10/24/2019
`
`NASDAQ | SEC Filing
`
`AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1998
`REGISTRATION STATEMENT NO. 333-
`
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D.C. 20549
`
`FORM S-1
`REGISTRATION STATEMENT
`UNDER
`THE SECURITIES ACT OF 1933
`
`POINTCAST INCORPORATED
`(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
`
`DELAWARE 7372
` (STATE OR OTHER JURISDICTION
`(PRIMARY STANDARD INDUSTRIAL
`OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
`
`77-0315081
`(I.R.S. EMPLOYER
`IDENTIFICATION NO.)
`
`501 MACARA AVENUE
`SUNNYVALE, CA 94086
`(408) 990-7000
`(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
`REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
`
`DAVID W. DORMAN
`PRESIDENT AND CHIEF EXECUTIVE OFFICER
`CHAIRMAN OF THE BOARD
`POINTCAST INCORPORATED,
`501 MACARA AVENUE
`SUNNYVALE, CA 94086
`(408) 990-7000
`(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
`OF AGENT FOR SERVICE)
`
`COPIES TO:
`
`SCOTT C. DETTMER, ESQ.
` LARRY W. SONSINI, ESQ.
`BENNETT L. YEE, ESQ.
` JUDITH M. O'BRIEN, ESQ.
`JONATHAN J. NOBLE, ESQ.
` DONNA M. PETKANICS, ESQ.
`GUNDERSON DETTMER STOUGH
` BRUCE M. MCNAMARA, ESQ.
`WILSON SONSINI GOODRICH & ROSATI VILLENEUVE FRANKLIN & HACHIGIAN, LLP
` PROFESSIONAL CORPORATION
`155 CONSTITUTION DRIVE
`650 PAGE MILL ROAD
`MENLO PARK, CA 94025
`PALO ALTO, CA 94304
`(650) 321-2400
`(650) 493-9300
`
`---------------
`
`APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
`
`practicable after the effective date of this Registration Statement.
`If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
`Securities Act of 1933, check the following box. [_]
`If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
`following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
`
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`offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box
`and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] 
`If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
`Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] 
`If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_]
`CALCULATION OF REGISTRATION FEE 
`------------------------------------------------------------------------------------------------
`------------------------------------------------------------------------------------------------
` TITLE OF EACH CLASS OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
` SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
` REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
`------------------------------------------------------------------------------------------------
`Common Stock, $0.001 par
` value................. 4,312,500 shares $12.00 $51,750,000 $15,266.25
`------------------------------------------------------------------------------------------------
`------------------------------------------------------------------------------------------------
`
`(1) Includes 562,500 shares issuable upon exercise of an option granted by the Company to the Underwriters to cover over-allotments,
`if any. 
`(2) Estimated solely for the purpose of computing the registration fee pursuant to Rule 457.
`
`THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE
`NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT
`WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
`ACCORDANCE WITH 
`SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
`EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID 
`SECTION 8(A), MAY DETERMINE.
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`++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
`
`+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
`+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
`+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
`+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
`+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
`+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
`+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
`
`+UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS + 
`+OF ANY SUCH STATE. + 
`++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subject to
`Completion, dated May 14, 1998
`
`PROSPECTUS
`
`3,750,000 SHARES 
`POINTCAST INCORPORATED 
`COMMON STOCK
`
`All of the shares of Common Stock offered hereby are being sold by PointCast Incorporated ("PointCast" or the "Company"). Prior to
`this offering, there has been no public market for the Common Stock of the Company. It is currently estimated that the initial public
`offering price will be between $10.00 and $12.00 per share. See "Underwriting" for a discussion of the factors to be considered in
`determining the initial public offering price. The Common Stock has been approved for quotation on the Nasdaq National Market,
`subject to notice of issuance, under the symbol "PCST."
`
`THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. 
`SEE "RISK FACTORS" BEGINNING ON PAGE 6.
