LINKSHARE CORP, S-1/A, 2000-04-14

LINKSHARE CORP
S-1/A, 2000-04-14
BUSINESS SERVICES, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on April 14, 2000

Registration No. 333-31262
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------

Amendment No. 1

to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LINKSHARE CORPORATION
(Exact name of registrant as specified in its charter)
----------------
Delaware 7374 13-3967340
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
LinkShare Corporation
215 Park Avenue South, 8th Floor
New York, New York 10003
(646) 654-6000
(Address, including zip code, telephone number, including
area code, of registrant's principal executive offices)
Joseph E. Young
Executive Vice President
LinkShare Corporation
215 Park Avenue South, 8th Floor
New York, New York 10003
(646) 654-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Lee D. Charles, Esq. Stephen H. Cooper, Esq.
Baker Botts L.L.P. Weil, Gotshal & Manges LLP
599 Lexington Avenue 767 Fifth Avenue
New York, New York 10022 New York, New York 10153
Telephone: (212) 705-5000 Telephone: (212) 310-8000
Telecopy: (212) 705-5125 Telecopy: (212) 310-8007

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date hereof.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed
Amount Maximum Maximum
Title of Each Class of to be Offering Price Aggregate Amount of
Securities to Be Registered Registered(1) Per Share Offering Price(2) Registration Fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par 5,405,000
value.................. shares $12.00 $64,860,000 $17,123(3)
</TABLE>
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(1)Includes 705,000 shares that the underwriters have an option to purchase
from the Registrant to cover over-allotments, if any.

(2)Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(o) under the Securities Act.

(3) The Registrant previously paid $15,180 of this fee on February 28, 2000.

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>

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

SUBJECT TO COMPLETION, DATED APRIL 14, 2000

4,700,000 Shares

[LINKSHARE LOGO]

Common Stock

--------

Prior to this offering, there has been no public market for our common stock.
The initial public offering price is expected to be between $10.00 and $12.00
per share. We have applied to list our common stock on The Nasdaq Stock
Market's National Market under the symbol "LNKS."

The underwriters have an option to purchase a maximum of 705,000 additional
shares to cover over-allotments of shares.

Investing in our common stock involves risks. See "Risk Factors" on page .

<TABLE>
<CAPTION>
Underwriting
Discounts and Proceeds to
Price to Public Commissions LinkShare
--------------- ------------- -------------
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total...................................... $ $ $
</TABLE>

Delivery of the shares of common stock will be made on or about , 2000.

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.

Credit Suisse First Boston
Deutsche Banc Alex. Brown
Bear, Stearns & Co. Inc.

The date of this prospectus is , 2000.
<PAGE>

INSIDE FRONT COVER

Blue background with dark blue arrow starting at the top right of the page and
ending at the bottom right of the page pointing to the LinkShare logo. In the
center of the page in white text is a sentence that reads, "The LinkShare
Network(TM) is a marketplace where businesses can build performance-based
marketing relationships to maximize the revenue potential of their Web sites''.

<PAGE>

INSIDE GATE FOLD

Across the gatefold is a flowchart diagram illustrating how business flows back
and forth between affiliate and merchant Web sites through LinkShare. Across the
top, the caption reads "LinkShare Builds Open Networks That Enable eCommerce".

At the center of the diagram is a circular schematic comprised of three arrows
with the LinkShare logo in the center. The three arrows depict LinkShare's
products and services. The arrows are varying shades of blue color and contain
the titles "Patented Technology", "Marketing/Reporting Tools" and "Suite of
Services".

On the left side of the diagram is a column of six oval images in vertical order
that depict examples of affiliates. At the top of the column is the title
"Affiliate Web Sites" and inside the oval images are the titles "Portal.com",
"News & Information.com", "Charity & Loyalty.com", "Trade Magazine.com",
"Industry Content.com" and "Corporate Intranet.com". The first three oval images
are burgundy in color and the second three oval images are green in color. To
the left of the three burgundy oval images is a bracket and to the left of the
bracket is the title "The LinkShare Network(TM)". To the left of the three green
oval images is a bracket and to the left of the bracket is the title "B2B
LinkShare(TM)".

On the right side of the diagram is a column of six oval images in vertical
order that depict examples of merchants. At the top of the column is the title
"Merchant Web Sites" and inside the oval images are the titles "Travel &
Entertainment.com", "Computers.com", "Gifts & Toys.com", "Exchange.com",
"Horizontal.com" and "Vertical.com". The first three oval images are burgundy in
color and the second three oval images are green in color.

There is a blue colored dotted line with arrows that originates from the oval
images on the left side of the diagram, flows through the circular schematic in
the center and ends at the oval images on the right side of the diagram. The
dotted line represents how business flows from affiliates through LinkShare to
merchants. Between the dotted lines at the left side of the diagram are the
titles "Buyers", "Applicants" and "Traffic".

There is a blue colored dotted line with arrows that originates from the oval
images on the right side of the diagram, flows through the circular schematic in
the center and ends at the oval images on the left side of the diagram. The
dotted line represents how business flows from merchants through LinkShare to
affiliates. Between the dotted lines at the right side of the diagram are the
titles "Commission for Sales", "Fee for Registrations" and "Fee for
Click-Throughs".
<PAGE>

On the upper right hand corner of the gatefold is one paragraph of text that
reads, "LinkShare creates online networks that enable businesses to maximize the
revenue generating power of their Web sites. Members of our networks include
more than 500 online merchants and hundreds of thousands of Web sites seeking to
convert visitor traffic into revenues by becoming marketing "affiliates" of
those merchants. Merchants pay their affiliates commissions for driving sales,
generating traffic and other actions. We operate The LinkShare Network(TM), a
business-to-consumer network and B2B LinkShare(TM), a business-to-business
network."

Across the bottom of the gatefold are a series of five blue arrows with the
caption "How a LinkShare Relationship Is Built". The arrows contain descriptions
of how The LinkShare Network(TM) operates.

Arrow 1 Reads: "FIND PARTNERS. Merchants and affiliates join The LinkShare
Network(TM) to gain immediate access to high quality marketing partners.
Merchants offer affiliates compensation for serving as their marketing partners
(e.g., commission for sales, fee for registration, fee for click-throughs or any
combination). Affiliates review these offers and apply to participate in the
merchant programs. Merchants select the affiliates with whom they want to
partner."

Arrow 2 Reads: "BUILD CREATIVE LINKS. Merchants create a set of promotional
"links" and make them available to affiliates through the LinkShare interface
(e.g. banners, text links, e-mail, individual product links and virtual
storefronts). Once a merchant and affiliate agree to partner with each other,
the affiliate simply cuts and pastes one of these links onto its site."

Arrow 3 Reads: "TRACK TRANSACTIONS. Online customers visit an affiliate's site,
click on the merchant's link, proceed to the merchant's site and make a
purchase. LinkShare's technology tracks the series of events from the moment the
customer views the link."

Arrow 4 Reads: "PAY FOR PERFORMANCE. Merchants compensate their affiliates and
pay us a fee each time an online customer takes an agreed-upon action (e.g., a
purchase, a registration, a click-through or any combination)."

Arrow 5 Reads: "MONITOR PERFORMANCE. Merchants and affiliates access marketing
and reporting tools through the LinkShare interface 24 hours a day, 7 days a
week. These tools enable merchants and affiliates to manage their partnerships,
communicate with their partners and analyze the results of their programs.
Merchants and affiliates use this information to monitor and improve performance
across their portfolio of marketing partnerships."
<PAGE>

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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 6
Cautionary Note on Forward-Looking Statements............................ 14
Use of Proceeds.......................................................... 14
Dividend Policy.......................................................... 14
Capitalization........................................................... 15
Dilution................................................................. 17
Selected Financial Data.................................................. 19
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 21
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Our Business............................................................... 28
Management................................................................. 41
Certain Transactions....................................................... 48
Principal Stockholders..................................................... 51
Description of Capital Stock............................................... 52
Shares Eligible for Future Sale............................................ 56
Underwriting............................................................... 58
Notice to Canadian Residents............................................... 60
Experts.................................................................... 61
Legal Matters.............................................................. 61
Additional Information..................................................... 61
Index to Financial Statements.............................................. F-1
</TABLE>
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You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.

Dealer Prospectus Delivery Obligation

Until , 2000 (25 days after the commencement of the offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting
as an underwriter and with respect to unsold allotments or subscriptions.

i
<PAGE>

PROSPECTUS SUMMARY

This summary highlights information contained in other parts of this
prospectus. You should read the entire prospectus carefully, including the
financial statements and related notes. Unless otherwise indicated, all
information in this prospectus:

. assumes a 3.5- for-1 split of our currently outstanding common stock
immediately before the closing of this offering;

. assumes the conversion of all of our outstanding preferred stock into
shares of our common stock upon the closing of this offering;

. assumes the conversion of all of our outstanding convertible notes into
shares of our common stock upon the closing of this offering (based upon
an assumed initial public offering price of $11.00 per share); and

. assumes that the underwriters will not exercise their over-allotment
option.

LinkShare

Our Company

LinkShare creates and operates online networks that enable businesses to
form commercial relationships by linking their Web sites to the Web sites of
other businesses. Businesses that join one of our networks can:

. find the right Web sites with which to establish links;

. negotiate the terms of their relationships with the businesses that own
those Web sites; and

. evaluate the success of those relationships.

Our first network, The LinkShare Network(TM), brings together merchants
selling products or services to consumers with Web site owners willing to
promote those products and services on their Web sites. Merchants who join The
LinkShare Network(TM) can establish promotional links on thousands of Web sites
owned by independent Web site publishers who join the network as "affiliates."
When a visitor to an affiliate's Web site clicks through a promotional link to
a merchant's site and takes a prescribed action, such as buying a product or
completing a form, that merchant pays a commission to that affiliate and to us.
We provide the software and operate the systems through which:

. merchants offer to pay commissions to affiliates who agree to carry their
promotional links;

. merchants screen affiliates and select those with whom they wish to form
a marketing relationship;

. links are created between the Web sites of merchants and affiliates who
form relationships; and

. Internet user traffic through these links is tracked and used to create
detailed online reports accessible by both merchants and affiliates.

The LinkShare Network(TM) currently has over 500 merchants and hundreds of
thousands of affiliates. In March 2000, we launched B2B LinkShare(TM), a
network similar to The LinkShare Network(TM) but whose members are focused on
the business-to-business, rather than business-to-consumer, e-commerce market.

To date, we have derived substantially all of our revenues from the fees we
collect from the merchant members of The LinkShare Network(TM). Merchant
members of The LinkShare Network(TM) pay us commissions based on the volume and
dollar amount of the transactions generated through the links with their
affiliates. They also pay us fees to use our software and to access our
network. In addition, some merchants pay us fees for optional software features
and service packages that we offer. Affiliates do not pay anything to access
our network or use our services. However, we actively recruit and support
affiliates to increase the overall transaction volume over our network, thereby
increasing the commissions we receive from the merchant members of our network.

1
<PAGE>

Risk Factors

Our business faces a number of risks that you should consider before you
decide to buy our common stock. We operate in a competitive market and have a
limited operating history. Since our inception, we have incurred substantial
losses and expect that we will continue to experience additional losses in the
foreseeable future. Our net losses were $193,428 and $3.4 million for the
fiscal years ended June 30, 1998 and 1999, respectively, and $3.2 million for
the six months ended December 31, 1999. At December 31, 1999, we had an
accumulated deficit of $6.8 million.

Our Market Opportunity

According to International Data Corporation, total e-commerce is expected to
grow to over $1.6 trillion by 2003. This growth represents both an opportunity
and a challenge for online merchants and advertisers seeking a cost-effective
method of reaching target audiences dispersed over millions of Web sites. We
expect these businesses to increasingly concentrate their online marketing
efforts on an advertising model known as performance-based marketing, in which
a merchant only pays for those promotions that produce a desired result.
Forrester Research, Inc. predicts that, by 2003, performance-based marketing
will account for 50% of the estimated $17.2 billion of projected annual U.S.
online advertising expenditures. We believe The LinkShare NetworkTM is an
efficient, performance-based marketing program that enables businesses to make
better marketing decisions, reduce their customer acquisition costs and
generate greater revenue.

Our Strategy

Our goal is to be the premier provider of open networks that facilitate
online commercial activity. Key elements of our growth strategy include:

. continuing to add quality merchants and affiliates to our existing
networks;

. introducing new affiliate networks tailored to meet the needs of
identifiable business communities;

. adapting our technology and network model to serve the needs of emerging
online commercial activity;

. continuing to expand and enhance the features and performance of our
software and revenue-generating service offerings; and

. introducing our network model into suitable international markets.

Where to Find Us

Our principal executive offices are located at 215 Park Avenue South, New
York, New York 10003, and our telephone number is (646) 654-6000. Our corporate
Web site is located at www.linkshare.com. The information on our Web site is
not part of this prospectus.

Trademarks and Brand Names

LinkShare Synergy(R) is a registered trademark of LinkShare Corporation, and
we have filed trademark applications for The LinkShare NetworkTM , B2B
LinkShareTM and TrafficShareTM. This prospectus contains other trademarks and
trade names of LinkShare and other companies. These companies are not involved
with the offering of our common stock.

2
<PAGE>

The Offering

<TABLE>
<S> <C>
Common stock we are offering...... 4,700,000 shares.
Common stock to be outstanding
after this offering.............. 31,104,084 shares.
Use of proceeds................... Working capital and other general corporate
purposes.
Proposed Nasdaq National Market
Symbol........................... LNKS
</TABLE>

The common stock to be outstanding after this offering excludes:

. 5,900,940 shares issuable upon exercise of outstanding options at a
weighted average exercise price of $3.18 per share;

. 269,000 shares we expect to sell to one of our executive officers upon
the closing of this offering at a per share price equal to 80% of the
per share initial public offering price of our common stock ($8.80,
assuming an initial offering price of $11.00 per share);

. 2,848,150 shares issuable upon exercise of options available for grant
under our stock option plan;

. 146,895 shares of common stock issuable upon the exercise of all of our
outstanding warrants; and

. 705,000 shares subject to the underwriters' over-allotment option.

3
<PAGE>

Summary Financial Data

<TABLE>
<CAPTION>
Six Months Ended
Years Ended June 30, December 31
--------------------- ---------------------
1998 1999 1998 1999
--------- ---------- --------- ----------
(In thousands, except share and per share
Statement of Operations Data data)
<S> <C> <C> <C> <C>
Licensing fees................... $ 8 $ 221 $ 45 $ 612
Network fees..................... 39 494 94 2,001
--------- ---------- --------- ----------
Total revenues................. 47 715 139 2,613
Operating expenses............... 240 4,156 1,205 5,283
--------- ---------- --------- ----------
Loss from operations............. (193) (3,441) (1,066) (2,670)
Interest income (expense), net... -- 61 28 (531)
Net loss attributable to common
stockholders.................... $ (193) $ (3,381) $ (1,038) $ (3,201)
========= ========== ========= ==========
Basic and diluted net loss per
share........................... $ (0.05) $ (0.85) $ (0.26) $ (0.80)
Shares used in computing basic
and diluted net loss
per share ...................... 4,000,000 4,000,000 4,000,000 4,000,000
Unaudited pro forma basic and
diluted net loss per share...... (0.14) (0.13)
Shares used in computing
unaudited pro forma basic and
diluted net loss per share...... 24,546,974 25,504,646
</TABLE>

Unaudited pro forma basic and diluted net loss per share have been
calculated assuming a 3.5-for-1 split of our outstanding common stock and the
conversion of all outstanding shares of preferred stock and convertible notes
into common stock, as if the preferred shares and notes had converted
immediately upon their issuance.

Balance Sheet Data

The following balance sheet data is presented on:

. an actual basis;

. a pro forma basis to reflect:

. a 3.5-for-1 split of our outstanding common stock;

. the automatic conversion of all outstanding shares of preferred stock
on a 3.5-for-1 basis into 11,347,518 shares of common stock upon the
closing of this offering;

. the issuance of convertible notes and advances from stockholders from
January 1, 2000, through February 7, 2000, for net proceeds of
$3,655,000;

. the issuance of convertible notes from March 31, 2000, through April
14, 2000, for net proceeds of $3,400,000; and

. the automatic conversion of all outstanding notes and accrued interest
on those notes through April 14, 2000, into 1,056,566 shares of common
stock upon the closing of this offering and the recognition of
$1,625,000 of interest expense for the related beneficial conversion
feature (assuming an initial public offering price of $11.00 per
share); and

. a pro forma as adjusted basis to reflect our receipt of the net proceeds
from the sale of 4,700,000 shares of common stock in this offering at an
assumed initial offering price of $11.00 per share, after deducting the
underwriting discounts and commissions and our estimated offering
expenses.

4
<PAGE>

<TABLE>
<CAPTION>
As of June
30, As of December 31, 1999
------------- ------------------------------
Pro Forma
1998 1999 Actual Pro Forma as Adjusted
------ ------ ------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and
short-term investments......... $ 4 $ 637 $ 7 $ 7,062 54,143
Working capital (deficit)....... (183) (88) (4,248) 5,652 52,733
Total assets.................... 102 1,788 4,752 11,807 58,888
Advances from stockholders...... -- -- 345 -- --
Convertible notes payable....... -- -- 2,500 -- --
Total stockholders' equity
(deficit)...................... (156) 563 (1,868) 8,032 55,113
</TABLE>

5
<PAGE>

RISK FACTORS

You should carefully consider the following risk factors in addition to
other information in this prospectus before purchasing our common stock. The
risks and uncertainties described below are those that we currently deem to be
material and that we believe are specific to our company, our industry and this
offering. If any of these or other risks actually occur, the trading price of
our common stock could decline, and you may lose all or part of your
investment.

Risks Relating to Our Business

Our limited operating history makes it difficult to evaluate our business and
prospects.

We launched The LinkShare NetworkTM, our initial and currently most
significant service offering, in 1997. With such a limited operating history,
our past results do not provide meaningful bases for evaluating an investment
in our common stock, and you should not rely on them as indicators of our
future performance. You should consider all the risks and difficulties we may
encounter as an early stage company in our industry, including:

. our ability to establish and maintain sustainable online affiliate
networks that generate large and growing volumes of revenue producing
transactions;

. our ability to gain widespread acceptance of our network model by online
businesses; and

. the new and evolving nature of e-commerce in general.

We have a history of losses and, because we expect our operating expenses to
increase in the future, we may never become profitable.

Since our inception, we have incurred substantial losses. Our losses were
$193,428 for the fiscal year ended June 30, 1998, $3.4 million for the fiscal
year ended June 30, 1999, and $3.2 million for the six months ended December
31, 1999. At December 31, 1999, we had an accumulated deficit of $6.8 million.
We expect to experience additional losses during the foreseeable future. While
we are unable to predict accurately our future operating expenses, we currently
expect to spend significantly on the following activities:

. expanding and enhancing our networks and the capabilities of our software
systems;

. expanding and improving our sales and marketing operations;

. broadening our customer support capabilities; and

. introducing new networks in international markets and in additional
online business communities.

We will need to significantly increase our revenues to achieve and maintain
profitability. If we fail to increase revenues from the operation of our
networks, we will continue to experience losses indefinitely, which could cause
the trading price of our stock to decline.

Our quarterly operating results may fluctuate significantly, and these
fluctuations may cause our stock price to fall.

Our operating results may fluctuate significantly from quarter to quarter
due to a variety of factors. We cannot control all of the factors that may
cause our future operating results to fluctuate. Although we are able to
control actions taken by our company, such as the introduction of new networks
designed to serve particular business communities and markets, we are unable to
control actions taken by third parties. For example, the rate at which new
businesses join our networks and the volume and dollar value of the
transactions effected by our network members will impact directly our quarterly
revenues as well as the viability of our business on a long-term basis. In
addition, technological advancements and pricing changes effected by our
competitors could cause our revenues to decrease and our costs to increase in
any given quarter as well as over longer periods of time. As a result, our
results of operations may fall below the expectations of securities analysts
and investors in any future period. If this happens, the trading price of our
stock may fall.

6
<PAGE>

Because we expect to derive substantially all of our future revenue from the
operation of our online networks, any failure of our networks to achieve
widespread market acceptance or to satisfy customer demands may prevent us from
becoming profitable.

We expect that nearly all of our future revenues will be derived from fees
generated by the transactions and other activities taking place over our
networks, from sales of services that support those networks and from licensing
fees. Our future financial performance depends on the acceptance and growth of
our networks and the successful development, introduction and customer
acceptance of new and enhanced products and services to support these networks.
If the demand for our networks does not develop as we expect or we are unable
to continue developing our products and services, our revenues will not
increase, and we may never become profitable.

We face intense competition from many companies that may have significantly
greater resources, which could prevent us from increasing revenue or achieving
profitability.

The market for online performance-based marketing is new, intensely
competitive and rapidly evolving. We expect competition from existing
competitors and new market entrants to continue to increase. We believe that
our ability to compete depends on many factors, including the timing and market
acceptance of our, and our competitors', products and services.

We primarily compete with software/service providers, such as Be Free, Inc.,
that offer merchants software and services to operate their own private label
affiliate marketing programs. These programs can serve as an alternative to the
affiliate marketing programs conducted over our open networks. Private label
providers, such as Be Free, aggressively market their programs to many of the
online merchants that we may target. Be Free is a public company and has
substantially more financial resources than we do.

We also compete to a lesser extent with other performance-based marketing
providers, enterprise software providers and ad server companies.

If we do not successfully develop our international strategy, we may not be
able to grow our business as much as we expect.

We intend to expand our operations internationally in future periods by
developing networks of online businesses located in foreign countries and by
opening international offices and hiring sales, marketing and support personnel
in those countries. We have little experience in marketing, selling and
supporting our services in foreign countries. As a result, our international
expansion may be more difficult or take longer than we anticipate, especially
due to language barriers and the less advanced Internet infrastructure that
exists in some of these countries. We will need to devote significant
management and financial resources to our international efforts. In some
countries, we may enter into arrangements with foreign businesses that would
enable us to rely on these businesses to initially conduct our operations,
establish local networks and coordinate our sales and marketing efforts abroad.
To the extent that we enter into these arrangements, our success in these
markets will depend on the willingness of these businesses to dedicate
sufficient resources to their arrangements with us.

International operations are subject to a variety of additional risks that
could seriously harm our financial condition and operating results, including:

. currency exchange risks;

. potentially adverse tax consequences;

. tariffs and general export restrictions, including export controls
relating to encryption technology;

. political instability;

. difficulties in enforcing contractual rights in some countries;

7
<PAGE>

. seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world; and

. the impact of local economic conditions and practices.

If we do not adequately address these risks, we will be unable to successfully
grow our business internationally.

Because our operating expenses exceed our cash flow from operations, we may
need to raise additional funds, which may not be available when we need them or
on acceptable terms.

Based on current projections, we do not anticipate the need during the next
15 months to raise capital in addition to the amount raised by this offering;
however, after that time, we may need to raise more money. Our future capital
requirements will depend on many factors, including, but not limited to:

. the rate at which we develop, introduce and market additional products
and services; and

. the response of the market to our products and services.

If we require additional funds, these funds might not be available in
sufficient amounts or on terms favorable to us or our stockholders. If our
operating expenses continue to exceed our operating cash flow after we have
expended the proceeds of this offering, and we are not then able to obtain
additional funds, we may not be able to finance the continued operation of our
business.

Risks Relating to Management

If we are unable to implement appropriate controls and procedures to manage our
growth, we may not be able to successfully implement our business plan.

We are growing rapidly as we develop our affiliate networks, increase our
product offerings and expand into new markets. We grew from five employees at
June 30, 1998, to 161 employees at March 31, 2000. Our rapid growth has placed,
and will continue to place, a significant strain on our management. Our
personnel, systems, procedures and controls may be inadequate to support our
future operations. We will need to hire, train and retain additional management
and support personnel. For example, we expect to hire approximately 100
additional employees by December 31, 2000. We will also need to implement
improved billing and collection procedures and financial and management
information systems. If we do not adequately address these needs or otherwise
effectively manage our growth, our management's time and attention could be
diverted, and we will be unable to execute our business plan.

If we are unable to retain the continued services of our founders and other key
personnel, we may not be able to successfully operate our business.

Our products and services are complex, and we are substantially dependent
upon the continued services of our senior executives, especially our Chief
Executive Officer, Stephen Messer, our President, Heidi Messer, and our key
marketing and technical personnel whose knowledge of our business and technical
expertise would be difficult to replace. The loss of any, or a group of, these
individuals, particularly to a competitor, could seriously harm our ability to
operate our business, because we may not be able to recruit personnel to
replace these individuals in a timely manner, on acceptable terms or at all.

If we do not attract and retain a growing number of skilled employees to
develop our business, we may not be able to implement our growth plans.

Our business depends on having highly trained account executives and
software developers. We will need to continue hiring additional personnel as
our business grows. Competition for personnel, particularly for

8
<PAGE>

employees with technical expertise, is intense and the costs of hiring and
retaining such personnel are high. If we fail to attract new personnel or
retain and motivate our current personnel, we may not be able to grow our
business.

Our management team is new and, if they are unable to work together
effectively, we may not be able to effectively operate our business.

Our business is highly dependent on the ability of our management team to
work together effectively to meet the demands of our growth. Of our current
management team, only seven members were employed by us at June 30, 1999. These
individuals have not previously worked together as a management team and have
had only limited experience managing a rapidly growing company on either a
public or private basis. If they are unable to effectively integrate themselves
into our business or work together as a management team, we may not be able to
manage our business effectively.

Risks Relating to Technology

Our rapid growth will place increasing demands on our technology, and, if we do
not meet those demands, we will not be able to serve new customers and we may
lose existing customers.

