<PAGE>

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

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                                   FORM S-1
                            REGISTRATION STATEMENT
                                     Under
                          The Securities Act of 1933

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

                                MEDIAPLEX, INC.
            (Exact name of Registrant as specified in its charter)

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

<TABLE>
 <S>                            <C>                                <C>
           Delaware                           7372                          94-3295822
 (State or other jurisdiction
              of                  (Primary Standard Industrial           (I.R.S. Employer
       incorporation or
         organization)             Classification Code Number)        Identification Number)
</TABLE>

                       131 Steuart Street, Fourth Floor
                     San Francisco, California 94105-1230
                                (415) 808-1900
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

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

                              Gregory R. Raifman
                     Chairman and Chief Executive Officer
                                Mediaplex, Inc.
                       131 Steuart Street, Fourth Floor
                     San Francisco, California 94105-1230
                                (415) 808-1900
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                  Copies to:
<TABLE>
<S>                                            <C>
            Aaron J. Alter, Esq.                         Laird H. Simons, III, Esq.
          Tamara G. Mattison, Esq.                        Robert A. Freedman, Esq.
             Linda M. Cuny, Esq.                          R. Gregory Roussel, Esq.
           Robert E. Dawson, Esq.                            Fenwick & West LLP
      Wilson Sonsini Goodrich & Rosati                      Two Palo Alto Square
          Professional Corporation                      Palo Alto, California 94306
             650 Page Mill Road                                (650) 494-0600
      Palo Alto, California 94304-1050
               (650) 493-9300
</TABLE>

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

  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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] ______________
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _________________
  If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _________________
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

                        CALCULATION OF REGISTRATION FEE
<TABLE>
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
<CAPTION>
                                                  Proposed Maximum
           Title of Each Class of                Aggregate Offering         Amount of
         Securities to be Registered                  Price(1)           Registration Fee
-----------------------------------------------------------------------------------------
<S>                                            <C>                    <C>
Common Stock, $0.0001 par value.............      $70,000,000.00             $19,460
-----------------------------------------------------------------------------------------
</TABLE>
-------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the amount of the
    registration fee pursuant to Rule 457(o) under the Securities Act.

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

  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 hereafter 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 such
Section 8(a), may determine.

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

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in the prospectus is not complete and may be changed. We may  +
+not sell these securities until the registration statement filed with the     +
+Securities and Exchange Commission is effective. This prospectus is not an    +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted.             +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                 Subject to Completion, dated September 2, 1999

PROSPECTUS

                                       Shares

                             [LOGO OF MEDIAPLEX]

                                  Common Stock
--------------------------------------------------------------------------------

  This is our initial public offering of shares of common stock. We are
offering          shares. No public market currently exists for our shares.

  We propose to list the shares on the Nasdaq National Market under the symbol
"MPLX." Anticipated price range of $     to $     per share.

  Investing in the shares involves risks. "Risk Factors" begin on page 7.

<TABLE>
<CAPTION>
                                                                      Per
                                                                     Share Total
                                                                     ----- -----
<S>                                                                  <C>   <C>
Public Offering Price...............................................  $     $
Underwriting Discount...............................................  $     $
Proceeds to Mediaplex...............................................  $     $
</TABLE>

  We have granted the underwriters a 30-day option to purchase up to
        additional shares of common stock on the same terms and conditions as
set forth above solely to cover over-allotments, if any.

  Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is accurate or complete. Any representation to the contrary is
a criminal offense.

  Lehman Brothers expects to deliver the shares on or about     , 1999.

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

Lehman Brothers

               SG Cowen

                                                      U.S. Bancorp Piper Jaffray

    , 1999
<PAGE>

                       [INSIDE FRONT COVER OF PROSPECTUS]

                  [Graphics of MOJO application appears here]
<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   3
Risk Factors.............................................................   7
Use of Proceeds..........................................................  18
Dividend Policy..........................................................  18
Capitalization...........................................................  19
Dilution.................................................................  20
Selected Financial Data..................................................  21
Selected Pro Forma Financial Data........................................  22
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  23
</TABLE>
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Business...................................................................  32
Management.................................................................  46
Related Party Transactions.................................................  55
Principal Stockholders.....................................................  57
Description of Capital Stock...............................................  59
Shares Eligible for Future Sale............................................  62
Underwriting...............................................................  64
Legal Matters..............................................................  66
Experts....................................................................  66
Where You Can Find Additional Information..................................  66
Index to Financial Statements.............................................. F-1
</TABLE>

                             ABOUT THIS PROSPECTUS

  You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock.

  This preliminary prospectus is subject to completion prior to this offering.
Among other things, this preliminary prospectus describes our company as we
currently expect it to exist at the time of this offering.

  See the section of this prospectus entitled "Risk Factors" for a discussion
of various factors that you should consider before investing in the common
stock offered by this prospectus.

  Certain statements under the captions "Prospectus Summary," "Risk Factors,"
"Use of Proceeds," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business" and elsewhere in this prospectus are
forward-looking statements. These forward-looking statements include, but are
not limited to, statements about our plans, objectives, expectations and
intentions and other statements contained in the prospectus that are not
historical facts. When used in this prospectus, the words "expects,"
"anticipates," "intends," "plans," "believes," "seeks" and "estimates" and
similar expressions are generally intended to identify forward-looking
statements. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual results to
differ materially from those expressed or implied by these forward-looking
statements, including our plans, objectives, expectations and intentions and
other factors discussed under "Risk Factors."

  Mediaplex(TM), MOJO(TM), the Mediaplex logo, Storyboard Messaging(TM),
Multiple Messaging(TM) and eBusiness Messaging(TM) are our trademarks. We have
applied to register Mediaplex and MOJO. All trademarks and trade names
appearing in this prospectus are the property of their respective holders.

  Until         , 1999, all dealers selling shares of the common stock, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE>

                               PROSPECTUS SUMMARY

  You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and the financial statements and notes to those statements appearing
elsewhere in this prospectus.

  Except as otherwise indicated, all information in this prospectus assumes
that the underwriters do not exercise the option granted by Mediaplex to
purchase additional shares in this offering, assumes the conversion of all of
our preferred stock into common stock upon the closing of this offering, and
reflects our reincorporation into Delaware to be effected prior to the
effectiveness of this offering. See "Underwriting."

                                   Mediaplex

  We provide technology-based eBusiness marketing solutions that enable
advertisers to optimize their online marketing efforts. eBusiness marketing
allows companies to combine their online direct marketing and branding
activities with critical enterprise business data in order to effectively use
the Internet to manage and transact business. Our services encompass the
planning, execution, monitoring and analysis of advertising campaigns over the
Internet. Our proprietary mobile Java objects technology platform, MOJO,
enables advertisers to deliver, in real time, customized advertising messages
to a targeted consumer. Our MOJO platform interfaces with companies' existing
enterprise data and software applications to access critical business
information that is used to customize the advertising message. We believe
customized, real-time messaging will increase the consumer response to online
advertisements, thereby improving the return on advertising spending. Our
services are offered as a comprehensive solution, or individually as part of a
complementary service in partnership with other advertising and technology
providers.

  The rapid growth in the worldwide online population and e-commerce spending
has established the Internet as an important advertising medium. Forrester
Research, Inc. anticipates that U.S. online advertising spending will grow from
$2.8 billion in 1999 to $17.2 billion in 2003. We believe online advertising
spending will increase even more dramatically as new technologies improve the
effectiveness of online advertising and attract more traditional media
advertisers to the Internet.

  We believe we are the first company to offer a complete eBusiness marketing
solution that integrates a company's enterprise software applications and
business data with its online advertising campaign to deliver the most
relevant, customized message to a targeted consumer in real time. Our
technology-enabled solution provides the following benefits:

  . Comprehensive Online Advertising Campaigns. We provide a full range of
    online advertising campaign services including strategic planning,
    consumer targeting, media buying, ad serving, and measurement and
    reporting of results.

  . Real-Time Tracking and Measuring of Campaign Results. We monitor multiple
    performance metrics in real time and provide Internet access to
    performance reports 24 hours a day.

  . Sophisticated Data Capture and Analysis. Using our data capture
    capabilities and those of our strategic partners to target and re-target
    consumers, we match advertiser-related profiles with audience profiles
    based on geographic, demographic, psychographic and site visitation
    information.

  . Real-Time Messaging. We can change the graphics, content and site
    placement of online advertisements in real time. This enables a company
    to tailor a message based on predefined parameters and a consumer's
    profile in order to deliver the most relevant message.

  . Integration of Enterprise Business Information. Our MOJO technology
    enables us to integrate business information with an online advertising
    campaign to dynamically tailor and deliver advertisements based on
    consumer profiles and relevant business information such as inventory and
    pricing levels.

                                       3
<PAGE>


  Our objective is to be the preeminent eBusiness marketing solution provider.
The principal elements of our strategy are as follows:

  . Target Global 1000 and e-Commerce Companies and Advertising Agencies. We
    can provide significant benefits to large companies that require online
    advertising management and technology expertise for the Internet medium
    and are looking to implement an eBusiness strategy. We also intend to
    target companies that rely on the Internet to conduct electronic
    commerce, and traditional advertising agencies that require critical
    online media technology expertise.

  . Maintain Technology Leadership. Our proprietary MOJO technology platform
    is a key competitive differentiator that we intend to extend by
    incorporating additional functionality and services.

  . Enhance Sales Capabilities Through Strategic Relationships. We plan to
    broaden our strategic relationships, such as those with online
    advertising service providers, online strategy consultants and enterprise
    software consultants, to extend our market penetration and the acceptance
    of our MOJO technology.

  . Deliver Flexible Online Marketing Solutions. We can unbundle our
    technology services to expand our revenue sources by partnering with
    other online advertising and technology providers, such as with our
    partner, DoubleClick, to deliver complementary products.

  . Broaden International Presence. We plan to continue to expand our
    international presence to capitalize on the global reach and acceptance
    of the Internet.

  Our clients include DATEK Online Brokerage Services, Corp., OfficeMax,
ShopNow.com, Strong Funds, and advertising agencies including McCann-Erickson
and Publicis & Hal Riney, which use our services on behalf of their clients
such as Hewlett-Packard, Siebel Systems, Silicon Graphics, Inc. and Sprint PCS.

  We currently generate the majority of our revenues from advertising campaign
management services. We have completed live testing of the enterprise
integration components of our MOJO technology and expect to quickly roll-out
new services based on this technology. Our accumulated deficit as of June 30,
1999 was $8.6 million. In addition, we had net losses of approximately
$2.0 million in 1998 and $5.2 million in the six months ended June 30, 1999.

  We were incorporated in California in September 1996 as Internet Extra
Corporation. On April 1, 1998, we set up a wholly-owned subsidiary, MediaPlex,
Inc., a California corporation, to carry out our current business. We expect to
merge MediaPlex, Inc. with Internet Extra Corporation and reincorporate the
merged entity under the name "Mediaplex, Inc." in Delaware in September 1999.

  Our principal executive offices are located at 131 Steuart Street, Fourth
Floor, San Francisco, California 94105-1230 and our telephone number is (415)
808-1900. Our Web site is located at www.mediaplex.com. Information contained
on our Web site does not constitute part of this prospectus.

                                       4
<PAGE>


                                  The Offering

<TABLE>
 <C>                                    <S>
 Common stock offered by Mediaplex.....            shares

 Common stock outstanding after the
  offering.............................            shares

 Use of proceeds....................... We estimate that we will receive net
                                        proceeds from this offering of
                                        $           , or $               if the
                                        underwriters exercise their over-
                                        allotment option in full. We expect to
                                        use the net proceeds for general
                                        corporate purposes, including working
                                        capital and potential acquisitions. See
                                        "Use of Proceeds."

 Proposed Nasdaq National Market
  symbol............................... "MPLX"
</TABLE>

  In addition to the         shares of common stock outstanding after the
offering, as of the closing of this offering and based on the number of shares
issued and options and warrants granted as of June 30, 1999, we expect to have
issue additional shares of common stock available for issuance under the
following plans and arrangements:

  . 12,243,000 shares issuable under our stock plans, consisting of:

   . 8,625,698 shares underlying options outstanding at a weighted average
     exercise price of $0.56 per share, of which 4,077,687 were exercisable;
     and

   . 3,617,302 shares available for future issuance;

  . 875,000 shares issuable upon the exercise of warrants outstanding at a
    weighted average exercise price of $0.97 per share; and

  . 400,000 shares available for issuance under our 1999 Employee Stock
    Purchase Plan.


                                       5
<PAGE>

                             Summary Financial Data

  The following table is a summary of our statement of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The financial results for the six months ended June 30, 1998 are
unaudited.

<TABLE>
<CAPTION>
                           September 10,       Years Ended            Six Months
                          1996 (inception)    December 31,         Ended  June 30,
                          to December 31,  --------------------  ---------------------
                                1996         1997       1998       1998        1999
                          ---------------- ---------  ---------  ---------  ----------
                               (in thousands, except share and per share data)
<S>                       <C>              <C>        <C>        <C>        <C>
Statement of Operations
 Data:
Revenues................         $  --        $  426    $ 3,588    $ 1,522     $ 7,323
Gross profit (loss).....            --           (19)       817        309       1,562
Loss from operations....          (255)       (1,115)    (1,772)      (782)     (5,200)
Net loss................          (255)       (1,117)    (2,019)    (1,016)     (5,186)
Net loss per share--
 basic and diluted......        $(0.07)      $ (0.13)   $ (0.25)   $ (0.11)    $ (0.43)
Weighted average shares
 outstanding............     3,795,714     8,457,464  8,186,127  9,408,557  12,070,449
Pro forma net loss per
 share-basic and
 diluted................                                 $(0.25)                $(0.38)
Shares used in pro forma
 net loss per share
 calculation--basic and
 diluted................                              8,186,127             13,501,001
</TABLE>

  The following table is a summary of our balance sheet as of June 30, 1999.
The pro forma column reflects the sale of 4,000,000 shares of our convertible
preferred stock in August 1999 for gross proceeds of $14.4 million and the
conversion of all outstanding shares of preferred stock into common stock upon
the closing of this offering. The pro forma as adjusted column also reflects
our receipt of the estimated net proceeds from the sale of the     shares of
common stock offered in this offering at an assumed initial public offering
price of $     per share after deducting the estimated underwriting discount
and offering expenses payable by us. See "Use of Proceeds" and
"Capitalization."

<TABLE>
<CAPTION>
                                                        As of June 30, 1999
                                                   -----------------------------
                                                                      Pro Forma
                                                   Actual  Pro Forma As Adjusted
                                                   ------- --------- -----------
                                                          (in thousands)
<S>                                                <C>     <C>       <C>
Balance Sheet Data:
Cash and cash equivalents......................... $ 7,602  $22,002
Working capital...................................   5,120   19,520
Total assets......................................  15,430   29,830
Long-term debt....................................     373      373
Total stockholders' equity........................   8,623   23,023
</TABLE>

                                       6
<PAGE>

                                  RISK FACTORS

  You should carefully consider the risks described below before making a
decision to buy our common stock. The risks and uncertainties described below
are not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks actually occurs, our business could
be harmed. In that case, the trading price of our common stock could decline,
and you might lose all or part of your investment. You should also refer to the
other information set forth in this prospectus, including our financial
statements and the related notes.

We Have Only a Short Operating History, Making It Difficult for You to Evaluate
Our Business and Your Investment

  We have only a limited operating history upon which you can evaluate our
business. Our business model is evolving and relies substantially upon the sale
of advertising on the Internet. Our prospects for financial and operational
success must be considered in light of the risks, expenses, delays and
difficulties frequently encountered by early-stage companies in the Internet
advertising market, many of which may be beyond our control. These risks
include our ability to:

  . purchase appropriate media space at reasonable costs;

  . attract new advertisers and maintain current client relationships;

  . achieve effective ad campaign results for our clients;

  . develop new relationships and maintain existing relationships with
    advertising agencies, our marketing alliance partners and other third
    parties;

  . continue to develop and upgrade our MOJO and other technology to keep
    pace with the growth of the Internet advertising industry and changes in
    technology; and

  . continue to expand the number of services we offer.

  If we do not successfully address these risks, our business, results of
operations and financial condition could be harmed.

We Have a History of Losses and Anticipate Continued Losses

  Our accumulated deficit as of June 30, 1999 was approximately $8.6 million.
For the year ended December 31, 1998 and the six months ended June 30, 1999, we
incurred losses of $2.0 million and $5.2 million, respectively. We have not
achieved profitability in any period to date and, given the level of planned
operating and capital expenditures, we expect to continue to incur losses and
negative cash flows for the foreseeable future. If our revenues grow more
slowly than we anticipate, or if our operating expenses exceed our expectations
and cannot be adjusted accordingly, our business will be harmed.

Our Quarterly Operating Results Are Subject to Fluctuations and Seasonality
Which May Cause Our Stock Price to Decline

  It is possible that in future periods our results of operations will be below
the expectations of securities analysts. If so, the market price of your shares
would likely decline. Our quarterly operating results have fluctuated in the
past and are likely to continue to do so in the future. We believe that
quarter-to-quarter comparisons of our operating results are not a good
indication of our future performance and should not be relied upon to predict
our future performance or our stock price.

  We believe that our revenues will be subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarters of each year. In addition, expenditures by

                                       7
<PAGE>

advertisers tend to be cyclical, reflecting overall economic conditions as well
as budgeting and buying patterns. A decline in the economic prospects of
advertisers or the economy generally could cause companies to discontinue,
delay or reduce online advertising spending. These events could harm our
business.

  In addition, we derive a significant portion of our revenues from the sale of
advertising services under short-term advertising campaign management
contracts. These contracts are generally cancelable upon 30 days' or less
notice. The non-renewal, cancellation or deferral of existing advertising
contracts or the failure to obtain new advertising contracts in any quarter
could severely harm our results of operations and financial condition for that
quarter.

  Our quarterly revenues, expenses and operating results could vary
significantly from quarter-to-quarter for several other reasons, many of which
are beyond our control. These factors include:

  . demand for our advertising solutions and mix of advertisements sold;

  . commitment of advertisers to Internet advertising generally;

  . addition of new or loss of current advertisers and advertising agencies;

  . timing variations on the part of advertisers or advertising agencies to
    implement campaigns;

  . deployment of new services we may offer;

  . changes in availability and pricing of advertising space;

  . changes in our pricing policies or the pricing policies of our
    competitors; and

  . costs related to acquisitions of technology or businesses.

  Our current and future expense estimates are based, in large part, on
estimates of future revenues, which are difficult to predict, and on our
investment plans. In particular, we plan to increase our operating expenses
significantly in order to expand our sales and marketing operations, to enhance
our proprietary software and to expand internationally. We may be unable to, or
may elect not to, adjust spending quickly enough to offset any unexpected
revenues shortfall. If these expenses are not accompanied by increased
revenues, our results of operations and financial condition would be harmed.

We Rely on a Limited Number of Clients, and the Loss of a Major Client Could
Significantly Reduce Our Revenues

  Our revenues have been derived from a limited number of advertisers and
advertising agencies that use our services. In 1998, DATEK Securities, Inc. and
uBid accounted for approximately 56% and 21% of our revenues, respectively. In
the first half of 1999, DATEK Online Brokerage Services, Corp., Publicis & Hal
Riney and uBid accounted for approximately 15%, 10% and 10% of our revenues,
respectively, and five of our clients accounted for approximately 68% of our
total revenues. In addition, four customers accounted for 76% of our
outstanding accounts receivable at December 31, 1998 and three customers
accounted for 48% of our outstanding accounts receivable at June 30, 1999. We
expect that some of these entities may continue to account for a significant
percentage of our revenues for the foreseeable future. Advertisers typically
purchase advertising that runs for a limited time. Current advertisers may not
continue to purchase advertising from us or we may not be able to successfully
attract additional advertisers. Consequently, our quarterly and annual results
of operations would be harmed by the loss of any of these clients. In addition,
the non-payment or late payment of amounts due to us from a significant
advertiser or ad agency could harm our financial condition.

If We Fail to Establish, Maintain and Expand Our Alliances with Business and
Marketing Partners, Our Ability to Grow Could Be Limited

  In order to grow our business, we must generate, retain and strengthen
successful strategic alliances with companies in industries including:

  . Internet and traditional media advertising, such as DoubleClick and
    Publicis & Hal Riney;

                                       8
<PAGE>

  . enterprise software, such as SAP Labs;

  . Web site development and consulting, such as Icon Medialab; and

  . information technology consultants.

  We depend, and expect to continue to depend, on these partners to refer
business from their clients and customers to us. We currently expect that a
significant amount of our future revenues will need to be generated through
these relationships. If our strategic alliances and partners do not refer their
clients and customers to us to do their online campaign management or banner
serving, our revenues and results of operations would be severely harmed. In
addition, if our partners do not provide high quality products and services to
our mutual clients, our sales could suffer. We have little control over the
amount of resources these companies will devote to online advertising or
referring their clients to our services. We may not be able to generate and
maintain adequate strategic relationships to offset the significant resources
that are necessary to develop marketing efforts to reach clients of our
strategic alliances.

Our MOJO Technology Is Relatively New and Untested; If Our MOJO Technology Does
Not Perform as Anticipated, Our Business Will Be Harmed

  Our MOJO technology is complex and has had, and may have in the future,
errors, defects or performance problems. In particular, we may encounter
problems when it is more broadly used or when it is updated to expand and
enhance its capabilities. Although we have internally tested our MOJO
technology extensively, we have deployed it with only a few select clients to
date. Consequently, our technology may still malfunction or suffer from design
defects. If our technology malfunctions or contains such defects, our services
may not be reliable or compatible in certain online environments used by our
clients. In such instances, we would need to devote significant resources to
address these defects, and any problems could result in lost revenues and
damage to our reputation.

If Our MOJO Technology Suffers From Design Defects, We May Be Subject To
Product Liability Claims

  Our business will be harmed if our MOJO technology suffers from design
defects and, as a result, we become subject to significant product liability
claims. Technology as complex as ours may contain design defects which are not
detectable even after extensive internal testing. Such defects may become
apparent only after widespread commercial use. Our contracts with our clients
currently do not contain provisions to limit our exposure to liabilities
resulting from product liability claims. We currently do not carry any
insurance against product liabilities. Although we have not experienced any
product liability claims to date, we cannot assure you that we will not do so
in the future. Any product liability claim brought against us could materially
harm our business.

If We Fail to Effectively Manage Our Growth, Our Ability to Capture New
Business Could Suffer

  We have grown significantly since our inception and expect to grow quickly in
the future. As we continue to increase the scope of our operations, we will
need an effective planning and management process to implement our business
plan successfully in the rapidly evolving market for Internet advertising. Our
failure to manage this growth could seriously harm our business. We have
increased our number of employees from 7 at September 30, 1998 to 100 at August
31, 1999. In addition, we have recently opened a sales office in Germany and we
anticipate that we will further expand international operations in late 1999.
Future expansion could be expensive and strain our management and other
resources. In order to effectively manage growth, we must:

  . hire, train and integrate new personnel;

  . augment our financial and accounting systems;

  . expand and manage our sales operations, which are in several locations;
    and

  . expand our facilities.

                                       9
<PAGE>

The Loss of Key Personnel or Any Inability to Attract and Retain Additional
Personnel Could Harm Our Future Success

  Our future success depends to a significant extent on the continued service
of our key senior management, technical and professional service and support
personnel. The loss of the services of any member of our management team or
certain other key employees would harm our business. Because many of our
executives, including our chief financial officer, have only recently joined
us, our management team has only worked together for a short time and may not
work effectively together. We would also be harmed if one or more of our
officers or key employees decided to join a competitor or otherwise compete
with us.

  Our future success also depends on our continuing ability to attract, retain
and motivate highly skilled employees. Competition for qualified personnel in
the high technology industry is intense, particularly in the San Francisco Bay
region of Northern California, where our principal offices are located. If we
fail to hire and retain a sufficient number of sales, marketing, technical,
service and support personnel, we will not be able to maintain or expand our
business.

Our Sales and Implementation Cycle is Lengthy and Subject to Delays, Which
Could Result in Delayed Revenues

  If the sales and implementation cycle of our services is delayed, our
revenues will likewise be delayed. Our sales and implementation cycle is
lengthy, causing us to recognize revenues long after our initial contact with a
client. During our sales effort, we spend significant time educating
prospective clients on the use and benefit of our campaign management
solutions. As a result, the sales cycle for our products and services is long,
ranging from a few weeks to several months for our larger clients. The sales
cycle for new sophisticated enterprise-based services is likely to be longer
than the sales cycle for our other current campaign management services because
we believe that clients may require more extensive approval processes related
to integrating enterprise business data with their online advertising
campaigns. In addition, in order for a client to implement our services, the
client must commit a significant amount of resources over an extended period of
time. Furthermore, even after a client purchases our services, the
implementation cycle is subject to delays. These delays may be caused by
factors within our control, such as possible technology defects, as well as
those outside our control, such as clients' budgetary constraints, internal
acceptance reviews and the complexity of clients' online advertising needs.

If We are Unable to Develop Relationships with Suppliers of Profiling Services
or Obtain or Develop Profiling Technology, Our Ability to Attract New Clients
and Retain Our Existing Clients Could be Harmed

  In order for our solution to gain market acceptance, we must be able to
leverage the technology of third-party vendors who successfully implement
sophisticated targeting solutions. Our solution depends upon the proven or
perceived success of third-party profiling technologies that can identify the
particular audience to be targeted with an advertising message. If we are
unable to develop relationships with suppliers of profiling services or obtain
or develop profiling technology, our clients will not be able to realize the
full potential that our services and technology offer. As a result, our ability
to attract new clients will be hampered and we may lose clients demanding a
more complete solution. We cannot assure you that we can partner with companies
to provide profiling services and technology, or obtain and develop this
technology in a cost-effective and timely manner, if at all.

Future Restrictions or Regulations Related to Privacy Concerns and Inadequate
Security on the Internet Could Limit the Effectiveness of Our Services and
Technology

  The effectiveness of our services and technology rely on the effectiveness of
techniques for profiling Internet users, which may raise privacy concerns. Due
to privacy concerns, some Internet commentators, advocates and governmental
bodies have suggested that the use of some of these techniques for profiling
users

                                       10
<PAGE>

be limited or eliminated altogether. It is possible in the future that federal,
state or other governmental entities may restrict the gathering and use of such
profile information. If the gathering of profiling information were to be
curtailed in any way, our services would be less effective, which would harm
our business.

  The effectiveness of our MOJO technology depends upon the utilization of user
profile data collected by our clients. Our clients generally have implemented
security features to protect the privacy and integrity of the data collected
from their users. However, this data may be susceptible to hacker interception,
break-ins and disruption. If any of these were to occur, or if a well-
publicized compromise of security were to occur, Internet usage may not
increase at the rate we expect and consequently, our services would be
perceived as less effective or desirable by our clients.

  The European Union has recently adopted a directive addressing data privacy
that may result in limitations on the collection and use of certain information
regarding Internet users. These limitations may limit our ability to target
advertising or collect and use information in most European countries.

Our Business Model Depends Upon Broad Market Acceptance of Internet Advertising

  Our business model is to generate revenues primarily by providing Internet
advertising solutions to response-oriented advertisers. The Internet as an
advertising medium has not been in existence for a sufficient period of time to
demonstrate its effectiveness. Internet banner advertising, response-oriented
marketing and other types of Internet advertising, as well as technology-based
methods for targeting advertising and tracking, measuring and reporting the
results of Internet advertising may not achieve broad market acceptance. Our
ability to generate significant revenues from advertisers will depend, in part,
on our ability to:

  . demonstrate to advertisers that banner advertising and direct response
    advertising on the Internet will add value and increase marketing
    effectiveness;

  . attract and retain advertisers and advertising agencies by
    differentiating the services and technology we offer; and

  . obtain adequate available advertising inventory from a large base of
    Internet sites.

  There are filter software programs available that limit or prevent
advertising from being delivered to a user's computer. The commercial viability
of Internet advertising would be limited by widespread adoption of these
programs.

Intense Competition in the Internet Advertising Industry Could Reduce Our
Ability to Gain Clients and May Require Us to Reduce Prices, Which Could Harm
Our Revenues

  We face intense competition in the Internet advertising services industry. We
primarily compete with companies that provide online media buying and planning,
ad serving companies, advertising networks which provide services directly to
clients, advertising agencies with in-house online media management
capabilities and organizations that manage affiliate programs.

  We believe that our ability to compete depends upon many factors both within
and outside of our control, including:

  . the effectiveness, ease of use, performance and features of our
    technology;

  . client perceptions of the effectiveness of our services and technology;

  . the price of our services;

  . our ability to service our clients effectively over a broad geographic
    basis; and

  . the timing and acceptance of new solutions and enhancements to existing
    solutions developed by us or our competitors.

                                       11
<PAGE>

  The intense competition among Internet sites has led to the creation of a
number of pricing alternatives for Internet advertising. These alternatives
make it difficult for us to project future levels of advertising revenues and
applicable gross margins that can be sustained either by us or the Internet
advertising industry in general.

  We expect competition to continue to increase in our industry because there
are no substantial barriers to entry. Competition may also increase as a result
of industry consolidation. Companies doing business on the Internet, including
ours, must also compete with television, radio, cable and print media for a
share of advertisers' total advertising budgets. Advertisers may be reluctant
to devote a significant portion of their advertising budget to Internet
advertising if they perceive the Internet to be a limited or ineffective
advertising medium. In addition, as we expand the scope of our Internet
advertising and direct marketing services, we may compete with a greater number
of Internet sites and other media companies across a wide range of different
Internet services. Competitive pressures could prevent us from growing, reduce
our market share or require us to reduce prices on our solutions, any of which
could harm our business.

  Many of our existing competitors have significantly greater financial,
technical, marketing, service and other resources, have a larger installed base
of users, have been in business longer or have greater name recognition than we
do. Some of our competitors' services may be more effective than our services
at performing particular functions or be more customized for particular needs.
Some large companies may attempt to build functions into their solutions that
are similar to functions of our solutions. Even if these functions are more
limited than those provided by our solutions, those solutions could discourage
potential clients from purchasing our solutions, as well as lead to price
reductions that could harm our revenues. In addition, companies larger than
ourselves may be more successful in purchasing advertising space.

Sustained or Repeated System Failures Could Significantly Affect Our Operations
and Lead to Client Dissatisfaction

  The continuing and uninterrupted performance of our computer systems is
critical to our success. Our operations depend on our ability to protect our
computer systems against damage from fire, power loss, water damage,
telecommunications failures, viruses, vandalism and other malicious acts, and
similar unexpected adverse events, including earthquakes. Clients may become
dissatisfied by any system failure that interrupts our ability to provide our
services to them, including failures affecting the ability to deliver
advertisements quickly and accurately to the targeted audiences. Sustained or
repeated system failures would reduce significantly the attractiveness of our
solutions to advertisers.

  In addition, interruptions in our solutions could result from the failure of
our telecommunications providers to provide the necessary data communications
capacity in the time frame required. Our ad network operations and MOJO
computer hardware is primarily housed at Verio, Inc. and AboveNet
Communications, Inc., third-party providers of Internet communication services
located in San Francisco and San Jose, California, respectively. In addition,
the failure of any advertising server system such as ours or DoubleClick's,
including failures that delay the delivery of advertisements to Internet sites,
could reduce client satisfaction and severely harm our business, results of
operations and financial condition.

  We also depend upon Internet browsers and Internet service providers that
provide consumers with access to our products and services. In the past, users
have occasionally experienced difficulties due to software incompatibility or
system failures unrelated to our systems. Any disruption in the Internet access
provided by third-party providers or any failure of third-party providers to
handle higher volumes of user traffic could seriously harm our business,
results of operations and financial condition.

We May Experience Capacity Constraints That Could Reduce Our Advertising
Revenues

  An increase in the volume of advertising delivered through our servers could
strain the capacity of our MOJO technology platform, which could lead to slower
response times or system failures. This would adversely affect the availability
of advertisements, the number of impressions received by advertisers and our

                                       12
<PAGE>

advertising revenues. If we do not effectively address capacity constraints or
system failures, our business, results of operations and financial condition
would be harmed.

Acquisitions or Strategic Investments May Divert Our Management Attention and
Consume Resources

  In March 1999, we acquired Netranscend Software, Inc., a Java-based
enterprise automation solutions software company. We intend to continue
pursuing selective acquisitions of businesses and technologies to complement
our current business. Any future acquisition or investment may result in the
use of significant amounts of cash, potentially dilutive issuances of equity
securities, incurrence of debt and amortization expenses related to goodwill
and other intangible assets. In addition, acquisitions involve numerous risks,
any of which could harm our business, operating results or financial conditions
including:

  . difficulties in the integration and assimilation of the operations,
    technologies, services and personnel of an acquired business;

  . diversion of management's attention from other business concerns;

  . availability of favorable financing for future acquisitions; and

  . potential loss of key employees in any acquired business.

Potential Clients in Similar Industries May Require Us to Contract With Them
Exclusively, Limiting Our Business Opportunities

  To use our services more effectively, advertisers may integrate their
enterprise business information into their advertising campaigns to deliver a
targeted message. To accomplish this task, we must have access to their
proprietary enterprise data. Many companies are wary of third parties having
access to their enterprise business information, because access by third
parties increases the risk that confidential enterprise data may become known,
even if unintentionally, to outsiders that are not the intended recipients of
the data. These privacy concerns may be so great as to prompt our clients to
attempt to contractually prohibit us from managing the online advertising
campaigns of their competitors. If our potential client base in a particular
industry was limited in this way, our business and future revenues could be
harmed.

Our Patent Application Related to Our MOJO Technology is Pending and May Not
Issue

  In July 1999, we filed a patent application related to our key proprietary
technology platform, MOJO, with the U.S. Patent and Trademark Office. Our
application is subject to current review by the U.S. Patent and Trademark
Office and we have no assurance that a patent will issue. If no patent issues
we will rely primarily on trade secret law to protect our MOJO technology,
which may be more difficult to monitor and enforce. Even if we are issued a
patent, third parties could successfully design around the patent to offer a
competing service and we will still be subject to claims of infringement from
third parties.

We Must Keep Pace with Rapidly Changing Internet Advertising Technologies to be
Successful

  The Internet advertising markets are characterized by rapidly changing
technologies, evolving industry standards, frequent new product and service
introductions and changing client demands. The introduction of new products and
services embodying new technologies and the emergence of new industry standards
and practices could render our existing products and services obsolete and
unmarketable or require unanticipated investments in research and development.
Our failure to adapt successfully to these changes could harm our business,
results of operations and financial condition.

  Our future success will depend on our ability to adapt to rapidly changing
technologies, to enhance existing solutions and to partner or develop and
introduce a variety of new solutions to address our clients' changing demands.
For example, advertisers may require the ability to deliver advertisements
utilizing new rich media formats and more precise consumer targeting
techniques. In addition, increased availability of broadband

                                       13
<PAGE>

Internet access is expected to enable the development of new products and
services that take advantage of this expansion in delivery capability. We may
also experience difficulties that could delay or prevent the successful design,
development, introduction or marketing of our solutions. In addition, any new
solutions or enhancements that we develop must meet the requirements of our
current and prospective clients and must achieve significant market acceptance.
Material delays in introducing new solutions and enhancements may cause clients
to forego purchases of our solutions and purchase those of our competitors.

  A key component of our strategy is to enhance the return on investment and
other performance measurements for our advertiser and advertising agency
clients. We have limited experience in implementing and following such a
strategy and this strategy may not succeed.

We Plan to Expand Internationally, Exposing Us to New Risks

  We opened a sales office in Germany in August 1999 and expect to initiate
operations in selected additional international markets in the second half of
1999. Expansion into international markets will require extensive management
attention and resources. We also may enter into a number of international
alliances as part of our international strategy and rely extensively on these
business partners to conduct operations, establish local networks, aggregate
Internet sites and coordinate sales and marketing efforts. Our success in such
markets will depend on the success of our business partners and their
willingness to dedicate sufficient resources to our relationships.
International operations are subject to other inherent risks, including:

  . difficulties and costs of staffing and managing foreign operations;

  . seasonal reductions in business activity;

  . the impact of recessions in economies outside the United States;

  . changes in regulatory requirements;

  . export restrictions, including export controls relating to encryption
    technology;

  . reduced protection for intellectual property rights in some countries;

  . potentially adverse tax consequences;

  . political and economic instability;

  . tariffs and other trade barriers; and

  . fluctuations in currency exchange rates.

  Our failure to address these risks adequately may severely harm our business.

Third Parties May Claim That We Are Infringing Their Intellectual Property,
Causing Us to Suffer Significant Expenses or Be Prevented From Selling Our
Products

  Third parties may claim that we are infringing their intellectual property
rights. While we do not believe that our technology infringes the proprietary
rights of third parties, we may be unaware of intellectual property rights of
others that may cover some of our technology.

  Any litigation regarding our intellectual property could be costly and time-
consuming and divert the attention of our management and key personnel from our
business operations. The complexity of the technology involved and the
uncertainty of intellectual property litigation increase these risks. Claims of
intellectual property infringement might also require us to enter into royalty
or license agreements; however, we may not be able to obtain royalty or license
agreements on terms acceptable to us, or at all. We also may be subject to
significant damages or an injunction against the use of our products. A
successful claim of patent or other intellectual property infringement against
us would immediately harm our business and financial condition.

                                       14
<PAGE>

We May Not Be Able to Protect Our Technology From Unauthorized Use, Which Could
Diminish the Value of Our Products and Services

  Our success depends in large part on our proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret laws,
confidentiality procedures and licensing arrangements to establish and protect
our proprietary rights. We may be required to spend significant resources to
monitor and police our intellectual property rights. If we fail to successfully
enforce our intellectual property rights, the value of our solutions could be
diminished and our competitive position may suffer.

  Third-party software providers could copy or otherwise obtain and use our
technology without authorization or develop similar technology independently
which may infringe our proprietary rights. We may not be able to detect
infringement and may lose competitive position in the market before we do so.
In addition, competitors may design around our technology or develop competing
technologies. Intellectual property protection may also be unavailable or
limited in some foreign countries.

  We generally enter into confidentiality or license agreements with our
employees, consultants, vendors, clients and corporate partners, and generally
control access to and distribution of our technologies, documentation and other
proprietary information. Despite these efforts, unauthorized parties may
attempt to disclose, obtain or use our solutions or technologies. Our
precautions may not prevent misappropriation of our solutions or technologies,
particularly in foreign countries where laws or law enforcement practices may
not protect our proprietary rights as fully as in the United States.

Government Regulation and Legal Uncertainties of Doing Business on the Internet
May Inhibit the Commercial Acceptance of the Internet

  Laws and regulations that apply to Internet communications, commerce and
advertising are becoming more prevalent. These regulations could affect the
costs of communicating on the Internet and adversely affect the growth in use
of the Internet. In turn, these regulations could result in decreased demand
for our solutions or otherwise harm our business.

  Recently, the United States Congress enacted Internet legislation regarding
children's privacy, copyrights and taxation. A number of other laws and
regulations may be adopted covering issues such as user privacy, pricing,
acceptable content, taxation and quality of products and services. This
legislation could hinder growth in the use of the Internet generally and
decrease the acceptance of the Internet as a communications, commercial and
advertising medium. In addition, the growing use of the Internet has burdened
existing telecommunications infrastructure and has caused interruptions in
telephone service. Certain telephone carriers have petitioned the government to
regulate and impose fees on Internet service providers and online service
providers in a manner similar to long distance carriers.

  Due to the global nature of the Internet, it is possible that, while our
transmissions originate in California, the governments of other states or
foreign countries might attempt to regulate our transmissions or levy sales or
other taxes relating to our activities. The laws governing the Internet remain
largely unsettled, even in areas where there has been some legislative action.
It may take years to determine whether and how existing laws including those
governing intellectual property, privacy, libel and taxation apply to the
Internet and Internet advertising. In addition, the growth and development of
the market for Internet commerce may prompt calls for more stringent consumer
protection laws, both in the United States and abroad, that may impose
additional burdens on companies conducting business over the Internet. Our
business could be adversely affected by the adoption or modification of laws or
regulations relating to the Internet.

Potential Year 2000 Problems with Our Internal Systems or Third-Party Systems
Could Harm Our Business

  Many currently installed computer systems and software products worldwide are
coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they are not able to distinguish between the year 1900 and
the year

                                       15
<PAGE>

2000. Accordingly, many companies, including ourselves and our clients,
potential clients, vendors and strategic partners, may need to continue to
upgrade their systems to comply with applicable year 2000 requirements.

  Because we and our clients depend, to a very substantial degree, upon the
proper functioning of computer systems, a failure of these systems to correctly
recognize dates beyond December 31, 1999 could disrupt operations. Any
disruptions could harm our business. Additionally, our failure to provide year
2000 compliant solutions solely or in connection with our strategic partners to
our clients could result in financial loss, reputational harm and legal
liability to us. Please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Year 2000 Compliance."

Spending by Our Clients to Evaluate and Address Year 2000 Compliance Could
Result in Lower Demand for Our Services

  In 1999, a significant number of companies, including some of our current
clients, may be required to devote a substantial amount of their information
technology resources to test systems for year 2000 compliance and fix existing
year 2000 problems. If these clients also defer purchases of our services until
year 2000 problems have been resolved, it will depress our sales in the near
term.

Because Our Directors and Executive Officers Own a Large Percentage of Our
Voting Stock, Your Voting Power May Be Limited

  After this offering, it is anticipated that our executive officers and
directors will beneficially own or control, directly or indirectly, 19.3
million shares of common stock, which in the aggregate will represent
approximately   % of the outstanding shares of common stock. As a result, if
these persons act together, they will have the ability to control all matters
submitted to our stockholders for approval, including the election and removal
of directors and the approval of any business combination. This may delay or
prevent an acquisition or affect the market price of our stock.

As a New Investor, You Will Experience Immediate and Substantial Dilution

  If you purchase shares of our common stock in this offering, you will
experience immediate and substantial dilution in pro forma net tangible book
value of $      per share. If the holders of outstanding options and warrants
exercise those options, you will experience further dilution.

An Active Public Market for Our Common Stock May Not Develop, Which Could
Impede Your Ability to Sell Your Shares and Depress the Market Price of Your
Shares

  Before this offering, you could not buy or sell our common stock on a public
market. An active public market for our common stock may not develop or be
sustained after the offering, which could affect your ability to sell your
shares and depress the market price of your shares. The market price of your
shares may significantly vary from the offering price.

Future Sales of Shares by Existing Stockholders Could Depress the Market Price
of Your Shares

  Sales of a substantial number of shares of our common stock in the public
market by our stockholders after this offering could depress the market price
of our common stock and could impair our ability to raise capital through the
sale of additional equity securities. Based on shares outstanding as of August
15, 1999,
upon completion of this offering we will have outstanding           shares of
common stock, assuming no exercise of the underwriters' overallotment option.
Of these shares, the             shares of common stock sold in this offering
and an additional 195,000 shares of common stock will be freely tradable,
without restriction, in the public market. An additional 85,814 shares of
common stock will become freely tradeable 90 days from the date of this
prospectus. After the lockup agreements pertaining to this offering expire 180
days from the date of this prospectus, an additional 15,880,717 shares will be
eligible for sale in the public market.

                                       16
<PAGE>

  In addition, the 4,952,687 shares subject to outstanding options and warrants
will be exercisable, and if exercised, available for sale 180 days after the
date of this prospectus. Please see "Shares Eligible for Future Sale" for a
description of shares of common stock that are available for future sale.

We Have Adopted Anti-takeover Provisions That Could Make the Sale of Mediaplex
More Difficult

  Our certificate of incorporation and bylaws contain provisions, such as
undesignated preferred stock, a staggered board and the restriction on the
persons that can call special board or stockholder meetings, which could make
it more difficult for a third-party to acquire us without the consent of our
board of directors. While we believe these provisions provide for an
opportunity to receive a higher bid by requiring potential acquirors to
negotiate with our board of directors, these provisions may apply even if the
offer may be considered beneficial by some stockholders.

                                       17
<PAGE>

                                USE OF PROCEEDS

  Our net proceeds from the sale of the          shares of common stock offered
in this offering at an assumed initial public offering price of $    per share,
after deducting the estimated underwriting discount and offering expenses will
be approximately $    . If the underwriters' over-allotment option is exercised
in full, our net proceeds will be approximately $     .

  We expect to use approximately $         of such proceeds for capital
expenditures and the majority of the net proceeds for working capital and
general corporate purposes. In addition, we may use a portion of the net
proceeds to acquire complementary products, technologies or businesses;
however, we currently have no commitments or agreements and are not involved in
any negotiations to do so.

  Pending use of the net proceeds of this offering, we intend to invest the net
proceeds in short-term, interest-bearing, investment-grade marketable
securities.

                                DIVIDEND POLICY

  We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation
and expansion of our business and do not anticipate paying any cash dividends
in the foreseeable future.

