L90 INC, S-1/A, 1999-11-02

L90 INC
S-1/A, 1999-11-02
BUSINESS SERVICES, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on November 2, 1999

Registration No. 333-87607
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT No. 1

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

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

L90, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
Delaware 7310 95-4761069
(State or other jurisdiction (Primary standard industrial (IRS employer
of incorporation or organization) classification code number) identification number)
</TABLE>

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

2020 Santa Monica Boulevard, Suite 400
Santa Monica, California 90404
(310) 315-1199
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive office)

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

John C. Bohan
President & Chief Executive Officer
L90, Inc.
2020 Santa Monica Boulevard, Suite 400
Santa Monica, California 90404
(310) 315-1199
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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

Copies to:
<TABLE>
<S> <C>
Robert A. Miller, Jr., Esq. Richard A. Fink, Esq.
Peter M. Huie, Esq. Allen Z. Sussman, Esq.
Paul, Hastings, Janofsky & Walker LLP Michael W. Chou, Esq.
555 South Flower Street Brobeck, Phleger & Harrison LLP
Los Angeles, California 90071 550 South Hope Street
(213) 683-6000 Los Angeles, California 90071
(213) 489-4060
</TABLE>
---------------

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

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

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

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

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

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

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

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

CALCULATION OF REGISTRATION FEE
<TABLE>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
<CAPTION>
Proposed
Title of each Class of Amount Proposed Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par
value per share....... 6,900,000(1) $12.00(2) $82,800,000(2) $23,018(5)
- -------------------------------------------------------------------------------------
Common Stock, $0.001 par
value per share....... 2,145,489(3) $ 4.59(4) $ 9,847,795(4) $ 2,738(6)
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
(1) Includes 900,000 shares that may be sold upon exercise of the
underwriters' over-allotment option.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).
(3) This Registration Statement also covers the resale under a separate
prospectus by certain stockholders of the Registrant of up to 2,145,489
shares of Common Stock to be issued to such stockholders upon the exercise
of warrants and conversion of their Series C Preferred Stock.
(4) Maximum offering price and amount of registration fee is based on the
conversion price of Series C Preferred Stock and the exercise price of
warrants pursuant to Rule 457(i).

(5) Of this amount, $19,182 has been previously paid.

(6) Of this amount, $2,738 has been previously paid.

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

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

Explanatory Note

This Registration Statement contains a prospectus to be used in connection
with the initial public offering of the Registrant's common stock through the
underwriters named on the cover page of that prospectus (the "IPO Prospectus").
The Registrant is contractually obligated to register on this Registration
Statement the resale of up to 2,145,489 shares (the "Registrable Securities")
of its common stock issuable upon (i) conversion of the Registrant's Series C
preferred stock upon the closing of the offering contemplated by the IPO
Prospectus into 871,460 shares of common stock, and (ii) the exercise of
warrants to acquire up to 1,274,029 shares of common stock. Consequently, this
Registration Statement contains a second prospectus to cover these possible
resales (the "Resale Prospectus") by certain of the Registrant's stockholders
(the "Selling Stockholders"). The IPO Prospectus and the Resale Prospectus are
substantively identical, except for the following principal points:

.they contain different outside and inside front covers;

.they contain different Offering sections in the prospectus summaries;

.they contain different Use of Proceeds sections;

.the Dilution section is deleted from the Resale Prospectus;

.a Selling Stockholder section is included in the Resale Prospectus;

. references in the IPO Prospectus to the Resale Prospectus will be
deleted from the Resale Prospectus;

. the Underwriting section from the IPO Prospectus is deleted from the
Resale Prospectus and a Plan of Distribution is inserted in its place;

. the Legal Matters section in the Resale Prospectus deletes the reference
to counsel for the underwriters; and

. the outside back cover of the IPO Prospectus is deleted from the Resale
Prospectus.

The Registrant has included in this Registration Statement, after the
financial statements, alternate pages to reflect the foregoing differences.

Notwithstanding the Resale Prospectus, the Selling Stockholders have agreed
(i) that they will not sell any of the Registrable Securities until 180 days
after the commencement of the offering contemplated in the IPO Prospectus (the
"Commencement Date"), at which time they may sell up to one-half of their
Registrable Securities, and (ii) commencing 270 days after the Commencement
Date, they may sell all of their Registrable Securities. Therefore, the Resale
Prospectus contemplated hereby will not be used until at least six months after
the Commencement Date. The Registrant anticipates that, prior to that time, it
will file a post effective amendment covering the Resale Prospectus, or an
amended prospectus or prospectus supplement pursuant to Rule 424.
<PAGE>

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

SUBJECT TO COMPLETION, DATED NOVEMBER 2, 1999

PROSPECTUS

6,000,000 Shares

[LOGO of L90]

Common Stock

This is an initial public offering of our common stock. We expect that the
public offering price of our common stock will be between $10.00 and $12.00 per
share.

We have applied to have our common stock listed for trading and quotation on
the Nasdaq National Market under the symbol "LNTY."

Our business involves significant risks. These risks are described under the
caption "Risk Factors" beginning on page 9.

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

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

<TABLE>
<CAPTION>
Per
Share Total
<S> <C> <C>
Public offering price............................................ $ $
Underwriting discounts and commissions........................... $ $
Proceeds, before expenses, to L90 ............................... $ $
</TABLE>

The underwriters may also purchase up to an additional 900,000 shares of
common stock from us to cover over-allotments.

The underwriters expect to deliver the shares against payment in New York,
New York on , 1999.

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

SG COWEN

BANC OF AMERICA SECURITIES LLC

CIBC WORLD MARKETS

WIT CAPITAL CORPORATION

, 1999
<PAGE>

[DESCRIPTION OF ARTWORK]

Images of the different screens from L90, Inc.

INSIDE FRONT COVER

The left side of the inside front cover of the prospectus will picture
twenty-nine screens from Web sites containing previous advertising campaigns
served by us. The right side of the inside front cover will list several of our
Web publishing clients under the title: Network of Premium Web Properties
including .... The list will contain the following names: Ain't It Cool News,
Alloy Online, Athlete Direct, BigYellow, Campus Pipeline, CarPrices.com,
click2send, eMachines, Fitness Online, Freei.net, HolidayChannel, Hollywood.com,
Homestead.com, IFILM, Infonautics Network, JobsOnline, Kanoodle.com,
LiquidAudio, MaMaMedia, Scoops Wrestling, Scour, Shoplet.com, Small World,
SpeedyClick.com, Sportspage.com, StarChefs, TargetMatch.com, whatis.com and
WinSite. Additionally, the inside front cover will list certain of our
advertising clients under the title: Over 450 Advertising Clients Including ....
This list will contain the following names: American Express, Ameritech, Ask
Jeeves, Chevrolet, Dell, eBay, FTD, GUESS.com, IBM, Intel, Infoseek, iVillage,
LAUNCH, Levi's Strauss, Mars, Microsoft, Mothernature.com, Netscape, OshKosh
B'Gosh, Procter & Gamble, Sony, Sprint, Starbucks, Tickets.com, United Airlines,
Visa, Vitamins.com, Wall Street Journal and Women.com. The upper left corner of
the inside front cover will contain the words: L90 Internet Advertising
Solutions, and the right top corner will contain the words: admonitor. The back
round of the inside front cover will contain a picture of our logo.

INSIDE GATEFOLD (two pages)

The Gatefold describes and illustrates various of our client's Web pages
containing our advertising campaigns. The following text runs across the top of
both Gatefold pages:

Internet Advertising Solutions - L90 Internet Advertising Solutions go "beyond
the banner" to leverage the capabilities of the Internet by incorporating:
customized sponsorships, co-branding with premium Web sites, content
integration, targeting based upon user interests and characteristics, rich
media, real-time reporting and campaign management.

[L90 Logo]

First Page of Gatefold

[Picture of OshKosh B'Gosh "Genuine Girl" Web page] with the following
description:

OshKosh B'Gosh "Genuine Girl"

An interactive solution created to promote the OshKosh B'Gosh "Genuine Girl"
brand on MaMaMedia. This custom tailored activity allows children to create
their own "Genuine Girl" interactive stickers by dragging and pasting rich media
items, such as talking girls and fluttering butterflies onto a virtual sticker.
<PAGE>

[Picture of tickets.com Web page] with the following description:

"The Big Game" with Tickets.com

An advertising solution developed to build brand awareness for Tickets.com,
generate ticket sales and acquire a qualified user database. The Tickets.com
sponsorship program incorporates a combination of content integration,
contextual offers, co-branded microsites and sweepstakes elements.

[Picture of iVillage.com Web page and Shape magazine cover alongside] with the
following description:

iVillage Cross Promotional Print/Online Campaign

An integrated sponsorship created to help iVillage grow its user base and reach
a broad cross-section of women. The campaign incorporates ad placements in
online and offline media properties of Weider Publications including Shape
magazine, Shape Online and Fitness Online.

Second Page of Gatefold

[Picture of Shop the Seasons Web page] with the following description:

Shop the Seasons Syndicated Sponsorship

A syndicated shopping guide and direct marketing solution that was designed,
developed and engineered by L90. Leveraging the reach of the L90 network, this
syndicated microsite features a selection of unique gift offers that are
optimized according to each advertiser's objectives. The shopping guide enables
advertisers to build a qualified marketing database by offering consumers the
opportunity to submit their e-mail addresses and "opt-in" to receive future
promotional offers.

[Picture of Levi's rock n'roll jeans factory Web page on top of a Music
Boulevard Web page] with the following description:

Levi's Rock n' Roll Jeans Factory

An advertising vehicle created to roll out the Levi's e-commerce Web site to
Levi's target audience. This contextual sponsorship includes a co-branded
micro-store embedded within the Rocktropolis area of Music Boulevard.

[Picture of LAUNCH Free Trial Offer Web page] with the following description:

LAUNCH on CD-ROM Trial Offer

A response-driven marketing solution designed to reach a diverse group of users
and offer them a trial subscription to LAUNCH on CD-ROM. The program utilizes
direct marketing components such as pop-up boxes, download interstitials
sweepstakes incentives, all of which are designed to invite users to "opt-in" to
receive three trial issues of LAUNCH on
<PAGE>

CD-ROM.

[Picture of Music Boulevard Web page] with the following description:

Visa on Music Boulevard

A "beyond the banner" campaign designed to strengthen the Visa brand, reinforce
current customer loyalty and increase Visa's overall market share. This
"Preferred Card" sponsorship provides Visa with ad placement throughout Music
Boulevard, positions Visa as the default payment method and offers customers a
coupon for changing their payment method to Visa.

INSIDE BACK COVER

The inside back cover of the prospectus has a flow chart illustrating
ad delivery and tracking technology using our adMonitor service. Across the top
of the page are the following words:

adMonitor Serving and Tracking Technology

L90's ad serving and tracking technology is the platform for all of our
advertising solutions. It is robust, flexible and scalable.

In the lower right hand corner of the inside back cover is the L90 admonitor
logo.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................. 5
Risk Factors........................ 9
Forward-Looking Statements.......... 18
Use of Proceeds..................... 18
Dividend Policy..................... 18
Capitalization...................... 19
Dilution............................ 20
Selected Financial Data............. 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 22
Business............................ 31
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management........................... 47
Related Party Transactions........... 53
Principal Stockholders............... 56
Description of Capital Stock......... 59
Shares Eligible for Future Sale...... 63
U.S. Tax Consequences to Non-U.S.
Holders............................. 65
Underwriting......................... 69
Legal Matters........................ 71
Experts.............................. 71
Where You Can Find More Information.. 71
Index to Financial Statements........ F-1
</TABLE>
------------------

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

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

Until , 1999, which is 25 days after commencement of this offering, all
dealers that buy, sell or trade our common stock, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition
to the dealers' obligations to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.

3
<PAGE>

(THIS PAGE INTENTIONALLY LEFT BLANK)

4
<PAGE>

PROSPECTUS SUMMARY

Because this is only a summary, it does not contain all of the information
that may be important to you. You should carefully read the more detailed
information contained in this prospectus, including our financial statements
and related notes. Our business involves significant risks. You should
carefully consider the information under the heading "Risk Factors."

We are a leading provider of comprehensive Internet-based advertising and
direct marketing solutions for advertisers and Web publishers. We design and
implement advertising campaigns for our advertising clients and place their ads
on our network of Web sites. We provide our Web publishing clients with a
fully-outsourced solution which includes the sale of advertising space on their
Web site, as well as the technology required to deliver advertisements to their
Web site.

Our advertising clients want Web users to take action such as visiting their
Web sites or making an online purchase when they view advertisements. Our Web
publishing clients seek to improve the sale of advertising space, or ad
inventory, on their Web sites. Our design and development teams help our
clients meet their objectives by creating advertising campaigns that
incorporate sponsorships. Sponsorships are advertisements that employ advanced
marketing techniques such as integrating advertisements into the text or
graphical content of a Web page. In contrast, traditional banner advertisements
are typically found at the top of a Web page and frequently contain content
that is unrelated to that of the Web page. Because our sponsorship-focused
solutions are specifically designed to promote interactivity between the Web
user and our advertisers, we believe that our advertising campaigns are more
effective than traditional banner advertisements in attracting a Web user's
attention and encouraging action. In addition, we have developed adMonitor, our
ad delivery, or ad serving and tracking technology that is used to deliver
advertisements to our network of Web site partners. adMonitor enables our
advertising and Web publishing clients to implement sophisticated advertising
campaigns quickly and to selectively target ads to Web users based upon
specific interests and characteristics. adMonitor also enables our clients to
track, measure and manage the effectiveness of their ad campaigns.

We believe that our solutions enable:

. Advertisers to effectively target their ads to Web users, improve
response rates to their advertisements and achieve a higher return on ad
spending; and

. Web publishers to realize increased ad sales, improved pricing for their
ad inventory and more efficient ad inventory management.

We represent a network of select Web publishers featuring sites with strong
online brand awareness and innovative content such as Alloy Online, BigYellow,
Hollywood.com and Liquid Audio. Over 450 advertisers, including Chevrolet,
iVillage, Microsoft, Netscape, Procter & Gamble and Visa, have utilized our
solutions. No advertising client represents over 10% of our revenue.

We believe that the growth of the Internet is driving advertisers to devote
an increasing portion of their overall advertising and marketing budgets to
online advertising and direct marketing.

5
<PAGE>

Forrester Research estimates that worldwide Internet advertising spending will
be approximately $3.3 billion in 1999 and will increase to approximately $33.1
billion by 2004. In addition, the Direct Marketing Association estimates that
worldwide expenditures for online direct marketing campaigns will grow from
$603 million in 1998 to approximately $5.3 billion in 2003. As the acceptance
and usage of online advertising continues to grow, online advertisers must find
ways to differentiate themselves in a crowded marketplace. Increasingly,
advertisers are seeking advertising campaigns that go beyond traditional banner
ads by incorporating enhanced features such as sponsorships in order to gain a
competitive edge. eStats estimates that sponsorship advertising will grow from
approximately 40% of total online advertising in 1998 to approximately 58% in
2001. We believe that our focus on creating sponsorship-driven advertising
campaigns, our in-depth industry knowledge and our adMonitor technology enable
us to provide our clients with solutions that meet their complex and evolving
needs.

Our objective is to be the leading provider of comprehensive online
advertising and direct marketing solutions. The following are key elements of
our strategy:

. Capture a greater share of online advertising budgets;

. Grow our sales and marketing organization;

. Selectively expand our network of Web publishers;

. Enhance and expand our adMonitor technology;

. Develop, deploy and leverage our library of creative marketing
solutions; and

. Expand our direct marketing capabilities.

Our business began in January 1997 as a proprietorship of one of our
founders, John C. Bohan. We changed our form of operations in May 1997 to a
California limited liability company known as John Bohan & Associates, LLC. We
initially conducted business under the name AdNet Strategies, and in January
1998, we incorporated under the name AdNet Strategies, Inc. in California and
elected S-corporation status. In December 1998, we changed our name to Latitude
90, Inc. and became a C-corporation. We reincorporated in Delaware as L90, Inc.
in September 1999. Our principal executive offices are located at 2020 Santa
Monica Boulevard, Suite 400, Santa Monica, California 90404. Our telephone
number at that location is (310) 315-1199. Our Web address is www.L90.com.
Information contained on our Web site does not constitute part of this
prospectus. References in this prospectus to "the Company," "L90," "we," "our,"
and "us" refer to L90, Inc. and its predecessor businesses and entities.

6
<PAGE>

The Offering

The following information excludes 2,685,660 shares of common stock issuable
upon the exercise of stock options and warrants outstanding as of September 30,
1999, with a weighted average exercise price of $2.58 per share.

<TABLE>
<C> <S>
Common Stock we are offering........................ 6,000,000 shares

Common Stock to be outstanding after this offering.. 19,079,057 shares

Underwriters' over-allotment option................. 900,000 shares

Use of Proceeds..................................... We intend to use the net
proceeds of this offering
for general corporate
purposes, including
working capital,
information technology
investments, sales and
marketing efforts and
potential acquisitions.
See "Use of Proceeds" for
more information on the
use of proceeds.
</TABLE>

Unless otherwise indicated, all information in this prospectus:

. reflects a 2-for-3 reverse stock split to be effected immediately prior
to the consummation of this offering;

. reflects the automatic conversion of all 2,000 shares of Series A
preferred stock, 4,107,044 shares of Series B preferred stock and
1,307,190 shares of Series C preferred stock into 5,276,156 shares of
common stock upon completion of this offering;

. reflects the cashless exercise of warrants to acquire 1,109,247 shares
of common stock with a weighted average exercise price of $4.84 per
share;

. excludes options and warrants outstanding as of September 30, 1999, to
purchase 2,685,660 shares of common stock with a weighted average
exercise price of $2.58 per share; and

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

7
<PAGE>

Summary Financial Data
(in thousands, except per share data)

The following summary financial data is derived and qualified in its entirety
by our financial statements. You should read this summary financial data
together with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our financial statements.

<TABLE>
<CAPTION>
Period from
Inception
(January 5, Nine Months Ended
1997) through Year Ended September 30,
December 31, December 31, -------------------
1997 1998 1998 1999
------------- ------------ ----------- -------
(unaudited)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenue....................... $1,160 $2,189 $1,465 $ 3,973
Operating income (loss)....... 307 (306) (49) (4,462)
Net income (loss) attributable
to common stockholders....... $ 310 $ (313) $ (42) $(5,758)
====== ====== ====== =======
Pro forma basic and diluted
net loss per share........... $(0.04) $ (0.44)
====== =======
Weighted average shares
outstanding used in pro forma
basic and diluted per share
calculation.................. 8,333 13,052
====== =======
Supplemental Data:

System revenue(1)............. $4,210 $8,024 $5,440 $ 9,232
====== ====== ====== =======
</TABLE>

<TABLE>
<CAPTION>
September 30, 1999
-------------------
Pro Forma
Actual As Adjusted
------- -----------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................. $11,556 $71,936
Current assets............................................ 14,895 75,275
Total assets.............................................. 15,611 75,991
Long-term capital lease obligations, net of current
portion.................................................. 286 286
Total stockholders' equity ............................... 10,512 70,892
</TABLE>
- --------

(1) System revenue represents the full value of gross billings for ads sold
under either commission-based contracts or service fee-based contracts.
Although system revenue is not recognized under generally accepted
accounting principles, we believe that system revenue is a standard measure
of advertising volume for the Internet advertising industry that enables a
meaningful comparison of activity from period to period and from one
company to another.

8
<PAGE>

RISK FACTORS

You should consider carefully the following risks before you decide to buy
our common stock. The risks and uncertainties described below are not the only
ones we may face. Additional risks and uncertainties may also impair our
business operations. If any of the following risks actually occurs, our
business, results of operations and financial condition would likely suffer. In
such case, 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.

Our revenues and prospects are difficult to forecast because we have only been
operating our business since January 1997

We began our business in January 1997 and have a brief operating history.
Therefore, we lack sufficient historical financial and operating data on which
to adequately forecast future operating results. You should consider our
prospects in light of the risks, uncertainties, expenses and difficulties
frequently encountered by companies in an early stage of development,
particularly companies in new and rapidly evolving markets such as online
advertising.

These risks include our ability to:

. manage our growth effectively;

. anticipate and adapt to the rapid changes in the Internet;

. continue to develop and upgrade our technology;

. respond to competitive developments in our market; and

. continue to identify, attract, retain and motivate qualified personnel.

If we are unsuccessful in addressing these risks, our revenues may not grow
in accordance with our business model and may fall short of expectations of
market analysts and investors, which could negatively affect the price of our
stock. Please see "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for more information on our operating history and
results of operations.

We have a history of losses and expect to incur substantial losses in the
future

We incurred net losses of approximately $4.5 million for the nine months
ended September 30, 1999 and $290,000 for the year ended December 31, 1998. We
expect to continue to incur substantial net losses for the foreseeable future
due to a high level of planned operating expenditures. We are making these
expenditures in anticipation of higher revenue, but we cannot assure you that
we will realize higher revenue. If we do not succeed in substantially
increasing our revenue, our losses may continue indefinitely and would likely
increase. In addition, we cannot assure you that we will return to
profitability. Please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for more information on our operating
history and results of operations.

Our quarterly operating results may fluctuate, which may make it difficult to
forecast our future performance and may result in volatility in our stock price

Although we intend to increase our spending and investment to support our
planned growth, our revenue, and some of our costs, will be much less
predictable. This unpredictability will likely result in significant
fluctuations in our quarterly results. Therefore, you should not rely on
quarter-to-quarter comparisons of results of operations as an indication of our
future performance. Because of our limited operating history and the emerging
nature of our industry, we anticipate that securities

9
<PAGE>

analysts may have difficulty in accurately forecasting our results. If our
operating results are below market expectations, the price of our common stock
will likely decline.

The following are among the factors that could cause significant fluctuations
in our operating results:

. market acceptance of the Internet as an advertising medium;

. delay or cancellation of advertising contracts;

. expiration or termination of contracts with Web publishers;

. introduction of new or enhanced services by us or our competitors;

. system outages, delays in obtaining new equipment or problems with
upgrades;

. disruption or impairment of the Internet;

. changes in our pricing policies or those of our competitors;

. seasonality in the demand for advertising;

. changes in government regulation of the Internet; and

. general economic and market conditions, as well as economic and market
conditions specific to the Internet.

If we do not effectively manage our growth and expansion, our business, results
of operations and financial condition could suffer

Our success depends in part on our ability to manage our growth and
expansion. We have grown to 96 full-time and three part-time employees as of
September 30, 1999 from 33 full-time and three part-time employees as of
December 31, 1998. We plan to continue to expand our sales, marketing,
technology and administrative organizations. This anticipated future expansion
may place a significant strain on our managerial, operational and financial
resources. In addition, we will need to continue to improve our financial and
managerial controls, enhance our reporting systems and procedures and expand,
train and manage our work force.

If we are unable to attract and retain sales and client service personnel, or
if we are unable to adequately train our sales personnel in a timely manner,
our business and future revenue growth could suffer

Our future success depends on our ability to identify, recruit, train,
integrate and retain qualified sales and marketing, managerial and technical
personnel. We anticipate the need to hire a significant number of personnel to
achieve our growth objectives. Competition for these personnel is intense. The
inability to attract, integrate and retain the necessary sales, marketing,
technical and administrative personnel could harm our ability to generate
revenue.

If our ad delivery and tracking technology is not effective, our relationships
with our advertising clients may be harmed

Because our adMonitor technology is relatively new, we cannot assure you that
the use of our adMonitor services will remain effective in serving, targeting
and tracking advertisements or other marketing and promotional activities. Our
revenue would be adversely affected if advertisers do not perceive that the use
of our adMonitor services will improve the effectiveness of their marketing
campaigns.

10
<PAGE>

A small number of Web publishers accounts for a substantial percentage of our
advertising revenue and our failure to develop and substain long-term
relationships with Web publishers, or the reduction in traffic of a current Web
publisher in our network could limit our ability to generate revenue

For the nine months ended September 30, 1999, our top five Web publishers
accounted for approximately 40.0% of our revenue, and our top three Web
publishers accounted for approximately 27.6% of our revenue. CarPrices.com
accounted for 11.2% of our revenue.

For the year ended December 31, 1998 our top five Web publishers accounted
for approximately 66.7% of our revenue, and our top three Web publishers
accounted for approximately 57.3% of our revenue. Our contracts with Web
publishers, including these top Web publishers, are generally one year in
duration and can be terminated by either party with as little as 30 days
notice. We cannot assure you that any of our Web publishers will continue their
relationships with us. Additionally, we may lose Web publishers as a result of
acquisitions or as a result of the discontinuation of operations of any of our
Web publishers. For example, Four11, Inc. terminated its contract with us after
it was acquired by Yahoo!. Furthermore, we cannot assure you that we would be
able to replace a departed or acquired Web publisher with another Web publisher
with comparable traffic patterns and demographics, if at all. Therefore, our
failure to develop and sustain long-term relationships with Web publishers or
the reduction in traffic of a current Web publisher in our network could limit
our ability to generate advertising revenue.

A limited number of advertisers accounts for a significant percentage of our
revenue and a loss of one or more of these advertisers could cause our business
to suffer

For the nine months ended September 30, 1999, revenue from our five largest
advertisers accounted for 21.3% of our revenue. No single advertiser accounted
for over 10.0% of our revenue for the nine months ended September 30, 1999 or
for the year ended December 31, 1998. However, our largest advertiser accounted
for 17% of our revenue for the year ended December 31, 1997. Advertisers
typically purchase advertising under short-term purchase order agreements. We
cannot assure you that our top advertisers or our other advertisers will
continue their relationships with us. The loss of one or more of the
advertisers that represent a significant portion of our revenue could cause our
business, results of operations and financial condition to suffer. In addition,
many of our contracts with Web publishers require us to bear the risk of non-
payment of advertising fees from advertisers. Accordingly, the non-payment or
late payment of amounts due to us from a significant advertiser could cause our
financial condition to suffer. For the nine months ended September 30, 1999,
our bad debt expense related to uncollected advertising fees was $128,000.

Since we expect to derive substantially all of our revenue in the foreseeable
future from online advertising, our business may suffer if the Internet is not
increasingly accepted as an effective advertising medium

If the online advertising market does not develop further, or develops more
slowly than expected, we may not generate enough advertising revenue to return
to profitability. Since we expect to derive substantially all of our revenue in
the foreseeable future from online advertising, our future success is highly
dependent on the increased use of the Internet as an advertising medium. Online
advertising is relatively new and rapidly evolving, and its effectiveness,
compared to traditional media, is uncertain. Widespread use of online
advertising depends upon businesses accepting a new way of marketing their
products and services. Businesses may view online advertising as undesirable

11
<PAGE>

or less effective for promoting their products and services relative to
traditional advertising media. In addition, the widespread adoption of
technologies that permit Internet users to block advertisements on Web sites
could inhibit the growth of the Internet as an advertising medium.

Since our business depends in part on market acceptance of electronic commerce,
if electronic commerce does not grow, or grows slower than we expect, our
business may suffer

Our success depends in part on market acceptance of electronic commerce. A
number of factors outside of our control could prevent this acceptance,
including the following:

. the necessary network infrastructure for substantial growth in usage of
the Internet may not develop adequately;

. insufficient availability of telecommunication services or changes in
telecommunication services could result in slower response times; and

. negative publicity and consumer concern surrounding the security of
transactions could impede the growth of electronic commerce.

If electronic commerce does not grow, or grows slower than we expect, due to
any of the above factors, or any other factor, our ability to generate revenue
could suffer.

Failure of our technology and computing systems could harm our business

The continuing and uninterrupted performance of our servers and networking
hardware and software infrastructure is critical to our business. Periodically,
we have experienced minor systems interruptions, including Internet
disruptions, which we believe may occur periodically in the future. Any system
failure that causes interruptions in our ability to service our customers,
including failures that affect our ability to deliver advertisements without
significant delay to the viewer, could reduce customer satisfaction and, if
sustained or repeated, could harm our business. Further, an increase in the
volume of advertising delivered through our servers could strain the capacity
of our hardware and software, which could lead to slower response times or
system failures. If we do not effectively address any capacity constraints,
customer satisfaction could be harmed and our business would likely suffer.

Failure of the Web infrastructure to support the growth of the electronic
marketplace could harm our business

The Internet may not in the future be a viable commercial marketplace because
of inadequate development of the necessary infrastructure, slow development of
complementary products, including high speed modems, delays in the development
or adoption of new standards and protocols required to handle increased levels
of Internet activity or increased government regulation. To the extent that the
Internet continues to experience significant growth in the number of users and
the level of use, we cannot assure you that the Internet infrastructure will
continue to be able to support the demands placed on it by its users. If the
necessary infrastructure or complementary products are not developed, our
business may not grow and would likely suffer.

Our failure to adequately respond to rapid changes in technology and the
Internet could harm our business

The market for online products and services is subject to rapid change and
characterized by evolving industry standards and frequent introductions of new
technological developments. These

12
<PAGE>

new standards and technological developments could make our existing or future
products or services obsolete. Keeping pace with the introduction of new
standards and technological developments could result in significant additional
costs or prove to be difficult or impossible for us. Any failure to keep pace
with the introduction of new standards and technological developments on a
cost-effective basis could result in increased costs and harm our ability to
generate revenue.

Many competitors have substantial competitive advantages that may make it more
difficult for us to retain our existing advertisers and Web publishers and to
attract new advertisers and Web publishers

The markets for online advertising, direct marketing and ad delivery, or ad
serving, and tracking technology are intensely competitive. We compete with
television, radio, cable and print for a share of advertisers' total
advertising budgets. We also compete with large Web publishers and Web search
engine companies, such as America Online, Excite@Home, Infoseek and Yahoo!, for
the online advertising budgets of advertisers. In addition, we compete with
various Internet advertising networks, such as 24/7 Media, DoubleClick and
Flycast Communications. In marketing our adMonitor products and services to Web
publishers and advertisers, we also compete with providers of ad delivery, or
ad serving, technology, database management and related services, including
AdForce, DoubleClick, Engage Technologies and NetGravity. Many of our current
and potential competitors enjoy competitive advantages over us, including
significantly greater financial, technical and marketing resources. They may
also enjoy significantly greater brand recognition and substantially larger
bases of Web site clients and advertisers. As a result, our competitors may be
able to respond more quickly than we can to new or emerging technologies and
changes in client requirements. Our competitors may also have a significantly
greater ability to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, strategic partners, advertisers and Web publishers. Further, we
cannot assure you that our competitors will not develop online products and
services that are equal to or superior to our products and services or that
achieve greater market acceptance than our products and services. If we are
unable to compete successfully against existing or potential competitors, our
revenue and margins may decline. Please see "Business -- Competition" for more
information on our competitors.

Our failure to successfully acquire and integrate new technologies and
businesses could cause our business to suffer

We intend to acquire and make investments in complementary businesses,
products, services or technologies. We cannot assure you that we will be able
to identify suitable acquisition or investment candidates. Even if we do
identify suitable candidates, we cannot assure you that we will be able to make
any potential acquisition or investment on commercially acceptable terms.
Moreover, we may have difficulty integrating any acquired businesses, products,
services or technologies into our operations. These difficulties could disrupt
our business, distract our management and employees and increase our expenses.
In addition, we may incur debt or issue equity securities to fund any future
acquisitions. The issuance of equity securities could be dilutive to existing
stockholders.

If we are unable to safeguard the security and privacy of our information, our
business may suffer

Our technical infrastructure is potentially vulnerable to physical or
electronic computer break-ins, viruses and similar disruptive problems.
Weaknesses or vulnerabilities in the Internet, a user's

13
<PAGE>

personal computer or in our services could compromise the confidential nature
of information transmitted over the Internet. These factors could require us to
devote significant financial and human resources to protect against future
breaches and alleviate or mitigate problems caused by security breaches.
Security breaches could result in financial loss, litigation and other
liabilities, any of which could cause our business, results of operations and
financial condition to suffer.

Government regulation may affect our ability to gather, generate or use
information for profiles and may hinder our ability to conduct business

The legal and regulatory environment governing the Internet and the use of
information about Web users is uncertain and may change. Web sites typically
place small files of information, commonly known as cookies, on a Web user's
hard drive, generally without the user's knowledge or consent. Although it is
possible to modify a Web user's Internet browser software to prevent the
placement of cookies, few users currently choose to do so. Our adMonitor
tracking technology currently uses cookies to collect data about a Web user's
movement through the Internet. Some Internet commentators and privacy advocates
have suggested limiting or eliminating the use of cookies and restricting the
collection of personal data through the use of cookies. United States
legislators in the past have introduced a number of bills aimed at regulating
the collection and use of personal data from Internet users and additional
similar bills are being considered during the current congressional session.
The European Union has recently adopted a directive addressing data privacy
that may result in limitations on the collection and the use of specific
personal information regarding Internet users. In addition, Germany and other
European Union member countries have imposed their own laws protecting data
that can become personally identifiable through subsequent processing. Other
countries have enacted, or are considering, limitations on the use of personal
data as well. The effectiveness of our technology could be impaired by any
limitation in the use of cookies or the collection of personal data, and
consequently, our business, results of operations and financial condition could
be harmed.