`
`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 NOR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
`THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
`
`--------------------------------------------------------------------------------
`--------------------------------------------------------------------------------
` UNDERWRITING
` PRICE TO DISCOUNTS AND PROCEEDS TO
` PUBLIC COMMISSIONS(1) COMPANY(2)
`--------------------------------------------------------------------------------
`Per Share............................... $ $ $
`--------------------------------------------------------------------------------
`Total(3)................................ $ $ $
`--------------------------------------------------------------------------------
`--------------------------------------------------------------------------------
`
`(1) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of
`1933, as amended. See "Underwriting." 
`(2) Before deducting estimated expenses of $850,000 payable by the Company. 
`(3) The Company has granted the Underwriters a 30-day option to purchase up to 562,500 additional shares of Common Stock on the
`same terms and conditions as set forth above, solely to cover over-allotments, if any. If such option is exercised in full, the total Price to
`Public, Underwriting Discounts and Commissions and Proceeds to Company will be $ , $ and $ , respectively. See "Underwriting."
`
`The shares of Common Stock offered by this Prospectus are offered by the Underwriters subject to prior sale, withdrawal, cancellation
`or modification of the offer without notice, to delivery and acceptance by the Underwriters and to certain further conditions. It is
`expected that delivery of certificates representing the shares of Common Stock will be made at the offices of Lehman Brothers Inc.,
`New York, New York, on or about , 1998.
`
`LEHMAN BROTHERS 
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`, 1998
`
`NASDAQ | SEC Filing
`BT ALEX. BROWN 
`BANCAMERICA ROBERTSON STEPHENS
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`Inside Front Cover of the Prospectus
`
`NASDAQ | SEC Filing
`
`The PointCast Network broadcasts news from approximately 700 sources, including: AccuWeather, Advertising Age, American Banker,
`American Medical Association, Associated Press, Aviation Week, Boston Globe, Business Wire, Chicago Tribune, CMPnet, CNN
`Interactive, CNNfn, Edgar Online, Fortune, Government Executive, Hoovers Online, International Mass Retail Association, Johns
`Hopkins Health News, Los Angeles Times, Money, Morningstar, National Association of Realtors, New York Times, Reuters, Standard
`& Poor's ComStock, Telecommunications Reports International, Wall Street Journal Interactive Edition, Washington Post, Zacks
`Investment Research, Zdnet
`
`PointCast is partnering with vertical market leaders to provide content in the following industries: Aerospace - EDS, Automotive --
`EDS, Banking and Finance -- KPMG, Consumer Markets -- KPMG, Federal Government -- BTG, Healthcare -- IntelliHealth and Perot
`Systems, Insurance -- KPMG, Real Estate -- RealSelect and Real Estate On-line, State and Local Government -- Ambac Connect,
`Telecommunications -- Coopers & Lybrand, Utilities/Energy -- Coopers & Lybrand
`
`The PointCast Network Broadcasts Personalized News to Business consumers' PC Screens
`
`(Picture of the ChannelViewer displaying the CNN channel)
`
`(Picture of the ChannelViewer displaying the Wall Street Journal channel)
`
`(Picture of the ChannelViewer displaying the Corporate Banking channel)
`
`(Picture of the ChannelViewer displaying the Weather channel)
`(Picture of the ChannelViewer displaying the New York Times channel) 
`The PointCast Network's SmartScreen technology replaces traditional screensavers with news broadcast directly to viewers' idle
`computer screens. The Corporate Banking Channel is expected to be released in June 1998.
`(Picture of the ChannelViewer displaying the Company's channel) 
`With the click of a mouse, viewers receive personalized in-depth coverage in the PointCast Channel Viewer.
`(Picture of the ticker) 
`The PointCast Network's scrolling ticker displays timely stock quotes, weather forecasts, news headlines, and other information.
`
`CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE,
`MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY, INCLUDING
`EFFECTING SYNDICATE COVERING TRANSACTIONS, INITIATING BIDS OR EFFECTING PURCHASES ON THE NASDAQ
`NATIONAL MARKET FOR THE PURPOSE OF PREVENTING OR RETARDING A DECLINE IN THE MARKET PRICE OF THE
`COMMON
`
`STOCK, OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
`
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`Since the PointCast Network's launch in 1996, the Company has won more than 75 industry awards and honors.
`
`(Pictures of eight of the awards won by the Company)
`The PointCast Network Enables Advertisers to Reach the Elusive Business Consumer. 