As traffic over our networks continues to increase, we must expand and
upgrade our technology, transaction processing systems and network hardware and
software. We may not be able to accurately project the rate of growth of our
networks. In addition, we may not be able to expand and upgrade our systems and
network hardware and software capabilities at a sufficient pace to accommodate
increased use of our networks. If we do not appropriately upgrade our systems
and network hardware and software, we could experience transaction processing
failures which would result in decreased revenues and customer dissatisfaction.

We may not be able to develop new products at a rate required by rapidly
changing technology, which may cause us to lose customers.

Our products are designed to operate on a variety of hardware and software
platforms employed by our customers. We must continually modify and enhance our
products to keep pace with changes in hardware and software platforms and
database technology. Because the timing and nature of new product introductions
or modifications by third party vendors is unpredictable, we may not be able to
keep pace with these changes, and our products and services may come to be
viewed as inferior to those of our competitors. If this happens, we could lose
customers and revenues.

System failures and security breaches could cause us to lose customers and
expose us to liability.

Online merchants and their marketing affiliates that participate in our
networks depend on us to accurately track, store and report the traffic and
sales that are attributable to the links they establish. Software defects,
system failures, natural disasters, human error and other factors could lead to
inaccurate or lost information or the inability to access our networks.
Although we have experienced almost no unplanned system outages in the past, we
may experience outages in the future. In addition, members of our networks
consider much of the transactional data that we collect and store to be highly
sensitive. Our systems could be vulnerable to computer viruses and physical and
electronic break-ins, and third parties may attempt to breach our security. Our
loss of information, our delivery of inaccurate information or a breach or
failure of our security mechanisms that leads to unauthorized disclosure of
information could lead to customer dissatisfaction, damage to our reputation
and possible claims against us for damages.

Undetected defects in our technology could damage our reputation, cause us to
lose customers and reduce our revenues.

Technology as complex as ours may contain errors, defects or performance
problems, commonly called "bugs." Although we regularly test our technology, we
cannot assure you that our testing will detect every potential defect, error or
performance problem. The discovery of a serious software defect, error or
performance problem in our technology could result in:

. the diversion of scarce resources away from customer service and product
development;

9
<PAGE>

. lost revenues;

. delays in customer acceptance of our products; and

. damage to our reputation.

Our customers and potential customers may be particularly sensitive to any
post-release defects, errors or performance problems because a failure of our
systems to accurately monitor an online relationship could result in lost or
reduced revenue to the affiliate members of our networks, or overpayment by
merchant members, during that failure. As a result, these errors, defects or
performance problems may damage our reputation, cause us to lose customers and
reduce our revenues.

We may not be able to protect our intellectual property rights, and we may be
sued for infringing the intellectual property rights of others.

Intellectual property rights are important to our success and our
competitive position. Our intellectual property rights include a patent, the
registered LinkShare Synergy(R) trademark, other trademarks, copyrights and our
trade secrets. Although we seek to protect our intellectual property rights
under applicable intellectual property laws, our actions may be inadequate to
protect these rights or to prevent others from claiming violations of their
patents, copyrights, trademarks and other intellectual property rights. In
addition, protection of intellectual property rights may be unavailable or
limited in certain countries. We cannot be certain that any of our intellectual
property rights would withstand a challenge by a third party or will be of
value in the future. For example, in February 2000, Amazon.com patented
technology covering nearly all aspects of its affiliate program. We do not
believe that our technologies infringe the intellectual property rights of
third parties, including Amazon.com. However, we cannot assure you that third
parties will not claim infringement by us of any past, current or future
intellectual property rights. Any such claim, whether meritorious or not, could
be time-consuming to defend, result in costly litigation, cause service upgrade
delays or require us to enter into royalty or licensing agreements, which would
increase our costs.

We may be exposed to liability for information displayed on our customers' Web
sites or in e-mail messages transmitted over our networks.

We facilitate the creation of links between the Web sites of our customers.
As a result, we may be deemed to be associated with the content of our
customers' Web sites, as well as the e-mails they distribute over our networks.
Although we are not party to the contracts formed between our customers, and we
do not and cannot screen all of the communications generated by them or the
content of their Web sites, we may face potential liability for defamation,
negligence, copyright, patent or trademark infringement and other claims based
on the materials displayed on their Web sites or included in their e-mail
messages. For example, if a banner advertisement that infringed a third party's
trademark were posted on the Web site of one of our customers, we may also be
named as a defendant in the legal action arising from that infringement based
solely on our network's role in facilitating the placement of the infringing
advertisement on that site. In addition, some foreign governments impose
content regulation stricter than that imposed in the United States, which could
subject us to litigation outside of the United States. Consequently, we may be
involved in legal proceedings and disputes that we had no way of foreseeing or
avoiding and that are costly to resolve regardless of their merit. In addition,
our reputation may be damaged, and we may lose customers, if we were involved
with these types of litigation.

Because we depend on a limited number of hardware and software vendors for
essential products, the loss of one or more of these vendors could impair our
ability to operate our networks.

We buy and lease hardware, including our servers and storage arrays, from
Sun Microsystems Inc. and MTI Corporation. We also license software, including
operating systems, Web server technology, database technology, graphical user
interface technology and encryption technology, primarily from Sun Microsystems

10
<PAGE>

and Oracle Corp. If these vendors change the terms of our lease or license
arrangements such that it becomes uneconomical for us to continue using their
hardware or software, or if they are unable or unwilling to supply us with the
hardware or software we need in the amount and at the time required, we may be
unable to operate our networks until equivalent hardware or software can be
identified, procured and integrated into our existing systems.

Risks Relating to Our Industry

Our business will not grow unless Internet use and online commerce continue to
increase.

Most of our revenues are derived from the commissions we earn on
transactions resulting from links formed between the merchant and affiliate
members of our networks. Accordingly, our long-term success depends on
widespread market acceptance of electronic commerce, which is subject to a high
level of uncertainty. A number of factors could prevent this acceptance.
Electronic commerce is at an early stage, and buyers may be unwilling to shift
their purchasing from traditional vendors to online vendors. The necessary
network infrastructure for substantial growth in usage of the Internet may not
be adequately developed. Insufficient availability of or changes in
telecommunications services could result in slower response times. Adverse
publicity and consumer concern about the security and privacy of online
transactions could discourage the growth of e-commerce. Companies may fail to
meet their customers' expectations in delivering goods and services sold over
the Internet. If electronic commerce does not grow or grows slower than we
expect, we will not be able to grow our business.

Governmental regulations and legal uncertainties could decrease demand for our
products and services.

We are subject not only to regulations applicable to businesses generally,
but also laws and regulations directly applicable to electronic commerce.
Regulation of Web communications, commerce and advertising is increasing. The
U.S. Congress recently enacted Internet legislation with respect to child
protection, copyrights and taxation. Additional legislation may be enacted to
regulate pricing, content or the quality of products and services offered over
the Web. In addition, increasing Web use has burdened existing
telecommunications infrastructure, causing sporadic interruptions in telephone
service. As a result, telephone service providers have petitioned the
government to regulate and impose fees on Internet and online service providers
similar to long distance carriers. Due to the global nature of the Web, state
governments and foreign governments may attempt to regulate transactions over
our networks or levy sales or other taxes on our products and services, as well
as those of our network members. In addition, more stringent consumer
protection laws, both in the United States and abroad, may result from
increased online commerce. These types of regulations, if enacted, could
increase the costs of conducting business on the Web, which could result in a
decrease in the demand for our products and services.

Changes in laws and standards relating to data collection and the privacy
rights of Web users could harm our business.

Federal and state governments are increasingly scrutinizing the collection,
distribution and use of information about Web users as a result of growing
public concern for the privacy rights of these users. Some government agencies
have recently proposed limitations on the collection and use of this
information. In October 1998, the European Union adopted a directive limiting
the collection and use of information about European Web users. In addition,
industry and privacy advocacy groups are considering various new, additional or
different self-regulatory standards. Many recently proposed laws or regulations
are still being developed, and no consensus on privacy and data usage has been
reached. Although our tracking and reporting systems are not dependent upon the
use or disclosure of personally identifiable information about Web users,
future regulations could restrict or prohibit some of the data collection and
reporting functions of our business, which could result in a loss of customers
and revenue.

11
<PAGE>

Risks Relating to this Offering

Our common stock has never been publicly traded, and you may not be able to
sell your shares at or above the initial offering price.

There has not been a public market for our common stock prior to this
offering. We cannot predict the extent to which a trading market will develop
or how liquid that market might become. Further, the market price of our common
stock may decline below the initial public offering price. The initial public
offering price will be determined by negotiations between our management and
representatives of the underwriters and may not be indicative of the price at
which our common stock will trade in the public market.

Internet-related stock prices are especially volatile, and this volatility may
depress our stock price.

The market price of our common stock may fluctuate because we are an
Internet-related company and the market for Internet-related companies, in
particular, has been highly volatile. The trading prices of shares of many
Internet-related companies have reached historical highs within the last 52
weeks. During the same period, prices for the shares of these types of
companies have also recorded lows well below their historical highs. Factors
that cause volatility in the market price of Internet stocks may include.

. announcements of technological innovations;

. changes in financial estimates by securities analysts;

. conditions or trends in the Internet industry;

. announcements of significant acquisitions, strategic partnerships or
joint ventures; and

. additions or departures of key personnel.

These factors may cause the trading price of our stock to decrease regardless
of our operating performance.

Our principal stockholders, including two of our directors, own enough of our
shares to control our company, which will limit your ability to influence
corporate matters.

Following the closing of this offering, our principal stockholders,
including two of our directors, will beneficially own approximately 84% of our
outstanding common stock. As a result, these stockholders will be able to
determine the outcome of any matter requiring a stockholder vote and, as a
result, our management and affairs. Matters that typically require stockholder
approval include the following:

. election of directors;

. merger or consolidation with another company; and

. sale of all or substantially all of our assets.

As a result, your ability to influence these decisions will be limited.

Two of our principal stockholders have interests that may differ from yours,
which may lead to conflicts of interest.

Following the closing of this offering, Internet Capital Group, Inc. and
Comcast Interactive Capital, LP will beneficially own approximately 33% and 5%,
respectively, of our outstanding common stock. Douglas A. Alexander, one of our
directors, is also a Managing Director of Internet Capital Group, Inc. Each of
these stockholders holds significant interests in other businesses that are
engaged in online commerce. In the future, these businesses may compete, or
enter into business arrangements, with us, which may result in a conflict
between the stockholder's interest in us and its interest in the other
business. Although we are not aware of any actual conflicts of interest
involving these stockholders, we cannot assure you that no conflicts will
develop in the future. If a conflict were to develop, these stockholders may
vote their ownership interests in favor of matters with which you may disagree.

You will experience an immediate and substantial dilution in the book value of
your investment.

The initial public offering price of our common stock is substantially
higher than what the net tangible book value per share of the common stock will
be immediately after this offering. Net tangible book value per

12
<PAGE>

share represents the amount of our total tangible assets reduced by our total
liabilities, divided by the number of shares of common stock outstanding. If
you purchase our common stock in this offering, you will incur immediate
dilution of approximately $9.23 in the net tangible book value per share of our
common stock from the price you pay for our common stock, based upon an assumed
initial public offering price of $11.00 per share. The exercise of outstanding
options may result in further dilution.

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 cause the market price
for our common stock to decline. After the closing of this offering, we will
have 31,104,084 shares outstanding. Of these shares, the 4,700,000 shares being
offered in this offering will be freely tradeable and the remaining shares will
become eligible for sale in the public market at various times after the date
of this prospectus pursuant to Rule 144. All of these remaining shares are
subject to contractual restrictions with the underwriters that prevent them
from being sold until 180 days after the date of the prospectus without the
consent of Credit Suisse First Boston. Credit Suisse First Boston may, in its
sole discretion, grant its consent to an earlier sale of these shares.

However, our existing stockholders have the right to require us to register
an aggregate of 26,404,084 shares of common stock under the Securities Act
after the expiration of the lock-up period or at such earlier time as Credit
Suisse First Boston consents to the sale of those shares.

In addition, following the effective date of this offering, we expect to
register for sale 9,018,090 shares of common stock reserved for issuance under
our stock incentive plan. As of April 14, 2000, options to purchase 5,900,940
shares of common stock were outstanding. Shares acquired upon exercise of these
options will be eligible for sale in the public market from time to time
subject to vesting and the 180-day lock-up period. The exercise price of
substantially all of these stock options is lower than the initial public
offering price of our common stock.

The sale of a significant number of any of these shares could cause the
price of our common stock to decline.

It may be difficult for a third party to acquire us, even if doing so may be
beneficial to our stockholders.

Certain provisions of our restated certificate of incorporation and bylaws
may discourage, delay or prevent a change in control of LinkShare that a
stockholder may consider favorable. These provisions include the following:

. authorizing the issuance of "blank check" preferred stock that could be
issued by our board of directors to increase the number of outstanding
shares and thwart a takeover attempt;

. classifying our board of directors with staggered three-year terms, which
may lengthen the time required to gain control of our board of directors;

. limiting who may call special meetings of stockholders;

. prohibiting stockholder action by written consent, thereby requiring all
stockholder actions to be taken at a meeting of the stockholders; and

. establishing advance notice requirements for nominations of candidates
for election to the board of directors or for proposing matters that can
be acted upon by stockholders at stockholder meetings.

Section 203 of the Delaware General Corporation Law and our stock option
plan may also discourage, delay or prevent a change in control of LinkShare.

In addition, we are, and, following the closing of this offering, will
continue to be, controlled by a few principal stockholders, which could delay,
deter or prevent a change of control.

13
<PAGE>

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which involve risks and
uncertainties. These forward-looking statements are not historical facts but
rather are based on current expectations, estimates and projections about our
industry, our beliefs and assumptions. We use words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates" and variations
of these words and similar expressions to identify forward-looking statements.
These statements are not guarantees of future performance and are subject to
certain risks, uncertainties and other factors, some of which are beyond our
control, are difficult to predict and could cause actual results to differ
materially from those expressed or forecasted in the forward-looking
statements. These risks and uncertainties include those described in "Risk
Factors" and other parts of this prospectus. You should not place undue
reliance on these forward-looking statements, which reflect our management's
view only as of the date of this prospectus.

USE OF PROCEEDS

Our net proceeds from the sale of the 4,700,000 shares of common stock in
this offering, or 5,405,000 if the underwriters' over-allotment option is
exercised in full, will be approximately $47.1 million, or approximately $54.3
million if the underwriters' over-allotment option is exercised in full, at an
assumed public offering price of $11.00 per share and after deducting the
underwriting discounts and commissions and our estimated offering expenses.

The primary purposes of this offering are to obtain additional working
capital, to create a public market for our common stock and to facilitate
future access to public equity markets. At the date of this prospectus, we have
not allocated any specific amount of the net proceeds of this offering for any
particular purpose. However, we presently anticipate that we will spend between
$22 million and $26 million in sales and marketing expenses during the year
ending December 31, 2000 to attract new members to our networks. During the
same period, we further anticipate that we will spend between $6 million and $8
million to adapt our technology and networks to serve emerging business needs
and to enhance the features and performance of our products and services. The
remainder of the net proceeds will be used for general corporate purposes and
working capital. This allocation is only an estimate, and we will have broad
discretion to adjust it as necessary to address our operational needs in the
future.

Pending these uses, we will invest the net proceeds of this offering in
short-term, investment-grade, interest-bearing securities.

DIVIDEND POLICY

We have never paid cash dividends on our capital stock. We expect to retain
our future earnings, if any, to operate and expand our business, and we do not
anticipate paying any cash dividends in the foreseeable future. As a result,
our stockholders will need to sell their shares to realize any return on their
investment.

14
<PAGE>

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 1999,
on:

. an actual basis,

. a pro forma basis that reflects:

. a 3.5-for-1 split of our currently outstanding common stock
immediately before the closing of this offering; and

. the automatic conversion of all outstanding shares of preferred stock
on a 3.5-for-1 basis into 11,347,518 shares of common stock upon the
closing of this offering;

. the issuance of convertible notes and advances from stockholders from
January 1, 2000, through February 7, 2000, for net proceeds of
$3,655,000;

. the issuance of convertible notes from March 31, 2000, through April
14, 2000, for net proceeds of $3,400,000; and

. the automatic conversion of all outstanding notes and accrued
interest on those notes through April 14, 2000, into 1,056,566 shares
of common stock upon the closing of this offering and the recognition
of $1,625,000 of interest expense for the related beneficial
conversion feature (assuming an initial public offering price of
$11.00 per share); and

. a pro forma as adjusted basis that reflects our issuance and sale of
4,700,000 shares of common stock in this offering at the assumed initial
public offering price of $11.00 per share and our receipt and application
of the estimated net proceeds from this offering, after deducting the
underwriting discounts and commissions and our estimated offering
expenses.

15
<PAGE>

Please read this capitalization table together with the sections of this
prospectus entitled "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" as well as the
financial statements included in this prospectus.
<TABLE>
<CAPTION>
As of December 31, 1999
------------------------------
Pro Forma
Actual Pro Forma as Adjusted
------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Cash and cash equivalents....................... $ 7 $ 7,062 $54,143
======= ======= =======
Advances from stockholders...................... 345 -- --
Convertible notes payable....................... 2,500 -- --
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 3,750,000
shares authorized:
Series A convertible preferred stock,
3,250,000 shares authorized, 3,242,148 issued
and outstanding actual, none issued pro forma
and pro forma as adjusted (liquidation
preference of $4 million at December 31, 1999
actual)...................................... 3 -- --
Common stock, $.001 par value, 10,000,000
shares authorized, 4,000,000 shares issued
actual, 26,404,084 shares issued pro forma
and 31,104,084 shares issued pro forma as
adjusted..................................... 4 26 31
Additional paid-in capital.................... 6,779 18,364 65,440
Deferred compensation......................... (1,879) (1,879) (1,879)
Accumulated deficit........................... (6,775) (8,479) (8,479)
------- ------- -------
Total stockholders' equity (deficit).......... (1,868) 8,032 55,113
------- ------- -------
Total capitalization............................ $ 977 $ 8,032 $55,113
======= ======= =======
</TABLE>

Shares of common stock reflected by the table shown above or in the
calculation of stockholders' equity do not include:

. 4,184,845 shares issuable upon exercise of outstanding options at
December 31, 1999, at a weighted average exercise price of $1.63 per
share;

. 269,000 shares we expect to sell to one of our executive officers upon
the closing of this offering at a per share price equal to 80% of the per
share initial public offering price of our common stock ($8.80 assuming
an initial offering price of $11.00 per share);

. 4,564,245 shares issuable at December 31, 1999, upon exercise of
additional options that may be granted under our stock option plan;

. 146,895 shares of common stock issuable upon the exercise of all of our
outstanding warrants; and

. 705,000 shares subject to the underwriters' over-allotment option.

We expect 31,104,084 shares of common stock to be outstanding immediately
after the closing of this offering.

16
<PAGE>

DILUTION

If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock. At December 31, 1999, the net tangible book value of our
common stock was $8.0 million or $0.30 per share of common stock, on a pro
forma basis after giving effect to:

. the automatic conversion of all outstanding shares of preferred stock on
a 3.5-for-1 basis into 11,347,518 shares of common stock upon the closing
of this offering;

. the issuance of convertible notes and advances from stockholders from
January 1, 2000, through February 7, 2000, for net proceeds of
$3,655,000;

. the issuance of convertible notes from March 31, 2000, through April 14,
2000 for net proceeds of $3,400,000; and

. the automatic conversion of all outstanding notes and accrued interest
on those notes through April 14, 2000, into 1,056,566 shares of common
stock upon the closing of this offering and the recognition of $1,625,000
of interest expense for the related beneficial conversion feature
(assuming an initial offering price of $11.00 per share).

"Net tangible book value" per share represents the amount of our total
tangible assets reduced by the amount of our total liabilities, divided by the
number of shares of common stock outstanding. At December 31, 1999, the net
tangible book value of our common stock, on a pro forma basis as adjusted for
the sale of shares offered in this offering and the application of the
estimated net proceeds from that sale of $47.1 million, would have been
approximately $1.77 per share. If the underwriters exercise their over-
allotment option in full, the net tangible book value of our common stock, on a
pro forma basis as adjusted for the sale of shares offered in this offering and
the application of the estimated net proceeds from that sale of $54.3 million,
would have been approximately $1.96 per share. These values are based on an
assumed initial public offering price of $11.00 per share and the deduction of
underwriting discounts and commissions and our other estimated offering
expenses. The difference between the pro forma and pro forma as adjusted net
tangible book value of our common stock represents an immediate increase of
$1.47 per share, or $1.66 per share if the underwriters exercise their over-
allotment option in full, to our existing stockholders and an immediate
dilution of $9.23 per share, or $9.04 per share if the underwriters exercise
their over-allotment option in full, to new investors who purchase shares in
this offering. 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 December
31, 1999................................................... $0.30
-----
Increase per share attributable to new investors............ 1.47
-----
Pro forma net tangible book value per share after the
offering..................................................... 1.77
------
Dilution per share to new investors........................... $ 9.23
======

The following table illustrates this per share dilution, assuming the
underwriters exercise their over-allotment option in full:

Assumed initial public offering price per share............... $11.00
------
Pro forma net tangible book value per share as of December
31, 1999................................................... $0.30
-----
Increase per share attributable to new investors............ 1.66
-----
Pro forma net tangible book value per share after the
offering..................................................... 1.96
------
Dilution per share to new investors........................... $ 9.04
======
</TABLE>

17
<PAGE>

The following table summarizes on a pro forma basis as of December 31, 1999,
the differences between the amounts of the total consideration paid and the
average price per share paid by our existing stockholders and amounts paid by
the new investors in this offering, based on an assumed initial public offering
price of $11.00 per share:

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price Per
Number Percent Amount Percent Share
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 26,404,084 85% $13,912,607 21% $ .53
New investors................ 4,700,000 15% $51,700,000 79% $11.00
---------- --- ----------- --- ------
Total...................... 31,104,084 100% $65,612,607 100% $ 2.11
========== === =========== === ======
</TABLE>

The following table summarizes on a pro forma basis as of December 31, 1999,
the differences between the amounts of the total consideration paid and the
average price per share paid by our existing stockholders and amounts paid by
our new investors in this offering, based on an assumed initial public offering
price of $11.00 per share and assuming that the underwriters exercise their
over-allotment option in full:

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price Per
Number Percent Amount Percent Share
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 26,404,084 83% $13,912,607 19% $ .53
New investors................ 5,405,000 17% $59,455,000 81% $11.00
---------- --- ----------- --- ------
Total...................... 31,809,084 100% $73,367,607 100% $ 2.31
========== === =========== === ======
</TABLE>

After this offering, we may issue additional shares of common stock upon the
exercise of options granted under our stock option plan.

18
<PAGE>

SELECTED FINANCIAL DATA

You should read the selected financial data set forth below in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and our financial statements and the related notes included
elsewhere in this prospectus. The statements of operations data for the fiscal
years ended June 30, 1998 and 1999 and the balance sheet data as of June 30,
1998 and 1999 are derived from our audited financial statements. The statements
of operations data for the six-month periods ended December 31, 1998 and 1999
and the balance sheet data as of December 31, 1999 are derived from our
unaudited financial statements. Our unaudited financial statements have been
prepared on the same basis as our audited financial statements and, in our
opinion, include all adjustments, consisting only of normal recurring
adjustments that we consider necessary for a fair presentation of our results
of operations and financial condition for the periods and at the date
presented. Historical results are not necessarily indicative of results that
may be expected for any future period.

KPMG LLP, independent certified public accountants, audited our historical
financial statements for the fiscal years ended June 30, 1998 and 1999. Their
report appears in another part of this prospectus.

<TABLE>
<CAPTION>
Six Months Ended
Years Ended June 30, December 31,
--------------------- ---------------------
1998 1999 1998 1999
--------- ---------- --------- ----------
(In thousands, except share and per share
data)
<S> <C> <C> <C> <C>
Statements of Operations Data:
Revenues:
Licensing fees................. $ 8 $ 221 $ 45 $ 612
Network fees................... 39 494 94 2,001
--------- ---------- --------- ----------
Total revenues............... 47 715 139 2,613
--------- ---------- --------- ----------
Operating expenses:
Cost of revenues (exclusive of
equity related compensation of
$1, 0 and $7 for the year
ended June 30, 1999 and the
six months ended
December 31, 1998 and 1999,
respectively)................. 13 105 15 350
Sales and marketing (exclusive
of equity related compensation
of $10, $1 and $74 for the
year ended June 30, 1999 and
the six months ended
December 31, 1998 and 1999,
respectively)................. 41 1,816 432 2,834
Product development (exclusive
of equity related compensation
of $154, $91 and $87 for the
year ended June 30, 1999 and
the six months ended December
31, 1998 and 1999,
respectively)................. 103 776 280 835
General and administrative
(exclusive of equity related
compensation of $38, 0 and $83
for the year ended June 30,
1999 and the six months ended
December 31, 1998 and 1999,
respectively)................. 83 1,257 386 1,013
Noncash compensation........... -- 203 92 251
--------- ---------- --------- ----------
Total operating expenses..... 240 4,157 1,205 5,283
--------- ---------- --------- ----------
Loss from operations......... (193) (3,442) (1,066) (2,670)
Interest income.................. -- 61 28 18
Interest expense................. -- -- -- (549)
--------- ---------- --------- ----------
Net loss..................... $ (193) $ (3,381) $ (1,038) $ (3,201)
========= ========== ========= ==========
Basic and diluted net loss per
share........................... $ (0.05) $ (0.85) $ (0.26) $ (0.80)
========= ========== ========= ==========
Shares used in computing basic
and diluted net loss per
share .......................... 4,000,000 4,000,000 4,000,000 4,000,000
========= ========== ========= ==========
Unaudited pro forma basic and
diluted net loss per share...... (0.14) (0.13)
========== ==========
Shares used in computing
unaudited pro forma basic and
diluted net loss per share...... 24,546,974 25,504,646
========== ==========
</TABLE>

19
<PAGE>

The following balance sheet data is presented on:

. an actual basis;

. a pro forma basis to reflect:

. a 3.5-for-1 split of our outstanding common stock;

. the automatic conversion of all outstanding shares of preferred stock
on a 3.5-for-1 basis into 11,347,518 shares of common stock upon the
closing of this offering;

. the issuance of convertible notes and advances from stockholders from
January 1, 2000, through February 7, 2000, for net proceeds of
$3,655,000;

. the issuance of convertible notes from March 31, 2000, through April
14, 2000, for net proceeds of $3,400,000; and

. the automatic conversion of all outstanding notes and accrued
interest on those notes throughApril 14, 2000, into 1,056,566 shares
of common stock upon the closing of this offering and the recognition
of $1,625,000 of interest expense for the related beneficial
conversion feature (assuming an initial public offering price of
$11.00 per share); and

<TABLE>
<CAPTION>
As of June
30, As of December 31, 1999
------------- ------------------------------
Pro Forma
1998 1999 Actual Pro Forma as Adjusted
----- ------ ------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and
short-term investments......... $ 4 $ 637 $ 7 $ 7,062 54,143
Working capital (deficit)....... (183) (88) (4,248) 5,652 52,733
Total assets.................... 102 1,788 4,752 11,807 58,888
Advances from stockholders...... -- -- 345 -- --
Convertible notes payable....... -- -- 2,500 -- --
Total stockholders' equity
(deficit)...................... (156) 563 (1,868) 8,032 55,113
</TABLE>

20
<PAGE>

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

The following discussion of our financial condition and results of
operations should be read together with our financial statements and the
related notes included in another part of this prospectus. This discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in these forward-
looking statements as a result of the factors set forth in the section of this
prospectus titled "Risk Factors."

