L90 INC, S-1/A, 1999-12-02

L90 INC
S-1/A, 1999-12-02
BUSINESS SERVICES, NEC

Previous: AVIATION UPGRADE TECHNOLOGIES INC, 10SB12G, 1999-12-02

Next: PFSWEB INC, 424B1, 1999-12-02

<PAGE>

As filed with the Securities and Exchange Commission on December 2, 1999
Registration No. 333-87607
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT No. 2
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(5)
- -------------------------------------------------------------------------------------
<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
- -------------------------------------------------------------------------------------
Common Stock, $0.001 par
value per share....... 2,145,489(3) $ 4.59(4) $ 9,847,795(4) $ 2,738
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</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) This amount 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 DECEMBER 2, 1999

PROSPECTUS

6,000,000 Shares

[LOGO of L90, INC.]

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.

Our common stock has been approved 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: Brand name Web sites
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, ScoopsWrestling, Scour, Shoplet.com, Small World,
SpeedyClick, 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: Ameritech, Ask
Jeeves, Chevrolet, Dell, eBay, FTD, ImproveNet, Infoseek, Intel, iVillage,
LAUNCH, Levi's, Mars, Microsoft, Mothernature.com, Netscape, OnHealth, OshKosh
B'Gosh, Procter & Gamble, Sony, Sprint, Talk City, Tickets.com, Uproar,
Visa, Vitamins.com, Wall Street Journal, Wired Solutions and Women.com.
The top right corner of the inside front cover will contain a picture of our
logo. The bottom right corner of the inside front cover will contain a footnote
that reads: This is a partial, but representative list of L90's advertisers and
Web sites. CarPrices.com represents 11.2% of L90's revenue. No other web site or
advertiser represents more than 10% of L90's revenue. See the "Business" section
of this Prospectus for additional clients.

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
traditional banner advertising to take advantage of the unique capabilities of
the Internet for our advertising, direct marketing and Web publishing clients.

[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 advertising campaign designed to promote the OshKosh B'Gosh
brand on MaMaMedia.
<PAGE>

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

"The Big Game" with Tickets.com

An advertising campaign developed to build brand awareness for Tickets.com,
generate ticket sales and develop a consumer database.

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

iVillage Cross Promotional Print/Online Campaign

A sponsorship program designed to reach a broad cross-section of women by
incorporating ad placements in online and offline media properties, 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 seasonal shopping guide and direct marketing campaign that is syndicated
across our network of Web sites and features a rotating selection of gift
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 solution created to roll out the Levi's e-commerce Web site to
their target audience.

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

LAUNCH on CD-ROM Trial Offer

A response-driven marketing campaign to invite Web users to register for free
trial issues of LAUNCH on
<PAGE>

CD-ROM without leaving the Web site that they are viewing.

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

Visa on Music Boulevard

A sponsorship campaign designed to strengthen the Visa brand and increase
Visa's overall market share by positioning Visa as the preferred card for
e-commerce transactions.

INSIDE BACK COVER

The inside back cover of the prospectus contains L90's adMonitor logo in
the center of the page. In the lower right hand corner of the inside back cover
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.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................. 5
Risk Factors........................ 9
Forward-Looking Statements.......... 19
Use of Proceeds..................... 19
Dividend Policy..................... 20
Other Information................... 20
Capitalization...................... 21
Dilution............................ 22
Selected Financial Data............. 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 25
Business............................ 34
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management........................... 51
Related Party Transactions........... 57
Principal Stockholders............... 60
Description of Capital Stock......... 63
Shares Eligible for Future Sale...... 67
U.S. Tax Consequences to Non-U.S.
Holders............................. 69
Underwriting......................... 73
Legal Matters........................ 75
Experts.............................. 75
Where You Can Find More Information.. 75
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 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. 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

5
<PAGE>

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;

. Further develop and deploy 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 2,752,327 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 $2.76 per share.

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

Common Stock to be outstanding after this offering.. 19,078,736 shares

Use of Proceeds..................................... We intend to use the net
proceeds of this offering
for general corporate
purposes. See "Use of
Proceeds" for more
information on the use of
proceeds.
</TABLE>

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
====== =======
</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>

<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>
Supplemental Data:

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

Intellectual property infringement claims, including a November 1999 lawsuit
against us by DoubleClick, could prevent or hinder our ability to deliver
advertisements over the Internet

We face the risk that other parties' intellectual property positions will
impair our ability to deliver advertisements over the Internet. On November 12,
1999, DoubleClick filed a patent

9
<PAGE>

infringement lawsuit against us in the United States District Court for the
Eastern District of Virginia. The suit alleges that we are infringing, and
inducing and contributing to the infringement by third parties of, a patent
held by DoubleClick related to methods and networks for delivering, targeting
and measuring advertising over the Internet. DoubleClick is seeking treble
damages in an unspecified amount, a preliminary and permanent injunction from
further alleged infringement and attorneys' fees and costs. This litigation can
be expected to result in significant expenses to us and the diversion of
management time and other resources, the extent of which cannot be quantified
with any reasonable accuracy given the early stage of this litigation. If
DoubleClick is successful in its claims against us, we may be hindered or even
prevented from competing in the Internet advertising market and our operations
would be severely harmed. The DoubleClick suit could result in limitations on
how we implement our products and services, delays and costs associated with
redesigning our products and services and payments of license fees and other
monies. An injunction obtained by DoubleClick could eliminate our ability to
deliver advertisements over the Internet. If DoubleClick is successful in its
claims against us, 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, such as 24/7 Media, may have, or may in
the future be granted, patents that cover our technology or other aspects of
our business. We may be limited in our ability to use our technology or conduct
our business without licenses from these third parties, which may not be
available on commercially reasonable terms, if at all.

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 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 ability to
provide services 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

10
<PAGE>

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.

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. No other Web publisher accounted for more
than 10% 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.

11
<PAGE>

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 results
of operations 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
results of operations 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 $301,000.

Since we expect to derive substantially all of our revenue in the foreseeable
future from online advertising, our ability to generate revenue 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 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
ability to generate revenue 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.

12
<PAGE>

Failure of our technology and computing systems could harm our relationships
with our clients and cause our results of operations to suffer

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 cause our results of operations to suffer.
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 limit the growth of 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 ability to generate revenue

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 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

13
<PAGE>

AdForce, DoubleClick and Engage Technologies. 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 results of operations to suffer

We focus on creating sponsorship-oriented advertising campaigns that take
full advantage of the unique capabilities of the Internet. The Internet is a
quickly changing environment, requiring companies to constantly improve their
technology and develop or acquire new technology. 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
results of operations 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 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 results of operations 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

14
<PAGE>

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 and results of operations 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.

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.

The loss of key employees would likely impair the growth of our business

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

15
<PAGE>

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 impair
the growth of our business. Please see "Management" for more information about
our executive officers and key employees.

Potential Year 2000 risks may harm our ability to generate revenue and our
results of operations

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 affect our ability to generate revenue and damage our business
and results of operations. 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.

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 results of
operations 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

16
<PAGE>

applying the net proceeds of this offering. If our management does not apply
these funds effectively, our results of operations 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
66.7% of the outstanding shares of common stock and 63.7% 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 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, the growth of our business and results of
operations may suffer.

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

A number of recent acquisitions and consolidations have occurred in our
industry. For example, DoubleClick acquired NetGravity in October 1999, and
CMGI, Inc. has agreed to acquire Flycast Communications and Adforce. We are
subject to anti-takeover provisions that 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.

17
<PAGE>

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, following initial public offerings, the market prices for stocks of
Internet-related and online companies often reach levels that bear no
relationship to the operating performance of these companies. These market
prices are generally not sustainable and could vary widely. The market prices
of the securities of Internet-related and online companies have been especially
volatile. If our common stock trades to high levels following this offering, it
could eventually experience a significant decline.

18
<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.

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. 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.

19
<PAGE>

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.

OTHER INFORMATION

Unless otherwise indicated, all information in this prospectus:

. reflects a 2-for-3 reverse stock split to be effected 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 2,752,327 shares of common stock with a weighted average
exercise price of $2.76 per share; and

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

20
<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 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;
13,078,736 shares issued and outstanding on a
pro forma basis; and 19,078,736 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 4,734,284 shares of common stock with a weighted average
exercise price of $3.63 per share.

21
<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 4,734,284 shares of common stock with a
weighted average exercise price of $3.63 per share.

22
<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 and the balance sheet data
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
====== =======
</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>

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

23
<PAGE>

- --------

(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.

(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 4,734,284 shares of common stock with a
weighted average exercise price of $3.63 per share.

24
<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 every thousand ads viewed, 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

25
<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 $1.0 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.

26
<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.

27
<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.

28
<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. 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>
- --------
(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.

29
<PAGE>

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.

<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
primarily due to increases in the number of advertising clients, the number of
ads delivered and adMonitor service fees. The increases in revenue from the
first quarter to second quarter of 1999 and from the second quarter to third
quarter of 1999 were also due to increases in the number of service fee-based
contracts.

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.

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.

30
<PAGE>

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 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. As of September
30, 1999, the amount billed on behalf of our Web publishing clients, and
therefore included in our accounts receivable and accounts payable balances
with no credit risk to us, was approximately $700,000.

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.

31
<PAGE>

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.

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

32
<PAGE>

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.

33
<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 more than 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.

34
<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
$33.1 billion in 2004. 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.

35
<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, integration of
advertisements into Web site content, or content integration, and rich media,
such as audio and video, 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.

[Performance Bar Graph]

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

36
<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

37
<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,
contemporaneous 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 an
advantage for our clients in the time it takes to implement an
advertising campaign. 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 and targeted 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.

38
<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 Visibility. 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.

39
<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 grow with the
growth of the Internet, will continue to provide us with significant
competitive advantages.

Further Develop and Deploy 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,

40
<PAGE>

such as the consumer databases of Donnelley Marketing. 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>

41
<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 91 Web publishers, 31 of which are in
our premium category. A Web publisher must satisfy a number of objective and
subjective criteria before we will designate it as "premium." The objective
requirements include measurable data such as minimum traffic volume. The
subjective requirements include matters such as high brand recognition,
desirable demographics and highly innovative content. 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.

42
<PAGE>

The following table identifies our premium Web publishers as of November 19,
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
AutoFusion, Inc. www.carprices.com Corp.
- -------------------------------------------------- ---------------------------------------------------
Bell Atlantic www.BigYellow.com JobsOnline, LLC www.jobsonline.com
Electronic ----------------------------------------------------------
Commerce Liquid Audio, Inc. www.liquidaudio.com
Services, Inc. ----------------------------------------------------------
- --------------------------------------------------- MaMaMedia, Inc. www.mamamedia.com
Broadband Sports, Inc. www.athletedirect.com ----------------------------------------------------------
- --------------------------------------------------- Regards.com, Inc. www.regards.com
Campus Pipeline, Inc. www.campuspipeline.com ----------------------------------------------------------
- --------------------------------------------------- Scour www.scour.net
click2send.com, Inc. www.click2send.com ---------------------------------------------------------
- --------------------------------------------------- Sega www.sega.com
eMachines, Inc. www.e4me.com ---------------------------------------------------------
- --------------------------------------------------- Small World, Inc. www.baseball.smallworld.com
Extreme Interactive www.scoopswrestling.com www.football.smallworld.com
Media, Inc. www.golf.smallworld.com
- --------------------------------------------------- www.hockey.smallworld.com
Freei Network, Inc. www.go.freei.net www.hoops.smallworld.com
- --------------------------------------------------- www.tennis.smallworld.com
Harry Knowles www.aint-it-cool-news.com ----------------------------------------------------------
- --------------------------------------------------- Speedyclick Corp. www.speedyclick.com
The HolidayChannel, www.holidaychannel.com ----------------------------------------------------------
Inc. Sportspage.com, Inc. www.sportspage.com
- --------------------------------------------------- ----------------------------------------------------------
Hollywood.com, Inc. www.hollywood.com Starchefs www.starchef.com
- --------------------------------------------------- ----------------------------------------------------------
Homestead www.homestead.com TargetMatch & www.datingclub.com
Technologies NetMatch www.jobmatch.com
- --------------------------------------------------- www.matchonline.com
iFilm Corporation www.ifilm.com www.open4assistance.com
- --------------------------------------------------- www.singlesmonthly.com
IMS, Inc. www.kanoodle.com www.travelmatch.com
- --------------------------------------------------- ---------------------------------------------------------
Infonautics Corp. www.companysleuth.com Weider Publications www.fitnessonline.com
www.elibrary.com www.jumponline.com
www.encyclopedia.com www.shapeonline.com
www.jobsleuth.com ----------------------------------------------------------
www.researchpaper.com Whatis.com, Inc. www.whatis.com
www.sportssleuth.com ----------------------------------------------------------
The WinSite www.winsite.com
Group, Inc.
- --------------------------------------------------- ----------------------------------------------------------
</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>

43
<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. No advertising client represented more than 10% of our revenue for
the nine months ended September 30, 1999.