`(Picture of the Company's ChannelViewer with an enlargement of the advertising window displaying an advertisement for Mercedes-
`Benz)
`
`PointCast's innovative ad model enables advertisers to access the attractive and hard-to-reach business consumer audience with
`engaging, 30-second animated commercials.
`
`Advertisers representing a wide range of products - from automotive and consumer goods to personal finance and technology - have
`successfully utilized the innovative properties of PointCast's advertising medium to build brand awareness and generate sales.
`
`(Picture of the ChannelViewer with an enlargement of the advertising window displaying an advertisement for Visa)
`
`Select Advertising Customers
`
`Consumer/Travel/Automotive: Avis, Boise Office Products, BMW, Colgate-Palmolive, Continental Airlines, InteliHealth, Kodak,
`Korean Air, Land Rover, Mercedes Benz, Pfizer, Procter & Gamble, Saturn, Levi Strauss & Company (Slates), Toyota
`
`Financial: American Express, Ameritrade, Charles Schwab, DLJ Direct, The Dreyfus Corporation, E*Trade, Fidelity Investments, First
`Chicago, Founders Funds, NationsBank, Northwestern Mutual Life Insurance Company, Quick & Reilly, The Vanguard Group, VISA,
`Wells Fargo
`
`Technology/Telecommunications: 3Com/US Robotics, Compaq Works, Comp USA, Computer Associates, Gateway 2000, Hewlett-
`Packard, IBM, Intel, MCI, Microsoft, Nortel, Oracle, SAP, Texas Instruments, Toshiba
`An Exceptionally Affluent and Influential Audience 
`(Chart) 
`Average Age: 39 years 
`Average Household Income: $109,080 
`College Degree or Greater: 69% 
`Management: 44% 
`Professional/Technical: 41% 
`Purchased Online: 63%
`
`Source: IntelliQuest, Inc., November 1997 PointCast Viewer Survey of 4,065 respondents between September 22, 1997 and October 14,
`1997.
`
`(Picture of the Company's ticker)
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`NASDAQ | SEC Filing
`PROSPECTUS SUMMARY
`
`The following summary is qualified in its entirety by and should be read in conjunction with, the more detailed information and the
`consolidated financial statements and notes thereto appearing elsewhere in this Prospectus. Except as otherwise noted, the information
`contained in this Prospectus assumes no exercise of the Underwriters' over-allotment option and gives effect to (i) the conversion of all
`outstanding shares of Mandatorily Redeemable Convertible Preferred Stock ("Preferred Stock") of the Company into Common Stock,
`which will occur upon the completion of this offering, and the conversion of all outstanding Warrants to purchase Preferred Stock into
`warrants to purchase Common Stock, (ii) a reincorporation of the Company into Delaware and (iii) a two-for-three reverse stock split of
`all issued and outstanding Common Stock that will be effected pursuant to the reincorporation into Delaware prior to the effectiveness
`of this offering. See "Capitalization" and "Description of Capital Stock."
`
`THE COMPANY
`
`PointCast is the leading broadcaster of personalized news and information to business consumers over the Internet and corporate
`intranets. The PointCast Network automatically appears whenever the computer is idle, replacing a screensaver with a constant stream
`of useful, personalized news and information. Viewers can effortlessly absorb headlines, stock quotes and other personalized news on
`screen or in the scrolling ticker, and can click on any headline to obtain in-depth information. The PointCast Network consists of four
`principal components: (i) general and business content; (ii) the PointCast Central Broadcast Facility, which receives, translates and
`transmits content; 
`(iii) the PointCast Network Client that resides on a viewer's PC; and (iv) the PointCast Intranet Broadcast Solution, a suite of free
`software tools. The PointCast Network is a free, advertising-supported service that has been specifically designed to meet the needs of
`business consumers, corporations and advertisers.
`
`PointCast aggregates content from approximately 700 news and information sources globally, including Associated Press, CNN, The
`New York Times and The Wall Street Journal Interactive Edition. The Company also offers in-depth vertical market information
`through relationships with leading industry partners, such as Ambac Connect, Inc., Coopers & Lybrand L.L.P., Electronic Data Systems
`Corporation and KPMG Peat Marwick LLP. The Company believes it is the largest aggregator of general, business, vertical market and
`local newspaper content on the Internet. Through its Central Broadcast Facility, the Company broadcasts approximately 450 million
`news and information items to viewers on a daily basis.
