MAGNACASH INC, S-1/A, 2000-09-13

MAGNACASH INC
S-1/A, 2000-09-13
BUSINESS SERVICES, NEC

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As filed with the Securities and Exchange Commission on September 13, 2000

Registration No. 333-43108
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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AMENDMENT NO. 1

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

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MAGNACASH, INC.
(Exact name of registrant as specified in its charter)

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<TABLE>
<CAPTION>
Delaware 7374 94-3370414
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

1330 Broadway, Suite 1535
Oakland, California 94612
(510) 808-3700
(Address and telephone number of principal executive offices and principal
place of business)

Barry C. McCarthy
President & Chief Operating Officer
MagnaCash, Inc.
1330 Broadway, Suite 1535
Oakland, California 94612
(510) 808-3700
(Name, address, and telephone number of agent for service)

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Copies to:
John W. Campbell, Esq.
Mark W. Pearson, Esq.
Dante G. Corricello, Esq.
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105-2482

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

If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

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

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

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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered(1) Per Share(2) Offering Price(2) Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par
value................. 11,069,133 shares $0.03 $408,585 $264
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</TABLE>
(1) Based on an estimate of the maximum number of shares of Common Stock to be
issued in connection with the distribution described herein.

(2) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(f)(2) under the Securities Act based on the
adjusted book value of the Common Stock after giving effect to the
distribution described herein. No consideration will be paid by the
recipients of the Common Stock.

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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 that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. +
+Cybergold and MagnaCash may not sell or distribute 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 SEPTEMBER 13, 2000

[LOGO OF MAGNACASH (TM)]

MagnaCash, Inc.

11,069,133 Shares of MagnaCash Common Stock
are being distributed to the Stockholders of Cybergold, Inc.

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Cybergold, Inc. will distribute to the holders of record of Cybergold common
stock as of the close of business on August 3, 2000, approximately 11,069,133
shares of common stock of MagnaCash, Inc. Each such holder of Cybergold common
stock will receive one share of MagnaCash common stock for every two shares of
Cybergold common stock held. This distribution will be a taxable distribution
to the recipients and all or a portion of the distribution may be taxable as a
return of capital or capital gain. Neither Cybergold nor MagnaCash will receive
any proceeds from this offering. MagnaCash has not applied for quotation of the
MagnaCash common stock on any national securities exchange.

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Investing in MagnaCash common stock involves risks. See "Risk Factors"
beginning on page 8.

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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.

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Delivery of the shares of MagnaCash common stock will be made on or about
September 29, 2000.

The date of this prospectus is , 2000.

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You should rely only on the information contained in this prospectus.
MagnaCash and Cybergold have not authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. MagnaCash and Cybergold
are not making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information
appearing in this prospectus is accurate as of the date on the front cover of
this prospectus only. MagnaCash's business, financial condition, results of
operations and prospects may have changed since that date.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
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<S> <C>
Prospectus Summary......................................................... 4
Risk Factors............................................................... 8
Forward Looking Statements................................................. 16
Use of Contribution........................................................ 16
Why This Prospectus Was Sent to You........................................ 17
The Distribution........................................................... 17
Investor Contact........................................................... 18
Reasons for the Distribution............................................... 18
Tax Treatment.............................................................. 19
Business of MagnaCash...................................................... 19
Selected Financial Data.................................................... 26
Management's Discussion and Analysis....................................... 31
Management................................................................. 37
Security Ownership of MagnaCash............................................ 42
Arrangements Between MagnaCash and Cybergold or Mypoints................... 43
Certain Relationships and Related Transactions............................. 46
Material Federal Income Tax Considerations................................. 47
Description of Capital Stock............................................... 48
Dividend Policy............................................................ 50
Indemnification of Directors and Officers.................................. 50
Transfer Agent and Registrar............................................... 50
Legal Matters.............................................................. 50
Experts.................................................................... 50
Where You Can Find More Information........................................ 51
Index to Financial Statements.............................................. F-1
Part II--Information Not Required in Prospectus............................ II-1
</TABLE>

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PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this
prospectus and may not contain all the information important to you. To better
understand the distribution and MagnaCash, you should read the entire
prospectus carefully, including the risk factors and financial statements,
including the notes to the financial statements which are included elsewhere in
this prospectus.

MagnaCash, Inc.

MagnaCash, Inc. is a newly formed company that was incorporated August 1,
2000 and is currently a wholly-owned subsidiary of Cybergold, Inc., an on-line
incentives business that rewards its users for participating in certain
marketing related activities like shopping at certain web sites. Cybergold,
Inc. is a wholly-owned subsidiary of MyPoints.com, Inc., a publicly traded
company that completed an acquisition of Cybergold on August 7, 2000 and is
also an on-line incentives business. MagnaCash anticipates incurring operating
and net losses for the foreseeable future and, as of June 30, 2000, had
accumulated net losses of $1,867,000.

MagnaCash operates an on-line credit and debit system capable of creating
and managing on-line dollar denominated accounts, transferring credits and
debits on-line between any combination of account holders on-line, and
processing monetary purchase transactions at businesses which agree to
participate in the system. The MagnaCash system is based on a proprietary, on-
line database and tracking system that stores dollar denominated credits that
are backed fully by physical bank deposits.

All on-line accounts managed by MagnaCash reside on our server network. We
complete money transfers by simultaneously debiting one account and crediting
another. When an account is credited on the MagnaCash system, U.S. dollars in
the amount of the credit are added to a pooled account at a depository
institution either through a transfer from a bank account to the pooled account
or through a Visa credit card transaction. Account holders may redeem credits
in their accounts at any time for U.S. dollars by requesting a transfer to
either a bank or Visa credit card account. MagnaCash then remits U.S. dollars
to the requested account from its pooled accounts according to standard bank
and Visa credit card operating rules. Although the pooled accounts maintained
by MagnaCash are FDIC-insured, MagnaCash is not a bank, and accounts on the
MagnaCash system are general liabilities of MagnaCash and not FDIC-insured.

Account holders may also use their accounts to pay for on-line purchases at
participating businesses. Payments are effected through a small piece of
software called The Mint. The Mint is installed on the commerce systems of
participating businesses and connects the systems to the MagnaCash servers over
the Internet. The Mint securely transfers the required information from the
business to MagnaCash where the electronic transfer of credits from the
purchaser's account to the business's account is completed. The business can
then redeem the credits for U.S. dollars through a transfer to either the
business's bank or Visa credit card account.

The MagnaCash system consists of a combination of proprietary and
commercially available software operated on standard, commercially available
hardware. MagnaCash owns or has licenses to all of the software it uses.
MagnaCash licenses software from Cybergold for the core of its technology.
Approximately 50% of the hardware used by MagnaCash is owned and operated by
MagnaCash. The other 50% is owned by Cybergold, and operated on behalf of
MagnaCash under the terms of a transitional services and joint operating
agreement between MagnaCash and Cybergold.

MagnaCash creates accounts for users on behalf of our clients. We can brand
these accounts with our clients' names or logos. Clients may pay rebates,
discounts or incentives directly into these accounts. Customers of our clients
may add funds to their accounts from bank accounts or Visa credit cards.
Potential clients for MagnaCash on-line account creation and management
services are businesses interested in offering

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an on-line payment system to their customers, including on-line direct
marketing companies, on-line retailers, Internet service providers, Internet
portals, banks and credit unions. MagnaCash clients can select from a variety
of MagnaCash tools to create a customized, on-line account system for their
customer base. MagnaCash employees monitor the MagnaCash system and provide
support to clients and businesses using the MagnaCash system. MagnaCash does
not play a role in designing clients' web sites, web pages or hosting hardware
or other related appliances or providing any other non-payment related
services.

Individuals will also have the opportunity to open on-line dollar
denominated accounts directly with MagnaCash. Accounts opened by individuals
will be branded with the MagnaCash logo.

Our sole current client is Cybergold. Cybergold pays its customers cash for
participating in certain marketing activities. These cash rewards are deposited
into Cybergold-branded, on-line accounts managed by MagnaCash. MagnaCash
manages over 9 million individual customer accounts for Cybergold as of August
31, 2000.

Approximately 50 on-line businesses are directly connected and participate
in our payment system through The Mint. Most of these businesses are on-line
retailers and charitable organizations that receive payments or donations
through the MagnaCash system.

We plan on generating revenues in the future by charging our clients monthly
fees for managing and maintaining accounts on our servers, delivering services
to customize the look and feel for the managed accounts of our clients and
connecting these accounts to the client's Internet site, and processing
transactions between participating businesses and account holders, for which
businesses pay a small fee. As of June 30, 2000, all of our revenues were
derived from processing purchase transactions between participating businesses
and their customers.

Industry Background

Electronic commerce using the Internet has grown substantially over the past
several years. Customers and businesses have adopted a variety of methods to
pay for goods and services obtained through the Internet. While the two most
common on-line methods of payment--credit cards and direct bank payments made
through the direct bank payment systems--are estimated to process more than 97%
of on-line payment transactions, each presents problems for both users and
merchants. These problems create opportunity for new payment systems like
MagnaCash.

Credit cards are currently the overwhelming payment method chosen by
Internet customers. However, some customers are reluctant to provide credit
card information over the Internet, and the cost for businesses accepting
credit card payments on-line can be high as a percentage of the total
transaction amount particularly for small dollar value sales on-line. We
believe that the marketplace for Internet-based, small dollar sales will
increase as digital goods, such as recorded music, become more available for
purchase over the Internet.

Some customers are also reluctant to use the direct bank payment system for
Internet transactions because it requires customers to enter their bank account
numbers, bank identification information and other personal information. In
addition, businesses may not receive credit for funds transferred using this
system for as long as three business days.

MagnaCash offers an on-line payment alternative, without the problems of
these existing payment systems. The MagnaCash system is cost-effective,
offering transaction fees consistently and substantially lower than those
charged by credit card systems as a percentage of the total transaction amount.
MagnaCash also allows customers to make purchases on-line without revealing
credit card or bank account information repeatedly to each business, or during
each transaction. In addition to lower cost transactions, businesses receive
immediate funds from sales and benefit from on-line customer service that
MagnaCash offers.

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For a description of the potential risks MagnaCash faces, please see "Risk
Factors" beginning on page 8.

MagnaCash is incorporated in Delaware. Our offices are located at 1330
Broadway, Suite 1535, Oakland, CA 94612 and our telephone number is (510) 808-
3700. "MagnaCash," "we," and "our" refer to MagnaCash, Inc.

Valuation of MagnaCash Common Stock

Valuation. We consulted with a valuation services provider, who calculated
the value of the MagnaCash common stock at $8,800,000 as of August 3, 2000.
The value is based on cash flows projected by Cybergold's management and
available market information on similar companies. The value is dependent upon
the assumptions upon which those projections are based and the time at which
the market information was derived. Due to the start-up nature and lack of
operating history of MagnaCash, and the risk inherent in implementing an on-
line business strategy, the assumptions and projections may vary significantly
from actual results. Additionally, given the early stage of the industry in
which MagnaCash operates, there was a limited availability of similar
guideline public companies and comparable market transactions.

Relationship between Cybergold and MagnaCash

80.1% of the MagnaCash common stock is being distributed to Cybergold
stockholders of record as of August 3, 2000. Cybergold will own 19.9% of our
common stock after the distribution. Cybergold has made a $5 million
contribution to MagnaCash. Our board of directors will consist of three to
nine directors. At the outset, two of our three directors will be former
directors of Cybergold.

Background and Reasons for the Distribution

On April 14, 2000, Cybergold, MagnaCash's corporate parent, entered into a
merger agreement with MyPoints and Mygo Acquisition Corporation, a wholly-
owned subsidiary of MyPoints, pursuant to which Mygo Acquisition Corporation
was to merge with and into Cybergold. In the merger agreement, the parties
agreed that, subsequent to the merger, 80.1% of the MagnaCash common stock
would be distributed to stockholders of Cybergold of record as of a date prior
to completion of the merger. The board of directors of Cybergold set this
record date as August 3, 2000. On August 7, 2000, MyPoints completed its
acquisition of Cybergold and Cybergold is now a wholly-owned subsidiary of
MyPoints.

Distribution

Each Cybergold stockholder of record as of the record date of August 3,
2000 will receive one share of MagnaCash common stock for every two shares of
Cybergold common stock held by such stockholder. Additionally, Cybergold
itself will retain 19.9%, or 2,750,009 of the outstanding shares, of
MagnaCash. Since Cybergold is now a wholly-owned subsidiary of MyPoints.com,
Inc. MyPoints will be the beneficial owner of these shares. No fractional
shares will be distributed. The number of shares distributed to each
stockholder will be rounded down to the nearest whole number where a
stockholder would otherwise receive a fractional share.

Prior to the distribution, there has been no public market for our common
stock. MagnaCash has not applied to have the MagnaCash common stock included
for quotation on the Nasdaq Stock Market's National Market or listed on any
exchange. In addition, the shares of MagnaCash being distributed may not be
disposed of until the earliest of a year from the distribution, the date a
registration statement covering an offering of shares of our common stock, the
issuance of which would increase the number of shares of our common stock
outstanding by eighty percent (80%) or more is declared effective by the
Securities and Exchange Commission, or a date determined by the board of
directors of MagnaCash in its sole discretion.

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There are two exceptions to this limitation on disposition:

. any holder of common stock that is a natural person may transfer the
shares to such stockholder's spouse or children, to any trust solely for
the benefit of such stockholder or the children or spouse of such
stockholder, or to any party pursuant to applicable laws of descent and
distribution; and

. any holder of common stock that is a corporation, limited liability
company, limited partnership or general partnership may transfer the
shares to any affiliate.

Cybergold will realize a taxable gain on the distribution of MagnaCash
common stock to the extent the fair market value of the distributed MagnaCash
common stock exceeds Cybergold's basis in such stock. The distribution of
MagnaCash common stock will be a taxable return of capital or capital gain to
Cybergold stockholders. Because public trading of MagnaCash common stock will
be restricted for a period of time, Cybergold stockholders must use another
source of funds to pay any taxes resulting from the distribution.

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RISK FACTORS

You should carefully consider the risks described below when evaluating your
ownership of MagnaCash common stock. If any of the following risks actually
occurs, our business, financial condition and results of operations would
suffer. Additional risks and uncertainties we are presently not aware of, or
that we currently consider immaterial, may also harm our business operations.

If a major credit card company or the banking industry offers similar services,
the market for our services may be reduced or eliminated.

No major credit card company currently offers services similar to the
MagnaCash payment system. If a major credit card company changes strategy and
offers Internet transactional services at a lower price, and with similar ease
of use to those offered by us, we will lose our primary points of appeal to
merchants and consumers. As a result the market for our business may be
significantly reduced or eventually eliminated.

Competition in our industry is intense. If we are unable to compete
effectively, the demand for, and/or the prices of, our services may decline.

The market for our services is embryonic, intensely competitive and
characterized by declining average selling prices and rapid technological
change. We compete with existing credit card systems and other companies
including:

<TABLE>
<S> <C> <C>
. Ipin . Beenz . WebCertificates
. PayPal/X.com . Flooz . RocketCash
. Qpass . Cybermoola . Internetcash; and
. Trivnet . Cobalt Card . eCount
</TABLE>

Our principal competitor--the entire existing credit card system--and many
potential competitors, have more resources with which to compete and implement
technological change. Our principal competitors could change or grow because
the market for our services is emerging and undefined.

We may not be able to effectively respond to competition because of the
disparity in resources between ourselves and our competitors. Though Cybergold
has always faced competition, we may be less able to react quickly to
competitive threats without the added benefits we enjoyed when we were a part
of Cybergold. These benefits included joint research and development,
Cybergold's sales force and financial stability.

We may incur increased losses as a result of operating independently from
Cybergold.

We have operated as a support division of Cybergold until recently. We will
incur losses operating as an independent company. Operating independently, we
cannot be sure that our operating results will not be adversely affected by the
loss of one or more attributes of operating as part of Cybergold. Operating as
part of Cybergold has allowed us, among other things:

. to develop as a business despite low initial revenues in 1999 for our
business;

. to have Cybergold as a captive client base that now may eventually cease
using our services; and

. to have a developed company administrative infrastructure.

We currently use Cybergold's information systems, for which Cybergold will
transfer or grant licenses to us to support our business as a stand-alone
entity.

We currently use Cybergold's systems to support our operations, including
systems to manage order processing, human resources, shipping, accounting,
telecommunications and computer networking. Any failure or significant downtime
in Cybergold's or our information systems could prevent us from taking customer

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orders and billing customers and could harm our business. Many of the systems
we currently use are proprietary to Cybergold and are very complex. These
systems have been modified, and are in the process of being further modified,
to enable us to separately track items related to our business. These
modifications, however, may result in unexpected system failures or the loss or
corruption of data, which may disrupt our operation and have a material adverse
effect on our business, results of operations and financial condition.

We cannot assure you that we will be profitable because we have operated our
business only for a short period of time and have only limited operating
history upon which to evaluate our business.

We have only been operating since 1999, and during that time have operated
as part of Cybergold, three of our key executives, Barry McCarthy, Eli Rosner
and Neta Klein, joined the MagnaCash business within the last six months. The
revenue and income potential of our business and the markets for on-line
payments through alternative mechanisms is unproven. We will encounter risks
and difficulties commonly encountered by early stage companies in new and
rapidly evolving markets.

To date we have derived substantially all of our product revenue from
transaction fees paid by businesses accepting direct payment from a Cybergold
account. Cybergold is our only current client through whom we have established
accounts for a limited number of merchants, other organizations and consumers.

We may never achieve profitability.

We have accumulated net losses of approximately $1,867,000 from our
inception through June 30, 2000, and we expect such losses to continue for the
foreseeable future. We cannot predict if we will ever achieve profitability
and, if we do, we may not be able to sustain or increase our profitability. Our
ability to achieve and maintain profitability will depend on, among other
things, market acceptance of our services. The commercial success, or
profitability and achievement of market share, of any of our services will
depend on:

. our ability to sell our services to clients, merchants, and consumers;
and

. our ability to induce merchants to install our software.

The market for alternate Internet payment mechanisms is relatively new and we
cannot be certain that a viable market for our products will emerge or be
sustainable.

We cannot assure you that the demand for and market acceptance of alternate
Internet payment services will develop to a sufficient level to support
continued operations or planned expansion, and also cannot assure you that
users, clients or merchants will utilize our system for payment transactions
over the Internet. If a viable market does not develop, our revenues will not
grow and our business will fail. Currently, Internet content and service
providers typically use a subscription model to charge for content or services
they provide, if they charge consumers directly for their content or services
at all. The subscription model involves charging subscribers a fixed fee in
exchange for allowing subscribers access to certain content on a web site. It
is not an on-line method of payment, but a means of calculating charges, as
opposed to, for example, a small charge for each page view on a web site.
Through the use of the MagnaCash system, on-line businesses will have the
opportunity to shift to a pay-per-view model. We cannot assure you that these
entities will ever adopt a method for accepting small payments for their
content or services over the Internet. In addition, the development of a market
for payments on the Internet may depend on the eventual adoption of a standard
payment system. There can be no assurance that our payment system will be the
system adopted by users, clients or merchants. If a widespread demand for on-
line payments does not develop or if another method for on-line payments is
adopted as a standard, our business will be harmed.

We may be unable to obtain additional capital needed to operate and expand our
business.

We believe that our available cash resources combined with funds from
operations and Cybergold's $5 million contribution will be sufficient to meet
our working capital and capital expenditure requirements for

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approximately one year. We may be required to raise additional funds in order
to expand operations, finance acquisitions or to finance other activities we
determine to be beneficial to our business.

If adequate funds are not available or are not available on acceptable
terms, we may be unable to develop or enhance our products and services, take
advantage of future opportunities or respond to competitive pressures, which
could have material adverse effect on our business, financial condition or
operating results.

If we raise additional funds through the issuance of equity securities, the
percentage ownership of the stockholders of record will be reduced, and
stockholders may experience dilution. It is also possible that new equity
securities may have rights, preferences or privileges senior to those of the
holders of our common stock. Moreover, we cannot assure you that additional
financing will be available as we need it.

We depend on continued growth in e-commerce and Internet infrastructure
development for our business to grow.

Use of the Internet by businesses and consumers as a medium for electronic
commerce is at an early stage of development and is subject to a level of
uncertainty. We depend on the growing use and acceptance of the Internet as an
effective medium of commerce by merchants and customers. The use of and,
interest in, the Internet are relatively recent developments. We cannot be
certain that acceptance and use of the Internet will continue to develop as a
medium for commerce or that a sufficiently broad base of merchants and
purchasers will adopt, and continue to use, the Internet as a medium of
commerce. Additionally, without concurrent development of the Internet's
infrastructure, consumers' ability to use our services may be limited, and our
business could be harmed.

The emergence of the Internet as a commercial marketplace may occur more
slowly than anticipated for a number of reasons, including potentially
inadequate development of the necessary network infrastructure or delayed
development of enabling technologies and performance improvements. If the
number of Internet users or their use of Internet resources continues to grow
it may overwhelm the existing Internet infrastructure. Delays in the
development or adoption of new standards and protocols required to handle
increased levels of Internet activity could also have a detrimental effect.
These factors could result in slower response times or adversely affect usage
of the Internet, resulting in lower numbers of transactions through the
Internet and lower demand for our services.

Our ability to grow also depends on our ability to expand our systems to
accommodate increases in the volume of traffic, especially during peak periods
of demand. We may not be able to anticipate increases in the use of our
services and successfully expand the capacity of our network infrastructure.
This could result in system disruptions, slower response times and other
difficulties in providing services to merchants, consumers and clients.

The Internet is characterized by rapid technological changes, and we must adapt
quickly to these changes to compete effectively.

The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer demands,
and frequent new product introductions and enhancements. For example, to the
extent that real-time on-line payment mechanisms become more widely utilized
and offered, we may be required to make significant changes to the design and
content of our services to respond to merchant and customer needs and
competitive pressures. Failure to effectively adapt to these or any other
technological developments could have an adverse effect on our business,
results of operations and financial conditions.

We are exposed to e-commerce security risks.

A requirement of the continued growth of e-commerce is the secure
transmission of confidential information over public networks. A party who is
able to circumvent our security measures could

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misappropriate proprietary information, steal cash, damage records or interrupt
our operations. Any such compromise or elimination of our security could lower
merchant and consumer confidence and reduce demand for our services, harming
our ability to grow, and could subject us to liability.

We may be required to expend significant capital and other resources to
protect against these security breaches or to address problems caused by these
breaches. Concerns over the security of the Internet and other on-line
transactions and the privacy of users may also inhibit the growth of the
Internet and other on-line services generally, and the Internet in particular,
especially as a means of conducting commercial transactions. Since some of its
activities involve the storage and transmission of proprietary information,
such as account numbers, security breaches could damage our reputation and
expose it to a risk of loss or litigation and possible liability. Our security
measures may not prevent security breaches, and failure to prevent these
security breaches may disrupt our operations and have a material adverse effect
on our business, results of operations and financial condition.

If we were found subject to or in violation of any laws or regulations
governing banks or electronic payment or money transfers we could be subject to
liability or forced to change our business practices.

While we believe, based on consultation with counsel, that we are not
subject to federal or state laws or regulations as a bank or branch of a bank,
and that we operate in conformity with any applicable electronic payment laws
or regulations, we have not received any definitive legal determination as to
our legal status under these laws. Should we be found subject to and/or in
violation of any such laws or regulations, we could be subject to liability or
forced to change our business practices. Such liability or changes could have a
material adverse effect on our business, results of operations and financial
condition.

Based on consultation with counsel, we also believe that we are not subject
to, or in violation of federal laws or regulations, including the Electronic
Funds Transfer Act and Federal Reserve Board Regulation E, or state laws and
regulations regarding money transfers. However, should we be found to be
subject to and in violation of such laws or regulations, we could be subject to
liability or forced to change our business practices. Such liability or changes
could have a material adverse effect on our business, results of operations and
financial condition.

We are subject to U.S. government regulation of the Internet, the impact of
which is difficult to predict.

There are currently few laws or regulations directly applicable to the
Internet. If laws or regulations are added or changed, the market for our
business could be materially adversely affected. The application of existing
laws and regulations to us relating to issues such as banking, currency
exchange, pricing, taxation, quality of services, and intellectual property
ownership and infringement can be unclear. Moreover, we use encryption
technology that may be or may become subject to government regulation. In
addition, we may also become subject to new laws and regulations directly
applicable to the Internet or our activities. Any existing or new legislation
applicable to us could expose us to substantial liability, including
significant expenses necessary to comply with these laws and regulations, and
dampen the growth in use of the Internet on which we depend.

In 1998, the United States government enacted a three-year moratorium, which
has since been proposed to be extended through 2005, prohibiting states and
local governments from imposing new taxes on electronic commerce transactions.
Upon expiration of this moratorium, if it is not extended, states or other
governments may levy sales or use taxes on electronic commerce transactions. An
increase in the taxation of electronic commerce transactions may make the
Internet less attractive for consumers and businesses which could have a
material adverse effect on our business, results of operations and financial
condition.

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If our relationship with the First National Bank of Omaha were to terminate our
ability to deposit to and transfer funds from Visa credit card accounts could
be disrupted.

We have a contractual relationship with the First National Bank of Omaha,
for processing for Visa credit card account transactions, that enables the
remission of value from individual MagnaCash accounts to Visa credit card
accounts, as well as the transfer of credit from the Visa credit card accounts
to MagnaCash accounts. The First National Bank of Omaha is able to remit or
transfer value to or from any Visa credit card account, regardless of whether
the person holding such account is a customer of the First National Bank of
Omaha. This transaction processing capability initially required re-engineering
of the First National Bank of Omaha's major credit card transaction processing
system. The First National Bank of Omaha can terminate the contract at any time
with 30 days notice. If our relationship with the First National Bank of Omaha
were to terminate, we would be required to find another processing entity which
could cause delays in our processing services until a new processor could be
found. Any such delay would disrupt our operations and have a material adverse
effect on our business, results of operations and financial condition.