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

44
<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,
or the number of users clicking on an advertisement, 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.

OshKosh B'Gosh, Inc. Building Product Awareness for the Genuine Girl Product
Line

Genuine Girl is a new product line from the popular children's clothing
manufacturer OshKosh B'Gosh, Inc. OshKosh B'Gosh needed a creative advertising
solution that would allow them to introduce the Genuine Girl product to their
desired audience, encourage consumer interaction with the product and
ultimately drive users to a retail store to purchase the product.

45
<PAGE>

Building on the interactive activities featured on MaMaMedia, we helped
create the OshKosh B'Gosh sponsored Genuine Girl program on MaMaMedia. One of
MaMaMedia's popular features is an activity that enables users to create
online, interactive stickers. We customized this activity for OshKosh B'Gosh's
Genuine Girl product line and tailored the program to young girls. By visiting
the Genuine Girl sponsored activity, children are able to create and print out
their own Genuine Girl interactive stickers by dragging and pasting rich media
items, such as talking girls, flowering stars and fluttering butterflies onto
this virtual sticker. By integrating the OshKosh B'Gosh Genuine Girl product
line into the MaMaMedia Web site, OshKosh B'Gosh is able to reach their target
audience in a creative and effective manner. This campaign has resulted in an
average click-through-rate of 15%.

Launch Media Inc. --Response Driven Direct Marketing

Launch Media, Inc. is a digital media company dedicated to creating the
premier Internet destination for discovering new music. Launch was seeking to
acquire new customers and introduce users to its subscription-based CD-ROM
offering.

Taking advantage of our network of Web sites, we developed a direct marketing
solution for Launch designed to reach a diverse group of users and offer them a
trial subscription to Launch. The program incorporates direct marketing
components, such as interstitials, sweepstakes and other opt-in opportunities
throughout a group of Web sites, all of which invite users to "opt-in" to
receive free trial issues of the Launch CD-ROM. This effective direct marketing
solution results in a monthly average of 1,000 user sign-ups.

Levi's Contextual Sponsorship for the Roll-Out of the Levi's E-Commerce Site

Levi's is a leading clothing manufacturer, best known for its manufacturing
and distribution of jeans. Until the advent of the Internet, Levi's primarily
relied on traditional retail stores to distribute its products. Levi's wanted
to introduce Web users to their new e-commerce Web site and tie their online
advertising campaign with their offline marketing plans, which featured their
support of music.

We worked in tandem with Levi's advertising agency, USWeb/CKS, to develop a
co-branded Levi's Web site, the Rock n' Roll Jeans Factory, that was embedded
within the content of Music Blvd.'s Rocktropolis Web site. This co-branded Web
site was designed to allow the user to interact with the new Levi's e-commerce
store while remaining within the Music Blvd. Web site. This program enabled
Levi's to successfully introduce their e-commerce offering to users while they
remained in a familiar landscape.

"Shop the Seasons" Syndicated Shopping Guide and Direct Marketing Solution

We developed the Shop the Seasons campaign in response to e-commerce
advertisers' need for holiday-centric shopping areas. We created the Shop the
Seasons Web site that presents users with a multitude of unique gift
suggestions that are continuously rotated and optimized according to each
advertiser's product offerings. This Web site also includes a promotional
ticker that continuously scrolls through special offers from participating
advertisers. The Shop the Seasons Web site is syndicated across and placed
within the content of our entire network of Web sites.

Additionally, we utilized adMonitor to build the Holiday Helper, a technology
that allows consumers to save a shopping list of the products they want to buy
while moving from advertiser site

46
<PAGE>

to advertiser site. Users are able to e-mail their personal shopping list to
friends and family for future shopping. In designing the Shop the Seasons
campaign, we incorporated a direct marketing and database building component
that requires users to submit their e-mail address in order to receive
promotional offers and allows them to "opt-in" to receive future offers from
the gift guide's advertisers. The Shop the Seasons campaign highlights an
original concept developed with the expertise of our sales, marketing, creative
and technology teams.

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;

. 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 flexible and versatile system with
the ability to adapt to specific advertiser and Web

47
<PAGE>

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.

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 and Engage Technologies. In addition, we may face potential
competition from a number of large Web publishers and Web search engine
companies,

48
<PAGE>

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.

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.

49
<PAGE>

further alleged infringement and attorneys' fees and costs. We believe we have
meritorious defenses to this lawsuit and intend to defend ourselves vigorously.
We currently believe that this lawsuit and its outcome will not cause any
material harm to our business. However, the litigation could result in
significant expenses and diversion of management time and other resources. If
DoubleClick is successful in its claims against us, then we may be hindered or
even prevented from competing in the Internet advertising market and our
operations would be severely harmed. See "Risk Factors -- Intellectual property
infringement claims, including claims by DoubleClick against us, could prevent
or hinder our ability to delivery advertisements over the Internet" and
"Business--Legal Proceedings" for more information relating to the DoubleClick
suit.

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.

Legal Proceedings

On November 12, 1999, DoubleClick filed a lawsuit against us in the United
States District Court for the Eastern District of Virginia. The suit alleges
that we are infringing, and inducing and contributing to the infringement by
third parties of, a patent held by DoubleClick related to methods and networks
for delivering, targeting and measuring advertising over the Internet.
DoubleClick is seeking treble damages in an unspecified amount, a preliminary
and permanent injunction from further alleged infringement and attorneys' fees
and costs. We believe we have meritorious defenses to this lawsuit and intend
to defend ourselves vigorously. We currently believe that this lawsuit and its
outcome will not cause any material harm to our business. See "Risk Factors--
Intellectual property infringement claims, including claims by DoubleClick
against us, could prevent or hinder our ability to delivery advertisements over
the Internet."

In addition to the DoubleClick lawsuit, we periodically may become subject to
other legal proceedings in the ordinary course of our business. We are not
currently involved in any such other proceedings 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, California and Santa Clara, California. These two 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.

50
<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

51
<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 principal 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.

52
<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.

53
<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. In November 1999, we entered into an
arrangement with Mr. Sebastian governing the vesting of stock options and
restricted stock grants upon a termination of his employment following a change
in control. The agreement provides that all of Mr. Sebastian's options and
restricted stock grants shall become exercisable upon a termination of his
employment following a change in control. In addition, the agreement provides
that in the event of a termination of his employment following a change in
control, Mr. Sebastian will receive a cash payment to offset the effects of any
"excess parachute" excise tax imposed upon him.

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.

54
<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 Option
Individual Grants 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 $31,863 $80,749
Mark D. Roah............ 133,333 41.25 $0.38 Dec. 31, 2007 $31,863 $80,749
</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.

55
<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. We currently contemplate that, prior to completion of this
offering, we will add an additional one million shares to be available for
grant under this 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 1,567,066 shares of
common stock had been granted and are outstanding under our 1999 Stock
Incentive Plan. These options have an average exercise price of $3.57 per share
and were held by 94 persons.

56
<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 $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 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

57
<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.

58
<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.

59
<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 46.0% 6,016,666 31.5%
William M. Apfelbaum (2).............. 2,459,224 18.2 2,459,224 12.6
Peter E. Ligeti (3)................... 1,132,685 8.7 1,132,685 5.9
Glenn S. Meyers (4)................... 1,102,396 8.4 1,102,396 5.8
Peter G. Diamandis (5)................ 920,306 7.0 920,306 4.8
Christopher J. Cardinali (6).......... 466,666 3.5 466,666 2.4
Mark D. Roah (7)...................... 466,666 3.5 466,666 2.4
Thomas A. Sebastian................... -- -- -- --
Frank A. Addante (8).................. 400,000 3.0 400,000 2.1
Peter Sealey.......................... 26,666 * 26,666 *
Gerald B. Redditt..................... -- -- -- --
Other 5% Stockholders:
Keystone Venture V, L.P. (9).......... 1,132,685 8.7 1,132,685 5.9
1601 Market Street, Suite 2500
Philadelphia, PA 19103
Development Ventures (Two) Inc. (10).. 1,109,759 8.5 1,109,759 5.8
51 Twin Pond Lane, New Canaan, CT
06840
Rare Medium Group, Inc. (11).......... 1,035,730 7.9 1,035,730 5.4
44 West 18th Street, New York, NY
10011
DigaComm (L90), L.L.C. (12)........... 920,306 7.0 920,306 4.8
400 North Michigan Avenue, Suite 520
Chicago, IL 60611
All directors and executive officers as
a group
(11 persons)(13)...................... 12,724,609 89.7 12,724,609 63.0
</TABLE>

60
<PAGE>

- --------

* Represents less than 1%.

(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.
Mr. Ligeti is the managing director of Keystone V Management Co., Inc.,
which is the general partner of Keystone V Partners, L.P., and Keystone V
Partners, L.P. is the general partner of Keystone Venture V, L.P.

(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.

61
<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.

62
<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.

63
<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

64
<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 6,998,000 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.

65
<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

Our common stock has been approved for trading and quotation on the Nasdaq
National Market under the trading symbol "LNTY."

66
<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 1,109,247 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.

806,936................. After 180 days from the date of this prospectus, a
180-day lock-up is released and these shares are
freely tradeable.

8,226,667............... 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.

3,104,865............... 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.

806,935................. 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

67
<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, except for
the holder of 133,333 shares, 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 2,163,733 shares of our common stock were issued and
outstanding. As of that date, 460,000 of these options had vested and were
therefore exercisable.

As of September 30, 1999, we had outstanding warrants to purchase 2,570,550
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.

68
<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.

69
<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

70
<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

71
<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.

72
<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, specific existing stockholders, specific clients and third party
vendors. 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

73
<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 and all of our directors, officers and other existing stockholders,
except for the holder of 133,333 shares, 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. Penalty bids
may have the effect of deterring syndicate members from selling to people who
have a history of quickly selling their shares. 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.

74
<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.

75
<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

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,
net....................... -- -- -- 8,957,694
Series C preferred stock,
net....................... -- -- -- 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) $ -- $ --
========= ========== ========== ===========
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.

System 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 system 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. No other advertising customer accounted for 10
percent or more of revenue in that period. 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.