Overview

LinkShare creates and operates networks that enable businesses to form and
manage online relationships with other businesses to facilitate commerce over
the Internet. Participants in the networks utilize the network technology and
services to establish links between their respective Web sites, establish the
terms of their business relationships and track and monitor the performance of
these relationships. LinkShare earns fees based on the activity that takes
place on its networks, fees for access to its networks and fees for related
services. LinkShare incurs expenses related to the development, maintenance and
marketing of its networks and management of its business.

LinkShare was incorporated on July 1, 1997, and launched The LinkShare
Network(TM) later that year. The LinkShare Network(TM) is a performance-based
marketing network over which merchants selling goods and services can establish
links with independent Web sites, which we refer to as affiliates, to promote
and sell the merchants' products to individual consumers who access the
affiliates' Web sites. In October 1999, we introduced TrafficShare(TM), a
program available to merchant members of The LinkShare Network(TM) whose
primary goal is increasing traffic to their Web sites rather than generating
sales. In March 2000, we launched B2B LinkShare(TM), a network similar to The
LinkShare Network(TM) that focuses on business-to-business online commerce.

Our fiscal year ends on June 30 of each year. All references to fiscal years
1998 and 1999 in the discussion that follows refer to the fiscal years ended
June 30, 1998, and June 30, 1999 respectively.

We have incurred significant net losses since the commencement of
operations. Net losses totaled $193,428 for fiscal year 1998, $3.4 million for
fiscal year 1999 and $3.2 million for the six months ended December 31, 1999.
At December 31, 1999, we had an accumulated deficit of $6.8 million. We
anticipate that we will spend significantly on developing, marketing and
supporting our products and services in the foreseeable future. As a result, we
expect to incur additional losses that will increase our accumulated deficit.

Sources of Revenue

To date, substantially all of our revenues have been derived from two types
of fees that we collect from the merchant members of The LinkShare Network(TM):

. licensing fees for the use of our software and access to the network; and

. network fees, which are based on:

. the volume and dollar amount of sales and other activities generated
through our merchant members' links with their affiliates, and

. charges for optional packages of enhanced software features, support
services and back-office services.

We do not charge affiliates any fees for access to The LinkShare Network(TM) or
for the services we provide to them. We recruit and support affiliates to
increase the overall transaction volume over our network, which increases the
transaction-based revenues that we receive from the merchant members of our
network.

Merchants pay us an initial license fee upon first signing a contract for
the use of our LinkShare Synergy(R) software and access to The LinkShare
Network(TM). Each merchant subsequently pays a renewal fee each year during the
term of its contract. Our contracts with merchants generally have terms of up
to three years and renew automatically for successive terms of up to two years,
unless either party gives notice not to extend. We typically bill each merchant
once a month for fees based on the transactions or other activities generated
by

21
<PAGE>

that merchant's links with its affiliates. We also provide optional support
services, enhanced software packages and back-office services, such as e-mail
generation and distribution and check disbursement, for which merchants pay us
additional fees. To date, these additional fees have represented a minimal
portion of our revenue.

We defer revenue from licensing fees at the time of software shipment and
billing and recognize revenue ratably over the related contractual period
during which we provide the applicable merchant with access to our networks. We
recognize revenue from network fees during the period in which they are earned
or during the period in which the applicable service is provided.

Comparison of Results of Operation for the Six-Month Periods Ended December 31,
1998 and 1999

Revenues

Revenues increased by $2.5 million from $139,313 for the six months ended
December 31, 1998, to $2.6 million for the six months ended December 31, 1999.
License fees represented 32% and 23% of total revenues for the six months ended
December 31, 1998 and 1999, respectively. The increase in revenues is
attributable to an increase in the number of merchants joining The LinkShare
Network(TM) and an increase in the volume and dollar amount of sales and other
activities generated over the network. At December 31, 1999, we had deferred
revenue of $1.1 million relating primarily to licensing fees.

Cost of Revenues

Cost of revenues consists of expenses incurred in operating The LinkShare
Network(TM), including the cost of technical support, hosting expenses and
depreciation of servers and related software. Cost of revenues increased by
$334,636 from $15,260 for the six months ended December 31, 1998, to $349,896
for the six months ended December 31, 1999. Of this increase, approximately
$123,000 is attributable to an increase in technical support personnel costs
and approximately $187,000 is attributable to hosting costs and incremental
depreciation associated with the additional computer hardware and software
required by the increased activity over The LinkShare Network(TM). Cost of
revenues represented 11% of our revenues for the six months ended December 31,
1998, compared to 13% of our revenues for the six months ended December 31,
1999.

Sales and Marketing

Sales and marketing expense consists primarily of salaries, commissions,
benefits and recruiting costs for client development and marketing personnel,
and costs associated with participating in trade shows, hosting our symposia,
public relations and promotional expenses. Sales and marketing expenses
increased by $2.4 million from $431,445 for the six months ended December 31,
1998, to $2.8 million for the six months ended December 31, 1999. Of this
increase, approximately $1.3 million is attributable to personnel costs
associated with a higher number of employees engaged in sales and marketing and
approximately $564,000 is attributable to an increase in public relations,
advertising and symposia costs. We expect these expenses to continue to
increase substantially as we continue expanding our sales and marketing
efforts.

Product Development

Product development expense consists primarily of salaries, benefits and
recruiting costs for employees engaged in our software and new product
development. All product development costs have been expensed as incurred.
Product development expenses increased by $544,782 from $279,974 for the six
months ended December 31, 1998, to $834,756 for the six months ended December
31, 1999. Of this increase, approximately $466,000 is attributable to personnel
costs associated with a higher number of employees engaged in product
enhancement and new product development, including such new products as
TrafficShare(TM) and B2B LinkShare(TM). We believe that continued investment in
software and product development is critical to attaining our strategic
objectives, and we therefore expect product development expenses to continue
increasing.

22
<PAGE>

General and Administrative

General and administrative expense consists primarily of employee salaries,
benefits and recruiting costs for our executive, administrative and finance
personnel, professional fees and bad debt expense. General and administrative
expenses increased by $627,656 from $386,104 for the six months ended December
31, 1998, to $1.0 million for the six months ended December 31, 1999. Of this
increase, approximately $330,000 is attributable to personnel costs associated
with a higher number of employees in our administrative and finance departments
and the addition of new members to our executive management team. In the six
months ended December 31, 1998 and 1999, we recorded provisions for doubtful
accounts of approximately $72,000 and $159,000, respectively. Write-offs during
these periods totaled $126,000 and $0, respectively, none of which were
individually significant. We expect general and administrative expenses to
increase as additional personnel are hired and additional administrative and
managerial activities are undertaken consistent with the growth of our
business.

Noncash Compensation

Noncash compensation charges relate to option grants to employees and
represent the excess of the fair value of our common stock on the date of
option grant over the applicable option's exercise price. The charge is
recorded as deferred compensation and expensed over the vesting period of the
option. Noncash compensation charges increased by $158,467 from $92,143 for the
six months ended December 31, 1998, to $250,610 for the six months ended
December 31, 1999. This increase is attributable to the grant of 251,700
options to our employees during the six months ended December 31, 1999.
Additional deferred compensation of $8.9 million, resulting from the grant of
471,636 options in January 2000, will be amortized over the applicable vesting
period of the relevant options.

Interest Income

Interest income consists of interest earned on our cash, cash equivalents
and short-term investments. Interest income decreased by $9,695 from $28,344
for the six months ended December 31, 1998, to $18,649 for the six months ended
December 31, 1999, due to a decline in our cash equivalents and short-term
investments.

Interest Expense

We had no interest expense for the six months ended December 31, 1998.
Interest expense totaled $549,505 for the six months ended December 31, 1999.
Interest expense consisted primarily of noncash charges of $519,505 related to
the issuance of warrants for the purchase of our common stock, which were
issued from August 1999 through December 1999 under the terms of the
convertible notes that we issued on August 23, 1999, to Comcast Interactive
Capital, LP, one of our principal stockholders. The interest charge is equal to
the fair value of the warrants at the time of their issuance.

Comparison of the Results of Operation for the Fiscal Years Ended June 30, 1998
and 1999

Revenues

Revenues increased by $667,207 from $47,494 for fiscal year 1998 to $714,701
for fiscal year 1999. This increase is attributable to an increase in the
number of merchants joining The LinkShare Network(TM) and an increase in the
volume and dollar amount of sales and other activities generated over the
network. License fees represented 17% and 31% of total revenues for the fiscal
year ended June 30, 1998 and 1999, respectively.

Cost of Revenues

Cost of revenues increased from $12,968 for fiscal year 1998, to $104,751
for fiscal year 1999. Of this increase, approximately $85,000 is attributable
to an increase in hosting expenses and incremental depreciation associated with
the additional computer hardware and software required by the increased
activity over The LinkShare Network(TM). These costs as a percentage of
revenues decreased from 27% for fiscal year 1998 to 15% for fiscal year 1999.

23
<PAGE>

Sales and Marketing

Sales and marketing expense increased from $41,026 for fiscal year 1998 to
$1.8 million for fiscal year 1999. Of this increase, approximately $731,000 is
attributable to personnel costs associated with a higher number of employees
engaged in sales and marketing and approximately $676,000 is attributable to
increased expenditures for public relations, advertising and symposia.

Product Development

Product development expense increased by $672,486 from $103,520 for fiscal
year 1998 to $776,006 for fiscal year 1999. Of this increase, approximately
$418,000 is attributable to personnel costs associated with a higher number of
employees engaged in product enhancement and new product development.

General and Administrative

General and administrative expense increased by $1.3 million from $83,408
for fiscal year 1998 to $1.3 million for fiscal year 1999. Of this increase,
approximately $413,000 is attributable to personnel costs associated with a
higher number of employees in our administrative and finance departments and
the addition of new members to our executive management team, and
approximately $287,000 is attributable to an increase in professional fees. In
fiscal years 1998 and 1999, we recorded a provision for doubtful accounts of
$25,000 and $261,000, respectively. Write-offs during these periods totaled
$25,000 and $166,000, respectively, none of which were individually
significant.

Noncash Compensation

We incurred no noncash compensation charges during fiscal year 1998.
Noncash compensation charges related to employee stock option grants totaled
$203,039 for fiscal year 1999.

Interest Income

We had no interest income during fiscal year 1998. Interest income totaled
$61,102 for fiscal year 1999.

Income Taxes

We have made no provision for income taxes for the periods presented
because we have incurred losses since our inception. At June 30, 1999, we had
approximately $3.2 million of Federal net operating loss carryforwards. Our
Federal net operating loss carryforwards begin expiring in 2018.

24
<PAGE>

Quarterly Statement of Operations Data

The following table sets forth statement of operations data for the six
quarters ended December 31, 1999. The information for each quarter has been
prepared on substantially the same basis as the audited financial statements
included elsewhere in this prospectus and, in the opinion of management,
includes all adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation of the results of operations for such
periods. Historical results are not necessarily indicative of future results.

<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------------------------------------------
Sept. 30, 1998 Dec. 31, 1998 Mar. 31, 1999 June 30, 1999 Sept. 30, 1999 Dec. 31, 1999
-------------- ------------- ------------- ------------- -------------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Licensing Fees......... $ 10.1 $ 35.1 $ 65.4 $ 110.2 $ 231.5 $ 379.9
Network Fees .......... 28.1 65.9 110.2 289.7 620.6 1,380.6
-------- ------- ------- --------- --------- ---------
Total Revenues........ 38.2 101.0 175.6 399.9 852.1 1,760.5
-------- ------- ------- --------- --------- ---------
Operating Expenses:
Cost of Revenues....... 4.7 10.6 25.9 63.6 132.9 217.1
Sales and Marketing.... 74.8 356.6 422.7 961.6 1,249.7 1,584.1
Product Development.... 111.0 169.0 236.6 259.5 322.1 512.6
General and
Administrative........ 169.9 216.2 316.2 554.4 380.2 633.6
Noncash Compensation... 81.6 10.5 22.7 88.2 115.6 135.0
-------- ------- ------- --------- --------- ---------
Total Operating
Expenses............. 442.0 762.9 1,024.1 1,927.3 2,200.5 3,082.4
-------- ------- ------- --------- --------- ---------
Loss From Operations.... (403.8) (661.9) (848.5) (1,527.4) (1,348.4) (1,321.9)
-------- ------- ------- --------- --------- ---------
Interest Income......... 14.0 14.3 9.0 23.8 13.0 5.7
-------- ------- ------- --------- --------- ---------
Interest Expense........ -- -- -- -- (29.5) (520.0)
-------- ------- ------- --------- --------- ---------
Net Loss................ $ (389.8) $(647.6) $(839.5) $(1,503.6) $(1,364.9) $(1,836.2)
======== ======= ======= ========= ========= =========
</TABLE>

The general trend of increased revenues and operating expenses for the
quarterly periods indicated above resulted from the following:

. The quarterly increase in license fees reflects the increase in the
number of merchants participating in The LinkShare Network(TM).

. The quarterly increase in network fees reflects the increase in the
number of merchants and affiliates utilizing The LinkShare Network(TM)
and growth in the revenue per merchant.

. The quarterly growth in the cost of revenues reflects an increase in
technical support personnel costs. There were no dedicated technical
support personnel at September 30, 1998. At December 31, 1999, we
employed eight individuals for technical support. The growth in the cost
of revenues also reflects an increase in hosting expenses related to the
growth in activity on The LinkShare Network(TM).

. The quarterly growth in sales and marketing expense reflects the costs
associated with the increase in sales and marketing personnel from nine
at September 30, 1998, to 65 at December 31, 1999.

. The quarterly growth in product development expense reflects the growth
in product development personnel from one dedicated staff member at
September 30, 1998, to 16 at December 31, 1999.

. The quarterly growth in general and administrative expense reflects the
growth in management and administrative staff from two at September 30,
1998, to 17 at December 31, 1999. The decrease in the quarter ended
September 30, 1999, compared to June 30, 1999 is attributable to non-
recurring professional fees in the quarter ended June 30, 1999, of
approximately $146,000.

25
<PAGE>

Our operating results have varied on a quarterly basis during our short
operating history and may fluctuate significantly in the future. The results of
any quarter do not indicate results to be expected for a full fiscal year. Our
annual or quarterly results of operations may be below the expectations of
public market analysts or investors, in which case the market price of our
common stock could be materially and adversely affected.

Liquidity and Capital Resources

We have financed our operations to date through the private issuance of
convertible preferred stock, convertible notes and warrants to purchase our
common stock. Through December 31, 1999, net proceeds from financing activities
totaled $6.7 million.

Net cash provided by operating activities totaled $4,680 for fiscal year
1998. We experienced significant growth in the number of merchants and
affiliates joining our network in fiscal year 1999 and incurred significant
expenditures to support that growth. Consequently, net cash used in operating
activities totaled $2.6 million for fiscal year 1999 and $659,668 and $1.5
million for the six months ending December 31, 1998, and December 31, 1999,
respectively. Cash used in operating activities for each period consisted
primarily of the cash used to fund operating losses in those periods.

Net cash used in investing activities totaled $680 for fiscal year 1998,
$1.1 million for fiscal year 1999 and $168,682 and $1.5 million for the six
months ending December 31, 1998, and December 31, 1999, respectively. Net cash
used in investing activities in these periods consisted primarily of capital
expenditures for computer hardware, software and other fixed assets.

Net cash provided by financing activities totaled $3.9 million for fiscal
year 1999 and $3.9 million and $2.8 million for the six months ending December
31, 1998, and December 31, 1999, respectively. Cash provided by financing
activities was obtained primarily through the private issuance of convertible
preferred stock, convertible notes and warrants to purchase our common stock.

We believe that the net proceeds from this offering, together with our
existing cash and cash equivalents, will be sufficient to meet our working
capital and capital expenditure requirements for at least the next 15 months.
Thereafter, based on current projections, it is likely that we will need to
raise additional funds. We may also be required to raise additional financing
before that time. If additional funds are raised through the issuance of equity
securities, our existing stockholders may experience significant dilution.
Furthermore, additional financing may not be available when needed or may be
available only on terms that are not favorable to us or our stockholders. If
additional financing is not available when needed or is not available on
acceptable terms, we may be unable to:

. develop or enhance our products or services;

. take advantage of business opportunities; or

. respond to competitive pressures;

which could have a material and adverse effect on our business, financial
condition or results of operations. If we are unable to raise funds in this
offering, we will have to raise funds from alternative sources to meet our
working capital needs and planned capital expenditures.

On February 7, 2000, we issued $6.5 million principal amount of new
convertible promissory notes to our founders and the holders of our Series A
Preferred Stock in exchange for (1) the cancellation of notes previously issued
to them on August 23, 1999, and November 18, 1999, (2) a waiver of interest
accrued on those notes and (3) cash advances made by them prior to and
contemporaneously with the issuance of the new notes. Each of the February 2000
notes matures on July 31, 2000, and bears interest at the rate of 6.2% per
year, payable upon maturity. Upon the closing of this offering, each of the
notes we issued on February 7, 2000, will be converted into a number of shares
of common stock determined by dividing the principal amount of those notes plus
accrued interest by 80% of the per share initial public offering price of our
common stock.

26
<PAGE>

On March 31 and April 5, 2000, we issued an aggregate $2.9 million principal
amount of new convertible promissory notes to Mitsui & Co. (U.S.A.), Inc. and
Mitsui & Co., Ltd. for an equal amount of cash. Each of these notes matures on
September 30, 2000, and bears interest at a rate of 6.2% per year, payable upon
maturity. Upon the closing of this offering, each of these notes will convert
into the number of shares of common stock determined by dividing the principal
amount of those notes plus accrued interest by the per share initial public
offering price of our common stock.

On April 14, 2000, we sold to Martin I. Pompadur, who has consented to
become a director of LinkShare upon the consummation of this offering, a
convertible promissory note in the principal amount of $500,000 for an equal
amount of cash. The note matures on September 30, 2000, and bears interest at
the rate of 6.2% per year, payable upon maturity. Upon the closing of this
offering, the note will convert into a number of shares of common stock
determined by dividing the principal amount of the note plus accrued interest
by the per share initial public offering price of our common stock.

At December 31, 1999, we had no significant capital commitments; however, we
plan to spend approximately $6 million on capital expenditures over the next
twelve months.

Quantitative and Qualitative Disclosures About Market Risk

Our exposure to financial market risk, including changes in interest rates
and marketable equity security prices, relates primarily to any investment
portfolio we may hold after this offering. We do not plan to reduce or hedge
our market exposure on any investment securities because, to the extent we
invest in securities, we intend to invest mainly in fixed-rate, short-term
securities. We do not intend to buy or sell any derivative securities. All of
our outstanding indebtedness at December 31, 1999, was fixed-rate debt.

Recent Accounting Pronouncements

In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including derivative
instruments embedded in other contracts, and for hedging activities.
Subsequently, SFAS No. 137 was issued, which deferred the effective date of
SFAS No. 133 to all fiscal quarters of fiscal years beginning after June 15,
2000. SFAS No. 133 is not expected to affect LinkShare, as we do not have any
derivative instruments or hedging activities.

On December 3, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
No. 101). SAB No. 101 provides the SEC staff's views on the recognition of
revenue including upfront fees received where the seller has continuing
involvement. SAB No. 101 states that in certain circumstances where the seller
has continuing involvement or performance obligations, fees for licenses at the
outset of an arrangement should be deferred and recognized as revenue
systemically over the related period of performance. SAB No. 101 requires
registrants to adopt the accounting guidance contained therein by no later than
the first fiscal quarter of the fiscal year beginning after December 15, 1999
(quarter ending September 30, 2000 for us). We believe the adoption of SAB No.
101 will not have an effect on our financial statements.

27
<PAGE>

OUR BUSINESS

LinkShare creates and operates networks that enable businesses to form and
manage online relationships with other businesses by establishing links between
their Web sites. By joining one of our networks, businesses can find a large
variety of potential online business partners in one convenient, central
location. Using our network technology and services, they can establish links
between their respective Web sites and monitor e-commerce activity through
those links. We provide detailed activity reports that our network members can
use to evaluate and optimize the performance of these link-based relationships.

The LinkShare Network(TM) is a performance-based marketing network where
merchants selling goods or services to consumers can establish promotional
links on thousands of independent Web sites that join the network as
"affiliates." When a Web visitor clicks through a link from an affiliate Web
site to a merchant site and takes a prescribed action, the merchant pays the
affiliate, and us, a commission. Examples of the activities that generate these
commissions include the following:

. A retailer selling computers on its Web site pays its affiliate and us a
commission for every sale resulting from a link on the affiliate's site.

. A bank offering credit cards on its Web site pays a fee to its affiliate
and us for every Web user that completes a credit application on the
bank's site after clicking through the link on the affiliate's site.

. An Internet search engine pays a fee to its affiliate and us for every
Web user that clicks through the link on the affiliate's site.

Merchant members of The LinkShare Network(TM) pay us commissions based on
the volume and dollar amount of the transactions generated through the links
with their affiliates. They also pay us initial and recurring licensing fees to
use our software and access our network. In addition, some merchants pay us
fees for optional software features and service packages that we offer.
Affiliate members of the network do not pay anything to us or the merchants to
access our network or use our services. However, we actively recruit and
support affiliates to increase the overall transaction volume over our network,
thereby increasing the commissions we receive from the merchant members of our
network.

We view The LinkShare Network(TM) as a model for additional networks and
applications that we may develop to use the linking and tracking capabilities
of our technology. For example, in March 2000 we launched B2B LinkShare(TM), a
network similar to The LinkShare Network(TM) in terms of features and
functionality, but whose members are focused on business-to-business, rather
than business-to-consumer, commerce.

Industry Background

Growth of Online Commerce

Business use of the Web is growing rapidly as new Web-based businesses and
traditional businesses increasingly use the Internet as a medium to exchange
information and enter into a variety of transactions with customers, suppliers
and distributors. This marketplace consists of businesses selling their
products and services to consumers, commonly referred to as business-to-
consumer commerce, and businesses that use the Web for transactions with other
businesses, commonly referred to as business-to-business commerce. In its
February 2000 report, International Data Corporation predicted that:

. business-to-consumer spending will grow from $58.6 billion in 2000 to
$209.1 billion in 2003; and

. business-to-business spending will grow from $210 billion in 2000 to $1.4
trillion in 2003.

Expansion and Fragmentation of the Internet Marketplace

As e-commerce grows, advertisers and direct marketers increasingly use the
Web to locate customers, advertise and facilitate transactions. To a large
degree, merchants' online marketing efforts are focused on increasing visitors
to their Web sites, which is commonly referred to as Web site "traffic." As a
result of the disaggregated nature of the Web, merchants face significant
challenges in achieving that goal cost-effectively.

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<PAGE>

The proliferation of easy-to-use, low-cost Web publishing tools has led to
the creation of millions of Web sites of widely varying content. International
Data estimates that the number of Web pages grew from 303.4 million in 1997 to
2.2 billion in 1999. Nielson/NetRatings estimates that, as of December 1999,
the top ten major Web sites, such as AOL and Yahoo!, accounted for less than
20% of all page views. As a result, online retailers and Web sites seeking to
convert visitor traffic into revenues need a cost-efficient way to reach the
remaining 80% of page views.

Early Online Marketing

Early Web marketing relied primarily on the posting of merchants' banner ads
on independent Web sites. A banner is a graphical rectangular box posted on a
Web site containing advertising material and a hypertext link that permits a
viewer to move from the Web site displaying the ad to the Web site of the
advertiser by "clicking on" the banner. Advertisers generally pay Web sites
carrying their banner ads fees based on the number of impressions, which is the
number of times the Web page displaying the ad is viewed. These fees are
usually fixed at a cost per-thousand (CPM) impressions.