We are dependent on Cybergold as our sole account management client for the
immediate future. Additionally, MyPoints may exert an undue amount of influence
on MagnaCash and the MagnaCash business given its 19.9% stake in the Company.

We will initially be dependent on Cybergold as our sole account management
client and will initially receive most of our revenues from our service
relationship with Cybergold. Our relationship with Cybergold is renegotiable
after six months. Any significant reductions in revenues or increase in
expenses from this relationship could adversely affect our business and results
of operations. In addition MyPoints will own 19.9% of MagnaCash through
Cybergold and thus could exert undue influence over us until we can expand our
customer base and increase our economic independence.

Our directors and executive officers may have conflicts of interest because of
their ownership of MyPoints common stock.

Two of our directors and executive officers have a substantial amount of
their personal financial portfolios in MyPoints common stock and options to
purchase MyPoints common stock. Ownership of MyPoints common stock by our
directors and officers after our separation from Cybergold could create, or
appear to create, potential conflicts of interest when directors and officers
are faced with decisions that could have different implications for MyPoints
and us. Specifically, these directors and officers might take action in their
own self interest that might not be the best possible action from our
perspective. For information regarding directors' and officers' ownership of
MyPoints common stock, see "Security Ownership of MagnaCash."

We are subject to the effective control of two stockholders and to anti-
takeover provisions.

A. Nathaniel Goldhaber and MyPoints will collectively hold 37.4% of
MagnaCash common stock, an amount sufficient to exercise effective control. Due
to this effective control and to anti-takeover provisions, a third party may be
reluctant to attempt to gain control of MagnaCash, even if a change in control
might be beneficial to our stockholders. This could adversely affect the market
price of our common stock once it is traded. These anti-takeover provisions
include:

. division of the board of directors into three separate classes;

. elimination of cumulative voting in the election of directors;

. prohibitions on our stockholders from acting by written consent and
calling special meetings;

. procedures for advance notification of stockholder nominations and
proposals; and

. the ability of the board of directors to alter our bylaws without
stockholder approval.

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Our historical financial information may not be representative of our results
as a separate, stand-alone company.

Our historical financial information, as part of Cybergold, is shown in the
financial statements beginning on page F-1 and does not necessarily reflect
what our financial position, results of operations and cash flows would have
been had we been a separate, stand-alone entity during the periods presented.
In addition, the historical information is not necessarily indicative of what
our results of operations, financial position and cash flows will be in the
future. We have not made adjustments to reflect many significant changes that
will occur in our cost structure, funding and operations as a result of our
separation from Cybergold, including changes in our employee base, changes in
our legal structure, increased costs associated with reduced economies of
scale, increased marketing expenses related to establishing a new brand
identity and increased costs associated with being a public, stand-alone
company. We have included the unaudited pro forma financial statements of
MagnaCash which present the effect of the separation agreements between
Cybergold and MagnaCash as if the agreements had been entered into on January
1, 1999. The only agreements that have a pro forma impact are the Services
Agreement and the Sublease Agreement.

For additional information, see "Proforma Financial Statements," "Selected
Financial Statements," as well as the notes thereto and "Management's
Discussion and Analysis."

Public trading in our stock will be restricted for up to one year following the
distribution. This restriction will almost certainly reduce the value of
MagnaCash common stock. Stockholders must use another source of funds to pay
any taxes resulting from this share distribution.

Market or listed on any exchange. In addition, the shares of MagnaCash being
distributed may not be disposed of until the earliest of a year from the
distribution, the date a registration statement covering an offering of shares
of our common stock, the issuance of which would increase the number of shares
of our common stock outstanding by eighty percent (80%) or more is declared
effective by the Securities and Exchange Commission, or a date determined by
the board of directors of MagnaCash in its sole discretion.

There are two exceptions to this limitation on disposition:

. any holder of common stock that is a corporation, limited liability
company, limited partnership or general partnership may transfer the
shares to any affiliate.

This restriction will lower the value of each stockholder's shares and will
force each stockholder to use another source of funds to pay any taxes assessed
to such stockholder on the distribution. Public trading of our stock is
restricted to allow MagnaCash, as a new company, to grow without the effect of
speculation in our stock price and allow investors sufficient time to evaluate
MagnaCash's performance.

Seasonal trends may cause our quarterly operating results to fluctuate. In the
future after the stock is publicly traded, this fluctuation may adversely
affect the market price of its common stock.

A significant portion of our sales revenue comes from the consumer and
merchant markets, both of which are characterized by seasonal sales. Both
markets tend to experience higher sales in the third and fourth calendar
quarters due to holiday purchases and relatively weaker sales in the first and
second calendar quarters. Seasonal trends may cause our operating results to
fluctuate which may have an adverse effect on our stock price when our stock is
publicly traded.

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Since pricing structures may vary by client, and Cybergold is our only
current client, we cannot predict how our pricing structure will evolve.
However, we expect that in some cases clients may pay one-time set-up fees in
connection with acquiring our services. The timing of the recognition of fees
varies, which contributes to quarterly fluctuations in revenues. In addition,
many of our distribution channels integrate our services with other electronic
commerce solutions. The timing for these channels to complete the integration
and deploy their solutions into their distribution channel is unpredictable.

We may experience software defects and development delays, damaging customer
relations and decreasing our potential profitability.

Services based on sophisticated software and computing systems often
encounter development delays, and the underlying software may contain
undetected errors or failures when introduced or when the volume of services
provided increases. While we are not currently developing new software, as we
update our services we may experience delays in the development of our software
products or the software and computing systems underlying our services. In
addition, despite testing by us, and potential clients, it is possible that our
software may nevertheless contain errors, and this could have a material
adverse effect on our business, results of operations and financial condition.

We rely on Cybergold and third party technology that we need for our services.

We do not own all of our technology. We have an exclusive, global, royalty
free license from Cybergold for a substantial portion of the technology needed
to operate our payment system business, including our core technology. We also
rely on other technology which we license from Cybergold and third parties. The
primary third party technology we rely on is commercially available web server
and database technology from Apache and Sybase. Similar technology is available
from other sources. Some commercial software is integrated with internally
developed and proprietary software and used in our software to perform key
functions. We cannot assure you that technology licenses will continue to be
available to us on commercially reasonable terms or at all. If we lose or
cannot maintain any of these technology licenses, it could impede our provision
of services, specifically our ability to transfer credits and debits on-line,
and delay the introduction of new services. Any delay resulting from the
acquisition or use of commercial software may have a material adverse effect on
our business, results of operations and financial condition.

We may experience difficulty attracting and retaining quality employees, who if
retained may not work well together, potentially limiting our ability to
operate our business effectively.

Our ability to grow will depend, in large part, on our ability to attract
and retain highly qualified technical and managerial personnel. The combination
of our business with the Cybergold business has resulted in faster growth and
greater scale. After the distribution, without these benefits of a combined
business, we may not experience the same success attracting quality employees.

Competition for qualified personnel is intense, especially in the Bay Area
where we are located. There is a risk that some key employees will depart as a
result of the distribution. Lack of success in attracting qualified new
employees could lead to lower than expected operating results, delays in the
introduction of new services and a negative effect on our ability to acquire
and support clients.

Our complete management team has been in place only since June 2000, and
only Gary Fitts and Barry McCarthy have previously worked together. The team
may not be able to work together effectively. Additionally, our performance is
substantially dependent on the performance of its executive officers and key
employees. We do not have "key person" life insurance policies on any of its
employees. The loss of the services of any key employees or directors,
particularly A. Nathaniel Goldhaber, Gary Fitts or Barry McCarthy, could have a
material adverse effect on our business, results of operations and financial
condition.

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If we are unable to adequately protect our intellectual property, third parties
could use our intellectual property without our consent.

Our operating results depend, in part, on our ability to protect our
technology. Our products are primarily based on technology that was developed
internally at Cybergold which we protect through a combination of
confidentiality agreements and licensing arrangements. Our technology manages
on-line accounts. There are two proprietary components of this technology--
creating a technological infrastructure for those accounts and transferring
debits and credits among accounts and transferring credits to Visa credit card
account and bank accounts. The components are payment servers and software,
called "The Mint" that communicates with the servers to move value in the
system. Unauthorized parties may attempt to obtain and use our proprietary
information which might negatively affect the value of our stock. Policing
unauthorized use of our proprietary information is difficult, and we do not
know whether the steps we have taken will prevent misappropriation,
particularly in foreign countries where the laws may not protect our
proprietary rights as fully as the laws of the United States.

Our operating results would suffer if we were forced to defend against a
protracted infringement claim or if a third party were awarded significant
damages.

There is a substantial risk of litigation regarding intellectual property
rights in the on-line account and transaction industry. A successful claim of
patent or other technology infringement against us and our failure or inability
to license the infringed or similar technology could harm our business. Any
claims, with or without merit, could:

. be time-consuming and costly to defend;

. divert management's attention and resources;

. cause delays in delivering services;

. require the payment of monetary damages which may be tripled if the
infringement is found to be willful;

. result in an injunction which would prohibit us from offering a
particular service; and

. require us to enter into royalty or licensing agreements which may not
be available on acceptable terms.

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FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements that are based on our
current expectations, assumptions, estimates and projections about MagnaCash
and its industry. When used in this prospectus, the words expects, anticipates,
estimates, intends and similar expressions are intended to identify forward-
looking statements. These statements include, but are not limited to,
statements under the captions "Risk Factors," "Management's Discussion and
Analysis," "Business of MagnaCash" and elsewhere in this prospectus.

These forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those projected. The
cautionary statements made in this prospectus should be read as being
applicable to all related forward-looking statements wherever they appear in
this prospectus.

USE OF CONTRIBUTION

While there will be no proceeds from the distribution, Cybergold has
provided MagnaCash with a $5,000,000 contribution. However, prior to the date
on which the MagnaCash shares are distributed, a reserve, if necessary, will be
established in MyPoints's favor to cover any and all taxes which may be
associated with the distribution and separation. The reserve may be credited
against the $5,000,000 cash contribution.

MagnaCash intends to use the contribution for working capital and general
corporate purposes. However, management will have significant flexibility in
applying the net proceeds of the contribution. Pending such use, we intend to
invest the contribution in short-term investment grade interest-bearing
instruments.

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WHY THIS PROSPECTUS WAS SENT TO YOU

This prospectus is being delivered to you because you were a holder of
record of Cybergold common stock on August 3, 2000. This entitles you to
receive a distribution of one share of MagnaCash common stock for every two
shares of Cybergold common stock held of record by you on August 3, 2000.
Although no action is required on your part to cause this to happen and you do
not have to pay cash or other consideration to receive these shares, the
distribution of these shares to you will have certain tax and other
consequences, so please read the information in this document carefully. You do
not need to surrender shares of MyPoints common stock to receive MagnaCash
common stock in the distribution. The number of shares of MyPoints common stock
you own will not change as a result of the distribution.

This prospectus describes our business, the relationship between Cybergold
and us, and provides other information to assist you in evaluating the benefits
and risks of holding or disposing of your shares of MagnaCash common stock once
share transfer restrictions expire.

THE DISTRIBUTION

Each holder of Cybergold common stock on August 3, 2000 will receive one
share of MagnaCash common stock for every two shares of Cybergold common stock
then held. Cybergold will retain 2,750,009 shares of MagnaCash common stock. As
of July 31, 2000, Cybergold had approximately 22,138,312 shares of common stock
outstanding.

Distribution and Transfer Information. U.S. Stock Transfer Corporation will
act as the distribution and transfer agent for the distribution. The
distribution agent will mail stock certificates beginning on or about the
distribution date.

Record Date, Distribution Date. The record date for the distribution will be
the close of business on August 3, 2000.

No Fractional Shares. No fractional shares of MagnaCash common stock will be
distributed.

Valuation. We consulted with a valuation services provider, who calculated
the value of the MagnaCash common stock to be $8,800,000 as of August 3, 2000.
The value is based on cash flows projected by Cybergold's management and
available market information on similar companies. The value is dependent upon
the assumptions upon which those projections are based and the time at which
the market information was derived. Due to the start-up nature and lack of
operating history of MagnaCash, and the risk inherent in implementing an on-
line business strategy, the assumptions and projections may vary significantly
from actual results. Additionally, given the early stage of the industry in
which MagnaCash operates, there was a limited availability of similar guideline
public companies and comparable market transactions.

Trading Market. Prior to the distribution, there has been no public market
for our common stock. MagnaCash has not applied to have the MagnaCash common
stock included for quotation on the Nasdaq Stock Market's National Market or
listed on any exchange. In addition, the shares of MagnaCash being distributed
may not be disposed of until the earliest of a year from the distribution, the
date a registration statement covering an offering of shares of our common
stock, the issuance of which would increase the number of shares of our common
stock outstanding by 80% or more is declared effective by the Securities and
Exchange Commission, or a date determined by the board of directors of
MagnaCash in its sole discretion.

There are two exceptions to this limitation on disposition:

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. any holder of common stock that is a corporation, limited liability
company, limited partnership or general partnership may transfer the
shares to any affiliate.

The board of directors of Cybergold has declared a distribution to its
stockholders, of one share of MagnaCash common stock for every two shares of
Cybergold common stock held on August 3, 2000, the record date for the
distribution. No fractional shares will be issued as part of the distribution.
Each person will receive one share of MagnaCash common stock for every two
shares of Cybergold the person holds, rounded down to the nearest whole number.
As a result of the distribution, 80.1% of the then outstanding MagnaCash common
stock will be distributed to Cybergold's stockholders. The remaining 19.9% will
be held by Cybergold. See "Description of MagnaCash's Capital Stock."

Cybergold stockholders will not be required to pay any cash or other
consideration for the MagnaCash common stock received in the distribution. The
distribution of the MagnaCash common stock to Cybergold stockholders will,
however, have certain tax and other consequences, as discussed in this
document.

MagnaCash and Cybergold have entered, or will enter, into various agreements
that will govern the distribution and the parties' relationship following the
distribution. The master separation and distribution agreement contains
provisions relating to the separation of MagnaCash from Cybergold and the
distribution of MagnaCash common stock to the Cybergold stockholders as of the
record date. The license, assignment and assumption agreement provides for the
transfer of assets and liabilities from Cybergold to MagnaCash and the license
or assignment of certain intellectual property of Cybergold to MagnaCash. The
transitional services and joint operations agreement provides for the
continuation of various services, such as phone systems and technical support,
provided by Cybergold for the benefit of MagnaCash for a period of time
following the distribution. Pursuant to the services agreement, MagnaCash will
perform, among other things, certain account management, fund transfers and
cash value incentive redemption processing for Cybergold for a period of three
years following the distribution, unless terminated earlier pursuant to the
terms of the services agreement. Pursuant to the sublease agreement, MagnaCash
will sublease approximately 7,258 square feet of office space at 1330 Broadway,
Oakland, California, from Cybergold.

In addition to the various agreements between MagnaCash and Cybergold,
MagnaCash will enter into a tax sharing agreement with MyPoints providing for,
among other things, the allocation of tax liabilities arising prior to, as a
result of, and subsequent to the distribution. Cybergold will pay the costs and
expenses incurred in connection with the distribution, other than any corporate
level taxes, which shall be paid by MagnaCash.

INVESTOR CONTACT

MagnaCash and Cybergold stockholders with questions about the distribution
should contact Wayne Wooddell at Cybergold's principal executive offices at
1330 Broadway, 15th Floor, Suite 1535, Oakland, California 94612; telephone
(510) 808-3700. This contact information will remain the same after the
distribution.

REASONS FOR THE DISTRIBUTION

The merger agreement pursuant to which MyPoints acquired Cybergold
contemplates the sale or distribution of the MagnaCash business following
completion of the merger. After thorough consideration, the board of directors
of Cybergold determined that a distribution of the MagnaCash business was in
the best interest of the Cybergold stockholders of record as of August 3, 2000.

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Cybergold believes that the distribution of MagnaCash will significantly
benefit Cybergold stockholders of record as of August 3, 2000 by:

. separating the risks associated with developing an on-line cash
transaction system from Cybergold's traditional focus on Internet
rewards services; and

. allowing Cybergold's near-term financial results to continue to reflect
principally its traditional Internet consumer rewards business, as
integrated with merger parent MyPoints' on-line direct marketing and
loyalty programs business.

After reviewing Cybergold's goals and objectives and considering other
possible methods of enhancing the growth of MagnaCash and Cybergold,
Cybergold's management and board of directors concluded that enhancing this
business through the formation of MagnaCash and the distribution of MagnaCash
would be in the best interest of Cybergold stockholders of record as of August
3, 2000. Cybergold's board of directors approved the formation of MagnaCash and
the distribution after consultation with Cybergold's management.

TAX TREATMENT

For tax and legal purposes, Cybergold will report the distribution of
MagnaCash stock as a taxable event to Cybergold. In connection with the
distribution of the stock of MagnaCash, Cybergold will recognize taxable gain
generally equal to the difference between its tax basis in the shares of
MagnaCash stock distributed and the fair market value of such shares at the
time of the distribution.

BUSINESS OF MAGNACASH

MagnaCash is a newly formed company that operates an on-line dollar-
denominated credit and debit account management and transaction system
initially developed by Cybergold, Inc. Currently the system is in use to manage
and permit the spending of dollar-denominated awards earned by Cybergold
members through their participation in Cybergold's on-line consumer incentives
business. MagnaCash has been capitalized by Cybergold, and will initially
continue to provide Cybergold account management and transaction enablement.
Shares of MagnaCash's stock are being distributed to stockholders of record of
Cybergold on August 3, 2000. The distribution of these shares to Cybergold
stockholders is expected to be made on or about September 29, 2000, pursuant to
the merger agreement under which Cybergold was acquired by MyPoints.

MagnaCash operates on-line credit and debit system capable of creating and
managing on-line dollar denominated accounts, transferring credits and debits
between any combination of account holders on-line, and processing monetary
purchase transactions at businesses which agree to participate in the system.
The MagnaCash system is based on a proprietary, on-line database and tracking
system that stores dollar denominated credits, backed fully by physical bank
deposits.

Account holders can remit credits from their accounts to credit cards,
transmit credits to bank accounts, convert credits to actual funds or use
credits to make purchases directly from businesses who participate in the
MagnaCash payment system. Transfers of credits between accounts within the
system occur immediately. For example, merchants receive immediate credit when
accepting payment from a consumer. Transfers of credits into or out of bank or
Visa credit card accounts out of the system are credited immediately within the
MagnaCash system, but are subject to standard bank and credit card settlement
processes that often take at least a day to complete.

As of August 31, 2000, we managed over 9,000,000 accounts on behalf of
Cybergold, our corporate parent where the payment infrastructure business
conducted by us was developed. Over 50 merchants and organizations currently
participate in the MagnaCash payment system.

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Industry Background

The Internet has emerged as a substantial vehicle for conducting commerce.
According to e-Marketeer, worldwide business to consumer e-commerce revenue is
projected to be nearly $200 billion by year 2003. Worldwide business to
business e-commerce revenue is projected to exceed $1.2 trillion by year 2003,
according to e-Marketeer. These revenue projections represent the total value
of goods and services sold across the Internet. This monetary value can be
transferred physically, by exchanges of cash, checks, money orders or the
presentation of a credit card or numerical information from it, or
electronically, by such means as wire transfers and payment mechanisms that use
the electronic communications networks, including the Internet, to transmit and
effect a transfer of value. MagnaCash believes that an increasing percentage of
payments underlying e-commerce are being made on-line and that this percentage
will continue to grow.

Today, most on-line payment transactions are processed through two existing
electronic payment systems--the automated clearing house and credit cards. The
automated clearing house is a system operated by the nation's depository
institutions through which monetary transactions are transmitted electronically
between financial institutions. The automated clearing house is a batch-
processing, store-and-forward system. Transactions received from a business
during the day by a financial institution are stored and processed later in a
batch mode. Rather than sending each transaction separately in real time,
automated clearing house transactions are accumulated and sorted by destination
for transmission during a pre-determined time. Customers, can access the
automated clearing house system on-line by presenting a business who chooses to
offer an automated clearing house payment option with sufficient checking
account information to permit a business to instruct its bank to debit the
account of the customer at the customer's bank. Because automated clearing
house information is processed only episodically and often must pass through
two financial institutions and the automated clearing house system operator
(the institution where the deposit was made, the institution where the account
is maintained and the Federal Reserve Bank or other automated clearing house
operator), it can take up to 72 hours for an automated clearing house
transaction to "clear," or result in the confirmation of available funds to the
merchant. Automated clearing house transactions typically require users to
enter 20 or more digits from the face of a physical check representing the
customer's account number and bank identification numbers, as well as other
personal information.

Credit cards are the dominant payment tool on the Internet today. Through
the major credit card networks, users can complete payment transactions with
virtually every on-line merchant. However, there are disadvantages for both
users and merchants in using credit cards in many situations:

. Some Internet customers do not possess credit cards.

. Some Internet customers are reluctant to use credit cards on-line
because of security concerns.

. Credit card usage can be cumbersome, requiring the typed entry of a 16
digit card number, four digit expiration date and personal information
such as street address, city, state, zip code and telephone number.

. Transaction costs associated with the acceptance of credit cards for on-
line payments are high. Merchants typically pay a fee to process
purchases using credit cards, ranging from as little as 1% to as much as
10% of the purchase price. These fees compensate the bank accepting a
credit card payment, the bank which issues the card and collects payment
from the customer, and in many cases the organization that provides
clearing services between the various institutions.

. Because a credit card is not physically presented to the merchant when
used on-line, the risk of fraudulent use is higher and, correspondingly,
so are transaction fees, which typically range from 2.5% to over 50% for
on-line transactions. Total transaction fees for "low value" purchases
of less than $5.00 by credit card over the Internet have the highest
relative cost, and can, in some cases exceed 50% of the aggregate
purchase price.

We believe that opportunities for Internet users to make small dollar
purchases on the Internet will grow substantially as business models develop
for the sale of digital content, such as individual songs and movies, to

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individual users. We believe that Internet portals and other Internet sites
will find increasingly compelling reasons to sponsor accounts for users in
order to capture revenue and transaction flow from this development.

The MagnaCash Solution

We offer an on-line payment infrastructure that allows our clients to
establish on-line "accounts" for their customers. Account users use the
Internet to access these accounts, view their balances, add to or spend amounts
in the accounts or instruct MagnaCash to transfer account balances. Customers
create balances in these accounts by transferring funds from their bank account
or a Visa credit card, or perhaps by participating in activities sponsored or
permitted by our clients. Customers can spend account balances over the
Internet with any merchant who participates in our payment system. Customers
can also transfer account balances to their Visa accounts or have balances
transferred to their bank accounts.

The MagnaCash system offers:

. Instantaneous payment and cost effectiveness for merchants. Our system
operates by establishing online credit and debit accounts on our servers
that keep track of value accrued or spent in the MagnaCash system for
each customer and each business who participates in the system. Funds or
cash awards deposited or received by customers with accounts are
deposited in commingled FDIC-insured accounts maintained at banks and
are credited to the user within our system. We are not a bank, and the
online credit and debit accounts are not bank accounts and are not FDIC-
insured. When a customer spends funds with a member business, we debit
the customer's account and credit the business's account
instantaneously, charging the business a small processing fee.
Businesses receive credit for funds on our system without the delays of
the automated clearing house or credit card payment settlement process.
Our processing fees are substantially lower than those charged by the
credit card system because our system is simple, does not require the
transfer of custody of funds, is self-contained and offers fewer
opportunities for fraud because our system verifies customers with a
personal identification number. Over 50 merchants and charities accept
direct payments from our system.

. New revenue opportunities for clients. The creation of on-line accounts
affords clients opportunities to increase revenues from their customers,
and simultaneously save costs. Virtually any organization can issue
MagnaCash accounts and reap the associated rewards. Clients implementing
accounts with us:

. share in transaction revenues generated by its customers from
businesses participating in our payment system;

. increase the chance of capturing rebates or rewards issued to users
by making it easier to spend such rebates and awards at the clients'
own sites;

. realize an opportunity to reduce costs by issuing rebates and awards
on-line rather than through more expensive methods like paper
checks; and

. potentially increase customer retention by providing customers with
the ability to make cash purchases on-line.

. Easy accessibility and easily customized features. We provide access to
our account management and payment system using an application service
provider model. We host the software necessary to operate the basic
payment system on our servers and interconnect with businesses and the
automated clearing house and credit card systems through the Internet.
Clients desiring to establish an account system for users may do so
through MagnaCash without any need to understand, install or operate the
complex systems necessary providing this service. Our service can be
customized with the client's brand, and look and feel of the client's
site. Our initial client is Cybergold, for whom we manage over 9,000,000
customer accounts.

21
<PAGE>

. Simplicity for users. Our system uses the email addresses of users as
account names. Each customer establishes a unique personal
identification number, or PIN, for the account. The PIN provides
authentication when the customer logs into the system. Once logged on, a
customer may view account balances, make purchases or request remission
of balances to a credit card or to a bank account through the automated
clearing house with a few mouse clicks, and add funds to their account
using the automated clearing house or credit card transfers on a real
time basis. We anticipate adding functions in the near future that will
permit credits and debits to accounts to be made by mail as well.