`
`New trends are affecting how and where people access and absorb news and information. Business professionals are shifting their news
`consumption from home to the office, where speed, timeliness and efficiency are key requirements for the media they use. At the same
`time, new technologies like cellular telephones, fax machines and pagers are accelerating the pace of business and enabling people to
`work where and when they need to, from home, office and in transit. These technologies are blurring the line between personal and
`professional activities. As a result, people are increasingly making purchase decisions in the work environment and business people are
`emerging as "business consumers."
`
`The growth of the Internet and corporate intranets is accelerating this fundamental change in business media consumption, making the
`desktop PC increasingly a focal point for news and information delivery. As business consumers move online for news and information,
`advertisers are looking for better ways to communicate with this audience and are beginning to allocate advertising dollars to the
`Internet. Online advertising is expected to grow from an estimated $940 million in 1997 to $5.8 billion in 2001, according to Jupiter
`Communications. Business consumers are a desirable advertising audience due to their affluence and acquisitiveness as consumers and
`their influence over business-to-business purchase decisions. In 1997, the Leading National Advertisers/Publishers Information Bureau
`reported that the value of advertising placements totaled $1.9 billion in the four leading business publications--Business Week, Forbes,
`Fortune and The Wall Street Journal--whose circulations range from approximately 766,000 to 1.8 million.
`
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`The Company's strategy is to provide advertisers with a highly effective and efficient vehicle to reach a premium business audience in
`the work environment, where previously they have been hard to reach through traditional media. The PointCast Network employs a
`client/server-based advertising model that provides advertisers with more complete audience data, larger and richer advertising units
`and more detailed advertising statistics than current leading web sites, as well as the ability to target specific audiences. Advertising
`opportunities on the PointCast Network currently consist of 30-second animated commercials, a variety of SmartScreen, ticker and
`content sponsorships and banner advertisements. Representative companies that advertised on the PointCast Network during 1997
`include Avis Rent A Car, Inc., Charles Schwab & Co., Inc., Fidelity Investments Institutional Services Company, Inc., Hewlett-Packard
`Company, Levi Strauss & Company, MCI Communications Corporation, Daimler-Benz North America Corp., Microsoft Corporation,
`The Procter & Gamble Company and Wells Fargo & Company. The Company had an average of approximately 1.2 million active
`viewers worldwide in the first quarter of 1998. Based on independent survey data, the Company believes its viewers are well educated,
`affluent individuals who are likely to purchase products and services online. In addition, the Company believes its viewers use its
`service more days per month and more minutes per day than the typical visitor to leading Web sites, based on the Company's own usage
`data and ongoing metering studies conducted by Media Metrix.
`
`An important part of the Company's strategy is to capitalize on its high rate of historical viewer registration, which has ranged between
`850,000 and 1,000,000 registrations per quarter throughout 1997 and the first quarter of 1998. The Company has experienced a low
`retention rate during the initial 90 days after registration and has conducted extensive market research, which it believes identifies the
`causes. According to a survey conducted by the Company approximately two-thirds of respondents indicated they left the PointCast
`Network for specific performance reasons related to the PointCast Network Client. Based on its research, the Company intends to
`release a new version of the PointCast Network Client in the second half of 1998, which is designed to improve performance in order to
`increase viewer retention.
`
`The Company believes corporate acceptance is a significant factor in increasing viewership and has invested substantially in creating a
`unique value proposition for corporations. The Company's strategy is to offer its free PointCast Intranet Broadcast Solution and employ
`multiple distribution channels to promote its deployment within corporations. The PointCast Intranet Broadcast Solution is designed to
`motivate corporate-wide adoption by providing efficient network management, enabling control of content on employee desktops, and
`integrating internal company news broadcasts. Since the introduction of the PointCast Intranet Broadcast Solution in January 1998,
`more than 40 corporations have deployed at least 500 desktops utilizing the PointCast Intranet Broadcast Solution, including American
`International Life Assurance Company of New York, BankAmerica Corporation, E.I. du Pont de Nemours and Company, MCI
`Communications Corporation, Monsanto Company, Northrop Grumman and The Procter & Gamble Company. In addition to a direct
`enterprise marketing team, there are more than 60 Solution Partners/VAR organizations that have been trained and certified to install
`and deploy the PointCast Intranet Broadcast Solution in their own client accounts. The enterprise marketing team also works closely
`with the Company's partners in vertical markets to capture enterprise accounts.