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, the three largest Web site partners
accounted for 27.1 percent, 22.0 percent and 17.3 percent of revenue,
respectively. For the year ended December 31, 1998, the two largest Web
site partners accounted for 36.3 percent and 12.0 percent of revenue,
respectively. For the nine months ended September 30, 1999, the largest Web
site partner accounted for 11.2 percent of revenue. 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 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 certificate
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 5,276,156 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 1,644,400 3.51
Exercised................ -- -- (26,666) 3.53
Forfeited................ (66,667) 1.20 (36,000) 1.80
------- ---------
Outstanding at end of
period.................. 582,000 $0.86 2,163,733 $2.82
======= =========
Options exercisable at
end of period........... -- 460,000
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
$4.59......................................... 66,667 9.98 years
---------
2,163,733
=========
</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>

L90, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

9. Subsequent Event (Unaudited)

Legal Proceedings

On November 12, 1999, DoubleClick, Inc. ("DoubleClick") filed a lawsuit
against the Company in the United States District Court for the Eastern
District of Virginia. The suit alleges that the Company is infringing, and
inducing and contributing to the infringement by third parties of, a patent
held by DoubleClick related to methods and networks for delivering,
targeting and measuring advertising over the internet. DoubleClick is
seeking treble damages in an unspecified amount, a preliminary and
permanent injunction from further alleged infringement and attorneys' fees
and costs. The Company believes that it has meritorious defenses to this
lawsuit and intends to defend itself vigorously. The Company currently
believes that this lawsuit and its outcome will not have a material adverse
effect on the Company's results of operations or financial position.
However, the litigation could result in significant expenses and diversion
of management time and other resources. Further, if DoubleClick
successfully asserts an infringement claim against the Company, its
operations would be impacted severely. The DoubleClick suit could result in
limitations on the Company's ability to market its products and services,
delays and costs associated with redesigning its products and services or
payments of license fees or other payments.

F-17
<PAGE>

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

6,000,000 Shares

[LOGO OF L90, INC.]

Common Stock

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

PROSPECTUS

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

SG COWEN

BANC OF AMERICA SECURITIES LLC

CIBC WORLD MARKETS

WIT CAPITAL CORPORATION

, 1999

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

[ALTERNATE PAGE]

SUBJECT TO COMPLETION, DATED DECEMBER 2, 1999

PROSPECTUS

2,145,489 Shares

[LOGO OF L90, INC.]

Common Stock

This prospectus relates to the offering of up to an aggregate of 2,145,489
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 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, the amount of any applicable underwriting discounts and
commissions and the net proceeds to the selling stockholders will be determined
at the time of such sale by the selling stockholders.

Our common stock has been approved 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............................................... 19
Use of Proceeds.......................................................... 19
Dividend Policy.......................................................... 19
Other Information........................................................ 19
Capitalization........................................................... 21
Dilution................................................................. 22
Selected Financial Data.................................................. 23
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 25
Business................................................................. 34
Management............................................................... 51
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Related Party Transactions................................................. 57
Principal Stockholders..................................................... 60
Selling Stockholders....................................................... 60-A
Description of Capital Stock............................................... 63
Shares Eligible for Future Sale............................................ 67
U.S. Tax Consequences to Non-U.S. Holders.................................. 69
Plan of Distribution....................................................... 73
Legal Matters.............................................................. 75
Experts.................................................................... 75
Where You Can Find More Information........................................ 75
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.

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 4,734,283 shares of common stock with a weighted average
exercise price of $3.63 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)........ $(0.04) $ (0.44)
====== =======
Weighted average shares
outstanding used in pro forma
basic and diluted per share
calculation(1)............... 8,333 13,052
====== =======
</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

OTHER INFORMATION

Unless otherwise indicated, all information in this prospectus:

. reflects a 2-for-3 reverse stock split to be effected 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 2,752,327 shares of common stock with a weighted average
exercise price of $2.76 per share; and

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

19
<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) 8.5% 1,109,759 0 0%
Rare Medium Group,
Inc. ................... 1,035,730(5) 7.9 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 our 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.

60-A
<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.

73
<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.

75
<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............................................ $25,756
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 Employment Agreement entered into between the Registrant and John C.
Bohan.
10.29 Employment Agreement entered into between the Registrant and
Christopher J. Cardinali.
10.30 Employment Agreement entered into between the Registrant and Mark D.
Roah (as amended).
10.31 Employment Agreement entered into between the Registrant and Frank A.
Addante (as amended).
10.32 Employment Agreement entered into between the Registrant and Thomas A.
Sebastian.
10.33 Severance Agreement entered into between the Registrant and Thomas A.
Sebastian.
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

II-4
<PAGE>

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
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. 2 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 30, 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. 2 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 30, 1999
---------------------------- Officer and Director
John C. Bohan (Principal Executive
Officer)

* Chief Financial Officer and November 30, 1999
---------------------------- Senior Vice President
(Principal Financial and
Thomas A. Sebastian Accounting Officer)

* November 30, 1999
---------------------------- Chairman of the Board
William M. Apfelbaum and Director

* Senior Vice President of November 30, 1999
---------------------------- Business Development and
Director
Mark D. Roah

* Vice President of November 30, 1999
---------------------------- Northwestern Sales
Christopher J. Cardinali and Director

* November 30, 1999
---------------------------- Director
Peter G. Diamandis

* November 30, 1999
---------------------------- Director
Peter E. Ligeti

* November 30, 1999
---------------------------- Director
Peter Sealey

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

* November 30, 1999
---------------------------- Director
G. Bruce Redditt

*By: /s/ John C. Bohan November 30, 1999
____________________
John C. Bohan
Attorney-in-Fact
</TABLE>

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 Employment Agreement entered into between the Registrant and John C.
Bohan.
10.29 Employment Agreement entered into between the Registrant and
Christopher J. Cardinali.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.30 Employment Agreement entered into between the Registrant and Mark D.
Roah (as amended).
10.31 Employment Agreement entered into between the Registrant and Frank A.
Addante (as amended).
10.32 Employment Agreement entered into between the Registrant and Thomas A.
Sebastian.
10.33 Severance Agreement entered into between the Registrant and Thomas A.
Sebastian.
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>

EXHIBIT 10.28

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
September 15, 1999 between L90, Inc., a Delaware corporation (the "Company"),
-------
and John C. Bohan (the "Employee").
--------

R E C I T A L
- - - - - - -

The Company desires to employ the Employee, and the Employee desires
to be so employed by the Company, on the terms and subject to the conditions set
forth in this Agreement.

AGREEMENT
---------

NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth in this Agreement, the Company and the Employee hereby agree
as follows:

1. Employment.
----------

(a) Subject to the terms and conditions contained herein, the
Company hereby agrees to employ the Employee, and the Employee accepts such
employment, from the date hereof until the earlier of (i) the date which is two
years from the date hereof, provided that such initial term shall be
automatically renewed for successive one-year terms unless either party hereto
otherwise notifies the other in writing within 30 days prior to the end of such
initial term or any such successive term, or (ii) the date such employment is
terminated pursuant to Section 4 of this Agreement. During the Employee's
employment under this Agreement, the Employee shall perform such duties for the
Company as may from time to time be assigned to the Employee by the Board of
Directors of the Company (the "Board"). The Employee shall have the title of
-----
President and Chief Executive Officer or such other title or titles, if any, as
from time to time may be assigned to the Employee by the Board.

(b) The Employee will devote his entire business time, energy,
attention and skill to the services of the Company and its affiliates and to the
promotion of their interests. So long as the Employee is employed by the
Company, the Employee shall not, without the written consent of the Company:
<PAGE>

(i) engage in any other activity for compensation, profit
or other pecuniary advantage, whether received during or after the term of this
Agreement;

(ii) render or perform services of a business,
professional, or commercial nature other than to or for the Company, either
alone or as an employee, consultant, director, officer, or partner of another
business entity, whether or not for compensation, and whether or not such
activity, occupation or endeavor is similar to, competitive with, or adverse to
the business or welfare of the Company; or

(iii) invest in or become a shareholder of another
corporation or other entity; provided, that the Employee's investment solely as
--------
a shareholder in another corporation shall not be prohibited hereby so long as
such investment is not in excess of one percent (1%) of any class of shares that
are traded on a national securities exchange.

(c) Prior to or concurrently with the execution of this
Agreement, the Employee has executed an Employee Proprietary Information, Trade
Secret and Confidentiality Agreement (the "Confidentiality Agreement").

2. Location of Employment. The Employee's principal place of
----------------------
employment shall be at the principal executive offices of the Company located at
Santa Monica, California, or the greater Southern California area, or, as may be
requested by the Board, at any other office of the Company or any of its
affiliates currently or hereinafter located in the State of California;
provided, that at the direction of the Board, the Employee may from time to time
- --------
be required to travel to various domestic and foreign locations.

3. Compensation.
------------

(a) In exchange for full performance of the Employee's
obligations and duties under this Agreement, the Company shall pay the Employee
(i) a base salary at a monthly rate of $4,833.33, payable in accordance with the
Company's standard payroll practices, and (ii) sales commissions in accordance
with the Company's policies in effect from time to time. In any month in which
the Employee shall be employed for less than the entire number of days in such
month, the base salary payable under Section 3(a)(i) shall be prorated on the
basis of the number of days during which the Employee was actually employed
divided by the number of days in such month. The base salary provided for in
Section 3(a)(i) shall be reviewed not less frequently than annually by the
Board, or a committee thereof, and may be adjusted in their discretion.

-2-
<PAGE>

(b) The base salary and commission described in subsection (a)
hereof is a gross amount, and the Company shall be required to withhold from
such amount deductions with respect to Federal, state and local taxes, FICA,
unemployment compensation taxes and similar taxes, assessments or withholding
requirements.

(c) During the Employee's employment under this Agreement, the
Employee shall also be reimbursed by the Company for reasonable business
expenses actually incurred or paid by the Employee, consistent with the policies
established by the Board, in rendering to the Company the services provided for
in this Agreement, upon presentation of expense statements or such other
supporting information as is consistent with the policies of the Company.

(d) The Employee shall be entitled to 15 business days vacation
for each full year of employment under this Agreement, which vacation time will
accrue in accordance with the vacation policy of the Company.

(e) The Employee shall be entitled to participate in all benefit
plans (including deferred compensation plans and any medical, dental or life
insurance plans) which shall be available from time to time to the domestic
management employees of the Company generally, except to the extent such
participation in any plan would, in the opinion of the Board, alter the intended
tax treatment of such plan; provided, however, that the Employee shall have no
-------- -------
right under this Agreement to participate in any stock option, stock purchase or
other plan relating to shares of capital stock of the Company or its affiliates,
which participation, if any, shall be governed by separate agreement. The
Employee acknowledges and agrees that the Board may in its discretion terminate
at any time or modify from time to time any such benefit plans.

(f) Other than as expressly set forth in this Section 3, the
Employee shall not receive any other compensation or benefits except to the
extent provided by the Board.

4. Termination.
-----------

(a) The employment of the Employee under this Agreement may be
terminated by the Company immediately upon giving the Employee notice if (i) the
Board determines that the Employee is unable to discharge his essential job
duties by reason of illness or injury or (ii) the Employee has been unable to
discharge his essential job duties by reason of illness or injury for either (A)
a period of two consecutive months or (B) twelve weeks in any twelve-month
period.

-3-
<PAGE>

(b) The employment of the Employee under this Agreement shall
terminate on the date of the Employee's death.

(c) The employment of the Employee under this Agreement may be
terminated by the Company upon written notice from the Board that, in the
opinion of the Board, the Employee has (i) refused or failed (after reasonable
notice that such refusal or failure would result in termination of the
Employee's employment) to perform, to the satisfaction of the Board, any duties
assigned to the Employee by the Board, (ii) committed a breach of the terms of
this Agreement or any other legal obligation to the Company, (iii) failed to
perform any of the Employee's obligations under the Confidentiality Agreement,
(iv) demonstrated gross negligence or willful misconduct in the execution of the
Employee's assigned duties, (v) been convicted of or pleaded nolo contendere to
---- ----------
a felony or other serious crime, (vi) repeatedly and intemperately used alcohol
or drugs, (vii) engaged in business practices which, in the opinion of the
Board, are unethical or reflect adversely on the Company, (viii) misappropriated
assets of the Company or (ix) been repeatedly absent from work during normal
business hours for reasons other than disability.