                                       18
<PAGE>

                                 CAPITALIZATION

The following table sets forth our capitalization as of June 30, 1999. Our
capitalization is presented:

  . on an actual basis;

  . on a pro forma basis to give effect to the sale of 4,000,000 shares of
    convertible preferred stock subsequent to June 30, 1999 for gross
    proceeds of $14.4 million and the automatic conversion of all outstanding
    shares of convertible preferred stock into shares of common stock
    effective upon the closing of this offering; and

  . on a pro forma as adjusted basis to reflect our receipt of the estimated
    net proceeds from the sale of the         shares of common stock offered
    in this offering at an assumed initial public offering price of $
    per share and after deducting the estimated underwriting discount and
    offering expenses payable by us.
<TABLE>
<CAPTION>
                                                          June 30, 1999
                                                  ------------------------------
                                                                      Pro Forma
                                                  Actual   Pro Forma As Adjusted
                                                  -------  --------- -----------
                                                         (in thousands)
<S>                                               <C>      <C>       <C>
Long-term debt..................................  $   373   $   373     $373
                                                  -------   -------     ----
Stockholders' equity:
Convertible preferred stock, $.0001 par value,
 8,206,000 shares authorized, 5,706,000 issued
 and outstanding, actual; 10,000,000 shares
 authorized, no shares issued or outstanding,
 pro forma and pro forma as adjusted............  $     1       --
Common stock, $.0001 par value; 40,000,000
 shares authorized, 14,838,865 shares issued and
 outstanding, actual; 150,000,000 shares
 authorized, 24,544,865 shares issued and
 outstanding, pro forma; 150,000,000 shares
 authorized,          shares issued and
 outstanding, pro forma as adjusted.............        1         2
Additional paid-in capital......................   20,239    34,639
Warrants........................................      432       432
Deferred stock-based compensation...............   (3,232)   (3,232)
Receivable from sale of Series B preferred
 stock..........................................     (240)     (240)
Accumulated deficit.............................   (8,578)   (8,578)
                                                  -------   -------     ----
Total stockholders' equity......................    8,623    23,023
                                                  -------   -------     ----
  Total capitalization..........................  $ 8,996   $23,396
                                                  =======   =======     ====
</TABLE>

  In addition to the         shares of common stock to be outstanding after the
offering, as of the closing of this offering and based on the number of shares
issued and options and warrants granted as of June 30, 1999, we expect to have
additional shares of common stock available for issuance under the following
plans and arrangements:

  . 12,243,000 shares issuable under our stock plans, consisting of:

   . 8,625,698 shares underlying options outstanding at a weighted average
     exercise price of $0.56 per share, of which 4,077,687 were exercisable;
     and

   . 3,617,302 shares available for future issuance;

  . 875,000 shares issuable upon the exercise of warrants outstanding at a
    weighted average exercise price of $0.97 per share; and

  . 400,000 shares available for issuance under our 1999 Employee Stock
    Purchase Plan.

  Please read the capitalization table together with the sections of this
prospectus entitled "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements included in this prospectus.

                                       19
<PAGE>

                                    DILUTION

  As of June 30, 1999, our net tangible book value on a pro forma basis, giving
effect to the sale of 4,000,000 shares of our convertible preferred stock
subsequent to June 30, 1999 for gross proceeds of $14.4 million and the
conversion of our preferred stock at the closing of this offering, was
$         , or $           per share of common stock. "Net tangible book value"
per share represents the amount of our total tangible assets reduced by the
amount of our total liabilities, divided by the number of shares of common
stock outstanding. As of June 30, 1999, our net tangible book value, on a pro
forma basis as adjusted for the sale of          shares offered in the offering
at an assumed initial public offering price of $     per share and after
deducting the estimated underwriting discount and offering expenses, would have
been approximately $     per share. This represents an immediate increase of
$     per share to existing stockholders and an immediate dilution of $     per
share to new investors. The following table illustrates this per share
dilution:

<TABLE>
<S>                                                                   <C>  <C>
Assumed initial public offering price per share......................      $
 Pro forma net tangible book value per share as of June 30, 1999..... $
 Increase per share attributable to new investors....................
                                                                      ----
Pro forma net tangible book value per share after the offering.......
                                                                           -----
Dilution per share to new investors..................................      $
                                                                           =====
</TABLE>

  The following table summarizes on a pro forma basis, as of June 30, 1999,
giving effect to the sale of 4,000,000 shares of our convertible preferred
stock subsequent to June 30, 1999, the differences between the total
consideration paid and the average price per share paid by our existing
stockholders and the new investors with respect to the number of shares of
common stock purchased from us, based on an assumed initial public offering
price of $       per share:

<TABLE>
<CAPTION>
                                Shares Purchased     Total Consideration    Average
                              --------------------- ----------------------   Price
                                Number   Percentage   Amount    Percentage Per Share
                              ---------- ---------- ----------- ---------- ---------
     <S>                      <C>        <C>        <C>         <C>        <C>
     Existing stockholders... 24,604,865        %   $20,240,901        %    $ 0.82
     New investors...........
                              ----------   -----    -----------   -----
      Total..................              100.0%                 100.0%
                              ==========   =====    ===========   =====
</TABLE>

  In addition to the         shares of common stock outstanding after the
offering, as of the closing of this offering and based on the number of shares
and options and warrants granted as of June 30, 1999, we expect to have
additional shares of common stock available for issuance under the following
plans and arrangements:

  . 12,243,000 shares issuable under our stock plans, consisting of:

   . 8,625,698 shares underlying options outstanding at a weighted average
     exercise price of $0.56 per share, of which 4,077,687 were exercisable;
     and

   . 3,617,302 shares available for future issuance;

  . 875,000 shares issuable upon the exercise of warrants outstanding at a
    weighted average exercise price of $0.97 per share; and

  . 400,000 shares available for issuance under our 1999 Employee Stock
    Purchase Plan.

                                       20
<PAGE>

                            SELECTED FINANCIAL DATA

  The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes included elsewhere
in this prospectus. The selected balance sheet as of December 31, 1997 and 1998
and June 30, 1999 and the selected statement of operations data for the period
from September 10, 1996 (inception) to December 31, 1996, the years ended
December 31, 1997 and 1998 and the six months ended June 30, 1999 have been
derived from our audited financial statements and related notes included
elsewhere in this prospectus. The statement of operations data for the six-
month period ended June 30, 1998 are derived from our unaudited interim
financial statements included elsewhere in this prospectus. In management's
opinion, the unaudited financial statements have been prepared on substantially
the same basis as the audited financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results of operations for such periods. Historical results
are not necessarily indicative of the results to be expected in the future, and
the results of interim periods are not necessarily indicative of results for
the entire year.

<TABLE>
<CAPTION>
                         September 10,
                             1996
                          (inception)       Years Ended           Six Months Ended
                              to           December 31,               June 30,
                         December 31,  ----------------------  -----------------------
                             1996         1997        1998        1998        1999
                         ------------- ----------  ----------  ----------  -----------
                              (in thousands, except share and per share data)
<S>                      <C>           <C>         <C>         <C>         <C>
Statement of Operations
 Data:
Revenues................  $       --   $      426  $    3,588  $    1,522  $     7,323
Cost of revenues........          --          445       2,771       1,213        5,762
                          ----------   ----------  ----------  ----------  -----------
 Gross profit (loss)....          --          (19)        817         309        1,561
Operating expenses:
 Sales and marketing....          23          481         820         395        1,647
 Research and
  development...........          49          347         556         220          815
 General and
  administrative........          31          256         635         325        1,082
 Stock-based
  compensation..........         152           11         578         151        2,966
 Amortization of
  goodwill and
  intangibles...........          --           --          --          --          251
                          ----------   ----------  ----------  ----------  -----------
  Total operating
   expenses.............         255        1,095       2,589       1,091        6,761
                          ----------   ----------  ----------  ----------  -----------
Loss from operations....        (255)      (1,114)     (1,772)       (782)      (5,200)
Interest income
 (expense), net.........          --           (3)       (247)       (234)          14
                          ----------   ----------  ----------  ----------  -----------
Net loss................  $     (255)  $   (1,117) $   (2,019) $   (1,016) $    (5,186)
                          ==========   ==========  ==========  ==========  ===========
Net loss per share--
 basic and diluted......  $    (0.07)  $    (0.13) $    (0.25) $    (0.11) $     (0.43)
Weighted average shares
 outstanding............   3,795,714    8,457,464   8,186,127   9,408,557   12,070,449
Pro forma net loss per
 share--basic and
 diluted................                           $    (0.25)             $     (0.38)
Weighted average shares
 used to compute
 pro forma net loss per
 share--basic and
 diluted................                            8,186,127               13,501,001
</TABLE>

<TABLE>
<CAPTION>
                                                     December 31,
                                                  --------------------  June 30,
                                                  1996  1997    1998      1999
                                                  ----  -----  -------  --------
<S>                                               <C>   <C>    <C>      <C>
Balance Sheet Data:
Cash and cash equivalents........................ $ 27  $ 142  $   375  $ 7,602
Working capital..................................  (46)  (586)  (1,863)   5,119
Total assets.....................................   52    262    1,444   15,430
Long-term debt ..................................   --     65      232      373
Shareholders' equity (deficit):..................  (22)  (558)  (1,962)   8,623
</TABLE>

                                       21
<PAGE>

                       SELECTED PRO FORMA FINANCIAL DATA

  On March 25, 1999, we acquired Netranscend Software, Inc., a Java-based
enterprise automation solutions software company. The acquisition was accounted
for using the purchase method of accounting and, accordingly, the purchase
price was allocated to the tangible and intangible assets acquired and
liabilities assumed on the basis of their fair values on the acquisition date.
The following unaudited pro forma statement of operations data reflects the
acquisition of Netranscend Software, Inc. as if the acquisition had occurred on
January 1, 1998. The pro forma statement of operations data may not be
indicative of the results of operations had the acquisition actually occurred
on January 1, 1998, nor do they purport to indicate our future results of
operations.

<TABLE>
<CAPTION>
                                                                  Year Ended
                                                                 December 31,
                                                                     1998
                                                                --------------
                                                                (in thousands,
                                                                 except share
                                                                and per share
                                                                    data)
<S>                                                             <C>
Pro Forma Statement of Operations Data:
Revenues.......................................................      $ 3,588
Cost of sales..................................................        2,771
                                                                  ----------
 Gross profit..................................................          817
                                                                  ----------
Operating expenses
 Sales and marketing...........................................          828
 Research and development......................................          557
 General and administrative....................................          636
 Stock-based compensation......................................          578
 Amortization of goodwill and intangibles......................        1,003
                                                                  ----------
  Total operating expenses.....................................        3,602
Loss from operations...........................................       (2,785)
                                                                  ----------
Interest income (expense), net.................................         (247)
                                                                  ----------
Net loss.......................................................      $(3,032)
                                                                  ==========
Pro forma net loss per share--basic and diluted(1).............      $ (0.30)
                                                                  ==========
Shares used in computing pro forma net loss per share--basic
 and diluted(1)................................................   10,164,844
                                                                  ==========
</TABLE>
--------
(1) See Note B of Notes to Pro Forma Financial Information for a description of
    the method used to compute basic and diluted net loss per share.

                                       22
<PAGE>

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

  The following discussion of our financial condition and results of operations
should be read together with the financial statements and related notes that
are included later in this prospectus. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those set forth under "Risk Factors" or in
other parts of this prospectus.

Overview

  We are a leading provider of technology-enabled eBusiness marketing services
for companies and advertising agencies that seek to optimize their Internet
marketing campaigns. Although we were incorporated in September 1996, we did
not begin offering our advertising campaign management services until April
1998. Before April 1998, we operated under our prior business model, which
consisted of generating our revenues primarily from the sale of advertising
space on our Internet content sites. During the first half of 1998, we devoted
most of our resources to developing our new business plan and technology and
establishing our technical and sales organizations.

  In the second quarter of 1998 we began generating revenue from our
advertising campaign management services and since the fourth quarter of 1998
have derived substantially all of our revenues from this source. Our campaign
management services include planning the online campaign, coordinating the
online and offline portions of the campaign, purchasing and placing online
media, and tracking, analyzing and reporting the results of the media campaign.
In the second quarter of 1999, we began utilizing our mobile Java objects, or
MOJO, architecture to enhance our service offerings and expand our business. We
plan to expand our revenue sources by leveraging the capabilities of our MOJO
architecture to offer enhanced banner management services, which will allow
advertisers to integrate their enterprise business information into the online
advertising campaign and to tailor the advertising message in real time.

  We currently charge our clients a fixed fee for advertising campaign
management, which varies from client to client. This fee is principally based
on the extent of services provided and the direct cost of media placement, or
the cost of purchasing advertising space on an Internet site, which is
typically determined by the cost per thousand impressions, or CPM. Revenues
from advertising campaign management services are recognized in the period that
advertising impressions are delivered, or placed on an Internet site, provided
that no significant obligations on our part remain and the collection of the
trade receivable is probable. Our obligations often include, for instance,
guarantees of a minimum number of impressions. To the extent that obligations
remain, we defer recognition of the corresponding portion of the revenues until
these obligations are met.

  Cost of revenues consists primarily of the cost of procuring advertising
space on third-party Internet sites and, to a lesser extent, of the
telecommunications and other costs related to maintaining our ad servers at
third-party locations. These costs are recorded in the period that the
advertising impressions are delivered and the related revenues are recorded.
Currently, we purchase advertising space on Internet sites for a particular
media campaign. In the future, we may enter into purchase commitments to obtain
advertising space in bulk without a particular media campaign identified in
order to obtain more favorable pricing.

  We expense all of our research and development costs in the period in which
we incur these costs. The period from achievement of technological feasibility
to the general availability of our software to clients has been short, and
therefore software development costs qualifying for capitalization have been
insignificant. Accordingly, we have not capitalized any software development
costs to date.

  In March 1999, we acquired Netranscend Software, Inc., a Java-based
enterprise automation solutions software company, for a note payable of
$430,000 due in four annual installments beginning in March 2000,

                                       23
<PAGE>

and 1,979,000 shares of common stock. This acquisition was accounted for under
the purchase method of accounting. We recorded $3.0 million of goodwill and
other identifiable intangible assets in connection with this acquisition, which
are being amortized over a three-year period.

  We have a limited operating history upon which you may evaluate our business
and prospects. We incurred losses of $255,000 in 1996, $1.1 million in 1997,
$2.0 million in 1998 and $5.2 million in the first six months of 1999. At June
30, 1999, our accumulated deficit was $8.6 million. We anticipate that we will
incur additional operating losses for the foreseeable future.

Results of Operations

  The following table sets forth our statement of operations data expressed as
a percentage of total revenues:

<TABLE>
<CAPTION>
                                             Six Months
                            Years Ended         Ended
                            December 31,      June 30,
                            --------------   -------------
                             1997    1998    1998    1999
                            ------   -----   -----   -----
<S>                         <C>      <C>     <C>     <C>
Revenues..................   100.0 % 100.0 % 100.0 % 100.0 %
Cost of revenues..........   104.6    77.2    79.7    78.7
                            ------   -----   -----   -----
 Gross profit.............    (4.6)   22.8    20.3    21.3
Operating expenses:
 Sales and marketing......   112.9    22.8    25.9    22.5
 Research and
  development.............    81.5    15.5    14.5    11.1
 General and
  administrative..........    60.0    17.8    21.4    14.8
 Stock-based
  compensation............     2.6    16.1     9.9    40.5
 Amortization of
  goodwill................      --      --      --     3.4
                            ------   -----   -----   -----
  Total operating
   expenses...............   257.0    72.2    71.7    92.3
                            ------   -----   -----   -----
Loss from operations......  (261.6)  (49.4)  (51.4)  (71.0)
Interest income (expense),
 net......................    (0.6)   (6.9)  (15.4)    0.2
                            ------   -----   -----   -----
Net loss..................  (262.2)% (56.3)% (66.8)% (70.8)%
                            ======   =====   =====   =====
</TABLE>

Six Months Ended June 30, 1999 and 1998

  Revenues. Revenues increased to $7.3 million for the six months ended June
30, 1999 from $1.5 million for the six months ended June 30, 1998. The period
to period increase was primarily due to our commencement of selling media
campaign management services to a broad set of advertisers, including
advertising agencies in April 1998. In the first six months of 1999,
substantially all of our revenues consisted of advertising fees received from
advertising campaign management services. In the first six months of 1998, our
revenues were derived from the sale of advertising on our content sites.

  In the six months ended June 30, 1999, five of our clients represented
approximately 68% of our revenues and in the six months ended June 30, 1998,
four of our clients represented approximately 80% of our revenues.

  Cost of Revenues. Cost of revenues increased to $5.8 million, or 78.7% of
revenues, for the six months ended June 30, 1999 from $1.2 million, or 79.7% of
revenues, for the six months ended June 1998. The increase in cost of revenues
in the 1999 period was primarily due to the increase in our revenues. The cost
of revenues in the first six months ended June 30, 1999 was comprised primarily
of media placement costs, while the cost of revenues in the first six months
ended June 30, 1998 consisted primarily of the cost of maintaining our content
Web sites.

                                       24
<PAGE>

Operating Expenses

  Sales and Marketing. Sales and marketing expenses consist primarily of
compensation expenses, including salaries, commissions and related payroll
expenses, and recruiting costs, and marketing expenses, including those
expenses associated with customer service and support. Sales and marketing
expenses increased to $1.6 million, or 22.5% of revenues, for the six months
ended June 30, 1999 from $395,000, or 25.9% of revenues, for the six months
ended June 30, 1998. The dollar increase in sales and marketing expenses during
the 1999 period was primarily due to the significant growth of our sales and
marketing organization in 1999 as we focused on selling advertising campaign
management services. The number of sales and marketing personnel increased from
5 as of June 30, 1998 to 41 as of June 30, 1999. The decrease in sales and
marketing expenses as a percentage of revenues was primarily due to the
significant growth in revenues. We expect that sales and marketing expenses
will continue to increase in dollars.

  Research and Development. Research and development expenses consist primarily
of compensation expenses for our internal development staff and contractor
services. Research and development expenses increased to $816,000, or 11.1% of
revenues, for the six months ended June 30, 1999 from $220,000, or 14.5% of
revenues, for the six months ended June 30, 1998. This dollar increase in
research and development expenses was due primarily to an increase in the
number of development engineers in our research and development organization.
The number of development engineers increased from 2 as of June 30, 1998 to 19
as of June 30, 1999. The decrease in research and development expenses as a
percentage of revenues was primarily due to the significant growth in revenues.
We expect to continue to spend significant amounts on research and development
as we continue to develop and upgrade our technology. Accordingly, we expect
that research and development expenses will continue to increase in dollars.

  General and Administrative. General and administrative expenses consist
primarily of compensation and related expenses and cost of outside contractor
services for administrative personnel. General and administrative expenses
increased to $1.1 million, or 14.8% of revenues, for the six months ended June
30, 1999 from $325,000, or 21.4% of revenues, for the six months ended June 30,
1998. The dollar increase in general and administrative expenses was due
primarily to an increase in personnel. The number of general and administrative
personnel increased from none as of June 30, 1998 to 17 as of June 30, 1999.
The decrease in general and administrative expenses as a percentage of revenues
was primarily due to the significant growth in revenues. We expect that general
and administrative expenses will continue to increase in dollars in the future,
reflecting additional costs associated with increasing our infrastructure and
headcount as we grow and the costs of being a public company.

  Stock-based Compensation. Stock-based compensation expense increased to $3.0
million for the six months ended June 30, 1999 from $151,000 for the six months
ended June 30, 1998. For accounting purposes, we recognize stock-based
compensation in connection with the issuance of shares of our common stock and
the granting of options to purchase our common stock to employees and
consultants with purchase or exercise prices that are less than the deemed fair
market value at the grant date. Stock-based compensation related to the
issuance of shares of common stock has been expensed in the period in which the
common stock was issued. Stock-based compensation related to the issuance of
options to purchase common stock is being amortized over the vesting period of
the stock options through 2003. Total deferred stock-based compensation as of
June 30, 1999 was $3.2 million. These deferred amounts and the related
amortization charges will increase if we record further deferred stock-based
compensation in future periods.

  Amortization of Goodwill and Intangible Assets. Amortization expense was
$251,000 for the six months ended June 30, 1999, due to the amortization of
goodwill and intangible assets recorded in connection with our acquisition of
Netranscend Software, Inc. in March 1999. We recorded no goodwill amortization
expense for the first six months of 1998. We expect to recognize $250,000 of
amortization expense for this transaction in each quarter through the first
quarter of 2002.

  Interest Income (Expense), Net. Interest income, net was $14,000 in the six
months ended June 30, 1999, representing primarily interest earned on the $9.6
million of cash and cash equivalents we generated in the

                                       25
<PAGE>

period from private placements of convertible preferred stock. The net interest
expense of $234,000 in the six months ended June 30, 1998 was primarily due to
the beneficial conversion feature of a note payable to stockholders.

Periods Ended December 31, 1998, 1997 and 1996

  Revenues. Revenues were $3.6 million in 1998 and $426,000 in 1997. We did not
have any revenues in 1996. The increase in revenues from 1997 to 1998 was
primarily due to the commencement of selling advertising campaign management
services. In 1997, we were selling advertising space on our Internet sites
under our prior business model. In 1998, we began providing our advertising
campaign management services and increased our sales force, resulting in
significant revenue growth in 1998.

  Cost of Revenues. Total cost of revenues was $2.8 million, or 77.2% of
revenues, in 1998 and $445,000, or 104.6% of revenues, in 1997. The dollar
increase in cost of revenues was primarily due to the increase in revenues from
1997 to 1998. The decrease in cost of revenues as a percentage of revenues in
1998 as compared to 1997 was primarily due to the commencement of selling
advertising campaign management services.

Operating Expenses

  Sales and Marketing. Sales and marketing expenses were $820,000, or 22.8% of
revenues, in 1998, $481,000, or 112.9% of revenues, in 1997, and $23,000 in
1996. The dollar increases in sales and marketing expenses from 1996 to 1997,
and from 1997 to 1998 were primarily due to the increases in the number of
sales personnel. The decrease in sales and marketing expenses as a percentage
of revenues was primarily due to the rate of increase in revenues in 1998
exceeding the rate of increase in sales and marketing expenses in 1998.

  Research and Development. Research and development expenses were $556,000, or
15.5% of revenues, in 1998, $347,000, or 81.5% of revenues, in 1997, and
$49,000 in 1996. The dollar increases in research and development expenses from
1996 to 1997, and from 1997 to 1998 were primarily due to the increases in the
number of development engineers we employed. The decrease in research and
development expenses as a percentage of revenues was primarily due to the rate
of increase in revenues in 1998 exceeding the rate of increase in research and
development expenses in 1998.

  General and Administrative. General and administrative expenses were
$636,000, or 17.8% of revenues, in 1998, $256,000, or 60.0% of revenues, in
1997, and $31,000 in 1996. The dollar increases in general and administrative
expenses from 1996 to 1997, and from 1997 to 1998 were primarily due to the
increases in the number of administrative personnel and outside administrative
services costs. The decrease in general and administrative expenses as a
percentage of revenues was primarily due to the rate of increase in revenues in
1998 exceeding the rate of increase in general and administrative expenses in
1998.

  Stock-based Compensation. Stock-based compensation expense was $578,000, in
1998, $11,000 in 1997, and $152,000 in 1996.

  Interest Income (Expense), Net. Net interest expense was $247,000 in 1998 and
$3,000 in 1997. There was no interest income or expense in 1996.


                                       26
<PAGE>

Quarterly Results of Operations

  The following table presents statement of operations data for the six
quarters ending with the quarter ended June 30, 1999. We believe that this
unaudited information has been prepared on the same basis as the audited annual
financial statements and includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the unaudited
financial information for the quarters presented. You should read this in
conjunction with our financial statements, including the accompanying notes,
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                            Three Months Ended
                          -------------------------------------------------------
                                                                           June
                          March 31, June 30, Sept. 30, Dec. 31, March 31,   30,
                            1998      1998     1998      1998     1999     1999
                          --------- -------- --------- -------- --------- -------
                                              (in thousands)
<S>                       <C>       <C>      <C>       <C>      <C>       <C>
Statements of Operations
Data:
Revenues................    $ 586    $ 935    $1,069    $ 997    $ 1,633  $ 5,689
Cost of revenues........      480      733       756      802      1,340    4,421
                            -----    -----    ------    -----    -------  -------
 Gross profit...........      106      203       313      195        294    1,268
Operating expenses:
 Sales and marketing....      193      201        87      338        543    1,104
 Research and
  development...........      125       95       195      140        308      507
 General and
  administrative........      117      208       132      180        456      626
 Stock-based
  compensation..........       --      151        --      427      1,953    1,013
 Amortization of
  goodwill..............       --       --        --       --         --      251
                            -----    -----    ------    -----    -------  -------
  Total operating
   expenses.............      435      656       414    1,085      3,260    3,501
                            -----    -----    ------    -----    -------  -------
Loss from operations....     (329)    (453)     (101)    (890)    (2,966)  (2,233)
Interest income
 (expense), net.........       (1)      (1)     (230)     (15)         1       12
                            -----    -----    ------    -----    -------  -------
Net loss................    $(330)   $(454)   $ (331)   $(905)   $(2,965) $(2,221)
                            =====    =====    ======    =====    =======  =======
</TABLE>

<TABLE>
<CAPTION>
                                            Three Months Ended
                         -----------------------------------------------------------
                         March 31, June 30,  Sept. 30, Dec. 31,  March 31,  June 30,
                           1998      1998      1998      1998      1999       1999
                         --------- --------  --------- --------  ---------  --------
<S>                      <C>       <C>       <C>       <C>       <C>        <C>
As a Percentage of
 Revenues:
Revenues................   100.0 %  100.0 %    100.0 %  100.0 %    100.0 %   100.0 %
Cost of revenues........    81.9     78.3       70.7     80.4       82.0      77.7
                           -----    -----      -----    -----     ------     -----
 Gross profit...........    18.1     21.7       29.3     19.6       18.0      22.3
Operating expenses:
 Sales and marketing....    33.0     21.5        8.1     33.9       33.2      19.4
 Research and
  development...........    21.3     10.2       18.3     14.1       18.9       8.9
 General and
  administrative........    19.9     22.3       12.3     18.0       27.9      11.0
 Stock-based
  compensation..........      --     16.2         --     42.8      119.6      17.8
 Amortization of
  goodwill..............      --       --         --       --         --       4.4
                           -----    -----      -----    -----     ------     -----
  Total operating
   expenses.............    74.2     70.2       38.7    108.8      199.6      61.5
                           -----    -----      -----    -----     ------     -----
Loss from operations....   (56.0)   (48.5)      (9.4)   (89.3)    (181.6)    (39.3)
Interest income
 (expense), net.........    (0.2)    (0.1)     (21.5)    (1.5)       0.1       0.2
                           -----    -----      -----    -----     ------     -----
Net loss................   (56.2)%  (48.5)%    (30.9)%  (90.8)%   (181.5)%   (39.1)%
                           =====    =====      =====    =====     ======     =====
</TABLE>

  Due to the early stage of our company and the commencement of selling
advertising campaign management services in April 1998, the period-to-period
comparisons of our historical operating results should not be relied upon as
indicative of future performance. During the second and third quarters of 1998,
our results reflect the transition from our prior content-based business model
to our media campaign management

                                       27
<PAGE>

business model. Beginning in the fourth quarter of 1998, our financial
performance solely reflected our current advertising campaign management
services.

  The quarter ended September 30, 1998 was the last quarter in which we
generated revenues from our prior business model. In the quarters ended
December 31, 1998, March 31, 1999 and June 30, 1999, revenues were $1.0
million, $1.6 million and $5.7 million, respectively, and were generated solely
from our advertising campaign management services business.

  The increases in sales and marketing expenses, research and development
expenses, and general and administrative expenses from the quarter ended
December 31, 1998 through the quarter ended June 30, 1999 are primarily due to
increased compensation and related expenses as a result of the increased
headcount required to support the growth in advertising campaign management
services revenues.

  The stock-based compensation expense for the quarter ended June 30, 1998
represented the non-cash expense related to the issuance of shares of our
common stock for services rendered. The stock-based compensation expense for
the quarters ended December 31, 1998 and March 31, 1999 represented expense for
the issuance of shares in exchange for services, and the amortization of
deferred stock compensation recorded for options granted to employees and
consultants to purchase common stock with exercise prices that were less than
the deemed fair market value at the grant date. The stock-based compensation
expense for the quarter ended June 30, 1999 consisted solely of the
amortization of the deferred stock compensation recorded for options granted to
employees to purchase common stock at exercise prices that were less than the
deemed fair market value at the grant date.

  Although we have experienced revenue growth in recent periods, we anticipate
that we will incur operating losses for the foreseeable future due to the high
level of planned operating and capital expenditures.

Liquidity and Capital Resources

  Since our inception in September 1996 through June 1999, we have financed our
operations primarily through the private placement of preferred stock, which
has generated an aggregate of $10.5 million. As of June 30, 1999, we had
$7.6 million in cash and cash equivalents. In August 1999, we raised an
additional $14.4 million from the gross proceeds of sale of additional shares
of preferred stock.

  Net cash used in operating activities in the six months ended June 30, 1999
and 1998, the years ended December 31, 1998, 1997 and the period from September
10, 1996 (inception) through December 31, 1996, was $1.4 million, $165,000,
$240,000, $150,000 and $28,000, respectively. Net cash used in operating
activities in each of these periods was primarily the result of net losses
before non-cash charges, and increases in accounts receivable, offset by stock-
based compensation expense and increases in accounts payable and accrued
liabilities, and, with respect to the year ended December 31, 1998 and the six
months ended June 30, 1999, depreciation and amortization charges.

  Net cash used in investing activities in the six months ended June 30, 1999
and 1998, the years ended December 31, 1998, 1997 and the period from September
10, 1996 (inception) through December 31, 1996, was $840,000, $38,000, $79,000,
$70,000 and $24,000, respectively. Net cash used in investing activities in all
periods presented was due principally to the acquisition of computer equipment
and software.

  Net cash provided by financing activities in the six months ended June 30,
1999 and 1998, the years ended December 31, 1998, 1997 and the period from
September 10, 1996 (inception) through December 31, 1996, was $9.4 million,
$306,000, $551,000, $335,000 and $80,000, respectively. Net cash provided by
financing activities in all periods was primarily due to sales of shares of our
common stock and, in the six months ended June 30, 1999, our preferred stock,
as well as in 1998 and the six months ended June 30, 1998, funds borrowed from
stockholders under notes payable. A portion of these notes payable were paid
off in the six months ended June 30, 1999.

                                       28
<PAGE>

  Although we have no material commitments for capital expenditures, we
anticipate an increase in the rate of capital expenditures consistent with our
anticipated growth in operations, infrastructure and personnel. We believe that
the net proceeds from this offering, combined with current cash balances and
cash equivalents, will be sufficient to meet our anticipated liquidity needs
for working capital and capital expenditures for at least twelve months from
the date of this prospectus. Our forecast of the period of time through which
our financial resources will be adequate to support operations is a forward-
looking statement that involves risks and uncertainties, and actual results
could vary materially as a result of the factors described above. If we require
additional capital resources to grow our business internally or to acquire
complementary technologies and businesses, we may seek to sell additional
equity or debt securities or secure a bank line of credit. The sale of
additional equity or convertible debt securities could result in additional
dilution to our stockholders. We cannot assure you that any financing
arrangements will be available in amounts or on terms acceptable to us.

Market Risk Disclosure

  The following discusses our exposure to market risk related to changes in
foreign currency exchange rates and interest rates. This discussion contains
forward-looking statements that are subject to risks and uncertainties. Actual
results could vary materially as a result of a number of factors including
those set forth in the risk factors section of this prospectus.

  Foreign Currency Exchange Rate Risk. To date, we have not had any revenues
from international operations, and all of our recognized revenues have been
denominated in U.S. dollars from clients in the United States. We expect,
however, that future revenues may also be derived from international markets
and may be denominated in the currency of the applicable market. As a result,
our operating results may become subject to significant fluctuations based upon
changes in the exchange rates of foreign currencies in relation to the U.S.
dollar. Furthermore, to the extent that we engage in international sales
denominated in U.S. dollars, an increase in the value of the U.S. dollar
relative to foreign currencies could make our products less competitive in
international markets. Although we expect to monitor our exposure to currency
fluctuations as we expand into international markets, and, when appropriate,
may use financial hedging techniques in the future to minimize the effect of
these fluctuations, we cannot assure you that exchange rate fluctuations will
harm our financial results in the future.

  Interest Rate Risk. As of June 30, 1999, we had cash and cash equivalents of
$7.6 million which consist of cash and highly liquid short-term investments.
Our short-term investments will decline in value by an immaterial amount if
market interest rates increase. Declines of interest rates over time will,
however, reduce our interest income from our short-term investments.

Recent Accounting Pronouncements

  In March 1998, the Accounting Standards Executive Committee, or ASEC, issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 provides guidance on when
costs related to software developed or obtained for internal use should be
capitalized or expensed. SOP 98-1 is effective for transactions entered into
for fiscal years beginning after December 15, 1998. We have reviewed the
provisions of SOP 98-1 and we do not believe adoption of this standard will
have a material effect upon our statement of operations.

  In April 1998, the ASEC issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 requires the cost of start-up activities, including
organization costs, to be expensed as incurred. We do not expect this
pronouncement to have a material effect upon our statement of operations.

  In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which requires companies to record derivative
financial instruments on the balance sheet as assets or liabilities, measured
at fair value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedging accounting. The key criterion for

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<PAGE>

hedge accounting is that the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of all fiscal years beginning after June 15,
1999. We do not anticipate that this statement will have a material effect upon
our statement of operations.

  In December 1998, the American Institute of Certified Public Accountants
issued SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition, with
Respect to Certain Transactions." SOP 98-9 amends SOP 97-2 and SOP 98-4 by
extending the deferral of the application of certain provisions of SOP 97-2
amended by SOP 98-4 through fiscal years beginning on or before March 15, 1999.
All other provisions of SOP 98-9 are effective for transactions entered into in
fiscal years beginning after March 15, 1999. We do not anticipate that these
statements will have a material effect upon our statement of operations.

Year 2000 Compliance

  Many currently installed computer systems and software products worldwide are
coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they are not able to distinguish between the year 1900 and
the year 2000. Accordingly, many companies, including ourselves and our
clients, potential clients, vendors and strategic partners, may need to upgrade
their systems to comply with applicable year 2000 requirements.

  Because we and our clients depend, to a very substantial degree, upon the
proper functioning of computer systems, a failure of these systems to correctly
recognize dates beyond December 31, 1999 could disrupt operations. Any
disruptions could harm our business. Additionally, our failure to provide Year
2000 compliant solutions to our clients could result in financial loss,
reputational harm and legal liability to us.

  Substantially all of our computer equipment and software was purchased in the
past twelve months. As such, we believe that this software is generally Year
2000 compliant, meaning that the use or occurrence of dates on or after January
1, 2000 will not materially affect the performance of this software or the
ability of this software to correctly create, store, process and output data
involving dates.

  We typically use industry-standard third-party hardware and software. We have
not, to date, sought assurances from our suppliers that their products are Year
2000 compliant. We also generally do not have any contractual rights with these
providers if their software or hardware fails to function due to Year 2000
issues. If these failures do occur, we may incur unexpected expenses to remedy
any problems, including purchasing replacement hardware and software.

  Because our computer equipment and software is substantially new, we have not
engaged any third parties to independently verify our Year 2000 readiness, nor
have we assessed potential costs associated with Year 2000 risks or made any
contingency plans to address these risks. Further, we have not deferred any of
our ongoing development efforts to address Year 2000 issues. Unanticipated
costs associated with any Year 2000 compliance could materially harm our
quarterly and annual results of operations.

  We are currently implementing a new accounting and management reporting
system for business reasons unrelated to Year 2000. We have been assured that
our new system is also Year 2000 compliant by the vendor. If any of our
vendors' representations regarding their products are not accurate, or if we
encounter unknown Year 2000 problems relating to the interaction of our
systems, we could incur significant expenses to resolve these issues or damages
resulting from a failure of our systems to perform correctly. For example, if
our accounting system fails to properly record our transactions, we would need
to devote additional staff or hire a third-party to correct the problem, could
lose important data and would have difficulty planning without accurate
financial information.

  We depend on the uninterrupted availability of the Internet infrastructure to
conduct our business as a centralized ad delivery and management service. We
also rely on the continued operations of our clients, in

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particular Web sites hosting advertisements, for our revenues. We are heavily
dependent upon the success of Year 2000 compliance efforts of our clients.
Interruptions in the Internet infrastructure affecting us or our clients, or
failure of the Year 2000 compliance efforts of one or more of our clients,
could harm our ability to generate revenue.

  In the event we discover Year 2000 problems in our products or internal
systems, we will endeavor to resolve these problems by making modifications to
our products or systems or purchasing new systems, on a timely basis. In
addition, the effect of Year 2000 issues on our clients generally, or on our
banks, stock markets and other infrastructure functions is unknown. We cannot
assure you that our systems will be Year 2000 compliant or that we will not
incur material expenses or liability relating to the Year 2000 problem.

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                                    BUSINESS

  We provide technology-based eBusiness marketing solutions that enable
advertisers to optimize their online marketing efforts. eBusiness marketing
allows companies to combine their online direct marketing and branding
activities with critical enterprise business data in order to effectively use
the Internet to manage and transact business. Our services encompass the
planning, execution, monitoring and analysis of advertising campaigns over the
Internet. Our proprietary MOJO technology platform enables advertisers to
deliver, in real time, customized advertising messages to a targeted consumer.
Our MOJO platform interfaces with companies' existing enterprise data and
software applications to access critical business information that is used to
customize the advertising message. We believe customized, real-time messaging
will increase the consumer response to online advertisements, thereby improving
the return on advertising spending. Our services are offered as a comprehensive
solution, or individually as part of a complementary service in partnership
with other advertising and technology providers. Some of our clients include
companies such as DATEK Online Brokerage Services, Corp., OfficeMax,
ShopNow.com, Strong Funds, and advertising agencies including McCann-Erickson
and Publicis & Hal Riney using our services on behalf of their clients such as
Hewlett-Packard, Siebel Systems, Silicon Graphics, Inc. and Sprint PCS.

Industry Background

The Internet as an Advertising Medium for Direct Marketing, Branding and
eBusiness

  The Internet is rapidly becoming an important advertising medium for direct
marketing and product branding. Forrester Research, Inc. anticipates that U.S.
online advertising spending will grow from $2.8 billion in 1999 to $17.2
billion in 2003, driven by a number of factors, including the growing online
population, the acceleration of e-commerce and the advancement of online
marketing technologies. According to International Data Corporation, the U.S.
online population is projected to grow from 80.8 million in 1999 to 177.0
million by 2003, and U.S. e-commerce spending is projected to increase from
$74.4 billion in 1999 to $707.9 billion by the end of 2003.

  To date, the major spenders in online advertising have been Internet,
computer and technology companies and financial institutions. We believe other
advertisers, who have historically used more traditional media, are
increasingly becoming attracted to the Internet because of its global reach,
potential to enable one-to-one marketing and ability to track and measure
campaign results in real time. Advertisers are beginning to recognize the
effectiveness of the Internet to build long-term brand awareness, perform
valuable market testing, and facilitate immediate trial and sales of products
and services. In contrast to traditional, or off-line advertising, the
interactive nature of the Internet gives companies the ability to send
advertising messages to consumers and enables consumers to immediately respond
to the advertising. Furthermore, the Internet enhances client-specific
marketing campaigns to promote customer retention and loyalty.

  Despite the emergence of the Internet as a medium for advertising,
expenditures for online advertising represent only a small portion of all media
spending. Forrester Research, Inc. estimates that by 2003, U.S. total media
spending will reach approximately $260.6 billion, of which the online component
of $17.2 billion will represent only 6.6%. We believe online media spending has
the potential to capture a larger portion of total media spending as new
technologies improve the effectiveness of online advertising and attract more
traditional media advertisers to the Internet.

  We believe the rapid growth of e-commerce has changed the nature and pace of
business operations and competition. Companies are increasingly realizing the
importance of conducting "eBusiness," which goes beyond the simple sale of
products and services over the Internet. eBusiness is the use of the Internet
to manage and transact business, and communicate with consumers, clients,
suppliers and partners. In addition, eBusiness leverages the significant
financial and technical resources that companies have made in software
applications which manage and store critical business information, such as
enterprise resource planning and supply and distribution management systems. We
believe that it is increasingly becoming a competitive necessity for companies
to operate as eBusiness enterprises.

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The Challenges of Online Advertising

  An effective online marketing campaign requires a wide range of
implementation, management and technology expertise in campaign development,
advertising execution and results analysis. The real-time delivery, measurement
and analysis of multiple advertising campaigns encompassing thousands of Web
sites is complex and difficult to execute and manage. Traditional advertising
agencies and most companies typically do not have the expertise in the Internet
medium to address these delivery and management requirements.

  The increase in online advertising spending has heightened expectations for
more effective advertising campaigns and improved return on investment, or ROI.
The standard benchmarks to measure the impact of an advertising campaign are
banner impressions, viewer click-through rates to advertisers' sites from
online messages, and conversion rates, which are the percentage of consumers
who complete a purchase or other transaction. Recently, click-through rates
have been declining and advertisers are increasingly competing for the
attention of online consumers. As a result, companies are currently searching
for more effective advertising messaging techniques in order to increase click-
through and conversion rates.

  To date, online advertising has not achieved effective one-to-one marketing,
which requires delivery of the right message to the right consumer at the right
time. Ideally, advertisers seek to identify potential customers most likely to
purchase their products, send them a message tailored to their individual
preferences, and do so at a time when they are most likely to make a purchase
decision. Most current technologies are focused on identifying the right
consumer based on their demographic, geographic or psychographic
characteristics. Identifying the right consumer, however, represents only one
component of true one-to-one marketing. The ability to send the right message
at the right time remains a significant challenge.

  Sending the right message at the right time would enable companies to use
advertising as an effective online marketing and sales channel. The right
message includes appropriate product information for a particular consumer,
based on the existing operating profile of the enterprise including, for
example, pricing and availability. In order to achieve this, companies must
access and integrate their existing business information into the online
advertising process, enabling them to incorporate critical business information
in targeted messages and turn an advertisement into an effective eBusiness
tool. For example, a hotel with excess availability in New York City would seek
to advertise discounts to consumers booking flights to New York.

  We believe that there is a significant opportunity for a vendor who can
provide a comprehensive, technology-based solution for online advertising
campaigns. We believe that this solution must provide the following key
capabilities:

  . Expertise to Manage and Execute All Stages of Online Marketing
    Campaigns. A comprehensive solution must encompass campaign planning and
    execution, measuring results, analyzing data and thereafter optimizing
    the ongoing and future campaigns. This requires the use of complex
    technologies that allow real-time campaign adjustments. In addition,
    integration with off-line advertising is essential to deliver a
    consistent brand and direct marketing message.

  . Data Accumulation and Analysis. A complete solution must include
    accumulation and analysis of valuable profiling data about consumers to
    target and re-target these consumers effectively in future campaigns.

  . Detailed ROI Analysis. An optimal solution should provide advertisers and
    advertising agencies with customizable, comprehensive, real-time return
    on investment analyses of both content and placement to optimize campaign
    performance and improve ROI.

  . Tailored Messaging Capabilities. To maximize the effectiveness of a
    campaign and achieve one-to-one marketing, an online advertiser must have
    the ability to tailor an advertisement in real time, either manually or
    automatically, based on parameters such as product selection, consumer
    profile and location, and campaign performance.

  . Leverage Enterprise Data. The ability to integrate existing enterprise
    data into online advertising campaigns through dynamic messaging would
    enable companies to increase conversion rates and sales and utilize the
    Internet more effectively as a medium for eBusiness. Dynamic messaging is
    the ability to change advertisements in real time based on business
    parameters, such as product pricing or inventory levels.

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<PAGE>

Solution

  We provide technology-enabled eBusiness marketing services that enable
companies to use online advertising as a sales and marketing channel. We plan,
execute, measure and report the effectiveness of online campaigns. Our MOJO
platform is a Java object-based technical architecture which allows us to offer
a broad range of technologically-advanced services that can scale across the
Internet to accommodate a large number of advertising campaigns, which are
simultaneously delivered to a broad universe of Web sites and consumers. Our
MOJO technology interfaces with companies existing product databases or
enterprise software applications to access critical business information, which
is used to deliver the most relevent message customized to a targeted consumer
in real time. Our technology is designed to maximize the effectiveness of
online advertising, resulting in higher click-through and conversion rates,
thereby delivering a higher ROI on advertising spending. Our services are
offered as a comprehensive solution, or individually as part of a complementary
service in partnership with other advertising and technology vendors, such as
DoubleClick.

  Our solution includes the following benefits:

  . Comprehensive Online Advertising Campaigns. Using our technology platform
    and expertise in online advertising, we provide a full range of services
    that optimize online campaigns, including strategic planning, execution
    of media buys, ad serving and reporting capabilities. We work with
    traditional advertising agencies to integrate online and off-line
    advertising and marketing strategies to increase the return on the total
    advertising investment.

  . Real-time Tracking and Measuring Campaign Results. To optimize any given
    campaign, we monitor its effectiveness by tracking the return on
    advertising investments through multiple metrics, including click-through
    and conversion rates, as well as revenues derived from these conversions.
    This monitoring enables campaigns to be automatically or manually
    modified in real time to maximize effectiveness.

  . Sophisticated Data Capture and Analysis. Using our data capture
    capabilities and those of our strategic partners, we match advertiser-
    selected profiles with consumer profiles based on geographic, demographic
    and psychographic information, including purchasing and site visitation
    patterns, to target and re-target consumers.