We believe that traditional banner advertising has proven to be an
inefficient method for converting ad viewers into shoppers and, eventually,
buyers. Only a few content Web sites attract sufficient traffic to generate
significant advertising revenue on a CPM basis, and those few, high-traffic
sites charge increasingly expensive rates for their advertising space. We
believe that the relative ineffectiveness of traditional banner ads results
from the lack of integration and relevance of traditional banner ads within the
content of the Web sites where they are displayed.

Because of the relative ineffectiveness of traditional CPM-based banner
advertising, performance-based marketing methods that tie advertising fees to
tangible results, such as click-throughs, purchases or registrations, represent
the fastest growing segment of the online advertising market. In its August
1999 report, Forrester projects that online advertising spending in the United
States will grow from $2.8 billion in 1999 to $17.2 billion in 2003. Forrester
further projects that performance-based advertising, which includes pay-per-
click, pay-per-lead and pay-per-customer advertising deals, will grow from 15%
of all U.S. online advertising spending in 1999 to over 50% in 2003, creating
significant opportunities for performance-based marketing techniques.

Emergence of Affiliate Marketing

"Affiliate marketing" is a performance-based marketing technique that
emerged in response to the ineffectiveness of early online marketing efforts.
In an affiliate marketing program, a business seeking to attract more traffic
to its Web site to sell goods or services or for other purposes, broadly
referred to as a "merchant," links its Web site to multiple independent Web
sites, usually called "affiliates" of that merchant. These links are embedded
in an affiliate's site and can take the form of a textual mention, banner ad or
other image promoting the merchant or its products. If a visitor to an
affiliate site uses the link to move to the merchant's site and takes a
prescribed action, such as making a purchase or completing a registration form,
the merchant pays a fee to the affiliate. Affiliate marketing enables a
merchant to promote itself across thousands of affiliate Web sites, while only
paying for promotions that actually produce results. Affiliate marketing
enables an affiliate to earn fees by linking its Web site to merchant sites
with products or services likely to be of interest to the affiliate's visitors.

For most merchants, internally implementing this type of program poses
significant challenges. Developing and maintaining the software and systems
that provide sophisticated linking, updating and tracking capabilities are
expensive and require a high degree of technical expertise. Additionally,
merchants must employ and train personnel to manage all aspects of their
programs, including the identification and screening of potential affiliates,
the negotiation of contracts with potential affiliates and the monitoring of
performance. As a result, many merchants seek a cost-effective way to reap the
benefits of an affiliate marketing program without the costs of self-
implementation.

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<PAGE>

We established The LinkShare Network(TM) in 1997 to enable businesses
engaged in the then-emerging business-to-consumer commerce market to quickly
and easily establish affiliate marketing programs without incurring the costs
of self-implementation. As The LinkShare Network(TM) has grown we have
continued to develop our software and systems and enhance our services. We
believe that the open network model on which The LinkShare Network(TM) is
based, and the linking and tracking technology we have developed, can be
applied to other online applications that involve managing multiple
relationships through linked Web sites.

The LinkShare Solution

LinkShare creates and operates open online networks that enable businesses
to quickly and easily initiate and monitor multiple relationships by linking
their Web sites to Web sites of other businesses. Our networks enable our
customers to:

. find appropriate online businesses with which to establish linked-based
relationships;

. negotiate a wide variety of relationships and customize their
compensation arrangements;

. establish links with thousands of Web sites and easily update, remove or
replace those links; and

. monitor the traffic through those links and promptly obtain comprehensive
and detailed reports retrievable from anywhere the Web can be accessed.

Our Network Model

Our open or "public" network model provides a business that joins one of our
networks with immediate access to the existing members of the network with whom
it can form link-based relationships on mutually agreeable terms. As more
businesses join a network, the costs of maintaining that network are spread
over the growing pool of network members, and the growing pool of network
members becomes an increasingly attractive source of potential business
partners to businesses that have not yet joined. We believe our network model
can be applied to virtually any situation in which a business has a need to
manage relationships with multiple Web sites. We currently operate two
networks, The LinkShare Network(TM) and B2B LinkShare(TM). The LinkShare
Network(TM) is an affiliate marketing program for businesses engaged in
business-to-consumer commerce. B2B LinkShare(TM) is a similar program for
businesses engaged in business-to-business commerce. Within The LinkShare
Network(TM), we also operate TrafficShare(TM), an affiliate marketing program
for content sites whose primary goal is increasing traffic to their sites,
rather than making sales.

Technology and Services

Our LinkShare Synergy(R) technology forms the backbone of our networks. It
consists of software and systems that link multiple Web sites, track the
activity through those links and analyze the results of that activity. Our
technology is easy for our clients to implement, produces prompt and
comprehensive tracking and reporting information and is highly scalable and
flexible. For more information about our technology,

see "--Technology Infrastructure" below. We also have a highly trained staff
that provides client support services which enable network members to optimize
the benefits of participation in our networks.

The LinkShare NetworkTM

The LinkShare Network(TM) is the first and, to date, the most significant
application of our open network business model in terms of its size and the
revenues it has generated. It is a network of merchants and affiliates using
affiliate marketing primarily to conduct business-to-consumer e-commerce. A
business joins The LinkShare Network(TM) as a merchant in order to establish
and operate an affiliate marketing program for the purpose of attracting
consumers to its Web site to buy its products or services. A business joins the
network as an affiliate in order to earn commissions by participating in the
affiliate marketing program of one or more of the merchants in the network. The
LinkShare Network(TM) currently has over 500 merchants and hundreds of
thousands of affiliates.

Merchant Membership

To join The LinkShare Network(TM) as a merchant, a business must enter into
a written contract with us. We then establish an interface between the
merchant's electronic commerce site and our Web site.

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<PAGE>

Once this interface is established, the merchant can access our Web site to:

. post the standard terms of participation in its affiliate marketing
program for review and acceptance by businesses applying to be affiliates
in its program;

. post different types of promotional links, such as banner ads or textual
mentions, that affiliates approved by the merchant can cut and paste onto
their own sites to link them to the merchant's site;

. review the Web sites of businesses that have applied to be affiliates of
that merchant and accept those businesses into its program or reject
them;

. communicate directly via e-mail with one or more of the affiliates in its
affiliate marketing program;

. modify the content of its links that are posted on the Web sites of its
affiliates or remove those links from one or more affiliate sites; and

. view and print information on the performance of its affiliate marketing
program, such as the number of click-throughs from each link on each
affiliate's site to the merchant's site, the number of transactions that
have resulted from click-throughs and the commissions owed to each
affiliate.

Affiliate Membership

A business can join The LinkShare Network(TM) as an affiliate in two ways:
it can submit an online application from the public portion of our Web site, or
it can submit an application from the Web site of a merchant member of the
network. To submit the application, the affiliate must agree to abide by the
standard terms and conditions of The LinkShare Network(TM). If the application
is made through a merchant's site, an affiliate must also agree to the terms of
that merchant's affiliate marketing program and be accepted into that program.

Once accepted into the network, each affiliate is given access to a
segregated, password-protected area of our Web site where it can view a list of
merchants that are offering affiliate marketing programs through the network.
The merchants are grouped by categories of interest so that the affiliate can
easily identify merchants selling products or services that may be of interest
to visitors of the affiliate's site. We currently have over 20 categories of
interest, such as Auto, Sports & Fitness, Computer & Electronics, Entertainment
and Travel, with ten or more merchants in each category. Some merchants appear
in more than one category. By clicking on a category, the affiliate can view a
list of merchants in that category and a brief description of what each
merchant sells and the commissions each merchant is offering to pay to
affiliates. By clicking for more information, the affiliate can view each
merchant's standard terms for participation in its affiliate marketing program.
By checking a box and clicking a button, an affiliate can apply to participate
in one, several or all of the listed merchants' affiliate marketing programs.
Each merchant decides whether or not to accept each affiliate into its program.

Once accepted into the affiliate marketing program of one or more merchants,
an affiliate can use our Web site to:

. send e-mails to those merchants in whose affiliate programs it
participates and seek to negotiate compensation arrangements that are
different from the merchant's standard terms;

. select from a variety of promotional links that those merchants have
posted on our site and cut and paste one or more of these links onto its
own site to link to the merchants' sites; and

. view and print information on its performance in each affiliate marketing
program in which it participates, such as the number of visitors that see
each link to each merchant site, the number of click-throughs on each
link, the number of completed transactions that result from each click-
through and the commissions earned from each merchant.

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<PAGE>

LinkShare's Role

We provide in one central location on the Web the tools that enable our
network members to establish and manage their affiliate marketing programs.
Using our software and systems, merchants and affiliates:

. find each other on the Web;

. establish links between their sites;

. monitor the number of visitors that view and click on these links;

. monitor the activity that occurs on the merchant sites and record the
commissions owed to the affiliates; and

. generate reports that enable them to monitor the results of their
participation in The LinkShare Network(TM).

We also provide a form of agreement that a merchant can, but is not obligated
to, use to specify the terms by which affiliates may participate in that
merchant's affiliate marketing program. We are, however, not a party to the
agreements between the merchants and their affiliates, which enables us to
remain neutral when tracking and reporting on network activity. We also provide
templates that merchants can use to create promotional links for affiliates to
cut and paste into their Web sites; however, the merchants supply their own art
work and retain complete editorial control over the content of their links. We
believe that these products and services enable our customers to maximize the
benefits of their participation in our networks.

Benefits to Merchants

Membership in The LinkShare Network(TM) provides merchants with an affiliate
marketing program that we believe reduces the time, cost and effort of
operating their own affiliate marketing programs. Key benefits of The LinkShare
Network(TM) to merchants include:

. Expansive reach of open networks. Merchants can quickly and easily access
and establish cost-effective marketing relationships with the thousands
of eligible affiliates that belong to The LinkShare Network(TM).

. Performance-based compensation. Merchants only pay their affiliates for
carrying a promotional link when that link produces a desired result. Our
technology gives merchants the flexibility to negotiate a variety of
performance-based compensation arrangements with their affiliates,
including percentage-of-sales, CPM, per-form and "hybrid" arrangements
combining any number of different compensation models.

. Low cost and ease of implementation. Merchants can cost-effectively
manage multiple online relationships, reduce infrastructure and personnel
costs and analyze the effectiveness of these relationships with prompt,
reliable and comprehensive information which can be accessed through any
Internet connection.

. Flexibility and choice. Merchants can choose from among the tiers of
service offerings we provide. Our service offerings enable a merchant
member of one of our networks to outsource management of its entire
affiliate marketing program, only certain functions of its program or
none at all.

Benefits to Affiliates

The LinkShare Network(TM) provides a central location where affiliates can
browse the link offers of hundreds of merchants and either form relationships
with a select few or use our technology and services to create on its own Web
site a "virtual storefront" on which it offers the products and services of
many merchants. Key benefits of The LinkShare Network(TM) to affiliates
include:

. Ability to monetize traffic. Affiliates can convert traffic on their Web
sites into revenues, even when that traffic is insufficient to attract
significant advertising on a CPM basis.

. One-stop access to quality merchants. Affiliates can quickly and easily
apply to participate in the affiliate marketing programs of hundreds of
quality merchants at one location using a single registration form,
username and password.

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<PAGE>

. Customized compensation arrangements. Affiliates can communicate directly
with merchants and negotiate individualized compensation arrangements
that differ from the merchants' standard forms.

. Centralized management and tracking. Affiliates can manage their
participation in the affiliate marketing programs of multiple merchants
with prompt, detailed information provided by us and accessible from any
Web connection.

Our Strategy for Future Growth

Our goal is to be the premier provider of open networks that facilitate
online commercial activity. Key elements of our growth strategy include:

. Attracting New Network Participants. We continually seek to attract
additional businesses to our networks. As a network grows, transaction
volume over the network increases, as does the pool of network members
that can benefit from our products and services. As The LinkShare
NetworkTM expands:

. each new merchant that joins the network attracts new affiliates by
its own brand recognition and individual marketing efforts; and

. the growing pool of easy to identify affiliates becomes an
increasingly attractive marketing opportunity for merchants not yet in
the network.

We believe that because of this self-reinforcing cycle, the addition of a
single merchant or affiliate increases exponentially the number of new
business relationships that may be formed on our affiliate networks. We
have teams of employees dedicated to identifying and recruiting new
merchants and affiliates to The LinkShare NetworkTM and to B2B
LinkShareTM. These teams focus on those merchants with widely recognized
brand names and high sales volumes and on those affiliates with the
greatest potential for increasing traffic over our networks.

. Introducing New Affiliate Marketing Networks. We intend to leverage the
value of our open network model by introducing new affiliate networks
catering to identifiable business communities. We may introduce these new
networks for a particular business community, as we did with B2B
LinkShareTM, an affiliate network focused on business-to-business e-
commerce. By making B2B LinkShareTM a separate network, we made it easier
for business-to-business merchants to find the right affiliates without
having to screen out thousands of unrelated consumer-oriented sites.
Alternatively, we may identify members of one of our existing networks
that have particular business needs and introduce specific products or
services to serve these needs. In October 1999, we introduced
TrafficShareTM, an affiliate marketing program for proprietors of
advertising-based sites whose primary goal is to drive traffic to their
sites in order to maintain or increase the rates they charge advertisers.
TrafficShareTM is currently a program available to all merchant members
of The LinkShare NetworkTM, but as the number of businesses using it
increases it may become a separate network.

Because each additional network or program that we create is modeled upon
our existing networks, we can maximize the use of our existing
infrastructure. Our technology and systems are highly scalable and can
accommodate increased transactional volume that results from the
introduction of new networks, products or services.

. Adapting Our Technology and Network Model for New Uses. We believe that
our patented technology and expertise in operating affiliate marketing
networks can be useful in virtually any situation in which businesses
need to create and manage link-based relationships among multiple Web
sites, track activities through those links and receive detailed reports
on the performance of the parties in those relationships. As e-commerce
continues to grow and evolve, we plan to pursue emerging opportunities to
apply our technology and network model for other uses.

. Expanding and Enhancing our Products and Services. We seek to develop new
revenue opportunities by introducing premium software features and
service packages to existing members of our networks for which we can
charge additional fees.

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<PAGE>

. Introducing Our Business Model to International Markets. Just as we can
introduce our network model to additional business communities, we can
also introduce it to additional geographic markets. We intend to identify
suitable international markets for expansion. Our strategy for each
international market we enter may be different, depending on such factors
as language, culture and local conditions. We may, for example:

. directly operate affiliate networks in some markets;

. form joint ventures with local partners; or

. license our technology to a third party to operate in a designated
market.

Products and Services

<TABLE>
<CAPTION>
Name Launch Date Description
---- ------------ -----------
<S> <C> <C>
The LinkShare NetworkTM... July 1997 A network of online businesses
engaging primarily in business-to-
consumer commerce. To date, The
LinkShare Network(TM) has generated
substantially all of our revenues.

TrafficShareTM (currently
part of The LinkShare October 1999 A program offered only to merchant
NetworkTM)............... members of The LinkShare NetworkTM
whose objective is to increase traffic
to their Web sites, such as portals
and large content sites that derive
revenue by selling advertising space
on their sites. To date, this program
has generated minimal revenues for us.

B2B LinkShareTM .......... March 2000 A network of online businesses
engaging primarily in business-to-
business commerce. This network is too
new to have generated significant
revenues for us.
</TABLE>

We provide a "private label" program to merchants that prefer to run their
affiliate marketing program from a segregated Web page that does not give their
affiliates access to the programs of other merchants; however, we believe that
participation in an open network either alone or in conjunction with a private
label program is a superior alternative for most merchants.

Technology

LinkShare Synergy(R). LinkShare Synergy(R) software is the platform on which
we build all of our affiliate networks. We believe LinkShare Synergy(R) is the
most secure, accurate and easy-to-use software available for affiliate
marketing programs. Use of LinkShare Synergy(R) is included in the network
access fees we charge our merchants. Features of LinkShare Synergy(R) include:

Web-Based Technology: . Network participants have immediate access to a
full suite of services from any Internet
connection.

. It requires minimal infrastructure installation
because most of the requisite software resides
on our servers.

. All upgrades occur automatically.

. Merchants can update product displays, promote
seasonal or limited-time-only offers and replace
underperforming links across all affiliate sites
with one-click updates.

. Affiliates with multiple Web sites can track
activity and update links across all sites
through a single interface.

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<PAGE>

Full Suite of Software Tools:
. SmartReports. Network members can monitor the
performance of their relationships online
through detailed and aggregate data and
automated reports that can be delivered by e-
mail on specified days.

. V-Link. Affiliates can include links to a
merchant's site directly in e-mails and send
them to potential customers.

. Grouping. Merchants can segment or group their
affiliate partners and target those segments or
groups with individualized e-mails and special
offers.

. Team Meeting. Merchants can send and receive
mail and distribute newsletters over our
internal e-mail system or to external addresses,
all from one centralized interface.

. E-mail Thank You Notes. Automatic e-mailing
capabilities allow affiliates to send thank you
notes to customers who make purchases on the
sites of merchant partners through the
affiliate's link.

Flexibility: . CustomComp. Merchants can reward or compensate
different partners in different ways, such as
percentage of sale, CPMs, click-throughs,
completed forms, flat fees, return days, monthly
minimums or any combination of models.

. OpenServe Technology. Merchants can work with
any ad-serving technology a merchant chooses,
including LinkShare's, through a simple drop-
down menu in the interface.

LinkShare Synergy Expert. We offer the LinkShare Synergy Expert software to
our merchant members for a fixed monthly fee. This optional software package
offers an expanded set of tools and features including:

. SmartTarget. Merchants can recruit particular affiliates by sending
targeted e-mails to affiliates within the network based on almost any
criteria, such as site type, geographical region and key word.

. Affiliate Content Spider. A "control spider" software feature patrols
affiliate sites automatically, according to a merchant's instructions, to
detect the use of prohibited words, such as a competitor's name or
offensive language, or to notify the merchant if an affiliate frames the
merchant's site without permission.

Services and Support

We work closely with the members of our networks to help them optimize the
value of their affiliate marketing programs. Our members can contact us with
their questions and problems via toll-free telephone number, e-mail and live
online chat sessions. When new merchants join our networks, we provide them
with four hours of free technical support and software training. Additional
support or training is available at hourly rates to merchants that do not
subscribe to one of our optional support packages described below. We also
provide other back-office services, such as e-mail generation and distribution,
check disbursement and 1099 form distribution, for which we charge fees on a
per-message, per-check or per-form basis.

Merchant members may subscribe to one of our tiered customer service
packages:

. AE Support. AE Support is designed to help merchants generate better
response rates by providing analyses of their affiliate marketing
programs and trends in marketing over the Web. Each merchant that
subscribes to AE Support is assigned a dedicated account executive to
assist with initial launch and marketing strategy and participate in
weekly discussions and six-month formal reviews of the merchant's overall
program. We provide AE Support free of charge to merchants who generate
specified transaction volumes over our network, and for a fixed monthly
fee in the case of merchants that do not achieve the monthly minimum.

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<PAGE>

. Client Services. Our Client Services package provides subscribing
merchants with more comprehensive and in-depth services designed to
optimize the results of their affiliate marketing programs. This service
package includes assistance with Web affiliate acquisition and approval,
affiliate relationship development and management, product merchandising,
cooperative advertising purchases and back-office services. Our Client
Services package, when combined with our affiliate payment and other
back-office service options, permits a merchant to outsource to us
responsibility for managing virtually all aspects of its affiliate
marketing program. We typically charge a fixed monthly fee for this
package and require a subscription for a minimum number of months.

We also provide services tailored to meet the needs of our affiliate
members:

. Signature Affiliates. Some of our network affiliates operate loyalty-
building programs that permit visitors who make a purchase from the
merchants with whom the affiliates have links to receive personal rewards
or credits based on the amount of the purchase. Other affiliates make
charitable contributions based on visitor purchases from linked
merchants. Our technology permits us to track transactions through the
links those affiliates have with our merchants down to the level of
individual transactions, so that the appropriate amounts can be credited
to visitors or contributed to the sponsored charity.

. Best Practices. We continually consult with our affiliates to learn the
best ways to make our networks work better for them. We organize online
chat and person-to-person conferences among network participants, and we
recently completed a comprehensive review of the affiliates in The
LinkShare NetworkTM that generate high levels of sales or other
compensated activities for their merchant partners to identify factors
that contribute to their success. We are implementing programs that will
permit other affiliates to institute the best practices we have
identified as a result of that review.

Customers

Our customers include:

. businesses selling products and services to consumers and businesses over
the Web;

. portals and major content sites seeking to generate advertising revenue;
and

. Web site publishers that form marketing relationships with these
businesses.

Merchants in our networks include companies with high brand recognition and
significant sales volumes both on and off the Web, as well as medium-sized and
some small merchants. We devote particular attention to recruiting large online
merchants or merchants that are recognized leaders in their industries. Our
goal is to offer members of our networks a selection of potential online
businesses that includes a variety of companies within each major product or
service category. Currently, the vast majority of our customers are the
merchant members of The LinkShare NetworkTM and their affiliates who are
engaged primarily in business-to-consumer e-commerce. The table below lists
some of the merchant members of The LinkShare NetworkTM, all of whom have
signed written contracts for our services. We have not received significant
revenues from every one of these merchants, and no single merchant has
accounted for more than 5% of our revenues, during the period July 1, 1999 (the
beginning of our current fiscal year) through March 31, 2000.

<TABLE>
<S> <C> <C>
BlueLight.com (Kmart's online
store) ibeauty.com priceline.com
Borders.com JCPenney Petopia.com
CVS.com L.L. Bean SharperImage.com
Dell Lands' End Sony Music Direct
flooz.com OfficeMax.com Toysrus.com
FragranceNet.com OmahaSteaks.com Verio
FreeShop.com OurHouse.com WeddingChannel.com
FTD.com Outpost.com Wine.com
Hallmark
</TABLE>

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<PAGE>

Typically, merchants in our networks enter into written agreements with us
for terms of up to three years that renew automatically for successive terms of
up to two years, unless either party gives notice not to extend. We generally
provide limited warranties concerning our system performance and protection for
our customers from infringement claims. Participating merchants agree to
exclusively use our networks and technology for affiliate marketing programs.

Participating affiliates in our networks can discontinue their participation
at anytime. They agree to abide by standard terms of network membership by
completing an online agreement when they register with us, either at our Web
site or at the affiliate recruitment page of the Web site of one of our
merchant members.

Sales and Marketing

Client Development

Our merchant development teams, located in New York City, San Francisco,
Chicago and Irvine, California, actively identify and recruit new merchants
into our networks. Our Client Services team, located in Denver, and our account
executives, located primarily in New York City, support our merchant
development teams to market our tiered customer support offerings.

We also have an affiliate development team, located in New York City, that
actively identifies and recruits new affiliates. All affiliate members of our
networks are affiliates of LinkShare, and we pay them commissions if they
recruit qualified new affiliates into one of our networks.

LinkShare Symposia

We sponsor periodic LinkShare Symposia in various locations in the United
States and abroad to which we invite a broad spectrum of the e-commerce
community as well as merchant and affiliate members of our networks. Prominent
industry figures speak on topics of general interest, and we organize closed
sessions at which our merchants and affiliates get special training and
information that will help them optimize their use of our products and services
and share the best practices that have been developed by the most successful
members of our networks. These symposia enable us to market our business to
potential clients and to strengthen our relationships with the members of our
networks. Attendance has continued to increase since our first Symposium, with
over 600 people attending our February 2000 Symposium in San Francisco.

Advertising and Promotion

We also market our networks and build awareness of the LinkShare brand
through advertisements within trade and other publications, trade show
participation and other media events and promotional activities.

Technology Infrastructure

Our Software and Patented Processes

We have built scalable user interfaces and processing systems that are based
on internally-developed proprietary LinkShare Synergy(R) software. Our products
are Web-based, and there is only a small amount of software for our merchants
to install. The bulk of our software resides on our own servers, which
minimizes both the amount of work and hardware needed by merchants and Web
affiliates to use our products and reduces the risk of theft or other
unauthorized copying of our software. To create links on their Web sites, Web
affiliates log in to our systems and then simply "cut and paste" the necessary
code into their Web sites. We work with our members to ensure that they
successfully integrate our technology, and we perform tests to guarantee that
the tracking mechanism is accurate and timely.

In December 1999, LinkShare was granted U.S. Patent No. 5,991,740 covering
"Data Processing System for Integrated Tracking and Management of Commerce
Related Activities on a Public Access Network." The patent is directed to the
system supporting our affiliate program. It claims a computer system linked to
an array of network-based businesses so that commerce generated by these
businesses may be properly tracked and

37
<PAGE>

quantified for reporting purposes. The patent covers an enhanced programming
capability for creating network-based promotional arrangements and accurately
tracking commerce governed by these promotional arrangements in a non-intrusive
manner. While patents issued by the United States Patent & Trademark office
enjoy a presumption of validity, we cannot assure you that our patent is valid.

Our Computer Systems

Our computer systems handle all aspects of our networks, including:

. the maintenance of our Web site;

. the formation of links;

. the collection of new member registration information; and

. the collection and processing of transaction data needed to furnish
reports to merchants and affiliates.

Our computer systems are built around industry standard architectures and are
designed to reduce downtime in the event of outages or catastrophic
occurrences. Over the past year, our systems have experienced minimal unplanned
downtime. The servers for our networks provide 24 hour a day, seven day a week
availability, subject to short maintenance periods. During maintenance of our
administrative systems, our members are not able to run reports and perform
other administrative functions, but all e-commerce activity continues to
function normally. We are currently developing the ability to perform routine
maintenance on our administrative systems without disrupting our members'
access to administrative functions. We expect to have this ability before the
third quarter of 2000.