(d) The employment of the Employee under this Agreement shall
terminate upon receipt by the Board of a written notice of resignation signed by
the Employee or, if no notice is given, on the date on which the Employee
voluntarily terminates his employment relationship with the Company.

(e) In addition to the circumstances described in subsections
(a), (b), (c) and (d) above, the Company may terminate the Employee's employment
for any reason or no reason and with or without cause or prior notice. The
Employee understands that, subject to subsection (f)(iii) below, he is an at-
will employee and may be terminated by the Company without cause or prior notice
pursuant to this subsection (e) notwithstanding any other provision contained in
this Agreement. This at-will relationship will remain in effect during the term
of this Agreement and so long thereafter provided that the Employee remains
employed by the Company, unless such at-will employment relationship is modified
by a specific, express written agreement signed by the Company.

(f) If the Employee's employment is terminated pursuant to this
Section 4 or for any other reason, the Employee shall not be entitled to any
compensation or benefits from the Company, under Section 3 of this Agreement or
otherwise, except for the following:

-4-
<PAGE>

(i) base salary and vacation pay accrued, and reasonable
business expenses incurred, under Section 3 of this Agreement through the date
of such termination;

(ii) such benefits, if any, as may be required to be
provided by the Company under the Comprehensive Omnibus Budget Reconciliation
Act (COBRA); and

(iii) if the Employee's employment is terminated without
cause pursuant to subsection (e) above, the Company shall continue to pay to the
Employee the base salary described in Section 3(a)(i) above until the
termination of the initial term or any successive term, as set forth in Section
1(a)(i) of this Agreement, during which such termination occurs.

5. Employee's Representations.
--------------------------

(a) The Employee represents that he has full authority to enter
into this Agreement and that he is free to enter into this Agreement and not
under any contractual restraint which would prohibit the Employee from
satisfactorily performing his duties to the Company under this Agreement.

(b) The Employee hereby agrees to indemnify and hold harmless
the Company, its officers, directors and stockholders from and against any
losses, liabilities, damages or costs (including reasonable attorney's fees)
arising out of a breach, or claimed breach, of any of the representations,
warranties and covenants of the Employee set forth in this Agreement.

(c) The Employee acknowledges that he is free to seek advice
from independent counsel with respect to this Agreement. The Employee has either
obtained such advice or, after carefully reviewing this Agreement, has decided
to forego such advice. The Employee is not relying on any representation or
advice from the Company or any of its officers, directors, attorneys or other
representatives regarding this Agreement, its content or effect.

6. Arbitration. Any controversy or claim arising out of or relating
-----------
to this Agreement or any breach hereof or the Employee's employment by the
Company or termination thereof, shall be settled by arbitration by one
arbitrator in accordance with the rules of the American Arbitration Association,
and judgment upon such award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. The arbitration

-5-
<PAGE>

shall be held in the City of Los Angeles or such other place as may be agreed
upon at the time by the parties to the arbitration.

7. Equitable Relief. The Employee acknowledges that the Company is
----------------
relying for its protection upon the existence and validity of the provisions of
this Agreement, that the services to be rendered by the Employee are of a
special, unique and extraordinary character, and that irreparable injury will
result to the Company from any violation or continuing violation of the
provisions of this Agreement for which damages may not be an adequate remedy.
Accordingly, the Employee hereby agrees that in addition to the remedies
available to the Company by law or under this Agreement, the Company shall be
entitled to obtain such equitable relief as may be permitted by law in a court
of competent jurisdiction including, without limitation, injunctive relief from
any violation or continuing violation by the Employee of any term or provision
of this Agreement.

8. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the internal substantive laws (without regard to
choice of law principles) of the State of California.

9. Entire Agreement. This Agreement constitutes the whole agreement
----------------
of the parties hereto in reference to any employment of the Employee by the
Company and in reference to any of the matters or things herein provided for or
hereinabove discussed or mentioned in reference to such employment; all prior
agreements, promises, representations and understandings relative thereto being
herein merged.

10. Assignability.
-------------

(a) In the event the Company shall merge or consolidate with any
other corporation, partnership or business entity, or all or substantially all
of the Company's business or assets shall be transferred in any manner to any
other corporation, partnership or business entity, then such successor to the
Company shall thereupon succeed to, and be subject to, all rights, interests,
duties and obligations of, and shall thereafter be deemed for all purposes
hereof to be, the "Company" under this Agreement.

(b) This Agreement is personal in nature and the Employee shall
not, without the written consent of the Company, assign or transfer this
Agreement or any rights or obligations hereunder.

(c) Except as set forth in subsection (a) above, nothing
expressed or implied in this Agreement is intended or shall be construed to
confer upon

-6-
<PAGE>

or give to any person, other than the parties to this Agreement, any right,
remedy or claim under or by reason of this Agreement or of any term, covenant or
condition of this Agreement.

11. Amendments; Waivers. This Agreement may be amended, modified,
-------------------
superseded, canceled, renewed or extended and the terms or covenants of this
Agreement may be waived only by a written instrument executed by the parties to
this Agreement or, in the case of a waiver, by the party waiving compliance.
Any such written instrument must be approved by the Board to be effective as
against the Company. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right at a later time to enforce the same. No waiver by any party of the breach
of any term or provision contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of the breach of
any other term or covenant contained in this Agreement.

12. Notice. All notices, requests or consents required or permitted
------
under this Agreement shall be made in writing and shall be given to the other
party by personal delivery, overnight air courier (with receipt signature) or
facsimile transmission (with "answerback" confirmation of transmission), if to
the Company, sent to such party's addresses or telecopy number as are set forth
below such party's signature to this Agreement, and if to the Employee, to his
address as set forth in the records of the Company, or such other addresses or
telecopy numbers of which the parties have given notice pursuant to this Section
12. Each such notice, request or consent shall be deemed effective upon the
date of actual receipt, receipt signature or confirmation of transmission, as
applicable.

13. Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

14. Survival. The representations and agreements of the Employee set
--------
forth in Sections 5, 6 and 7 of this Agreement shall survive the expiration or
termination of this Agreement (irrespective of the reason for such expiration of
termination).

15. Attorney's Fees. If any party to this Agreement seeks to enforce
---------------
his or its rights under this Agreement, the prevailing party shall be entitled
to recover reasonable fees, costs and expenses incurred in connection therewith
including, without

-7-
<PAGE>

limitation, the fees, costs and expenses of attorneys, accountants and experts,
whether or not litigation is instituted, and including such fees, costs and
expenses of appeals.

-8-
<PAGE>

IN WITNESS WHEREOF, the parties to this Agreement have executed this
Employment Agreement as of the date first above written.

L90, INC.,
a Delaware corporation

By /s/ Tom Sebastian
--------------------------------------
An Authorized Officer

Address for Notices:

2020 Santa Monica Boulevard
Suite 400
Santa Monica, California 90404
Attention: Chairman of the Board
Telecopy: (310) 315-1369

EMPLOYEE:

/s/ John C. Bohan
-----------------------------------------
John C. Bohan

-9-

<PAGE>

EXHIBIT 10.29

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
September 15, 1999 between L90, Inc., a Delaware corporation (the "Company"),
-------
and Christopher J. Cardinali (the "Employee").
--------

R E C I T A L
- - - - - - -

The Company desires to employ the Employee, and the Employee desires
to be so employed by the Company, on the terms and subject to the conditions set
forth in this Agreement.

AGREEMENT
---------

NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth in this Agreement, the Company and the Employee hereby agree
as follows:

1. Employment.
----------

(a) Subject to the terms and conditions contained herein, the
Company hereby agrees to employ the Employee, and the Employee accepts such
employment, from the date hereof until the earlier of (i) the date which is two
years from the date hereof, provided that such initial term shall be
automatically renewed for successive one-year terms unless either party hereto
otherwise notifies the other in writing within 30 days prior to the end of such
initial term or any such successive term, or (ii) the date such employment is
terminated pursuant to Section 4 of this Agreement. During the Employee's
employment under this Agreement, the Employee shall perform such duties for the
Company as may from time to time be assigned to the Employee by the Board of
-----
Directors of the Company (the "Board") or the President of the Company (the
"Designated Officer"). The Employee shall have the title of Vice President of
------------------
Northwestern Sales or such other title or titles, if any, as from time to time
may be assigned to the Employee by the Board.

(b) The Employee will devote his entire business time, energy,
attention and skill to the services of the Company and its affiliates and to the
promotion
<PAGE>

of their interests. So long as the Employee is employed by the Company, the
Employee shall not, without the written consent of the Company:

(i) engage in any other activity for compensation, profit
or other pecuniary advantage, whether received during or after the term of this
Agreement;

2. Location of Employment. The Employee's principal place of
----------------------
employment shall be at the principal executive offices of the Company located in
the San Francisco Bay area of California, or, as may be requested by the Board,
at any other office of the Company or any of its affiliates currently or
hereinafter located in the State of California; provided, that at the direction
--------
of the Board or the Designated Officer, the Employee may from time to time be
required to travel to various domestic and foreign locations.

3. Compensation.
------------

(a) In exchange for full performance of the Employee's
obligations and duties under this Agreement, the Company shall pay the Employee
(i) a base salary at a monthly rate of $5,000.00, payable in accordance with the
Company's standard payroll practices, and (ii) sales commissions in accordance
with the Company's policies in effect from time to time. In any month in which
the Employee shall be employed for less than the entire number of days in such
month, the base salary payable under Section 3(a)(i) shall be prorated on the
basis of the number of days during which the Employee was actually employed
divided by the number of days in such month. The
<PAGE>

base salary provided for in Section 3(a)(i) shall be reviewed not less
frequently than annually by the Board, or a committee thereof, and may be
adjusted in their discretion.

(e) The Employee shall be entitled to participate in all benefit
plans (including deferred compensation plans and any medical, dental or life
insurance plans) which shall be available from time to time to the domestic
management employees of the Company generally, except to the extent such
participation in any plan would, in the opinion of the Designated Officer, alter
the intended tax treatment of such plan; provided, however, that the Employee
-------- -------
shall have no right under this Agreement to participate in any stock option,
stock purchase or other plan relating to shares of capital stock of the Company
or its affiliates, which participation, if any, shall be governed by separate
agreement. The Employee acknowledges and agrees that the Board may in its
discretion terminate at any time or modify from time to time any such benefit
plans.

(f) Other than as expressly set forth in this Section 3, the
Employee shall not receive any other compensation or benefits except to the
extent provided by the Board.

4. Termination.
-----------

-3-
<PAGE>

job duties by reason of illness or injury for either (A) a period of two
consecutive months or (B) twelve weeks in any twelve-month period.

(b) The employment of the Employee under this Agreement shall
terminate on the date of the Employee's death.

(c) The employment of the Employee under this Agreement may be
terminated by the Company upon written notice from the Board that, in the
opinion of the Board, the Employee has (i) refused or failed (after reasonable
notice that such refusal or failure would result in termination of the
Employee's employment) to perform, to the satisfaction of the Designated Officer
or the Board, any duties assigned to the Employee by the Designated Officer or
the Board, (ii) committed a breach of the terms of this Agreement or any other
legal obligation to the Company, (iii) failed to perform any of the Employee's
obligations under the Confidentiality Agreement, (iv) demonstrated gross
negligence or willful misconduct in the execution of the Employee's assigned
duties, (v) been convicted of or pleaded nolo contendere to a felony or other
---- ----------
serious crime, (vi) repeatedly and intemperately used alcohol or drugs, (vii)
engaged in business practices which, in the opinion of the Board, are unethical
or reflect adversely on the Company, (viii) misappropriated assets of the
Company or (ix) been repeatedly absent from work during normal business hours
for reasons other than disability.

