INFOSEEK CORP, 424B4, 1998-02-13

INFOSEEK CORP
424B4, 1998-02-13
PREPACKAGED SOFTWARE

Previous: SOUTH CAROLINA COMMUNITY BANCSHARES INC, SC 13G, 1998-02-13

Next: INFOSEEK CORP, SC 13G/A, 1998-02-13

<PAGE>
FILED PURSUANT TO RULE 424(b)(4)
REGISTRATION NO. 333-45087
PROSPECTUS

3,000,000 SHARES

[LOGO OF INFOSEEK]

COMMON STOCK

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

All of the 3,000,000 shares of Common Stock offered hereby are being sold by
Infoseek Corporation ("Infoseek" or the "Company"). The Company's Common Stock
is traded on the Nasdaq National Market under the symbol "SEEK." On February
12, 1998, the last reported sale price of the Common Stock was $13 7/16 per
share. See "Price Range of Common Stock."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............. $13.4375 $.81 $12.6275
- -------------------------------------------------------------------------------
Total(3).............. $40,312,500 $2,430,000 $37,882,500
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $450,000.
(3) The Company has granted the Underwriters an option, to purchase up to an
additional 450,000 shares of Common Stock, on the same terms as set forth
above, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $46,359,375, $2,794,500, and $43,564,875,
respectively. See "Underwriting."

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

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York, on
or about February 19, 1998.

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

MERRILL LYNCH & CO. BT ALEX. BROWN

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

The date of this Prospectus is February 12, 1998.
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission (File No.
333-45087) pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated in this Prospectus by reference: (i) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996, as amended by the Company's Form 10-K/A filed on January 23, 1998 (ii)
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997; (iii) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997; (iv) the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997; (v) the Company's Current Report on Form 8-K
filed on January 28, 1998; (vi) the Company's Definitive Proxy Statement dated
June 24, 1997, filed in connection with the Company's 1997 Annual Meeting of
Shareholders held on July 8, 1997; and (vii) the description of the Company's
Common Stock contained in the Company's Registration Statement on Form 8-A
filed on June 5, 1996 under Section 12 of the Exchange Act, including any
amendment or report updating such description.

Each document filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such document (all such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents"). Any statement
contained in an Incorporated Document shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed Incorporated Document
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner, upon the written
or oral request of such person, a copy of any or all of the Incorporated
Documents, other than exhibits to such documents unless such exhibits are
specifically incorporated by reference therein. Requests for such copies
should be directed to Infoseek Corporation, 1399 Moffett Park Drive,
Sunnyvale, California 94089, Attention: Andrew E. Newton, Vice President and
General Counsel (telephone: (408) 543-6000). The information relating to the
Company contained in this Prospectus does not purport to be comprehensive and
should be read together with the information contained in the Incorporated
Documents.

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

Ultraseek(TM) and Ultramatch(TM) are among the trademarks of the Company and
Infoseek(R) and the Infoseek logo are among the registered trademarks of the
Company. This Prospectus also refers to trademarks held by other corporations.

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO
COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

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

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere in this Prospectus or
incorporated by reference herein. Except where otherwise indicated, the
information contained in this Prospectus assumes that the Underwriters' over-
allotment option is not exercised. Investors should carefully consider the
information set forth under the heading "Risk Factors."

THE COMPANY

Infoseek provides leading Internet search and navigation technology, products
and services that use the Web to connect its viewers' personal, work and
community lives. As a "connected" media company, Infoseek is able to segment
viewers by interest area, providing advertisers with focused and targeted
audiences. The Infoseek Service is a comprehensive Internet gateway that
combines search and navigation with directories of relevant information sources
and content sites, offers chat and instant messaging for communicating shared
interests and facilitates the purchase of related goods and services. The
Company's goal is to have the Infoseek Service become a viewer's first choice
Web destination site. According to PC Meter, Infoseek was the seventh most
trafficked site on the Internet during November 1997. Infoseek's revenues,
principally consisting of advertising revenues, increased 129% to $34.6 million
during 1997 over 1996, and increased 52% to $12.5 million during the fourth
quarter of 1997 as compared to the third quarter of 1997.

Average daily page views served from the Infoseek Service increased by 190%
to 12.5 million in the fourth quarter of 1997 compared to the fourth quarter of
1996 and increased by 23% as compared to the third quarter of 1997. The Company
believes that by building brand awareness with consumers, it will be able to
attract more viewers directly to the Infoseek Service. In addition, the Company
acquires viewers through agreements with Netscape and other high traffic Web
sites. The percentage of page views delivered to viewers that originated from
Netscape declined to 27% in December 1997 from 44% in December 1996.

In response to rapid growth and change in the Internet search and navigation
market, the Company's Board of Directors, in the second quarter of 1997, hired
a new Chief Executive Officer, Harry Motro, to help evolve the strategic vision
of the Company while continuing to leverage the Company's core strength in
search and navigation. Mr. Motro and Founder Steven Kirsch recruited a number
of new members to the executive management team to execute on the Company's
strategy of building Infoseek brand awareness; creating a richer viewer
experience; maximizing value for the Company's advertisers; providing intranet
search products; and enhancing Infoseek's search and navigation service.

In October 1997, the Company launched an enhanced version of the Infoseek
Service with 15 easy to navigate "channels" that integrate search results with
relevant information, services, products and communications on the Web. The new
Infoseek Service provides the Company with a platform for creating content and
marketing partnerships that enrich the viewer's experience while enabling
advertisers, sponsors and partners to more effectively target viewers.
Beginning with the launch of the Company's channels, the Company began to sell
sponsorships to advertisers, sponsors and partners for specific channels and
product categories. In the fourth quarter of 1997, the Company entered into
eight sponsorship and partnership agreements relating to five of the Company's
15 channels. The Company believes there is significant potential to increase
sponsorship revenues through the ten unsponsored channels, further segmentation
of existing channels into sub-channels as well as channels to be introduced in
the future.

In order to leverage its strength in search and navigation and to diversify
its revenue base, the Company began to license its Ultraseek Server product to
corporate customers for use on their intranets and public Web sites beginning
in early 1997. During 1997, the Company derived approximately 6% of total
revenues from sales of its Ultraseek Server product. The Company believes that
as the amount of content hosted in online corporate environments continues to
grow, the factors that have contributed to the popularity of the Internet
navigation and search services will drive the demand for similar technologies
within corporate intranets and public Web sites.

3
<PAGE>

THE OFFERING

Common Stock offered by the
Company........................ 3,000,000 shares

Common Stock to be outstanding
after the offering (1)......... 30,243,682 shares

Use of proceeds................. For general corporate purposes, including
capital expenditures and working capital. See
"Use of Proceeds."

Nasdaq National Market Symbol... SEEK

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------------------
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total revenues.................................... $ 1,032 $ 15,095 $ 34,603
Gross profit...................................... 418 11,901 28,503
Restructuring and other charges(2)................ -- -- 7,349
Operating loss.................................... (3,393) (17,281) (25,943)
Net loss.......................................... $(3,296) $(15,938) $(24,623)
Basic and diluted net loss per share.............. $ (0.13) $ (0.73) $ (0.93)
Shares used in computing basic and diluted net
loss per share(3)................................ 25,863 21,737 26,610
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------
AS
ACTUAL ADJUSTED(4)
------- -----------
<S> <C> <C>
BALANCE SHEETS DATA:
Cash, cash equivalents and short-term investments........... $31,334 $68,767
Working capital............................................. 19,321 56,754
Total assets................................................ 51,154 88,587
Long-term obligations....................................... 4,329 4,329
Total shareholders' equity.................................. $27,268 $64,701
</TABLE>
- --------
(1) Based on the number of shares of Common Stock outstanding as of December
31, 1997. Outstanding Common Stock as of December 31, 1997 does not
include: (i) 5,716,000 shares of Common Stock available for issuance
pursuant to the Company's 1996 Stock Option/Stock Issuance Plan, of which
4,121,000 shares were subject to outstanding stock options as of December
31, 1997 at a weighted-average exercise price of $4.92 per share and (ii)
143,000 shares of Common Stock available for issuance pursuant to the
Company's 1996 Employee Stock Purchase Plan.
(2) During the second quarter of 1997, the Company took a restructuring charge
of approximately $7,400,000 related to the discontinuance of certain
business arrangements that were determined to be non-strategic and to
management changes. See Note 5 of Notes to Financial Statements.
(3) The earnings per share amounts prior to 1997 have been restated as required
to comply with Statement of Financial Accounting Standards No. 128,
Earnings Per Share. See Notes 1 and 12 of Notes to Financial Statements for
an explanation of the method used to determine the number of shares used in
computing basic and diluted net loss per share.
(4) Adjusted to reflect the sale of 3,000,000 shares of Common Stock offered by
the Company hereby, after deducting the estimated underwriting discounts
and commissions and the estimated offering expenses payable by the Company.

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

This Prospectus (including the documents incorporated by reference herein)
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All forward-looking statements included in this document are based on
information available to the Company on the date hereof, and the Company
assumes no obligation to update any such forward-looking statements. Actual
results could differ materially from those projected in the forward-looking
statements as a result of the risk factors set forth herein and in the
documents incorporated by reference herein.

4
<PAGE>

RISK FACTORS

In evaluating the Company's business, prospective investors should carefully
consider the following risk factors in addition to the other information set
forth herein or incorporated herein by reference.

LIMITED OPERATING HISTORY; HISTORICAL LOSSES; ANTICIPATION OF CONTINUED LOSSES

The Company's limited operating history makes it difficult to manage
operations and predict future operating results. The Company has incurred
significant net losses since inception and expects to continue to incur
significant losses on a quarterly and annual basis in 1998 and may do so in
subsequent fiscal periods. As of December 31, 1997, the Company had an
accumulated deficit of $45,394,000. The Company and its prospects must be
considered in light of the risks, costs and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in the new and rapidly evolving Internet market. There can be no
assurance that the Company will be able to address any of these challenges.
Although the Company has experienced significant revenue growth in 1997, there
can be no assurance that this growth rate will be sustained or that revenues
will continue to grow or that the Company will achieve profitability. In 1997,
the Company significantly increased its operating expenses as a result of a
substantial increase in its sales and marketing efforts, development of new
distribution channels, expansion of its customer support capabilities and to
fund greater levels of research and development. Further increases in
operating expenses are planned during fiscal 1998. To the extent that any such
expenses are not timely followed by increased revenues, the Company's
business, results of operations, financial condition and prospects would be
materially adversely affected.

RELATIONSHIP WITH NETSCAPE

Since March 1995, the Company has been a featured provider of navigational
services on the Web page of Netscape Communications Corporation ("Netscape").
In 1996 and 1997, approximately 65% and 36%, respectively, of all page views
served on the Infoseek Service came from traffic attributable to the Netscape
Web page. The current agreement with Netscape provides for the Company to pay
an aggregate of $12,500,000 in cash and reciprocal advertising ($10,000,000 in
cash and $2,500,000 in reciprocal advertising) to be one of four non-exclusive
premier providers of navigational services (along with Excite Inc. ("Excite"),
Lycos Inc. ("Lycos") and Yahoo! Inc. ("Yahoo!") and expires on April 30, 1998.
Although the Company is currently in discussions with Netscape about renewing
the agreement, there can be no assurance that Netscape will be willing to
renew the agreement with the Company on commercially equivalent terms or on
other terms that may be satisfactory to the Company, if at all. Were Netscape
not to renew the agreement on commercially equivalent terms, such decision
could be based on changes in Netscape's strategies, business or other factors
that are beyond the control of the Company. Moreover, the Company is aware
that Netscape has from time to time considered decreasing the number of non-
exclusive premier providers of navigational services. The failure to renew the
Netscape agreement would result, at least in the short term, in a material
reduction in traffic to the Infoseek Web site. This could, in turn, result in
advertisers on the Company's Web sites, including channel sponsors and
partners, terminating their contracts with the Company as such contracts are
typically of short duration and terminable on relatively short notice, or
reducing the number of impressions purchased. Furthermore, the Company's
contracts with advertisers and sponsors generally guarantee a minimum number
of page views, and a failure to achieve the minimum page views could result in
a reduction in payments to the Company or compel the Company to provide "make
good" impressions if such minimums are not met. If the Company is unable to
develop viable alternative distribution channels to Netscape or is otherwise
unable to offset a reduction in traffic, advertising revenues would be
substantially adversely affected, resulting in the Company's business, results
of operations, financial condition and prospects being materially and
adversely affected.

POTENTIAL FLUCTUATIONS IN FUTURE RESULTS

5
<PAGE>

commerce; demand for the Company's products and services; the advertising
budgeting cycles of individual advertisers; the introduction and acceptance of
new, enhanced or alternative products or services by the Company or by its
competitors; the Company's ability to anticipate and effectively adapt to a
developing market and to rapidly changing technologies; the Company's ability
to attract, retain and motivate qualified personnel; initiation,
implementation, renewal or expiration of significant contracts with Bell
Atlantic Electronic Commerce Services, Inc. ("Bell Atlantic"), Borders Group,
Inc. ("Borders OnLine"), Microsoft Corporation ("Microsoft"), Netscape and
others; pricing changes by the Company or its competitors; specific economic
conditions in the Internet and intranet markets; general economic conditions;
and other factors. Substantially all of the Company's revenues have been
generated from the sale of advertising, and the Company expects to continue to
derive substantially all of its revenues from selling advertising and related
products for the foreseeable future. Moreover, most of the Company's contracts
with advertising customers have terms of three months or less. Advertising
revenues are tightly related to the amount of traffic on the Company's Web
site, which is inherently unpredictable. Accordingly, future sales and
operating results are difficult to forecast. The Company's expense levels are
based, in part, on its expectations as to future revenues and, to a
significant extent, are not expected to decrease, at least in the short term.
The Company may not be able to adjust spending in a timely manner to
compensate for any future revenue shortfall. Accordingly, any significant
shortfall in relation to the Company's expectations would have an immediate
material adverse impact on the Company's business, results of operations,
financial condition and prospects.

In addition, the Company may elect from time to time to make certain
pricing, service or marketing decisions or acquisitions that could have a
short-term material adverse effect on the Company's business, results of
operations, financial condition and prospects and which may not generate the
long-term benefits intended. From time to time, the Company has entered into
and may continue to enter into strategic relationships with companies for
cross service advertising, such as the Company's relationships with Bell
Atlantic and United Parcel Service of America, Inc. ("UPS"). The Company's
revenues have in the past been, and may in the future continue to be,
partially dependent on its relationship with its strategic partners. Such
strategic relationships have and may continue to include substantial one-time
or up front payments from the Company's partners. Accordingly, the Company
believes that its quarterly revenues are likely to vary significantly in the
future, that period-to-period comparisons are not necessarily meaningful and
that such comparisons should not necessarily be relied upon as an indication
of the Company's future performance. Due to the foregoing factors, it is
likely that in future periods, the Company's operating results may be below
the expectations of public market analysts and investors. In such event, the
price of the Company's Common Stock would likely be materially adversely
affected.

DEVELOPING MARKET; UNPROVEN ACCEPTANCE OF INTERNET ADVERTISING AND OF THE
COMPANY'S PRODUCTS AND SERVICES

The Company's future success is highly dependent upon the increased use of
the Internet and intranets for information publication, distribution and
commerce. The market for the Company's products and services has only recently
begun to develop, is rapidly evolving and is characterized by an increasing
number of market entrants with products and services for use on the Internet
and intranets. In particular, because the Company expects to derive
substantially all of its revenues in the foreseeable future from sales of
Internet advertising, the future success of the Company is highly dependent on
the development of the Internet as an advertising medium. If the market fails
to continue to develop, develops more slowly than expected or becomes
saturated with competitors, or if the Company's products and services do not
achieve or sustain acceptance by Internet users or advertisers, the Company's
business, results of operations, financial condition and prospects would be
materially adversely affected.

RISKS ASSOCIATED WITH BRAND DEVELOPMENT

The Company believes that establishing and maintaining the Infoseek brand is
a critical aspect of its efforts to attract and expand its audience and that
the importance of brand recognition will increase due to the growing number of
Internet sites and the relatively low barriers to entry. Promotion and
enhancement of the Infoseek

6
<PAGE>

brand will depend largely on the Company's success in providing high-quality
products and services and in designing and implementing effective media
promotions, which success cannot be assured. In order to attract and retain
Internet users and to promote and maintain the Infoseek brand in response to
competitive pressures, the Company believes it is necessary to increase
substantially its financial commitment to creating and maintaining a distinct
brand loyalty among consumers. If the Company is unable to provide high-
quality products and services, design and implement effective media promotions
or otherwise fails to promote and maintain its brand, or if the Company incurs
excessive expenses in an attempt to improve its products and services or
promote and maintain its brand, the Company's business, results of operations,
financial condition and prospects would be materially and adversely affected.

INTENSE COMPETITION

The market for Internet and intranet products and services is highly
competitive, and the Company expects that competition will continue to
intensify. The market for Internet and intranet search and navigational
services has only recently begun to develop, and the Company cannot predict
with any certainty how competition will affect the Company, its competitors or
its customers. There can be no assurance that the Company will be able to
compete successfully or that the competitive pressures faced by the Company,
including those listed below, will not have a material adverse effect on the
Company's business, results of operations, financial condition and prospects.
The Company believes it faces numerous competitive risks, including the
following:

Consolidation of products offered by Web browsers and other Internet points
of entry. A number of companies offering Internet products and services,
including direct competitors of the Company, recently have begun to integrate
multiple features within the products and services they offer to consumers.
Integration of Internet products and services is occurring through development
of competing products and through acquisitions of, or entering into joint
ventures and/or licensing arrangements involving, competitors of the Company.
For example, the Web browsers offered by Netscape and Microsoft, which are the
two most widely-used browsers and substantial sources of traffic for the
Company, may incorporate and promote information search and retrieval
capabilities in future releases or upgrades that could make it more difficult
for Internet viewers to find and use the Company's products and services.
Microsoft recently licensed products and services from Inktomi Corporation
("Inktomi"), a direct competitor of the Company, and has announced that it
will feature and promote Inktomi services in the Microsoft Network and other
Microsoft online properties. The Company expects that such search services may
be tightly integrated into the Microsoft operating system, the Internet
Explorer browser and other software applications, and that Microsoft will
promote such services within the Microsoft Network or through other Microsoft-
affiliated end-user services such as MSNBC or WebTV Networks, Inc. ("WebTV").
The Company's agreement with Netscape to be one of four non-exclusive premier
providers of navigational services expires on April 30, 1998, and there can be
no assurance that the Company will be successful in renewing this agreement on
terms advantageous to the Company, if at all. See "--Relationship With
Netscape." In addition, entities that sponsor or maintain high-traffic Web
sites or that provide an initial point of entry for Internet viewers, such as
the Regional Bell Operating Companies ("RBOCs") or Internet Service Providers
("ISPs") such as Microsoft and America Online, Inc. ("AOL"), currently offer
and can be expected to consider further development, acquisition or licensing
of Internet search and navigation functions competitive with those offered by
the Company, or could take actions that make it more difficult for viewers to
find and use the Company's products and services. For example, AOL is
currently a significant shareholder of Excite and offers Excite's WebCrawler
and NetFind as the exclusive Internet search and retrieval services for use by
AOL's subscribers. Continued or increased competition from such
consolidations, integration and strategic relationships involving competitors
of the Company could have a material adverse effect on the Company's business,
results of operations, financial condition and prospects.

Competition from existing search and navigational competitors. Many
companies currently offer directly competitive products or services addressing
Web search and navigation, including Digital Equipment Corporation (AltaVista)
("DEC/AltaVista"), Excite, Hot Wired Ventures LLC (HotBot) ("HotBot"),
Inktomi, Lycos, CNET (Snap! Online) ("CNET") and Yahoo! In addition, the
Company's Ultraseek Server product

7
<PAGE>

competes directly with intranet products and services offered by companies
such as DEC/AltaVista, Lycos, Open Text Corporation (Open Text Index) ("Open
Text") and Verity, Inc. ("Verity"). The Web browsers currently offered by
Netscape and Microsoft, which are the two most widely-used browsers,
incorporate prominent search buttons and similar features, such as features
based on "push" technologies, that direct search traffic to competing
services, including those that may be developed or licensed by Microsoft or
Netscape in enhancements or later versions of these or other products. Many of
the Company's existing competitors, as well as a number of potential new
competitors, have significantly greater financial, technical, marketing and
distribution resources than the Company.