Scalability, Availability and Reliability

Our system infrastructure has been engineered to provide maximum reliability
and availability. We have divided our systems into two groups to make each
group operate at the highest level of availability and to provide the
infrastructure with scalability. The first group, which we refer to as the
"front-end," is responsible for tracking and all related functions that link
merchants with their affiliates. The second group, which we refer to as the
"back-end," is responsible for all administrative tasks, including participant
registrations, reporting and merchant and affiliate program maintenance.

The front-end systems consist of multiple Intel-based computers running the
Linux operating system. These systems are controlled by redundant geographical
load balancing hardware, and are designed to handle excess loads placed on
them. Since the front-end is designed to function independently of the back-
end, any disruptions to the back-end will have no effect on the front-end.

The back-end systems run on a combination of Sun Solaris-based systems and
Intel-based multi-processor systems running the Linux operating system. Our
systems allow for quick growth and scalability by enabling us to easily add
additional servers on the back-end for reporting and other administrative
purposes. Since our software is based on industry standards, we are able to
take advantage of new advances in hardware and software in a timely and
efficient manner. We are currently replicating our back-end data over multiple
machines located in geographically dispersed data centers to provide a greater
degree of redundancy in the event of disaster and to distribute the workload
across multiple systems and improve network performance.

Our system hardware is hosted at the Exodus Communications facility in
Harborside, New Jersey. We also maintain servers at hosting facilities in
Weehawken, New Jersey, New York City, New York, Santa Clara, California and
London, England. Our use of two providers of hosting facilities and the
dispersion of our servers over multiple sites in different regions is intended
to provide redundancy in the event of a natural disaster or other event
affecting any one facility or region. Our hosting facility providers are
contractually obligated to maintain redundant high-capacity Internet
connections, communications lines, emergency power backup, climate-control,
fire protection, seismic reinforcement and continuous security surveillance.

We regularly test and maintain the multiple connections between our servers,
and regularly test the connections between our network data centers and the
Internet. Our engineering and hosting center personnel monitor traffic patterns
and congestion points and reroute traffic flows to reduce end-user response
times.

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<PAGE>

Competition

The market for affiliate marketing programs, which at present is our only
line of business, is new, rapidly evolving and highly competitive. We compete
against companies of all sizes with respect to the products and services we
provide, and we expect to face increased competition from some of these
companies as they broaden the scope of their products and services.

We compete primarily with software/service providers, such as Be Free, Inc.,
that offer merchants software and services to operate their own private label
sales affiliate programs. These programs can serve as an alternative to the
sales affiliate programs conducted over our networks. Private label providers,
such as Be Free, aggressively market their programs to many of the online
merchants that we may target. We believe that our network model offers
advantages to private label programs, in that merchant members of a network
gain immediate access to all of the network's existing affiliates and do not
have to spend time or resources recruiting an initial affiliate base.
Similarly, affiliate members of a public network can offer to establish
marketing relationships with all of the merchant members and can manage those
multiple relationships in one centralized location. We offer a private label
program; however, we have not generated significant revenues from that program.

We also compete, to a lesser extent, with other providers operating forms of
open networks, such as Commission Junction. We believe that Commission Junction
provides its affiliate marketing programs primarily to smaller and midsize
merchants rather than large online merchants with significant sales volumes and
high brand recognition.

We may also compete with companies that provide banner ad services, which
may be considered an alternative marketing technique. However, participants in
our networks are able to use any ad serving technology they choose.

We believe that the principal competitive factors in the market for our
services include:

. the ease of use of the system;

. the flexibility and scalability of the marketing program;

. technological features; and

. the quality, comprehensiveness and value of available services.

We believe that we compare favorably to our competitors on the basis of each of
these factors due to the combination of our open network business model, the
features and ease of use of our LinkShare Synergy(TM) software and our quality
customer service. In addition, we compete by:

. emphasizing the benefits of using an open network model over a
software/service model or private label program;

. providing our network members with state-of-the-art technology, such as
our individualized customer service;

. providing increasingly comprehensive, cost-effective and easily managed
solutions; and

. requiring our merchant members to use LinkShare as their exclusive
provider for affiliate marketing programs by including the terms of that
exclusivity in each of our contracts with our merchant members.

Employees

At March 31, 2000, we had a total of 161 full-time employees, including 12
in product development, 37 in sales and marketing, 22 in research and
development and 60 in customer and technical support, affiliate development and
client services. None of our employees are unionized. From time to time, we
also employ independent contractors to supplement our development staff. We
believe our relations with our employees are good.

39
<PAGE>

Facilities

Our headquarters are located in 15,000 square feet of office space that we
occupy in New York City under a lease expiring in December 2000. Some of our
personnel are based in 2,370 square feet of separate office space in New York
City that we use under a lease expiring in August 2001. Under a lease expiring
in September 2003, we rent 5,800 square feet of office space in San Francisco,
where we base regional sales and marketing staff. Our Client Services program
is managed from our Denver office, which occupies 5,458 square feet of space
under a lease expiring in December 2000. Our sales personnel based in Irvine,
California occupy office suites, under a contract expiring in September 2000.
We also have sales personnel based in Chicago who work in home office space. In
the future, we may lease additional space as needed.

Legal Proceedings

From time to time, we may be involved in litigation incidental to the
conduct of our business. We are not currently a party to any legal proceedings.

40
<PAGE>

MANAGEMENT

Executive Officers, Key Employees and Directors

The following table sets forth our executive officers, key employees and
directors, their ages and the positions they held at March 31, 2000, except in
the case of Messrs. Gilligan and Pompadur, who have agreed to join our board of
directors effective upon the closing of this offering:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Stephen D. Messer............ 28 Chairman of the Board, Chief Executive Officer and Director
Heidi S. Messer.............. 30 President, Secretary and Director
Bowers W. Espy............... 49 Senior Vice President, Chief Financial Officer and Treasurer
Jianhao Meng................. 31 Senior Vice President and Chief Technology Officer
Richard S. Okin.............. 42 Vice President and Chief Information Officer
Joseph E. Young.............. 51 Executive Vice President, Business and Legal Affairs
Pamela A. Codispoti.......... 34 Senior Vice President, Marketing and Communications
Cheryl C. Ho................. 28 Senior Vice President, Product Development
Bruce R. Gilburne............ 38 Vice President, Sales
Catherine L. McCall.......... 42 Vice President, Client Services
Wendy N. Salomon............. 32 Vice President, Marketing
Douglas A. Alexander......... 38 Director
Edward P. Gilligan........... 40 Director
I. Martin Pompadur........... 64 Director
</TABLE>

Stephen D. Messer co-founded LinkShare and has been a director since our
inception. He was our Chief Executive Officer from inception until April 1999
and resumed that position in July 1999. Prior to founding LinkShare, Mr. Messer
was the Assistant Director of the Columbia University Institute of Tele-
Information from May 1996 to May 1997. He continues to serve as an Affiliated
Research Fellow at the Institute. Mr. Messer holds a J.D. from the Benjamin
Cardozo School of Law at Yeshiva University in New York and a B.A. degree from
Lafayette University in Pennsylvania. He is the brother of Heidi S. Messer.

Heidi S. Messer co-founded LinkShare and has been a director and our
President since our inception. From October 1995 to May 1997, Ms. Messer was
associated with the law firm of Baker Botts L.L.P. Ms. Messer holds a J.D. from
Harvard Law School and a B.A. from Brown University. Ms. Messer has served on
the board of shop.org, a trade association focused on Internet retailing, since
February 1999. She is the sister of Stephen D. Messer.

Bowers W. Espy has served as a Senior Vice President and our Chief Financial
Officer and Treasurer since January 2000. From 1983 to 1995, Mr. Espy served in
various senior management positions at Merrill Lynch & Co., including Managing
Director--Investment Banking, Co-head Depository Institutions--Mergers and
Acquisitions. Prior to joining Merrill Lynch, from 1981 to 1983, he served as
Deputy Director for Financial Analysis and Policy Research for the Federal Home
Loan Bank Board in Washington, D.C. After departing Merrill Lynch in 1995 and
until joining LinkShare, Mr. Espy was primarily retired, but served as a
consultant for an Internet-related company. Mr. Espy holds a M.A. in Economics
and a B.S. in Business Administration from the University of Florida.

Jianhao Meng co-founded LinkShare and has been our Chief Technology Officer
since our inception. He became a Senior Vice President of LinkShare in January
2000. Mr. Meng was a graduate research assistant at the Center for
Telecommunications Research at Columbia University from 1993 to August 1998.
Previously, Mr. Meng worked as a programmer at Ernst & Young, LLP from 1992 to
1994 and a system engineer at Computers & Communications, Inc. from 1990 to
1992. Mr. Meng holds an M.S. in Electrical Engineering from Columbia
University. He is currently pursuing his Ph.D. in Electrical Engineering from
Columbia University.

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<PAGE>

Richard S. Okin has been our Chief Information Officer since February 1999.
He became one of our Vice Presidents in January 2000. From January 1993 to
February 1999, Mr. Okin was with TIR Securities, first as a consultant and then
as Director of Software Development. Mr. Okin holds an A.B. from Vassar College
and has completed graduate work at Sloan Kettering Memorial Cancer Center in
the field of Biochemistry.

Joseph E. Young has served as our Executive Vice President, Business and
Legal Affairs since September 1999. Prior to joining LinkShare, Mr. Young was
Of Counsel to the law firm of Baker Botts L.L.P from January 1995 to September
1999. Mr. Young spent over 14 years in private legal practice with a number of
law firms, specializing in corporate and securities transactions. Mr. Young
holds a J.D. from Harvard Law School and a B.A. from the University of
Illinois.

Pamela A. Codispoti has been our Senior Vice President, Marketing and
Communications since January 2000. Prior to joining LinkShare, from 1993 until
joining LinkShare, Ms. Codispoti worked for American Express Company, where she
started as Senior Manager of the Strategic Planning Group and rose to
Vice President of Marketing for the Corporate Services Division. Ms. Codispoti
holds an M.B.A. from the Harvard Graduate School of Business Administration and
a B.A. in Math and Social Science from Dartmouth College.

Cheryl C. Ho co-founded LinkShare and has been with us since our inception.
She was our Vice President of Marketing and Product Development from May 1997
until she assumed the office of Vice President, Product Development, in
December 1998. She was promoted to Senior Vice President, Product Development
in January 2000. Prior to joining LinkShare, Ms. Ho worked as a research
assistant at the Columbia Institute for Tele-Information from September 1996 to
May 1997. Ms. Ho, a licensed CPA, worked as an Audit Associate (Information
Communications) for Coopers & Lybrand, L.L.P. from January 1994 to April 1996.
Ms. Ho holds an M.B.A., with a concentration in Marketing and Management of
Information and Communications, from the Columbia University School of
Business, and a B.S. from New York University's Leonard N. Stern School of
Business with majors in Accounting and International Business.

Bruce R. Gilburne has been our Vice President, Sales since July 1999. From
August 1998 until being promoted to Vice President of Sales, Mr. Gilburne was a
Sales Director for LinkShare. Prior to joining LinkShare, Mr. Gilburne was a
senior sales executive at USN Communications, a large re-seller of telecom
services, from May 1998 to August 1998. From August 1996 until May 1998, Mr.
Gilburne was East Coast Sales Director with Northwest Molded Products. He
served as a Sales Manager for Gary Plastics Packaging from March 1994 to August
1996. Mr. Gilburne holds a B.S. in Economics, Finance and Business
Administration from the University of Hartford.

Catherine L. McCall has been our Vice President, Client Services since
August 1999. From December 1998 to August 1999, she was an Internet Marketing
Consultant, providing services to clients that included U.S. West, Guild.com,
Promark and Prima Capital. From March 1996 through December 1998, she was
responsible for marketing and investor relations with Online System Services, a
Denver-based broadband services, e-commerce and portal software company. From
January 1995 to March 1996, Ms. McCall was a Marketing Consultant to OnPoint
Technologies, an Internet software company. Prior to January 1995, she held a
variety of senior marketing, sales and product development positions at
Standard & Poor's Compustat. Ms. McCall is the co-author of The Complete
Idiot's Guide to Online Marketing, published by Macmillan in 1999. Ms. McCall
holds an M.B.A. from Keller Graduate School of Management and a B.A. from The
Colorado College.

Wendy N. Salomon has served as our Vice President, Marketing since April
1999. From September 1998 until being promoted to Vice President, Marketing,
Ms. Salomon served as our Director, Brand Development. From July 1997 to July
1998, Ms. Salomon was Manager of Marketing for MTV Consumer Products at MTV:
Music Television. From August 1991 to May 1994, Ms. Salomon worked in Account
Management at Tatham EURO RSCG, a Chicago advertising agency. She was an
Assistant Account Executive on Procter & Gamble brands from August 1991 to
September 1992, when she was promoted to Account Executive for Ameritech
Consumer Services. Ms. Salomon holds an M.B.A. from the Stanford University
Graduate School of Business and a B.A. in History of Art and Architecture from
Brown University.

42
<PAGE>

Douglas A. Alexander has served as a director since July 1998. Mr. Alexander
is a Managing Director of Internet Capital Group, Inc. Prior to joining
Internet Capital Group, Mr. Alexander co-founded Reality Online, Inc. in 1986
and later sold it to Reuters Group in 1994. Mr. Alexander continued to serve as
President and Chief Executive Officer of Reality Online after its acquisition
by Reuters Group until September 1997. Mr. Alexander is Chairman of the Board
of VerticalNet, Inc. and serves as a director of Arbinet Communications, Inc.,
Blackboard Inc., ComputerJobs.com, Inc., Deja.com, Inc., eMerge Interactive,
Inc., SageMaker, Inc., StarCite, Inc. and traffic.com, Inc.

Edward P. Gilligan has agreed to join our board of directors upon the
closing of this offering. Mr. Gilligan has served as President, Corporate
Services for American Express Travel Related Services, since February 1996.
From June 1995 to February 1996, Mr. Gilligan served as Executive Vice
President of Travel Management Services for American Express Travel Related
Services. Initially joining American Express in 1980, Mr. Gilligan has since
held a number of key positions with that organization. Mr. Gilligan serves on
the boards of American Express Incentive Solutions and Concur Technologies,
Inc.

I. Martin Pompadur has agreed to join our board of directors upon the
closing of this offering. Mr. Pompadur has served as Chairman of News Corp.
Europe since January 2000. Since June 1998, he has served as Executive Vice
President of News Corp., President of News Corp. Eastern and Central Europe and
a member of News Corp.'s Executive Management Committee. Since 1983, Mr.
Pompadur has served as Chairman and Chief Executive Officer of RP Companies'
various private and public limited partnerships, which operate television and
radio stations and cable television systems. Mr. Pompadur serves on the boards
of BSkyB, Fox Kids Europe, Stream, Metromedia International Group, Inc.,
StoryFirst Communications and Big Star Entertainment.

Classes of the Board

Upon the closing of this offering, the board of directors will be divided
into three classes that serve staggered three-year terms as follows:

<TABLE>
<CAPTION>
Class Expiration Member
----- ---------- ------
<S> <C> <C>
Class I 2001 Edward P. Gilligan and I. Martin Pompadur

Class II 2002 Douglas A. Alexander

Class III 2003 Heidi S. Messer and Stephen D. Messer
</TABLE>

Board Committees

Compensation Committee

The compensation committee of our board of directors reviews and makes
recommendations to the board regarding all forms of compensation provided to
the executive officers and directors of LinkShare. In addition, the
compensation committee reviews and makes recommendations on bonus and stock
compensation arrangements for all of our employees. The compensation committee
also administers our stock option plan. Since July 1998, the compensation
committee has consisted of Heidi S. Messer and Douglas A. Alexander. Effective
upon the closing of this offering, the members of the compensation committee
will consist of Ms. Messer and Edward P. Gilligan.

Audit Committee

The audit committee of our board of directors reviews and monitors the
corporate financial reporting and the internal and external audits of
LinkShare. The committee's functions include:

. recommending annually to our board of directors the appointment of our
independent auditors;

. discussing and reviewing in advance the scope and the fees of our annual
audit and reviewing the results of our audits with our independent
auditors;

43
<PAGE>

. reviewing and approving non-audit services of our independent auditors;

. reviewing compliance with our existing major accounting and financial
reporting policies;

. reviewing the adequacy of major accounting and financial reporting
policies; and

. reviewing our management's procedures and policies relating to the
adequacy of our internal accounting controls and compliance with
applicable laws relating to accounting practices.

After the closing of this offering, the committee's functions will also
include:

. reviewing compliance with applicable Securities and Exchange Commission
and Nasdaq rules regarding audit committees; and

. preparing a report for our annual proxy statement.

Effective upon the closing of this offering, the members of the audit committee
will consist of Douglas A. Alexander, Edward P. Gilligan and I. Martin
Pompadur, each of whom will be an independent director as defined under the
rules of the National Association of Securities Dealers, Inc.

Director Compensation

Our directors currently do not receive cash compensation for their service
as directors. We do reimburse them for expenses they incur in attending
meetings of the board and board committees. Non-employee directors are eligible
to receive options to purchase common stock awarded under our stock option
plan. See "--Stock Option Information--LinkShare Corporation Long-Term
Incentive Plan." Upon the closing of this offering, we will grant to each of
Edward P. Gilligan and I. Martin Pompadur, each of whom will be an independent
director as defined under the rules of the National Association of Securities
Dealers, options to purchase 87,500 shares of our common stock at the initial
public offering price of our common stock. We will grant these options under
our stock option plan. These options will vest over three years.

Compensation Committee Interlocks and Insider Participation

The compensation committee consists of Heidi S. Messer and Douglas A.
Alexander. Effective upon the closing of this offering, the compensation
committee will consist of Ms. Messer and Edward P. Gilligan. No interlocking
relationship exists between the board of directors or compensation committee
and the board of directors or compensation committee of any other company, nor
has any such interlocking relationship existed in the past.

Employment Agreements

On July 16, 1998, we entered into a two-year employment agreement with each
of Stephen D. Messer and Heidi S. Messer that provides for an annual base
salary and an annual merit bonus that may be granted at the discretion of the
board of directors. Our agreements with each of Mr. Messer and Ms. Messer
provides for a base salary of $80,000. Each agreement provides for payment to
the officer of accrued and unpaid compensation plus a lump sum equal to six
months salary if the officer's employment is terminated by LinkShare without
"cause" or by the officer with "good cause," as each term is defined in the
applicable agreement.

On January 31, 2000, our board of directors adopted a resolution increasing
Mr. Messer's annual base salary to $180,000 and Ms. Messer's annual base salary
to $150,000, in each case effective only upon the closing of this offering.

Change of Control Arrangements

Shares subject to options or restricted stock awards granted under our stock
option plan generally vest over four years, with 25% of the shares vesting
after one year and the remaining shares vesting in equal monthly installments
over the next 36 months.

44
<PAGE>

We have issued options to certain of our officers and employees that provide
for accelerated vesting of those shares or options upon a change in control or
upon the termination of employment without "cause" or for "good reason" as
defined in the agreement under which those shares or options were issued. In
general terms, change of control would occur where any person acquires
ownership of more than 50% of our voting shares or upon any merger or
acquisition where our stockholders before the transaction hold less than a
majority of the voting stock of the surviving entity outstanding after the
transaction.

Executive Compensation

The following table sets forth information for the fiscal year ended June
30, 1999, concerning compensation we paid to our Chief Executive Officer. No
other executive officer received compensation in excess of $100,000 in the
fiscal year ended June 30, 1999. Our Chief Executive Officer holds no options
to purchase our common stock.

Summary Compensation Table

Annual Compensation

<TABLE>
<CAPTION>
Fiscal Other Annual
Name and Principal Position Year Salary Bonus Compensation Options
--------------------------- ------ ------- ----- ------------ -------
<S> <C> <C> <C> <C> <C>
Stephen D. Messer(1)
Chief Executive Officer.......... 1999 $80,000 -- -- --
</TABLE>
- --------

(1) Mr. Messer's annual salary during calendar year 2000 will increase to
$180,000 upon the closing of this offering.

Stock Option Information

LinkShare Corporation Long-Term Incentive Plan

Our board of directors has adopted, and the stockholders have approved, the
LinkShare Corporation Long-Term Incentive Plan in order to provide grants of
options, stock appreciation rights, restricted stock and cash bonuses to our
employees, directors and consultants. The plan authorizes the issuance of a
maximum of 9,018,090 shares of common stock. As of April 14, 2000, options to
purchase 5,900,940 shares had been issued under the plan.

The compensation committee, which is designated by our board of directors,
administers the plan. This committee has the power to:

. interpret the plan and adopt any rules, regulations and guidelines for
carrying out the plan that the committee feels are proper;

. correct any defect or supply any omission or reconcile any inconsistency
in the plan or related documents;

. determine the form and terms of the awards made under the plan, including
persons eligible to receive the awards, whether awards have been earned
and the number of shares or other consideration subject to awards;

. provide that option exercises may be paid in cash, common stock, a
portion of any award or a combination thereof; and

. make awards under the plan, subject to approval by our board of directors
if the number of shares exceeds any pre-approved limit established by the
board or the exercise price is below any pre-approved amount set by the
board.

45
<PAGE>

The compensation committee may delegate to one or more of our senior
officers some or all of its authority under the plan. However, the committee
may not delegate its authority to grant awards under the plan or take other
action with respect to our officers who are subject to Section 16 of the
Securities Exchange Act of 1934.

Options. Stock options entitle the holder to purchase a specified number of
shares of our common stock at a specified exercise price, subject to the other
terms and conditions in the option grant. Under present law, however, incentive
stock options and options intended to qualify as performance-based compensation
under Section 162(m) of the tax code may not be granted at an exercise price
less than the fair market value of the common stock on the date of grant (or
less than 110% of the fair market value in the case of incentive stock options
granted to optionees holding more than 10% of the voting power of LinkShare).
Also, incentive stock options may not be granted under the plan after July 16,
2008.

Stock Appreciation Rights. Stock appreciation rights entitle the recipient
to receive a payment in cash or in stock equal to the excess of the value of
the stock on the day the right is exercised over the price specified in the
grant.

Stock Award. A stock award may be based on fair market value or other
valuations set by our board of directors or by the committee within any limits
established by the board and the exercise of the award may be subject to
conditions set forth in the award agreement, such as:

. continuous service;

. achievement of specific business objectives;

. attaining certain growth rates; or

. other requirements established by the committee.

Cash Award. An award may be granted in cash with the amount of future
payment subject to requirements and goals set by the committee.

Awards Generally. The awards described above may be granted singly, in
combination or in tandem. However, no participant may be granted stock options
or stock appreciation rights exercisable for more than 25% of the shares of
stock authorized under the plan.

Non-Transferability of Awards. Awards granted under the plan are generally
not transferable by the participant. Each award is exercisable during the
lifetime of the participant only by the participant, and any elections
regarding the awards may be made only by the participant. Except with respect
to incentive stock options, the committee may allow a participant to transfer
an award to certain parties specified by the committee.

Amendment and Termination of the Plan. Our board of directors may at any
time terminate or amend the plan or any related document, except that our board
of directors may not make any amendments that would impair the rights of any
participant under any award previously granted to the participant or that would
require stockholder approval without obtaining it.

46
<PAGE>

Option Grants

We did not grant options during fiscal year 1999 to our Chief Executive
Officer or any executive officer whose compensation exceeded $100,000 during
that fiscal year. The following table sets forth the names and titles of the
executive officers who we expect will receive compensation in excess of
$100,000 for the year ended December 31, 2000, and the number of options to
purchase shares of our common stock that were granted to these officers through
March 31, 2000:

<TABLE>
<CAPTION>
Number of
Name Title Options Granted
---- ----- ---------------
<C> <S> <C>
Stephen D. Messer Chairman of the Board and Chief 0
Executive Officer
Heidi S. Messer President and Secretary 0
Bowers W. Espy Senior Vice President, Chief Financial 522,605
Officer and Treasurer
Jianhao Meng Senior Vice President and Chief 0
Technology Officer
Joseph E. Young Executive Vice President, Business and 700,000
Legal Affairs
Pamela A. Codispoti Senior Vice President, Marketing and 402,500
Communications
Cheryl C. Ho Senior Vice President, Product 700,000
Development
</TABLE>

No holder exercised his or her options to purchase any shares of our common
stock during fiscal year 1999.

47
<PAGE>

CERTAIN TRANSACTIONS

Founder Stock Acquisitions

Stephen D. Messer and Heidi S. Messer, two of our directors and executive
officers, and Cheryl C. Ho and Jianhao Meng, two of our executive officers,
were all involved in our founding and organization and may be considered our
promoters. At the time of LinkShare's incorporation in July 1997, Mr. Messer,
Ms. Messer and Mr. Meng acquired 7,000,000, 5,600,000 and 1,400,000 shares,
respectively, of LinkShare's common stock for nominal cash consideration. Under
our stock option plan, in July 1998, we issued to Ms. Ho an option to purchase
238,298 shares of common stock at $0.04 per share. Effective in April 1999, Ms.
Ho was granted an additional option under our stock option plan for 461,702
shares of common stock with an exercise price of $0.35 per share.

Upon the closing of this offering, we expect to sell to Mr. Meng pursuant to
our stock option plan, 269,000 restricted shares of our common stock at a per
share price equal to 80% of the per share initial public offering price. Based
upon an assumed initial public offering price of $11.00 per share, Mr. Meng
would pay for the restricted stock by delivering to LinkShare a non-recourse
promissory note in the principal amount of $2,367,200. The note will be due on
the third anniversary of the date it is issued and accrue interest at the rate
of 7% per annum. On each of the first three anniversaries of the issue date,
89,667 of these restricted shares will vest. If Mr. Meng's employment by
LinkShare terminates prior to the third anniversary of the issue date, he will
forfeit all unvested shares and the portion of his note allocable to the
forfeited shares will be cancelled. If, however, his employment is terminated
by LinkShare without cause, by Mr. Meng for good reason or after a change of
control or because of Mr. Meng's death or disability, then vesting of the
shares will be accelerated.