A number of laws and regulations have been, and in the future may be, adopted
covering issues such as pricing, acceptable content, taxation and quality of
products and services on the Internet. This legislation could inhibit the
growth in the use of the Internet and decrease the acceptance of the Internet
as a communications and commercial medium. In addition, due to the global
accessibility of the Internet, it is possible that multiple federal, state or
foreign jurisdictions might inconsistently regulate our activities and our
customers. Any of these developments could limit our ability to do business and
to generate revenue.

Any failure by us to protect our intellectual property could harm our business
and competitive position

We generally protect our intellectual property through a combination of
trademark, trade secret and copyright laws, confidentiality agreements with our
employees and third parties, and license agreements with consultants, vendors
and clients. We have filed applications for several trademarks in the United
States. We cannot assure you that any of our trademark applications will be
approved. Even if these applications are approved, the trademarks may be
successfully challenged by others or invalidated. In addition, despite our
efforts to protect our intellectual property, unauthorized parties may attempt
to copy aspects of our services or to obtain and use information that we regard
as proprietary. We may not have adequate remedies for any breach of
confidentiality agreements, and our trade secrets may otherwise become known or
independently developed by competitors. Please see "Business -- Intellectual
Property Rights" for more information on our intellectual property.

14
<PAGE>

DoubleClick was recently awarded a patent on aspects of its ad delivery
technology. The DoubleClick patent may cover technology we use in our
advertising solutions. If we are unable to distinguish our technology from the
technology covered under the DoubleClick patent or if the DoubleClick patent is
not invalidated, we may be limited in our ability to use our technology or may
be required to license the use of technology from DoubleClick. If this
situation were to occur, we cannot assure you that we would be able to enter
into a licensing agreement with DoubleClick on commercially reasonable terms,
if at all. Furthermore, other third parties may have or may in the future be
granted patents that cover our technology. We may be limited in our ability to
use our technology without licenses from these third parties, which may not be
available on commercially reasonable terms, if at all.

We may be liable for content available or posted on the Web sites of our
publishers

We may be liable to third parties for content in the advertising we serve if
the music, artwork, text or other content involved violates the copyright,
trademark or other intellectual property rights of such third parties or if the
content is defamatory. Any claims or counterclaims could be time-consuming,
result in costly litigation or divert management's attention.

Our business may suffer if we lose key employees

Our performance and future success is substantially dependent on the
continued service of our executive officers and other key employees, all of
whom are employed on an at-will basis. In particular, our success depends on
the client relationships, management skills and industry and technical
knowledge of our CEO and president, John C. Bohan, and our chief technology
officer, Frank A. Addante. Given our early stage of development, we are
dependent on our ability to retain and motivate highly qualified personnel,
especially our management, technical and business development executives and
other key employees. The loss of the services of one or more of our executive
officers or other key employees would likely cause our business, results of
operations and financial condition to suffer. Please see "Management" for more
information about our executive officers and key employees.

Potential Year 2000 risks may adversely affect our business

We may have substantial exposure to the Year 2000 problem, both with our own
systems and with systems we do not control. The Year 2000 problem is the result
of many computer systems and software programs having been designed to use two
digits rather than four to define the applicable year. Date-sensitive hardware
and software may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in system failures or miscalculations causing
disruptions of operations.

With respect to our internal systems, we have been working with our
technology personnel during the research and development stage of such systems
and during the ordinary course of our business to identify any exposure to the
Year 2000 problem. Any Year 2000 problem discovered may require us to upgrade
our systems at a substantial cost. We also rely on third party vendors to
provide network services, maintain our databases and support and operate our
systems. All third-party vendors of material hardware or software have provided
statements assuring Year 2000 compliance. However, failures or interruptions of
any of the systems of these third parties because of the Year 2000 problem
could seriously damage our business, results of operations and financial
condition. Furthermore, we cannot assure you that we will be successful in our
efforts to identify and remedy by the end of this year all Year 2000 problems
that may affect our systems.

15
<PAGE>

Our business is dependent upon the availability of our publishers' Web sites.
We have committed significant resources to the process of identifying any
potential Year 2000 problems at the Web sites of our publishers and, to date,
have discovered none. However, we cannot assure you that Year 2000 problems
will not materialize at any of these sites. Moreover, our publishers' Web sites
rely on a wide array of hardware and software, as well as numerous Internet
service providers, in order to reach the Internet and maintain their Web sites.
Failures or interruptions of any of the systems associated with our Web
publishers due to Year 2000 problems could result in temporary, but
significant, damage to our business and reduce our revenue. Please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Impact of the Year 2000" for detailed information on our state of
readiness, costs, potential risks and contingency plans regarding the Year 2000
problem.

The substantial number of shares that will be eligible for sale in the near
future may cause the market price of our common stock to decline

A substantial number of shares of common stock will be available for sale in
the public market following this offering, which could adversely affect the
market price of our common stock. This includes up to 2,145,489 shares of
common stock registered concurrently with this offering which may be offered by
two of our current stockholders, but are subject to at least a 180-day lock-up
from the date of commencement of this offering. See "Shares Eligible for Future
Sale" for a more detailed description of the eligibility of shares of our
common stock for future sale.

We will have broad discretion with respect to the use of proceeds from this
offering and if the proceeds are not applied effectively, our business could
suffer

As of the date of this prospectus, we cannot specify any of the particular
uses of the net proceeds we will receive from this offering. Our management
will have significant flexibility in applying the net proceeds of this
offering. If our management does not apply these funds effectively, our
business, results of operations and financial condition could suffer. Please
see "Use of Proceeds" for more information on the use of proceeds from this
offering.

Our executive officers and directors will exercise significant control over our
company following this offering including the ability to control the election
of our board of directors and the outcome of corporate actions requiring
stockholder approval

Following the offering, we anticipate that our executive officers and
directors, in the aggregate, will beneficially own or control approximately
% of the outstanding shares of common stock and % of the outstanding
shares of common stock if the underwriters' over-allotment option is exercised
in full. Our officers, directors and their affiliates will have the ability to
control the election of our board of directors and the outcome of corporate
actions requiring stockholder approval, including merger and other changes of
corporate control, going private transactions and other extraordinary
transactions and terms thereof. Please see "Principal Stockholders" for
information on beneficial ownership of our common stock by our executive
officers and directors.

We may need additional capital in the future to operate our business and we may
experience difficulty in obtaining this additional capital

We believe that our existing cash and cash equivalents will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures
for at least the next 12 months. We may need

16
<PAGE>

to raise additional funds in the future, which may include the net proceeds
from this offering, to fund our operations, to enhance or expand the range of
products and services we offer or to respond to competitive pressures or
perceived opportunities. We cannot assure you that additional financing will be
available on terms favorable to us, or at all. If adequate funds are not
available or not available when required or on acceptable terms, our business,
results of operations and financial condition may suffer.

We are subject to anti-takeover provisions, which may make it difficult for a
third party to acquire us

We are subject to the anti-takeover provisions of Section 203 of the Delaware
General Corporation Law. In general, the statute prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For purposes of
Section 203, a "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder, and
an "interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years prior, did own, 15% or more of the
corporation's voting stock. Please see "Description of Capital Stock" for
additional information on anti-takeover provisions to which we are subject.

There has been no prior market for our common stock and our stock price may
experience extreme price and volume fluctuations

Prior to this offering, there has been no public market for our common stock.
We cannot assure you that an active trading market will develop or be sustained
or that the market price of our common stock will not decline. Even if an
active trading market does develop, the market price of our of common stock is
likely to be highly volatile and could be subject to wide fluctuations in
response to factors such as:

. actual or anticipated variations in our revenue;

. earnings and cash flow;

. announcements of new service offerings;

. technological innovations;

. competitive developments with respect to patents, copyrights or
proprietary rights;

. changes in financial estimates by securities analysts;

. conditions and trends in the Internet and electronic commerce
industries;

. adoption of new accounting standards affecting our industry; and

. general market conditions.

Further, the stock markets, and in particular the Nasdaq National Market,
have experienced extreme price and volume fluctuations that have affected the
market prices of equity securities of many technology companies and that often
have been unrelated or disproportionate to the operating performance of these
companies. These market fluctuations, as well as general economic, political
and market conditions such as recessions, interest rate changes or
international currency fluctuations, may cause our stock price to fall. In the
past, following periods of volatility in a company's stock price, securities
class action litigation has often been instituted against a company. This
litigation, if instituted, could result in substantial costs and a diversion of
management's attention and resources.

17
<PAGE>

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that are based on our
current expectations, assumptions, estimates and projections about us and our
industry. When used in this prospectus, the words "may," "will," "should,"
"potential," "continue," "expects," "anticipates," "estimates," "intends,"
"plans," "believes" and any similar expressions are intended to identify
forward- looking statements. These forward-looking statements involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of other factors,
as more fully described in the "Risk Factors" section and elsewhere in this
prospectus. You should not place undue reliance on forward-looking statements
because they are inherently uncertain.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of the 6,000,000 shares of
common stock in the offering will be approximately $60.4 million, assuming an
initial public offering price of $11.00 per share and after deducting the
underwriting discounts and commissions and estimated offering expenses. If the
underwriters' over-allotment option is exercised in full, we estimate that our
net proceeds will be approximately $69.6 million.

The principal purposes of this offering are to increase our working capital,
to create a public market for our common stock, to facilitate our future access
to the public capital markets, and to increase our visibility in the retail
marketplace. The net proceeds will be used for general corporate purposes,
working capital and to fund operating losses. We cannot specify with certainty
the particular uses for the net proceeds. The amounts and timing of our actual
expenditures will depend on numerous factors, including the status of our
technology development efforts, sales and marketing activities, the amount of
cash generated or used by our operations and competition. We may find it
necessary or advisable to use portions of the proceeds for other purposes, and
we will have broad discretion in the application of the net proceeds. We have
no current intentions to acquire any businesses, products, services or
technologies. Pending these uses, the proceeds will be invested in short-term,
investment grade, interest-bearing securities.

DIVIDEND POLICY

Other than a total of $50,000 that we distributed to our common stockholders
during the year ended December 31, 1998, we have not declared or paid cash
dividends on our common stock since our incorporation. Holders of our Series A
preferred stock are entitled to receive cumulative dividends that accrue at an
annual rate of $40.00 per share. Holders of our Series B preferred stock are
entitled to receive cumulative dividends that accrue at an annual rate of $0.14
per share. Holders of Series C preferred stock are entitled to receive
cumulative dividends that accrue at an annual rate of $0.18 per share. These
dividends are expected to be paid in cash at the closing of this offering upon
conversion of the Series A, Series B, and Series C preferred stock into common
stock. The aggregate amount of these dividend payments is expected to be
approximately $400,000. We otherwise currently intend to retain any future
earnings for use in our business and do not anticipate paying any additional
cash dividends in the foreseeable future.

18
<PAGE>

CAPITALIZATION

The following table presents our capitalization as of September 30, 1999:

. on an actual basis, after giving effect to a 2-for-3 reverse stock split
to be effected immediately prior to the consummation of this offering;

. on a pro forma basis to give effect to:

. the automatic conversion upon the closing of this offering of all
outstanding shares of preferred stock into 5,276,156 shares of
common stock;

. the issuance upon the closing of this offering of an aggregate of
1,109,247 shares of our common stock upon the cashless exercise of
warrants at a weighted average exercise price of $4.84 per share;
and

. on a pro forma as adjusted basis to give effect to the sale of, and the
application of the net proceeds from, 6,000,000 shares of common stock
in this offering, assuming an initial public offering price of $11.00
per share.

This information should be read in conjunction with our financial statements
and the notes relating to these statements appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
September 30, 1999
-----------------------------
Pro Pro Forma
Actual Forma As Adjusted
------- ------- -----------
(in thousands, except per
share data)
<S> <C> <C> <C>
Long-term capital lease obligations, net of
current portion................................ $ 286 $ 286 $ 286

Stockholders' equity:
Preferred stock, $0.001 par value; 15,000,000
shares authorized:
Series A preferred stock; 2,000 shares
authorized; 2,000 shares issued and
outstanding on an actual basis; 2,000 shares
issued and none outstanding on a pro forma
basis; and no shares issued or outstanding on
a pro forma as adjusted basis................ 2,077 -- --
Series B preferred stock; 5,000,000 shares
authorized; 4,107,044 shares issued and
outstanding on an actual basis; 4,107,044
shares issued and none outstanding on a pro
forma basis; and no shares issued or
outstanding on a pro forma as adjusted
basis........................................ 9,353 -- --
Series C preferred stock; 3,000,000 shares
authorized; 1,307,190 shares issued and
outstanding on an actual basis; 1,307,190
shares issued and none outstanding on a pro
forma basis; and no shares issued or
outstanding on a pro forma as adjusted
basis........................................ 4,575 -- --
Common stock, $0.001 par value; 53,333,333
shares authorized; 6,693,333 shares issued and
outstanding on an actual basis;
13,079,057 shares issued and outstanding on a
pro forma basis; and 19,079,057 shares issued
and outstanding on a pro forma as adjusted
basis.......................................... 7 13 19
Additional paid-in capital...................... 182 16,181 76,555
Notes receivable for common stock............... (44) (44) (44)
Accumulated deficit............................. (5,638) (5,638) (5,638)
------- ------- -------
Total stockholders' equity...................... 10,512 10,512 70,892
------- ------- -------
Total capitalization............................ $10,798 $10,798 $71,178
======= ======= =======
</TABLE>

The foregoing table assumes no exercise of any stock options or warrants
outstanding as of September 30, 1999, except the pro forma data, which assume
the cashless exercise of warrants to acquire 1,109,247 shares of common stock.
As of September 30, 1999, there were options and warrants outstanding to
purchase a total of 4,667,617 shares of common stock with a weighted average
exercise price of $3.52 per share.

19
<PAGE>

DILUTION

Our pro forma net tangible book value as of September 30, 1999, after giving
effect, upon the closing of this offering, to:

. the automatic conversion of all outstanding shares of preferred stock
into common stock; and

. the cashless exercise of warrants to acquire 1,109,247 shares of common
stock

was $10,512,406, or $0.80 per share of common stock.

Pro forma net tangible book value per share is equal to the amount of our
total tangible assets, reduced by the amount of our total liabilities, divided
by 13,078,736 shares of common stock outstanding, on a pro forma basis, as of
September 30, 1999. Assuming the sale of the 6,000,000 shares offered hereby at
an initial public offering price of $11.00 per share, and after deducting the
underwriting discounts and commissions and estimated offering expenses, and the
application of the estimated net proceeds therefrom, our pro forma net tangible
book value as of September 30, 1999 would have been $70,892,406 or $5.42 per
share of common stock. This represents an immediate increase in pro forma net
tangible book value of $4.62 per share to existing stockholders and an
immediate dilution in pro forma net tangible book value of $5.58 per share to
new investors. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............... $11.00
Pro forma net tangible book value per share as of September
30, 1999................................................... $0.80
Pro forma increase attributable to new investors............ 4.62
-----

Pro forma net tangible book value per share after the
offering..................................................... 5.42
------

Pro forma dilution per share to new investors................. $ 5.58
======
</TABLE>

The following table summarizes the total number of shares of common stock
purchased from us, the total consideration paid to us and the average price per
share paid by existing stockholders and by new investors before deduction of
estimated discounts and commissions and estimated offering expenses payable by
us, on a pro forma basis as of September 30, 1999, after giving effect to:

. the automatic conversion of all outstanding shares of preferred stock
into common stock; and

. the cashless exercise of warrants to acquire 1,109,247 shares of common
stock.

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price Per
Number Percent Amount Percent Share
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 13,078,736 69% $15,064,920 19% $ 1.15
New investors.................. 6,000,000 31 66,000,000 81 11.00
---------- --- ----------- ---
Total........................ 19,078,736 100% $81,064,920 100%
========== === =========== ===
</TABLE>

The foregoing tables assume no exercise of any stock options or warrants
outstanding as of September 30, 1999, except the pro forma data, which assume
the cashless exercise of warrants to acquire 1,109,247 shares of common stock.
After the closing of this offering, no shares of preferred stock will be issued
or outstanding. There will be 19,078,736 shares of common stock outstanding
after the offering. As of September 30, 1999, there were options and warrants
outstanding to purchase a total of 4,667,617 shares of common stock with a
weighted average exercise price of $3.52 per share.

20
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the
Financial Statements and related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this prospectus. The statement of operations data for the period from
inception through the year ended December 31, 1997 and the year ended December
31, 1998 and the balance sheet data as of September 30, 1999 are derived from
our Financial Statements that are included elsewhere in this prospectus.

<TABLE>
<CAPTION>
Period from
Inception Nine Months Ended
(January 5, 1997) September 30,
through Year Ended -------------------
December 31, 1997 December 31, 1998 1998 1999
----------------- ------------------- ----------- -------
(unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue................. $1,160 $2,189 $1,465 $ 3,973

Operating expenses:

Cost of revenue....... -- -- -- 1,335
Sales and marketing... 550 1,362 875 2,988
Research and
development.......... -- 138 61 1,405
General and
administrative....... 303 995 578 2,707
------ ------ ------ -------
Total operating
expenses............... 853 2,495 1,514 8,435
------ ------ ------ -------
Operating income
(loss)................. 307 (306) (49) (4,462)
Interest income
(expense), net......... 3 17 7 (52)
------ ------ ------ -------
Net income (loss) before
provision for income
taxes.................. 310 (289) (42) (4,514)
Provision for income
taxes.................. -- 1 -- --
------ ------ ------ -------
Net income (loss)....... $ 310 $ (290) $ (42) $(4,514)
====== ====== ====== =======
Cumulative dividends on
participating preferred
stock.................. -- (23) -- (1,244)
------ ------ ------ -------
Net income (loss)
attributable to common
stockholders........... $ 310 $ (313) $ (42) $(5,758)
====== ====== ====== =======
Pro forma basic and
diluted net loss
per share(2)........... $(0.04) $ (0.44)
====== =======
Weighted average shares
outstanding used in pro
forma basic and diluted
per share
calculation(2)......... 8,333 13,052
====== =======
Supplemental Data:
System revenue(1)....... $4,210 $8,024 $5,440 $ 9,232
====== ====== ====== =======
</TABLE>

<TABLE>
<CAPTION>
December 31, December 31, September 30,
1997 1998 1999
------------ -------------- -------------
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents............. $235 $2,112 $11,556
Working capital....................... 470 1,996 10,082
Total assets.......................... 970 3,936 15,611
Convertible preferred stock........... -- 2,000 16,006
Total stockholders' equity............ 495 2,133 10,512
</TABLE>
- --------

(2) The foregoing table assumes no exercise of any stock options or warrants
outstanding as of September 30, 1999, except the pro forma data, which
assume the cashless exercise of warrants to acquire 1,109,247 shares of
common stock. As of September 30, 1999, there were options and warrants
outstanding to purchase a total of 4,667,617 shares of common stock with a
weighted average exercise price of $3.52 per share.

21
<PAGE>

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

You should read the following discussion of our financial condition and
results of operations together with the financial statements and the notes to
financial statements included elsewhere in this prospectus. This discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those anticipated in
these forward-looking statements.

Overview

We are a leading provider of comprehensive online advertising and direct
marketing solutions for advertisers and Web publishers. Since inception,
substantially all of our revenue has been derived from online advertising
sales, and we expect this to continue for the foreseeable future. We offer
advertisements primarily priced on a cost per thousand ad impressions, or CPM,
basis. We also offer direct marketing programs which may be priced on a cost
per action basis, such as cost for each new user registration. In January 1999,
we began to charge our customers for the use of our adMonitor technology. For
the nine months ended September 30, 1999, online advertising sales accounted
for 97.3% of our revenue, and fees generated by our adMonitor technology
accounted for 2.7% of our revenue.

Revenue from ad sales is earned under commission-based and service fee-based
contracts. For commission-based contracts, we receive commissions from Web
publishers for the sale of their ad inventory. Revenue earned from commission-
based contracts reflects only the amount of the commission earned without any
associated cost of revenue. We recognize commissions ratably over the term of
an advertising campaign, which typically ranges from one to twelve months. For
service fee-based contracts, we purchase advertising space, or ad inventory,
from Web publishers and are obligated to pay a service fee to Web publishers
for ads placed on their Web sites. Additionally, under service fee-based
contracts, we bear the risk of loss from the non-collection of fees payable by
advertisers for ads sold. Consequently, revenue earned from service fee-based
contracts reflects the full value of the ads sold. System revenue represents
the full value of gross billings for ads sold under either commission-based
contracts or service fee-based contracts.

In the second quarter of 1999, we began the process of amending many of our
commission-based contracts with Web publishers to provide that we will sell
their ad inventory on a best efforts basis to our advertising clients and remit
to Web publishers, as a service fee, a percentage of the resulting advertising
revenue. We are attempting to amend almost all of our existing commission-based
contracts with Web publishers to convert these contracts into service fee-based
contracts. So long as we have both commission-based and service fee-based
contracts, revenue will include a mix of commissions received under our
commission-based contracts and total billings to our advertising clients under
our service fee-based contracts. For the foreseeable future, we do not expect
to completely convert all of our contracts into service fee-based contracts. As
our amended contracts are phased in, we expect that revenue will increase
disproportionately from prior periods as a result of the recognition of total
billings to our advertising clients as revenue.

The financial statements included elsewhere in this prospectus include
references to system revenue. We believe system revenue provides a consistent
basis for reporting revenue from period to period, regardless of the change in
contract type, as discussed above. System revenue represents the full value of
gross billings for ads sold under either commission-based contracts or service
fee-based

22
<PAGE>

contracts. We believe that period to period comparisons of operating results
are not always meaningful and that the results for any period should not be
relied upon as an indication of future performance. For the nine months ended
September 30, 1999, service fee-based contracts accounted for 62.3% of our
revenue, and commission based contracts accounted for 37.7% of our revenue. For
the year ended December 31, 1998, commission-based contracts accounted for 100%
of our revenue.

We expect that revenue generated from the delivery of advertisements on our
network of Web sites will continue to account for a substantial portion of our
revenue for the foreseeable future. Our five largest advertising customers
accounted for 21.3% of revenue for the nine months ended September 30, 1999,
25.5% of revenue for the year ended December 31, 1998 and 30.0% for the period
ended December 31, 1997. Our largest advertising customer accounted for less
than 10.0% of revenue for the nine months ended September 30, 1999, less than
10.0% for the year ended December 31, 1998 and 17.0% for the period ended
December 31, 1997.

We typically enter into one-year contracts with the Web publishers in our
network. Web publishers do not pay a fee to join our network. These agreements
usually may be terminated by either party by giving 30 to 120 days prior
written notice. Additionally, these agreements are usually automatically
renewable for successive one-year terms. Ads delivered on the top five Web
sites in our network accounted for 40.0% of our revenue for the nine months
ended September 30, 1999, 66.7% of our revenue for the year ended December 31,
1998 and 74.5% for the period ended December 31, 1997.

Cost of revenue includes service fees paid to our Web publishers under our
service fee-based contracts and Internet connectivity and bandwidth costs
associated with ad serving. We expect cost of revenue to increase on an
absolute dollar basis in future periods as we increase the number of our Web
publishing clients and as more of the contracts with these Web publishers
become service fee-based.

Results of Operations

Nine Months Ended September 30, 1999 and 1998

Revenue. Revenue increased 171% to $4.0 million for the nine months ended
September 30, 1999 from $1.5 million for the nine months ended September 30,
1998. This was primarily a result of a $2.4 million increase due to the number
of advertising customers and the number of ads delivered increasing over time,
a $1.3 million increase due to our adoption of service fee-based contracts and
$253,000 for the initiation of our charging service fees to customers for the
use of adMonitor.

System Revenue. System revenue represents the full value of gross billings
for ads sold under either commission-based contracts or service fee-based
contracts. Although system revenue is not recognized under generally accepted
accounting principles, we believe that system revenue is a standard measure of
advertising volume for the Internet advertising industry that enables a
meaningful comparison of activity from period to period and from one company to
another. System revenue increased 69.7% to $9.2 million for the nine months
ended September 30, 1999 from $5.4 million for the nine months ended September
30, 1998. This was due to an increase in the number of advertising customers,
an increase in the number of ads delivered and the initiation of our charging
service fees to customers for the use of adMonitor.

23
<PAGE>

Cost of Revenue. Cost of revenue was $1.3 million for the nine months ended
September 30, 1999. During the nine months ended September 30, 1998, all
revenue was derived solely from advertising sales commissions with no related
service fees to customers for the use of adMonitor, or associated cost of
revenue.

Sales and Marketing. Sales and marketing expenses include salaries,
commissions, travel, advertising, trade show costs and marketing materials
expense. Sales and marketing expenses were $3.0 million, or 75.2% of revenue,
for the nine months ended September 30, 1999, and $875,000, or 59.7% of
revenue, for the nine months ended September 30, 1998. This increase was
primarily due to an increase in the number of sales and marketing personnel.
Our sales and marketing organization has grown to 65 employees as of September
30, 1999 from six employees as of January 1, 1998. We expect sales and
marketing expenses to increase on an absolute dollar basis in future periods as
we hire additional personnel in sales and marketing, expand into new markets
and continue to promote our advertising solutions.

Research and Development. Research and development expenses consist primarily
of compensation, consulting expenses and expenses for hardware, software and
materials associated with the development and improvement of our adMonitor
technology. To date, all research and development costs have been expensed as
incurred. Research and development expenses were $1.4 million, or 35.4% of
revenue, for the nine months ended September 30, 1999, and $61,000, or 4.2% of
revenue, for the nine months ended September 30, 1998. This increase was due
primarily to an increase in expenses associated with the deployment and
enhancement of our adMonitor technology. We expect research and development
expenses to increase significantly on an absolute dollar basis in future
periods.

General and Administrative. General and administrative expenses consist
primarily of compensation and professional service fees. General and
administrative expenses were $2.7 million, or 68.1% of revenue, for the nine
months ended September 30, 1999, and $578,000, or 39.5% of revenue, for the
nine months ended September 30, 1998. This increase was primarily a result of a
$617,000 increase in personnel expenses, a $385,000 increase in professional
service fees and a $676,000 increase in facility expenses necessary to support
our growth. We expect general and administrative expenses to increase on an
absolute dollar basis as we hire additional personnel and incur additional
costs related to the growth of our business and our operation as a public
company.

Interest Income (Expense), Net. Interest income (expense), net primarily
consists of interest earned on cash balances, offset by interest expense
incurred with respect to our capital leases and equipment financing
obligations. Net interest expense was $51,000 for the nine months ended
September 30, 1999. Net interest income was $7,000 for the nine months ended
September 30, 1998.

Year Ended December 31, 1998 and the Period Ended December 31, 1997

Revenue. Revenue increased 88.8%, to $2.2 million for the year ended December
31, 1998 from $1.2 million for the period ended December 31, 1997. This
increase was mainly attributable to an increase in the number of advertisers
using our solutions, as well as the number of ads delivered.

24
<PAGE>

standard measure of advertising volume for the Internet advertising industry
that enables a meaningful comparison of activity from period to period and from
one company to another. System revenue increased 90.6% to $8.0 million for the
year ended December 31, 1998 from $4.2 million for the period ended December
31, 1997. This was mainly attributable to an increase in the number of
advertisers using our solutions, as well as the number of ads delivered.

Cost of Revenue. During both periods, all revenue was derived solely from
advertising sales commissions and there was no associated cost of revenue.

Sales and Marketing. Sales and marketing expenses were $1.4 million, or 62.2%
of revenue, for the year ended December 31, 1998, and $550,000, or 47.4% of
revenue, for the period ended December 31, 1997. This increase was primarily
due to an increase in the number of sales and marketing personnel.

Research and Development. Research and development expenses were $138,000, or
6.3% of revenue, for the year ended December 31, 1998. Research and development
expenses consisted primarily of expenses associated with the development and
deployment of our adMonitor technology. There were no research and development
expenses for the period ended December 31, 1997.

General and Administrative. General and administrative expenses were
$995,000, or 45.5% of revenue, for the year ended December 31, 1998, and
$303,000, or 26.1% of revenue, for the period ended December 31, 1997. The
increase was primarily a result of a $144,000 increase in personnel expenses, a
$176,000 increase in professional service fees and a $234,000 increase in
facility expenses necessary to support our growth.

Interest Income (Expense), Net. Net interest income was $17,000 for the year
ended December 31, 1998, and $3,000 for the period ended December 31, 1997.

25
<PAGE>

Quarterly Results of Operations

The following tables set forth unaudited quarterly statement of operations
data for the quarters ended September 30, 1999 in dollars and as a percentage
of revenue and system revenue. In the opinion of management, this information
has been prepared on the same basis as the audited financial statements
appearing elsewhere in this prospectus, and all necessary adjustments,
consisting only of normal recurring adjustments, have been included in the
amounts stated below to present fairly the unaudited quarterly results of
operations. The quarterly data should be read in conjunction with our audited
financial statements and the notes to the financial statements appearing
elsewhere in this prospectus.

<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30,
1998 1998 1998 1998 1999 1999 1999
-------- -------- --------- -------- -------- -------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue................. $ 404 $ 516 $ 545 $ 724 $ 753 $ 1,168 $ 2,052

Operating expenses:
Cost of revenue....... -- -- -- -- 2 307 1,027
Sales and marketing... 313 239 322 487 803 1,003 1,182
Research and
development.......... 7 20 34 77 139 252 1,013
General and
administrative....... 116 187 275 417 528 812 1,368
------ ------ ------ ------ ------ ------- -------
Total operating
expenses............... 436 446 631 981 1,472 2,374 4,590
------ ------ ------ ------ ------ ------- -------
Operating income
(loss)................. (32) 70 (86) (257) (719) (1,206) (2,538)
Interest income
(expense), net......... 3 -- 3 10 11 (16) (47)
------ ------ ------ ------ ------ ------- -------
Income (loss) before
provision for income
taxes.................. (29) 70 (83) (247) (708) (1,222) (2,585)
Provision for income
taxes.................. -- -- -- 1 -- -- --
------ ------ ------ ------ ------ ------- -------
Net income (loss)....... $ (29) $ 70 $ (83) $ (248) $ (708) $(1,222) $(2,585)
====== ====== ====== ====== ====== ======= =======
Supplemental Data:
System revenue (1)...... $1,466 $1,910 $2,064 $2,583 $2,529 $ 3,101 $ 3,602
====== ====== ====== ====== ====== ======= =======
</TABLE>
- --------

Our system revenue increased during each quarter of 1998. Quarterly system
revenue increased 30.3% from the first to second quarter, 8.1% from the second
to third quarter and 25.2% from the third to fourth quarter of 1998. Quarterly
system revenue decreased 2.1% from the fourth quarter of 1998 to the first
quarter of 1999 due to seasonal factors. Quarterly system revenue increased
22.6% from the first quarter to the second quarter of 1999 and 16.1% from the
second to third quarter of 1999. Quarterly growth was due to increases in the
number of advertisers and the number of ads delivered.

26
<PAGE>

<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30,
1998 1998 1998 1998 1999 1999 1999
-------- -------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
As a Percentage of
Revenue:
Revenue................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Operating expenses:

Cost of revenue....... -- -- -- -- 0.3 26.3 50.0

Sales and marketing... 77.5 46.5 59.1 67.2 106.6 85.9 57.6
Research and
development.......... 1.7 3.9 6.3 10.7 18.5 21.6 49.4
General and
administrative....... 28.7 36.2 50.5 57.7 70.1 69.5 66.7
----- ----- ----- ----- ----- ------ ------
Total operating
expenses............... 107.9 86.6 115.9 135.6 195.5 203.3 223.7
----- ----- ----- ----- ----- ------ ------
Operating loss.......... (7.9) 13.4 (15.9) (35.6) (95.5) (103.3) (123.7)
Interest income
(expense), net......... 0.7 0.1 0.6 1.5 1.4 (1.3) (2.2)
----- ----- ----- ----- ----- ------ ------
Income (loss) before
provision for income
taxes.................. (7.2) 13.5 (15.3) (34.1) (94.1) (104.6) (125.9)
Provision for income
taxes.................. -- -- -- -- -- -- --
----- ----- ----- ----- ----- ------ ------
Net income (loss)....... (7.2)% 13.5% (15.3)% (34.1)% (94.1)% (104.6)% (125.9)%
===== ===== ===== ===== ===== ====== ======
</TABLE>

Our revenue increased during each of the last seven quarters. In 1998,
quarterly revenue increased 27.7% from the first to second quarter, 5.6% from
the second to the third quarter and 32.8% from the third to the fourth quarter.
In 1999, quarterly revenue increased 55.1% from the first to the second quarter
and 75.7% from the second to the third quarter. Quarterly revenue growth was
due to increases in the number of advertising clients, the number of ads
delivered and adMonitor service fees.

Increases in total operating expenses were due primarily to the addition of
sales, technical and administrative personnel needed to sustain our growth and
further develop our infrastructure.