Competition from Internet and other advertising media. The Company also
competes with online services, other Web site operators and advertising
networks, as well as traditional media such as television, radio and print for
a share of advertisers' total advertising budgets. Additionally, a large
number of Web sites and online services (including, among others, the
Microsoft Network, MSNBC, AOL and other Web navigation companies such as
Excite, Lycos and Yahoo!) offer informational and community features, such as
news, stock quotes, sports coverage, yellow pages and e-mail listings, weather
news, chat services and bulletin board listings that are competitive with the
services currently offered or proposed to be offered by the Company. Moreover,
the Company believes that the number of companies selling Web-based
advertising and the available inventory of advertising space have recently
increased substantially. Accordingly, the Company may face increased pricing
pressure for the sale of advertisements and reductions in the Company's
advertising revenues.

Low barriers to entry for new search and navigational companies. The Company
believes that the costs associated with developing technologies, products and
services that compete with those offered by the Company are relatively low. As
a result, as the market for Internet and intranet search and navigational
products develops, other companies may be expected to offer similar products
and services and directly and indirectly compete with the Company for
advertising revenues.

RELIANCE ON ADVERTISING REVENUES

The Company has derived a substantial majority of its revenues to date from
the sale of advertisements and expects to continue its dependence on
advertising and related products, including channel sponsorships and, to a
lesser extent, the sale of the Ultramatch advertising management system and
the Ultraseek Server intranet product. The Company's current business model of
generating revenues through the sale of advertising on the Internet, which is
highly dependent on the amount of traffic on the Company's Web site, is
relatively unproven. The Internet as an advertising medium has not been
available for a sufficient period of time to gauge its effectiveness as
compared with traditional advertising media. In addition, most of the
Company's current advertising customers have limited or no experience using
the Internet as an advertising medium, have not devoted a significant portion
of their advertising expenditures to such advertising and may not find such
advertising to be effective for promoting their products and services relative
to advertising in traditional media. There can be no assurance that current
advertisers will continue to purchase advertising space and services from the
Company or that sufficient impressions will be achieved or available, or that
the Company will be able to successfully attract additional advertisers.
Furthermore, with the rapid growth of available inventory on the Internet and
the intense competition among sellers of advertising space, it is difficult to
project future levels of advertising revenues and pricing models that will be
adopted by the industry or individual companies. In addition, the ability to
quickly develop new business models which will generate additional revenue
sources may be vital for the Company to remain competitive in its marketplace.
Accordingly, there can be no assurance that the Company will be successful in
generating significant future advertising revenues or other source of
revenues; failure to do so could have a material adverse effect on the
Company's business, results of operations, financial condition and prospects.

TECHNOLOGICAL CHANGE AND NEW PRODUCTS AND SERVICES

The market for Internet products and services is characterized by rapid
technological change, changing customer needs, frequent new product
introductions and evolving industry standards. These market characteristics
are exacerbated by the emerging nature of this market and the fact that many
companies are expected to introduce new Internet products and services in the
near future. The Company's future success will

8
<PAGE>

depend on its ability to continually and, on a timely basis, introduce new
products, services and technologies and to continue to improve the
performance, features and reliability of the Company's products and services
in response to both evolving demands of the marketplace and competitive
product offerings.

In the fourth quarter of 1997, the Company released a new version of its
service which currently features 15 "channels," designed to bring together
topical information, services, products and communities on the Web. The new
service provides additional opportunities for revenue from the sale of channel
sponsorships as well as provides an opportuntiy for the Company to share in a
portion of the revenue facilitated by its viewers with these channel sponsors.
Continued market acceptance of this new version and successful conclusion of
sponsorship arrangements are integral to the Company's competitiveness and
viability. Most of the Company's additional channel sponsorship and
partnership arrangements are dependent on an increasing level of viewer
traffic. If the Company is unable to renew its relationship with Netscape, or
if viewer traffic is otherwise materially adversely affected, the Company may
be unable to retain its channel sponsorship and partnership arrangements. In
addition, there can be no assurance that this new sponsorship service or any
other new or proposed product or service will attain market acceptance,
experience technological sustainability or be free of errors that require
significant design modifications or that the business model to generate
revenues will be successful. Failure of the Company to successfully design,
develop, test, market and introduce other new and enhanced technologies and
services, or any enhancements of the Company's current search technology, or
the failure of the Company's recently introduced products and services to
achieve market acceptance could have a material adverse effect upon the
Company's business, results of operations, financial condition and prospects.
Due to rapid technological change, changing customer needs, frequent new
product and service introductions and evolving industry standards, timeliness
of introduction of these new products and services is critical. Delays in the
introduction of new products and services may result in customer
dissatisfaction and may delay or cause a loss of advertising revenue. There
can be no assurance that the Company will be successful in developing new
products or services or improving existing products and services that respond
to technological changes or evolving industry standards, that the Company will
not experience difficulties that could delay or prevent the successful
development, introduction and marketing of new or improved products and
services, or that its new products and services will adequately meet the
requirements of the marketplace and achieve market acceptance. If the Company
is unable to develop and introduce new or improved products or services in a
timely manner in response to changing market conditions or customer
requirements, the Company's business, results of operations, financial
condition and prospects could be materially adversely affected.

MANAGEMENT OF GROWTH

The Company has recently experienced and may continue to experience rapid
growth, which has placed, and could continue to place, a significant strain on
the Company's limited personnel and other resources. Competition for
engineering, sales and marketing personnel is intense, and there can be no
assurance that the Company will be successful in attracting and retaining such
personnel or that the Company will be able to manage such growth effectively.
To succeed, the Company will need to continue to implement and improve its
operational, financial and management information systems and to hire, train,
motivate and manage its employees. In particular, the Company has experienced
difficulty in hiring and retaining the personnel necessary to support the
growth of the Company's business. The failure of the Company to successfully
manage any of these issues would have a material adverse effect on the
Company's business, results of operations, financial condition and prospects.
The Company's ability to manage its growth will require a significant
investment in and upgrade to its existing internal management information
systems to support increased accounting and other management related
functions, and a new advertising inventory management analysis system to
provide enhanced internal reporting and customer feedback on advertising.
These system upgrades and replacements will impact almost all phases of the
Company's operations (i.e. planning, advertising implementation and
management, finance and accounting). These systems are currently scheduled to
become operational by the second half of 1998. There can be no assurance that
the Company will not experience problems, delays or unanticipated additional
costs in implementing these systems or in the use of its existing system that
could have a material adverse effect on the Company's business, results of
operations, financial condition and prospects, particularly in the period or
periods in which these systems are brought online.

9
<PAGE>

ACQUISITION STRATEGY

The Company believes that, although it currently has no specific plans to do
so, it may be necessary to enter into joint ventures or other strategic
relationships or make acquisitions of complementary products, technologies or
businesses in order to remain competitive. The failure of the Company to
execute such a strategy may lead to decreased market share, viewer traffic or
brand loyalty, which may have a material adverse effect on the Company's
business, results of operations, financial condition and prospects. In
addition, acquisition transactions are accompanied by a number of risks,
including, among other things, the difficulty of integrating the operations
and personnel of the acquired companies, the potential disruption of the
Company's ongoing business, the inability of management to maximize the
financial and strategic position of the Company through the successful
incorporation of acquired technology or content and rights into the Company's
products and media properties, expenses associated with the transactions,
additional expenses associated with amortization of acquired intangible
assets, the maintenance of uniform standards, controls, procedures and
policies, the impairment of relationships with employees and customers as a
result of any integration of new management personnel, and the potential
unknown liabilities associated with acquired businesses. There can be no
assurance that the Company would be successful in overcoming these risks or
any other problems encountered in connection with such acquisitions.

CAPACITY CONSTRAINTS AND SYSTEM FAILURE; ADVERTISING MANAGEMENT SYSTEM

A key element of the Company's strategy is to generate a high volume of
traffic to its products and services. Accordingly, the performance of the
Company's products and services is critical to the Company's reputation, its
ability to attract advertisers to the Company's Web sites and market
acceptance of these products and services. Any system failure that causes
interruptions or that increases response time of the Company's products and
services would result in less traffic to the Company's Web sites and, if
sustained or repeated, would reduce the attractiveness of the Company's
products and services to advertisers and customers. In addition, an increase
in the volume of searches conducted through the Company's products and
services could strain the capacity of the software, hardware or
telecommunications lines deployed by the Company, which could lead to slower
response time or system failures. If traffic to the Company's Web site
continues to increase, there can be no assurance that the Company's products,
services and systems will be able to scale appropriately. The Company is also
dependent upon Web browser companies and Internet and online service providers
for access to its products and services, and viewers have experienced and may
in the future experience difficulties due to system or software failures or
incompatibilities not within the Company's control. The Company is also
dependent on hardware suppliers for prompt delivery, installation and service
of servers and other equipment and services used to provide its products and
services. Any disruption in the Internet access and service provided by the
Company or its service providers could have a material adverse effect upon the
Company's business, results of operations, financial condition and prospects.

The process of managing advertising within large, high traffic Web sites
such as the Company's is an increasingly important and complex task. The
Company is in the process of evaluating the conversion from an internally
developed advertising inventory management analysis system to provide enhanced
internal reporting and customer feedback on advertising to a system being
developed by NetGravity. The Company currently anticipates that this new
advertising management system will be installed and become operational in the
second half of 1998. To the extent that the Company encounters material
difficulties in bringing, or is unable to bring, this new system online, the
Company will need to acquire an alternative solution from a third party vendor
or devote sufficient resources to enhance its current internally developed
system. Any extended failure of, or material difficulties encountered in
connection with, the Company's advertising management system may expose the
Company to "make good" obligations with its advertising customers, which, by
displacing advertising inventory among other consequences, would reduce
revenue and would have a material adverse effect on the Company's business,
results of operations, financial condition and prospects.

In addition, the Company's operation depends upon its ability to maintain
and protect its computer systems, all of which are located at the Company's
principal offices in Sunnyvale, California. This system is vulnerable to
damage from fire, floods, earthquakes, power loss, telecommunications
failures, break-ins and similar events. The Company does not currently have a
disaster recovery plan in effect and does not have redundant systems for its

10
<PAGE>

service at an alternate site. Despite the implementation of network security
measures by the Company, its servers are also vulnerable to computer viruses,
break-ins and similar disruptive problems. Computer viruses, break-ins or
other problems caused by third parties could lead to interruptions, delays in
or temporary cessation of service to users of the Company's products and
services. The occurrence of any of these events would have a material adverse
effect on the Company's business, results of operations, financial condition
and prospects.

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING

The Company currently anticipates that the net proceeds of this offering
together with its cash, cash equivalents, short-term investments, available
funds under its equipment term loan facility and cash flows generated from
advertising revenues, will be sufficient to meet its anticipated needs for
working capital and other cash requirements through at least December 31,
1998. Thereafter, the Company may need to raise additional funds. The Company
may need to raise additional funds sooner, however, in order 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 additional funds are raised through the
issuance of equity or convertible debt securities, the percentage ownership of
the shareholders of the Company will be reduced, shareholders may experience
additional dilution and such securities may have rights, preferences or
privileges senior to those of the holders of the Company's Common Stock. There
can be no assurance that additional financing will be available on terms
favorable to the Company, or at all. If adequate funds are not available or
are not available on acceptable terms, the Company's ability to fund its
expansion, take advantage of unanticipated acquisition opportunities, develop
or enhance services or products or respond to competitive pressures would be
significantly limited. Such limitation could have a material adverse effect on
the Company's business, results of operations, financial condition and
prospects. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."

RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION

As part of its business strategy, the Company has begun to seek additional
opportunities to expand its products and services into international markets.
The Company believes that such expansion is important to the Company's ability
to continue to grow and to market its products and services. In marketing its
products and services internationally, however, the Company faces new
competitors. In addition, the Company's success in entering international
markets is dependent upon the Company's ability to create localized versions
of its products and services. There can be no assurance that the Company will
be successful in creating localized versions of its products and services or
marketing or distributing its products abroad or that, if the Company is
successful, its international revenues will be adequate to offset the expense
of establishing and maintaining international operations. To date, the Company
has limited experience in marketing and distributing its products and services
internationally. In addition to the uncertainty as to the Company's ability to
establish an international presence, there are certain difficulties and risks
inherent in doing business on an international level, such as compliance with
regulatory requirements and changes in these requirements, export
restrictions, export controls relating to technology, tariffs and other trade
barriers, protection of intellectual property rights, difficulties in staffing
and managing international operations, longer payment cycles, problems in
collecting accounts receivable, political instability, fluctuations in
currency exchange rates and potentially adverse tax consequences. There can be
no assurance that one or more of such factors would not have a material
adverse effect on any international operations established by the Company and,
consequently, on the Company's business, results of operations, financial
condition and prospects.

DEPENDENCE ON KEY PERSONNEL; NEW MEMBERS OF THE EXECUTIVE MANAGEMENT TEAM

The Company has recently experienced significant changes to its executive
management team. Those who have recently joined the executive management team
include Harry Motro, President and Chief Executive Officer; Beth Haggerty,
Vice President of Worldwide Sales; Barak Berkowitz, Vice President of
Marketing; and Leslie Wright, Vice President Finance and Chief Financial
Officer. There can be no assurance that the new members of the Company's
management team will work effectively together with the rest of the Company's
executive management. In addition, the Company has recently hired, and plans
to continue to hire, a number of engineers to design and implement
improvements to the integration of content with its search engine technology,

11
<PAGE>

which the Company believes will be a significant factor in its future ability
to compete favorably with other navigational guides. The Company's future
performance depends in significant part upon the contributions of its senior
management personnel, including its Chairman Steven Kirsch, who is integrally
involved in the Company's research and development efforts. Although the
Company provides incentives such as salary, benefits and option grants (which
are typically subject to vesting over four years) to attract and retain
qualified employees, the loss of services of any of the Company's officers or
other key employees would have a material adverse effect on the Company's
business, results of operations, financial condition and prospects.

VOLATILITY OF STOCK PRICE

The price of the Company's Common Stock has been and may continue to be
subject to wide fluctuations in response to a number of events and factors
such as quarterly variations in results of operations, announcements of new
technological innovations or new products and media properties by the Company
or its competitors, changes in financial estimates and recommendations by
securities analysts, the operating and stock price performance of other
companies that investors may deem comparable to the Company, and news relating
to trends in the Company's markets. In addition, the stock market in general,
and the market prices for Internet-related companies in particular, have
experienced extreme volatility that often has been unrelated to the operating
performance of such companies. These broad market and industry fluctuations
may adversely affect the price of the Company's Common Stock, regardless of
the Company's operating performance.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

The Company's success depends significantly upon its proprietary technology.
The Company currently relies on a combination of copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company seeks to protect its software,
documentation and other written materials under trade secret, patent and
copyright laws, which afford only limited protection. The Company holds one
patent and currently has 12 United States patent applications pending and five
foreign patent applications pending. There can be no assurance that the
pending applications will be approved, or that if issued, such patents will
not be challenged, and if such challenges are brought, that such patents will
not be invalidated. There can be no assurance that the Company will develop
proprietary products or technologies that are patentable, that any issued
patent will provide the Company with any competitive advantages or will not be
challenged by third parties, or that the patents of others will not have a
material adverse effect on the Company's ability to do business. The Company
has registered and applied for registration for certain service marks and
trademarks, and will continue to evaluate the registration of additional
service marks and trademarks, as appropriate. The Company generally enters
into confidentiality agreements with its employees and with its consultants
and customers. Litigation may be necessary to protect the Company's
proprietary technology. Any such litigation may be time-consuming and costly.
Despite the Company's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy aspects of the Company's products or services or
to obtain and use information that the Company regards as proprietary. In
addition, the laws of some foreign countries do not protect proprietary rights
to as great an extent as do the laws of the United States. There can be no
assurance that the Company's means of protecting its proprietary rights will
be adequate or that the Company's competitors will not independently develop
similar technology or duplicate the Company's products or design around
patents issued to the Company or other intellectual property rights of the
Company.

There have been substantial amounts of litigation in the computer industry
regarding intellectual property rights. There can be no assurance that third
parties will not in the future claim infringement by the Company with respect
to current or future products, trademarks or other proprietary rights, that
the Company will counterclaim against any such parties in such actions or that
if the Company makes claims against third parties with respect thereto, that
any such party will not counterclaim against the Company in such actions. Any
such claims or counterclaims could be time-consuming, result in costly
litigation, cause product release delays, require the Company to redesign its
products or require the Company to enter into royalty or licensing agreements,
any of which could have a material adverse effect upon the Company's business,
results of operations, financial condition and prospects. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
the Company or at all.

12
<PAGE>

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

The Company is not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses, and there are
currently few laws or regulations directly applicable to access to or commerce
on the Internet. A number of legislative and regulatory proposals are under
consideration by federal, state and foreign governmental organizations, and it
is possible that a number of laws or regulations may be adopted with respect
to the Internet covering issues such as user privacy, pricing and
characteristics and quality of products and services. The adoption of any such
laws or regulations may decrease the growth of the Internet, which could in
turn decrease the demand for the Company's products, increase the Company's
cost of doing business, or otherwise have an adverse effect on the Company's
business, results of operations, financial condition and prospects. Moreover,
the applicability to the Internet of existing laws governing issues such as
property ownership, copyright, trade secret, libel and personal privacy is
uncertain and developing. Any such new legislation or regulation, or
application or interpretation of existing laws, could have a material adverse
effect on the Company's business, results of operations, financial condition
and prospects.

Because materials may be downloaded by the online or Internet services
operated or facilitated by the Company and may be subsequently distributed to
others, there is a potential that claims will be made against the Company for
defamation, negligence, copyright or trademark infringement, personal injury
or other theories based on the nature, content, publication and distribution
of such materials. Such claims have been brought, and sometimes successfully
pressed, against online service providers in the past. In addition, the
Company could be exposed to liability with respect to the selection of
listings that may be accessible through content and materials that may appear
in chat room, instant messaging or other services offered by the Company. Such
claims might include, among others, that by providing hypertext links to Web
sites operated by third parties, the Company is liable for copyright or
trademark infringement or other wrongful actions by such third parties through
such Web sites. It is also possible that if any information provided through
the Company's services, such as stock quotes, analyst estimates or other
trading information, contains errors, third parties could make claims against
the Company for losses incurred in reliance on such information. The Company
expects to offer Web-based e-mail services in the near future, which may
expose the Company to potential risks, such as liabilities or claims resulting
from unsolicited e-mail (spamming), lost or misdirected messages, illegal or
fraudulent use of e-mail, harassment or interruptions or delays in e-mail
service.

From time to time, the Company enters into agreements with sponsors, content
providers, service providers and merchants under which the Company is entitled
to receive a share of revenue from the purchase of goods and services by users
of the Company's online properties. Such arrangements may expose the Company
to additional legal risks and uncertainties, including (without limitation)
potential liabilities to consumers of such products and services. Although the
Company carries general liability insurance, the Company's insurance may not
cover potential claims of this type or may not be adequate to indemnify the
Company for all liability that may be imposed.

YEAR 2000 COMPLIANCE

The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "year 2000 problem"
is pervasive and complex as virtually every computer operation will be
affected in some way by the rollover of the two digit year value to 00. The
issue is whether computer systems will properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. Management is in the process of working with its software vendors to
assure that the Company is prepared for the year 2000. Management does not
anticipate that the Company will incur significant operating expenses or be
required to invest heavily in computer systems improvements to be year 2000
compliant. However, significant uncertainty exists concerning the potential
costs and effects associated with any year 2000 compliance. The Company is
currently implementing an upgrade to its management information system that
the Company believes is year 2000 compliant. Any year 2000 compliance problem
of either the Company or its viewers, Ultraseek Server customers or
advertisers could materially adversely affect the Company's business, results
of operations, financial condition and prospects.

