in to receive email messages in a
selection of topical categories that the Web site owner believes will be of
greatest interest to the Web site's visitors. We currently have email addresses
listed in more than 3,000 topical categories in our database.

In the first nine months of 1999, we generated over 95% of our net revenues
by providing Internet opt-in email direct marketing services to our advertising
customers. We charge direct marketers for each use of an opt-in email address
from our database. In some cases, we grant volume discounts to our customers.
Additionally, for the first nine months of 1999, we earned less than 5% of our
net revenue by charging for delivery of email for customers sending messages to
email addresses owned by such customers.

Some of our customers consist of resellers. These resellers, principally
consisting of email list brokers but also including interactive advertising
agencies, Web design firms and Web sites that attract small business owners,
place orders in the reseller's own name for use of opt-in email addresses in our
database by the reseller's email direct marketing customers. We bill the
reseller our customary fees for that use of opt-in email addresses, less any
applicable volume discounts. In addition, we grant a brokerage discount to the
reseller. Revenue earned for our services after volume and broker discounts, is
reported in our financial statements as net revenues and is recognized when
email messages are transmitted to the selected email addresses.

We pay to the applicable Web site owner a commission amounting to typically
50% of the revenue we have earned, less volume discounts, if applicable, each
time we send an email message to the email addresses owned by that Web site
owner. In the event that an email address appears on more than one email address
list selected by our customer, the commission is only paid to the Web site owner
whose email address list is designated by our customer as the preferred list.
These commissions, along with amounts incurred in implementing the Web site's
sign-up program are reported as cost of revenues in our financial statements. In
the first nine months of 1999, commissions accounted for over 98% of cost of
revenue. We do not incur these commissions when customers select names from our
own email address lists. As of September 30, 1999, we derived approximately 6.0%
of the total email addresses in our database from our own Web site, but the
proportion of email addresses in our database that are derived from our Web site
has been decreasing and we expect that proportion will continue to decrease over
time.

27
<PAGE>
In connection with the email address list management agreement with ICQ,
Inc., we have made an initial advance of $1.0 million of commissions to ICQ. We
have agreed to advance an additional $4.0 million of commissions to ICQ as
follows: (1) $2.0 million upon the consummation of this offering,
(2) $1.0 million on May 3, 2000, and (3) $1.0 million on November 3, 2000. We
are entitled to take credits for the advances against commissions due to ICQ
under the email address list management agreement. If the agreement terminates
before May 3, 2000, all of the advances other than the first $1.0 million will
be refunded to us to the extent not offset by commissions earned by ICQ.
However, the remaining $4.0 million of the advances will become non-refundable
with the passage of time as follows: (1) $1.0 million on May 3, 2000,
(2) $1.0 million on November 3, 2000, and (3) $2.0 million on May 3, 2001. Our
net income would be negatively affected if advanced commissions that become non-
refundable have not been earned. Advances of commissions also burden our cash
flow and might prevent us from making other expenditures that might generate
revenues or growth for us.

We do not typically make such advances to Web site owners. We also do not
typically pay any Web site owner commissions of more than 50% of the revenue we
earn, less volume discounts, if applicable, each time we send an email message
to any email address list owned by that Web site owner. However, it is possible
that competitive pressures or strategic or other reasons may cause us to make
such advances or pay commissions of more than 50% of the revenue from sending
email messages to email address list owners in the future. If we should pay to
our Web site owners higher commissions our margins will be reduced. We may have
reduced profits or may become unprofitable if any increase in the rate of
commissions paid to Web site owners, and the consequent decrease in our margins,
is not offset by lower general and administrative costs as a percentage of
revenues or increased revenues from other sources.

For the year ended December 31, 1998, we had net revenues of $3,446,539 and
net income of $605,863. For the first nine months of 1999, we had net revenues
of $10,202,614 and net income of $2,597,569. We intend to implement our business
strategy by increasing expenditures on sales and marketing, new product
offerings, technology, and infrastructure development. Incremental costs
relating to any new products that may be introduced in the immediately
foreseeable future would be primarily for increased personnel but would likely
also include nominal costs for technological enhancements. Those expenditures,
any changes in our customary arrangements with Web site owners described in the
two preceding paragraphs, as well as various factors beyond our control,
including increased competition, may negatively impact our operating margins and
our profitability in the future.

Additionally, future profits are likely to be negatively impacted by the
initial granting of stock options to employees under our 1999 Stock Option Plan.
To the extent that options are granted at an exercise price which is below fair
market value on the date of grant a charge will result to our operations under
Financial Accounting Standards Board Statement No. 123 ("FASB 123"), "Accounting
for Stock-Based Compensation." We have granted options to acquire 247,000 shares
of our common stock to our employees other than Ms. Resnick and Mr.
Druckenmiller at $5.00 per share, which is below our initial public offering
price. During the three months ended September 30, 1999, we recorded deferred
compensation of $1,395,000 of which $19,375 was amortized to expense. In
addition, we have granted options, effective as of October 8, 1999, to purchase
100,000 shares of common stock to each of our three non-management directors at
an exercise price per share of $10.00.

As permitted by FASB 123, we have elected to follow Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25") and
related interpretations in accounting for our stock options. Under APB 25, when
the exercise price of stock options equals or exceeds the market price of the
underlying stock on the date of grant, no compensation expense is recorded. If
the exercise price of the stock option is less than the market price of the
underlying stock on the date of grant, we will record an expense equal to the
difference between the market price on the date of grant and the exercise price.
Such expense will be recorded in our statements of income, ratably over the
vesting periods of such stock options.

28
<PAGE>
The amount of compensation expense that would be recognized subsequent to
September 30, 1999 over the next four years, relating to our options granted to
date, at the initial public offering price of $13.00 per share, is as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1999..................... $ 579,000
2000..................... 959,000
2001..................... 846,000
2002..................... 473,000
----------
Total.................. $2,857,000
==========
</TABLE>

RESULTS OF OPERATIONS

The following table sets forth our statement of operations expressed as a
percentage of total net revenues:

<TABLE>
<CAPTION>
PERIOD FROM NINE MONTHS ENDED
INCEPTION TO YEAR ENDED DECEMBER 31, SEPTEMBER 30,
DECEMBER 31, ------------------------------- -------------------
1995 1996 1997 1998 1998 1999
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net revenues............................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues........................ 8.1 9.0 15.7 43.8 39.4 48.6
----- ------ ------ ------ -------- -------
Gross profit........................ 91.9 91.0 84.3 56.2 60.6 51.4
Operating expenses
Selling and marketing................. 29.0 41.0 26.3 14.3 16.1 11.0
Technology, support and development... 27.8 37.4 17.6 10.8 11.3 3.3
General and administrative............ 12.7 12.8 13.7 10.7 13.0 7.8
Depreciation and amortization......... -- 0.1 0.9 0.7 0.8 0.8
----- ------ ------ ------ -------- -------
Total operating expenses............ 69.5 91.3 58.5 36.5 41.2 22.9
----- ------ ------ ------ -------- -------
Income (loss) before income tax
provision............................. 22.4 (0.3) 25.8 19.7 19.4 28.5
Income tax provision.................... -- 1.6 2.1 2.1 2.1 3.0
----- ------ ------ ------ -------- -------
Net income (loss)................... 22.4% (1.9)% 23.7% 17.6% 17.3% 25.5%
===== ====== ====== ====== ======== =======
</TABLE>

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

NET REVENUES. Net revenues increased 394.7% from $2,062,333 for the nine
months ended September 30, 1998, to $10,202,614 for the nine months ended
September 30, 1999. This increase was the result of continued growth in the
number of email messages delivered for our customers as well as in the number of
customers utilizing our opt-in email address database. The number of opt-in
email addresses in our database grew from approximately 1.7 million at the end
of September 1998, to approximately 4.3 million by the end of September 1999,
primarily as a result of the addition of opt-in email addresses to our database
from third-party Web sites added to our NetCreations Network.

For the nine months ended September 30, 1998, volume and broker discounts
were $172,695 and $98,729, respectively. For the nine months ended
September 30, 1999, volume and broker discounts were $1,548,754 and $1,530,867,
respectively. The increase in volume discounts is attributable to the growth in
demand for our email marketing services and the increase in broker discounts is
attributable to the growth in utilization of our services by resellers. For the
nine months ended September 30, 1998, resellers accounted for approximately 21%
of our net revenues compared to approximately 44% of our net revenues for the
nine months ended September 30, 1999. We intend to increase the proportion of

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<PAGE>
our marketing customers obtained through our reseller channels. To the extent we
increase the proportion of sales through resellers, our net revenues and gross
profits could decrease.

On July 5, 1999, we terminated our email list management and email list
brokerage agreements with YesMail.com. Use of email addresses in our database by
YesMail.com as an email address list reseller accounted for approximately 7% of
our net revenues in 1998 and approximately 11% of our net revenues for the first
nine months of 1999. Although we can give no assurance, we anticipate that
substantially all of such net revenues will be replaced by selling our services,
either directly or indirectly through other email address list brokers, to
direct marketers, including direct marketers represented by YesMail.com as well
as other direct marketing customers. In addition, net revenues generated by
selling use of the email address list in our database collected from
YesMail.com's Web site and, therefore, owned by YesMail.com as an email address
list owner, represented 3.3% and 0.8% in 1998 and the first nine months of 1999,
respectively.

COST OF REVENUES. Cost of revenues increased 510.6% from $812,547, or 39.4%
of net revenues, for the nine months ended September 30, 1998, to $4,961,667, or
48.6% of net revenues, for the nine months ended September 30, 1999. This
increase was the result of an increase in commissions due to a greater
proportion of opt-in email addresses being added to our database from
third-party Web sites.

SELLING AND MARKETING. Selling and marketing expenses increased 236.8% from
$332,164 for the nine months ended September 30, 1998, to $1,118,883 for the
nine months ended September 30, 1999. Selling and marketing expenses consisted
primarily of personnel costs and direct expenditures for advertising,
promotional programs and other related activities. This increase was the result
of our business expansion and is attributable to an increase in the number of
employees. As of September 30, 1999, we had 18 employees in sales and marketing
functions as compared to four employees as of September 30, 1998. Additionally,
advertising expenditures increased by $282,637 in connection with our efforts to
enhance recognition of our company and the services we provide.

TECHNOLOGY, SUPPORT AND DEVELOPMENT. Technology, support and development
expenses increased 46.1% from $232,429 for the nine months ended September 30,
1998, to $339,515 for the nine months ended September 30, 1999. Technology,
support and development expenses consisted primarily of personnel costs and
expenditures for software and related supplies. This increase was the result of
the hiring of four employees during the first nine months of 1999, in connection
with our efforts to improve the efficiency of our WWW.POSTMASTERDIRECT.COM Web
site and expand its capabilities.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
198.9% from $268,587 for the nine months ended September 30, 1998, to $802,869
for the nine months ended September 30, 1999. General and administrative
expenses consisted primarily of personnel, facilities, communication costs and
professional fees. This increase was attributable to the addition of two
employees to support growth in business activity, space expansion at our current
location, professional fees in connection with various legal matters relating to
customer and employment agreements, intellectual property and employee benefit
matters, and accounting and auditing fees.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased 378.3% from $16,676 for the nine months ended September 30, 1998, to
$79,756 for the nine months ended September 30, 1999. Depreciation and
amortization expenses consisted primarily of depreciation of computer equipment.
This increase was primarily a result of investments in computer equipment.

INCOME TAXES. As we had elected to be taxed as an S corporation for federal
and certain state tax purposes, the provision for income taxes for the first
nine months of 1998 and 1999 represents state and local taxes only to the extent
they do not recognize the S corporation status, based on the pre-tax operating
results for each year.

30
<PAGE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1998

NET REVENUES. Net revenues increased 213.1% from $1,100,781 for the year
ended December 31, 1997, to $3,446,539 for the year ended December 31, 1998.
This increase was the result of continued growth in the number of email messages
delivered for our customers as well as in the number of customers utilizing our
opt-in email address database. The number of opt-in email addresses in our
database grew from approximately 675,000 at the end of 1997, to approximately
1.9 million by the end of 1998, primarily as a result of the addition of opt-in
email addresses to our database from third-party Web sites added to our
NetCreations Network.

For the year ended December 31, 1997, volume discounts were $16,181 and
there were no broker discounts. For the year ended December 31, 1998, volume and
broker discounts were $357,733 and $317,549, respectively. The increase in
volume discounts is attributable to the growth in demand for our email marketing
services. The increase in broker discounts is attributable to our use of
resellers as an additional sales channel in 1998. During 1998, resellers
accounted for approximately 38% of our net revenues.

COST OF REVENUES. Cost of revenues increased 772.1% from $173,124, or 15.7%
of net revenues, for the year ended December 31, 1997, to $1,509,776, or 43.8%
of net revenues, for the year ended December 31, 1998. This increase was the
result of an increase in commissions due to a greater proportion of opt-in email
addresses being added to our database from third-party Web sites.

SELLING AND MARKETING. Selling and marketing expenses increased 69.7% from
$289,904 for the year ended December 31, 1997, to $492,004 for the year ended
December 31, 1998. Of this increase, $145,000 was attributable to rising
personnel costs, including the addition of four employees. Additionally,
advertising expenditures increased by approximately $54,000 to heighten market
awareness of our company and the email marketing services we provide.

TECHNOLOGY, SUPPORT AND DEVELOPMENT. Technology, support and development
expenses increased 93.1% from $193,554 for the year ended December 31, 1997, to
$373,746 for the year ended December 31, 1998. This increase was attributable to
a combination of hiring additional employees and utilizing consultants to
enhance the business support system and improving the infrastructure and
capabilities of our WWW.POSTMASTERDIRECT.COM Web site.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
144.2% from $151,307 for the year ended December 31, 1997, to $369,508 for the
year ended December 31, 1998. This was generally attributable to growth in
business activities and the establishment of an office facility, replacing our
former home-based office.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased 146.1% from $9,515 for the year ended December 31, 1997, to $23,414
for the year ended December 31, 1998. This increase was primarily a result of
investments in computer equipment.

INCOME TAXES. As we had elected to be taxed as an S corporation for federal
and certain state tax purposes, the provision for income taxes for 1997 and 1998
represents state and local taxes only to the extent that they do not recognize
the S corporation status, based on the pre-tax operating results for each year.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1997

NET REVENUES. Net revenues increased 131.2% from $476,190 for the year
ended December 31, 1996, to $1,100,781 for the year ended December 31, 1997.
This increase was the result of a shift in the focus of our business from Web
site design and promotion to email direct marketing and the growth in

31
<PAGE>
the number of email messages delivered for our customers as well as in the
number of customers utilizing our opt-in email address database.

For the year ended December 31, 1996, there were no volume or broker
discounts. For the year ended December 31, 1997, volume discounts were $16,181
and there were no broker discounts.

COST OF REVENUES. Cost of revenues increased 301.8% from $43,090, or 9.0%
of net revenues, for the year ended December 31, 1996, to $173,124, or 15.7% of
net revenues, for the year ended December 31, 1997. This increase was the result
of a shift in the focus of our business from Web site promotion to email direct
marketing and the increase in the number of opt-in email addresses being added
to our database through third-party Web sites, the majority of which were added
during 1997. The lower amount in 1996 represents higher utilization of opt-in
email addresses from our own email address list, as compared with use of opt-in
email address lists in our database that are owned by third-party Web sites.

SELLING AND MARKETING. Selling and marketing expenses increased 48.3% from
$195,451 for the year ended December 31, 1996, to $289,904 for the year ended
December 31, 1997. This was primarily attributable to increases in advertising
expenditures in various marketing publications and attendance at industry
related trade shows and conferences.

TECHNOLOGY, SUPPORT AND DEVELOPMENT. Technology, support and development
expenses increased 8.8% from $177,923 for the year ended December 31, 1996, to
$193,554 for the year ended December 31, 1997 as a result of additional
personnel costs incurred during the year.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
149.1% from $60,734 for the year ended December 31, 1996, to $151,307 for the
year ended December 31, 1997. This increase was generally attributable to
additional employees hired to support growth in business activity,
infrastructure development expenses and various legal and accounting services.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased 1,617.5% from $554 for the year ended December 31, 1996, to $9,515 for
the year ended December 31, 1997. This increase was primarily as a result of
investments in computer equipment and furniture.