Internet Capital Group and Comcast Equity Investments

Internet Capital Group, LLC and Comcast Internet Investments I, Inc. were
our first institutional investors. In July 1998, we issued and sold 2,431,611
shares of our Series A Preferred Stock to Internet Capital Group at a purchase
price of $1.23 per share for an aggregate purchase price of $3 million. In
February 1999, those shares were acquired by Internet Capital Group, Inc. as a
result of a reorganization merger with Internet Capital Group, LLC. Douglas A.
Alexander, one of our directors, is a managing director of Internet Capital
Group, Inc. In August 1998, we issued and sold 810,537 shares of our Series A
Preferred Stock at a purchase price of $1.23 per share for an aggregate
purchase price of $1 million to Comcast Internet Investments I, Inc., a wholly-
owned subsidiary of Comcast Corporation. In November 1999, those shares were
acquired by Comcast Interactive Capital, LP, which is controlled by Comcast
Corporation. In February 2000, Comcast Interactive Capital, LP sold 400,000
shares of our Series A Preferred Stock to Internet Capital Group, Inc. for
$50.00 per share. Together, Internet Capital Group and Comcast Interactive
Capital will own approximately 38% of our outstanding common stock following
the closing of this offering.

Immediately prior to the closing of our initial public offering, each share
of our Series A Preferred Stock will convert into 3.5 shares of our common
stock.

Registration Rights

All of our existing stockholders have demand and "piggyback" registration
rights with respect to their shares of common stock. For further information,
please see the section of this prospectus titled "Description of Capital
Stock--Registration Rights."

Bridge Financings

On August 23, 1999, and November 18, 1999, we sold an aggregate $2.5 million
principal amount of convertible promissory notes to our founders and the
holders of our Series A Preferred Stock for an equal amount of cash. These
notes began to accrue interest on November 23, 1999, and December 31, 1999,
their respective maturity dates, at a rate of 18% per annum. On February 7,
2000, we issued $6.5 million principal amount of new convertible promissory
notes to those persons in exchange for the notes previously issued to them in
1999, a waiver of interest accrued on the notes issued in 1999 and additional
cash advances made by

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<PAGE>

them. Each of the February 2000 notes matures on July 31, 2000, and bears
interest at the rate of 6.2% per year, payable upon maturity. Upon the closing
of this offering, each of these notes will convert into the number of shares of
common stock determined by dividing the principal amount of the note plus
accrued interest by 80% of the per share initial public offering price of our
common stock.

In connection with the issuance of convertible notes to Comcast Interactive
Capital, we issued to Comcast Interactive Capital on the 23rd day of each month
beginning on August 23, 1999, and ending on December 23, 1999 warrants to buy
shares of our common stock. At the date of this prospectus, Comcast Interactive
Capital holds warrants to purchase 146,895 shares of our common stock. Each of
these warrants has a term of five years from the date of issuance and is
exercisable at $0.29 per share. These warrants have a net exercise provision
under which Comcast Interactive Capital may, in lieu of payment of the exercise
price in cash, surrender the warrant and receive a net amount of shares, based
on the fair market value of our common stock at the time of the exercise of the
warrant, after deducting the aggregate exercise price.

On March 31, and April 5, 2000, we sold to Mitsui & Co. (U.S.A.), Inc. and
Mitsui & Co., Ltd., respectively, an aggregate $2.9 million in principal amount
of convertible promissory notes for an equal amount of cash.

On April 14, 2000, we sold to Martin I. Pompadur, who has consented to
become a director of LinkShare upon the consummation of this offering, a
convertible promissory note in the principal amount of $500,000 for an equal
amount of cash. Each of these notes matures on September 30, 2000, and bears
interest at the rate of 6.2% per year, payable upon maturity. Upon the closing
of this offering, each of these notes will convert into the number of shares of
common stock determined by dividing the principal amount of the note plus
accrued interest by the per share initial public offering price of our common
stock.

The following table gives the names of the persons to whom we issued
convertible notes, the principal amount of those notes held by each person, the
total value of the common stock into which the notes convert (based on an
assumed initial public offering price of $11.00 per share) and the net value of
the common stock for which the warrants are exercisable (based on an assumed
initial public offering price of $11.00 per share and after deducting the total
exercise price):

<TABLE>
<CAPTION>
Principal Value of Common Stock Value of Common Stock
Amount of into which the for which the
Convertible Principal Amount of Warrants
Notes the Convertible Issued to the Named
Issued to the Notes Issued to the Person are
Name Named Person Named Person Converts Exercisable
---- ------------- --------------------- ---------------------
<S> <C> <C> <C>
Internet Capital Group,
Inc.................... $2,805,638 $3,507,048 --
Comcast Interactive
Capital, LP............ $ 657,880 $ 822,350 $1,573,875
Stephen D. Messer....... $1,518,242 $1,897,803 --
Heidi S. Messer......... $1,215,394 $1,519,242 --
Jianhao Meng............ $ 302,849 $ 378,561 --
Mitsui & Co. (U.S.A.),
Inc.................... $2,000,000 $2,000,000 --
Mitsui & Co., Ltd....... $ 900,000 $ 900,000 --
Martin I. Pompadur ..... $ 500,000 $ 500,000 --
</TABLE>

Employment Agreements

LinkShare has entered into employment agreements with Stephen D. Messer and
Heidi S. Messer. Please see the section of this prospectus titled "Management--
Employment Agreements."

Patent Assignment

In July 1998, as a condition to the purchase by Internet Capital Group and
Comcast Interactive Capital of our Series A Preferred Stock, Stephen D. Messer
was required to contribute and assign to LinkShare for no additional
consideration all of his rights to the "Data Processing System for Integrated
Tracking and

49
<PAGE>

Management of Commerce Related Activities on a Public Access Network". For more
information on this patent, see the section of this prospectus titled "Our
Business--Technology Infrastructure."

Other

Accent Maintenance Corp. is owned by the mother of Stephen D. Messer and
Heidi S. Messer. In the second half of calendar 1999, Accent Maintenance Corp.
performed moving, construction, renovation and other services related to the
relocation of our principal offices in New York City. Accent Maintenance
charged us approximately $863,000 for those services. In addition, since August
1998, we have used Accent Maintenance to provide janitorial, porter,
maintenance and similar services at our New York offices for monthly charges of
up to $6,000 plus the cost of supplies.

50
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to beneficial
ownership of our common stock after the offering by:

. each person who beneficially owns more than 5% of our common stock;

. our Chief Executive Officer and each of our directors; and

. all executive officers and directors as a group.

We have determined beneficial ownership in accordance with the rules of the
SEC. Unless otherwise indicated, the persons included in the table have sole
voting and investment power with respect to all shares beneficially owned.
Shares of common stock issuable under options, convertible securities or
warrants that are currently exercisable or are exercisable within 60 days of
April 14, 2000 are treated as outstanding and beneficially owned with respect
to the person holding these options for the purpose of computing the percentage
ownership of that person. However, these shares are not treated as outstanding
for purposes of computing the percentage ownership of any other person. For
purposes of this table, we have assumed the automatic conversion, upon the
closing of this offering, of all of our outstanding shares of preferred stock
into 11,347,518 shares of common stock and all of our outstanding convertible
notes into 1,056,566 shares of common stock. See the section of this prospectus
titled "Certain Transactions--Bridge Financings."

<TABLE>
<CAPTION>
Percent of Common
Stock Beneficially
Owned
--------------------
Shares of
Common Stock Before the After the
Beneficially Owned Offering Offering
------------------ ---------- ---------
<S> <C> <C> <C>
Internet Capital Group, Inc.
#800 The Safeguard Bldg.
435 Devon Park Drive
Wayne, PA 19087....................... 10,233,035 38.5% 32.7%

Comcast Interactive Capital, LP
1500 Market Street
Philadelphia, PA 19102................ 1,659,384(1) 6.3% 5.3%

Stephen D. Messer..................... 7,174,462 27.0% 23.0%

Heidi S. Messer....................... 5,739,661 21.6% 18.4%

Jianhao Meng.......................... 1,434,800 5.4% 4.6%

Douglas A. Alexander.................. 10,233,035(2) 38.5% 32.7%

All executive officers and directors
as a group (10 persons).............. 25,108,471(3) 92.7% 79.0%
</TABLE>
- --------

(1) Includes 146,895 shares of common stock that may be purchased under the
warrants issued in connection with our August 23, 1999 convertible note
financing. See the section of this prospectus titled "Certain
Transactions--Bridge Financing." Comcast Interactive Capital, LP, is a
limited partnership controlled by Mr. Julian A. Brodsky.

(2) The shares in the table include 10,233,035 shares owned by Internet
Capital Group, Inc. Douglas A. Alexander, a director of LinkShare, is a
Managing Director of Internet Capital Group, Inc. and may be deemed to
have beneficial ownership of the 10,233,035 shares owned by Internet
Capital Group; however, Mr. Alexander disclaims beneficial ownership of
these shares.

(3) Includes 471,878 shares of common stock issuable under stock options that
are exercisable as of April 14, 2000 and 54,634 shares of common stock
issuable under stock options that are exercisable within 60 days after
April 14, 2000.

51
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following is a summary description of our capital stock. We refer you to
our restated certificate of incorporation and bylaws, both of which have been
filed as exhibits to the registration statement, and the applicable provisions
of the Delaware General Corporation Law. Please see the section of this
prospectus titled "Additional Information."

General

Upon the closing of this offering, our authorized capital stock will consist
of 200,000,000 shares of common stock and 5,000,000 shares of preferred stock,
both of which have a par value of $.001 per share. Assuming the underwriters do
not exercise their over-allotment option, we will have 31,104,084 shares of
common stock and no shares of preferred stock outstanding after the closing of
this offering.

Common Stock

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive
proportionately any dividends as may be declared by our board of directors,
subject to any preferential dividend rights of outstanding preferred stock.
Upon our liquidation, dissolution or winding up, the holders of common stock
are entitled to receive proportionately our net assets available after the
payment of all debts and other liabilities and subject to the prior rights of
any outstanding preferred stock. Holders of common stock have no preemptive,
subscription, redemption or conversion rights. Our outstanding shares of common
stock are, and the shares offered by us in this offering will be, when issued
and paid for, fully paid and nonassessable. The rights, preferences and
privileges of holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock which we may designate and issue in the future.

Preferred Stock

The board of directors may issue preferred stock, without stockholder
approval, in such series and with such designations, preferences, conversion or
other rights, voting powers, qualifications, limitations, or restrictions as
the board of directors deems appropriate. While the board of directors has no
current intention of doing so, it could, without stockholder approval, issue
preferred stock with voting and conversion rights which adversely affect the
benefit of any voting power and the benefit of other rights of the holders of
the common stock and which the board of directors could use as an anti-takeover
measure without any further action by the holders of common stock. This may
have the effect of delaying, deferring or preventing a change of control of
LinkShare by increasing the number of shares necessary to gain control of the
company. Except as described below, the board of directors has not authorized
the issuance of any shares of preferred stock and we have no agreements or
current plans for the issuance of any shares of preferred stock.

Series A Preferred Stock

As of April 14, 2000 we had issued and outstanding 11,347,518 shares of
Series A Preferred Stock, par value $.001 per share, which will automatically
convert into an aggregate of 11,347,518 shares of common stock upon the closing
of this offering.

Options

As of April 14, 2000, options to purchase a total of 5,900,940 shares of
common stock were outstanding. The total number of shares of common stock that
may be subject to the granting of options under our stock option plan is equal
to 9,018,090. Please see the sections of this prospectus titled "Management--
Stock Option Information--LinkShare Corporation Long-Term Incentive Plan" and
"Shares Eligible for Future Sale."

52
<PAGE>

We have outstanding a large number of stock options to purchase our common
stock with exercise prices significantly below the price at which our common
stock is being offered in this offering. The possible sale of a significant
number of those shares by our option holders may have an adverse effect on the
price of the common stock. For a discussion of our intentions with respect to
the registration of the shares underlying these options, see "Shares Eligible
for Future Sale."

Warrants

As of April 14, 2000, we had issued and outstanding warrants to purchase
146,895 shares of common stock, at an exercise price of $0.29 per share. Of
those warrants, 29,379 will expire on the 23rd day of each month beginning
August 23, 2004. Please see the sections of this prospectus titled "Certain
Transactions-Warrants."

Registration Rights

Pursuant to the terms of the investor rights agreement, the holders of
26,404,084 shares of common stock are entitled to certain demand registration
rights with respect to the registration of their shares under the Securities
Act. The holders of a majority of these shares that are owned by Stephen D.
Messer, Heidi S. Messer, Jianhao Meng, Mitsui & Co. (U.S.A.), Inc., Mitsui &
Co., Ltd. and Martin I. Pompadur are entitled to demand that we register their
shares under the Securities Act, subject to certain limitations. Similarly, the
holders of a majority of these shares that are owned by Internet Capital Group,
Inc. and Comcast Interactive Capital, LP are entitled to demand that we
register their shares under the Securities Act, subject to certain limitations.
We are not required to effect more than two such registrations pursuant to such
demand registration rights and not more than one in any 12 month period. In
addition, pursuant to the terms of the investor rights agreement, the holders
of 26,404,084 shares of common stock are entitled to certain piggyback
registration rights with respect to the registration of such shares of common
stock under the Securities Act, subject to certain limitations. Further, at any
time after we become eligible to file a registration statement on Form S-3
certain holders may require us to file registration statements under the
Securities Act on Form S-3 with respect to their shares of common stock. These
registration rights are subject to certain conditions and limitations,
including the right of the underwriters of an offering to limit the number of
shares of common stock held by security holders with registration rights to be
included in such registration. In addition, holders of these shares will be
restricted from exercising their demand rights for a period of 180 days after
the date of this prospectus. We are generally required to bear all of the
expenses of all such registrations, except underwriting discounts and
commissions. Registration of any of the shares of common stock held by security
holders with registration rights would result in such shares becoming freely
tradable without restriction under the Securities Act immediately upon
effectiveness of such registration.

Anti-takeover Effects of Certain Provisions of Delaware Law and Our Certificate
of Incorporation and Bylaws

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

In addition, certain provisions of the restated certificate of incorporation
and bylaws, which provisions are summarized in the following paragraphs, may be
deemed to have an anti-takeover effect and may delay, defer

53
<PAGE>

or prevent a tender offer or takeover attempt that a stockholder might consider
in its best interest, including those attempts that might result in a premium
over the market price for the shares held by stockholders.

Board of Directors

Upon the closing of this offering, our board of directors will be divided
into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of the board of directors will be elected each
year. In addition, our restated certificate of incorporation provides that
directors may be removed only for cause by the affirmative vote of the holders
of two-thirds of our shares of capital stock entitled to vote. Our restated
certificate of incorporation further provides that any vacancy on our board of
directors, including a vacancy resulting from an enlargement of our board of
directors, may only be filled by a vote of a majority of our directors then in
office. The classification of our board of directors and the limitations on the
removal of directors and filling of vacancies could make it more difficult for
a third party to acquire, or discourage a third party from acquiring, control
of LinkShare.

Stockholder Action; Special Meeting of Stockholders

Our restated certificate of incorporation provides that stockholders may not
take action by written consent, but only at duly called annual or special
meetings of stockholders. Special meetings of stockholders may be called only
by the chairman of the board of directors or by a majority of the board of
directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations

Our bylaws provide that stockholders seeking to bring business before an
annual meeting of stockholders, or to nominate candidates for election as
directors at an annual meeting of stockholders, must provide timely notice of
their proposals to the board of directors in writing. To be timely, a
stockholder's notice must be delivered to or mailed and received at our
principal executive offices not less than 120 days nor more than 150 days prior
to the first anniversary of the date of the notice of annual meeting we
provided with respect to the previous year's annual meeting of stockholders. If
no annual meeting of stockholders was held in the previous year or the date of
the annual meeting of stockholders has been changed to be more than 30 calendar
days earlier than or 60 calendar days after such anniversary, for notice by the
stockholder to be timely, we must receive it not more than 90 days before nor
later than the later of (1) 60 days prior to the annual meeting of stockholders
or (2) the close of business on the 10th day following the date on which notice
of the date of the meeting is given to stockholders or made public, whichever
occurs first. LinkShare's bylaws also specify certain requirements as to the
form and content of a stockholder's notice. These provisions could have the
effect of delaying stockholders from bringing matters before an annual meeting
of stockholders or from making nominations for directors at an annual meeting
of stockholders.

Authorized but Unissued Shares

The authorized but unissued shares of common stock and preferred stock are
available for future issuance without stockholder approval. We may use these
additional shares for a variety of corporate purposes, including future public
offerings to raise additional capital, corporate acquisitions and employee
benefit plans. The existence of authorized but unissued shares of common stock
and preferred stock could render more difficult or discourage an attempt to
obtain control of LinkShare by means of a proxy contest, tender offer, merger
or otherwise.

The DGCL provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws, unless a corporation's certificate of
incorporation or bylaws, as the case may be, requires a greater percentage.

Limitation of Liability and Indemnification Matters

The restated certificate of incorporation provides that, except to the
extent prohibited by the DGCL, our directors shall not be personally liable to
us or our stockholders for monetary damages for any breach of fiduciary duty as
directors of LinkShare. Under the DGCL, the directors have a fiduciary duty to
LinkShare

54
<PAGE>

which is not eliminated by this provision of the restated certificate of
incorporation 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 LinkShare, for acts or
omissions which are found by a court of competent jurisdiction to be not in
good faith or which involve intentional misconduct, or 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 the 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.

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. Our restated certificate of incorporation
eliminates the personal liability of directors to the fullest extent permitted
by Section 102(b)(7) of the DGCL and provides that LinkShare 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
person:

. is or was a director or officer of LinkShare, or

. is or was serving at LinkShare's request as a director or officer of:

. another corporation,

. partnership,

. joint venture,

. trust, or

. other enterprise,

against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by that person in connection
with the action, suit or proceeding.

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

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is HSBC Bank USA.

55
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Before this offering, there has been no public market for our common stock.
Future sales of substantial amounts of our common stock in the public market
following this offering, including shares issued upon exercise of outstanding
options or options that may be granted after this offering, could harm market
prices and could impair our ability to raise capital through the sale of our
equity securities. As described below, less than 16% of our shares currently
outstanding will be available for sale immediately after this offering because
of restrictions on resale. Sales of a substantial amount of our common stock in
the public market after the restrictions lapse could adversely affect the
prevailing market price of our common stock and our ability to raise equity
capital in the future.

Upon the closing of this offering and assuming that none of our outstanding
options are exercised, we will have outstanding 31,104,084 shares of common
stock, or 31,809,084 shares if the underwriters exercise their over-allotment
option in full. Of these outstanding shares, 4,700,000 shares, or 5,405,000
shares if the underwriters exercise their over-allotment option in full, will
be freely tradable without restriction under the Securities Act, except for
shares purchased by our "affiliates," as that term is defined in Rule 144 under
the Securities Act. Any shares purchased by our affiliates generally may be
sold in compliance with Rule 144 as described below.

The remaining 26,404,834 shares outstanding are "restricted securities"
within the meaning of Rule 144. Restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rules 144, 144(k) or 701 promulgated under the Securities Act, which are
summarized below. Sales of the restricted securities in the public market, or
the availability of these shares for sale, could adversely affect the market
price of our common stock.

At April 14, 2000, options for a total of 5,900,940 shares of common stock
had been granted under our stock option plan. Approximately 889,448 of those
options were vested and exercisable at such date. All of the shares issuable
upon exercise of those vested options are subject to 180-day lock-up agreements
described below.

We anticipate that our current stockholders will enter into lock-up
agreements or other contractual restrictions providing that they will not
offer, sell, contract to sell or otherwise dispose of any shares of our common
stock for a period of 180 days after the date of this prospectus, without the
prior written consent of Credit Suisse First Boston Corporation. As a result of
these lock-up agreements and other contractual restrictions, notwithstanding
possible earlier eligibility for sale under the provisions of Rule 144, none of
these shares will be resellable until 181 days after the date of this
prospectus.

Credit Suisse First Boston Corporation may, in its sole discretion and at
any time without notice, release any portion of the securities subject to lock-
up agreements or other contractual restrictions. At the date of this
prospectus, Credit Suisse First Boston does not intend to release any portion
of the securities subject to lock-up agreements or other contractual
restrictions. However, when Credit Suisse First Boston receives a request to
release shares from a lock-up agreement under circumstances in which an
individual would suffer a hardship or under which a sale could reduce future
volatility in the market price of our common stock, Credit Suisse First Boston
may grant its consent to a sale of all or a portion of these shares in its sole
discretion, if it concludes that the sale could be conducted in an orderly
fashion to minimize the volatility of the market price of our common stock.

In general, under Rule 144 as currently in effect, after the expiration of
the lock-up agreements, a person who has beneficially owned restricted shares
for at least one year 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 311,125 shares immediately after this offering;
or

. the average weekly trading volume of our common stock during the four
calendar weeks preceding the sale.

56
<PAGE>

Sales under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current public information about us. Under
Rule 144(k), a person who is not deemed to have been an affiliate of ours at
any time during the six months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell such
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.

Rule 701 permits our employees, officers, directors or consultants who
purchased shares pursuant to a written compensatory plan or contract to resell
these shares in reliance upon Rule 144 but without compliance with specific
restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares
under Rule 144 without complying with the holding period requirement and that
non-affiliates may sell these shares in reliance on Rule 144 without complying
with the holding period, public information, volume limitation or notice
provisions of Rule 144.

Following the closing of this offering, we will file a registration
statement on Form S-8 to register shares of our common stock subject to
outstanding options or reserved for future issuance under our stock option
plan. As of April 14, 2000, options to purchase approximately 5,900,940 shares
of our common stock were outstanding and approximately 3,117,150 additional
shares of our common stock were reserved for future issuance under our stock
option plan. This registration statement will automatically become effective
upon filing. As a result, the common stock issued upon exercise of outstanding
vested options, other than common stock issued to our affiliates, will be
available for immediate resale in the open market, subject to any applicable
lock-up agreement.

57
<PAGE>

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2000, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc, and Bear, Stearns & Co. Inc. are acting as representatives, the
following respective numbers of shares of common stock:

<TABLE>
<CAPTION>
Number
of
Underwriter Shares
----------- ------
<S> <C>
Credit Suisse First Boston Corporation................................
Deutsche Bank Securities Inc. ........................................
Bear, Stearns & Co. Inc. .............................................
-----
Total.............................................................
=====
</TABLE>

The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in this offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or this
offering of common stock may be terminated.

We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares from us at the initial public offering price
less the underwriting discounts. The option may be exercised only to cover any
over-allotments of common stock.

The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker-dealers. After the initial public offering, the public
offering price and concession and discount to broker-dealers may be changed by
the representatives.

The following table summarizes the compensation and estimated expenses we
will pay:

<TABLE>
<CAPTION>
Per Share Total
------------------- -------------------
Without With Without With
Over- Over- Over- Over-
allotment allotment allotment allotment
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Underwriting Discounts and Commissions
paid by us........................... $ $ $ $
Expenses payable by us................ $ $ $ $
</TABLE>

The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.

We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any offer, sale, pledge, disposition or filing,
without the prior written consent of Credit Suisse First Boston Corporation for
a period of 180 days after the date of this prospectus, except issuances
pursuant to the exercise of employee stock options outstanding on the date
hereof or pursuant to our dividend reinvestment plan.

Our officers, directors and stockholders have agreed that they will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, enter into a
transaction which would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of the

58
<PAGE>

economic consequences of ownership of our common stock, whether any such
aforementioned transaction is to be settled by delivery of our common stock or
such other securities, in cash or otherwise, or publicly disclose the intention
to make any such offer, sale, pledge or disposition, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of Credit Suisse First Boston Corporation for a period of 180
days after the date of this prospectus.

The underwriters have reserved for sale, at the initial public offering
price up to 352,500 shares of our common stock for employees, directors and
certain other persons associated with us who have expressed an interest in
purchasing common stock in this offering. The number of shares available for
sale to the general public in this offering will be reduced to the extent these
persons purchase the reserved shares. Any reserved shares not so purchased will
be offered by the underwriters to the general public on the same terms as the
other shares.

We have agreed to indemnify the underwriters against liabilities under the
Securities Act or contribute to payments which the underwriters may be required
to make in that respect.

We have applied to list our common stock on The Nasdaq Stock Market's
National Market under the symbol "LNKS."

Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be determined by negotiation
between our management and representatives of the underwriters. The principal
factors that will be considered in determining the public offering price
include:

. the information set forth in this prospectus and otherwise available to
the underwriters;

. the history and the prospects for the industry in which we will compete;

. the ability of our management;

. the prospects for our future earnings;

. the present state of our development and our current financial condition;

. the general condition of the securities markets at the time of this
offering; and

. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies.

The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934.

. Over-allotment involves syndicate sales in excess of this 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 stabilizing or syndicate covering
transaction to cover syndicate short positions.

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.

A prospectus in electronic format may be made available on the Web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters that will make Internet distributions on the
same basis as other allocations.

59
<PAGE>

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.

Representations of Purchasers

Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom the
purchase confirmation is received that (i) the purchaser is entitled under
applicable provincial securities laws to purchase the common stock without the
benefit of a prospectus qualified under Canadian securities laws; (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent; and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."

Rights of Action (Ontario Purchasers)

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

Enforcement of Legal Rights

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.

Notice to British Columbia Residents

A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that the purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by the purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one report must
be filed in respect of common stock acquired on the same date and under the
same prospectus exemption.

Taxation and Eligibility for Investment

Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in our common
stock in their particular circumstances and with respect to the eligibility of
our common stock for investment by the purchaser under relevant Canadian
legislation.