13
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock are estimated to be $37,432,500 ($43,114,875 if the Underwriters'
over allotment option is exercised in full), after deducting the estimated
underwriting discounts and commissions and the estimated offering expenses
payable by the Company. The Company expects that the net proceeds received by
it will be used for general corporate purposes, including expansion of its
sales and marketing efforts, and capital expenditures, primarily for computer
equipment. The Company may also use a portion of the proceeds for the
acquisition of complementary businesses, services or product lines, although
no particular acquisition is currently being negotiated or is contemplated.
The balance of the net proceeds will be used for other general corporate
purposes, including working capital requirements. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources." Pending such uses, the Company will invest the net
proceeds in short-term, interest-bearing securities.

DIVIDEND POLICY

The Company has never paid cash dividends on its Common Stock and does not
anticipate paying any cash dividends in the foreseeable future. The Company's
equipment term loan facility restricts the payment of dividends when
borrowings are outstanding.

14
<PAGE>

PRICE RANGE OF COMMON STOCK

The Company's Common Stock has been traded on the Nasdaq National Market
under the symbol "SEEK" since June 11, 1996, the date of the Company's initial
public offering. The following table sets forth, for the periods indicated,
the high and low closing sale prices for the Common Stock as reported by the
Nasdaq National Market:

<TABLE>
<CAPTION>
HIGH LOW
-------- ---------
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1996:
Second Quarter (from June 11, 1996)................... $14 1/4 $ 9 1/2
Third Quarter......................................... 9 5/8 5 3/4
Fourth Quarter........................................ 10 3/4 7 3/4
FISCAL YEAR ENDED DECEMBER 31, 1997:
First Quarter......................................... $10 3/4 $ 6 1/4
Second Quarter........................................ 8 4 1/2
Third Quarter......................................... 9 9/32 4 11/16
Fourth Quarter........................................ 13 3/4 8
FISCAL YEAR ENDING DECEMBER 31, 1998:
First Quarter (through February 12, 1998)............. $13 7/16 $10
</TABLE>

On February 12, 1998, the last reported sale price for the Common Stock on
the Nasdaq National Market was $13 7/16 per share. As of January 26, 1998, the
Company estimates that there were approximately 221 holders of record and over
400 beneficial owners of the Common Stock.

15
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company at December
31, 1997, (i) on an actual basis, and (ii) as adjusted to give effect to the
sale of the 3,000,000 shares of Common Stock offered by the Company hereby and
after deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by the Company.

<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Long-term obligations..................................... $ 4,329 $4,329
Shareholders' equity:
Preferred Stock, no par value; 5,000,000 shares
authorized; no shares issued and outstanding, actual;
no shares issued and outstanding, as adjusted.......... -- --
Common Stock(1), no par value; 60,000,000 shares
authorized; 27,244,000 shares issued and outstanding,
actual; 30,244,000 shares issued and outstanding, as
adjusted............................................... 73,565 110,998
Accumulated deficit..................................... (45,394) (45,394)
Deferred compensation................................... (753) (753)
Notes receivable from shareholders...................... (150) (150)
------- -------
Total shareholders' equity............................ 27,268 64,701
------- -------
Total capitalization.................................. $31,597 $69,030
======= =======
</TABLE>
- --------
(1) Based on the number of shares of Common Stock outstanding as of December
31, 1997. Outstanding Common Stock as of December 31, 1997 does not
include: (i) 5,716,000 shares of Common Stock available for issuance
pursuant to the Company's 1996 Stock Option/Stock Issuance Plan, of which
4,121,000 shares were subject to outstanding stock options as of December
31, 1997 at a weighted-average exercise price of $4.92 per share and (ii)
143,000 shares of Common Stock available for issuance pursuant to the
Company's 1996 Employee Stock Purchase Plan.

16
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data are derived from the financial
statements of Infoseek Corporation which have been audited by Ernst & Young
LLP, independent auditors. The data should be read in conjunction with the
financial statements, related notes thereto and other financial information
included or incorporated by reference herein.

<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 30,
1993
(INCEPTION) TO YEARS ENDED DECEMBER 31,
DECEMBER 31, ------------------------------------
1993 1994 1995 1996 1997
-------------- ------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Total revenues............ $ -- $ -- $ 1,032 $ 15,095 $ 34,603
Cost of revenues.......... -- -- 614 3,194 6,100
------ ------- ------- -------- --------
Gross profit.............. -- -- 418 11,901 28,503
Operating expenses:
Research and
development............. 8 1,063 1,175 4,550 7,327
Sales and marketing...... -- 97 1,488 20,455 33,364
General and
administrative.......... 19 360 1,148 4,177 6,406
Restructuring and other
charges (1)............. -- -- -- -- 7,349
------ ------- ------- -------- --------
Total operating
expenses.............. 27 1,520 3,811 29,182 54,446
------ ------- ------- -------- --------
Operating loss............ (27) (1,520) (3,393) (17,281) (25,943)
Interest income (expense),
net...................... -- 10 97 1,343 1,320
------ ------- ------- -------- --------
Net loss.................. $ (27) $(1,510) $(3,296) $(15,938) $(24,623)
====== ======= ======= ======== ========
Basic and diluted net loss
per share (2)............ $ (0.13) $ (0.73) $ (0.93)
======= ======== ========
Shares used in computing
basic and diluted net
loss per share........... 25,863 21,737 26,610
<CAPTION>
DECEMBER 31,
---------------------------------------------------
1993 1994 1995 1996 1997
-------------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEETS DATA:
Cash, cash equivalents and
short-term investments... $ 177 $ 568 $ 1,626 $ 46,653 $ 31,334
Working capital (deficit). (99) 458 93 41,997 19,321
Total assets.............. 318 859 5,123 58,332 51,154
Long-term obligations..... -- 210 838 1,892 4,329
Total shareholders'
equity................... $ 27 $ 520 $ 2,142 $ 48,985 $ 27,268
</TABLE>
- --------
(1) During the second quarter of 1997, the Company took a restructuring charge
of approximately $7,400,000 related to the discontinuance of certain
business arrangements that were determined to be non-strategic and to
management changes. See Note 5 of Notes to Financial Statements.
(2) The earnings per share amounts prior to 1997 have been restated as
required to comply with Statement of Financial Accounting Standards No.
128, Earnings Per Share. See Notes 1 and 12 of Notes to Financial
Statements for an explanation of the method used to determine the number
of shares used in computing basic diluted net loss per share.

17
<PAGE>

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

This Management's Discussion and Analysis of Financial Condition and Results
of Operations contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of the factors set
forth in "Risk Factors." In particular, note the factors entitled "Limited
Operating History; Historical Losses; Anticipation of Continued Losses,"
"Potential Fluctuations in Future Results," "Reliance on Advertising
Revenues," "Intense Competition," "Relationship With Netscape," "Capacity
Constraints and System Failure; Advertising Management System" and
"Technological Change and New Products and Services." The discussion of those
factors is incorporated herein by this reference as if said discussion was
fully set forth at this point.

OVERVIEW

Infoseek was formed in August 1993 to develop and provide Internet and World
Wide Web search and navigational services. From inception to March 31, 1995,
the Company's operations were limited and consisted primarily of start-up
activities, including recruiting personnel, raising capital, research and
development, and the negotiation and execution of an agreement to license an
information retrieval search engine.

The Company introduced its first products and services in 1995. Through the
second quarter of 1997, the Company's strategic focus was on developing its
capabilities as an Internet search and navigation service. In response to
rapid growth and a change in the Internet search and navigation market, the
Company's Board of Directors, in the second quarter of 1997, hired a new Chief
Executive Officer, Harry Motro, to evolve the strategic vision of the Company
while continuing to leverage the Company's core strength in search and
navigation. Mr. Motro and Founder Steven Kirsch recruited a number of new
members to the executive management team to execute the Company's strategy of
building Infoseek brand awareness; creating a richer viewer experience;
maximizing value for the Company's advertisers; providing intranet search
products; and enhancing Infoseek's search and navigation service. In June
1997, the Company took a restructuring charge of approximately $7,400,000
related to the discontinuance of certain non-strategic business arrangements
and management changes.

In October 1997, the Company launched an enhanced version of the Infoseek
Service, with 15 easy to navigate "channels" that integrate search results
with relevant information, services, products and communities on the Web. The
new Infoseek Service provides the Company with a platform for creating content
and marketing partnerships that enrich the viewer's experience while enabling
advertisers, sponsors and partners to more effectively target viewers.

Since inception, the Company has achieved significant growth in traffic and
revenues. The Company's 1997 revenues of approximately $34,600,000 represents
a 129% increase as compared to 1996 revenues of approximately $15,100,000. The
Company's average daily page views increased 190% in the fourth quarter of
1997 as compared to the fourth quarter of 1996 and averaged 12.5 million for
the fourth quarter of 1997. During 1997, 1996 and 1995, the Company derived a
substantial majority of its revenues from the sale of advertisements on its
Web pages. During these periods, advertising revenues accounted for
approximately 94%, 99% and 82%, respectively, of total revenues. Most of the
Company's contracts with advertising customers have terms of three months or
less, with options to cancel at any time.

Beginning with the October 1997 launch of the enhanced version of the
Infoseek Service, the Company began to sell channel sponsorships to
advertisers, sponsors and partners. In the fourth quarter of 1997, the Company
entered into eight different sponsor and partnership agreements covering
certain topics within five of the Company's 15 channels, including an
exclusive relationship with Borders OnLine for the sale of books. The duration
of the Company's sponsorship and partnership agreements range from two months
to two years and revenues are generally recognized ratably over the term of
the agreements, provided that minimum impressions are met, and are included in
advertising revenues.

Beginning in early 1997, the Company began to license its Ultraseek Server
product to corporate customers for use on their intranets and public Web
sites. Such licensing revenues represented approximately 6% of total revenues
for the year.

18
<PAGE>

The Company's significant growth and limited operating history in a rapidly
evolving industry makes it difficult to manage operations and predict future
operating results. The Company has incurred significant net losses since
inception and expects to continue to incur significant losses on a quarterly
and annual basis in 1998 and may do so in subsequent fiscal periods. As of
December 31, 1997, the Company had an accumulated deficit of $45,394,000. The
Company and its prospects must be considered in light of the risks, costs and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in the new and rapidly evolving Internet
market. There can be no assurance that the Company will be able to address any
of these challenges. Although the Company has experienced significant revenue
growth in 1997, there can be no assurance that this growth rate will be
sustained or that revenues will continue to grow or that the Company will
achieve profitability. In 1997, the Company significantly increased its
operating expenses as a result of a substantial increase in its sales and
marketing operation, development of new distribution channels, broadening of
its customer support capabilities and funding of greater levels of research
and development. Further increases in operating expenses are planned during
fiscal 1998. To the extent that any such expenses are not timely followed by
increased revenues, the Company's business, results of operations, financial
condition and prospects would be materially adversely affected.

As a result of the Company's limited operating history as well as the recent
emergence of both the Internet and intranet markets addressed by the Company,
the Company has neither internal nor industry-based historical financial data
for any significant period of time upon which to project revenues or base
planned operating expenses. The Company expects that its results of operations
may also fluctuate significantly in the future as a result of a variety of
factors, including: the continued rate of growth, usage and acceptance of the
Internet and intranets as information media; the rate of acceptance of the
Internet as an advertising medium and a channel of commerce; demand for the
Company's products and services; the advertising budgeting cycles of
individual advertisers; the introduction and acceptance of new, enhanced or
alternative products or services by the Company or by its competitors; the
Company's ability to anticipate and effectively adapt to a developing market
and to rapidly changing technologies; the Company's ability to attract, retain
and motivate qualified personnel; initiation, implementation, renewal or
expiration of significant contracts with Bell Atlantic, Borders OnLine,
Microsoft, Netscape and others; pricing changes by the Company or its
competitors; specific economic conditions in the Internet and intranet
markets; general economic conditions; and other factors. Substantially all of
the Company's revenues have been generated from the sale of advertising, and
the Company expects to continue to derive substantially all of its revenues
from selling advertising and related products for the foreseeable future.
Moreover, most of the Company's contracts with advertising customers have
terms of three months or less. Advertising revenues are tightly related to the
amount of traffic on the Company's Web site, which is inherently
unpredictable. Accordingly, future sales and operating results are difficult
to forecast. The Company's expense levels are based, in part, on its
expectations as to future revenues and, to a significant extent, are not
expected to decrease, at least in the short term. The Company may not be able
to adjust spending in a timely manner to compensate for any future revenue
shortfall. Accordingly, any significant shortfall in relation to the Company's
expectations would have an immediate material adverse impact on the Company's
business, results of operations, financial condition and prospects.

In addition, the Company may elect from time to time to make certain
pricing, service or marketing decisions or acquisitions that could have a
short-term material adverse effect on the Company's business, results of
operations, financial condition and prospects and which may not generate the
long-term benefits intended. From time to time, the Company has entered into
and may continue to enter into strategic relationships with companies for
cross service advertising, such as the Company's relationships with Bell
Atlantic and UPS. The Company's revenues have in the past been, and may in the
future continue to be partially dependent on its relationship with its
strategic partners. Such strategic relationships have and may continue to
include substantial one-time or up front payments from the Company's partners.
Accordingly, the Company believes that its quarterly revenues are likely to
vary significantly in the future, that period-to-period comparisons are not
necessarily meaningful and that such comparisons should not necessarily be
relied upon as an indication of the Company's future performance. Due to the
foregoing factors, it is likely that in future periods, the Company's
operating results may be below the expectations of public market analysts and
investors. In such event, the price of the Company's Common Stock would likely
be materially adversely affected. See "Risk Factors--Limited

19
<PAGE>

Operating History; Historical Losses; Anticipation of Continued Losses," "--
Potential Fluctuations in Future Results," "--Relationship With Netscape" and
"--Developing Market; Unproven Acceptance of Internet Advertising and of the
Company's Products and Services."

RESULTS OF OPERATIONS

Total Revenue

For the years ended December 31, 1997, 1996 and 1995 total revenues were
$34,603,000, $15,095,000 and $1,032,000, respectively.

During 1997, 1996 and 1995 the Company derived a substantial majority of its
revenues from the sale of advertisements on its Web pages. Advertising
revenues in 1997, 1996 and 1995 were $32,462,000, $14,951,000 and $849,000,
respectively, representing 94%, 99% and 82% of total revenues in such periods.
The growth in advertising revenues since 1995 is attributable to the increased
use of the Internet for information publication, distribution and commerce
coupled with the development and acceptance of the Internet as an advertising
medium and increased viewer traffic on the Infoseek Service. The Company
expects to continue to derive a substantial majority of its revenues for the
foreseeable future from selling advertising space on its Web sites.
Advertising revenues are derived principally from short-term advertising
contracts in which the Company guarantees a minimum number of impressions
(displays of an advertisement to the viewer) for a fixed fee. Advertising
revenues are recognized ratably over the term of the contract during which
services are provided and are stated net of customer discounts. To the extent
minimum guaranteed impressions are not met, the Company defers recognition of
the corresponding revenue until the remaining guaranteed impression levels are
achieved. Deferred revenue is comprised of billings in excess of recognized
revenue related to advertising contracts.

Also included in advertising revenues is the exchange by the Company of
advertising space on the Company's Web sites for reciprocal advertising space
or traffic in other media publications or other Web sites or receipt of
applicable goods and services. Revenues from these exchange transactions are
recorded as advertising revenues at the estimated fair value of the goods and
services received and are recognized when both the Company's advertisements
and reciprocal advertisements are run or applicable goods or services are
received. Although such revenues have not exceeded 10% of total revenues in
any period to date, the Company believes these exchange transactions are of
value, particularly in the marketing of the Infoseek brand, and expects to
continue to engage in these transactions in the future.

In late 1997, the Company released a new version of its service which
features 15 "channels," designed to bring together topical information,
services, products and communities on the Web. The new service provides
additional opportunities for revenue from the sale of channel sponsorships and
in some circumstances enables the Company to share in a portion of the revenue
generated by its viewers with these channel sponsors. Revenue generated by
channel sponsors is included in advertising revenues and is recognized on a
straight line basis over the terms of the agreements provided that minimum
impressions are met.

In 1997, the balance of total revenues was derived from the licensing of the
Ultraseek Server product to businesses for internal use in their intranets,
extranets or public sites. Licensing of the Ultraseek Server commenced in
early 1997 and represented approximately 6% of total revenues for the year. In
1996 and 1995, the balance of the total revenues were derived from
subscription fees for a premium service offered to business and professional
viewers, which was discontinued during the third quarter of 1996.

The Company's current business model is to generate revenues through the
sale of advertising on the Internet. There can be no assurance that current
advertisers will continue to purchase advertising space and services from the
Company or that the Company will be able to successfully attract additional
advertisers.

20
<PAGE>

Cost of Revenues

For the years ended December 31, 1997, 1996 and 1995, cost of revenues were
$6,100,000, $3,194,000 and $614,000, respectively. Cost of revenues consists
primarily of expenses associated with the enhancement, maintenance and support
of the Company's Web sites, including telecommunications costs and equipment
depreciation. Cost of revenues also includes expenses associated with the
licensing of certain third-party technologies. Cost of revenues increased in
1997 and 1996 as the Company added additional equipment and personnel to
support its Web sites and as royalties due to certain third parties increased.
The Company expects its cost of revenues will continue to increase in absolute
dollars and possibly as a percentage of revenues as it upgrades equipment and
maintenance and support personnel and adds content partners to meet the
growing demands for Web services.

Operating Expenses

The Company's operating expenses have increased in absolute dollars during
1997, 1996 and 1995 as the Company has transitioned from the product
development stage to the marketing of its services and products and expansion
of its business. The Company expects operating expenses to continue to
increase in dollar amount in the future as the Company continues to expand its
business.

The Company recorded aggregate deferred compensation of $5,666,000 in
connection with certain stock options granted through 1997. The amortization
of such deferred compensation is being charged to operations over the vesting
periods of the options, which are typically four years. For the years ended
December 31, 1997, 1996 and 1995, the Company amortized $832,000 and
$1,346,000 and $44,000, respectively, related to stock options. At December
31, 1997, unamortized deferred compensation totaled $753,000. The amortization
of this deferred compensation will continue to have an adverse effect on the
Company's results of operations through 1999. See Note 7 of Notes to Financial
Statements.

Research and Development

For the years ended December 31, 1997, 1996 and 1995 research and
development expenses were $7,327,000, $4,550,000 and $1,175,000, respectively.
Research and development expenses consist principally of personnel costs,
consulting and equipment depreciation. Costs related to research, design and
development of products and services have been charged to research and
development expense as incurred. See Note 1 of Notes to Financial Statements.

The increase in research and development expenses for 1997 and 1996 over
1995 was primarily the result of on-going enhancements to the Infoseek Service
and the development and implementation of new technology and products.
Ultraseek, the Company's core search engine, was released in November 1996 and
the Ultramatch technology and channel products, were commercially released
during the second and fourth quarter of 1997, respectively. The Company
believes that a significant level of product development expenses is required
to continue to remain competitive in its industry. Accordingly, the Company
anticipates that it will continue to devote substantial resources to product
development and that these costs are expected to continue to increase in
dollar amount in future periods.

Sales and Marketing

For the years ended December 31, 1997, 1996 and 1995 sales and marketing
expenses were $33,364,000, $20,455,000 and $1,488,000, respectively. Sales and
marketing expenses consist primarily of compensation of sales and marketing
personnel, advertising and promotional expenses.

Sales and marketing expenses for the years ended December 31, 1997 and 1996
included payments made to Netscape pursuant to an arrangement for the listing
of the Company's service on the Netscape Web page. The

21
<PAGE>

original agreement with Netscape provided for payments of up to an aggregate
of $5,000,000 in cash and reciprocal advertising ($3,500,000 in cash and
$1,500,000 in reciprocal advertising) over the course of the one-year term of
the agreement. The current agreement with Netscape provides for the Company to
pay an aggregate of $12,500,000 in cash and reciprocal advertising
($10,000,000 in cash and $2,500,000 in reciprocal advertising) to be one of
four non-exclusive premier providers of navigational services (along with
Excite, Lycos and Yahoo!) and expires on April 30, 1998. During the years
ended December 31, 1997 and 1996, the Company recognized $9,583,000 and
$3,750,000, respectively, of expense related to this agreement. The payments
to Netscape are being recognized ratably over the term of the agreement. At
December 31, 1997, the Company has approximately $7,555,000 of cash commitment
remaining in connection with this agreement, which includes $4,221,000 of
accrued liabilities to service providers.