(f) If the Employee's employment is terminated pursuant to this
Section 4 or for any other reason, the Employee shall not be entitled to any

-4-
<PAGE>

compensation or benefits from the Company, under Section 3 of this Agreement or
otherwise, except for the following:

(i) base salary and vacation pay accrued, and reasonable
business expenses incurred, under Section 3 of this Agreement through the date
of such termination;

(ii) such benefits, if any, as may be required to be
provided by the Company under the Comprehensive Omnibus Budget Reconciliation
Act (COBRA); and

5. Employee's Representations.
--------------------------

-5-
<PAGE>

rules of the American Arbitration Association, and judgment upon such award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in the City of Los Angeles or such other
place as may be agreed upon at the time by the parties to the arbitration.

10. Assignability.
-------------

(b) This Agreement is personal in nature and the Employee shall
not, without the written consent of the Company, assign or transfer this
Agreement or any rights or obligations hereunder.

-6-
<PAGE>

(c) Except as set forth in subsection (a) above, nothing
expressed or implied in this Agreement is intended or shall be construed to
confer upon or give to any person, other than the parties to this Agreement, any
right, remedy or claim under or by reason of this Agreement or of any term,
covenant or condition of this Agreement.

15. Attorney's Fees. If any party to this Agreement seeks to enforce
---------------
his or its rights under this Agreement, the prevailing party shall be entitled
to recover

-7-
<PAGE>

reasonable fees, costs and expenses incurred in connection therewith including,
without limitation, the fees, costs and expenses of attorneys, accountants and
experts, whether or not litigation is instituted, and including such fees, costs
and expenses of appeals.

-8-
<PAGE>

IN WITNESS WHEREOF, the parties to this Agreement have executed this
Employment Agreement as of the date first above written.

L90, INC.,
a Delaware corporation

By /s/ John C. Bohan
--------------------------------------
An Authorized Officer

Address for Notices:

2020 Santa Monica Boulevard
Suite 400
Santa Monica, California 90404
Attention: Chairman of the Board
Telecopy: (310) 315-1369

EMPLOYEE:

/s/ Christopher J. Cardinali
-----------------------------------------
Christopher J. Cardinali

-9-

<PAGE>

EXHIBIT 10.30

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
September 15, 1999 between L90, Inc., a Delaware corporation (the "Company"),
-------
and Mark D. Roah (the "Employee").
--------

R E C I T A L
- - - - - - -

The Company desires to employ the Employee, and the Employee desires
to be so employed by the Company, on the terms and subject to the conditions set
forth in this Agreement.

AGREEMENT
---------

NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth in this Agreement, the Company and the Employee hereby agree
as follows:

1. Employment.
----------

(a) Subject to the terms and conditions contained herein, the
Company hereby agrees to employ the Employee, and the Employee accepts such
employment, from the date hereof until the earlier of (i) the date which is two
years from the date hereof, provided that such initial term shall be
automatically renewed for successive one-year terms unless either party hereto
otherwise notifies the other in writing within 30 days prior to the end of such
initial term or any such successive term, or (ii) the date such employment is
terminated pursuant to Section 4 of this Agreement. During the Employee's
employment under this Agreement, the Employee shall perform such duties for the
Company as may from time to time be assigned to the Employee by the Board of
Directors of the Company (the "Board") or the President of the Company (the
-----
"Designated Officer"). The Employee shall have the title of Vice President of
------------------
Technology Sales or such other title or titles, if any, as from time to time may
be assigned to the Employee by the Board.

(b) The Employee will devote his entire business time, energy,
attention and skill to the services of the Company and its affiliates and to the
promotion
<PAGE>

of their interests. So long as the Employee is employed by the Company, the
Employee shall not, without the written consent of the Company:

(i) engage in any other activity for compensation, profit
or other pecuniary advantage, whether received during or after the term of this
Agreement;

2. Location of Employment. The Employee's principal place of
----------------------
employment shall be at the principal executive offices of the Company located at
Santa Monica, California, or the greater Southern California area, or, as may be
requested by the Board, at any other office of the Company or any of its
affiliates currently or hereinafter located in the State of California;
provided, that at the direction of the Board or the Designated Officer, the
- --------
Employee may from time to time be required to travel to various domestic and
foreign locations.

3. Compensation.
------------

(a) In exchange for full performance of the Employee's
obligations and duties under this Agreement, the Company shall pay the Employee
(i) a base salary at a monthly rate of $15,000, payable in accordance with the
Company's standard payroll practices, and (ii) sales commissions in accordance
with the Company's policies in effect from time to time. In any month in which
the Employee shall be employed for less than the entire number of days in such
month, the base salary payable under Section 3(a)(i) shall be prorated on the
basis of the number of days during which the Employee was actually employed
divided by the number of days in such month. The

-2-
<PAGE>

base salary provided for in Section 3(a)(i) shall be reviewed not less
frequently than annually by the Board, or a committee thereof, and may be
adjusted in their discretion.

(e) The Employee shall be entitled to participate in all benefit
plans (including deferred compensation plans and any medical, dental or life
insurance plans) which shall be available from time to time to the domestic
management employees of the Company generally, except to the extent such
participation in any plan would, in the opinion of the Designated Officer, alter
the intended tax treatment of such plan; provided, however, that the Employee
-------- -------
shall have no right under this Agreement to participate in any stock option,
stock purchase or other plan relating to shares of capital stock of the Company
or its affiliates, which participation, if any, shall be governed by separate
agreement. The Employee acknowledges and agrees that the Board may in its
discretion terminate at any time or modify from time to time any such benefit
plans.

(f) Other than as expressly set forth in this Section 3, the
Employee shall not receive any other compensation or benefits except to the
extent provided by the Board.

4. Termination.
-----------

-3-
<PAGE>

job duties by reason of illness or injury for either (A) a period of two
consecutive months or (B) twelve weeks in any twelve-month period.

(b) The employment of the Employee under this Agreement shall
terminate on the date of the Employee's death.

(c) The employment of the Employee under this Agreement may be
terminated by the Company upon written notice from the Board that, in the
opinion of the Board, the Employee has (i) refused or failed (after reasonable
notice that such refusal or failure would result in termination of the
Employee's employment) to perform, to the satisfaction of the Designated Officer
or the Board, any duties assigned to the Employee by the Designated Officer or
the Board, (ii) committed a breach of the terms of this Agreement or any other
legal obligation to the Company, (iii) failed to perform any of the Employee's
obligations under the Confidentiality Agreement, (iv) demonstrated gross
negligence or willful misconduct in the execution of the Employee's assigned
duties, (v) been convicted of or pleaded nolo contendere to a felony or other
---- ----------
serious crime, (vi) repeatedly and intemperately used alcohol or drugs, (vii)
engaged in business practices which, in the opinion of the Board, are unethical
or reflect adversely on the Company, (viii) misappropriated assets of the
Company or (ix) been repeatedly absent from work during normal business hours
for reasons other than disability.

(f) If the Employee's employment is terminated pursuant to this
Section 4 or for any other reason, the Employee shall not be entitled to any

-4-
<PAGE>

compensation or benefits from the Company, under Section 3 of this Agreement or
otherwise, except for the following:

(i) base salary and vacation pay accrued, and reasonable
business expenses incurred, under Section 3 of this Agreement through the date
of such termination;

(ii) such benefits, if any, as may be required to be
provided by the Company under the Comprehensive Omnibus Budget Reconciliation
Act (COBRA); and

5. Employee's Representations.
--------------------------

-5-
<PAGE>

10. Assignability.
-------------

(b) This Agreement is personal in nature and the Employee shall
not, without the written consent of the Company, assign or transfer this
Agreement or any rights or obligations hereunder.

-6-
<PAGE>

15. Attorney's Fees. If any party to this Agreement seeks to enforce
---------------
his or its rights under this Agreement, the prevailing party shall be entitled
to recover

-7-
<PAGE>

-8-
<PAGE>

IN WITNESS WHEREOF, the parties to this Agreement have executed this
Employment Agreement as of the date first above written.

L90, INC.,
a Delaware corporation

By /s/ John C. Bohan
--------------------------------------
An Authorized Officer

Address for Notices:

2020 Santa Monica Boulevard
Suite 400
Santa Monica, California 90404
Attention: Chairman of the Board
Telecopy: (310) 315-1369

EMPLOYEE:

/s/ Mark D. Roah
-----------------------------------------
Mark D. Roah

-9-
<PAGE>

L90, INC.

Amendment No. 1 to
------------------
Employment Agreement
--------------------

This Amendment No. 1 (the "Amendment") is made as of October ___, 1999 to
the Employment Agreement (the "Agreement") made and entered into on September
15, 1999, by and between L90, Inc., a Delaware corporation (the "Company"), and
Mark D. Roah (the "Employee").

Recital
-------

WHEREAS, pursuant to the Agreement, the Employee receives a base salary
equal to $15,000 per year.

WHEREAS, the parties hereto desire to amend the Agreement to increase the
Employee's base salary to $100,000 per year.

Agreement
---------

NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the Company and the Employee agree as follows:

1. Amendment to Agreement. The first sentence of Section 3(a) of the
----------------------
Agreement is amended and restated in its entirety as follows:

"In exchange for full performance of the Employee's obligations and duties
under this Agreement, the Company shall pay the Employee (i) a base salary
at a monthly rate of $8,333.33, payable in accordance with the Company's
standard payroll practices, and (ii) sales commissions in accordance with
the Company's policies in effect from time to time."

2. General Provisions.
------------------

(a) Governing Law. This Amendment shall be construed in accordance
-------------
with and governed by the laws of the State of California.

(b) Full Force and Effect. Except as amended hereby, the Agreement
---------------------
shall remain in full force and effect.

(c) Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute on instrument.
<PAGE>

(d) Captions. The captions herein are included for convenience of
--------
reference only and shall be ignored in the construction or interpretation
hereof.

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered as of the day and year first written above.

COMPANY:

L90, Inc.

By: /s/ Lucrezia Bickerton
-------------------------------------
Name: Lucrezia Bickerton
Title: Assistant Secretary

EMPLOYEE:

By: /s/ Mark D. Roah
-------------------------------------
Name: Mark D. Roah
Title:

<PAGE>

EXHIBIT 10.31

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
September 15, 1999 between L90, Inc., a Delaware corporation (the "Company"),
-------
and Frank Addante (the "Employee").
--------

R E C I T A L
- - - - - - -

The Company desires to employ the Employee, and the Employee desires
to be so employed by the Company, on the terms and subject to the conditions set
forth in this Agreement.

AGREEMENT
---------

NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth in this Agreement, the Company and the Employee hereby agree
as follows:

1. Employment.
----------

(a) Subject to the terms and conditions contained herein, the
Company hereby agrees to employ the Employee, and the Employee accepts such
employment, from the date hereof until the earlier of (i) the date which is two
years from the date hereof, provided that such initial term shall be
automatically renewed for successive one-year terms unless either party hereto
otherwise notifies the other in writing within 30 days prior to the end of such
initial term or any such successive term, or (ii) the date such employment is
terminated pursuant to Section 4 of this Agreement. During the Employee's
employment under this Agreement, the Employee shall perform such duties for the
Company as may from time to time be assigned to the Employee by the Board of
Directors of the Company (the "Board") or the President of the Company (the
-----
"Designated Officer"). The Employee shall have the title of Chief Technology
------------------
Officer or such other title or titles, if any, as from time to time may be
assigned to the Employee by the Board.

(b) The Employee will devote his entire business time, energy,
attention and skill to the services of the Company and its affiliates and to the
promotion
<PAGE>

of their interests. So long as the Employee is employed by the Company, the
Employee shall not, without the written consent of the Company:

(i) engage in any other activity for compensation, profit
or other pecuniary advantage, whether received during or after the term of this
Agreement;

(c) Prior to or concurrently with the execution of this Agreement,
the Employee has executed an Employee Proprietary Information, Trade Secret and
Confidentiality Agreement (the "Confidentiality Agreement").