INCOME TAXES. As we had elected to be taxed as an S corporation for federal
and certain state tax purposes, the provision for income taxes for 1996 and 1997
represents state and local taxes only to the extent they do not recognize the
S corporation status, based on the pre-tax operating results for each year.

QUARTERLY RESULTS OF OPERATIONS

The following tables set forth certain unaudited quarterly information for
each quarter of fiscal year 1998 and the first three quarters of 1999. This
quarterly information has been prepared on a basis consistent with the audited
financial statements and, we believe, includes all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of the
information shown. Our quarterly

32
<PAGE>
operating results may fluctuate significantly as a result of a variety of
factors and operating results for any quarter are not necessarily indicative of
results for a full fiscal year.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------
1998 1999
-------------------------------------------------- --------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 JUNE 30 SEPTEMBER 30
--------- -------- ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues........................ $476,545 $709,653 $876,135 $1,384,206 $1,694,505 $3,578,089 $4,930,020
Cost of revenues.................... 139,913 282,580 390,054 697,229 827,152 1,750,815 2,383,700
-------- -------- -------- ---------- ---------- ---------- ----------
Gross profit.................... 336,632 427,073 486,081 686,977 867,353 1,827,274 2,546,320
Operating expenses
Selling and marketing............. 82,870 119,422 129,872 159,840 294,328 307,632 516,923
Technology, support and
development..................... 55,169 82,762 94,498 141,317 85,981 105,824 147,710
General and administrative........ 71,500 82,361 114,727 100,920 138,866 233,638 430,365
Depreciation and amortization..... 4,130 5,352 7,193 6,739 17,354 27,797 34,605
-------- -------- -------- ---------- ---------- ---------- ----------
Total operating expenses........ 213,669 289,897 346,290 408,816 536,529 674,891 1,129,603
-------- -------- -------- ---------- ---------- ---------- ----------
Income before income tax
provision......................... 122,963 137,176 139,791 278,161 330,824 1,152,383 1,416,717
Income tax provision................ 13,100 14,600 14,900 29,628 36,300 121,700 144,355
-------- -------- -------- ---------- ---------- ---------- ----------
Net income...................... $109,863 $122,576 $124,891 $ 248,533 $ 294,524 $1,030,683 $1,272,362
======== ======== ======== ========== ========== ========== ==========
</TABLE>

Our operating results for these fiscal quarters expressed as a percentage of
sales were as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------
1998 1999
-------------------------------------------------- --------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 JUNE 30 SEPTEMBER 30
--------- -------- ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues........................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues.................... 29.4 39.8 44.5 50.4 48.8 48.9 48.4
-------- -------- -------- ---------- ---------- ---------- --------
Gross profit.................... 70.6 60.2 55.5 49.6 51.2 51.1 51.6
Operating expenses
Selling and marketing............. 17.3 16.8 14.8 11.5 17.4 8.6 10.5
Technology, support and
development..................... 11.6 11.7 10.8 10.2 5.1 3.0 3.0
General and administrative........ 15.0 11.6 13.1 7.3 8.2 6.5 8.7
Depreciation and amortization..... 0.9 0.8 0.8 0.5 1.0 0.8 0.7
-------- -------- -------- ---------- ---------- ---------- --------
Total operating expenses........ 44.8 40.9 39.5 29.5 31.7 18.9 22.9
-------- -------- -------- ---------- ---------- ---------- --------
Income before income tax
provision......................... 25.8 19.3 16.0 20.1 19.5 32.2 28.7
Income tax provision................ 2.7 2.0 1.7 2.1 2.1 3.4 2.9
-------- -------- -------- ---------- ---------- ---------- --------
Net income...................... 23.1% 17.3% 14.3% 18.0% 17.4% 28.8% 25.8%
======== ======== ======== ========== ========== ========== ========
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have primarily financed our business using the cash
flow generated from operations. We borrow under our revolving line of credit
with Citibank, N.A. to supplement operating cash. Borrowings under this line of
credit are payable on demand, plus interest at 1% above the bank's announced
base rate and are collateralized by our accounts receivable. As of November 3,
1999, we are permitted to borrow up to $1.3 million under the line of credit,
and borrowings bear interest at the rate of 9.25%. At November 3, 1999,
$1.3 million was outstanding under the line of credit. These borrowings are
personally guaranteed by Ms. Resnick and Mr. Druckenmiller.

In connection with the email address list management agreement with ICQ, we
are required to make $5.0 million in advance payments to ICQ, for commissions to
be earned under the agreement. We paid $1.0 million of these advance payments on
November 3, 1999. We will pay the remaining $4.0 million of the advance payments
as follows: (1) $2.0 million upon the consummation of this offering, (2)
$1.0 million on May 3, 2000, and (3) $1.0 million on November 3, 2000. The first
$1.0

33
<PAGE>
million of these advance payments is non-refundable. The remaining $4.0 million
becomes non-refundable in increments upon the passage of time. In connection
with paying the first advance, we borrowed $1.0 million under our line of
credit. We anticipate that we will pay the remaining advances from additional
borrowings, operating cash flows or the proceeds from this offering.

Net cash provided by operating activities was $40,518 for the year ended
December 31, 1996, $205,737 for the year ended December 31, 1997, $375,566 for
the year ended December 31, 1998, and $2,911,333 for the nine months ended
September 30, 1999.

Net cash used in investing activities was $11,074 for the year ended
December 31, 1996, $50,955 for the year ended December 31, 1997, $79,422 for the
year ended December 31, 1998, and $98,426 for the nine months ended
September 30, 1999. Cash used in investing activities was used for capital
expenditures, primarily computer hardware and software for the operation and
support of our business activities.

Net cash used in financing activities was none for the year ended
December 31, 1996, $133,761 for the year ended December 31, 1997, $253,261 for
the year ended December 31, 1998, and $2,111,657 for the nine months ended
September 30, 1999. Cash used in financing activities was primarily for
distributions to the shareholders relating to our election to be taxed as
an S corporation.

As of September 30, 1999, we had $798,135 of cash and our principal
commitments consisted of $202,510 of obligations under our capital lease
financing arrangement. Although we have no material commitments for capital
expenditures, we expect to increase our capital expenditures and lease
commitments consistent with our expected growth in operations, infrastructure
and personnel.

We believe that the proceeds from this offering, together with anticipated
cash flow from operations and funds available from our credit facility, will be
sufficient to satisfy our working capital and capital expenditure requirements
for at least the next 12 months. We believe that we would be able to satisfy our
working capital requirements for our current level of operations with
anticipated cash flows from operations and funds available from our credit
facility. However, if we do not obtain the proceeds of this offering, we would
implement our expansion program more slowly and we might be unable to make large
expenditures, such as acquisitions of other companies that we might otherwise
have the necessary funds to complete from time to time. In connection with our
expansion program, we plan to make substantial expenditures over the near term
primarily in connection with (1) additional costs related to the expansion of
our network of third-party Web sites, (2) increased staffing of our sales and
service groups, (3) increased advertising and marketing activities,
(4) additional capital expenditures, primarily for computer equipment and
(5) continued research and development of our systems to improve our services.
Changes in our operating plans, acceleration of our expansion plans, lower than
anticipated sales, increased expenses, potential acquisitions or other events
may cause us to seek additional financing sooner than anticipated. Additional
financing may not be available on acceptable terms, or at all. Failure to obtain
additional financing as needed could have a material adverse effect on our
business and results of operations.

SEASONALITY

34
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131 ("SFAS No. 131"),
"Disclosures About Segments of an Enterprise and Related Information." SFAS
No. 131 establishes standards for the way companies report information about
operating segments in annual financial statements. It also establishes standards
for related disclosures about products and services, geographic areas and major
customers. The disclosures prescribed in SFAS No. 131 are effective for the year
ended December 31, 1998. The Company has determined that it operates as one
business segment, a provider of Internet marketing services.

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging
Activities," which defines derivatives, requires that all derivatives be carried
at fair value, and provides for hedge accounting when certain conditions are
met. SFAS No. 133 is effective for us in 2002. Although we have not fully
assessed the implications of SFAS No. 133, we do not believe that the adoption
of this statement will have a material impact on our financial position or
results of operations.

In April 1998, Statement of Position (SOP) 98-5, "Reporting on the Costs of
Start-Up Activities" was issued by the Accounting Standards Executive Committee.
SOP 98-5 provides guidance on the financial reporting of start-up costs and
organization costs. It requires costs of start-up activities and organization
costs to be expensed as incurred, and is effective for fiscal years beginning
after December 15, 1998. The adoption of this SOP will not have a material
effect on our operations.

THE YEAR 2000

The "Year 2000 issue" refers generally to the problems that some software
may have in determing the correct century for the year. For example, software
with date-sensitive functions that is not Year 2000 compliant may not be able to
distinguish whether "00" means 1900 or 2000, which may result in failures or the
creation of erroneous results.

OUR STATE OF YEAR 2000 READINESS. We designed our current software to be
Year 2000 compliant when configured and used in accordance with the related
documentation, and provided that the underlying operating system of the host
machine and any other software used with or in the host machine or our service
are Year 2000 compliant. However, we have not tested our software for Year 2000
compliance.

We have not tested software obtained from third parties. However, we are
seeking assurances from our vendors that licensed software is Year 2000
compliant. Despite assurances from developers of software incorporated into our
software, our software may contain undetected errors or defects associated with
Year 2000 date functions. Known or unknown errors or defects in our software
could result in delay or loss of revenues, diversion of development resources,
damage to our reputation, or increased service and warranty costs, any of which
could seriously harm our business, financial condition and results of
operations. Some commentators have predicted significant litigation regarding
Year 2000 compliance issues, and we are aware of such lawsuits against other
software vendors. Because of the unprecedented nature of such litigation, it is
uncertain whether or to what extent we may be affected by it.

We are assessing our material internal information technology systems,
including both our own software products and third-party software and hardware
technology, but we have not initiated an assessment of our non-information
technology systems. We expect to complete testing of our information technology
systems in 1999. To the extent that we are not able to test the technology
provided by third-party vendors, we are seeking assurances from such vendors
that their systems are Year 2000 compliant. We are not currently aware of any
significant operational issues or costs associated with preparing our internal
information technology and non-information technology systems

35
<PAGE>
for the Year 2000. However, we may experience significant unanticipated problems
and costs caused by undetected errors or defects in the technology used in our
internal information technology and non-information technology systems.

We do not currently have any information concerning the Year 2000 compliance
status of our customers. Our current or future customers may incur significant
expenses to achieve Year 2000 compliance. If our customers are not Year 2000
compliant, they may experience material costs to remedy problems, they may face
litigation costs and they may delay purchases or implementation of our service.
Year 2000 issues could reduce or eliminate the budgets that current or potential
customers could have for purchases of our service. As a result, our business,
financial condition and results of operations could be seriously harmed.

THE COSTS TO ADDRESS OUR YEAR 2000 ISSUES. We estimate that we have
incurred nominal costs to date in connection with our Year 2000 plan. We
currently estimate the total costs of completing our Year 2000 plan, including
costs incurred to date, to be less than $250,000. This estimate is based on
currently available information and will be updated as we continue our
assessment of third-party relationships, proceed with our testing and
implementation and design contingency plans.

THE RISKS OF OUR YEAR 2000 ISSUES. If any information technologies or
embedded microprocessor technology systems critical to our operations have been
overlooked, there could be a material adverse effect on our business or results
of operations of a magnitude which we have not yet fully analyzed. If the
vendors of our important goods and services or the suppliers of our necessary
energy, telecommunications and transportation needs fail to provide us with
(1) the materials and services which are necessary to sell our products and
services, (2) the electrical power and other utilities necessary to sustain our
operations, or (3) reliable means of transportation, such failure could affect
our ability to sell our products and services which could have a material
adverse effect on our business or results of operations.

OUR CONTINGENCY PLAN. We have not yet fully developed a contingency plan to
address situations that may result if we are unable to achieve Year 2000
readiness of our critical operations. The cost of developing and implementing
such a plan may itself be significant. Although we expect to have a plan to deal
with Year 2000 compliance issues pertaining to our internal systems soon after
December 1, 1999, we expect to be unable to deal with Year 2000-related service
outages by the telecommunications carriers, Internet service providers, and
electric utilities upon which we rely. In addition, enhancements and revisions
to any contingency plan will be continuously considered and implemented as
appropriate.

36
<PAGE>
BUSINESS

INDUSTRY BACKGROUND

THE INTERNET AND ONLINE COMMERCE. The Internet is an increasingly
significant global medium for communications, content and commerce.
International Data Corporation estimates that the number of Web users worldwide
was approximately 142 million at the end of 1998 and will grow to approximately
399 million by the end of 2002. Email was originally viewed as a simple personal
communications tool, but it is increasingly used as a powerful and
cost-effective business tool. Consequently, it has become one of the most
popular Internet applications.

The increasing functionality, accessibility and overall usage of the
Internet and online services have made them an attractive commercial medium. The
Internet and other online services are evolving into a unique sales and
marketing channel, similar to retail stores, mail-order catalogs and television
shopping. According to International Data Corporation, the number of Web buyers
worldwide is estimated to increase from 30.8 million in 1998 to 133.9 million in
2002, which represents a compounded annual growth rate of 44%. International
Data Corporation also estimates that the total value of goods and services
purchased worldwide over the Web will increase from $50.4 billion in 1998 to
$733.6 billion in 2002. The growing use of the Internet has led businesses to
develop e-commerce strategies to drive traffic to their Web sites, attract
customers and facilitate transactions.

ADVERTISING. Businesses use two forms of advertising to attract customers:
brand advertising and direct marketing. Brand advertisements, including
television, radio, magazine displays, and billboards, target a mass audience to
generate awareness of a particular company, product or service. The goal of
direct marketing, by contrast, is to target specific individuals who appear from
behavioral patterns or demographic data to be likely purchasers of products or
services. Direct marketing includes direct mail, telemarketing, and direct
response advertising in newspapers, magazines and on radio and television.
According to the DMA, approximately $162.7 billion, representing 57% of the
total advertising expenditures in the United States, was spent on direct
marketing in 1998. Furthermore, the DMA projects direct marketing spending to
grow to $221.5 billion by 2003.

INTERNET ADVERTISING. The rise of the Internet and its fast-growing
popularity among consumers and business owners has led both brand advertisers
and direct marketers to begin experimenting with advertising and marketing
online. According to Forrester Research, Internet advertising expenditures are
expected to increase from $3.3 billion in 1999 to $24.1 billion in 2003
worldwide, and from $2.8 billion in 1999 to $17.2 billion in 2003 in the United
States. According to the DMA, online direct marketing expenditures in the United
States are expected to increase from $1.1 billion in 1999 to $5.3 billion in
2003.

Currently, the most popular form of Internet advertising is banner
advertising. Web sites display advertising banners which users can click through
to visit the advertiser's Web site and obtain more information about a company's
product or service. However, while banners provide advertisers with the ability
to reach broad audiences and establish brand awareness, they have proven to be
less than effective as vehicles for direct marketing. Response rates, or
click-throughs, from banner advertisements averaged approximately 0.7% as
reported by Forrester Research in March 1999.

Email advertising campaigns are cheaper and faster than traditional direct
marketing. However, the practice of sending unsolicited commercial email, or
"spam," is strongly opposed by many Internet users. Spam lists are databases of
email addresses gathered without the recipients' knowledge or consent from
Internet newsgroups, chat rooms, Web sites, and member directories. While spam
lists may be inexpensive to rent, costing less than $1 for 1,000 addresses, the
hostile reaction they can generate among Internet users can be very costly to a
marketer's reputation. Spamming can also result in attacks on the marketer's
corporate mail server by the automated transmission of extremely large volumes
of angry email messages. Moreover, a marketer who engages in spamming risks
being

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disconnected from its Internet service provider or having all subsequent email
transmission attempts blocked. Over the last few years, spam transmitters have
been successfully sued by Internet service providers such as America Online and
Earthlink and several states have passed legislation barring or restricting the
transmission of unsolicited email messages.