Our revenue has historically been, and we expect it to continue to be,
subject to seasonal fluctuations because advertisers generally place fewer
advertisements during the first calendar quarter of each year. Additionally,
expenditures by advertisers tend to be cyclical, reflecting overall economic
conditions, as well as budgeting and buying patterns.

27
<PAGE>

Liquidity and Capital Resources

From our inception through September 1998, we financed our operations
primarily through internally generated cash flow. In September 1998, we
completed a private placement of equity securities to an individual investor
and received $1.9 million in net proceeds. In September 1999, we completed two
private placements of equity securities and received $12.9 million in net
proceeds. The net proceeds from these private placements are being used to
expand our business operations, to hire additional personnel, to provide
additional services and for general corporate purposes related to the expansion
of our business.

Net cash used by operating activities was $3.2 million for the nine months
ended September 30, 1999. Net cash provided by operating activities was $1,000
for the year ended December 31, 1998 and $259,000 for the period ended December
31, 1997. Cash used in operating activities for the nine months ended September
30, 1999 resulted from a net loss of $4.5 million, as well as a $1.3 million
increase in accounts receivable and a $576,000 increase in prepaids and other
current assets partially offset by a $1.9 million increase in accounts payable
and a $1.1 million increase in accrued expenses. Cash provided by operating
activities for the year ended December 31, 1998 resulted from a $834,000
increase in accounts payable and a $200,000 increase in accrued liabilities,
partially offset by a $290,000 net loss and a $626,000 increase in accounts
receivable. Cash provided by operating activities for the period ended December
31, 1997 resulted from $310,000 in net income and a $327,000 increase in
accounts payable and a $100,000 increase in accrued liabilities, partially
offset

28
<PAGE>

by a $490,000 increase in accounts receivable. The increases in both accounts
receivable and accounts payable include amounts invoiced on behalf of Web
publishers for which the Company has no credit exposure.

Net cash used in investing activities was $530,000 for the nine months ended
September 30, 1999, $323,000 for the year ended December 31, 1998 and $19,000
for the period ended December 31, 1997. Cash used in investing activities was
primarily related to purchases of property and equipment.

Net cash provided by financing activities was $13.2 million for the nine
months ended September 30, 1999 and $2.2 million for the year ended December
31, 1998. Net cash used by financing activities was $5,000 for the period ended
December 31, 1997, resulting from a withdrawal of capital. Cash provided by
financing activities for the nine months ended September 30, 1999 resulted
primarily from the proceeds from our private placement of equity securities.
Cash provided by financing activities for the year ended December 31, 1998
resulted primarily from the sale of Series A preferred stock, partially offset
by distributions to stockholders.

Although we do not have any material commitments for capital expenditures, we
anticipate that we will experience a substantial increase in our capital
expenditures consistent with our anticipated growth in operations,
infrastructure and personnel. We currently anticipate that we will continue to
experience significant growth in operating expenses for the foreseeable future.
We believe that our existing cash and cash equivalents will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures
for at least the next 12 months.

Impact of the Year 2000

Our business could be significantly harmed if the systems on which we are
dependent to conduct our operations are not Year 2000 compliant. The Year 2000
problem is the result of many computer systems and programs having been
designed to use two digits rather than four to define the applicable year.
Date-sensitive hardware and software may recognize a date using "00" as the
year 1900 rather than the year 2000.

State of Readiness

Because we believe our internal information systems are Year 2000 compliant,
we have not engaged any third parties to independently verify our readiness
with respect to the Year 2000 problem. We have conducted our own initial
assessment of Year 2000 compliance for both our information and non-information
technology. Based on our initial assessment, we believe all non-information
technology, including security and phone systems, upon which we are materially
dependent, is Year 2000 compliant. We have evaluated our internally developed
software, including our adMonitor technology, during its research and
development process and during the ordinary course of our business. Although we
have not discovered any material Year 2000 problems with our internal
information technology to date, we may in the future.

We believe that the third party hardware and software that we use is Year
2000 compliant. Prior to the purchase of third party hardware or software, we
typically seek assurance from the vendor that the hardware or software is Year
2000 compliant. We also typically test the hardware or software for Year 2000
compliance upon its installation. Moreover, our hardware and software is
subject to evaluation during the operation of our business. We cannot assure
you, however, that we will not experience unanticipated negative consequences,
including material costs caused by undetected errors or defects in the
technology used in our internal systems.

29
<PAGE>

We do not currently have complete information concerning the Year 2000
compliance status of our advertising or Web publishing clients. We have begun
contacting most of these clients to review their Year 2000 compliance efforts
and the potential effects of the Year 2000 problem on their systems and to
gauge their Year 2000 compliance. To date, we have not discovered any problems
with our advertising and Web publishing clients that could harm our business.
However, we cannot assure you that we will be successful in collecting
information from the remainder of our advertising and Web publishing clients,
nor can we assure you that all of them have adequately addressed the Year 2000
problem.

Costs

We expect to resolve any Year 2000 compliance problems that arise primarily
through normal upgrades or, when necessary, through replacement of existing
software with Year 2000 compliant products. We do not anticipate the costs of
these upgrades and replacements to exceed $100,000. To date, we have not
incurred any material expenditures in connection with our Year 2000 compliance
efforts. However, if we discover any Year 2000 issue, the costs of remediating
the problem could be higher than we anticipated and could harm our business,
results of operations and financial condition.

Risks

We are not currently aware of any significant Year 2000 compliance problems
relating to our software, our information technology systems or our other
systems that would materially harm our business, results of operations or
financial condition. During our ongoing assessment, we may discover Year 2000
compliance problems in our proprietary software that may require substantial
repair or replacement which could cause our business to suffer. Moreover,
software or hardware failures of products supplied to us by third party
vendors, or interruptions or failures in service provided to us by third party
vendors due to the Year 2000 problem, could cause significant harm to our
business. We also depend on the uninterrupted availability of the Internet
infrastructure to conduct our ad serving and tracking business. Furthermore, we
depend on the continued operations of our Web publishers. Year 2000 problems
affecting the Internet or our Web publishers could result in significant harm
to our business, results of operations and financial condition.

Contingency Plans

Failures in infrastructure, such as widespread Internet or electric utility
grid failure, are contingencies against which we cannot guard and which could
cause significant damage to our business for as long as they persisted. Plans
are in place to mitigate, to the extent reasonably possible, any failures in
our adMonitor technology should any arise. These plans include the immediate
replacement or repair of any software components found to be in a failure mode.
This will be carried out by our technical staff with the support of relevant
outside vendors.

30
<PAGE>

BUSINESS

Overview

We are a leading provider of Internet-based advertising and direct marketing
solutions for advertisers and Web publishers. We design and implement
advertising campaigns for our advertising clients and strategically place their
ads on our network of Web sites. We provide our Web publishing clients with a
fully-outsourced solution which includes the sale of advertising space on their
Web sites as well as the technology required to deliver advertisements.

Our advertising clients want Web users to take action such as visiting their
Web sites or making an online purchase when they view advertisements. Our Web
publishing clients seek to improve the sale of advertising space, or ad
inventory, on their Web sites. Our design and development teams help our
clients meet their objectives by creating advertising campaigns that
incorporate sponsorships. Sponsorships are advertisements that employ advanced
marketing techniques such as integrating advertisements into the text or
graphical content of a Web page and contain features such as audio and video,
co-branding between the advertiser and the Web site publisher, and
interstitials, which are advertisements contained in separate Web browser
windows that open up within a client's Web site. In contrast, traditional
banner advertisements are typically found at the top of a Web page and
frequently contain content that is unrelated to that of the Web page. Because
our sponsorship-focused solutions are specifically designed to promote
interactivity between the Web user and our advertisers, we believe that our
advertising campaigns are more effective than traditional banner advertisements
in attracting a Web user's attention and encouraging action.

In addition, we have developed adMonitor, our ad serving and tracking
technology that is used to deliver advertisements to our network of Web site
publishers. adMonitor enables our advertising and Web publishing clients to
implement sophisticated advertising campaigns quickly and to selectively target
ads to Web users based on specific interests or characteristics. adMonitor also
enables our clients to measure and manage the effectiveness of their ad
campaigns.

We represent a network of select Web publishers featuring sites with strong
online brand awareness and innovative content such as Alloy online, BigYellow,
Hollywood.com and Liquid Audio. Over 450 advertisers including Chevrolet,
iVillage, Microsoft, Netscape, Procter & Gamble and Visa have utilized our
solutions. No advertising client represents over 10% of our revenue.

Industry Background

Emergence of the Internet as an Advertising and Direct Marketing Medium

The Internet has rapidly emerged as an important medium for facilitating
communication, disseminating information and conducting commerce. International
Data Corporation estimates that the number of worldwide Internet users exceeded
142 million in 1998 and will grow to approximately 502 million by 2003.
International Data Corporation also estimates that worldwide commerce over the
Internet will grow from approximately $50.4 billion in 1998 to approximately
$1.3 trillion by 2003.

31
<PAGE>

As the Internet has grown, advertisers have devoted increasing portions of
their advertising and marketing budgets to online advertising and direct
marketing. Forrester Research estimates that worldwide Internet advertising
spending will grow from approximately $3.3 billion in 1999 to approximately
$24.1 billion in 2003. Moreover, worldwide expenditures for online direct
marketing, as estimated by the Direct Marketing Association, will grow from
approximately $603 million in 1998 to approximately $5.3 billion in 2003.

Advantages of Online Advertising and Direct Marketing Over Traditional Media

Unlike traditional broadcast media, the Internet allows advertisers to
selectively target advertisements to individual consumers based upon their
specific interests and characteristics. The interactivity of the Internet also
enables advertisers and marketers to reach the consumer at the point of sale
and to receive immediate feedback on their ad campaigns. Moreover, the Internet
provides advertisers with the ability to monitor and measure the effectiveness
of their campaigns and track the resulting transactions. This timely feedback
enables advertisers to continually optimize ad campaigns and increase their
returns on advertising spending. We believe that online advertising and direct
marketing campaigns generally are more cost effective and easier to develop and
implement than advertising and direct marketing campaigns in traditional media.

32
<PAGE>

Progression of Online Advertising and Marketing

Early online advertising was generally limited to placing banner
advertisements on highly trafficked, individual Web sites with the intent of
maximizing reach. As online advertising evolved, advertisers began to run
banners across categories of Web sites, such as sports or technology, to reach
consumers in general interest groups. Currently, advertisers are looking to use
more powerful targeting techniques and technology to direct ads to individual
users based on specific characteristics derived from their demographic and
behavioral data. Further, advertisers are increasingly demanding effective
advertising campaigns that go beyond traditional banner ads and incorporate
enhanced features such as sponsorships, co-branding, content integration and
rich media, as well as direct marketing techniques. eStats estimates that
sponsorships will grow from approximately 40% of total online advertising in
1998 to approximately 58% in 2001. Additionally, the response rates achieved by
advertising campaigns incorporating rich media, as measured by the number of
users clicking through to the Web site promoted by an advertisement, commonly
known as the click-through rate, are significantly higher than response rates
achieved by simple banner advertisements. These developments in online
advertising and marketing have led to increased differentiation in the pricing
of online advertising. We believe that online advertisers increasingly will pay
higher prices for more effective campaigns.

[Bar chart entitled Percent of Online Advertising Dollars, by Ad Format]

<TABLE>
<CAPTION>
1998 1999 2000 2001
---- ---- ---- ----
<S> <C> <C> <C> <C>
Banners................... 52% 46% 37% 26%
Sponsorships.............. 40% 45% 52% 58%
Other..................... 5% 5% 6% 10%
</TABLE>

Source: eAdvertising Report, Vol. I, April 1999, published by eMarketer.

Challenges for Online Advertisers

Online advertisers seek to continually enhance the effectiveness of their
advertising campaigns. They face several significant challenges, including:

. Complicated Media Buy. Low barriers to entry and easy-to-use Web site
authoring software have resulted in a proliferation of Web sites and Web
pages. eStats estimates that the number of Web sites in the United
States has grown to 3.6 million in 1999. As a result, advertisers are
faced with an increasingly complex and fragmented environment in which
to construct, purchase and implement their advertising campaigns.

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<PAGE>

. Lack of Technical and Creative Expertise. Advertisers are increasingly
seeking solutions that enable them to achieve their goals by integrating
sponsorships such as rich media and other marketing techniques into
their online advertising campaigns. Implementing online solutions
requires higher levels of technical and creative expertise.

. Engaging the Online User. Because Web users exercise control over their
online experience, online advertisers face greater difficulties in
engaging a user's attention than do advertisers utilizing broadcast
media who rely on the passive reception of their messages. The impact of
traditional banner ad campaigns is limited. As a result, online
advertisers have focused increasingly on developing campaigns that
engage online users and encourage their interaction with the
advertisements.

. Compiling Data and Extracting Value. In order to create effective
advertising campaigns, advertisers seek to gather relevant information
about Web users through various means, such as tracking technology,
which is able to track a user's movements through the Internet, and
modeling techniques, which are used to predict a Web user's online
behavior, and quickly analyze this information to continually refine
campaign strategies. Most advertisers do not have the technical
expertise to compile and analyze campaign performance data and, as a
result, require a third party solution.

. Execution. Once advertisers have compiled and analyzed the information
gathered about Web users, they must be able to capitalize on the value
of this information to create tailored advertising campaigns and direct
these campaigns to specific groups of Web users. To maximize the
effectiveness of their campaigns, advertisers must be able to implement
changes in their strategies on a timely basis.

Challenges for Web Publishers

Web publishers seek to maximize the value realized from their available Web
site space, or ad inventory. They face several significant challenges,
including:

. Lack of Sales Expertise. Many Web publishers lack sufficient experienced
personnel to effectively sell ad space on their Web sites.

. Difficulty in Differentiation. The number of Web sites has increased
dramatically due in part to growth in the number of Web users, the
advent of easy-to-use Web site authoring software and the continuing
growth of electronic commerce. As a result, Web publishers increasingly
face difficulty in differentiating themselves to prospective advertisers
and in gaining access to advertising decision makers.

. Lack of Ad Delivery and Tracking Technology. Given the pace and scale in
which new ad delivery and tracking technology is evolving, many Web
publishers cannot afford to develop and maintain the technology
necessary to target, deliver and track Web advertising.

. Inventory Management. Maximizing the value of a Web publisher's
available Web site space, or ad inventory, requires efficient inventory
management. It is difficult for Web publishers to maintain price
consistency with their high-CPM ad packages while monetizing their
unsold ad inventory.

The L90 Solution

Our solution is designed to enable advertisers and Web publishers to take
advantage of the Internet as a marketing medium. We offer advertisers creative
campaign development and design

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<PAGE>

services, strategic sales solutions and a network of Web sites on which to
place their ads. Our adMonitor technology provides them with ad serving, real-
time campaign management, measurement, reporting and transaction tracking
capabilities. We offer Web publishers the opportunity to focus on their core
businesses while we provide online advertising sales, ad inventory management
and back office operational support. Our comprehensive advertising solution
combines our high value-added, strategic ad campaign development services, an
extensive knowledge of our Web publishers and our adMonitor technology. We
believe this combination enables us to obtain improved pricing by maximizing
the value of the ad inventory of our Web publishers.

Benefits to Advertisers

. Strategic Advertising Sales Approach. Our highly skilled sales force
consults closely with advertisers and advertising agencies to determine
their needs and to construct effective advertising solutions that enable
them to realize their online advertising objectives. Utilizing this
consultative approach, we develop comprehensive campaigns that are
intended to achieve higher response rates in a fragmented and crowded
Web publishing marketplace.

. Design and Marketing Expertise. Our extensive design, creative
development and marketing expertise provides our clients with cost
savings in the development and deployment of their advertising
campaigns. In addition, our design and marketing expertise allows us to
quickly develop and deploy these advertising campaigns, resulting in a
time-to-market advantage for our clients. Our skilled staff has
significant expertise in creating advertising campaigns that employ
leading-edge technologies and techniques, such as sponsorships or the
incorporation of rich media into the campaign and sponsorships. Further,
by maintaining a library of our successful advertising campaigns, we are
able to offer advertisers the ability to select pre-tested solutions
that can be quickly tailored to meet the advertisers needs and goals.
This "plug and play" functionality significantly reduces the time it
takes to implement an advertising campaign.

. Sponsorship Advertising. We have created sponsorship advertising
solutions that enable our advertising clients to develop campaigns that
go beyond traditional banner advertising. Our highly targeted solutions
utilize value-added features such as content integration, co-branding,
rich media and campaign structures such as promotions and sweepstakes.
We believe that our sponsorship solutions enable advertisers to place
their ads in a more relevant, targeted and trusted context. For example,
by co-branding an advertiser with a Web publisher or integrating the
advertiser's advertisement with the Web publisher's content, the
advertiser benefits from the Web publisher's existing relationship with
its users. We believe these placements generate higher returns by
leveraging the existing relationship between the Web user and the Web
site.

. Ad Serving and Tracking Technology. Our adMonitor technology delivers
advertising campaigns incorporating rich media, interactivity and ad
targeting. We aggregate information about Web users in our proprietary
databases that can be used on a standalone basis or in conjunction with
other data sources to deliver highly targeted advertising messages to
users across our entire network of Web sites. Additionally, advertisers
can access adMonitor through a Web browser, enabling them to view their
campaigns and obtain real-time reports. adMonitor also enables
advertisers to execute valuable testing programs, such as simultaneously
running a number of different campaigns, and to obtain real-time
performance feedback that assesses their relative effectiveness.

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<PAGE>

. Highly Targeted Advertising. The combination of our network of Web
sites, category sales specialists and adMonitor technology empowers us
to structure highly targeted campaigns for advertisers. Advertisers can
target delivery based on the Web user's demographic or behavioral data,
or on more complex parameters, such as future buying prospects.

. Direct Marketing Capabilities. We have considerable expertise in
creating direct marketing campaigns that incorporate creative
promotional offers and easy-to-use interactivity in order to realize
increased click-through rates and greater participation by Web users.
Our direct marketing campaigns include components such as interstitials,
sweepstakes, targeted e-mails, Web user registrations and other
techniques designed to encourage specific actions by users or to collect
valuable customer data.

Benefits to Web Publishers

. Outsourced Advertising Sales. Participants in our network benefit from
the services of our skilled sales force. By outsourcing online
advertising sales, Web publishers are able to focus on their core
competencies and avoid the significant investment and distraction of
developing an in-house sales force.

. Improved Pricing. Based on our ability to deliver highly effective
campaigns, advertisers are willing to pay higher prices for the ad
inventory on our network. We believe the average CPM realized by our Web
publishers is substantially higher than the industry average.

. Efficient Inventory Management. adMonitor provides Web publishers with
an inventory management tool that generates useful real-time reports on
current and expected ad inventory. By monitoring each active ad
campaign, adMonitor continuously updates available inventory to properly
deliver ads on schedule and to ensure that Web publishers achieve a
superior revenue yield from their ad inventory. We seek to optimize
yield by selling packages that emphasize high CPM advertising campaigns,
including sponsorships, sweepstakes, promotions and content integration.

. Creating Network Scale. Due to the proliferation in the number of Web
sites, it is often difficult for individual Web sites to gain the
attention of major advertisers. Through the aggregation of online ad
inventory from the Web sites we represent, our Web site network attracts
the attention of major advertisers. Inclusion in our network provides
Web publishers with access to a larger number of major advertisers.

. Web-Hosted Ad Serving and Tracking. adMonitor provides Web publishers
with centralized ad serving, targeting and tracking capabilities to
execute, manage and optimize advertising campaigns incorporating rich
media and sponsorships. Outsourcing this technology enables Web
publishers to avoid the significant investments associated with
developing this capability in-house.

. Flexible, Adaptable Technology Platform. Our adMonitor technology is
designed to be easily modified to incorporate new technologies in order
to meet the needs and demands of Web publishers and advertisers.
adMonitor's flexible technology also provides a platform for additional
direct marketing applications such as e-mail campaign management and
loyalty programs.

. Rapid Implementation. We can implement adMonitor quickly and simply to
begin serving ads for new Web publishing clients, typically within 24
hours. As a result, these clients can begin to generate revenue from the
sale of their ad inventory in a highly efficient manner.

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<PAGE>

Strategy

Our objective is to be the leading provider of comprehensive online
advertising and direct marketing solutions. The following are the key elements
of our strategy:

Capture a Greater Share of Online Advertising Budgets

We plan to capture a greater share of online advertising budgets by
continuing to strengthen our relationships with advertisers and ad agencies and
to provide comprehensive solutions that offer advertisers a broad range of
options. Due to the creative and strategic emphasis of our advertising
solutions, our sales executives typically work directly with senior advertising
executives in developing and implementing their campaigns.

Grow Our Sales and Marketing Organization

In order to broaden our market coverage and expand our service offerings, we
intend to continue to grow our sales and marketing organization. We believe
that executing our strategy requires a knowledgeable and experienced sales and
marketing organization. We intend to complement our current staff of trained
professionals with additional qualified personnel, including increasing the
number of category sales specialists and hiring international specialists.

Selectively Expand Our Network of Web Publishers

By enhancing and selectively expanding our network of Web publishers, we
believe our marketing and sales solutions will become an increasingly
attractive choice for online advertisers and Web publishers. We intend to
expand our network by selectively adding new Web publishers that offer
attractive demographics, innovative and quality content, strong management,
brand name recognition and growing traffic. We strive to ensure that our
network of Web publishers will continue to provide the desired audiences for
advertisers.

Enhance and Expand Our adMonitor Technology

We intend to continue to enhance the performance and functionality of our
adMonitor technology. adMonitor has enabled us to become a leading provider of
centralized, outsourced advertising and direct marketing solutions. We believe
that the ability of our technology infrastructure to incorporate new devices,
technologies and targeting techniques, as well as its ability to scale as the
Internet grows, will continue to provide us with significant competitive
advantages.

Develop, Deploy and Leverage Our Library of Creative Marketing Solutions

Our design, technical and marketing capabilities enable us to continually
develop new and interactive marketing techniques and solutions. Once designed
and implemented, these marketing and advertising solutions can be modified and
adapted to create new campaigns for multiple advertisers and Web sites. We
intend to enhance our design and creative capabilities and take advantage of
our library of pre-tested solutions in order to provide our advertising clients
with time-to-market and implementation advantages in the development and
deployment of their advertising campaigns.

Expand Our Direct Marketing Capabilities

Our adMonitor technology facilitates online direct marketing by aggregating
demographic and behavioral information about Web users from both our
proprietary databases and third-party sources.

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<PAGE>

We are testing a new service through which users visiting our publishers' Web
sites can voluntarily provide personal data in exchange for personalized ads
and merchandise rewards. We intend to expand these capabilities with the goal
of enabling true one-to-one targeting.

Products and Services

We offer products and services designed to provide our advertisers and our
Web publishers with comprehensive, customized online advertising solutions.

Advertising Solutions

In designing an advertising solution, we offer the following primary
advertising programs:

<TABLE>
<CAPTION>
Advertising Programs Description
- -------------------------------------------------------------------------------
<C> <S>
L90Premium . L90Premium leverages the strengths and
demographics of each of our premium Web
sites through advertising programs
featuring advertising components, such as
co-branding, content integration,
contextual sponsorship, rich media and
targeted banners, as well as promotions and
sweepstakes. We specialize in providing
three types of sponsorship opportunities:

. turnkey sponsorships, which are pre-
packaged programs that can be easily
and quickly implemented to meet the
objectives of the advertiser;

. customized sponsorships, which are
original programs specifically created
for, and based upon the marketing
objectives of, a specific advertiser;
and

. syndicated sponsorships, which are
genre-specific programs that run
across a selection of our premium Web
sites.

- -------------------------------------------------------------------------------
L90Targeted . L90Targeted enables an advertiser to run
ads across 12 distinct interest categories,
such as automotive, sports and technology.
Our category sales specialists possess in-
depth knowledge and understanding of their
respective categories and can assist
advertising clients in developing ad
campaigns that address audiences in these
categories.

- -------------------------------------------------------------------------------
L90R&E . L90R&E offers broad distribution across our
(Reach and Efficiency Network) entire network of Web sites for advertisers
interested in attaining the greatest reach
for the lowest and most efficient cost.

- -------------------------------------------------------------------------------
L90D.m. . L90D.m. programs are designed to reach
(Direct Marketing) targeted audiences and build qualified
marketing databases. These programs
include:
. L90Opt-in, which is a data-driven
research tool and rewards program,
enables us to develop detailed
profiles of consumers by providing
them with special promotions and
rewards in return for sharing insight
into their behaviors and interests.
. L90Link, which is a marketing tool
that uses the entire L90 network, our
adMonitor technology, and the power of
word-of-mouth marketing to generate
customer acquisitions. L90Link rewards
users for taking advantage of
promotional offers and forwarding
these offers to friends and
colleagues.
</TABLE>

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<PAGE>

Ad Serving and Tracking Technology

Through our Web-hosted adMonitor technology, we offer advertisers and Web
publishers the ability to selectively target and deliver ad campaigns that
incorporate rich media and other marketing features. In addition, adMonitor
enables advertisers to track, measure and manage the effectiveness of their ad
campaigns and receive real-time reports from any Web browser.

. Ad Serving. adMonitor delivers targeted advertising campaigns quickly,
consistently and on schedule. In addition, because adMonitor is a
centrally served technology platform administered from our facilities,
our Web publishing clients are not required to purchase additional
hardware, software or back-up systems to implement or utilize our
adMonitor services. Our adMonitor system is easily modified, can handle
significantly increased volume when needed, and is able to deliver
targeted and specialized advertising campaigns virtually
instantaneously. In addition, because adMonitor is capable of delivering
rich media content, advertisers have the freedom to develop complex
advertising solutions.

. Tracking. adMonitor allows our clients to track their advertising
audience's behavior and collect this information to build proprietary
databases. adMonitor tracks Web users' online behavior after they enter
one of our Web publisher's sites. As a result, we are able to construct
databases of user interests and purchasing habits based on their online
behavior. By applying analytical tools to our databases, we are able to
offer advertisers valuable demographic and behavioral information for
targeting campaigns.

. Targeting. adMonitor enables our advertising clients to target their
campaigns using a wide range of parameters, including domain, content
area, keyword, geography and user-profile data. By utilizing adMonitor's
advanced targeting capabilities, advertisers are able to direct their
campaigns at Web users who are most likely to respond.

. Monitoring. adMonitor provides advertisers with comprehensive
performance reports and the ability to adjust media plans, all in real-
time. Advertisers are able to track the progress of their campaigns from
their Web browsers. These reports contain detailed information such as
the Web sites included in an advertising campaign, the number of
impressions served, the click-through rates and the resulting sales, as
well as other performance measures. In addition, they provide the
information that advertisers need to actively manage their campaigns to
maximize effectiveness. adMonitor is fully Web-hosted and gives
advertisers the ability to optimize in real time the performance of
their advertising campaigns.

. Inventory Management. We provide our Web publishers and advertisers with
detailed, real-time information about current and future ad inventory.
adMonitor automatically monitors each advertising campaign in progress,
adjusts the delivery of ads for variations in site traffic and updates
available ad inventory based upon current advertising campaigns. Our
system ensures that advertising campaigns are optimally scheduled and
delivered and that our Web publishers maximize the value of their ad
inventory.

Our Network of Web Publishers

We currently represent approximately 80 Web publishers, 29 of which are in
our premium category. Our premium Web publishers represent sites in our network
that we believe have high brand recognition, highly innovative content,
desirable demographics and high traffic volume. For the nine months ended
September 30, 1999, our premium Web publishers accounted for 62% of our total
revenue derived from Web publishers. Our other Web publishers are generally
newer Web sites that we believe have high growth potential. The decision to
accept a Web publisher for representation is based on a number of criteria,
including the demographics of the Web site's users, the Web site's content
quality and brand name recognition, the level of existing and projected traffic
on the Web site, and sponsorship opportunities.

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<PAGE>

The following table identifies our premium Web publishers as of October 31,
1999:

Premium Web Sites

<TABLE>
<CAPTION>
- ------------------------- -------------------------------- ------------------------------ ------------------------------
Company Web Address Company Web Address
<S> <C> <C> <C>
Alloy Online, Inc. www.alloy.com Internet Shopping www.shoplet.com
Outlet New York Corp.
AutoFusion, Inc. www.carprices.com
JobsOnline, LLC www.jobsonline.com

Bell Atlantic www.BigYellow.com Liquid Audio, Inc. www.liquidaudio.com
Electronic
Commerce MaMaMedia, Inc. www.mamamedia.com
Services, Inc.
Scour www.scour.net
Broadband Sports, Inc. www.athletedirect.com
Small World, Inc. www.baseball.smallworld.com
Campus Pipeline, www.campuspipeline.com www.football.smallworld.com
Inc. www.golf.smallworld.com
www.hockey.smallworld.com
click2send.com, www.click2send.com www.hoops.smallworld.com
Inc. www.tennis.smallworld.com

eMachines, Inc. www.e4me.com Speedyclick Corp. www.speedyclick.com

Extreme Interactive www.scoopswrestling.com Sportspage.com, Inc. www.sportspage.com
Media, Inc.
Starchefs www.starchef.com
Freei Network, Inc. www.go.freei.net
TargetMatch & www.datingclub.com
Harry Knowles www.aint-it-cool-news.com NetMatch www.jobmatch.com
www.matchonline.com
The HolidayChannel, www.holidaychannel.com www.open4assistance.com
Inc. www.singlesmonthly.com
www.travelmatch.com
Hollywood.com, Inc. www.hollywood.com
Weider Publications www.fitnessonline.com
Homestead www.homestead.com www.jumponline.com
Technologies www.shapeonline.com

iFilm Corporation www.ifilm.com Whatis.com, Inc. www.whatis.com

IMS, Inc. www.kanoodle.com The WinSite www.winsite.com
Group, Inc.
Infonautics Corp. www.companysleuth.com
www.elibrary.com
www.encyclopedia.com
www.jobsleuth.com
www.researchpaper.com
www.sportssleuth.com
</TABLE>

Our entire network of Web publishers is organized into 12 categories. We
determine the category of a Web site based primarily on its content.
Advertisers may choose to target their ads on sites within one or more of these
categories. Some of our Web sites may fall into multiple categories if they
provide a broad range of content.

Web Site Categories

<TABLE>
<S> <C> <C>
.Automotive .E-Commerce .Sports
.Business/Finance .Entertainment .Technology
.College .Health/Fitness .Travel
.Directories/Portals .Kids/Teens .Women
</TABLE>

40
<PAGE>

Our Advertising Clients

In connection with the representation of our Web publishers, we have
developed relationships with, and continue to focus our sales and marketing
efforts on, online advertisers and advertising agencies. Since inception, over
450 advertisers from a variety of industries have utilized our services. Our
experienced sales and marketing organization works closely with advertisers and
advertising agencies to enhance the effectiveness of their online advertising
campaigns.

Set forth below is a list of the top 20 advertisers during the nine month
period ended September 30, 1999. The following list of advertisers accounted
for 47.4% of the total revenue derived from advertisers for the nine months
ended September 30, 1999.

Top 20 L90 Advertisers

<TABLE>
<S> <C>
Ameritech Improvenet
Ask Jeeves iVillage
AutoConnect Microsoft
Chevrolet Netscape
Computers4SURE Target Match
Deluxe Entertainment Tickets.com
Dynamic Telecommunications Uproar
Galaxi World Visa
Gateway VR Services
Honda Wired Solutions
</TABLE>

Selected Customer Applications

The following customer case studies are a few examples of comprehensive
advertising solutions we have developed for our advertising clients.

Tickets.com--Brand Building, Ticket Sales and Database Generation

Tickets.com is a premier online resource for event information and tickets,
updating traditional ticketing distribution practices with today's Internet
technology. Tickets.com required an online advertising and marketing solution
that would generate brand awareness, increase market share, drive traffic to
their Web site and build a targeted database.

Working closely with Tickets.com, our marketing and creative teams designed
an integrated sponsorship program that is featured on three of our premium
entertainment and sports Web sites. Our advertising solution places Tickets.com
in contextually-relevant Web site content and positions Tickets.com as the
premier ticket buying and information resource. Specifically, the Tickets.com
sponsorship program utilizes a combination of content integration, contextual
offers, co-branded sites within the host Web publisher's site, and sweepstakes
elements to generate brand awareness for Tickets.com and drive users to the
Tickets.com Web site. For example, we created a "Take Me to the Big Game"
sweepstakes on Small World's Web sites that offers visitors the opportunity to
win tickets to premier sporting events, including the championships of the four
major professional sports.

Additionally, our adMonitor technology enables Tickets.com to capture
registration details at the Web sites on which this sponsorship is featured, as
well as track the movement of visitors through the Web sites. Tickets.com uses
this information to create user profiles based on declared and inferred
behavioral data. By building this growing database of individual user profiles,
Tickets.com intends to provide

41
<PAGE>

customized offers, such as local sports or special interest tickets, targeted
to individual Web users or groups of users. This campaign demonstrates our
expertise at developing multi-pronged solutions that meet an advertiser's
objective and highlights adMonitor's targeting and database building
capabilities.