  . Real-time Messaging Capabilities. We have the ability to change the
    content of online advertisements in real time. This enables a company to
    tailor its marketing messages based on consumer profiles as well as
    predefined parameters or business rules, such as product rotations or
    pricing. We also enable a company to test advertising graphics, messages
    and sites, and adjust them in real time to optimize campaign performance.

  . Integration of Enterprise Business Information. Our MOJO technology
    enables us to integrate online advertising campaigns with enterprise
    data, allowing us to dynamically tailor and deliver advertisements based
    on a consumer's profile and on a company's real-time inventory, pricing
    or other pertinent product data. We believe that this integration leads
    to more effective messaging, increased sales and improved inventory yield
    management. In this sense, our technology will not only be used to report
    ROI figures, but will also be used to produce higher ROI results.

Strategy

  Our objective is to become the leading provider of technology-enabled
eBusiness marketing solutions. Our strategy includes the following key
elements:

  . Target Global 1000 Companies and e-Commerce Companies. We believe we can
    deliver significant value to Global 1000 companies that require online
    management and technology expertise to develop and execute effective
    direct marketing and branding campaigns. We plan to identify Global 1000
    companies that want to leverage the potential of the Internet for
    eBusiness to strengthen their competive position. In addition, we intend
    to target e-commerce companies of all sizes that rely significantly on
    the Internet to extend their business presence and to market, sell and
    purchase products and services.


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  . Partner with Advertising Agencies. We intend to expand and strengthen our
    partnerships with traditional advertising agencies to extend our direct
    sales efforts. We will continue to provide agencies with critical online
    media technology expertise, which we believe will accelerate our
    penetration of medium to large-sized corporate clients. We have already
    established partnerships with leading agencies such as McCann-Erickson
    and Publicis & Hal Riney. We intend to pursue relationships with other
    advertising agencies by providing technology-enabled services and support
    for online advertising that can be fully integrated with their off-line
    initiatives.

  . Maintain Technology Leadership. We believe that our technology is a key
    competitive differentiator. Our MOJO technology platform enables us to
    efficiently deploy services that give our clients innovative advertising
    capabilities while providing the ability to integrate enterprise
    information into their online messages in real time. Our Java objects-
    based architecture enables our solutions to scale geographically across
    the Internet and a large number of transactions and advertisers. We
    intend to extend our technology leadership by incorporating additional
    functionality and services into our platform, such as e-commerce-enabled
    messages.

  . Enhance Sales Capabilities Through Strategic Relationships. We plan to
    broaden our existing strategic relationships with companies such as
    DoubleClick, SAP Labs and Icon Medialab, and to build relationships with
    additional companies for our campaign management and MOJO technology
    capabilities. We are seeking to work with traditional and interactive
    advertising agencies, online ad serving companies, ad publishing
    representatives, Web development and consulting firms, enterprise
    application companies and systems integrators. Our objective is to
    establish alliances with these companies and accelerate our sales
    penetration into enterprises in need of our services. In addition, we
    expect to develop and manage affiliate and sponsorship programs which
    generate shared revenues derived from prospective e-commerce-based
    services.

  . Deliver Flexible Online Marketing Solutions. We believe that online
    advertisers will increasingly demand greater flexibility and
    accountability in their advertising programs. Because we can unbundle our
    technology-enabled services, our solutions can be deployed together with
    the capabilities offered by other advertising and technology providers,
    such as DoubleClick. By working with third-party providers, we can offer
    specific services, such as dynamic tailored messaging, that complement
    their advertising services. This flexibility creates enhanced revenue
    opportunities and accelerates market adoption of our services and
    technology by targeting clients interested in unbundled elements of our
    solution.

  . Broaden International Presence. We plan to expand our capabilities and
    presence internationally in order to capitalize on the global reach of
    the Internet. We also believe there is a significant opportunity to
    provide our solutions to companies based outside of the United States
    that require technology-enabled advertising services tailored for their
    local markets. We have recently opened a sales office in Hamburg, and by
    the end of 1999, we expect to have established an office in Tokyo and
    offices in London, Paris and Stockholm.

Our Services

  Our technology-enabled eBusiness marketing services encompass all aspects of
an online advertising initiative, including campaign planning and execution,
online message management and campaign analysis. Our technology-enabled
offerings can be delivered individually or as a suite of services and are
principally priced based on cost per thousand impressions, cost per click, or
cost per acquisition, which can include sales and registrations.

  Our services can be offered as part of a complementary solution provided in
partnership with other advertising and technology vendors. In particular, our
MOJO technology can be deployed with the serving capabilities provided by other
companies, such as DoubleClick, and interactive ad agencies. This allows us to
work with clients of these service and technology providers who do not need all
of our campaign management capabilities, but still want to deploy our MOJO
technology or any of our other services.

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--------------------------------------------------------------------------------
   Services                                 Description of Services
--------------------------------------------------------------------------------

                               . Develop an online media strategy based on the
                                 client's business objectives and the
                                 appropriate Internet media opportunities
 Campaign Planning and Execution

                               . Plan and purchase media across Internet
                                 advertising networks and independent Web
                                 sites, employing various price structures

                               . Manage the ad serving process

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

 Online Message Management     . Apply targeting goals based on the specific
                                 capabilities of each Web site or advertising
                                 network considered for the marketing campaign

                               . Adjust campaigns in real time across all Web
                                 sites based on predetermined schedules or the
                                 occurrence of defined events

                               . Customize messages in real time based on
                                 customer profiling, defined business rules
                                 determined by enterprise data, market events
                                 and campaign performance as measured by
                                 standard metrics or ROI analysis

                               . Use data capture capabilities to refine the
                                 database and re-target consumers

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

Campaign Analysis
                               . Track and monitor campaigns for results as
                                 measured by Web site and advertisement

                               . Provide real-time reports customized by
                                 performance data, including impressions,
                                 click-throughs and conversions for each Web
                                 site and advertisement

                               . Generate campaign ROI statistics summarizing
                                 results by categories such as user-targeting
                                 data, inventory changes, Internet sites and
                                 date/time

                               . Optimize campaigns based on ongoing
                                 performance data

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

Campaign Planning and Execution

  . Campaign Planning. We develop Internet media strategies based on
    advertisers' business goals and advertising objectives, such as brand
    awareness, product trial and sales, and previous online performance, if
    available. We determine target audiences using demographic, geographic
    and psychographic information, or consumers' areas of interest. Our
    online media programs are integrated with clients' off-line campaigns to
    deliver a consistent brand message at each point of contact.

  . Media Buying and Placement. We leverage our wholesale buying power in
    planning and buying across all advertising networks and independent Web
    sites. Each campaign is customized, incorporating sponsorships, keywords,
    run of site, specific position and remnant space, where applicable. Media
    purchases can be based on several models including cost per thousand
    impressions, cost per click, cost per acquisition and revenue-sharing
    programs. Our MOJO technology processes insertion orders systematically
    across networks and individual Web sites to deliver accurate ad
    placement.

  . Ad Serving. Our third-party ad serving capabilities allow adjustments to
    be managed quickly and efficiently because the only change required to
    the advertisement is effected on our server instead of on each individual
    Web site.


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  . Re-Targeting. During a campaign, we use extensive data capture
    capabilities through strategic partners like DoubleClick to further
    refine the database and re-target advertising to prospects who have
    visited a client's Web site. Information can include site visitation
    patterns and online purchasing activity. For example, we can track which
    product pages a consumer visits, how far they proceed in the shopping
    process, and if they have made previous online purchases. This data can
    then be used to optimize audience and message targeting for the ongoing
    campaign.

Online Message Management

  . Dynamic Messaging. We enable advertisers to modify advertising messages
    dynamically, that is, at any point in time. Online advertisements contain
    "data fields" where messages can change, such as products, prices or
    special offers. Message modification can be automated by establishing
    predefined events that determine message content, such as product
    rotations or price reductions. Advertisers can also make modifications
    manually, directly from their desktop computers.

  . Targeted Messaging Integrated with Enterprise Data. Our eBusiness
    messaging capability enables advertisers to use real-time business
    information, such as product inventory, pricing and availability, to
    deliver the most relevant message to each viewer. We assist advertisers
    with the development of business rules based on product database or
    enterprise system information. During the campaign, our MOJO technology
    can make automatic modifications to the advertising on the basis of these
    business rules. We believe that clients with time-sensitive inventory are
    particularly well-suited to take advantage of these capabilities. For
    example:

    . An airline promotes roundtrip fares between San Francisco and New
      York. Fourteen days prior to the flight, the airline advertises seats
      at $956. The airline could specify that seven days before the flight,
      the price on the banner message would systematically change to
      $1,499. Based on excess seat availability two days prior to
      departure, the fare offered for a limited number of the seats would
      be automatically discounted to $799.

    . A hotel chain focuses its advertising campaign on reaching an 80%
      occupancy rate. When the occupancy rate of a particular hotel reaches
      this level, the message is automatically directed to promote another
      property within the chain.

  . Integration of Data From Third-Party Vendors. In addition to customer
    profiling data that we compile, we have access to the extensive profiling
    data of our strategic partner, DoubleClick. Our MOJO technology utilizes
    this data in creating, in real time, the appropriate message to a
    profiled consumer based on enterprise and market data.

  . Storyboard Messaging. Using our technology, a "storyboard" of advertising
    messages can be constructed in a series. The campaign can be designed to
    show a set of advertisements in a predefined sequence for a particular
    consumer, regardless of which Web site in the campaign is viewed. This
    choreographs a series of customized messages based on the consumer's
    interests and online activity. For example, a viewer purchasing a
    computer online will be presented with advertisements for accessories the
    next time he or she accesses a Web site within the campaign.

  . Multiple Messaging. MOJO technology enables single advertisements to
    provide multiple click-through message options. The choice of message is
    determined by the location of the advertisement on which the consumer
    clicks. For example, if a consumer received a banner depicting a map of
    the United States and clicked on the state of California, the consumer
    would receive a different message than if he or she were to click on the
    state of Maryland.

Campaign Analysis

  . Campaign Tracking. We track impressions, click-throughs and conversions,
    which include sales and other types of transaction activity such as
    registrations and requests for information, across all campaign sites.
    Activity is monitored by site, creative unit, such as a banner or side
    panel, and message content.

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   Our technology enables tracking of performance metrics for standard
   advertisements and for the more difficult to monitor advertisements
   utilizing rich media that may incorporate audio and video components. We
   can also track advertising that is served by independent third-party ad
   servers.

  . Campaign Reporting. We provide a full range of accurate and timely
    reporting capabilities customized to meet individual advertiser's needs.
    Clients are able to view secure, real-time campaign reports by
    performance metrics, including impressions, click-throughs, conversion
    rates and sales, at any time over the Internet in a summary format that
    provides results categorized by site and by advertisement.

  . ROI Analysis. ROI reporting is customized to each advertiser and
    integrates sales and conversion data to dynamically generate campaign
    statistics in real time. Reports provide measurements on performance by
    tracking sales and other conversions criteria, such as registrations and
    information requests, as well as by tracking visitors who did not act
    immediately, but subsequently returned to the Web site and purchased.

  . Real-Time Campaign Optimization. Our MOJO technology allows predefined
    business rules to automatically optimize campaigns. In addition, we can
    make real-time changes to campaigns based on ongoing performance data.
    Our customized, real-time reports facilitate quick determination of the
    effectiveness of sites and advertisements based on performance metrics,
    such as lowest cost per sale and highest sales volume.

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Technology

  Our proprietary MOJO technology platform utilizes a mobile Java object
architecture that facilitates timely, efficient and accurate campaign execution
and management as well as a secure and efficient means of integrating a
client's proprietary enterprise business data with the online advertising
campaign. Our architecture is designed for scalability and high performance, to
manage multiple advertising campaigns across thousands of Web sites. All data
for an advertising campaign are captured in the form of intelligent Java
objects, each of which perform discrete functions. These objects store critical
information relevant to their function, can be controlled remotely, and can
exchange data with each other using the Java language over our publish and
subscribe-based messaging backbone. These objects, programmed using Java
language, are platform- independent and can reside on servers operated by
Mediaplex, the advertiser, a network publisher or any other third-party ad
server.

          [Graphic depiction of MOJO technology platform appears here]

  Mediaplex's MOJO architecture has three primary technical components:
advertising objects, network services and enterprise integration:

    Advertising Objects. Advertising objects contain all information relevant
  to a campaign and manage the serving of each advertisement. Targeting rules
  residing in an ad-serving object determine, for example, which targeting
  profile upon which to focus and which message to send to a particular
  consumer.

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<PAGE>

  Tracking functions for an advertising campaign are also performed by these
  objects, which can be stored and executed on any server. The advertising
  objects are configurable in real time from remote locations.

    Network Services. This component manages the entire campaign and
  coordinates communication between other objects and with our clients
  through our publish and subscribe messaging capability. This messaging
  capability intelligently receives events published or transmitted by
  various objects and forwards that information to other objects that have
  subscribed to or are authorized to receive such information. This component
  contains the business rules for a campaign that determine, for example,
  which product information will be advertised and at what price, in response
  to changes in inventory levels. Reporting functions are also performed in
  this layer, which also manages access to relevant campaign data, through
  the publish and subscribe messaging capability. This network services layer
  effectuates dynamic messaging by applying predefined business rules to
  modify an advertising message within a preset graphic template on the basis
  of events encapsulated within other objects within the network. This
  component is administered remotely, residing in our two co-location data
  centers, and communicates with the advertising objects and enterprise
  integration components while executing the campaign.

    Enterprise Integration. This component consists of objects that
  encapsulate the client's enterprise data relevant to the campaign and
  generate events that are communicated to the network services layer and
  advertising objects. The underlying enterprise data is not transferred and
  as such the integrity of a client's enterprise data is protected and
  preserved under our architecture. In addition to communicating client
  events to the campaign, actual campaign results are communicated back to
  the client's enterprise data. This two-way communication facilitates
  optimization of a business' operating systems and performance based on
  campaign results, as well as optimization of a campaign based upon current
  business data.

  We believe our technology architecture provides these distinct competitive
advantages:

  Real Time. Campaign optimization occurs in or near real time. Our MOJO
technology is structured to enable our clients to establish business rules
which will automatically optimize results in response to pre-defined events.
Real-time manual adjustments can be made interactively based on reports
received during ongoing campaigns.

  Flexibility. Our MOJO platform is designed to be flexible, supporting both
simple systems such as remote banner serving and click-through tracking as well
as more sophisticated ROI tracking and automated feedback. Marketing campaigns
can be modified in real time automatically or manually, based on changes in the
data encapsulated in various objects. These changes are communicated between
objects through a continuous communication loop facilitated by the publish and
subscribe messaging capabilities. Our architecture is also designed to be open
and compatible with most major enterprise software applications and systems.
Our MOJO technology is easy to integrate and implement because it uses an
industry standard language, XML, for its data encoding and communication.
MOJO's support for major industry standards also includes HTTP, CORBA and LDAP.

  Scability and Reliability. Our MOJO architecture is designed to scale in
anticipation of increased transaction demand and system load. Our architecture
is scalable by simply adding more servers to accommodate system data traffic.
The application logic is designed to remain unchanged as the transaction volume
grows. In addition, our technology uses automatic failure protection combined
with fault tolerance, which allows campaign requests to be served even if one
or more servers are down.

  We have invested significant amounts toward research and development to date.
Our expenses in this area totaled approximately $347,000, $556,000 and $816,000
in 1997, 1998 and the six months ended June 30, 1999, respectively.

                                       40
<PAGE>

Sales and Marketing

  We market and sell our services primarily through our field sales force,
which included 53 sales people as of August 31, 1999. Currently, we have sales
offices and support operations in San Francisco, New York City and Hamburg, and
plan to open additional sales offices in Western Europe and Tokyo by the end of
1999. We intend to broaden our global presence by expanding our international
sales force and by entering into marketing agreements with international
partners.

  Sales leads are obtained primarily from two sources: direct leads and
strategic alliance leads. Direct leads are derived through field sales, client
referrals, our Web site, trade shows, and responses to our public relations and
marketing efforts. Strategic alliance leads are derived through companies that
offer complementary Internet solutions services. These companies include
traditional advertising agencies, Web site design, development and consulting
firms, enterprise resource planning vendors, interactive agencies, system
integrators, and creative and software tool kit companies. Our sales account
teams typically include an account manager, associate account managers, a
campaign manager and an account coordinator.

  We use a variety of marketing programs to build awareness of Mediaplex and
its service offerings. These include collateral marketing materials, online and
off-line advertising, press coverage and other public relations efforts, direct
marketing, trade shows, seminars and conferences, relationships with recognized
industry analysts, and the Mediaplex Web site.

Strategic Alliances

  An integral part of our strategy is to develop alliances with complementary
partners for sales, marketing and client development in the United States,
Europe and Asia. We currently have strategic relationships with companies in
the following categories:

  Internet Advertising. In August 1999, DoubleClick Inc., a leading provider of
online advertising services, and Mediaplex established a strategic alliance to
bridge the gap between non-personally identifiable online target data and an
advertiser's enterprise data. Through this relationship, we are able to
integrate our MOJO technology with DoubleClick's targeting system, known as
DART, thereby enabling creative messages in real time that are specifically
targeted to a consumer profile. Under our agreement with DoubleClick, we will
coordinate our efforts in DART-enabling the MOJO technology and jointly
marketing our services to prospective clients. The relationship also allows us
to use the DART system, where appropriate, and reduce our own serving costs as
we manage an increasing number of advertisements.

  Enterprise Resource Planning. In August 1999, we entered into an agreement
with SAP Labs, Inc., a subsidiary of SAP AG, an enterprise resource planning,
or ERP, software company. Under the terms of our agreement, we will create an
interface to SAP's R3 ERP system that will enable SAP's enterprise customers to
implement our MOJO technology in their e-commerce marketing initiatives.

  Internet Development and Consulting. In July 1999, we entered into a
preferred provider agreement with Icon Medialab, a global Internet architect
for companies integrating Internet-based technology with business strategies.
Icon Medialab's services include strategy consulting, system integration,
interface design and usability testing for enhanced customer relations. Under
our agreement with Icon Medialab, we will cross-refer clients and collaborate
on joint marketing and strategic consumer development programs. We also believe
that we will benefit from Icon Medialab's presence and marketing capabilities
in Europe.

  Cable Television Providers. In August 1999, Mediaplex and Across Media
Networks entered into a partnership to offer marketers the capability to match
a specific consumer with a specific offer, both on cable television and the
Internet, driven by business rules and relevant marketing data. Across Media
Networks designs and operates private label cable channels to enable cable
operators to outsource the creation of branded, advertiser-supported subscriber
information channels, and serves over three million subscribers in more than
75 cities nationwide. We will provide MOJO technology to Across Media Networks
exclusively in conjunction with online marketing and advertising programs for
its CityHits Internet business and clients.

                                       41
<PAGE>

  International Alliances. In April 1999, Zeron Capital Ltd., a Japanese
merchant bank, investment management and venture capital firm, invested $2.0
million in us, and in June 1999, invested an additional $3 million in us. Zeron
Capital Ltd. has agreed to use its best efforts to help secure our presence in
Japan, establish alliances with major companies in Japan and develop an
international presence in Asia. We believe that the Japanese market represents
significant growth opportunities for us and will allow us to expand in other
Asian markets. We are currently in discussions with Zeron Capital, Ltd. to
establish a joint venture to develop Japanese leads for our MOJO technology and
our campaign management services.

Our Clients

  As of June 30, 1999, Mediaplex had over 50 active clients. The following is a
list of our clients that purchased more than $50,000 in services from January
1, 1998 to June 30, 1999:

                                 Direct Clients

<TABLE>
     <S>                                            <C>
     Ashford                                        Investor's Business Daily
     Buy Software                                   MacMall/Creative Computers
     Capstone Studio                                Majestic International
     DATEK Online Brokerage Services, Corp.         Music Maker
     DriveSavers                                    MyShopNow.com
     eCost/Creative Computers                       OfficeMax
     efax.com                                       PCMall/Creative Computers
     Flower Farm                                    ShopNow
     FreeShop                                       Strong Funds
     Fresh Flower Source                            uBid
     Hitachi Data Systems                           1800 DAYTRADE.com
</TABLE>

                              Advertising Agencies

  .  McCann-Erickson for Silicon Graphics, Inc. and Siebel Systems
  .  Publicis & Hal Riney for Sprint PCS and Hewlett-Packard's Vectra, Brio,
     Kayak and Omnibook products

  In 1998, DATEK Online Brokerage Services, Corp. and uBid accounted for
approximately 56% and 21% of our revenues, respectively. In the first half of
1999, DATEK Online Brokerage Services, Corp., Publicis & Hal Riney and uBid
accounted for approximately 15%, 10% and 10% of our revenues, respectively.

Technical Support

  We provide extensive technical strategy and support throughout the
implementation and maintenance phases of the deployment of our services. This
support is comprised of three key components: Network Operations, Technical
Account Coordination and MOJO Implementation.

Network Operations

  Our network operations organization is responsible for ensuring our network
and servers are fault-tolerant. We have organized our network of servers to
provide significant protection against potential breakdown or outages.

                                       42
<PAGE>

Technical Account Coordination

  We believe that our technical account procedures protect the client from data
loss. Each account team, comprised of a customer support manager, software
engineer and director of systems operations, holds frequent meetings to discuss
each ad campaign currently being conducted. These teams review each client's
campaign for which the team is responsible to ensure the client's program is
operating trouble-free.

  Our account coordinators also work with each publisher to provide smooth
technical implementation of the campaign, and test each technical aspect of the
campaign before it is launched.

MOJO Implementation

  Our engineering organization takes an in-depth and focused approach to the
implementation of our MOJO technology for each client's online campaign. Each
team meets with its clients to fully understand the client's environment, its
enterprise system and exactly how the MOJO technology needs to work within the
client's specific enterprise design. The team also works with the client to
define the campaign needs and then implements an appropriate plan based on the
campaign goals set by the client. Once MOJO is installed, the team performs
ongoing implementation and support of the client's campaign.

Intellectual Property

  To protect our proprietary rights, we rely generally on patent, copyright,
trademark and trade secret laws, and confidentiality agreements or licenses
with employees, consultants, vendors, clients and corporate parties. Despite
these protections, a third-party could, without authorization, disclose, copy
or otherwise obtain and use our technology or develop similar technology
independently.

  We currently have one patent pending in the United States relating to our
MOJO product architecture and technology. We cannot assure you that our
pending, or any future, patent application will be granted, that any existing
or future patent will not be challenged, invalidated or circumvented, or that
the rights granted under the patent that has issued or any patent that may
issue will provide competitive advantages to us. Many of our current and
potential competitors dedicate substantially greater resources to the
protection and enforcement of intellectual property rights, especially patents.
If a blocking patent has issued or issues in the future to a third-party, we
would need either to obtain a license to, or to design around, the patent. We
may not be able to obtain a license on acceptable terms, if at all, or design
around the patent, which could harm our ability to provide our services.

  We pursue the registration of our trademarks and service marks in the U.S.
and in other countries, although we have not secured registration of all of our
marks. As of June 30, 1999, we had no registered U.S. trademarks or service
marks; however, we have applied for registration of our Mediaplex and MOJO
trademarks. In addition, the laws of some foreign countries will not protect
our proprietary rights to the same extent as do the laws of the U.S., and
effective patent, copyright, trademark and trade secret protection may not be
available in these jurisdictions.

  We may, in the future, license our proprietary rights, in particular our MOJO
technology, to third parties. These licensees may fail to abide by compliance
and quality control guidelines with respect to our proprietary rights or take
actions that would severely harm our ability to use our proprietary rights and
our business.

  We attempt to avoid infringing known proprietary rights of third parties in
our product development efforts. We have conducted an independent patent search
for prior art related to our MOJO architecture. This patent search did not
uncover any references that would anticipate our patent claim; however, this
patent search was not exhaustive and may not have uncovered all prior art
applicable to our MOJO architecture. In addition, it is difficult to proceed
with certainty in a rapidly evolving technological environment in which there
exists numerous patent applications pending, many of which are confidential
when filed, with regard to similar technologies. If we were to discover that
our technology violates third-party proprietary rights, we might not be

                                       43
<PAGE>

able to obtain licenses or continue offering our services based on our
technology without substantial reengineering. Any efforts to undertake this
reengineering might not be successful, and any necessary licenses might not be
available on commercially reasonable terms, if at all.

  Litigation for claims of infringement might not be avoided or settled without
incurring substantial expenses and damage awards. In addition, any of these
claims, even if not meritorious, could result in the expenditure of significant
financial and managerial resources and could result in injunctions preventing
us from delivering our services based on our technology or licensing our
technology to third parties or clients. These claims could harm our business.

  In the future, we may license technology that will be integrated with our
internally developed software and used in our services. We cannot assure you
that third-party technology licenses will become or will continue to be
available to us on commercially reasonable terms. The loss of any of these
technologies could harm our business. In addition, by licensing technology from
third parties, we may become susceptible to claims for infringement with
respect to this third-party technology. Even if we receive broad
indemnification from our licensors, third-party indemnitors are not always well
capitalized and may not be able to indemnify us in the event of infringement,
resulting in substantial exposure to us. Any infringement claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources in addition to potential product redevelopment costs and
delays, all of which could harm our business.

Competition

  The Internet media services market, which includes planning media campaigns,
buying advertising space, ad serving and tracking and reporting results of
advertising, is extremely competitive and likely to become more intense due to
the lack of significant barriers of entry. We believe that, in addition,
competition will continue to increase as a result of industry mergers,
partnerships and consolidation. Many of our existing competitors, as well as a
number of potential new competitors, have longer operating histories, greater
name recognition, larger client bases and significantly greater financial,
technical and marketing resources than we have. The following categories
represent current and potential competition:

  . online media planning and buying services, such as Avenue A;

  . ad serving companies, such as AdForce, DoubleClick and Engage
    Technologies, Inc.;

  . publisher networks which provide services directly to clients, such as
    Flycast Communications and 24/7 Media, Inc.;

  . organizations that manage affiliate programs, such as LinkShare; and

  . advertising agencies with in-house online media management capabilities,
    such as Lowe Interactive.

  We believe that our ability to compete depends upon many factors both within
and outside of our control, including:

  . effectiveness, ease of use, performance and features of our technology;

  . client perceptions of the effectiveness of our services and technology;

  . the price of our services;

  . our ability to service our clients effectively over a broad geographic
    basis; and

  . the timing and acceptance of new solutions and enhancements to existing
    solutions developed by us or our competitors.

                                       44
<PAGE>

Employees

  As of August 31, 1999, we had 100 full-time employees. Of these employees, 24
were engaged in research and development, 53 were engaged in sales and
marketing and 23 were engaged in finance and administration. None of our
employees is represented by a labor union or a collective bargaining agreement.
We have not experienced any work stoppages and consider our relations with our
employees to be good.

Facilities

  We currently lease approximately 11,600 square feet of office space for our
headquarters in one building, located in San Francisco, California. We believe
we will need additional space in the near future and are currently in
negotiations to lease approximately 10,500 square feet of office space near our
headquarters in San Francisco. We cannot assure you that we will find adequate
space at a reasonable price. We also lease approximately 13,200 square feet of
a facility in San Jose, California that houses our research and development
organization and approximately 7,700 square feet in New York City for a sales
office. In addition, we use two third-party, fully-redundant co-location
facilities that house our Web servers in San Francisco and San Jose, California
and we are currently seeking to obtain additional co-location facilities in
other areas in the United States. We cannot assure you that we will be able to
locate and lease additional acceptable co-location space at a reasonable price.

Legal Proceedings

  From time to time, we may become involved in litigation relating to claims
arising from the ordinary course of our business. We believe that there are no
claims or actions pending or threatened against us, the ultimate disposition of
which would have a material adverse effect on us.

                                       45
<PAGE>

                                   MANAGEMENT

Directors and Executive Officers

  The following table sets forth certain information with respect to our
directors and executive officers as of August 31, 1999:

<TABLE>
<CAPTION>
              Name             Age                   Position
   --------------------------- --- --------------------------------------------
   <C>                         <C> <S>
   Gregory R. Raifman.........  40 Chairman of the Board of Directors and Chief
                                   Executive Officer

   Jon L. Edwards.............  39 President and Director

   Walter Haefeker............  38 Chief Operating Officer

   Ruiqing "Barclay" Jiang....  37 Chief Technology Officer

                                   Executive Vice President, Sales and
   Timothy M. Favia...........  37 Development

                                   Senior Vice President, Chief Financial
   Sandra L. Abbott...........  52 Officer and Secretary

   Robert M. Henely...........  47 Senior Vice President, Technical Operations

   M. Joy Fauvre..............  48 Senior Vice President, Marketing

   Alan M. Raifman............  45 Vice President, Business and Legal Affairs

   James DeSorrento ..........  56 Director

   Lawrence D. Lenihan, Jr. ..  34 Director

   Peter S. Sealey ...........  59 Director

   A. Brooke Seawell .........  51 Director
</TABLE>

  Gregory R. Raifman has served as our Chairman of the Board of Directors and
Chief Executive Officer since September 1998, and Chief Executive Officer and
sole director of MediaPlex, Inc., our former wholly-owned subsidiary since
April 1998. Since August 1993, Mr. Raifman has also served as a general partner
of Raifman & Edwards LLP, a law firm. Since September 1994, Mr. Raifman has
served as a managing member of PointBreak Ventures, LLC, a venture capital
firm. Mr. Raifman received an A.B. in economics and history from the University
of Michigan and a J.D. from Georgetown University Law Center.

  Jon L. Edwards has served as our President and a member of our board of
directors since April 1998. Since August 1993, Mr. Edwards has also served as a
general partner of Raifman & Edwards LLP. Since September 1994, Mr. Edwards has
served as a managing member of PointBreak Ventures, LLC. Mr. Edwards received
an A.B. in engineering science from Dartmouth College and a J.D. from
Georgetown University Law Center.

  Walter Haefeker has served as our Chief Operating Officer since September
1998. Since September 1994, Mr. Haefeker has served as a managing member for
PointBreak Ventures, LLC. From March 1994 to April 1995, Mr. Haefeker served as
chairman of the board of directors for CADIS Software, Ltd., a software
company. Mr. Haefeker received an Abitur in chemistry and physics from Theodor-
Heass Gymnasium, Pinneberg, Germany.

  Ruiqing "Barclay" Jiang has served as our Chief Technology Officer since
March 1999. Prior to joining Mediaplex, Mr. Jiang served as president of
Netranscend Software, Inc., an enterprise software company, from November 1996
until it was acquired by Mediaplex in March 1999. From October 1993 to
September 1997, Mr. Jiang served as an engineering manager for FutureLabs,
Inc., a software company. Mr. Jiang received a B.S. in computer science from
Xi'an Jiaotong University, China and an M.S. in applied statistics from
Louisiana State University.

  Timothy M. Favia has served as our Executive Vice President, Sales and
Development since January 1999. Prior to joining Mediaplex, Mr. Favia was a co-
founder of Oxygen Electronics, LLC, a distributor of electronic components,
where he served as managing partner from June 1997 to December 1998. From
January 1996 to May 1997, Mr. Favia served as vice president, western region,
of Open Port Technology, an Internet messaging

                                       46
<PAGE>

services company. From July 1988 to January 1996, he served as director of
international sales for Thomson Software Products, a software company. Mr.
Favia received a B.A. in political science from Fairfield University.

  Sandra L. Abbott has served as a Senior Vice President and our Chief
Financial Officer and Secretary since August 1999. Prior to joining Mediaplex,
Ms. Abbott served as chief financial officer for 8x8, Inc., a manufacturer of
digital telecommunication products, from June 1995 to August 1999. From April
1991 to June 1995, Ms. Abbott served as controller for 8x8, Inc. Ms. Abbott
received a B.A. in political science from the University of California,
Riverside and an M.B.A. from Santa Clara University.

  Robert M. Henely has served as our Senior Vice President, Technical
Operations since March 1999. Prior to joining Mediaplex, Mr. Henely served as
director of engineering for Boole & Babbage, Inc., a software company, from
December 1997 to March 1999. From November 1981 to December 1997, Mr. Henely
served as a research and development manager at Hewlett-Packard Company.
Mr. Henely received a B.S. in economics from California State University, Chico
and an M.S. in econometrics from the University of California, San Diego.

  M. Joy Fauvre has served as our Senior Vice President, Marketing since July
1999. Prior to joining Mediaplex, Ms. Fauvre served as a marketing director for
Heller Financial, a commercial lender, from October 1994 to July 1999. From
June 1994 to October 1994, Ms. Fauvre served as acting advertising manager for
Qantas Airways, a commercial airline, and from August 1991 to January 1994, she
served as an account supervisor for D'Arcy Masius Benton & Bowles, an
advertising agency. Ms. Fauvre received a B.A. in theatre from the University
of California, Santa Barbara and an M.A. in theatre from Ball State University.

  Alan M. Raifman has served as our Vice President, Business and Legal Affairs
since October 1998. Prior to joining Mediaplex, Mr. Raifman served as an
associate for Albert A. Rettig & Associates, a business services company, from
June 1997 through January 1999. Since July 1989, Mr. Raifman has also served as
a member of the board of directors for Little Cargo, Inc., a juvenile product
development company that he co-founded. Mr. Raifman received a B.A. in history
and a J.D. from Washington University.

  James DeSorrento has served as a member of our board of directors since
August 1999. Since June 1982, Mr. DeSorrento has served as chief executive
officer and chairman of the board of Triax Telecommunications Company, LLC and
its predecessor, Triax Communications Corporation, a cable television operating
company. Mr. DeSorrento received a B.A. in English from St. Michael's College.

  Lawrence D. Lenihan, Jr. has served as a member of our board of directors
since August 1999. Since January 1999, Mr. Lenihan has served as fund manager
for Pequot Capital Management, Inc., a venture capital firm. From October 1996
to December 1998, Mr. Lenihan served as fund manager for Dawson-Sanberg Capital
Management, a venture capital firm. From August 1993 to October 1996, Mr.
Lenihan served as a principal for Broadview Associates, an investment bank. Mr.
Lenihan also serves as a member of the boards of directors of Digital
Generation Systems, Inc., a provider of distribution services for ad agencies
and broadcasters, STM Wireless, Inc., a satellite and wireless-based
communications company, and Triken Technologies, Inc., a semiconductor-
processing equipment company, as well as several private companies. Mr. Lenihan
received a B.S.E.E. in electrical engineering from Duke University and an
M.B.A. from the Wharton School of Business at the University of Pennsylvania.

  Peter S. Sealey has served as a member of our board of directors since August
1999. Since September 1994, Dr. Sealey has served as an adjunct professor of
marketing at the Haas School of Business at the University of California,
Berkeley where he also has served as a co-director of the Center for Marketing
and Technology. Prior to that, Dr. Sealey was employed by the Coca Cola Company
for 24 years, where he held a series of senior management positions, including
senior vice president, global marketing. Dr. Sealey serves as a member of the
boards of directors of US Web/CKS, an Internet professional services firm,
Autoweb.com Inc., a consumer automotive Internet site, bamboo.com, a producer
of virtual tours for the real estate industry on the

                                       47
<PAGE>

Internet, and Cybergold, Inc., an Internet-based direct marketing and
advertising company, as well as several private companies. Dr. Sealey received
a B.S.B.A. in business from the University of Florida, an M.I.A. in industrial
administration from Yale University, and an M.A. in management and Ph.D. in
management and information technology from the Peter F. Drucker Graduate
Management Center at The Claremont Graduate University.

  A. Brooke Seawell has served as a member of our board of directors since
August 1999. From January 1997 to August 1998, Mr. Seawell served as the
executive vice president of NetDynamics Inc., an enterprise network
applications server software company. From March 1991 to January 1997, Mr.
Seawell served as the senior vice president of finance and operations of
Synopsys Inc., an electronic design automation company. Mr. Seawell serves as a
member of the boards of directors of NVIDIA Corporation, a three-dimensional
graphics processor, Informatica Corporation, a data integration software
company and Accrue Software, Inc., an internet data collection and analysis
software company, as well as several private companies. Mr. Seawell received a
B.A. in economics and an M.B.A. in finance from Stanford University.

Board of Directors

  Our board of directors is currently comprised of six directors. Our restated
certificate of incorporation, to be filed upon the closing of this offering,
states that the board of directors will be divided into three classes as nearly
equal in size as possible with staggered, three-year terms. The term of office
of our Class I directors will expire at the annual meeting of stockholders to
be held in 2000; the term of office of our Class II directors will expire at
the annual meeting of stockholders to be held in 2001; and the term of office
of our Class III directors will expire at the annual meeting of the
stockholders to be held in 2002. Messrs. Lenihan and Sealey have been
designated as Class I directors; Messrs. Edwards and DeSorrento have been
designated as Class II directors; and Messrs. Raifman and Seawell have been
designated as Class III directors. At each annual meeting of the stockholders
after the initial classification, the successors to the directors whose terms
have expired will be elected to serve from the time of election and
qualification until the third annual meeting following their election or until
their successors have been duly elected and qualified, or until their earlier
resignation or removal, if any. In addition, our bylaws, to be adopted upon the
closing of this offering, provide that the authorized number of directors may
be changed by resolution of the board of directors. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the total number of directors. The classification
of our board of directors could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring,
control of Mediaplex. See "Description of Capital Stock."

  Each officer is elected by, and serves at the discretion of, the board of
directors or until his or her successor has been duly elected and qualified.
Each of our executive officers and directors, other than non-employee
directors, devotes his or her full time to our affairs. Our non-employee
directors devote the amount of time necessary to discharge their duties to us.
Gregory R. Raifman, our Chairman of the Board of Directors and Chief Executive
Officer is the brother of Alan M. Raifman, our Vice President, Business and
Legal Affairs. There are otherwise no family relationships among any of our
directors, officers or key employees.

Board Committees

  The board of directors has established an audit committee to meet with and
consider suggestions from members of management and our internal accounting
personnel, as well as our independent accountants, concerning our financial
operations. The audit committee also has the responsibility to review our
audited financial statements and consider and recommend the employment of, and
approve the fee arrangements with, independent accountants for both audit
functions and for advisory and other consulting services. The audit committee
is currently comprised of Messrs. DeSorrento and Seawell.

  The board of directors has also established a compensation committee to
review and approve the compensation and benefits for our key executive
officers, administer our equity incentive plans and make

                                       48
<PAGE>

recommendations to the board of directors regarding such matters. The
compensation committee is currently comprised of Messrs. Lenihan and Sealey.

Compensation Committee Interlocks and Insider Participation

  Prior to establishing the compensation committee, the board of directors as a
whole performed the functions delegated to the compensation committee. No
member of the board of directors or the compensation committee serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our board of
directors or compensation committee.

Director Compensation

  Directors do not currently receive any cash compensation from us for their
service as members of the board of directors; however, directors are reimbursed
for all reasonable expenses incurred by them in attending board and committee
meetings. Employee and non-employee directors are also eligible to receive
options under our 1999 Stock Plan and employee directors are eligible to
participate in our 1999 Employee Stock Purchase Plan. In August 1999, Messrs.
DeSorrento and Seawell and Dr. Sealey were each granted an option to acquire
50,000 shares of common stock at an exercise price of $3.25 per share upon such
director's appointment to our board of directors. The options vest over a four
year period but may be exercised at any time. See "--Equity Incentive Plans."

Executive Compensation

  The following table sets forth the total compensation received for services
rendered to us during 1998 by our Chief Executive Officer and two of our other
executive officers. Except as set forth below, no other employee received
salary and bonus in 1998 in excess of $100,000. These three officers are
referred to as the named executive officers in this prospectus. In 1998,
Messrs. Gregory Raifman and Jon Edwards, general partners of Raifman & Edwards,
LLP, provided legal and management services to us, for which Raifman & Edwards,
LLP was paid approximately $197,000. See "Related Party Transactions." Except
as disclosed below and in "Related Party Transactions," we gave no bonuses,
stock-based compensation or other compensation to our named executive officers
in 1998.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                             Annual Compensation
                                                             -------------------
Name and Principal Position                                      Salary ($)
------------------------------------------------------------ -------------------
<S>                                                          <C>
Gregory R. Raifman, Chief Executive Officer (1).............      $180,000

Jon L. Edwards, President (2)...............................       180,000

Walter Haefeker, Chief Operating Officer (3)................       150,000
</TABLE>
--------
(1) The salary amount represents the amount Mr. Raifman would have earned if he
    had been employed by us for the entire year. Mr. Raifman's actual salary
    earned was $35,000.

(2) The salary amount represents the amount Mr. Edwards would have earned if he
    had been employed by us for the entire year. Mr. Edward's actual salary
    earned was $35,000.

(3) The salary amount represents the amount Mr. Haefeker would have earned if
    he had been employed by us for the entire year. Mr. Haefeker's actual
    salary earned in 1998 was $41,100.

  The 1999 annual base salary rates for Messrs. Raifman, Edwards and Haefeker
are $250,000, $250,000 and $225,000, respectively. In addition, we hired the
following executive officers in 1999 at the following annual salaries: Ruiqing
"Barclay" Jiang, $180,000; Timothy M. Favia, $175,000; Sandra L. Abbott,
$170,000; Robert Henely, $150,000; M. Joy Fauvre, $140,000; and Alan M.
Raifman, $90,000.


                                       49
<PAGE>

Option Grants and Exercises in Last Fiscal Year and Fiscal Year End Option
Values

  No named executive officers were granted or held any options to purchase our
common stock at any time in 1998. In February 1999, however, Gregory R.
Raifman, Jon L. Edwards and Walter Haefeker were each granted options to
purchase 1,750,000, 1,500,000 and 1,250,000 shares of common stock,
respectively, at a purchase price of $0.50 per share, under our 1999 Stock Plan
of which 388,889 shares, 333,333 shares and 138,889 shares, respectively, had
vested as of December 31, 1998.

Employment Agreements

  In connection with our hiring and retention of each of Gregory R. Raifman,
Jon L. Edwards and Walter Haefeker, we entered into employment agreements in
which we agreed to pay each of them a specified base salary and options to
purchase our common stock, and each executive officer agreed to enter into a
three-year employment term with us. Upon the expiration of the three-year term,
employment with us becomes terminable at-will. All options vest at the rate of
1/6th of the shares on the six-month anniversary of the vesting commencement
date, and 1/36th of the shares per month thereafter as long as such optionee is
employed by us. The following table sets forth the stock options granted to
each executive officer under his employment agreement with us:

<TABLE>
<CAPTION>
                                                                  Exercise Price
Name                                              Options Granted    Per Share
------------------------------------------------- --------------- --------------
<S>                                               <C>             <C>
Gregory R. Raifman...............................    1,750,000        $0.50

Jon L. Edwards...................................    1,500,000         0.50

Walter Haefeker..................................    1,250,000         0.50
</TABLE>

  Under the terms of each employment agreement, if we terminate employment with
the executive officer without cause, we are required to pay him severance
payments of 1/13th of his base salary for each complete month previously
worked; however, the aggregate severance payments are not to exceed his annual
base salary. Additionally, each executive officer has agreed to not compete
with us or not solicit others from us for a period of one year following his
termination with us.

Equity Incentive Plans

  1997 Stock Plan. Our 1997 Stock Plan provides for the granting to employees
of incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and for the granting to employees and
consultants of nonstatutory stock options and stock purchase rights. As of
August 15 1999, options to purchase 243,000 shares of common stock were
outstanding under our 1997 Stock Plan. Our board of directors has determined
that no further options will be granted under the 1997 Stock Plan after this
offering. The 1997 Stock Plan provides that, if we merge with or into another
corporation or sell substantially all of our assets, each outstanding option
must be assumed or substituted for by the successor corporation. If the
successor corporation refuses to assume or substitute for the Mediaplex
options, the Mediaplex options will terminate as of the closing of the merger
or sale of assets.

  Amended and Restated 1999 Stock Plan. Our 1999 Stock Plan was initially
adopted by our board of directors and shareholders in February 1999. It was
amended and restated by our board of directors in August 1999, and we expect to
submit it to our stockholders for their approval prior to the closing of this
offering. If approved by the stockholders, the Amended and Restated 1999 Stock
Plan will become effective upon the closing of this offering.

  The Amended and Restated 1999 Stock Plan provides for the grant of incentive
stock options to employees, including officers and employee directors, and for
the grant of nonstatutory stock options and stock purchase rights to employees,
directors and consultants.

                                       50
<PAGE>

  We have reserved 12,000,000 shares of our common stock for issuance pursuant
to the Amended and Restated 1999 Stock Plan. In addition, commencing January 1,
2000, the number of shares reserved for issuance under the Amended and Restated
1999 Stock Plan will be increased by an amount equal to the least of (a)
1,000,000 shares, (b) 4% of the outstanding shares or (c) an amount determined
by our board of directors.

  Unless terminated sooner, the Amended and Restated 1999 Stock Plan will
automatically terminate ten years from the effective date of this offering.

  The administrator of our stock plan has the power to determine:

  . the terms of the options or stock purchase rights granted, including the
    exercise prices of the options or stock purchase rights;

  . the number of shares subject to each option or stock purchase right;

  . the exercisability of each option or stock purchase right; and

  . the form of consideration payable upon the exercise of each option or
    stock purchase right.

  In addition, the administrator has the authority to amend, suspend or
terminate the stock plan, so long as this action does not affect any shares of
common stock previously issued and sold or any option previously granted under
the Amended and Restated 1999 Stock Plan. The maximum number of shares covered
by an option that each optionee may be granted during a fiscal year is 500,000
shares. In addition, in connection with an optionee's initial employment with
us, the optionee may be granted an option covering an additional
500,000 shares.