Businesses attempt to utilize the most cost-effective advertising source to
maximize their advertising dollar. Drawbacks to traditional direct mail include
the high costs involved, the delay in response and the difficulty in tracking
responses. Banner advertising is not a cost-effective form of direct marketing
because of its relatively low click-through rate. Unsolicited email advertising
is generally not desirable because of privacy concerns and potential damage to
marketers' reputations.

OUR BUSINESS

We provide Internet-based opt-in email direct marketing services. Our opt-in
email marketing system enables direct marketers to target promotional campaigns
to consumers who choose (1) whether or not they would like to receive commercial
messages, (2) the type or categories of information that they would like to
receive and (3) the amount of personal data that they are willing to disclose.
The users can opt out, or stop receiving these messages, at any time. Unlike
some "permission-based" email marketing companies that do not always verify the
election of their list members to receive email messages, we have developed a
double opt-in confirmation system. We require each Internet user to confirm the
user's desire to receive messages, typically by responding to a verification
email. This way, no Internet user can be signed up for our lists by an
unauthorized third party.

Our opt-in email direct marketing business offers direct marketers three key
advantages over postal direct marketing and banner advertising:

- SPEED. Opt-in email campaigns can be sent out immediately without waiting
days or weeks at a postal lettershop. We believe that email campaigns also
generate results in a shorter period of time than traditional direct mail,
producing leads and sales within 24 to 48 hours, compared to six to eight
weeks offline.

- RESPONSIVENESS. Opt-in email campaigns typically generate higher response
rates than postal mail or banner ad campaigns. We believe that opt-in
email campaigns typically generate response rates ranging from 5% to 15%,
although Forrester Research estimates that opt-in email campaigns
generated average response rates of 18% as of March 1999. This greatly
exceeds the typical banner advertising response rate of 0.7% and typical
postal direct mail response rates, which we believe to be approximately
2%. We also believe, based on the response rates reported to us by our
direct marketing customers, that our double opt-in system contributes to
our lists generating higher response rates than other email lists in the
market. In addition, we can confirm to Internet service providers that
messages sent are not unsolicited spam. As a result, NetCreations' and our
direct marketers' email messages are allowed to travel freely through the
networks of all of the major Internet service providers.

- COST. Opt-in email campaigns cost less than postal mail campaigns.
Forrester Research estimates that the typical costs for email campaigns
range from 15 to 45 cents per email message sent (to rent a list and have
an email service bureau send it out). This compares to an average cost of
60 cents per delivery for a postal direct mail campaign, including the
list rental, printing, postage and processing fees. While banner ads may
cost less than email campaigns, on a CPM (cost per thousand) basis, banner
campaigns often end up costing more because of their low response rates.

Our customers include Web sites that collect email addresses and direct
marketers, including advertisers and email address list brokers. Our service
allows demographic selection of email addresses based on the personal data
provided by Internet users when their sign-up forms were completed.

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Additionally, it provides real-time, online list selection and ordering. We also
provide an optional response-tracking program that allows marketers to monitor
and improve the effectiveness of their email marketing campaigns.

Our email address database offers direct marketers and email address list
brokers more than 4.3 million email addresses gathered from a network of more
than 175 third-party Web sites, including sites such as Internet.com, NetZero,
Entrepreneur Magazine, CMPnet, LinkExchange, CDROM Guide, Regards.com and
Volition. We provide marketers and e-commerce retailers a selection of targeted
email address lists designed to achieve maximum response to their offers. We
currently have email addresses listed in our database in over 3,000 topical
categories, from general consumer lists to business-to-business lists.

On November 3, 1999, we entered into a two-year email list management
agreement with ICQ, Inc., an instant messaging subsidiary of America Online,
Inc. We will be ICQ's exclusive email address list manager for delivery of
targeted email messages on behalf of third-party advertisers to ICQ users who
opt in to our service. Under the agreement, we have agreed that ICQ will be our
exclusive instant messaging partner and that we will not enter into any similar
transactions with a company that provides instant messaging applications as a
material part of its business, other than America Online or its affiliates. We
agreed to advance to ICQ $5.0 million, constituting a portion of the fees that
ICQ expects to earn under the agreement. Of that sum, $1.0 million was paid on
signing. An additional $2.0 million is payable upon the consummation of this
offering. The remaining $2.0 million is payable in installments over time. We
are entitled to take credit for the advances against fees due to ICQ under the
email address list management agreement. If the agreement terminates before
May 3, 2000, all of the advances other than the first $1 million will be
refunded to us. The remaining $4.0 million of the advances will also become
non-refundable with the passage of time.

Our services enable Web site owners to compile email address lists and
demographic profiles of
their members. We then make these lists available to direct marketers on our
WWW.POSTMASTERDIRECT.COM online store, providing incremental revenue
opportunities in the form of commissions for Web sites when email addresses
owned by those Web sites are used by marketers. In addition, our Web site
provides marketing, mailing, merging of lists, purging of duplicate email
addresses, and subscribe/ unsubscribe services to users of our email addresses.

OUR STRATEGY

Our goal is to become the leader in opt-in direct marketing services on the
Internet. Key elements of our strategy include the following:

- MAINTAIN AND EXTEND MARKET LEADERSHIP IN OPT-IN EMAIL DIRECT MARKETING. We
intend to maintain and extend our leadership role in email direct
marketing by aggressively expanding our network of third-party Web sites
with additional Web sites worldwide. We are exploring ways to encourage
third-party Web sites currently participating in our NetCreations Network
to refer additional Web sites to join our network. In addition, we may
participate in cooperative databases, in which we would agree to share
opt-in email addresses and fees. We may also acquire other Web sites in an
effort to aggregate more opt-in email addresses. In connection with our
worldwide list expansion, we intend to develop capabilities for adding
email addresses to our database from non-English language consumers. We
also plan on hiring additional business development personnel to assist us
in obtaining more list members.

- ENRICH OUR DATABASE WITH OPT-IN TRANSACTION DATA. We intend to develop
mechanisms to provide direct marketers with lists of consumers who have
purchased specified products on the Internet. We plan to work with leading
e-commerce and catalog sites to incorporate an opt-in sign-up form that
will allow Internet consumers to elect to receive targeted offers related
to the products and services that they have purchased. By doing so, we
will build a large, comprehensive

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database of consumer purchase behavior on the Internet which we believe
will be attractive to direct marketers.

- DEVELOP NEW INTERNET MARKETING PRODUCTS AND SERVICES. We intend to expand
our direct marketing services to additional applications on the Internet
such as incentive programs and sweepstakes promotions. We also intend to
expand the use of our current response-tracking system to create an
end-to-end system that measures responses all the way from the message
delivery to the sale. In addition, we intend to develop email delivery and
tracking capabilities for non-English languages and character sets to
facilitate our worldwide list expansion and marketing plans.

- EXPAND OUR SALES CHANNELS. In addition to our direct sales efforts, we
market our services through indirect sales channels such as list brokers,
advertising agencies, Web design firms and other resellers. We intend to
develop additional sales channels to penetrate vertical markets such as
small business/home office, technology, publishing and manufacturing. In
addition, we continuously work with our existing indirect sales channels
to further the growth of sales through these sales channels. We recently
launched an online list brokerage program that enables Web sites that
target small business owners and entrepreneurs to private-label our email
address list rental program and earn commissions by referring customers to
us.

- LEVERAGE OUR SCALEABLE TECHNOLOGY PLATFORM. We have developed and rely
upon our proprietary software and intend to capitalize on its modular
design to easily expand our capabilities to process increasing demand for
email messaging by our direct marketing customers. Our platform also
enables the addition of new features and products to satisfy the needs of
our customers for quality, innovative products and services.

OUR SERVICES

We provide Internet-based opt-in email address list management, email
address list brokerage, a response management system, and email delivery
services through our WWW.POSTMASTERDIRECT.COM Web site.

EMAIL ADDRESS LIST MANAGEMENT. We currently aggregate and manage opt-in
email addresses across a network of more than 175 third-party Web sites. Once a
Web site joins our network, we provide a sign-up template for the site to place
on one or more of its Web pages. Generally, this is a page that receives a large
number of visitors, such as a registration page or a page thanking visitors for
entering a contest or downloading some software. Our template allows the
participating site to facilitate the gathering of opt-in email addresses in a
variety of topical categories, including business, investing, sports, travel,
computing, contests, and entertainment. Although our system is capable of
processing elections to receive email messages relating to more than 3,000
topical categories, most Web sites post the selection of category choices that
they believe will be of greatest interest to their visitors. The sign-up form
also includes a demographic profile asking the visitor for an email address,
postal address, age, income, gender, occupation, title and other information.
However, the only information a user is required to submit is their email
address.

In November 1997, we adopted a double opt-in process to protect Internet
users' privacy by preventing anyone from signing them up without authorization.
Generally, whenever a visitor to a participating Web site opts in to receive
email, the sign-up request is immediately transmitted to our server. Our server
then sends the visitor a confirmation message requiring the person to click on
an embedded link in the message and enter a special code on our
WWW.POSTMASTERDIRECT.COM Web site. In a few cases, the Web site owner confirms
the visitor's sign-up request for us. When the visitor confirms the sign-up
request and becomes an email list member, the visitor's email address is added
to our database and is made available to our direct marketing customers.
However, the Web site from which the email address was derived continues to own
its list of email addresses which are included in our database. We typically pay
to the applicable Web site owner a commission of 50% of the revenue we

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have earned, less volume discounts, if applicable, each time we send an email
message to the email addresses owned by that Web site owner. In the event that
an email address appears on more than one email address list selected by our
customer, the 50% commission is only paid to the Web site owner whose email
address list is designated by our customer as the preferred list. We currently
do not charge the list owners any additional setup, processing or maintenance
fees for our service.

EMAIL ADDRESS LIST BROKERAGE. We provide marketers and e-commerce retailers
with a selection of targeted email address lists designed to achieve the maximum
response rates to their offers. Direct marketers can make their own list
selections and place their own orders through our Web site. On-screen menus and
instructions help direct marketers pick lists and choose selection criteria.
Alternatively, our sales and customer service staff provides assistance with
email address list recommendations, order placement, and, occasionally,
copywriting of email messages. Orders placed by 5 PM Eastern Time are generally
sent out that night. Orders placed through our online marketplace by the direct
marketers themselves are generally paid by credit card.

Our service allows direct marketers to:

- open a customer account;

- search for email address lists by topical category or keyword, such as
"travel" or "sports;"

- select demographic data characteristics, such as age, income and zip code,
to define the email addresses to which they would like to send email
messages (but they do not actually access demographic data in our
database); and

- aggregate the various email address lists the direct marketer wants to use
and remove any duplicate addresses.

TRACKBOT EMAIL RESPONSE MANAGEMENT SYSTEM. Through TrackBot, we can provide
campaign results to our customers, but only on an anonymous, aggregate basis
that does not violate an individual's expectation that personal data will not be
disclosed without their permission. TrackBot offers direct marketers, if they
elect to use this service, a way to track aggregate responses to their mailings
through the responder's click-through, allowing direct marketers to gauge the
success of their campaigns quickly and to focus their campaigns on the
best-performing email address lists. TrackBot provides a simple one-click setup
through WWW.POSTMASTERDIRECT.COM's automated Web ordering system and easy to
read charts that display aggregate response rates by list or by offer. Direct
marketers who select email address lists from our email marketing service simply
place their order in their online accounts and TrackBot automatically generates
customized hypertext links for insertion into the email messages sent out. The
click-throughs produced by the campaign are then tracked and recorded by our
servers. TrackBot is a free service to companies that use our opt-in email
address lists. We intend to upgrade our current response-tracking system to
create an end-to-end system that would permit us to measure responses from the
message delivery to the sale.

EMAIL LIST DELIVERY. In addition to emailing messages for our direct
marketing customers' campaigns, our email list delivery service provides
high-volume email distribution for delivery of email for customers sending
messages to email addresses owned by such customers. Our sophisticated email
infrastructure is available to direct marketers, publishers, list managers,
online merchants and Web site owners seeking a fast, affordable way to
communicate with their own customers by email.

OUR CUSTOMERS

EMAIL ADDRESS LIST MANAGEMENT CUSTOMERS. We manage email address lists for
our NetCreations Network, which currently consists of more than 175 third-party
Web sites. Our network sites include a variety of Web sites such as
Internet.com, NetZero, Entrepreneur Magazine, CMPnet, LinkExchange, CDROM Guide,
Regards.com and Volition. On November 3, 1999, we entered into an email list

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management agreement with ICQ, Inc., an instant messaging subsidiary of America
Online, Inc., to be the newest third-party Web site in the NetCreations Network.

EMAIL ADDRESS LIST BROKERAGE CUSTOMERS. Our email direct marketing
customers consist of advertisers and email list brokers. As of September 30,
1999, we have sent email messages on behalf of more than 1,500 direct marketing
customers, from large companies such as Dell, Compaq, Ziff-Davis and J. Crew to
small retailers selling items over the Web, such as Vermont Nutrition,
Cyberswap, Inc., Technology Marketing Corp., and Intratech Alliance Corp.

On July 5, 1999 we terminated our email list management and email list
brokerage agreements with YesMail.com. Use of email addresses in our database by
YesMail.com as an email address list reseller accounted for approximately 7% of
our net revenues in 1998 and approximately 11% of our net revenues for the first
nine months of 1999. Although we can give no assurance, we anticipate that
substantially all of such net revenues will be replaced by selling our services,
either directly or indirectly through other email address list brokers, to
direct marketers, including direct marketers represented by YesMail.com as well
as other direct marketing customers. In addition, net revenues generated by
selling use of the email address list in our database collected from
YesMail.com's Web site, and therefore, owned by Yesmail.com as an email address
list owner, represented 3.3% and 0.8% in 1998 and the first nine months of 1999,
respectively.

SALES AND MARKETING

We market our services through our direct sales organization and through
indirect distribution channels, including email list brokers, advertising
agencies, Web design firms and other resellers. We sell our services to direct
marketers primarily through our direct sales organization. As of September 30,
1999, our direct sales organization included 16 employees responsible for
account management, business development and support, and we had two employees
engaged in separate marketing activities.

Our sales organization is complemented by independent resellers, such as
list brokers, advertising agencies and Web design firms. These resellers
purchase our service at a discount for resale to their own marketing customers
and may provide list selection, support and customer service to end users. In
1998, resellers were responsible for approximately 38% of our net revenues and
represented approximately 44% of our net revenues for the first nine months of
1999. We anticipate that the percentage of our total revenues derived from
indirect sales will increase in the future.

RESEARCH AND DEVELOPMENT

Our research and development efforts include product architecture, core
technology, product testing, quality assurance and expanding the ability of our
products to operate with the leading email software and Web browser platforms.
In addition, our research and development group also provides some customer
support activities. As of September 30, 1999, we had three employees, including
our Chief Technology Officer, Ryan Scott Druckenmiller, who devote a substantial
portion of their time to our research and development efforts. We believe that
research and development expenses will increase in the future and that we will
need to hire more developers as our operations expand.

We believe that our future performance will depend in large part on our
ability to:

- scale our technology platform;

- maintain and enhance its speed, reliability, capacity, and connectivity
across multiple platforms; and

- assure its ease-of-use by customers, flexibility and effectiveness in
satisfying evolving customer requirements.

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TECHNOLOGY

We employ a combination of hardware and custom and third-party software to
implement our opt-in direct marketing services. We believe that this results in
a highly scaleable, secure, reliable, and modular architecture that blends our
internal expertise with industry-standard technology to create a proprietary
infrastructure.

We intend to continue expanding our technology infrastructure to support the
growth of our business. This will include, among other things, co-locating our
servers and increasing the redundancy of our networks and database storage
systems.