Visa--Preferred Card Placement, Market Share Penetration and Card Usage

Visa, one of the premier brand names in electronic payment methods, sought a
solution that would take advantage of the Internet as a new commerce vehicle.
Visa's goals were to strengthen their brand recognition, reinforce current
customer loyalty and increase their overall credit card market share.

We leveraged Music Boulevard's niche as a leading e-commerce site to create a
customized sponsorship for Visa. The sponsorship included "Visa, the Preferred
Card" banner placements throughout the Music Boulevard site, "Visa, the
Preferred Card" banner placements on all checkout pages of the site, and Visa
sponsorship of Rocktropolis' AllStar Column, Classical Insites' Hall of Fame
and Jazz Central Stations' Events on Music Boulevard. In addition, Visa was
featured as the default payment choice on each checkout page on Music
Boulevard. Moreover, if a user attempted to use another payment choice, the
user was presented with a $2 coupon for use on future Music Boulevard
purchases, provided that the user switched to Visa as the form of payment. Due
to the success of the Visa campaign in increasing Visa's marketshare over its
competitors, this campaign, which was originally scheduled to run for six
months, was extended for an additional six months.

iVillage--Integrated Sponsorship Across Online and Print Media

iVillage, the leading women's community site, offers women's health and
fitness information, parenting advice, financial insight, e-mail, chat rooms
and personal homepages. iVillage required an advertising campaign that would
grow its market share and reach a broad demographic cross-section of women.

Our marketing and creative teams designed a comprehensive campaign that takes
advantage of both the online and offline media properties of Weider
Publications, which produces both print magazines, such as Shape, Men's Fitness
and Muscle & Fitness, and Web sites, such as Fitness Online and Shape Online.
Using our adMonitor technology, we serve targeted banner placements throughout
Shape Online and the women-centric areas of Fitness Online, as well as banner
placements throughout Fitness Online. In addition to the online components, the
iVillage campaign includes recurring print ads in Shape magazine. These print
ads are used to build brand awareness for iVillage, to drive readers to the
iVillage Web site and to promote new offerings at iVillage. This campaign has
been running for over nine months and receives an average click-through rate
that is twice as high as the industry average. This integrated sponsorship
demonstrates our ability to couple the attributes of online and offline media
properties to build an effective advertising campaign.

Privacy Concerns

We believe that issues relating to the privacy of Internet users and the use
of personal information about these users are extremely important. In
implementing any service or program designed to gather personal data about Web
users, we are always mindful of our continuing commitment to uphold the privacy
principles of the Direct Marketing Association. These privacy principles
include:

. a prominent, easy to read, online notice of a marketer's information
practices and a user's opportunity to opt out or prohibit the disclosure
of any personal information collected;

42
<PAGE>

. the posting of online solicitations to newsgroups, bulletin boards and
chat rooms only when consistent with the forum's stated policies; and

. additional principles that apply to online activities directed primarily
at children.

Sales and Marketing

Our sales and marketing staff is trained to work strategically with our Web
publishers and advertisers to develop comprehensive advertising solutions. We
believe that advertisers desire sponsorship opportunities that go beyond the
banner to include content integration, contextual sponsorships, promotions,
sweepstakes, e-mail sponsorships, interstitials, custom content and other
highly effective advertising tools. We have assembled a sales and marketing
staff that possesses the marketing, media, creative and advertising skills
required to develop these types of large, comprehensive advertising campaigns.
We have close relationships with, and detailed knowledge of, our Web
publishers. Consequently, we are able to work with advertisers in developing
customized and effective advertising solutions.

We sell our advertising solutions in the United States through a sales and
marketing team consisting of a total of 65 employees as of September 30, 1999.
Our sales and marketing team is organized in a matrix fashion and includes
account executives, who sell all of our Web site ad inventory, and category
sales specialists, who focus on a specific field of content. Currently, our
sales and marketing team is organized according to five geographic regions.

Our experienced Web publisher and advertiser sales and marketing personnel
use a variety of marketing programs to generate demand for our products and
services, build market awareness, develop customer leads and establish business
relationships. Our marketing activities include public relations, print
advertisements, online advertisements and direct marketing, Web advertising
seminars, trade shows, special events, sponsorships and ongoing customer
communications programs.

Technology Platform

We have developed a centralized ad serving and tracking system that is
resident in our facilities. adMonitor is a modular, scalable and versatile
system with the ability to adapt to specific advertiser and Web publisher
needs. Complex ad campaigns can be quickly developed and implemented using our
technology. adMonitor supports most leading Web tools and technologies,
including JAVA, Java Script, RealAudio, Enliven and VRML and is capable of
delivering these advertising campaigns containing rich media and interstitials.
Moreover, adMonitor is compatible with most leading host servers.

adMonitor has the ability to selectively serve advertisements to and track
the movements of Web users. Upon viewing and downloading a Web page of one of
our Web publishers, the user is automatically and discretely directed to the
adMonitor system to retrieve an advertisement. Our adMonitor system, based on
the user's provider and the current ad campaign, matches a set of
advertisements to the user and selects the appropriate ad to display. Through
the use of cookies, adMonitor is also able to track the users movements through
the Web publisher's site. adMonitor provides advertisers real-time reporting
tools. Advertisers can log into the adMonitor system from any Web browser to
access reports on their campaigns. All reports are real-time and can be
customized to satisfy the needs of the advertiser.

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adMonitor functions on a fully redundant, high performance system built with
an emphasis on capacity and speed. We use a combination of products from Sun
Microsystems, Cisco Systems, Microsoft, Oracle, 3Com and F5 Labs to support
adMonitor's scalability and reliability. adMonitor is deployed on hardware
resident in multiple, secure data centers located across the United States in
three facilities operated by Exodus Communications, where technical support is
provided 24 hours a day, seven days a week.

Competition

The online advertising market is extremely competitive. We believe that our
ability to compete depends upon many factors both within and beyond our
control, including the following:

. the timing and market acceptance of new solutions and enhancements to
existing solutions developed either by us or our competitors;

. the continued and increasing acceptance by advertisers of the Internet
as an effective and cost-efficient means of advertising;

. the ability to adapt to the rapidly changing trends of the Internet;

. our customer service and support efforts;

. our sales and marketing efforts;

. our ability to adapt and scale our technology as customer needs change
and grow; and

. the ease of use, performance, price and reliability of solutions
developed either by us or our competitors.

As we expand the scope of our Web services, we may face greater competition
from a number of Web sites and other media companies across a wide range of
different Web services, including in vertical markets where competitors may
have advantages in expertise, brand recognition and other factors. Several
companies offer competitive products or services through Web advertising
networks, including 24/7 Media, DoubleClick and Flycast Communications. Our
business may also encounter competition from providers of advertising inventory
and database management products and related services, including AdForce,
DoubleClick, Engage Technologies and NetGravity. In addition, we may face
potential competition from a number of large Web publishers and Web search
engine companies, such as America Online, Excite@Home, Infoseek and Yahoo!. We
also compete with television, radio, cable and print for a share of the overall
advertising budgets of advertisers.

Intellectual Property Rights

Our success and ability to compete are substantially dependent on our
internally developed technologies, including adMonitor, and trademarks that we
protect through a combination of intellectual property laws. We have applied to
register trademarks in the United States. We cannot guarantee that any of our
trademark registrations will be approved. Even if they are approved, these
trademarks might be successfully challenged by others or invalidated.
Furthermore, if our trademark registrations are not approved because third
parties own these trademarks, our use of these trademarks will be restricted
unless we enter into arrangements with these third parties. We cannot assure
you that we can enter into arrangements with these third parties on
commercially reasonable terms.

44
<PAGE>

We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite these efforts, unauthorized parties may attempt to
disclose, obtain or use our advertising solutions or technologies. Our
precautions may not prevent misappropriation of our advertising solutions or
technologies, particularly in foreign countries where laws or law enforcement
practices may not protect our rights as fully as in the United States.

Our technology collects and utilizes data derived from user activity on the
Internet. This information is used for targeting advertising and predicting
advertising performance. Although we believe that we generally have the right
to use this information and to compile it in our database, we cannot assure you
that any trade secret, copyright or other protection will be available for this
information. In addition, others may claim rights to this information.
Furthermore, we cannot guarantee that any of our other intellectual property
rights will be viable or valuable in the future since the validity,
enforceability and scope of protection of intellectual property rights in
Internet related industries is uncertain and still evolving. In addition, third
parties may assert infringement claims against us. Any claims could subject us
to significant liability for damages and could result in the invalidation of
our intellectual property rights. In addition, any claims could result in
litigation, which would be time-consuming and expensive to defend, and divert
our time and attention. Even if we prevail, this litigation could cause our
business, results of operations and financial condition to suffer. Any claims
or litigation from third parties may also result in limitations on our ability
to use the intellectual property subject to these claims or litigation unless
we enter into arrangements with the third parties responsible for these claims
or litigation, which could be unavailable on commercially reasonable terms. We
believe that factors such as the technological and creative skills of our
personnel, new service offerings, brand recognition and reliable customer
service are more essential to establishing and maintaining our position in the
marketplace, rather than the legal protection of our technology. There can be
no assurance that others will not develop technologies that are similar or
superior to our technology.

DoubleClick was recently awarded a patent on aspects of its ad delivery
technology. The DoubleClick patent may cover some of the technology we use in
our advertising solutions. We have not received any notification from
DoubleClick alleging that our technology infringes on its patent. We are
currently evaluating the merits and validity of the DoubleClick patent as it
pertains to our technology. We cannot assure you that the options available to
us will be reasonably available, adequate or cost effective. Moreover, if we
are unable to distinguish our technology from the technology covered under the
DoubleClick patent or if the DoubleClick patent is not invalidated, we may be
limited in our ability to use our technology or may be required to license the
use of our technology from DoubleClick. We cannot assure you that we can enter
into a licensing agreement with DoubleClick on commercially reasonable terms,
if at all.

Employees

As of September 30, 1999, we had 96 full-time employees, including 65 in
sales and marketing, 21 in engineering and product development and 10 in
accounting, human resources, business operations and administration. In
addition, we had three part-time employees. We are not subject to any
collective bargaining agreements and believe that our employee relations are
excellent. Our future success depends in part on our ability to attract,
retain, integrate and motivate highly-skilled employees. Competition for
employees in the industry is intense.

45
<PAGE>

Legal Proceedings

Periodically, we may become subject to legal proceedings in the ordinary
course of our business. We are not currently involved in any litigation which
we believe will materially and adversely affect us.

Facilities

Our principal executive offices are located in Santa Monica, California,
where we lease approximately 11,000 square feet under a lease that expires on
December 31, 2000. We also lease approximately 6,000 square feet of space in
another facility in Santa Monica, California. In addition, we lease space for
our sales and marketing efforts in Chicago; Franklin, Michigan; New York; and
San Francisco. Our adMonitor ad serving and tracking software and hardware is
housed in Irvine and Santa Clara, California and Sterling, Virginia. These
three facilities provide us with a secure area to store and operate our
computer systems and capacity for communications links and Internet
connectivity systems. We are continually evaluating our facility requirements.
We believe that our existing leased space is more than adequate for our current
operations, and that suitable replacement and additional space will be
available in the future on commercially reasonable terms.

46
<PAGE>

MANAGEMENT

Directors, Executive Officers and Key Employees

Our directors, executive officers and key employees and their positions and
ages, as of September 30, 1999, are as follows:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
William M. Apfelbaum........... 52 Chairman of the Board of Directors
John C. Bohan.................. 34 President, Chief Executive Officer and
Director
Thomas A. Sebastian............ 35 Senior Vice President, Chief Financial
Officer and Assistant Secretary
Mark D. Roah................... 30 Senior Vice President of Business
Development and Director
Christopher J. Cardinali....... 35 Vice President of Northwestern Sales,
Secretary and Director
Frank A. Addante............... 23 Chief Technology Officer
Sean P. Cowan.................. 32 Senior Vice President of New York Sales
Keith J. Kaplan................ 31 Senior Vice President of National Sales
Peter G. Diamandis............. 67 Director
Peter E. Ligeti................ 44 Director
Glenn S. Meyers................ 38 Director
G. Bruce Redditt............... 48 Director
Peter Sealey................... 59 Director
</TABLE>

William M. Apfelbaum has served as our Chairman of the Board and a director
since September 1998. Mr. Apfelbaum has been the President and Chief Executive
Officer of TDI Worldwide, a wholly-owned subsidiary of CBS, since 1989. Mr.
Apfelbaum is also the founder of CBS Plus which oversees advertising sales
across all seven of CBS's media divisions, including their Internet-based
properties. Mr. Apfelbaum graduated with a B.A. from New York University. He
has guest lectured at the Harvard Business School, the London Business School
and New York University's Stern School of Business.

John C. Bohan has served as our President and Chief Executive Officer and a
director since our inception. Mr. Bohan is a co-founder of L90. From April 1995
to December 1996, he was Executive Vice President for Screaming Media, formerly
known as Interactive Connection. From August 1994 until March 1995, Mr. Bohan
served as an advertising sales Account Executive for USA Networks. Mr. Bohan
worked as a cable advertising sales Account Executive for Landmark
Communications in both New York City and Los Angeles from February 1990 to
August 1994. Mr. Bohan graduated with a B.A. in Economics from Middlebury
College.

Thomas A. Sebastian has served as Chief Financial Officer, Senior Vice
President and Assistant Secretary of L90 since July 1999. Between June 1997 and
June 1999, Mr. Sebastian served as Vice President of Finance of Fair, Isaac &
Company. Between May 1996 and May 1997, he was an Investment Banker at Volpe,
Brown, Whelan & Company. Between June 1994 and May 1996, Mr. Sebastian worked
as Corporate Finance Manager at Hewlett-Packard Company. Mr. Sebastian
graduated with a B.S. in Computer Science from the University of Virginia and
an M.B.A. from the Anderson School at UCLA.

Mark D. Roah has served as our Senior Vice President of Business Development
since April 1999 and has served as a director of L90 since our inception. Mr.
Roah is a co-founder of L90. From

47
<PAGE>

January 1997 to April 1999, he served as our Vice President of Southwestern
Sales. Between January 1996 and December 1996, Mr. Roah worked as an Account
Executive at Screaming Media, formerly known as Interactive Connection. From
August 1992 until November 1994, Mr. Roah worked as a Financial Analyst at
Shaman Pharmaceuticals and between November 1994 and December 1995 he was a
Marketing Manager for ICS Communications. Mr. Roah graduated with a B.S. in
Finance from San Francisco State University.

Christopher J. Cardinali has served as our Vice President of Northwestern
Sales and Secretary and has served as a director since our inception. Mr.
Cardinali is a co-founder of L90. Between January 1996 and December 1996, Mr.
Cardinali worked as an Account Executive at Screaming Media, formerly known as
Interactive Connection. Between June 1995 and December 1995, he was a
consultant for Halo Interactive. Mr. Cardinali graduated with a B.A. in
Economics and Philosophy from Boston College and also received an M.B.A. from
the Anderson School at UCLA.

Frank A. Addante has served as our Chief Technology Officer since February
1998. Between January 1995 and February 1998, Mr. Addante served as Vice
President of ReaXions, Inc., an Internet advertising and e-commerce technology
development company. Between January 1997 and February 1998, ReaXions provided
technology consulting services to L90, during which time Mr. Addante served as
our primary contact within ReaXions. Prior to January 1995, Mr. Addante
attended the Illinois Institute of Technology.

Sean P. Cowan has served as our Senior Vice President of New York Sales since
October 1999. Between September 1997 and September 1999, Mr. Cowan served as
Vice President, National Sales, for Paramount Advertiser Services, Paramount
Pictures. Between September 1992 and September 1997, he served as an Account
Executive for Paramount Advertiser Services, Paramount Pictures. Mr. Cowan
graduated with a B.S. in Marketing from State University of New York, College
at Oswego.

Keith J. Kaplan has served as our Senior Vice President of National Sales
since October 1999. Between August 1998 and September 1999, Mr. Kaplan served
as National Account Manager for Transportation Displays Incorporated. Between
April 1995 and August 1998, Mr. Kaplan served as Northeast Division Manager for
Paramount Pictures. From February 1990 to April 1995, he served as National
Sales Manager for Cablevision Systems (SportsChannel). Mr. Kaplan graduated
with B.A. in Communications from Syracuse University.

Peter G. Diamandis has served as one of our directors since August 1999. Mr.
Diamandis is currently a managing member of DigaComm, L.L.C., a private
investment firm. Between February 1991 and September 1996, he served as Vice
Chairman of DM Holdings, Inc., the parent company of Donnelley Marketing, Inc.
Mr. Diamandis was also the founder or publisher of several popular magazines,
including Self Magazine, New York and Mademoiselle. Mr. Diamandis serves on the
board of directors of Big Flower Press Holdings, Inc. Mr. Diamandis graduated
with a B.S. in Finance from Bucknell University.

Peter E. Ligeti has served as a director of L90 since August 1999. Since
1988, Mr. Ligeti has been a General Partner of Keystone Venture Capital, a
Philadelphia-based venture capital firm, where he has managed many of
Keystone's technology-related investments and provided financing to emerging
growth companies. Mr. Ligeti has represented Keystone on the boards of such
companies as Solbright, Nettech, BATNET, Hollywood Stock Exchange, Integrated
Circuit Systems, Paradigm Software Technologies, Ansoft, Infonautics and
National Medical Technologies. Mr. Ligeti graduated with a B.A. from Harvard
University and an M.B.A. from the Wharton School at the University of
Pennsylvania.

48
<PAGE>

Glenn S. Meyers has served as one of our directors since September 1999.
Since April 1998, Mr. Meyers has served as a director and the President and
Chief Executive Officer of Rare Medium Group, Inc. Mr. Meyers has also served
as a director and Chief Executive Officer of Rare Medium, Inc. since September
1995. Prior to September 1995, Mr. Meyers served as President of Brookridge
Capital Management, an Internet venture capital firm. Mr. Meyers graduated with
a B.S. from the University of Florida School of Business Administration.

G. Bruce Redditt has served as one of our directors since September 1999.
Since May 1998, Mr. Redditt has served as Executive Vice President of Omnicom
Group Inc. His duties include overseeing Communicade, a division of Omnicom
Group that holds investment positions in companies specializing in Web-based,
interactive media services. Between July 1995 and April 1998, Mr. Redditt
served as Executive Vice President of Sony Pictures Entertainment. Between July
1986 and June 1995, Mr. Redditt held a number of communication positions within
GTE Corporation, last as Corporate Vice President. Mr. Redditt graduated with a
B.S. from Florida State University.

Peter Sealey has served as one of our directors since August 1999. Dr. Sealey
has been a Lecturer and an Adjunct Professor of Marketing at the Haas School of
Business at the University of California, Berkeley since 1994. In addition,
during the same period Dr. Sealey has been self-employed as a management
consultant. Dr. Sealey was employed by the Coca-Cola Company for 24 years,
where he held a series of senior management positions, including Senior Vice
President, Global Marketing. Dr. Sealey serves on the board of directors of
Autoweb.com, Cybergold, Inc. and USWeb Corporation. Dr. Sealey graduated with a
B.S. from the University of Florida, an M.I.A. from Yale University, and an
M.A. and a Ph.D. from Claremont Graduate University.

Composition of the Board

Our board of directors has nine authorized members. Our certificate of
incorporation and a stockholders agreement to which substantially all our
stockholders are a party provide that one director is to be elected by the
holders of the Series A preferred stock, three are to be elected by the holders
of the Series B preferred stock, one is to be elected by the holders of the
Series C preferred stock (which member is to be designated by Rare Medium
Group, Inc.) and four are to be elected by the holders of the common stock, one
of whom is to be nominated by the other eight directors. These election rights
of the Series A, Series B preferred and Series C preferred stockholders will
expire upon the closing of this offering upon conversion of their preferred
stock into common stock. The stockholders agreement will also expire at that
time. Thereafter, all directors will be elected by the holders of common stock.
Members of the board of directors will be elected each year at our annual
meeting of stockholders, and serve until the following annual meeting of
stockholders or until their respective successors have been elected and
qualified.

Board Committees

We have established an audit committee, comprised of Mr. Ligeti and Mr.
Diamandis, and a compensation committee, comprised of Mr. Apfelbaum and Mr.
Sealey. The audit committee reviews our internal accounting procedures and
consults with and reviews the results and scope of the audit and other services
provided by our independent accountants. The compensation committee administers
our stock option plans and reviews and approves the compensation and benefits
for our key executive officers. This committee also establishes and reviews
general policies relating to compensation and benefits of our employees.

49
<PAGE>

Director Compensation

Other than reimbursing directors for customary and reasonable expenses of
attending board and committee meetings, we do not currently compensate our non-
employee directors.

Employment Agreements

In September 1999, we entered into at-will employment agreements with each of
Messrs. Bohan, Sebastian, Roah, Cardinali and Addante. These agreements provide
for annual base salaries of $58,000, $130,000, $100,000, $60,000 and $81,600,
respectively. In addition, these agreements provide for sales commissions for
Messrs. Bohan, Roah, Cardinali and Addante in accordance with our then current
policy. Each agreement provides for an initial two-year term, and is
automatically renewed for successive one-year terms, unless otherwise
terminated in writing by us or the employee prior to 30 days before the
expiration of the initial term or any successive term. These agreements provide
for customary benefits and for the ongoing payment to each of these employees
of their base salaries for the balance of the initial term or any successive
term if he is terminated without cause.

Executive Compensation

The following table sets forth all compensation awarded to, earned by or paid
to our Chief Executive Officer and the other executive officers whose cash
compensation exceeded $100,000 in 1998 for services rendered to L90 in all
capacities during 1998.

Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
Name and Principal ------------ Other Annual Shares Underlying All Other
Position Salary Compensation(1) Options Compensation
- ------------------ ------------ --------------- ----------------- ------------
<S> <C> <C> <C> <C>
John C. Bohan.......... $60,000 $242,000 -- --
President and Chief
Executive Officer
Christopher J.
Cardinali............. $60,000 $ 63,000 133,333 $2,400(2)
Vice President of
Northwestern Sales
Mark D. Roah........... $15,000 $109,000 133,333 $3,200(2)
Senior Vice President
of Business
Development
</TABLE>
- --------
(1) The amounts listed in "Other Annual Compensation" is comprised solely of
sales commissions.
(2) This amount represents a vehicle allowance.

50
<PAGE>

Option Grants in 1998

The following table sets forth information regarding options granted to the
named executives during the year ended December 31, 1998. We have not granted
any stock appreciation rights. Options were granted at an exercise price equal
to the fair market value of the common stock at the date of the grant. In
determining the fair market value of the common stock, the board of directors
considered various factors, including recent arms' length transactions, our
financial condition and business prospects, operating results, the absence of a
market for the common stock and the risks normally associated with investments
in companies engaged in similar businesses. The term of each option granted is
generally 10 years from the date of grant. Options may terminate before their
expiration dates, if the optionee's status as an employee is terminated or upon
the optionee's death or disability.
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term(1)
-------------------------------------------------- ----------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise Price Expiration
Name Granted in 1998 Per Share Date 5% 10%
- ---- ---------- ---------- -------------- ------------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
John C. Bohan........... -- -- -- -- -- --
Christopher J.
Cardinali.............. 133,333 41.25 $0.38 Dec. 31, 2007 $81,444 $129,687
Mark D. Roah............ 133,333 41.25 $0.38 Dec. 31, 2007 $81,444 $129,687
</TABLE>
- --------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted based upon the
fair market value on the date of grant. These assumptions are not intended
to forecast future appreciation of our stock price. The amounts reflected
in the table may not be achieved.

1998 Year-Ended Option Values

The following table sets forth for each of the named executives information
concerning the number of shares subject to both exercisable and unexercisable
stock options as of December 31, 1998. Also reported are values for "in-the-
money" options that represent the positive spread between the respective
exercise prices of outstanding options and the fair market value of our common
stock as of December 31, 1998. None of the named executives exercised any
options in 1998.

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at FY-End Options at FY-End(1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John C. Bohan.............. -- -- -- --
Christopher J. Cardinali... 66,667 66,667 $75,000 $75,000
Mark D. Roah............... 66,667 66,667 $75,000 $75,000
</TABLE>
- --------

(1) Calculated by determining the difference between the fair market value of
the securities underlying the option as of December 31, 1998, which the
Board of Directors has determined to be $1.50 per share, and the exercise
price of the named executive's options. In determining the fair market
value of L90's common stock, the board of directors considered various
factors, including L90's financial condition and business prospects, its
operating results, the absence of a market for its common stock and the
risks normally associated with technology companies.

51
<PAGE>

1999 Stock Incentive Plan

Our 1999 Stock Incentive Plan was adopted by the board of directors on April
30, 1999, and provides for awards or sales of shares and options, including
incentive stock options and nonstatutory stock options. A total of 1,666,667
shares of common stock has been reserved for issuance under our 1999 Stock
Incentive Plan.

Our 1999 Stock Incentive Plan is administered by our compensation committee
of the board of directors. The board of directors may amend our 1999 Stock
Incentive Plan as it desires without further action by our stockholders except
as required by applicable law. Our 1999 Stock Incentive Plan will remain in
effect until terminated by the board or for a term of 10 years from its
original adoption date, whichever is earlier.

The consideration for each award under our 1999 Stock Incentive Plan will be
established by the administrator, but in no event will the option price for any
award be less than 100% of the fair market value of the stock on the date of
the grant. In the event that an employee recipient of incentive stock options
under our 1999 Stock Incentive Plan holds 10% or more of our outstanding common
stock on the date of the grant, the option price for these options may not be
less than 110% of the fair market value of the stock on the date of the grant.
Awards will have such terms and be exercisable in such manner and at such times
as the administrator may determine. However, each option must expire within a
period of not more than 10 years from the date of grant.

Our 1999 Stock Incentive Plan provides that, in the event of a change in our
capitalization, outstanding options, restricted shares and options available
for grant under the 1999 Stock Incentive Plan will be subject to adjustment in
the discretion of the administrator.

As of September 30, 1999, options to purchase up to 1,500,400 shares of
common stock had been granted and are outstanding under our 1999 Stock
Incentive Plan. These options have an exercise price of $3.53 per share and
were held by 93 persons.

52
<PAGE>

RELATED PARTY TRANSACTIONS

Founder Transactions

Beginning in January 1998, we sold an aggregate of 6,666,667 shares of common
stock to founders and key executive officers at a value of $0.38 per share.
These purchasers were John C. Bohan (6,016,667 shares), Mark Roah (200,000
shares), C.J. Cardinali (200,000 shares), Todd Taplin (133,333 shares), Frank
Addante (66,667 shares) and Neal Weinberg (50,000 shares). The consideration
tendered by Messrs. Bohan, Roah, Cardinali and Taplin was the contribution of
the operating business of John Bohan & Associates, LLC. Messrs. Addante and
Weinberg tendered promissory notes in consideration for their shares.

Preferred Stock Financings

We used the funds raised in each of the preferred stock financings described
below:

. to expand our business operations;

. to hire additional personnel;

. to provide additional services; and

. for other general corporate purposes related to the expansion of our
business.

Series A Preferred Stock Financing

On September 16, 1998, in a private placement transaction, we issued 2,000
shares of Series A preferred stock to William Apfelbaum, our Chairman of the
Board of Directors, at $1,000 per share, convertible into common stock at the
conversion price per share of $1.20. The number of shares of common stock into
which the Series A preferred stock will convert is an aggregate of
1,666,666 shares. In connection with sale of Series A preferred stock, Mr.
Apfelbaum was granted a right to require us to repurchase the Series A
preferred stock and any shares of common stock issued upon conversion of the
Series A preferred stock held by Mr. Apfelbaum. Mr. Apfelbaum irrevocably
waived his right to exercise this right in August, 1999. Mr. Apfelbaum, our
chairman, was issued a warrant to purchase up to 438,593 shares of our common
stock at a price per share of $1.71. The holder of the Series A preferred stock
is entitled to incidental registration rights regarding the shares of common
stock issued or issuable upon conversion and upon exercise of the warrant. See
"Description of Capital Stock--Registration Rights" for a description of these
registration rights. The holder of the outstanding shares of Series A preferred
stock is entitled to receive, upon conversion of shares of Series A preferred
stock into common stock, a dividend in cash accruing from September 16, 1998,
at an annual rate of $60 per share of Series A preferred stock so converted.
The holder of Series A preferred stock has the right to elect one member of the
board of directors. To date, the holder of the Series A preferred stock has
designated William Apfelbaum to the board of directors. All shares of Series A
preferred stock will automatically convert into shares of common stock upon the
closing of the offering.

Series B Preferred Stock Financing

In a private placement transaction, which closed in September 1999, we issued
a total of 4,107,044 shares of Series B preferred stock at $2.35 per share
convertible into common stock at a three-to-two ratio. The principal purchasers
of the Series B preferred stock included DigaComm (L90), L.L.C. and Keystone
Venture V, L.P. DigaComm (L90), L.L.C. also purchased a warrant to acquire up
to 353,964 shares of our common stock at a price per share of $5.30. Unless
previously exercised, this warrant will automatically be exercised on a
cashless basis into 183,418 shares of

53
<PAGE>

common stock upon the closing of the offering. The holders of the Series B
preferred stock are entitled to registration rights regarding the shares of
common stock issued or issuable upon conversion. See "Description of Capital
Stock--Registration Rights" for a description of these registration rights. The
holders of the outstanding shares of Series B preferred stock are entitled to
receive, upon conversion of shares of Series B preferred stock into common
stock, a dividend in cash accruing from August 6, 1999, at an annual rate of
$0.14 per share of Series B preferred stock so converted. The holders of Series
B preferred stock collectively have the right to elect three members of the
board of directors. To date, the holders of the Series B preferred stock have
designated Peter Diamandis, Peter Ligeti and Peter Sealey to the board of
directors. Mr. Diamandis is a managing member of DigaComm, L.L.C., the parent
of DigaComm (L90), L.L.C. Mr. Ligeti is a general partner of Keystone Venture
V, L.P. All shares of Series B preferred stock will automatically convert into
shares of common stock upon the closing of the offering.

Series C Preferred Stock Financing

In a private placement transaction, which closed in September 1999, we issued
a total of 1,307,190 shares of Series C preferred stock at $3.06 per share
convertible into common stock at a three-to-two ratio. The purchasers of the
Series C preferred stock were Development Ventures (Two) Inc. and Rare Medium
Group, Inc. Development Ventures (Two) Inc. purchased a warrant to acquire up
to an additional 674,029 shares of our common stock at a price of $4.59. Rare
Medium Group, Inc. purchased a warrant to acquire up to an additional 600,000
shares of our common stock at a price of $4.59. Unless previously exercised,
both warrants will automatically be exercised on a cashless basis into
742,411 shares of common stock upon the closing of this offering. The holders
of Series C preferred stock have registered the re-sale of the shares of common
stock issued or issuable upon conversion of the Series C preferred stock and
exercise of their warrants on the registration statement of which this
prospectus is a part. However, these stockholders have agreed not to sell any
of these shares for at least 180 days after commencement of this offering, and
one-half of their shares until 270 days after commencement of this offering.
See "Description of Capital Stock--Registration Rights" for a description of
these registration rights. The holders of the outstanding shares of Series C
preferred stock are entitled to receive, upon conversion of shares of Series C
preferred stock into common stock, a dividend in cash accruing from
September 22, 1999, at an annual rate of $0.18 per share of Series C preferred
stock so converted. The holders of Series C preferred stock collectively have
the right to elect one member of the board of directors, which member shall be
designated by Rare Medium for so long as it and its affiliates hold at least 50
percent of the outstanding shares of Series C preferred stock. Rare Medium has
designated Glenn S. Meyers to the board of directors. Mr. Meyers is President
and Chief Executive Officer of Rare Medium Group, Inc. All shares of Series C
preferred stock will automatically convert into shares of common stock upon the
closing of the offering.

Warrants

On June 7, 1999, we issued to The Roman Arch Fund L.P. and The Roman Arch
Fund II, L.P. four warrants to purchase up to an aggregate of 333,333 shares of
common stock, later adjusted to an aggregate of 150,000 shares of common stock,
at an initial purchase price of $2.40 per share, subject to adjustment. These
warrants may be exercised on a cashless basis. These warrants expire on the
earlier of June 7, 2005, or the fifth anniversary of this offering. Warrants to
purchase up to 83,333 shares of common stock, to the extent not previously
exercised, may be exchanged at the election of the holder within 180 days of
the closing of this offering for warrants to purchase up to 166,667 shares of
common stock.

54
<PAGE>

On August 13, 1999, we issued to William Apfelbaum a warrant to purchase up
to 353,964 shares of common stock, at an exercise price of $5.30 per share.
Unless previously exercised this warrant will be automatically exercised on a
cashless basis into 183,418 shares of common stock upon the closing of the
offering.