  Options and stock purchase rights granted under our Amended and Restated 1999
Stock Plan are generally not transferable by the optionee, and each option and
stock purchase right is exercisable during the lifetime of the optionee only by
the optionee. Options granted under the Amended and Restated 1999 Stock Plan
must generally be exercised within three months after the end of the optionee's
status as an employee, director or consultant of Mediaplex, or within 12 months
after the optionee's termination by death or disability, but in no event later
than the expiration of the option's term.

  In the case of stock purchase rights, unless the administrator determines
otherwise, the restricted stock purchase agreement must grant us a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment or consulting relationship with us for any reason,
including death or disability. The purchase price for shares repurchased
pursuant to the restricted stock purchase agreement will be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of
the purchaser to us. The repurchase option will lapse at a rate determined by
the administrator.

  The exercise price of all incentive stock options granted under the Amended
and Restated 1999 Stock Plan must be at least equal to the fair market value on
the date of grant of the common stock underlying the option. The exercise price
of nonstatutory stock options and stock purchase rights granted under the
Amended and Restated 1999 Stock Plan is determined by the administrator, but
with respect to nonstatutory stock options intended to qualify as "performance-
based compensation" within the meaning of Section 162(m) of the Code, the
exercise price must be at least equal to the fair market value on the date of
grant of the common stock underlying the option. With respect to any
participant who owns stock possessing more than 10% of the voting power of all
classes of our outstanding capital stock, the exercise price of any incentive
stock option granted must be at least equal 110% of the fair market value on
the grant date and the term of the incentive stock option must not exceed five
years. The term of all other options granted under the Amended and Restated
1999 Stock Plan may not exceed ten years.

  The Amended and Restated 1999 Stock Plan provides that, in the event of a
merger of Mediaplex with or into another corporation, or a sale of
substantially all of our assets, each option and stock purchase right must be
assumed, or an equivalent option or stock purchase right substituted, by the
successor corporation. If the

                                       51
<PAGE>

outstanding options and stock purchase rights are not assumed or substituted
for by the successor corporation, the optionees will fully vest in and have the
right to exercise their options or stock purchase rights. If an option or stock
purchase right becomes fully vested and exercisable in the event of a merger or
sale of assets, the administrator must notify the optionee that the option or
stock purchase right will be fully exercisable for a period of 15 days from the
date of notice and that the option or stock purchase right will terminate upon
the expiration of the 15-day period.

  1999 Employee Stock Purchase Plan. Our 1999 Employee Stock Purchase Plan was
adopted by our board of directors in August 1999, and we expect to submit it to
our stockholders for their approval prior to the closing of this offering. If
approved by the stockholders, the 1999 Employee Stock Purchase Plan will become
effective upon the closing of this offering. This plan is designed to allow our
eligible employees and the eligible employees of any participating subsidiaries
to purchase shares of common stock, at semi-annual intervals, with their
accumulated payroll deductions.

  We have reserved 400,000 shares of our common stock for issuance pursuant to
the 1999 Employee Stock Purchase Plan. In addition, commencing January 1, 2000,
the number of shares reserved for issuance under the 1999 Employee Stock
Purchase Plan will be increased by an amount equal to the least of: (a) 400,000
shares, (b) 2% of the outstanding shares on such date or (c) an amount
determined by our board of directors. As of the date of this prospectus, no
shares have been issued under the 1999 Employee Stock Purchase Plan.

  Our 1999 Employee Stock Purchase Plan, which is intended to qualify under
Section 423 of the Code, contains consecutive, overlapping, 24-month offering
periods. Each offering period includes four six-month purchase periods. The
offering periods generally start on the first trading day on or after May 1 and
November 1 of each year, except for the first offering period which commences
on the first trading day on or after the effective date of this offering and
ends on the last trading day on or before October 31, 2001.

  Employees are eligible to participate if they are customarily employed by us
or any participating subsidiary for at least 20 hours per week and more than
five months in any calendar year. However, employees may not be granted an
option to purchase stock under the 1999 Employee Stock Purchase Plan if they
either:

  . immediately after grant, own stock possessing 5% or more of the total
    combined voting power or value of all classes of our capital stock; or

  . hold rights to purchase stock under our 1999 Employee Stock Purchase Plan
    that accrue at a rate which exceeds $25,000 worth of stock for each
    calendar year.

  The 1999 Employee Stock Purchase Plan permits each participant to purchase
our common stock through payroll deductions of up to 10% of his or her
"compensation." Compensation is defined as the participant's base straight-time
gross earnings, overtime, shift premium and bonuses, but excludes other
compensation. The maximum number of shares a participant may purchase during a
single purchase period is 1,000 shares.

  Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each purchase period. The price of stock
purchased under the 1999 Employee Stock Purchase Plan is generally 85% of the
lower of the fair market value of the common stock either:

  . at the beginning of the offering period; or

  . at the end of the purchase period.

  In the event the fair market value at the end of a purchase period is less
than the fair market value at the beginning of the offering period, the
participants will be withdrawn from the current offering period following
exercise and automatically re-enrolled in a new offering period. The new
offering period will use the lower fair market value as of the first date of
the new offering period to determine the purchase price for future purchase
periods. Participants may end their participation at any time during an
offering period, and they will be paid their payroll deductions to date.
Participation ends automatically upon termination of employment with us.

                                       52
<PAGE>

  Rights granted under the 1999 Employee Stock Purchase Plan are not
transferable by a participant other than by will, the laws of descent and
distribution, or as otherwise provided under the 1999 Employee Stock Purchase
Plan. The 1999 Employee Stock Purchase Plan provides that, in the event of a
merger of Mediaplex with or into another corporation or a sale of substantially
all of our assets, each outstanding option may be assumed or substituted for by
the successor corporation. If the successor corporation refuses to assume or
substitute for the outstanding options, the offering period then in progress
will be shortened and a new exercise date will be set.

  Our board of directors has the authority to amend or terminate the 1999
Employee Stock Purchase Plan, except that no such action may adversely affect
any outstanding rights to purchase stock under the 1999 Employee Stock Purchase
Plan, provided that the board of directors may terminate an offering period on
any exercise date if the board of directors determines that the termination of
the 1999 Employee Stock Purchase Plan is in our best interests and the best
interests of our stockholders. The board of directors may in its sole
discretion amend the 1999 Employee Stock Purchase Plan to the extent necessary
and desirable to avoid unfavorable financial accounting consequences by
altering the purchase price for any offering period, shortening any offering
period or allocating remaining shares among the participants. Unless sooner
terminated by our board of directors, the 1999 Employee Stock Purchase Plan
will terminate automatically ten years from the effective date of this
offering.

401(k) Plan

  In February 1997, we adopted a 401(k) plan to provide eligible employees with
a tax preferential savings and investment program. Employees become eligible to
participate in the 401(k) plan on the first day they perform an hour of service
for us, at which point we classify them as participants. They may elect to
reduce their current compensation by up to the lesser of 15% of eligible
compensation or the statutorily prescribed annual limit, currently $10,000, and
have this reduction contributed to the 401(k) plan. The 401(k) plan permits,
but does not require, us to make additional matching contributions to the
401(k) plan on behalf of eligible participants. All contributions made by and
on behalf of participants are subject to a maximum contribution limitation
currently equal to the lesser of 25% of their compensation or $30,000 per year.
At the direction of each participant, the trustee of the 401(k) plan invests
the assets of the 401(k) plan in selected investment options. Contributions by
participants or by us to the 401(k) plan, and income earned on plan
contributions, are generally not taxable to the participants until withdrawn,
and contributions by us, if any, are generally deductible by us when made. To
date, we have made no contributions to the 401(k) plan on behalf of
participants.

Limitations on Directors' Liability and Indemnification

  Our amended and restated certificate of incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for any of the following:

  . any breach of their duty of loyalty to the corporation or its
    stockholders;

  . acts or omissions not in good faith or that involve intentional
    misconduct or a knowing violation of law;

  . unlawful payments of dividends or unlawful stock repurchases or
    redemptions; or

  . any transaction from which the director derived an improper personal
    benefit.

  This limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

  Our amended and restated certificate of incorporation provides that we may
indemnify our directors, officers and employees to the fullest extent permitted
by law. We believe that indemnification under our bylaws

                                       53
<PAGE>

covers at least negligence and gross negligence on the part of indemnified
parties. Our bylaws also permit us to secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of his
or her actions in such capacity, regardless of whether our bylaws would permit
indemnification.

  We have entered into agreements to indemnify our directors and executive
officers, in addition to indemnification provided for in our bylaws. These
agreements, among other things, provide for indemnification of our directors
and executive officers for expenses, judgments, fines and settlement amounts
incurred by them in any action or proceeding arising out of their services as
directors or executive officers or at our request. We believe that these
provisions and agreements are necessary to attract and retain qualified persons
as directors and executive officers.

  At present, there is no material litigation or proceeding pending involving
any of our directors or officers in which indemnification is required or
permitted, and we are not aware of any threatened material litigation or
proceeding that might result in a claim for indemnification.

                                       54
<PAGE>

                           RELATED PARTY TRANSACTIONS

  Since our inception in September 1996, we have never been party to, and we
have no plan to be a party to, any transaction or series of similar
transactions in which the amount involved exceeded or will exceed $60,000 and
in which any director, executive officer or holder of more than 5% of our
common stock had or will have an interest, other than as described under
"Management" and the transactions described below.

  Michael Schwartz, Raifman & Edwards LLP, PointBreak Ventures, LLC and Eugene
Jarvis were involved in our initial funding. Michael Schwartz and Eugene Jarvis
served as our initial officers and directors. Neither Mr. Schwartz nor Mr.
Jarvis is currently affiliated with us. Gregory R. Raifman and Jon L. Edwards,
two of our current executive officers, are general partners of Raifman &
Edwards LLP and are managing members of, and hold substantial interests in,
PointBreak Ventures, LLC. Walter Haefeker, also a current executive officer,
holds a substantial interest in PointBreak Ventures, LLC. Following our
inception in September and October 1996, we issued 2,460,000 shares to Michael
Schwartz for a nominal amount, 350,000 shares to Raifman & Edwards LLP in
consideration primarily for legal services rendered, and 250,000 shares to
PointBreak Ventures, LLC, in consideration primarily for business and financial
consulting services rendered. All shares initially issued to Raifman & Edwards
LLP have been transferred to R&E Holdings, LLC, a limited liability company in
which Messrs. Gregory R. Raifman and Jon L. Edwards are managing members. In
October 1996, we also issued 800,000 shares to Eugene Jarvis for $40,000 and in
January 1997, we issued an additional 800,000 shares to Mr. Jarvis for $40,000.

  In March 1999, R&E Holdings, LLC acquired 947,009 shares of our common stock
by converting a promissory note from us in the amount of $71,000 that had been
issued for unpaid legal fees, and 4,643,228 shares of our common stock by
converting a promissory note in the amount of $232,000 acquired by R&E
Holdings, LLC from Michael Schwartz.

  Raifman & Edwards LLP provided legal and management services to us in the
period from inception to December 31, 1996, and the years ended December 31,
1997 and 1998 of approximately $22,000, $67,000 and $197,000, respectively. No
legal services were provided by Raifman & Edwards LLP to us in the six months
ended June 30, 1999.

  In connection with his employment by us in January 1999, we issued a warrant
to purchase 500,000 shares of our common stock at an exercise price of $0.50
per share to Timothy M. Favia, one of our current executive officers. The
warrant may be exercised prior to January 10, 2002 by Mr. Favia only if a
number of milestones that are in the control of Mr. Favia, ourselves, or both
of us, are met prior to January 2000. As of the date of this prospectus,
several of these milestones have been met.

  In connection with our acquisition of Netranscend Software, Inc. in March
1999, we issued to Ruiqing "Barclay" Jiang, one of our current executive
officers and formerly the sole shareholder of Netranscend Software, Inc., a
promissory note in the principal amount of $430,000, payable in four annual
installments and an aggregate of 1,979,000 shares of common stock valued at
$2.6 million. Of the shares issued, 300,000 are currently being held in escrow
to cover breaches of representations and warranties made by Mr. Jiang and
Netranscend Software, Inc. in the agreement and plan of reorganization executed
in connection with the acquisition.

  In February 1999, we sold an aggregate of 1,206,000 shares of Series A
preferred stock to investors at a purchase price of $1.25 per share. In June
1999, we sold an aggregate of 4,500,000 shares of Series B preferred stock to
investors at a purchase price of $2.00 per share. In August 1999, we sold an
aggregate of 4,000,000 shares of Series C preferred stock to investors at a
purchase price of $3.59 per share. The shares of Series A, Series B and Series
C preferred stock will automatically convert into an aggregate of 9,706,000
shares of common stock upon the closing of this offering. The holders of
converted shares of Series C preferred stock are entitled to demand and piggy-
back registration rights. See "Description of Capital Stock--Registration
Rights."


                                       55
<PAGE>

  The investors in the preferred stock included the following entities that
hold 5% or more of our stock or that are affiliated with our directors or
executive officers, or both:

<TABLE>
<CAPTION>
                                  Shares of       Shares of       Shares of
                                  Series A        Series B        Series C
Investor                       Preferred Stock Preferred Stock Preferred Stock
------------------------------ --------------- --------------- ---------------
<S>                            <C>             <C>             <C>
5% Stockholder Entities
 Affiliated with a Mediaplex
 Director or Executive
 Officer:
 Entities affiliated with
  James DeSorrento (1)(2).....     160,000          140,000              --
 Entities affiliated with A.
  Brooke Seawell (1)(3).......          --           75,000              --
 Entities affiliated with
  Gregory R. Raifman and
  Jon L. Edwards (1)(4).......          --               --          19,360
 Entities affiliated with
  Lawrence D. Lenihan,
  Jr.(1)(5)...................          --               --       1,671,309
Other 5% Stockholders
 Zeron Capital Ltd. (6).......          --        2,625,000              --
 The Goldman Sachs Group, Inc.
  (7).........................          --               --       1,392,758
</TABLE>
--------
(1) James DeSorrento, A. Brooke Seawell, Gregory R. Raifman, Jon L. Edwards and
    Lawrence D. Lenihan, Jr. are each members of our board of directors.

(2) All shares are held of record by DeSorrento Revocable Trust under an
    agreement dated 12/17/80.

(3) All shares are held of record by Seawell Revocable Trust, A. Brooke Seawell
    & Patricia C. Seawell, trustees.

(4) All shares are held of record by R&E Holdings, LLC. Messrs. Gregory R.
    Raifman and Jon L. Edwards are the managing members and beneficial owners
    of R&E Holdings, LLC. Each of Mr. Raifman and Mr. Edwards disclaims
    beneficial ownership of these shares, except to the extent of his
    respective pecuniary interest therein.

(5) Represents 1,483,484 shares of Series C preferred stock held of record by
    Pequot Private Equity Fund, L.P. and 187,825 shares of Series C preferred
    stock held or record by Pequot Offshore Private Equity Fund, Inc. Mr.
    Lenihan is the fund manager for Pequot Capital Management, Inc. He
    disclaims beneficial ownership of these shares except to the extent of his
    pecuniary interest therein.

(6) Includes 1,500,000 shares held of record by Odyssey Venture Partners and
    1,000,000 shares held of record by Argossy Limited. Argossy Limited and
    Odyssey Venture Partners are funds affiliated with Zeron Capital Ltd. Zeron
    Capital Ltd. also holds a warrant to purchase 125,000 shares of Series B
    preferred stock.

(7) Includes 139,276 shares of Series C preferred stock purchased by Stone
    Street Fund L.P., an affiliate of The Goldman Sachs Group, Inc.
--------
  In connection with the sale of our Series B preferred stock in June 1999, we
issued a warrant to purchase 125,000 shares of Series B preferred stock, at an
exercise price of $2.00 per share, to Zeron Capital, Ltd., a 5% stockholder.
After this offering, the warrant will be exercisable into a like number of
shares of our common stock. The warrant may be exercisable at any time prior to
its expiration in June 2002.

  In connection with the sale of our Series B preferred stock in June 1999 to
Zeron Capital, Ltd., we issued a warrant to purchase 150,000 shares of Series B
preferred stock, at an exercise price of $2.00 per share, and a warrant to
purchase 100,000 shares of common stock, at a purchase price of $0.50 per
share, to Retail Ventures International, Inc., a financial advisor to us. After
this offering, the warrant to purchase Series B preferred stock will be
exercisable into a like number of shares of our common stock. The warrants may
be exercisable at any time prior to their expiration in June 2002.

  In September 1999, we entered into an oral agreement with R&E Holdings, LLC
to sublease a portion of the space we currently occupy at our headquarters in
San Francisco, California. The sublease terms and payments paid by us to R&E
Holdings, LLC are substantially similar to the lease terms and payments paid by
R&E Holdings, LLC to the landlord. To date, we have paid R&E Holdings, LLC a
total of approximately $74,000 for these lease payments.

                                       56
<PAGE>

                             PRINCIPAL STOCKHOLDERS

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

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

  . each of our named executive officers;

  . each of our directors; and

  . all directors and executive officers as a group.

  Except as otherwise noted, the address of each 5% stockholder listed in the
table is c/o Mediaplex, Inc., 131 Steuart Street, Fourth Floor, San Francisco,
California 94105. The table includes all shares of common stock issuable within
60 days of August 15, 1999, upon the exercise of options and warrants
beneficially owned by the indicated stockholders on that date based on options
and warrants outstanding as of August 15, 1999. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to shares. To
our knowledge, except under applicable community property laws or as otherwise
indicated, the persons named in the table have sole voting and sole investment
control with respect to all shares beneficially owned. The applicable
percentage of ownership for each stockholder is based on shares of common stock
outstanding as of August 15, 1999, together with applicable options and
warrants for that stockholder. Shares of common stock issuable upon exercise of
options and warrants beneficially owned are deemed outstanding for the purpose
of computing the percentage ownership of the person holding those options and
warrants, but are not deemed outstanding for computing the percentage ownership
of any other person.

<TABLE>
<CAPTION>
                                                            Percent of
                                         Number of      Shares Outstanding
                                         Shares of      ----------------------
                                        Common Stock     Before       After
Name                                 Beneficially Owned Offering    Offering
-----------------------------------  ------------------ ---------   ----------
<S>                                  <C>                <C>         <C>
R & E Holdings, LLC (1)............      10,296,265           41.8%
Zeron Capital Ltd. (2).............       2,625,000           10.7
 44 Church Street
 Hamilton HM12
 Bermuda
Pequot Capital Management, Inc.
 (3)...............................       1,671,309            6.8
 500 Nyala Farm Road
 Westport, CT 06880
The Goldman Sachs Group, Inc. (4)..       1,392,758            5.7
 85 Broad Street
 New York, NY 10002
Gregory R. Raifman (5).............      12,296,265           46.7
Jon L. Edwards (6).................      12,046,265           46.1
Ruiqing "Barclay" Jiang (7)........       2,001,000            8.1
Walter Haefeker (8)................       1,250,000            4.8
Lawrence D. Lenihan, Jr. (9).......       1,671,309            6.8
James DeSorrento (10)..............         350,000            1.4
A. Brooke Seawell (11).............         125,000              *
Peter S. Sealey (12)...............          50,000              *
All executive officers and
 directors as a group (13 persons)
 (13)..............................      19,276,907           65.8
</TABLE>
--------
  *Less than 1%
 (1) Messrs. Raifman and Edwards are the managing members and the beneficial
     owners of R&E Holdings, LLC.

 (2) Includes 1,500,000 shares held of record by Odyssey Venture Partners and
     1,000,000 shares held of record by Argossy Limited. Argossy Limited and
     Odyssey Venture Partners are venture funds affiliated with Zeron Capital
     Ltd. Also includes a warrant held by Zeron Capital Ltd. to purchase
     125,000 shares.

                                       57
<PAGE>

 (3) Represents 1,483,484 shares held of record by Pequot Private Equity Fund,
     L.P. and 187,825 shares held of record by Pequot Offshore Private Equity
     Fund, Inc. Pequot Private Equity Fund, L.P. and Pequot Offshore Private
     Equity Fund, Inc. are managed by Pequot Capital Management, Inc.

 (4) Includes 139,276 shares held of record by Stone Street Fund 1999, L.P., an
     affiliate of The Goldman Sachs Group, Inc.

 (5) Represents 10,296,265 shares held of record by R&E Holdings, LLC, 250,000
     shares held of record by PointBreak Ventures, LLC and 1,750,000 shares
     issuable upon the exercise of options exercisable within 60 days of August
     15, 1999. Mr. Raifman is one of the beneficial owners of R&E Holdings, LLC
     and PointBreak Ventures, LLC. Mr. Raifman disclaims beneficial interest of
     the shares held by R&E Holdings, LLC and PointBreak Ventures, LLC, except
     to the extent of his pecuniary interest in those entities.

 (6) Represents 10,296,265 shares held of record by R&E Holdings, LLC, 250,000
     shares held of record by PointBreak Ventures, LLC and 1,500,000 shares of
     common stock issuable upon the exercise of options exercisable within 60
     days of August 15, 1999. Mr. Edwards is one of the beneficial owners of
     R&E Holdings, LLC and PointBreak Ventures, LLC. Mr. Edwards disclaims
     beneficial interest of the shares held by R&E Holdings, LLC and PointBreak
     Ventures, LLC, except to the extent of his pecuniary interest in those
     entities.

 (7) Includes 22,000 shares issuable upon the exercise of options exercisable
     within 60 days of August 15, 1999.

 (8) Represents 1,250,000 shares issuable upon the exercise of options
     exercisable within 60 days of August 15, 1999.

 (9) Represents 1,671,309 shares beneficially owned by Pequot Capital
     Management, Inc. See note (3). Mr. Lenihan is the fund manager of Pequot
     Capital Management, Inc. Mr. Lenihan disclaims beneficial ownership of
     these shares, except to the extent of his pecuniary interest in that
     entity.

(10) Represents 300,000 shares held of record by DeSorrento Revocable Trust, of
     which Mr. DeSorrento is the beneficial owner and 50,000 shares issuable
     upon the exercise of options exercisable within 60 days of August 15,
     1999.
(11) Represents 75,000 shares held of record by Seawell Revocable Trust, A.
     Brooke Seawell & Patricia C. Seawell, trustees. Mr. Seawell is one of the
     beneficial owners of the Seawell Revocable Trust and 50,000 shares
     issuable upon the exercise of options exercisable within 60 days of August
     15, 1999.

(12) Represents 50,000 shares issuable upon the exercise of options exercisable
     within 60 days of August 15, 1999.

(13) See notes (5) through (12). Includes an aggregate of 4,705,333 shares
     issuable upon exercise of options held by our officers exercisable within
     60 days of August 15, 1999.

                                       58
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

General

  Our restated certificate of incorporation, which will become effective upon
the closing of this offering, authorizes the issuance of up to 150,000,000
shares of common stock, par value $0.0001 per share, and 10,000,000 shares of
undesignated preferred stock, par value $0.0001 per share, the rights and
preferences of which may be established from time to time by our board of
directors. As of August 15, 1999, we had outstanding 14,898,865 shares of
common stock and 9,706,000 shares of redeemable convertible preferred stock,
which will automatically convert into 9,706,000 shares of common stock upon the
completion of this offering. As of August 15, 1999, we had 120 stockholders.

Common Stock

  Each holder of common stock will be entitled to one vote for each share on
all matters to be voted upon by the stockholders, and there will be no
cumulative voting rights. Subject to preferences to which holders of preferred
stock issued after the sale of the common stock in this offering may be
entitled, holders of common stock will be entitled to receive ratably any
dividends that may be declared from time to time by the board of directors out
of funds legally available for that purpose. Please see "Dividend Policy." In
the event of our liquidation, dissolution or winding up, holders of our common
stock will be entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock. Holders of common stock
have no preemptive or conversion rights or other subscription rights and there
are no redemption or sinking fund provisions applicable to the common stock.
All outstanding shares of common stock are, and the shares of common stock
offered by us in this offering, when issued and paid for, will be, fully paid
and nonassessable. The rights, preferences and privileges of the holders of
common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of preferred stock that we may designate in
the future.

Preferred Stock

  Upon the closing of this offering, the board of directors will be authorized,
subject to any limitations prescribed by law, without stockholder approval,
from time to time to issue up to an aggregate of 10,000,000 shares of preferred
stock, $0.0001 par value per share, in one or more series, each series to have
rights and preferences, including voting rights, dividend rights, conversion
rights, redemption privileges and liquidation preferences, as may be determined
by the board of directors. The rights of the holders of common stock will be
subject to, and may be adversely affected by, the rights of holders of any
preferred stock that may be issued in the future. The issuance of preferred
stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, a majority of our outstanding voting stock. We have
no present plans to issue any shares of preferred stock.

Warrants

  At August 15, 1999, there were outstanding warrants to purchase up to 275,000
shares of Series B preferred stock at an exercise price of $2.00 per share and
warrants to purchase up to 600,000 shares of common stock at an exercise price
of $0.50 per share. Upon completion of this offering, the warrants to purchase
shares of Series B preferred stock will become exercisable to purchase 275,000
shares of common stock.

Registration Rights

  The holders of 4,000,000 shares of Series C preferred stock, referred to as
"registrable securities," are entitled to certain rights with respect to
registration of such shares under the Securities Act. These rights are provided
under the terms of an investor rights agreement between us and the holders of
registrable securities.

                                       59
<PAGE>

Beginning 180 days following the date of this prospectus, holders of at least
25% of the then outstanding registrable securities may require on up to two
occasions that we register their shares for public resale. We are obligated to
register these shares only if the outstanding registrable securities have an
anticipated public offering price of at least $5.5 million. Also, holders of
registrable securities may require once per 12-month period that we register
their shares for public resale on Form S-3 or similar short-form registration,
provided we are eligible to use that form, if the value of the securities to be
registered is at least $1.0 million; however, we may defer this registration
for 120 days in view of market conditions. Furthermore, in the event we elect
to register any of our shares of common stock for purposes of effecting any
public offering, the holders of registrable securities are entitled to include
their shares of common stock in the registration, but we may reduce the number
of shares proposed to be registered in view of market conditions. These
registration rights will not be applicable with respect to this offering. All
expenses in connection with any registration, other than underwriting discounts
and commissions, will be borne by us. All registration rights will terminate
five years following the consummation of this offering, or, with respect to
each holder of registrable securities, at the time the holder is entitled to
sell all of its shares in any three-month period under Rule 144 of the
Securities Act.

Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws and
Delaware Law

  Certain provisions of Delaware law and our amended and restated certificate
of incorporation and bylaws could make the following more difficult:

  . the acquisition of us by means of a tender offer;

  . the acquisition of us by means of a proxy contest or otherwise; or

  . the removal of our incumbent officers and directors.

  These provisions, summarized below, are expected to discourage certain types
of coercive takeover practices and inadequate takeover bids. These provisions
are also designed to encourage persons seeking to acquire control of us to
negotiate first with our board. We believe that the benefits of increased
protection of our potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging such proposals because negotiation of these
proposals could result in an improvement of their terms.

  Election and Removal of Directors. Our board of directors is divided into
three classes. The directors in each class will serve for a three-year term,
one class being elected each year by our stockholders. For more information on
the classified board, see the section entitled "Management--Board of
Directors." This system of electing and removing directors may tend to
discourage a third party from making a tender offer or otherwise attempting to
obtain control of us because it generally makes it more difficult for
stockholders to replace a majority of the directors.

  Stockholder Meetings. Under our bylaws, only the board of directors, the
chairman of the board, the chief executive officer and the president may call
special meetings of stockholders.

  Requirements for Advance Notification of Stockholder Nominations and
Proposals. Our bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election as
directors, other than nominations made by or at the direction of the board of
directors or a committee of the board.

  Delaware Anti-Takeover Law. We are subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a business
combination with an interested stockholder for a period of three years
following the date the person became an interested stockholder, unless the
business combination or the transaction in which the person became an
interested stockholder is approved in a prescribed manner. Generally, a
business combination includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested

                                       60
<PAGE>

stockholder. Generally, an interested stockholder is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status did own, 15% or more of a
corporation's voting stock. The existence of this provision may have an anti-
takeover effect with respect to transactions not approved in advance by the
board of directors, including discouraging attempts that might result in a
premium over the market price for the shares of common stock held by
stockholders.

  Elimination of Stockholder Action By Written Consent. Our certificate of
incorporation eliminates the right of stockholders to act by written consent
without a meeting.

  Elimination of Cumulative Voting. Our certificate of incorporation and bylaws
do not provide for cumulative voting in the election of directors.

  Undesignated Preferred Stock. The authorization of undesignated preferred
stock makes it possible for the board of directors to issue preferred stock
with voting or other rights or preferences that could impede the success of any
attempt to change control of us. These and other provisions may have the effect
of deferring hostile takeovers or delaying changes in control or management of
us.

  Amendment of Charter Provisions. The amendment of any of the above provisions
would require approval by holders of at least 66 2/3% of the outstanding common
stock.

Transfer Agent and Registrar

  The transfer agent and registrar for our common stock is Chase Mellon
Shareholder Services.

Nasdaq National Market Listing

  We have applied for the listing of our shares on the Nasdaq National Market
under the symbol "MPLX."

                                       61
<PAGE>

                        SHARES ELIGIBLE FOR FUTURE SALE

  Sales of substantial amounts of our common stock in the public market after
the offering could adversely affect the market price of our common stock and
our ability to raise equity capital in the future on terms favorable to us.

  After this offering,      shares of our common stock will be outstanding,
assuming that the underwriters do not exercise the over-allotment option, and
based on shares outstanding as of August 15, 1999. Of these shares, all of the
     shares sold in this offering will be freely tradable without restriction
or further registration under the Securities Act, unless these shares are
purchased by "affiliates" as that term is defined in Rule 144 under the
Securities Act. The remaining shares of common stock held by existing
stockholders are "restricted securities" as that term is defined in Rule 144
under the Securities Act. Restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rule 144 or 701 under the Securities Act, which rules are summarized
below.

  As a result of the contractual restrictions described below and the
provisions of Rules 144, 144(k) and 701, the 24,604,865 restricted shares will
be available for sale in the public market as follows:

         Eligibility of Restricted Shares for Sale in the Public Market

<TABLE>
   <S>                                                                <C>
   At the effective date.............................................     45,000
   90 days after the effective date..................................     85,814
   180 days after the effective date................................. 15,880,717
   More than 180 days after the effective date.......................  8,593,334
</TABLE>

  Resale of 15,730,717 of the restricted shares that will become available for
sale in the public market starting 180 days after the effective date will be
limited by volume and other resale restrictions under Rule 144 because the
holders are our affiliates.

Rule 144

  In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year is entitled to sell, within any three-month
period, a number of shares that is not more than the greater of:

  . 1% of the number of shares of common stock then outstanding, which will
    equal approximately      shares immediately after this offering; or

  . the average weekly trading volume of our common stock on the Nasdaq
    National Market during the four calendar weeks before a notice of the
    sale on Form 144 is filed.

  Sales under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current public information about us.

  Under Rule 144(k), a person who has not been one of our affiliates at any
time during the three months before a sale, and who has beneficially owned the
restricted shares for at least two years, is entitled to sell the shares
without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.

Rule 701

  In general, under Rule 701 of the Securities Act as currently in effect, any
of our employees, consultants or advisors who purchase shares from us under a
stock option plan or other written agreement can resell those shares 90 days
after the effective date of this offering in reliance on Rule 144, but without
complying with some of the restrictions, including the holding period,
contained in Rule 144.

                                       62
<PAGE>

Lock-Up Arrangements

  Including our executive officers and directors, holders of a total of
24,304,051 shares of common stock (including preferred stock convertible into
common stock), warrants to purchase a total of 875,000 shares of common stock
and options to purchase 4,705,333 shares of common stock have agreed not to
sell or otherwise dispose of any unrestricted shares of common stock for a
period of 180 days after the date of this prospectus without the prior written
consent of Lehman Brothers Inc. In addition, all options granted under our
Amended and Restated 1999 Stock Plan are subject to similar lock-up
arrangements pursuant to an agreement between the optionee and us.

                                       63
<PAGE>

                                  UNDERWRITING

  Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, the underwriters named
below, for whom Lehman Brothers Inc., SG Cowen Securities Corporation and U.S.
Bancorp Piper Jaffray Inc. are acting as representatives, have each agreed to
purchase from us the number of shares of common stock shown opposite its name
below:

<TABLE>
<CAPTION>
                                                                       Number of
     Underwriters                                                       Shares
     ------------                                                      ---------
     <S>                                                               <C>
       Lehman Brothers Inc............................................
       SG Cowen Securities Corporation................................
       U.S. Bancorp Piper Jaffray Inc. ...............................
                                                                       --------
       Total..........................................................
                                                                       ========
</TABLE>

  The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement. It also provides that, if any of the
shares of common stock are purchased by the underwriters under the underwriting
agreement, all of the shares of common stock that the underwriters have agreed
to purchase under the underwriting agreement, must be purchased. The conditions
contained in the underwriting agreement include the requirement that:

  . the representations and warranties made by us to the underwriters are
    true;

  . that there is no material change in the financial markets; and

  . we deliver to the underwriters customary closing documents.

  The representatives have advised us that the underwriters propose to offer
the shares of common stock directly to the public at the public offering price
set forth on the cover page of this prospectus. The representatives have also
advised us that the underwriters propose to offer the shares of common stock to
dealers, who may include the underwriters, at this public offering price less a
selling concession not in excess of $     per share. The underwriters may
allow, and the dealers may reallow, a concession not in excess of $     per
share to brokers and dealers. After the offering, the underwriters may change
the offering price and other selling terms.

  We have granted to the underwriters an option to purchase up to
additional shares of common stock, exercisable solely to cover over-allotments,
if any, at the public offering price less the underwriting discount shown on
the cover page of this prospectus. The underwriters may exercise this option at
any time until 30 days after the date of the underwriting agreement. If this
option is exercised, each underwriter will be committed, so long as the
conditions of the underwriting agreement are satisfied, to purchase a number of
additional shares of common stock proportionate to the underwriter's initial
commitment as indicated in the table above and we will be obligated, under the
over-allotment option, to sell the shares of common stock to the underwriters.

  We have agreed, that, without the prior consent of Lehman Brothers Inc., we
will not, directly or indirectly, offer, sell or otherwise dispose of any
shares of common stock or any securities that may be converted into or
exchanged for any shares of common stock for a period of 180 days from the date
of this prospectus. All of our executive officers and directors and
stockholders holding 24,304,051 shares of our capital stock, including our
preferred stock, and holders of options and warrants to purchase 5,580,333
shares, have agreed under lock-up agreements that, without the prior written
consent of Lehman Brothers Inc., they will not, directly or indirectly, offer,
sell or otherwise dispose of any shares of common stock or any securities that
may be converted into or exchanged for any shares of common stock for the
period ending 180 days after the date of this prospectus. See "Shares Eligible
for Future Sale."

  Before this offering, there has been no public market for the shares of
common stock. The initial public offering price will be negotiated between the
representatives and us. In determining the initial public offering

                                       64
<PAGE>

price of the common stock, the representatives will consider, among other
things and in addition to prevailing market conditions:

  . our historical performance and capital structure;

  . estimates of our business potential and earning prospects;

  . an overall assessment of our management; and

  . the above factors in relation to market valuations of companies in
    related businesses.

  We have applied to have our common stock approved for quotation on the Nasdaq
National Market under the symbol "MPLX."

  We have agreed to indemnify the underwriters against liabilities, including
liabilities under the Securities Act and liabilities arising from breaches of
the representations and warranties contained in the underwriting agreement, and
to contribute to payments that the underwriters may be required to make for
these liabilities.

  Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purposes of pegging, fixing or
maintaining the price of the common stock.

  The underwriters may create a short position in the common stock in
connection with the offering. This means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create
a short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.

  The representatives also may impose a penalty bid on underwriters and selling
group members. This means that, if the representatives purchase shares of
common stock in the open market to reduce the underwriters' short position or
to stabilize the price of the common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members that sold
those shares as part of the offering.

  In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of these purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
an offering.

  Neither we 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 we nor
any of the underwriters makes any representation that the representatives will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.

  Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
the sale is made.

  Purchasers of the shares of common stock offered in this prospectus may be
required to pay stamp taxes and other charges under the laws and practices of
the country of purchase, in addition to the offering price listed on the cover
page of this prospectus.

  The representatives have informed us that they do not intend to confirm sales
to discretionary accounts that exceed 5% of the shares of common stock offered
by them.

  At our request, the underwriters have reserved up to      shares of the
common stock offered by this prospectus for sale to our officers, directors,
employees and their family members and to our business associates at the
initial public offering price set forth on the cover page of this prospectus.
These persons must commit to purchase no later than the close of business on
the day following the date of this prospectus. The number of shares available
for sale to the general public will be reduced to the extent these persons
purchase the reserved shares.

                                       65
<PAGE>

                                 LEGAL MATTERS

  The validity of the shares of common stock offered hereby will be passed upon
for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Fenwick & West LLP, Palo Alto, California will pass upon
legal matters for the underwriters. As of the date of this prospectus, WS
Investments, an investment partnership composed of certain current and former
members of and persons associated with Wilson Sonsini Goodrich & Rosati,
Professional Corporation, and certain individual attorneys of this firm,
beneficially own a total of 43,116 shares of our common stock.

                                    EXPERTS

  The financial statements of Mediaplex, Inc., as of and for the six months
ended June 30, 1999, as of December 31, 1998 and 1997, for each of the two
years in the period ended December 31, 1998, and for the period from September
10, 1996 (inception) to December 31, 1996 included in this prospectus and the
financial statement schedule included in the registration statement have been
so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.

  The financial statements of Netranscend Software, Inc. (a development stage
company) as of December 31, 1998 and 1997, for each of two years in the period
ended December 31, 1998, and for the period from November 27, 1996 (inception)
to December 31, 1998 included in this prospectus have been so included in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

  We have filed with the Securities and Exchange Commission under the
Securities Act of 1933 a registration statement on Form S-1, including the
exhibits filed with the registration statement, with respect to the shares to
be sold in this offering. This prospectus does not contain all the information
contained in the registration statement. For further information with respect
to us and the shares to be sold in this offering, we refer you to the
registration statement. Statements contained in this prospectus as to the
contents of any contract, agreement or other document to which we make
reference are not necessarily complete. In each instance, we refer you to the
copy of the contract, agreement or other document filed as an exhibit to the
registration statement, each statement being qualified in all respects by the
more complete description of the matter involved.

  You may read and copy all or any portion of the registration statement or any
reports, statements or other information we file at the Commission's public
reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of
these documents upon payment of a duplicating fee, by writing to the
Commission. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Our Commission
filings, including the registration statement, will also be available to you on
the Commission's Internet site, http://www.sec.gov.

  We intend to send to our stockholders annual reports containing audited
consolidated financial statements and quarterly reports containing unaudited
financial statements for the first three quarters of each fiscal year.

                                       66
<PAGE>

                                Mediaplex, Inc.

                         Index to Financial Statements

<TABLE>
<CAPTION>
                                                                           Pages
                                                                           -----
<S>                                                                        <C>
MEDIAPLEX, INC.

Report of Independent Accountants.........................................  F-2

Balance Sheets............................................................  F-3

Statements of Operations..................................................  F-4

Statements of Changes in Stockholders' Equity (Deficit)...................  F-5

Statements of Cash Flows..................................................  F-6

Supplemental Disclosure of Cash Flows.....................................  F-7

Notes to Financial Statements.............................................  F-8

PRO FORMA FINANCIAL INFORMATION

Overview.................................................................. F-21

Pro Forma Statement of Operations......................................... F-22

Notes to Pro Forma Financial Information.................................. F-23

NETRANSCEND SOFTWARE, INC.

Report of Independent Accountants......................................... F-24

Balance Sheets............................................................ F-25

Statements of Operations.................................................. F-26

Statements of Shareholders' Equity (Deficit).............................. F-27

Statements of Cash Flows.................................................. F-28

Notes to Financial Statements............................................. F-29
</TABLE>

                                      F-1
<PAGE>

                       Report of Independent Accountants

To the Board of Directors and Stockholders of Mediaplex, Inc.

The recapitalization described in Note 1 to the financial statements has not
been consummated at September 2, 1999. When it has been consummated, we will be
in a position to furnish the following report:

  "In our opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Mediaplex, Inc. (the "Company") at
December 31, 1997 and 1998, and June 30, 1999, and the results of operations
and its cash flows for the period from September 10, 1996 (inception) to
December 31, 1996, the years ended December 31, 1997 and 1998, and the six
months ended June 30, 1999, in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above."

                                          /s/ PricewaterhouseCoopers LLP
San Francisco, California
July 30, 1999
except for Note 10,
which is as of
September 1, 1999


                                      F-2
<PAGE>

                                Mediaplex, Inc.

                                 Balance Sheets

<TABLE>
<CAPTION>
                                               December 31,
                                          ------------------------   June 30,
                                             1997         1998         1999
                                          -----------  -----------  -----------
<S>                                       <C>          <C>          <C>
Assets
Current Assets:
  Cash and cash equivalents.............  $   141,994  $   374,567  $ 7,602,205
  Accounts receivable, net of allowance
   of $20,211, $37,367 and $183,367 as
   of December 31, 1997 and 1998 and
   June 30, 1999, respectively..........        3,967      936,497    3,888,361
  Other current assets..................           --           --       62,933
                                          -----------  -----------  -----------
   Total current assets.................      145,961    1,311,064   11,553,499
  Property and equipment, net...........      110,546      105,921    1,030,699
  Goodwill and intangible assets, net of
   accumulated amortization of $250,811
   as of June 30, 1999..................           --           --    2,758,924
  Other assets..........................        5,000       27,030       86,573
                                          -----------  -----------  -----------
   Total assets.........................  $   261,507  $ 1,444,015  $15,429,695
                                          ===========  ===========  ===========
Liabilities and Stockholders' Equity
 (Deficit)
Current Liabilities:
  Accounts payable......................  $   379,122  $ 1,528,600  $ 1,941,756
  Payables to stockholders..............       48,873      139,701      127,281
  Advance from stockholder..............           --      262,750           --
  Accrued liabilities...................      150,067      422,177    2,930,697
  Deferred revenues.....................      142,400      479,764    1,364,096
  Notes payable to stockholders, current
   portion..............................           --      339,569       50,000
  Capital lease obligations, current
   portion..............................       11,463           --           --
  Other liabilities.....................           --        1,039       19,854
                                          -----------  -----------  -----------
   Total current liabilities............      731,925    3,173,600    6,433,684
Notes payable, stockholders.............       64,569      232,161      372,765
Capital lease obligations...............       23,072           --           --
                                          -----------  -----------  -----------
   Total liabilities....................      819,566    3,405,761    6,806,449
Commitments (Note 6)
Stockholders' Equity (Deficit):
  Convertible preferred stock; issuable
   in series; $0.0001 value; authorized
   8,206,000 shares; 5,706,000 shares
   issued and outstanding; liquidation
   preference of $10,507,500 at June 30,
   1999.................................           --           --          571
  Common stock, $0.0001 par value;
   authorized 10,000,000, 40,000,000,
   and 40,000,000 shares, respectively;
   11,318,566, 6,984,302 and 14,839,539
   shares issued and outstanding at
   December 31, 1997 and 1998 and June
   30, 1999, respectively...............        1,132          698        1,484
  Additional paid-in capital............      813,355    1,482,685   20,238,846
  Warrants..............................           --           --      432,354
  Deferred stock compensation...........           --      (53,371)  (3,232,130)
  Receivable from sale of Series B
   preferred stock......................           --           --     (240,000)
  Accumulated deficit...................   (1,372,546)  (3,391,758)  (8,577,879)
                                          -----------  -----------  -----------
   Total stockholders' equity
    (deficit)...........................     (558,059)  (1,961,746)   8,623,246
                                          -----------  -----------  -----------
   Total liabilities and stockholders'
    equity (deficit)....................  $   261,507  $ 1,444,015  $15,429,695
                                          ===========  ===========  ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-3
<PAGE>

                                Mediaplex, Inc.