Strategy

Our objective is to become a leading provider of on-line payment services
through executing the following strategies:

. Increase substantially the number of merchants accepting payment through
our system. The value of our payment system to clients and customers
increases substantially as the number of merchants accepting payment
through it grows. We intend to establish an internal sales force and
create strategic alliances with others to increase the number of
merchants participating in our payment system.

. Increase the number of clients to which we provide on-line, private-
label account management services. We intend to invest in marketing and
sales efforts to form strategic alliances with other companies which
value enabling on-line purchases with cash accounts.

Potential clients of MagnaCash include:

. on-line direct marketing companies;

. Internet service providers;

. Internet portals;

. banks;

. credit unions; or

. any business interested in offering an on-line payment system for their
customer base.

How the System Works

All on-line accounts managed by MagnaCash reside on our servers. We complete
money transfers by debiting one account and crediting another simultaneously.
Credits and debits transferred between accounts are the virtual, electronic
representation of money, fully backed by bank deposits.

Customers can add credits to MagnaCash accounts from Visa credit card
accounts. Credits can also be added from incentive awards. When credits enter
our system, our payment servers credit the appropriate customer account
residing on the MagnaCash system. The physical cash is held in a pooled account
a depository institution.

MagnaCash is not a bank and customer accounts on the MagnaCash system are
general liabilities of MagnaCash and are not FDIC-insured. Our pooled account
is FDIC-insured.

When a purchase transaction is completed between a customer and a business
in the MagnaCash system, the transaction details are transmitted from the
business to MagnaCash over the Internet. This communication is made possible by
our software called The Mint. Once this communication has been received, our
payment server debits the customer's account and credits the business's
account. The payment server then sends a communication to the business, via The
Mint, confirming the transaction.

Customers may also redeem credits from their accounts on the MagnaCash
system for U.S. dollars by requesting transfer to either their bank or credit
card account. After receiving a request from a customer to

22
<PAGE>

initiate a transfer of funds, the payment server debits the customer's account.
The transfer of actual funds is then accomplished using standard bank and
credit card processing procedures that result in funds transferring out of the
pooled account to either a bank account of the customer or the customer's Visa
credit card account.

Our Services and Customers

On-line account management

Our clients are typically Internet businesses. We enable our clients to
offer their users an on-line credit and debit account. MagnaCash manages the
accounts and provides all the customer service. We host the accounts and
account information on our servers, and provide security for the accounts using
a combination of internally developed and commercially available software.

We intend to provide account management services in exchange for a monthly
fee. We also anticipate charging customers for consulting and design fees in
connection with the implementation of a payment system for them. To date, our
sole client for account management services is Cybergold, which pays a monthly
management fee for management of its accounts.

Our clients may be subject to applicable federal and state money transfer
laws and regulations regarding privacy and money transfers. While we believe
MagnaCash itself is not subject to such laws and regulations, it may alter its
account management services in response to regulations and laws affecting its
clients.

Payment system services

Over 50 merchants and organizations are currently part of our on-line
payment system and accept payments made directly from customer accounts in our
system. The payment process is enabled through "The Mint," client software
installed on the servers of participating businesses. The Mint facilitates the
real-time transmission of business data necessary to process the payment
portion of a commerce transaction between a user of MagnaCash's system and the
business. The Mint is compatible with most major commerce systems installed at
businesses, and can be installed in most configurations in less than one day
and in most cases less than six hours.

Technology

The MagnaCash technology was originally developed by Cybergold, the parent
company of MagnaCash recently acquired by MyPoints. Cybergold and MagnaCash are
parties to a license agreement that gives MagnaCash an exclusive, perpetual,
royalty-free, fully paid, irrevocable worldwide license to use and further
develop all Cybergold technology necessary for the MagnaCash system to operate
in the payments marketplace, and to sublicense these rights. The Cybergold
employees who were the principal developers this technology are now employed by
MagnaCash, and MagnaCash will continue to develop and enhance this technology.

There are two proprietary components to this technology infrastructure:

. The MagnaCash Mint, originally developed by Cybergold, licensed to
MagnaCash, and further developed by MagnaCash, is a distributed link to
our electronic commerce payment service. The Mint is a piece of software
that runs on our web servers, and on the servers of our clients and
merchants. One unique feature of the Mint is that it can generate both
incentive reward transactions and on-line payments for consumer
purchases (allowing merchants to offer rebates and incentives along with
payments, something not possible with credit cards). To make worldwide
distribution possible, the Mint employs a cryptographic system that
offers full 128-bit security but is not subject to without export
controls.

. The MagnaCash Payment Servers, originally developed by Cybergold,
licensed to MagnaCash, and further developed by MagnaCash, are our real-
time transaction processing engines. The Payment

23
<PAGE>

Server software is optimized for high-volume financial transactions, and
we can process even higher volumes of transactions by simply adding
additional hardware to our system. The Payment Servers communicate with
consumer browsers using SSL, the industry-standard Internet security
protocols, to safeguard all private user information.

Our Payment Servers include proprietary modules for handling:

. Interactive transactions;

. Background transactions for off-line incentive programs;

. Consumer account management and on-line statements;

. Transfers from a major credit card and clearinghouse transfers and
charity donations;

. Transaction reversal and dispute management;

. Real-time risk management with velocity checking and fraud detection;

. Context-sensitive help; and

. Automated customer assistance with escalation to our separate Customer
Service system.

Using our payment system, online businesses may offer MagnaCash as one
choice of payment method. Typical MagnaCash transactions begin when the user
encounters an opportunity to spend money at an associated or affiliated
Internet site. The merchant's Internet servers use the Mint to generate
payment transaction details. These transactions are sent on-line to the
MagnaCash Payment Servers, which move funds from the user's accounts to the
merchant's account.

In addition to our proprietary technology, the MagnaCash system
incorporates third-party software including SQL Servers licensed from Sybase,
Inc., Solaris platforms running Unix software from Sun Microsystems, Inc., and
open source Apache Internet servers with SSL software licensed from C2Net,
Inc. Consumers access our system with standard Internet browsers such as
Netscape Navigator and Microsoft Internet Explorer. We do not require
consumers to download any software to process payments or rewards.

Competition

The on-line payment industry is embryonic, intensely competitive and
characterized by declining average selling prices. Competition in our markets
is primarily affected by the ability to provide reliable service with a low
transaction cost and to secure merchant and client partnerships to provide
user bases and spending outlets.

We compete primarily with credit cards and other Internet payment
mechanisms such as gift certificate currencies (companies such as Flooz),
stored value cards or mechanisms (companies such as WebCertificates) and
money-like rewards units earned by visiting sites (companies such as Beenz).
We expect increased competition from existing competitors and from a number of
companies that may enter the on-line payment market, as well as future
competition from companies that may offer new or emerging technologies, such
as wireless. In addition, many of our current and potential competitors have
significantly greater financial, technical and marketing resources than we
have. Our failure to successfully compete in our markets would have a material
adverse effect on our business, financial condition and results of operations.

Intellectual Property and Licenses

As of today, we have issued no United States or foreign patents and have no
U.S. or foreign patent applications pending. Moreover, while we, where
appropriate, will apply for patents relating to the design of our products,
our products are based in part on standards and MagnaCash does not hold
patents or other intellectual property rights for such standards. We intend to
seek patents on this technology where appropriate. We have applied for
trademark protection for "MAGNACASH." Notwithstanding its patent, trademark,
and

24
<PAGE>

copyright position, we believe that, in view of the rapid pace of technological
change in the on-line payments industry, the technical experience and creative
skills of its engineers and other personnel are the most important factors in
determining our future technological success.

Intellectual Property and Licenses from Cybergold to MagnaCash

As of the separation date, Cybergold will grant MagnaCash an exclusive,
perpetual, royalty-free, fully paid, irrevocable worldwide license to use all
the Cybergold owned software necessary for the MagnaCash system to operate in
the payments marketplace, and a sublicense under the same terms for the
necessary intellectual property Cybergold does not own. Cybergold will assign
to MagnaCash the trademarks for "mint" and "The Mint."

Employees

As of August 1, 2000, we had approximately 25 employees of which
approximately nine individuals in engineering, research and development; nine
in sales and marketing; four in operations and customer service; and three in
general administration. Our employees are not represented by any collective
bargaining agreement, and we have never experienced a work stoppage. We believe
our employee relations are good.

Our future success is heavily dependent upon our ability to hire and retain
qualified technical, marketing and management personnel. We are currently
seeking certain additional engineering, marketing and management personnel. Our
success in the future will depend in part on the successful assimilation of
such new personnel.

Competition for qualified personnel in our industry and geographical
location is intense, and there can be no assurance that we will be successful
in attracting, retaining and motivating a sufficient number of qualified
personnel to conduct its business in the future.

Properties

Our headquarters occupy approximately 7,258 square feet of office space at
1330 Broadway, Oakland, California. We intend to sublease this space from
Cybergold, under Cybergold's lease that extends through July 30, 2005, with an
option to lease the space for an additional three-year term, and includes a
right of first refusal on additional sub-lease space, which may become
available from Cybergold in the building. We believe our office space is
adequate to meet our needs for the next 12 months, and we expect our growth for
the next 24 months to be accommodated by our existing space plus our right of
first refusal on additional office space made available from Cybergold.

Legal Proceedings

From time-to-time MagnaCash may become party to certain litigation or legal
claims. MagnaCash is not currently party to any litigation or legal claims.

25
<PAGE>

SELECTED FINANCIAL DATA

Selected Financial Data

The selected financial data set forth below with respect to our statement of
operations for the year ended December 31, 1999 and with respect to our balance
sheet as of December 31, 1999, are derived from our financial statements, which
have been audited by Arthur Andersen LLP, independent public accountants, and
which are included elsewhere herein. The selected financial data set forth
below with respect to our statements of operations for the six month periods
ended June 30, 1999 and 2000, are derived from our unaudited financial
statements which are included elsewhere herein and which include, in the
opinion of MagnaCash, all adjustments, consisting only of normal recurring
adjustments, that are necessary for a fair presentation of its financial
position and results of operations for those periods. Operating results for the
six months ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. The selected
financial data set forth below is qualified in its entirety by, and should be
read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our financial statements and the notes
to those statements included elsewhere herein.

<TABLE>
<CAPTION>
Six Months Ended
Year Ended June 30,
December ----------------------
31, 1999 1999 2000
----------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C>
Net revenues............................. $ 4,347 $ 1,254 $ 7,725
Cost of revenues......................... (36,109) (17,345) (26,452)
----------- ---------- ----------
Gross margin............................. (31,762) (16,091) (18,727)
Sales and marketing expenses............. 295,880 98,833 412,790
General and administrative expenses...... 122,500 36,185 115,233
Research and development expenses........ 281,173 107,497 266,601
Amortization of deferred compensation.... 304,177 284,298 18,402
----------- ---------- ----------
Net loss................................. $(1,035,492) $(542,904) $ (831,753)
=========== ========== ==========
Pro forma net loss per share, basic and
diluted (unaudited)..................... $ (.10) $ (.05) $ (.08)
=========== ========== ==========
Pro forma weighted average shares--basic
and diluted (unaudited)................. 10,575,000 10,575,000 10,575,000
=========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Balance Sheet Data
Cash and cash equivalents.......................................... $ 0
Working capital.................................................... (52,503)
Total assets....................................................... 380,682
Total divisional equity............................................ 328,179
</TABLE>

26
<PAGE>

Unaudited Pro Forma Financial Statements

On August 7, 2000, MyPoints merged with Cybergold in a transaction accounted
for as a purchase. Under the terms of the agreement and in conjunction with
this merger, Cybergold entered into certain agreements with MagnaCash (see
Arrangements Between Cybergold and MagnaCash) relating to the separation of
MagnaCash from Cybergold.

The following unaudited pro forma financial statements present the effect of
these separation agreements between Cybergold and MagnaCash as if the
agreements had been entered into on January 1, 1999. The only agreements that
have a pro forma impact are the Services Agreement and the Sublease Agreement.
These unaudited pro forma financial statements should be read in conjunction
with the historical financial statements and notes thereto of MagnaCash and
Cybergold included elsewhere in this statement.

The unaudited pro forma financial statements are presented for illustrative
purposes only and are not indicative of the operating results or financial
position that would have occurred if these agreements had been consummated on
January 1, 1999, and are not indicative of expected future operating results or
financial position.

27
<PAGE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
MagnaCash MagnaCash
Historical Adjustments Proforma
----------- ----------- ----------
<S> <C> <C> <C>
Revenues.................. $ 4,347 $1,380,809 (A) $1,385,156
Cost of revenues.......... (36,109) -- (36,109)
----------- ---------- ----------
Gross margin.............. (31,762) 1,380,809 1,349,047
----------- ---------- ----------
Operating expenses:
Sales and marketing
expenses................ 295,880 61,895 (B) 357,775
General and
administrative
expenses................ 122,500 30,948 (B) 153,448
Research and development
expenses................ 281,173 30,947 (B) 312,120
Amortization of deferred
compensation............ 304,177 -- 304,177
----------- ---------- ----------
Total operating
expenses............... 1,003,730 123,790 1,127,520
----------- ---------- ----------
Operating income (loss)... (1,035,492) 1,257,019 221,527
----------- ---------- ----------
Net income (loss) before
taxes.................... (1,035,492) 1,257,019 221,527
Provision for income
taxes.................... -- (86,395)(C) (86,395)
----------- ---------- ----------
Net income (loss)......... $(1,035,492) $1,170,624 $ 135,132
=========== ========== ==========
Basic net income (loss)
per share................ $ (.10) $ .01
=========== ==========
Diluted net income (loss)
per share................ $ (.10) $ .01
=========== ==========
Weighted average shares--
basic.................... 10,575,000 10,575,000
=========== ==========
Weighted average shares--
diluted.................. 10,575,000 13,157,323
=========== ==========
</TABLE>

See accompanying notes to unaudited pro forma financial data.

28
<PAGE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2000

<TABLE>
<CAPTION>
MagnaCash MagnaCash
Historical Adjustments Proforma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues.............................. $ 7,725 $833,660(A) $ 841,385
Cost of revenues...................... (26,452) -- (26,452)
----------- -------- -----------
Gross margin.......................... (18,727) 833,660 814,933
----------- -------- -----------
Operating expenses:
Sales and marketing expenses......... 412,790 22,381(B) 435,171
General and administrative expenses.. 115,233 11,191(B) 126,424
Research and development expenses.... 266,601 11,190(B) 277,791
Amortization of deferred
compensation........................ 18,402 -- 18,402
----------- -------- -----------
Total operating expenses............ 813,026 44,762 857,788
----------- -------- -----------
Operating income (loss)............... (831,753) 788,898 (42,855)
----------- -------- -----------
Net income (loss) before taxes........ (831,753) 788,898 (42,855)
Provision for income taxes............ -- -- --
----------- -------- -----------
Net income (loss)..................... $ (831,753) $788,898 $ (42,855)
=========== ======== ===========
Basic and diluted net income (loss)
per share............................ $ (.08) $ (.004)
=========== ===========
Weighted average shares--basic and
diluted.............................. 10,575,000 10,575,000
=========== ===========
</TABLE>

See accompanying notes to unaudited pro forma financial data.

29
<PAGE>

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

A. To reflect the effects of the Services Agreement described in the
"Arrangements Between Cybergold and MagnaCash" section of this document as
if the agreements occurred on January 1, 1999. This agreement includes a
monthly management fee which includes both a fixed and variable element
based on the number of Cybergold membership accounts under management, and
the sharing of certain transaction revenues between MagnaCash and MyPoints.

B. To reflect the effects of the Sublease Agreement described in the
"Arrangements Between Cybergold and MagnaCash" section of this document as
if the agreement occurred on January 1, 1999.

C. To reflect the application of a blended Federal and state tax rate of 39
percent.

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<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

You should read the following discussion of the financial condition and
results of operations of MagnaCash together with the financial statements and
the notes to such statements included elsewhere in this report. This discussion
contains forward-looking statements based on our current expectations,
assumptions, estimates and projections about MagnaCash and our industry. These
forward-looking statements involve risks and uncertainties. MagnaCash's actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, as more fully described in the "Risk
Factors" section and elsewhere in this report. We undertake no obligation to
update publicly any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.

Overview

MagnaCash is a newly formed company that contains the account management and
transaction enablement system developed by Cybergold, Inc., its corporate
parent. Currently the system is in use to manage and permit the spending of
cash awards earned by Cybergold members through their participation in
Cybergold's on-line consumer incentives business.

MagnaCash's operations were a division of Cybergold and not a separate legal
entity. The technology utilized by MagnaCash was developed by Cybergold for use
in its business from the formation of Cybergold. In 1997 and 1998, Cybergold
undertook substantial research and development activities. Total spending in
1997 and 1998 by Cybergold on research and development was approximately
$1.2 million and $1.7, respectively. These costs were incurred by Cybergold to
develop additional hardware, including additional servers and security systems
and customer service related software. The customer related software included
dispute resolution systems and version 2.0 of The Mint. A portion of these
research and development activities ultimately lead to the development of the
technology Cybergold currently licenses to MagnaCash. On or about January 1,
1999, the management of Cybergold decided to develop MagnaCash into a separate
business venture in addition to being a servicing vehicle for Cybergold. As a
result, the financial information presented in this prospectus is for the
period beginning January 1, 1999. The Cybergold board of directors decided to
separate MagnaCash from Cybergold as an independent entity in connection with
the negotiation of Cybergold's acquisition by MyPoints, believing that
MagnaCash would have a better opportunity to develop as a separate entity.
MagnaCash has been capitalized by, and will initially continue to provide
account management and transaction enablement services to, Cybergold.

Our revenues consist primarily of fees paid to us for each payment
transaction between businesses and customers through our transaction system.
Customers may earn rewards by responding to on-line advertisements with a
specific action such as filling out a survey or registering for services at a
client, like Cybergold, site. Customers spend their cash rewards or use cash
transferred to their account from a Visa credit card to purchase services or
products through businesses sites using our system. These transaction fees are
not recognized until the transaction has been completed.

Our transaction revenues are driven by a number of factors, including:

. the number of clients using our payment system;

. the size and growth of our clients' membership base that we manage;

. the number of transactions performed by each member; and

. the average revenue per transaction.

MagnaCash has generated transaction revenues of $4,347 for the year ended
December 31, 1999 and $1,254 and $7,725 for the six month periods ending June
30, 1999 and 2000, respectively.

The cost of revenues represent transaction fees paid to various banking
organizations for transferring balances to or from credit cards or bank
accounts. Gross margin on transaction revenues may fluctuate based on the
nature of the transactions processed in any given period.

31
<PAGE>

We incurred a net loss of approximately $1,035,000 in the year ended
December 31, 1999. We plan to continue to build infrastructure and expand
client recruitment efforts which may contribute to losses in the future.

Cybergold will realize a taxable gain on the distribution of MagnaCash
common stock to the extent the fair market value of the distributed MagnaCash
common stock exceeds Cybergold's basis in such stock. MagnaCash has agreed to
indemnify Cybergold for any taxes payable by Cybergold on such gain. Cybergold,
however, accumulated losses which Cybergold anticipates will be greater than
the taxable gain incurred on the distribution. Accordingly, MagnaCash expects
that the amount of any indemnification liability Magnacash may have regarding
Cybergold's tax liability incurred in connection with the distribution to be
minimal.

Our limited operating history makes it difficult to forecast future
operating results. Although we have experienced revenue growth in recent
quarters, we cannot be certain that revenues will increase at a rate sufficient
to achieve and maintain profitability. Even if we were to achieve profitability
in any period, we may not be able to sustain or increase profitability on a
quarterly or annual basis.

In connection with the granting of options to MagnaCash employees and
consultants to purchase Cybergold common stock during 1998 and 1999, we
recorded deferred compensation of $503,272 representing the difference between
the exercise price of options granted and the deemed fair market value of
Cybergold's common stock at the time of grant. We will amortize this deferred
compensation as an expense over the vesting periods of the related options.
Total deferred compensation expenses recognized during the year ended December
31, 1999 was $304,177.

Year Ended December 31, 1999

Revenues

Total revenues, which consisted completely of transaction revenues, were
$4,347 for the year ended December 31, 1999. The Company had no revenue or
operations during the year ended 1998 as the inception of the Company was
January 1999. All transaction revenues earned for the year ended December 31,
1999 related to Cybergold members spending cash awards earned through their
participation in Cybergold's on-line consumer incentives business.

Cost of Revenues

Overall cost of revenues were $36,109 for the year ended December 31, 1999.
The cost of revenues represent transaction fees paid to various banking
organizations for transferring balances to or from credit cards or bank
accounts. MagnaCash generated a negative gross margin of $31,762 or 731% for
the year ended December 31, 1999. We expect overall gross margin to continue to
fluctuate as a result of the overall variation in the mix transaction revenue
and new products MagnaCash plans to introduce.

Sales and Marketing Expenses

Sales and marketing expenses were $295,880 for the year ended December 31,
1999. Sales and marketing costs relate primarily to salaries for the sales and
marketing employees of MagnaCash. In addition, MagnaCash has allocated a
portion of Cybergold overhead costs to the operations of MagnaCash using
various allocation methodologies including headcount and payroll dollars.
MagnaCash allocated $76,385 or 47% of the Cybergold overhead costs allocated to
MagnaCash to sales and marketing expenses. We expect that sales and marketing
expenses will continue to increase as we expand our operations and sales
efforts to attract additional clients.

General and Administrative Expenses

General and administrative expenses were $122,500 for the year ended
December 31, 1999. General and administrative expenses consist primarily of
depreciation expense. In addition, MagnaCash has allocated a portion of
Cybergold overhead costs to the operations of MagnaCash using various
allocation methodologies

32
<PAGE>

including headcount and payroll dollars. MagnaCash allocated $31,878 or 20% of
the Cybergold overhead costs allocated to MagnaCash to general and
administrative expenses. We expect that general and administrative expenses
will continue to increase as we expand our operations and incur additional
costs related to being a public company.

Research and Development Expenses

Research and development expenses were $281,173 for the year ended December
31, 1999. Research and development expenses consist primarily of salaries for
the research and development employees of MagnaCash as well as third party
computer hosting costs. In addition, MagnaCash has allocated a portion of
Cybergold overhead costs to the operations of MagnaCash using various
allocation methodologies including headcount and payroll dollars. MagnaCash
allocated $52,937 or 33% of the Cybergold overhead costs allocated to MagnaCash
to research and development expenses. We expect product development costs to
continue to increase as we continue to build features and functionality into
our system.

Amortization of Deferred Compensation Expense

In connection with the granting of options to purchase Cybergold common
stock to certain MagnaCash employees and consultants during the years ended
December 31, 1998 and 1999, we recorded deferred compensation representing the
difference between the exercise price of options granted and the deemed fair
market value of Cybergold's common stock at the time of grant as determined by
the Cybergold board of directors. This deferred compensation is being amortized
ratably over the vesting periods of the options, generally four years.
Amortization of deferred compensation in the year ended December 31, 1999 was
$304,177.

Income Taxes

We recorded a net loss of $1,035,492 for the year ended December 31, 1999.
For federal and state tax purposes, no provision for income taxes was recorded,
and no tax benefit has been recognized due to the uncertainty of realizing
future tax deductions for these losses.

Six Months Ended June 30, 1999 and 2000

Revenues

Total Revenues were $1,254 and $7,725 for the six months ended June 30, 1999
and 2000, respectively, representing an increase of 6,471 or 516%. All
transaction revenues earned for the year ended December 31, 1999 related to
Cybergold members spending cash awards earned through their participation in
Cybergold's on-line consumer incentives business. Revenues increased
proportionally with the increase in the number of Cybergold members using our
service.

Cost of Revenues

Overall cost of revenues were $17,345 and $26,452 for the six month periods
ended June 30, 1999 and 2000, respectively, representing an increase of $9,107
or 53%. This increase relates directly to the increase in total revenues and
the increase in the number of Cybergold members spending cash awards earned
through their participation in Cybergold's on-line consumer incentives
business. Cost of revenues represent fees paid to various banking organizations
as our client's members transfer earned balances to a bank account or a certain
major credit card or spent in a payment transaction. MagnaCash generated
negative gross margins of $16,091 or 1,283%, and $18,727 or 242% for the six
month periods ended June 30, 1999 and 2000, respectively. We expect overall
gross margin to continue to fluctuate as a result of the overall variation in
the mix transaction revenue and new products MagnaCash plans to introduce.

33
<PAGE>

Sales and Marketing Expenses

Sales and marketing expenses were $98,833 and $412,790 for the six month
periods ended June 30, 1999 and 2000, respectively, representing an increase of
$313,957 or 318%. Sales and marketing costs relate primarily to salaries for
the sales and marketing employees of MagnaCash. The increase in sales and
marketing expenses relates directly to the increased number of MagnaCash
employees in this department. In addition, MagnaCash has allocated a portion of
Cybergold overhead costs to the operations of MagnaCash using various
allocation methodologies including headcount and payroll dollars. MagnaCash
allocated $28,112 or 47%, and $32,697 or 50% of the Cybergold overhead costs
allocated to MagnaCash to sales and marketing expenses for the six month
periods ended June 30, 1999 and 2000, respectively. We expect that sales and
marketing expenses will continue to increase as we expand our operations and
sales efforts to attract additional clients.

General and Administrative Expenses

General and administrative expenses were $36,185 and $115,233 for the six
month periods ended June 30, 1999 and 2000, respectively, representing an
increase of $79,048 or 218%. General and administrative expenses consist
primarily of depreciation expense. In addition, MagnaCash has allocated a
portion of Cybergold overhead costs to the operations of MagnaCash using
various allocation methodologies including headcount and payroll dollars.
MagnaCash allocated $11,482 or 20%, and $16,349 or 25% of the Cybergold
overhead costs allocated to MagnaCash to general and administrative expenses
for the six month periods ended June 30, 1999 and 2000, respectively. We expect
that general and administrative expenses will continue to increase as we expand
our operations and incur additional costs related to being a public company.