`
`The Company has financed its operations to date through private equity investments from media and technology companies, as well as
`financial investors. These investors include Adobe Systems, Inc., Asahi Shimbun, Benchmark Capital, Cendant Corporation, Gannett
`Media Technologies International, Knight-Ridder, Inc., KPMG Peat Marwick LLP, Merrill, Pickard, Anderson & Eyre, Mohr, Davidow
`Ventures, SOFTBANK Holdings, Inc. and Times Mirror.
`
`The Company was incorporated in California in 1992 as PED Software Corporation. The Company changed its name to PointCast
`Incorporated in 1995 and will reincorporate in Delaware in 1998. The Company's web site can be found at http://www.pointcast.com.
`Information contained in the Company's web site shall not be deemed to be a part of this Prospectus. The Company's principal
`executive office is located at 501 Macara Avenue, Sunnyvale, CA 94086, and its telephone number at that location is (408) 990-7000.
`
`PointCast is a registered trademark of the Company. The Company has also applied for registration of the following trademarks:
`PointCast Network, SmartScreen, EntryPoint and the Company's logo. This Prospectus also includes product names and other trade
`names and trademarks of the Company and of other organizations.
`
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`THE OFFERING
`
`Common Stock offered................... 3,750,000 shares
`Common Stock to be outstanding after
` the offering.......................... 21,337,112 shares(1)
`Use of proceeds........................ For general corporate purposes,
` including working capital and capital
` expenditures and expansion of sales
` capabilities and marketing efforts. See
` "Use of Proceeds."
`Proposed Nasdaq National Market symbol. PCST
`
`SUMMARY CONSOLIDATED AND PRO FORMA FINANCIAL DATA
`
` THREE MONTHS
` ENDED
` YEARS ENDED DECEMBER 31, MARCH 31,
` ------------------------------------------- ----------------
` 1993 1994 1995 1996 1997 1997 1998
` ----- ------- ------- -------- -------- ------- -------
` (in thousands, except per share data)
`CONSOLIDATED STATEMENT
` OF OPERATIONS DATA:
` Revenue................ $ 146 $ 816 $ 765 $ 5,199 $ 17,993 $ 2,967 $ 5,106
` Gross profit........... 127 603 756 2,573 10,595 1,926 2,579
` Total operating
` expenses(2)........... 342 1,779 5,006 18,375 40,528 8,428 9,189
` Loss from operations... (215) (1,176) (4,250) (15,802) (29,933) (6,502) (6,610)
` Net loss............... (215) (1,059) (4,221) (15,134) (29,111) (6,238) (6,395)
`
` MARCH 31, 1998
` -------------------------------------
` ACTUAL PRO FORMA(3) AS ADJUSTED(4)
` -------- ------------ --------------
` (in thousands)
`CONSOLIDATED BALANCE SHEET DATA:
` Cash, cash equivalents and short-term
` investments............................ $ 19,066 $ 19,066 $ 56,579
` Working capital......................... 9,243 9,243 46,756
` Total assets............................ 32,800 32,800 70,313
` Long-term obligations................... 2,679 2,679 2,679
` Mandatorily redeemable securities....... 72,240 -- --
` Stockholders' (deficit) equity.......... (58,119) 14,121 51,634
`
`(1) As of March 31, 1998. Excludes: (i) 936,370 shares of the Company's Common Stock reserved for issuance pursuant to warrants at
`a weighted average exercise price of $12.41 per share, (ii) 4,720,160 shares subject to outstanding options at March 31, 1998 and (iii)
`2,927,018 shares reserved for issuance under the Company's 1994 Stock Plan, 1998 Employee Stock Purchase Plan and 1998 Director
`Option Plan. Subsequent to March 31, 1998, options to purchase 471,846 shares were exercised at a weighted average exercise price of
`$1.69 per share and the Company granted additional options to purchase an aggregate of 746,094 shares of Common Stock under the
`1994 Stock Plan at a weighted average exercise price of $7.66 per share. See "Management--Stock Plans," "Certain Transactions,"
`"Description of Capital Stock" and Notes 6, 8 and 11 of Notes to Consolidated Financial Statements.