CONNECTIVITY. We currently have redundant T1 Internet connections provided
by Globix and Frontier Communications, enabling us to deliver approximately two
million email messages per day. We believe that the scaleable nature of our
system's design will allow us to increase our email delivery capacity as needed.
We are in the process of establishing a new T3 Internet access which we
anticipate will provide us more than sufficient Internet bandwidth for at least
the next 12 months.

Our online ordering system provides for secure e-commerce credit card
purchases and for email delivery. We believe that this encourages use of our
online marketplace.

HARDWARE. Multiple servers and personal computers are dedicated to specific
functions within our network architecture. We utilize two ALPHA servers from
Digital Equipment Corporation running Digital Unix operating systems. One server
utilizes an Oracle database to aggregate, sort, and store the data we manage
from our network of Web sites. The second DEC machine serves as the primary Web
server for our WWW.POSTMASTERDIRECT.COM Web site. In addition, we plan on
installing in the next few months a third server, which will be used to back up
system information and increase processing power and redundancy.

Intel-based servers are dedicated to sending out email messages and allowing
tens of thousands of users per day to access the list sign-up forms on our
third-party Web sites, to opt in to receive email messages on topics of
interest, and to confirm that their elections to receive commercial email
messages are valid. We utilize a dedicated server to balance the load among our
email delivery servers and to provide redundancy within the email delivery
system. We currently have a server which is dedicated for system backup. In
addition, a separate server is dedicated to monitoring system activity and will
notify an administrator if a problem arises. All of these servers run Linux
operating systems from Red Hat Software; we believe that more servers can be
added to increase capacity as needed.

We employ a Network Associates firewall to protect our computer systems from
unauthorized access.

SOFTWARE. Our research and development team developed proprietary software
using MetaHTML, PERL and SQL. This software enables Internet users to opt in to
receive targeted advertising information from our marketing customers through
sign-up forms on our network of more than 175 third-party Web sites. In
addition, this software enables our direct marketing customers and email address
list brokers to target Internet users with specific demographics who have opted
in to our database. This process allows our marketing customers to send specific
advertising messages to recipients who have indicated an interest in receiving
messages on the topic.

Our software is modular. Modularity enhances our ability to add, remove, or
replace system applications as needed. For example, we recently implemented
TrackBot, a proprietary software application which allows marketers to track the
response rates to their mailings. We can continue to enhance TrackBot, or any
other application, as well as add additional software elements as needed.

We have also developed a double opt-in list subscription confirmation system
which sends Internet users a confirmation email message after they have signed
up for a list and requires them to verify that

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they would like to begin receiving commercial email messages from our marketing
clients. We developed the double opt-in system in November 1997 and have filed a
patent application for this technology.

COMPETITION

The market for our email address list management and brokerage services is
intensely competitive, evolving and subject to rapid technological change. We
expect the intensity of competition to increase in the future. Competitors vary
in size and in the scope and breadth of the services offered. While no
competitor, to our knowledge, currently has a network of third-party Web sites
similar to ours that generates double opt-in email address lists, we face
intense competition for companies' Internet-based direct marketing budgets.

We face direct competition from companies in the following categories:

- email direct marketers such as YesMail.com, BulletMail and 24/7 Media;

- incentive-based direct marketers such as MyPoints.com and Netcentives; and

- permission-based outsourced email direct marketers such as Exactis.com and
MessageMedia.

In addition, we presently indirectly compete with companies in the following
categories:

- email address list owners who manage their own email address lists, such
as Xoom.com;

- banner advertising managers such as DoubleClick and Flycast
Communications; and

- postal direct marketing companies such as Direct Media (Acxiom) and
American List Counsel;

In addition, because there are relatively low barriers to entry in the email
direct marketing business, we expect additional competition from other
established and emerging companies as the email direct marketing business
continues to develop and expand. We also expect to face competition in the
future from other companies entering the field as email address list owners,
managers and brokers.

Many of our competitors have longer operating histories, significantly
greater financial, technical, marketing and other resources, significantly
greater name recognition and a larger installed base of customers than we have.
In addition, many of our competitors have well-established relationships with
our current and potential marketing customers, have extensive knowledge of our
industry and are capable of offering non-email based advertising and marketing
products that are beyond the scope of our current business operations but might
be attractive to customers seeking to purchase services in addition to email
direct marketing services. As a result, our competitors may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements or to devote greater resources to the development, promotion and
sale of their services than we can. In addition, current and potential
competitors have established, or may establish, cooperative relationships among
themselves or with third parties to increase the ability of their services to
address their customers' needs. Accordingly, it is possible that new competitors
or alliances among competitors may emerge and rapidly acquire significant market
share. We also expect that competition will increase as a result of industry
consolidations.

We may not be able to compete successfully against current and future
competitors, because increased competition is likely to result in price
reductions, reduced gross margins and loss of market share, any of which could
seriously harm our business, financial condition and results of operations.

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

While we provide a direct marketing service, we are also a technology
company. A large part of our success depends on protecting our intellectual
property, which is one of our most important assets.

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If we do not adequately protect our intellectual property, our business,
financial condition and results of operations would be seriously harmed.

We have developed and continue to develop our proprietary software and make
it available for our customers' use over the Internet. This way, we never allow
our customers access to our source code. In addition, we require employees,
contractors and other persons with access to our proprietary information to
execute confidentiality and non-compete agreements with us. We seek to protect
our software, documentation and other written materials under trade secret and
other intellectual property laws, which afford only limited protection.

We have one pending United States patent application. This application seeks
to protect our "double opt-in" system of verifying the requests of Internet
users who ask to join our targeted email lists. We have no issued foreign
patents, nor do we have any pending foreign patent applications. It is possible
that no patent will issue from the currently pending patent application. It is
also possible that any potential future patents may be found invalid or
unenforceable, or otherwise be successfully challenged. Also, any patent issued
to us may not provide us with any competitive advantages. We may not develop
future proprietary products or technologies that are patentable, and the patents
of others may seriously limit our ability to do business. In this regard, we
have not performed any comprehensive analysis of patents of others that may
limit our ability to do business.

Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy aspects of our products or to obtain and use information
that we regard as proprietary. Policing unauthorized use of our products is
difficult, and, while we are unable to determine the extent to which piracy of
our software products exists, software piracy can be expected to be a persistent
problem. In addition, the laws of some foreign countries do not protect our
proprietary rights to as great an extent as do the laws of the United States.
Our means of protecting our proprietary rights may not be adequate, and our
competitors may independently develop similar technology, duplicate our products
or design around patents issued to us or our other intellectual property.

There has been a substantial amount of litigation in the software industry
regarding intellectual property rights. It is possible, that in the future,
third parties may claim that our current or potential future products infringe
upon their intellectual property. We expect that persons, such as ourselves,
that develop software will increasingly be subject to infringement claims as the
number of products and competitors in our industry segment grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require us to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to us or at all, which could seriously harm our
business, financial condition and results of operations.

We integrate third-party software in our software products. We license
server software from Digital Equipment Corporation and Universal Access, Inc.
The third-party software may not continue to be available to us on commercially
reasonable terms. We may not be able to renew these agreements or develop
alternative technology. If we cannot maintain licenses to key third-party
software, develop similar technology or license similar technology from another
source on a timely or commercially feasible basis, our business, financial
condition and results of operations could be seriously harmed.

GOVERNMENT REGULATION

Currently, there are relatively few laws and regulations directly applicable
to access to or commerce on the Internet. However, due to the increasing
popularity and use of the Internet, it is likely that a growing number of laws
and regulations will be adopted and that existing laws or regulations may be
applied differently with respect to the Internet and email direct marketing
services covering issues such as user privacy, pricing, content, copyrights,
distribution, antitrust, and characteristics and quality of products and
services. Also, the growth and development of the market

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for email direct marketing may lead to more stringent consumer protection laws
and regulations that may impose additional burdens on those companies conducting
business online. In addition, the applicability to the Internet of existing laws
in various jurisdictions governing issues such as property ownership, sales and
other taxes, libel and personal privacy is uncertain and may take years to
resolve. Any such new laws or regulations or new applications of those existing
laws or regulations could hinder the growth of the Internet or email direct
marketing, which could, in turn, decrease the demand for our products and
services and increase our cost of doing business or otherwise adversely affect
our business.

Legislation has recently been enacted in several states relating to
spamming. The federal government and several states, including New York, are
considering, or have considered, similar legislation. The provisions of these
current and contemplated laws vary, but they generally limit or prohibit both
the transmission of unsolicited emails and the use of familiar spamming
techniques such as the use of forged or fraudulent routing and header
information. Some states, including California, require that unsolicited emails
include opt-out instructions and that senders of such emails honor any opt-out
requests, a requirement that is consistent with our own permission email
policies. We believe that our opt-in email system will not be affected by such
legislation because we do not send unsolicited messages and because our current
practices are intended to comply with current and proposed legislation. However,
there can be no assurance that such legislation or similar legislation will not
also affect permission email marketing in a way that could force us to change
our business practices, particularly in light of the rapidly evolving state of
the law in this area. In such event, our business could suffer.

EMPLOYEES

As of September 30, 1999, we had a total of 29 employees, including 16 in
sales and customer service, seven in technology, four in administration, and two
in marketing. All of these employees were located at our headquarters in New
York City. None of our employees is represented by a collective bargaining
agreement, and we believe our employee relations to be good.

FACILITIES

We lease our principal sales, marketing, technology, and administrative
facility of approximately 7,400 square feet in New York City at an annual cost
of approximately $195,000 with customary escalation clauses. The lease expires
on March 1, 2003. We have no other offices at this time. We believe that our
existing facilities are adequate for our current needs and that suitable
additional or alternative space will be available in the future as required on
commercially reasonable terms.

LEGAL PROCEEDINGS

As of the date of this prospectus, we are not a party to any litigation.

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MANAGEMENT

Our executive officers and directors as of October 31, 1999, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ---------------------------------------------------------
<S> <C> <C>
Rosalind B. Resnick........ 40 Chief Executive Officer, President, Chairman of the Board
of Directors, and Treasurer
Ryan Scott Druckenmiller... 30 Chief Technology Officer, Vice President, Secretary and
Director
Gary Sindler............... 53 Chief Financial Officer
Larry Mahon................ 36 Vice President of Sales
Daniel Sweeney............. 24 Vice President of Business Development
Michael Levy (1)(2)........ 52 Director
Gregory W. Slayton 40 Director
(1)(2).....................
Mitchell York (1)(2)....... 42 Director
</TABLE>

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

(1) Member of Audit Committee

(2) Member of Compensation Committee

ROSALIND B. RESNICK has served as our Chief Executive Officer, President and
Chairman of our board of directors since our inception. In September 1995,
Ms. Resnick developed America Online's NetGirl Forum, a dating and relationships
area of the America Online service which she hosted until September 1996.
Ms. Resnick began her career in the newspaper industry in 1980 as an intern at
the BALTIMORE SUN. From 1984 to 1989, Ms. Resnick worked as a business writer at
THE MIAMI HERALD. Her articles have appeared in INTERNET WORLD, NETGUIDE,
COMPUTER LIFE, PC TODAY, HOME OFFICE COMPUTING, and other leading computer
magazines. In 1995, she co-authored THE INTERNET BUSINESS GUIDE, and from 1994
to 1997, she served as the editor and publisher of INTERACTIVE PUBLISHING ALERT,
a semi-monthly newsletter tracking trends and developments in online publishing
and advertising. She is also a contributing editor to PHILLIPS' INTERACTIVE P.R.
AND MARKETING NEWS NEWSLETTER. Ms. Resnick received B.A. and M.A. degrees from
Johns Hopkins University.

RYAN SCOTT DRUCKENMILLER has served as our Chief Technology Officer and a
member of our board of directors since our inception. Mr. Druckenmiller is an
award-winning Web programmer who created the software that powers
WWW.POSTMASTERDIRECT.COM's online list store, list member sign-up process, and
list owner accounting system. Mr. Druckenmiller's prolific software output also
includes the PostMaster URL Announcement Service, which submits Web sites to
over 400 leading search engines and directories; PostMaster BannerNet, a free
banner network; TrackBot, an advertising tracking tool, and PinPoint, a
personalized search engine interface. Prior to joining NetCreations, from 1990
to 1995, Mr. Druckenmiller developed video games for the Amiga platform and
published an Amiga newsletter, providing software and information for Amiga
computer users.

GARY SINDLER has been our Chief Financial Officer since June 1999. From
February 1999 to June 1999, Mr. Sindler was a consultant to FTI
Consulting, Inc., a provider of litigation, applied sciences and expert
financial consulting services based in Annapolis, Maryland. From July 1996 to
February 1999, Mr. Sindler was Executive Vice President, Secretary and Chief
Financial Officer of FTI. From August 1993 to July 1996, Mr. Sindler was Chief
Financial Officer of Aon Risk Services, Inc. of New York. Prior to 1993, he held
various senior-level positions in finance and administration with Willis
Corroon, PLC and Alexander & Alexander Services Inc., two international
insurance brokerage firms. Mr. Sindler holds a B.S. degree in accounting from
the University of Baltimore and is a certified public accountant.

LARRY MAHON joined us as our Vice President of Sales in June 1999. From
July 1985 through January 1999, Mr. Mahon was employed by AlphaNet
Solutions, Inc., a systems integration firm that provides computer products and
IT services to Fortune 1000 clients, in various capacities, chiefly from

47
<PAGE>
November 1996 through January 1999 as Vice President of Sales, New York, from
July 1993 to October 1996 as Vice President of Operations and from August 1990
to July 1993 as Vice President of Client Services.

DANIEL SWEENEY joined us as Vice President of Business Development in
September 1999. From February 1998 to August 1999, Mr. Sweeney was the Network
Manager for The @dventure Network, a direct marketing/sales firm in New York.
From August 1997 to December 1997, Mr. Sweeney was a manager of operations for
Adbot, Inc., an Internet advertising auction business based in Chicago,
Illinois. From 1993 to June 1997, Mr. Sweeney was a student at Harvard
University where he received his A.B. degree in Economics.

MICHAEL LEVY has been a member of our board of directors since October 1999.
He has served as the President, Chief Executive Officer and Chairman of the
Board of SportslineUSA, Inc. since its inception in February 1994. From 1979
through March 1993, Mr. Levy served as President, Chief Executive Officer and as
a Director of Lexicon Corporation, a high technology company specializing in
data communications and signal processing technology. From January 1988 to June
1993, Mr. Levy also served as Chairman of the Board and Chief Executive Officer
of Sports-Tech International, Inc., a company engaged in the development,
acquisition, integration, and sale of computer software, equipment, and
computer-aided video systems used by professional, collegiate and high school
sports programs. Between June 1993 and February 1994 Mr. Levy was a private
investor. Mr. Levy also serves as a member of the board of directors of iVillage
Inc. Mr. Levy received a B.S. in Electrical Engineering from the Georgia
Institute of Technology.

GREGORY W. SLAYTON has been a member of our board of directors since October
1999. He has served as President, Chief Executive Officer and a member of the
board of directors of ClickAction Inc. since December 1997. From March 1996 to
July 1997, Mr. Slayton was the President, Chief Operating Officer, and Director
of ParaGraph International. In August 1994, Mr. Slayton co-founded Worlds, Inc.
and served as Senior Vice President and Chief Financial Officer until November
1995. Prior to founding Worlds, Inc., Mr. Slayton served as Vice President and
Chief Financial Officer of Paramount Technology Group of Paramount
Communications Inc. Mr. Slayton was also a management consultant with McKinsey &
Company for four years. Mr Slayton serves on the board of directors of inTest
Corporation, and he is on the board of directors of Opportunity International, a
non-profit organization. Mr. Slayton holds a B.A. in Economics from Dartmouth
College and an M.B.A. from Harvard Business School.