Research and Development Expenses

Research and development expenses were $107,497 and $266,601 for the six
month periods ended June 30, 1999 and 2000, respectively, representing an
increase of $159,104 or 148%. Research and development expenses consist
primarily of salaries for the research and development employees of MagnaCash
as well as third party computer hosting costs. The increase in research and
development expenses relates directly to the increased number of MagnaCash
employees in this department. In addition, MagnaCash has allocated a portion of
Cybergold overhead costs to the operations of MagnaCash using various
allocation methodologies including headcount and payroll dollars. MagnaCash
allocated $20,067 or 33%, and $16,349 or 25% of the Cybergold overhead costs
allocated to MagnaCash to research and development expenses for the six month
periods ended June 30, 1999 and 2000, respectively. We expect product
development costs to continue to increase as we continue to build features and
functionality into our system.

Amortization of Deferred Compensation Expense

In connection with the granting of options to purchase Cybergold common
stock to certain MagnaCash employees and consultants during the year ends
December 31, 1998 and 1999, we recorded deferred compensation representing the
difference between the exercise price of options granted and the deemed fair
market value of Cybergold common stock at the time of grant as determined by
the Cybergold board of directors. Amortization of deferred compensation
amounted to $284,298 and $18,402 for the six month periods ended June 30, 1999
and 2000, respectively, representing a decrease of $265,896 or 94%. The
decrease in deferred compensation expense relates to the vesting, during the
six months ended June 30, 1999, of a significant portion of the options granted
to a consultant during 1998 and 1999.

Income Taxes

We recorded net losses of $542,904 and $831,753 for the six month periods
ended June 30, 1999 and 2000, respectively. For federal and state tax purposes,
no provision for income taxes was recorded, and no tax benefit has been
recognized due to the uncertainty of realizing future tax deductions for these
losses.

34
<PAGE>

Liquidity and Capital Resources

Since inception, we have been dependent upon and financed our operations
exclusively from funding provided by Cybergold.

Net cash used in operating activities was $209,207 and $705,125 for the six
month periods ended June 30, 1999 and 2000, respectively, and consisted of our
net loss, adjusted for amortization of deferred compensation, depreciation
expense and changes in accrued liabilities.

Net cash used in investing activities was $63,413 and $188,632 for the six
month periods ended June 30, 1999 and 2000, respectively, and consisted
primarily of the purchase of property and equipment.

Net cash provided by financing activities was $272,620 and $893,757 for the
six month periods ended June 30, 1999 and 2000, respectively, and consisted
entirely of capital contributions from Cybergold.

We currently anticipate that our available cash resources will be sufficient
to meet our anticipated working capital and capital expenditure requirements
through August 2001. However, our intention is to raise additional funds sooner
to fund more rapid expansion, to develop new or enhance existing services or
products, to respond to competitive pressures or to acquire complementary
products, businesses or technologies. If adequate funds are not available on
acceptable terms, our business, results of operations and financial condition
could be harmed. See "Risk Factors--We may be unable to obtain additional
capital needed to operate and expand our business."

Recent Accounting Pronouncements

In April 1998, the Accounting Standards Executive Committee issued SOP 98-5,
"Reporting on the Costs of Start-Up Activities." This SOP provides guidance on
the financial reporting of start-up costs and organization costs. It requires
the costs of the start-up activities and organization costs to be expensed as
incurred. The SOP is effective for financial statements for fiscal years
beginning after December 15, 1998. The Company adopted the SOP during the year
ended December 31, 1999. The adoption of the SOP did not have a material impact
on our financial statements.

In March 1998, the American Institute of Certified Public Accountants issued
SOP No. 98-1, "Software for Internal Use." The adoption of SOP No. 98-1 has not
had a material impact on our financial statements.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." We do not expect the adoption of SFAS
No.133 to have a material impact on our financial position or results of
operations.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements. We
have adopted SAB 101.

In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation" (an Interpretation of APB
Opinion No. 25) ("FIN 44"). FIN 44 provides guidance on the application of APB
25, particularly as it relates to options. The effective date of FIN 44 is
July 1, 2000 and we have adopted FIN 44 as of that date.

Liquidity and Capital Resources

Since inception, we have been dependent upon and financed our operations
exclusively from funding provided by Cybergold.

35
<PAGE>

Net cash used in operating activities was $588,223 for the year ended
December 31, 1999 and consisted of our net loss, adjusted for amortization of
deferred compensation, depreciation expense and changes in accrued liabilities.

Net cash used in investing activities was $471,271 for the year ended
December 31, 1999 and consisted primarily of the purchase of property and
equipment.

Net cash provided by financing activities was $1,059,494 for the year ended
December 31, 1999 and consisted entirely of capital contributions from
Cybergold.

Year 2000 Issues

During 1999, the Company conducted an overall assessment of the software
underlying our Internet-based programs as well as our Internet site and related
technology infrastructure and determined it to be Year 2000 compliant. The
Company also contacted the vendors of third-party hardware and software we use
in order to gauge their Year 2000 compliance. Based on these vendors'
representations and the activities we have conducted, we believe that the
third-party hardware and software we use are Year 2000 compliant.

As of 12:01 AM, January 1, 2000, we executed a full security check and
validation of our site, as well as our partner merchants. There were no Year
2000 issues found within our site or the sites of our partner merchants. In
cases where there was a potential Year 2000 problem, we removed the merchant
from our site until the potential problem was corrected. This affected less
than 1 percent of our merchants.

Since January 1, 2000, we have not encountered any material issues relating
to the Year 2000. The costs associated with correcting reported issues have not
been and are not expected to be material. However, some Year 2000 issues may
not be discovered until well after January 1, 2000. The Company intends to
continue to prioritize reports of such issues and correct significant related
problems.

Qualitative and Quantitative Disclosures About Market Risk

Disclosure Regarding Forward-Looking Statements

Certain statements contained in or incorporated by reference into this
prospectus, including, but not limited to, those regarding our financial
position, business strategy, acquisition strategy and other plans and
objectives for future operations and any other statements that are not
historical facts constitute "forward looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors that could cause our actual results, performance or achievements, or
industry results, to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Although
we believe that the expectations reflected in these forward-looking statements
are reasonable, there can be no assurance that the actual results or
developments that we anticipate will be realized or, even if substantially
realized, that they will have expected effects on our business or operations.

These forward-looking statements are based on management's expectations and
beliefs concerning future events impacting our business and operations and are
subject to uncertainties and factors (including, but not limited to, those
specified under the heading "Risk Factors" below) that are difficult to predict
and, in many instances, are beyond our control. As a result, our actual results
may differ materially from those expressed or implied by any such forward-
looking statements.

36
<PAGE>

MANAGEMENT

The following table lists the names, ages and positions of all directors and
executive officers of MagnaCash as of the distribution date. There are no
family relationships between any director or executive officer and any other
director or executive officer of MagnaCash. Executive officers serve at the
discretion of the board of directors.

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
A. Nathaniel Goldhaber........... 52 Chairman
Barry McCarthy................... 37 President, Chief Operating Officer and
Secretary; Director
Gary Fitts....................... 54 Chief Technology Officer; Director
Lawrence Farrell................. 44 Treasurer, VP-Finance
Eli Rosner....................... 43 VP-Engineering Services
Neta Klein....................... 54 VP-Operations
</TABLE>

Chairman--A. Nathaniel Goldhaber

A. Nathaniel Goldhaber is Founder and former Chief Executive Officer of
Cybergold, Inc. and a director of MyPoints. He is a well-known innovator in
commercial aspects of the Internet. Previously he served as head of Centram
Systems West, which developed TOPS, the first IBM/MacIntosh local area network,
and as Chief Executive Officer of Kaleida, the multimedia joint venture between
IBM and Apple. Mr. Goldhaber was also President of Cole Gilburne Goldhaber &
Ariyoshi Management, Inc., a venture capital firm focused on high-technology
development. He founded Cybergold in 1996 and continues to serve on the boards
of several privately held high-tech companies. He is a frequent columnist,
guest speaker, and a Director of the University of California, Berkeley,
College of Letters and Sciences.

President, COO and Secretary; Director--Barry McCarthy

Barry C. McCarthy joined Cybergold in March 2000 to lead the
commercialization of the payment business. Mr. McCarthy brings to MagnaCash
more than 14 years of banking and consumer products experience. He joined
Cybergold from Wells Fargo & Company, San Francisco, where he started in 1998
and was most recently vice president and general manager of the ATM banking
group. During his time at Wells Fargo, Mr. McCarthy created the first scalable
Internet-connected ATMs and the first ATM screen and receipt advertising
program--Media Express ATM Network, and lead the first broad deployment of
talking ATMs for the blind. Before Wells Fargo, Mr. McCarthy was at Procter &
Gamble Company, Cincinnati, Ohio, for more than 11 years, beginning in 1986,
where he held positions of increasing responsibility in Sales and Marketing
Management. This included responsibilities for several of Procter and Gamble's
key products.

CTO; Director--Gary Fitts

Gary Fitts oversees the technical design of the MagnaCash system, and was
the original architect of the Cybergold systems which remain in operation
powering MagnaCash. Mr. Fitts has worked with Cybergold & MagnaCash founder Nat
Goldhaber since 1984, when the two developed the TOPS Local Area Network at
Centram Systems West. Mr. Fitts remained in charge of the TOPS product line
following Sun Microsystems Inc.'s acquisition of Centram in 1987. While at Sun
Microsystems, Gary was named a Sun Distinguished Engineer. In 1996, he rejoined
Nat Goldhaber to help launch Cybergold.

Treasurer, VP-Finance--Lawrence Farrell

Lawrence Farrell joined Cybergold in January 2000, reporting to the CFO and
responsible for special projects, including stock options, SEC reporting and
merger and disposition analysis. Mr. Farrell brings to MagnaCash more than 20
years of Finance, Accounting and Real Estate experience. Prior to joining
Cybergold, Mr. Farrell owned his own consulting practice, which dealt primarily
with real estate and small businesses. Mr. Farrell spent nine years at Cushman
& Wakefield, from 1986 through 1994, where he held positions of

37
<PAGE>

increasing responsibility and was the Director and Manager of the Valuation and
Advisory Services Group for Northern California. Mr. Farrell has also worked
for Peterson Worldwide, Credit Suisse First Boston and KPMG, where he earned
his CPA designation.

VP-Engineering--Eli Rosner

Eli Rosner has almost 20 years of experience developing software and
building engineering teams, from inception and analysis through development to
deployment and customer support. Prior to joining MagnaCash, Mr. Rosner was CTO
at The Pathways Group where he designed Smart Card based applications and
managed a high volume transaction database system spread over multiple
locations. As Vice President Engineering at BuyerForce, Mr. Rosner participated
in the strategy, design and development of a business to business collaborative
environment that brings buyers and sellers together. He implemented cutting
edge standards based technologies like Enterprise Java Beans. As Vice President
for Software Development at SL Corporation, Mr. Rosner helped the Company in
pre-sales and post sales support and helped the Company secure multi-million
dollar contracts.

VP-Operations--Neta Klein

Neta Klein brings to MagnaCash more than 20 years of operations experience
in the Legal, Insurance, and Healthcare industries. Prior to joining MagnaCash
Ms. Klein was VP of Operations/Business Development and Regional Manager for
the Doctors' Company a nationwide professional liability carrier. During her
tenure with TDC, Ms. Klein spearheaded the Company's strategic expansion
through merger and acquisition and most recently established and directed the
first stand-alone regional operation serving eight mid-western states. Before
joining TDC, Ms. Klein was the Director of Risk Management and Insurance
Services for UniHealth, a self insured hospital management company, were she
constructed and directed an all inclusive claims and risk management operation
for 12 hospitals in southern California. Ms. Klein spent over 13 years in
Farmers/Truck Insurance Exchange were she held positions of increasing
responsibility in the Insurance/Legal operations management, and where she
designed and implemented litigation management programs, agency-claims
operations procedures and tracking systems for fraud indicators and cost
containment.

Compensation of Directors

We will reimburse directors for reasonable out-of-pocket expenses incurred
in attending meetings of the board of directors. Following the distribution,
our non-employee directors will receive automatic annual grants of stock
options pursuant to our 2000 Omnibus Equity Incentive Plan.

Board Committees

The full board of directors serve on the audit committee and the
compensation committee. Until MagnaCash was formed in August 2000, it operated
as part of Cybergold and the audit and compensation committees of the Cybergold
board of directors provided the audit and compensation committee functions for
the combined companies.

Election of Directors

The board of directors is divided into three classes, each of whose members
will serve for a staggered three-year term. Mr. Fitts will serve in the class
whose term expires in 2001; Mr. Goldhaber will serve in the class of directors
whose term expires in 2002; and Mr. McCarthy will serve in the class of
directors whose term expires in 2003. Upon the expiration of the term of a
class of directors, directors in that class will be eligible to be elected for
a new three-year term at the annual meeting of stockholders in the year in
which that term expires.

Compensation Committee Interlocks and Insider Participation

No interlocking relationships exist between any member of our board of
directors or compensation committee and the board of directors or compensation
committee of any other company, nor has any interlocking relationship existed
in the past.

38
<PAGE>

Gary Fitts, A. Nathaniel Goldhaber and Barry McCarthy have served on the
compensation committee of our board of directors. Mr. McCarthy is the
President and Chief Operating Officer of MagnaCash and Mr. Fitts is the Chief
Technology Officer of MagnaCash. A. Nathaniel Goldhaber continued to own 22.2%
of Cybergold until the merger when he exchanged that stock for stock in
MyPoints and will own 17.5% of MagnaCash common stock following the
distribution.

Executive Compensation

Prior to the distribution, Cybergold has paid the compensation provided to
our officers and employees. After the distribution, MagnaCash will negotiate
employment contracts with our officers and employees. The full board of
directors will approve any employment contract between Mr. McCarthy and
MagnaCash after the distribution.

Option/Stock Option Grants

In addition, to date MagnaCash has not awarded options or stock
appreciation rights. Future option grants will be under the MagnaCash 2000
Omnibus Equity Incentive Plan as described below. MagnaCash has no plans to
grant stock appreciation rights.

2000 Omnibus Equity Incentive Plan

Share Reserve. Our board of directors will adopt our 2000 Omnibus Equity
Incentive Plan on or about the date of the distribution. Our stockholders will
also approve this plan. We have reserved 5,000,000 shares of our common stock
for issuance under the 2000 Omnibus Equity Incentive Plan. On January 1 of
each year, starting with the year 2001, the number of shares in the reserve
will automatically increase by 5% of the total number of shares of common
stock that are outstanding at that time or, if less, by 1,500,000 shares. In
general, if options or shares awarded under the 2000 Omnibus Equity Incentive
Plan are forfeited, then those options or shares will again become available
for awards under the 2000 Omnibus Equity Incentive Plan. We have not yet
granted any options under the 2000 Omnibus Equity Incentive Plan.

Administration. A committee of our board of directors administers the 2000
Omnibus Equity Incentive Plan. The committee has the complete discretion to
make all decisions relating to the interpretation and operation of our 2000
Omnibus Equity Incentive Plan. The committee has the discretion to determine
who will receive an award, what type of award it will be, how many shares will
be covered by the award, what the vesting requirements will be (if any), and
what the other features and conditions of each award will be. The committee
may also reprice outstanding options and modify outstanding awards in other
ways.

Eligibility. The following groups of individuals are eligible to
participate in the 2000 Omnibus Equity Incentive Plan:

. Employees,

. Members of our board of directors who are not employees, and

. Consultants.

Types of Award. The 2000 Omnibus Equity Incentive Plan provides for the
following types of award:

. Incentive stock options to purchase shares of our common stock,

. Nonstatutory stock options to purchase shares of our common stock,

. Restricted shares of our common stock,

. Stock appreciation rights, and

. Stock units.

Options. An optionee who exercises an incentive stock option may qualify
for favorable tax treatment under Section 422 of the Internal Revenue Code of
1986. On the other hand, nonstatutory stock options do not

39
<PAGE>

qualify for such favorable tax treatment. The exercise price for incentive
stock options granted under the 2000 Omnibus Equity Incentive Plan may not be
less than 100% of the fair market value of our common stock on the option grant
date. In the case of nonstatutory stock options, the minimum exercise price is
85% of the fair market value of our common stock on the option grant date.
Optionees may pay the exercise price by using:

. Cash,

. Shares of common stock that the optionee already owns,

. A full-recourse promissory note, except that the par value of newly
issued shares must be paid in cash,

. An immediate sale of the option shares through a broker designated by
us, or

. A loan from a broker designated by us, secured by the option shares.

Options vest at the time or times determined by a committee. In most cases,
our options will vest over a four-year period following the date of grant.
Options generally expire 10 years after they are granted, except that they
generally expire earlier if the optionee's service terminates earlier. The 2000
Omnibus Equity Incentive Plan provides that no participant may receive options
covering more than 500,000 shares in the same year, except that a newly hired
employee may receive options covering up to 1,000,000 shares in the first year
of employment.

Restricted Shares. Restricted shares may be awarded under the 2000 Omnibus
Equity Incentive Plan in return for:

. Cash,

. A full-recourse promissory note, except that the par value of newly
issued shares must be paid in cash,

. Services already provided to us, and

. In the case of treasury shares only, services to be provided to us in
the future.

Automatic Option Grants to Directors

Initial Grants. Only the non-employee members of our board of directors will
be eligible for option grants under the automatic option grant program. Each
non-employee director who first joins our board after the effective date of
this offering will receive an initial option for 15,000 shares. That grant will
occur when the director takes office. The initial options vest in full on the
first year anniversary of the date of grant.

Annual Grants. At the time of each of our annual stockholders, meetings,
beginning in 2001, each non-employee director who will continue to be a
director after that meeting will automatically be granted an annual option for
7,500 shares of our common stock. However, a new non-employee director who is
receiving the 15,000-share initial option will not receive the 7,500-share
annual option in the same calendar year. The annual options vest in full on the
first year anniversary of the date of grant.

The exercise price of each non-employee director's option will be equal to
the fair market value of our common stock on the option grant date. A director
may pay the exercise price by using cash, shares of common stock that the
director already owns, or an immediate sale of the option shares through a
broker designated by us. The non-employee directors' options have a 10-year
term, except that they expire one year after a director leaves the board (if
earlier). If a change in control of Cybergold occurs, a non-employee director's
option will become fully vested unless the accounting rules applicable to a
pooling of interests preclude acceleration. Vesting may accelerate as
determined by the committee if the optionee retires after age 65, dies or is
disabled.

Stock Appreciation Rights. We may award stock appreciation rights under the
2000 Omnibus Equity Incentive Plan. Each agreement evidencing stock
appreciation rights will inform the holder when such rights may be exercised.
Stock appreciation rights may be exercised for shares of common stock, cash or
a combination of cash and shares. No participant may receive stock appreciation
rights for more than 500,000 shares in the same year, except that a newly hired
employee may receive stock appreciation rights for up to 1,000,000 shares.

40
<PAGE>

Stock Units. We may award stock units under the 2000 Omnibus Equity
Incentive Plan. The stock units may be subject to vesting. Stock units may be
settled for shares of common stock, cash or a combination of cash and shares.

Buy Outs. In our sole discretion, we may offer to buy out for cash an option
or authorize an optionee to cash out an option that was previously granted.

Deferral of Awards. We may permit or require a participant to have cash that
would be paid to the participant for exercise of a stock appreciation right or
settlement of a stock unit credited to a deferred compensation account. We may
also permit shares that would be delivered for exercise of an option or stock
appreciation right converted into an equal number of stock units or converted
into amounts that would be credited to a deferred compensation account.

Change in Control.

If a change in control of MagnaCash occurs, an option or other award under
the 2000 Omnibus Equity Incentive Plan will become fully vested if the option
or other award is not assumed by the surviving corporation or its parent or if
the surviving corporation or its parent does not substitute another award on
substantially the same terms. A change in control will not cause accelerated
vesting even if outstanding awards are not assumed if such acceleration would
prevent a pooling of interest accounting treatment.

A change in control includes:

. A merger of MagnaCash after which our own stockholders own 50% or less
of the surviving corporation or its parent company,

. A sale of all or substantially all of our assets,

. A proxy contest that results in the replacement of more than one-third
of our directors over a 24-month period, or

. An acquisition of 50% or more of our outstanding stock by any person or
group, other than a person related to MagnaCash (such as a holding
company owned by our stockholders).

Amendments or Termination. Our board may amend or terminate the 2000 Omnibus
Equity Incentive Plan at any time. If our board amends the plan, it does not
need to ask for stockholder approval of the amendment unless applicable law
requires it. The 2000 Omnibus Equity Incentive Plan will continue in effect
indefinitely, unless the board decides to terminate the plan earlier.

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<PAGE>

SECURITY OWNERSHIP OF MAGNACASH

Prior to the distribution of MagnaCash common stock, all of the outstanding
MagnaCash common stock is held by Cybergold. The following table sets forth the
projected beneficial ownership of MagnaCash common stock immediately following
the distribution by:

. each person known by MagnaCash who will own beneficially more than 5% of
the outstanding common stock of MagnaCash;

. each of the directors of MagnaCash;

. each of the executive officers of MagnaCash; and

. all directors and executive officers as a group.

Except as otherwise noted, each entity or person listed below maintains a
mailing address of c/o Cybergold, Inc., 1330 Broadway, 13th Floor, Oakland,
California 94612.

<TABLE>
<CAPTION>
MagnaCash Shares Projected
to be Beneficially Owned
--------------------------
Name and Address Number(1) Percent of Class
---------------- --------- ----------------
<S> <C> <C>
Principal Stockholders:
Cybergold, Inc..................................... 2,750,009 19.9%

Entities affiliated with Alta California Partners,
L.P.(2)........................................... 1,356,175 9.4%
One Embarcadero Center #4050
San Francisco, CA 94111

VantagePoint Venture Partners, 1996(3)............. 1,115,008 7.7%
1001 Bayhill Drive #100
San Bruno, CA 94066

Garrett P. Gruener(2).............................. 1,356,175 9.8%

Alan Salzman(3).................................... 1,115,008 8.1%

Executive Officers and Directors:
A. Nathaniel Goldhaber............................. 2,412,886 17.5%

Gary Fitts......................................... 100,375 0.7%

Lawrence Farrell................................... 250 *

Barry McCarthy..................................... -- 0.0%

Eli Rosner......................................... -- 0.0%

Neta Klein......................................... -- 0.0%

All directors and executive officers as a group (6
persons).......................................... 2,513,511 18.2%
</TABLE>
--------
* Less than 1%
(1) Except as otherwise noted, reflects, in each case, the number of shares of
MagnaCash common stock to be beneficially owned as of October 1, 2000.

(2) Includes 1,356,175 shares beneficially owned by Alta California Partners,
L.P., and 29,511 shares beneficially owned by Alta Embarcadero Partners
LLC. Of these shares, a total of 53,557 are issuable upon exercise of
warrants. Garrett P. Gruener, a former Cybergold, Inc. Director, is a
general partner of the general partner Alta California Partners, L.P. and a
member of Alta Embarcadero Partners LLC. The address of Alta California
Partners, L.P. and Alta Embarcadero Partners LLC is One Embarcadero Center,
Suite 4050, San Francisco, CA 94111. Mr. Gruener disclaims beneficial
ownership of the shares held by Alta California Partners, L.P. and Alta
Embarcadero Partners LLC, except to the extent of his pecuniary interest
therein.
(3) Alan Salzman, a Cybergold, Inc. Director, is a managing partner of
VantagePoint Venture Partners, 1996. The address of VantagePoint Venture
Partners, 1996 is 1001 Bayhill Drive, Suite 100, San Bruno, CA 94066. Mr.
Salzman disclaims beneficial ownership of the shares held by VantagePoint
Venture Partners, 1996, except to the extent of his pecuniary interest
therein.

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<PAGE>

ARRANGEMENTS BETWEEN MAGNACASH AND CYBERGOLD OR MYPOINTS

We have provided below a summary description of the master separation and
distribution agreement, and the key related agreements into which Cybergold and
MagnaCash have entered or intend to enter prior to the distribution of
MagnaCash common stock to Cybergold stockholders of record as of August 3,
2000. You should read the full text of these agreements, which have been or
will be filed with the Securities and Exchange Commission as exhibits to the
registration statement of which this prospectus is a part. See "Where You Can
Find More Information."

Master Separation and Distribution Agreement

The master separation and distribution agreement contains the key provisions
relating to the separation of Cybergold and MagnaCash. The separation is
scheduled to occur on or before September 30, 2000. As requested by the
separation agreement, Cybergold and MagnaCash have entered into the license,
assignment and assumption agreement which provides for the transfer to
MagnaCash of assets and liabilities from Cybergold and the license and
assignment to MagnaCash of certain intellectual property from Cybergold,
effective on the separation date. The ancillary agreements include:

. a license, assignment and assumption agreement;

. a transitional services and joint operation agreement;

. services agreement; and

. a tax sharing agreement.

To the extent that the terms of any of these ancillary agreements conflict
with the separation agreement, the terms of these agreements govern. These
agreements are described more fully below.

Cash to be transferred to MagnaCash. Cybergold will provide to MagnaCash
with a $5,000,000 contribution. However, prior to the separation date a
reserve, if necessary, shall be established in MyPoints favor to cover any and
all taxes which may be associated with the distribution and separation as well
as associated costs and this may be accomplished by adjusting the $5,000,000
cash contribution.