Shareholders Agreement

In connection with the financings described above, substantially all of our
stockholders entered into an agreement with us which provides for specified
voting for our board of directors and requires that corporate activities, such
as a merger or sale of assets, be approved by our stockholders. This agreement
also contains various other rights. However, the provisions of this agreement
will terminate upon the closing of this offering and with the conversion at
that closing of all of our preferred stock into common stock.

55
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the beneficial
ownership of our common stock as of October 31, 1999, and as adjusted to
reflect this offering and the conversion of the preferred stock into common
stock, and the cashless exercise of warrants, upon the closing of this
offering, for each of the following persons:

. each person or entity who we know to beneficially own 5% or more of the
outstanding common stock,

. each of the named executives,

. each of our directors, and

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

Unless otherwise indicated, the address of each beneficial owner listed below
is c/o L90, Inc., 2020 Santa Monica Boulevard, Suite 400, Santa Monica,
California 90404.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options or warrants held by that person that
are currently exercisable or exercisable within 60 days of September 30, 1999,
are deemed outstanding. Such shares, however, are not deemed outstanding for
the purposes of computing the percentage ownership of each other person. Except
as indicated in the footnotes to this table and under applicable community
property laws, each stockholder named in the table has sole voting and
investment power with respect to the shares set forth opposite such
stockholder's name.

<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Owned After Offering
---------------------------------------------------
Number Percent Number Percent
--------------- ------------------------ ----------
<S> <C> <C> <C> <C>
Named executive officers and directors:
John C. Bohan (1)..................... 6,016,666 6,016,666
William M. Apfelbaum (2).............. 2,459,224 2,459,224
Peter E. Ligeti (3)................... 1,132,685 1,132,685
Glenn S. Meyers (4)................... 1,102,396 1,102,396
Peter G. Diamandis (5)................ 920,306 920,306
Christopher J. Cardinali (6).......... 466,666 466,666
Mark D. Roah (7)...................... 466,666 466,666
Thomas A. Sebastian................... -- --
Frank A. Addante (8).................. 400,000 400,000
Peter Sealey.......................... 26,666 26,666
Gerald B. Redditt..................... -- --
Other 5% Stockholders:
Keystone Venture V, L.P. (9).......... 1,132,685 1,132,685
1601 Market Street, Suite 2500
Philadelphia, PA 19103
Development Ventures (Two) Inc. (10).. 1,109,759 1,109,759
51 Twin Pond Lane, New Canaan, CT
06840
Rare Medium Group, Inc. (11).......... 1,035,730 1,035,730
44 West 18th Street, New York, NY
10011
DigaComm (L90), L.L.C. (12)........... 920,306 920,306
400 North Michigan Avenue, Suite 520
Chicago, IL 60611
All directors and executive officers as
a group
(11 persons)(13)...................... 12,724,609 12,724,609
</TABLE>

56
<PAGE>

- --------

(1) Includes 570,000 shares on which Mr. Bohan has granted options to other
key employees of L90.

(2) Includes:

. 1,666,666 shares issuable upon conversion of 2,000 shares of Series A
preferred stock,

. 438,593 shares issuable upon conversion of a warrant at an exercise
price of $1.71 per share, and

. 353,964 shares issuable upon exercise of a warrant at an exercise price
of $5.30 per share.

(3) Reflects 1,132,685 shares beneficially owned by Keystone Venture V, L.P.,
of which Mr. Ligeti is a general partner.

(4) Includes:

. 1,035,730 shares beneficially owned by Rare Medium Group, Inc., of
which Mr. Meyers serves as President and Chief Executive Officer, and

. 66,666 shares issuable upon exercise of stock options at a price of
$4.59 per share, which are presently exercisable or will become
exercisable within 60 days from September 30, 1999.

(5) Reflects 920,306 shares beneficially owned by DigaComm (L90), L.L.C., the
parent of which Mr. Diamandis is a managing member.

(6) Includes:

. 133,333 shares issuable upon exercise of stock options at a price of
$.38 per share, which are presently exercisable or will become
exercisable within 60 days from September 30, 1999, and

. 133,333 shares issuable upon exercise of options granted by Mr. Bohan
at a price of $3.53 per share, which are presently exercisable or will
become exercisable within 60 days from September 30, 1999.

(7) Includes:

. 133,333 shares issuable upon exercise of stock options at a price of
$.38 per share, which are presently exercisable or will become
exercisable within 60 days from September 30, 1999, and

(8) Includes 333,333 shares issuable upon exercise of stock options at a price
of $3.53 per share, which are presently exercisable or will become
exercisable within 60 days from September 30, 1999.

(9) Includes 1,132,685 shares issuable upon conversion of 1,699,028 shares of
Series B preferred stock.

(10) Includes:

. 435,730 shares issuable upon conversion of 653,595 shares of Series C
preferred stock, and

. 674,029 shares issuable upon exercise of a warrant at an exercise price
of $4.59 per share.

57
<PAGE>

(11) Includes:

. 435,730 shares issuable upon conversion of 653,595 shares of Series C
preferred stock, and

. 600,000 shares issuable upon exercise of a warrant at an exercise price
of $4.59 per share.

(12) Includes:

. 566,342 shares issuable upon conversion of 849,514 shares of Series B
preferred stock, and

. 353,964 shares issuable upon exercise of a warrant at an exercise price
of $5.30 per share.

(13) Excludes:

. 133,333 shares issuable upon exercise of options granted by Mr. Bohan
to Mr. Cardinali, and

. 133,333 shares issuable upon exercise of options granted by Mr. Bohan
to Mr. Roah.

58
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following descriptions of our capital stock and material provisions of
our certificate of incorporation and our bylaws are summaries and are qualified
by reference to our certificate of incorporation and our bylaws, which are
included as exhibits to the registration statement of which this prospectus is
a part.

We are authorized to issue up to 53,333,333 shares of common stock, par value
$0.001 per share, and 15,000,000 shares of preferred stock, par value $0.001
per share.

Common Stock

As of September 30, 1999, there were 6,693,333 shares of common stock
outstanding held of record by seven stockholders. Based upon the number of
shares outstanding as of that date and giving effect to the issuance of an
aggregate of 12,385,403 shares of common stock to reflect:

. the offering;

. the conversion of all outstanding preferred stock; and

. the cashless exercise of warrants to purchase 1,109,247 shares of common
stock

there will be approximately 19,078,736 shares of common stock outstanding upon
the closing of this offering.

All outstanding shares of common stock are fully paid and nonassessable, and
the shares of common stock to be issued upon completion of the offering will be
fully paid and nonassessable. Holders of common stock are entitled to one vote
per share in all matters to be voted on by the stockholders and do not have
cumulative voting rights. Accordingly, subject to any voting rights granted to
holders of any preferred stock, 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 those dividends, if any, as may be declared by the board of
directors out of funds legally available therefor, subject to any preferential
dividend rights of any outstanding preferred stock. In the event of a
liquidation, dissolution or winding up, the holders of our common stock are
entitled to share ratably in all assets remaining after payment of liabilities,
after prior distribution rights of shares of preferred stock then outstanding,
if any. The common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock.

Preferred Stock

Under our certificate of incorporation, the board of directors is authorized,
without further stockholder approval, to issue up to 15,000,000 shares of
preferred stock in one or more series and to designate and alter all rights
(including voting rights), preferences, privileges and qualifications,
limitations, restrictions granted to or imposed upon any wholly unissued series
of stock. Our board of directors is also authorized to determine the number of
shares constituting any such series and to increase or decrease (but not below
the number of shares of such series then outstanding) the number of shares of
any series. Our board of directors may authorize the issuance of preferred
stock with voting, conversion or other rights that are senior to the rights of
the holders of common stock. To date, 8,002,000 shares of preferred stock have
been designated as Series A, Series B and Series C preferred stock, leaving
6,998,000 shares available for designation in the future. Upon the completion
of this offering, all outstanding shares of our preferred stock will be
automatically converted into common stock and no shares of preferred stock will
be outstanding.

59
<PAGE>

Holders of Series A, Series B or Series C preferred stock are entitled to
two-thirds of one vote per preferred share in all matters to be voted on by the
stockholders and do not have cumulative voting rights. Holders of Series A
preferred stock are entitled to receive cumulative dividends that accrue at an
annual rate of $40.00 per share. Holders of Series B preferred stock are
entitled to receive cumulative dividends that accrue at an annual rate of $0.14
per share. Holders of Series C preferred stock are entitled to receive
cumulative dividends that accrue at an annual rate of $0.18 per share. In the
event of a liquidation dissolution or winding up, the holders of Series A,
Series B and Series C preferred stock are entitled to share ratably, on a pari
passu basis among each other and senior to the holders of common stock, in all
assets remaining after payment of liabilities. The Series A, Series B and
Series C preferred stock do not have preemptive rights or other subscription
rights. The Series A, Series B and Series C preferred stock are convertible
into shares of common stock on a three-for-two basis.

Six million nine hundred ninety-eight thousand shares of preferred stock are
available for designation in the future and could thus be issued quickly with
terms calculated to delay or prevent a change in control of L90 or to make
removal of management more difficult. Additionally, the issuance of preferred
stock may have the effect of decreasing the market price of the common stock,
and may adversely affect the voting and other rights of the holders of common
stock. Upon the closing of the offering, no shares of preferred stock will be
outstanding and we have no current plans to issue any of the preferred stock.
See "Related Party Transactions" for a description of prior issuances of
preferred stock.

Registration Rights

The Stock Purchase and Stockholders Agreement dated September 16, 1998, among
L90 and the holders of 8,333,333 shares of common stock and securities
convertible into common stock, provides that the holder of the Series A
preferred stock is entitled to registration rights.

. Piggyback registration rights. The holder of our Series A preferred
stock may request to have its shares registered under the Securities Act
any time we file a registration statement to register any of our
securities for our own account or the account of any of our
stockholders. The number of times such rights may be exercised is
unlimited, but the number of shares that can be registered at any one
time is subject to limitations that an underwriter may impose. The
holder has waived his registration rights in connection with this
offering.

The Registration Agreement dated August 6, 1999, among L90 and the holders of
4,107,044 shares of our Series B preferred stock, provides that the holders are
entitled to registration rights.

. Demand registration rights. Commencing 270 days after the closing of
this offering, the holders of a majority of the shares issued upon
conversion of our Series B preferred stock have the right to demand that
we register their shares under the Securities Act. The holders may
exercise their demand registration rights up to two times on Form S-1
and an unlimited number of times on Form S-3, provided that the value of
the shares to be registered is at least $5,000,000.

. Piggyback registration rights. The holders of the shares issued upon
conversion of our Series B preferred stock may request to have their
shares registered under the Securities Act any time we file a
registration statement to register any of our securities for our own
account or the account of any of our stockholders. The number of times
such rights may be

60
<PAGE>

exercised is unlimited, but the number of shares that can be registered
at any one time is subject to limitations that an underwriter may
impose. The holders have waived their registration rights in connection
with this offering.

The Series C Registration Agreement dated September 22, 1999, among L90 and
the holders of 1,307,190 shares of Series C preferred stock, provides that the
holders are entitled to have their shares of common stock issuable upon
conversion of the Series C preferred stock, as well as the common stock
issuable upon exercise of their warrants, registered on the same registration
statement of which this prospectus is a part. The total number of these shares
is 2,145,489 and they are included in a separate resale prospectus. However,
these holders have agreed not to sell any of these shares until 180 days after
commencement of this offering, at which time they may sell one-half of their
shares. These holders have also agreed that they will not sell the other one-
half of their shares until 270 days after commencement of this offering.

Anti-Takeover Effects of Provisions of Delaware Law and L90's Certificate of
Incorporation and Bylaws

We are subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law. Generally, the statute prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For purposes of
Section 203, a "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder,
and an "interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock.

Upon completion of the offering, there will be approximately 34,254,597
shares of common stock and 9,583,766 shares of preferred stock available for
future issuance. Delaware law does not require stockholder approval for the
issuance of authorized shares, or to designate price, rights, preferences,
privileges and restrictions, including voting rights, of the preferred stock.
The additional shares may be used for a variety of corporate purposes. The
issuance of common stock or preferred stock may have the effect of delaying,
deferring or preventing a change in control by making it more difficult for a
third party to acquire a majority of our outstanding voting stock.

Indemnification of Directors, Officers and Agents and Limitation of Liability

Our certificate of incorporation includes a provision that eliminates the
personal liability of our directors, officers and agents for monetary damages
for breach of fiduciary duty as a director, officer or agent, except:

. for any breach of the director's, officer's or agent's duty of loyalty
to us or our stockholders;

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

. for unlawful dividends and stock purchases under section 174 of the
Delaware General Corporation Law; or

. for any transaction from which the director, officer or agent derived an
improper personal benefit.

61
<PAGE>

Our bylaws provide that:

. we must indemnify our directors, officers and agents to the fullest
extent permitted by Delaware law, subject to very limited exceptions;

. we must advance expenses, as incurred, to our directors, officers and
agents in connection with any legal proceeding to the fullest extent
permitted by Delaware law, subject to limited exceptions.

The limitation of liability and indemnification provisions in our certificate
of incorporation and bylaws may discourage stockholders from bringing a lawsuit
against directors for breach of their fiduciary duty. These provisions may also
have the effect of reducing the likelihood of stockholder derivative litigation
against directors, officers and agents, even though a derivative action, if
successful, might otherwise benefit us and our stockholders. Furthermore, a
stockholder's investment may be adversely affected to the extent we pay the
costs of settlement and damage awards against directors, officers and agents
under these indemnification provisions.

We have entered into an agreement with each of our directors and officers
that, among other things, indemnifies him or her for expenses, including
attorneys' fees and associated legal expenses, judgments and fines and amount
paid in settlement, actually and reasonably incurred by him or her in
connection with any action, suit or proceeding arising out of his or her
services as our director or officer. We believe that these agreements are
necessary to attract and retain qualified directors and officers. Our bylaws
also permit us to secure insurance on behalf of any director, officer, employee
or agent for any liability arising out of his or her actions on our behalf,
regardless of whether Delaware law would permit indemnification. We have
obtained liability insurance for our directors and officers.

At present, there is no pending litigation or proceeding involving any of our
directors, officers or agents for which indemnification is sought, nor are we
aware of any threatened litigation that may result in claims for
indemnification.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Chase Mellon
Shareholder Services. Its telephone number for such purposes is (213) 553-9700.

Listing

We have applied for quotation of our common stock on the Nasdaq National
Market under the trading symbol "LNTY."

62
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for our common stock. Future
sales of substantial amounts of our common stock in the public market could
adversely affect market prices. Upon completion of this offering, we will have
outstanding an aggregate of 19,078,736 shares of common stock, assuming no
exercise of the underwriters' over-allotment option and no exercise of
outstanding options or warrants, other than the cashless exercise of warrants
to acquire 1,109,568 shares of common stock upon the closing of this offering.
Of these shares, the 6,000,000 shares sold in the offering will be freely
tradeable without restriction or further registration under the Securities Act,
except that any shares purchased by our "affiliates," as that term is defined
in Rule 144 of the Securities Act, may generally only be sold in compliance
with the limitations of rule 144 described below. All other outstanding shares
not sold in this offering will be deemed "restricted securities" as defined
under Rule 144. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rule 144
or 701 promulgated under the Securities Act, which rules are summarized below.
Subject to the lock-up agreements described below and the provisions of Rules
144 and 701, additional shares will be available for sale in the public market
as follows:

<TABLE>
<CAPTION>
Approximate Number of
Shares Eligible For
Future Sale Date
--------------------- ----

<C> <S>
6,000,000............... After the date of this prospectus, freely tradeable
shares sold in this offering.

1,072,744............... After 180 days from the date of this prospectus, a
180-day lock-up is released and these shares are
freely tradeable.

6,666,667............... After 180 days from the date of this prospectus, a
180-day lock-up is released and these shares are
saleable under Rule 144, subject, in some cases, to
volume limitations, or Rule 701.

5,112,624............... After 180 days from the date of this prospectus,
restricted securities that are held for less than one
year and are not yet saleable under Rule 144.

1,072,744............... After 270 days from the date of this prospectus, a
270-day lock-up is released and these shares are
freely tradeable.
</TABLE>

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person, or persons whose shares are aggregated,
who has beneficially owned shares of our common stock for at least one year,
including the holding period of any prior owner, except if the prior owner was
one of our affiliates, would be entitled to sell within any three-month period
a number of shares that does not exceed the greater of:

. 1% of the number of shares of our common stock then outstanding (which
will equal approximately 190,787 immediately after this offering); or

. the average weekly trading volume of our common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about L90.

Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold

63
<PAGE>

for at least two years, including the holding period of any prior owner except
one of our affiliates, is entitled to sell the shares without complying with
the manner of sale, public information, volume limitation or notice provisions
of Rule 144; therefore, unless otherwise restricted, 144(k) shares could be
sold immediately upon the completion of this offering.

Under Rule 701 of the Securities Act as currently in effect, any of our
employees, consultants or advisors who purchased shares from us in connection
with a compensatory stock or option plan or other written agreement is eligible
to resell these shares 90 days after the effective date of this offering in
reliance on Rule 144, but without compliance with restrictions, such as the
holding period, contained in Rule 144. However, because all shares that we have
issued under Rule 701 are subject to lock-up agreements, they will only become
eligible for sale when the 180-day lock-up agreements expire. As a result, they
may be sold 90 days after this offering only if the holder obtains the prior
written consent of SG Cowen Securities Corporation.

All of our officers, directors, and other existing stockholders have agreed
not to sell, transfer, offer, or otherwise dispose of, directly or indirectly,
any shares of common stock or any securities convertible into or exercisable or
exchangeable for common stock without the prior written consent of SG Cowen
Securities Corporation for a period of 180 days after the date of this
prospectus.

Upon completion of this offering, some of the holders of shares of our common
stock, or their transferees, will be entitled to rights with respect to the
registration of their shares under the Securities Act. See "Description of
Capital Stock-Registration Rights" for a description of these registration
rights. Registration of these shares under the Securities Act would result in
such shares becoming freely tradeable without restriction under the Securities
Act (except for shares purchased by our affiliates) immediately upon the
effectiveness of a registration. Furthermore, the resale of up to 2,145,489
shares issuable to two of our stockholders upon conversion of their Series C
preferred stock and exercise of their warrants have been registered on the same
registration statement of which this prospectus is a part. However, these
stockholders have agreed not to sell any of these shares until 180 days after
commencement of this offering, and not to sell one-half of these shares until
270 days after commencement of this offering.

We intend to file a registration statement under the Securities Act covering
shares of our common stock reserved for issuance upon exercise of options
granted under our 1999 Stock Incentive Plan and options granted outside of this
plan. See "Management-1999 Stock Incentive Plan" for more information on this
Plan. This registration statement is expected to be filed and become effective
as soon as practicable after the effective date of this offering. Accordingly,
shares registered under this registration statement will, subject to the 180-
day lock-up period and to Rule 144 volume limitations applicable to our
affiliates, be available for sale in the open market, unless these shares are
subject to vesting restrictions with us. A total of 2,263,333 shares have been
reserved for issuance upon exercise of options granted under our 1999 Stock
Incentive Plan and options granted outside of this plan. As of September 30,
1999, options to purchase 2,097,067 shares of our common stock were issued and
outstanding. As of that date, 393,333 of these options had vested and were
therefore exercisable.

As of September 30, 1999, we had outstanding warrants to purchase 1,296,520
shares of common stock. If these warrants are exercised and the exercise price
is paid in cash, the shares must be held for one year before they can be sold
under Rule 144. However, warrants to purchase 1,981,957 shares are subject to a
cashless exercise provision upon the closing of this offering which would
result in the issuance of 1,109,247 shares of common stock. These shares would
be saleable under Rule 144 one year after the issuance of the warrants.

64
<PAGE>

U.S. TAX CONSEQUENCES TO NON-U.S. HOLDERS

Following is a general discussion of the material U.S. federal income and
estate tax consequences of the ownership and disposition of the common stock
applicable to non-U.S. holders of common stock. For purposes of this
discussion, a non-U.S. holder is any holder of common stock that, for U.S.
federal income tax purposes, is not a U.S. person, as defined below. This
discussion does not address all aspects of U.S. federal income and estate
taxation that may be relevant in light of a non-U.S. holder's particular facts
and circumstances, such as being a U.S. expatriate, and does not address any
tax consequences arising under the laws of any state, local or non-U.S. taxing
jurisdiction. Furthermore, the following discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended, and administrative
and judicial interpretations thereof, all as in effect on the date hereof, and
all of which are subject to change, possibly with retroactive effect. L90, Inc.
has not and will not seek a ruling from the Internal Revenue Service with
respect to the U.S. federal income and estate tax consequences described below,
and as a result, there can be no assurance that the Internal Revenue Service
will not disagree with or challenge any of the conclusions set forth in this
discussion.

For purposes of this discussion, the term U.S. person means:

. a citizen or resident of the United States;

. a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or any political
subdivision thereof that is subject to U.S. federal income tax on a net
basis in respect of income or gain with respect to the common stock of
L90, Inc.;

. an estate whose income is included in gross income for U.S. federal
income tax purposes regardless of its source; or

. a trust whose administration is subject to the primary supervision of a
U.S. court and which has one or more U.S. persons who have the authority
to control all substantial decisions of the trust.

Dividends

A dividend paid to a non-U.S. holder generally will be subject to U.S.
withholding tax either at a rate of 30% of the gross amount of the dividend or
such lower rate as may be specified by an applicable income tax treaty.
Dividends received by a non-U.S. holder that are effectively connected with a
U.S. trade or business conducted by the non-U.S. holder or a "permanent
establishment" or fixed base in the United States of such non-U.S. holder are
exempt from that withholding tax. However, those effectively connected
dividends, net of deductions and credits, are taxed at the same graduated rates
applicable to U.S. persons.

In addition to the graduated tax described above, dividends received by a
corporate non-U.S. holder that are effectively connected with a U.S. trade or
business of the corporate non-U.S. holder may also be subject to a branch
profits tax at a rate of 30% or such lower rate as may be specified by an
applicable income tax treaty.

A non-U.S. holder that is eligible for a reduced rate of withholding tax due
to an applicable income tax treaty may be required to submit forms or other
documentation to avail itself of that treaty and may be able to obtain a refund
of any excess amounts withheld by L90, Inc. by filing an appropriate claim for
refund with the Internal Revenue Service.

65
<PAGE>

Gain on Disposition of Common Stock

A non-U.S. holder generally will not be subject to U.S. federal income tax on
any gain realized upon the sale or other disposition of common stock unless:

. the gain is effectively connected with a U.S. trade or business of the
non-U.S. holder, which gain, in the case of a corporate non-U.S. holder,
must also be taken into account for branch profits tax purposes, or, in
the case of inapplicable income tax treaty, the gain is attributable to
a "permanent establishment" of the non-U.S. holder or of a U.S.
partnership, limited liability company or trust or estate in which the
non-U.S. holder is a partner, member or beneficiary;

. the non-U.S. holder is an individual who holds his or her common stock
as a capital asset within the meaning of Section 1221 of the Code,
generally, an asset held for investment purposes, and who is present in
the United States for a period or periods aggregating 183 days or more
during the calendar year in which the sale or disposition occurs and
other conditions are met;

. L90 is or has been a "United States real property holding corporation"
for U.S. federal income tax purposes at any time within the shorter of
the five-year period preceding the disposition or the holder's holding
period for its common stock. L90 believes that, as of the date of this
prospectus, it is not and does not expect that it will become a "United
States real property holding corporation" for U.S. federal income tax
purposes; or

. the non-U.S. holder is a U.S. expatriate subject to the tax provisions
of U.S. law.

Generally, a corporation is a "United States real property holding
corporation" if the fair market value of its "United States real property
interests" equals or exceeds 50% of the sum of the fair market value of its
worldwide real property interests plus its other assets used or held for use in
a trade or business. However, even if we were to become a "United States real
property holding corporation," any gain realized by a non-U.S. holder still
would not be subject to United States federal income tax if our shares are
"regularly traded", within the meaning of the applicable regulations, on an
established securities market, such as, the New York Stock Exchange or NASDAQ
Stock Market. We believe that our common stock will be "regularly traded on an
established securities market." If, however, our common stock is not so traded,
on a sale or disposition by a non-U.S. holder of the common stock the
transferee of such stock will be required to withhold 10% of the proceeds
unless we certify that either we are not, nor have we been, a United States
real property holding company or another exemption from withholding applies. If
a non-U.S. holder who is an individual is subject to tax under clauses (1) or
(4) above, such individual generally will be taxed on the net gain derived from
a sale of common stock under regular graduated United States federal income tax
rates. If an individual non-U.S. holder is subject to tax under clause
(2) above, such individual generally will be subject to a flat 30% tax on the
gain derived from a sale, which may be offset by United States capital losses,
notwithstanding the fact that such individual is not considered a resident
alien of the United States. Thus, individual non-United States holders who have
spent, or expect to spend, more than a de minimis period of time in the United
States in the taxable year in which they contemplate a sale of common stock are
urged to consult their tax advisers prior to the sale concerning the United
States federal income tax consequences of such sale.

Backup Withholding and Information Reporting

Generally, L90 would be required to report annually to the Internal Revenue
Service the amount of dividends, if any, paid on the common stock, the name and
address of the recipient, and the

66
<PAGE>

amount, if any, of tax withheld. A similar report would be sent to the
recipient. Under applicable income tax treaties or other agreements, the
Internal Revenue Service may make its reports available to tax authorities in
the recipient's country of residence.

Dividends paid to a non-U.S. holder at an address within the United States
may be subject to backup withholding at a rate of 31% if the non-U.S. holder
fails to establish that it is entitled to an exemption or to provide a correct
taxpayer identification number and other information to the payer. Backup
withholding will generally not apply to dividends paid to non-U.S. holders at
an address outside the United States on or prior to December 31, 2000 unless
the payer has knowledge that the payee is a U.S. person. Under recently
finalized Treasury Department regulations regarding withholding and information
reporting, payment of dividends to non-U.S. holders at an address outside the
United States after December 31, 2000 may be subject to backup withholding at a
rate of 31% unless such non-U.S. holder satisfies various certification
requirements. These regulations generally presume that a non-U.S. holder is
subject to backup withholding at the 31% rate and information reporting unless
L90 receives certification of such holder's non-U.S. status. Backup withholding
at the 31% rate also generally will not apply to dividends paid to non-U.S.
holders that are subject to the 30% withholding on gross dividends, or a lower
rate specified by an applicable income tax treaty, as discussed above.

Under current Treasury Department regulations, the payment of the proceeds of
the disposition of common stock to or through the U.S. office of a broker is
subject to information reporting and backup withholding at a rate of 31% unless
the holder certifies its non-U.S. status under penalties of perjury or
otherwise establishes an exemption. Generally, the payment of the proceeds of
the disposition by a non-U.S. holder of common stock outside the United States
to or through a foreign office of a broker will not be subject to backup
withholding but will be subject to information reporting requirements if the
broker is:

. a U.S. person;

. a "controlled foreign corporation" for U.S. federal income tax purposes;
or

. a foreign person 50% or more of whose gross income for specified periods
is from the conduct of a U.S. trade or business

unless the broker has documentary evidence in its files of the holders' non-
U.S. status and other conditions are met, or the non-U.S. holder otherwise
establishes an exemption.

In the case of the payment of proceeds from the disposition of common stock
effected by a foreign office of a broker that is a United States person or a
"United States related person", existing regulations require information
reporting on the payment unless (1) the broker receives a statement from the
owner, signed under penalty of perjury, certifying its non-United States status
or the broker has documentary evidence in its files as to the non-U.S. holder's
foreign status, and the broker has no actual knowledge to the contrary, and
other United States federal tax law conditions are met or (2) the beneficial
owner otherwise establishes an exemption. For this purpose, a "United States
related person" is either (1) a "controlled foreign corporation" for United
States federal income tax purposes; or (2) a foreign person 50% or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment, or for such part of the period
that the broker has been in existence, is derived from activities that are
effectively connected with the conduct of a United States trade or business.
After December 31, 1999, the Final Regulations will impose information
reporting and backup withholding on payments of the gross

67
<PAGE>

proceeds from the sales or redemptions of common stock that are effected
through foreign offices of brokers having any of a broader class of specified
connections with the United States. Such information reporting and backup
withholding may be avoided, however, if the applicable IRS certification
requirements are complied with. Prospective investors should consult with their
own tax advisers regarding the Final Regulations and in particular with respect
to whether the use of a particular broker would subject the investor to these
rules.

In general, the recently finalized Treasury Department regulations, described
above, do not significantly alter substantive withholding and information
reporting requirements but would alter procedures for claiming benefits of an
income tax treaty and change the certification procedures relating to the
receipt by intermediaries of payments on behalf of the beneficial owner of
shares of common stock. Non-U.S. holders should consult their tax advisors
regarding the effect, if any, of those final Treasury Department regulations on
an investment in the common stock. Those final Treasury Department regulations
are generally effective for payments made after December 31, 2000.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the Internal
Revenue Service.

Estate Tax

An individual non-U.S. holder who owns common stock at the time of his or her
death or had made lifetime transfers of an interest in common stock will be
required to include the value of that common stock in his or her gross estate
for U.S. federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise. Therefore, the value of such stock may be subject to U.S.
federal and state estate tax.

The foregoing discussion is a summary of the principal U.S. federal income
and estate tax consequences of the ownership, sale or other disposition of
common stock by non-U.S. holders. Accordingly, investors are urged to consult
their own tax advisors with respect to the income and estate tax consequences
of the ownership and disposition of common stock, including the application and
effect of the laws of any state, local, foreign or other taxing jurisdiction.

68
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement dated ,
1999, the underwriters named below, through their representatives SG Cowen
Securities Corporation, Banc of America Securities LLC, CIBC World Markets
Corp. and Wit Capital Corporation, have severally agreed to purchase from us
the number of shares of common stock set forth opposite their names at the
public offering price less the underwriting discounts and commissions set forth
on the cover page of this prospectus.

<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ---------
<S> <C>
SG Cowen Securities Corporation....................................
Banc of America Securities LLC.....................................
CIBC World Markets Corp............................................
Wit Capital Corporation............................................
---
Total............................................................
===
</TABLE>

The underwriting agreement provides that the obligations of the underwriters
are conditional and may be terminated at their discretion based on their
assessment of the state of the financial markets and may also be terminated
upon the occurrence of the events specified in the underwriting agreement. The
underwriters are severally committed to purchase all of the common stock being
offered by L90 if any of such shares are purchased, other than those covered by
the over-allotment option described below.

The underwriters propose to offer the common stock directly to the public at
the public offering price set forth on the cover page of this prospectus. The
underwriters may offer the common stock to some dealers at that price less a
concession not in excess of $ per share. Dealers may reallow a concession
not in excess of $ per share to some other dealers. After the shares of
common stock are released for sale to the public, the underwriters may vary the
offering price and other selling terms.

We have granted to the underwriters an option, exercisable for up to 30 days
after the date of this prospectus, to purchase up to 900,000 additional shares
of common stock at the public offering price set forth on the cover of this
prospectus to cover over-allotments, if any. If the underwriters exercise their
over-allotment option, the underwriters have severally agreed, subject to
limited conditions, to purchase approximately the same percentage that the
number of shares of common stock to be purchased by each of them, as shown in
the foregoing table, bears to the common stock covered by this prospectus.

At our request, the underwriters have reserved up to 5% of the shares of
common stock for sale at the initial public offering price to our employees,
directors and other persons with relationships with us. The number of shares of
common stock available for sale to the general public will be reduced to the
extent such persons 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 hereby.

A prospectus in electronic format is being made available on an Internet Web
site maintained by Wit Capital. In addition, under an e-Dealer Agreement, all
dealers purchasing shares from Wit Capital in the offering similarly have
agreed to make a prospectus in electronic format available

69
<PAGE>

on Web sites maintained by each of the e-Dealers. Wit Capital offers securities
over the Internet to its customers in compliance with the no-action letter
addressed to it and the related request letter, each dated July 14, 1999.

We have agreed to indemnify the underwriters against some liabilities,
including liabilities under the Securities Act, and to contribute to payments
that the underwriters may be required to make in respect thereof.

L90, our directors and officers and existing stockholders, holding
approximately 99% of our common stock, have agreed that for a period of at
least 180 days following the date of this prospectus, without the prior written
consent of SG Cowen Securities Corporation, they will not directly or
indirectly, offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, other than by operation of law, any shares of common
stock or any securities convertible into or exercisable or exchangeable for
common stock, including, without limitation, common stock which may be deemed
to be beneficially owned in accordance with rules and regulations promulgated
under the Securities Act. Except for holders of 2,145,488 shares of common
stock, the resale of which is registered on the same registration statement of
which this prospectus is a part, all holders of demand or incidental
registration rights have waived these rights with respect to this offering.