MITCHELL YORK has been a member of our board of directors since October
1999. He has served as President of LendingTree, Inc., a leading online loan
marketplace, from September 1998 to September 1999. During that time he oversaw
LendingTree's marketing, technology and other key business areas. Prior to this,
Mr. York was, for 17 years, an executive of CMP Media Inc., a worldwide
technology information and marketing services company. As vice president of
CMP's Internet division, he lead the company's entry into online media by
launching TechWeb, an information service for information technology
professionals. Prior to launching TechWeb, Mr. York was a publisher of several
of CMP's major technology titles, including VARBusiness magazine. He also was
the founding editor of the company's Travel division, which was later sold to
Miller Freeman. Mr. York received a bachelor's degree with honors from
Northwestern University and an M.B.A. from the Columbia Graduate School of
Business.

BOARD COMPOSITION

We currently have five directors. Each director is elected at the annual
general meeting of our shareholders, by a vote of the holders of a plurality of
the voting power represented at such meeting. Each director holds office until
the annual general meeting of our shareholders or until his or her successor has
been elected.

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Our non-management directors serve on the audit committee and the
compensation committee of the board. The executive officers serve at the
discretion of the board.

BOARD COMMITTEES

In July 1999, our board of directors established an audit committee and a
compensation committee. Our board of directors does not currently have and does
not currently intend to establish an executive committee or a nominating
committee, as those functions are to be performed by our entire board of
directors.

AUDIT COMMITTEE. The audit committee of the board of directors consists of
Messrs. Levy, Slayton and York. This committee makes recommendations to the
board of directors with respect to various auditing and accounting matters,
including the recommendation of our auditors, the scope of the annual audits,
fees to be paid to the auditors, the performance of our independent auditors and
our accounting practices. The audit committee has responsibility for, among
other things, the planning and review of our annual and periodic reports and
accounts and the involvement of our auditors in that process, focusing
particularly on compliance with legal requirements and accounting standards and
the related rules of the Nasdaq, the Securities and Exchange Commission, and the
United States, and the establishment of an effective system of internal
accounting controls.

COMPENSATION COMMITTEE. The compensation committee of the board of
directors consists of Messrs. Levy, Slayton and York. This committee recommends,
reviews and oversees the salaries, benefits and stock option plans for our
employees, consultants, directors and other individuals compensated by us. The
compensation committee also administers our compensation plans.

DIRECTOR COMPENSATION

None of our directors receive cash compensation for their service on our
board of directors, although our management directors receive cash compensation
for their services as our officers. All directors, however, are reimbursed for
reasonable expenses incurred in connection with serving as a director. We have
granted options, effective as of October 8, 1999, to purchase 100,000 shares of
our common stock to each of our non-management directors, Messrs. Levy, Slayton
and York, at an exercise price of $10.00 per share. The options granted to our
three non-management directors vest one-third upon the consummation of our
initial public offering. The remaining two-thirds vest in equal installments on
each of the next eight quarterly anniversaries following the consummation of our
initial public offering. We anticipate that our board of directors will hold
regularly scheduled meetings quarterly.

EXECUTIVE COMPENSATION

The following table sets forth all compensation received during the
indicated years by our Chief Executive Officer and President and our Chief
Technology Officer in their capacities as officers. In these fiscal years we had
no other executive officers and no other employee earned in excess of $100,000.

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<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
------------------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OTHER OPTIONS COMPENSATION(1)
- --------------------------- --------------------- -------- -------- ------------ ----------------------
<S> <C> <C> <C> <C> <C>
Rosalind Resnick,
Chief Executive Officer,
President and Chairman of the
Board of Directors............... 1998-$185,000 -- -- -- 1998-$155,000
1997-$120,000 -- -- -- 1997-$96,880
1996-$198,000 -- -- -- 1996- --
Ryan Scott Druckenmiller,
Chief Technology Officer and
member of the Board of
Directors........................ 1998-$185,000 -- -- -- 1998-$155,000
1997-$120,000 -- -- -- 1997-$96,880
1996-$198,000 -- -- -- 1996-$30,000
</TABLE>

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

(1) Includes contributions to our pension plan of $30,000 and $30,000 for the
benefit of each of Ms. Resnick and Mr. Druckenmiller in 1998 and 1997,
respectively, and $30,000 for the benefit of Mr. Druckenmiller in 1996. Also
includes distributions to the shareholders which were made in accordance
with our election to be taxed as an S corporation. Such distributions are
common for S corporations.

STOCK OPTION INFORMATION

We granted options, effective as of September 14, 1999 and as of
November 11, 1999, to purchase 247,000 shares of our common stock at an exercise
price of $5.00 per share under our 1999 Stock Option Plan. Those options were
granted to our employees other than Ms. Resnick and Mr. Druckenmiller. Those
options are exercisable for a period of five years, but not until they have
vested. Those options vest in equal one-third installments on each of the three
anniversaries of the date of grant, subject to the optionees' continued
employment with us. Ms. Resnick and Mr. Druckenmiller have received, and will
continue to receive until the consummation of our initial public offering,
S corporation distributions. Upon termination of our status as an S corporation
immediately prior to the consummation of this offering, we intend to pay Ms.
Resnick and Mr. Druckenmiller final S corporation distributions based on current
year earnings to the extent of available cash balances. At September 30, 1999,
this amount would have been $798,135. Ms. Resnick and Mr. Druckenmiller have
received no options or other stock-based compensation. In addition, we have
granted options, effective as of October 8, 1999, to purchase 100,000 shares of
common stock to each of our non-management directors, Messrs. Levy, Slayton and
York, at an exercise price of $10.00 per share. The options granted to our three
non-management directors are also exercisable for a period of five years, but
not until they have vested. These options vest one-third upon the consummation
of our initial public offering. The remaining two-thirds of the options vest in
equal installments on each of the next eight quarterly anniversaries following
the consummation of our initial public offering. Vesting also depends on
continued service as our director, subject to acceleration under certain
circumstances. All the outstanding options granted to our non-management
directors would be accelerated, and all of our other outstanding options may be
accelerated, as to vesting and exercisability, in the event of certain
transactions, including certain changes in our control, certain mergers and
reorganizations, and certain dispositions of substantially all of our assets.
The vesting and exercisability of the options issued to our non-management
directors would also be accelerated if those directors are not re-elected to
office,

50
<PAGE>
except if they are unable to serve or choose not to serve, or if they are
removed from office, except for cause or material non-performance of their
duties. We have granted no other options and no stock appreciation rights.

EMPLOYMENT AGREEMENTS

We have entered into one-year employment agreements with six of our
technology employees. These agreements are automatically renewable and are
terminable by either the employee or us upon 90 days' notice. The remaining
non-management employees are employed on an at-will basis. All of our
non-management employment arrangements provide, among other things, that each of
the employees shall provide services to us on a full-time basis. All of our
non-management employees have also entered into agreements with us which contain
restrictive covenants relating to non-competition with us, non-solicitation of
our customers, non-dealing with our customers and non-solicitation of our
suppliers and employees. In addition, each of these agreements contains an
express obligation of confidentiality in respect of our trade secrets and
confidential information and provide for us to own any intellectual property
rights created by our employees in the course of their employment.

We have entered into employment agreements with Rosalind Resnick, as our
Chief Executive Officer, President, and Chairman of our board of directors, Ryan
Scott Druckenmiller, as our Chief Technology Officer, Gary Sindler, as our Chief
Financial Officer, Larry Mahon, as our Vice President of Sales, and Daniel
Sweeney, as our Vice President of Business Development, all of which expire on
December 31, 2002. The executives are entitled to base salaries per annum,
initially as follows: Rosalind Resnick, $175,000; Ryan Scott Druckenmiller,
$175,000; Gary Sindler, $150,000; Larry Mahon, $100,000; and Daniel Sweeney,
$100,000. The executives are entitled to annual bonuses as the compensation
committee of our board of directors may determine based upon their performance
and achievement of specified goals to be established and mutually agreed upon by
each of them and the compensation committee prior to the beginning of their
bonus period as follows: Rosalind Resnick, up to $175,000 per year; Ryan Scott
Druckenmiller, up to $175,000 per year; Gary Sindler, up to $75,000 per year;
Larry Mahon, up to $100,000 per year; and Daniel Sweeney, up to $50,000 per
year. Ms. Resnick and Mr. Druckenmiller are also entitled to additional
performance bonuses, if any, as may be determined from time to time by the
compensation committee upon the achievement of performance goals to be mutually
agreed upon by each of Ms. Resnick and Mr. Druckenmiller, as the case may be,
and the compensation committee. Each of Ms. Resnick and Mr. Druckenmiller have
agreed not to compete with us in providing direct email marketing services to
third parties for compensation during the term of employment and for at least
three years after their employment is terminated other than a termination
without cause or a termination during the first year following a change in
control. Each of the remaining executives has agreed not to compete with us in
providing direct email marketing services to third parties for compensation
during the term of employment and for at least two years after their employment
is terminated other than a termination without cause or a termination during the
first year following a change in control. The executives are entitled to
customary medical, life insurance, vacation, and other benefits under each of
the agreements. Each of the executives will be eligible to be granted options
under our 1999 Stock Option Plan, at the discretion of the committee
administering that plan. Pursuant to each of their employment agreements,
Messrs. Sindler, Mahon and Sweeney have been granted 117,000, 20,000 and 20,000
stock options respectively, under our 1999 Stock Option Plan. Ms. Resnick and
Mr. Druckenmiller have not been granted any options. Each of the contracts
include customary provisions entitling us to terminate the executive's
employment for cause, upon extended disability of the executive, upon the
executive's death, and otherwise without cause. Each executive is entitled to
terminate the executive's employment upon material breach of the contract by us
and without cause upon prior notice to us. The contracts contain customary
provisions to protect our confidential information and to ensure that we will
own inventions and improvements developed by the executive during the
executive's employment activities.

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<PAGE>
STOCK OPTION PLAN

Our 1999 Stock Option Plan was adopted by the board of directors in July
1999. The Plan provides for the grant of options to our directors, officers,
employees and certain consultants. There are 1,170,000 shares reserved for
issuance under the 1999 Stock Option Plan. We have granted options, effective as
of September 14, 1999 and as of November 11, 1999, to purchase 247,000 shares of
our common stock at an exercise price of $5.00 per share. In addition, we have
granted options, effective as of October 8, 1999, to purchase 100,000 shares of
our common stock to each of our three non-management directors at an exercise
price of $10.00 per share.

The 1999 Stock Option Plan provides for the grant of options intended to
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended, and non-qualified stock options. The board of
directors or a committee designated by the board is authorized to administer the
Plan, including the selection of individuals eligible for grants of options, the
terms of such grants, possible amendments to the terms of such grants, and the
interpretation of the terms of the Plan. The maximum term of any stock option
granted under the Plan is ten years, except that with respect to incentive stock
options granted to a person possessing more than 10% of our combined voting
power, the term of their options shall be for no more than five years.

The exercise price of incentive stock options granted under the Plan must be
at least equal to the fair market value of our common stock on the date of
grant. However, for any employee holding more than 10% of our combined voting
power, the exercise price must be at least 110% of the fair market value of our
common stock. The exercise price of non-qualified stock options is set by the
administrator of the Plan.

The aggregate fair market value on the date of grant of the common stock for
which incentive stock options are exercisable for the first time by an employee
during any calendar year may not exceed $100,000. Also, the aggregate number of
options granted to any one optionee may not exceed 468,000 shares.

Options granted under the 1999 Stock Option Plan may be exercised at any
time or from time to time or only after a period of time in installments, as our
compensation committee or the board of directors determines. Our compensation
committee or the board of directors may in its sole discretion accelerate the
date on which any option may be exercised or determine to provide in an option
agreement that an option may become partially or fully exercisable in the event
of certain transactions, including certain changes in our control, certain
mergers and reorganizations, and certain dispositions of substantially all of
our assets. The exercise price of options granted under the 1999 Stock Option
Plan will be as determined by the relevant administrator, although the exercise
price of incentive stock options must be at least equal to the fair market value
of our common stock on the date of grant. Our board of directors may amend,
modify or terminate the 1999 Stock Option Plan at any time as long as such
amendment, modification or termination does not impair vesting rights of plan
participants. The 1999 Stock Option Plan will terminate in 2009, unless
terminated earlier by the board of directors.

PENSION PLAN

In 1997 and 1996, we had a money purchase pension and profit sharing plan
for our officers and directors, who were also our only shareholders. Upon
termination of that plan, we established a defined contribution plan in 1998 for
eligible employees under Section 401(k) of the Internal Revenue Code. Employees
must complete one year of service to be eligible to participate in the 401(k)
plan. In 1996, 1997 and 1998, we incurred contribution expenses of $30,000,
$60,000 and $60,000, respectively, relating to these plans. The 401(k) plan is
administered by us.

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<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of October 31, 1999 by:

- each person or group of affiliated persons who we know owns beneficially
5% or more of our common stock,

- each of our directors,

- our executive officers listed in the Summary Compensation Table, and

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

Percentage of ownership is calculated as required by Commission
Rule 13d-3(d)(1). Except as otherwise indicated below, the persons named in this
table have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them, subject to community property laws.
The address for each individual is: 379 West Broadway, Suite 202, New York, New
York 10012.

<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES
SHARES -------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED OFFERING OFFERING
- ---------------- ------------ -------- --------
<S> <C> <C> <C>
Rosalind B. Resnick......................................... 5,967,000 51.0% 39.8%
Ryan Scott Druckenmiller.................................... 5,733,000 49.0% 38.2%
Michael Levy(1)............................................. 33,333 * *
Gregory W. Slayton(1)....................................... 33,333 * *
Mitchell York(1)............................................ 33,333 * *
All directors and executive officers as a group (8
persons).................................................. 11,799,999 100.0% 78.1%
</TABLE>

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

* Less than 1% of the outstanding common stock.

(1) Consists of options to purchase 33,333 shares of common stock which are
exercisable within 60 days following the date of this prospectus.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

The following information describes our common stock and preferred stock, as
well as some provisions of our restated certificate of incorporation and our
amended and restated bylaws as in effect upon the closing of this offering. This
description is only a summary. You should also refer to the certificate and
bylaws which have been filed with the SEC as exhibits to our registration
statement, of which this prospectus forms a part.

Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $0.01 per share, and 5,000,000 shares of preferred stock, $0.01 par
value per share.

COMMON STOCK

As of September 30, 1999, there were 11,700,000 shares of common stock
outstanding and held of record by two shareholders. Based upon the number of
shares outstanding and giving effect to the issuance of the 3,300,000 shares of
common stock offered hereby, there will be 15,000,000 shares of common stock
outstanding upon the closing of this offering.

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of shareholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared by the board of directors out of
funds legally available for that purpose, subject to any preferential dividend
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, when issued in consideration for payment thereof, 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 the holders of
shares of any series of preferred stock which we may designate and issue in the
future. Upon the closing of this offering, there will be no shares of preferred
stock outstanding.

PREFERRED STOCK

The board of directors is authorized, without further shareholder approval,
to issue from time to time up to an aggregate of 5,000,000 shares of preferred
stock in one or more series and to fix or alter the designations, powers,
preferences, rights and any qualifications, limitations or restrictions of the
shares of each such series thereof, including the dividend rights, dividend
rates, conversion rights, voting rights, terms of redemption (including sinking
fund provisions), redemption price or prices, liquidation preferences and the
number of shares constituting any series or designations of such series. We have
no present plans to issue any shares of preferred stock.