                            Statements of Operations

<TABLE>
<CAPTION>
                         September 10,
                              1996            Years Ended            Six Months Ended
                         (inception) to      December 31,                June 30,
                          December 31,  ------------------------  ------------------------
                              1996         1997         1998         1998         1999
                         -------------- -----------  -----------  -----------  -----------
                                                                  (unaudited)
<S>                      <C>            <C>          <C>          <C>          <C>
Revenues................   $      --    $   425,877  $ 3,588,094  $ 1,521,895  $ 7,322,572
Cost of revenues........          --        445,372    2,770,567    1,212,773    5,761,199
                           ---------    -----------  -----------  -----------  -----------
  Gross profit..........          --        (19,495)     817,527      309,122    1,561,373

Operating expenses:
  Sales and marketing...      22,704        480,756      819,641      394,626    1,647,288
  Research and
   development..........      48,834        347,130      555,736      220,003      815,659
  General and
   administrative.......      30,948        256,413      636,651      325,073    1,081,697
  Stock-based
   compensation.........     152,694         11,000      577,525      151,427    2,965,683
  Amortization of
   goodwill and
   intangibles..........          --             --           --           --      250,811
                           ---------    -----------  -----------  -----------  -----------
    Total operating
     expenses...........     255,180      1,095,299    2,589,553    1,091,129    6,761,138
                           ---------    -----------  -----------  -----------  -----------
    Loss from
     operations.........    (255,180)    (1,114,794)  (1,772,026)    (782,007)  (5,199,765)
Interest income
 (expense), net.........          --         (2,572)    (247,186)    (233,934)      13,644
                           ---------    -----------  -----------  -----------  -----------
  Net loss..............   $(255,180)   $(1,117,366) $(2,019,212) $(1,015,941) $(5,186,121)
                           =========    ===========  ===========  ===========  ===========
Net loss per share--
 basic and diluted......   $   (0.07)   $     (0.13) $     (0.25) $     (0.11) $     (0.43)
                           =========    ===========  ===========  ===========  ===========
Weighted average shares
 used to compute net
 loss per share--basic
 and diluted............   3,795,714      8,457,464    8,186,127    9,408,557   12,070,449
                           =========    ===========  ===========  ===========  ===========
Pro forma net loss per
 share--basic and
 diluted (unaudited)....                             $     (0.25)              $     (0.38)
                                                     ===========               ===========
Weighted average shares
 used to compute pro
 forma net loss per
 share--basic and
 diluted (unaudited)....                               8,186,127                13,501,001
                                                     ===========               ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>

                                Mediaplex, Inc.

            Statements of Changes in Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
                    Convertible
                  Preferred Stock    Common Stock
                  ---------------- ------------------
                                                                                            Receivable
                                                                                           from sale of
                                                       Additional              Deferred      Series B
                                                         Paid-in                Stock       Preferred   Accumulated
                   Shares   Amount   Shares    Amount    Capital    Warrants Compensation     Stock       Deficit       Total
                  --------- ------ ----------  ------  -----------  -------- ------------  ------------ -----------  -----------
<S>               <C>       <C>    <C>         <C>     <C>          <C>      <C>           <C>          <C>          <C>
Balance,
September 10,
1996
(inception).....         --  $ --          --  $   --  $        --  $     -- $        --    $      --   $        --  $        --
Issuance of
common stock for
cash and for
services........                    3,060,000     306      152,419                                                       152,725
Issuance of
common stock....                    1,600,000     160       79,840                                                        80,000
Net loss........                                                                                           (255,180)    (255,180)
                  ---------  ----  ----------  ------  -----------  -------- -----------    ---------   -----------  -----------
Balance,
December 31,
1996............         --    --   4,660,000     466      232,259        --          --           --      (255,180)     (22,455)
Issuance of
common stock....                    1,795,338     180      338,421                                                       338,601
Conversion of
payable to
stockholder for
common stock....                    4,643,228     464      231,697                                                       232,161
Issuance of
common stock for
services........                      220,000      22       10,978                                                        11,000
Net loss........                                                                                         (1,117,366)  (1,117,366)
                  ---------  ----  ----------  ------  -----------  -------- -----------    ---------   -----------  -----------
Balance,
December 31,
1997............         --    --  11,318,566   1,132      813,355        --          --           --    (1,372,546)    (558,059)
Repurchase of
common stock for
convertible note
payable.........                   (4,643,228)   (464)    (231,697)                                                     (232,161)
Beneficial
conversion
feature of note
payable to
stockholder.....                                           232,161                                                       232,161
Issuance of
common stock....                       76,000       7       37,993                                                        38,000
Issuance of
common stock for
services........                      232,290      23      151,404                                                       151,427
Stock-based
compensation....                                           286,079                                                       286,079
Deferred stock
compensation....                                           193,390              (193,390)                                    --
Amortization of
deferred stock
compensation....                                                                 140,019                                 140,019
Net loss........                                                                                         (2,019,212)  (2,019,212)
                  ---------  ----  ----------  ------  -----------  -------- -----------    ---------   -----------  -----------
Balance,
December 31,
1998............         --    --   6,983,628     698    1,482,685        --     (53,371)          --    (3,391,758)  (1,961,746)
Issuance of
common stock for
services........                       23,333       3       27,935                                                        27,938
Issuance of
common stock
upon acquisition
of Netranscend..                    1,979,000     198    2,569,068                                                     2,569,266
Issuance of
common stock
upon exercise of
options.........                       62,667       6        9,029                                                         9,035
Issuance of
Series A
preferred stock,
net of issuance
cost of
$46,701.........  1,206,000   121                        1,460,678                                                     1,460,799
Conversion of
note payable to
stockholder for
common stock....                      947,009      95       70,931                                                        71,026
Issuance of
Series B
preferred stock,
net of issuance
cost of
$741,632........  4,500,000   450                        8,257,918   432,354                 (240,000)                 8,450,722
Conversion of
note payable for
common stock....                    4,643,228     464      231,697                                                       232,161
Issuance of
common stock
upon exercise of
options in
connection with
waiver of
payable.........                      200,000      20       12,400                                                        12,420
Deferred stock
compensation....                                         6,116,505            (6,116,505)                                     --
Amortization of
deferred stock
compensation....                                                               2,937,746                               2,937,746
Net loss........                                                                                         (5,186,121)  (5,186,121)
                  ---------  ----  ----------  ------  -----------  -------- -----------    ---------   -----------  -----------
Balance, June
30, 1999........  5,706,000  $571  14,838,865  $1,484  $20,238,846  $432,354 $(3,232,130)   $(240,000)  $(8,577,879) $ 8,623,246
                  =========  ====  ==========  ======  ===========  ======== ===========    =========   ===========  ===========
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                      F-5
<PAGE>

                                Mediaplex, Inc.

                            Statements of Cash Flows

<TABLE>
<CAPTION>
                         September 10,
                             1996
                          (inception)        Years Ended            Six Months Ended
                              to            December 31,                June 30,
                         December 31,  ------------------------  ------------------------
                             1996         1997         1998         1998         1999
                         ------------- -----------  -----------  -----------  -----------
                                                                 (unaudited)
<S>                      <C>           <C>          <C>          <C>          <C>
Cash flows from operat-
 ing activities:
 Net loss...............   $(255,180)  $(1,117,366) $(2,019,212) $(1,015,941) $(5,186,121)
 Adjustments to
  reconcile net loss to
  net cash used in
  operating activities:
 Depreciation and amor-
  tization..............       1,726        20,023       54,810       25,181      376,082
 Write-off of property
  and equipment.........          --            --       18,853           --           --
 Allowance for doubtful
  accounts..............          --        20,211       17,156        5,147      146,000
 Stock-based compensa-
  tion expense..........     152,694        11,000      577,525      151,427    2,965,683
 Interest expense re-
  lated to beneficial
  conversion feature of
  notes payable, stock-
  holder................          --            --      232,161      232,161           --
 Changes in assets and
  liabilities:
  Accounts receivable...          --       (24,178)    (949,686)    (627,475)  (3,097,826)
  Other assets..........      (1,650)       (3,350)     (22,030)     (28,662)    (122,476)
  Accounts payable......         800       378,322    1,149,477      729,760      203,566
  Payables to stock-
   holders..............      35,982       309,621       90,828       62,248           --
  Accrued liabilities...      37,203       112,864      272,110      236,946    2,447,236
  Deferred revenue......          --       142,400      337,364       61,093      884,332
  Other liabilities.....          --            --        1,039        3,038       18,815
                           ---------   -----------  -----------  -----------  -----------
   Net cash used in op-
    erating activities..     (28,425)     (150,453)    (239,605)    (165,077)  (1,364,709)
                           ---------   -----------  -----------  -----------  -----------
Cash flows from invest-
 ing activities:
 Purchase of property
  and equipment.........     (24,488)      (69,892)     (78,819)     (37,535)    (840,459)
                           ---------   -----------  -----------  -----------  -----------
   Net cash used in in-
    vesting activities..     (24,488)      (69,892)     (78,819)     (37,535)    (840,459)
                           ---------   -----------  -----------  -----------  -----------
Cash flows from financ-
 ing activities:
 Net proceeds from issu-
  ance of common stock..      80,031       338,601       38,000       38,000           --
 Net proceeds from issu-
  ance of Series A pre-
  ferred stock..........          --            --           --           --    1,198,049
 Net proceeds from issu-
  ance of Series B pre-
  ferred stock..........          --            --           --           --    8,450,722
 Proceeds from exercise
  of stock options......          --            --           --           --        9,035
 Payments of capital
  lease obligations.....          --        (3,380)     (24,753)      (6,834)          --
 Proceeds from notes
  payables--stockhold-
  ers...................          --            --      275,000      275,000           --
 Payment of notes pay-
  able--stockholders....          --            --           --           --     (225,000)
 Advance from sharehold-
  ers...................          --            --      262,750           --           --
                           ---------   -----------  -----------  -----------  -----------
   Net cash provided by
    financing activi-
    ties................      80,031       335,221      550,997      306,166    9,432,806
                           ---------   -----------  -----------  -----------  -----------
   Net change in cash
    and cash equiva-
    lents...............      27,118       114,876      232,573      103,554    7,227,638
Cash and cash equiva-
 lents at beginning of
 period.................          --        27,118      141,994      141,994      374,567
                           ---------   -----------  -----------  -----------  -----------
Cash and cash equiva-
 lents at end of peri-
 od.....................   $  27,118   $   141,994  $   374,567  $   245,548  $ 7,602,205
                           =========   ===========  ===========  ===========  ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>

                                Mediaplex, Inc.

                     Supplemental Disclosure of Cash Flows

<TABLE>
<CAPTION>
                          September 10,
                               1996         Years Ended       Six Months Ended
                          (inception) to   December 31,           June 30,
                           December 31,  ----------------- ----------------------
                               1996        1997     1998      1998        1999
                          -------------- -------- -------- ----------- ----------
                                                           (unaudited)
<S>                       <C>            <C>      <C>      <C>         <C>
Cash paid for interest..      $   --     $  2,572 $  1,804  $    541   $   13,621
                              ======     ======== ========  ========   ==========
Noncash financing and
 investing activities:
 Issuance of common
  stock for
  acquisition...........      $   --     $     -- $     --  $     --   $2,552,910
                              ======     ======== ========  ========   ==========
 Issuance of note
  payable for
  acquisition...........      $   --     $     -- $     --  $     --   $  430,000
                              ======     ======== ========  ========   ==========
 Conversion of payables
  to stockholders to
  common stock..........      $   --     $232,161 $     --  $     --   $       --
                              ======     ======== ========  ========   ==========
 Conversion of
  stockholders' notes
  payable to common
  stock.................      $   --     $        $     --  $     --   $  303,187
                              ======     ======== ========  ========   ==========
 Repurchase of common
  stock in exchange for
  a note payable........      $   --     $     -- $232,161  $232,161   $       --
                              ======     ======== ========  ========   ==========
 Issuance of note
  payable to shareholder
  for settlement of
  outstanding payable to
  shareholder...........      $   --     $ 64,569 $     --  $     --   $       --
                              ======     ======== ========  ========   ==========
 Issuance of warrant to
  purchase common stock
  in connection with
  completing Series B
  preferred stock
  financing.............      $   --     $     -- $     --  $     --   $  432,354
                              ======     ======== ========  ========   ==========
 Conversion of advance
  from shareholder to
  Series A preferred
  stock.................      $   --     $     -- $     --  $     --   $  262,750
                              ======     ======== ========  ========   ==========
 Issuance of Series B
  preferred stock in
  exchange for note
  receivable............      $   --     $     -- $     --  $     --   $  240,000
                              ======     ======== ========  ========   ==========
 Exercise of common
  stock options in
  connection with waiver
  of payable to
  stockholder...........      $   --     $     -- $     --  $     --   $   12,420
                              ======     ======== ========  ========   ==========
 Purchase of equipment
  under capital leases..      $   --     $ 37,915 $  3,036  $  3,036   $       --
                              ======     ======== ========  ========   ==========
 Deferred stock
  compensation from
  issuance of options...      $   --     $     -- $193,390  $     --   $6,116,505
                              ======     ======== ========  ========   ==========
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      F-7
<PAGE>

                                Mediaplex, Inc.

                         Notes to Financial Statements

1. Business Activities and Summary of Significant Accounting Policies

Nature of Business

  Mediaplex, Inc. provides e-commerce and eBusiness solutions for online
marketing companies, advertisers and their advertising agencies. The Company's
service offerings include planning and execution of online media and marketing
campaigns, proprietary third-party ad serving to advertisers, and tracking and
reporting of an advertiser's return on investment ("ROI"), including evaluation
of online transactions.

Reincorporation

  In August 1999, the Company approved reincorporating in Delaware, changing
the name to Mediaplex, Inc. In connection with the reincorporation, the Company
authorized (i) an increase in the amount of authorized shares of common stock
to 150,000,000 and (ii) 10,000,000 shares of undesignated preferred stock. All
share data and stock option plan information has been restated to reflect the
reincorporation. The reincorporation is expected to be completed in 1999.

Netranscend Software, Inc. Acquisition

  On March 25, 1999, the Company acquired Netranscend Software, Inc., a Java-
based enterprise automation solutions software company, for a note payable of
$430,000, due in four annual installments (Note 5) beginning on the first
anniversary of the acquisition, and 1,979,000 shares of the Company's common
stock with an estimated fair value of $1.29 per share. Transaction costs of
$68,231 were incurred.

  The acquisition was accounted for using the purchase method of accounting.
The aggregate purchase price of $2,993,906, together with $15,836 of net
liabilities assumed, has been allocated based on the fair value of the assets
acquired. Goodwill and intangible assets, consisting of proprietary technology,
totaling $3,009,732 are being amortized over three years.

  The following pro forma results of operations reflect the combined results of
the Company and Netranscend Software, Inc. for the fiscal years ended December
31, 1997 and 1998 and have been prepared as though the entities had been
combined as of January 1, 1997 and 1998. The pro forma results do not reflect
any nonrecurring charges which resulted directly from the transaction.

<TABLE>
<CAPTION>
                                                        1997         1998
                                                     -----------  -----------
                                                           (unaudited)
   <S>                                               <C>          <C>
   Revenues......................................... $   425,877  $ 3,558,094
   Net loss......................................... $(2,124,951) $(3,032,444)
   Net loss per share--basic and diluted............ $     (0.20) $     (0.30)
   Shares used in computing net loss per share--
    basic and diluted...............................  10,436,464   10,165,127
</TABLE>

Unaudited Interim Financial Information

  The accompanying interim statements of operations and cash flows for the six
months ended June 30, 1998 are unaudited. The unaudited interim financial
statements have been prepared on the same basis as the annual financial
statements and, in the opinion of management, reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the
Company's results of operations and cash flows for the six months ended June
30, 1998. The financial data and other information disclosed in these notes to
consolidated financial statements related to this period are unaudited. Results
for the six months ended June 30, 1999 are not necessarily indicative of
results that may be expected for the full year.

                                      F-8
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


Use of Estimates

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

Concentration of Credit Risk

  Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of cash equivalents and accounts receivable.
The Company has cash equivalents and short-term investment policies that
require placement of these funds in financial institutions evaluated as highly
credit-worthy. The Company's credit risk is mitigated by the Company's ongoing
credit evaluation of its customers' financial condition. The Company does not
require collateral or other security to support accounts receivable and
maintains allowances for potential bad debts. At December 31, 1997, one
customer accounted for 67% of the outstanding accounts receivable. Four
customers accounted for 76% of the outstanding accounts receivable at December
31, 1998. At June 30, 1999, three customers represent 48% of outstanding
accounts receivable. One, two, four and five customers accounted for 91%, 77%,
80%, and 68% of revenues for the years ended December 31, 1997 and 1998, and
the six months ended June 30, 1998 and 1999, respectively.

Risks and Uncertainties

  The Company is subject to all of the risks inherent in an early stage company
in the Internet advertising industry. These risks include, but are not limited
to, a limited operating history, limited management resources, dependence upon
a consumer acceptance of the Internet, Internet related security risks and the
changing nature of the electronic commerce industry. The Company's operating
results may be materially affected by the foregoing factors.

Fair Value of Financial Instruments

  The Company's financial instruments include cash and cash equivalents,
borrowings, and accounts payable, and are carried at cost, which approximates
their fair value due to their short-term maturities.

Cash and Cash Equivalents

  All highly liquid instruments purchased with an original maturity of three
months or less are considered to be cash equivalents.

Property and Equipment

  Property and equipment are stated at cost less accumulated depreciation and
amortization. Maintenance and repairs are charged to operations as incurred.
Depreciation and amortization are based on the straight-line method over the
estimated useful lives of the related assets, which range from three to five
years. When assets are retired or otherwise disposed of, the cost and
accumulated depreciation and amortization are removed from the accounts, and
any resulting gain or loss is reflected in operations in the period realized.

Goodwill and Intangible Assets

  Goodwill and intangible assets consist of the excess of the purchase price
paid over identified intangible and tangible net assets resulting from the
acquisition of Netranscend Software, Inc. Due to the rapid

                                      F-9
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

technological changes occurring in the Internet industry, the goodwill and
intangible assets are amortized using the straight-line method over three
years, the period of expected benefit. Valuation of goodwill and intangible
assets is based on forecasted discounted cash flows and is reassessed
periodically. Cash flow forecasts are based on trends of historical performance
and management's estimate of future performance, giving consideration to
existing and anticipated competitive and economic conditions.

Impairment of Long-Lived Assets

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

Revenue Recognition

  Revenues are generated primarily from fixed fees from advertising campaign
management services. Advertising revenues are recognized ratably as impressions
are delivered over the period in which the advertisement is displayed, provided
that no significant Company obligations remain at the end of a period and
collection of the resulting receivable is probable. Company obligations
typically includes guarantees of minimum number of "impressions," or times that
an advertisement appears in pages viewed by users of the Company's online
properties. To the extent minimum guaranteed impressions are not met, the
Company defers recognition of the corresponding revenues until the remaining
guaranteed impression levels are achieved.

  Amounts payable to third-party Web sites for providing advertising space are
recorded as cost of revenues in the period the advertising impressions are
delivered.

Deferred Revenues

  Deferred revenues consist of advertising fees received or billed in advance
of delivery of the advertisement.

Research and Development

  Research and development costs are charged to expense as incurred.

Advertising Expenses

  The Company expenses the cost of advertising and promoting its services as
incurred. These costs are included in sales and marketing on the statements of
operations. The Company has not incurred any advertising expenses to date.

Stock-based Compensation

  The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion ("APB") No.
25, "Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation." Under APB No. 25,
compensation cost is recognized based on the difference, if any, on the date of
grant between the fair value of the Company's stock and the amount an employee
must pay to acquire the stock.

                                      F-10
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


  The Company accounts for non-employee stock-based awards in which goods or
services are the consideration received for the equity instruments issued in
accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force
No. 96-18, "Accounting for Equity Instruments that are Issued to Employees for
Acquiring, or in Conjunction with Selling, Goods or Services."

  The Company amortizes stock-based compensation recorded in connection with
certain stock option grants over the vesting periods of the related options.

Income Taxes

  In accordance with SFAS No. 109, "Accounting for Income Taxes," deferred
income taxes are recognized for the differences between the tax bases of assets
and liabilities and their financial reporting amounts based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. A valuation allowance is recognized for
deferred tax assets when it is more likely than not, based on available
evidence, that some portion or all of the deferred tax asset will not be
realized. Income tax expense or benefit is the tax payable or refundable,
respectively, for the period plus or minus the change during the period in
deferred tax assets and liabilities.

Net Loss Per Share

  Net loss per share is presented in accordance with the provisions of SFAS No.
128, "Earnings per Share," and Staff Accounting Bulletin No. 98. Basic net loss
per share is computed based on weighted average number of shares of common
stock outstanding, while diluted net loss per share reflects the potential
dilution that would occur if preferred stock had been converted and stock
options and warrants had been exercised. Common equivalent shares from
preferred stock, stock options and warrants have been excluded from the
computation of diluted net loss per share as their effect would be
antidilutive.

Pro Forma Net Loss Per Share (unaudited)

  Pro forma net loss per share for the year ended December 31, 1998 and the six
months ended June 30, 1999 is computed based on the weighted average number of
common shares outstanding, including the exercise of all outstanding warrants
at June 30, 1999, and the assumed conversion of the Company's Series A and
B preferred stock into shares of the Company's common stock that will be
effective upon the closing of the Company's initial public offering, as if such
conversion had occurred on January 1, 1998 or at the date of original issuance,
if later. The resulting pro forma adjustment includes an increase in the
weighted average shares used to compute basic and diluted net loss per share of
0 and 1,430,552 for the year ended December 31, 1998 and the six months ended
June 30, 1999, respectively. The calculation of pro forma diluted net loss per
share excludes common stock subject to repurchase rights and incremental common
shares issuable upon the exercise of stock options.

Comprehensive Income

  The Company complies with the provisions of SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements. Comprehensive
income, as defined, includes all changes in equity (net assets) during a period
from non-owner sources. To date, the Company has not had any significant
transactions that are required to be reported in comprehensive income.

                                      F-11
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


Segment Information

  The Company complies with the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company operates in a
single business segment providing advertising campaign management services in
the United States.

2. Recently Issued Accounting Standards

  In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which defines derivatives, requires that
all derivatives be carried at fair value, and provides for hedge accounting
when certain conditions are met. SFAS No. 133 is effective for the Company in
fiscal 2000. Although the Company has not fully assessed the implications of
SFAS No. 133, the Company does not believe the adoption of this statement will
have a material effect on the Company's financial position, results of
operations, or cash flows.

  In March 1998, the Accounting Standards Executive Committee ("ASEC") issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 provides guidance on
when costs related to software developed or obtained for internal use should
the capitalized or expensed. The SOP is effective for transactions entered into
for fiscal years beginning after December 15, 1998. The Company has reviewed
the provisions of the SOP and does not believe the adoption of this standard
will have a material effect on the Company's financial position, results of
operations, or cash flows.

  In April 1998, the ASEC issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 requires the cost of start-up activities, including
organization costs, to be expensed as incurred. The Company does not expect
this pronouncement to have a material effect on the Company's financial
position, results of operations, or cash flows.

  In December 1998, the AICPA issued SOP 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions." SOP 98-9
amends SOP 97-2 and SOP 98-4 by extending the deferral of the application of
certain provisions of SOP 97-2 amended by SOP 98-4 through fiscal years
beginning on or before March 15, 1999. All other provisions of SOP 98-9 are
effective for transactions entered into in fiscal years beginning after March
15, 1999. We do not anticipate adoption of this pronouncement to have a
material effect on the Company's financial position, results of operations, or
cash flows.

3. Balance Sheet Data

  Property and equipment as of December 31, 1997, 1998 and June 30, 1999 are
summarized as follows:

<TABLE>
<CAPTION>
                                                  December 31,
                                                ------------------   June 30,
                                                  1997      1998       1999
                                                --------  --------  ----------
<S>                                             <C>       <C>       <C>
Property and equipment, net:
  Computer equipment and software.............. $ 90,056  $161,336  $1,123,678
  Furniture....................................    4,321     5,369      93,076
  Leased equipment.............................   37,915        --          --
  Less: Accumulated depreciation and
   amortization................................  (21,746)  (60,784)   (186,055)
                                                --------  --------  ----------
                                                $110,546  $105,921  $1,030,699
                                                ========  ========  ==========
</TABLE>

  Depreciation and amortization expense was $20,023, $54,810, $25,181 and
$376,082 for the years ended December 31, 1997, 1998 and six-months ended June
30, 1998 and 1999, respectively.

                                      F-12
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


  Accrued liabilities as of December 31, 1997, 1998 and June 30, 1999 are
summarized as follows:

<TABLE>
<CAPTION>
                                                     December 31,
                                                   -----------------  June 30,
                                                     1997     1998      1999
                                                   -------- -------- ----------
<S>                                                <C>      <C>      <C>
Accrued liabilities:
  Accrued cost of revenues........................ $ 94,440 $293,590 $2,628,865
  Accrued payroll-related costs...................   12,383   24,090    133,303
  Other accrued liabilities.......................   43,244  104,497    168,529
                                                   -------- -------- ----------
                                                   $150,067 $422,177 $2,930,697
                                                   ======== ======== ==========
</TABLE>

4. Income Taxes

  The Company has incurred losses from inception through June 30, 1999.
Management believes that, based on the history of losses and other factors, the
weight of available evidence indicates it is more likely than not that the
Company will not be able to realize its deferred tax assets. Thus, a full
valuation reserve has been recorded at December 31, 1997 and 1998 and June 30,
1999. At December 31, 1997 and 1998, and June 30, 1999, the Company's fully
reserved deferred tax assets totaled $482,000, $1,057,000 and $1,937,000,
respectively.

  As of June 30, 1999, the Company has net operating loss carry forwards of
approximately $3,052,000 and $3,092,000 for federal and state income tax
purposes, respectively. The carryforwards will begin to expire in 2017 and 2012
for federal and state income tax purposes, respectively. For federal and state
tax purposes, a portion of the Company's net operating loss may be subject to
certain limitations on annual utilization due to changes in ownership, as
defined by federal and state tax laws. The amount of such limitations, if any,
has not yet been determined.

5. Notes Payable to Stockholders

  The Company's notes payable consist of the following:

<TABLE>
<CAPTION>
                                                       December 31,
                                                     ---------------- June 30,
                                                      1997     1998     1999
                                                     ------- -------- --------
<S>                                                  <C>     <C>      <C>
Convertible note payable to stockholder, 6% per
 annum, due July 1999............................... $64,569 $ 64,569 $     --
Convertible note payable to stockholder, 6% per
 annum, due April 2000..............................      --  232,161       --
Convertible notes payable to stockholder, 6% per
 annum, due August 1999.............................      --  150,000       --
Notes payable to stockholder, 6% per annum, due
 August 1999........................................      --  125,000   50,000
Note payable to stockholder.........................      --       --  372,765
                                                     ------- -------- --------
Total notes payable to stockholders.................  64,569  571,730  422,765
Less current portion................................      --  339,569   50,000
                                                     ------- -------- --------
                                                      64,569  232,161  372,765
                                                     ======= ======== ========
</TABLE>

  A law firm affiliated with a stockholder performed legal services for the
Company during 1996 and 1997. In July 1997, the Company issued a convertible
note payable to the law firm for $64,569 for these services. This note bore
interest at a rate of 6% per annum, and had a due date of July 1999. In March
1999, the Company converted the outstanding amount and accrued interest of
$6,458 into 947,009 shares of common stock at $0.075 per share. The law firm
subsequently transferred the shares to the stockholder.

  During 1996 and 1997 a founder of the Company purchased certained assets and
incurred expenses on behalf of the Company (Note 8). In June 1997, $232,161 of
the outstanding amount was converted into 4,643,228 shares of common stock at
$0.05 per share. In April 1998, the Company repurchased the

                                      F-13
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

4,643,228 shares from the founder at the original conversion price of $0.05 per
share with a convertible promissory note payable. The note bore interest at the
rate of 6% per annum, was due in April 2000, and was convertible into common
stock at $0.05 per share. The Company recorded the difference between the
conversion price of the note and the fair value of the common stock, or the
beneficial conversion feature, on the date the note was issued as additional
interest expense. In March 1999, this outstanding promissory note payable was
converted into 4,643,228 shares of common stock at $0.05 per share.

  In May 1998, the Company entered into two senior subordinated secured
convertible promissory notes and two senior subordinated secured promissory
notes with a stockholder. Under these agreements the stockholder advanced to
the Company a total of $275,000 bearing interest at the rate of 6% per annum.
The unpaid principal and accrued interest were payable on August 1, 1999,
however could be prepaid without penalty. In the event of any default, as
defined in the agreement, the holder could convert the outstanding amount and
accrued interest into preferred stock at the price that is applicable to the
preferred stock issued in the most recent round of financing. At December 31,
1998, the outstanding notes payable balance was $275,000. In May 1999, the
Company paid $225,000 along with the accrued interest to the stockholder. At
June 30, 1999, $50,000 remained outstanding.

  In connection with the Netranscend Software, Inc. acquisition in March 1999,
the Company agreed to pay $430,000 as a part of the purchase consideration.
This note is payable over four years, with the first payment of $110,000 due on
the first anniversary, $110,000 on the second anniversary, $100,000 on the
third anniversary and $110,000 on the fourth anniversary. The note payable has
been recorded at $372,765, net of a discount. The discount will be amortized as
interest expense over the four-year term of the note.

  The Company incurred interest expense of $17,015, $3,403 and $12,976 during
1998 and for the six months ended June 30, 1998 and 1999, respectively, in
connection with the notes payable to stockholders.

6. Commitments and Contingencies

Lease Agreements

  The Company leases office space under noncancelable operating lease
agreements that expire in 2002. The terms of the leases provide for rental
payments on a graduated scale. The Company recognizes rent expense on a
straight-line basis over the lease period, and has accrued for rent expense
incurred but not paid.

  Future minimum lease payments under noncancelable operating leases as of June
30, 1999 are as follows:

<TABLE>
<CAPTION>
      Six month period
      Ended December 31,
      ------------------
      <S>                                                             <C>
        1999........................................................  $  212,883

<CAPTION>
      Year Ended December 31,
      -----------------------
      <S>                                                             <C>
        2000........................................................     327,966
        2001........................................................     338,583
        2002........................................................     332,176
        2002........................................................     148,295
                                                                      ----------
                                                                      $1,359,903
                                                                      ==========
</TABLE>

  Rent expense was $5,366, $41,555, $92,550, $12,105 and $125,704 for the
period ended December 31, 1996, the years ended December 31, 1997 and 1998 and
the six months ended June 30, 1998 and 1999, respectively.

                                      F-14
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


Severence Payments

  The Company has entered into employment agreements under which the employees
are entitled to receive severence payments totalling $825,000 if their
employment were terminated under certain conditions.

Legal Proceedings


  From time to time, the Company is subject to legal proceedings and claims in
the ordinary course of business. The Company is not currently aware of any
legal proceedings or claims that it believes will have, individually or in the
aggregate, a material adverse effect on its business, financial condition and
operating results.

7. Stockholders' Equity (Deficit)

Convertible Preferred Stock

  The Company is authorized to issue 8,206,000 shares of preferred stock, of
which 1,206,000 shares are designated as Series A preferred stock and 7,000,000
shares of which are designated as Series B preferred stock.

  Preferred stock at June 30, 1999 consisted of the following:

<TABLE>
<CAPTION>
                                        Shares                     Cash Proceeds
                                ----------------------                Net of
                                           Issued and  Liquidation   Issuance
Series                          Authorized Outstanding   Amount        Costs
------                          ---------- ----------- ----------- -------------
<S>                             <C>        <C>         <C>         <C>
A.............................. 1,206,000   1,206,000  $ 1,507,500  $1,460,799
B.............................. 7,000,000   4,500,000    9,000,000   8,258,368
                                ---------   ---------  -----------  ----------
Total.......................... 8,206,000   5,706,000  $10,507,500  $9,719,167
                                =========   =========  ===========  ==========
</TABLE>

  The holders of convertible preferred stock have various rights and
preferences as follows:

 Voting Rights

  Each holder of Series A and Series B preferred stock is entitled to the
number of votes equal to the number of shares of common stock into which the
shares of preferred stock held by the holder can be converted. As of June 30,
1999, all preferred stock converts on a one-for-one basis into common stock.
Preferred stockholders can vote on all matters on which common stockholders are
entitled to vote.

 Dividends

  Holders of Series A and Series B preferred stock are entitled to
noncumulative dividends at the rate of $0.10 per share and $0.16 per share per
annum, respectively, before any dividend is paid on common stock. No dividends
on preferred stock or common stock have been declared by the Board of Directors
from inception through June 30, 1999.

 Liquidation

  In the event of (i) any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, or (ii) merger or consolidation of
the Company with or into another corporation, the holders of Series A and
Series B preferred stock are first entitled to receive, in preference to the
holders of common stock, an amount of $1.25 and $2.00, respectively, per share
plus all accrued but unpaid dividends. If assets and funds

                                      F-15
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

are insufficient for such distribution, the available funds will be distributed
ratably among the holders of Series A and Series B preferred stock in
proportion to the preferential amount each holder would have otherwise been
entitled to receive. After such distribution, any remaining funds will be
distributed ratably among the holders of common stock.

 Conversion Rights

  Each share of Series A and Series B preferred stock is convertible into
common shares, at the option of the holder, according to a conversion ratio,
subject to adjustment for dilution. Each share of preferred stock will
automatically be converted into common stock, at the then applicable conversion
rate, (i) in the event of the closing of an underwritten public offering of the
Company's securities in which the aggregate gross proceeds to the Company
exceeds $10,000,000 and an offering price per share exceeds $5.00, or (ii) when
the Company obtains the consent of a majority of the outstanding shares of
preferred stock.

  At June 30, 1999, the Company had reserved 1,206,000 shares and 7,000,000
shares of common stock for conversion of its Series A and Series B convertible
preferred stock.

Common Stock

  The Company is authorized to issue 40,000,000 shares of common stock. In July
1999, the Company amended its certificate of incorporation to increase the
number of authorized shares of common stock to 75,000,000 shares.

  The Company recognizes stock-based compensation upon the issuance of common
stock for less than the deemed fair market value and upon the issuance of
common stock in exchange for services. Accordingly, the Company recorded stock-
based compensation of $152,694, $11,000, $151,427, $151,427 and $27,938 for the
period ended December 31, 1996, the years ended December 31, 1997 and 1998 and
the six months ended June 30, 1998 and 1999, respectively.

Warrants

  In January 1999, the Company issued a warrant to an employee to purchase
500,000 shares of common stock at $0.50 per share upon completing certain
defined milestones. The warrant expires in January 2002. The holder of the
warrant is not entitled to any rights as a stockholder until the warrant is
exercised. The warrant was not exercisable at June 30, 1999, as the milestones
were not completed. The Company will recognize stock compensation expense
associated with the warrants based on the difference between the exercise price
and the fair value of the warrants on the date each of the milestones are met.

  In June 1999, in connection with services provided related to the issuance of
Series B preferred stock, the Company granted warrants to a non-employee,
exercisable for 275,000 shares of Series B convertible preferred stock and
100,000 shares of common stock at exercise prices of $2.00 per share and $0.50
per share, respectively. The warrants are exercisable by the holder at any time
until June 2002. The holder of warrant is not entitled to any voting rights.
The fair value of the warrants calculated using Black-Scholes model was
$432,354 and has been included in the offering costs of Series B convertible
preferred stock.

1997 Stock Plan

  The Company's 1997 Stock Plan provides for the granting to employees of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code and for the granting to employees and consultants of nonstatutory
stock options and stock purchase rights.

                                      F-16
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


  In November 1998, the Company granted options to purchase 505,667 shares of
common stock with exercise prices ranging from $0.05 to $0.30 to both former
and current employees for services previously rendered under the 1997 Stock
Plan. The options granted to former employees were immediately exercisable
until February 1999. For those options granted to current employees, the
Company recorded $193,390 in deferred stock compensation for the difference
between the exercise price and the assumed fair value of the common stock. For
the year ended December 31, 1998, the Company recorded stock compensation
expense of $140,019.

  The Company recorded the fair value for the options granted to former
employees as stock-based compensation expense of $286,079 in 1998. The fair
value of the options granted to the former employees were determined using a
Black-Scholes option-pricing model using a weighted average risk-free rate of
4.65% and a weighted average expected life of three months. No price volatility
was assumed because the Company's equity securities were not traded publicly.
No dividend yield was assumed as the Company has not paid dividends and has no
plans to do so.

1999 Stock Plan

  In February 1999, the Company adopted the 1999 Stock Plan (the "1999 Plan").
Options granted under the 1999 Plan may be either incentive stock options
("ISOs") or nonstatutory stock options ("NSOs"). ISOs may be granted only to
Company employees. NSOs may be granted to Company employees, directors and
consultants. The Company has reserved 9,000,000 shares of common stock for
issuance under the 1999 Plan. The 1997 Plan was amended in August 1999, raising
the number of shares reserved for issuance to 12,000,000.

  In the case of ISOs granted to an employee who, at the time of the option was
granted, owns stock representing more than 10% of the voting power of all
classes of stock, the term of the option will be five years from the date of
grant or shorter term as determined by the Board of Directors. The exercise
price of an ISO or NSO may not be less than 100% or 85%, respectively, of the
estimated fair value of the underlying stock on the date of grant and the
exercise price of an ISO or NSO granted to a 10% shareholder shall not be less
than 100% of the estimated fair value of the underlying stock on the date of
grant. Options generally become exercisable in equal increments over a four-
year vesting period and expire at the end of ten years from the date of grant,
or sooner if terminated by the Board of Directors.

  The following table summarizes option activity through June 30, 1999:

<TABLE>
<CAPTION>
                                                     Options Outstanding
                            Shares    ---------------------------------------------------
                          Available   Number of   Exercise   Aggregate   Weighted Average
                          for Grants   Shares       Price      Price      Exercise Price
                          ----------  ---------  ----------- ----------  ----------------
<S>                       <C>         <C>        <C>         <C>         <C>
Share authorized under
 the 1997 Plan               505,667
Granted.................    (505,667)   505,667  $0.05-$0.30    $91,935       $0.18
Cancelled...............          --         --           --         --          --
Exercised...............          --   (262,667) $0.05-$0.30    (19,035)       0.07
                          ----------  ---------  ----------- ----------       -----
Balance, December 31,
 1998...................          --    243,000  $      0.30     72,900       $0.30
Shares authorized under
 the 1999 Plan..........   9,000,000
Granted.................  (8,393,398) 8,393,398  $0.50-$1.80  4,775,841        0.57
Cancelled...............      10,700    (10,700) $0.50-$1.80    (18,350)       1.71
Exercised...............          --         --           --         --          --
                          ----------  ---------  ----------- ----------       -----
Balance, June 30, 1999..     617,302  8,625,698  $0.50-$1.80 $4,830,391       $0.56
                          ==========  =========  =========== ==========       =====
</TABLE>

                                      F-17
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


  The following table summarizes information for stock options outstanding at
June 30, 1999:

<TABLE>
<CAPTION>
                                                                                Options
                         Options Outstanding                                  Exercisable
             -----------------------------------------------------            -----------
                                                       Weighted
                                                        Average
                                                       Remaining
                                                      Contractual
             Exercise           Number                   Life                   Number
              Price           Outstanding               (Years)               Exercisable
             --------         -----------             -----------             -----------
             <S>              <C>                     <C>                     <C>
             $0.30               243,000                  8.0                    123,854
              0.50             7,992,360                  9.7                  1,781,970
              1.80               390,338                  9.9                         --
                               ---------                                       ---------
                               8,625,698                                       1,905,824
                               =========                                       =========
</TABLE>

  In connection with the stock option grants made during the six months ended
June 30, 1999, the Company recorded deferred stock compensation of $6,116,505,
which will be amortized over the vesting periods of the related stock options
through 2003. For the six months ended June 30, 1999, the Company recorded
stock compensation expense of $2,937,746 in connection with stock option
grants.

  Under SFAS No. 123, the Company is required to calculate the pro forma fair
market value of options granted and report the impact that would result from
recording the compensation expense. The fair value of option grants has been
estimated on the date of grant using the Black-Scholes option-pricing model
using a weighted average risk-free interest rate of 4.82% and a weighted
average expected life of 3.2 years. No price volatility was assumed because the
Company's equity securities were not traded publicly. No dividend yield was
assumed as the Company has not paid dividends and has no plans to do so.

  The weighted average expected life was calculated based on the vesting period
and the expected life at the date of grant. The risk-free interest rate was
calculated based on rates prevailing during the grant periods and expected
lives of options at the date of grants.

  The weighted average fair values of options granted to employees for the year
ended December 31, 1998 and the six months ended June 30, 1999 were $1.06 and
$0.80, respectively.

  Had compensation expenses for option grants to employees been determined
under SFAS No. 123 the Company's net loss would have been as follows:

<TABLE>
<CAPTION>
                         September 10,
                             1996
                          (inception)                                Six Months Ended
                              to       Year Ended December 31,           June 30,
                         December 31,  -------------------------  ------------------------
                             1996         1997          1998         1998         1999
                         ------------- -----------  ------------  -----------  -----------
<S>                      <C>           <C>          <C>           <C>          <C>
Net loss--as reported...   $(255,180)  $(1,117,366) $ (2,019,212) $(1,015,941) $(5,186,121)
Net loss--pro forma.....   $(255,180)  $(1,117,366) $ (2,019,212) $(1,015,941) $(5,431,121)
Net loss per share--
 basic and diluted as
 reported...............   $   (0.07)  $     (0.13) $      (0.25) $     (0.11) $     (0.43)
Net loss per share--
 basic and diluted
 pro forma..............   $   (0.07)  $     (0.13) $      (0.25) $     (0.11) $     (0.45)
</TABLE>

  The pro forma net loss disclosures made above are not necessarily
representative of the effects on pro forma net income (loss) for future years
as options typically vest over several years and additional option grants are
expected to be made in future years.

                                      F-18
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


8. Related Party Transactions

  Related party balances consist of the following:

<TABLE>
<CAPTION>
                                                        December 31,
                                                      ---------------- June 30,
                                                       1997     1998     1999
                                                      ------- -------- --------
<S>                                                   <C>     <C>      <C>
Payables to stockholders............................. $19,203 $ 71,781 $ 71,781
Payables to founders.................................  29,670   67,920   55,500
                                                      ------- -------- --------
    Total payables to stockholders................... $48,873 $139,701 $127,281
                                                      ======= ======== ========
</TABLE>

  The Company incurred expenses of $21,547, $66,546, and $196,611 for the
period from September 10 (inception) to December 31, 1996 and the years ended
December 31, 1997 and 1998, respectively, in connection with legal and
consulting services performed by a law firm affiliated with a stockholder.

  During 1996 and 1997, founders of the Company purchased certain assets and
incurred expenses on behalf of the Company for a total of $274,661. In June
1997, $232,161 of the outstanding amount was converted into common stock (see
Note 5). During 1997 and 1998, $12,830 and $11,750 was paid back to the
founders, respectively. In 1998, a founder advanced the Company $50,000.

  In January 1999, the Company converted $12,420 of the payables to founders
into 200,000 shares of common stock in connection with the founder's exercise
of stock options.

  In May 1998, the Company entered into a sublease agreement, on a month-to-
month basis, for office space with a stockholder, who was the original tenant
of the office space. The Company paid $41,000, $9,000, and $42,000 during the
year ended December 31, 1998 and the six months ended June 30, 1998 and 1999,
respectively, to the shareholder.

  In June 1999, the Company entered into an agreement with a former employee
and stockholder, under which the stockholder will receive commissions on the
net proceeds (defined as gross revenue minus associated costs) generated from
certain customers. The agreement expires in July 2000.

9. Employee Benefit Plan

  The Company maintains a retirement and deferred savings plan for its
employees (the "401(k) Plan") that is intended to qualify as a tax-qualified
plan under the Internal Revenue Code. The 401(k) Plan provides that each
participant may contribute up to 15% of his or her pre-tax gross compensation
(up to a statutory limit). However, to date, the Company has not made
discretionary contributions under the 401(k) Plan. All amounts contributed by
participants and earnings on these contributions are fully vested at all times.

10. Subsequent Events

  In August 1999, the Company issued 4,000,000 shares of Series C convertible
preferred stock for net proceeds of $14,237,113. Included in this issuance a
stockholder also converted an outstanding note payable for $50,000 (Note 5) and
related accrued interest of $3,250 into 14,833 shares of Series C convertible
preferred stock, and this same stockholder also converted $16,252 of interest
accrued on a separate note payable into 4,527 shares of Series C convertible
preferred stock.

                                      F-19
<PAGE>

                                Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)


  In July and August 1999 the Company granted options to purchase 910,700
shares of common stock at an exercise price of $3.25 per share to employees and
directors. The Company expects to record deferred stock compensation of
approximately $3.4 million in conjunction with these grants, which is being
amortized over the four year vesting period of the related options.

  In August 1999, the Board of Directors adopted the 1999 Employee Stock
Purchase Plan (the "Purchase Plan") effective on the date of the Company's
initial public offering. The Purchase Plan reserved 400,000 shares for issuance
thereunder. Employees generally will be eligible to participate in the Purchase
Plan if they are customarily employed by the Company for more than 20 hours per
week and more than five months in a calendar year and are not 5% or greater
shareholders. Under the Purchase Plan, eligible employees may select a rate of
payroll deduction up to 10% of their compensation subject to certain maximum
purchase limitations. The Purchase Plan will be implemented in a series of
overlapping twenty-four month offering periods and beginning on the effective
date of the Company's initial public offering and subsequent offering periods
will begin on the first trading day on or after May 1 and November 1 of each
year. Purchases will occur on each April 30 and October 31 (the "purchase
dates") during each participation period. Under the Purchase Plan, eligible
employees will be granted an option to purchase shares of Common Stock at a
purchase price equal to 85% of the fair market value per share of Common Stock
on either the start date of the offering period or the end date of the offering
period, whichever is less. If the fair market value of the Common Stock at the
end of the purchase period is lower than the fair market value on the start
date of that offering period, then all participants in that offering period
will be automatically withdrawn from such offering period and re-enrolled in
the offering period immediately following. The Company amended the 1999 Stock
Plan in August 1999, increasing the number of shares reserved for issuance to
12,000,000.


11. Pro Forma Stockholders' Equity (unaudited)

  Pro forma stockholders' equity is computed to include the automatic
conversion of the pro forma outstanding shares of Series A and Series B
preferred stock into approximately 1,206,000 and 4,500,000 shares,
respectively, of common stock.