60
<PAGE>

EXPERTS

Our financial statements as of June 30, 1998 and 1999 and for the years then
ended have been included in this prospectus and the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere in this prospectus, and upon the authority of such firm as
experts in auditing and accounting.

LEGAL MATTERS

Baker Botts L.L.P., New York, New York will pass upon the validity of the
common stock offered hereby. Weil, Gotshal & Manges LLP, New York, New York,
represented the underwriters in connection with this offering.

ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1, including
its exhibits and schedules, under the Securities Act with respect to the shares
to be sold in this offering. This prospectus, which forms a part of the
registration statement, does not contain all the information included in the
registration statement. You should refer to the registration statement,
including its exhibits and schedules, for further information about us or the
shares to be sold in this offering. Statements contained in this prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and where any contract or other document is an exhibit to
the registration statement, we refer you to that exhibit for a more complete
description of the matter involved.

We are not currently subject to the informational requirements of the
Securities Exchange Act of 1934. However, as a result of this offering, we will
become subject to the informational requirements of the Securities Exchange
Act. Accordingly, following this offering, we will file reports and other
information with the SEC.

You may read and copy the registration statement or any reports, statements
or other information we file with the SEC at the SEC's public reference room at
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-
SEC-0330 for further information on the public reference rooms. Our SEC
filings, including the registration statement, are also available to you on the
SEC Internet site (http://www.sec.gov). In addition, reports, proxy statements
and other information concerning LinkShare may be inspected at the National
Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington,
D.C. 20006.

61
<PAGE>

LINKSHARE CORPORATION
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Balance Sheets as of June 30, 1998 and 1999 and December 31, 1999
(unaudited).............................................................. F-3
Statements of Operations for the years ended June 30, 1998 and 1999, and
for the six months ended December 31, 1998 (unaudited) and December 31,
1999 (unaudited)......................................................... F-4
Statements of Stockholders' Equity (Deficit) for the years ended June 30,
1998 and 1999, and for
the six months ended December 31, 1999 (unaudited)....................... F-5
Statements of Cash Flows for the years ended June 30, 1998 and 1999, and
for the six months ended December 31, 1998 (unaudited) and December 31,
1999 (unaudited)......................................................... F-6
Notes to Financial Statements............................................. F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
LinkShare Corporation:

We have audited the accompanying balance sheets of LinkShare Corporation as
of June 30, 1998 and 1999, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years then ended. 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 LinkShare Corporation as of
June 30, 1998 and 1999, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

KPMG LLP

New York, New York
February 16, 2000

F-2
<PAGE>

LINKSHARE CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
Pro Forma
June 30, (Note 1)
---------------------- December 31, December 31,
1998 1999 1999 1999
--------- ----------- ------------ ------------
(unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 4,000 $ 238,666 $ 6,822 $ 6,822
Short-term investments.................................. -- 398,695 -- --
Accounts receivable, less allowance for doubtful
accounts and returns of $0, $95,000 and $254,000 as of
June 30, 1998, June 30, 1999 and December 31, 1999,
respectively........................................... 2,847 479,880 2,344,941 2,344,941
Prepaid expenses and other current assets............... 67,475 20,327 19,840 19,840
--------- ----------- ----------- -----------
Total current assets.................................. 74,322 1,137,568 2,371,603 2,371,603
Property and equipment, net............................... 26,718 605,988 2,157,757 2,157,757
Other assets, net......................................... 680 44,602 222,162 222,162
--------- ----------- ----------- -----------
Total assets.......................................... $ 101,720 $ 1,788,158 $ 4,751,522 $ 4,751,522
========= =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable........................................ $ 103,987 $ 650,153 $ 2,190,812 $ 2,190,812
Accrued expenses........................................ 140,404 184,158 499,161 499,161
Deferred revenue........................................ 12,833 391,144 1,084,838 1,084,838
Advances from stockholders.............................. -- -- 345,000 --
Convertible notes payable............................... -- -- 2,500,000 --
--------- ----------- ----------- -----------
Total current liabilities............................. 257,224 1,225,455 6,619,811 3,774,811
Stockholders' equity (deficit):
Preferred stock, $.001 par value; 3,750,000 shares
authorized:
Series A convertible preferred stock, 3,250,000 shares
authorized, 0, 3,242,148 and 3,242,148 shares issued
and outstanding as of June 30, 1998 and 1999 and
December 31, 1999, respectively, none issued on a pro
forma basis (liquidation preference of $4,000,000 at
June 30, 1999)....................................... -- 3,242 3,242 --
Common stock, $.001 par value; 10,000,000 shares
authorized, 4,000,000 shares issued and outstanding;
shares issued on a pro forma basis................. 4,000 4,000 4,000 7,565
Additional paid-in capital.............................. 33,924 5,449,886 6,778,751 11,248,428
Deferred compensation................................... -- (1,320,485) (1,879,235) (1,879,235)
Accumulated deficit..................................... (193,428) (3,573,940) (6,775,047) (8,400,047)
--------- ----------- ----------- -----------
Total stockholders' equity (deficit).................. (155,504) 562,703 (1,868,289) 976,711
--------- ----------- ----------- -----------
Commitments and contingencies
Total liabilities and stockholders' equity (deficit).. $ 101,720 $ 1,788,158 $ 4,751,522 $ 4,751,522
========= =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE>

LINKSHARE CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Six months ended
Year ended June 30, December 31,
---------------------- -------------------------
1998 1999 1998 1999
--------- ----------- ------------ -----------
(unaudited)
<S> <C> <C> <C> <C>
Revenues:
Licensing fees............ $ 8,167 $ 220,881 $ 45,275 $ 611,328
Network fees.............. 39,327 493,820 94,038 2,001,297
--------- ----------- ------------ -----------
Total revenues.......... 47,494 714,701 139,313 2,612,625
--------- ----------- ------------ -----------
Operating expenses:
Cost of revenues
(exclusive of equity
related compensation of
$1,107, $0 and $6,643 for
the year ended June 30,
1999 and the six months
ended December 31, 1998
and 1999, respectively).. 12,968 104,751 15,260 349,896
Sales and marketing
(exclusive of equity
related compensation of
$10,238, $1,012 and
$73,581 for the year
ended June 30, 1999 and
the six months ended
December 31, 1998 and
1999, respectively)...... 41,026 1,815,701 431,445 2,833,854
Product development
(exclusive of equity
related compensation of
$154,113, $91,131 and
$86,906 for the year
ended June 30, 1999 and
the six months ended
December 31, 1998 and
1999, respectively)...... 103,520 776,006 279,974 834,756
General and administrative
(exclusive of equity
related compensation of
$37,581, $0 and $83,480
for the year ended June
30, 1999 and the six
months ended December 31,
1998 and 1999,
respectively)............ 83,408 1,256,818 386,104 1,013,760
Noncash compensation...... -- 203,039 92,143 250,610
--------- ----------- ------------ -----------
Total operating
expenses............... 240,922 4,156,315 1,204,926 5,282,876
--------- ----------- ------------ -----------
Loss from operations.... (193,428) (3,441,614) (1,065,613) (2,670,251)
Interest income............. -- 61,102 28,344 18,649
Interest expense............ -- -- -- (549,505)
--------- ----------- ------------ -----------
Net loss................ $(193,428) $(3,380,512) $ (1,037,269) $(3,201,107)
========= =========== ============ ===========
Basic and diluted net loss
per share.................. $ (0.05) $ (0.85) $ (0.26) $ (0.80)
========= =========== ============ ===========
Shares used in computing
basic and diluted net loss
per share ................. 4,000,000 4,000,000 4,000,000 4,000,000
========= =========== ============ ===========
Unaudited pro forma basic
and diluted net loss per
share...................... (0.14) (0.13)
=========== ===========
Shares used in computing
unaudited pro forma basic
and diluted net loss per
share...................... 24,546,974 25,504,646
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>

LINKSHARE CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

YEARS ENDED JUNE 30, 1998 AND 1999 AND SIX MONTHS ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
Series A Total
Preferred Stock Common Stock Additional stockholders'
---------------- ---------------- paid-in Deferred Accumulated equity
Shares Amount Shares Amount capital Compensation deficit (deficit)
--------- ------ --------- ------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30,
1997................... -- $ -- -- $ -- $ -- $ -- $ -- $ --
Issuance of common
stock to founders..... -- -- 4,000,000 4,000 33,924 -- -- 37,924
Net loss............... -- -- -- -- -- -- (193,428) (193,428)
--------- ------ --------- ------ ---------- ----------- ----------- -----------
Balance at June 30,
1998................... -- -- 4,000,000 4,000 33,924 -- (193,428) (155,504)
Issuance of Series A
convertible preferred
stock, net of $104,320
of issuance costs..... 3,242,148 3,242 -- -- 3,892,438 -- -- 3,895,680
Deferred compensation
in connection with
grant of stock
options............... -- -- -- -- 1,523,524 (1,523,524) -- --
Amortization of
deferred
compensation.......... -- -- -- -- -- 203,039 -- 203,039
Net loss............... -- -- -- -- -- -- (3,380,512) (3,380,512)
--------- ------ --------- ------ ---------- ----------- ----------- -----------
Balance at June 30,
1999................... 3,242,148 3,242 4,000,000 4,000 5,449,886 (1,320,485) (3,573,940) 562,703
Deferred compensation
in connection with
grant of stock options
(unaudited)........... -- -- -- -- 809,360 (809,360) -- --
Amortization of
deferred compensation
(unaudited)........... -- -- -- -- -- 250,610 -- 250,610
Issuance of warrants in
connection with
convertible notes
(unaudited)........... -- -- -- -- 519,505 -- -- 519,505
Net loss for the period
(unaudited)........... -- -- -- -- -- -- (3,201,107) (3,201,107)
--------- ------ --------- ------ ---------- ----------- ----------- -----------
Balance at December 31,
1999 (unaudited)....... 3,242,148 $3,242 4,000,000 $4,000 $6,778,751 $(1,879,235) $(6,775,047) $(1,868,289)
========= ====== ========= ====== ========== =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>

LINKSHARE CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Six months Ended
Year ended June 30, December 31,
---------------------- ------------------------
1998 1999 1998 1999
--------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss.................... $(193,428) $(3,380,512) $(1,037,269) $(3,201,107)
Adjustments to reconcile net
loss to net cash (used in)
provided by operating
activities:
Depreciation and
amortization.............. 11,206 84,494 16,390 210,731
Noncash compensation....... -- 203,039 92,143 250,610
Noncash financing expense
from issuance of
warrants.................. -- -- -- 519,505
Provision for doubtful
accounts.................. 25,000 261,000 -- 158,760
Changes in operating assets
and liabilities:
Accounts receivable....... (27,847) (738,033) (228,830) (2,023,821)
Prepaid expenses and other
current assets........... (67,475) 47,148 67,206 487
Accounts payable.......... 103,987 546,166 245,130 1,540,659
Accrued expenses.......... 140,404 43,754 (44,563) 315,003
Deferred revenue.......... 12,833 378,311 230,125 693,694
--------- ----------- ----------- -----------
Net cash (used in)
provided by operating
activities.............. 4,680 (2,554,633) (659,668) (1,535,479)
--------- ----------- ----------- -----------
Cash flows from investing
activities:
Sale (purchase) of short-
term investments........... -- (398,695) -- 398,695
Purchase of property and
equipment.................. -- (657,286) (132,654) (1,759,097)
Other assets................ (680) (50,400) (35,958) (180,963)
--------- ----------- ----------- -----------
Net cash used in
investing activities.... (680) (1,106,381) (168,682) (1,541,365)
--------- ----------- ----------- -----------
Cash flows from financing
activities:
Net proceeds from issuance
of convertible notes....... -- -- -- 2,500,000
Advances from stockholders.. -- -- -- 345,000
Net proceeds from issuance
of Series A convertible
preferred stock............ -- 3,895,680 3,895,680 --
--------- ----------- ----------- -----------
Net cash provided by
financing activities.... -- 3,895,680 3,895,680 2,845,000
--------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents............. 4,000 234,666 3,067,400 (231,844)
Cash and cash equivalents at
beginning of year........... -- 4,000 4,000 238,666
--------- ----------- ----------- -----------
Cash and cash equivalents at
the end of year............. $ 4,000 $ 238,666 $3,071,400 $ 6,822
========= =========== =========== ===========
Supplemental disclosure of
noncash transactions:
Issuance of common stock to
founders in exchange for
fixed assets............... $ 37,924 $ -- $ -- $ --
========= =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 1998 AND 1999
(All information subsequent to June 30, 1999 is unaudited)

(1) Summary of Operations and Significant Accounting Policies

(a) Summary of Operations

LinkShare Corporation ("LinkShare" or the "Company") was incorporated on
July 1, 1997. LinkShare enables the formation of cooperative, performance-based
online business relationships. The Company's networks and technology enable
online businesses to find the right Web sites for those business relationships,
negotiate the terms of their relationships with the publishers of those Web
sites, and evaluate the success of those relationships. The Company's first
network is The LinkShare Network(TM), an affiliate marketing solution that
enables online merchants to establish performance-based relationships with
thousands of Web site publishers who seek to convert visitor traffic into
revenues by becoming marketing "affiliates" of those merchants. The LinkShare
Network(TM) provides affiliate Web sites a quick and easy way to establish
hyperlink promotions with the merchant members of the network to drive traffic
from its site to a merchant's Web site. If a visitor accesses a merchant's Web
site through that hyperlink and takes a prescribed action, such as buying a
product, the affiliate earns a fee payable by that merchant. Merchants pay
LinkShare fees for access to the network and for tracking the activity that
occurs through their links with their marketing affiliates. The Company
operates in one segment, operating online networks and providing software and
services to support those networks.

(b) Unaudited Interim Financial Information

The interim financial statements of the Company as of December 31, 1999, and
for the six months ended December 31, 1998 and 1999, are unaudited. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC") relating to interim financial statements. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial position, the
results of operations and cash flows have been included in such unaudited
financial statements. The results of operations for the six months ended
December 31, 1999, are not necessarily indicative of the results to be expected
for the entire year.

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

(d) Cash and Cash Equivalents and Short Term Investments

The Company considers all highly liquid securities, with original maturities
of three months or less when acquired, to be cash equivalents. Cash
equivalents, consisting of money market accounts, were approximately $0 and
$418,000 at June 30, 1998 and 1999, respectively. Short-term investments at
June 30, 1999, are comprised entirely of U.S. Treasury bills, which matured in
July 1999. Such investments were classified as available for sale and are
carried at amortized cost, which approximates fair value.

(e) Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the related assets, which is three years for computer

F-7
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

equipment and software and seven years for office equipment. Leasehold
improvements are amortized over the shorter of the related lease term or the
asset's estimated useful life.

(f) Other Assets

At June 30, 1999, other assets include $49,650 of intangible assets, which
are comprised of costs incurred for patents and trademarks related to the
Company's networks and software. Amortization is provided using the straight-
line method over five years. Accumulated amortization was $0 and $6,478 as of
June 30, 1998 and 1999, respectively.

(g) Income Taxes

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in results of operations in the period that
the tax change occurs. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.

(h) Revenue Recognition

The Company's revenues are derived primarily from software and network
access licensing fees and network fees for services provided to members of the
Company's networks, generally calculated as a percentage of net sales, or fee
per activity, generated through the networks, or from click-throughs,
calculated at a cost per thousand click-throughs ("CPM"). The terms of
licensing agreements provide that merchants pay an initial license fee upon
first signing a contract for the use of the Company's software and access to
the Company's network. Merchants subsequently pay an annual renewal fee. In
addition, the agreements typically provide that each merchant is billed once a
month for fees based on the transactions or other activities generated by that
merchant's links with its affiliates during the previous month. Licensing fees
are deferred at the time of software shipment and billing and recognized as
revenue ratably over the related contractual period the Company provides
network availability. The Company does not perform software installation and
integration services. Network fees are recognized monthly, when earned or when
the applicable service is provided. Cost of revenues primarily consists of the
costs of operating the networks, including depreciation of servers and related
software and Internet connectivity and technical support costs.

The Company's license fees are nonrefundable. However, certain network fees
are subject to return, due primarily to product returns to merchants from sales
they generated through the Company's network. Revenue is recorded net of a
provision for estimated returns. Through December 31, 1999, network fees
returns have been insignificant.

(i) Product Development Costs

Software development costs incurred subsequent to the establishment of
technological feasibility through general release of products are capitalized
and amortized over the estimated lives of the related products. Technological
feasibility is established upon completion of a working model. To date, the
timing of completion of a working model of the Company's products and general
release have substantially coincided. As a result, the Company has not
capitalized any software development costs since such costs have not been
significant. All development costs have been charged to product development
expense in the accompanying statements of operations.

F-8
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

(j) Stock-Based Compensation

Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the date of
grant or to continue to apply the provisions of Accounting Principle Board
("APB") Opinion No. 25 and provide pro forma net earnings (loss) disclosures
for employee stock option grants as if the fair-value-based method defined in
SFAS No. 123 had been applied. The Company has elected to apply the provisions
of APB Opinion No. 25 and records compensation expense for employee stock
options for the excess, if any, of the market price of the underlying stock on
the date of grant over the exercise price, and provides the pro forma
disclosures.

(k) Advertising Costs

The Company expenses the cost of advertising and promoting its services as
incurred.

(l) Financial Instruments and Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist of cash and cash equivalents, short-term
investments, accounts receivable, accounts payable and accrued expenses. At
June 30, 1998 and 1999, the fair value of these instruments approximated their
financial statement carrying amount because of the short-term maturity of these
instruments. No single customer exceeded 10% of either revenue or accounts
receivable for any period presented.

(m) Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to future net cash flows
expected to be generated by the assets. If the assets are considered to be
impaired, the impairment loss to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair value of the assets.

(n) Basic and Diluted Net Loss Per Share and Pro Forma Basic and Diluted Net
Loss Per Share

Basic earnings per share ("EPS") excludes dilution for common stock
equivalents and 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 is computed based on the weighted average number of
shares outstanding increased by the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock. Diluted net loss per share is equal to basic net loss per
share for each of the periods presented since all common stock equivalents are
anti-dilutive.

Potential dilutive shares consist of stock options, convertible preferred
stock, convertible notes payable and warrants. During the year ended June 30,
1998, there were no potentially dilutive common stock equivalents. As of June
30, 1999, there were outstanding preferred shares convertible into 3,242,148
shares of common stock and options to purchase 951,470 shares of common stock.
As of December 31, 1999, there were outstanding preferred shares convertible
into 3,242,148 shares of common stock and options and warrants to purchase
1,195,670 and 41,970 common shares, respectively. In addition, there were notes
payable outstanding that, under differing circumstances, would be convertible
into varying amounts of common stock (see note 9(a)).

F-9
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
Six Months
Year Ended Ended
June 30, December 31,
1999 1999
---------- ------------
<S> <C> <C>
Weighted average number of common shares outstanding.. 14,000,000 14,000,000
Weighted average impact of assumed conversion of
preferred stock at issuance.......................... 10,546,974 11,347,518
Weighted average impact of assumed conversion of
convertible notes payable............................ -- 157,128
---------- ----------
24,546,974 25,504,646
========== ==========
</TABLE>

(o) Comprehensive Income (Loss)

The Company has not presented separate statements of comprehensive income
(loss) since, for all periods presented, comprehensive loss equaled net loss.

(p) Recent Accounting Pronouncements

In April 1998, Statement of Position ("SOP") 98-5, "Reporting on the Costs
of Start-Up Activities", was issued which provides guidance on the financial
reporting of start-up costs. SOP 98-5 requires costs of start-up activities and
organization costs to be expensed as incurred. The Company adopted SOP 98-5 as
of July 1, 1997.

In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including derivative
instruments embedded in other contracts, and for hedging activities.
Subsequently, SFAS No. 137 was issued, which deferred the effective date of
SFAS No. 133 to all fiscal quarters of fiscal years beginning after June 15,
2000. SFAS No. 133 is not expected to affect the Company, as the Company does
not have any derivative instruments or hedging activities.

On December 3, 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" (SAB No. 101). SAB No. 101 provides the SEC staff's views on the
recognition of revenue including upfront fees received where the seller has
continuing involvement. SAB No. 101 states that in certain circumstances where
the seller has continuing involvement or performance obligations, fees for
licenses at the outset of an arrangement should be deferred and recognized as
revenue systemically over the related period of performance. SAB No. 101
requires registrants to adopt the accounting guidance contained therein by no
later than the first fiscal quarter of the fiscal year beginning after December
15, 1999 (quarter ending September 30, 2000 for the Company). We believe the
adoption of SAB No. 101 will not have an effect on our financial statements.

(q) Pro Forma Balance Sheet (unaudited)

Upon the closing of the Company's planned initial public offering, all of
the outstanding shares of Series A Convertible preferred stock will
automatically convert on a 1-for-1 basis into 11,347,518 shares of common stock
assuming an offering of at least $15 million and an offering price of at least
$4.94 per share. On February 7, 2000, all outstanding notes and advances were
exchanged for 2000 Notes (see note 9(a)). Upon the closing of the Company's
planned initial public offering, the convertible notes payable and advances
outstanding at December 31, 1999, will automatically convert into 323,295
shares of common stock, assuming an offering price of $11.00. The unaudited pro
forma presentation of the balance sheet has been prepared

F-10
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

assuming the issuance of the 2000 Notes, the recording of a $1,625,000 charge
for the related beneficial conversion feature and the conversion of the
convertible preferred stock and convertible notes payable into common stock at
December 31, 1999.

(2) Property and Equipment

Property and equipment is summarized as follows:

<TABLE>
<CAPTION>
June 30,
---------------- December 31,
1998 1999 1999
------- -------- ------------
<S> <C> <C> <C>
Computer equipment and software.............. $35,924 $671,018 $1,430,485
Office equipment............................. 2,000 24,191 66,643
Leasehold improvements....................... -- -- 957,178
------- -------- ----------
37,924 695,209 2,454,306
Less accumulated depreciation and
amortization................................ 11,206 89,221 296,549
------- -------- ----------
$26,718 $605,988 $2,157,757
======= ======== ==========
</TABLE>

Depreciation and amortization expense was $11,206 and $78,016 for the years
ended June 30, 1998 and 1999, respectively, and $14,086 and $207,328 for the
six months ended December 31, 1998 and 1999, respectively.

(3) Capitalization

Common Stock

At formation, 200,000 shares of common stock were issued to the Company's
founders. In July 1998, coincidental with the sale of preferred stock, the
Company declared a 20-for-1 common stock split, resulting in 4,000,000 shares
of common stock outstanding. All references to the number of shares of common
stock and per share amounts have been adjusted to reflect the stock split. In
addition, stockholders' equity (deficit) has been restated to give retroactive
recognition to the split in prior periods by reclassifying from additional
paid-in capital to common stock the par value of the additional shares arising
from the split.

Preferred Stock

In July and August 1998, the Company sold in a private placement an
aggregate of 3,242,148 shares of Series A Convertible preferred stock ("Series
A Preferred") at a purchase price of $1.23375 per share. Proceeds, net of
offering costs of $104,320, amounted to $3,895,680. Each share of Series A
Preferred is convertible into one share of common stock, subject to adjustment
for certain events. Shares of Series A Preferred shall automatically be
converted into shares of common stock upon the closing of an underwritten
public offering resulting in gross proceeds to the Company equal to or greater
than $15,000,000 at a price per share of at least $4.94. The Series A Preferred
is not redeemable at the option of the holder or the Company and the purchase
price exceeded the fair value of the Company's common stock on the date of
issuance. The Series A Preferred shares have equal voting rights with the
shares of the Company's common stock.

(4) Stock Options

In July 1998, the Company established its Long-Term Incentive Plan (the
"Plan"), which provides for the grant of options and stock appreciation rights
and awards to employees, consultants and directors to purchase up to 2,576,597
shares of common stock, as amended. The Plan provides for the granting of
nonqualified and incentive stock options with a duration of ten years or less
from the date of grant. The exercise price for all incentive stock options
shall be no less than 100% of the fair value of common stock at the time of the
grant. The Board of Directors may provide that option exercise prices may be
paid in cash, common stock, or a portion of an award, or any combination
thereof.

F-11
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

The Company applies APB No. 25 in accounting for its stock options granted
to employees and, accordingly, compensation expense has been recognized in the
financial statements for those nonqualified options issued with exercise
prices less than the fair value of the common stock at the date of grant.
During fiscal 1999, certain of the options granted to employees had exercise
prices less than the fair value of the common stock on the date of grant.
Deferred compensation related to these options was $1,523,524, which is being
amortized over the vesting periods. Compensation expense related to these
options was $203,039 for the year ended June 30, 1999. Had the Company
determined compensation expense based on the fair value at the date of grant
for its stock options granted to employees under SFAS No. 123, the Company's
net loss would have been adjusted to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
Year ended June 30,
----------------------
1998 1999
--------- -----------
<S> <C> <C>
Net loss--as reported............................. $(193,428) $(3,380,512)
========= ===========
Net loss--pro forma............................... $(193,428) $(3,387,786)
========= ===========
Diluted loss per share--as reported............... $ (0.05) $ (0.85)
========= ===========
Diluted loss per share--pro forma................. $ (0.05) $ (0.85)
========= ===========
</TABLE>

During the year ended June 30, 1999, the per share weighted average fair
value of stock options granted was $1.81 on the dates of grants using the
Black Scholes option-pricing method with the following assumptions: expected
dividend yield of 0%; risk-free interest rate of 5%; and an expected option
life of four years. As permitted under the provisions of SFAS No. 123, and
based on the lack of a historical public market for the Company's shares, no
factor for volatility has been reflected in the option pricing calculation.