The Distribution. On or before September 30, 2000, Cybergold intends to
distribute the common stock of MagnaCash by transferring the shares to the
distribution and transfer agent except for those shares of common stock
Cybergold shall retain. Cybergold may in its sole discretion determine the
distribution date. Cybergold intends to consummate the distribution only if the
following conditions are met (any of which may be waived by Cybergold):

. all required government approvals must be in effect; and

. no legal restraints must exist preventing the distribution.

License, Assignment and Assumption Agreement

Prior to the formation of MagnaCash in August 2000, Cybergold operated the
MagnaCash business as part of its over all business operations. Cybergold and
MagnaCash entered into a License Assignment and Assumption Agreement, or
License Agreement, for the purpose of allocating rights in intellectual and
other property to MagnaCash as appropriate to establish MagnaCash as a separate
company, and assigning certain property needed to operate MagnaCash's business.
Under the License Agreement, Cybergold will continue the business of awarding
incentives for Internet activity, and MagnaCash will handle the consumer
accounts and provide methods of redeeming the incentives.

The License Agreement provides as follows:

. Cybergold will assign to MagnaCash all rights it now or may in the
future have in certain intellectual property relating to the new
business of MagnaCash. Cybergold further will assign to MagnaCash all

43
<PAGE>

merchant agreements, where the merchants agreed to exchange goods or
services for value, provided the merchants agree to assignment in
writing where necessary. Cybergold will also assign to MagnaCash all of
its rights in certain furniture and equipment and certain third-party
agreements with First National Bank of Omaha and Wells Fargo Bank.

. Cybergold will grant to MagnaCash an exclusive, perpetual, fully-paid,
irrevocable, worldwide, royalty-free license to use certain proprietary
intellectual property in the payment marketplace. To the extent that
Cybergold has the right to sub-license non-owned proprietary
intellectual property, Cybergold will grant to MagnaCash a perpetual,
irrevocable, worldwide, royalty-free license to use such non-owned
proprietary intellectual property. Any derivative works that either
party develops from the licensed intellectual property discussed herein
will be owned by the party which developed the work.

. MagnaCash will agree not to use the licensed intellectual property to
offer goods or services relating to the business of awarding consumers
incentives for Internet or other on-line or off-line activity for ten
(10) years commencing from August 4, 2000. Except as a service to its
membership, Cybergold will not use the relevant intellectual property to
offer goods or services relating to the business of managing accounts
which hold cash value or other value issued by others.

Services Agreement

Cybergold and MagnaCash have entered into a Services Agreement to provide
for MagnaCash to perform for Cybergold certain account management, fund
transfer, and cash value incentive redemption processing and other services.
Pursuant to the Services Agreement the parties have agreed to the following
terms:

. MagnaCash will operate that portion of Cybergold's consumer loyalty
reward system relating to the management, transfer and spending or other
redemption of incentive payments earned by Cybergold members. The
parties will cooperate to streamline any processes relating to this
service agreement so as to create minimal inconvenience to Cybergold's
members. MagnaCash may make additional services available to Cybergold
for a negotiable fee, and if accepted, such additional services will
become services under this agreement.

. MagnaCash will provide on-line facilities for users and merchants to
manage their accounts. MagnaCash will also facilitate transfers of cash
value among merchants, users, and related credit card and bank accounts.
Cybergold will pay to MagnaCash a fixed monthly service fee and fees
based on account activity. MagnaCash will pay to Cybergold a percentage
of various transaction fees.

. Cybergold will first consult with MagnaCash before obtaining additional
services relating to redemption or payment of incentives. If MagnaCash
offers the additional services on terms no less advantageous to
Cybergold than are available from other parties, Cybergold will obtain
the additional services from MagnaCash.

This agreement is in effect for three years from August 7, 2000. It will
thereafter be renewed automatically for successive one year renewal terms.
During the first five months of joint operation, both parties agree to
renegotiate the terms of this agreement and again at 17 and 29 months.

Transitional Services and Joint Operations Agreement

MagnaCash has entered into a transitional services and joint operations
agreement with Cybergold covering the provision of various transitional
services, including phone systems, accounting, computer facilities, technical
support, human resources and others by Cybergold to MagnaCash and, if
necessary in certain circumstances, vice versa. Certain infrastructure
hardware and software (including, but not limited to, networks, servers,
desktop computers and enterprise applications, unless prohibited by a third
party) shall be separately owned and part of a system jointly operated by the
parties. The services provided will generally be provided for a fee equal to
the estimated costs of providing the services as calculated by various
methods, plus a 25%

44
<PAGE>

upcharge to cover overhead and administrative costs. The transition services
agreement has an initial term of six months from the date of separation.

The parties anticipate joint operation of certain equipment for a period of
six months commencing August 4, 2000. During this time, major system changes
will require mutual consent from the parties, costs for major changes in
hardware will be shared, and assistance from the other party's staff will be
available on a paid consulting basis.

Sublease Agreement

Prior to the distribution, we intend to enter into a sublease agreement with
Cybergold with respect to the 7,258 square feet of office space we currently
occupy at 1330 Broadway, Oakland, California.

Tax Sharing Agreement

Prior to the distribution, MagnaCash will enter into a tax sharing agreement
with MyPoints providing for, among other things, the allocation of tax
liabilities arising prior to, as a result of, and subsequent to the
distribution. MagnaCash will be required to pay its share of income taxes shown
as due on any consolidated, combined or unitary tax returns filed by MyPoints
or Cybergold for tax periods ending on or before or including the distribution
date. MyPoints will indemnify MagnaCash against liability for all taxes in
respect of consolidated, combined or unitary tax returns for periods as to
which MyPoints or Cybergold files group returns which include MagnaCash.
MagnaCash will be responsible for filing any separate tax returns for any
taxable period, including for tax periods of MagnaCash beginning on or after
the date of the distribution, at which time MagnaCash will no longer be a
member of MyPoint's group for federal, state or local tax purposes, as the case
may be. MagnaCash will be responsible for any tax liabilities, and entitled to
any refunds or credits of taxes, with respect to separately filed tax returns.
MagnaCash will indemnify MyPoints against any tax liability with respect to
separately filed tax returns. MagnaCash will also indemnify MyPoints against
all federal, state, local and foreign taxes related to the distribution of the
MagnaCash stock.

The tax sharing agreement will allocate responsibility with respect to tax
matters including audits, and will provide for the exchange of information and
the retention of records which may affect the income tax liability of either
party.

Cybergold has agreed to indemnify us and our affiliates, agents, successors
and assigns from all liabilities arising from:

. Cybergold's business other than the businesses transferred to us
pursuant to the separation; and

. any breach by Cybergold of the separation agreement or any ancillary
agreement.

The indemnifying party will make all indemnification payments net of
insurance proceeds that the indemnified party receives. The agreement also
contains provisions governing notice and indemnification procedures.

Insurance. In general, Cybergold has agreed to secure and pay for insurance
covering all liabilities and losses arising from:

. management of Cybergold accounts; and

. failure of the jointly owned server hardware.

The parties shall otherwise provide their own insurance.

45
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Cybergold

MagnaCash has entered, or will enter into various arrangements with
Cybergold which set forth both companies' duties and responsibilities in the
separation and distribution. MagnaCash and Cybergold will continue to provide
services to each partner for at least six months from the date of distribution
and Cybergold will initially be MagnaCash's sole client. Please see
"Arrangements Between Cybergold and MagnaCash" beginning on page 44 for further
details. Cybergold will continue to hold a 19.9% interest in MagnaCash after
the distribution.

Cross-Ownership; Directors and Officers

A. Nathaniel Goldhaber continued to own 22.2% of Cybergold until the merger
when he exchanged that stock for stock in MyPoints and will own 17.5% of
MagnaCash common stock following the distribution. Together with Cybergold,
Goldhaber will own 37.4% of MagnaCash, a combined percentage giving them
significant control over MagnaCash.

Additionally, Mr. Goldhaber is a MagnaCash director and vice-chairman and a
director of MyPoints.

Restrictions on Transfer

Prior to the distribution, there has been no public market for our common
stock. MagnaCash has not applied to have the MagnaCash common stock included
for quotation on the Nasdaq Stock Market's National Market or listed on any
exchange. Prior to the earliest of (i) a year from the distribution, (ii) the
date a registration statement regarding an offering of shares of common stock
the issuance of which would increase the number of shares of common stock
outstanding by eighty percent (80%) or more is declared effective by the
Securities and Exchange Commission, or (iii) a date as determined by the board
of directors of MagnaCash in its sole discretion, common stock may not be
disposed of except: (A) by Cybergold or its successor, in connection with the
initial distribution described herein, (B) from any holder of common stock that
is a natural person to such stockholder's spouse or children, to any trust
solely for the benefit of such stockholder or the children or spouse of such
stockholder, or to any party pursuant to applicable laws of descent and
distribution, and (C) from any holder of common stock that is a corporation,
limited liability company, limited partnership or general partnership to any
affiliate.

46
<PAGE>

MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

Material Federal Income Tax Considerations of the Distribution

The following discussion summarizes the material federal income tax
consequences of the distribution of interests in the MagnaCash business to the
Cybergold stockholders. This discussion is based on the Internal Revenue Code,
applicable Treasury Regulations, judicial authority and administrative rulings
and practice, all as of the date hereof. No opinion of counsel has been
obtained with respect to the tax consequences of the distribution. Further, no
ruling regarding the distribution will be sought; therefore the IRS may
disagree with the statements and conclusions set forth herein. In addition,
future legislative, judicial or administrative changes or interpretations could
adversely affect the accuracy of the statements and conclusions set forth
herein. Any such changes or interpretations could be applied retroactively and
could affect the tax consequences of the distribution to Cybergold or its
stockholders, or both.

Stockholders of Cybergold should be aware that the following discussion does
not deal with all federal income tax consequences that may be relevant to
Cybergold stockholders in light of their particular circumstances, such as
stockholders who are foreign persons, stockholders who acquired their Cybergold
stock in compensatory transactions, and stockholders who do not hold Cybergold
shares as capital assets. Accordingly, Cybergold stockholders are urged to
consult their own tax advisors as to the specific tax consequences to them of
the distribution of the MagnaCash business, including the applicable federal,
state, local and foreign tax consequences.

The distribution of the MagnaCash business will be a taxable distribution to
Cybergold. Cybergold will recognize any gain (but not loss) on the distribution
equal to the difference between its tax basis in the shares of MagnaCash that
it distributes and the fair market value of such stock on the date of the
distribution.

Cybergold stockholders will be treated as having received a distribution of
property with respect to their Cybergold shares equal to the fair market value
of the MagnaCash stock received in the distribution. The distribution will be
taxable as a dividend to the extent of Cybergold's current and accumulated
earnings and profits. Any amount not taxable as a dividend will be applied
against and reduce the adjusted basis of the stockholder's MyPoints stock. To
the extent that the fair market value of the portion of the distribution which
is not a dividend exceeds the stockholder's adjusted tax basis in the MyPoints
shares, the excess will be treated as gain from the sale or exchange of
property.

Cybergold does not have accumulated earnings and profits, and does not
expect to have current earnings and profits in its taxable year during which
the MagnaCash stock is distributed. However, whether Cybergold will have
current earnings and profits for its taxable year during which the distribution
occurs depends upon the date on which the merger was completed, the date of the
distribution, and the fair market value of the MagnaCash business at the time
of the distribution, among other things, not all of which can be known with any
certainty at present. Therefore, it is possible that under certain
circumstances all or a portion of the distribution will be taxable as a
dividend. Cybergold will provide information to stockholders regarding the
amount of the distribution taxable as a dividend following the close of the
calendar year in which the distribution occurs.

Distribution of the MagnaCash stock may be subject to information reporting
to the IRS and possible backup withholding at a rate of 31%. Backup withholding
will not apply, however, to a Cybergold stockholder who furnishes a correct
taxpayer identification number and makes other required certifications or is
otherwise exempt from backup withholding. Amounts withheld under backup
withholding rules may be credited against a stockholder's tax liability, and a
stockholder may obtain a refund of any excess amounts withheld under the backup
withholding rules by timely filing the appropriate form for refund with the
IRS.

47
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Following the distribution, MagnaCash authorized capital stock will consist
of 75,000,000 shares of common stock, $.001 par value, and 10,000,0000 shares
of preferred stock, $.001 par value. The following summary of provisions of our
capital stock describes all material provisions of, but does not purport to be
complete and is subject to, and qualified in its entirety by, our certificate
of incorporation and our by-laws, which are included as exhibits to the
registration statement of which this prospectus forms a part, and by the
provisions of applicable law.

Common Stock

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Except as
otherwise provided by law, the holders of common stock vote together with the
holders of preferred stock as one class. Subject to the rights of holders of
any shares of preferred stock which may at the time be outstanding, holders of
common stock will be entitled to such dividends as the board of directors may
declare out of funds legally available therefor. Subject to the prior rights of
creditors and holders of any preferred stock which may be outstanding from time
to time, the holders of common stock are entitled, in the event of liquidation,
dissolution or winding up of MagnaCash, to share equally in the distribution of
all remaining assets. The common stock is not liable for any calls or
assessments and is not convertible into any other securities.

Prior to the distribution, there has been no public market for our common
stock. MagnaCash has not applied to have the MagnaCash common stock included
for quotation on the Nasdaq Stock Market's National Market or listed on any
other exchange. Prior to the earliest of (i) a year from the distribution, (ii)
the date a registration statement regarding an offering of shares of common
stock the issuance of which would increase the number of shares of common stock
outstanding by eighty percent (80%) or more is declared effective by the
Securities and Exchange Commission, or (iii) a date as determined by the board
of directors of MagnaCash in its sole discretion, common stock may not be
disposed of except: (A) by Cybergold or its successor, in connection with the
initial distribution described herein, (B) from any holder of MagnaCash common
stock that is a natural person to such stockholder's spouse or children, to any
trust solely for the benefit of such stockholder or the children or spouse of
such stockholder, or to any party pursuant to applicable laws of descent and
distribution, and (C) from any holder of common stock that is a corporation,
limited liability company, limited partnership or general partnership to any
affiliate. In addition, there are no redemption or sinking fund provisions
applicable to the common stock.

Preferred Stock

The certificate provides that the board of directors is authorized to
provide for the issuance of shares of preferred stock, from time to time, in
one or more series. Prior to the issuance of shares in each series, the board
of directors is required by the certificate and the Delaware General
Corporation Law to adopt resolutions and file a Certificate of Designations,
Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof or the
"Certificate of Designation" with the Secretary of State of Delaware, fixing
for each such series the designations, preferences and relative, participating,
optional or other special rights applicable to the shares to be included in any
such series and any qualifications, limitations or restrictions thereon,
including, but not limited to, dividend rights, dividend rate or rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences as are permitted by Delaware law.

Voting Rights of Capital Stock

Directors are elected by plurality vote of the stockholders entitled to vote
in the election of directors. The board of directors of MagnaCash is divided
into three classes of equal number. Stockholders do not have cumulative voting
rights. All matters other than the election of directors, including the
amendment or repeal of

48
<PAGE>

provisions of the articles of incorporation not dealing with the limitations on
the personal liability of directors, are decided by the affirmative vote of a
majority of the voting power of the stock entitled to vote thereon.

In general, nominations of directors or the bringing of business before an
annual meeting by a stockholder requires notice to be delivered to MagnaCash
not less than 70 nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting. After the distribution, the stockholders may
not take action by written consent without a meeting.

Certain Charter and Bylaw Provisions and Delaware Law

After the distribution, provisions of our charter and bylaws may have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of us. These
provisions are expected to discourage coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to acquire control of
MagnaCash to first negotiate with us. These provisions could limit the price
investors might be willing to pay in the future for our common stock and could
have the effect of delaying or preventing a change in control. We believe that
the benefits of increased protection of our ability to negotiate with the
proponent of an unfriendly or unsolicited acquisition proposal outweigh the
disadvantages of discouraging these proposals because, among other things,
negotiation will result in an improvement of their terms. These provisions
could limit the price that investors might be willing to pay in the future for
shares of our common stock. These provisions include:

. division of the board of directors into three separate classes;

. elimination of cumulative voting in the election of directors;

. prohibitions on our stockholders from acting by written consent and
calling special meetings;

. procedures for advance notification of stockholder nominations and
proposals; and

. the ability of the board of directors to alter our bylaws without
stockholder approval.

In addition, subject to limitations prescribed by law, our board of
directors has the authority to issue up to 10,000,000 shares of preferred stock
and to determine the price, rights, preferences, privileges and restrictions,
including voting rights, of those shares without any further vote or action by
the stockholders. The issuance of preferred stock, while providing flexibility
in connection with possible financings or acquisitions or other corporate
purposes, could have the effect of making it more difficult for a third party
to acquire a majority of our outstanding voting stock.

MagnaCash is subject to the provisions of Section 203 of the Delaware
General Corporation Law, an antitakeover law. In general, the statute prohibits
a publicly held Delaware corporation from entering into a business combination
with an interested stockholder for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
the business combination is approved in a prescribed manner. For purposes of
Section 203, a business combination includes a merger, asset sale or
transaction resulting in a financial benefit to the interested stockholder, and
an interested stockholder is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of its
voting capital stock.

THE PROVISIONS OF THE CERTIFICATE, BYLAWS AND DELAWARE LAW ARE INTENDED TO
ENCOURAGE POTENTIAL ACQUIRERS TO NEGOTIATE WITH US AND ALLOW MAGNACASH'S BOARD
OF DIRECTORS THE OPPORTUNITY TO CONSIDER ALTERNATIVE PROPOSALS IN THE INTEREST
OF MAXIMIZING STOCKHOLDER VALUE. SUCH PROVISIONS, HOWEVER, MAY ALSO HAVE THE
EFFECT OF DISCOURAGING ACQUISITION PROPOSALS OR DELAYING OR PREVENTING A CHANGE
IN CONTROL, WHICH MAY HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF THE COMMON
STOCK.

49
<PAGE>

DIVIDEND POLICY

MagnaCash has never declared or paid any cash dividends on its capital
stock. MagnaCash currently intends to retain all future earnings, if any, for
use in the operation and expansion of its business and does not anticipate
declaring or paying cash dividends.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by the Delaware General Corporate Law, MagnaCash has included
in its certificate a provision to eliminate the personal liability of its
directors for monetary damages for breach or alleged breach of their fiduciary
duties as directors, subject to certain exceptions. In addition, the bylaws
require the companies to:

. indemnify their officers and directors under certain circumstances,
including those circumstances in which indemnification would otherwise
be discretionary; and

. advance expenses to their officers and directors as incurred in
connection with proceedings against them for which they may be
indemnified.

MagnaCash has entered into indemnification agreements with its officers and
directors containing provisions that are in some respects broader than the
specific indemnification provisions contained in the Delaware General Corporate
Law. The indemnification agreements may require the companies, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as directors or officers
(other than liabilities arising from willful misconduct of a culpable nature),
to advance expenses incurred as a result of any proceeding against them as to
which they could be indemnified, and to obtain directors' and officers'
insurance if available on reasonable terms. MagnaCash believes that these
charter provisions and indemnification agreements are necessary to attract and
retain qualified persons as directors and officers.

MagnaCash understands that the staff of the Securities and Exchange
Commission is of the opinion that statutory, charter and contractual provisions
as are described above have no effect on claims arising under the federal
securities laws.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the MagnaCash common stock is U.S.
Stock Transfer Corporation, 1745 Gardena Avenue, Glendale, CA 91204; telephone:
(818) 502-1404.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for us by
Morrison & Foerster LLP, San Francisco, California. Morrison & Foerster LLP is
legal counsel to both Cybergold and MagnaCash.

EXPERTS

The financial statements included in this registration statement, to the
extent and for the periods indicated in their reports, have been audited by
Arthur Andersen LLP, independent public accountants, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.

The board of directors of MagnaCash have not selected auditors for MagnaCash
for the period following the distribution of shares. Such selection will be
acted upon by the Audit Committee of the board of directors of MagnaCash after
the transaction contemplated in this document has been consummated.

50
<PAGE>

WHERE YOU CAN FIND MORE INFORMATION

As a result of the distribution, the Securities Exchange Act of 1934
requires us to file annual, quarterly and other reports with the Securities and
Exchange Commission. We intend to provide annual reports containing audited
financial statements to its stockholders in connection with its annual meetings
of stockholders.

We filed with the Securities and Exchange Commission a registration
statement, which includes certain exhibits, under the Securities Act, for the
securities issued under this prospectus. This prospectus contains general
information about the contents of contracts and other documents filed as
exhibits to the registration statement. However, this prospectus does not
contain all of the information set forth in the registration statement and the
exhibits filed with the registration statement. You should read the
registration statement and the exhibits for further information about MagnaCash
and the distribution.

You should rely only on the information in this document or to which we have
referred you. We have not authorized anyone to provide you with information
that is different. If you are in a jurisdiction where offers to exchange or
sell, or solicitations of offers to exchange or purchase, the securities
offered by this document or the solicitation of proxies is unlawful, or if you
are a person to whom it is unlawful to direct these types of activities, then
the offer presented in this document does not extend to you. The information
contained in this document speaks only as of the date of this document unless
the information specifically indicates that another date applies.

51
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
MagnaCash, Inc.
Financial Statements:
Report of Independent Public Accountants................................. F-2
Balance Sheet............................................................ F-3
Statements of Operations................................................. F-4
Statements of Divisional Equity.......................................... F-5
Statements of Cash Flows................................................. F-6
Notes to Financial Statements............................................ F-7

Cybergold, Inc.
Financial Statements:
Report of Independent Public Accountants................................. F-18
Consolidated Balance Sheets.............................................. F-19
Consolidated Statements of Operations.................................... F-20
Consolidated Statements of Stockholders' Equity.......................... F-21
Consolidated Statements of Cash Flows.................................... F-22
Notes to Consolidated Financial Statements............................... F-23
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Cybergold, Inc.:

We have audited the accompanying balance sheet of MagnaCash, Inc. (a
division of Cybergold, Inc.--Note 1) as of December 31, 1999 and the related
statements of operations, divisional equity and cash flows for the year 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 audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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 audit provides 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 MagnaCash, Inc. as of
December 31, 1999 and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to these
statements, the Company has an accumulated deficit of approximately $1,035,000
at December 31, 1999 and has continued to incur losses in 2000. Management's
plans with regard to these matters are also described in Note 3. These factors
raise substantial doubt as to the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

ARTHUR ANDERSEN LLP

San Francisco,
July 24, 2000

F-2
<PAGE>

MAGNACASH, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
Property
Computer equipment and licenses.................... $ 416,127 $ 702,891
Furniture and fixtures............................. 55,144 55,144
Accumulated depreciation........................... (90,589) (287,506)
----------- -----------
Property, net........................................ 380,682 470,529
----------- -----------
Total assets......................................... $ 380,682 $ 470,529
=========== ===========

LIABILITIES AND DIVISIONAL EQUITY
Accrued liabilities
Payroll and benefits............................... $ 52,503 $ 61,944
----------- -----------
Total current liabilities............................ 52,503 61,944
----------- -----------
Divisional equity
Cybergold, Inc. investment......................... 1,489,190 2,360,522
Deferred compensation.............................. (125,519) (84,692)
Accumulated deficit................................ (1,035,492) (1,867,245)
----------- -----------
Total divisional equity............................ 328,179 408,585
----------- -----------
Total liabilities and divisional equity.............. $ 380,682 $ 470,529
=========== ===========
</TABLE>

The accompanying Notes to the Financial Statements are an integral part of
these statements.

F-3
<PAGE>

MAGNACASH, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Six Months Ended
Year Ended June 30,
December 31, ------------------------
1999 1999 2000
------------ ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
Net revenues........................... $ 4,347 $ 1,254 $ 7,725
Cost of revenues....................... (36,109) (17,345) (26,452)
----------- ---------- ----------
Gross margin........................... (31,762) (16,091) (18,727)

Sales and marketing expenses........... 295,880 98,833 412,790
General and administrative expenses.... 122,500 36,185 115,233
Research and development expenses...... 281,173 107,497 266,601
Amortization of deferred compensation.. 304,177 284,298 18,402
----------- ---------- ----------
Net loss............................... $(1,035,492) $(542,904) $ (831,753)
=========== ========== ==========

Pro forma net loss per share, basic and
diluted (unaudited)................... $ (.10) $ (.05) $ (.08)
=========== ========== ==========

Pro forma weighted average common
shares outstanding, basic and diluted
(unaudited)........................... 10,575,000 10,575,000 10,575,000
=========== ========== ==========
</TABLE>

The accompanying Notes to the Financial Statements are an integral part of
these statements.

F-4
<PAGE>

MAGNACASH, INC.

STATEMENTS OF DIVISIONAL EQUITY

<TABLE>
<CAPTION>
Deferred Cybergold, Inc. Accumulated
Compensation Investment Deficit Total
------------ --------------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCES AT JANUARY 1,
1999................... $(503,272) $ 503,272 $ -- $ --
Net loss.............. -- -- (1,035,492) (1,035,492)
Deferred
compensation......... 73,576 (73,576) -- --
Amortization of
deferred
compensation......... 304,177 -- -- 304,177
Capital contribution.. -- 1,059,494 -- 1,059,494
--------- ---------- ----------- -----------
BALANCES AT DECEMBER 31,
1999................... (125,519) 1,489,190 (1,035,492) 328,179
Net loss(1)........... -- -- (831,753) (831,753)
Deferred
compensation(1)...... 22,425 (22,425) -- --
Amortization of
deferred
compensation(1)...... 18,402 -- -- 18,402
Capital
contribution(1)...... -- 893,757 -- 893,757
--------- ---------- ----------- -----------
BALANCES AT JUNE 30,
2000(1)................ $ (84,692) $2,360,522 $(1,867,245) $ 408,585
========= ========== =========== ===========
</TABLE>
--------
(1) unaudited

The accompanying Notes to the Financial Statements are an integral part of
these statements.