Although the Company is currently in discussions with Netscape about
renewing the agreement, there can be no assurance that Netscape will be
willing to renew the agreement on commercially equivalent terms or on other
terms that may be satisfactory to the Company. The failure to renew the
Netscape agreement would result, at least in the short term, in a material
reduction in traffic to the Infoseek Web site. This could, in turn, result in
advertisers on the Company's Web sites, including channel sponsors,
terminating their contracts with the Company as such contracts are typically
of short duration and terminable on relatively short notice, reducing the
number of impressions purchased. Furthermore, the Company's contracts with
advertisers generally guarantee a minimum number of page views, and a failure
to achieve the minimum page views could result in a reduction in payments to
the Company or compel the Company to provide "make good" impressions if such
minimums are not met. If the Company is unable to develop viable alternative
distribution channels to Netscape or is otherwise unable to offset a reduction
in traffic, advertising revenues would be substantially adversely affected,
resulting in the Company's business, results of operations, financial
condition and prospects being materially and adversely affected. See "Risk
Factors--Relationship With Netscape."

In addition, in July 1997, the Company entered into an agreement with
Netscape whereby it was designated as a premier provider of international
search and navigational guide services for the Netscape Net Search Program,
for 10 Netscape local Web sites. The Company's agreement with Netscape
provides for payments of up to a maximum aggregate of $1,219,000 in cash and
reciprocal advertising over the one-year term of the agreement. During the
year ended December 31, 1997, Netscape delivered at the minimum exposure level
and the Company as a result recognized sales and marketing expenses of
approximately $333,000 under this agreement as a component of sales and
marketing expense. See Note 4 of Notes to Financial Statements.

In addition, the increase in sales and marketing expenses for the year ended
1997 and 1996 was also the result of hiring additional sales and marketing
personnel and an increase in promotional and advertising activity including
advertising campaigns in both 1997 and 1996, including television. The Company
expects to increase the amount of promotional and advertising expenses and
anticipates hiring additional sales representatives in 1998 and future
periods.

General and Administrative

For the years ended December 31, 1997, 1996 and 1995 general and
administrative expenses were $6,406,000, $4,177,000 and $1,148,000,
respectively. General and administrative expenses consist primarily of
compensation of administrative and executive personnel, facility costs and
fees for professional services.

The increase in general and administrative expenses for the years ended 1997
and 1996 was the result of hiring additional administrative and executive
staff and adding infrastructure to manage the expansion of the business. The
Company anticipates that its general and administrative expenses will continue
to increase in dollar amount as the Company continues to expand its
administrative and executive staff.

22
<PAGE>

Restructuring and Other Charges

During the second quarter of 1997, the Company recorded restructuring and
other charges of approximately $7,400,000, of which approximately $6,200,000
related to the discontinuance of certain business arrangements which were
determined to be non-strategic, and approximately $1,200,000 related to
management changes. Of these restructuring charges, approximately $5,000,000
involved cash outflows, of which $3,100,000 had been paid as of December 31,
1997. Non-cash restructuring charges of approximately $2,400,000 related
primarily to the write-down of certain non-strategic business assets. There
have been no material changes to the restructuring plan or in the estimates of
the restructuring costs. As of December 31, 1997, the Company had
approximately $1,900,000 remaining in its restructuring reserve, which is
currently expected to be fully utilized by June 30, 1998.

Income Taxes

Due to the Company's loss position, there was no provision for income taxes
for any of the periods presented. At December 31, 1997, the Company had
federal and state net operating loss carry forwards of approximately
$42,600,000 and $28,300,000, respectively. The federal net operating loss
carry forwards will expire beginning in 2009 through 2012, if not utilized,
and the state net operating loss carry forwards will expire in the years 1999
through 2002. Certain future changes in the share ownership of the Company, as
defined in the Tax Reform Act of 1986 and similar state provisions, may
restrict the utilization of carry forwards. A valuation allowance has been
recorded for the entire deferred tax asset as a result of uncertainties
regarding the realization of the asset due to the lack of earnings history of
the Company. See Note 9 of Notes to Financial Statements.

Year 2000 Compliance

New Accounting Pronouncements

The Financial Accounting Standards Board approved the new American Institute
of Certified Public Accountants Statement of Position, Software Revenue
Recognition (SOP 97-2). SOP 97-2 will be effective for the Company beginning
in the first quarter of 1998. The Company is currently assessing the impact of
SOP 97-2 on its revenue recognition policy.

In June 1997, the Financial Accounting Standards Board issued Statement No.
130, Reporting Comprehensive Income (SFAS No. 130) and Statement No. 131,
Disclosures About Segments of An Enterprise and Related Information (SFAS No.
131). SFAS No. 130 establishes rules for reporting and displaying
comprehensive income. SFAS No. 131 will require the Company to use the
"management approach" in disclosing segment information. Both statements are
effective for the Company during 1998. The Company does not believe that the
adoption of either SFAS No. 130 or SFAS No. 131 will have a material impact on
the Company's results of operations, cash flows, financial position or
prospects.

23
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

From inception through May 1996, the Company financed its operations and met
its capital expenditure requirements primarily from proceeds derived from the
issuance of equity, convertible debt securities and equipment term loans. In
June 1996, the Company completed its initial public offering and received
proceeds from the offering of $43,485,000 net of underwriting discounts,
commissions and other offering costs. Concurrent with the closing of the
initial public offering, all outstanding shares of its redeemable convertible
preferred and convertible preferred stock were automatically converted into
shares of common stock.

For 1997, 1996 and 1995, operating activities used cash of $12,547,000,
$10,068,000 and $1,408,000, respectively. The net cash used during these
periods was primarily due to net losses and increases in accounts receivable,
partially offset by increases in accounts payable and accrued liabilities. For
1997, investing activities generated cash of $6,317,000 primarily related to
the sale of investments offset by purchases of property, plant and equipment.
For 1996 and 1995, investing activities used net cash of $49,827,000 and
$3,326,000, respectively, primarily associated with the net purchase of short-
term investments and purchase of property and equipment. Financing activities
generated cash of $5,662,000, $62,552,000 and $5,295,000, in 1997, 1996 and
1995, respectively, primarily from the initial public offering in June 1996,
equipment loans and preferred stock sales.

The Company has commitments for its facilities under operating lease
agreements and expects to continue to incur significant capital expenditures
to support expansion of the Company's business. Furthermore, from time to time
the Company expects to evaluate the acquisition of products, businesses and
technologies that complement the Company's business. The Company does not,
however, currently have any understandings, commitments or agreements with
respect to any such acquisitions. See Note 4 of Notes to Financial Statements.

The Company had $31,334,000 in cash, cash equivalents and short-term
investments at December 31, 1997. Also, in March 1997, the Company entered
into a four-year, $5,000,000 equipment term loan facility. The Company
currently anticipates that the net proceeds of this offering together with its
cash, cash equivalents, short-term investments, available funds under its
equipment term loan facility and cash flows generated from advertising
revenues, will be sufficient to meet its anticipated needs for working capital
and other cash requirements through at least December 31, 1998. Thereafter,
the Company may need to raise additional funds. The Company may need to raise
additional funds sooner, however, in order 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 additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of the shareholders of
the Company will be reduced, shareholders may experience additional dilution
and such securities may have rights, preferences or privileges senior to those
of the holders of the Company's Common Stock. There can be no assurance that
additional financing will be available on terms favorable to the Company, or
at all. If adequate funds are not available or are not available on acceptable
terms, the Company's ability to fund expansion, take advantage of acquisition
opportunities, develop or enhance services or products or respond to
competitive pressures would be significantly limited. Such limitation could
have a material adverse effect on the Company's business, results of
operations, financial condition and prospects. The estimate of the period for
which the Company expects its available funds to be sufficient to meet its
capital requirements is a forward-looking statement that involves risks and
uncertainties. There can be no assurance that the Company will be able to meet
its working capital and other cash requirements for this period as a result of
a number of factors including but not limited to those described under "Risk
Factors--Future Capital Needs; Uncertainty of Additional Financing."

24
<PAGE>

BUSINESS

INDUSTRY BACKGROUND

The most important technological enhancement to the Internet was the
creation of the World Wide Web (the "Web") in the early 1990s. The Web is an
interactive environment, which facilitates the exchange of multimedia-rich
information and entertainment resources among users worldwide. The Web is an
attractive medium for advertisers for several reasons. Unlike more traditional
media, the Web allows advertisers to target advertisements to broad audiences,
specific regional populations, specific communities or select customers, while
simultaneously tracking the impression levels, demographic viewership and
effectiveness of their advertisements. The interactive nature of Web
advertising enables advertisers to establish dialogues and meaningful
relationships with potential customers, and to change their messages rapidly
in response to real world events and consumer feedback. Jupiter Communications
estimates that the Web viewer population will grow from approximately 49
million viewers in 1997 to approximately 116 million viewers by 2002 and that
online advertising revenues will grow from approximately $940 million in 1997
to approximately $7.7 billion in 2002.

Optimizing the Web Experience

The rapid growth in content on the Web and the proliferation of Web sites,
combined with the Web's unindexed nature, present significant challenges for
businesses and consumers seeking access to Internet-based information and
resources. Until the emergence of search and navigational tools, users had to
know a lengthy Web address (URL) for each specific site, or had to move from
Web site to Web site using hypertext links, searching for relevant
information. Content providers and advertisers face similar difficulties in
making the existence and location of their Web sites known and available to
their target audiences. A number of tools have emerged to enable consumers,
content providers and advertisers to locate one another on the Web, including
Web directories and search engines. Web directories generally list Web sites
by specific topics of interest and by their hypertext address, thus enabling
an interested user to go directly to the listed site by clicking on the
address. Search engines offer users the ability to search for Web sites based
upon specific word or phrase queries. Search engines typically use automated
software that continuously crawls the Web to capture, store and index updated
Web site information in order to provide immediate retrieval of relevant Web
site listings in response to a query. Although search engines and directories
help users navigate the Web, the Company believes that these tools have
certain limitations and that there is an opportunity to provide added value to
the user experience.

The Company believes that in order to provide users with a richer and more
relevant Internet experience, search and navigation services must do more than
simply provide a response to searches. They must also offer value-added
services such as targeted one-to-one marketing, personalized news, discussion
groups, instant messaging and online shopping. The Company believes that
services which aggregate and organize the vast resources of the Web will
attract a high volume of traffic and command customer loyalty.

Challenges of Advertising on the Web

As the number of Internet users and content providers increases, the
Internet has begun to develop the attributes of a conventional mass medium
such as television or radio, where advertising subsidizes content delivered to
users. The Web is proving to be a more effective relationship-building media
than traditional means because it enables advertisers to target specific
audiences, measure the popularity of advertising content (and make frequent
and timely changes), reach worldwide audiences cost-effectively, and create
innovative and interactive advertisements. This process also has the potential
to enhance the consumer's Internet experience, by marketing only those goods
and services that are of interest. The Company believes that increases in
transmission bandwidth through higher speed Internet connections and wider
multimedia-enabling technologies for the Web will also increase the appeal and
effectiveness of advertisements, making the Web an even more attractive
platform for mass consumer advertising.

Advertisers currently face difficulties in understanding the behavior and
demographics of Web users, making it difficult to ensure that the existence
and location of their advertisements are widely known and their

25
<PAGE>

audiences are targeted effectively. Advertisers increasingly have migrated to
sites and services that experience a high volume of repeat, track users
carefully, attract users that "click through" to the advertiser's site and
deliver to advertisers loyal audiences that fit specific buying profiles.
Services and sites must be able to match advertisements with buyers in order
to deliver targeted, high impact advertising.

Corporate Web Sites and Intranets

As the Web has evolved into an efficient and widely-used communications
medium, corporations are increasingly utilizing Web-based technologies to
share information via their intranets and public Web sites with employees,
corporate partners, customers and public site visitors. The Company believes
that as the amount of content hosted in these environments continues to grow,
the same factors that have contributed to the popularity of the Internet
navigation services will drive the demand for similar technologies within
corporate intranets and public Web sites. The same search and navigation
capabilities the Company offers for Internet users are valuable on these
networks.

THE INFOSEEK SOLUTION AND STRATEGY

The Infoseek branded search and navigation services integrate accurate
search results with relevant Internet and other resources to enhance the
viewer's interaction with information and content and create a more effective
medium for advertisers, sponsors and commerce partners. The Infoseek Service
is a comprehensive Internet gateway that combines search and navigation with
directories of relevant information sources and content sites, offers chat and
instant messaging for communicating shared interests and facilitates the
purchase of related goods and services. Infoseek's goal is to become a
viewer's first choice Web destination site. In order to further leverage its
core strength in technology and to diversify its revenue base, the Company
licenses its Ultraseek Server product to corporate customers for use on their
intranets and public Web sites.

The Company's business strategy is to leverage its leading search and
directory technologies, products and services to achieve the following:

. Build Infoseek Brand Awareness and Increase Market Share. The Company
believes that, as a "connected" media company that brings together
elements of its viewers' personal, work and community lives, building
Infoseek brand awareness is a key to building market share. The Company
intends to continue to utilize conventional mass media advertising
campaigns, distribution relationships and OEM relationships to enhance
its brand awareness. The Company intends to continue an integrated brand-
awareness campaign through press, print, broadcast, outdoor, radio and
online promotions in 1998. The Company has entered into agreements with a
number of companies such as AT&T Corp., Bell Atlantic, Southwestern Bell
Capital Corporation, Sprint Corporation and CNET in order to increase its
brand awareness and acquire new viewers.

. Create a Richer Viewer Experience. The Company believes that consumer
loyalty on the Internet is highly dependent on the creation of a robust
online environment from which viewers may access the information and
resources in which they are interested. The Infoseek Service provides a
rich experience for viewers through the integration of search, large
directories, shared interest communities and content features with the
Company's highly advanced core search technology. In addition, in October
1997 the Company launched 15 "channels," which are organized topically.

. Maximize Value for Advertisers. The Company believes that it can best
serve advertisers on the Internet by effectively targeting interested
audiences and consumers. With the launch of its intelligent Web channel
service in October 1997, the Company believes that it greatly enhanced
the segmentation of its viewing audience. The Company intends to continue
to develop innovative approaches and solutions for its advertisers to
effectively reach their target audiences. For a segment of advertisers,
improved viewer targeting is achieved through the Company's Ultramatch
product, an advertising management product designed to create viewer
behavior profiles for the matching of goods and services. These Infoseek
products and services can result in better click-through for advertisers
and higher advertising rates for the Company.

26
<PAGE>

. Provide Intranet Search Products. The Company believes that as enterprise
and corporate intranets continue to grow and are increasingly relied upon
for the efficient sharing of corporate documents, data and other
information, the need for advanced search and indexing technology becomes
critical. The Company has leveraged its research and development
investments in the core Infoseek search and navigation services to
provide a customizable intranet solution to corporate and enterprise
customers.

. Enhance Core Search and Navigation Service. The Company believes that
search technology that delivers highly relevant results is an important
component in differentiating its services and in building a rich viewer
experience. The Company continuously seeks to innovate in the development
and integration of its services to provide viewers with a robust and
appealing environment and a convenient and powerful gateway to the
Internet.

THE INFOSEEK SERVICE AND PRODUCT OFFERINGS

Internet End-User Services and Products

Infoseek Service is a free search and navigation service targeted to viewers
at home, in business and in schools. Infoseek Service integrates multiple
methods of obtaining, organizing and sharing information on the Internet.
Viewers are presented with four principal means of obtaining information--
Search, Channels, Directory and Service Links--from which they can launch
specific queries, browse or access relevant content.

. Search: The Search function allows the viewer to launch query-based
searches of the Web, USENET News and other premium content databases,
including news and company collections. To perform a search, a viewer
types a query in the search box and is then presented a highly specific
response from a search of the entire database. A search can be effected
using either simple keywords, phrases or full text. The Search function
utilizes sophisticated techniques to allow viewers to obtain specific
results for case sensitive, numerical or singular letter aspects of
certain queries, such as "49ers" or "Vitamin C."

. Channels: The Company offers viewers 15 "channels" which are organized
topically much like sections of a newspaper. Current channels include
Automotive, Business, Careers, Computer, Entertainment, The Good Life,
Health, Internet, Kids & Family, News, Personal Finance, Real Estate,
Shopping, Sports and Travel. Each channel includes content teasers to
full stories, reviews, databases and other information on content
providers' sites and other sites, best of the Web links to interesting
and relevant information, relevant Directory subtopics, news headlines,
chat, transaction opportunities and classified advertisements. Infoseek
intends to launch new channels aimed at specific demographic audiences
and launch subchannels within existing channels to help viewers easily
find the environment and information they are looking for.

. Directory: The Infoseek Directory is a hierarchical listing of Web pages
that have been selected and abstracted by the Company and organized by
category, which can be accessed by the Company's home page or the
relevant channel. The Directory enables a viewer to click on a directory
entry such as Arts & Entertainment or Sports, and to look through a
hierarchy of relevant Internet sites for areas of interest. For example,
under Sports, the viewer can proceed from "Baseball" to "Players," and
finally, to "Ken Griffey Jr." The Directory assists the viewer by
providing abstracts of each directory entry. As of January 1, 1998, the
Company had increased its directory of Web sites to over 500,000.

. Service Links: Viewers can be directly linked to third party sites by
clicking on several different title bars listed at the side of the search
screen or icons presented on the Infoseek page. Pursuant to arrangements
with Bell Atlantic and UPS, viewers can access the BigYellow on-line
yellow pages directory or the UPS tracking system by clicking on those
links. The standard Internet advertising on Infoseek also contains direct
links to the advertisers' home page. Without direct hypertext links such
as these a viewer must either conduct a new search or know and enter a
precise URL to move to another site.

27
<PAGE>

The Infoseek Service offers viewers access to content feeds from a variety
of well-known Internet sources, third party content sources and co-branded
sites between the Company and other providers of services and products such as
Bell Atlantic and UPS, to provide viewers with high quality, up-to-date
information whether a viewer is navigating via search, channels or directory.
For example, news that is relevant to the viewer's query is made available as
part of a search result. In addition, the News Channel offers viewers the
latest business, world, political, technology and sports news from a variety
of data sources such as Reuters Holdings PLC ("Reuters"), Business Wire,
Hoover's, Inc. ("Hoover's"), PR Newswire, and USENET news groups.

To enrich the viewer experience, the Infoseek Service allows the use of the
information gathered from a search to interact with viewers of similar
interests and purchase goods within the site through features such as chat,
instant messaging and transaction-based Web sites. For example, a consumer who
is interested in purchasing a Saturn automobile can conduct an online search,
compare notes with Saturn drivers in Infoseek's automobile chat room and even
purchase a Saturn through Auto-By-Tel Corporation ("Auto-By-Tel"), a Web site
for evaluating and making car-buying decisions.

Corporate Intranet and Public Site Navigation Services and Products

In March 1997, the Company introduced Ultraseek Server, its first software
product targeted at the corporate market. Designed as an easy-to-install,
simple-to-manage spider and search engine, the product leverages the core
technology developed for the Infoseek Service. Key advantages of the Infoseek
Service in areas such as natural language support, relevance ranking
algorithms, and automated spider revisiting are augmented with an intuitive
interface, support for alternate document formats (for example, Microsoft
Office or Adobe PDF) and robust error recovery. The result is a solution for
corporate webmasters that enables the creation of a search capability on one
site or across an intranet with thousands of hosts, that is quick to
implement, and manageable with limited resources.