OPTIONS

We have granted options, effective as of September 14, 1999 and as of
November 11, 1999, to purchase 247,000 shares of our common stock at an exercise
price of $5.00 per share under our 1999 Stock Option Plan. Those options have
been granted to our employees other than Rosalind Resnick and Ryan Scott
Druckenmiller. In addition, we have granted options, effective as of October 8,
1999, to purchase 100,000 shares of our common stock to each of our three
non-management directors at an exercise price of $10.00 per share. The options
are exercisable for a period of five years, but not until they have vested. The
options, other than the options granted to our three non-management directors,
vest in equal one-third installments on each of the three anniversaries of the
date of the grant, subject to the optionees' continued employment with us. The
options granted to our three non-management directors vest one-third upon the
consummation of our initial public offering. The remaining two-thirds vest in
equal installments on each of the next eight quarterly anniversaries following
the consummation

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<PAGE>
of our initial public offering. The vesting period for all the outstanding
options granted to our non-management directors would be accelerated, and all of
our other outstanding options may be accelerated, if we do not survive a "change
in control," as defined in the option instrument, and the surviving company or
the acquiror in a change in control transaction does not make appropriate
arrangements to continue the rights of the optionholder under the option. The
acceleration provisions do not apply to a change in control as a consequence of
this offering, an acquisition of thirty percent (30%) or more of our shares
after which Ms. Resnick and Mr. Druckenmiller continue to hold the largest
indivdual percentages of our outstanding shares of common stock, or to certain
restructurings that will be completed prior to the offering in connection with
the termination of our S corporation election and related estate planning by
Ms. Resnick and Mr. Druckenmiller. The vesting period of the options granted to
our employees would be accelerated in the event that the employee is terminated
within one year after a change in control. The vesting period of the options
granted to our three non-management directors would also be accelerated if those
directors are not re-elected to office, except if they are unable to serve or
choose not to serve, or if they are removed from office, except for cause or
material non-performance of their duties. The holders of the options do not have
any rights as our shareholders until they exercise their options.

REGISTRATION RIGHTS

After this offering, Ms. Resnick and Mr. Druckenmiller will be entitled to
registration rights with respect to their shares. These holders can require us
to register all or part of their shares at any time following 180 days after
this offering. Subsequent to that time, Ms. Resnick and Mr. Druckenmiller may
sell, dispose of or transfer their shares in accordance with Rule 144 or other
available exemptions. In addition, these holders may also require us to include
their shares for sale in future registration statements, subject to such
restrictions, and unless acquired by one of our affiliates, purchasers of those
shares will have freely tradable shares.

Also, we intend to register the shares of common stock underlying any stock
options issued or issuable pursuant to our stock option plan. Upon registration,
the registered shares are freely tradable in the public market without
restriction, unless held by an affiliate of ours, within the meaning of
applicable securities laws.

ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF NEW YORK LAW AND OUR RESTATED
CERTIFICATE OF INCORPORATION AND AMENDED AND RESTATED BYLAWS

GENERAL. A number of provisions of New York law, our restated certificate
of incorporation and our bylaws could make any attempt to acquire us by means of
a tender offer, a proxy contest or otherwise and the removal of incumbent
officers and directors more difficult. These provisions are intended to
discourage certain types of coercive takeover practices and inadequate takeover
bid, even though such a transaction may offer our shareholders the opportunity
to sell their stock at a price above the prevailing market price. This also
encourages persons seeking to acquire control of us to negotiate with us first.

NEW YORK TAKEOVER STATUTE. We are subject to the "business combination"
provisions of Section 912 of the New York Business Corporation Law and expect to
continue to be so subject if and for so long as we have a class of securities
registered under Section 12 of the Securities Exchange Act of 1934. Section 912
provides, with some exceptions (which include, among others, transactions with
shareholders who became interested prior to the effective date of an amendment
to our Certificate of Incorporation providing that we would be subject to
Section 912 if such corporation did not then have a class of stock registered
pursuant to Section 12 of the Exchange Act), that a New York corporation may not
engage in a "business combination" (e.g., merger, consolidation,
recapitalization or disposition

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<PAGE>
of stock) with any "interested shareholder" for a period of five years from the
date that such person first became an interested shareholder unless:

(1) the transaction resulting in a person becoming an interested
shareholder was approved by the board of directors of the corporation prior
to that person becoming an interested shareholder; or

(2) the business combination is approved by the holders of a majority of
the outstanding voting stock not beneficially owned by such interested
shareholder; or

(3) the business combination is approved by the disinterested
shareholders at a meeting called no earlier than five years after the
interested shareholder's stock acquisition date; or

(4) the business combination meets certain valuation requirements for
the stock of the New York corporation.

An "interested shareholder" is defined as any person that (a) is the
beneficial owner of 20% or more of the outstanding voting stock of a New York
corporation or (b) is an affiliate or associate of the corporation that at any
time during the prior five years was the beneficial owner, directly or
indirectly, of 20% or more of the then outstanding voting stock.

A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested shareholder.
Subject to certain exceptions, an "interested shareholder" is a person who,
together with affiliates and associates, owns, or within five years did own, 20%
or more of the corporation's outstanding voting stock. This statute could
prohibit or delay the accomplishment of mergers or other takeover or change in
control attempts with respect to us and, accordingly, may discourage attempts to
acquire us. These provisions are likely to impose greater restrictions on an
unaffiliated shareholder than on the existing shareholders who will continue to
own a majority of our outstanding common stock after this offering.

The "stock acquisition date," with respect to any person and any New York
corporation, means the date that such person first becomes an interested
shareholder of such corporation.

In addition, some provisions of our certificate of incorporation and bylaws
summarized in the following paragraphs may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that a
shareholder might consider in its best interest, including those attempts that
might result in a premium over the market price for the shares held by
shareholders.

BOARD OF DIRECTORS VACANCIES. Our bylaws authorize the board of directors
to fill vacant directorships or increase the size of the board of directors.
This may deter a shareholder from removing incumbent directors and
simultaneously gaining control of the board of directors by filling the
vacancies created by such removal with its own nominees.

ADVANCE NOTICE OF SHAREHOLDER PROPOSALS AND NOMINEES. Our bylaws establish
an advance notice procedure for shareholders to make nominations of candidates
for election as directors or bring other business before any meeting of our
shareholders. The shareholder notice procedure provides that only persons who
are nominated by, or at the direction of, the board, or by a shareholder who has
given timely written notice prior to the meeting at which directors are to be
elected, will be eligible for election as directors and that, at a shareholders'
meeting, only such business may be conducted as has been brought before the
meeting by, or at the direction of, the board of directors or by a shareholder
who has given timely written notice of such shareholder's intention to being
such business before such meeting.

Under the shareholder notice procedure, for notice of shareholder
nominations or other business to be made at a shareholders' meeting to be
timely, such notice must be received by us not less than 60 days prior to the
meeting.

56
<PAGE>
A shareholder's notice to us proposing to nominate a person for election as
a director or proposing other business must contain information specified in the
bylaws, including the identity and address of the nominating shareholder, a
representation that the shareholder is a record holder of our stock entitled to
vote at the meeting and information regarding each proposed nominee or each
proposed matter of business that would be required under the federal securities
laws to be included in a proxy statement soliciting proxies for the proposed
nominee or the proposed matter of business.

The shareholder notice procedure may have the effect of precluding a contest
for the election of directors or the consideration of shareholder proposals if
the proper procedures are not followed, and of discouraging or deterring a third
party from conducting a solicitation of proxies to elect its own slate of
directors or to approve its own proposal, without regard to whether
consideration of such nominees or proposals might be harmful or beneficial to us
and our shareholders.

SPECIAL MEETINGS OF SHAREHOLDERS. Our restated certificate of incorporation
provides that special meetings of shareholders can be only called by a majority
of the board of directors, the Chairman of the Board, the President or the
holders of at least 50% of the outstanding shares of stock entitled to vote at
the meeting.

SHAREHOLDER ACTION. Our restated certificate of incorporation provides that
shareholders may act only at duly called annual or special meetings of
shareholders, not by written consent.

AMENDMENT OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS. Our restated
certificate of incorporation and bylaws require the affirmative vote of at least
two-thirds of our shareholders of our capital stock entitled to vote to amend
certain provisions of the certificate or to amend our bylaws.

AUTHORIZED BUT UNISSUED SHARES. Our authorized but unissued shares of
common stock and preferred stock are available for future issuance without
shareholder approval, subject to certain limitations imposed by the Nasdaq
National Market. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued and unreserved 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.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted by the New York Business Corporation Law, our restated
certificate of incorporation provides that a director will not be personally
liable to us or our shareholders for damages for any breach of duty in his or
her capacity as a director unless a judgment or other final adjudication adverse
to such director establishes that (1) his or her acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation of law,
(2) such director personally gained in fact a financial profit or other
advantage to which he or she was not legally entitled or (3) his or her acts
violated Section 719 of the New York Business Corporation Law.

This provision is intended to afford directors protection, and limit their
potential liability, from suits alleging a breach of the duty of care by a
director. We believe this provision will assist us in maintaining and securing
the services of directors who are not employees of NetCreations. As a result of
the inclusion of such a provision, shareholders may be unable to recover
monetary damages against directors for actions taken by them that constitute
negligence or gross negligence or that are in violation of their fiduciary
duties, although it may be possible to obtain injunctive or other equitable
relief with respect to those actions. If equitable remedies are found not to be
available to shareholders for any particular case, shareholders may not have any
effective remedy against the challenged conduct This provision does not affect
the directors' responsibilities, under any other laws, such as the Federal
securities laws or state or Federal environmental laws.

57
<PAGE>
Our restated certificate of incorporation also provides that directors and
officers shall be indemnified against liabilities arising from their service as
directors or officers to the fullest extent permitted by law, which generally
requires that the individual have acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to NetCreations' best interests. No
indemnification may be made to or on behalf of any directors or officers if a
judgment or other final adjudication adverse to him or her established that his
or her acts were committed in bad faith or were the result of active and
deliberate dishonesty and were material to the cause of action so adjudicated,
or that he or she personally gained in fact a financial profit or other
advantage to which he or she was not legally entitled.

New York law provides further that the indemnification permitted under New
York law shall not be deemed exclusive of any other rights to which the
directors and officers may be entitled under our bylaws, any agreement, a vote
of shareholders or otherwise.

We have also entered into agreements to indemnify our directors and
executive officers, in addition to the indemnification provided for in our
bylaws. We believe that these provisions and agreements are necessary to attract
and retain qualified directors and executive officers. 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, regardless of whether New
York law would permit indemnification. We have obtained directors' and officers'
liability insurance for our officers and directors.

At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under our restated certificate of incorporation, bylaws,
or any indemnification agreement. We are not aware of any threatened litigation
or proceeding that may result in a claim for such indemnification.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is American Stock
Transfer and Trust Company.

58
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

When the offering is completed, NetCreations will have a total of 15,000,000
shares of common stock outstanding. The 3,300,000 shares offered by this
prospectus will be freely tradable unless they are purchased by "affiliates" of
NetCreations, as defined in Rule 144 under the Securities Act of 1933. The
remaining 11,700,000 shares are "restricted," 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 under an available
exemption from registration, such as provided through Rule 144. Under Rule 144,
all of the restricted shares may be sold subject to applicable volume and other
restrictions, commencing 90 days after the consummation of this offering.
However, the holders of these 11,700,000 shares of common stock have agreed to a
180-day "lock-up" with respect to their shares. This generally means that they
cannot sell these shares during the 180 days following the date of this
prospectus. After the 180-day lock-up period expires, or sooner if earlier
terminated by the underwriters, these shares may be sold in accordance with
Rule 144.

In addition, 247,000 shares are issuable upon exercise of options that have
been granted as of September 14, 1999 and as of November 11, 1999 and 300,000
shares are issuable upon exercise of options that have been granted as of
October 8, 1999. If any options are exercised, the shares issued upon exercise
will also be restricted, but may be sold under Rule 144 after the shares have
been held for one year. Sales under Rule 144 may be subject to volume
limitations and other conditions.

59
<PAGE>
UNDERWRITING

Subject to the terms and conditions of an underwriting agreement, the
underwriters named below are acting through their representatives, Friedman,
Billings, Ramsey & Co., Inc.; C.E. Unterberg, Towbin; fbr.com, a division of FBR
Investment Services, Inc., which is an affiliate of Friedman, Billings, Ramsey &
Co., Inc.; and Fidelity Capital Markets, a division of National Financial
Services Corporation. The representatives have agreed with us, subject to the
terms and conditions of the underwriting agreement, to purchase from us the
number of shares of common stock shown opposite their names below. Other than
the shares covered by the over-allotment option, the underwriters are obligated
to purchase and accept delivery of all the shares of common stock if any are
purchased.

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
<S> <C>
Friedman, Billings, Ramsey & Co., Inc....................... 1,562,000
C.E. Unterberg, Towbin...................................... 852,000
fbr.com, a division of FBR Investment Services, Inc......... 213,000
Fidelity Capital Markets, a division of National Financial
Services Corporation...................................... 213,000
Bear, Stearns & Co. Inc. ................................... 65,000
SG Cowen Securities Corporation............................. 65,000
Adams, Harkness & Hill, Inc. ............................... 30,000
Advest, Inc. ............................................... 30,000
Cruttenden Roth Incorporated................................ 30,000
Kaufman Bros., L.P. ........................................ 30,000
McDonald Investments Inc., a KeyCorp Company................ 30,000
Needham & Company, Inc. .................................... 30,000
Pennsylvania Merchant Group................................. 30,000
Suntrust Equitable Securities Corporation................... 30,000
Sutro & Co. Incorporated.................................... 30,000
Tucker Anthony Cleary Gull.................................. 30,000
Wedbush Morgan Securities Inc. ............................. 30,000
---------
Total............................................... 3,300,000
=========
</TABLE>

The underwriters propose initially to offer the shares of common stock in
part directly to the public at the initial public offering price shown on the
cover page of this prospectus and in part to dealers, including the
underwriters, at this price less a discount not in excess of $0.55 per share.
The underwriters may allow, and such dealers may re-allow other dealers, a
discount not in excess of $0.10 per share.

The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us. These amounts represent the public offering
price per share minus the amount paid by the underwriters per share and are
shown assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares of common stock. The underwriters' compensation was
determined through negotiations between their representatives and us. The table
also includes other expenses we expect to incur in connection with this
offering. All these other expenses, other than

60
<PAGE>
the SEC registration fee, the NASD filing fee and the Nasdaq National Market
listing fee are estimates.

<TABLE>
<CAPTION>
EXERCISE NO EXERCISE FULL EXERCISE
- -------- ----------- -------------
<S> <C> <C>
Total underwriting fees.............................. $3,003,000 $3,453,450
Underwriting fees per share.................... $ 0.91 $ 0.91

Other offering expenses:
SEC registration fee............................... $ 15,985 $ 15,985
NASD filing fee.................................... $ 6,250 $ 6,250
Nasdaq National Market listing fee................. $ 88,500 $ 88,500
Legal fees and expenses............................ $ 600,000 $ 600,000
Accounting fees and expenses....................... $ 350,000 $ 350,000
Printing and engraving............................. $ 400,000 $ 400,000
Blue sky fees and expenses......................... $ 5,000 $ 5,000
Transfer agent fees................................ $ 15,000 $ 15,000
Miscellaneous...................................... $ 19,265 $ 19,265
Total other offering expenses........................ $1,500,000 $1,500,000
Other offering expenses per share.............. $ 0.45 $ 0.40
</TABLE>

OVER-ALLOTMENT. The underwriters have an option, exercisable within
30 days after the date of this prospectus, to purchase up to an aggregate of
495,000 additional shares of common stock at the public offering price less the
underwriting discounts and commissions. The underwriters may exercise this
option solely to cover over-allotments, if any, made in this offering. If the
underwriters exercise this option, each underwriter will purchase shares in
approximately the same proportion as indicated in the table above.

INDEMNITY. NetCreations, Rosalind Resnick and Ryan Scott Druckenmiller have
agreed to indemnify the underwriters against some types of liabilities,
including liabilities under the Securities Act provided that the underwriters
will not assert any claim for indemnification against Ms. Resnick or
Mr. Druckenmiller unless NetCreations has failed to so indemnify the
underwriters for any amounts properly due to the underwriters within 365 days of
their request for indemnification. These parties have also agreed to contribute
to payments that the underwriters may be required to make with respect to any of
those liabilities. In addition, we have agreed to make the underwriters insured
parties under our directors and officers insurance policy prior to the
consummation of the offering.

FUTURE SALES. NetCreations, its executive officers, directors and our
existing stockholders, have agreed not to offer, pledge, sell, hedge or
otherwise transfer or dispose of, directly or indirectly, any shares of common
stock or any securities convertible into or exercisable or exchangeable for
common stock for a period of 180 days from the date of this prospectus.
Transfers or dispositions can be made sooner with the prior written consent of
Friedman, Billings, Ramsey & Co., Inc. Such consent may be given at any time
without public notice. During such 180-day period, we have agreed not to file
any registration statement with respect to any shares of our common stock.