F-5
<PAGE>

MAGNACASH, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Six Months Ended
June 30,
Year Ended -----------------------
1999 1999 2000
----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................. $(1,035,492) $(542,904) $(831,753)
Adjustments for noncash charges included
in net loss:
Depreciation........................... 90,589 24,670 98,785
Amortization of deferred compensation.. 304,177 284 18,402
Changes in current assets and
liabilities:
Increase in accrued liabilities...... 52,503 24,729 9,441
----------- --------- ---------
Net cash used in operating activities.. (588,223) (209,207) (705,125)
----------- --------- ---------

INVESTMENT ACTIVITIES
Purchases of property and equipment...... (471,271) (63,413) (188,632)
----------- --------- ---------
Net cash used in investment
activities............................ (471,271) (63,413) (188,632)
----------- --------- ---------

FINANCING ACTIVITIES
Cybergold capital contribution........... 1,059,494 272,620 893,757
----------- --------- ---------
Net cash provided by financing
activities............................ 1,059,494 272,620 893,757
----------- --------- ---------
Increase in cash and equivalents....... 0 0 0
Cash and equivalents at beginning of
period.................................. 0 0 0
----------- --------- ---------
Cash and equivalents at end of period.... $ 0 $ 0 $ 0
=========== ========= =========
</TABLE>

The accompanying Notes to the Financial Statements are an integral part of
these statements.

F-6
<PAGE>

MAGNACASH, INC.

NOTES TO FINANCIAL STATEMENTS

Year Ended December 31, 1999 and the Six Months Ended
June 30, 2000 (Unaudited) and June 30, 1999 (Unaudited)

1. OPERATIONS

MagnaCash, Inc. ("MagnaCash" or the "Company"), a division of Cybergold,
Inc. ("Cybergold"), is a provider of on-line payment infrastructure to on-line
businesses and organizations. MagnaCash offers an on-line funds transfer system
that enables its customers to create individual accounts for consumers and
businesses with whom they have relationships. Transfers within accounts in the
system occur immediately. These accounts can be used to store value credited to
the accounts by transfers from bank accounts and credit cards or earned by
users from promotional and other activities performed by them on the Internet.
Users can apply funds from these accounts to credit cards, transmit them to
bank accounts, or use them to make purchases directly from merchants who
participate in the MagnaCash payment system. Transfers to accounts outside the
system are credited immediately within the system, but are subject to standard
bank and credit card protocols for audit outside the system. MagnaCash
currently manages 9,000,000 accounts on behalf of Cybergold, Inc., its former
corporate parent where the payment infrastructure business conducted by
MagnaCash was developed. Over 50 merchants and organizations currently
participate in the MagnaCash system.

2. BASIS OF PRESENTATION

On April 14, 2000, Cybergold entered into an agreement and plan of merger
and reorganization with MyPoints.com, Inc. ("MyPoints"). As outlined in the
merger agreement between Cybergold and MyPoints, Cybergold is to create an
independent company, MagnaCash, Inc. ("MagnaCash" or the "Company") comprised
of Cybergold's Internet payments business. After completion of MagnaCash's
initial public offering, Cybergold will own 19.9% of MagnaCash's outstanding
common stock.

In connection with the creation of MagnaCash as a separate company,
Cybergold and MagnaCash will enter into a series of agreements (collectively
referred to as the "Separation Agreements") (See Note 10 of the financial
statements). Pursuant to the Separation Agreements, Cybergold will transfer to
MagnaCash up to $5 million in cash in addition to certain assets and
liabilities that relate to the MagnaCash business prior to the date of
completion of MagnaCash's initial public offering (the "separation date").

The accompanying financial statements of MagnaCash reflect the historical
results of operations and cash flows of the MagnaCash on-line payments business
of Cybergold for the year ended December 31, 1999. Under Cybergold's ownership,
MagnaCash's operations were a division of Cybergold and not a separate legal
entity. The technology utilized by MagnaCash was developed by Cybergold for use
in its business. On or about January 1, 1999, management of Cybergold decided
to develop MagnaCash into a separate business venture in addition to a
servicing vehicle for Cybergold. As a result, the financial information
presented in this Registration Statement is for the period starting January 1,
1999.

In 1997 and 1998, Cybergold undertook substantial research and development
activities. Total spending in 1997 and 1998 by Cybergold on research and
development was approximately $1.2 million and $1.7, respectively. These costs
were incurred by Cybergold to develop additional hardware, including additional
servers and security systems and customer service related software. The
customer related software included dispute resolution systems and version 2.0
of The Mint. A portion of these research and development activities ultimately
lead to the development of the technology Cybergold currently licenses to
MagnaCash.

MagnaCash's historical financial information, as part of Cybergold, is shown
in the financial statements. As a result of the various allocations and lack of
specific identifiable historical divisional financial statements, the
accompanying statements do not necessarily reflect what the financial position,
results of operations and

F-7
<PAGE>

MAGNACASH, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Year Ended December 31, 1999 and the Six Months Ended
June 30, 2000 (Unaudited) and June 30, 1999 (Unaudited)

cash flows would have been had MagnaCash been a separate, stand-alone entity
during the periods presented. In addition, the historical information is not
necessarily indicative of what MagnaCash's results of operations, financial
position and cash flows will be in the future. Management has not made
adjustments to reflect many significant changes that will occur in MagnaCash's
cost structure, funding and operations as a result of the separation from
Cybergold, including changes in employee base, changes in legal structure,
increased costs associated with reduced economies of scale, increased marketing
expenses related to establishing a new brand identity and increased costs
associated with being a public, stand-alone company.

The financial statements include allocations of applicable Cybergold
expenses, including accounting, real estate, human resources, and other
Cybergold corporate services and infrastructure costs. The expense allocations
have been determined on the basis that Cybergold and MagnaCash management
considered to be reasonable reflections of the utilization of services provided
by Cybergold. These allocation methodologies include amounts allocated on the
basis of MagnaCash's headcount in relation to the entire headcount of Cybergold
and the total payroll of MagnaCash employees in relation to the entire payroll
of Cybergold.

3. RISK FACTORS

Through December 31, 1999, MagnaCash had an accumulated deficit of
approximately $1,035,000 and has continued to incur losses in 2000. Management
is currently exploring alternative sources of financing, in addition to the $5
million contributed by Cybergold. There is no guarantee that such financing
will be available on terms acceptable to the Company. In addition, under the
terms of the Merger Agreement with MyPoints, should this Registration Statement
not be declared effective on or before September 30, 2000, MyPoints has the
option to dividend an amount equal to $5 million less any operating expenses
funded by MyPoints through the date of the distribution, less any taxes payable
upon the distribution of up to $5 million to the Cybergold stockholders and
MagnaCash would cease operations. These factors raise substantial doubt as to
the Company's ability to continue as a going concern.

In addition to these factors, MagnaCash is exposed to a number of other
risks including, but not limited to, intense competition, possible undue
influence of one customer, a new and unproven market, ability to raise
additional capital, rapidly changing technology, regulation, and lack of an
active public market for its stock.

4. SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities; 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. Significant estimates include those related to the allocation
of expenses to MagnaCash. Actual results could differ from those estimates.

Interim Financial Information. The financial information as of June 30, 1999
and 2000 is unaudited and includes adjustments, consisting only of normal and
recurring adjustments, that management considered necessary for a fair
presentation of MagnaCash's financial position, operating results and cash
flows. Results for the six months ended June 30, 2000 are not necessarily
indicative of results to be expected for the full fiscal year or for any future
period.

Receivables. MagnaCash has no accounts receivable as the transaction fees
that it earns are credited to its account as soon as the transaction is
completed.

F-8
<PAGE>

MAGNACASH, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Year Ended December 31, 1999 and the Six Months Ended
June 30, 2000 (Unaudited) and June 30, 1999 (Unaudited)

Property. Property and equipment are stated at cost less accumulated
depreciation. Depreciation is calculated on a straight line basis over the
estimated useful lives of the assets. All property and equipment is depreciated
over 3 years. Maintenance and repair costs are charged to earnings while
expenditures for major renewals and improvements are capitalized.

Research and Development Costs. The Company accounts for its development
costs in accordance with SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." Management determined that
the software was substantially complete and ready for its intended use in early
1999 and the costs incurred during 1999 and 2000 relate to maintenance and
minor enhancements. These costs have been expensed as incurred.

Divisional Equity. Payable to/receivable from Cybergold represents the net
amount due to or from Cybergold as a result of intercompany transactions
between MagnaCash and Cybergold. See Note 10 for a description of the
relationship with Cybergold.

Revenue Recognition. Revenues are recognized at the time of the transaction,
which occurs when a customer completes a transaction that transfers value in
their personal on-line account to another merchant, their individual bank
account or personal credit card. MagnaCash earns a transaction fee based on a
percentage of the value transferred. This percentage fee is what is recognized
as revenue by MagnaCash.

Cost of Revenues. Cost of revenues represent fees paid to various banking
organizations as client's members transfer earned balances to a bank account or
a VISA card or spend in a payment transaction.

Deferred Compensation. Employee stock options are accounted for under the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" (APB No. 25). APB No. 25 requires the use of the intrinsic
value method, which measures compensation cost as the excess, if any, of the
quoted market price of the stock at grant over the amount an employee must pay
to acquire the stock. MagnaCash makes pro forma disclosures of net earnings as
if the fair value based method of accounting had been applied as required by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation" ("SFAS No. 123").

Income Taxes. MagnaCash's operating results historically generated losses
that have been included in Cybergold's consolidated U.S. and state income tax
returns. As a result of the significant losses of Cybergold, the resulting net
deferred tax asset was fully reserved. In the future, MagnaCash will record a
provision for income taxes in its financial statements and will file separate
tax returns. Deferred tax assets and liabilities will be recognized for the
expected tax consequences of temporary differences between the tax bases of
assets and liabilities and their reported amounts to the extent that these
assets and liabilities are realizable.

Comprehensive Income. There are no other comprehensive income items except
for net loss for any of the periods presented.

Pro Forma Net Loss Per Share (Unaudited). Pro forma net loss per share is
calculated by dividing net loss by the common shares to be issued to Cybergold
shareholders in connection with the distribution. Diluted income per share is
calculated by dividing the net income by the average common shares outstanding
adjusted for all potential common shares issuable upon the exercise of
outstanding common stock options, warrants and other contingent issuances of
common stock. The Company has losses for all periods presented and,
accordingly, such potential common shares are excluded from the computation of
diluted net loss per share, as their effect is antidilutive.

F-9
<PAGE>

MAGNACASH, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Year Ended December 31, 1999 and the Six Months Ended
June 30, 2000 (Unaudited) and June 30, 1999 (Unaudited)

Potentially dilutive securities include the following:

<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------ ---------
<S> <C> <C>
Options to purchase common stock...................... 1,250,838 1,438,226
Warrants to purchase common stock..................... 151,215 25,000
</TABLE>

Segment Information. Management believes that the Company operates in one
segment only.

5. STOCK OPTIONS

Cybergold Stock Based Plans

Stock Options. MagnaCash employees and consultants participate in
Cybergold's stock option plan. Generally, the exercise price of each stock
option was equal to 100% of the market price of Cybergold's stock on the date
of grant and has a maximum term of 10 years. Options vest 25% after 12 months
of service and then vest ratably over the following three years. During 1999,
Cybergold instituted a broad-based stock option incentive program under which
Cybergold granted options, to essentially all full-time employees, including
current MagnaCash employees, to purchase a total of approximately 140,000
shares of Cybergold common stock. A portion of the stock options granted was at
exercise prices below market price of Cybergold's stock on the date of grant.
In connection with the granting of these stock options, during 1999 Cybergold
recorded deferred compensation of $1,279,995, of which $370,068 related to
MagnaCash employees/consultants or a proportionate share of Cybergold employee
deferred compensation relating to time spent on the MagnaCash business.In
addition, all remaining Cybergold employees will receive one MagnaCash stock
option for every four Cybergold stock options they have been granted.

As of the date of the merger between Cybergold and MyPoints, August 7, 2000,
all Cybergold option holders who became MagnaCash employees received four
months of accelerated vesting in their Cybergold options. In addition, these
option holders will receive an additional four months of accelerated vesting as
of the date of the distribution. These option holders will then have a period
of ninety days following the distribution in which to exercise their Cybergold
options.

A summary of options held by MagnaCash employees and consultants under the
Cybergold option plans follows:

<TABLE>
<CAPTION>
Number of Weighted
Cybergold Average
Exercisable Exercisable Exercise
Options Shares Price
----------- ----------- --------
<S> <C> <C> <C>
Outstanding at January 1, 1999............. 141,599 141,599 $ 0.20
Granted.................................. 134,400 84,600 $ 4.43
Exercised................................ (90,666) (90,666) $ 0.05
Canceled/Expired......................... (13,600) (13,600) $ 0.23
------- -------
Outstanding at December 31, 1999........... 171,733 121,933 $ 3.58
Granted.................................. 75,800 -- $10.02
Exercised................................ (58,545) (58,545) $ 0.41
Canceled/Expired......................... (17,490) (13,490) $ 3.36
------- -------
Outstanding at June 30, 2000 (unaudited)... 171,498 49,898 $ 7.53
======= =======
</TABLE>

F-10
<PAGE>

MAGNACASH, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Year Ended December 31, 1999 and the Six Months Ended
June 30, 2000 (Unaudited) and June 30, 1999 (Unaudited)

The weighted average fair value of individual options granted during 1999
was $1.25.

The fair value of each MagnaCash option grant under the Cybergold plans is
estimated on the date of grant using the Black-Scholes option-pricing model and
the following weighted average assumptions:

<TABLE>
<CAPTION>
Employees Consultants
--------- -----------
<S> <C> <C>
Expected lives......................................... 4 years 2 years
Weighted average risk-free interest rate............... 6.28% 5.06%
Expected volatility.................................... 0% 50%
Dividend yield......................................... 0% 0%
</TABLE>

The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compenation." Had compensation expense been
determined based on the fair value at the grant dates, as prescribed in SFAS
No. 123, the Company's net loss would have increased by approximately $13,000
for the year ended December 31, 1999.

MagnaCash Stock Based Plans

Stock Options. Concurrent with the initial public offering, MagnaCash
intends to establish a stock option plan for MagnaCash employees. No future
stock option grants will be made under the Cybergold plan to MagnaCash
employees; instead, future grants to MagnaCash employees will be made under the
MagnaCash plan.

Under this plan, all Cybergold option holders will receive one option of
MagnaCash for every four options of Cybergold held, assuming that they are
still employed by Cybergold as of the date of the distribution. These options
will be 25 percent vested at the date of issuance with the balance vesting
monthly over the remaining term of the option, generally three years. These
options will have an exercise price equal to the fair market value of the
MagnaCash stock as determined by an independent third party appraisal.

6. EMPLOYEE STOCK PURCHASE PLAN (ESPP)

Cybergold maintains an ESPP that permits full-time MagnaCash employees to
purchase a limited number of Cybergold common shares at 85% of market value.
Under the plan, Cybergold sold 2,789 shares to MagnaCash employees in 1999.

7. LEASES

MagnaCash will enter into a sublease agreement with Cybergold to lease space
consisting of 7,258 sq. ft. located at 1330 Broadway, Suite 1535 in Oakland,
California. The sublease is for a period of 60 months and requires lease
payments of $14,516 per month. Rent expense included in these financial
statements for the year ended December 31, 1999 was $50,402 and was allocated
based on headcount.

8. EQUITY

Following the distribution, MagnaCash's authorized capital stock will
consist of 11,069,133 shares of common stock, $.001 par value, and 0 shares of
preferred stock, $.001 par value.

F-11
<PAGE>

MAGNACASH, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Year Ended December 31, 1999 and the Six Months Ended
June 30, 2000 (Unaudited) and June 30, 1999 (Unaudited)

The holders of common stock are entitled to one vote for each share held.
Except as otherwise provided by law, the holders of common stock vote together
with the holders of preferred stock as one class. Subject to the rights of
holders of any shares of preferred stock which may at the time be outstanding,
holders of common stock will be entitled to such dividends as the board of
directors may declare out of funds legally available therefor. Subject to the
prior rights of creditors and holders of any preferred stock which may be
outstanding from time to time, the holders of common stock are entitled, in the
event of liquidation, dissolution or winding up of MagnaCash, to share equally
in the distribution of all remaining assets.

Prior to the distribution, there has been no public market for our common
stock. MagnaCash has not applied to have the MagnaCash common stock included
for quotation on the Nasdaq Stock Market's National Market or listed on any
exchange. Prior to the earliest of (i) the date that is the first anniversary
of the date that Cybergold ceases to be the sole holder of outstanding shares
of common stock, (ii) the date the Securities and Exchange Commission or
successor organization declares effective a registration statement on Form S-1
or Form S-3 or successor form regarding an offering of shares of common stock
the issuance of which would have the effect of increasing the number of shares
of common stock outstanding by eighty percent (80%) or more, or (iii) such date
as determined by the board of directors of MagnaCash in its sole discretion,
common stock may not be, directly or indirectly, sold, transferred, assigned,
pledged, exchanged, hypothecated, gifted or otherwise disposed of except: (A)
by Cybergold or its successor, in connection with the initial distribution by
Cybergold of common stock to the holders of Cybergold's common stock, as of the
record date of August 3, 2000, (B) from any holder of common stock that is a
natural person to (i) such stockholder's spouse or children, (ii) to any trust
solely for the benefit of such stockholder or the children or spouse of such
stockholder or (iii) to any party pursuant to applicable laws of descent and
distribution and (C) from any holder of common that is a corporation, limited
liability company, limited partnership or general partnership to any affiliate
(as defined under Rule 405 of the Securities Act of 1933, as amended).

9. CONTINGENCIES

MagnaCash is presently not a party to any pending legal proceeding or
claims.

10. RELATIONSHIP WITH CYBERGOLD AND MYPOINTS

MagnaCash's costs and expenses include allocations from Cybergold for
certain centralized accounting, human resources, and benefits administration
services and a real estate sublease. These allocations have been determined on
a basis that MagnaCash and Cybergold considered to be reasonable reflections of
the utilization of services provided or the benefit received by MagnaCash. The
allocation methods include relevant equipment, revenues and headcount.
Allocated costs included in Sales and Marketing, General and Administrative and
Research and Development expenses in the accompanying statement of operations
for the year ended 1999 are $63,755, 31,878 and 31,878, respectively. All
revenues have been generated by servicing Cybergold's accounts.

For purposes of governing certain of the ongoing relationships between
MagnaCash and Cybergold at and after the separation date and to provide for an
orderly transition, MagnaCash and Cybergold have entered or will enter into
various agreements, subject to change until finalized. A brief description of
each of the draft agreements or proposed agreements follows:

Services Agreement

The Services Agreement governs the relationship between MagnaCash and
Cybergold for the management of Cybergold's consumer loyalty rewards system
related to the spending and other redemption of incentive

F-12
<PAGE>

MAGNACASH, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Year Ended December 31, 1999 and the Six Months Ended
June 30, 2000 (Unaudited) and June 30, 1999 (Unaudited)

payments earned by Cybergold members. This agreement will be in effect for
three years commencing on August 4, 2000 and includes terms for the payment by
Cybergold of a monthly base fee and an active account fee which is based on the
total number of active accounts managed by MagnaCash and payment by MagnaCash
of transaction fees based on purchases and cash transfers by Cybergold members.
In addition, the agreement will be renewed automatically for successive one
year renewal terms unless either party give the other written notice of
nonrenewal at least 120 days prior to the end of the initial term. The
agreement also includes a provision to renegotiate the terms of this agreement
after 5, 17 and 29 months due to the evolving business needs of MagnaCash and
Cybergold.

License, Assignment and Assumption Agreement

The License and Assignment Agreement governs the use by MagnaCash of
Cybergold's intellectual and other property relating to the transaction system
MagnaCash uses to complete real-time, on-line cash transactions that enable the
movement of money between any combination of individuals, merchants and
businesses participating in the system. In addition, this agreement outlines
the proposed sharing of certain desktop and server software which will be used
by both MagnaCash and Cybergold for the foreseeable future. This agreement
grants MagnaCash an exclusive, perpetual, irrevocable, worldwide, royalty-free
license to use the above noted intellectual property. As a condition of this
agreement, certain third party banking agreements, agreements with customers,
computer hardware and office services agreements will be assigned to MagnaCash.

Transitional Services and Joint Operations Agreement

The transitional services agreement with Cybergold governs the provision of
various transitional services, including telecommunications, accounting,
computer facilities, technical support, human resources and other services by
Cybergold to MagnaCash and, if necessary in limited circumstances, vice versa.
This agreement also provides for interim joint operation of certain equipment
and the overall system to facilitate the separation process. The transitional
services agreement will have an initial term of six months from the date of
separation.

Tax Sharing Agreement

F-13
<PAGE>

MAGNACASH, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Year Ended December 31, 1999 and the Six Months Ended

June 30, 2000 (Unaudited) and June 30, 1999 (Unaudited)

11. RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998 and June 1999, the Financial Accounting Standards Board
("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" and SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities--Deferral of the Effective Date of FASB Statement No.
133." These statements outline the accounting treatment for all derivative
activity. MagnaCash does not presently use derivative instruments. As a result
management believes that these accounting statements will not have an effect on
MagnaCash.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in financial
Statements." SAB 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements.
The Company has adopted SAB 101.

12. UNAUDITED PRO FORMA FINANCIAL STATEMENTS

On August 7, 2000, MyPoints merged with Cybergold in a transaction accounted
for as a purchase. Under the terms of the agreement and in conjunction with
this merger, Cybergold entered into certain agreements with MagnaCash (see Note
10) relating to the separation of MagnaCash from Cybergold.

The following unaudited pro forma financial statements present the effect of
these separation agreements between Cybergold and MagnaCash as if the
agreements had been entered into on January 1, 1999. The only agreements that
have a pro forma impact are the Services Agreement (Note 10) and the Sublease
Agreement (Note 7). These unaudited pro forma financial statements should be
read in conjunction with the historical financial statements and notes thereto
of MagnaCash and Cybergold included elsewhere in this statement.

F-14
<PAGE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

Year Ended December 31, 1999

See accompanying notes to unaudited pro forma financial data.

F-15
<PAGE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

Six Months Ended June 30, 2000

See accompanying notes to unaudited pro forma financial data.

F-16
<PAGE>

A. To reflect the effects of the Services Agreement described in Note 10 as if
the agreements were consummated on January 1, 1999. This agreement includes
a monthly management fee which includes both a fixed and variable element
based on the number of Cybergold membership accounts under management, and
the sharing of certain transaction revenues between MagnaCash and MyPoints.

B. To reflect the effects of the Sublease Agreement described in Note 10 as if
the agreement were consummated on January 1, 1999.

C. To reflect the application of a blended Federal and state tax rate of 39
percent.

F-17
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We have audited the accompanying consolidated balance sheets of Cybergold,
Inc. (a Delaware corporation) as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of itarget.com, a company
acquired on March 29, 2000 in a transaction accounted for as a pooling of
interests, as discussed in Note 10. Such statements are included in the
consolidated financial statements of Cybergold, Inc. and reflect total assets
and total net loss of 1% and 2%, and 1% and 17%, respectively, of the related
1998 and 1999 consolidated totals. These statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for itarget.com, is based solely on the report
of the other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 and the report of
other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Cybergold, Inc. as of December 31,
1998 and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.