The Company views the Ultraseek Server product as a horizontal application,
with a strong fit across many industries. In 1997, the Company licensed
software to customers in the publishing industry (IDG, New Century Network,
National Geographic Society), high technology (Sun Microsystems, 3Com
Corporation, Hewlett-Packard Company, Lexmark International Group, Inc.),
manufacturing (Ford Motor Company, The Boeing Company, Merck & Co., Inc., Rohm
& Haas Company), communications (BellSouth Corporation, Ericsson LM Tel. Co.
Ad., Worldcom Inc.), government (NASA, U.S. Department of Education, Lawrence
Livermore National Laboratory), finance (Morgan Stanley Dean Witter, John
Hancock Mutual Life Insurance Company, Swiss Bank Corporation, New York Stock
Exchange), consumer goods (Sony Corporation, NIKE, Inc., Sears, Roebuck and
Co.) and education (Stanford University, Harvard University, Pennsylvania
State University, Georgia Institute of Technology, University of Sydney,
McGill University) among others. The Company also announced that it had been
selected as the intranet and public site search application by CERN, the
European Particle Physics Lab and creator of the World Wide Web.

Ultraseek Server's key benefits for viewers and administrators are:

Best Viewer Experience
Fast searches and relevant results
Easy to use natural language queries

Simple Administration
Easy install and startup
Remote management via browser

Real-Time Index
Deleted documents are immediately removed; new documents instantly
added
Finds new/changed content automatically

28
<PAGE>

Scalable, Flexible Spider
Scalable to handle even very large intranets
Can be tuned to limit load on servers and networks

Full-Text Search
Search for any word or phrase
Query refinement (search only these results)

Customization
Customizable viewer interface and results ranking
Include/exclude at the site, directory or document level

Advertising Services and Products

Infoseek derives a substantial majority of its revenues from the sale of
advertisements. The Company is focused on providing its advertisers with high
volume and targeted access to interested audiences and potential buyers. These
advertisements appear on the Infoseek Service Web page when a viewer enters
the service, receives search results, browses through the Directory or
accesses a channel. Advertising revenues represented 94% and 99% of the
Company's total revenues for fiscal 1997 and fiscal 1996, respectively. The
Company believes it has been able to achieve its advertising revenues to date
primarily through its direct sales force and through the products it offers
advertisers.

Advertising Products and Pricing

The Company derives its revenue from several advertising options that may be
purchased individually or in packages--run of site rotations, directory and
channel rotations, key word rotations, cross service sponsorship, channel
sponsorship and Ultramatch targeting. These options may contain hypertext
links to the advertiser's home page.

Rotations

. Run of Site: Run of site rotations are advertisements that rotate on a
random basis throughout the Infoseek Service, appealing to advertisers
seeking to establish brand recognition across the broadest reach of
Infoseek viewers. Search results advertisements are typically sold in
blocks of one thousand impressions to be generated over a four week
period. Infoseek's current cost per one thousand impressions ("CPM")
ranges from $18 to $26 depending upon the number of impressions
purchased.

. Directory and Channel: Directory and channel rotations are advertisements
that appear when an Infoseek viewer browses through directory and channel
topic pages. Directory and channel rotations allow advertisers to target
an audience with a specific area of interest. Like run of site rotations,
directory and channel rotations are sold in blocks of impressions over a
four week period. Because of the greater selectivity of the audience,
Infoseek's current CPM ranges from $35 to $45.

. Keyword: Keyword rotations are advertisements that are displayed when an
Infoseek viewer's search contains a particular keyword selected by the
advertiser. This option offers the advertiser a highly targeted, self-
selected audience. Through its proprietary advertising management system,
the Company tracks every word that is queried by Infoseek viewers, from
which the Company has identified keywords that are most frequently
queried by Infoseek viewers and requested by advertisers. Infoseek's
current four week rate card CPM for a keyword is $55 on a non-exclusive
basis and $66 on an exclusive basis.

Channel and Cross-Service Sponsors and Partners

The channel version of the Infoseek Service, which was introduced in October
1997, features 15 "channels" that allow a viewer to browse in an environment
that brings together the best topical information, service, products and
communities on the Web. In addition, this version of the Infoseek Service
dynamically wraps relevant content around answers to a viewer's queries.

29
<PAGE>

Sponsors and partners with whom the Company has executed agreements include
the following:

<TABLE>
<CAPTION>
CHANNEL SPONSORS AND PARTNERS
------- ---------------------
<S> <C>
Automotive Auto-By-Tel
Microsoft CarPoint
Computer CMP Media, Inc.
Entertainment--Books sub- Borders OnLine
channel
Internet CMP Media, Inc.
Personal Finance Microsoft Investor
Personal Finance--Trading Donaldson, Lufkin & Jenrette, Inc. (DLJ Direct)
Partners Datek Online
Ameritrade
<CAPTION>
CROSS-SERVICE
-------------
<S> <C>
Bell Atlantic
UPS
</TABLE>

The Company believes there is significant potential to increase sponsorship
revenues through the ten unsponsored channels, further segmentation of
existing channels into sub-channels as well as channels to be introduced in
the future.

The Company's enhanced channel version of the Infoseek Service provides a
better viewer experience and better segmentation of the target audience for
advertisers and sponsors. In addition, the Company was able to supplement its
banner advertising business with media-based revenues for sponsorships in its
channels and sub-channels. These opportunities for channel sponsors are in
addition to already existing arrangements with cross-service sponsors such as
UPS and Bell Atlantic. A cross-service sponsor's content or service appears on
the Infoseek Service home page or on multiple channels across the Infoseek
Service. The Company seeks to bundle these advertising options to create
packages that offer the greatest value to advertisers.

Ultramatch Targeting

The Company currently sells Ultramatch, an advertising management product
based upon technology which is designed to create a viewer profile based on
real, observed viewer behavior to allow precise, targeted advertising. The
Company and its advertisers have found that this technology significantly
increases viewer click-throughs. This innovative advertising approach, which
allows advertisers to target advertisements to specific viewer types based on
analysis of searching behavior, serves to significantly differentiate the
Company's services. Infoseek's current CPM for this targeting is $55, and the
net cost for an Ultramatch behavioral report is $1,100.

30
<PAGE>

Advertisers

During 1997, over 500 advertisers placed advertisements on the Company's
service. For the year ended December 31, 1997 one customer, Bell Atlantic
Electronic Commerce Services, Inc., which has a representative on the Company's
Board of Directors and owns a substantial amount of the Company's common stock,
accounted for 8.2% of revenues. No one advertiser accounted for 10% or more of
the Company's revenues for the year ended December 31, 1997. To date, most of
Infoseek's contracts with advertisers have terms of three months or less. The
following is a representative list of brands or companies for which advertisers
and sponsors purchased more than $100,000 in advertising on the Company's
service during 1997:

TECHNOLOGY TELECOMMUNICATIONS
Compaq Computer Corporation AT&T Corp.
Hewlett-Packard Company BellSouth Corporation
Intel Corporation Mobile Telecommunications Technologies
Intuit Inc. Corp. (SkyTel)
Northern Telecom Inc. Sprint Corporation
SAP America, Inc.
FINANCIAL
AUTOMOTIVE American Express Company
America Honda Motor Company Inc. John Hancock Mutual Life Insurance
Ford Motor Company Company
General Motor Corporation (Saturn) Metropolitan Life Insurance Company
Toyota Motor Corporation (Toyota The Charles Schwab Corporation
and Lexus) The Quick & Reilly Group, Inc.
Volvo North America Corporation
CONSUMER PRODUCTS
PUBLISHING Delta Airlines, Inc.
Advance Publications, Inc. (Conde J.C. Penney Company, Inc.
Nast) LAT Sportswear Inc. (Hanes)
The Dun & Bradstreet Corporation Sony Corporation
The Hearst Corporation (Hearst New The Proctor & Gamble Company
Media) The Walt Disney Company
Newsday, Inc.

Sales Force

As of December 31, 1997, Infoseek's advertising sales staff consisted of 31
representatives located in Sunnyvale, New York, San Francisco, Los Angeles,
Atlanta and Chicago. The Company believes that having an internal direct sales
force allows it to better understand and meet advertisers' needs, increase its
access to potential advertisers and maintain strong relationships with its
existing base of advertising clients.

MARKETING AND DISTRIBUTION

Marketing

Infoseek's strategy is to build brand awareness through an integrated plan
utilizing online and traditional media, public relations and promotions. The
Company's current consumer campaign includes the marketing of the Infoseek
brand on selected Web sites including MSNBC, ESPN SportsZone, AT&T Worldnet,
BigYellow and WhoWhere. The Company's 1997 television campaign included a
rotation of prime time spots in New York and San Francisco, both of which are
cities with higher than average Internet usage, and the Company currently plans
additional television advertising in at least the first quarter of 1998. In
addition, the Company's traditional media campaign includes local radio,
outdoor billboards, print advertising in consumer and vertical magazines such
as Home PC, Windows Magazine, Information Week and Internet Week, and trade
advertising in Advertising Age. The Company also cross-promotes with content
providers through advertising swaps both in online media and traditional print
and broadcast media.

31
<PAGE>

Distribution

The Company seeks to form relationships that maximize audience reach and
create alternate distribution channels to the Company's services. The Company
has relationships with Netscape and Microsoft each of which distributes
browser software to their customers which is used to navigate the Web. The
Company also has distribution relationships with various Internet service
providers and content providers such as AT&T, Bell Atlantic, Southwestern
Bell, Sprint and CNET. Infoseek Service is listed by each of these companies
as a navigational service available to their viewers. The terms of these
relationships vary widely, both in the prominence given to Infoseek Service
relative to other alternatives and the compensation paid by Infoseek for
advertising.

Since March 1995, the Company's service has been listed as a navigational
service on the Netscape Web page accessible via the "NetSearch" button.
Currently, Netscape's Web page displays three additional premier providers. In
March 1997, the Company renewed its agreement with Netscape under terms which
provide for Infoseek Service to be one of four non-exclusive premier providers
displayed on Netscape's Web page for the period through April 30, 1998.
Infoseek's current agreement with Netscape provides for the Company to pay an
aggregate of $12,500,000 in cash and reciprocal advertising ($10,000,000 in
cash and $2,500,000 in reciprocal advertising) over the term of the agreement.
There can be no assurance that the Company will be able to maintain or
increase its current level of traffic and any failure to do so could
materially and adversely impact advertising revenues. Over the past year, page
views sourced from Netscape traffic declined from 44% in December 1996 to 27%
in December 1997. The Company defines a page view from Netscape as all pages
requested and delivered to a viewer whose Infoseek session was initiated from
a Netscape Web page. In addition, the Company cannot anticipate the impact of
any changes Netscape may make to this service, to its Web page or its other
services, or the effect on advertising revenues that may be generated from
such traffic. For example, is possible that any increased presence on Netscape
under the terms of the March 1997 agreement could generate traffic that
exceeds the Company's service capacity. Any interruption in service would
adversely affect advertising revenues. In the alternative, if traffic is
decreased significantly as a result of changes in the Netscape relationship or
for other reasons, and the Company is unable to develop alternative viable
distribution channels, advertising revenues would be adversely affected yet
the remaining Netscape obligations would not be reduced, the result being that
the Company's business, results of operations, financial condition and
prospects would be materially and adversely affected. See "Risk Factors--
Relationship With Netscape" and "--Capacity Constraints and System Failure;
Advertising Management System."

Since August 1995, the Infoseek Service has been listed as a navigational
search service available to users from various "Search Referral Sources" by
Microsoft. The Company currently receives less than 10% of its traffic sourced
from Microsoft. Effective as of January 1997, the Company renewed its Search
Services Agreement with Microsoft under terms which extend the search referral
relationship through April 1997. Effective as of June 1997, the Company
renewed this agreement with Microsoft under terms which extended certain
search referral sources through November 1997 and continues on an automatic
six-month renewal term and extends certain other search referral sources
through May 1998. As consideration for the listing of the Infoseek Service by
Microsoft, the Company will display the Microsoft Internet Explorer logo and
Microsoft advertising banners on the Infoseek Service search results page in
relative proportion to the number of search referrals originating from
Microsoft. See "Risk Factors--Intense Competition."

INTERNATIONAL OPERATIONS

As the Internet becomes an increasingly global information resource, the
Company believes it can leverage its core search and navigation technology and
brand recognition to provide benefits to viewers and advertisers worldwide.
Accordingly, the Company offers its service internationally through
partnerships with local providers of directory and editorial content in
Brazil, Denmark, Holland, France, Germany, Italy, Sweden and the United
Kingdom, and has been translated into Spanish. Typically, the Company
contributes the search technology and the site's look and feel, while the
partners contribute local content, translation services, and marketing
support. All of these sites are operated and hosted by the Company. In July
1997, the Company entered into an agreement

32
<PAGE>

with Netscape whereby it was designated as a premier provider of international
search and navigation guide services for the Netscape Net Search program for
10 Netscape local Web sites. In 1997, the Company established strategic
relationships with Microsoft in France and the United Kingdom and Attract
Media in Sweden, Denmark, Finland and Norway. In addition, the Company's U.S.
sales force sells advertisements on Infoseek's foreign sites to U.S.
advertisers who want to reach a global audience. During 1997, less than 10% of
the Company's traffic was derived from international sources and less than 10%
of the Company's revenues were derived from advertising to international
viewers. See "Risk Factors--Risks Associated With International Expansion."

TECHNOLOGY

The Company believes that by developing innovative proprietary technology
and integrating technology licensed from third parties where appropriate, it
can differentiate itself from its competitors. The Company's strategy is to
develop and license only technologies that are able to scale with the growth
in content on the Internet, in order to enable the Company to cost-effectively
adapt and grow with the Internet.

Core Search Engine Technology

The Company's current search engine technology is based on Ultraseek, an
enhanced search technology that provides users enhanced levels of accuracy,
currency, comprehensiveness and speed. Ultraseek includes built-in
intelligence with features such as phrase, capitalization and proper name
recognition.

The Company's highly-rated search engine seeks to deliver accurate results,
which are characterized by the level of precision and the level of recall. In
addition, due to the dynamic nature of the Internet, the retrieval of up-to-
date information has become another key factor for the evaluation of Internet
search services. To bring current information to the viewer, the Company has
developed technology to regularly update its entire database of Web pages.
This enables Infoseek Service to deliver accurate, relevant and up-to-date
search results.

To facilitate the ease of use of the service, Infoseek Service includes a
sophisticated technology to interpret "natural language" queries. Although
many current search engines also provide natural language capabilities, the
results achieved may differ dramatically. The Infoseek technology is based
upon a weighting of various factors such as the case of the words in the
search phrase, how common the words appear in usage, word proximity and how
the words appear in the pages searched. By using the stemming, case-
sensitivity, word proximity, operators and other algorithms in the search
engine, Infoseek Service is able to retrieve highly accurate and relevant
results.

The Company has also provided a proprietary Web spider which works to
enhance the performance of the search engine. A Web spider is software that
identifies and catalogs pages on the Web. This catalog, when indexed with text
retrieval software such as the Company's search engine, can be quickly
accessed by keyword or phrase. Together, the search engine technology and the
Web spider technology are used to index Web pages, the directory and other
sources of content. When the viewer submits a query, such as "find an
apartment in New York City," the engine searches the Web index created by the
Web spider, the pages indexed in the directory and other content, to provide a
list of hits ordered by the relevance to the viewer's query. In addition,
Infoseek has also developed a technology to allow viewers to add their Web
pages to Infoseek virtually instantly. This "Add URL" feature allows Infoseek
to accept the most up-to-date pages.

The Company has also licensed certain software technologies from InXight
Software, Inc. ("InXight"), a unit of Xerox Corporation ("Xerox"), which the
Company uses for the linguistic analysis of Web pages and search terms. In
addition, in May 1996 the Company licensed certain technology from Aptex
Software Inc. ("Aptex") that allows the Company to update and to enhance the
Company's Web directory feature automatically. This technology has automated
the assignment of Web pages to each directory category. This

33
<PAGE>

technology has been licensed to the Company for an initial five year term
beginning in October 1996. There can be no assurance that the Aptex technology
will function as anticipated or will provide the intended benefits, and any
such deficiency could require the Company to incur significant increased costs
to expand its directory as planned. See "Risk Factors--Technological Change
and New Products and Services."

Advertising Management

Infoseek has developed certain proprietary systems for the placement of
advertisements with targeted audiences on appropriate Infoseek Service Web
pages. Infoseek's advertising management systems are capable of presenting in
real-time advertising that corresponds to a viewer's inquiry. If certain key
words have been purchased by more than one advertiser, the system
automatically determines which advertisement is displayed based upon the
number of impressions under contract and delivered to date. As part of the
Company's proprietary advertising management system, Infoseek also maintains a
database that tracks the number of searches of each word queried by Infoseek
viewers, the number of browses through each directory category and the number
of impressions of each advertisement. This system assists the Company in
estimating the number of expected impressions of specific advertisement
options marketed by the Company or otherwise sought by advertisers. As the
Company's advertising volume increases, the Company believes that it may be
required to significantly improve its internally developed advertising
management system or to implement an advertising management system from a
third party vendor. The Company is in the process of evaluating such a system
from NetGravity, but has not yet determined whether this outsourced solution
will be implemented. To the extent that the Company encounters material
difficulties in bringing, or is unable to bring, this new system online, the
Company will need to acquire an alternative solution from a third party vendor
or devote sufficient resources to enhance its internally developed current
system. Any extended failure of, or material difficulties encountered in
connection with, the Company's advertising management system may expose the
Company to "make good" obligations with its advertising customers, which, by
displacing advertising revenue among other consequences, would reduce revenue
and would have a material adverse effect on the Company's business, results of
operations, financial condition and prospects.

In April 1996, the Company licensed certain software technology from Aptex
which the Company used to develop its Ultramatch technology, which was
released in 1997. Ultramatch is an advertising and audience management system
which utilizes real-time behavioral tracking technology to optimize the
matching of advertisements with the appropriate audience. The Company believes
that Ultramatch provides technological improvements to the Company's
advertising and audience management systems. The Aptex technology underlying
Ultramatch has been licensed to the Company for an initial five-year term
beginning in October 1996. In consideration for giving up any exclusive rights
to the Aptex technology during the five-year term of the license, the Company
will receive a portion of any Aptex revenue generated from other advertising
licenses.

COMPETITION

34
<PAGE>

and substantial sources of traffic for the Company, may incorporate and
promote information search and retrieval capabilities in future releases or
upgrades that could make it more difficult for Internet viewers to find and
use the Company's products and services. Microsoft recently licensed products
and services from Inktomi, a direct competitor of the Company, and has
announced that it will feature and promote Inktomi services in the Microsoft
Network and other Microsoft online properties. The Company expects that such
search services may be tightly integrated into the Microsoft operating system,
the Internet Explorer browser and other software applications, and that
Microsoft will promote such services within the Microsoft Network or through
other Microsoft-affiliated end-user services such as MSNBC or WebTV. The
Company's agreement with Netscape to be one of four non-exclusive premier
providers of navigational services expires on April 30, 1998, and there can be
no assurance that the Company will be successful in renewing this agreement on
terms advantageous to the Company, if at all. See "Risk Factors--Relationship
With Netscape." In addition, entities that sponsor or maintain high-traffic
Web sites or that provide an initial point of entry for Internet viewers, such
as the RBOCs or ISPs such as Microsoft and AOL, currently offer and can be
expected to consider further development, acquisition or licensing of Internet
search and navigation functions competitive with those offered by the Company,
or could take actions that make it more difficult for viewers to find and use
the Company's products and services. For example, AOL is currently a
significant shareholder of Excite and offers Excite's WebCrawler and NetFind
as the exclusive Internet search and retrieval services for use by AOL's
subscribers. Continued or increased competition from such consolidations,
integration and strategic relationships involving competitors of the Company
could have a material adverse effect on the Company's business, results of
operations, financial condition and prospects.

Competition from existing search and navigational competitors. Many
companies currently offer directly competitive products or services addressing
Web search and navigation, including DEC/AltaVista, Excite, HotBot, Inktomi,
Lycos, CNET and Yahoo!. In addition, the Company's Ultraseek Server product
competes directly with intranet products and services offered by companies
such as DEC/AltaVista, Lycos, Open Text and Verity. The Web browsers currently
offered by Netscape and Microsoft, which are the two most widely-used
browsers, incorporate prominent search buttons and similar features, such as
features based on "push" technologies, that direct search traffic to competing
services, including those that may be developed or licensed by Microsoft or
Netscape in enhancements or later versions of these or other products. Many of
the Company's existing competitors, as well as a number of potential new
competitors, have significantly greater financial, technical, marketing and
distribution resources than the Company.