A summary of the Company's stock option activity and weighted average
exercise prices is as follows:

<TABLE>
<CAPTION>
Weighted
Number average
of options exercise price
---------- --------------
<S> <C> <C>
Outstanding at June 30, 1998................... -- --
Granted........................................ 951,470 $ 1.01
Exercised...................................... -- --
Cancelled...................................... -- --
---------
Outstanding at June 30, 1999................... 951,470 1.01
Granted (unaudited)............................ 251,700 23.27
Exercised (unaudited).......................... -- --
Cancelled (unaudited).......................... (7,500) 1.23
---------
Outstanding at December 31, 1999 (unaudited)... 1,195,670 $ 5.69
========= ======
Exercisable at June 30, 1999................... 114,869
=========
Options available for grant at June 30, 1999... 1,625,127
=========
</TABLE>

F-12
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

The following table summarizes the information about stock options
outstanding at June 30, 1999.

<TABLE>
<CAPTION>
Options outstanding Options exercisable
--------------------------------- ----------------------------
Range of Weighted average
exercise Number remaining Weighted average Number Weighted average
price outstanding contractual life exercise price outstanding exercise price
-------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$0.13 196,555 9 years $0.13 114,869 $0.13
$1.23 754,915 9.6 years $1.23 -- --
------- -------
951,470 114,869
======= =======
</TABLE>

(5) Income Taxes

There has been no provision for U.S. Federal income taxes for all periods
presented, since the Company has incurred losses since inception.

Significant components of the Company's deferred tax assets for Federal and
state income taxes at June 30, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
1998 1999
-------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................. $ 61,000 $ 1,296,000
Noncash compensation.............................. -- 81,000
Fixed assets depreciation......................... 16,400 7,000
Accounts receivable allowance..................... -- 38,000
-------- -----------
Total deferred tax assets....................... 77,400 1,422,000
Less valuation allowance............................ (77,400) (1,422,000)
-------- -----------
Net deferred tax assets......................... $ -- $ --
======== ===========
</TABLE>

Realization of deferred tax assets is dependent upon future earnings, if
any, the timing and amount of which are uncertain. The Company has recorded a
full valuation allowance against its deferred tax assets due to the uncertainty
of realization.

As of June 30, 1999, the Company had net operating loss carryforwards for
Federal income tax purposes of approximately $3,240,000, expiring in fiscal
2018 and 2019. There can be no assurance that the Company will realize the
benefit of the net operating loss carryforwards.

Due to the "change of ownership" provisions of Section 382 of the Internal
Revenue Code, the availability of the Company's net operating loss
carryforwards may be subject to an annual limitation against taxable income in
future periods, which could substantially limit the eventual utilization of
these carryforwards.

(6) Commitments and Contingencies:

The Company leases office space in several locations under agreements
accounted for as operating leases. These leases generally require the Company
to pay all executory costs such as maintenance and insurance.

Rent expense for the years ended June 30, 1998 and 1999 and for the six
months ended December 31, 1998 and 1999 was approximately $0, $33,000, $14,279
and $322,155, respectively.

F-13
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

Future minimum lease payments under operating leases are as follows:

<TABLE>
<CAPTION>
Year ending June 30, Amount
-------------------- ----------
<S> <C>
2000........................................................... $ 667,376
2001........................................................... 680,138
2002........................................................... 702,383
2003........................................................... 714,642
2004........................................................... 499,875
Thereafter..................................................... 1,143,811
----------
Total minimum lease payments................................. $4,408,225
==========
</TABLE>

(7) Valuation and Qualifying Accounts

The changes in the allowance for doubtful accounts and returns is as
follows:

<TABLE>
<CAPTION>
Provision
Balance at for Balance
beginning doubtful Write- at end
of period accounts offs of period
---------- --------- -------- ---------
<S> <C> <C> <C> <C>
Year ended June 30, 1998........... $ -- $ 25,000 $ 25,000 $ --
Year ended June 30, 1999........... $ -- $261,000 $166,000 $ 95,000
Six months ended December 31, 1999
(unaudited)....................... $95,000 $159,000 -- $254,000
</TABLE>

The allowance as of June 30, 1999 and December 31, 1999 is comprised of an
allowance for doubtful accounts of $91,000 and $236,000, respectively, and an
allowance for returns of $4,000 and $18,000, respectively.

(8) Employment Agreements

In July 1998, the Company entered into employment agreements with two of its
executive officers. These agreements will be in effect for two years and may be
terminated by the Company at any time without cause and by the executive
officers under certain conditions.

(9) Subsequent Events--Unaudited

(a) Convertible Notes Payable

On August 23, 1999 and November 18, 1999, the Company issued noninterest-
bearing Convertible Promissory Notes (the "1999 Notes") to its common and
Series A Preferred stockholders (collectively the "Lenders"), with an aggregate
principal amount of $1,500,000 and $1,000,000, respectively. Upon the closing
of a preferred stock financing with gross proceeds to the Company of at least
$4 million, the 1999 Notes would have automatically converted into preferred
shares similar to those issued in the preferred stock financing, with the
number of shares issued determined by dividing the principal balance by the
price paid by third parties for the preferred stock. The 1999 Notes were
payable on November 23, 1999 and December 31, 1999, respectively. The 1999
Notes were not repaid on their due dates. As a result, they were due on demand
and, commencing from the due dates, began to accrue interest at 18% per annum.

In connection with the issuance of the convertible notes in August 1999, the
Company issued warrants to purchase an aggregate of 41,970 shares of common
stock to one of the Lenders. The Company issued the warrants ratably on the
23rd day of each month from August to December 1999. The warrants can be
exercised at $1 per share for five years from the date of issuance. The Company
recorded the fair value of the warrants, amounting to $519,505, as financing
expense for the six months ended December 31, 1999.

From October 21, 1999 through January 6, 2000, certain of the Company's
common and Series A Preferred stockholders advanced the Company an aggregate of
$1,029,152, of which $345,000 was received by

F-14
<PAGE>

LINKSHARE CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

the Company as of December 31, 1999. On February 7, 2000 the Company issued
Convertible Promissory Notes to the Lenders with an aggregate principal amount
of $6,500,000 (the "2000 Notes"). The 2000 Notes in an aggregate principal
amount of $2,500,000 were issued in exchange for the 1999 Notes, which were
retired and $1,029,152 of the 2000 Notes were issued in exchange for the
advances. In addition, the Lenders waived their right to receive any unpaid
interest accrued under the 1999 Notes, which will be reflected as a capital
contribution. The 2000 Notes are due on July 31, 2000 and bear interest at the
rate of 6.2% per annum. If the Company closes an underwritten initial public
offering of its common stock under the Securities Act of 1933, the 2000 Notes
will automatically convert into that number of common shares determined by
dividing the principal balance, plus accrued interest, by 80% of the price per
share at which common stock is sold to the public. If earlier, upon the closing
of a preferred stock financing with gross proceeds to the Company of at least
$4,000,000, the 2000 Notes shall automatically convert into preferred shares
similar to those issued in the preferred stock financing, with the number of
shares issued determined by dividing the principal balance, plus accrued
interest, by the price per share paid by third parties for the preferred stock.
If the Company is acquired prior to the closing of either of these financings,
the 2000 Notes will be due on demand, repayable at two times the principal
balance.

Based on the fair value of the common stock on February 7, 2000, the
convertible notes payable had a beneficial conversion feature of $1,625,000,
which will be allocated to additional paid-in-capital and recognized as
interest expense upon the closing of an underwritten initial public offering of
the Company's common stock.

On March 31, and April 5, 2000, the Company issued convertible promissory
notes with an aggregate principal amount of $2,900,000. These notes are due on
September 30, 2000, bear interest at 6.2% per annum and, if the Company closes
an underwritten initial public offering of its common stock under the
Securities Act of 1933, with gross proceeds to the Company of $15 million or
more, will automatically convert into that number of common shares determined
by dividing the principal balance, plus accrued interest, by the price per
share at which common stock is sold to the public.

On April 14, 2000, the Company issued a convertible promissory note with a
principal amount of $500,000. This note is due on September 30, 2000, bears
interest at 6.2% per annum and, if the Company closes an underwritten initial
public offering of its common stock under the Securities Act of 1933, with
gross proceeds to the Company of $15 million or more, will automatically
convert into that number of common shares determined by dividing the principal
balance, plus accrued interest, by the price per share at which common stock is
sold to the public.

(b) Options

During January 2000, the Company granted options to purchase an aggregate of
471,636 shares of the Company's common stock resulting in additional deferred
compensation of $8.0 million, which will be expensed over the options' vesting
periods.

On February 4, 2000, the Company increased its authorized common shares to
13,000,000.

F-15
<PAGE>

INSIDE BACK COVER

Across the top of the inside back cover is the caption, "LinkShare's Technology
is 100% Web Based. Our full suite of marketing and reporting tools are easy to
use and help merchants and affiliates optimize their programs."

Below the caption are two screen shots from LinkShare's merchant user
interface. The first is the home page of the merchant user interface and the
second is an Affiliate Management Report.

Above the screen shots is the title, "MERCHANTS USE LINKSHARE TO:" Below the
screen shots are the following bullet points in vertical order, "Target and
find potential affiliate partners", "Receive applications and approve
affiliates", "Develop promotional links and establish an online inventory of
these links", "Create standard and private compensation offers", "Communicate
with affiliates via e-mail", "View and update merchant account information"
and "Run reports to analyze program performance across affiliates, link types,
time frames, etc. Reports include data on impressions, click-throughs, orders,
sales, commissions and more."

Below those bullets are two screen shots from LinkShare's affiliate user
interface. The first is the home page of the affiliate user interface and the
second is a Quick Report. Above the screen shots is the title, "AFFILIATES USE
LINKSHARE TO:" Below the screen shots are the following bullet points in
vertical order, "Target and find potential merchant partners", "Review
merchants' compensation offers and apply for merchant programs", "View each
merchant's inventory of link types, select links and cut and paste them on their
site", "Communicate with merchants via e-mail", "Establish and update affiliate
account information", "Run reports to analyze program performance across
merchants, link types, time frames, etc. Reports include data on impressions,
click-throughs, orders, sales, commissions and more. "

At the bottom right of the page is the LinkShare logo.

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Registration.

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

<TABLE>
<S> <C>
Registration fee.............................................. $ 17,123
NASD filing fee............................................... $ 6,986
Blue Sky/NASD fees and expenses (including legal fees)........ $ 5,000
Nasdaq National Market entry and application fee.............. $ 100,000
Transfer agent and registrar fees............................. $ 4,500
Printing and engraving expenses............................... $ 200,000
Other legal fees and expenses................................. $ 300,000
Accounting fees and expenses.................................. $ 300,000
Miscellaneous................................................. $ 66,391
----------
Total..................................................... $1,000,000
==========
</TABLE>

Item 14. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law ("DGCL") provides,
generally, that a corporation shall have the power to 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 (except actions by or in the
right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. A corporation may similarly indemnify
such person for expenses actually and reasonably incurred by such person in
connection with the defense or settlement of any action or suit by or in the
right of the corporation, provided such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, in the case of claims, issues and matters as
to which such person shall have been adjudged liable to the corporation,
provided that a court shall have determined, upon application, that, despite
the adjudication of liability but in view of all of the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.

Section 102(b)(7) of the DGCL provides, generally, that the certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision may 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) under section 174
of Title 8 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. No such provision
may eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision became effective.

II-1
<PAGE>

Upon the closing of this offering, Article V, Section E of the Restated
Certificate of Incorporation, as amended ("LinkShare charter"), of LinkShare
Corporation, a Delaware corporation ("LinkShare"), will provide as follows:

1. Limitation on Liability

To the fullest extent permitted by the DGCL as the same exists or may
hereafter be amended, a director of LinkShare shall not be liable to LinkShare
or any of its stockholders for monetary damages for breach of fiduciary duty as
a director. Any repeal or modification of this subparagraph 1 shall be
prospective only and shall not adversely affect any limitation, right or
protection of a director of LinkShare existing at the time of such repeal or
modification.

2. Indemnification

(a) Right to Indemnification. LinkShare shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director or officer of LinkShare or is or was serving at the request of
LinkShare as a director, officer, employee or agent of another corporation or
of a partnership, limited liability company, joint venture, trust, enterprise
or nonprofit entity, including service with respect, to employee benefit plans,
against all liability and loss suffered and expenses (including attorneys'
fees) reasonably incurred by such person. Such right of indemnification shall
inure whether or not the claim asserted is based on matters which antedate the
adoption of this Section E. LinkShare shall be required to indemnify a person
in connection with a proceeding (or part thereof) initiated by such person only
if the proceeding (or part thereof) was authorized by the Board of Directors of
LinkShare.

(b) Prepayment of Expenses. LinkShare shall pay the expenses (including
attorneys' fees) incurred by a director or officer in defending any proceeding
in advance of its final disposition, provided, however, that the payment of
expenses incurred by a director or officer in advance of the final disposition
of the proceeding shall be made only upon receipt of an undertaking by the
director or officer to repay all amounts advanced if it should be ultimately
determined that the director or officer is not entitled to be indemnified under
this subparagraph 2 or otherwise.

(c) Claims. If a claim for indemnification or payment of expenses under this
subparagraph 2 is not paid in full within 60 days after a written claim
therefor has been received by LinkShare, the claimant may file suit to recover
the unpaid amount of such claim and, if successful in whole or in part, shall
be entitled to be paid the expense of prosecuting such claim. In any such
action LinkShare shall have the burden of proving that the claimant was not
entitled to the requested indemnification or payment of expenses under
applicable law.

(d) Non-Exclusivity of Rights. The rights conferred on any person by this
subparagraph 2 shall not be exclusive of any other rights which such person may
have or hereafter acquire under any statute, provision of this Certificate, the
Bylaws, agreement, vote of stockholders or disinterested directors or
otherwise.

(e) Other Indemnification. LinkShare's obligation, if any, to indemnify any
person who was or is serving at its request as a director, officer, employee or
agent of another corporation, partnership, limited liability company, joint
venture, trust, enterprise or nonprofit entity shall be reduced by any amount
such person may collect as indemnification from such other corporation,
partnership, limited liability company, joint venture, trust, enterprise or
nonprofit entity.

3. Amendment or Repeal

Any repeal or modification of the foregoing provisions of this Section E
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification."

II-2
<PAGE>

Item 15. Recent Sales of Unregistered Securities.

(a) On July 18, 1997, LinkShare issued and sold an aggregate of
14,000,000 shares of its common stock to Stephen D. Messer, Heidi S. Messer
and Jianhao Meng for an aggregate purchase price of $200 and fixed assets
with a fair value of $37,924.

(b) On July 16, 1998, LinkShare issued and sold 2,431,611 shares of
Series A Preferred Stock to Internet Capital Group, LLC for $3,000,000.

(c) On August 28, 1998, LinkShare issued and sold 810,537 shares of
Series A Preferred Stock to Comcast Internet Investments I, Inc. for
$1,000,000.

(d) On August 23, 1999, LinkShare issued and sold (1) convertible notes
having an aggregate face value of $1,500,000 to Stephen D. Messer, Heidi S.
Messer, Jianhao Meng, Internet Capital Group, Inc. and Comcast Internet
Investments I, Inc., for an aggregate purchase price of $1,500,000.
Pursuant to the terms of the notes purchased by Comcast Internet
Investments I, LinkShare issued warrants to purchase an aggregate of
146,895 shares of common stock at an exercise price of $0.29 per share to
Comcast Interactive Capital, LP, as successor in interest to Comcast
Internet Investments I, Inc. The warrants were issued ratably on the 23rd
day of each month from August to December 1999.

(e) On November 18, 1999, LinkShare issued and sold convertible notes
having an aggregate face value of $1,000,000 to Internet Capital Group,
Inc. and Comcast Interactive Capital, LP for an aggregate purchase price of
$1,000,000.

(f) On February 7, 2000, LinkShare issued and sold convertible notes
having an aggregate face value of $6,500,000 to Stephen D. Messer, Heidi S.
Messer, Jianhao Meng, Internet Capital Group, Inc. and Comcast Interactive
Capital, LP. The consideration for those notes consisted of the surrender
of the August 1999 and November 1999 convertible notes issued to such
persons, waiver of interest accrued under those notes plus cash advances
equal to the difference between the aggregate principal amount of the notes
surrendered and the aggregate principal amount of the February 2000 notes.

(g) On March 31 and April 5, 2000, LinkShare issued and sold convertible
notes having an aggregate face value of $2,900,000 to Mitsui & Co.
(U.S.A.), Inc. and Mitsui & Co., Ltd., respectively, for an equal amount of
cash.

(h) On April 14, 2000, LinkShare issued and sold a convertible note
having an aggregate face value of $500,000 to Martin I. Pompadur for an
equal amount of cash.

None of the foregoing transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and LinkShare believes that
each transaction was exempt from the registration requirements of the
Securities Act by virtue of Section 4(2) thereof. The first transaction listed
was the initial capitalization of LinkShare by its founders. In each other
transaction the recipients of LinkShare securities represented to LinkShare
that they were acquiring the securities for investment only and not with a
view to the sale or distribution thereof. Appropriate legends were affixed to
the share certificates or other instruments issued in each transaction. Each
recipient of LinkShare securities had adequate access to information about
LinkShare and the securities acquired through that recipient's relationship
with LinkShare.

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits. The following is a complete list of Exhibits filed as part of
this Registration Statement.

<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<C> <S>
1.1 Form of Underwriting Agreement.*

3.1 Restated Certificate of Incorporation of the Registrant, as
amended to date.+

3.2 Form of Amended and Restated Certificate of Incorporation of the
Registrant to be in effect upon the closing of this offering.+

3.3 Bylaws of the Registrant, as amended to date.+

3.4 Form of Amended and Restated Bylaws of the Registrant to be in
effect upon the closing of this offering.+

</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<C> <S>
4.1 Specimen certificate for shares of common stock, par value $.001
per share, of the Registrant.+

4.2 Form of warrant to purchase common stock issued to Comcast
Interactive Capital, LP+

5.1 Form of Opinion of Baker Botts L.L.P.

10.1 Investor Rights Agreement, dated as of July 16, 1998.+

10.2 LinkShare Corporation Long-Term Incentive Plan.+

10.3 Lease Agreement and Sublease Agreement for 215 Park Avenue South,
New York, New York.+

10.4 Employment Agreement with Stephen D. Messer.*

10.5 Employment Agreement with Heidi S. Messer.*

23.1 Consent of KPMG LLP.

23.2 Form of Consent of Baker Botts L.L.P. (included in Exhibit 5.1).

23.3 Consent of Edward P. Gilligan.

23.4 Consent of I. Martin Pompadur.

24.1 Power of Attorney (included on page II-6).+

27.1 Financial Data Schedule.
</TABLE>

- --------

+ Previously filed
* To be filed by amendment

(b) Financial Statement Schedules. Schedules not listed above have been
omitted because the information to be set forth therein is not material, not
applicable or is shown in the financial statements or notes thereto.

Item 17. Undertakings.

(a) LinkShare hereby undertakes to provide to the underwriter at the closing
specified in the underwriting agreements, certificates in such denominations
and registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
LinkShare pursuant to the foregoing provisions, or otherwise, LinkShare 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 of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by LinkShare
of expenses incurred or paid by a director, officer or controlling person of
LinkShare 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, LinkShare 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 of 1933 and will be
governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, 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-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on April 14, 2000.

Linkshare Corporation

By: /s/ Stephen D. Messer
_______________________________
Name: Stephen D. Messer
Title:Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
* Chairman of the Board,
______________________________________ Chief Executive Officer
Stephen D. Messer and Director (Principal
Executive Officer)

* President and Director
______________________________________
Heidi S. Messer

* Director
______________________________________
Douglas A. Alexander

* Treasurer and Chief
______________________________________ Financial Officer
Bowers W. Espy (Principal Financial and
Accounting Officer)
</TABLE>

<TABLE>
<S> <C> <C>
*By: /s/ Joseph E. Young April 14, 2000
______________________________________
Joseph E. Young
Attorney-in-Fact
</TABLE>

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<C> <S>
1.1 Form of Underwriting Agreement.*

3.1 Restated Certificate of Incorporation of the Registrant, as
amended to date.+

3.2 Form of Amended and Restated Certificate of Incorporation of the
Registrant to be in effect upon the closing of this offering.+

3.3 Bylaws of the Registrant, as amended to date.+

3.4 Form of Amended and Restated Bylaws of the Registrant to be in
effect upon the closing of this offering.+

4.1 Specimen certificate for shares of common stock, par value $.001
per share, of the Registrant.+

4.2 Form of warrant to purchase common stock issued to Comcast
Interactive Capital, LP+

5.1 Form of Opinion of Baker Botts L.L.P.

10.1 Investor Rights Agreement, dated as of July 16, 1998.+

10.2 LinkShare Corporation Long-Term Incentive Plan.+

10.3 Lease Agreement and Sublease Agreement for 215 Park Avenue South,
New York, New York.+

10.4 Employment Agreement with Stephen D. Messer.*

10.5 Employment Agreement with Heidi S. Messer.*

23.1 Consent of KPMG LLP.

23.2 Form of Consent of Baker Botts L.L.P. (included in Exhibit 5.1).

23.3 Consent of Edward P. Gilligan.

23.4 Consent of I. Martin Pompadur.

24.1 Power of Attorney (included on page II--6).+

27.1 Financial Data Schedule.
</TABLE>

- --------

+ Previously filed
* To be filed by amendment.

II-6

<PAGE>

EXHIBIT 5.1

[LETTERHEAD OF BAKER BOTTS LLP]

[Date]

LinkShare Corporation
215 Park Avenue, 8th Floor
New York, New York 10003

Dear Sirs and Madames:

As counsel for LinkShare Corporation, a Delaware corporation (the
"Company"), we have examined and are familiar with the registration statement on
Form S-1, File No. 333-31262 (the "Registration Statement"), which relates to
the registration under the Securities Act of 1933, as amended, of 5,405,000
shares (the "Shares") of the Company's Common Stock, par value $.001 per share,
to be issued and sold to the underwriters (the "Underwriters") named in the
Registration Statement under the heading "Underwriting."

In connection therewith, we have examined, among other things,
originals, certified copies or copies otherwise identified to our satisfaction
as being copies of originals, of the Certificate of Incorporation, as amended,
and Bylaws of the Company, in the forms filed as Exhibits 3.1 and 3.3,
respectively, to the Registration Statement; the proposed Restated Certificate
of Incorporation (the "Restated Charter") and By-Laws of the Company, in the
forms filed as Exhibits 3.2 and 3.4, respectively, to the Registration
Statement; records of proceedings of the Company's Board of Directors, including
committees thereof, with respect to the filing of the Registration Statement and
related matters; the form of Underwriting Agreement, in the form filed as
Exhibit 1.1 to the Registration Statement (the "Underwriting Agreement"); and
such other documents, records, certificates of public officials and questions of
law as we deemed necessary or appropriate for the purpose of this opinion. In
rendering this opinion, we have relied, to the extent we deem such reliance
appropriate, on certificates of officers of the Company as to factual matters.
We have assumed the authenticity of all documents submitted to us as originals
and the conformity to authentic original documents of all documents submitted to
us as certified, conformed or reproduction copies. We have further assumed that
there will be no changes in applicable law between the date of this opinion and
the date of issuance and sale of the Shares to the Underwriters.

Based upon the foregoing, we are of the opinion that when the Shares
are issued, signed by the transfer agent and delivered pursuant to the
Underwriting Agreement and paid for by the Underwriters in accordance therewith,
such Shares will be duly authorized, validly issued, fully paid and non-
assessable.

<PAGE>

EXHIBIT 23.1

The Board of Directors
LinkShare Corporation:

We consent to the use of our report included herein (Form S-1) and to the
references to our firm under the headings "Selected Financial Data" and
"Experts" in the prospectus.

KPMG LLP

New York, New York
April 14, 2000

<PAGE>

EXHIBIT 23.3

February 28, 2000

To the Board of Directors of
LinkShare Corporation (the "Company"):

I consent to being named as a prospective director of the Company in the
Company's Registration Statement on Form S-1 to be filed with the Securities
Exchange Commission in connection with the Company's common stock. Of course, my
consent does not obligate me to join the Company's Board of Directors, nor
should it be construed as my approval of the Company's registration statement.

Very truly yours,

/s/ Edward R. Gilligan

Edward R. Gilligan

<PAGE>

EXHIBIT 23.4

February 28, 2000

To the Board of Directors of
LinkShare Corporation (the "Company"):

Very truly yours,

/s/ I. Martin Pompadur

I. Martin Pompadur

<PAGE>

<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1999 DEC-31-1999
<PERIOD-START> JUL-01-1998 JUL-01-1999
<PERIOD-END> JUN-30-1999 DEC-31-1999
<CASH> 238,666 6,822
<SECURITIES> 398,695 0
<RECEIVABLES> 574,880 2,598,941
<ALLOWANCES> 95,000 254,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,137,568 2,371,603
<PP&E> 695,209 2,454,306
<DEPRECIATION> 89,221 296,549
<TOTAL-ASSETS> 1,788,158 4,751,522
<CURRENT-LIABILITIES> 1,225,455 6,619,811
<BONDS> 0 0
0 0
3,242 3,242
<COMMON> 4,000 4,000
<OTHER-SE> 555,461 (1,875,531)
<TOTAL-LIABILITY-AND-EQUITY> 1,788,158 4,751,522
<SALES> 714,701 2,612,625
<TOTAL-REVENUES> 714,701 2,612,625
<CGS> 104,751 349,896
<TOTAL-COSTS> 4,156,315 5,282,876
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 549,505
<INCOME-PRETAX> (3,380,512) (3,201,107)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,380,512) (3,201,107)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,380,512) (3,201,107)
<EPS-BASIC> (0.85) (0.80)
<EPS-DILUTED> (0.85) (0.80)

</TABLE>