Arthur Andersen LLP

San Francisco, California
June 9, 2000

F-18
<PAGE>

CYBERGOLD, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

<TABLE>
<CAPTION>
December 31,
------------------ March 31,
1998 1999 2000
-------- -------- -----------
(unaudited)
<S> <C> <C> <C>
ASSETS

Current Assets:
Cash and cash equivalents..................... $ 3,181 $ 17,265 $ 16,107
Short-term investments........................ -- 27,822 23,442
Accounts receivable, less allowance for
doubtful accounts of $30, $171 and $294,
respectively................................. 398 1,799 3,233
Prepaid expenses and other current assets..... 26 709 1,061
-------- -------- --------
Total current assets........................ 3,605 47,595 43,843
Property and equipment, net................... 407 1,307 1,475
Intangible assets, net........................ 10 317 176
Deposits and other assets..................... 71 134 147
-------- -------- --------
Total assets................................ $ 4,093 $ 49,353 $ 45,641
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
Accounts payable.............................. $ 301 $ 1,308 $ 1,820
Related party payable......................... -- 255 255
Capital lease obligations, current
maturities................................... 136 136 126
Notes payable, current maturities............. -- 65 87
Members payable............................... 822 2,201 2,853
Membership acquisition payable................ 176 625 591
Accrued liabilities........................... 145 1,271 2,534
Deferred revenue.............................. 202 643 666
-------- -------- --------
Total current liabilities................... 1,782 6,504 8,932
Capital lease obligations, net of current
maturities.................................... 226 90 63
Notes payable, net of current maturities....... -- 299 268
-------- -------- --------
Total liabilities........................... 2,008 6,893 9,263

Commitments and contingencies

Convertible Redeemable Preferred Stock:
Series C, 0.00015 par value: 5,333,353,
5,333,353, and 0 shares authorized,
respectively; 4,189,195, 0, and 0 issued and
outstanding shares at December 31, 1998,
1999, and March 31, 2000, respectively
(preference in liquidation of $5,718,251).... 6,379 -- --
-------- -------- --------
Total convertible redeemable preferred
stock...................................... 6,379 -- --
Stockholders' Equity (deficit):
Series A convertible preferred stock, 0.00015
par value:
Authorized shares -- 2,123,333, 2,123,333,
and 0, respectively; Issued and outstanding
shares -- 2,000,000, 0, and 0,
respectively............................... -- -- --
Preference in liquidation -- $3,000,000
Series B convertible preferred stock, 0.00015
par value:
Authorized shares -- 1,429,981, 1,429,981,
and 0, respectively; Issued and outstanding
shares -- 1,394,981, 0, and 0,
respectively............................... -- -- --
Preference in liquidation -- $4,184,942
Series A preferred stock -- itarget.com, 0.01
par value:
Authorized shares -- 0, 208,321, and 0,
respectively; Issued and outstanding
shares --
0, 208,321, and 0, respectively............ -- -- --
Preference in liquidation -- $1,000,000
Series B preferred stock -- itarget.com, 0.01
par value:
Authorized shares -- 0, 754,950, and 0,
respectively; Issued and outstanding
shares --
0, 126,781, and 0, respectively............ -- -- --
Preference in liquidation -- $1,100,045
Common stock, 0.00015 par value:
Authorized shares -- 14,446,667, 75,000,000,
and 75,000,000, respectively; Issued and
outstanding shares -- 5,130,273,
20,525,235, and 21,402,136, respectively... 1 3 3
Additional paid-in capital.................... 8,641 69,647 71,485
Deferred compensation......................... (767) (1,313) (1,200)
Retained earnings (deficit)................... (12,169) (25,877) (33,793)
Unrealized loss on short term investments..... -- -- (117)
-------- -------- --------
Total stockholders' equity (deficit)...... (4,294) 42,460 36,378
-------- -------- --------
Total liabilities and stockholders' equity
(deficit)................................ $ 4,093 $ 49,353 $ 45,641
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-19
<PAGE>

CYBERGOLD, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended March 31,
-------------------------- ----------------
1997 1998 1999 1999 2000
------- ------- -------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Transaction................... $ 457 $ 628 $ 3,316 $ 333 $ 2,269
Custom marketing services and
other........................ 74 377 2,167 170 2,021
------- ------- -------- ------- -------
Total revenues.............. 531 1,005 5,483 503 4,290
------- ------- -------- ------- -------
Cost of Revenues:
Transaction................... 256 293 1,594 159 1,094
Custom marketing services and
other........................ 37 173 334 85 78
------- ------- -------- ------- -------
Total cost of revenues...... 293 466 1,928 244 1,172
------- ------- -------- ------- -------
Gross margin................ 238 539 3,555 259 3,118
------- ------- -------- ------- -------
Operating Expenses:
Product development........... 1,190 1,726 3,187 513 1,630
Sales and marketing........... 2,162 2,695 9,158 1,024 5,410
General and administrative.... 740 814 3,352 307 2,302
itarget acquisition costs..... -- -- -- -- 2,142
Amortization of deferred
compensation................. -- 198 735 327 113
------- ------- -------- ------- -------
Total operating expenses.... 4,092 5,433 16,432 2,171 11,597
------- ------- -------- ------- -------
Loss from operations........ (3,854) (4,894) (12,877) (1,912) (8,479)
Interest Income (Expense), net.. (15) 78 740 11 563
------- ------- -------- ------- -------
Net loss.................... (3,869) (4,816) (12,137) (1,901) (7,916)
Dividend Attributable to
Preferred Stockholders......... -- (660) (1,571) (283) --
------- ------- -------- ------- -------
Net Loss Attributable to Common
Stockholders................... (3,869) (5,476) (13,708) (2,184) (7,916)
Other comprehensive loss...... -- -- -- -- (117)
------- ------- -------- ------- -------
Comprehensive loss.............. $(3,869) $(5,476) $(13,708) $(2,184) $(8,033)
======= ======= ======== ======= =======
Net Loss Per Common Share:
Basic and diluted............. $ (0.97) $ (1.18) $ (1.45) $ (0.42) $ (0.38)
======= ======= ======== ======= =======
Weighted Average Common Shares
Outstanding:
Basic and diluted............. 3,979 4,648 9,464 5,175 20,642
======= ======= ======== ======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-20
<PAGE>

CYBERGOLD, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
Preferred Stock Preferred Stock -- itarget.com
-------------------------------------- ----------------------------------
Series A Series B Series A Series B Common Stock Additional
------------------ ------------------ ---------------- ---------------- ------------------ Paid-in
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital
---------- ------ ---------- ------ -------- ------ -------- ------ ---------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31,
1996............ 2,000,000 $ 300 -- $ -- -- $ -- -- $ -- 3,780,000 $ 567 $ 3,163,858
Issuance of
Series B
preferred
stock........... -- -- 1,378,314 207 -- -- -- -- -- -- 4,134,732
Exercise of
common stock
options......... -- -- -- -- -- -- -- -- 270,375 41 15,644
Repurchase of
stock options... -- -- -- -- -- -- -- -- (38,333) (6) (4,157)
Imputed
compensation.... -- -- -- -- -- -- -- -- -- -- 125,000
Net loss........ -- -- -- -- -- -- -- -- -- -- --
---------- ----- ---------- ----- -------- ----- -------- ------ ---------- ------ -----------
Balance,
December 31,
1997............ 2,000,000 300 1,378,314 207 -- -- -- -- 4,012,042 602 7,435,077
Issuance of
Series B
preferred
stock........... -- -- 16,667 2 -- -- -- -- -- -- 49,998
Issuance of
common stock.... -- -- -- -- -- -- -- -- 1,082,095 162 29,838
Accretion of
Series C
redemption
premium......... -- -- -- -- -- -- -- -- -- -- --
Exercise of
common stock
options......... -- -- -- -- -- -- -- -- 61,761 9 10,820
Repurchase of
stock options... -- -- -- -- -- -- -- -- (25,625) (4) (380)
Deferred
compensation.... -- -- -- -- -- -- -- -- -- -- 965,571
Amortization of
deferred
compensation.... -- -- -- -- -- -- -- -- -- -- --
Imputed
compensation.... -- -- -- -- -- -- -- -- -- -- 150,000
Net loss........ -- -- -- -- -- -- -- -- -- -- --
---------- ----- ---------- ----- -------- ----- -------- ------ ---------- ------ -----------
Balance,
December 31,
1998............ 2,000,000 300 1,394,981 209 -- -- -- -- 5,130,273 769 8,640,924
Accretion of
Series C
redemption
premium......... -- -- -- -- -- -- -- -- -- -- --
Accretion of
Series D
redemption
premium......... -- -- -- -- -- -- -- -- -- -- --
Issuance of
common stock.... -- -- -- -- -- -- -- -- 117,646 18 42,181
Issuance of
Series A
preferred --
itarget......... -- -- -- -- 208,321 414 -- -- -- -- 999,586
Issuance of
Series B
preferred --
itarget......... -- -- -- -- -- -- 126,781 252 -- -- 921,263
Exercise of
common stock
options......... -- -- -- -- -- -- -- -- 339,718 50 46,857
Deferred
compensation.... -- -- -- -- -- -- -- -- -- -- 1,279,995
Amortization of
deferred
compensation.... -- -- -- -- -- -- -- -- -- -- --
IPO proceeds,
net of
$1,161,949 of
issuance costs.. -- -- -- -- -- -- -- -- 5,000,000 750 40,696,256
Exercise of
warrants........ -- -- -- -- -- -- -- -- 302,140 46 987,954
Imputed
compensation.... -- -- -- -- -- -- -- -- -- -- 83,333
Conversion of
Series A
preferred....... (2,000,000) (300) -- -- -- -- -- -- 2,000,000 300 --
Conversion of
Series B
preferred....... -- -- (1,394,981) (209) -- -- -- -- 1,394,981 209 --
Conversion of
Series C
preferred....... -- -- -- -- -- -- -- -- 4,189,195 628 5,717,621
Conversion of
Series D
preferred....... -- -- -- -- -- -- -- -- 2,051,282 308 7,999,692
Conversion of
Series C
accretion....... -- -- -- -- -- -- -- -- -- -- 1,759,330
Conversion of
Series D
accretion....... -- -- -- -- -- -- -- -- -- -- 471,407
Net loss........ -- -- -- -- -- -- -- -- -- -- --
---------- ----- ---------- ----- -------- ----- -------- ------ ---------- ------ -----------
Balance,
December 31,
1999............ -- -- -- -- 208,321 414 126,781 252 20,525,235 3,078 69,646,399
Exercise of
common stock
options......... -- -- -- -- -- -- -- -- 261,875 39 211,511
Exercise of
warrants ....... 13,351 2 10,025
Issuance of
Series
B preferred --
itarget.com..... -- -- -- -- -- -- 266,573 2,666 -- -- 1,613,540
Conversion of
Series
A preferred --
itarget.com..... -- -- -- -- (208,321) (414) -- -- 208,321 71 343
Conversion of
Series B
preferred --
itarget.com..... -- -- -- -- -- -- (393,354) (2,918) 393,354 59 2,859
Amortization of
deferred
compensation.... -- -- -- -- -- -- -- -- -- -- --
Unrealized loss
on marketable
securities...... -- -- -- -- -- -- -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- -- --
---------- ----- ---------- ----- -------- ----- -------- ------ ---------- ------ -----------
Balance, March
31, 2000
(unaudited)..... -- $ -- -- $ -- -- $ -- -- $ -- 21,402,136 $3,249 $71,484,677
========== ===== ========== ===== ======== ===== ======== ====== ========== ====== ===========
<CAPTION>
Unrealized
Deferred Loss on
Compen- Retained Short-Term
sation Deficit Investments Total
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Balance,
December 31,
1996............ $ -- $ (2,823,823) $ -- $ 340,902
Issuance of
Series B
preferred
stock........... -- -- -- 4,134,939
Exercise of
common stock
options......... -- -- -- 15,685
Repurchase of
stock options... -- -- -- (4,163)
Imputed
compensation.... -- -- -- 125,000
Net loss........ -- (3,869,323) -- (3,869,323)
------------ ------------- ----------- ------------
Balance,
December 31,
1997............ -- (6,693,146) -- 743,040
Issuance of
Series B
preferred
stock........... -- -- -- 50,000
Issuance of
common stock.... -- -- -- 30,000
Accretion of
Series C
redemption
premium......... -- (660,430) -- (660,430)
Exercise of
common stock
options......... -- -- -- 10,829
Repurchase of
stock options... -- -- -- (384)
Deferred
compensation.... (965,571) -- -- --
Amortization of
deferred
compensation.... 198,288 -- -- 198,288
Imputed
compensation.... -- -- -- 150,000
Net loss........ -- (4,815,213) -- (4,815,213)
------------ ------------- ----------- ------------
Balance,
December 31,
1998............ (767,283) (12,168,789) -- (4,293,870)
Accretion of
Series C
redemption
premium......... -- (1,098,900) -- (1,098,900)
Accretion of
Series D
redemption
premium......... -- (471,407) -- (471,407)
Issuance of
common stock.... -- -- -- 42,199
Issuance of
Series A
preferred --
itarget......... -- -- -- 1,000,000
Issuance of
Series B
preferred --
itarget......... -- -- -- 921,515
Exercise of
common stock
options......... -- -- -- 46,907
Deferred
compensation.... (1,279,995) -- -- --
Amortization of
deferred
compensation.... 734,614 -- -- 734,614
IPO proceeds,
net of
$1,161,949 of
issuance costs.. -- -- -- 40,697,006
Exercise of
warrants........ -- -- -- 988,000
Imputed
compensation.... -- -- -- 83,333
Conversion of
Series A
preferred....... -- -- -- --
Conversion of
Series B
preferred....... -- -- -- --
Conversion of
Series C
preferred....... -- -- -- 5,718,249
Conversion of
Series D
preferred....... -- -- -- 8,000,000
Conversion of
Series C
accretion....... -- -- -- 1,759,330
Conversion of
Series D
accretion....... -- -- -- 471,407
Net loss........ -- (12,137,503) -- (12,137,503)
------------ ------------- ----------- ------------
Balance,
December 31,
1999............ (1,312,664) (25,876,599) -- 42,460,880
Exercise of
common stock
options......... -- -- -- 211,550
Exercise of
warrants ....... 10,027
Issuance of
Series
B preferred --
itarget.com..... -- -- -- 1,616,206
Conversion of
Series
A preferred --
itarget.com..... -- -- -- --
Conversion of
Series B
preferred --
itarget.com..... -- -- -- --
Amortization of
deferred
compensation.... 112,211 -- -- 112,211
Unrealized loss
on marketable
securities...... -- -- (116,175) (116,175)
Net loss........ -- (7,915,972) -- (7,915,972)
------------ ------------- ----------- ------------
Balance, March
31, 2000
(unaudited)..... $(1,200,453) $(33,792,571) $(116,175) $36,378,727
============ ============= =========== ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-21
<PAGE>

CYBERGOLD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended March 31,
----------------------------- ------------------
1997 1998 1999 1999 2000
-------- -------- --------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating
Activities:
Net loss................... $ (3,869) $ (4,816) $ (12,137) $ (1,901) $ (7,916)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and
amortization.............. 191 269 378 83 205
Amortization of deferred
compensation.............. -- 198 735 327 113
Imputed compensation....... 125 150 125 83 --
Changes in assets and
liabilities:
Accounts receivable....... (161) (237) (1,401) 261 (1,434)
Prepaid expenses and
other assets............. (28) (17) (1,076) 32 (365)
Accounts payable.......... (6) 159 1,007 (64) 512
Related party payable..... -- -- 255 -- --
Members payable........... 382 440 1,379 794 652
Membership acquisition
payable.................. 70 218 450 (535) (34)
Accrued liabilities....... 50 (55) 1,126 (88) 1,263
Deferred revenue.......... 43 159 441 163 23
-------- -------- --------- -------- --------
Net cash used in
operating activities.... (3,203) (3,532) (8,718) (845) (6,981)
-------- -------- --------- -------- --------
Cash Flows From Investing
Activities:
Acquisition of property and
equipment................. (58) (163) (1,213) (104) (232)
Sale (purchase) of short-
term investments.......... -- -- (27,822) -- 5,880
Purchase of business....... -- -- (250) -- --
-------- -------- --------- -------- --------
Net cash provided by
(used in) investing
activities.............. (58) (163) (29,285) (104) 5,648
-------- -------- --------- -------- --------
Cash Flows From Financing
Activities:
Payment of capital lease
obligations............... (115) (143) (137) (234) (46)
Borrowings under equipment
financing................. -- -- 399 -- --
Proceeds from equipment
financing................. -- -- (35) 115 --
Proceeds from sale
leaseback transaction..... 250 -- -- -- --
Proceeds from loans from
stockholders.............. 1,000 -- -- -- --
Proceeds from issuance of
common stock.............. -- -- 40,727 -- --
Proceeds from issuance of
preferred stock........... 3,135 5,769 10,100 -- --
Proceeds from exercise of
common stock warrants..... -- -- 988 -- --
Proceeds from exercise of
stock options, net of
repurchases............... 12 11 45 168 221
-------- -------- --------- -------- --------
Net cash provided by
financing activities.... 4,282 5,637 52,087 49 175
-------- -------- --------- -------- --------
Net Increase (Decrease) in
Cash and Cash Equivalents.. 1,021 1,942 14,084 (900) (1,158)
Cash and Cash Equivalents:
Balance at beginning of
period.................... 218 1,239 3,181 3,181 17,265
-------- -------- --------- -------- --------
Balance at end of period... $ 1,239 $ 3,181 $ 17,265 $ 2,281 $ 16,107
======== ======== ========= ======== ========
Supplemental Cash Flow
Information:
Cash paid for interest..... $ 36 $ 71 $ 92 $ 19 $ 30
Acquisition of property and
equipment using capital
leases.................... 97 152 -- -- --
Conversion of stockholder
loans into preferred
stock..................... 1,000 -- -- -- --
</TABLE>

Non-Cash Transactions

In March 2000, the Company issued approximately 1.83 million shares in
exchange for the entire capital stock of itarget in an acquisition accounted
for as a pooling.

In January 2000, itarget entered into a stock swap agreement with Quintel
Communications whereby Quintel issued 229,862 shares of its common stock to the
Company in exchange for 213,258 shares of the itarget Series B preferred stock
(Note 12).

The accompanying notes are an integral part of these statements.

F-22
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies:

Nature of Operations

Cybergold, Inc. was incorporated in California in 1994 and reincorporated
under the name Cybergold, Inc. (Cybergold) in Delaware in August 1999.
Cybergold did not have any significant operations prior to 1996. Cybergold was
a development-stage company through December 31, 1997.

Cybergold is engaged in the business of providing on-line direct marketing
and cash-based incentive advertising solutions for on-line advertisers and
marketers. Additionally, Cybergold provides custom marketing services, which
include production and development of marketing programs, delivery of targeted
email to Cybergold members, design of customer web sites, and third-party
engineering functions.

As of December 31, 1999, Cybergold had a retained deficit of approximately
$25.9 million and has continued to incur losses during 2000. During May 1999,
Cybergold issued redeemable convertible preferred stock, as further discussed
in Note 5, in the amount of $8.0 million. During September 1999, Cybergold
underwent its initial public offering of 5 million shares of common stock,
raising net proceeds of $40.7 million. Management believes its cash and cash
equivalent and short-term investment balances at December 31, 1999 will be
adequate to allow Cybergold to meet its cash needs through at least December
31, 2000.

The industry in which Cybergold operates is very specialized and is subject
to a number of industry-specific risk factors, including, but not limited to,
rapidly changing technologies, significant numbers of new entrants, dependence
on key individuals, competition from similar products and from larger
companies, customer preferences, the need for the continued successful
development, marketing and selling of its products and services, the need for
financing, and the need for positive cash flows from operations.

On February 28, 2000, Cybergold signed a definitive agreement to acquire
itarget.com ("itarget") in exchange for 1.83 million shares of Cybergold's
stock. itarget is a permission based email marketing company that rewards its
members with premium products, delivered on-line. The acquisition was completed
on March 29, 2000 and was accounted for as a pooling of interests.

Reference to Cybergold in these notes includes Cybergold and its
subsidiaries.

Basis of Presentation

The accompanying consolidated financial statements and related notes to
consolidated financial statements include the accounts and results of Cybergold
and companies acquired in business combinations (see Note 10). Results of
companies acquired in business combinations accounted for under the purchase
method are included from their acquisition dates. Results of companies acquired
in business combinations accounted for under the pooling-of-interests method
are retroactively included for all periods presented. All significant
intercompany transactions and accounts have been eliminated.

Interim Financial Statements

The accompanying financial statements as of March 31, 2000 and for the three
months ended March 31, 1999 and 2000 are unaudited, but in the opinion of
management, include all adjustments consisting of normal recurring adjustments
necessary for a fair presentation of results for the interim periods. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted, although Cybergold believes that the disclosures included are adequate
to make the information presented not misleading. Results for the three-month
period ended March 31, 2000 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2000.

F-23
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Significant Customers

Two customers individually accounted for 22 percent and 16 percent,
respectively, of the Cybergold's total revenue during the year ended December
31, 1998.

No individual customer exceeded 10 percent of total revenue during the year
ended December 31, 1999.

Concentration of Credit Risk

Financial instruments that may potentially subject Cybergold to
concentration of credit risk consist principally of cash, cash equivalents,
and short-term investments. All cash, cash equivalents, and short-term
investments are placed in financial institutions with strong credit ratings,
which minimizes the risk of loss due to nonpayment. Cybergold has not
experienced any losses due to credit impairment or other factors related to
its financial instruments.

Cash Equivalents

For the statements of cash flows, Cybergold treats financial instruments as
cash equivalents if the original maturity of such instruments is three months
or less.

Short-Term Investments

Short-term investments consist primarily of government securities that are
considered to be held-to-maturity and are accounted for in accordance with
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Accordingly, these assets
are reported at their estimated fair market values.

Other Comprehensive Loss

Other Comprehensive Loss consists of unrealized losses on short-term
investments.

Financial Instruments

Financial instruments consist of cash equivalents, short-term investment,
accounts receivable, accounts payable, and debt. The estimated fair value of
these financial instruments approximates their carrying value.

Valuation Accounts

Below is a summary of the changes in Cybergold's valuation accounts for
1999, 1998 and 1997:

<TABLE>
<CAPTION>
Balance at Balance
Beginning of Additions at End of
Description Year Charged Expense Deductions Year
----------- ------------ --------------- ---------- ---------
<S> <C> <C> <C> <C>
1999:
Allowance for Doubtful Accounts....... $ 30,000 $ 151,000 $ 10,000 $ 171,000
1998:
Allowance for Doubtful Accounts....... $ 50,000 $ 25,000 $ 45,000 $ 30,000
1997:
Allowance for Doubtful Accounts....... $ 0 $ 50,000 $ 0 $ 50,000
</TABLE>

F-24
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Property and Equipment

Property and equipment are carried at cost, and for financial reporting
purposes depreciation is computed using the straight-line method over estimated
useful lives of three years for all assets. Maintenance and repair expenditures
are charged to expense when incurred.

Intangibles

Intangibles include goodwill which represents the excess of cost over the
estimated fair value of the net tangible and intangible assets of acquired
businesses. Should events or circumstances occur subsequent to acquisition that
bring into question the realizable values or impairment of any component of
goodwill, Cybergold will evaluate the remaining useful life and balance of
goodwill and will make appropriate adjustments. Cybergold's principal
considerations in determining impairment include the strategic benefits to
Cybergold of the particular business related to the questioned component of
goodwill as measured by undiscounted current and expected future operating
income levels of that particular business and expected undiscounted future cash
flows.

Members Payable

Members payable represents amounts payable to Cybergold's members as a
result of their performing certain actions and completing transactions. These
amounts are cash rewards and are recorded on Cybergold's balance sheets until
the member elects to receive payment of the rewards or to use the rewards to
purchase items on-line.

Member Acquisition Payable

Member acquisition payable represents amounts due to advertising partners
for new member sign-ups that are originated from a partner web site.

Revenue Recognition and Cost of Revenues

Cybergold earns revenue from certain member transactions and from custom
marketing and other services. Transaction revenues are earned each time a
member either earns or spends incentive rewards within the system and for
micropayment transactions. Transaction revenues are recognized as revenue upon
completion of the specific action related to the transaction fee.

Custom marketing services and other revenues include production and
development fees received for customization of marketing programs, fees
received for delivering targeted email to Cybergold's members, and fees
received for other advertising and marketing services. Production and
development fees represent HTML design services, graphic services, engineering,
and database development and related services; revenue is recognized as these
services are performed. Email revenue is recognized in the month that the
contract is fulfilled. Other advertising and marketing services revenue is
recognized as these services are performed.

Prepayments by advertising or marketing clients for transaction fees or
custom marketing services are included in deferred revenue on the accompanying
balance sheets.

The cost of revenues associated with transaction revenues represents cash
rewards paid to members for completing transactions. The cost of revenues
associated with custom advertising and marketing services and other revenues
primarily consists of costs for production and development personnel and
independent contractors.

Any unpaid rewards due to members are recorded in members payable in the
accompanying balance sheets.

F-25
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Product Development

Product development costs include expenses related to the development and
enhancement of Cybergold's product offerings. Product development costs are
expensed as incurred.

Use of Estimates

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

Income Taxes

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes.
Under SFAS No. 109, deferred tax assets and liabilities are determined based on
temporary differences between the financial statement and tax bases of assets
and liabilities and net operating loss and credit carryforwards using enacted
tax rates in effect for the year in which the differences are expected to
reverse. Valuation allowances are established when necessary to reduce deferred
tax assets to the amounts expected to be realized.

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted
average common shares outstanding during the period. Diluted loss per share is
calculated by dividing the net loss by the weighted average common shares
outstanding adjusted for all potential common shares, which includes shares
issuable upon the exercise of outstanding common stock options, warrants, and
other contingent issuances of common stock. Cybergold has losses for all
periods presented and, accordingly, such potential common shares are excluded
from the computation of diluted net loss per share, as their effect is
antidilutive.

Potentially dilutive securities include the following:

<TABLE>
<CAPTION>
December 31,
----------------------------- March 31,
1997 1998 1999 2000
--------- --------- --------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Options to purchase common
stock........................... 776,333 1,250,122 2,531,184 2,454,699
Warrants to purchase common
stock........................... 166,667 166,667 166,667 166,667
Warrants to purchase preferred
stock........................... 146,667 138,333 171,843 138,333
Series A preferred stock......... 2,000,000 2,000,000 -- --
Series B preferred stock......... 1,378,314 1,394,981 -- --
Series A preferred stock--
itarget.com..................... -- -- 208,321 --
Series B preferred stock--
itarget.com..................... -- -- 126,781 --
Redeemable preferred stock....... -- 4,189,195 -- --
--------- --------- --------- ---------
Total........................ 4,467,981 9,139,298 3,204,796 2,759,699
========= ========= ========= =========
</TABLE>

Stock Split

During June 1999, Cybergold approved a two-for-three reverse stock split.
All of the share amounts and per share amounts in these financial statements
have been restated to reflect this split for all periods presented.

F-26
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

New Accounting Standards

During 1998, Cybergold adopted SFAS No. 130, "Reporting Comprehensive
Income." Cybergold has disclosed all items of comprehensive income (loss) in
the accompanying consolidated statements of operations.

Cybergold also adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." As of December 31, 1998, management has
concluded that Cybergold only operates in one segment and exclusively in the
United States.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS No. 137,
is effective for fiscal years beginning after June 15, 2000. SFAS No. 133 is
not expected to have a material impact on Cybergold's financial position or
results of operations.