2. Location of Employment. The Employee's principal place of
----------------------
employment shall be at the principal executive offices of the Company located in
Santa Monica, California, or the greater Southern California area, or, as may be
requested by the Board, at any other office of the Company or any of its
affiliates currently or hereinafter located in the State of California;
provided, that at the direction of the Board or the Designated Officer, the
- --------
Employee may from time to time be required to travel to various domestic and
foreign locations.

3. Compensation.
------------

(a) In exchange for full performance of the Employee's
obligations and duties under this Agreement, the Company shall pay the Employee
a base salary at a monthly rate of $5,000.00, payable in accordance with the
Company's standard payroll practices and (ii) sales commissions in accordance
with the Company's policies in effect from time to time. In any month in which
the Employee shall be employed for less than the entire number of days in such
month, the compensation payable under this Section 3(a) shall be prorated on the
basis of the number of days during which the Employee was actually employed
divided by the number of days in such month. The base

-2-
<PAGE>

salary provided for in Section 3(a) shall be reviewed not less frequently than
annually by the Board, or a committee thereof, and may be adjusted in their
discretion.

(b) The base salary described in subsection (a) hereof is a
gross amount, and the Company shall be required to withhold from such amount
deductions with respect to Federal, state and local taxes, FICA, unemployment
compensation taxes and similar taxes, assessments or withholding requirements.

(e) The Employee shall be entitled to participate in all benefit
plans (including deferred compensation plans and any medical, dental or life
insurance plans) which shall be available from time to time to the domestic
management employees of the Company generally, except to the extent such
participation in any plan would, in the opinion of the Designated Officer, alter
the intended tax treatment of such plan; provided, however, that the Employee
-------- -------
shall have no right under this Agreement to participate in any stock option,
stock purchase or other plan relating to shares of capital stock of the Company
or its affiliates, which participation, if any, shall be governed by separate
agreement. The Employee acknowledges and agrees that the Board may in its
discretion terminate at any time or modify from time to time any such benefit
plans.

(f) Other than as expressly set forth in this Section 3, the
Employee shall not receive any other compensation or benefits except to the
extent provided by the Board.

4. Termination.
-----------

-3-
<PAGE>

job duties by reason of illness or injury for either (A) a period of two
consecutive months or (B) twelve weeks in any twelve-month period.

(b) The employment of the Employee under this Agreement shall
terminate on the date of the Employee's death.

(c) The employment of the Employee under this Agreement may be
terminated by the Company upon written notice from the Board that, in the
opinion of the Board, the Employee has (i) refused or failed (after reasonable
notice that such refusal or failure would result in termination of the
Employee's employment) to perform, to the satisfaction of the Designated Officer
or the Board, any duties assigned to the Employee by the Designated Officer or
the Board, (ii) committed a breach of the terms of this Agreement or any other
legal obligation to the Company, (iii) failed to perform any of the Employee's
obligations under the Confidentiality Agreement, (iv) demonstrated gross
negligence or willful misconduct in the execution of the Employee's assigned
duties, (v) been convicted of or pleaded nolo contendere to a felony or other
---- ----------
serious crime, (vi) repeatedly and intemperately used alcohol or drugs, (vii)
engaged in business practices which, in the opinion of the Board, are unethical
or reflect adversely on the Company, (viii) misappropriated assets of the
Company or (ix) been repeatedly absent from work during normal business hours
for reasons other than disability.

(f) If the Employee's employment is terminated pursuant to this
Section 4 or for any other reason, the Employee shall not be entitled to any

-4-
<PAGE>

compensation or benefits from the Company, under Section 3 of this Agreement or
otherwise, except for the following:

(i) base salary and vacation pay accrued, and reasonable
business expenses incurred, under Section 3 of this Agreement through the date
of such termination;

(ii) such benefits, if any, as may be required to be
provided by the Company under the Comprehensive Omnibus Budget Reconciliation
Act (COBRA); and

(iii) if the Employee's employment is terminated without
cause pursuant to subsection (e) above, the Company shall continue to pay to the
Employee the base salary described in Section 3(a) above until the termination
of the initial term or any successive term, as set forth in Section 1(a)(i) of
this Agreement, during which such termination occurs.

5. Employee's Representations.
--------------------------

-5-
<PAGE>

10. Assignability.
-------------

(b) This Agreement is personal in nature and the Employee shall
not, without the written consent of the Company, assign or transfer this
Agreement or any rights or obligations hereunder.

-6-
<PAGE>

15. Attorney's Fees. If any party to this Agreement seeks to enforce
---------------
his or its rights under this Agreement, the prevailing party shall be entitled
to recover

-7-
<PAGE>

-8-
<PAGE>

IN WITNESS WHEREOF, the parties to this Agreement have executed this
Employment Agreement as of the date first above written.

L90, INC.,
a Delaware corporation

By /s/ John C. Bohan
--------------------------------------
An Authorized Officer

Address for Notices:

2020 Santa Monica Boulevard
Suite 400
Santa Monica, California 90404
Attention: Chairman of the Board
Telecopy: (310) 315-1369

EMPLOYEE:

/s/ Frank Addante
-----------------------------------------
Frank Addante

-9-
<PAGE>

L90, INC.

Amendment No. 1 to
------------------
Employment Agreement
--------------------

Recital
-------

WHEREAS, pursuant to the Agreement, the Employee receives a base salary
equal to $60,000 per year.

WHEREAS, the parties hereto desire to amend the Agreement to increase the
Employee's base salary to $81,600 per year.

WHEREAS, the parties hereto also desire to amend the Agreement to provide
that the Employee shall be eligible for sales commissions.

Agreement
---------

NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the Company and the Employee agree as follows:

1. Amendment to Agreement. Section 3(a) of the Agreement is amended and
----------------------
restated in its entirety as follows:

"In exchange for full performance of the Employee's obligations and duties
under this Agreement, the Company shall pay the Employee (i) a base salary
at a monthly rate of $6,800, payable in accordance with the Company's
standard payroll practices, and (ii) sales commissions in accordance with
the Company's policies in effect from time to time or as determined from
time to time by the Board, or a committee thereof. In any month in which
the Employee shall be employed for less than the entire number of days in
such month, the base salary payable under Section 3(a)(i) shall be prorated
on the basis of the number of days during which the Employee was actually
employed divided by the number of days in such month. The base salary
provided for in Section 3(a)(i) shall be reviewed not less frequently than
annually by the Board, or a committee thereof, and may be adjusted in their
discretion."
<PAGE>

2. General Provisions.
------------------

(a) Governing Law. This Amendment shall be construed in accordance
-------------
with and governed by the laws of the State of California.

(b) Full Force and Effect. Except as amended hereby, the Agreement
---------------------
shall remain in full force and effect.

(c) Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute on instrument.

(d) Captions. The captions herein are included for convenience of
--------
reference only and shall be ignored in the construction or interpretation
hereof.

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered as of the day and year first written above.

COMPANY:

L90, Inc.

By: /s/ Lucrezia Bickerton
-------------------------------------
Name: Lucrezia Bickerton
Title: Assistant Secretary

EMPLOYEE:

By: /s/ Frank Addante
-------------------------------------
Name: Frank Addante
Title: Chief Technology Officer

<PAGE>

EXHIBIT 10.32

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
September 15, 1999 between L90, Inc., a Delaware corporation (the "Company"),
-------
and Thomas A. Sebastian (the "Employee").
--------

R E C I T A L
- - - - - - -

The Company desires to employ the Employee, and the Employee desires
to be so employed by the Company, on the terms and subject to the conditions set
forth in this Agreement.

AGREEMENT
---------

NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth in this Agreement, the Company and the Employee hereby agree
as follows:

1. Employment.
----------

(a) Subject to the terms and conditions contained herein, the
Company hereby agrees to employ the Employee, and the Employee accepts such
employment, from the date hereof until the earlier of (i) the date which is two
years from the date hereof, provided that such initial term shall be
automatically renewed for successive one-year terms unless either party hereto
otherwise notifies the other in writing within 30 days prior to the end of such
initial term or any such successive term, or (ii) the date such employment is
terminated pursuant to Section 4 of this Agreement. During the Employee's
employment under this Agreement, the Employee shall perform such duties for the
Company as may from time to time be assigned to the Employee by the Board of
Directors of the Company (the "Board") or the President of the Company (the
-----
"Designated Officer"). The Employee shall have the title of Chief Financial
------------------
Officer or such other title or titles, if any, as from time to time may be
assigned to the Employee by the Board.

(b) The Employee will devote his entire business time, energy,
attention and skill to the services of the Company and its affiliates and to the
promotion
<PAGE>

of their interests. So long as the Employee is employed by the Company, the
Employee shall not, without the written consent of the Company:

(i) engage in any other activity for compensation, profit
or other pecuniary advantage, whether received during or after the term of this
Agreement;

3. Compensation.
------------

(a) In exchange for full performance of the Employee's
obligations and duties under this Agreement, the Company shall pay the Employee
a base salary at a monthly rate of $10,833.33, payable in accordance with the
Company's standard payroll practices. In any month in which the Employee shall
be employed for less than the entire number of days in such month, the
compensation payable under this Section 3(a) shall be prorated on the basis of
the number of days during which the Employee was actually employed divided by
the number of days in such month. The base

-2-
<PAGE>

salary provided for in Section 3(a) shall be reviewed not less frequently than
annually by the Board, or a committee thereof, and may be adjusted in their
discretion.

(e) The Employee shall be entitled to participate in all benefit
plans (including deferred compensation plans and any medical, dental or life
insurance plans) which shall be available from time to time to the domestic
management employees of the Company generally, except to the extent such
participation in any plan would, in the opinion of the Designated Officer, alter
the intended tax treatment of such plan; provided, however, that the Employee
-------- -------
shall have no right under this Agreement to participate in any stock option,
stock purchase or other plan relating to shares of capital stock of the Company
or its affiliates, which participation, if any, shall be governed by separate
agreement. The Employee acknowledges and agrees that the Board may in its
discretion terminate at any time or modify from time to time any such benefit
plans.

(f) Other than as expressly set forth in this Section 3, the
Employee shall not receive any other compensation or benefits except to the
extent provided by the Board.

4. Termination.
-----------

-3-
<PAGE>

job duties by reason of illness or injury for either (A) a period of two
consecutive months or (B) twelve weeks in any twelve-month period.

(b) The employment of the Employee under this Agreement shall
terminate on the date of the Employee's death.

(c) The employment of the Employee under this Agreement may be
terminated by the Company upon written notice from the Board that, in the
opinion of the Board, the Employee has (i) refused or failed (after reasonable
notice that such refusal or failure would result in termination of the
Employee's employment) to perform, to the satisfaction of the Designated Officer
or the Board, any duties assigned to the Employee by the Designated Officer or
the Board, (ii) committed a breach of the terms of this Agreement or any other
legal obligation to the Company, (iii) failed to perform any of the Employee's
obligations under the Confidentiality Agreement, (iv) demonstrated gross
negligence or willful misconduct in the execution of the Employee's assigned
duties, (v) been convicted of or pleaded nolo contendere to a felony or other
---- ----------
serious crime, (vi) repeatedly and intemperately used alcohol or drugs, (vii)
engaged in business practices which, in the opinion of the Board, are unethical
or reflect adversely on the Company, (viii) misappropriated assets of the
Company or (ix) been repeatedly absent from work during normal business hours
for reasons other than disability.