See "Risk Factors--Intense Competition."

RESEARCH AND DEVELOPMENT

During 1997 and 1996, the Company spent approximately $7,327,000 and
$4,550,000, respectively, on research and development activities. As of
December 31, 1997, the Company had a research and development staff of 45
full-time employees, all located at the Company's headquarters in Sunnyvale,
California.

35
<PAGE>

The Company continues to evolve its Ultraseek search engine technology,
which has been designed to significantly improve retrieval and Web page
indexing capabilities with features such as distributed search and natural
language handling. The distributed searching capability is based on a patent
held by the Company and allows integration of results among both logically and
geographically distributed Web indexes. The Company has also licensed certain
software technologies from InXight, which the Company uses for the linguistic
analysis of Web pages and search terms. This technology has been licensed to
the Company for a five-year contract, which began on March 31, 1996. Infoseek
has licensed certain technology from Aptex which augments the development of
the Company's Web directory by providing an automation capability. The Company
continues to differentiate its service by providing additional contextual
information to the user in addition to just the Web results for a query. In
addition to these technologies and services under development, many of the
Company's new products and product enhancements have been only recently
introduced and it is not yet clear that such products will achieve significant
market acceptance. See "Risk Factors--Technological Change and New Products
and Services."

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

36
<PAGE>

EMPLOYEES

As of December 31, 1997, the Company had 171 full-time employees, including
45 in research and development, 76 in sales and marketing and 50 in finance
and administration. The Company's future performance depends in significant
part upon the continued service of Harry M. Motro, the Company President and
Chief Executive Officer and Steven T. Kirsch, a founder and the Chairman of
the Board of the Company, as well as its other key technical and senior
management personnel, none of whom is bound by an employment agreement. The
Company provides incentives such as salary, benefits and option grants (which
are typically subject to vesting over four years) to attract and retain
qualified employees.

LEGAL PROCEEDINGS

As of the date hereof, there is no material litigation pending against the
Company. From time to time, the Company may be a party to litigation and
claims incident to the ordinary course of its business. Although the results
of litigation and claims cannot be predicted with certainty, the Company
believes that the final outcome of such matters will not have a material
adverse effect on the Company's business, results of operations, financial
condition or prospects.

37
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the Company's
executive officers and directors as of December 31, 1997:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Harry M. Motro................... 37 President, Chief Executive Officer and
Director
Leslie E. Wright................. 44 Vice President of Finance and Chief
Financial Officer
Barak Berkowitz.................. 44 Vice President, Marketing
Beth A. Haggerty................. 38 Vice President, Worldwide Advertising
Sales
Leo R. Jolicoeur................. 40 Vice President, Online Services
John S. Nauman................... 50 Vice President, Engineering
Andrew E. Newton................. 54 Vice President, General Counsel and
Secretary
Steven T. Kirsch................. 41 Chairman of the Board of Directors
L. William Krause(1)............. 55 Director
Matthew J. Stover(2)............. 42 Director
John E. Zeisler(1)(2)............ 45 Director
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

Harry M. Motro joined the Company in April 1997 as its President and was
appointed Chief Executive Officer and a director of the Company in May 1997.
From 1995 to April 1997, Mr. Motro served as Senior Vice President of Cable
News Network Inc. in charge of CNN Interactive and News Business Development.
From 1988 to 1995, Mr. Motro served in several executive positions with Turner
Broadcasting Inc. and CNN, including Director, Special Projects and External
Reporting, Assistant Vice President, Finance, and Vice President, Business
Development and Strategic Planning. From 1982 to 1988, Mr. Motro served as
Manager, Audit Services, with Coopers & Lybrand LLP. Mr. Motro holds a B.S.
degree in business from the University of Virginia.

Leslie E. Wright joined the Company in August 1997 as Vice President,
Finance and Chief Financial Officer. From 1994 to July 1997, Mr. Wright worked
with Fractal Design Corporation, a graphics software company, where from May
1995 to July 1997 he served as Chief Operating Officer. From 1984 to 1994, Mr.
Wright worked with The ASK Group, Inc., a software company, where from 1986
through 1994, he served as Executive Vice President and Chief Financial
Officer. Mr. Wright holds a B.S. degree in business from San Jose State
University.

Barak Berkowitz joined the Company in October 1997 as Vice President,
Marketing. In August 1990, Mr. Berkowitz founded MarketCentrix, a marketing
consulting firm servicing technology-based companies. Mr. Berkowitz acted as
President of MarketCentrix from August 1990 to July 1994, and again from
October 1996 until October 1997. From July 1994 to October 1996, Mr. Berkowitz
was Vice President and General Manager for the American region of Logitech,
Inc., a computer peripherals company. Mr. Berkowitz studied Psychology and
Biology at the City College of New York.

Beth A. Haggerty joined the Company in August 1997 as Vice President,
Worldwide Advertising Sales. From 1995 to April 1997, Ms. Haggerty served as
Publishing Director of NetGuide Magazine, a CMP Media publication ("CMP"), and
most recently as Publishing Director of CMPnet, the Internet Media Group of
CMP. In August 1996, Ms. Haggerty also managed the launch of CMP's online
product, NetGuide Live. From 1994 to 1995, Ms. Haggerty was a partner and co-
founder of Interactive Enterprises, a Ziff Davis venture, and a Publisher of
Inter@ctiveWeek magazine. From 1986 to 1994, Ms. Haggerty served in various
capacities with CMP, including senior-level sales and marketing management
positions for Information Week magazine, National Sales

38
<PAGE>

Manager for Network Computing magazine and Publisher of CommunicationsWeek
magazine. Ms. Haggerty holds a B.S. degree in political science from Rutgers
University.

Leo R. Jolicoeur joined the Company in October 1995 and was appointed Vice
President, Online Services in December of 1997. From June 1997 to December
1997, Mr. Jolicoeur was Vice President of Product Management and Infoseek
International. From October of 1995 to June 1997, Mr. Jolicoeur was Senior
Director, Infoseek International and Director of Business Development. From
1987 to 1995, Mr. Jolicoeur served in several management positions within
Apple Computer, including Pacific Marketing Manager, Newton Systems; Business
Development and Licensing Manager, Newton Systems; Project and Programs
Manager, Enterprise Systems. Prior to that, from 1984 to 1987, Mr. Jolicoeur
served as Network Services Manager, Digital Equipment Corporation. Mr.
Jolicoeur holds a B.S. degree in Finance and Computer Science from Boston
College.

John S. Nauman joined the Company in February 1996 as Vice President,
Engineering. From November 1993 to February 1996, Mr. Nauman served as Vice
President, Engineering and then Vice President, Development at NetFRAME
Systems, a hardware and software engineering company. From December 1989 to
October 1993, Mr. Nauman was Senior Director of Networking and Communications
Development and then Business Unit Manager, Integrated Technologies of Apple
Computer Inc. Mr. Nauman holds a B.S. degree in mathematics from the
University of Oklahoma, an M.B.A. degree from Santa Clara University and an
M.S. degree in electrical engineering from Stanford University.

Andrew E. Newton, a founder of the Company, has served as Vice President and
General Counsel since January 1994 and Secretary since March 1994. From
February 1990 to November 1993, Mr. Newton was Vice President and General
Counsel of Frame Technology Corporation, a software engineering company. Mr.
Newton holds an A.B. degree in English from Dartmouth College and a J.D.
degree from Columbia University School of Law.

Steven T. Kirsch, a founder of the Company, has been a director of the
Company since August 1993 and Chairman of the Board of Directors since
December 1995. From September 1993 to November 1995, Mr. Kirsch also served as
President and Chief Executive Officer of the Company. From January 1990 to
December 1993, Mr. Kirsch served as Vice President, New Product Development of
Frame Technology Corporation, a software engineering company which he co-
founded. Mr. Kirsch holds a B.S. degree and an M.S. degree in electrical
engineering and computer science from the Massachusetts Institute of
Technology.

L. William Krause has served as a director of the Company since July 1997.
Since October 1991, Mr. Krause has served as President, Chief Executive
Officer and as a director of Storm Technology, Inc., a provider of computer
peripherals and software for digital imaging. Prior to that, Mr. Krause spent
ten years at 3Com Corporation, a manufacturer of global data networking
systems, where he served as President and Chief Executive Officer until he
retired in September 1990. Mr. Krause continued as Chairman of the Board for
3Com Corporation until 1993. Previously, Mr. Krause served in various
marketing and general management executive positions at Hewlett-Packard
Company. Mr. Krause currently serves as a director of Sybase, Inc. and Aureal
Semiconductor, Inc.

Matthew J. Stover has served as a director of the Company since March 1996.
Since December 1997, Mr. Stover has served as President and Chairman of the
Board of Bell Atlantic Information Services Group, an international marketing
information services provider. Mr. Stover is also the Chairman of the Board of
Global Directory Services Company. Since January 1998, Mr. Stover has served
as Chairman of the Board of Bell Atlantic Yellow Pages Company, formerly known
as NYNEX Information Resources Company where from January 1994 to January
1998, he served as President and Chief Executive Officer. Prior to that, Mr.
Stover served as President and Chief Executive Officer of AGS Computers, Inc.
from December 1992 to December 1993, Vice President, Public Affairs and
Corporate Communications of NYNEX Corporation from May 1990 to December 1992
and Vice President, Communications for American Express Company from 1987 to
1990. Mr. Stover holds a B.A. degree in English language and literature from
Yale University and a certificate from the Executive Program of the University
of Virginia, Colgate Darden Graduate School of Business Administration.

39
<PAGE>

John E. Zeisler has served as a director of the Company since May 1995.
Since October 1996, Mr. Zeisler has served as a General Partner of InterWest
Partners, a venture capital firm. From August 1995 to September 1996, he
served as Senior Vice President, Marketing of NETCOM, an internet company.
From 1992 to 1995, he served as President and Chief Executive Officer of
Pensoft Corporation, a software company. From 1987 to 1992, Mr. Zeisler was a
co-founder and Vice President, Marketing of Claris Corporation, a software
company. Mr. Zeisler holds a B.S. degree in communications from Boston
University.

40
<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of December 31, 1997 by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock, (ii) each of the Company's directors, (iii) each
person serving as the Company's Chief Executive Officer during the Company's
last fiscal year and each of the four other most highly compensated executive
officers of the Company who were serving in such capacities at December 31,
1997 and (iv) all directors and executive officers as a group. A total of
27,243,682 shares of the Company's Common Stock was issued and outstanding as
of December 31, 1997.

<TABLE>
<CAPTION>
BENEFICIAL
BENEFICIAL OWNERSHIP OWNERSHIP
PRIOR TO AFTER
OFFERING(1) OFFERING(1)
---------------------- -----------------
NUMBER OF NUMBER OF
SHARES PERCENT SHARES PERCENT
------------ --------- --------- -------
<S> <C> <C> <C> <C>
Steven T. Kirsch(2).................. 5,888,855 21.62% 5,888,855 19.47%
Bell Atlantic Electronic Commerce
Services, Inc.(3)................... 1,156,884 4.25% 1,156,884 3.82%
35 Village Road
Middleton, MA 01949
Harry M. Motro....................... -- -- -- --
Andrew E. Newton(4).................. 527,815 1.94% 527,815 1.74%
John E. Zeisler(5)................... 54,061 * 54,061 *
Matthew J. Stover(3)(6).............. 1,156,884 4.25% 1,156,884 3.82%
L. William Krause(7)................. 7,500 * 7,500 *
Beth A. Haggerty(8).................. 1,122 * 1,122 *
John S. Nauman(9).................... 131,208 * 131,208 *
Leo R. Jolicoeur(10)................. 38,911 * 38,911 *
Robert E.L. Johnson III (11)......... -- -- -- --
All directors and executive officers
as a group
(10 persons)(12).................... 7,806,356 28.45% 7,806,356 25.65%
</TABLE>
- --------
* Represents less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, the aggregate number of shares of Common Stock subject to options
held by that person that are currently exercisable or exercisable within
60 days of January 28, 1998 are deemed outstanding. Shares issuable
pursuant to such options are deemed outstanding for computing the
percentage of the person holding such options but are not deemed
outstanding for computing the percentage of any other person. To the
Company's knowledge, except as set forth in the footnote to this table
and subject to applicable community property laws, each party named in
the table has sole voting and investment power with respect to the shares
set forth opposite such party's name. Except as otherwise indicated, the
address of each of the parties in this table is as follows: c/o Infoseek
Corporation, 1399 Moffett Park Drive, Sunnyvale, California 94089.
(2) Represents 5,888,854 shares held in the name of trusts for the benefit of
Mr. Kirsch and family members of Mr. Kirsch.
(3) Includes all shares held by Bell Atlantic, which is a wholly-owned
subsidiary of NYNEX Corporation. Additionally, includes 7,500 shares held
in the name of Mr. Stover for the benefit of Bell Atlantic Corporation
issuable pursuant to stock options that may be exercised within 60 days
after January 28, 1998, of which 3,750 shares are subject to the
Company's right of repurchase.
(4) Includes 12,500 shares issuable pursuant to stock options that may be
exercised within 60 days after January 28, 1998.
(5) Includes 41,562 shares issuable pursuant to stock options that may be
exercised within 60 days after January 28, 1998, of which 9,375 shares
are subject to the Company's right of repurchase.
(6) Mr. Stover, a director of the Company, is President and Chairman of the
Board of Bell Atlantic Information Services Group, Chairman of the Board
of Global Directory Services Company and Chairman of the Board of Bell
Atlantic Yellow Pages Company.
(7) Represents 7,500 shares which are subject to the Company's right of
repurchase.
(8) Represents 1,122 shares held in the name of Ms. Haggerty's spouse.
(9) Includes 75,000 shares which are subject to the Company's right of
repurchase and 17,708 shares issuable pursuant to stock options that may
be exercised within 60 days after January 28, 1998.
(10) Includes 37,625 shares issuable pursuant to stock options that may be
exercised within 60 days after January 28, 1998.
(11) Mr. Johnson served as the Company's Chief Executive Officer through May
13, 1997.
(12) Includes 199,395 shares issuable pursuant to stock options that may be
exercised within 60 days after January 28, 1998, of which 95,625 shares
are subject to the Company's right of repurchase.

41
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and BT Alex.
Brown Incorporated are acting as representatives (the "Representatives"), has
severally agreed to purchase from the Company, the respective numbers of
shares of Common Stock set forth opposite its name below. In the Purchase
Agreement, the several Underwriters have agreed, subject to the terms and
conditions set forth therein, to purchase all of the shares of Common Stock
offered hereby if any of such shares are purchased. In the event of default by
an Underwriter, the Purchase Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting Underwriters may be
increased or the Purchase Agreement may be terminated.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................. 1,425,000
BT Alex. Brown Incorporated........................................ 1,425,000
PaineWebber Incorporated........................................... 50,000
UBS Securities LLC................................................. 50,000
Volpe Brown Whelan & Company, LLC.................................. 50,000
---------
Total......................................................... 3,000,000
=========
</TABLE>

The Representatives have advised the Company that the Underwriters propose
initially to offer the shares of Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price less a concession not in excess of $.47 per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $.10 per share to certain other dealers. After the public offering, the
public offering price, concession and discount may be changed.

The Company has granted to the Underwriters an option, exercisable for 30
days after the date of this Prospectus, to purchase up to an aggregate of
450,000 additional shares of Common Stock at the public offering price set
forth on the cover page of this Prospectus, less the underwriting discount.
The Underwriters may exercise such option only to cover over-allotments, if
any, made in connection with the sale of Common Stock offered hereby. To the
extent that the Underwriters exercise this option, each Underwriter will have
a firm commitment, subject to certain conditions, to purchase approximately
the same percentage thereof which the number of shares of Common Stock to be
purchased by it shown in the above table is of the 3,000,000 shares of Common
Stock initially offered hereby. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the 3,000,000 shares are
being offered.

Until the distribution of the Common Stock is completed, the rules of the
Securities and Exchange Commission (the "Commission") may limit the ability of
the Underwriters and certain selling group members (if any) to bid for and
purchase the Common Stock. As an exception to these rules, the Representatives
are permitted to engage in certain transactions that stabilize the price of
the Common Stock. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the offering (i.e., if they sell a greater number of shares of
Common Stock than is set forth on the cover page of this Prospectus), the
Representatives may reduce that short position by purchasing shares of Common
Stock in the open market. The Representatives may also elect to reduce any
short position by exercising all or part of the over-allotment option
described above.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.

42
<PAGE>

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the Representatives will engage in such transactions or
that such transactions, once commenced, will not be discontinued without
notice.

In connection with this offering, the Underwriters or their respective
affiliates and selling group members (if any) who are qualified market makers
on Nasdaq may engage in "passive market making" in the Common Stock on the
Nasdaq National Market in accordance with Rule 103 of Regulation M under the
Exchange Act. Rule 103 permits, upon the satisfaction of certain conditions,
underwriters and selling group members participating in a distribution that
are also Nasdaq market makers in the security being distributed (or a related
security) to engage in limited market making transactions during the period
when Regulation M under the Exchange Act would otherwise prohibit such
activity. Rule 103 prohibits underwriters and selling group members engaged in
passive market making generally from entering a bid or effecting a purchase at
a price that exceeds the highest bid for those securities displayed on the
Nasdaq National Market by a market maker that is not participating in the
distribution. Under Rule 103, each underwriter or selling group member engaged
in passive market making is subject to a daily net purchase limitation equal
to 30% of such entity's average daily trading volume during the two full
consecutive calendar months immediately preceding the date of the filing of
the registration statement under the Securities Act pertaining to the security
to be distributed (or such related security).

The Company and the directors and executive officers of the Company have
agreed not to offer, sell, contract to sell or otherwise dispose of, directly
or indirectly, or file or cause to be filed a registration statement under the
Securities Act with respect to, any shares of Common Stock, securities
convertible into, exchangeable for or repayable with such shares or rights or
warrants to acquire such shares, for a period of 90 days after the date of
this Prospectus without the prior written consent of Merrill Lynch, except
that the Company may, without such consent, grant options pursuant to its
benefit plans or issue shares of Common Stock upon exercise of options
currently outstanding, or issue, or file registration statements with respect
to, shares of Common Stock in connection with acquisitions.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Certain legal matters relating to this offering will be
passed upon for the Underwriters by Latham & Watkins, Menlo Park, California.

EXPERTS

The financial statements of Infoseek Corporation at December 31, 1997 and
1996, and for each of the three years in the period ended December 31, 1997,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

43
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy and information statements,
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy and information statements, and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C., as well as the regional offices of the Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois, and
Seven World Trade Center, Suite 1300, New York, New York. Copies of such
materials can be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Company's Common Stock is listed on the Nasdaq National Market. Reports and
other information concerning the Company are available for inspection at the
National Association of Securities Dealers, Inc. at 9513 Key West Avenue,
Rockville, Maryland 20850. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements, and other information
filed through the Commission's Electronic Data Gathering, Analysis and
Retrieval System. This Web site can be accessed at http://www.sec.gov.

The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and such
Common Stock, reference is made to the Registration Statement and the exhibits
and schedules thereto. Statements contained in this Prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference. Copies of
the Registration Statement, including all exhibits thereto, may be inspected
without charge at the Commission's principal office in Washington, D.C., and
copies of all or any part thereof may be obtained from such office after
payment of fees prescribed by the Commission.

44
<PAGE>

INFOSEEK CORPORATION

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors.......................... F-2
Balance Sheets............................................................. F-3
Statements of Operations................................................... F-4
Statements of Cash Flows................................................... F-5
Statements of Shareholders' Equity......................................... F-6
Notes to Financial Statements.............................................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Infoseek Corporation

We have audited the accompanying balance sheets of Infoseek Corporation as
of December 31, 1997 and 1996, and the related statements of operations,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Infoseek Corporation at
December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.