  At June 30, 1999, the pro forma effects of these transactions are as follows:

<TABLE>
<CAPTION>
                                                               Pro Forma
                                                          Stockholders' Equity
                                            June 30,1999    At June 30, 1999
                                            ------------  --------------------
<S>                                         <C>           <C>
Preferred stock............................ $       571       $        --
Common stock...............................       1,484             2,055
Additional paid-in capital.................  20,238,846        20,238,846
Warrants...................................     432,354           432,354
Deferred stock compensation................  (3,232,130)       (3,232,130)
Receivable from sale of Series B preferred
 stock.....................................    (240,000)         (240,000)
Accumulated deficit........................  (8,577,879)       (8,577,879)
                                            -----------       -----------
  Total stockholders' equity............... $ 8,623,246       $ 8,623,246
                                            ===========       ===========
</TABLE>

                                      F-20
<PAGE>

                                Mediaplex, Inc.

                        Pro Forma Financial Information

                                    Overview

  On March 25, 1999, the Company acquired Netranscend Software, Inc.,
("Netranscend") a Java-based enterprise automation solution software company.
The acquisition was accounted for using the purchase method of accounting and,
accordingly, the purchase price was allocated to the tangible and intangible
assets acquired and liabilities assumed on the basis of their fair values on
the acquisition date.

  The aggregate purchase price of $2,993,906 consisted of a note payable of
$430,000, due in four annual installments beginning on the first anniversary of
the acquisition, 1,979,000 shares of the Company's common stock with an
estimated fair value of $2,552,910, acquisition-related expenses of $68,231 for
miscellaneous transaction fees and $15,826 of net liabilities assumed. Of the
total purchase price, $3,009,732 was allocated to goodwill and intangible
assets, consisting of proprietary technology. The acquired goodwill and
intangible assets will be amortized over their estimated useful lives of three
years.

  The following unaudited pro forma consolidated statement of operations gives
effect to this acquisition as if it had occurred on January 1, 1998, by
consolidating the results of operations of Netranscend Software, Inc. for the
year ended December 31, 1998 with the results of operations of the Company for
the year ended December 31, 1998.

  The unaudited pro forma consolidated statement of operations are not
necessarily indicative of the operating results that would have been achieved
had the transactions been in effect as of January 1, 1998 and should not be
construed as being representative of future operating results.

  The historical financial statements of the Company and Netranscend are
included elsewhere in this Prospectus and the unaudited pro forma consolidated
financial information presented herein should be read in conjunction with those
financial statements and related notes.

                                      F-21
<PAGE>

                                Mediaplex, Inc.

                       Pro Forma Statement of Operations
                                  (unaudited)

<TABLE>
<CAPTION>
                                    Year Ended December 31, 1998
                           ---------------------------------------------------
                            Mediaplex   Netranscend Adjustments     Pro Forma
                           -----------  ----------- -----------    -----------
<S>                        <C>          <C>         <C>            <C>
Revenues.................. $ 3,588,094    $    --   $        --    $ 3,588,094
Cost of sales.............   2,770,567         --            --      2,770,567
                           -----------    -------   -----------    -----------
    Gross profit..........     817,527         --            --        817,527

Operating expenses:
  Sales and marketing.....     819,641      8,271            --        827,912
  Research and
   development............     555,736      1,717            --        557,453
  General and
   administrative.........     636,652         --            --        636,652
  Stock-based
   compensation...........     577,525         --            --        577,525
  Amortization of goodwill
   and intangibles........          --         --     1,003,244(A)   1,003,244
                           -----------    -------   -----------    -----------
    Total operating
     expenses.............   2,589,553      9,988     1,003,244      3,602,785
                           -----------    -------   -----------    -----------
    Loss from operations..  (1,772,026)    (9,988)   (1,003,244)    (2,785,238)
Interest expense, net.....    (247,186)        --            --       (247,186)
                           -----------    -------   -----------    -----------
    Net loss.............. $(2,019,212)   $(9,988)  $(1,003,244)   $(3,032,444)
                           -----------    -------   -----------    -----------
Net loss per share--basic
 and diluted(B)...........                                         $     (0.30)
                                                                   -----------
Weighted average shares
 outstanding(B)...........                                          10,165,518
                                                                   -----------
</TABLE>



     See accompanying Notes to Pro Forma Consolidated Financial Information

                                      F-22
<PAGE>

                                Mediaplex, Inc.

                    Notes to Pro Forma Financial Information
                                  (unaudited)

  The following adjustments were applied to the Company's historical financial
statements and those of Netranscend Software, Inc. to arrive at the pro forma
consolidated financial information.

   (A) To record amortization of goodwill and purchased proprietary
       technology totaling $1,003,244 over the estimated period of benefit
       of three years.

   (B) Pro forma basic and diluted net loss per share for the year ended
       December 31, 1998 was computed using the weighted average number of
       common shares outstanding. Differences between historical weighted
       average shares outstanding and pro forma weighted average shares
       outstanding used to compute net loss per share result from the
       inclusion of shares issued in conjunction with the acquisition as if
       these shares were outstanding from January 1, 1998.

                                      F-23
<PAGE>

                       Report of Independent Accountants

To the Board of Directors and Shareholders of
Netranscend Software, Inc.:

  In our opinion, the accompanying balance sheets and the related statements of
operations, of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of Netranscend Software, Inc. (a
development stage company) (the "Company") at December 31, 1997 and 1998 and
the results of its operations and its cash flows for period from November 27,
1996 (inception) to December 31, 1996, years ended December 31, 1997 and 1998,
and the period from November 27, 1996 (inception) to December 31, 1998 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.

                                          /s/ PricewaterhouseCoopers LLP

San Francisco, California
July 23, 1999

                                      F-24
<PAGE>

                           Netranscend Software, Inc.
                         (a development stage company)

                                 Balance Sheets

<TABLE>
<CAPTION>
                                                               December 31,
                                                             -----------------
                                                              1997      1998
                                                             -------  --------
<S>                                                          <C>      <C>
                           Assets
Current assets:
  Cash and cash equivalents................................. $   --   $    530
  Prepaid expenses..........................................     114        78
                                                             -------  --------
    Total current assets....................................     114       608
Property and equipment, net.................................   3,149     1,746
                                                             -------  --------
    Total assets............................................ $ 3,263  $  2,354
                                                             =======  ========
       Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
  Payable due to shareholder................................ $ 6,126  $ 16,356
  Accrued liabilities.......................................   1,171       --
                                                             -------  --------
    Total current liabilities...............................   7,297    16,356
                                                             -------  --------
Shareholders' equity (deficit):
  Common stock: No par value; 10,000,000 shares authorized;
   3,000,000 shares issued and outstanding at December 31,
   1997 and 1998............................................   3,030     3,030
  Deferred stock compensation...............................     (30)      (10)
  Deficit accumulated during the development stage..........  (7,034)  (17,022)
                                                             -------  --------
    Total shareholders' equity (deficit)....................  (4,034)  (14,002)
                                                             -------  --------
    Total liabilities and shareholders' equity (deficit).... $ 3,263  $  2,354
                                                             =======  ========
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      F-25
<PAGE>

                           Netranscend Software, Inc.
                         (a development stage company)

                            Statements of Operations

<TABLE>
<CAPTION>
                                                                    Period from
                                                                    November 27,
                                                                        1996
                                                    Year Ended      (inception)
                                                   December 31,       through
                                                  ----------------  December 31,
                                                   1997     1998        1998
                                                  -------  -------  ------------
<S>                                               <C>      <C>      <C>
Operating expenses:
  Research and development....................... $ 1,405  $ 1,717    $  3,219
  Selling, general and administrative............   2,936    8,271      13,803
                                                  -------  -------    --------
    Total operating expenses.....................   4,341    9,988      17,022
                                                  -------  -------    --------
    Net loss..................................... $(4,341) $(9,988)   $(17,022)
                                                  =======  =======    ========
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      F-26
<PAGE>

                           Netranscend Software, Inc.
                         (a development stage company)

                  Statements of Shareholders' Equity (Deficit)

<TABLE>
<CAPTION>
                                                          Deficit
                                                        Accumulated     Total
                            Common Stock     Deferred   during the  Shareholders'
                          ----------------    Stock     Development    Equity
                           Shares   Amount Compensation    Stage      (Deficit)
                          --------- ------ ------------ ----------- -------------
<S>                       <C>       <C>    <C>          <C>         <C>
Balance at January 1,
 1997...................  3,000,000 $3,000     $--       $ (2,693)    $    307
Deferred stock
 compensation...........        --      30      (30)          --           --
Net loss ...............        --     --       --         (4,341)      (4,341)
                          --------- ------     ----      --------     --------
Balance at December 31,
 1997...................  3,000,000  3,030      (30)       (7,034)      (4,034)
Amortization of deferred
 stock compensation.....        --     --        20           --            20
Net loss................        --     --       --         (9,988)      (9,988)
                          --------- ------     ----      --------     --------
Balance at December 31,
 1998...................  3,000,000 $3,030     $(10)     $(17,022)    $(14,002)
                          ========= ======     ====      ========     ========
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      F-27
<PAGE>

                           Netranscend Software, Inc.
                         (a development stage company)

                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                   Period from
                                                                   November 27,
                                                                       1996
                                                   Year Ended      (inception)
                                                  December 31,       through
                                                 ----------------  December 31,
                                                  1997     1998        1998
                                                 -------  -------  ------------
                                                                   (unaudited)
<S>                                              <C>      <C>      <C>
Cash flows from operating activities:
 Net loss....................................... $(4,341) $(9,988)   $(17,022)
 Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
  Depreciation and amortization.................   1,404    1,618       3,119
  Stock compensation expense....................      --       20          20
  Changes in current assets and liabilities:
    Prepaid expenses............................    (114)      36         (78)
    Accrued liabilities.........................   1,171   (1,171)         --
                                                 -------  -------    --------
      Net cash used in operating activities.....  (1,880)  (9,485)    (13,961)
                                                 -------  -------    --------
Cash flows from investing activities:
 Purchase of property and equipment.............  (1,174)    (215)     (4,865)
                                                 -------  -------    --------
      Net cash used in investing activities.....  (1,174)    (215)     (4,865)
                                                 -------  -------    --------
Cash flows from financing activities:
 Proceeds from issuance of common stock.........      --       --       3,000
 Proceeds from payables due to shareholder......   3,054   10,230      16,356
                                                 -------  -------    --------
      Net cash provided by financing
       activities...............................   3,054   10,230      19,356
                                                 -------  -------    --------
Net increase (decrease) in cash and cash
 equivalents....................................      --      530         530
Cash and cash equivalents at beginning of
 period.........................................      --       --          --
                                                 -------  -------    --------
Cash and cash equivalents at end of period...... $    --  $   530    $    530
                                                 =======  =======    ========
Supplemental disclosure of cash flow
 information:
 Deferred stock compensation from issuance of
  common stock.................................. $    30  $          $     30
                                                 =======  =======    ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-28
<PAGE>

                           Netranscend Software, Inc.
                         (a development stage company)

                         Notes to Financial Statements

1. Nature of Business

  Netranscend Software, Inc. (the "Company") was incorporated on November 27,
1996 as a California Corporation. The Company provides Java-based enterprise
automation solutions on the Internet and for intranets.

2. Summary of Significant Accounting Policies

Basis of presentation

  The Company has had limited operations to date and its activities have
consisted primarily of developing products and recruiting personnel.
Accordingly, the Company is considered to be in the development stage at
December 31, 1998, as defined in Statement of Financial Accounting Standards
("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises."

Use of estimates

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

Cash and cash equivalents

  The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

Property and equipment

  Property and equipment are stated at cost and depreciated on the straight-
line basis over the estimated useful lives of the asset, which is generally
three years. Upon sale or disposal, the Company removes the asset and
accumulated depreciation from its records and recognizes the related gain or
loss in results of operations.

Research and development costs

  The costs of establishing the technological feasibility of the Company's
software products or product enhancements are expensed as research and
development costs when incurred. The costs incurred subsequent to the
establishment of technological feasibility and prior to a product's general
release will be capitalized. All costs have been expensed to date.

Stock-based compensation

  The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of APB No. 25, "Accounting for Stock Issued to
Employees," and complies with the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Under APB No. 25, compensation cost
is recognized based on the difference, if any, on the date of grant between the
fair value of the Company's Stock and the amount an employee must pay to
acquire the stock.

                                      F-29
<PAGE>

                           Netranscend Software, Inc.
                         (a development stage company)

                   Notes to Financial Statements--(Continued)


  The Company accounts for non-employee stock-based awards in which goods or
services are the consideration received for the equity instruments issued based
on the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.

Comprehensive Income

  The Company complies with the provisions of SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements. Comprehensive
income, as defined, includes all changes in equity (net assets) during a period
from non-owner sources. The Company has not had any significant transactions
that are required to be reported in comprehensive income.

Income Taxes

  Deferred tax assets and liabilities are determined based on the difference
between the financial statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amounts expected to be realized.

Concentration of Credit Risk

  Financial instruments which potentially subject the Company to concentration
of credit risk consist principally of cash and cash equivalents. The Company
deposits its cash and cash equivalents with a single major financial
institution, which deposits may exceed federal deposit insurance limits.

3. Related Party Transactions

  During the period from November 27, 1996 (inception) to December 31, 1998,
the sole principal shareholder purchased certain assets and incurred expenses
on behalf of the Company. The Company recorded such amounts due to the
shareholder as an interest-free loan. The amounts due to the shareholder at
December 31, 1997 and 1998 were $6,126 and $16,356, respectively.

4. Property and Equipment

  Property and equipment as of December 31, 1997 and 1998 is summarized as
follows:

<TABLE>
<CAPTION>
                                                                 December 31,
                                                                 --------------
                                                                  1997    1998
                                                                 ------  ------
   <S>                                                           <C>     <C>
   Property and equipment, net:
     Computer equipment and software............................ $4,651  $4,866
     Less: Accumulated depreciation and amortization............ (1,502) (3,120)
                                                                 ------  ------
                                                                 $3,149  $1,746
                                                                 ======  ======
</TABLE>

                                      F-30
<PAGE>

                           Netranscend Software, Inc.
                         (a development stage company)

                   Notes to Financial Statements--(Continued)


5. Income Taxes

  During the period from November 27, 1996 (inception) through December 31,
1998 no income tax provision or benefit was recognized due to net operating
losses incurred during the periods for which a full valuation allowance was
recorded.

  The difference between the income tax benefit at the federal statutory rate
of 34% and the Company's effective tax rate is due to the recording of the
valuation allowance.

6. Shareholders' Equity

Common stock

  The Company is authorized to issue 10,000,000 shares of common stock. In
November 1996, the Company issued 3,000,000 shares of common stock to the sole
principal shareholder in exchange for a capital contribution made by the
shareholder. At December 31, 1998, total of 3,000,000 shares of common stock
was issued and outstanding.

Stock option plan

  The Company did not have a formal stock option plan. However, during 1997,
the Company issued nonstatutory stock options to three non-employees. The
Company did not reserve any specific number of shares of common stock for
issuance of the stock options. The options generally become exercisable in
equal increments over a eighteen-month vesting period and expire at the end of
five years from the date of grant or sooner if terminated by the Board of
Directors.

  In connection with the stock options grants made, the Company recorded a
deferred stock compensation of $30, which will be amortized over the vesting
period through February 1999.

  The following table summarizes option activity through December 31, 1998:

<TABLE>
<CAPTION>
                                                Options Outstanding
                                    -------------------------------------------
                                                                    Weighted
                                    Number of Exercise Aggregate    Average
                                     Shares    Price     Price   Exercise/Price
                                    --------- -------- --------- --------------
   <S>                              <C>       <C>      <C>       <C>
   Shares:
     Granted.......................  59,000    $0.002    $118        $0.002
     Cancelled.....................      --        --      --            --
     Exercised.....................      --        --      --            --
                                     ------    ------    ----        ------
   Balance, December 31, 1997......  59,000    $0.002     118         0.002
     Granted.......................      --        --      --            --
     Cancelled.....................      --        --      --            --
     Exercised.....................      --        --      --            --
                                     ------    ------    ----        ------
   Balance, December 31, 1998......  59,000    $0.002    $118        $0.002
                                     ======    ======    ====        ======
</TABLE>

  As of December 31, 1997 and 1998 options to purchase 5,000 and 56,000 shares
of common stock were exercisable.

                                      F-31
<PAGE>

                           Netranscend Software, Inc.
                         (a development stage company)

                   Notes to Financial Statements--(Continued)


  The following table summarizes information for stock options outstanding at
December 31, 1998:

<TABLE>
<CAPTION>
                                                Options
                  Options Outstanding         Exercisable
            ---------------------------------------------
                                   Weighted
                                    Average
                                   Remaining
                                  Contractual
            Exercise    Number       Life       Number
             Price    Outstanding   (Years)   Exercisable
            --------  ----------- ----------- -----------
           <S>        <C>         <C>         <C>
            $  0.002    59,000        3.7       56,000
                        ======                  ======
</TABLE>

  The pro forma disclosures for net loss and net loss per share have not been
presented as the results would be the same as the net loss and net loss per
share as reported.

7. Subsequent Events

  On March 25, 1999, the Company was acquired by Mediaplex, Inc. ("Mediaplex")
in exchange for a note issued to the Company's sole shareholder payable in four
annual installments, and for 1,979,000 shares of Mediaplex's common stock. The
note will be paid in annual installments of $110,000 due on March 25, 2000,
2001 and 2004 and $100,000 on March 25, 2003. Mediaplex delivered 1,679,000
common shares immediately after the closing date and deposited the remaining
300,000 common shares into an escrow fund. The escrow fund period expires two
years after the closing date, subject to fulfilling pending unsatisfied claims,
if any. At the end of the escrow period or resolution of the unsatisfied
claims, the remaining 300,000 common shares will be delivered to the sole
shareholder.

  All vested and unvested options of the Company were cancelled at the closing
date.

                                      F-32
<PAGE>

      [INSIDE BACK COVER OF PROSPECTUS CONTAINS CLIENTS' NAMES AND LOGOS]
<PAGE>

                                        Shares

                             [LOGO OF MEDIAPLEX]


                                  Common Stock


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

                                   PROSPECTUS
                                       , 1999

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


                                Lehman Brothers

                                    SG Cowen

                           U.S. Bancorp Piper Jaffray
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

  The following table sets forth the costs and expenses, other than the
underwriting discount payable by Mediaplex in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fee.

<TABLE>
   <S>                                                               <C>
   SEC registration fee............................................. $   19,460
   NASD filing fee..................................................      7,500
   Nasdaq National Market listing fee...............................     95,000
   Printing and engraving costs.....................................    250,000
   Legal fees and expenses..........................................    350,000
   Accounting fees and expenses.....................................    275,000
   Blue Sky fees and expenses.......................................      5,000
   Transfer agent and registrar fees................................     10,000
   Miscellaneous expenses...........................................     38,040
                                                                     ----------
     Total.......................................................... $1,050,000
                                                                     ==========
</TABLE>

Item 14. Indemnification of Directors and Officers

  Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents, and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law.

  Article IX of the Registrant's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware law.

  Article VI of the Registrant's Amended and Restated Bylaws provides for the
indemnification of officers, directors and third parties acting on behalf of
the Registrant if such persons act in good faith and in a manner reasonably
believed to be in and not opposed to the best interests of the Registrant, and,
with respect to any criminal action or proceeding, the indemnified party had no
reason to believe his or her conduct was unlawful.

  The Registrant has entered into indemnification agreements with its directors
and executive officers, in addition to indemnification provided for in the
Registrant's Amended and Restated Bylaws, and intends to enter into
indemnification agreements with any new directors and executive officers in the
future.

  The Underwriting Agreement (Exhibit 1.1 hereto) provides for indemnification
by the Underwriters of the Registrant and its executive officers and directors
for certain liabilities, including liabilities arising under the Securities
Act, in connection with matters specifically provided in writing by the
Underwriters for inclusion in the Registration Statement.

Item 15. Recent Sales of Unregistered Securities

  During the past three years, the Registrant has issued unregistered
securities to a limited number of entities and persons as described below:

    (a) From September 1996 to August 15, 1999, the Registrant issued and
  sold common stock to various entities and persons at per share purchase
  prices, as follows:

     (1) In September and October 1996, the Registrant issued and sold to
         Michael Schwartz an aggregate of 2,460,000 shares at a purchase
         price of $0.0001 per share, in connection with the Registrant's
         founding;

                                      II-1
<PAGE>

     (2) In September 1996, the Registrant issued and sold 350,000 shares
         and 250,000 shares, to Raifman & Edwards LLP and PointBreak
         Ventures, LLC, respectively, at a purchase price of $0.0001 per
         share, in payment for past services rendered to the Registrant;

     (3) In October 1996 and January 1997, the Registrant issued and sold
         1,600,000 shares to Eugene Jarvis, at a purchase price of $0.05
         per share;

     (4) In December 1996, the Registrant issued and sold an aggregate of
         800,000 shares to Kuni Research, at a purchase price of $0.05 per
         share;

     (5) During 1997, the Registrant issued and sold 220,000 shares and
         995,338 shares to various employees and non-employee investors at
         a purchase price of $0.05 per share and $0.30 per share,
         respectively;

     (6) In June 1997, the Registrant issued a convertible promissory note
         to Michael Schwartz in payment for past services rendered, which
         was converted into 4,643,228 shares at a conversion rate of $0.05
         per share in June 1997. In April 1998, the Registrant repurchased
         these shares, and issued in exchange a convertible promissory note
         to Michael Schwartz. In July 1998, Michael Schwartz transferred
         these shares to Raifman & Edwards, LLP. In March 1999, Raifman &
         Edwards converted the principal and interest of this note into
         4,643,228 shares at a conversion rate of $0.05 per share;

     (7) In July 1997, the Registrant issued a convertible promissory note
         to Raifman & Edwards, LLP, in payment for past services rendered,
         which in March 1999 was converted into 947,009 shares at a
         conversion rate of $0.075 per share;

     (8) In February 1998, the Registrant issued and sold to employees and
         non-employee investors 76,000 shares at a purchase price of $0.50
         per share;

     (9) In June 1998, the Registrant issued and sold to an employee
         232,964 shares at a purchase price of $0.65 per share;

    (10) In January and March 1999, the Registrant issued and sold to two
         employees 13,333 shares and 10,000 shares, respectively, in
         payment for past services rendered; and

    (11) In January 1999, the Registrant, as part of a settlement agreement
         issued and sold to an employee 200,000 shares for an aggregate
         purchase price of $12,420 under our 1997 Stock Plan.

    (b) From October 31, 1996 to August 15, 1999, the Registrant issued to
  certain of its employees, officers, directors and consultants options to
  purchase an aggregate of 8,781,777 shares of common stock of the
  Registrant, at exercise prices ranging from $0.05 per share to $3.25 per
  share, pursuant to the Registrant's 1997 Stock Plan and 1999 Stock Plan,
  and Amended and Restated 1999 Stock Plan.

    (c) From October 31, 1996 to August 15, 1999, the Registrant issued an
  aggregate of 62,667 shares of common stock of the Registrant upon the
  exercise of options at exercise prices ranging from $0.05 to $0.30 per
  share.

    (d) On January 11, 1999, the Registrant issued to an employee a warrant
  to purchase an aggregate of 500,000 shares of common stock at an exercise
  price of $0.50 per share.

    (e) On January 26, 1999, the Registrant issued and sold an aggregate of
  1,206,000 shares of Series A preferred stock to 37 investors at a purchase
  price of $1.25 per share or an aggregate purchase price of $1,507,500.

    (f) On March 25, 1999, the Registrant issued and sold an aggregate of
  1,979,000 shares of common stock valued at $2,600,000 to Ruiquing Jiang in
  connection with the Registrant's acquisition of Netranscend Software, Inc.,
  of which Mr. Jiang was the sole shareholder.

    (g) On June 15, 1999, the Registrant issued and sold an aggregate of
  4,500,000 shares of Series B preferred stock to 36 investors at a purchase
  price of $2.00 per share, or an aggregate purchase price of $9,000,000.

                                      II-2
<PAGE>

    (h) On June 15, 1999, the Registrant issued to two investors warrants to
  purchase an aggregate of 275,000 shares of Series B preferred stock at an
  exercise price of $2.00 per share.

    (i) On June 19, 1999, the Registrant issued to an investor a warrant to
  purchase an aggregate of 100,000 shares of common stock at an exercise
  price of $0.50 per share.

    (j) On August 6, 1999, the Registrant issued and sold an aggregate of
  4,000,000 shares of Series C preferred stock to 14 investors at a purchase
  price of $3.59 per share, or an aggregate purchase price of $14,360,000.

  The issuances described in paragraphs (a) (1) through (10) and (d) through
(j) above were deemed to be exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act as transactions by an issuer
not involving a public offering. The sales of securities described in
paragraphs a(11), (b) and (c) above were deemed to be exempt from the
registration requirements of the Securities Act in reliance on Rule 701
promulgated under Section 3(b) of the Securities Act as transactions by an
issuer pursuant to compensatory benefit plans and contracts relating to
compensation as provided under such Rule 701. The recipients of securities in
each such transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. The issuance of
warrants to purchase stock described in paragraphs (h) and (i) above did not
require registration under the Securities Act, or an exemption therefrom,
insofar as such grants did not involve a "sale" of securities as such term is
used in Section 2(3) of the Securities Act. All recipients either received
adequate information about the Registrant or had access, through employment or
other relationships, to information about the Registrant.

Item 16. Exhibits and Financial Statement Schedules

  (a) Exhibits

<TABLE>
<CAPTION>
 Exhibit
 Number
 -------
 <C>     <S>
  1.1*   Form of Underwriting Agreement.

  2.1    Agreement and Plan of Reorganization between Registrant, Netranscend
          Software, Inc. and Ruiqing "Barclay" Jiang, dated March 8, 1999.

  3.1    Form of the Amended and Restated Certificate of Incorporation of the
          Registrant to be in effect after the closing of the offering made
          under this Registration Statement.

  3.2    Form of the Amended and Restated Bylaws of the Registrant to be in
          effect after the closing of the offering made under this Registration
          Statement.

  4.1    Warrant to purchase 500,000 shares of Common Stock of the Registrant,
          dated January 11, 1999, held by Timothy Favia.

  4.2    Warrant to purchase 100,000 shares of Common Stock of the Registrant,
          dated June 15, 1999, held by Retail Ventures International, Inc.

  4.3    Warrant to purchase 150,000 shares of Series B Preferred Stock of the
          Registrant, dated June 15, 1999, held by Retail Ventures
          International, Inc.

  4.4    Warrant to purchase 125,000 shares of Series B Preferred Stock of the
          Registrant, dated June 15, 1999, held by Zeron Capital, Inc.

  5.1*   Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.

 10.1    Form of Indemnification Agreement between the Registrant and each of
          its directors and officers.

 10.2    Amended and Restated 1999 Stock Plan and form of agreements
          thereunder.

 10.3    1999 Employee Stock Purchase Plan and form of agreements thereunder.

 10.4    1997 Stock Plan and form of agreements thereunder.

 10.5    Basic Lease Agreement, First Amendment and Basic Lease Information
          thereto, between R&E Holdings, LLC and Persis Corporation and BidCom,
          Inc., dated September 24, 1999, February 1, 1997 and July 31, 1998,
          respectively.
</TABLE>

                                      II-3
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number
 -------

 <C>     <S>
 10.6    Sublease, dated July 9, 1999, with Telocity, Inc.

 10.7    Employment Agreement with Gregory R. Raifman, dated February 19, 1999.

 10.8    Employment Agreement with Jon L. Edwards, dated February 19, 1999.

 10.9    Employment Agreement with Walter Haefeker, dated February 19, 1999.

 10.10   Employment Agreement with Ruiqing "Barclay" Jiang, dated March 24,
          1999.

 10.11   Employment Agreement with Sandra L. Abbott, dated August 6, 1999.

 10.12+* Technology Integration and Services Agreement between the Registrant
          and DoubleClick, Inc., dated July 22, 1999.

 10.13   Investors' Rights Agreement, dated July 30, 1999.

 23.1    Consent of PricewaterhouseCoopers LLP, independent accountants.

 23.2    Consent of PricewaterhouseCoopers LLP, independent accountants.

 23.3*   Consent of Counsel (see Exhibit 5.1).

 24.1    Power of Attorney (see page II-5).

 27.1    Financial Data Schedule.
</TABLE>
--------
 *To be filed by amendment.
 +Confidential treatment requested.

Item 17. Undertakings

  The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

  Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by a
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit 1 to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

  The undersigned Registrant hereby undertakes that:

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

    (2) For the purpose of determining any liability under the Securities
  Act, each post-effective amendment that contains a form of Prospectus shall
  be deemed to be a new registration statement relating to the securities
  offered therein, and the offering of such securities at that time shall be
  deemed to be the initial bona fide offering thereof.

                                      II-4
<PAGE>

                                   SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 2nd day of September, 1999.

                                          MEDIAPLEX, INC.

                                                  /s/ Gregory R. Raifman
                                          By:__________________________________
                                                     Gregory R. Raifman
                                                Chairman and Chief Executive
                                                          Officer

                               POWER OF ATTORNEY

  KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gregory R. Raifman and Sandra L. Abbott and each
of them singly, as true and lawful attorneys-in-fact and agents with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities to sign the Registration Statement filed herewith and
any or all amendments to said Registration Statement (including post-effective
amendments and registration statements filed pursuant to Rule 462 and
otherwise), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
granting unto said attorneys-in-fact and agents the full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the foregoing, as to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or his or her substitute, may lawfully do or
cause to be done by virtue hereof.

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

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

<S>                                  <C>                           <C>
      /s/ Gregory R. Raifman         Chairman and Chief Executive  September 2, 1999
____________________________________  Officer (Principal
         Gregory R. Raifman           Executive Officer)

       /s/ Sandra L. Abbott          Senior Vice President, Chief  September 2, 1999
____________________________________  Financial Officer and
          Sandra L. Abbott            Secretary (Principal
                                      Accounting Officer)

        /s/ Jon L. Edwards           President and Director        September 2, 1999
____________________________________
           Jon L. Edwards

    /s/ Lawrence D. Lenihan, Jr.     Director                      September 2, 1999
____________________________________
      Lawrence D. Lenihan, Jr.

       /s/ Peter S. Sealey           Director                      September 2, 1999
____________________________________
          Peter S. Sealey
</TABLE>

                                      II-5
<PAGE>

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

<S>                                  <C>                           <C>
       /s/ James DeSorrento          Director                       September 2, 1999
____________________________________
          James DeSorrento

      /s/ A. Brooke Seawell          Director                       September 2, 1999
____________________________________
         A. Brooke Seawell
</TABLE>



                                      II-6
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number
 -------
 <C>     <S>
  1.1*   Form of Underwriting Agreement.

  2.1    Agreement and Plan of Reorganization between Registrant, Netranscend
          Software, Inc. and Ruiqing "Barclay" Jiang, dated March 8, 1999.

  3.1    Form of the Amended and Restated Certificate of Incorporation of the
          Registrant to be in effect after the closing of the offering made
          under this Registration Statement.

  3.2    Form of the Amended and Restated Bylaws of the Registrant to be in
          effect after the closing of the offering made under this Registration
          Statement.

  4.1    Warrant to purchase 500,000 shares of Common Stock of the Registrant,
          dated January 11, 1999, held by Timothy Favia.

  4.2    Warrant to purchase 100,000 shares of Common Stock of the Registrant,
          dated June 15, 1999, held by Retail Ventures International, Inc.

  4.3    Warrant to purchase 150,000 shares of Series B Preferred Stock of the
          Registrant, dated June 15, 1999, held by Retail Ventures
          International, Inc.

  4.4    Warrant to purchase 125,000 shares of Series B Preferred Stock of the
          Registrant, dated June 15, 1999, held by Zeron Capital, Inc.

  5.1*   Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.

 10.1    Form of Indemnification Agreement between the Registrant and each of
          its directors and officers.

 10.2    Amended and Restated 1999 Stock Plan and form of agreements
          thereunder.

 10.3    1999 Employee Stock Purchase Plan and form of agreements thereunder.

 10.4    1997 Stock Plan and form of agreements thereunder.

 10.5    Basic Lease Agreement, First Amendment and Basic Lease Information
          thereto, between R&E Holdings, LLC and Persis Corporation and BidCom,
          Inc., dated September 24, 1999, February 1, 1997 and July 31, 1998,
          respectively.

 10.6    Sublease, dated July 9, 1999, with Telocity, Inc.

 10.7    Employment Agreement with Gregory R. Raifman, dated February 19, 1999.

 10.8    Employment Agreement with Jon L. Edwards, dated February 19, 1999.

 10.9    Employment Agreement with Walter Haefeker, dated February 19, 1999.

 10.10   Employment Agreement with Ruiqing "Barclay" Jiang, dated March 24,
          1999.

 10.11   Employment Agreement with Sandra L. Abbott, dated August 6, 1999.

 10.12+* Technology Integration and Services Agreement between the Registrant
          and DoubleClick, Inc., dated July 22, 1999.

 10.13   Shareholders' Rights Agreement, dated July 30, 1999.

 23.1    Consent of PricewaterhouseCoopers LLP, independent accountants.

 23.2    Consent of PricewaterhouseCoopers LLP, independent accountants.

 23.3*   Consent of Counsel (see Exhibit 5.1).

 24.1    Power of Attorney (see page II-5).

 27.1    Financial Data Schedule.
</TABLE>
--------
 * To be filed by amendment.
 + Confidential treatment requested.
[{"type": "S-1", "sequence": "1", "description": "FORM S-1", "secsgml_size_bytes": 379632}]
{"company-data": {"conformed-name": "MEDIAPLEX INC", "cik": "0001091621", "assigned-sic": "", "irs-number": "943295822"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-86459", "film-number": "99705552"}, "business-address": {"street1": "131 STEUART STREET, FOURTH FL CA", "city": "SAN FRANCISCO", "state": "CA", "zip": "94105", "phone": "6504967590"}, "mail-address": {"street1": "131 STEUART STREET, FOURTH FLOOR CA", "city": "SAN FRANCISCO", "state": "CA", "zip": "94105"}}
As filed with the Securities and Exchange Commission on September 2, 1999
                                                    Registration No. 333-
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                                   FORM S-1
                            REGISTRATION STATEMENT
                                     Under
                          The Securities Act of 1933

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

                                MEDIAPLEX, INC.
            (Exact name of Registrant as specified in its charter)

                               ----------------
Delaware                           7372                          94-3295822
 (State or other jurisdiction
              of                  (Primary Standard Industrial           (I.R.S. Employer
       incorporation or
         organization)             Classification Code Number)        Identification Number)
131 Steuart Street, Fourth Floor
                     San Francisco, California 94105-1230
                                (415) 808-1900
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

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

                              Gregory R. Raifman
                     Chairman and Chief Executive Officer
                                Mediaplex, Inc.
                       131 Steuart Street, Fourth Floor
                     San Francisco, California 94105-1230
                                (415) 808-1900
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                  Copies to:
Aaron J. Alter, Esq.                         Laird H. Simons, III, Esq.
          Tamara G. Mattison, Esq.                        Robert A. Freedman, Esq.
             Linda M. Cuny, Esq.                          R. Gregory Roussel, Esq.
           Robert E. Dawson, Esq.                            Fenwick & West LLP
      Wilson Sonsini Goodrich & Rosati                      Two Palo Alto Square
          Professional Corporation                      Palo Alto, California 94306
             650 Page Mill Road                                (650) 494-0600
      Palo Alto, California 94304-1050
               (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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] ______________
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _________________
  If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _________________
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

                        CALCULATION OF REGISTRATION FEE

-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Proposed Maximum
           Title of Each Class of                Aggregate Offering         Amount of
         Securities to be Registered                  Price(1)           Registration Fee
-----------------------------------------------------------------------------------------
Common Stock, $0.0001 par value.............      $70,000,000.00             $19,460
-----------------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the amount of the
    registration fee pursuant to Rule 457(o) under the Securities Act.

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

  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 hereafter 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 such
Section 8(a), may determine.

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in the prospectus is not complete and may be changed. We may  +
+not sell these securities until the registration statement filed with the     +
+Securities and Exchange Commission is effective. This prospectus is not an    +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted.             +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                 Subject to Completion, dated September 2, 1999

PROSPECTUS

                                       Shares

                             [LOGO OF MEDIAPLEX]

                                  Common Stock
--------------------------------------------------------------------------------

  This is our initial public offering of shares of common stock. We are
offering          shares. No public market currently exists for our shares.

  We propose to list the shares on the Nasdaq National Market under the symbol
"MPLX." Anticipated price range of $     to $     per share.

  Investing in the shares involves risks. "Risk Factors" begin on page 7.
Per
                                                                     Share Total
                                                                     ----- -----
Public Offering Price...............................................  $     $
Underwriting Discount...............................................  $     $
Proceeds to Mediaplex...............................................  $     $
We have granted the underwriters a 30-day option to purchase up to
        additional shares of common stock on the same terms and conditions as
set forth above solely to cover over-allotments, if any.

  Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is accurate or complete. Any representation to the contrary is
a criminal offense.

  Lehman Brothers expects to deliver the shares on or about     , 1999.

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

Lehman Brothers

               SG Cowen

                                                      U.S. Bancorp Piper Jaffray

    , 1999
[INSIDE FRONT COVER OF PROSPECTUS]

                  [Graphics of MOJO application appears here]
TABLE OF CONTENTS
Page
                                                                          ----
Prospectus Summary.......................................................   3
Risk Factors.............................................................   7
Use of Proceeds..........................................................  18
Dividend Policy..........................................................  18
Capitalization...........................................................  19
Dilution.................................................................  20
Selected Financial Data..................................................  21
Selected Pro Forma Financial Data........................................  22
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  23
Page
                                                                            ----
Business...................................................................  32
Management.................................................................  46
Related Party Transactions.................................................  55
Principal Stockholders.....................................................  57
Description of Capital Stock...............................................  59
Shares Eligible for Future Sale............................................  62
Underwriting...............................................................  64
Legal Matters..............................................................  66
Experts....................................................................  66
Where You Can Find Additional Information..................................  66
Index to Financial Statements.............................................. F-1
ABOUT THIS PROSPECTUS

  You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock.

  This preliminary prospectus is subject to completion prior to this offering.
Among other things, this preliminary prospectus describes our company as we
currently expect it to exist at the time of this offering.

  See the section of this prospectus entitled "Risk Factors" for a discussion
of various factors that you should consider before investing in the common
stock offered by this prospectus.

  Certain statements under the captions "Prospectus Summary," "Risk Factors,"
"Use of Proceeds," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business" and elsewhere in this prospectus are
forward-looking statements. These forward-looking statements include, but are
not limited to, statements about our plans, objectives, expectations and
intentions and other statements contained in the prospectus that are not
historical facts. When used in this prospectus, the words "expects,"
"anticipates," "intends," "plans," "believes," "seeks" and "estimates" and
similar expressions are generally intended to identify forward-looking
statements. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual results to
differ materially from those expressed or implied by these forward-looking
statements, including our plans, objectives, expectations and intentions and
other factors discussed under "Risk Factors."

  Mediaplex(TM), MOJO(TM), the Mediaplex logo, Storyboard Messaging(TM),
Multiple Messaging(TM) and eBusiness Messaging(TM) are our trademarks. We have
applied to register Mediaplex and MOJO. All trademarks and trade names
appearing in this prospectus are the property of their respective holders.

  Until         , 1999, all dealers selling shares of the common stock, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
PROSPECTUS SUMMARY

  You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and the financial statements and notes to those statements appearing
elsewhere in this prospectus.

  Except as otherwise indicated, all information in this prospectus assumes
that the underwriters do not exercise the option granted by Mediaplex to
purchase additional shares in this offering, assumes the conversion of all of
our preferred stock into common stock upon the closing of this offering, and
reflects our reincorporation into Delaware to be effected prior to the
effectiveness of this offering. See "Underwriting."

                                   Mediaplex

  We provide technology-based eBusiness marketing solutions that enable
advertisers to optimize their online marketing efforts. eBusiness marketing
allows companies to combine their online direct marketing and branding
activities with critical enterprise business data in order to effectively use
the Internet to manage and transact business. Our services encompass the
planning, execution, monitoring and analysis of advertising campaigns over the
Internet. Our proprietary mobile Java objects technology platform, MOJO,
enables advertisers to deliver, in real time, customized advertising messages
to a targeted consumer. Our MOJO platform interfaces with companies' existing
enterprise data and software applications to access critical business
information that is used to customize the advertising message. We believe
customized, real-time messaging will increase the consumer response to online
advertisements, thereby improving the return on advertising spending. Our
services are offered as a comprehensive solution, or individually as part of a
complementary service in partnership with other advertising and technology
providers.

  The rapid growth in the worldwide online population and e-commerce spending
has established the Internet as an important advertising medium. Forrester
Research, Inc. anticipates that U.S. online advertising spending will grow from
$2.8 billion in 1999 to $17.2 billion in 2003. We believe online advertising
spending will increase even more dramatically as new technologies improve the
effectiveness of online advertising and attract more traditional media
advertisers to the Internet.

  We believe we are the first company to offer a complete eBusiness marketing
solution that integrates a company's enterprise software applications and
business data with its online advertising campaign to deliver the most
relevant, customized message to a targeted consumer in real time. Our
technology-enabled solution provides the following benefits:

  . Comprehensive Online Advertising Campaigns. We provide a full range of
    online advertising campaign services including strategic planning,
    consumer targeting, media buying, ad serving, and measurement and
    reporting of results.

  . Real-Time Tracking and Measuring of Campaign Results. We monitor multiple
    performance metrics in real time and provide Internet access to
    performance reports 24 hours a day.

  . Sophisticated Data Capture and Analysis. Using our data capture
    capabilities and those of our strategic partners to target and re-target
    consumers, we match advertiser-related profiles with audience profiles
    based on geographic, demographic, psychographic and site visitation
    information.

  . Real-Time Messaging. We can change the graphics, content and site
    placement of online advertisements in real time. This enables a company
    to tailor a message based on predefined parameters and a consumer's
    profile in order to deliver the most relevant message.

  . Integration of Enterprise Business Information. Our MOJO technology
    enables us to integrate business information with an online advertising
    campaign to dynamically tailor and deliver advertisements based on
    consumer profiles and relevant business information such as inventory and
    pricing levels.

                                       3
Our objective is to be the preeminent eBusiness marketing solution provider.
The principal elements of our strategy are as follows:

  . Target Global 1000 and e-Commerce Companies and Advertising Agencies. We
    can provide significant benefits to large companies that require online
    advertising management and technology expertise for the Internet medium
    and are looking to implement an eBusiness strategy. We also intend to
    target companies that rely on the Internet to conduct electronic
    commerce, and traditional advertising agencies that require critical
    online media technology expertise.

  . Maintain Technology Leadership. Our proprietary MOJO technology platform
    is a key competitive differentiator that we intend to extend by
    incorporating additional functionality and services.

  . Enhance Sales Capabilities Through Strategic Relationships. We plan to
    broaden our strategic relationships, such as those with online
    advertising service providers, online strategy consultants and enterprise
    software consultants, to extend our market penetration and the acceptance
    of our MOJO technology.

  . Deliver Flexible Online Marketing Solutions. We can unbundle our
    technology services to expand our revenue sources by partnering with
    other online advertising and technology providers, such as with our
    partner, DoubleClick, to deliver complementary products.

  . Broaden International Presence. We plan to continue to expand our
    international presence to capitalize on the global reach and acceptance
    of the Internet.

  Our clients include DATEK Online Brokerage Services, Corp., OfficeMax,
ShopNow.com, Strong Funds, and advertising agencies including McCann-Erickson
and Publicis & Hal Riney, which use our services on behalf of their clients
such as Hewlett-Packard, Siebel Systems, Silicon Graphics, Inc. and Sprint PCS.

  We currently generate the majority of our revenues from advertising campaign
management services. We have completed live testing of the enterprise
integration components of our MOJO technology and expect to quickly roll-out
new services based on this technology. Our accumulated deficit as of June 30,
1999 was $8.6 million. In addition, we had net losses of approximately
$2.0 million in 1998 and $5.2 million in the six months ended June 30, 1999.

  We were incorporated in California in September 1996 as Internet Extra
Corporation. On April 1, 1998, we set up a wholly-owned subsidiary, MediaPlex,
Inc., a California corporation, to carry out our current business. We expect to
merge MediaPlex, Inc. with Internet Extra Corporation and reincorporate the
merged entity under the name "Mediaplex, Inc." in Delaware in September 1999.

  Our principal executive offices are located at 131 Steuart Street, Fourth
Floor, San Francisco, California 94105-1230 and our telephone number is (415)
808-1900. Our Web site is located at www.mediaplex.com. Information contained
on our Web site does not constitute part of this prospectus.

                                       4
The Offering
Common stock offered by Mediaplex.....            shares

 Common stock outstanding after the
  offering.............................            shares

 Use of proceeds....................... We estimate that we will receive net
                                        proceeds from this offering of
                                        $           , or $               if the
                                        underwriters exercise their over-
                                        allotment option in full. We expect to
                                        use the net proceeds for general
                                        corporate purposes, including working
                                        capital and potential acquisitions. See
                                        "Use of Proceeds."