OFFERS IN OTHER JURISDICTIONS. Neither we nor the underwriters have taken
any action that would permit a public offering of the shares of common stock
offered by this prospectus in any jurisdiction other than the United States
where action for that purpose is required. The shares of common stock offered by
this prospectus may not be offered or sold, directly or indirectly, nor may this
prospectus or any other offering material or advertisements related to the offer
and sale of these shares of common stock be distributed or published, in any
jurisdiction, except under circumstances that will result in compliance with the
applicable rules and regulations of such jurisdiction. This prospectus is not an
offer

61
<PAGE>
to sell or a solicitation of an offer to buy any shares of common stock offered
hereby in any jurisdiction in which such an offer or solicitation is unlawful.

DISCRETIONARY ACCOUNT SALES. Friedman, Billings, Ramsey & Co., Inc. has
advised us that the underwriters do not expect discretionary sales by the
underwriters to exceed five percent of the shares offered by this prospectus.

DIRECTED SHARE PROGRAM. At our request, the underwriters have reserved up
to 330,000 shares of common stock to be issued by us and offered for sale by
this prospectus, at the initial public offering price, to directors, officers,
employees, business associates and related persons of NetCreations, Inc. The
number of shares of common stock available for sale to the general public will
be reduced to the extent these individuals purchase such reserved shares. Any
reserved shares which are not so purchased will be offered by the underwriters
to the general public on the same basis as the other shares offered by this
prospectus.

INTERNET DISTRIBUTION. fbr.com, a division of FBR Investment Services,
Inc., is acting as an underwriter in this offering. The underwriters have agreed
to allocate a limited number of shares to fbr.com for sale to its online
brokerage account holders and to participants in our directed share program. An
electronic prospectus is available on the Web site maintained by fbr.com. Other
than the prospectus in electronic format, the information on this Web site
relating to this offering is not a part of this prospectus and has not been
approved and/or endorsed by us or any underwriter, and should not be relied upon
by prospective investors.

Fidelity Capital Markets, a division of National Financial Services
Corporation, is acting as an underwriter in this offering, and will be
facilitating electronic dissemination of information through the Internet,
intranet and other proprietary electronic technology.

STABILIZATION. In connection with this offering, the underwriters may
engage in transactions on the Nasdaq National Market or the over-the-counter
market or otherwise that stabilize, maintain or otherwise affect the price of
the common stock. Specifically, the underwriters may overallot this offering,
creating a syndicate short position. In addition, the underwriters may bid for
and purchase shares of common stock. In addition, Friedman, Billings Ramsey &
Co., Inc., on behalf of the underwriters, may reclaim selling concessions
allowed to an underwriter or dealer for distributing the common stock in the
offering if the syndicate repurchases previously distributed shares of common
stock to cover syndicate short positions, in stabilizing transactions or
otherwise. These activities may stabilize or maintain the market price of the
common stock above independent market levels. The underwriters are not required
to engage in these activities and may discontinue any of these activities at any
time.

NO PRIOR PUBLIC MARKET. Prior to this offering, there has been no public
market for our common stock. As a result, the initial public offering price for
the common stock was determined by negotiations between us and the underwriters.
Among the factors considered in determining the public offering price were:

- prevailing market conditions;

- our results of operations in recent periods;

- the present stage of our development;

- the market capitalizations and development stages of other companies that
we and the underwriters believe to be comparable to us; and

- estimates of our growth potential.

62
<PAGE>
LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for us by Greenberg Traurig, a partnership of limited liability entities,
New York, New York. Certain legal matters in connection with this offering will
be passed upon for the underwriters by Fulbright & Jaworski L.L.P., New York,
New York.

EXPERTS

The financial statements as of December 31, 1997 and December 31, 1998 and
for each of the three years in the period ended December 31, 1998 included in
this prospectus have been audited by Grant Thornton LLP, independent certified
public accountants, as stated in their report appearing herein, and are included
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission in connection with this offering. In addition, upon
completion of the offering, we will be required to file annual, quarterly and
current reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy the registration statement and any
other documents filed by us at the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further information
on the Public Reference Room. Our Securities and Exchange Commission filings
will also be available to the public at the Securities and Exchange Commission's
Internet site at www.sec.gov.

This prospectus is part of the registration statement and does not contain
all of the information included in the registration statement. Whenever a
reference is made in this prospectus to any of our contracts or our other
documents, the reference may not be complete and you should refer to the
exhibits that are a part of the registration statement for a copy of the
contract or document.

After the offering, we expect to provide annual reports to our shareholders
containing audited financial statements and quarterly reports for the first
three quarters of each year containing unaudited interim financial information.

63
<PAGE>
INDEX TO
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Certified Public Accountants.......... F-2

Financial Statements:
Balance Sheets............................................ F-3
Statements of Operations.................................. F-4
Statement of Stockholders' Equity......................... F-5
Statements of Cash Flows.................................. F-6
Notes to Financial Statements............................. F-7
</TABLE>

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

Board of Directors and Stockholders of
NETCREATIONS, INC.

We have audited the accompanying balance sheets of NetCreations, Inc. as of
December 31, 1997 and 1998, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

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

GRANT THORNTON LLP

New York, New York
June 25, 1999 (except for Notes B-8 and B-9 as to which

the date is September 14, 1999)

F-2
<PAGE>
NETCREATIONS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
(UNAUDITED)
DECEMBER 31, -----------------------
------------------- PRO FORMA
1997 1998 ACTUAL (NOTE G)
ASSETS -------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Current assets
Cash........................................... $ 54,002 $ 96,885 $ 798,135 $ --
Accounts receivable (net of allowance for
doubtful accounts of $41,000 at
September 30, 1999).......................... 120,739 673,706 2,708,164 2,708,164
Prepaid income taxes........................... 6,317 -- --
Other current assets........................... -- 6,022 16,168 16,168
-------- -------- ---------- ----------
Total current assets....................... 181,058 776,613 3,522,467 2,724,332

Equipment (net of accumulated depreciation and
amortization).................................. 51,960 155,740 385,488 385,488
Deferred offering costs.......................... -- -- 620,637 620,637
Other assets..................................... 471 11,451 47,673 47,673
-------- -------- ---------- ----------
Total assets............................... $233,489 $943,804 $4,576,265 $3,778,130
======== ======== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings on credit line........................ $ -- $ -- $ 275,000 $ 275,000
Accounts payable and accrued expenses............ 11,158 24,663 583,423 583,423
Commissions payable.............................. 32,902 293,000 2,180,351 2,180,351
Accrued pension.................................. 60,000 60,000 45,000 45,000
Current portion of capital lease obligations..... -- 14,331 82,261 82,261
Income taxes payable............................. -- 12,138 145,487 145,487
Deferred income taxes............................ 8,300 32,500 31,500 123,000
-------- -------- ---------- ----------
Total current liabilities.................. 112,360 436,632 3,343,022 3,434,522

Capital lease obligations........................ -- 30,180 120,249 120,249
-------- -------- ---------- ----------
Total liabilities.......................... 112,360 466,812 3,463,271 3,554,771

Common stock, $.01 par value; 50,000,000 shares
authorized, 11,700,000 issued and
outstanding.................................... 117,000 117,000 117,000 117,000
Additional paid-in capital....................... -- -- 1,395,000 1,481,984
Deferred compensation............................ -- -- (1,375,625) (1,375,625)
Retained earnings................................ 4,129 359,992 976,619 --
-------- -------- ---------- ----------
Total stockholders' equity................. 121,129 476,992 1,112,994 223,359
-------- -------- ---------- ----------
Total liabilities and stockholders'
equity................................... $233,489 $943,804 $4,576,265 $3,778,130
======== ======== ========== ==========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

F-3
<PAGE>
NETCREATIONS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -------------------------
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues.................. $ 476,190 $ 1,100,781 $ 3,446,539 $ 2,062,333 $10,202,614
Cost of revenues.............. 43,090 173,124 1,509,776 812,547 4,961,667
----------- ----------- ----------- ----------- -----------
Gross profit............ 433,100 927,657 1,936,763 1,249,786 5,240,947

Operating expenses
Selling and marketing....... 195,451 289,904 492,004 332,164 1,118,883
Technology, support and
development............... 177,923 193,554 373,746 232,429 339,515
General and
administrative............ 60,734 151,307 369,508 268,587 802,869
Depreciation and
amortization.............. 554 9,515 23,414 16,676 79,756
----------- ----------- ----------- ----------- -----------
Total operating
expenses.............. 434,662 644,280 1,258,672 849,856 2,341,023
----------- ----------- ----------- ----------- -----------
Income (loss) before
income tax
provision............. (1,562) 283,377 678,091 399,930 2,899,924

Income tax provision.......... 7,434 23,028 72,228 42,600 302,355
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS)....... $ (8,996) $ 260,349 $ 605,863 $ 357,330 $ 2,597,569
=========== =========== =========== =========== ===========
Basic and diluted net income
(loss) per common share..... $ (0.00) $ 0.02 $ 0.05 $ 0.03 $ 0.22
=========== =========== =========== =========== ===========
Weighted-average common shares
outstanding used for basic
and diluted net income
(loss) per share............ 11,700,000 11,700,000 11,700,000 11,700,000 11,700,000
=========== =========== =========== =========== ===========

Pro forma data (unaudited)
Historical income (loss)
before income tax
provision................. $ (1,562) $ 283,377 $ 678,091 $ 399,930 $ 2,899,924
Pro forma income tax
provision (benefit)....... (1,000) 129,000 316,000 186,000 1,342,000
----------- ----------- ----------- ----------- -----------
Pro forma net income (loss)... $ (562) $ 154,377 $ 362,091 $ 213,930 $ 1,557,924
=========== =========== =========== =========== ===========

Pro forma basic and diluted
net income (loss) per common
share....................... $ (0.00) $ 0.01 $ 0.03 $ 0.02 $ 0.13
=========== =========== =========== =========== ===========

Pro forma weighted-average
common shares outstanding
used for basic and diluted
net income (loss) per
share....................... 11,700,000 11,700,000 11,700,000 11,700,000 11,700,000
=========== =========== =========== =========== ===========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

F-4
<PAGE>
NETCREATIONS, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON PAID-IN DEFERRED EARNINGS
STOCK CAPITAL COMPENSATION (DEFICIENCY) TOTAL
-------- ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996.......... 117,000 $ -- $ -- $ (113,463) $ 3,537
Net loss............................ -- (8,996) (8,996)
------- ---------- ----------- ---------- ----------
Balance at December 31, 1996........ 117,000 -- -- (122,459) (5,459)

Net income.......................... -- 260,349 260,349
S corporation distributions to
shareholders...................... -- (133,761) (133,761)
------- ---------- ----------- ---------- ----------
Balance at December 31, 1997........ 117,000 -- -- 4,129 121,129

Net income.......................... -- 605,863 605,863
S corporation distributions to
shareholders...................... -- (250,000) (250,000)
------- ---------- ----------- ---------- ----------
Balance at December 31, 1998........ 117,000 -- -- 359,992 476,992

Net income (unaudited).............. -- 2,597,569 2,597,569
Grant of stock options
(unaudited)....................... 1,395,000 (1,375,625) 19,375
S corporation distributions to
shareholders (unaudited).......... -- (1,980,942) (1,980,942)
------- ---------- ----------- ---------- ----------
Balance at September 30, 1999
(unaudited)....................... 117,000 $1,395,000 $(1,375,625) $ 976,619 $1,112,994
======= ========== =========== ========== ==========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.

F-5
<PAGE>
NETCREATIONS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- -----------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
-------- --------- --------- --------- -----------
(UNAUDITED)
Cash flows from operating activities
Net income (loss)....................... $ (8,996) $ 260,349 $ 605,863 $ 357,330 $ 2,597,569
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Depreciation and amortization....... 554 9,515 23,414 16,676 79,756
Provision for doubtful accounts..... -- -- 3,613 -- 41,000
Deferred taxes...................... (2,220) 10,520 24,200 -- (1,000)
Equity based expense................ -- -- -- -- 19,375
Changes in assets and liabilities
Accounts receivable............... (13,037) (107,702) (556,580) (230,197) (2,075,458)
Prepaid income taxes.............. -- (6,317) 6,317 -- --
Other current assets.............. -- -- (6,022) -- (10,146)
Other assets...................... (614) 143 (10,980) (11,050) (36,222)
Accounts payable and accrued
expenses........................ 19,665 (8,507) 13,505 33,766 290,759
Commissions payable............... 14,019 18,883 260,098 136,374 1,887,351
Accrued pension................... 30,000 30,000 (15,000) (15,000)
Income taxes payable.............. 1,147 (1,147) 12,138 17,697 133,349
-------- --------- --------- --------- -----------
Net cash provided by operating
activities.................... 40,518 205,737 375,566 305,596 2,911,333
-------- --------- --------- --------- -----------
Cash flows from investing activities
Capital expenditures.................... (11,074) (50,955) (79,422) (59,195) (98,426)
-------- --------- --------- --------- -----------
Net cash used in investing
activities.................... (11,074) (50,955) (79,422) (59,195) (98,426)
-------- --------- --------- --------- -----------
Cash flows from financing activities
Distributions to shareholders........... -- (133,761) (250,000) (150,000) (1,980,942)
Borrowings under line of credit......... -- -- 284,240 -- 275,000
Payments on line of credit.............. -- -- (284,240) --
Payments of offering costs.............. -- -- -- -- (352,637)
Payments on capital lease obligation.... -- -- (3,261) -- (53,078)
-------- --------- --------- --------- -----------
Net cash used in financing
activities.................... (133,761) (253,261) (150,000) (2,111,657)
-------- --------- --------- --------- -----------
NET INCREASE IN CASH............ 29,444 21,021 42,883 96,401 701,250
Cash at beginning of period............... 3,537 32,981 54,002 54,002 96,885
-------- --------- --------- --------- -----------
Cash at end of period..................... $ 32,981 $ 54,002 $ 96,885 $ 150,403 $ 798,135
======== ========= ========= ========= ===========
Supplemental disclosures of cash flow
information:
Cash paid during the period for income
taxes............................... $ 8,500 $ 18,825 $ 28,825 $ 31,062 $ 170,804
======== ========= ========= ========= ===========
Noncash financing activities:
</TABLE>

Capital lease obligations of $47,772, $11,335, and $211,078 during the year
ended December 31, 1998 and the nine months ended September 30, 1998 and 1999,
respectively, were incurred when the Company entered into leases for new
equipment.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

F-6
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997 AND 1998

NOTE A--NATURE OF OPERATIONS

NetCreations, Inc. (the "Company") was incorporated and commenced operations
in 1995. NetCreations, Inc. is a provider of opt-in email marketing services on
the Internet. The Company manages an extensive database of email addresses
gathered from its own and from third-party Web sites. These lists are available
for rental, including list rental, email delivery, and merge/purge. The Company
also maintains a Web site at www.postmasterdirect.com as a vehicle for its
services and another Web site that contains its corporate information at
www.netcreations.com.

The Company's primary revenue source is the rental of opt-in email lists.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE RECOGNITION

The Company recognizes revenue when email messages are transmitted to
selected addresses, net of volume discounts and broker discounts.

2. EQUIPMENT

Equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally
ranging from three to five years. Amortization of assets under capital leases is
computed using the straight-line method over the lesser of the lease term or the
estimated useful lives of the assets, generally three to five years.

3. INCOME TAXES

Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

4. USE OF ESTIMATES

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

5. ADVERTISING

Advertising costs are expensed as incurred. Advertising expense for the
years ended December 31, 1996, 1997 and 1998 amounted to $10,000, $74,000 and
$128,000, respectively.

F-7
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
6. COST OF REVENUES

Cost of revenues consists primarily of commissions to the Web site owners
that are incurred for each emailing to the email addresses owned by the Web
sites.

7. INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Information in the accompanying financial statements for the nine months
ended September 30, 1998 and 1999 is unaudited.

The condensed financial statements as of September 30, 1999 and for the nine
months then ended have been prepared in accordance with generally accepted
accounting principles applicable to interim financial information and the rules
and regulations promulgated by the Securities and Exchange Commission.
Accordingly, such condensed financial statements do not include all of the
information and footnote disclosures required by generally accepted accounting
principles.

In the opinion of the Company's management, the September 30, 1998 and 1999
unaudited condensed interim financial statements include all adjustments,
consisting of normal recurring adjustments necessary for a fair presentation of
such financial statements. The results of operations for the nine months ended
September 30, 1999 are not necessarily indicative of the results to be expected
for the entire year.

8. NET INCOME (LOSS) PER SHARE:

The Company has adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings Per Share," which requires public companies to present
basic net income (loss) per share, and, if applicable, diluted net income (loss)
per share. Basic and diluted net income (loss) per share are included, in
accordance with SFAS No. 128, for all periods presented. Basic net income (loss)
per share is computed by dividing the net income (loss) per share for the period
by the weighted-average number of common shares outstanding during the period.
The weighted average shares have been adjusted retroactively to give effect to a
117,000-to-1 share split effective September 14, 1999. Diluted net income (loss)
per share is computed by dividing the net income (loss) for the period by the
weighted-average number of common shares adjusted for the dilutive effect of any
potential shares issuable outstanding during the period. The Company did not
have any potential common shares outstanding during the periods presented in
these financial statements.

Reference is made to Note G.

9. STOCK SPLIT

On September 14, 1999 the Company effected a 117,000-to-1 stock split. The
accompanying financial statements have been adjusted retroactively to reflect
the stock split.

10. OTHER COMPREHENSIVE INCOME

Effective January 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 130 ("SFAS No. 130"), "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements.

F-8
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Other comprehensive income, as defined, includes all changes in equity during a
period from non-owner sources. To date, the Company has not had any transactions
that are required to be reported as other comprehensive income.

11. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging
Activities," which defines derivatives, requires that all derivatives be carried
at fair value, and provides for hedge accounting when certain conditions are
met. SFAS No. 133 is effective for the Company in 2002. Although the Company has
not fully assessed the implications of SFAS No. 133, the Company does not
believe that the adoption of this statement will have a material impact on the
Company's financial position or results of operations.

12. TECHNOLOGY, SUPPORT AND DEVELOPMENT EXPENSES

Technology, support and development costs, which consist principally of
salaries, including that of the Company's Chief Technology Officer, have been
expensed as incurred.

Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use (the SOP) is effective for the Company
beginning with its fiscal year ending December 31, 1999. The adoption of this
SOP had no effect for the period ended September 30, 1999. Costs incurred that
meet the criteria under this SOP will be capitalized prospectively.

NOTE C--EQUIPMENT

Equipment consists of the following:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Computer equipment....................................... $62,029 $177,342
Office equipment......................................... -- 11,881
------- --------
62,029 189,223
Less accumulated depreciation............................ (10,069) (33,483)
------- --------
$51,960 $155,740
======= ========
</TABLE>

Assets under capital lease at December 31, 1998 were $47,772 and related
accumulated amortization was $4,060 at December 31, 1998.

F-9
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

NOTE D--INCOME TAXES

The Company is an S corporation for Federal and state income tax purposes.
Accordingly, no provision has been made for Federal and certain state income
taxes in the accompanying financial statements, since the income of the Company
is included in the personal income tax returns of the stockholders. The Company
is, however, responsible for taxes in jurisdictions which do not recognize
S corporation status (e.g., New York City.) Provision is made for income taxes
relating to these jurisdictions. In addition, the Company files its tax returns
on the cash basis of accounting.

The S corporation status will terminate immediately prior to the
consummation of the Initial Public Offering (see Note I-3). The Company will
convert to a C corporation and will be subject to Federal and all applicable
state and local income taxes, prospectively. Any income tax adjustment required
as a result of the conversion will be reflected in the period in which it
becomes effective (see Note G-1).

The components of income tax expense are as follows at December 31:

<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Current--state and local.................................... $9,654 $12,508 $48,028
Deferred--state and local................................... (2,220) 10,520 24,200
------ ------- -------
$7,434 $23,028 $72,228
====== ======= =======
</TABLE>

The differences between income tax expense shown in the statements of
operations and the computed income tax expense based on the Federal statutory
corporate rate are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
<S> <C> <C> <C>
1996 1997 1998
------ -------- --------
Computed income tax expense (benefit) based on the Federal
statutory rate of 34%..................................... $ -- $ 96,000 $231,000
State and local income taxes, net of Federal benefit........ 7,434 33,000 80,000
Effect of S corporation..................................... -- (105,972) (238,772)
------ -------- --------
$7,434 $ 23,028 $ 72,228
====== ======== ========
</TABLE>

The significant components of the net deferred tax liability are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
<S> <C> <C>
1997 1998
------- -------
Deferred tax liabilities--current
Accounts receivable and prepaid expenses.................. $13,000 $73,100
Deferred tax assets--current
Accounts payable and accrued expenses..................... (4,700) (40,600)
------- -------
Net deferred tax liability............................ $ 8,300 $32,500
======= =======
</TABLE>

F-10
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

NOTE E--LINE OF CREDIT

The Company had an unused line of credit in the amount of $175,000 at
December 31, 1998.

NOTE F--COMMITMENTS AND CONTINGENCIES

1. CAPITAL LEASE OBLIGATIONS

The annual maturities of capital lease obligations are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1999................................................... $19,856
2000................................................... 19,856
2001................................................... 14,793
-------
54,505
Less amount representing interest...................... (9,994)
-------
Present value of net minimum lease payments including
current portion of $14,331........................... $44,511
=======
</TABLE>

2. OPERATING LEASE COMMITMENTS

The Company leases office space under the terms of operating leases that
expire in 2003. Future minimum payments under noncancellable operating leases
consisted of the following at December 31, 1998:

The Company paid $49,600 in rent expense for the year ended December 31,
1998. No rent expense was incurred for the years ended December 31, 1996 and
1997, since the stockholders provided minimum facilities in those years.

3. DEFINED CONTRIBUTION PLAN

In 1996 and 1997, the Company had a money purchase pension and profit
sharing plan for its officers/shareholders. Upon termination, the Company
established a defined contribution plan in 1998 for eligible employees under
Section 401(k) of the Internal Revenue Code. Employees must complete one year of
service to be eligible to participate in the 401(k) plan. In 1996, 1997 and
1998, the Company incurred contribution expenses of $30,000, $60,000 and
$60,000, respectively, relating to these plans.

F-11
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

NOTE G--PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

1. PRO FORMA BALANCE SHEET

The Company intends to make a final S corporation distribution based on
current period earnings to the extent of available cash. Such distribution will
not be paid out of proceeds of the planned IPO. The pro forma balance sheet
reflects adjustments at September 30, 1999 for pro forma S corporation
distributions of $798,135, an additional deferred tax liability of $91,500
resulting from the termination of our S corporation election and the
reclassification of the undistributed retained earnings to additional paid in
capital.

2. PRO FORMA INCOME TAXES

As disclosed in Note A, the Company has elected to be taxed as an
S corporation pursuant to the Internal Revenue Code. Pro forma adjustments in
the statements of operations for each of the three years in the period ended
December 31, 1998 and for the nine months ended September 30, 1998 and 1999,
reflect a pro forma provision for income taxes based upon pre-tax income as if
the Company had been subject to all applicable Federal, state and local income
taxes. As disclosed in Note D, the Company is a cash basis taxpayer.
Accordingly, the pro forma tax provision is calculated assuming that taxes are
reported on a cash basis.

The pro forma provision for income taxes, after giving effect to the Federal
statutory rate of 34% and an applicable state and local tax provision consists
of the following:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------ -----------------------
1996 1997 1998 1998 1999
-------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Current
Federal............................... $ 5,000 $ 52,000 $115,000 $ 68,000 $ 816,000
State and local....................... 4,000 33,000 71,000 42,000 542,000
-------- -------- -------- -------- ----------
Total current....................... 9,000 85,000 186,000 110,000 1,358,000
-------- -------- -------- -------- ----------
Deferred
Federal............................... (6,000) 27,000 80,000 47,000 (10,000)
State and local....................... (4,000) 17,000 50,000 29,000 (6,000)
-------- -------- -------- -------- ----------
Total deferred...................... (10,000) 44,000 130,000 76,000 (16,000)
-------- -------- -------- -------- ----------
Total................................... $ (1,000) $129,000 $316,000 $186,000 $1,342,000
======== ======== ======== ======== ==========
</TABLE>

F-12
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

NOTE G--PRO FORMA FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)
The differences between pro forma provision for income taxes shown in the
statements of operations and the pro forma computed income tax expense based on
the Federal statutory corporate rate are as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------ ----------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
------- -------- -------- -------- ----------
Computed income taxes based
on Federal statutory rate of 34%........ $ -- $ 96,000 $231,000 $136,000 $ 986,000
State and local income taxes,
net of Federal benefit.................. (1,000) 33,000 85,000 50,000 356,000
Other..................................... -- -- --
------- -------- -------- -------- ----------
$(1,000) $129,000 $316,000 $186,000 $1,342,000
======= ======== ======== ======== ==========
</TABLE>

The significant components of the pro forma net deferred tax liability,
assuming a 34% Federal statutory rate and an applicable state and local tax
provision are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998 SEPTEMBER 30, 1999
-------- --------- ------------------
<S> <C> <C> <C>
Deferred tax liability--current
Accounts receivable and prepaid expenses............. $ 55,000 $ 309,000 $ 1,275,000
Deferred tax asset--current
Accounts payable and accrued expenses................ (20,000) (172,000) (1,152,000)
-------- --------- -----------
Net deferred tax liability..................... $ 35,000 $ 137,000 $ 123,000
======== ========= ===========
</TABLE>

NOTE H--CONCENTRATIONS

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and trade receivables.
The Company places its cash investments with high quality financial institutions
and does not maintain balances that exceed FDIC-insured limits. Concentrations
of credit risk with respect to trade receivables are limited due to the
Company's large number of customers and their dispersion across many different
industries and countries worldwide. The Company had no significant
concentrations of credit risk. No single customer represented more than 10% of
the Company's revenues during the years ended December 31, 1996, 1997 and 1998.

For the nine months ended September 30, 1999 one reseller accounted for
approximately 11% of net revenues. In addition, net revenues derived from this
reseller as a list owner represented 0.8% of the Company's net revenues for the
nine months ended September 30, 1999. For the year ended December 31, 1998, this
reseller accounted for approximately 7% of net revenues as a reseller and 3.3%
of net revenues as a list owner. In July 1999, the Company terminated its
agreement with this reseller.

F-13
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

NOTE I--SUBSEQUENT EVENTS (UNAUDITED)

1. FINANCING

On June 3, 1999, the Company increased its line of credit to $500,000, of
which $275,000 is outstanding as of September 30, 1999. On November 3, 1999, the
Company further increased its line of credit to $1,300,000, all of which became
outstanding on that date. Reference is made to Note I-6. Borrowings are
guaranteed by the Company's stockholders/officers.

Through September 30, 1999, the Company acquired equipment and obtained
additional equipment financing approximating $260,000.

2. STOCK OPTION PLAN

The Company adopted its 1999 Stock Option Plan (the "Plan") in July 1999.
The Plan provides for the granting of up to 1,170,000 options to directors,
officers, employees and consultants. The Plan provides for the granting of
options intended to qualify as incentive stock options under the Internal
Revenue Code and non-qualified options. The Plan will terminate in July 2009
unless terminated earlier. As of September 14, 1999 and as of November 11, 1999,
the Company granted options totaling 247,000 to officers and employees other
than the Company's officer/shareholders at an exercise price of $5.00 per share.
The options vest ratably over a three-year period and may be accelerated under
certain conditions. The officer/shareholders of the Company did not receive any
of the options granted on September 14, 1999 nor any options or stock based
compensation prior to that date. The Company will recognize compensation expense
for the excess of its IPO price per share over $5.00 over the period of vesting.
During the three months ended September 30, 1999 the Company recorded deferred
compensation of $1,395,000 of which $19,375 was amortized to expense. In
addition, the Company granted, effective October 8, 1999, options to purchase
100,000 shares of common stock to each of the three non-management directors at
an exercise price per share equal to $10.00 per share. These options vest at a
rate of one-third as of the date of the initial public offering and the
remainder vests quarterly over the next two years and may be accelerated under
certain conditions. The Company will recognize compensation expense for the
excess of its IPO price per share over the exercise price over the period of
vesting. No other options have been granted pursuant to the Plan. The amount of
compensation expense that would be recognized subsequent to September 30, 1999
over the next four years, relating to the options that have been granted to
date, at the initial offering price of $13.00, is as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1999...................................................... $ 579,000
2000...................................................... 959,000
2001...................................................... 846,000
2002...................................................... 473,000
----------
Total................................................... $2,857,000
==========
</TABLE>

F-14
<PAGE>
NETCREATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997 AND 1998

NOTE I--SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
3. INITIAL PUBLIC OFFERING AND DEFERRED OFFERING COSTS

The Company intends to offer shares of its common stock to the general
public through an initial public offering (the "IPO").

In connection with this planned IPO, the Company has deferred offering costs
of $620,637 as of September 30, 1999. These costs will be reflected as a
reduction of the proceeds of the offering. In the event the offering is not
consummated, these costs will be charged to operations.

4. EMPLOYMENT AGREEMENTS

The Company has entered into five employment agreements which expire on
December 31, 2002 with its five executive officers. The agreements provide for,
among other things, aggregate annual compensation of $700,000 and for bonuses
that will be earned upon the achievement of specified goals.

5. PREFERRED STOCK

The Company's restated certificate of incorporation authorizes the board of
directors to issue an aggregate of up to 5,000,000 shares of preferred stock. No
shares of preferred stock have been issued.

6. NEW LIST MANAGEMENT AGREEMENT

On November 3, 1999, the Company entered into a two year email list
management agreement with a third-party Web site. The third-party Web site has
the right to renew the agreement for three successive one-year renewal terms.
Pursuant to such agreement, the Company incurred an obligation to advance to the
third-party website, an aggregate of $5,000,000. The Company paid $1,000,000 of
those advance payments upon signing. The remaining $4,000,000 will be paid as
follows: (1) $2,000,000 on the consummation of the Company's IPO
(2) $1,000,000, on May 3, 2000 and (3) $1,000,000 on November 3, 2000. The
Company is entitled to take credit for the advance payments against commissions
earned by the third-party website, payable under the email list management
agreement. The initial advance payment is non-refundable. The remaining
$4,000,000 of advances become non-refundable upon the passage of time, not to
extend past two years.

The Company intends to account for these advances as prepaid commissions.
Management considers it probable that the revenue generated will be sufficient
to achieve the minimum level needed to amortize the advances at the rate of
commissions (50%) specified in the agreement. Accordingly, commission expense
will be recognized as revenue is earned by NetCreations upon the transmission of
applicable email messages and applied against the advances. Should management
determine that it is no longer probable that sufficient revenue will be
generated over the term of the agreement to meet the minimum level, the Company
will amortize the remaining non-refundable advances at the greater of the method
described in the preceding sentence or the straight-line basis over the
remaining term of the agreement.

Management will also assess the recoverability of prepaid commissions at
each reporting period. To the extent that it is probable that some or all of the
prepaid commissions have become non-recoverable, a charge to operations will be
made in that period to reduce the balance to the amount recoverable.

F-15
<PAGE>
[Inside back cover page]

[Description of Artwork]

Large NetCreations logo graphic.
<PAGE>
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3,300,000 SHARES

[LOGO]

COMMON STOCK

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

PROSPECTUS

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

FRIEDMAN BILLINGS RAMSEY

C.E. UNTERBERG, TOWBIN

FBR.COM

FIDELITY CAPITAL MARKETS

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

NOVEMBER 12, 1999
------------------------

UNTIL DECEMBER 7, 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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