`
`(2) Total operating expenses include non-recurring and non-cash stock compensation expense and amortization of warrants aggregating
`$562,000 and $6,059,000 for the years ended December 31, 1996 and 1997, respectively, and $459,000 and $696,000 for the three
`months ended March 31, 1997 and 1998. There were no such expenses for the years ended December 31, 1993, 1994 and 1995.
`
`(3) Pro forma to reflect the assumed conversion of all outstanding shares of Preferred Stock into 11,775,560 shares of Common Stock
`upon the completion of this offering and conversion of warrants to purchase 701,756 shares of Preferred Stock into warrants to purchase
`701,756 shares of Common Stock.
`
`(4) As adjusted to reflect the sale of the 3,750,000 shares of Common Stock offered hereby at an assumed initial public offering price of
`$11.00 per share and the receipt of net proceeds therefrom. Assumes no exercise of the Underwriters' over-allotment option. See "Use of
`Proceeds," "Capitalization" and "Underwriting."
`
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`RISK FACTORS
`
`Prospective investors should consider carefully the following risk factors, in addition to the other information contained in this
`Prospectus concerning the Company and its business, before purchasing the shares of Common Stock offered hereby. Certain statements
`contained in "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of
`Operations" and "Business," including statements regarding the anticipated growth in the market for Internet advertising and the belief
`of the Company as to its future operating performance and other statements contained in this Prospectus that are not historical facts, are
`"forward- looking" statements within the meaning of the U.S. federal securities laws. Because such statements include risks and
`uncertainties, actual results may differ materially from those anticipated in such forward-looking statements as a result of certain
`factors, including those set forth herein and in "Management's Discussion and Analysis of Financial Condition and Results of
`Operations" and "Business."
`
`History of Net Losses; Accumulated Deficit; Expected Future Net Losses. The Company has incurred net losses since its inception in
`July 1992. The Company incurred net losses of $4.2 million, $15.1 million, $29.1 million and $6.4 million in fiscal 1995, 1996, 1997
`and for the three months ended March 31, 1998, respectively. As of March 31, 1998, the Company had an accumulated deficit of $56.8
`million. In addition, the Company did not recognize revenue relating to the PointCast Network until February 1996. Accordingly, the
`Company has a history of net losses and its prospects must be considered in light of the risks, expenses and difficulties frequently
`encountered by companies with limited histories of generating revenue from their core services, particularly companies in the new and
`rapidly evolving markets for the Internet and Internet services, including the Internet advertising market. To increase revenue, the
`Company must, among other things, enhance performance of the PointCast Network by further developing and upgrading its
`technology, significantly grow and increase retention of its viewing audience, effectively develop new relationships and maintain
`existing relationships with its advertising customers, particularly advertisers who have historically relied on traditional media for
`advertising, their advertising agencies and other third parties, obtain widespread acceptance of enterprise-wide deployment of the
`PointCast Network, maintain and form new relationships with third-party content providers and media partners, obtain, aggregate and
`distribute original and compelling content to Internet users, increase PointCast brand awareness, successfully expand international
`operations, respond to competitive developments and attract, retain and motivate qualified personnel. There can be no assurance that the
`Company will be able to successfully address these and other risks and increase revenue, and the failure to do so could have a material
`adverse effect on the Company's business, financial condition and results of operations.
`
`The Company does not expect significant growth, if any, in revenue for at least the next two quarters, and the Company expects to incur
`increased net losses for at least the next two quarters and significant net losses for the foreseeable future. There can be no assurance that
`revenue from advertisers or other sources will not decline in the future or that the Company's net losses will not continue to increase in
`the future or that the Company will ever achieve or maintain profitability. The Company intends to substantially increase its operating
`expenses in order to increase brand awareness, increase its sales and marketing operations and continue to expand internationally. The
`Company also expects its