 Proposed Nasdaq National Market
  symbol............................... "MPLX"
In addition to the         shares of common stock outstanding after the
offering, as of the closing of this offering and based on the number of shares
issued and options and warrants granted as of June 30, 1999, we expect to have
issue additional shares of common stock available for issuance under the
following plans and arrangements:

  . 12,243,000 shares issuable under our stock plans, consisting of:

   . 8,625,698 shares underlying options outstanding at a weighted average
     exercise price of $0.56 per share, of which 4,077,687 were exercisable;
     and

   . 3,617,302 shares available for future issuance;

  . 875,000 shares issuable upon the exercise of warrants outstanding at a
    weighted average exercise price of $0.97 per share; and

  . 400,000 shares available for issuance under our 1999 Employee Stock
    Purchase Plan.

                                       5
Summary Financial Data

  The following table is a summary of our statement of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The financial results for the six months ended June 30, 1998 are
unaudited.
September 10,       Years Ended            Six Months
                          1996 (inception)    December 31,         Ended  June 30,
                          to December 31,  --------------------  ---------------------
                                1996         1997       1998       1998        1999
                          ---------------- ---------  ---------  ---------  ----------
                               (in thousands, except share and per share data)
Statement of Operations
 Data:
Revenues................         $  --        $  426    $ 3,588    $ 1,522     $ 7,323
Gross profit (loss).....            --           (19)       817        309       1,562
Loss from operations....          (255)       (1,115)    (1,772)      (782)     (5,200)
Net loss................          (255)       (1,117)    (2,019)    (1,016)     (5,186)
Net loss per share--
 basic and diluted......        $(0.07)      $ (0.13)   $ (0.25)   $ (0.11)    $ (0.43)
Weighted average shares
 outstanding............     3,795,714     8,457,464  8,186,127  9,408,557  12,070,449
Pro forma net loss per
 share-basic and
 diluted................                                 $(0.25)                $(0.38)
Shares used in pro forma
 net loss per share
 calculation--basic and
 diluted................                              8,186,127             13,501,001
The following table is a summary of our balance sheet as of June 30, 1999.
The pro forma column reflects the sale of 4,000,000 shares of our convertible
preferred stock in August 1999 for gross proceeds of $14.4 million and the
conversion of all outstanding shares of preferred stock into common stock upon
the closing of this offering. The pro forma as adjusted column also reflects
our receipt of the estimated net proceeds from the sale of the     shares of
common stock offered in this offering at an assumed initial public offering
price of $     per share after deducting the estimated underwriting discount
and offering expenses payable by us. See "Use of Proceeds" and
"Capitalization."
As of June 30, 1999
                                                   -----------------------------
                                                                      Pro Forma
                                                   Actual  Pro Forma As Adjusted
                                                   ------- --------- -----------
                                                          (in thousands)
Balance Sheet Data:
Cash and cash equivalents......................... $ 7,602  $22,002
Working capital...................................   5,120   19,520
Total assets......................................  15,430   29,830
Long-term debt....................................     373      373
Total stockholders' equity........................   8,623   23,023
6
RISK FACTORS

  You should carefully consider the risks described below before making a
decision to buy our common stock. The risks and uncertainties described below
are not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks actually occurs, our business could
be harmed. In that case, the trading price of our common stock could decline,
and you might lose all or part of your investment. You should also refer to the
other information set forth in this prospectus, including our financial
statements and the related notes.

We Have Only a Short Operating History, Making It Difficult for You to Evaluate
Our Business and Your Investment

  We have only a limited operating history upon which you can evaluate our
business. Our business model is evolving and relies substantially upon the sale
of advertising on the Internet. Our prospects for financial and operational
success must be considered in light of the risks, expenses, delays and
difficulties frequently encountered by early-stage companies in the Internet
advertising market, many of which may be beyond our control. These risks
include our ability to:

  . purchase appropriate media space at reasonable costs;

  . attract new advertisers and maintain current client relationships;

  . achieve effective ad campaign results for our clients;

  . develop new relationships and maintain existing relationships with
    advertising agencies, our marketing alliance partners and other third
    parties;

  . continue to develop and upgrade our MOJO and other technology to keep
    pace with the growth of the Internet advertising industry and changes in
    technology; and

  . continue to expand the number of services we offer.

  If we do not successfully address these risks, our business, results of
operations and financial condition could be harmed.

We Have a History of Losses and Anticipate Continued Losses

  Our accumulated deficit as of June 30, 1999 was approximately $8.6 million.
For the year ended December 31, 1998 and the six months ended June 30, 1999, we
incurred losses of $2.0 million and $5.2 million, respectively. We have not
achieved profitability in any period to date and, given the level of planned
operating and capital expenditures, we expect to continue to incur losses and
negative cash flows for the foreseeable future. If our revenues grow more
slowly than we anticipate, or if our operating expenses exceed our expectations
and cannot be adjusted accordingly, our business will be harmed.

Our Quarterly Operating Results Are Subject to Fluctuations and Seasonality
Which May Cause Our Stock Price to Decline

  It is possible that in future periods our results of operations will be below
the expectations of securities analysts. If so, the market price of your shares
would likely decline. Our quarterly operating results have fluctuated in the
past and are likely to continue to do so in the future. We believe that
quarter-to-quarter comparisons of our operating results are not a good
indication of our future performance and should not be relied upon to predict
our future performance or our stock price.

  We believe that our revenues will be subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarters of each year. In addition, expenditures by

                                       7
advertisers tend to be cyclical, reflecting overall economic conditions as well
as budgeting and buying patterns. A decline in the economic prospects of
advertisers or the economy generally could cause companies to discontinue,
delay or reduce online advertising spending. These events could harm our
business.

  In addition, we derive a significant portion of our revenues from the sale of
advertising services under short-term advertising campaign management
contracts. These contracts are generally cancelable upon 30 days' or less
notice. The non-renewal, cancellation or deferral of existing advertising
contracts or the failure to obtain new advertising contracts in any quarter
could severely harm our results of operations and financial condition for that
quarter.

  Our quarterly revenues, expenses and operating results could vary
significantly from quarter-to-quarter for several other reasons, many of which
are beyond our control. These factors include:

  . demand for our advertising solutions and mix of advertisements sold;

  . commitment of advertisers to Internet advertising generally;

  . addition of new or loss of current advertisers and advertising agencies;

  . timing variations on the part of advertisers or advertising agencies to
    implement campaigns;

  . deployment of new services we may offer;

  . changes in availability and pricing of advertising space;

  . changes in our pricing policies or the pricing policies of our
    competitors; and

  . costs related to acquisitions of technology or businesses.

  Our current and future expense estimates are based, in large part, on
estimates of future revenues, which are difficult to predict, and on our
investment plans. In particular, we plan to increase our operating expenses
significantly in order to expand our sales and marketing operations, to enhance
our proprietary software and to expand internationally. We may be unable to, or
may elect not to, adjust spending quickly enough to offset any unexpected
revenues shortfall. If these expenses are not accompanied by increased
revenues, our results of operations and financial condition would be harmed.

We Rely on a Limited Number of Clients, and the Loss of a Major Client Could
Significantly Reduce Our Revenues

  Our revenues have been derived from a limited number of advertisers and
advertising agencies that use our services. In 1998, DATEK Securities, Inc. and
uBid accounted for approximately 56% and 21% of our revenues, respectively. In
the first half of 1999, DATEK Online Brokerage Services, Corp., Publicis & Hal
Riney and uBid accounted for approximately 15%, 10% and 10% of our revenues,
respectively, and five of our clients accounted for approximately 68% of our
total revenues. In addition, four customers accounted for 76% of our
outstanding accounts receivable at December 31, 1998 and three customers
accounted for 48% of our outstanding accounts receivable at June 30, 1999. We
expect that some of these entities may continue to account for a significant
percentage of our revenues for the foreseeable future. Advertisers typically
purchase advertising that runs for a limited time. Current advertisers may not
continue to purchase advertising from us or we may not be able to successfully
attract additional advertisers. Consequently, our quarterly and annual results
of operations would be harmed by the loss of any of these clients. In addition,
the non-payment or late payment of amounts due to us from a significant
advertiser or ad agency could harm our financial condition.

If We Fail to Establish, Maintain and Expand Our Alliances with Business and
Marketing Partners, Our Ability to Grow Could Be Limited

  In order to grow our business, we must generate, retain and strengthen
successful strategic alliances with companies in industries including:

  . Internet and traditional media advertising, such as DoubleClick and
    Publicis & Hal Riney;

                                       8
. enterprise software, such as SAP Labs;

  . Web site development and consulting, such as Icon Medialab; and

  . information technology consultants.

  We depend, and expect to continue to depend, on these partners to refer
business from their clients and customers to us. We currently expect that a
significant amount of our future revenues will need to be generated through
these relationships. If our strategic alliances and partners do not refer their
clients and customers to us to do their online campaign management or banner
serving, our revenues and results of operations would be severely harmed. In
addition, if our partners do not provide high quality products and services to
our mutual clients, our sales could suffer. We have little control over the
amount of resources these companies will devote to online advertising or
referring their clients to our services. We may not be able to generate and
maintain adequate strategic relationships to offset the significant resources
that are necessary to develop marketing efforts to reach clients of our
strategic alliances.

Our MOJO Technology Is Relatively New and Untested; If Our MOJO Technology Does
Not Perform as Anticipated, Our Business Will Be Harmed

  Our MOJO technology is complex and has had, and may have in the future,
errors, defects or performance problems. In particular, we may encounter
problems when it is more broadly used or when it is updated to expand and
enhance its capabilities. Although we have internally tested our MOJO
technology extensively, we have deployed it with only a few select clients to
date. Consequently, our technology may still malfunction or suffer from design
defects. If our technology malfunctions or contains such defects, our services
may not be reliable or compatible in certain online environments used by our
clients. In such instances, we would need to devote significant resources to
address these defects, and any problems could result in lost revenues and
damage to our reputation.

If Our MOJO Technology Suffers From Design Defects, We May Be Subject To
Product Liability Claims

  Our business will be harmed if our MOJO technology suffers from design
defects and, as a result, we become subject to significant product liability
claims. Technology as complex as ours may contain design defects which are not
detectable even after extensive internal testing. Such defects may become
apparent only after widespread commercial use. Our contracts with our clients
currently do not contain provisions to limit our exposure to liabilities
resulting from product liability claims. We currently do not carry any
insurance against product liabilities. Although we have not experienced any
product liability claims to date, we cannot assure you that we will not do so
in the future. Any product liability claim brought against us could materially
harm our business.

If We Fail to Effectively Manage Our Growth, Our Ability to Capture New
Business Could Suffer

  We have grown significantly since our inception and expect to grow quickly in
the future. As we continue to increase the scope of our operations, we will
need an effective planning and management process to implement our business
plan successfully in the rapidly evolving market for Internet advertising. Our
failure to manage this growth could seriously harm our business. We have
increased our number of employees from 7 at September 30, 1998 to 100 at August
31, 1999. In addition, we have recently opened a sales office in Germany and we
anticipate that we will further expand international operations in late 1999.
Future expansion could be expensive and strain our management and other
resources. In order to effectively manage growth, we must:

  . hire, train and integrate new personnel;

  . augment our financial and accounting systems;

  . expand and manage our sales operations, which are in several locations;
    and

  . expand our facilities.

                                       9
The Loss of Key Personnel or Any Inability to Attract and Retain Additional
Personnel Could Harm Our Future Success

  Our future success depends to a significant extent on the continued service
of our key senior management, technical and professional service and support
personnel. The loss of the services of any member of our management team or
certain other key employees would harm our business. Because many of our
executives, including our chief financial officer, have only recently joined
us, our management team has only worked together for a short time and may not
work effectively together. We would also be harmed if one or more of our
officers or key employees decided to join a competitor or otherwise compete
with us.

  Our future success also depends on our continuing ability to attract, retain
and motivate highly skilled employees. Competition for qualified personnel in
the high technology industry is intense, particularly in the San Francisco Bay
region of Northern California, where our principal offices are located. If we
fail to hire and retain a sufficient number of sales, marketing, technical,
service and support personnel, we will not be able to maintain or expand our
business.

Our Sales and Implementation Cycle is Lengthy and Subject to Delays, Which
Could Result in Delayed Revenues

  If the sales and implementation cycle of our services is delayed, our
revenues will likewise be delayed. Our sales and implementation cycle is
lengthy, causing us to recognize revenues long after our initial contact with a
client. During our sales effort, we spend significant time educating
prospective clients on the use and benefit of our campaign management
solutions. As a result, the sales cycle for our products and services is long,
ranging from a few weeks to several months for our larger clients. The sales
cycle for new sophisticated enterprise-based services is likely to be longer
than the sales cycle for our other current campaign management services because
we believe that clients may require more extensive approval processes related
to integrating enterprise business data with their online advertising
campaigns. In addition, in order for a client to implement our services, the
client must commit a significant amount of resources over an extended period of
time. Furthermore, even after a client purchases our services, the
implementation cycle is subject to delays. These delays may be caused by
factors within our control, such as possible technology defects, as well as
those outside our control, such as clients' budgetary constraints, internal
acceptance reviews and the complexity of clients' online advertising needs.

If We are Unable to Develop Relationships with Suppliers of Profiling Services
or Obtain or Develop Profiling Technology, Our Ability to Attract New Clients
and Retain Our Existing Clients Could be Harmed

  In order for our solution to gain market acceptance, we must be able to
leverage the technology of third-party vendors who successfully implement
sophisticated targeting solutions. Our solution depends upon the proven or
perceived success of third-party profiling technologies that can identify the
particular audience to be targeted with an advertising message. If we are
unable to develop relationships with suppliers of profiling services or obtain
or develop profiling technology, our clients will not be able to realize the
full potential that our services and technology offer. As a result, our ability
to attract new clients will be hampered and we may lose clients demanding a
more complete solution. We cannot assure you that we can partner with companies
to provide profiling services and technology, or obtain and develop this
technology in a cost-effective and timely manner, if at all.

Future Restrictions or Regulations Related to Privacy Concerns and Inadequate
Security on the Internet Could Limit the Effectiveness of Our Services and
Technology

  The effectiveness of our services and technology rely on the effectiveness of
techniques for profiling Internet users, which may raise privacy concerns. Due
to privacy concerns, some Internet commentators, advocates and governmental
bodies have suggested that the use of some of these techniques for profiling
users

                                       10
be limited or eliminated altogether. It is possible in the future that federal,
state or other governmental entities may restrict the gathering and use of such
profile information. If the gathering of profiling information were to be
curtailed in any way, our services would be less effective, which would harm
our business.

  The effectiveness of our MOJO technology depends upon the utilization of user
profile data collected by our clients. Our clients generally have implemented
security features to protect the privacy and integrity of the data collected
from their users. However, this data may be susceptible to hacker interception,
break-ins and disruption. If any of these were to occur, or if a well-
publicized compromise of security were to occur, Internet usage may not
increase at the rate we expect and consequently, our services would be
perceived as less effective or desirable by our clients.

  The European Union has recently adopted a directive addressing data privacy
that may result in limitations on the collection and use of certain information
regarding Internet users. These limitations may limit our ability to target
advertising or collect and use information in most European countries.

Our Business Model Depends Upon Broad Market Acceptance of Internet Advertising

  Our business model is to generate revenues primarily by providing Internet
advertising solutions to response-oriented advertisers. The Internet as an
advertising medium has not been in existence for a sufficient period of time to
demonstrate its effectiveness. Internet banner advertising, response-oriented
marketing and other types of Internet advertising, as well as technology-based
methods for targeting advertising and tracking, measuring and reporting the
results of Internet advertising may not achieve broad market acceptance. Our
ability to generate significant revenues from advertisers will depend, in part,
on our ability to:

  . demonstrate to advertisers that banner advertising and direct response
    advertising on the Internet will add value and increase marketing
    effectiveness;

  . attract and retain advertisers and advertising agencies by
    differentiating the services and technology we offer; and

  . obtain adequate available advertising inventory from a large base of
    Internet sites.

  There are filter software programs available that limit or prevent
advertising from being delivered to a user's computer. The commercial viability
of Internet advertising would be limited by widespread adoption of these
programs.

Intense Competition in the Internet Advertising Industry Could Reduce Our
Ability to Gain Clients and May Require Us to Reduce Prices, Which Could Harm
Our Revenues

  We face intense competition in the Internet advertising services industry. We
primarily compete with companies that provide online media buying and planning,
ad serving companies, advertising networks which provide services directly to
clients, advertising agencies with in-house online media management
capabilities and organizations that manage affiliate programs.

  We believe that our ability to compete depends upon many factors both within
and outside of our control, including:

  . the effectiveness, ease of use, performance and features of our
    technology;

  . client perceptions of the effectiveness of our services and technology;

  . the price of our services;

  . our ability to service our clients effectively over a broad geographic
    basis; and

  . the timing and acceptance of new solutions and enhancements to existing
    solutions developed by us or our competitors.

                                       11
The intense competition among Internet sites has led to the creation of a
number of pricing alternatives for Internet advertising. These alternatives
make it difficult for us to project future levels of advertising revenues and
applicable gross margins that can be sustained either by us or the Internet
advertising industry in general.

  We expect competition to continue to increase in our industry because there
are no substantial barriers to entry. Competition may also increase as a result
of industry consolidation. Companies doing business on the Internet, including
ours, must also compete with television, radio, cable and print media for a
share of advertisers' total advertising budgets. Advertisers may be reluctant
to devote a significant portion of their advertising budget to Internet
advertising if they perceive the Internet to be a limited or ineffective
advertising medium. In addition, as we expand the scope of our Internet
advertising and direct marketing services, we may compete with a greater number
of Internet sites and other media companies across a wide range of different
Internet services. Competitive pressures could prevent us from growing, reduce
our market share or require us to reduce prices on our solutions, any of which
could harm our business.

  Many of our existing competitors have significantly greater financial,
technical, marketing, service and other resources, have a larger installed base
of users, have been in business longer or have greater name recognition than we
do. Some of our competitors' services may be more effective than our services
at performing particular functions or be more customized for particular needs.
Some large companies may attempt to build functions into their solutions that
are similar to functions of our solutions. Even if these functions are more
limited than those provided by our solutions, those solutions could discourage
potential clients from purchasing our solutions, as well as lead to price
reductions that could harm our revenues. In addition, companies larger than
ourselves may be more successful in purchasing advertising space.

Sustained or Repeated System Failures Could Significantly Affect Our Operations
and Lead to Client Dissatisfaction

  The continuing and uninterrupted performance of our computer systems is
critical to our success. Our operations depend on our ability to protect our
computer systems against damage from fire, power loss, water damage,
telecommunications failures, viruses, vandalism and other malicious acts, and
similar unexpected adverse events, including earthquakes. Clients may become
dissatisfied by any system failure that interrupts our ability to provide our
services to them, including failures affecting the ability to deliver
advertisements quickly and accurately to the targeted audiences. Sustained or
repeated system failures would reduce significantly the attractiveness of our
solutions to advertisers.

  In addition, interruptions in our solutions could result from the failure of
our telecommunications providers to provide the necessary data communications
capacity in the time frame required. Our ad network operations and MOJO
computer hardware is primarily housed at Verio, Inc. and AboveNet
Communications, Inc., third-party providers of Internet communication services
located in San Francisco and San Jose, California, respectively. In addition,
the failure of any advertising server system such as ours or DoubleClick's,
including failures that delay the delivery of advertisements to Internet sites,
could reduce client satisfaction and severely harm our business, results of
operations and financial condition.

  We also depend upon Internet browsers and Internet service providers that
provide consumers with access to our products and services. In the past, users
have occasionally experienced difficulties due to software incompatibility or
system failures unrelated to our systems. Any disruption in the Internet access
provided by third-party providers or any failure of third-party providers to
handle higher volumes of user traffic could seriously harm our business,
results of operations and financial condition.

We May Experience Capacity Constraints That Could Reduce Our Advertising
Revenues

  An increase in the volume of advertising delivered through our servers could
strain the capacity of our MOJO technology platform, which could lead to slower
response times or system failures. This would adversely affect the availability
of advertisements, the number of impressions received by advertisers and our

                                       12
advertising revenues. If we do not effectively address capacity constraints or
system failures, our business, results of operations and financial condition
would be harmed.

Acquisitions or Strategic Investments May Divert Our Management Attention and
Consume Resources

  In March 1999, we acquired Netranscend Software, Inc., a Java-based
enterprise automation solutions software company. We intend to continue
pursuing selective acquisitions of businesses and technologies to complement
our current business. Any future acquisition or investment may result in the
use of significant amounts of cash, potentially dilutive issuances of equity
securities, incurrence of debt and amortization expenses related to goodwill
and other intangible assets. In addition, acquisitions involve numerous risks,
any of which could harm our business, operating results or financial conditions
including:

  . difficulties in the integration and assimilation of the operations,
    technologies, services and personnel of an acquired business;

  . diversion of management's attention from other business concerns;

  . availability of favorable financing for future acquisitions; and

  . potential loss of key employees in any acquired business.

Potential Clients in Similar Industries May Require Us to Contract With Them
Exclusively, Limiting Our Business Opportunities

  To use our services more effectively, advertisers may integrate their
enterprise business information into their advertising campaigns to deliver a
targeted message. To accomplish this task, we must have access to their
proprietary enterprise data. Many companies are wary of third parties having
access to their enterprise business information, because access by third
parties increases the risk that confidential enterprise data may become known,
even if unintentionally, to outsiders that are not the intended recipients of
the data. These privacy concerns may be so great as to prompt our clients to
attempt to contractually prohibit us from managing the online advertising
campaigns of their competitors. If our potential client base in a particular
industry was limited in this way, our business and future revenues could be
harmed.

Our Patent Application Related to Our MOJO Technology is Pending and May Not
Issue

  In July 1999, we filed a patent application related to our key proprietary
technology platform, MOJO, with the U.S. Patent and Trademark Office. Our
application is subject to current review by the U.S. Patent and Trademark
Office and we have no assurance that a patent will issue. If no patent issues
we will rely primarily on trade secret law to protect our MOJO technology,
which may be more difficult to monitor and enforce. Even if we are issued a
patent, third parties could successfully design around the patent to offer a
competing service and we will still be subject to claims of infringement from
third parties.

We Must Keep Pace with Rapidly Changing Internet Advertising Technologies to be
Successful

  The Internet advertising markets are characterized by rapidly changing
technologies, evolving industry standards, frequent new product and service
introductions and changing client demands. The introduction of new products and
services embodying new technologies and the emergence of new industry standards
and practices could render our existing products and services obsolete and
unmarketable or require unanticipated investments in research and development.
Our failure to adapt successfully to these changes could harm our business,
results of operations and financial condition.

  Our future success will depend on our ability to adapt to rapidly changing
technologies, to enhance existing solutions and to partner or develop and
introduce a variety of new solutions to address our clients' changing demands.
For example, advertisers may require the ability to deliver advertisements
utilizing new rich media formats and more precise consumer targeting
techniques. In addition, increased availability of broadband

                                       13
Internet access is expected to enable the development of new products and
services that take advantage of this expansion in delivery capability. We may
also experience difficulties that could delay or prevent the successful design,
development, introduction or marketing of our solutions. In addition, any new
solutions or enhancements that we develop must meet the requirements of our
current and prospective clients and must achieve significant market acceptance.
Material delays in introducing new solutions and enhancements may cause clients
to forego purchases of our solutions and purchase those of our competitors.

  A key component of our strategy is to enhance the return on investment and
other performance measurements for our advertiser and advertising agency
clients. We have limited experience in implementing and following such a
strategy and this strategy may not succeed.

We Plan to Expand Internationally, Exposing Us to New Risks

  We opened a sales office in Germany in August 1999 and expect to initiate
operations in selected additional international markets in the second half of
1999. Expansion into international markets will require extensive management
attention and resources. We also may enter into a number of international
alliances as part of our international strategy and rely extensively on these
business partners to conduct operations, establish local networks, aggregate
Internet sites and coordinate sales and marketing efforts. Our success in such
markets will depend on the success of our business partners and their
willingness to dedicate sufficient resources to our relationships.
International operations are subject to other inherent risks, including:

  . difficulties and costs of staffing and managing foreign operations;

  . seasonal reductions in business activity;

  . the impact of recessions in economies outside the United States;

  . changes in regulatory requirements;

  . export restrictions, including export controls relating to encryption
    technology;

  . reduced protection for intellectual property rights in some countries;

  . potentially adverse tax consequences;

  . political and economic instability;

  . tariffs and other trade barriers; and

  . fluctuations in currency exchange rates.

  Our failure to address these risks adequately may severely harm our business.

Third Parties May Claim That We Are Infringing Their Intellectual Property,
Causing Us to Suffer Significant Expenses or Be Prevented From Selling Our
Products

  Third parties may claim that we are infringing their intellectual property
rights. While we do not believe that our technology infringes the proprietary
rights of third parties, we may be unaware of intellectual property rights of
others that may cover some of our technology.

  Any litigation regarding our intellectual property could be costly and time-
consuming and divert the attention of our management and key personnel from our
business operations. The complexity of the technology involved and the
uncertainty of intellectual property litigation increase these risks. Claims of
intellectual property infringement might also require us to enter into royalty
or license agreements; however, we may not be able to obtain royalty or license
agreements on terms acceptable to us, or at all. We also may be subject to
significant damages or an injunction against the use of our products. A
successful claim of patent or other intellectual property infringement against
us would immediately harm our business and financial condition.

                                       14
We May Not Be Able to Protect Our Technology From Unauthorized Use, Which Could
Diminish the Value of Our Products and Services

  Our success depends in large part on our proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret laws,
confidentiality procedures and licensing arrangements to establish and protect
our proprietary rights. We may be required to spend significant resources to
monitor and police our intellectual property rights. If we fail to successfully
enforce our intellectual property rights, the value of our solutions could be
diminished and our competitive position may suffer.

  Third-party software providers could copy or otherwise obtain and use our
technology without authorization or develop similar technology independently
which may infringe our proprietary rights. We may not be able to detect
infringement and may lose competitive position in the market before we do so.
In addition, competitors may design around our technology or develop competing
technologies. Intellectual property protection may also be unavailable or
limited in some foreign countries.

  We generally enter into confidentiality or license agreements with our
employees, consultants, vendors, clients and corporate partners, and generally
control access to and distribution of our technologies, documentation and other
proprietary information. Despite these efforts, unauthorized parties may
attempt to disclose, obtain or use our solutions or technologies. Our
precautions may not prevent misappropriation of our solutions or technologies,
particularly in foreign countries where laws or law enforcement practices may
not protect our proprietary rights as fully as in the United States.

Government Regulation and Legal Uncertainties of Doing Business on the Internet
May Inhibit the Commercial Acceptance of the Internet

  Laws and regulations that apply to Internet communications, commerce and
advertising are becoming more prevalent. These regulations could affect the
costs of communicating on the Internet and adversely affect the growth in use
of the Internet. In turn, these regulations could result in decreased demand
for our solutions or otherwise harm our business.

  Recently, the United States Congress enacted Internet legislation regarding
children's privacy, copyrights and taxation. A number of other laws and
regulations may be adopted covering issues such as user privacy, pricing,
acceptable content, taxation and quality of products and services. This
legislation could hinder growth in the use of the Internet generally and
decrease the acceptance of the Internet as a communications, commercial and
advertising medium. In addition, the growing use of the Internet has burdened
existing telecommunications infrastructure and has caused interruptions in
telephone service. Certain telephone carriers have petitioned the government to
regulate and impose fees on Internet service providers and online service
providers in a manner similar to long distance carriers.

  Due to the global nature of the Internet, it is possible that, while our
transmissions originate in California, the governments of other states or
foreign countries might attempt to regulate our transmissions or levy sales or
other taxes relating to our activities. The laws governing the Internet remain
largely unsettled, even in areas where there has been some legislative action.
It may take years to determine whether and how existing laws including those
governing intellectual property, privacy, libel and taxation apply to the
Internet and Internet advertising. In addition, the growth and development of
the market for Internet commerce may prompt calls for more stringent consumer
protection laws, both in the United States and abroad, that may impose
additional burdens on companies conducting business over the Internet. Our
business could be adversely affected by the adoption or modification of laws or
regulations relating to the Internet.

Potential Year 2000 Problems with Our Internal Systems or Third-Party Systems
Could Harm Our Business

  Many currently installed computer systems and software products worldwide are
coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they are not able to distinguish between the year 1900 and
the year

                                       15
2000. Accordingly, many companies, including ourselves and our clients,
potential clients, vendors and strategic partners, may need to continue to
upgrade their systems to comply with applicable year 2000 requirements.

  Because we and our clients depend, to a very substantial degree, upon the
proper functioning of computer systems, a failure of these systems to correctly
recognize dates beyond December 31, 1999 could disrupt operations. Any
disruptions could harm our business. Additionally, our failure to provide year
2000 compliant solutions solely or in connection with our strategic partners to
our clients could result in financial loss, reputational harm and legal
liability to us. Please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Year 2000 Compliance."

Spending by Our Clients to Evaluate and Address Year 2000 Compliance Could
Result in Lower Demand for Our Services

  In 1999, a significant number of companies, including some of our current
clients, may be required to devote a substantial amount of their information
technology resources to test systems for year 2000 compliance and fix existing
year 2000 problems. If these clients also defer purchases of our services until
year 2000 problems have been resolved, it will depress our sales in the near
term.

Because Our Directors and Executive Officers Own a Large Percentage of Our
Voting Stock, Your Voting Power May Be Limited

  After this offering, it is anticipated that our executive officers and
directors will beneficially own or control, directly or indirectly, 19.3
million shares of common stock, which in the aggregate will represent
approximately   % of the outstanding shares of common stock. As a result, if
these persons act together, they will have the ability to control all matters
submitted to our stockholders for approval, including the election and removal
of directors and the approval of any business combination. This may delay or
prevent an acquisition or affect the market price of our stock.

As a New Investor, You Will Experience Immediate and Substantial Dilution

  If you purchase shares of our common stock in this offering, you will
experience immediate and substantial dilution in pro forma net tangible book
value of $      per share. If the holders of outstanding options and warrants
exercise those options, you will experience further dilution.

An Active Public Market for Our Common Stock May Not Develop, Which Could
Impede Your Ability to Sell Your Shares and Depress the Market Price of Your
Shares

  Before this offering, you could not buy or sell our common stock on a public
market. An active public market for our common stock may not develop or be
sustained after the offering, which could affect your ability to sell your
shares and depress the market price of your shares. The market price of your
shares may significantly vary from the offering price.

Future Sales of Shares by Existing Stockholders Could Depress the Market Price
of Your Shares

  Sales of a substantial number of shares of our common stock in the public
market by our stockholders after this offering could depress the market price
of our common stock and could impair our ability to raise capital through the
sale of additional equity securities. Based on shares outstanding as of August
15, 1999,
upon completion of this offering we will have outstanding           shares of
common stock, assuming no exercise of the underwriters' overallotment option.
Of these shares, the             shares of common stock sold in this offering
and an additional 195,000 shares of common stock will be freely tradable,
without restriction, in the public market. An additional 85,814 shares of
common stock will become freely tradeable 90 days from the date of this
prospectus. After the lockup agreements pertaining to this offering expire 180
days from the date of this prospectus, an additional 15,880,717 shares will be
eligible for sale in the public market.

                                       16
In addition, the 4,952,687 shares subject to outstanding options and warrants
will be exercisable, and if exercised, available for sale 180 days after the
date of this prospectus. Please see "Shares Eligible for Future Sale" for a
description of shares of common stock that are available for future sale.

We Have Adopted Anti-takeover Provisions That Could Make the Sale of Mediaplex
More Difficult

  Our certificate of incorporation and bylaws contain provisions, such as
undesignated preferred stock, a staggered board and the restriction on the
persons that can call special board or stockholder meetings, which could make
it more difficult for a third-party to acquire us without the consent of our
board of directors. While we believe these provisions provide for an
opportunity to receive a higher bid by requiring potential acquirors to
negotiate with our board of directors, these provisions may apply even if the
offer may be considered beneficial by some stockholders.

                                       17
USE OF PROCEEDS

  Our net proceeds from the sale of the          shares of common stock offered
in this offering at an assumed initial public offering price of $    per share,
after deducting the estimated underwriting discount and offering expenses will
be approximately $    . If the underwriters' over-allotment option is exercised
in full, our net proceeds will be approximately $     .

  We expect to use approximately $         of such proceeds for capital
expenditures and the majority of the net proceeds for working capital and
general corporate purposes. In addition, we may use a portion of the net
proceeds to acquire complementary products, technologies or businesses;
however, we currently have no commitments or agreements and are not involved in
any negotiations to do so.

  Pending use of the net proceeds of this offering, we intend to invest the net
proceeds in short-term, interest-bearing, investment-grade marketable
securities.

                                DIVIDEND POLICY

  We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation
and expansion of our business and do not anticipate paying any cash dividends
in the foreseeable future.

                                       18
CAPITALIZATION

The following table sets forth our capitalization as of June 30, 1999. Our
capitalization is presented:

  . on an actual basis;

  . on a pro forma basis to give effect to the sale of 4,000,000 shares of
    convertible preferred stock subsequent to June 30, 1999 for gross
    proceeds of $14.4 million and the automatic conversion of all outstanding
    shares of convertible preferred stock into shares of common stock
    effective upon the closing of this offering; and

  . on a pro forma as adjusted basis to reflect our receipt of the estimated
    net proceeds from the sale of the         shares of common stock offered
    in this offering at an assumed initial public offering price of $
    per share and after deducting the estimated underwriting discount and
    offering expenses payable by us.
June 30, 1999
                                                  ------------------------------
                                                                      Pro Forma
                                                  Actual   Pro Forma As Adjusted
                                                  -------  --------- -----------
                                                         (in thousands)
Long-term debt..................................  $   373   $   373     $373
                                                  -------   -------     ----
Stockholders' equity:
Convertible preferred stock, $.0001 par value,
 8,206,000 shares authorized, 5,706,000 issued
 and outstanding, actual; 10,000,000 shares
 authorized, no shares issued or outstanding,
 pro forma and pro forma as adjusted............  $     1       --
Common stock, $.0001 par value; 40,000,000
 shares authorized, 14,838,865 shares issued and
 outstanding, actual; 150,000,000 shares
 authorized, 24,544,865 shares issued and
 outstanding, pro forma; 150,000,000 shares
 authorized,          shares issued and
 outstanding, pro forma as adjusted.............        1         2
Additional paid-in capital......................   20,239    34,639
Warrants........................................      432       432
Deferred stock-based compensation...............   (3,232)   (3,232)
Receivable from sale of Series B preferred
 stock..........................................     (240)     (240)
Accumulated deficit.............................   (8,578)   (8,578)
                                                  -------   -------     ----
Total stockholders' equity......................    8,623    23,023
                                                  -------   -------     ----
  Total capitalization..........................  $ 8,996   $23,396
                                                  =======   =======     ====
In addition to the         shares of common stock to be outstanding after the
offering, as of the closing of this offering and based on the number of shares
issued and options and warrants granted as of June 30, 1999, we expect to have
additional shares of common stock available for issuance under the following
plans and arrangements:

  . 12,243,000 shares issuable under our stock plans, consisting of:

   . 8,625,698 shares underlying options outstanding at a weighted average
     exercise price of $0.56 per share, of which 4,077,687 were exercisable;
     and

   . 3,617,302 shares available for future issuance;

  . 875,000 shares issuable upon the exercise of warrants outstanding at a
    weighted average exercise price of $0.97 per share; and

  . 400,000 shares available for issuance under our 1999 Employee Stock
    Purchase Plan.

  Please read the capitalization table together with the sections of this
prospectus entitled "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements included in this prospectus.

                                       19
DILUTION

  As of June 30, 1999, our net tangible book value on a pro forma basis, giving
effect to the sale of 4,000,000 shares of our convertible preferred stock
subsequent to June 30, 1999 for gross proceeds of $14.4 million and the
conversion of our preferred stock at the closing of this offering, was
$         , or $           per share of common stock. "Net tangible book value"
per share represents the amount of our total tangible assets reduced by the
amount of our total liabilities, divided by the number of shares of common
stock outstanding. As of June 30, 1999, our net tangible book value, on a pro
forma basis as adjusted for the sale of          shares offered in the offering
at an assumed initial public offering price of $     per share and after
deducting the estimated underwriting discount and offering expenses, would have
been approximately $     per share. This represents an immediate increase of
$     per share to existing stockholders and an immediate dilution of $     per
share to new investors. The following table illustrates this per share
dilution:
Assumed initial public offering price per share......................      $
 Pro forma net tangible book value per share as of June 30, 1999..... $
 Increase per share attributable to new investors....................
                                                                      ----
Pro forma net tangible book value per share after the offering.......
                                                                           -----
Dilution per share to new investors..................................      $
                                                                           =====
The following table summarizes on a pro forma basis, as of June 30, 1999,
giving effect to the sale of 4,000,000 shares of our convertible preferred
stock subsequent to June 30, 1999, the differences between the total
consideration paid and the average price per share paid by our existing
stockholders and the new investors with respect to the number of shares of
common stock purchased from us, based on an assumed initial public offering
price of $       per share:
Shares Purchased     Total Consideration    Average
                              --------------------- ----------------------   Price
                                Number   Percentage   Amount    Percentage Per Share
                              ---------- ---------- ----------- ---------- ---------
Existing stockholders... 24,604,865        %   $20,240,901        %    $ 0.82
     New investors...........
                              ----------   -----    -----------   -----
      Total..................              100.0%                 100.0%
                              ==========   =====    ===========   =====
In addition to the         shares of common stock outstanding after the
offering, as of the closing of this offering and based on the number of shares
and options and warrants granted as of June 30, 1999, we expect to have
additional shares of common stock available for issuance under the following
plans and arrangements:

  . 12,243,000 shares issuable under our stock plans, consisting of:

   . 8,625,698 shares underlying options outstanding at a weighted average
     exercise price of $0.56 per share, of which 4,077,687 were exercisable;
     and

   . 3,617,302 shares available for future issuance;

  . 875,000 shares issuable upon the exercise of warrants outstanding at a
    weighted average exercise price of $0.97 per share; and

  . 400,000 shares available for issuance under our 1999 Employee Stock
    Purchase Plan.

                                       20
SELECTED FINANCIAL DATA

  The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes included elsewhere
in this prospectus. The selected balance sheet as of December 31, 1997 and 1998
and June 30, 1999 and the selected statement of operations data for the period
from September 10, 1996 (inception) to December 31, 1996, the years ended
December 31, 1997 and 1998 and the six months ended June 30, 1999 have been
derived from our audited financial statements and related notes included
elsewhere in this prospectus. The statement of operations data for the six-
month period ended June 30, 1998 are derived from our unaudited interim
financial statements included elsewhere in this prospectus. In management's
opinion, the unaudited financial statements have been prepared on substantially
the same basis as the audited financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results of operations for such periods. Historical results
are not necessarily indicative of the results to be expected in the future, and
the results of interim periods are not necessarily indicative of results for
the entire year.
September 10,
                             1996
                          (inception)       Years Ended           Six Months Ended
                              to           December 31,               June 30,
                         December 31,  ----------------------  -----------------------
                             1996         1997        1998        1998        1999
                         ------------- ----------  ----------  ----------  -----------
                              (in thousands, except share and per share data)
Statement of Operations
 Data:
Revenues................  $       --   $      426  $    3,588  $    1,522  $     7,323
Cost of revenues........          --          445       2,771       1,213        5,762
                          ----------   ----------  ----------  ----------  -----------
 Gross profit (loss)....          --          (19)        817         309        1,561
Operating expenses:
 Sales and marketing....          23          481         820         395        1,647
 Research and
  development...........          49          347         556         220          815
 General and
  administrative........          31          256         635         325        1,082
 Stock-based
  compensation..........         152           11         578         151        2,966
 Amortization of
  goodwill and
  intangibles...........          --           --          --          --          251
                          ----------   ----------  ----------  ----------  -----------
  Total operating
   expenses.............         255        1,095       2,589       1,091        6,761
                          ----------   ----------  ----------  ----------  -----------
Loss from operations....        (255)      (1,114)     (1,772)       (782)      (5,200)
Interest income
 (expense), net.........          --           (3)       (247)       (234)          14
                          ----------   ----------  ----------  ----------  -----------
Net loss................  $     (255)  $   (1,117) $   (2,019) $   (1,016) $    (5,186)
                          ==========   ==========  ==========  ==========  ===========
Net loss per share--
 basic and diluted......  $    (0.07)  $    (0.13) $    (0.25) $    (0.11) $     (0.43)
Weighted average shares
 outstanding............   3,795,714    8,457,464   8,186,127   9,408,557   12,070,449
Pro forma net loss per
 share--basic and
 diluted................                           $    (0.25)             $     (0.38)
Weighted average shares
 used to compute
 pro forma net loss per
 share--basic and
 diluted................                            8,186,127               13,501,001
December 31,
                                                  --------------------  June 30,
                                                  1996  1997    1998      1999
                                                  ----  -----  -------  --------
Balance Sheet Data:
Cash and cash equivalents........................ $ 27  $ 142  $   375  $ 7,602
Working capital..................................  (46)  (586)  (1,863)   5,119
Total assets.....................................   52    262    1,444   15,430
Long-term debt ..................................   --     65      232      373
Shareholders' equity (deficit):..................  (22)  (558)  (1,962)   8,623
21
SELECTED PRO FORMA FINANCIAL DATA

  On March 25, 1999, we acquired Netranscend Software, Inc., a Java-based
enterprise automation solutions software company. The acquisition was accounted
for using the purchase method of accounting and, accordingly, the purchase
price was allocated to the tangible and intangible assets acquired and
liabilities assumed on the basis of their fair values on the acquisition date.
The following unaudited pro forma statement of operations data reflects the
acquisition of Netranscend Software, Inc. as if the acquisition had occurred on
January 1, 1998. The pro forma statement of operations data may not be
indicative of the results of operations had the acquisition actually occurred
on January 1, 1998, nor do they purport to indicate our future results of
operations.
Year Ended
                                                                 December 31,
                                                                     1998
                                                                --------------
                                                                (in thousands,
                                                                 except share
                                                                and per share
                                                                    data)
Pro Forma Statement of Operations Data:
Revenues.......................................................      $ 3,588
Cost of sales..................................................        2,771
                                                                  ----------
 Gross profit..................................................          817
                                                                  ----------
Operating expenses
 Sales and marketing...........................................          828
 Research and development......................................          557
 General and administrative....................................          636
 Stock-based compensation......................................          578
 Amortization of goodwill and intangibles......................        1,003
                                                                  ----------
  Total operating expenses.....................................        3,602
Loss from operations...........................................       (2,785)
                                                                  ----------
Interest income (expense), net.................................         (247)
                                                                  ----------
Net loss.......................................................      $(3,032)
                                                                  ==========
Pro forma net loss per share--basic and diluted(1).............      $ (0.30)
                                                                  ==========
Shares used in computing pro forma net loss per share--basic
 and diluted(1)................................................   10,164,844
                                                                  ==========
--------
(1) See Note B of Notes to Pro Forma Financial Information for a description of
    the method used to compute basic and diluted net loss per share.

                                       22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  The following discussion of our financial condition and results of operations
should be read together with the financial statements and related notes that
are included later in this prospectus. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those set forth under "Risk Factors" or in
other parts of this prospectus.

Overview

  We are a leading provider of technology-enabled eBusiness marketing services
for companies and advertising agencies that seek to optimize their Internet
marketing campaigns. Although we were incorporated in September 1996, we did
not begin offering our advertising campaign management services until April
1998. Before April 1998, we operated under our prior business model, which
consisted of generating our revenues primarily from the sale of advertising
space on our Internet content sites. During the first half of 1998, we devoted
most of our resources to developing our new business plan and technology and
establishing our technical and sales organizations.

  In the second quarter of 1998 we began generating revenue from our
advertising campaign management services and since the fourth quarter of 1998
have derived substantially all of our revenues from this source. Our campaign
management services include planning the online campaign, coordinating the
online and offline portions of the campaign, purchasing and placing online
media, and tracking, analyzing and reporting the results of the media campaign.
In the second quarter of 1999, we began utilizing our mobile Java objects, or
MOJO, architecture to enhance our service offerings and expand our business. We
plan to expand our revenue sources by leveraging the capabilities of our MOJO
architecture to offer enhanced banner management services, which will allow
advertisers to integrate their enterprise business information into the online
advertising campaign and to tailor the advertising message in real time.

  We currently charge our clients a fixed fee for advertising campaign
management, which varies from client to client. This fee is principally based
on the extent of services provided and the direct cost of media placement, or
the cost of purchasing advertising space on an Internet site, which is
typically determined by the cost per thousand impressions, or CPM. Revenues
from advertising campaign management services are recognized in the period that
advertising impressions are delivered, or placed on an Internet site, provided
that no significant obligations on our part remain and the collection of the
trade receivable is probable. Our obligations often include, for instance,
guarantees of a minimum number of impressions. To the extent that obligations
remain, we defer recognition of the corresponding portion of the revenues until
these obligations are met.

  Cost of revenues consists primarily of the cost of procuring advertising
space on third-party Internet sites and, to a lesser extent, of the
telecommunications and other costs related to maintaining our ad servers at
third-party locations. These costs are recorded in the period that the
advertising impressions are delivered and the related revenues are recorded.
Currently, we purchase advertising space on Internet sites for a particular
media campaign. In the future, we may enter into purchase commitments to obtain
advertising space in bulk without a particular media campaign identified in
order to obtain more favorable pricing.