The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions, penalty bids and passive market making in
accordance with Regulation M under the Securities Exchange Act of 1934. Over-
allotment involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed
a specified maximum. Syndicate covering transactions involve purchases of the
common stock in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the
representatives to reclaim a selling concession from a syndicate member when
the common stock originally sold by the syndicate member is purchased in a
syndicate covering transaction to cover syndicate short positions. In passive
market making, market makers in the common stock who are underwriters or
prospective underwriters may, subject to some limitations, make bids for or
purchases of the common stock until the time, if any, at which a stabilizing
bid is made. These stabilizing transactions, syndicate covering transactions
and penalty bids may cause the price of the common stock to be higher than it
would otherwise be in the absence of these transactions. These transactions may
be effected on the Nasdaq National Market or otherwise and, if commenced, may
be discontinued at any time.

The underwriters have advised us that they do not intend to confirm sales in
excess of 5% of the common stock offered to any account over which they
exercise discretionary authority.

Prior to this offering, there has been no public market of the common stock.
Consequently, the initial public offering price will be determined by
negotiations between us and the underwriters. Among the factors considered in
these negotiations will be prevailing market conditions, the market
capitalizations and the stages of development of other companies that we and
the underwriters believe to be comparable to us, estimates of our business
potential, our results of operations in recent periods, the present state of
our development and other factors deemed relevant.

70
<PAGE>

We estimate that our out of pocket expenses for this offering will be
approximately $1,000,000.

Wit Capital, a member of the National Association of Securities Dealers, Inc.
will participate in the offering as one of the underwriters. The National
Association of Securities Dealers, Inc. approved the membership of Wit Capital
on September 4, 1997. Since that time, Wit Capital has acted as an underwriter,
co-manager or selected dealer in over 125 public offerings. Except for its
participation as a manager in this offering, Wit Capital has no relationship
with L90 or any of its founders or significant stockholders.

LEGAL MATTERS

Matters relating to this offering are being passed upon for us by Paul,
Hastings, Janofsky & Walker LLP, Los Angeles, California. Brobeck, Phleger &
Harrison LLP, Los Angeles, California is acting as counsel for the
underwriters.

EXPERTS

Our financial statements, included in this prospectus, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission in Washington,
D.C., a registration statement on Form S-1 under the Securities Act with
respect to the common stock covered under this prospectus. This prospectus does
not contain all of the information set forth in the registration statement and
the exhibits and schedules filed with the registration statement. Some items
are omitted in accordance with the rules and regulations of the SEC. For
further information with respect to L90 and the common stock covered under this
prospectus, reference is made to the registration statement and the exhibits
filed as a part thereof. Statements contained in this prospectus as to the
contents of any contract or other document filed as an exhibit to the
registration statement are, in each case, qualified in all respects by
reference to such exhibit. Upon completion of the offering, we will be subject
to the informational requirements of the Securities Exchange Act of 1934, and
in accordance with the Exchange Act, will file reports and other information
with the SEC. The registration statement, including exhibits, as well as
reports and other information which we filed with the SEC, may be inspected
without charge at the Public Reference Room of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the SEC's regional offices at Seven World
Trade Center, 13th Floor, New York, NY 10048, and Citicorp Center, 500 West
Madison Street, Chicago, IL 60661. Copies of such materials can also be
obtained at prescribed rates from the Public Reference Section of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549. Electronic filings made through
the Electronic Data Gathering Analysis and Retrieval System are publicly
available through the SEC's Web Site at http://www.sec.gov.

We will issue to our stockholders annual reports and, upon request, will make
available unaudited quarterly reports for the first three quarters of each
fiscal year. Annual reports will include audited financial statements and
reports of our independent accountants with respect to the examination of these
financial statements.

71
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
L90, Inc.

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

Balance Sheets as of December 31, 1997 and 1998 and September 30, 1999... F-3

Statements of Operations for the period ended December 31, 1997, for the
year ended December 31, 1998 and for the nine months ended September 30,
1998 and 1999........................................................... F-4

Statements of Stockholders' Equity for the period ended December 31,
1997, for the year ended December 31, 1998 and for the nine months ended
September 30, 1999...................................................... F-5

Statements of Cash Flows for the period ended December 31, 1997, for the
year ended December 31, 1998 and for the nine months ended September 30,
1998 and 1999........................................................... F-6

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

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
L90, Inc.:

We have audited the accompanying balance sheets of L90, Inc. (a Delaware
Corporation) as of December 31, 1997 and 1998, and September 30, 1999, and the
related statements of operations, stockholders' equity and cash flows for the
period from January 5, 1997 (inception) to December 31, 1997, the year ended
December 31, 1998 and the nine month period ended September 30, 1999. 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 L90, Inc. as of December 31,
1997 and 1998, and September 30, 1999 and the results of its operations and its
cash flows for the period from January 5, 1997 (inception) to December 31,
1997, the year ended December 31, 1998 and the nine month period ended
September 30, 1999, in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen LLP

Los Angeles, California

November 1, 1999

F-2
<PAGE>

L90, INC.

BALANCE SHEETS
<TABLE>
<CAPTION>
Pro Forma
Stockholders
December 31, Equity
-------------------- September 30, September 30,
1997 1998 1999 1999
-------- ---------- ------------- -------------
(unaudited)
(Note 3)
ASSETS
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents.. $235,189 $2,111,852 $11,555,831
Accounts receivable (net of
allowances of $69,860 and
$142,952 at December 31,
1997 and 1998,
respectively, and $316,022
at September 30, 1999).... 684,037 1,310,457 2,566,721
Prepaid expenses and other
assets.................... 25,325 196,562 772,552
-------- ---------- -----------
Total current assets....... 944,551 3,618,871 14,895,104
-------- ---------- -----------
Property and equipment:
Equipment................. 24,455 320,567 792,350
Furniture and fixtures.... 7,417 15,720 68,621
Leasehold improvements.... -- 18,347 23,801
-------- ---------- -----------
31,872 354,634 884,772
Less--Accumulated
depreciation and
amortization............. (6,455) (37,340) (168,592)
-------- ---------- -----------
Property and equipment,
net....................... 25,417 317,294 716,180
-------- ---------- -----------
Total assets............... $969,968 $3,936,165 $15,611,284
======== ========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable........... $344,000 $1,177,950 $ 3,133,178
Accrued expenses........... 100,240 300,670 1,363,264
Current portion of long-
term capital lease
obligations............... -- 68,025 140,753
Deferred revenues.......... 30,418 53,417 --
Accrued dividends.......... -- 23,233 175,589
-------- ---------- -----------
Total current liabilities.. 474,658 1,623,295 4,812,784
Long-term capital lease
obligations, net of current
portion..................... -- 180,362 286,094
-------- ---------- -----------
Total liabilities.......... 474,658 1,803,657 5,098,878
-------- ---------- -----------
Stockholders' Equity:
Preferred stock, $0.001 par
value; 15,000,000 shares
authorized:
Series A preferred stock,
$0.001 par value,
2,000 shares authorized,
2,000 shares issued and
outstanding, including
paid-in capital of
$2,077,483............... -- 2,000,000 2,077,503 $ --
Series B preferred stock,
$0.001 par value,
5,000,000 shares
authorized,
4,107,044 shares issued
and outstanding,
including paid-in-capital
of $9,348,823............ 9,352,930 --
Series C preferred stock,
$0.001 par value,
3,000,000 shares
authorized,
1,307,190 shares issued
and outstanding,
including paid-in-capital
of $4,574,279............ 4,575,586 --
Common stock, $0.001 par
value, 53,333,333 shares
authorized, 6,693,333 and
11,969,489 shares issued
and outstanding, actual
and proforma,
respectively.............. -- 6,667 6,693 11,969
Additional paid-in
capital................... -- 50,151 181,901 16,182,644
Notes receivable for common
stock..................... -- (43,750) (43,750) (43,750)
Capital contributions, net
of shareholder draws...... 8,068 -- -- --
Retained earnings.......... 487,242 119,440 (5,638,457) (5,638,457)
-------- ---------- ----------- -----------
Total stockholders'
equity.................... 495,310 2,132,508 10,512,406 $10,512,406
-------- ---------- ----------- ===========
Total liabilities and
stockholders' equity...... $969,968 $3,936,165 $15,611,284
======== ========== ===========
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-3
<PAGE>

L90, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Period Ended Year Ended Nine Months Ended
December 31, December 31, September 30,
------------ ------------ -----------------------
1997 1998 1998 1999
------------ ------------ ---------- ------------
(unaudited)
<S> <C> <C> <C> <C>
Revenue
Service fee-based
revenue................ $ -- $ -- $ -- $ 2,474,727
Commission-based
revenue................ 1,159,764 2,189,433 1,465,259 1,498,580
---------- ----------- ---------- ------------
Total revenue............. 1,159,764 2,189,433 1,465,259 3,973,307
---------- ----------- ---------- ------------
Operating expenses:
Cost of service fee and
other revenue.......... -- -- -- 1,335,504
Sales and marketing..... 549,805 1,361,856 874,897 2,988,069
Research and
development............ -- 138,402 61,122 1,404,641
General and
administrative......... 302,776 995,435 578,077 2,707,578
---------- ----------- ---------- ------------
Total operating expenses.. 852,581 2,495,693 1,514,096 8,435,792
---------- ----------- ---------- ------------
Operating income (loss)... 307,183 (306,260) (48,837) (4,462,485)
Interest income (expense),
net...................... 2,601 17,491 6,822 (51,139)
---------- ----------- ---------- ------------
Income (loss) before
provision for income
taxes.................... 309,784 (288,769) 42,015 (4,513,624)
Provision for income
taxes.................... -- 800 -- --
---------- ----------- ---------- ------------
Net income (loss)......... $ 309,784 $ (289,569) $ 42,015 $ (4,513,624)
========== =========== ========== ============
Cumulative dividends on
participating preferred
stock.................... -- (23,233) -- (1,244,273)
---------- ----------- ---------- ------------
Net income (loss)
attributable to common
stockholders............. $ 309,784 $ (312,802) $ 42,015 $ (5,757,897)
========== =========== ========== ============
Net income (loss) per
share:
Basic/Diluted........... $ -- $ (0.05) $ 0.01 $ (0.86)
========== =========== ========== ============
Weighted average number of
common shares
outstanding:
Basic/Diluted........... -- 6,666,667 6,666,667 6,667,434
========== =========== ========== ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>

L90, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
Notes
Receivable
Additional for
Preferred Capital Common Paid-in Common Retained
Stock Account Stock Capital Stock Earnings Total
----------- ---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE at January 1,
1997................... $ -- $ 13,068 $ -- $ -- $ -- $ 177,458 $ 190,526
Withdrawal of capital... -- (5,000) -- -- -- -- (5,000)
Net income.............. -- -- -- -- -- 309,784 309,784
----------- ---------- ---------- ---------- ---------- ----------- -----------
BALANCE at December 31,
1997................... -- 8,068 -- -- -- 487,242 495,310
Net loss................ -- -- -- -- -- (289,569) (289,569)
Issuance of Series A
preferred stock........ 2,000,000 -- -- -- -- -- 2,000,000
Issuance of common
stock.................. -- -- -- 43,750 (43,750) -- --
Distributions to
shareholders........... -- -- -- -- -- (50,000) (50,000)
Conversion to
C-corporation.......... -- (8,068) 6,667 6,401 -- (5,000) --
Accrual of cumulative
dividends on
participating preferred
stock.................. -- -- -- -- -- (23,233) (23,233)
----------- ---------- ---------- ---------- ---------- ----------- -----------
BALANCE at December 31,
1998................... 2,000,000 -- 6,667 50,151 (43,750) 119,440 2,132,508
Net loss................ -- -- -- -- -- (4,513,624) (4,513,624)
Issuance of Series B
preferred stock, net of
costs of $706,471...... 8,957,694 -- -- -- -- -- 8,957,694
Issuance of Series C
preferred stock, net of
costs of $45,505....... 3,956,408 -- -- -- -- -- 3,956,408
Issuance of common stock
for options............ -- -- 26 93,974 -- -- 94,000
Issuance of debt related
warrants............... -- -- -- 37,776 -- -- 37,776
Issuance of preferred
stock warrants......... 1,091,917 -- -- -- -- (1,091,917) --
Accrual of cumulative
dividends on
participating preferred
stock.................. -- -- -- -- -- (152,356) (152,356)
----------- ---------- ---------- ---------- ---------- ----------- -----------
BALANCE at September 30,
1999................... $16,006,019 $ -- $ 6,693 $ 181,901 $ (43,750) $(5,638,457) $10,512,406
=========== ========== ========== ========== ========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

L90, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Period Ended Year Ended Nine Months Ended
December 31, December 31, September 30,
------------ ------------ ------------------------
1997 1998 1998 1999
------------ ------------ ----------- -----------
(unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)........... $ 309,784 $ (289,569) $ (42,015) $(4,513,624)
Adjustments to reconcile net
loss to cash used in
operating activities--
Depreciation and
amortization............. 5,800 30,885 8,023 169,028
Changes in assets and
liabilities:
Increase in accounts
receivable............... (489,637) (626,420) (411,857) (1,256,263)
Increase in prepaid
expenses and other
assets................... (25,325) (171,237) (83,846) (575,990)
Increase in accounts
payable.................. 327,237 833,950 529,607 1,955,228
Increase in accrued
expenses................. 100,240 200,430 76,246 1,062,594
Increase (decrease) in
deferred revenues........ 30,418 22,999 30,526 (53,417)
--------- ---------- ---------- -----------
Net cash provided by
(used in) operating
activities.............. 258,517 1,038 106,684 (3,212,444)
--------- ---------- ---------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment................. (18,876) (322,762) (18,428) (530,139)
--------- ---------- ---------- -----------
Net cash used in
investing activities.... (18,876) (322,762) (18,428) (530,139)
--------- ---------- ---------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net borrowings (repayments)
under capital lease
obligations............... -- 248,387 (8,340) 178,460
Loan proceeds.............. -- -- 200,000 --
Withdrawal of capital...... (5,000) -- -- --
Distribution to
Shareholder............... -- (50,000) -- --
Series A preferred stock... -- 2,000,000 2,000,000 --
Series B preferred stock... -- -- -- 8,957,694
Series C preferred stock... -- -- -- 3,956,408
Exercise of common stock
options................... -- -- -- 94,000
--------- ---------- ---------- -----------
Net cash provided by
(used in) financing
activities.............. (5,000) 2,198,387 2,191,660 13,186,562
--------- ---------- ---------- -----------
Net increase in cash........ 234,641 1,876,663 2,279,916 9,443,979
Cash and cash equivalents,
beginning of period........ 548 235,189 235,189 2,111,852
--------- ---------- ---------- -----------
Cash and cash equivalents,
end of period.............. $ 235,189 $2,111,852 $2,515,105 $11,555,831
========= ========== ========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period
for:
Interest................... $ -- $ 15,555 $ -- $ 42,670
========= ========== ========== ===========
Income taxes............... $ -- $ -- $ -- $ --
========= ========== ========== ===========
SUMMARY OF NON-CASH
FINANCING ACTIVITIES:
Notes receivable for common
stock..................... $ -- $ (43,750) $ -- $ (43,750)
========= ========== ========== ===========
Accrued dividends.......... $ -- $ 23,233 $ -- $ 152,356
========= ========== ========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS

1. Description of the Business

L90, Inc., (the "Company") is an internet-based provider of online
advertising and direct marketing solutions for advertisers and Web
publishers. The Company provides fully-outsourced ad sales, as well as ad
serving and tracking technology. The Company develops targeted advertising
campaigns that leverage the capabilities of the internet. The Company's
adMonitor technology platform provides Web publishers, advertisers and ad
agencies with the ability to target, deliver, measure and analyze their
marketing campaigns.

The Company commenced operations in January 1997 as a sole
proprietorship. In May 1997, the Company became a California limited
liability company and changed its name to John Bohan and Associates, LLC.
At that time, the Company did business as AdNet Strategies. In January
1998, the Company incorporated in California, elected S-corporation status
and changed its name to AdNet Strategies, Inc. In December 1998, the
Company became a California C-corporation under the name Latitude 90, Inc.
In September 1999, the Company reincorporated in Delaware as L90, Inc.

2. Summary of Significant Accounting Policies

a. Revenue Recognition

Revenue from ad sales is earned under commission-based and service fee-
based contracts. For commission-based contracts, the Company generally
invoices the full amount of revenue due from Web Publishers for the sale of
their ad inventory and is entitled to receive a commission. Revenue earned
from commission-based contracts reflects only the amount of the commission
earned without any associated cost of revenue. The Company recognizes
commissions ratably over the term of the advertising campaigns, which
usually range from one to twelve months. For service fee-based contracts,
the Company is obligated to pay a service fee to the Web publishers for ads
placed on their Web sites that is included in cost of revenue.
Additionally, under service fee-based contracts, the Company must collect
and bear the risk of loss from the advertiser for ads sold. Consequently,
revenue earned from service fee-based contracts reflects the full value of
the ads sold, or the Company's credit risk exposure on service fee-based
sales.

Systems revenue represents the full value of gross billings for ads sold
under either commission-based or service fee-based contracts and is not
affected by the mix of such contracts. Revenue of the Company was derived
from systems revenue of $4,210,080 for the period ended December 31, 1997,
$8,023,501 for the year ended December 31, 1998 and $9,231,591 for the nine
month period ended September 30, 1999.

b. Current Vulnerability Due to Certain Concentrations

The Company sells advertising space to its customers. For the period
ended December 31, 1997, approximately 17 percent of revenue was to one
advertising customer. For the year ended December 31, 1998 and the nine
months ended September 30, 1999, there were no advertising customers that
comprised greater than 10 percent of revenue. No other advertising customer
accounted for 10 percent or more of revenue.

F-7
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

The Company purchases advertising space from its Web site partners. For
the period ended December 31, 1997, approximately 66.4 percent of revenue
was generated from advertising space from three Web site partners. For the
year ended December 31, 1998, approximately 57.3 percent of revenue was
generated from advertising space from three Web site partners. For the nine
months ended September 30, 1999, approximately 27.6 percent of revenue was
generated from advertising space from three Web site partners. No other Web
site partner accounted for 10 percent or more of the advertising space sold
to generate revenue. The loss of the largest advertising customer or any of
the largest Web site partners could have an adverse effect on the Company's
operations.

c. Cash and Cash Equivalents

For purposes of the balance sheets and statements of cash flows, cash and
cash equivalents includes all cash instruments due on demand or with an
original maturity of 90 days or less.

d. Accounts Receivable

The Company has receivables due from advertisers and from Web publishers
resulting from the sales of ads. These receivables relate to both
commission-based and service fee-based contracts. The Company's credit
exposure on commission-based contracts is limited to the net amount of cash
to be received by the Company from ad sales. The Company's credit exposure
on service fee-based contracts is the full amount of the ad sales as the
Company is obligated to pay the Web publishers for ads sold on their Web
sites irrespective of receiving payment from the advertisers.

The Company extends credit to its customers, who are located in the
United States. The ability of these customers to meet their obligations to
the Company is dependent on their economic health, as well as their
industry and other factors. The Company maintains an allowance for doubtful
accounts which represents management's estimate of expected losses on
specific accounts and inherent losses on other as yet unidentified accounts
included in accounts receivable. In estimating the potential losses on
specific accounts, management performs ongoing credit evaluations of its
customers based on management analysis and reviews of available public
documents. The amounts the Company will ultimately realize could differ
materially in the near term from the amounts assumed in arriving at the
allowance for doubtful accounts reported in the financial statement.

e. Property and Equipment

Property and equipment are recorded at cost and depreciated over the
estimated useful life of the asset, using the straight-line method of
depreciation. Leasehold improvements are amortized over the shorter of the
estimated useful life of the asset or the term of the lease. Property,
equipment and leasehold improvements have estimated useful lives ranging
from three to five years.

f. Equipment Under Capital Leases

Equipment under capital leases is recorded at the lower of the present
value of the minimum lease payments or the fair value of the leased
property at the inception of the lease. Amortization of leased property is
computed using the straight-line method over the term of the lease.

F-8
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

g. Deferred Revenue

Deferred revenue primarily represents advertising campaign revenue to be
recognized over the period of the campaign subsequent to the respective
year-end. This revenue will be recognized ratably over the term of the
advertising campaign, which usually ranges from one to twelve months.

h. Income Taxes

The Company provides for income taxes in accordance with the asset and
liability method. 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 the enacted tax rates in effect for the year 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.

i.Net Loss Per Share

Basic earnings per share ("EPS") is computed by dividing income or loss
available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or result in the
issuance of common stock that would then share in the earnings of the
Company. Potentially dilutive securities are excluded from the Company's
calculation of diluted EPS when their inclusion would be antidilutive.

j. Stock-Based Compensation

Generally Accepted Accounting Principles permit companies to use either
of two alternative accounting methods to recognize employee stock-based
compensation. Under the first accounting method, if options are granted at
an exercise price equal to the market value of the stock at the time of the
grant, no compensation expense is recognized. The Company follows this
accounting method, which it believes better reflects the motivation for its
issuance of stock options, namely, that they are incentives for future
performance rather than compensation for past performance. Under the second
accounting method, issuers record compensation expense over the period they
are expected to be outstanding prior to exercise, expiration, or
cancellation. The amount of compensation expense recognized over this term
is the "fair value" of the options at the time of the grant as determined
by an option pricing model. The option pricing model attributes fair value
to the options based upon the length of their term, the volatility of the
stock price in past periods, and other factors. Under this method, the
issuer recognizes compensation expense regardless of whether the officer or
director exercised the options. Pro forma disclosures of net income under
this method are presented in Note 6.

k. Use of Estimates

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the

F-9
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

l. New Accounting Pronouncements

In March 1998, the Accounting Standards Executive Committee issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 requires all
costs related to the development of internal use software other than those
incurred during the application development stage to be expensed as
incurred. Costs incurred during the application development stage are
required to be capitalized and amortized over the estimated useful life of
the software. SOP 98-1 was adopted by the Company on January 1, 1999 and
did not have a material effect on the Company's financial position or
results of operations.

3. Equity

On April 29, 1999, the Board of Directors of the Company authorized a
stock split converting each share of common stock into ten shares of common
stock. This stock split increased the total number of common stock shares
authorized from 1,800,000 to 18,000,000. In October 1999, the Company
announced that it will effect a reverse stock split converting three shares
of common stock into two shares of common stock. This action is pending the
approval of the Board of Directors and is intended to be effective
immediately prior to the initial public offering of the Company's common
stock. The effect of these stock splits are retroactively reflected in the
financial statements and the accompanying notes to the financial
statements,

On September 22, 1999, the Company restated and amended its articles of
incorporation authorizing 80,000,000 shares of common stock, later adjusted
to 53,333,333 as a result of the reverse stock split, and 15,000,000
authorized shares of preferred stock.

a. Series A Preferred Stock Financing

On September 16, 1998, in a private placement transaction, the Company
issued 2,000 shares of Series A preferred stock to William Apfelbaum at
$1,000 per share, convertible into common stock at the conversion price per
share of $1.20. The number of shares of common stock into which the Series
A preferred stock will convert is an aggregate of 1,666,666 shares. Mr.
Apfelbaum, the Company's chairman, was issued a warrant to purchase up to
438,593 shares of the Company's common stock at a price per share of $1.71.
The holder of the Series A preferred stock is entitled to registration
rights regarding the shares of common stock issued or issuable upon
conversion and upon exercise of the warrant. The holder of the outstanding
shares of Series A preferred stock is entitled to receive, upon conversion
of shares of Series A preferred stock into common stock, a dividend in cash
accruing from September 16, 1998, at an annual rate of $40 per share of
Series A preferred stock so converted. The holder of Series A preferred
stock has the right to elect one member of the board of directors. To date,
the holder of the Series A preferred stock has designated William Apfelbaum
to the board of directors. All shares of Series A preferred stock will
automatically convert into shares of common stock upon the closing of an
initial public offering of the Company's common stock.

F-10
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

b. Series B Preferred Stock Financing

Commencing on August 6, 1999, in a private placement transaction, the
Company issued a total of 4,107,044 shares of Series B preferred stock at
$2.35 per share convertible into common stock at a three-to-two ratio. The
principal purchasers of the Series B preferred stock included DigaComm
(L90), L.L.C. and Keystone Venture V, L.P. DigaComm (L90), L.L.C. also
purchased a warrant to acquire up to 353,964 shares of common stock of the
Company at a price per share of $5.30. Unless previously exercised this
warrant will be automatically exercised on a cashless basis into shares of
common stock, with a fair value equivalent to the intrinsic value of the
warrant, upon the closing of an initial public offering of the Company's
common stock. The holders of the Series B preferred stock are entitled to
registration rights regarding the shares of common stock issued or issuable
upon conversion and upon exercise of the warrant. The holders of the
outstanding shares of Series B preferred stock are entitled to receive,
upon conversion of shares of Series B convertible preferred stock into
common stock, a dividend in cash accruing from August 6, 1999, at an annual
rate of $0.141 per share of Series B preferred stock so converted. The
holders of Series B preferred stock collectively have the right to elect
three members of the board of directors. All shares of Series B preferred
stock will automatically convert into shares of common stock upon the
closing of an initial public offering of the Company's common stock. In
connection with the closing of the private placement transaction for Series
B preferred stock, the Company incurred fees and expenses totaling
$629,864. This amount has been accrued for at September 30, 1999 and has
subsequently been paid.

c. Series C Preferred Stock Financing

On September 22, 1999, in a private placement transaction, the Company
issued 1,307,190 shares of Series C preferred stock to Development Ventures
(Two) Inc. and Rare Medium Group, Inc. at $3.06 per share, convertible into
common stock at a three-to-two ratio. The holders of the outstanding shares
of Series C preferred stock are entitled to receive, upon conversion of the
Series C preferred stock into common stock, a dividend in cash accruing
from September 22, 1999, at an annual rate of $0.18 per share of Series C
preferred stock so converted. Development Ventures (Two) Inc. also
purchased a warrant to acquire up to 674,029 shares of common stock of the
Company at a price per share of $4.59. Rare Medium Group, Inc. also
purchased a warrant to acquire up to 600,000 shares of common stock of the
Company at a price per share of $4.59. Unless previously exercised, both
warrants will automatically be exercised on a cashless basis into shares of
common stock upon the closing of an initial public offering. The holders of
Series C preferred stock are entitled to have their shares of common stock
issuable upon conversion of the Series C preferred stock, as well as the
common stock issuable upon exercise of their warrants, registered on the
same registration statement. All shares of Series C preferred stock will
automatically convert into shares of common stock upon the closing of an
initial public offering of the Company's common stock.

d. Warrants

On June 7, 1999, the Company issued to The Roman Arch Fund L.P. and The
Roman Arch Fund II, L.P. four warrants to purchase up to an aggregate of
333,333 shares of common stock, later adjusted to an aggregate of 150,000
shares of common stock, at an initial purchase price of

F-11
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

$2.40 per share, subject to adjustment. These warrants may be exercised on
a cashless basis. These warrants expire on the earlier of (i) June 7, 2005
or (ii) the fifth anniversary of an initial public offering with gross
proceeds of at least $20,000,000. Eighty-three thousand three hundred
thirty-three of these warrants, to the extent not previously exercised, may
be exchanged at the election of the holder within 180 days of the closing
of an initial public offering of the Company's common stock with gross
proceeds of at least $20,000,000.

On August 13, 1999, the Company issued to William Apfelbaum a warrant to
purchase up to 353,964 shares of common stock, at an exercise price of
$5.30 per share. This warrant will automatically convert into the right to
receive 353,964 shares of common stock immediately prior to the closing of
an initial public offering of the Company's common stock.

e. Unaudited Pro Forma Stockholders' Equity

Concurrent with the consummation of an initial public offering of the
Company's common stock, the Company will cause the conversion of all
existing Series A, B and C preferred stock into 7,080,901 shares of the
Company's common stock. The unaudited pro forma stockholders' equity at
September 30, 1999, gives effect to this conversion.

4. Debt

On June 7, 1999, the Company entered into two senior promissory note
agreements in the aggregate principal amount of $1,000,000 and warrants to
purchase an aggregate of up to 333,333 shares of common stock. These notes
bear interest at 9% through June 7, 2000, and 12% thereafter until paid in
full. During August 1999, the Company paid in full its obligations under
these two senior promissory note agreements and issued the warrants in
aggregate of 150,000 shares of common stock.

5. Income Taxes

During 1997, the Company was a sole proprietorship and limited liability
corporation. In 1998, the Company was an S-corporation and the federal and
state taxes were the responsibility of stockholders rather than the
Company. Effective November 30, 1998, the Company became a C-corporation
for income tax purposes. Pursuant to this election, such taxes will be the
responsibility of the Company rather than stockholders.

Deferred income taxes arise as a result of temporary differences in the
methods used to determine income for financial reporting purposes versus
income for tax reporting purposes. These differences result primarily from
accruals, reserves and net operating losses carrying forward.

F-12
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

The provision (benefit) for income taxes for December 31, 1998 and the
nine months ended September 30, 1999 consists of the following:

<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
<S> <C> <C>
Current:
Federal........................................ $ -- $ --
State.......................................... 800 --
-------- ----------
800 --
Deferred........................................ 136,600 1,806,963
-------- ----------
137,400 1,806,963
Less: Valuation allowance....................... 136,600 1,806,963
-------- ----------
$ 800 $ --
======== ==========
</TABLE>

The net deferred income tax assets at December 31, 1998, and
September 30, 1999, are comprised primarily of net operating loss carry
forwards and are summarized as follows:

<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
<S> <C> <C>
Deferred tax asset............................. $ 136,600 $ 1,806,963
Less: Valuation allowance...................... (136,600) (1,806,963)
--------- -----------
$ -- $ --
========= ===========
</TABLE>

At December 31, 1998 and September 30, 1999, the Company provided a
valuation allowance for net deferred tax assets which management determined
were "more likely than not" to be unrealizable. As a result, no deferred
tax assets have been recorded by the Company.

6. Stock Options and Warrants

a. Stock Options

During 1998, the Company issued 648,667 nonqualified stock options at an
exercise price equal to the then current fair market value of the stock, as
determined by the Company's Board of Directors. These options vest between
two to three years after the grant date and expire no later than ten years
after the grant date.

During February 1999, the Company granted 46,666 stock options to
employees with a strike price of $1.50 vesting ratably through March 1,
2003. These options are dependent upon continued employment with the
Company.

During April 1999, the Company adopted an employee stock option plan
authorized by the Board of Directors to grant up to an aggregate of
1,666,666 options to purchase common stock shares. These shares may be
comprised of authorized but unissued shares or shares previously issued but
reacquired by the Company. The price of these options will be not less than
the fair market value of the shares, or greater than 110 percent of the
fair market value of the shares, at the date of grant. This plan will
terminate ten years from the adoption date and may be amended by the Board
of Directors with stockholder approval.

F-13
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

No options were issued by the Company prior to 1998. Employee
transactions during the year ended December 31, 1998, and for the nine
months ended September 30, 1999, is summarized as follows:

<TABLE>
<CAPTION>
1998 1999
----------------------- -------------------------
Weighted Weighted
average Average
Employee stock options Shares exercise price Shares exercise price
---------------------- ------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Outstanding at beginning
of year................. -- $ -- 582,000 $0.86
Granted.................. 648,667 0.89 1,577,733 3.53
Exercised................ -- -- (26,666) 3.53
Forfeited................ (66,667) 1.20 (36,000) 1.80
------- ---------
Outstanding at end of
period.................. 582,000 $0.86 2,097,067 $2.78
======= =========
Options exercisable at
end of period........... -- 393,333
Weighted-average fair
value of options granted
during the period....... $ 0.60 $ 2.31
</TABLE>

The following table summarizes information about employee stock options
outstanding at September 30, 1999:

<TABLE>
<CAPTION>
Weighted average
Number remaining
Range of exercise prices outstanding contractual life
------------------------ ----------- ----------------
<S> <C> <C>
$0.38......................................... 266,667 8.26 years
$1.20......................................... 263,333 8.71 years
$1.50......................................... 66,667 9.21 years
$3.53......................................... 1,500,400 9.88 years
---------
2,097,067
=========
</TABLE>

The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its plan. No compensation cost has been recognized for its
employee stock option grants, which are fixed in nature, as the options
have been granted with an exercise price equal to the then current fair
market value of the Company's stock as determined by the Company's Board of
Directors. Had compensation cost for the Company's stock-based compensation
plan been determined based on the fair value at the grant dates for awards
under this plan consistent with the method of Financial Accounting
Standards Board ("FASB") Statement No. 123, "Accounting for Stock-Based
Compensation," the Company's net loss for the year ended December 31, 1998
and the nine months ended September 30, 1999 would have been increased to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
Nine months
Year ended ended
December 31, September 30,
1998 1999
------------ -------------
<S> <C> <C>
Net loss as reported.......................... $289,569 $4,513,624
Pro forma adjustment.......................... 137,769 381,374
-------- ----------
Pro forma loss................................ $427,338 $4,894,998
======== ==========
</TABLE>

F-14
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants during the year ended December 31, 1998:
dividend yield of 0 percent; expected volatility of 20 percent; risk-free
interest rates of 5.9 percent; and an expected life of five years.

b. Common Stock Warrants

On September 16, 1998, the Company entered into a Series A preferred
stock agreement which included a warrant to purchase 438,593 shares of
common stock at a strike price of $1.71 per share. In August 1999, the
Company issued another warrant to this holder of Series A preferred stock
to purchase 353,964 shares of common stock at a strike price of $5.30 per
share.