(f) If the Employee's employment is terminated pursuant to this
Section 4 or for any other reason, the Employee shall not be entitled to any

-4-
<PAGE>

compensation or benefits from the Company, under Section 3 of this Agreement or
otherwise, except for the following:

(i) base salary and vacation pay accrued, and reasonable
business expenses incurred, under Section 3 of this Agreement through the date
of such termination;

(ii) such benefits, if any, as may be required to be
provided by the Company under the Comprehensive Omnibus Budget Reconciliation
Act (COBRA); and

(iii) if the Employee's employment is terminated without
cause pursuant to subsection (e) above, the Company shall continue to pay to the
Employee the base salary described in Section 3(a) above until the termination
of the initial term or any successive term, as set forth in Section 1(a)(i) of
this Agreement, during which such termination occurs.

5. Employee's Representations.
--------------------------

-5-
<PAGE>

10. Assignability.
-------------

(b) This Agreement is personal in nature and the Employee shall
not, without the written consent of the Company, assign or transfer this
Agreement or any rights or obligations hereunder.

-6-
<PAGE>

15. Attorney's Fees. If any party to this Agreement seeks to enforce
---------------
his or its rights under this Agreement, the prevailing party shall be entitled
to recover

-7-
<PAGE>

-8-
<PAGE>

IN WITNESS WHEREOF, the parties to this Agreement have executed this
Employment Agreement as of the date first above written.

L90, INC.,
a Delaware corporation

By /s/ John C. Bohan
---------------------------------------
An Authorized Officer

Address for Notices:

2020 Santa Monica Boulevard
Suite 400
Santa Monica, California 90404
Attention: Chairman of the Board
Telecopy: (310) 315-1369

EMPLOYEE:

/s/ Thomas A. Sebastain
-----------------------------------------
Thomas A. Sebastian

-9-

<PAGE>

SEVERANCE AGREEMENT
-------------------

THIS AGREEMENT, dated November 18, 1999, is made by and between L90,
Inc., a Delaware corporation (the "Company"), and Thomas A. Sebastian (the
"Executive").

WHEREAS, the Company considers it essential to the best interests of its
stockholders to foster the continued employment of key management personnel; and

WHEREAS, the Board recognizes that the possibility of a Change in
Control exists and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its stockholders;
and

WHEREAS, the Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of members of
the Company's management, including the Executive, to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from the possibility of a Change in Control;

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
<PAGE>

1. Defined Terms. The definitions of capitalized terms used in this
-------------
Agreement are provided in the last Section hereof.

2. Term of Agreement. The Term of this Agreement shall commence on
-----------------
the date hereof (the "Effective Date") and shall continue in effect through the
fourth anniversary of the Effective Date; provided, however, that commencing on
-------- -------
each anniversary of the Effective Date during the Term of this Agreement, the
Term shall automatically be extended for one additional year unless, not later
than 90 days prior to any such anniversary, the company or the Executive shall
have given notice not to extend the Term; and further provided, however, that if
------- -------- -------
one or more Change in Control events shall have occurred during the Term, the
Term shall expire twenty-four (24) months following the month in which the first
such Change in Control occurred.

3. Company's Covenants Summarized. In order to induce the Executive
to remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and the
other payments and benefits described herein. Except as provided in Section 9.1
hereof, no benefits shall be payable under this Agreement unless during the Term
there shall have been (or, under the terms of the second sentence of Section 6.1
hereof,

<PAGE>

there shall be deemed to have been) (i) a termination of the Executive's
employment with the Company following a Change in Control or (ii) with respect
to the acceleration of stock options provided under Section 6.1(B) hereof, the
occurrence of an event that gives the Executive the right to terminate
employment with the Company for Good Reason regardless of whether such
employment is terminated. This Agreement shall not be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.

4. The Executive's Covenants. The Executive agrees that, subject to
-------------------------
the terms and conditions of this Agreement (a) in the event of a Potential
Change in Control during the Term, the Executive will remain in the employ of
the Company until the earliest of (i) a date which is six (6) months from the
date of such Potential Change in Control, or if a Change in Control occurs
during such six (6) month period, the date which is six (6) months from the date
of a Change in Control, (ii) the date of termination by the Executive of the
Executive's employment for Good Reason or by reason of death, Disability or
Retirement, or (iii) the termination by the Company of the Executive's
employment for any reason; and (b) in the event the Executive is terminated
under circumstances that would entitle the Executive to severance

3
<PAGE>

benefits under Section 6.1(A) of this Agreement, as a condition of the
Executive's receipt of such benefits, the Executive shall execute a release set
forth in Section 8.2 of this Agreement.

5. Compensation Other Than Severance Payments.
------------------------------------------

5.1 Following a Change in Control and during the Term, during any
period that the Executive fails to perform the Executive's full-time duties with
the Company as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive's full salary to the Executive at the rate in
effect at the commencement of any such period, together with all compensation
and benefits payable to the Executive under the terms of any compensation or
benefit plan, program or arrangement (other than the Company's short- or
long-term disability plan, as applicable) maintained by the Company during such
period, until the Executive's employment is terminated by the Company for
Disability.

5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay the
Executive's full salary to the Executive through the Date of Termination at the
rate in effect immediately prior to the Date of Termination or, if higher, the
rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive

4
<PAGE>

through the Date of Termination under the terms of the Company's compensation
and benefit plans, programs or arrangements as in effect immediately prior to
the Date of Termination or, if more favorable to the Executive, as in effect
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason.

5.3 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the
Executive the Executive's normal post-termination compensation and benefits as
such payments become due. Such post-termination compensation and benefits shall
be determined under, and paid in accordance with, the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements as
in effect immediately prior to the Date of Termination or, if more favorable to
the Executive, as in effect immediately prior to the occurrence of the first
event or circumstance constituting Good Reason.

6. Severance Payments.
------------------

6.1 If the Executive's employment is terminated following a Change in
Control and during the Term, (A) by the Company other than for Cause, or (B) by
the Executive with Good Reason, the Company shall pay the Executive the amounts,
and provide the Executive the benefits, described in this Section 6.1
("Severance Payments") and Section 6.2, in addition to any payments

5
<PAGE>

and benefits to which the Executive is entitled under Section 5 hereof;
provided, however, that if following a Change in Control and event occurs that
- -------- -------
gives the Executive the right to terminate his employment with the Company for
Good Reason, the Executive shall be entitled to receive the benefits provided in
Section 6.1(B) regardless of whether such employment is terminated. For
purposes of this Agreement, the Executive's employment shall be deemed to have
been terminated following a Change in Control by the Company without Cause or by
the Executive with Good Reason, if (i) the Executive's employment is terminated
by the Company without Cause prior to a Change in Control (whether or not a
Change in Control ever occurs) and such termination was at the request or
direction of a Person who has entered into an agreement with the Company the
consummation of which would constitute a Change in Control, (ii) the Executive
terminates his employment for Good Reason prior to a Change in Control (whether
or not a Change in Control ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction of such Person, or
(iii) the Executive's employment is terminated by the Company without Cause or
by the Executive for Good Reason and such termination or the circumstance or
event which constitutes Good Reason is otherwise in connection with or in
anticipation of a Change in Control (whether or not a Change in Control ever
occurs). For purposes of any

6
<PAGE>

determination regarding the applicability of the immediately preceding sentence,
any position taken by the Executive shall be presumed to be correct unless the
Company establishes to the board by clear and convincing evidence that such
position is not correct.

(A) The Company shall pay the Executive the amounts and
provide the Executive the benefits the Executive would be entitled to
receive under the Employment Agreement had the Executive been terminated
by the Company without cause.

(B) All stock options and restricted stock held by the
Executive under any stock option or incentive plan maintained by the
Company (including the Company's Stock Incentive Plan) shall immediately
vest and become exercisable as of (i) the Date of Termination or (ii) if
earlier, the date on which an event occurs that gives the Executive the
right to terminate employment with the Company for Good Reason
regardless of whether such employment is terminated, to be exercised in
accordance with the terms of the applicable plan.

6.2 (A) Whether or not the Executive becomes entitled to the
Severance Payments, if any payment or benefit received or to be received by the
Executive in connection with a Change in Control, the occurrence of a Good
Reason event or the termination of the Executive's employment (whether pursuant
to the terms of this Agree-

<PAGE>

ment or any other plan, arrangement or agreement with the Company, any Person
whose actions result in a Change in Control or any Person affiliated with the
Company or such Person) (all such payments and benefits, excluding the Gross-Up
Payment, being hereinafter called "Total Payments") will be subject (in whole or
part) to the Excise Tax, then, subject to the provisions of subsection (B) of
this Section 6.2, the Company shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Total Payments and any federal, state
and local income and employment taxes and Excise Tax upon the Gross-Up Payment,
shall be equal to the Total Payments. For purposes of determining the amount of
the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination (or if there is no Date of Termination,
then the date on which the Gross-up Payment is calculated for purposes of this
Section 6.2), net of the maximum reduction in federal income tax which could be
obtained from deduction of such state and local taxes.

(B) In the event that, after giving effect to any redeterminations
described in subsection (D) of this

8
<PAGE>

Section 6.2, a reduction in the Severance Payments to the largest amount that
would result in no portion of the Total Payments being subject to the Excise Tax
(after taking into account any reduction in the Total Payments provided by
reason of section 280G of the Code in such other plan, arrangement or agreement)
would produce a net amount (after subtracting the net amount of federal, state
and local income and employment taxes on such reduced Total Payments) that would
be greater than or equal to the net amount of unreduced Total Payments (after
deduction of the net amount of unreduced Total Payments (after deduction of the
net amount of federal, state and local income and employment taxes and the
amount of Excise Tax to which the Executive would be subject in respect of such
unreduced Total Payments), then subsection (A) of this Section 6.2 shall not
apply and the cash Severance Payments shall first be reduced (if necessary, to
zero), and the non cash Severance Benefits shall thereafter be reduced (if
necessary, to zero); provided, however, that the Executive may elect to have the
-------- -------
noncash Severance Payments reduced (or eliminated) prior to any reduction of
the cash Severance Payments.

(C) For purposes of determining whether any of the Total Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" within the meaning of
section 280G(b)(2) of the Code, unless in the opinion of tax counsel ("Tax
Counsel") reasonably

9
<PAGE>

acceptable to the Executive and selected by the accounting firm which was,
immediately prior to the Change in Control, the Company's independent auditor
(the "Auditor"), such other payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of section 280G(b)(4)(A) of
the Code, (ii) all "excess parachute payments" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in
the opinion of Tax Counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered, within the
meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount
allocable to such reasonable compensation, or are otherwise not subject to the
Excise Tax, and (iii) the value of any noncash benefits or any deferred payment
or benefit shall be determined by the Auditor in accordance with the principles
of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth
in Section 6.3 hereof, the Company shall provide the Executive with its
calculation of the amounts referred to in this Section 6.2(C) and such
supporting materials as are reasonably necessary for the Executive to evaluate
the Company's calculations. If the Executive disputes the Company's calculations
(in whole or in part), the reasonable opinion of Tax Counsel with respect to the
matter in dispute shall prevail.

10
<PAGE>

(D) In the event that (i) amounts are paid to the Executive pursuant to
subsection (A) of this Section 6.2, (ii) the Excise Tax is finally determined to
be less than the amount taken into account hereunder in calculating the Gross-Up
Payment, and (iii) after giving effect to such redetermination, the Severance
Payments are to be reduced pursuant to subsection (B) of this Section 6.2, the
Executive shall repay to the Company, within five (5) business days following
the time that the amount of such reduction in Excise Tax is finally determined,
the portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income and employment taxes imposed on the Gross-Up Payment
being repaid by the Executive), to the extent that such repayment results in (i)
no portion of the Total Payments being subject to the Excise tax and (ii) a
dollar-for-dollar reduction in the Executive's taxable income and wages for
purposes of federal, state and local income and employment taxes) plus interest
on the amount of such repayment at 120% of the rate provided in section 1274
(b)(2)(B) of the Code. In the event that (x) the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination
of the Executive's employment (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment) and
(y) after

11
<PAGE>

giving effect to such redetermination, the Severance Payments should not have
been reduced pursuant to subsection (B) of this Section 6.2, the Company shall
make an additional Gross-Up Payment in respect of such excess and in respect of
any portion of the Excise Tax with respect to which the Company had not
previously made a Gross-Up Payment (plus any interest, penalties or additions
payable by the Executive with respect to such excess and such portion) within
five (5) business days following the time that the amount of such excess is
finally determined.