Ernst & Young, LLP

San Jose, California
January 16, 1998

F-2
<PAGE>

INFOSEEK CORPORATION

BALANCE SHEETS

(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1997 1996
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 3,218 $ 3,786
Short-term investments..................................... 28,116 42,867
Accounts receivable, less allowance for doubtful accounts
of $850 in 1997 and $350 in 1996.......................... 6,918 2,428
Other current assets....................................... 626 371
------- -------
Total current assets..................................... 38,878 49,452
Property and equipment:
Computer and office equipment.............................. 16,169 9,651
Furniture and fixtures..................................... 935 307
Leasehold improvements..................................... 1,323 108
------- -------
18,427 10,066
Less accumulated depreciation and amortization............. 8,144 2,479
------- -------
Net property and equipment................................. 10,283 7,587
Deposits and other assets.................................. 1,993 1,293
------- -------
Total assets............................................. $51,154 $58,332
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 4,779 $ 3,269
Accrued payroll and related expenses....................... 1,618 1,362
Accrued liabilities to service providers................... 4,221 --
Other accrued liabilities.................................. 2,045 1,070
Deferred revenue........................................... 2,542 760
Accrued restructuring and other charges.................... 1,877 --
Short-term obligations..................................... 2,475 994
------- -------
Total current liabilities................................ 19,557 7,455
Long-term obligations........................................ 4,329 1,892
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value:
Authorized shares--5,000,000
No shares issued and outstanding........................... -- --
Common stock, no par value:
Authorized shares--60,000,000
Issued and outstanding shares--27,244,000 in 1997 and
25,691,000 in 1996........................................ 73,565 73,754
Accumulated deficit.......................................... (45,394) (20,771)
Deferred compensation........................................ (753) (3,546)
Notes receivable from shareholders........................... (150) (452)
------- -------
Total shareholders' equity............................... 27,268 48,985
------- -------
Total liabilities and shareholders' equity............... $51,154 $58,332
======= =======
</TABLE>

See accompanying notes.

F-3
<PAGE>

INFOSEEK CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
---------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
TOTAL REVENUES.................................... $ 34,603 $ 15,095 $ 1,032
Cost of revenues.................................. 6,100 3,194 614
-------- -------- -------
Gross profit...................................... 28,503 11,901 418
OPERATING EXPENSES
Research and development......................... 7,327 4,550 1,175
Sales and marketing.............................. 33,364 20,455 1,488
General and administrative....................... 6,406 4,177 1,148
Restructuring and other charges.................. 7,349 -- --
-------- -------- -------
Total operating expenses.......................... 54,446 29,182 3,811
-------- -------- -------
Operating loss.................................... (25,943) (17,281) (3,393)
INTEREST INCOME (EXPENSE)
Interest income.................................. 1,943 1,771 115
Interest expense................................. (623) (428) (18)
-------- -------- -------
1,320 1,343 97
-------- -------- -------
NET LOSS.......................................... $(24,623) $(15,938) $(3,296)
======== ======== =======
Basic and diluted net loss per share.............. $ (0.93) $ (0.73) $ (0.13)
Shares used in computing basic and diluted net
loss per share
(pro forma in 1995).............................. 26,610 21,737 25,863
</TABLE>

See accompanying notes.

F-4
<PAGE>

INFOSEEK CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
---------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss......................................... $(24,623) $(15,938) $(3,296)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................. 4,788 2,157 438
Writedown of restructuring related assets...... 2,080 -- --
Amortization of unearned compensation related
to stock options.............................. 832 1,347 44
Amortization of warrants issued in connection
with term loan................................ -- -- 21
Fair value assigned to services provided by
Netscape...................................... -- -- 200
Changes in operating assets and liabilities:
Accounts receivable............................ (4,490) (1,929) (499)
Other current assets........................... (255) (260) (92)
Deposits and other assets...................... (1,500) -- --
Accounts payable............................... 1,510 2,047 1,211
Accrued payroll and related expenses........... 256 1,291 67
Accrued liabilities to service providers....... 4,221 -- --
Other accrued liabilities...................... 975 457 498
Deferred revenue............................... 1,782 760 --
Accrued restructuring and other charges........ 1,877 -- --
-------- -------- -------
Net cash used in operating activities............ (12,547) (10,068) (1,408)
INVESTING ACTIVITIES
Purchases of available-for-sale investments...... (44,769) (92,966) (2,483)
Proceeds from sales of available-for-sale
investments..................................... 59,520 50,596 1,986
Issuance of notes receivable..................... (950) (600) --
Purchase of property and equipment............... (7,484) (6,857) (2,829)
-------- -------- -------
Net cash provided by (used) in investing
activities...................................... 6,317 (49,827) (3,326)
FINANCING ACTIVITIES
Term loan........................................ 5,000 2,573 967
Repayments of term loan.......................... (1,082) (763) (100)
Payment of deposit............................... -- (693) --
Proceeds from sale of convertible preferred
stock, net of issuance costs.................... -- 17,619 4,430
Proceeds from sale of common stock, net of
issuance costs.................................. -- 43,785 --
Proceeds from the exercise of stock options...... 1,147 6 --
Proceeds from employee stock purchase plan....... 295 -- --
Proceeds from repayment of notes receivable from
shareholders.................................... 302 28 --
Repurchase of common stock....................... -- (3) (2)
-------- -------- -------
Net cash provided by financing activities........ 5,662 62,552 5,295
-------- -------- -------
Net increase in cash and cash equivalents........ (568) 2,657 561
Cash and cash equivalents at beginning of period. 3,786 1,129 568
-------- -------- -------
Cash and cash equivalents at end of period....... $ 3,218 $ 3,786 $ 1,129
======== ======== =======
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES

Unearned compensation related to stock options amounted to $440,000,
$3,102,000 and $2,124,000 for the years ended December 31, 1997, 1996 and
1995, respectively. Cash paid for interest expense amounted to $606,000,
$428,000 and $18,000 in 1997, 1996 and 1995, respectively.

See accompanying notes.

F-5
<PAGE>

INFOSEEK CORPORATION

STATEMENTS OF SHAREHOLDERS' EQUITY

(IN THOUSANDS)
<TABLE>
<CAPTION>
CONVERTIBLE NOTES
PREFERRED STOCK COMMON STOCK RECEIVABLE TOTAL
---------------- --------------- ACCUMULATED DEFERRED FROM SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT DEFICIT COMPENSATION SHAREHOLDERS EQUITY
------- ------- ------ ------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1994................... 9,421 $ 2,020 3,783 $ 38 $ (1,537) $ -- $ -- $ 521
Issuance of preferred
stock and warrants for
technology and cash... 6,159 4,675 -- -- -- -- -- 4,675
Repurchase of common
stock from founder.... -- -- (155) (2) -- -- -- (2)
Issuance of common
stock to employee for
note receivable....... -- -- 372 50 -- -- (50) --
Unearned compensation
related to stock
options............... -- -- -- 2,124 -- (2,124) -- --
Amortization of
unearned compensation. -- -- -- -- -- 44 -- 44
Fair value assigned to
services provided by
Netscape.............. -- -- -- 200 -- -- -- 200
Net loss............... -- -- -- -- (3,296) -- -- (3,296)
------- ------- ------ ------- -------- ------ ----- -------
BALANCE AT DECEMBER 31,
1995................... 15,580 6,695 4,000 2,410 (4,833) (2,080) (50) 2,142
Cancellation of
preferred stock issued
for purchased
technology............ (280) -- -- -- -- -- -- --
Unearned compensation
related to stock
options............... -- -- -- 3,102 -- (3,102) -- --
Amortization of
unearned compensation. -- -- -- -- -- 1,346 -- 1,346
Issuance of preferred
stock for cash, net of
issuance costs........ 2,267 17,619 -- -- -- -- -- 17,619
Repurchases of common
stock................. -- -- (325) (3) -- -- -- (3)
Issuance of common
stock to officers..... -- -- 787 910 -- -- (610) 300
Cancellation of note
receivable and
repurchase of shares.. -- -- (365) (470) -- 290 180 --
Payment on
shareholders' notes
receivable............ -- -- -- -- -- -- 28 28
Conversion of preferred
stock into common
stock upon the initial
public offering....... (17,567) (24,314) 17,567 24,314 -- -- -- --
Issuance of common
stock in connection
with initial public
offering, net of
issuance costs........ -- -- 3,973 43,485 -- -- -- 43,485
Exercise of common
stock options......... -- -- 54 6 -- -- -- 6
Net loss............... -- -- -- -- (15,938) -- -- (15,938)
------- ------- ------ ------- -------- ------ ----- -------
BALANCE AT DECEMBER 31,
1996................... -- -- 25,691 73,754 (20,771) (3,546) (452) 48,985
Unearned compensation
related to stock
options............... -- -- -- 440 -- (440) -- --
Amortization of
unearned compensation. -- -- -- -- -- 832 -- 832
Reversal of unearned
compensation.......... -- -- -- (2,071) -- 2,071 -- --
Writeoff deferred
compensation related
to restructure........ -- -- -- -- -- 330 -- 330
Repurchases of common
stock................. -- -- (27) -- -- -- -- --
Payment on
shareholders' notes
receivable............ -- -- -- -- -- -- 302 302
Exercise of common
stock options......... -- -- 1,445 1,147 -- -- -- 1,147
Issuance of common
stock through employee
stock purchase plan... -- -- 44 295 -- -- -- 295
Issuance of common
stock from exercise of
warrants.............. -- -- 91 -- -- -- -- --
Net loss............... -- -- -- -- (24,623) -- -- (24,623)
------- ------- ------ ------- -------- ------ ----- -------
BALANCE AT DECEMBER 31,
1997................... -- $ -- 27,244 $73,565 $(45,394) $ (753) $(150) $27,268
======= ======= ====== ======= ======== ====== ===== =======
</TABLE>

See accompanying notes.

F-6
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization--Infoseek Corporation (the "Company") provides leading Internet
search and navigation technology, products and services that use the Web to
connect its viewers' personal, work and community lives. As a "connected"
media company, Infoseek is able to segment viewers by interest area, providing
advertisers with focused and targeted audiences. The Infoseek Service is a
comprehensive Internet gateway that combines search and navigation with
directories of relevant information sources and content sites, offers chat and
instant messaging for communicating shared interests and facilitates the
purchase of related goods and services. The Company conducts its business
within one industry segment.

Cash and Cash Equivalents--The Company considers all highly liquid debt
instruments which are purchased with a maturity of three months or less to be
cash equivalents.

Short-Term Investments--The Company accounts for investments in accordance
with Financial Accounting Standards Board, Statement No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Management determines the
appropriate classification of debt securities at the time of purchase and
reevaluates such designation as of each balance sheet date. The Company's
short-term investments, which consist primarily of commercial paper and
government agency notes with maturities of one year or less, are classified as
available-for-sale, and as such, are carried at fair value with the unrealized
gains and losses, net of tax, reported in a separate component of
shareholders' equity. The amortized cost of debt securities in this category
is adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization, as well as any interest on the securities, is
included in interest income. Realized gains and losses and declines in value
judged to be other-than-temporary on available-for-sale securities are
included in interest income (expense). The cost of securities sold is based on
the specific identification method. The Company had no investments in equity
securities at December 31, 1997 and 1996.

Property and Equipment--Property and equipment are carried at cost less
accumulated depreciation. The Company depreciates property and equipment using
the straight-line method over the estimated useful lives of three to five
years. Leasehold improvements are amortized using the straight-line method
over the shorter of the life of the related asset or the term of the lease.

Research and Development--Research and development expenditures are
generally charged to operations as incurred. Financial Accounting Standards
Board, Statement No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed," requires the capitalization of certain
software development costs subsequent to the establishment of technological
feasibility. In the Company's case, capitalization would begin upon completion
of a working model as the Company does not prepare detailed program designs as
part of the development process. As of December 31, 1997 and 1996, capitalized
costs were insignificant.

Stock-Based Compensation--The Company has elected to follow Accounting
Principles Board Opinion No. 25 (APB No. 25), "Accounting of Stock Issued to
Employees" and related interpretations, in accounting for its employee stock
options because, as discussed below, the alternative fair value accounting
provided for under Financial Accounting Standards Board, Statement No. 123
(SFAS No. 123) "Accounting for Stock-Based Compensation," requires use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, with the exception of certain options granted
during 1997, 1996 and 1995 as discussed in Note 7, no compensation expense is
recognized as the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant.

Long-Lived Assets--In 1995, the Financial Accounting Standards Board
released the Statement No. 121 (SFAS No. 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No.
121 requires recognition of impairment of long-lived assets in the event the
net book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. SFAS No. 121 has not had a material impact on the
financial statements of the Company.

F-7
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Revenue Recognition--The Company's advertising revenues are derived
principally from short-term advertising contracts in which the Company
guarantees a minimum number of impressions for a fixed fee. Advertising
revenues are recognized ratably over the term of the contract provided that
the monthly minimum impressions are met, the Company does not have any
remaining significant obligations, and collection of the resulting receivable
is probable. To the extent the minimum guaranteed impressions are not met, the
Company defers recognition of the revenue until guaranteed impressions levels
are met.

Also included in advertising revenues is the exchange by the Company of
advertising space on the Company's Web sites for reciprocal advertising space
in other media publications or other Web sites or receipt of applicable goods
and services. Revenues from these exchange transactions are recorded as
advertising revenue at the estimated fair value of the goods and services
received and are recognized when both the Company's advertisements and the
reciprocal advertisements are run, or goods or services are received.
Advertising revenues recognized under these trading activities were less than
10% of total revenues for all periods presented.

In late 1997, the Company released a new version of its service which
features 15 "channels," and provides opportunities for revenue from the sale
of channel sponsorships, as well as to enable the Company to share in a
portion of the revenue generated by its viewers with these channel sponsors.
Revenue generated by channel sponsors is included in advertising revenues and
is generally recognized on a straight line basis over the term of the
agreements provided that minimum impressions are met.

The Company also derived revenues of $2,141,000 from the licensing of its
Ultraseek technology. License revenues are recognized at the time of delivery,
provided no significant obligations remain and collectibility of the resulting
receivable is probable.

During 1996 and 1995, the Company also derived revenues from fees related to
a premium subscription service offered to business and professional users.
Revenues from this service are recognized over the period the services are
provided. During the third quarter of 1996, the Company discontinued this
service.

Advertising Costs--Advertising costs are expensed as incurred. Advertising
costs, which include service provider fees and reciprocal advertising amounted
to $14,840,000 and $8,523,000 for the years ended December 31, 1997 and 1996,
respectively. There were no advertising costs for the year ended December 31,
1995. The Company does not incur any significant direct response advertising
costs.

Concentration of Credit Risk--Financial instruments that potentially subject
the Company to concentrations of credit risk consist primarily of cash
equivalents, short-term investments, and trade receivables. The Company places
its cash equivalents and short-term investments with high-quality financial
institutions. Through December 31, 1997, the Company invested its excess cash
in commercial paper, government agency notes and money market funds. The
Company operates in one business segment and sells advertising to various
companies across several industries. The Company generally does not require
collateral. The Company maintains allowances for credit losses, and such
losses have been within management's expectations. For the year ended December
31, 1997, no customer accounted for greater than 10% of revenues. For the year
ended December 31, 1996, one customer (a related party, see Note 11) accounted
for 13% of revenues and for the year ended December 31, 1995, another customer
accounted for 13% of revenues.

Net Loss Per Share--In 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share. Statement No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. Earnings per share amounts for all
periods have been presented and where appropriate, restated to conform to the
Statement No. 128 requirements.

F-8
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Pursuant to the Securities and Exchange Commission Staff Accounting
Bulletins, convertible preferred stock, redeemable convertible preferred
stock, common stock and common equivalent shares issued by the Company at
prices below the initial public offering price during the twelve-month period
prior to the offering have been included in the basic and diluted calculation
through June 11, 1996 (the initial public offering date) as if they were
outstanding for all periods presented regardless of whether they are
antidilutive (using the treasury stock method at the public offering price).

Pro Forma Net Loss Per Share--Pro forma net loss per share for the year
ended December 31, 1995 has been computed as described above and also gives
effect, even if antidilutive, to common equivalent shares from preferred stock
that automatically converted upon the closing of the Company's initial public
offering (using the as-if-converted method).

Use of Estimates in the Preparation of Financial Statements--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 the disclosure of
contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of revenue and expenses during the reporting
period. Actual results inevitably will differ from those estimates, and such
differences may be material to the financial statements.

New Accounting Pronouncements--The Financial Accounting Standards Board
approved the new American Institute of Certified Public Accountants Statement
of Position, Software Revenue Recognition (SOP 97-2). SOP 97-2 will be
effective for the Company beginning in the first quarter of 1998. The Company
does not believe the adoption of SOP 97-2 will have a significant impact on
its revenue recognition policy.

Reclassifications--Certain reclassifications, none of which affected net
loss, have been made to prior year's amounts in order to conform to the
current year's presentation.

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting
market data to develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that the
Company could realize in a current market exchange.

<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
-----------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
SHORT-TERM INVESTMENTS COST GAINS LOSSES VALUE
---------------------- --------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial paper................. $23,007 $ -- $ -- $23,007
Government agency notes.......... 4,003 2 -- 4,005
Money market fund................ 1,106 -- -- 1,106
------- -------- -------- -------
Total.......................... $28,116 $ 2 $ -- $28,118
======= ======== ======== =======
</TABLE>

F-9
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
SHORT-TERM INVESTMENTS COST GAINS LOSSES FAIR VALUE
---------------------- --------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial paper.................. $27,588 $ -- $ -- $27,588
Government agency notes........... 15,279 -- -- 15,279
------- -------- -------- -------
Total........................... $42,867 $ -- $ -- $42,867
======= ======== ======== =======
</TABLE>

Realized gains and losses were insignificant during all periods presented.

3. OBLIGATIONS

In March 1997, the Company entered into a four year, $5,000,000 equipment
term loan facility. The loan bears interest at the bank's prime rate plus
0.25% (8.75% at December 31, 1997). Under the terms of the agreement, the
Company grants a security interest in certain assets of the Company and must
maintain financial covenants including minimum tangible net worth and others
based on monthly cash balances with which the Company was in compliance as of
December 31, 1997. Under the equipment term loan facility the Company is
restricted in its ability to pay dividends. Interest only payments will be
made during the first 12 months and borrowings and interest will be repaid on
a straight-line basis over 36 months beginning in month 13 of the facility. As
of December 31, 1997, there was approximately $5,000,000 outstanding against
the term loan facility.

In 1996 and 1995, the Company entered into term loan agreements with a
lending institution under which the Company borrowed approximately $3,540,000
to finance the purchase of equipment. Borrowings made under the agreement are
due over 37 months, bear interest which ranges from 15.80% to 16.39%, and are
secured by certain assets of the Company. In connection with the 1996 loan
agreement, the Company paid a cash deposit of $693,000 to the lending
institution which is included in deposits and other assets on the balance
sheet.