On June 7, 1999, the Company issued warrants, in association with the
senior promissory notes, to purchase an aggregate of up to 333,333 shares
of common stock, later adjusted to an aggregate of 150,000 shares of common
stock. These warrants may be exercised on a cashless basis. These warrants
are exercisable at a price equal to $2.40 per share at any time or from
time to time commencing on the earliest of (i) December 7, 1999, (ii) the
closing of a qualified initial public offering as defined, (iii) the
closing of a qualified private placement as defined and prior to 5:00 p.m.,
Los Angeles, California time, on the earlier of (i) June 7, 2005 or (ii)
the fifth anniversary of the commencement of trading of the Company's
common stock in connection with an initial public offering with gross
proceeds of at least $20,000,000.

In August 1999, in association with the Series B preferred stock
issuance, the Company issued a warrant to purchase 353,964 shares of the
Company's common stock at a price of $5.30 per share expiring August 2004.
To the extent not previously exercised, this warrant will be automatically
exercised on a cashless basis into shares of common stock immediately upon
the closing of an initial public offering of the Company's common stock.
The holder of the warrant is entitled to registration rights regarding the
shares of common stock issued or issuable upon conversion and upon exercise
of the warrant.

In September 1999, in association with the Series C preferred stock
issuance, the Company issued warrants to purchase 1,274,029 shares of the
Company's common stock at a price of $4.59 per share expiring September
2004. To the extent not previously exercised, these warrants will be
automatically exercised on a cashless basis into shares of common stock
immediately upon the closing of an initial public offering of the Company's
common stock. The holders of the warrants are entitled to registration
rights regarding the shares of common stock issued on issuable upon
conversion and upon exercise of the warrants.

7. Commitments and Contingencies

a. Litigation

The Company may become subject to legal proceeding from time to time in
the normal course of business. The Company is not currently involved in any
litigation that management believes will have a material adverse effect on
the Company's financial position or results of operations.

F-15
<PAGE>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

b. Lease Commitments

The Company is committed under noncancellable operating and capital lease
obligations for certain facilities and equipment. The equipment related to
capital leases has an original cost of approximately $0 and $274,000 at
December 31, 1997 and 1998, respectively, and $521,662 at September 30,
1999, with accumulated depreciation of approximately $0, $11,000, and
$77,150, respectively. Rent expense under operating leases was
approximately $24,000 and $163,000 for December 31, 1997 and 1998,
respectively, and $442,250 for September 30, 1999.

Future minimum annual payments under noncancellable operating and capital
leases are as follows as of September 30, 1999:

<TABLE>
<CAPTION>
Capital Operating
Leases Leases
-------- ----------
<S> <C> <C>
Three-month period ending December 31, 1999........... $ 52,906 $ 172,174
<CAPTION>
Year
----
<S> <C> <C>
2000.................................................. 212,342 408,356
2001.................................................. 193,222 347,755
2002.................................................. 64,293 294,427
Thereafter............................................ 14,336 982,045
-------- ----------
537,249 $2,204,757
======== ==========
Less--Amounts representing interest................... 110,420
--------
426,829
Less--Current portion................................. 140,753
--------
$286,094
========
</TABLE>

8. Related Party Transactions

During 1998, the Company received $43,750 in notes receivable for common
stock from employees for the issuance of 116,667 shares of common stock
with a par value of $0.001 per share. These notes bear interest at a rate
equal to 5.28 percent per annum and mature at the earliest of cessation of
maker's employment by the Company for any reason or May 18, 2004. In
addition, during 1998, the Company issued an aggregate of 6,550,000 shares
of common stock with a par value of $0.001 per share to certain other
employees and a former employee in exchange for their contribution of the
operating business of John Bohan & Associates, LLC, which was valued at
$2,456,250.

During 1998, the Company entered into an agreement with a stockholder to
purchase 2,000 shares of preferred stock for $2,000,000 and a warrant to
purchase 438,593 shares of common stock at a strike price of $1.71 per
share.

During September, 1999, a member of the Board of Directors exercised
options to purchase 26,667 shares of common stock at $3.53 per share. This
transaction has been reflected in the financial statements and accompanying
notes to the financial statements.

F-16
<PAGE>

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

6,000,000 Shares

[LOGO OF L90]

Common Stock

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

PROSPECTUS

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

SG COWEN

BANC OF AMERICA SECURITIES LLC

CIBC WORLD MARKETS

WIT CAPITAL CORPORATION

, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

[ALTERNATE PAGE]

SUBJECT TO COMPLETION, DATED NOVEMBER 2, 1999

PROSPECTUS

2,145,489 Shares

Common Stock

This prospectus relates to the offering of up to an aggregate of 2,145,489
shares (the "Shares") of L90, Inc. common stock which may be offered by the
persons named in this prospectus under the caption "selling stockholders."

Each selling stockholder, acting as principal for its own account or in
brokerage transactions at prevailing market prices or in transactions at
negotiated prices, may offer for sale the Shares. We make no representation
that any Shares will or will not be offered for sale. We will not receive any
proceeds from the sale of the Shares. It is not possible at the present time to
determine the price to the public in any sale of the Shares by the selling
stockholders and each selling stockholder reserves the right to accept or
reject, in whole or in part, any proposed purchase of Shares. Accordingly, the
public offering price and the amount of any applicable underwriting discounts
and commissions will be determined at the time of such sale by the selling
stockholders. We are paying all costs, expenses and fees incurred in connection
with the registration of the Shares, estimated to be approximately $ .
However, the selling stockholders will bear all selling and other expenses
incurred by them. See "Plan of Distribution."

We have applied to have our common stock listed for trading and quotation on
the Nasdaq National Market under the symbol "LNTY."

Our business involves significant risks. These risks are described under the
caption "Risk Factors" beginning on page 9.

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

, 1999
<PAGE>

[Alternate Page]

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 5
Risk Factors............................................................. 9
Forward-Looking Statements............................................... 18
Use of Proceeds.......................................................... 18
Dividend Policy.......................................................... 18
Capitalization........................................................... 19
Dilution................................................................. 20
Selected Financial Data.................................................. 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Business................................................................. 31
Management............................................................... 47
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Related Party Transactions................................................. 53
Principal Stockholders..................................................... 56
Selling Stockholders....................................................... 56A
Description of Capital Stock............................................... 59
Shares Eligible for Future Sale............................................ 63
U.S. Tax Consequences to Non-U.S. Holders.................................. 65
Plan of Distribution....................................................... 69
Legal Matters.............................................................. 71
Experts.................................................................... 71
Where You Can Find More Information........................................ 71
Index to Financial Statements.............................................. F-1
</TABLE>
------------------

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

3
<PAGE>

[ALTERNATE PAGE]
The Offering

The Shares being offered include shares which:

. were issued to the selling stockholders upon their conversion of our
Series C preferred stock upon the closing of our initial public
offering, and

. may be issued to the selling stockholders upon their exercise of
warrants.

The selling stockholders have agreed not to sell any of these shares until
180 days after commencement of this offering, at which time they may sell one-
half of their shares. These holders have also agreed that they will not sell
the other one-half of their shares until 270 days after commencement of this
offering. We will not receive any proceeds from the sale of shares of common
stock by the selling stockholders.

-----------

Unless otherwise indicated, all information in this prospectus:

. reflects a 2-for-3 reverse stock split to be effected immediately prior
to the consummation of this offering;

. reflects the cashless exercise of warrants to acquire 1,109,247 shares
of common stock with a weighted average exercise price of $4.84 per
share;

. excludes options and warrants outstanding as of September 30, 1999, to
purchase 2,685,660 shares of common stock with a weighted average
exercise price of $2.58 per share; and

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

Summary Financial Data
(in thousands, except per share data)

The following tables assume no exercise of any stock options or warrants
outstanding as of September 30, 1999, except the pro forma data, which assume
the cashless exercise of warrants to acquire 1,109,247 shares of common stock.
As of September 30, 1999, there were options and warrants outstanding to
purchase a total of 4,667,617 shares of common stock with a weighted average
exercise price of $3.52 per share.
<TABLE>
<CAPTION>
Period from
Inception
(January 5, Nine Months Ended
1997) through Year Ended September 30,
December 31, December 31, -------------------
1997 1998 1998 1999
------------- ------------ ----------- -------
(unaudited)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenue....................... $1,160 $2,189 $1,465 $ 3,973
------ ------ ------ -------
Operating income (loss)....... 307 (306) (49) (4,462)
------ ------ ------ -------
Net income (loss) attributable
to common stockholders....... $ 310 $ (313) $ (42) $(5,758)
====== ====== ====== =======
Pro forma basic and diluted
net loss per share(1)........ $ $ $ $
====== ====== ====== =======
Weighted average shares
outstanding used in pro forma
basic and diluted per share
calculation(1)...............
====== =======
</TABLE>

7
<PAGE>

[Alternate Page]

FORWARD-LOOKING STATEMENTS

USE OF PROCEEDS

We will not receive any proceeds from the sale of shares of common stock by
The selling stockholders.

DIVIDEND POLICY

18
<PAGE>

[Alternate Page]

SELLING STOCKHOLDERS

The following table sets forth as of October 31, 1999, and upon completion of
the offering described in this prospectus, information with regard to the
beneficial ownership of our common stock by the selling stockholders. The
selling stockholders may not have a present intention of selling the Shares and
may offer less than the amount of shares indicated.

<TABLE>
<CAPTION>
Shares Beneficially Owned
----------------------------------------------------
Shares
Shares Beneficially Shares Beneficially
Owned Before to be Owned After
Offering(1) Offered(2) Offering(3)
----------------------- ---------- -----------------
Name Number Percentage Number Number Percentage
- ---- --------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Development Ventures
(Two) Inc. ............. 1,109,759(4) % 1,109,759 0 0%
Rare Medium Group,
Inc. ................... 1,035,730(5) 1,035,730 0 0
</TABLE>
- --------

(1) The persons named in the above table have sole voting and investment power
with respect to all shares beneficially owned by them. Information with
respect to beneficial ownership is based upon the Company's stock records
and data supplied to us by the selling stockholders.

(2) The selling stockholders may offer less than the amount of Shares
indicated. No representation is made that any Shares will or will not be
offered for sale.

(3) This assumes that all Shares owned by the selling stockholders which are
offered are sold. The selling stockholders reserve the right to accept or
reject, in whole or in part, any proposed purchase of Shares.

(4) Includes:

. 435,730 shares issuable upon conversion of Series C preferred stock at a
ratio of three preferred shares to two common shares, and

.674,029 shares issuable upon exercise of a warrant at an exercise price of
$4.59 per share.

(5) Includes:

. 435,730 shares issuable upon conversion of Series C preferred stock at a
ratio of three preferred shares to two common shares, and

.600,000 shares issuable upon exercise of a warrant at an exercise price of
$4.59 per share.

Mr. Glenn Meyers, a director of L90, serves as President and Chief Executive
Officer of this selling stockholder.

56A
<PAGE>

[ALTERNATE PAGE]
PLAN OF DISTRIBUTION

The Shares offered may be sold by the selling stockholders. These sales may
be made on one or more exchanges or in the over-the-counter market, including
NASDAQ National Market System, or otherwise, at prices and at terms then
prevailing or at prices related to the then current market price, or in
negotiated transactions. The Shares may be sold by each of the selling
stockholders acting as principal for its own account or in ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, broker-dealers engaged by the selling stockholders may arrange
for other broker-dealers to participate in the resales.

Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions from selling stockholders in amounts to be negotiated
in connection with the sale. These broker-dealers and any other participating
broker-dealers may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with these sales, and any such commission,
discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. In addition, any securities covered by
this prospectus which qualify for sale under Rule 144 may be sold under Rule
144 rather than under to this prospectus.

It is not possible at the present time to determine the price to the public
in any sale of the common stock by the selling stockholders. Accordingly, the
public offering price and the amount of any applicable underwriting discounts
and commissions will be determined at the time of such sale by the selling
stockholders. The aggregate proceeds to the selling stockholders from the sale
of the common stock will be the purchase price of the common stock sold less
all applicable commissions and underwriters' discounts, if any. We will pay
substantially all the expenses incident to the registration, offering and sale
of the common stock to the public by selling stockholders, which is currently
estimated to be $ , other than fees, discounts and commissions of
underwriters, dealers or agents, if any, and transfer taxes.

69
<PAGE>

[Alternate Page]

LEGAL MATTERS

Matters relating to this offering are being passed upon for us by Paul,
Hastings, Janofsky & Walker LLP, Los Angeles, California.

EXPERTS

Our financial statements, included in this prospectus, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission in Washington,
D.C., a registration statement on Form S-1 under the Securities Act with
respect to the to the common stock covered by this prospectus. This prospectus
does not contain all of the information set forth in the registration statement
and the exhibits and schedules filed with the registration statement. Some
items are omitted in accordance with the rules and regulations of the SEC. For
further information with respect to L90 and the common stock covered by this
prospectus, reference is made to the registration statement and the exhibits
filed as a part thereof. Statements contained in this prospectus as to the
contents of any contract or other document filed as an exhibit to the
registration statement are, in each case, qualified in all respects by
reference to such exhibit. Upon completion of the offering, we will be subject
to the informational requirements of the Securities Exchange Act of 1934 and in
accordance with the Exchange Act, will file reports and other information with
the SEC. The registration statement, including exhibits, as well as reports and
other information which we filed with the SEC, may be inspected without charge
at the Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the SEC's regional offices at Seven World Trade Center, 13th
Floor, New York, NY 10048, and Citicorp Center, 500 West Madison Street,
Chicago, IL 60661. Copies of such materials can also be obtained at prescribed
rates from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Electronic filings made through the Electronic Data
Gathering Analysis and Retrieval System are publicly available through the
SEC's Web Site at http://www.sec.gov.

71
<PAGE>

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, to be paid in connection with the sale
of the Common Stock being registered, all of which will be paid by the
Registrant.

<TABLE>
<C> <S> <C>
Registration fee............................................ $21,866
NASD filing fee............................................. 8,385
Nasdaq National Market listing fee..........................
* Blue Sky fees and expenses..................................
* Accounting fees and expenses................................
* Legal fees and expenses.....................................
* Transfer agent and registrar fees...........................
* Printing and engraving expenses.............................
* Miscellaneous expenses......................................
Total....................................................... $
=======
</TABLE>
- --------
* To be completed by amendment.

Item 14. Indemnification of Directors and Officers

The Registrant's Certificate of Incorporation (the "Certificate") provides
that, except to the extent prohibited by the Delaware General Corporation Law
(the "DGCL"), the Registrant's directors shall not be personally liable to the
Registrant or its stockholders for monetary damages for any breach of fiduciary
duty as directors of the Registrant. The Certificate eliminates the personal
liability of directors to the fullest extent permitted by Section 102(b)(7) of
the DGCL and provides that the Registrant shall fully indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that such person is or
was a director or officer of the Registrant, or is or was serving at the
request of the Registrant as a director or officer of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding. Under the DGCL, the directors have a
fiduciary duty to the Registrant which is not eliminated by this provision of
the Certificate and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of nonmonetary relief will remain available. In
addition, each director will continue to be subject to liability under the DGCL
for breach of the director's duty of loyalty to the Registrant, for acts or
omissions which are found by a court of competent jurisdiction to be not in
good faith or involving intentional misconduct, for knowing violations of law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
prohibited by DGCL. This provision also does not affect the directors'
responsibilities under any other laws, such as the Federal securities laws or
state or Federal environmental laws.

II-1
<PAGE>

Section 145 of the DGCL empowers a corporation to indemnify its directors and
officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) arising under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. The DGCL provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
Registrant has obtained liability insurance for its officers and directors, and
has entered into indemnification agreements with each of its officers and
directors and intends to enter into indemnification agreements with each of its
future officers and directors. Pursuant to such indemnification agreements, the
Registrant has agreed to indemnify its officers and directors against certain
liabilities, including liabilities arising out of the offering made by this
registration statement.

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 the Certificate or any indemnification agreement.
The Registrant is not aware of any threatened litigation or proceeding that may
result in a claim for such indemnification.

Item 15. Recent Sales of Unregistered Securities

The Registrant has sold and issued the following securities since January
1997 (inception):

Beginning in January 1998, we sold an aggregate of 6,666,666 shares of common
stock to founders and key executive officers at a value of $0.38 per share.
These purchasers were John C. Bohan (6,016,667 shares), Mark Roah (200,000
shares), C.J. Cardinali (200,000 shares), Todd Taplin (133,333 shares), Frank
Addante (66,666 shares) and Neal Weinberg (50,000 shares). The consideration
tendered by Messrs. Bohan, Roah, Cardinali and Taplin was the contribution of
the operating business of John Bohan & Associates, LLC. Messrs. Addante and
Weinberg tendered promissory notes in consideration for their shares. Such
shares were sold in reliance upon an exemption from registration under the
Securities Act of 1933 pursuant to Section 4(2) thereof.

In November 1998, the Registrant sold 2,000 shares of its Series A
Convertible Preferred Stock, par value $0.01 per share, and a warrant to
William Apfelbaum in exchange for $2,000,000 in cash. Such shares of Series A
Convertible Preferred Stock will convert into an aggregate of 1,666,666 shares
of Common Stock on the closing of the Registrant's initial public offering. The
warrant issued to William Apfelbaum was for the purchase of up to 438,593
shares of Common Stock at an exercise price of $1.71 per share. These
securities were sold in reliance upon the exemption provided for by Section
4(2) of the Securities Act.

In August and September 1999, the Registrant sold 4,107,044 shares of its
Series B Convertible Preferred Stock, par value $.001 per share to (i) DigaComm
(L90), L.L.C. in exchange for $2,000,000 in cash, (ii) Keystone Venture V, L.P.
in exchange for $4,000,000 in cash, (iii) The Roman Arch Fund L.P. and The
Roman Arch Fund II L.P. in exchange for $500,000 in cash, (iv) Remtula and
Shinin Suleman, co-trustees for Trust dated 9/10/93 for the benefit of Trevor
F. Suleman and Miles L. Suleman in exchange for $500,000 in cash, (v) Lawrence
Haut in exchange for $117,500 in cash, (vi) Donald and Cathy Allman in exchange
for $100,000 in cash, (vii) Seymour Zises in exchange for $25,000 in cash,
(viii) Matthew Ludmer in exchange for $30,000 in cash, (ix) Jodi Yegelwel in
exchange for $50,000 in cash, (x) Lewis Katz in exchange for $200,000 in

II-2
<PAGE>

cash, (xi) Herb Corbin in exchange for $50,000 in cash, (xii) Paul Konigsberg
in exchange for $40,000 in cash, (xiii) Dime Capital Partners, Inc. in exchange
for $1,000,000 in cash, (xiv) James Stern in exchange for $500,000 in cash,
(xv) Cambridge Lat 90 Associates, LLC in exchange for $500,000 in cash and
(xvi) Harley Greenfield in exchange for $50,000 in cash. Such shares of
Series B Convertible Preferred Stock will automatically convert into 2,738,029
shares of Common Stock on a three-for-two basis on the closing of the
Registrant's initial public offering. In addition, the Registrant sold to (i)
DigaComm (L90), L.L.C. a warrant for the purchase of up to 353,964 shares of
Common Stock at an exercise price of $5.30 per share and (ii) William Apfelbaum
a warrant for the purchase of up to 353,964 shares of Common Stock at an
exercise price of $5.30 per share. These securities were sold in reliance upon
the exemption provided for by Section 4(2) of the Securities Act and Regulation
D promulgated thereunder.

In September 1999, the Registrant sold 1,307,190 shares of its Series C
Convertible Preferred Stock, par value $0.001 per share, to (i) Development
Ventures (Two) Inc. in exchange for $2,000,000 in cash and (ii) Rare Medium
Group, Inc. in exchange for $2,000,000 in cash. Such shares of Series C
Convertible Preferred Stock will automatically convert into 871,460 shares of
Common Stock on a three-for-two basis on the closing of the Registrant's
initial public offering. In addition, the Registrant sold to (i) Development
Ventures (Two) Inc. a warrant for the purchase of up to 674,029 shares of
Common Stock at an exercise price of $4.59 per share and (ii) Rare Medium
Group, Inc. a warrant for the purchase of up to 600,000 shares of Common Stock
at an exercise price of $4.59 per share. These securities were sold in reliance
upon the exemption provided for by Section 4(2) of the Securities Act and
Regulation D promulgated thereunder.

Item 16. Exhibits and Financial Statement Schedules

(a)Exhibits

II-3
<PAGE>

<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.9* Equipment Lease dated December 2, 1998 between AdNet Strategies, Inc.
and Premier Capital Corporation.
10.10* Shareholders Agreement dated August 6, 1999 (as amended).
10.11* Amended and Restated Shareholders Agreement dated September 22, 1999.
10.12* Series B Preferred Stock Purchase Agreement dated August 6, 1999
between the Registrant and the holders of Series B preferred stock (as
amended).
10.13* Series C Preferred Stock Purchase Agreement dated September 22, 1999
between the Registrant and the holders of Series C preferred stock.
10.14* Warrant dated September 16, 1998 issued to William Apfelbaum.
10.15* Stock Purchase Warrant dated August 16, 1999 issued to DigaComm,
L.L.C.
10.16* Stock Purchase Warrant dated August 16, 1999 issued to William
Apfelbaum.
10.17* Stock Purchase Warrant dated September 22, 1999 issued to Development
Ventures (Two) Inc.
10.18* Stock Purchase Warrant dated September 22, 1999 issued to Rare Medium
Group, Inc.
10.19* Promissory Note in the original principal amount of $600,000, made
June 7, 1999 by the Registrant in favor of The Roman Arch Fund L.P.
10.20* Promissory Note in the original principal amount of $400,000, made
June 7, 1999 by the Registrant in favor of The Roman Arch Fund II L.P.
10.21* Warrant No. PP-99-1 dated June 7, 1999 issued to The Roman Arch Fund
L.P.
10.22* Warrant No. PP-99-2 dated June 7, 1999 issued to The Roman Arch Fund
II L.P.
10.23* Warrant No. IPO-99-1 dated June 7, 1999 issued to The Roman Arch Fund
L.P.
10.24* Warrant No. IPO-99-2 dated June 7, 1999 issued to The Roman Arch Fund
II L.P.
10.25* Assignment and Assumption Agreement dated September 17, 1999.
10.26* Assignment and Assumption Agreement dated September 17, 1999.
10.27* Form of Indemnification Agreement entered into between the Registrant
and each of its directors and executive officers.
10.28* Form of Employment Agreement entered into between the Registrant and
certain of its executive officers.
23.1 Consent of Arthur Andersen LLP.
23.2+ Consent of Paul, Hastings, Janofsky & Walker LLP (included in Exhibit
5.1).
24.1* Powers of Attorney (See Signature Page on Page II-6).
27.1* Financial Data Schedule.
27.2* Financial Data Schedule.
</TABLE>
- --------

* Previously filed.

+ To be filed by amendment.

(b) Financial Statement Schedules.

Schedule I Valuation and Qualifying Accounts (see page S-1).

Item 17. Undertakings

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

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being

II-4
<PAGE>

registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

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

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

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Los Angeles, State of California, on November 2, 1999.

L90, INC.

/s/ John C. Bohan
By __________________________________
John C. Bohan
President and Chief Executive
Officer

II-6
<PAGE>

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Name Title Date
---- ----- ----

<C> <S> <C>
/s/ John C. Bohan President, Chief Executive November 2, 1999
---------------------------- Officer and Director
John C. Bohan (Principal Executive
Officer)

* Chief Financial Officer and November 2, 1999
---------------------------- Senior Vice President
(Principal Financial and
Thomas A. Sebastian Accounting Officer)

* Chairman of the Board November 2, 1999
---------------------------- and Director
William M. Apfelbaum

* Senior Vice President of November 2, 1999
---------------------------- Business Development and
Mark D. Roah Director

* Vice President of November 2, 1999
---------------------------- Northwestern Sales
Christopher J. Cardinali and Director

* Director November 2, 1999
----------------------------
Peter G. Diamandis

* Director November 2, 1999
----------------------------
Peter E. Ligeti

* Director November 2, 1999
----------------------------
Peter Sealey

Director
----------------------------
Glenn S. Meyers

* Director November 2, 1999
----------------------------
G. Bruce Redditt
</TABLE>

*By:/s/ John C. Bohan
____________________ November 2, 1999
John C. Bohan
Attorney-in-Fact

II-7
<PAGE>

SCHEDULE I--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
Balance Charged Balance
at to Costs at End
Beginning and of
Description of Period Expenses Deductions Period
- ----------- --------- -------- ---------- --------
<S> <C> <C> <C> <C>
For the Period Ending September 30,
1999
Allowance for doubtful accounts
receivable........................... $142,952 $300,893 $(127,823) $316,022
======== ======== ========= ========
For the Year Ending December 31, 1998
Allowance for doubtful accounts
receivable .......................... $ 69,860 $142,952 $ (69,860) $142,952
======== ======== ========= ========
For the Period Ending December 31,
1997
Allowance for doubtful accounts
receivable........................... $ 7,029 $ 69,860 $ (7,029) $ 69,860
======== ======== ========= ========
</TABLE>

S-1
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1 Form of Underwriting Agreement.
2.1* Agreement of Merger dated September 15, 1999.
3.1* Amended and Restated Certificate of Incorporation.
3.2* Amended and Restated Bylaws.
4.1* See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
Certificate of Incorporation and Bylaws of the Registrant defining the
rights of holders of Common Stock of the Registrant.
4.2* Stock Purchase and Stockholders Agreement dated September 14, 1998.
4.3* Registration Agreement dated August 6, 1999.
4.4* Series C Registration Agreement dated September 22, 1999.
5.1+ Opinion of Paul, Hastings, Janofsky & Walker LLP.
10.1* 1999 Stock Incentive Plan.
10.2* Stock Purchase and Stockholders Agreement dated September 14, 1998. See
Exhibit 4.2
10.3* Sublease dated May 21, 1999 between Widom, Wein, Cohen, O'Leary,
Terasawa and Latitude 90.
10.4* Representation Agreement dated April 24, 1997 between AdNet Strategies,
Inc. and Four11 Corporation.
10.5* Representation Agreement dated September 12, 1997 between John Bohan &
Associates, L.L.C. and N2K, Inc.
10.6* National Sales Representation Agreement dated March 10, 1998 between
Zip2 Corp. and AdNet Strategies, Inc.
10.7* Representation Agreement dated December 31, 1998 between Latitude 90,
Inc. and Go2Net, Inc.
10.8* Advertising Sales Agency Agreement dated January 1, 1999 between
Latitude 90, Inc. and Bell Atlantic Electronic Commerce Services, Inc.
10.9* Equipment Lease dated December 2, 1998 between AdNet Strategies, Inc.
and Premier Capital Corporation.
10.10* Shareholders Agreement dated August 6, 1999 (as amended).
10.11* Amended and Restated Shareholders Agreement dated September 22, 1999.
10.12* Series B Preferred Stock Purchase Agreement dated August 6, 1999
between the Registrant and the holders of Series B preferred stock (as
amended).
10.13* Series C Preferred Stock Purchase Agreement dated September 22, 1999
between the Registrant and the holders of Series C preferred stock.
10.14* Warrant dated September 16, 1998 issued to William Apfelbaum.
10.15* Stock Purchase Warrant dated August 16, 1999 issued to DigaComm, L.L.C.
10.16* Stock Purchase Warrant dated August 16, 1999 issued to William
Apfelbaum.
10.17* Stock Purchase Warrant dated September 22, 1999 issued to Development
Ventures (Two) Inc.
10.18* Stock Purchase Warrant dated September 22, 1999 issued to Rare Medium
Group, Inc.
10.19* Promissory Note in the original principal amount of $600,000, made June
7, 1999 by the Registrant in favor of The Roman Arch Fund L.P.
10.20* Promissory Note in the original principal amount of $400,000, made June
7, 1999 by the Registrant in favor of The Roman Arch Fund II L.P.
10.21* Warrant No. PP-99-1 dated June 7, 1999 issued to The Roman Arch Fund
L.P.
10.22* Warrant No. PP-99-2 dated June 7, 1999 issued to The Roman Arch Fund II
L.P.
10.23* Warrant No. IPO-99-1 dated June 7, 1999 issued to The Roman Arch Fund
L.P.
10.24* Warrant No. IPO-99-2 dated June 7, 1999 issued to The Roman Arch Fund
II L.P.
10.25* Assignment and Assumption Agreement dated September 17, 1999.
10.26* Assignment and Assumption Agreement dated September 17, 1999.
10.27* Form of Indemnification Agreement entered into between the Registrant
and each of its directors and executive officers.
10.28* Form of Employment Agreement entered into between the Registrant and
certain of its executive officers.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
23.1 Consent of Arthur Andersen
LLP.
23.2+ Consent of Paul, Hastings,
Janofsky & Walker LLP
(included in Exhibit 5.1).
24.1* Powers of Attorney (See
Signature Page on Page II-6).
27.1* Financial Data Schedule.
27.2* Financial Data Schedule.
</TABLE>
- --------

* Previously filed.

+ To be supplied by amendment.

<PAGE>

[_______]Shares

L90, INC.

Common Stock

UNDERWRITING AGREEMENT
----------------------

[________], 1999

SG COWEN SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
WIT CAPITAL CORPORATION
As Representatives of the several Underwriters
c/o SG Cowen Securities Corporation
Financial Square
New York, New York 10005

Dear Sirs:

1. Introductory. L90, Inc., a Delaware corporation (the "Company"),
proposes to sell, pursuant to the terms of this Agreement, to the several
underwriters named in Schedule A hereto (the "Underwriters," or, each, an
"Underwriter"), an aggregate of [________] shares of Common Stock, $0.001 par
value per share (the "Common Stock") of the Company. The aggregate of [________]
shares so proposed to be sold is hereinafter referred to as the "Firm Stock".
The Company also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 3(d) hereof, up to an additional [________]
shares of Common Stock (the "Optional Stock"). The Firm Stock and the Optional
Stock are hereinafter collectively referred to as the "Stock". SG Cowen
Securities Corporation ("SG Cowen"), Banc of America Securities LLC, CIBC World
Markets Corp. and Wit Capital Corporation are acting as representatives of the
several Underwriters and in such capacity are hereinafter referred to as the
"Representatives."

2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters that:

(a) A registration statement on Form S-1 (File No. 333-
[_____]) (the "Initial Registration Statement") in respect of the Stock has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto, to you
for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any, increasing
the size of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations (the "Rules and Regulations") of
the Commission thereunder, which became effective upon filing, no other document
with respect
<PAGE>

to the Initial Registration Statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the Rules and Regulations, is hereinafter
called a "Preliminary Prospectus"); the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if any,
including all exhibits thereto and including the information contained in the
form of final prospectus filed with the Commission pursuant to Rule 424(b) under
the Securities Act and deemed by virtue of Rule 430A under the Securities Act to
be part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statements"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Securities Act, is
hereinafter called the "Prospectus". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act. No order
preventing or suspending the use of any Preliminary Prospectus has been issued
by the Commission.

(b) The Registration Statement conforms (and the Rule 462(b)
Registration Statement, if any, the Prospectus and any amendments or supplements
to either of the Registration Statements or the Prospectus, when they become
effective or are filed with the Commission, as the case may be, will conform) in
all material respects to the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the applicable effective date (as
to the Registration Statements and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or supplement
thereto) contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing representations
and warranties shall not apply to information contained in or omitted from the
Registration Statements or the Prospectus or any such amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.

(c) The Company [and each of its subsidiaries (as defined in
Section 14 hereof)] have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective jurisdictions
of incorporation, are duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged,
except where the failure to so qualify or have such power or authority would not
have, singularly or in the aggregate, a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its subsidiaries taken as a whole (a "Material Adverse Effect").
[The Company owns or controls, directly or indirectly, only the following
corporations, associations or other entities: [_______________].]

2
<PAGE>

(d) This Agreement has been duly authorized executed and
delivered by the Company.

(e) The Stock to be issued and sold by the Company to the
Underwriters hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights and will conform to the description thereof contained in the Prospectus.

(f) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description thereof contained in the Prospectus.

(g) All the outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and, except to the extent set forth in the
Prospectus, are owned by the Company directly or indirectly through one or more
wholly-owned subsidiaries, free and clear of any claim, lien, encumbrance,
security interest, restriction upon voting or transfer or any other claim of any
third party.

(h) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets.

(i) Except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.

(j) Arthur Andersen LLP, who have expressed their opinions on
the audited financial statements and related schedules included in the
Registration Statements and the Prospectus are independent public accountants as
required by the Securities Act and the Rules and Regulations.