6.3 The payments provided in subsections (A) of Section 6.1 hereof and
in Section 6.2 hereof shall be made not later than the fifth day following the
Date of Termination (or if there is no Date of Termination, then the date as of
which the Gross-up Payment is calculated for purposes of Section 6.2 hereof);
provided, however, that if the amounts of such payments cannot be finally
- -------- -------
determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Executive or, in the case of
payments under Section 6.2 hereof, in accordance with Section 6.2 hereof, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest on the unpaid
remainder (or on all such payments to the extent the Company fails to make such
payments when due)

12
<PAGE>

at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as
the amount thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) business day after demand by the Company (together with interest
at 120% of the rate provided in section 1274(b)(2)(B) of the Code). At the time
that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinion or
advice which are in writing shall be attached to the statement).

6.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, in seeking
in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder; pro-
---

13
<PAGE>

vided that the Executive substantially prevails on the merits of the claim that
- -----
is the subject of the legal proceeding. Such payments shall be made within five
(5) business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require and shall be made as such fees are incurred subject to
Executive's agreement to promptly return to the Company any amounts to which
the Executive is not entitled under the terms hereof.

7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------

7.1 Notice of Termination. After a Change in Control and during the
---------------------
Term, any purported termination of the Executive's employment (other than by
reason of death) shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. A Notice of Termination for Good Reason must be given
within ninety (90) days following the occurrence of the Good Reason event.
Further, a Notice of Termination for Cause is

<PAGE>

required to include a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at
a meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.

7.2 Date of Termination. "Date of Termination," with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a termination for
Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) days nor more than sixty (60)

15
<PAGE>

days, respectively, from the date such Notice of Termination is given).

7.3 Dispute Concerning Termination. If within fifteen (15) days
------------------------------
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice
- -------- -------
of dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable diligence.

7.4 Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and during the Term and the Date of Termination is
extended in accordance with Section 7.3 hereof, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise to
the dispute was given (including, but limited to, salary) and con-

16
<PAGE>

tinue the Executive as a participant in all compensation, benefit and insurance
plans in which the Executive was participating when the notice giving rise to
the dispute was given, until the Date of Termination, as determined in
accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in
addition to all other amounts due under this Agreement (other than those due
under Section 5.2 hereof); provided, however, the amounts payable under this
-------- -------
Section 7.4 shall be reduced by the amount of any compensation of a similar type
earned by the Executive as the result of employment by another employer during
the period of the dispute.

8. No Mitigation; Release.
----------------------

8.1 The Company agrees that, if the Executive's employment with the
Company terminates during the Term, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof.
Further, except as provided in Section 7.4 above, the amount of any payment or
benefit provided for in this Agreement shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.

<PAGE>

8.2 In the event the Executive is terminated under circumstances that
would entitle the Executive to severance benefits under Section 6.1(A) of this
Agreement, as a condition of the Executive's receipt of such benefits, the
Executive shall release the Company from any and all claims, causes of action,
debts, contracts, promises and demands, whether in law or equity, that Executive
ever had or then has, relating solely to the termination of his employment with
the Company (but not including any rights to benefits accrued under any employee
benefit plan of the Company or any indemnification whether under law, pursuant
to the Company's Amended and Restated By-Laws or the Company's Certificate of
Incorporation, or any indemnification agreement between the parties).

9. Successors; Binding Agreement.
-----------------------------

9.1 In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this

18
<PAGE>

Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.

9.2 This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.

10. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the

19
<PAGE>

final page hereof and, if to the Company, to the address set forth below, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:

To the Company:

L90, Inc.
2020 Santa Monica Boulevard
Suite 400
Santa Monica, California 90404
Attention: Chief Executive Officer

11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement supersedes any other
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party;
provided, however that this Agreement shall supersede any agreement setting
- -------- -------
forth the terms and conditions of the Executive's employment with the Company
only in the event that the Executive's employment with

<PAGE>

the Company is terminated on or following a Change in Control, by the Company
other than for Cause or by the Executive for Good Reason. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of California. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The obligations
of the Company and Executive under this Agreement which by their nature may
require either partial or total performance after the expiration of the Term
(including, without limitation, those under Sections 6 and 7 hereof) shall
survive such expiration.

12. Validity. The invalidity or unenforceability of any provision of
--------
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

13. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

14. Settlement of Disputes; Arbitration.
------------------------------------

21
<PAGE>

14.1 All claims by the Executive for benefits under this Agreement
shall be directed to and determined by the Board and shall be in writing. Any
denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of
the decision denying a claim and shall further allow the Executive to appeal to
the Board a decision of the Board within sixty (60) days after notification by
the Board that the Executive's claim has been denied.

14.2 Any further dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Los Angeles,
California in accordance with the rules of the American Arbitration Association
then in effect; provided, however, that the evidentiary standards set forth in
-------- -------
this Agreement shall apply. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall be entitled to seek specific
performance of the Executive's right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.

22
<PAGE>

15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:

(A) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.

(B) "Auditor" shall have the meaning set forth in Section 6.2 hereof.

(D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.

(E) "Board" shall mean the Board of Directors of the Company.

(F) "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
that has not been cured within 30 days after a written demand for substantial
performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substan-

23
<PAGE>

tially performed the Executive's duties, or (ii) the willful engaging by
the Executive in conduct which is demonstrably and materially injurious
to the Company or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, (x) no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that the Executive's act, or failure to act,
was in the best interest of the Company and (y) in the event of a
dispute concerning the application of this provision, no claim by the
Company that Cause exists shall be given effect unless the Company
establishes to the Board by clear and convincing evidence that Cause
exists.
(G) A "Change in Control" shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have
occurred:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates) representing 25% or
more of the combined voting power of the Company's then outstanding
securities; or
(II) the following individuals cease for any reason to
constitute a majority of the

<PAGE>

number of directors then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election by
the Company's stockholders was approved or recommended by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or recommended; or
(III) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof), in combination with the
owner-

<PAGE>

ship of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company,
at least a majority of the combined voting power of the securities of
the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation; or

(IV) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets.

Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

(H) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.

26
<PAGE>

(I) "Company" shall mean L90, Inc. and, except in determining under
Section 15(E) hereof whether or not any Change in Control of the Company had
occurred, shall include any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law, or otherwise.

(J) "Date of Termination: shall have the meaning set forth in Section
7.2 hereof.

(K) "Disability" shall be deemed the reason for the termination by
the Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the Company
for a period of six (6) consecutive months, the Company shall have given the
Executive a Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.

(L) "Employment Agreement" shall mean the employment agreement
between the Company and the Executive dated September 15, 1999.

(M) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

(N) "Excise Tax" shall mean any excise tax imposed under section 4999
of the Code.

<PAGE>

(O) "Executive" shall mean the individual named in the first
paragraph of this Agreement.

(P) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express written
consent) after any Change in Control, or prior to a Change in Control under the
circumstances described in clauses (ii) and (iii) of the second sentence of
Section 6.1 hereof (treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a "Potential Change in
Control"), of any one of the following acts by the Company, or failures by the
Company to act, unless such act or failure to act is corrected prior to the Date
of Termination specified in the Notice of Termination given in respect thereof
which shall be no less than ten (10) days following the date of such notice:

(I) the assignment to the Executive of any duties
inconsistent with the Executive's status as Chief Financial Officer of
the combined enterprise that includes the Company or a substantial
adverse alteration in the nature or status of the Executive's
responsibilities from those in effect immediately prior to the Change
in Control;

(II) a reduction by the Company in the Executive's annual
base salary as in ef-

<PAGE>

fect on the date hereof or as the same may be increased from time to
time;

(III) notice to the Executive of the relocation of the
Executive's principal place of employment to a location other than the
following major metropolitan areas: a) Los Angeles, California; b) San
Francisco, California; c) New York, New York; and d) Boston,
Massachusetts or the Company's requiring the Executive to be based
anywhere other than such principal place of employment (or permitted
relocation thereof) except for required travel on the Company's
business to an extent substantially consistent with the Executive's
present business travel obligations;

(IV) the failure by the Company to pay to the Executive any
portion of the Executive's current compensation, or to pay to the
Executive any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within seven (7)
days of the date such compensation is due;

(V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control which is material to the Executive's
total compensation,

29
<PAGE>

including but not limited to the Company's stock option, bonus and
other plans or any substitute plans adopted prior to the Change in
Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the Executive's
participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount or
timing of payment of benefits provided and the level of the
Executive's participation relative to other participants, as existed
immediately prior to the Change in Control;

(IV) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, savings, life insurance,
medical, health and accident, or disability plans in which the
Executive was participating immediately prior to the Change in Control
(except for across the board changes similarly affecting all senior
executives of the Company and all senior executives of any Person in
control of the Company), the taking of any other action by

30
<PAGE>

the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in Control,
or the failure by the Company to provide the Executive with the number
of paid vacation days to which the Executive is entitled on the basis
of years of service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the Change in Control;
or

(VII) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 7.1 hereof; for purposes of this
Agreement, no such purported termination shall be effective. The
Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.

For purposes of any determination regarding the existence of Good
Reason, any claim by the Executive that Good Reason exists shall be presumed to
be correct

31
<PAGE>

unless the Company establishes to the Board by clear and convincing evidence
that Good Reason does not exist.

(Q) "Gross-Up Payment" shall have the meaning set forth in Section
6.2 hereof.

(R) "Notice of Termination" shall have the meaning set forth in
Section 7.1 hereof.

(S) "Pension Plan" shall mean any tax-qualified, supplemental or
excess benefit pension plan maintained by the Company and any other plan or
agreement entered into between the Executive and the Company which is designed
to provide the Executive with supplemental retirement benefits.

(T) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company
or (v) a group of stockholders who have entered into a voting agreement or
similar arrangement provided that none of the purposes for which such

32
<PAGE>

agreement or arrangement was entered into or maintained includes the
effectuation of a Change in Control.

(U) "Potential Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:

(I) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;

(II) the Company or any Person publicly announces an intention
to take or to consider taking actions which, if consummated, would
constitute a Change in Control;

(III) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 15% or more of
either the then outstanding shares of common stock of the Company or
the combined voting power of the Company's then outstanding securities
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates); or

(IV) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.

33
<PAGE>

(V) "Retirement" shall be deemed the reason for the termination by
the Executive of the Executive's employment if such employment is terminated in
accordance with the Company's retirement policy, including early retirement,
generally applicable to its salaried employees.

(W) "Severance Payments" shall have the meaning set forth in Section
6.1 hereof.

(X) "Tax Counsel" shall have the meaning set forth in Section 6.2
hereof.

(Y) "Term" shall mean the period of time described in Section 2
hereof (including any extension, continuation or termination described therein).

34
<PAGE>

(Z) "Total Payments" shall mean those payments so described in
Section 6.2 hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

L90, INC.

By /s/ John Bohan
----------------------
Name John Bohan
Title: CEO

/s/ Tom Sebastian
-------------------------
Tom Sebastian
EXECUTIVE

Address:

447 30th Street
-------------------------

Hermosa Beach, CA
-------------------------

90254
-------------------------

(Please print carefully)

<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
second amendment to the registration statement.

/s/ Arthur Andersen LLP

Los Angeles, California

November 30, 1999