In April 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation, an interpretation of APB Opinion No. 25 ("FIN 44"). Among other
issues, FIN 44 clarifies (a) the definition of employee for purposes of
applying Opinion No. 25, (b) the criteria for determining whether a plan
qualifies as a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain conclusions in the
interpretation cover specific events that occur after either December 15, 1998
or January 12, 2000. To the extent that this interpretation covers events
occurring during the period after December 15, 1998, or January 12, 2000, but
before the effective date of July 1, 2000, the effect of applying this
interpretation are recognized on a prospective basis from July 1, 2000. The
Company is currently reviewing stock grants to determine the impact, if any,
that may arise from implementation of FIN 44, although management does not
expect the impact, if any, to be material to the financial statements.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," which provides
guidance on the recognition, presentation, and disclosure of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosures
related to revenue recognition policies. The Company believes that its revenue
recognition policies comply with the requirements of SAB 101.

Reclassifications

Certain reclassifications have been made to the financial statements to
conform to the current year presentation.

2. Property and Equipment:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
December 31,
----------------------
1998 1999
--------- -----------
<S> <C> <C>
Computer equipment and software...................... $ 923,127 $ 2,054,951
Furniture and fixtures............................... 30,465 163,143
Leasehold improvements............................... 14,541 16,638
--------- -----------
968,133 2,234,732
Accumulated depreciation............................. (561,067) (927,684)
--------- -----------
$ 407,066 $ 1,307,048
========= ===========
</TABLE>

F-27
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Depreciation expense for property and equipment was $190,859, $269,158, and
$356,257 for the years ended December 31, 1997, 1998, and 1999, respectively.
Included in property and equipment at December 31, 1998 and 1999, are
depreciated amounts of approximately $278,000 and $125,948, respectively,
related to assets acquired under capital leases.

3. Intangible Assets:

Intangible assets represent goodwill and other intangibles related to the
1999 acquisition of Smartfrog.com (Note 10). This amount is being amortized on
a straight-line basis over five years. Total amortization expense for the year
ended December 31, 1999, was $22,500.

4. Income Taxes:

Significant components of net deferred tax assets as of December 31 were:

<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Net operating loss carryforwards................... $ 3,744,037 $ 8,898,212
R&D credit carryforward............................ 274,163 485,436
Other.............................................. 25,028 77,060
----------- -----------
Gross deferred tax assets.......................... 4,043,228 9,460,708
Deferred tax valuation allowance................... (4,043,228) (9,460,708)
----------- -----------
Net deferred tax asset............................. $ -- $ --
=========== ===========
</TABLE>

As of December 31, 1999, Cybergold had tax net operating loss carryforwards
of approximately $22.2 million for federal and state income tax purposes ($2.0
million of which related to itarget.com). These carryforwards begin to expire
in 2011 and 2005, respectively. In addition, Cybergold has research and
development tax credit carryforwards of $271,557 and $213,879 for federal and
state income tax purposes, respectively, which begin to expire in 2011. A
valuation allowance has been provided to offset gross deferred tax assets due
to the uncertainty surrounding the realizability of such assets.

The Tax Reform Act of 1986 contains provisions that may limit the net
operating loss carryforwards and research and development credits available to
be used in any given year should certain events occur, including the sale of
equity securities and other changes in ownership. There can be no assurance
that Cybergold will be able to utilize net operating loss carryforwards and
credits before expiration.

The net operating loss carryforwards related to itarget.com as of March 29,
2000 can only be utilized to offset future taxable income of itarget.

5. Convertible Redeemable Preferred Stock:

Cybergold's amended and restated articles of incorporation allowed for the
issuance of 5,333,353 shares of Series C Convertible Redeemable Preferred Stock
(Series C Stock) and 2,566,667 shares of Series D Convertible Redeemable
Preferred Stock (Series D Stock). During the period from May 1998 through
August 1998, Cybergold issued 4,189,195 shares of Series C Stock at $1.37 per
share. During May 1999, Cybergold issued 2,051,282 shares of Series D Stock at
$3.90 per share. Each share of Series C Stock and Series D Stock was
automatically converted into shares of common stock during Cybergold's initial
public offering.

For the years ended December 31, 1998 and 1999, redemption accretion related
to Series C and Series D stock was charged to retained deficit in the amount of
$660,430 and $1,570,307, respectively. This accumulated accretion was recorded
as an increase to additional paid in capital upon the closure of Cybergold's
initial public offering.

F-28
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

In connection with the issuance of Series D Stock, Cybergold also issued
warrants to purchase 302,140 warrants of Series D Stock at an exercise price of
$4.50. These warrants automatically converted into shares of common stock
during Cybergold's initial public offering.

6. Stockholders' Equity:

Common Stock

The holders of common stock are entitled to one vote per share. The holders
of common stock are entitled to receive ratably such dividends, if any, as may
be declared by the board of directors. In the event of liquidation, the holders
of common stock are entitled to share ratably in all assets remaining after
payment of liabilities, subject to prior distribution rights of preferred
stock. The common stock has no preemptive, conversion, or other subscription
rights.

Preferred Stock

In connection with the capital leases described in Note 7, Cybergold issued
warrants to the lessor to purchase 15,000 shares of Series B preferred stock at
$3.00 per share. The value of these warrants at the grant dates was determined
to be immaterial, based on the Black-Scholes pricing model.

In connection with itarget's issuance of Series A and Series B preferred
stock in 1999, itarget. com issued warrants to purchase 33,290 shares of
itarget preferred stock at various exercise prices in excess of the fair market
value of the underlying securities on the date of grant. The value of these
warrants at the grant dates was determined to be immaterial, based on the
Black-Scholes pricing model.

7. Commitments and Contingencies:

Lease Commitments

During 1999, Cybergold moved its headquarters to Oakland, California, and
entered into an operating lease that expires in November 2004, with an option
to extend the lease for an additional three years. Subsequent to year-end,
Cybergold has entered into an additional operating lease for additional floor
space at their headquarters. This lease expires in June 2005, with an option to
extend the lease for an additional three years. Cybergold also leases certain
items of property and equipment under capital leases expiring at various dates
through 2002.

Future minimum lease commitments are as follows:

<TABLE>
<CAPTION>
Operating Capital
Lease Lease
Payments Payments
---------- ---------
<S> <C> <C>
2000................................................... $1,061,809 $ 166,500
2001................................................... 1,077,876 83,500
2002................................................... 1,053,407 18,100
2003................................................... 1,134,400 --
2004 and thereafter.................................... 1,307,200 --
---------- ---------
Total................................................ $5,634,692 268,100
==========
Less: Interest component............................. (42,500)
---------
Present value of minimum lease payments................ 225,600
Less: Current maturities............................... (135,800)
---------
Long-term capital obligations.......................... $ 89,800
=========
</TABLE>

F-29
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Interest expense on capital leases amounted to $35,800, $71,086, and $59,375
for the years-ended December 31, 1997, 1998, and 1999, respectively. Rent
expense for the years ended December 31, 1997, 1998, and 1999, was $150,730,
$139,749, and $331,638, respectively.

Employment Agreements

During 1998, Cybergold entered into employment agreements with three
officers that provide for minimum annual base salaries, bonus entitlements, and
issuance of common stock options upon the achievement of certain objectives.
Should these objectives not be achieved, these options vest over five years.
The employment agreements were effective as of the hire date of each respective
officer and may be terminated by either party. As of December 31, 1998 and
1999, Cybergold accrued approximately $32,000 and $25,000, respectively, in the
accompanying balance sheets for accrued bonuses in relation to these
agreements.

During 1999, itarget entered into employment agreements with two officers of
itarget that provide for lump sum payments upon a change of control. Upon
Cybergold, Inc.'s acquisition of itarget in March, 2000 (Note 10), Cybergold
paid out $1.2 million in connection with these agreements.

Equipment Credit Line

During February 1999, Cybergold entered into an equipment credit line
agreement. This credit line is to be used solely for capital expenditures.
Maximum borrowings under this line are $400,000. Interest of approximately 20
percent and principal are payable monthly over a three-year period. At December
31, 1999, Cybergold had amounts outstanding under this line of $364,649. Of
this amount, $65,518 is included in current maturities of long-term obligations
in the accompanying balance sheets, with the remainder included in long-term
obligations, net of current maturities.

8. Stock Option Plan:

Under the terms of Cybergold's 1996 Employee Stock Option Plan (1996 Plan)
adopted in June 1996, options to purchase shares of Cybergold's common stock
are granted to employees, consultants, and directors. Options currently
outstanding vest at 25 percent on the first anniversary of the grant date and
1/36 per month thereafter. Each option shall terminate 10 years after the date
of grant. In addition, the option holder is entitled to exercise prior to the
option's vesting as long as he or she is still an employee. Should the employee
subsequently leave, Cybergold has the right to repurchase the shares that had
not vested at the departure date. At December 31, 1998 and 1999, 56,771 and
18,646 shares of common stock were subject to repurchase, respectively, under
this provision.

The 1999 Omnibus Equity Incentive Plan was adopted in September 1999. The
provisions of this plan match the 1996 Plan, except that optionees may exercise
only those options they are vested in. All options granted from the effective
date of the initial public offering on September 22, 1999 were granted from the
1999 Plan.

F-30
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

A summary of the status of Cybergold's stock option plan at December 31, A
summary of the status of Cybergold's stock option plan at December 31, 1999,
and changes during the years ended December 1997, 1998, and 1999, are presented
in the table below:

<TABLE>
<CAPTION>
Weighted
Weighted Average
Options Outstanding Average Fair Value
------------------------- Exercise of Options
Qualifying Nonqualifying Total Price Granted
---------- ------------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996....... 690,375 -- 690,375 $ 0.05
Granted........................ 334,333 106,667 441,000 0.41 $ 0.08
Canceled....................... (93,000) -- (93,000) 0.23
Exercised...................... (262,042) -- (262,042) 0.05
--------- ------- --------- ------
Balance, December 31, 1997....... 669,666 106,667 776,333 0.24
Granted........................ 675,733 200,233 875,966 0.41 $ 1.02
Canceled....................... (279,305) (61,111) (340,416) 0.51
Exercised...................... (60,694) (1,067) (61,761) 0.18
--------- ------- --------- ------
Balance, December 31, 1998....... 1,005,400 244,722 1,250,122 0.29
Granted........................ 1,806,898 138,899 1,945,797 5.53 $ 3.21
Canceled....................... (242,917) (91,696) (334,613) 1.71
Exercised...................... (290,375) (54,776) (345,151) 0.15
--------- ------- --------- ------
Balance, December 31, 1999....... 2,279,006 237,149 2,516,155 $ 4.17
========= ======= ========= ======
</TABLE>

Options outstanding, exercisable, and vested by price range at December 31,
1999, are as follows:

<TABLE>
<CAPTION>
Weighted
Range of Average
Exercise Number Contractual Number Number
Price Outstanding Remaining Life Exercisable Vested
-------- ----------- -------------- ----------- -------
<S> <C> <C> <C> <C>
$ 0.02-1.00 950,875 7.6 950,875 520,986
$3.90 507,359 9.4 507,359 66,087
$ 6.63-10.00 1,038,921 9.8 278,388 60,833
$10.01-18.13 19,000 10.0 0 0
--------- --------- -------
2,516,155 1,736,622 647,906
========= ========= =======
</TABLE>

During 1997, Cybergold entered into agreements that granted options to
purchase 123,333 shares of Series A preferred stock to consultants at $1.50 per
share. The options were fully vested at December 31, 1998. The value of these
options at the grant date (as determined using the Black-Scholes model) was not
material.

In connection with the granting of certain stock options to employees,
directors, and consultants during 1998 and 1999, Cybergold recorded deferred
compensation of $965,571 and $1,279,995 respectively. This deferred
compensation is being amortized over the expected service periods of the
grantees, generally four years. Amortization of deferred compensation for the
years ended December 31, 1998 and 1999 was $198,288 and $734,614, respectively.

F-31
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Cybergold has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Had compensation expense for the
Plan been determined based on the fair value at the grant dates, as prescribed
in SFAS No. 123, Cybergold's net loss and net loss per share would have been as
follows:

<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1997 1998 1999
------------ ------------ -------------
<S> <C> <C> <C>
Net loss:
As reported................... $ (3,869,323) $ (5,475,213) $ (13,707,503)
Pro forma..................... $ (3,929,438) $ (5,572,769) $ (14,281,465)
Basic and diluted net loss per
common share:
As reported................... $ (0.97) $ (1.18) $ (1.45)
Pro forma..................... $ (0.99) $ (1.20) $ (1.51)
</TABLE>

The fair value of each option was estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions used for the
grants: expected dividend yield of 0 percent in all periods; expected
volatility of 149 percent in all periods; weighted average risk-free interest
rates ranging from 3.91 percent to 6.05 percent for all periods presented in
the table above; and expected lives from one month to four years for all
periods.

During 1999, itarget granted options to an itarget executive to purchase up
to 30,057 shares of common stock at an exercise price of $0.02 per share. In
connection with this grant, itarget recognized $7,900 of compensation expense,
which is included in general and administrative expense in the accompanying
consolidated statement of operations for the year ended December 31, 1999.

9. Compensation and Retirement Plans:

On May 18, 1999, the Board of Directors adopted the following plans:

1999 Omnibus Equity Incentive Plan--Cybergold has reserved 1,500,000
shares of common stock for issuance under this plan. Options may be granted
under this plan to employees, directors, and consultants and will not be
granted at less than 100 percent of the fair market value of the common
stock on the option grant date. These options will generally vest over four
years and expire ten years after the date of grant. At December 31, 1999,
780,000 options were outstanding under this plan.

1999 Employee Stock Purchase Plan--Cybergold has reserved 300,000 shares
of common stock for issuance under this plan, and only employees are
eligible. Employees can purchase stock through payroll deductions that may
not exceed 15 percent of the employee's cash compensation. The purchase
price per share of common stock will be no less than 85 percent of the fair
market value of the stock at the date of purchase. At December 31, 1999, 0
purchases had been made under this plan.

401(k) Defined Contribution Plan--Cybergold also sponsors a defined
contribution 401(k) retirement plan for all employees who have completed at
least 30 days of service. Participants may elect to defer up to 15 percent
of their current annual salary, not to exceed $10,500. Cybergold does not
match contributions.

F-32
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

10. Acquisitions:

In November 1999, Cybergold purchased substantially all of the assets and
assumed certain liabilities of Smartfrog.com, a Delaware corporation, for
$250,000 and has included Smartfrog.com's results of operations as of such
date. Cybergold accounted for this acquisition under the purchase method of
accounting. The allocation of the purchase price to the underlying net assets
acquired is based upon estimates of the fair value of the net assets. Of the
net assets acquired, $150,000 was allocated to employment contracts and is
being amortized over one year. The remainder was allocated to goodwill and is
being amortized over 5 years. Smartfrog.com had no activity during 1998. Had
the acquisition occurred as of January 1, 1999, Cybergold's net loss would have
increased by approximately $100,000.

On March 29, 2000, Cybergold issued approximately 1.83 million shares of its
common stock for the entire common stock of itarget. This acquisition was
accounted for under the pooling-of-interests method of accounting. The
financial statements reflect this acquisition as if Cybergold, Inc. and itarget
had always been members of the same operating group. Separate results of
operations for Cybergold and itarget prior to the acquisition were:

<TABLE>
<CAPTION>
Cybergold itarget
------------ -----------
<S> <C> <C>
1998
Revenue.......................................... $ 1,004,933 --
Net loss......................................... $ (4,767,951) $ (47,262)
1999
Revenue.......................................... $ 5,302,961 $ 179,878
Net loss......................................... $(10,062,816) $(2,074,687)
</TABLE>

11. Related Parties:

During the years ended December 31, 1997, 1998 and through May 1999 the
president of Cybergold and majority common stockholder was not paid a salary.
Cybergold has imputed a salary of $125,000, $150,000, and $83,333 for the
years-ended December 31, 1997, 1998 and the period January 1, 1999 to May 1,
1999, respectively.

In January 1999, itarget entered into an agreement with a related party
whereby the related party provided certain services, including consulting
services, office space, website hosting services, and providing personal
identification numbers relating to prepaid calling cards. As of December 31,
1999, total consulting fees provided by the related party were $94,242, rent
expenses was $50,960, website hosting service costs were $14,280, and personal
identification number costs were $113,065. As of December 31, 1999, itarget
maintained amounts payable to the related party totaling $254,856.

In December 1999, itarget entered into a consulting agreement with a
stockholder of itarget. Pursuant to the agreement, Cybergold paid the
stockholder fees in the amount of $133,000 for financial-related services.

12. Subsequent Event:

In January 2000, itarget entered into a stock swap agreement with Quintel
Communications, Inc. ("Quintel"), whereby itarget issued 213,258 shares of its
Series B and placed in escrow 53,315 shares of its Series B in exchange for
229,862 shares of common stock of Quintel. In addition, itarget entered into a
strategic marketing agreement with Quintel for the development of a proposed
website. The agreement allows for any surviving party in a subsequent change of
control of itarget to terminate the agreement for $150,000, subject to certain
provisions.

F-33
<PAGE>

CYBERGOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

On April 17, 2000, the Company entered into a merger agreement with MyPoints
under which the Company will be acquired by MyPoints in a tax-free, stock-for-
stock, fixed-share transaction. Under the terms of the merger agreement each
share of Cybergold will be exchanged for 0.4800 shares of MyPoints. Based on
closing prices on April 14, 2000, the transaction is valued at approximately
$157 million. The effective date of the merger was August 7, 2000.

F-34
<PAGE>

You may read and copy the registration statement and other materials that
MagnaCash files with the Securities and Exchange Commission at the Public
Reference Room of the Securities and Exchange Commission, 450 Fifth Street,
Washington, D.C. 20549 and at the Securities and Exchange Commission's regional
offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can request
copies of these documents, upon payment of a duplication fee, by writing to the
Securities and Exchange Commission's Public Reference Section. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the operation of the Public Reference Rooms. The Securities and Exchange
Commission filings of MagnaCash are also available to the public on the
Securities and Exchange Commission Internet site (http://www.sec.gov).

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of Common Stock being registered. All
amounts are estimates except the registration fee.

<TABLE>
<CAPTION>
Amount
to
be Paid
--------
<S> <C>
SEC Registration Fee............................................... $ 264
Printing and Engraving............................................. 65,000
Legal Fees and Expenses............................................ 175,000
Accounting Fees and Expenses....................................... 125,000
Blue Sky Qualification Fees and Expenses........................... N/A
Transfer Agent Fees................................................ 10,000
Miscellaneous...................................................... 9,000
--------
Total............................................................ $384,264
========
</TABLE>

Item 14. Indemnification of Directors and Officers

As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's certificate of incorporation and bylaws includes provisions that
eliminate the personal liability of its directors for monetary damages for
breach or alleged breach of their duty of care to the Company or its
stockholders. In addition, as permitted by Section 145 of the Delaware General
Corporation Law, the certificate of incorporation and bylaws of the Registrant
provides, inter alia, that each person who is made a party or is threatened to
be made a party to or otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director or
officer of the Company or, while a director or officer of the Company, is or
was serving at the request of the Company as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other
capacity while serving as a director or officer, is authorized to be
indemnified and held harmless by the Company to the fullest extent authorized
by the Delaware General Corporation Law, as the same exists or may hereafter be
amended, against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee's heirs,
executors and administrators; provided, however, that, except with respect to
the proceedings brought by an indemnitee (subject to certain restrictions and
as more fully described in the Registrant's certificate of incorporation), the
Company shall indemnify any such indemnitee in connection with a proceeding (or
part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board of directors of the

II-1
<PAGE>

Company. The right to indemnification conferred in the Registrant's certificate
of incorporation includes the right to be paid by the Company the expenses
incurred in connection with any such proceeding in advance of its final
disposition; provided, however, that, if and to the extent that the Delaware
General Corporation Law requires, such an advancement of expenses incurred by
an indemnitee in his or her capacity in which service was or is rendered by
such indemnitee, including, without limitation, service with respect to an
employee benefit plan, shall be made only upon delivery to the Company of an
undertaking by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal that such indemnitee is not entitled
to be indemnified for such expenses under the Company's certificate of
incorporation or otherwise.

The Registrant's policy is to enter into indemnification agreements with
each of its directors and executive officers that provide the maximum indemnity
allowed to directors and executive officers by Section 145 of the Delaware
General Corporation Law and the Bylaws, as well as certain additional
procedural protections. The indemnity agreements provide that directors and
executive officers will be indemnified to the fullest possible extent not
prohibited by law against all expenses (including attorney's fees) and
settlement amounts paid or incurred by them in any action or proceeding,
including any derivative action by or in the right of the Registrant, on
account of their services as directors or executive officers of the Registrant
or as directors or officers of any other company or enterprise when they are
serving in such capacities at the request of the Registrant. Pursuant to the
indemnity agreements, the Company will not be obligated to indemnify or advance
expenses to an indemnified party with respect to proceedings or claims
initiated by the indemnified party and not by way of defense, except with
respect to proceedings specifically authorized by the board of directors or
brought to enforce a right to indemnification under such indemnity agreement,
the Company's certificate of incorporation, Bylaws or any statute or law, or as
otherwise required under Section 145 of the Delaware General Corporation Law.
Also under the indemnity agreements, the Company is not obligated to indemnify
the indemnified party for (i) any expenses incurred by the indemnified party
with respect to any proceeding instituted by the indemnified party to enforce
or interpret the agreement, if a court of competent jurisdiction determines
that each of the material assertions made by the indemnified party in such
proceeding was not made in good faith or was frivolous, (ii) acts, omissions or
transactions on the part of the indemnified party from which such party may not
be relieved of liability under applicable law or (iii) expenses and the payment
of profits arising from the purchase and sale by the indemnified party of
securities in violation of Section 16(b) of the Exchange Act, or any similar or
successor statute.

The indemnification provisions in the certificate of incorporation and the
indemnification agreements entered into between the Registrant and its
directors and executive officers, may be sufficiently broad to permit
indemnification of the Registrant's officers and directors for liabilities
arising under the 1933 Act.

II-2
<PAGE>

Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:

Item 15. Exhibits and Financial Schedules

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
3.1 Certificate of Incorporation of MagnaCash, Inc.*
3.2 Bylaws of MagnaCash, Inc.*
5.1 Form of Legal Opinion of Morrison & Foerster LLP*
10.1 Form of Master Separation and Distribution Agreement between
Cybergold, Inc. and MagnaCash, Inc.*
10.2 Form of Tax Sharing Agreement between MyPoints.com, Inc. and
MagnaCash, Inc.*
10.3 Form of License Assignment and Assumption Agreement between
Cybergold, Inc. and MagnaCash, Inc.*
10.4 Form of Transitional Services and Joint Operating Agreement between
Cybergold, Inc. and MagnaCash, Inc.*
10.5 Form of Services Agreement between Cybergold, Inc. and MagnaCash,
Inc.*
21.1 2000 Omnibus Equity Incentive Plan*
23.1 Independent Auditor's Consent
23.2 Consent of Morrison & Foerster LLP (included in Exhibit 5.1)*
24.1 Power of Attorney (included in signature pages to the Registration
Statement)
</TABLE>
--------
* To be filed by amendment.

(b) Financial Statement Schedules

Independent Auditors' Report S-1

Item 16. Undertakings

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referenced in Item 14 of this
Registration Statement or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the 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 Act, each post-
effective amendment that contains a form of Prospectus shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement on Form S-1 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Oakland, State of
California, on the 13th day of September, 2000.

MagnaCash Inc.

By: /s/ Barry McCarthy
-----------------------------------
Barry McCarthy
COO, President and Director

Each person whose signature appears below constitutes and appoints Barry
McCarthy with full power of substitution and resubstitution; his true and
lawful attorney-in-fact agent, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
securities and exchange commission or any state, granting unto said attorney-
in-fact and agent full power and authority to do and perform each and every act
and thing requisite and necessary to be in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agents or his substitution
many lawfully do or cause to be done by virtue hereof.

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

<C> <S> <C>
/s/ Barry McCarthy Director, President and September 13, 2000
____________________________________ Chief Operating Officer
Barry McCarthy (Principal Executive
Officer)

/s/ Lawrence Farrell Treasurer, VP-Finance September 13, 2000
____________________________________ (Chief Financial
Lawrence Farrell Officer and Principal
Accounting Officer)

* Director September 13, 2000
____________________________________
A. Nathaniel Goldhaber

* Director, Chief September 13, 2000
____________________________________ Technical Officer
Gary Fitts

*By: /s/ Barry McCarthy September 13, 2000
____________________________________
Barry McCarthy
(Attorney-in-Fact)
</TABLE>
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
3.1 Certificate of Incorporation of MagnaCash, Inc.*
3.2 Bylaws of MagnaCash, Inc.*
5.1 Form of Legal Opinion of Morrison & Foerster LLP*
10.1 Form of Master Separation and Distribution Agreement between
Cybergold, Inc. and MagnaCash, Inc.*
10.2 Form of Tax Sharing Agreement between MyPoints.com, Inc. and
MagnaCash, Inc.*
10.3 Form of License Assignment and Assumption Agreement between Cybergold,
Inc. and MagnaCash, Inc.*
10.4 Form of Transitional Services and Joint Operating Agreement between
Cybergold, Inc. and MagnaCash, Inc.*
10.5 Form of Services Agreement between Cybergold, Inc. and MagnaCash,
Inc.*
21.1 2000 Omnibus Equity Incentive Plan*
23.1 Consent of Independent Public Accountants
23.2 Consent of Morrison & Foerster LLP (included in Exhibit 5.1)*
24.1 Power of Attorney (included in signature pages to the Registration
Statement)
</TABLE>
--------
* To be filed by amendment.