(k) The financial statements, together with the related notes
and schedules, included in the Prospectus and in each Registration Statement
fairly present the financial position

3
<PAGE>

and the results of operations and changes in financial position of the Company
and its consolidated subsidiaries at the respective dates or for the respective
periods therein specified. Such statements and related notes and schedules have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis except as may be set forth in the Prospectus.

(l) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements included
in the Prospectus, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since such
date, there has not been any change in the capital stock or long-term debt of
the Company or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
business, general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus.

(m) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or any of its subsidiaries
is a party or of which any property or assets of the Company or any of its
subsidiaries is the subject which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, might have a Material
Adverse Effect or would prevent or adversely affect the ability of the Company
to perform its obligations under this Agreement; and to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.

(n) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any respect, and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) is in violation in
any respect of any law, ordinance, governmental rule, regulation or court decree
to which it or its property or assets may be subject except any violations or
defaults which, singularly or in the aggregate, would not have a Material
Adverse Effect.

(o) The Company and each of its subsidiaries possess all
licenses, certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate state, federal or foreign
regulatory agencies or bodies which are necessary or desirable for the ownership
of their respective properties or the conduct of their respective businesses as
described in the Prospectus except where any failures to possess or make the
same, singularly or in the aggregate, would not have a Material Adverse Effect,
and the Company has not received notification of any revocation or modification
of any such license, authorization or permit and has no reason to believe that
any such license, certificate, authorization or permit will not be renewed.

4
<PAGE>

(p) Neither the Company nor any of its subsidiaries is or, after
giving effect to the offering of the Stock and the application of the proceeds
thereof as described in the Prospectus will become, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended and the
rules and regulations of the Commission thereunder.

(q) Neither the Company nor any of its officers, directors or
affiliates has taken or will take, directly or indirectly, any action designed
or intended to stabilize or manipulate the price of any security of the Company,
or which caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any security of the Company.

(r) The Company and its subsidiaries own or possess the right
to use all patents, trademarks, trademark registrations, service marks, service
mark registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by them for the conduct of
their respective businesses, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company and
its subsidiaries with respect to the foregoing. The Company's business as now
conducted and as proposed to be conducted does not and will not infringe or
conflict with any patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses or other intellectual property or franchise right of any
person. Except as described in the Prospectus, no claim has been made against
the Company alleging the infringement by the Company of any patent, trademark,
service mark, trade name, copyright, trade secret, license in or other
intellectual property right or franchise right of any person.

(s) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or otherwise
use, all items of real or personal property which are material to the business
of the Company and its subsidiaries taken as a whole, in each case free and
clear of all liens, encumbrances, claims and defects that may result in a
Material Adverse Effect.

(t) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the best of the Company's knowledge, is
imminent which might be expected to have a Material Adverse Effect. The Company
is not aware that any key employee or significant group of employees of the
Company or any subsidiary plans to terminate employment with the Company or any
such subsidiary.

(u) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time (the "Code"))
or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any
of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan which could
have a Material Adverse Effect; each employee benefit plan is in compliance in
all material respects with applicable law, including ERISA and the Code; the
Company has not incurred and does not expect to incur liability under Title IV
of ERISA with respect to the termination of, or

5
<PAGE>

withdrawal from, any "pension plan"; and each "pension plan" (as defined in
ERISA) for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
could cause the loss of such qualification.

(v) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other release of any kind
of toxic or other wastes or other hazardous substances by, due to, or caused by
the Company or any of its subsidiaries (or, to the best of the Company's
knowledge, any other entity for whose acts or omissions the Company or any of
its subsidiaries is or may be liable) upon any of the property now or previously
owned or leased by the Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule, regulation, order,
judgment, decree or permit or which would, under any statute or any ordinance,
rule (including rule of common law), regulation, order, judgment, decree or
permit, give rise to any liability, except for any violation or liability which
would not have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; there has been no disposal, discharge,
emission or other release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company or any of its subsidiaries have
knowledge, except for any such disposal, discharge, emission, or other release
of any kind which would not have, singularly or in the aggregate with all such
discharges and other releases, a Material Adverse Effect.

(w) The Company and its subsidiaries each (i) have filed with
all necessary federal, state and foreign income and franchise tax returns, (ii)
have paid all federal sate, local and foreign taxes due and payable for which it
is liable, and (iii) do not have any tax deficiency or claims outstanding or
assessed or, to the best of the Company's knowledge, proposed against it which
could reasonably be expected to have a Material Adverse Effect.

(x) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate
for the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.

(y) The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

(z) The minute books of the Company and each of its subsidiaries
have been made available to the Underwriters and counsel for the Underwriters,
and such books (i) contain a complete summary of all meetings and actions of the
directors and shareholders of the Company and each of its subsidiaries since the
time of its respective incorporation through the

6
<PAGE>

date of the latest meeting and action, and (ii) accurately in all material
respects reflect all transactions referred to in such minutes.

(aa) There is no franchise, lease, contract, agreement or
document required by the Securities Act or by the Rules and Regulations to be
described in the Prospectus or to be filed as an exhibit to the Registration
Statements which is not described or filed therein as required; and all
descriptions of any such franchises, leases, contracts, agreements or documents
contained in the Registration Statements are accurate and complete descriptions
of such documents in all material respects.

(bb) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required to be
described in the Prospectus and which is not so described.

(cc) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statements or otherwise, except for persons
and entities who have expressly waived such right or who have been given proper
notice and have failed to exercise such right within the time or times required
under the terms and conditions of such right.

(dd) Neither the Company nor any of its subsidiaries own any
"margin securities" as that term is defined in Regulations G and U of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Stock will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Securities to be considered a "purpose credit" within the
meanings of Regulation G, T, U or X of the Federal Reserve Board.

(ee) Neither the Company nor any of its subsidiaries is a party
to any contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or the Underwriters for a brokerage
commission, finder's fee or like payment in connection with the offering and
sale of the Stock.

(ff) No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained in the
Prospectus has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.

(gg) None of the Company or any of its subsidiaries does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Florida Statutes Section 517.075.

(hh) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which the
business or operations of the Company or any of its subsidiaries

7
<PAGE>

will be affected by the Year 2000 Problem. As a result of such review, the
Company has no reason to believe, and does not believe, that the Year 2000
Problem will have a Material Adverse Effect. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.

(ii) The Stock has been approved for listing subject to notice of
issuance on the NASDAQ Stock Market's National Market.

3. Purchase, Sale and Delivery of Offered Securities.

(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company that number of shares of Firm Stock (rounded up or down, as
determined by SG Cowen in its discretion, in order to avoid fractions) obtained
by multiplying [________] shares of Firm Stock by a fraction the numerator of
which is the number of shares of Firm Stock set forth opposite the name of such
Underwriter in Schedule A hereto and the denominator of which is the total
number of shares of Firm Stock.

(b) The purchase price per share to be paid by the Underwriters
to the Company for the Stock will be $[_____] per share (the "Purchase Price").

(c) The Company will deliver the Firm Stock to the
Representatives for the respective accounts of the several Underwriters in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Company given at
or prior to 12:00 Noon, New York time, on the second full business day preceding
the First Closing Date (as defined below) against payment of the aggregate
Purchase Price therefor by wire transfer to an account at a bank acceptable to
SG Cowen, payable to the order of the Company at the offices of SG Cowen,
Financial Square, New York, New York 10005. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The time and date of
the delivery and closing shall be at 10:00 A.M., New York time, on [________],
1999, in accordance with Rule 15c6-1 of the Exchange Act. The time and date of
such payment and delivery are herein referred to as the "First Closing Date".
The First Closing Date and the location of delivery of, and the form of payment
for, the Firm Stock may be varied by agreement between the Company and SG Cowen.
The Company shall make the certificates for the Stock available to the
Representatives for examination on behalf of the Underwriters in New York, New
York at least twenty-four hours prior to the First Closing Date.

(d) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Stock as contemplated by the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Stock. The price per share to be paid for the Optional

8
<PAGE>

Stock shall be the Purchase Price. The Company agrees to sell to the
Underwriters the number of shares of Optional Stock specified in the written
notice by SG Cowen described below and the Underwriters agree, severally and not
jointly, to purchase such shares of Optional Stock. Such shares of Optional
Stock shall be purchased from the Company for the account of each Underwriter in
the same proportion as the number of shares of Firm Stock set forth opposite
such Underwriter's name bears to the total number of shares of Firm Stock
(subject to adjustment by SG Cowen to eliminate fractions). The option granted
hereby may be exercised as to all or any part of the Optional Stock at any time,
and from time to time, not more than thirty (30) days subsequent to the date of
this Agreement. No Optional Stock shall be sold and delivered unless the Firm
Stock previously has been, or simultaneously is, sold and delivered. The right
to purchase the Optional Stock or any portion thereof may be surrendered and
terminated at any time upon notice by SG Cowen to the Company. The option
granted hereby may be exercised by written notice being given to the Company by
SG Cowen setting forth the number of shares of the Optional Stock to be
purchased by the Underwriters and the date and time for delivery of and payment
for the Optional Stock. Each date and time for delivery of and payment for the
Optional Stock (which may be the First Closing Date, but not earlier) is herein
called the "Option Closing Date" and shall in no event be earlier than two (2)
business days nor later than five (5) business days after written notice is
given. The Option Closing Date and the First Closing Date are herein called the
"Closing Dates". The Company will deliver the Optional Stock to the Underwriters
(in the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company given at or prior to 12:00 Noon, New York time, on the second full
business day preceding the Option Closing Date against payment of the aggregate
Purchase Price therefor in federal (same day) funds by certified or official
bank check or checks or wire transfer to an account at a bank acceptable to SG
Cowen payable to the order of the Company. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The Company shall
make the certificates for the Optional Stock available to the Representatives
for examination on behalf of the Underwriters in New York, New York not later
than 10:00 A.M., New York Time, on the business day preceding the Option Closing
Date. The Option Closing Date and the location of delivery of, and the form of
payment for, the Optional Stock may be varied by agreement between the Company
and SG Cowen.

(e) The several Underwriters propose to offer the Stock for sale
upon the terms and conditions set forth in the Prospectus.

4. Further Agreements of the Company. The Company agrees with the several
Underwriters that:

(a) The Company will prepare the Rule 462(b) Registration
Statement, if necessary, in a form approved by the Representatives and file such
Rule 462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form approved by the Representatives and file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than the
second business day following the execution and delivery of this Agreement; make
no further amendment or any supplement to the Registration Statements or to the
Prospectus to which the Representatives shall reasonably object by notice to the
Company after a reasonable

9
<PAGE>

period to review; advise the Representatives, promptly after it receives notice
thereof, of the time when any amendment to either Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the Representatives with copies
thereof; advise the Representatives, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statements or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification, use promptly its best efforts to obtain its
withdrawal.

(b) If at any time prior to the expiration of nine months after
the effective date of the Initial Registration Statement when a prospectus
relating to the Stock is required to be delivered any event occurs as a result
of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Securities Act, the Company will
promptly notify the Representatives thereof and upon their request will prepare
an amended or supplemented Prospectus which will correct such statement or
omission or effect such compliance. The Company will furnish without charge to
each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of such amended or
supplemented Prospectus; and in case any Underwriter is required to deliver a
prospectus relating to the Stock nine months or more after the effective date
of the Initial Registration Statement, the Company upon the request of the
Representatives and at the expense of such Underwriter will prepare promptly an
amended or supplemented Prospectus as may be necessary to permit compliance
with the requirements of Section 10(a)(3) of the Securities Act.

(c) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of each of the Registration
Statements as originally filed with the Commission, and each amendment thereto
filed with the Commission, including all consents and exhibits filed therewith.

(d) To deliver promptly to the Representatives in New York City
such number of the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statements as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits), (ii) each Preliminary Prospectus, (iii) the Prospectus (not later
than 10:00 A.M., New York time, of the business day following the execution and
delivery of this Agreement) and any amended or supplemented Prospectus (not
later than 10:00 A.M., New York City time, on the business day following the
date of such amendment or supplement).

(e) To make generally available to its shareholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as

10
<PAGE>

defined in Rule 158(c) under the Securities Act), an earnings statement of the
Company and its subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158).

(f) The Company will promptly take from time to time such actions as
the Representatives may reasonably request to qualify the Stock for offering and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives may designate and to continue such qualifications in effect for
so long as required for the distribution of the Stock ; provided that the
--------
the Company and its subsidiaries shall not be obligated to qualify as foreign
corporations in any jurisdiction in which they are not so qualified or to file a
general consent to service of process in any jurisdiction.

(g) During the period of five years from the date hereof, the
Company will deliver to the Representatives and, upon request, to each of the
other Underwriters, (i) as soon as they are available, copies of all reports or
other communications furnished to shareholders and (i) as soon as they are
available, copies of any reports and financial statements furnished or filed
with the Commission pursuant to the Exchange Act or any national securities
exchange or automatic quotation system on which the Stock is listed or quoted.

(h) The Company will not directly or indirectly offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of any shares
of Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock for a period of 180 days from the date of the Prospectus
without the prior written consent of SG Cowen other than the Company's sale of
the Stock hereunder and the issuance of shares pursuant to employee benefit
plans, qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights; the Company will cause each officer, director and
shareholder listed in Schedule B to furnish to the Representatives, prior to the
First Closing Date, a letter, substantially in the form of Exhibit I hereto,
pursuant to which each such person shall agree not to directly or indirectly
offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of
any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock for a period of 180 days from the date of the
Prospectus, without the prior written consent of SG Cowen.

(i) The Company will supply the Representatives with copies of
all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the Securities
Act.

(j) Prior to each of the Closing Dates the Company will furnish
to the Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for any
periods subsequent to the periods covered by the financial statements appearing
in the Registration Statement and the Prospectus.

(k) Prior to each of the Closing Dates, the Company will not
issue any press release or other communication directly or indirectly or hold
any press conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business

11
<PAGE>

and consistent with the past practices of the Company and of which the
Representatives are notified), without the prior written consent of the
Representatives, unless in the judgment of the Company and its counsel, and
after notification to the Representatives, such press release or communication
is required by law.

(l) In connection with the offering of the Stock, until SG Cowen
shall have notified the Company of the completion of the resale of the Stock,
the Company will not, and will cause its affiliated purchasers (as defined in
Regulation M under the Exchange Act) not to, either alone or with one or more
other persons, bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Stock, or attempt to induce
any person to purchase any Stock; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating actual, or
apparent, active trading in or of raising the price of the Stock.

(m) The Company will not take any action prior to the Option
Closing Date which would require the Prospectus to be amended or supplemented
pursuant to Section 4(b) hereof.

(n) The Company will apply the net proceeds from the sale of the
Stock as set forth in the Prospectus under the heading "Use of Proceeds".

5. Payment of Expenses. The Company agrees with the Underwriter to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Stock and any taxes payable in that connection; (b) the costs
incident to the Registration of the Stock under the Securities Act; (c) the
costs incident to the preparation, printing and distribution of the Registration
Statement, Preliminary Prospectus, Prospectus any amendments and exhibits
thereto, and the costs of printing, reproducing and distributing the "Agreement
Among Underwriters" between the Representatives and the Underwriters, the Master
Selected Dealers' Agreement, the Underwriters' Questionnaire and this Agreement
by mail, telex or other means of communications; (d) the fees and expenses
(including related fees and expenses of counsel for the Underwriters) incurred
in connection with filings made with the National Association of Securities
Dealers; (e) any applicable listing or other fees; (f) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 4(f) hereof and of preparing, printing and distributing Blue
Sky Memoranda and Legal Investment Surveys (including related fees and expenses
of counsel to the Underwriters); (g) all fees and expenses of the registrar and
transfer agent of the Stock; and (h) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement
(including, without limitation, the fees and expenses of the Company's counsel
and the Company's independent accountants); provided that, except as otherwise
provided in this Section 5 and in Section 9 hereof, the Underwriters shall pay
their own costs and expenses, including the fees and expenses of their counsel,
any transfer taxes on the Stock which they may sell and the expenses of
advertising any offering of the Stock made by the Underwriters.

6. Conditions of Underwriters' Obligations. The respective obligations of
the several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions

12
<PAGE>

hereof, to the performance by the Company of their obligations hereunder, and to
each of the following additional terms and conditions:

(a) No stop order suspending the effectiveness of either the
Registration Statements shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission, and any
request for additional information on the part of the Commission (to be included
in the Registration Statements or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives. The Rule
462(b) Registration Statement, if any, and the Prospectus shall have been timely
filed with the Commission in accordance with Section 4(a) hereof.

(b) None of the Underwriters shall have discovered and disclosed
to the Company on or prior to the Closing Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Underwriters, is
material or omits to state any fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.

(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of this Agreement, the Stock, the
Registration Statement and the Prospectus and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.

(d) Paul, Hastings, Janofsky & Walker LLP shall have furnished to
the Representatives such counsel's written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:

i. The Company and each of its subsidiaries have been
duly incorporated and are validly existing as
corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly
qualified to do business and a re in good standing as
foreign corporations in each jurisdiction in which
their respective ownership or lease of property or
the conduct of their respective businesses requires
such qualification, and have all power and authority
necessary to own or hold their respective properties
and to conduct the businesses in which they are
engaged, except where the failure to so qualify or
have such power or authority would not have,
singularly or in the aggregate, a Material Adverse
Effect.

ii. The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares
of capital stock of the Company, including the Stock
being delivered on the Closing

13
<PAGE>

Date, have been duly and validly authorized and
issued, are fully paid and non-assessable and conform
to the description thereof contained in the
Prospectus.

iii. All the outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized
and validly issued, are fully paid and nonassessable
and, except to the extent set forth in the
Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien,
encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third
party.

iv. There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any shares of the
Stock pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such
counsel.

v. This Agreement has been duly authorized, executed
and delivered by the Company.

vi. The execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result
in a breach or violation of any of the terms or
provisions of, or constitute a default under any
indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel
after reasonable investigation to which the Company
or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to
which any of the properties or assets of the Company
or any of its subsidiaries is subject, nor will such
actions result in any violation of the Charter or by-
laws of the Company or of any of its subsidiaries or
any statute or any order, rule or regulation of any
court or governmental agency or body or court having
jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets.

vii. Except for the registration of the Stock under the
Securities Act and such consents, approvals,
authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable
state securities laws in connection with the purchase
and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or
filing or registration with, any such court or
governmental agency or body is required for the
execution, delivery and performance of this Agreement
by the Company and the consummation of the
transactions contemplated hereby.

14
<PAGE>

viii. The statements in the Prospectus under the heading
"Related Party Transactions - Founder Transactions",
"Description of Capital Stock - Anti-Takeover Effects
of Certain Provisions of Delaware Law and L90's
Certificate of Incorporation and Bylaws", "Shares
Eligible for Future Sale", "Certain U.S. Tax
Consequences to Non-U.S. Holders" and
[_______________] to the extent that they constitute
summaries of matters of law or regulation, legal
conclusions or descriptions of contractual terms,
have been reviewed by such counsel and fairly
summarize the matters described therein in all
material respects.

ix. The description in the Registration Statement and
Prospectus of statutes, legal or governmental
proceedings and contracts and other documents are
accurate in all material respects; and to the best of
such counsel's knowledge, there are no statutes,
legal or governmental proceedings, contracts or other
documents of a character required to be described in
the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement which
are not described or filed as required.

x. To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or
of which any property or asset of the Company or any
of its subsidiaries is the subject which, singularly
or in the aggregate, if determined adversely to the
Company or any of its subsidiaries, might have a
Material Adverse Effect or would prevent or adversely
affect the ability of the Company to perform its
obligations under this Agreement; and, to the best of
such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental
authorities or threatened by others.

xi. The Registration Statement was declared effective
under the Securities Act as of the date and time
specified in such opinion, the Rule 462(b)
Registration Statement, if any, was filed with the
Commission on the date specified therein, the
Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened
by the Commission.

xii. The Registration Statement, as of its effective date
and the Prospectus, as of its date, and any further
amendments or

15
<PAGE>

supplements thereto, as of their respective dates,
made by the Company prior to the Closing Date (other
than the financial statements and other financial
data contained therein, as to which such counsel need
express no opinion) complied as to form in all
material respects with the requirements of the
Securities Act and the Rules and Regulations.

xiii. No person or entity has the right to require
registration of shares of Common Stock or other
securities of the Company because of the filing or
effectiveness of the Registration Statements or
otherwise, except for persons and entities who have
expressly waived such right or who have been given
proper notice and have failed to exercise such right
within the time or times required under the terms and
conditions of such right.

xiv. Neither the Company nor any of its subsidiaries is
an "investment company" within the meaning of the
Investment Company Act and the rules and regulations
of the Commission thereunder.

Such counsel shall also have furnished to the Representatives a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representatives, to the effect that such counsel
has acted as counsel to the Company in connection with the preparation of the
Registration Statements and based on such counsel's examination of the
Registration Statements and such counsel's investigations made in connection
with the preparation of the Registration Statements and "conferences with
certain officers and employees of and with auditors for and counsel to the
Company", such counsel has no reason to believe that the Registration
Statements, as of the respective effective dates, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
that the Prospectus contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; it being understood that such counsel need express no
opinion as to the financial statements or other financial data contained in the
Registration Statement or the Prospectus. The foregoing opinion and statement
may be qualified by a statement to the effect that such counsel has not
independently verified the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and takes no
responsibility therefor except to the extent set forth in the opinion described
in clauses (viii) and (ix) above.

(e) The Representatives shall have received from Brobeck, Phleger
& Harrison LLP, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Underwriters may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for enabling them to pass upon such matters.

16
<PAGE>

(f) At the time of the execution of this Agreement, the
Representatives shall have received from Arthur Andersen LLP a letter, addressed
to the Underwriters and dated such date, in form and substance satisfactory to
the Representatives (i) confirming that they are independent certified public
accountants with respect to the Company and its subsidiaries within the meaning
of the Securities Act and the Rules and Regulations and (ii) stating the
conclusions and findings of such firm with respect to the financial statements
and certain financial information contained or incorporated by reference in the
Prospectus.

(g) On the Closing Date, the Representatives shall have received
a letter (the "bring-down letter") from Arthur Andersen LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of the bring-
down letter (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given in the
Prospectus as of a date not more than three business days prior to the date of
the bring-down letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by its letter delivered
to the Representatives concurrently with the execution of this Agreement
pursuant to Section 6(g) hereof.

(h) The Company shall have furnished to the Representatives a
certificate, dated the Closing Date, of its Chairman of the Board, its President
or a Vice President and its chief financial officer stating that (i) such
officers have carefully examined the Registration Statements and the Prospectus
and, in their opinion, the Registration Statements as of their respective
effective dates and the Prospectus, as of each such effective date, did not
include any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) since the effective date of the Initial
Registration Statement no event has occurred which should have been set forth in
a supplement or amendment to the Registration Statements or the Prospectus,
(iii) to the best of their knowledge after reasonable investigation, as of the
Closing Date, the representations and warranties of the Company in this
Agreement are true and correct and the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, and (iv) subsequent to the date of the most
recent financial statements in the Prospectus, there has been no material
adverse change in the financial position or results of operation of the Company
and its subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries taken as a
whole, except as set forth in the Prospectus.

(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the business, general affairs, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the

17
<PAGE>

Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Stock on the terms and
in the manner contemplated in the Prospectus.

(j) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date, prevent the
issuance or sale of the Stock; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance or sale
of the Stock.

(k) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an announcement
with positive implications of a possible upgrading), its rating of any of the
Company's debt securities.

(l) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the sale or
delivery of the Stock on the terms and in the manner contemplated in the
Prospectus.

(m) The National Market System shall have approved the Stock for
listing, subject only to official notice of issuance and evidence of
satisfactory distribution.

(n) SG Cowen shall have received the written agreements,
substantially in the form of Exhibit I hereto, of the officers, directors and
shareholders of the Company listed in Schedule C to this Agreement.

All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Underwriters.

7. Indemnification and Contribution.

18
<PAGE>

(a) The Company shall indemnify and hold harmless each
Underwriter, its officers, employees, representatives and agents and each
person, if any, who controls any Underwriter within the meaning of the
Securities Act (collectively the "Underwriter Indemnified Parties" and , each an
"Underwriter Indemnified Party") against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which that Underwriter
Indemnified Party may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of or is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Prospectus, either of the Registration
Statements or the Prospectus or in any amendment or supplement thereto, (ii) the
omission or alleged omission to state in any Preliminary Prospectus, either of
the Registration Statements or the Prospectus or in any amendment or supplement
thereto a material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any act or failure to act, or any
alleged act or failure to act, by any Underwriter in connection with, or
relating in any manner to, the Stock or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above, (provided that the Company shall not be liable in the case of any
matter covered by this clause (iii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such act or failure to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct) and shall reimburse each Underwriter
Indemnified Party promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter Indemnified Party in connection with
investigating or preparing to defend or defending against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon (i) an untrue
statement or alleged untrue statement in or omission or alleged omission from
the Preliminary Prospectus, either of the Registration Statements or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for use therein,
which information the parties hereto agree is limited to the Underwriter's
Information (as defined in Section 16 hereof) or (ii) an untrue statement,
alleged untrue statement, omission or alleged omission made in the Preliminary
Prospectus, either of the Registration Statements or the Prospectus or any such
amendment or supplement, if a copy of the Final Prospectus was not furnished to
the person asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Securities Act, and if the Final Prospectus
would have cured the defect giving rise to the loss, liability, claim or damage.
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company might otherwise have and shall not limit any rights
or remedies which may otherwise be available at law or in equity to each
Underwriter Indemnified Party.

(b) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company its officers, employees, representatives and
agents, each of its directors and each person, if any, who controls the Company
within the meaning of the Securities Act (collectively the "Company Indemnified
Parties" and each a "Company Indemnified Party") against any loss, claim, damage
or liability, joint or several, or any action in respect thereof, to

19
<PAGE>

which the Company Indemnified Parties may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Prospectus, either of
the Registration Statements or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company through
the Representatives by or on behalf of that Underwriter specifically for use
therein, and shall reimburse the Company Indemnified Parties for any legal or
other expenses reasonably incurred by such parties in connection with
investigating or preparing to defend or defending against or appearing as third
party witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided that the parties hereto hereby
agree that such written information provided by the Underwriters consists solely
of the Underwriter's Information. This indemnity agreement is not exclusive and
will be in addition to any liability which the Underwriters might otherwise have
and shall not limit any rights or remedies which may otherwise be available at
law or in equity to the Company Indemnified Parties.

(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent it has
been materially prejudiced by such failure; and, provided, further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 7.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall

20
<PAGE>

not have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties, which firm shall be designated in writing by SG Cowen, if
the indemnified parties under this Section 7 consist of any Underwriter
Indemnified Party, or by the Company if the indemnified parties under this
Section 7 consist of any Company Indemnified Parties. Each indemnified party, as
a condition of the indemnity agreements contained in Sections 7(a) and 7(b),
shall use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. Subject to the provisions of Section 7(e)
below, no indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.

(d) If at any time an indemnified party shall have requested that
an indemnifying party reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 7 effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the request for reimbursement, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.

(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under Section
7(a) or 7(b) then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Stock, or if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Stock purchased under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the

21
<PAGE>

other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission; provided that the parties hereto agree that the written information
furnished to the Company through the Representatives by or on behalf of the
Underwriters for use in any Preliminary Prospectus, either of the Registration
Statements or the Prospectus consists solely of the Underwriter's Information.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 7(e) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7(e) shall be
deemed to include, for purposes of this Section 7(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(e), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public were offered to the public less
the amount of any damages which such Underwriter has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(e) are several in proportion to their respective underwriting
obligations and not joint.

8. Termination. The obligations of the Underwriters hereunder may be
terminated by SG Cowen, in its absolute discretion by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock if,
prior to that time, any of the events described in Sections 6(j), 6(k) or 6(l)
have occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.

9. Reimbursement of Underwriters' Expenses. If (a) this Agreement shall
have been terminated pursuant to Sections 8 or 10, (b) the Company shall fail to
tender the Stock for delivery to the Underwriters for any reason permitted under
this Agreement, or (c) the Underwriters shall decline to purchase the Stock for
any reason permitted under this Agreement the Company shall reimburse the
Underwriters for the fees and expenses of their counsel and for such other out-
of-pocket expenses as shall have been reasonably incurred by them in connection
with this Agreement and the proposed purchase of the Stock, and upon demand the
Company shall pay the full amount thereof to the SG Cowen. Notwithstanding any
provision contained herein to the contrary, if this Agreement is terminated
pursuant to Section 10 by reason of the default of one or more Underwriters, the
Company shall not be obligated to reimburse any defaulting Underwriter on
account of those expenses.

10. Substitution of Underwriters.

(a) If any Underwriter or Underwriters shall default in its or
their obligations to purchase shares of Stock hereunder and the aggregate number
of shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of

22
<PAGE>

the total number of shares underwritten, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.

(b) If the remaining Underwriters or substituted Underwriters are
required hereby or agree to take up all or part of the shares of Stock of a
defaulting Underwriter or Underwriters as provided in this Section 10, (i) the
Company shall have the right to postpone the Closing Dates for a period of not
more than five (5) full business days in order that the Company may effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees promptly to file any amendments to the Registration Statement or
supplements to the Prospectus which may thereby be made necessary, and (ii) the
respective numbers of shares to be purchased by the remaining Underwriters or
substituted Underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of its liability to the Company or the other
Underwriters for damages occasioned by its default hereunder. Any termination of
this Agreement pursuant to this Section 10 shall be without liability on the
part of any non-defaulting Underwriter or the Company, except expenses to be
paid or reimbursed pursuant to Sections 5 and 9 and except the provisions of
Section 7 shall not terminate and shall remain in effect.

11. Successors; Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the several Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the Underwriter Indemnified Parties, and the
indemnities of the several Underwriters shall also be for the benefit of the
Company Indemnified Parties.

12. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by them respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Company or any person controlling any of them and
shall survive delivery of and payment for the Stock.

13. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and:

23
<PAGE>

(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to SG Cowen Securities Corporation,
Attention: [ ] (Fax: [ ]);

(b) if to the Company shall be delivered or sent by mail, telex
or facsimile transmission to L90, Inc., Attention: [_________] (Fax: [ ]);

provided, however, that any notice to an Underwriter pursuant to Section 7 shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.

14. Definition of Certain Terms. For purposes of this Agreement, (a)
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the
Rules and Regulations.

15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

16. Underwriters' Information. The parties hereto acknowledge and agree
that, for all purposes of this Agreement, the Underwriters' Information consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Underwriters;
and (ii) the statements concerning the Underwriters contained in the [_______]
paragraphs under the heading "Underwriting."

17. Authority of the Representatives. In connection with this Agreement,
you will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives, will be binding on all the
Underwriters.

18. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.

19. General. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. In this Agreement, the masculine, feminine and neuter
genders and the singular and the plural include one another. The section
headings in this Agreement are for the convenience of the parties only and will
not affect the construction or interpretation of this Agreement. This Agreement
may be amended or modified, and the observance of any term of this Agreement may
be waived, only by a writing signed by the Company and the Representatives.

24
<PAGE>

20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

[Signature page follows]

25
<PAGE>

If the foregoing is in accordance with your understanding of the
agreement between the Company and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.

Very truly yours,

L90, INC.

By:____________________________
Name:
Title:

SG COWEN SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
WIT CAPITAL CORPORATION
Acting on their own behalf
and as Representatives of the several
Underwriters referred to in the
foregoing Agreement.

By: SG COWEN SECURITIES CORPORATION

By:______________________________
Name:
Title:

26
<PAGE>

SCHEDULE A

<TABLE>
<CAPTION>
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
- -----
<S> <C> <C>
SG Cowen Securities Corporation --------------- --------------

Total =============== ==============
</TABLE>
<PAGE>

SCHEDULE B

[List of stockholders subject to Section 4(h)]
<PAGE>

Exhibit I

[Form of Lock-Up Agreement]

[Date]

Re: L90, Inc. Shares of Common Stock

Dear Sirs:

In order to induce SG Cowen Securities Corporation ("SG Cowen"), Banc
of America Securities LLC, CIBC World Markets Corp. and Wit Capital Corporation
(together with SG Cowen, the "Representatives"), to enter in to a certain
underwriting agreement with L90, Inc., a Delware corporation (the "Company"),
with respect to the public offering of shares of the Company's Common Stock, par
value $0.001 per share ("Common Stock"), the undersigned hereby agrees that for
a period of 180 days following the date of the final prospectus filed by the
Company with the Securities and Exchange Commission in connection with such
public offering, the undersigned will not, without the prior written consent of
SG Cowen, directly or indirectly, offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of, any shares of Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933, as the same may be
amended or supplemented from time to time (such shares, the "Beneficially Owned
Shares")) or securities convertible into or exercisable or exchangeable in
Common Stock.

Anything contained herein to the contrary notwithstanding, any person
to whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned shall be bound by the terms of this Agreement.

[Signatory]

By:___________________________________
Name:
Title:

<PAGE>

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and all references to our Firm) included in or made part of this
amended registration statement.

/s/ Arthur Andersen LLP

Los Angeles, California

November 1, 1999