Maturities under these agreements are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1997
--------------
(IN THOUSANDS)
<S> <C>
1998...................... $2,475
1999...................... 2,245
2000...................... 1,667
2001...................... 417
------
$6,804
======
</TABLE>

F-10
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. COMMITMENTS AND CONTINGENCIES

Operating lease

The Company leases its facilities under operating lease agreements which
expire at various dates through 2002. Total rent expense for the years ended
December 31, 1997, 1996 and 1995 was $1,372,000, $379,000 and $86,000,
respectively. In January 1998, the Company signed an agreement to sublease
approximately 20,500 square feet of its Sunnyvale, California facility. In
connection with the sublease agreement, the Company will receive future rent
payments of approximately $372,000 in 1998 and $300,000 in 1999. Minimum
future rental commitments under these leases, net of sublease rent payments,
are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1997
(IN THOUSANDS) ------------
<S> <C>
1998........................ $1,756
1999........................ 1,799
2000........................ 2,089
2001........................ 1,985
2002........................ 1,712
------
$9,341
======
</TABLE>

Netscape

Historically, a large portion of the Company's traffic was derived through
the Web page of Netscape Communications Corporation ("Netscape"). In March
1996, the Company entered into an agreement with Netscape, which provided that
the Company would be listed as a Premier Provider on Netscape's Web page for
the period from April 10, 1996 to March 31, 1997. This agreement with Netscape
provided for an aggregate of $5,000,000 in cash and reciprocal advertising
($3,500,000 in cash and $1,500,000 in reciprocal advertising) over the course
of the one-year term of the agreement. In March 1997, Infoseek renewed its
agreement with Netscape under terms that extended the current contract through
April 30, 1997 and thereafter provided for Infoseek to be one of four premier
providers displayed on Netscape's Web page for the period of May 1, 1997
through April 30, 1998. The renewed agreement with Netscape provides for the
Company to pay an aggregate of $12,500,000 in cash and reciprocal advertising
($10,000,000 in cash and $2,500,000 in reciprocal advertising) over the term
of the agreement. During the year ended December 31, 1997 and 1996, the
Company recognized $9,583,000 and $3,750,000, respectively, of expense related
to this agreement. The payments to Netscape are being recognized ratably over
the term of the agreement. At December 31, 1997, the Company had approximately
$7,555,000 of cash commitment remaining in connection with this agreement, of
which $4,221,000 is included in accrued liabilities to service providers on
the December 31, 1997 balance sheet.

In July 1997, the Company entered into an agreement with Netscape whereby it
was designated as a premier provider of international search and navigational
guide services for the Netscape Net Search Program. Under the terms of the
agreement, the Company will provide services for 10 Netscape local Web sites.
The Company's agreement with Netscape provides for payments ranging from a
minimum of $666,000 ($400,000 in cash and $266,000 in reciprocal advertising)
to a maximum of $1,219,000 ($677,000 in cash and $542,000 in reciprocal
advertising) depending on the level of traffic delivered by Netscape. During
the year ended December 31, 1997, Netscape delivered traffic at the minimum
level and as a result the Company recognized sales and marketing expenses of
approximately $333,000 under this agreement. At December 31, 1997, the Company
had a cash commitment ranging from a minimum of $74,000 to a maximum of
$351,000 depending on the level of traffic delivered by Netscape in connection
with this agreement.

F-11
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Contingencies

From time to time, the Company may be a party to litigation and claims
incident to the ordinary course of its business. Although the results of
litigation and claims cannot be predicted with certainty, the Company believes
that the final outcome of such matters will not have a material adverse effect
on the Company's financial position, results of operations, or cash flows.

5. RESTRUCTURING AND OTHER CHARGES

During the second quarter of 1997, the Company recorded restructuring and
other charges of approximately $7,400,000, of which approximately $6,200,000
related to the discontinuance of certain business arrangements, which were
determined to be non-strategic, and approximately $1,200,000 related to
management changes. Of these restructuring charges, approximately $5,000,000
involves cash outflows, of which $3,100,000 has been completed as of December
31, 1997. Non-cash restructuring charges of approximately $2,400,000 relate
primarily to the write-down of certain non-strategic business assets. There
have been no material changes to the restructuring plan or in the estimates of
the restructuring costs. As of December 31, 1997, the Company has
approximately $1,900,000 remaining in its restructuring reserve, which is
anticipated to be fully utilized by June 30, 1998.

6. SHAREHOLDERS' EQUITY

Preferred Stock--On May 15, 1996, the Board of Directors authorized
5,000,000 shares of undesignated preferred stock. In connection with this
action, the Board has the authority to issue in one or more series and to fix
the rights, preferences, privileges, and restrictions thereof, without further
vote or action by the shareholders. No such shares have been issued to date.

Convertible Preferred Stock--Through May of 1996, the Company issued series
A, B, C and E convertible preferred stock. A portion of the Series E
convertible preferred stock was redeemable at the request of the holder. On
June 11, 1996, the Company completed its initial public offering and at that
time all outstanding shares of convertible preferred stock were converted into
common stock on a one-for-one basis.

Common Stock--On May 15, 1996, the Company's Shareholders approved a 3-for-4
reverse stock split of the Company's preferred and common stock. All
outstanding preferred, common and common equivalent shares in the accompanying
financial statements have been retroactively adjusted to give effect to this
reverse stock split. At the same time, the Board of Directors approved the
increase of authorized common stock to 60,000,000 shares.

Founders' Common Stock--The Company has the right, at any time within sixty
days after termination of a founder's employment or service, to repurchase
certain common shares at the price per share paid by the founder. The
Company's right to repurchase lapses with respect to 25% of the total number
of shares held by the founder, commencing twelve months after purchase, and in
monthly increments of 2.08% of the total number of shares thereafter. There
were approximately 7,000 and 1,101,000 common shares subject to repurchase by
the Company at December 31, 1997 and 1996, respectively.

Shareholders' Notes Receivable--During 1996 and 1995, the Company entered
into agreements with certain officers and an employee to sell 412,000 and
372,000 shares, respectively, of the Company's common stock in exchange for
full recourse promissory notes. The shares are subject to repurchase by the
Company, and such repurchase options lapse in monthly increments of 2.08% of
the total number of shares purchased. At December 31, 1997 and 1996, there
were approximately 81,000 and 504,000 common shares, respectively, subject to
repurchase by the Company.

F-12
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Warrants--During 1995, in connection with an equipment financing
transaction, the Company issued warrants to purchase 100,000 shares of series
C convertible preferred stock at an exercise price of $0.80 per share. These
warrants are exercisable at any time through October 2000. As of December 31,
1997 all warrants had been exercised. The Company recorded additional interest
expense using the minimum value method to determine the value of the warrants.

Common Stock Reserved For Future Issuance--Shares of common stock reserved
for future issuance are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1997
(IN THOUSANDS) ------------
<S> <C>
Preferred stock............. 5,000
Stock option plan........... 5,716
Employee stock purchase
plan....................... 143
------
10,859
======
</TABLE>

7. STOCK OPTION/STOCK ISSUANCE PLAN

The Company's Stock Option Plan (the "Predecessor Plan") provides for the
grant of incentive stock options and nonstatutory stock options to employees
and consultants of the Company at prices ranging from 85% to 110% (depending
on the type of grant) of the fair market value of the common stock on the date
of grant as determined by the Board of Directors.

In April 1996, the Board of Directors adopted the 1996 Stock Option/Stock
Issuance Plan (the "1996 Plan") which was approved by the Company's
shareholders on May 15, 1996. The 1996 Plan is intended to serve as the
successor equity incentive stock issuance program to the Predecessor Plan.
Under the 1996 Plan, 7,225,000 shares of common stock have been authorized for
issuance. The 1996 Plan is divided into three separate components: the
Discretionary Option Grant Program under which eligible individuals may be
granted options to purchase shares of common stock at an exercise price of not
less than 85% of their fair market value on the grant date; the Stock Issuance
Program under which eligible individuals may be issued shares of common stock
directly through the purchase of such shares at a price of not less than 85%
of their fair market value at the time of issuance or as a bonus tied to the
performance of services; and the Automatic Option Grant Program under which
option grants will automatically be made at periodic intervals to eligible non
employee Board members to purchase shares of common stock at an exercise price
equal to 100% of their fair market value on the grant date.

The vesting and exercise provisions of the option grants are determined by
the Board of Directors. Options generally vest and become exercisable as to
25% of the shares one year from the date of grant and the balance in monthly
increments over the subsequent three years of service. Options expire no later
than seven years from the date of grant. Options for the purchase of 583,000
and 845,000 shares were exercisable as of December 31, 1997 and 1996,
respectively.

The Company has elected to follow Accounting Principles Board Opinion No. 25
(APB No. 25), "Accounting of Stock Issued to Employees" and related
interpretations, in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
Financial Accounting Standards Board, Statement No. 123 (SFAS No. 123)
"Accounting for Stock-Based Compensation," requires use of option valuation
models that were not developed for use in valuing employee stock options. The
Company, under APB No. 25, generally does not recognize compensation expense
as the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant.

F-13
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Through December 31, 1997, the Company recorded aggregate deferred
compensation of $5,666,000 representing the difference between the grant price
and the deemed fair value of the Company's common stock granted during those
periods. The amortization of deferred compensation is being charged to
operations and is being amortized over the vesting period of the options,
which is typically four years. For December 31, 1997, 1996 and 1995, the
amortized expenses were $832,000, $1,346,000 and $44,000, respectively.

Pro forma information regarding net loss and loss per share is required by
SFAS No. 123, which also requires that the information be determined as if the
Company has accounted for its employee stock options granted subsequent to
December 31, 1994 under the fair value method of this statement. The fair
value for options granted during 1997 were estimated at the date of grant
using the Black-Scholes multiple option pricing model with the following
weighted average assumptions: risk-free interest rate ranging from 5.53% to
6.77%; a dividend yield of 0.0%; a volatility factor of the expected market
price of the Company's common stock of .87; and a weighted-average expected
life of the option of five years for officers and four years for non officers.
Subsequent to the Company's initial public offering in June 1996, the fair
value of options granted during the balance of 1996 were estimated with the
following weighted average assumptions: risk-free interest rate ranging from
5.18% to 6.58% in 1996 and 5.34% to 7.03% in 1995; a dividend yield of 0.0%; a
volatility factor of the expected market price of the Company's common stock
of .80; and a weighted-average expected life of the option of five years for
officers and four years for non officers. The fair value for options granted
prior to the Company's initial public offering in June 1996 were estimated at
the date of grant using the minimum value method and have a volatility factor
of zero.

Had compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method of SFAS No. 123, the Company's net loss and
loss per share would have been increased to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
Pro forma net loss................................ $28,980 $17,328 $3,442
Pro forma basic and diluted net loss per share.... $ 1.09 $ 0.80 $ 0.13
</TABLE>

Because SFAS No. 123 is applicable only to options granted subsequent to
December 31, 1994, its pro forma effect will not be fully reflected until
1999.

In July 1997, the Board of Directors authorized the repricing of options to
purchase 821,300 shares of common stock effective on July 23, 1997 to the then
fair market value of $6.13 per share. Under the terms of the repricing, the
repriced options maintain the same vesting and expiration terms, except they
may not be exercised until January 9, 1998. Executive officers, consultants
and members of the Board of Directors were not eligible to participate in the
repricing.

F-14
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

A summary of the Company's stock option activity and related information for
the years ended December 31 is as follows:

<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ---------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
------- -------------- ------- -------------- ------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Outstanding--beginning
of year................ 4,914 $2.10 3,074 $0.13 165 $0.07
Granted............... 4,384 $6.61 2,851 $3.98 3,438 $0.13
Exercised............. (1,455) $0.79 (54) $0.11 -- --
Cancelled............... (3,722) $4.79 (957) $1.51 (529) $0.11
------ ----- -----
Outstanding--end of
year................... 4,121 $4.92 4,914 $2.10 3,074 $0.13
Exercisable at end of
year................... 583 $2.63 845 $0.35 155 $0.13
Weighted-average fair
value of options
granted during the
year................... $4.48 $3.79 $0.40
</TABLE>

Outstanding and exercisable options by price range as of December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------- -----------------------------------------------
NUMBER NUMBER
OUTSTANDING AS OF WEIGHTED AVERAGE WEIGHTED EXERCISABLE AS OF WEIGHTED
RANGE OF EXERCISE DECEMBER 31, REMAINING AVERAGE DECEMBER 31, AVERAGE
PRICES 1997 CONTRACTUAL LIFE EXERCISE PRICE 1997 EXERCISE PRICE
- ----------------- ----------------- ---------------- -------------- ----------------- --------------
(IN THOUSANDS) (YEARS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
$ 0.00-$ 5.00 2,687 7.9 $ 3.47 386 $0.51
$ 5.01-$10.00 1,018 7.5 $ 6.64 197 $6.77
$10.01-$15.00 416 9.8 $10.26 -- $ --
----- ---
4,121 8.0 $ 2.10 583 $2.63
===== ===
</TABLE>

8. EMPLOYEE STOCK PURCHASE PLAN

In April 1996, the Board of Directors adopted the 1996 Employee Stock
Purchase Plan (the "Purchase Plan"), which is designed to allow eligible
employees of the Company to purchase shares of common stock at semiannual
intervals through their periodic payroll deductions. An aggregate of 187,500
shares of common stock has been reserved for the Purchase Plan of which 44,443
have been issued through December 31, 1997. The Purchase Plan is implemented
in a series of successive offering periods, each with a maximum duration of 24
months. Eligible employees can have up to 10% (up to a maximum of 1,000 shares
per year) of their base salary deducted that is to be used to purchase shares
of the common stock on specific dates determined by the Board of Directors.
The price of common stock purchased under the Purchase Plan will be equal to
85% of the lower of the fair market value of the common stock on the
commencement date of each offering period or the specified purchase date. The
Company does not recognize compensation cost related to employee purchase
rights under the Plan. To comply with the pro forma reporting requirements of
SFAS No. 123, compensation cost is estimated for the fair value of the
employees' purchase rights using the Black-Scholes model with the following
assumptions for those rights granted in 1997: a risk free interest rate of
6.0%; dividend yield of 0.0%; expected volatility factor of .87; and an
expected life of six months; and for those granted in 1996: a risk free
interest rate of 5.0%; dividend yield of 0.0%; expected volatility factor of
.80; and an expected life of six months. The weighted average estimated fair
value of the Purchase Plan shares granted in 1997 was $4.05.

F-15
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

9. INCOME TAXES

Due to the Company's loss position, there was no provision for income taxes
for any period presented.

As of December 31, 1997, the Company has federal and state net operating
loss carry forwards of approximately $42,600,000 and $28,300,000,
respectively. The federal net operating loss carry forwards will expire in the
years 2009 through 2012, and the state net operating loss carry forwards will
expire in the years 1999 through 2002. The Company has federal and state
research and experimentation credits of approximately $300,000 each, that will
expire in the years 2009 through 2012. Utilization of the net operating losses
and credits may be subject to a substantial annual limitation due to the
ownership change limitations provided by the Internal Revenue Code of 1986 and
similar state provisions. The annual limitation may result in the expiration
of net operating losses and credits before utilization.

Deferred taxes reflect the net tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred taxes consisted of the following at:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Net operating losses.................................. $ 16,548 $ 7,500
Research credit carry forwards........................ 406 200
Accrued royalties..................................... 37 60
Other individually immaterial items................... 1,654 340
-------- -------
Total deferred tax assets........................... 18,645 8,100
Valuation allowance................................... (18,645) (8,100)
-------- -------
Total net deferred tax assets....................... $ -- $ --
======== =======
</TABLE>

The change in the valuation allowance was a net increase of approximately
$6,409,000 for the year ended December 31, 1996.

10. EMPLOYEE BENEFIT PLAN

In January 1996, the Company adopted a plan to provide retirement and
incidental benefits for its eligible employees, known as the Infoseek
Corporation 401(k) Plan ("the Plan"). As allowed under Section 401(k) of the
Internal Revenue Code, the Plan provides tax-deferred salary deductions for
eligible employees. Participants in the Plan may make salary deferrals of up
to 20% of their annual salary, limited by the maximum dollar amount allowed by
the Internal Revenue Code. The Company, at its discretion, may elect to make
contributions to the Plan on behalf of its eligible participants. The Company
has made no such contributions to date.

11. RELATED PARTY TRANSACTIONS

Bell Atlantic, with a representative on the Company's Board of Directors and
ownership of a substantial amount of the outstanding common stock of the
Company, is considered a related party. In March 1996, the Company and Bell
Atlantic entered into a one-year agreement, which provided for the Company's
display of the BigYellow logo within the Infoseek Service. According to the
terms of the agreement, Bell Atlantic agreed to pay to the Company up to an
aggregate of $4,600,000, in monthly payments, which amount would be decreased
proportionately if the number of impressions of the BigYellow logo were below
a specified number. In

F-16
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

February 1997, the Company signed an amendment with Bell Atlantic extending
the term of the original agreement, dated March 1996, through June 1998 in
exchange for an additional $1,400,000, for a total of $6,000,000, in monthly
payments. The terms and conditions of the amended agreement are substantially
the same, except for elimination of certain exclusivity and reimbursement
provisions. The Company recognized revenue of $2,820,000 and $1,882,000 in
connection with this agreement during the year ended December 31, 1997 and
1996, respectively. Amounts receivable from and payable to such related party
were immaterial at December 31, 1997 and 1996.

12. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings
per share (in thousands, except per share amounts):

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Numerator:
Net loss...................................... $(24,623) $(15,938) $ (3,296)
Numerator for basic and diluted loss per
share........................................ $(24,623) $(15,938) $ (3,296)
======== ======== ========
Weighted average of common shares............. 26,610 12,494 3,680
Shares related to SEC Staff Accounting
Bulletins No. 55, 64 and 83.................. -- 5,201 12,483
Conversion of preferred stock not included in
shares related to SEC Staff Accounting
Bulletins No. 55, 64 and 83.................. -- 4,042 9,700
-------- -------- --------
Denominator for basic and diluted loss per
share (pro forma in 1995).................... 26,610 21,737 25,863
======== ======== ========
Basic and diluted loss per share (pro forma in
1995)........................................ $ (0.93) $ (0.73) $ (0.13)
======== ======== ========
</TABLE>

F-17
<PAGE>

INFOSEEK CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

13. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1997 1997
--------- -------- ------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Total revenues.................. $ 6,151 $ 7,684 $ 8,255 $12,513
Cost of revenues................ 1,284 1,490 1,468 1,858
------- -------- ------- -------
Gross profit.................... 4,867 6,194 6,787 10,655
Operating expenses:
Research and development....... 1,592 2,203 1,637 1,895
Sales and marketing............ 6,453 7,294 8,129 11,488
General and administrative..... 1,333 1,665 1,809 1,599
Restructuring and other
charges....................... -- 7,349 -- --
------- -------- ------- -------
Total operating expenses........ 9,378 18,511 11,575 14,982
------- -------- ------- -------
Operating loss.................. (4,511) (12,317) (4,788) (4,327)
Net interest income............. 405 383 295 237
------- -------- ------- -------
Net loss........................ $(4,106) $(11,934) $(4,493) $(4,090)
======= ======== ======= =======
Basic and diluted net loss per
share.......................... $ (0.16) $ (0.45) $ (0.17) $ (0.15)
======= ======== ======= =======
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1996 1996 1996 1996
--------- -------- ------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Total revenues.................. $ 1,731 $ 3,286 $ 4,007 $ 6,071
Cost of revenues................ 690 729 827 948
------- -------- ------- -------
Gross profit.................... 1,041 2,557 3,180 5,123
Operating expenses:
Research and development....... 934 950 1,218 1,448
Sales and marketing............ 2,757 5,566 5,219 6,913
General and administrative..... 860 919 1,091 1,307
------- -------- ------- -------
Total operating expenses........ 4,551 7,435 7,528 9,668
------- -------- ------- -------
Operating loss.................. (3,510) (4,878) (4,348) (4,545)
Net interest income (expense)... (58) 155 652 594
------- -------- ------- -------
Net loss........................ $(3,568) $ (4,723) $(3,696) $(3,951)
======= ======== ======= =======
Basic and diluted net loss per
share.......................... $ (0.14) $ (0.52) $ (0.14) $ (0.15)
======= ======== ======= =======
</TABLE>

The 1996 and first three quarters of 1997 earnings per share amounts have
been restated to comply with Statement of Financial Accounting Standards No.
128, Earnings Per Share.

F-18
<PAGE>

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

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY THE COMMON STOCK IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 14
Dividend Policy........................................................... 14
Price Range of Common Stock............................................... 15
Capitalization............................................................ 16
Selected Financial Data................................................... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 18
Business.................................................................. 25
Management................................................................ 38
Principal Shareholders.................................................... 41
Underwriting.............................................................. 42
Legal Matters............................................................. 43
Experts................................................................... 43
Available Information .................................................... 44
Index to Financial Statements............................................. F-1
</TABLE>

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

3,000,000 SHARES

[LOGO OF INFOSEEK]

COMMON STOCK

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

PROSPECTUS

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

MERRILL LYNCH & CO.

BT ALEX. BROWN

FEBRUARY 12, 1998

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