  We expense all of our research and development costs in the period in which
we incur these costs. The period from achievement of technological feasibility
to the general availability of our software to clients has been short, and
therefore software development costs qualifying for capitalization have been
insignificant. Accordingly, we have not capitalized any software development
costs to date.

  In March 1999, we acquired Netranscend Software, Inc., a Java-based
enterprise automation solutions software company, for a note payable of
$430,000 due in four annual installments beginning in March 2000,

                                       23
and 1,979,000 shares of common stock. This acquisition was accounted for under
the purchase method of accounting. We recorded $3.0 million of goodwill and
other identifiable intangible assets in connection with this acquisition, which
are being amortized over a three-year period.

  We have a limited operating history upon which you may evaluate our business
and prospects. We incurred losses of $255,000 in 1996, $1.1 million in 1997,
$2.0 million in 1998 and $5.2 million in the first six months of 1999. At June
30, 1999, our accumulated deficit was $8.6 million. We anticipate that we will
incur additional operating losses for the foreseeable future.

Results of Operations

  The following table sets forth our statement of operations data expressed as
a percentage of total revenues:
Six Months
                            Years Ended         Ended
                            December 31,      June 30,
                            --------------   -------------
                             1997    1998    1998    1999
                            ------   -----   -----   -----
Revenues..................   100.0 % 100.0 % 100.0 % 100.0 %
Cost of revenues..........   104.6    77.2    79.7    78.7
                            ------   -----   -----   -----
 Gross profit.............    (4.6)   22.8    20.3    21.3
Operating expenses:
 Sales and marketing......   112.9    22.8    25.9    22.5
 Research and
  development.............    81.5    15.5    14.5    11.1
 General and
  administrative..........    60.0    17.8    21.4    14.8
 Stock-based
  compensation............     2.6    16.1     9.9    40.5
 Amortization of
  goodwill................      --      --      --     3.4
                            ------   -----   -----   -----
  Total operating
   expenses...............   257.0    72.2    71.7    92.3
                            ------   -----   -----   -----
Loss from operations......  (261.6)  (49.4)  (51.4)  (71.0)
Interest income (expense),
 net......................    (0.6)   (6.9)  (15.4)    0.2
                            ------   -----   -----   -----
Net loss..................  (262.2)% (56.3)% (66.8)% (70.8)%
                            ======   =====   =====   =====
Six Months Ended June 30, 1999 and 1998

  Revenues. Revenues increased to $7.3 million for the six months ended June
30, 1999 from $1.5 million for the six months ended June 30, 1998. The period
to period increase was primarily due to our commencement of selling media
campaign management services to a broad set of advertisers, including
advertising agencies in April 1998. In the first six months of 1999,
substantially all of our revenues consisted of advertising fees received from
advertising campaign management services. In the first six months of 1998, our
revenues were derived from the sale of advertising on our content sites.

  In the six months ended June 30, 1999, five of our clients represented
approximately 68% of our revenues and in the six months ended June 30, 1998,
four of our clients represented approximately 80% of our revenues.

  Cost of Revenues. Cost of revenues increased to $5.8 million, or 78.7% of
revenues, for the six months ended June 30, 1999 from $1.2 million, or 79.7% of
revenues, for the six months ended June 1998. The increase in cost of revenues
in the 1999 period was primarily due to the increase in our revenues. The cost
of revenues in the first six months ended June 30, 1999 was comprised primarily
of media placement costs, while the cost of revenues in the first six months
ended June 30, 1998 consisted primarily of the cost of maintaining our content
Web sites.

                                       24
Operating Expenses

  Sales and Marketing. Sales and marketing expenses consist primarily of
compensation expenses, including salaries, commissions and related payroll
expenses, and recruiting costs, and marketing expenses, including those
expenses associated with customer service and support. Sales and marketing
expenses increased to $1.6 million, or 22.5% of revenues, for the six months
ended June 30, 1999 from $395,000, or 25.9% of revenues, for the six months
ended June 30, 1998. The dollar increase in sales and marketing expenses during
the 1999 period was primarily due to the significant growth of our sales and
marketing organization in 1999 as we focused on selling advertising campaign
management services. The number of sales and marketing personnel increased from
5 as of June 30, 1998 to 41 as of June 30, 1999. The decrease in sales and
marketing expenses as a percentage of revenues was primarily due to the
significant growth in revenues. We expect that sales and marketing expenses
will continue to increase in dollars.

  Research and Development. Research and development expenses consist primarily
of compensation expenses for our internal development staff and contractor
services. Research and development expenses increased to $816,000, or 11.1% of
revenues, for the six months ended June 30, 1999 from $220,000, or 14.5% of
revenues, for the six months ended June 30, 1998. This dollar increase in
research and development expenses was due primarily to an increase in the
number of development engineers in our research and development organization.
The number of development engineers increased from 2 as of June 30, 1998 to 19
as of June 30, 1999. The decrease in research and development expenses as a
percentage of revenues was primarily due to the significant growth in revenues.
We expect to continue to spend significant amounts on research and development
as we continue to develop and upgrade our technology. Accordingly, we expect
that research and development expenses will continue to increase in dollars.

  General and Administrative. General and administrative expenses consist
primarily of compensation and related expenses and cost of outside contractor
services for administrative personnel. General and administrative expenses
increased to $1.1 million, or 14.8% of revenues, for the six months ended June
30, 1999 from $325,000, or 21.4% of revenues, for the six months ended June 30,
1998. The dollar increase in general and administrative expenses was due
primarily to an increase in personnel. The number of general and administrative
personnel increased from none as of June 30, 1998 to 17 as of June 30, 1999.
The decrease in general and administrative expenses as a percentage of revenues
was primarily due to the significant growth in revenues. We expect that general
and administrative expenses will continue to increase in dollars in the future,
reflecting additional costs associated with increasing our infrastructure and
headcount as we grow and the costs of being a public company.

  Stock-based Compensation. Stock-based compensation expense increased to $3.0
million for the six months ended June 30, 1999 from $151,000 for the six months
ended June 30, 1998. For accounting purposes, we recognize stock-based
compensation in connection with the issuance of shares of our common stock and
the granting of options to purchase our common stock to employees and
consultants with purchase or exercise prices that are less than the deemed fair
market value at the grant date. Stock-based compensation related to the
issuance of shares of common stock has been expensed in the period in which the
common stock was issued. Stock-based compensation related to the issuance of
options to purchase common stock is being amortized over the vesting period of
the stock options through 2003. Total deferred stock-based compensation as of
June 30, 1999 was $3.2 million. These deferred amounts and the related
amortization charges will increase if we record further deferred stock-based
compensation in future periods.

  Amortization of Goodwill and Intangible Assets. Amortization expense was
$251,000 for the six months ended June 30, 1999, due to the amortization of
goodwill and intangible assets recorded in connection with our acquisition of
Netranscend Software, Inc. in March 1999. We recorded no goodwill amortization
expense for the first six months of 1998. We expect to recognize $250,000 of
amortization expense for this transaction in each quarter through the first
quarter of 2002.

  Interest Income (Expense), Net. Interest income, net was $14,000 in the six
months ended June 30, 1999, representing primarily interest earned on the $9.6
million of cash and cash equivalents we generated in the

                                       25
period from private placements of convertible preferred stock. The net interest
expense of $234,000 in the six months ended June 30, 1998 was primarily due to
the beneficial conversion feature of a note payable to stockholders.

Periods Ended December 31, 1998, 1997 and 1996

  Revenues. Revenues were $3.6 million in 1998 and $426,000 in 1997. We did not
have any revenues in 1996. The increase in revenues from 1997 to 1998 was
primarily due to the commencement of selling advertising campaign management
services. In 1997, we were selling advertising space on our Internet sites
under our prior business model. In 1998, we began providing our advertising
campaign management services and increased our sales force, resulting in
significant revenue growth in 1998.

  Cost of Revenues. Total cost of revenues was $2.8 million, or 77.2% of
revenues, in 1998 and $445,000, or 104.6% of revenues, in 1997. The dollar
increase in cost of revenues was primarily due to the increase in revenues from
1997 to 1998. The decrease in cost of revenues as a percentage of revenues in
1998 as compared to 1997 was primarily due to the commencement of selling
advertising campaign management services.

Operating Expenses

  Sales and Marketing. Sales and marketing expenses were $820,000, or 22.8% of
revenues, in 1998, $481,000, or 112.9% of revenues, in 1997, and $23,000 in
1996. The dollar increases in sales and marketing expenses from 1996 to 1997,
and from 1997 to 1998 were primarily due to the increases in the number of
sales personnel. The decrease in sales and marketing expenses as a percentage
of revenues was primarily due to the rate of increase in revenues in 1998
exceeding the rate of increase in sales and marketing expenses in 1998.

  Research and Development. Research and development expenses were $556,000, or
15.5% of revenues, in 1998, $347,000, or 81.5% of revenues, in 1997, and
$49,000 in 1996. The dollar increases in research and development expenses from
1996 to 1997, and from 1997 to 1998 were primarily due to the increases in the
number of development engineers we employed. The decrease in research and
development expenses as a percentage of revenues was primarily due to the rate
of increase in revenues in 1998 exceeding the rate of increase in research and
development expenses in 1998.

  General and Administrative. General and administrative expenses were
$636,000, or 17.8% of revenues, in 1998, $256,000, or 60.0% of revenues, in
1997, and $31,000 in 1996. The dollar increases in general and administrative
expenses from 1996 to 1997, and from 1997 to 1998 were primarily due to the
increases in the number of administrative personnel and outside administrative
services costs. The decrease in general and administrative expenses as a
percentage of revenues was primarily due to the rate of increase in revenues in
1998 exceeding the rate of increase in general and administrative expenses in
1998.

  Stock-based Compensation. Stock-based compensation expense was $578,000, in
1998, $11,000 in 1997, and $152,000 in 1996.

  Interest Income (Expense), Net. Net interest expense was $247,000 in 1998 and
$3,000 in 1997. There was no interest income or expense in 1996.

                                       26
Quarterly Results of Operations

  The following table presents statement of operations data for the six
quarters ending with the quarter ended June 30, 1999. We believe that this
unaudited information has been prepared on the same basis as the audited annual
financial statements and includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the unaudited
financial information for the quarters presented. You should read this in
conjunction with our financial statements, including the accompanying notes,
included elsewhere in this prospectus.
Three Months Ended
                          -------------------------------------------------------
                                                                           June
                          March 31, June 30, Sept. 30, Dec. 31, March 31,   30,
                            1998      1998     1998      1998     1999     1999
                          --------- -------- --------- -------- --------- -------
                                              (in thousands)
Statements of Operations
Data:
Revenues................    $ 586    $ 935    $1,069    $ 997    $ 1,633  $ 5,689
Cost of revenues........      480      733       756      802      1,340    4,421
                            -----    -----    ------    -----    -------  -------
 Gross profit...........      106      203       313      195        294    1,268
Operating expenses:
 Sales and marketing....      193      201        87      338        543    1,104
 Research and
  development...........      125       95       195      140        308      507
 General and
  administrative........      117      208       132      180        456      626
 Stock-based
  compensation..........       --      151        --      427      1,953    1,013
 Amortization of
  goodwill..............       --       --        --       --         --      251
                            -----    -----    ------    -----    -------  -------
  Total operating
   expenses.............      435      656       414    1,085      3,260    3,501
                            -----    -----    ------    -----    -------  -------
Loss from operations....     (329)    (453)     (101)    (890)    (2,966)  (2,233)
Interest income
 (expense), net.........       (1)      (1)     (230)     (15)         1       12
                            -----    -----    ------    -----    -------  -------
Net loss................    $(330)   $(454)   $ (331)   $(905)   $(2,965) $(2,221)
                            =====    =====    ======    =====    =======  =======
Three Months Ended
                         -----------------------------------------------------------
                         March 31, June 30,  Sept. 30, Dec. 31,  March 31,  June 30,
                           1998      1998      1998      1998      1999       1999
                         --------- --------  --------- --------  ---------  --------
As a Percentage of
 Revenues:
Revenues................   100.0 %  100.0 %    100.0 %  100.0 %    100.0 %   100.0 %
Cost of revenues........    81.9     78.3       70.7     80.4       82.0      77.7
                           -----    -----      -----    -----     ------     -----
 Gross profit...........    18.1     21.7       29.3     19.6       18.0      22.3
Operating expenses:
 Sales and marketing....    33.0     21.5        8.1     33.9       33.2      19.4
 Research and
  development...........    21.3     10.2       18.3     14.1       18.9       8.9
 General and
  administrative........    19.9     22.3       12.3     18.0       27.9      11.0
 Stock-based
  compensation..........      --     16.2         --     42.8      119.6      17.8
 Amortization of
  goodwill..............      --       --         --       --         --       4.4
                           -----    -----      -----    -----     ------     -----
  Total operating
   expenses.............    74.2     70.2       38.7    108.8      199.6      61.5
                           -----    -----      -----    -----     ------     -----
Loss from operations....   (56.0)   (48.5)      (9.4)   (89.3)    (181.6)    (39.3)
Interest income
 (expense), net.........    (0.2)    (0.1)     (21.5)    (1.5)       0.1       0.2
                           -----    -----      -----    -----     ------     -----
Net loss................   (56.2)%  (48.5)%    (30.9)%  (90.8)%   (181.5)%   (39.1)%
                           =====    =====      =====    =====     ======     =====
Due to the early stage of our company and the commencement of selling
advertising campaign management services in April 1998, the period-to-period
comparisons of our historical operating results should not be relied upon as
indicative of future performance. During the second and third quarters of 1998,
our results reflect the transition from our prior content-based business model
to our media campaign management

                                       27
business model. Beginning in the fourth quarter of 1998, our financial
performance solely reflected our current advertising campaign management
services.

  The quarter ended September 30, 1998 was the last quarter in which we
generated revenues from our prior business model. In the quarters ended
December 31, 1998, March 31, 1999 and June 30, 1999, revenues were $1.0
million, $1.6 million and $5.7 million, respectively, and were generated solely
from our advertising campaign management services business.

  The increases in sales and marketing expenses, research and development
expenses, and general and administrative expenses from the quarter ended
December 31, 1998 through the quarter ended June 30, 1999 are primarily due to
increased compensation and related expenses as a result of the increased
headcount required to support the growth in advertising campaign management
services revenues.

  The stock-based compensation expense for the quarter ended June 30, 1998
represented the non-cash expense related to the issuance of shares of our
common stock for services rendered. The stock-based compensation expense for
the quarters ended December 31, 1998 and March 31, 1999 represented expense for
the issuance of shares in exchange for services, and the amortization of
deferred stock compensation recorded for options granted to employees and
consultants to purchase common stock with exercise prices that were less than
the deemed fair market value at the grant date. The stock-based compensation
expense for the quarter ended June 30, 1999 consisted solely of the
amortization of the deferred stock compensation recorded for options granted to
employees to purchase common stock at exercise prices that were less than the
deemed fair market value at the grant date.

  Although we have experienced revenue growth in recent periods, we anticipate
that we will incur operating losses for the foreseeable future due to the high
level of planned operating and capital expenditures.

Liquidity and Capital Resources

  Since our inception in September 1996 through June 1999, we have financed our
operations primarily through the private placement of preferred stock, which
has generated an aggregate of $10.5 million. As of June 30, 1999, we had
$7.6 million in cash and cash equivalents. In August 1999, we raised an
additional $14.4 million from the gross proceeds of sale of additional shares
of preferred stock.

  Net cash used in operating activities in the six months ended June 30, 1999
and 1998, the years ended December 31, 1998, 1997 and the period from September
10, 1996 (inception) through December 31, 1996, was $1.4 million, $165,000,
$240,000, $150,000 and $28,000, respectively. Net cash used in operating
activities in each of these periods was primarily the result of net losses
before non-cash charges, and increases in accounts receivable, offset by stock-
based compensation expense and increases in accounts payable and accrued
liabilities, and, with respect to the year ended December 31, 1998 and the six
months ended June 30, 1999, depreciation and amortization charges.

  Net cash used in investing activities in the six months ended June 30, 1999
and 1998, the years ended December 31, 1998, 1997 and the period from September
10, 1996 (inception) through December 31, 1996, was $840,000, $38,000, $79,000,
$70,000 and $24,000, respectively. Net cash used in investing activities in all
periods presented was due principally to the acquisition of computer equipment
and software.

  Net cash provided by financing activities in the six months ended June 30,
1999 and 1998, the years ended December 31, 1998, 1997 and the period from
September 10, 1996 (inception) through December 31, 1996, was $9.4 million,
$306,000, $551,000, $335,000 and $80,000, respectively. Net cash provided by
financing activities in all periods was primarily due to sales of shares of our
common stock and, in the six months ended June 30, 1999, our preferred stock,
as well as in 1998 and the six months ended June 30, 1998, funds borrowed from
stockholders under notes payable. A portion of these notes payable were paid
off in the six months ended June 30, 1999.

                                       28
Although we have no material commitments for capital expenditures, we
anticipate an increase in the rate of capital expenditures consistent with our
anticipated growth in operations, infrastructure and personnel. We believe that
the net proceeds from this offering, combined with current cash balances and
cash equivalents, will be sufficient to meet our anticipated liquidity needs
for working capital and capital expenditures for at least twelve months from
the date of this prospectus. Our forecast of the period of time through which
our financial resources will be adequate to support operations is a forward-
looking statement that involves risks and uncertainties, and actual results
could vary materially as a result of the factors described above. If we require
additional capital resources to grow our business internally or to acquire
complementary technologies and businesses, we may seek to sell additional
equity or debt securities or secure a bank line of credit. The sale of
additional equity or convertible debt securities could result in additional
dilution to our stockholders. We cannot assure you that any financing
arrangements will be available in amounts or on terms acceptable to us.

Market Risk Disclosure

  The following discusses our exposure to market risk related to changes in
foreign currency exchange rates and interest rates. This discussion contains
forward-looking statements that are subject to risks and uncertainties. Actual
results could vary materially as a result of a number of factors including
those set forth in the risk factors section of this prospectus.

  Foreign Currency Exchange Rate Risk. To date, we have not had any revenues
from international operations, and all of our recognized revenues have been
denominated in U.S. dollars from clients in the United States. We expect,
however, that future revenues may also be derived from international markets
and may be denominated in the currency of the applicable market. As a result,
our operating results may become subject to significant fluctuations based upon
changes in the exchange rates of foreign currencies in relation to the U.S.
dollar. Furthermore, to the extent that we engage in international sales
denominated in U.S. dollars, an increase in the value of the U.S. dollar
relative to foreign currencies could make our products less competitive in
international markets. Although we expect to monitor our exposure to currency
fluctuations as we expand into international markets, and, when appropriate,
may use financial hedging techniques in the future to minimize the effect of
these fluctuations, we cannot assure you that exchange rate fluctuations will
harm our financial results in the future.

  Interest Rate Risk. As of June 30, 1999, we had cash and cash equivalents of
$7.6 million which consist of cash and highly liquid short-term investments.
Our short-term investments will decline in value by an immaterial amount if
market interest rates increase. Declines of interest rates over time will,
however, reduce our interest income from our short-term investments.

Recent Accounting Pronouncements

  In March 1998, the Accounting Standards Executive Committee, or ASEC, issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 provides guidance on when
costs related to software developed or obtained for internal use should be
capitalized or expensed. SOP 98-1 is effective for transactions entered into
for fiscal years beginning after December 15, 1998. We have reviewed the
provisions of SOP 98-1 and we do not believe adoption of this standard will
have a material effect upon our statement of operations.

  In April 1998, the ASEC issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 requires the cost of start-up activities, including
organization costs, to be expensed as incurred. We do not expect this
pronouncement to have a material effect upon our statement of operations.

  In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which requires companies to record derivative
financial instruments on the balance sheet as assets or liabilities, measured
at fair value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedging accounting. The key criterion for

                                       29
hedge accounting is that the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of all fiscal years beginning after June 15,
1999. We do not anticipate that this statement will have a material effect upon
our statement of operations.

  In December 1998, the American Institute of Certified Public Accountants
issued SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition, with
Respect to Certain Transactions." SOP 98-9 amends SOP 97-2 and SOP 98-4 by
extending the deferral of the application of certain provisions of SOP 97-2
amended by SOP 98-4 through fiscal years beginning on or before March 15, 1999.
All other provisions of SOP 98-9 are effective for transactions entered into in
fiscal years beginning after March 15, 1999. We do not anticipate that these
statements will have a material effect upon our statement of operations.

Year 2000 Compliance

  Many currently installed computer systems and software products worldwide are
coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they are not able to distinguish between the year 1900 and
the year 2000. Accordingly, many companies, including ourselves and our
clients, potential clients, vendors and strategic partners, may need to upgrade
their systems to comply with applicable year 2000 requirements.

  Because we and our clients depend, to a very substantial degree, upon the
proper functioning of computer systems, a failure of these systems to correctly
recognize dates beyond December 31, 1999 could disrupt operations. Any
disruptions could harm our business. Additionally, our failure to provide Year
2000 compliant solutions to our clients could result in financial loss,
reputational harm and legal liability to us.

  Substantially all of our computer equipment and software was purchased in the
past twelve months. As such, we believe that this software is generally Year
2000 compliant, meaning that the use or occurrence of dates on or after January
1, 2000 will not materially affect the performance of this software or the
ability of this software to correctly create, store, process and output data
involving dates.

  We typically use industry-standard third-party hardware and software. We have
not, to date, sought assurances from our suppliers that their products are Year
2000 compliant. We also generally do not have any contractual rights with these
providers if their software or hardware fails to function due to Year 2000
issues. If these failures do occur, we may incur unexpected expenses to remedy
any problems, including purchasing replacement hardware and software.

  Because our computer equipment and software is substantially new, we have not
engaged any third parties to independently verify our Year 2000 readiness, nor
have we assessed potential costs associated with Year 2000 risks or made any
contingency plans to address these risks. Further, we have not deferred any of
our ongoing development efforts to address Year 2000 issues. Unanticipated
costs associated with any Year 2000 compliance could materially harm our
quarterly and annual results of operations.

  We are currently implementing a new accounting and management reporting
system for business reasons unrelated to Year 2000. We have been assured that
our new system is also Year 2000 compliant by the vendor. If any of our
vendors' representations regarding their products are not accurate, or if we
encounter unknown Year 2000 problems relating to the interaction of our
systems, we could incur significant expenses to resolve these issues or damages
resulting from a failure of our systems to perform correctly. For example, if
our accounting system fails to properly record our transactions, we would need
to devote additional staff or hire a third-party to correct the problem, could
lose important data and would have difficulty planning without accurate
financial information.

  We depend on the uninterrupted availability of the Internet infrastructure to
conduct our business as a centralized ad delivery and management service. We
also rely on the continued operations of our clients, in

                                       30
particular Web sites hosting advertisements, for our revenues. We are heavily
dependent upon the success of Year 2000 compliance efforts of our clients.
Interruptions in the Internet infrastructure affecting us or our clients, or
failure of the Year 2000 compliance efforts of one or more of our clients,
could harm our ability to generate revenue.

  In the event we discover Year 2000 problems in our products or internal
systems, we will endeavor to resolve these problems by making modifications to
our products or systems or purchasing new systems, on a timely basis. In
addition, the effect of Year 2000 issues on our clients generally, or on our
banks, stock markets and other infrastructure functions is unknown. We cannot
assure you that our systems will be Year 2000 compliant or that we will not
incur material expenses or liability relating to the Year 2000 problem.

                                       31
BUSINESS

  We provide technology-based eBusiness marketing solutions that enable
advertisers to optimize their online marketing efforts. eBusiness marketing
allows companies to combine their online direct marketing and branding
activities with critical enterprise business data in order to effectively use
the Internet to manage and transact business. Our services encompass the
planning, execution, monitoring and analysis of advertising campaigns over the
Internet. Our proprietary MOJO technology platform enables advertisers to
deliver, in real time, customized advertising messages to a targeted consumer.
Our MOJO platform interfaces with companies' existing enterprise data and
software applications to access critical business information that is used to
customize the advertising message. We believe customized, real-time messaging
will increase the consumer response to online advertisements, thereby improving
the return on advertising spending. Our services are offered as a comprehensive
solution, or individually as part of a complementary service in partnership
with other advertising and technology providers. Some of our clients include
companies such as DATEK Online Brokerage Services, Corp., OfficeMax,
ShopNow.com, Strong Funds, and advertising agencies including McCann-Erickson
and Publicis & Hal Riney using our services on behalf of their clients such as
Hewlett-Packard, Siebel Systems, Silicon Graphics, Inc. and Sprint PCS.

Industry Background

The Internet as an Advertising Medium for Direct Marketing, Branding and
eBusiness

  The Internet is rapidly becoming an important advertising medium for direct
marketing and product branding. Forrester Research, Inc. anticipates that U.S.
online advertising spending will grow from $2.8 billion in 1999 to $17.2
billion in 2003, driven by a number of factors, including the growing online
population, the acceleration of e-commerce and the advancement of online
marketing technologies. According to International Data Corporation, the U.S.
online population is projected to grow from 80.8 million in 1999 to 177.0
million by 2003, and U.S. e-commerce spending is projected to increase from
$74.4 billion in 1999 to $707.9 billion by the end of 2003.

  To date, the major spenders in online advertising have been Internet,
computer and technology companies and financial institutions. We believe other
advertisers, who have historically used more traditional media, are
increasingly becoming attracted to the Internet because of its global reach,
potential to enable one-to-one marketing and ability to track and measure
campaign results in real time. Advertisers are beginning to recognize the
effectiveness of the Internet to build long-term brand awareness, perform
valuable market testing, and facilitate immediate trial and sales of products
and services. In contrast to traditional, or off-line advertising, the
interactive nature of the Internet gives companies the ability to send
advertising messages to consumers and enables consumers to immediately respond
to the advertising. Furthermore, the Internet enhances client-specific
marketing campaigns to promote customer retention and loyalty.

  Despite the emergence of the Internet as a medium for advertising,
expenditures for online advertising represent only a small portion of all media
spending. Forrester Research, Inc. estimates that by 2003, U.S. total media
spending will reach approximately $260.6 billion, of which the online component
of $17.2 billion will represent only 6.6%. We believe online media spending has
the potential to capture a larger portion of total media spending as new
technologies improve the effectiveness of online advertising and attract more
traditional media advertisers to the Internet.

  We believe the rapid growth of e-commerce has changed the nature and pace of
business operations and competition. Companies are increasingly realizing the
importance of conducting "eBusiness," which goes beyond the simple sale of
products and services over the Internet. eBusiness is the use of the Internet
to manage and transact business, and communicate with consumers, clients,
suppliers and partners. In addition, eBusiness leverages the significant
financial and technical resources that companies have made in software
applications which manage and store critical business information, such as
enterprise resource planning and supply and distribution management systems. We
believe that it is increasingly becoming a competitive necessity for companies
to operate as eBusiness enterprises.

                                       32
The Challenges of Online Advertising

  An effective online marketing campaign requires a wide range of
implementation, management and technology expertise in campaign development,
advertising execution and results analysis. The real-time delivery, measurement
and analysis of multiple advertising campaigns encompassing thousands of Web
sites is complex and difficult to execute and manage. Traditional advertising
agencies and most companies typically do not have the expertise in the Internet
medium to address these delivery and management requirements.

  The increase in online advertising spending has heightened expectations for
more effective advertising campaigns and improved return on investment, or ROI.
The standard benchmarks to measure the impact of an advertising campaign are
banner impressions, viewer click-through rates to advertisers' sites from
online messages, and conversion rates, which are the percentage of consumers
who complete a purchase or other transaction. Recently, click-through rates
have been declining and advertisers are increasingly competing for the
attention of online consumers. As a result, companies are currently searching
for more effective advertising messaging techniques in order to increase click-
through and conversion rates.

  To date, online advertising has not achieved effective one-to-one marketing,
which requires delivery of the right message to the right consumer at the right
time. Ideally, advertisers seek to identify potential customers most likely to
purchase their products, send them a message tailored to their individual
preferences, and do so at a time when they are most likely to make a purchase
decision. Most current technologies are focused on identifying the right
consumer based on their demographic, geographic or psychographic
characteristics. Identifying the right consumer, however, represents only one
component of true one-to-one marketing. The ability to send the right message
at the right time remains a significant challenge.

  Sending the right message at the right time would enable companies to use
advertising as an effective online marketing and sales channel. The right
message includes appropriate product information for a particular consumer,
based on the existing operating profile of the enterprise including, for
example, pricing and availability. In order to achieve this, companies must
access and integrate their existing business information into the online
advertising process, enabling them to incorporate critical business information
in targeted messages and turn an advertisement into an effective eBusiness
tool. For example, a hotel with excess availability in New York City would seek
to advertise discounts to consumers booking flights to New York.

  We believe that there is a significant opportunity for a vendor who can
provide a comprehensive, technology-based solution for online advertising
campaigns. We believe that this solution must provide the following key
capabilities:

  . Expertise to Manage and Execute All Stages of Online Marketing
    Campaigns. A comprehensive solution must encompass campaign planning and
    execution, measuring results, analyzing data and thereafter optimizing
    the ongoing and future campaigns. This requires the use of complex
    technologies that allow real-time campaign adjustments. In addition,
    integration with off-line advertising is essential to deliver a
    consistent brand and direct marketing message.

  . Data Accumulation and Analysis. A complete solution must include
    accumulation and analysis of valuable profiling data about consumers to
    target and re-target these consumers effectively in future campaigns.

  . Detailed ROI Analysis. An optimal solution should provide advertisers and
    advertising agencies with customizable, comprehensive, real-time return
    on investment analyses of both content and placement to optimize campaign
    performance and improve ROI.

  . Tailored Messaging Capabilities. To maximize the effectiveness of a
    campaign and achieve one-to-one marketing, an online advertiser must have
    the ability to tailor an advertisement in real time, either manually or
    automatically, based on parameters such as product selection, consumer
    profile and location, and campaign performance.

  . Leverage Enterprise Data. The ability to integrate existing enterprise
    data into online advertising campaigns through dynamic messaging would
    enable companies to increase conversion rates and sales and utilize the
    Internet more effectively as a medium for eBusiness. Dynamic messaging is
    the ability to change advertisements in real time based on business
    parameters, such as product pricing or inventory levels.

                                       33
Solution

  We provide technology-enabled eBusiness marketing services that enable
companies to use online advertising as a sales and marketing channel. We plan,
execute, measure and report the effectiveness of online campaigns. Our MOJO
platform is a Java object-based technical architecture which allows us to offer
a broad range of technologically-advanced services that can scale across the
Internet to accommodate a large number of advertising campaigns, which are
simultaneously delivered to a broad universe of Web sites and consumers. Our
MOJO technology interfaces with companies existing product databases or
enterprise software applications to access critical business information, which
is used to deliver the most relevent message customized to a targeted consumer
in real time. Our technology is designed to maximize the effectiveness of
online advertising, resulting in higher click-through and conversion rates,
thereby delivering a higher ROI on advertising spending. Our services are
offered as a comprehensive solution, or individually as part of a complementary
service in partnership with other advertising and technology vendors, such as
DoubleClick.

  Our solution includes the following benefits:

  . Comprehensive Online Advertising Campaigns. Using our technology platform
    and expertise in online advertising, we provide a full range of services
    that optimize online campaigns, including strategic planning, execution
    of media buys, ad serving and reporting capabilities. We work with
    traditional advertising agencies to integrate online and off-line
    advertising and marketing strategies to increase the return on the total
    advertising investment.

  . Real-time Tracking and Measuring Campaign Results. To optimize any given
    campaign, we monitor its effectiveness by tracking the return on
    advertising investments through multiple metrics, including click-through
    and conversion rates, as well as revenues derived from these conversions.
    This monitoring enables campaigns to be automatically or manually
    modified in real time to maximize effectiveness.

  . Sophisticated Data Capture and Analysis. Using our data capture
    capabilities and those of our strategic partners, we match advertiser-
    selected profiles with consumer profiles based on geographic, demographic
    and psychographic information, including purchasing and site visitation
    patterns, to target and re-target consumers.

  . Real-time Messaging Capabilities. We have the ability to change the
    content of online advertisements in real time. This enables a company to
    tailor its marketing messages based on consumer profiles as well as
    predefined parameters or business rules, such as product rotations or
    pricing. We also enable a company to test advertising graphics, messages
    and sites, and adjust them in real time to optimize campaign performance.

  . Integration of Enterprise Business Information. Our MOJO technology
    enables us to integrate online advertising campaigns with enterprise
    data, allowing us to dynamically tailor and deliver advertisements based
    on a consumer's profile and on a company's real-time inventory, pricing
    or other pertinent product data. We believe that this integration leads
    to more effective messaging, increased sales and improved inventory yield
    management. In this sense, our technology will not only be used to report
    ROI figures, but will also be used to produce higher ROI results.

Strategy

  Our objective is to become the leading provider of technology-enabled
eBusiness marketing solutions. Our strategy includes the following key
elements:

  . Target Global 1000 Companies and e-Commerce Companies. We believe we can
    deliver significant value to Global 1000 companies that require online
    management and technology expertise to develop and execute effective
    direct marketing and branding campaigns. We plan to identify Global 1000
    companies that want to leverage the potential of the Internet for
    eBusiness to strengthen their competive position. In addition, we intend
    to target e-commerce companies of all sizes that rely significantly on
    the Internet to extend their business presence and to market, sell and
    purchase products and services.

                                       34
. Partner with Advertising Agencies. We intend to expand and strengthen our
    partnerships with traditional advertising agencies to extend our direct
    sales efforts. We will continue to provide agencies with critical online
    media technology expertise, which we believe will accelerate our
    penetration of medium to large-sized corporate clients. We have already
    established partnerships with leading agencies such as McCann-Erickson
    and Publicis & Hal Riney. We intend to pursue relationships with other
    advertising agencies by providing technology-enabled services and support
    for online advertising that can be fully integrated with their off-line
    initiatives.

  . Maintain Technology Leadership. We believe that our technology is a key
    competitive differentiator. Our MOJO technology platform enables us to
    efficiently deploy services that give our clients innovative advertising
    capabilities while providing the ability to integrate enterprise
    information into their online messages in real time. Our Java objects-
    based architecture enables our solutions to scale geographically across
    the Internet and a large number of transactions and advertisers. We
    intend to extend our technology leadership by incorporating additional
    functionality and services into our platform, such as e-commerce-enabled
    messages.

  . Enhance Sales Capabilities Through Strategic Relationships. We plan to
    broaden our existing strategic relationships with companies such as
    DoubleClick, SAP Labs and Icon Medialab, and to build relationships with
    additional companies for our campaign management and MOJO technology
    capabilities. We are seeking to work with traditional and interactive
    advertising agencies, online ad serving companies, ad publishing
    representatives, Web development and consulting firms, enterprise
    application companies and systems integrators. Our objective is to
    establish alliances with these companies and accelerate our sales
    penetration into enterprises in need of our services. In addition, we
    expect to develop and manage affiliate and sponsorship programs which
    generate shared revenues derived from prospective e-commerce-based
    services.

  . Deliver Flexible Online Marketing Solutions. We believe that online
    advertisers will increasingly demand greater flexibility and
    accountability in their advertising programs. Because we can unbundle our
    technology-enabled services, our solutions can be deployed together with
    the capabilities offered by other advertising and technology providers,
    such as DoubleClick. By working with third-party providers, we can offer
    specific services, such as dynamic tailored messaging, that complement
    their advertising services. This flexibility creates enhanced revenue
    opportunities and accelerates market adoption of our services and
    technology by targeting clients interested in unbundled elements of our
    solution.

  . Broaden International Presence. We plan to expand our capabilities and
    presence internationally in order to capitalize on the global reach of
    the Internet. We also believe there is a significant opportunity to
    provide our solutions to companies based outside of the United States
    that require technology-enabled advertising services tailored for their
    local markets. We have recently opened a sales office in Hamburg, and by
    the end of 1999, we expect to have established an office in Tokyo and
    offices in London, Paris and Stockholm.

Our Services

  Our technology-enabled eBusiness marketing services encompass all aspects of
an online advertising initiative, including campaign planning and execution,
online message management and campaign analysis. Our technology-enabled
offerings can be delivered individually or as a suite of services and are
principally priced based on cost per thousand impressions, cost per click, or
cost per acquisition, which can include sales and registrations.

  Our services can be offered as part of a complementary solution provided in
partnership with other advertising and technology vendors. In particular, our
MOJO technology can be deployed with the serving capabilities provided by other
companies, such as DoubleClick, and interactive ad agencies. This allows us to
work with clients of these service and technology providers who do not need all
of our campaign management capabilities, but still want to deploy our MOJO
technology or any of our other services.

                                       35
--------------------------------------------------------------------------------
   Services                                 Description of Services
--------------------------------------------------------------------------------

                               . Develop an online media strategy based on the
                                 client's business objectives and the
                                 appropriate Internet media opportunities
 Campaign Planning and Execution

                               . Plan and purchase media across Internet
                                 advertising networks and independent Web
                                 sites, employing various price structures

                               . Manage the ad serving process

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

 Online Message Management     . Apply targeting goals based on the specific
                                 capabilities of each Web site or advertising
                                 network considered for the marketing campaign

                               . Adjust campaigns in real time across all Web
                                 sites based on predetermined schedules or the
                                 occurrence of defined events

                               . Customize messages in real time based on
                                 customer profiling, defined business rules
                                 determined by enterprise data, market events
                                 and campaign performance as measured by
                                 standard metrics or ROI analysis

                               . Use data capture capabilities to refine the
                                 database and re-target consumers

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

Campaign Analysis
                               . Track and monitor campaigns for results as
                                 measured by Web site and advertisement

                               . Provide real-time reports customized by
                                 performance data, including impressions,
                                 click-throughs and conversions for each Web
                                 site and advertisement

                               . Generate campaign ROI statistics summarizing
                                 results by categories such as user-targeting
                                 data, inventory changes, Internet sites and
                                 date/time

                               . Optimize campaigns based on ongoing
                                 performance data

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

Campaign Planning and Execution

  . Campaign Planning. We develop Internet media strategies based on
    advertisers' business goals and advertising objectives, such as brand
    awareness, product trial and sales, and previous online performance, if
    available. We determine target audiences using demographic, geographic
    and psychographic information, or consumers' areas of interest. Our
    online media programs are integrated with clients' off-line campaigns to
    deliver a consistent brand message at each point of contact.

  . Media Buying and Placement. We leverage our wholesale buying power in
    planning and buying across all advertising networks and independent Web
    sites. Each campaign is customized, incorporating sponsorships, keywords,
    run of site, specific position and remnant space, where applicable. Media
    purchases can be based on several models including cost per thousand
    impressions, cost per click, cost per acquisition and revenue-sharing
    programs. Our MOJO technology processes insertion orders systematically
    across networks and individual Web sites to deliver accurate ad
    placement.

  . Ad Serving. Our third-party ad serving capabilities allow adjustments to
    be managed quickly and efficiently because the only change required to
    the advertisement is effected on our server instead of on each individual
    Web site.

                                       36
. Re-Targeting. During a campaign, we use extensive data capture
    capabilities through strategic partners like DoubleClick to further
    refine the database and re-target advertising to prospects who have
    visited a client's Web site. Information can include site visitation
    patterns and online purchasing activity. For example, we can track which
    product pages a consumer visits, how far they proceed in the shopping
    process, and if they have made previous online purchases. This data can
    then be used to optimize audience and message targeting for the ongoing
    campaign.

Online Message Management

  . Dynamic Messaging. We enable advertisers to modify advertising messages
    dynamically, that is, at any point in time. Online advertisements contain
    "data fields" where messages can change, such as products, prices or
    special offers. Message modification can be automated by establishing
    predefined events that determine message content, such as product
    rotations or price reductions. Advertisers can also make modifications
    manually, directly from their desktop computers.

  . Targeted Messaging Integrated with Enterprise Data. Our eBusiness
    messaging capability enables advertisers to use real-time business
    information, such as product inventory, pricing and availability, to
    deliver the most relevant message to each viewer. We assist advertisers
    with the development of business rules based on product database or
    enterprise system information. During the campaign, our MOJO technology
    can make automatic modifications to the advertising on the basis of these
    business rules. We believe that clients with time-sensitive inventory are
    particularly well-suited to take advantage of these capabilities. For
    example:

    . An airline promotes roundtrip fares between San Francisco and New
      York. Fourteen days prior to the flight, the airline advertises seats
      at $956. The airline could specify that seven days before the flight,
      the price on the banner message would systematically change to
      $1,499. Based on excess seat availability two days prior to
      departure, the fare offered for a limited number of the seats would
      be automatically discounted to $799.

    . A hotel chain focuses its advertising campaign on reaching an 80%
      occupancy rate. When the occupancy rate of a particular hotel reaches
      this level, the message is automatically directed to promote another
      property within the chain.

  . Integration of Data From Third-Party Vendors. In addition to customer
    profiling data that we compile, we have access to the extensive profiling
    data of our strategic partner, DoubleClick. Our MOJO technology utilizes
    this data in creating, in real time, the appropriate message to a
    profiled consumer based on enterprise and market data.

  . Storyboard Messaging. Using our technology, a "storyboard" of advertising
    messages can be constructed in a series. The campaign can be designed to
    show a set of advertisements in a predefined sequence for a particular
    consumer, regardless of which Web site in the campaign is viewed. This
    choreographs a series of customized messages based on the consumer's
    interests and online activity. For example, a viewer purchasing a
    computer online will be presented with advertisements for accessories the
    next time he or she accesses a Web site within the campaign.

  . Multiple Messaging. MOJO technology enables single advertisements to
    provide multiple click-through message options. The choice of message is
    determined by the location of the advertisement on which the consumer
    clicks. For example, if a consumer received a banner depicting a map of
    the United States and clicked on the state of California, the consumer
    would receive a different message than if he or she were to click on the
    state of Maryland.

Campaign Analysis

  . Campaign Tracking. We track impressions, click-throughs and conversions,
    which include sales and other types of transaction activity such as
    registrations and requests for information, across all campaign sites.
    Activity is monitored by site, creative unit, such as a banner or side
    panel, and message content.

                                       37
Our technology enables tracking of performance metrics for standard
   advertisements and for the more difficult to monitor advertisements
   utilizing rich media that may incorporate audio and video components. We
   can also track advertising that is served by independent third-party ad
   servers.

  . Campaign Reporting. We provide a full range of accurate and timely
    reporting capabilities customized to meet individual advertiser's needs.
    Clients are able to view secure, real-time campaign reports by
    performance metrics, including impressions, click-throughs, conversion
    rates and sales, at any time over the Internet in a summary format that
    provides results categorized by site and by advertisement.

  . ROI Analysis. ROI reporting is customized to each advertiser and
    integrates sales and conversion data to dynamically generate campaign
    statistics in real time. Reports provide measurements on performance by
    tracking sales and other conversions criteria, such as registrations and
    information requests, as well as by tracking visitors who did not act
    immediately, but subsequently returned to the Web site and purchased.

  . Real-Time Campaign Optimization. Our MOJO technology allows predefined
    business rules to automatically optimize campaigns. In addition, we can
    make real-time changes to campaigns based on ongoing performance data.
    Our customized, real-time reports facilitate quick determination of the
    effectiveness of sites and advertisements based on performance metrics,
    such as lowest cost per sale and highest sales volume.

                                       38
Technology

  Our proprietary MOJO technology platform utilizes a mobile Java object
architecture that facilitates timely, efficient and accurate campaign execution
and management as well as a secure and efficient means of integrating a
client's proprietary enterprise business data with the online advertising
campaign. Our architecture is designed for scalability and high performance, to
manage multiple advertising campaigns across thousands of Web sites. All data
for an advertising campaign are captured in the form of intelligent Java
objects, each of which perform discrete functions. These objects store critical
information relevant to their function, can be controlled remotely, and can
exchange data with each other using the Java language over our publish and
subscribe-based messaging backbone. These objects, programmed using Java
language, are platform- independent and can reside on servers operated by
Mediaplex, the advertiser, a network publisher or any other third-party ad
server.

          [Graphic depiction of MOJO technology platform appears here]

  Mediaplex's MOJO architecture has three primary technical components:
advertising objects, network services and enterprise integration:

    Advertising Objects. Advertising objects contain all information relevant
  to a campaign and manage the serving of each advertisement. Targeting rules
  residing in an ad-serving object determine, for example, which targeting
  profile upon which to focus and which message to send to a particular
  consumer.

                                       39
Tracking functions for an advertising campaign are also performed by these
  objects, which can be stored and executed on any server. The advertising
  objects are configurable in real time from remote locations.

    Network Services. This component manages the entire campaign and
  coordinates communication between other objects and with our clients
  through our publish and subscribe messaging capability. This messaging
  capability intelligently receives events published or transmitted by
  various objects and forwards that information to other objects that have
  subscribed to or are authorized to receive such information. This component
  contains the business rules for a campaign that determine, for example,
  which product information will be advertised and at what price, in response
  to changes in inventory levels. Reporting functions are also performed in
  this layer, which also manages access to relevant campaign data, through
  the publish and subscribe messaging capability. This network services layer
  effectuates dynamic messaging by applying predefined business rules to
  modify an advertising message within a preset graphic template on the basis
  of events encapsulated within other objects within the network. This
  component is administered remotely, residing in our two co-location data
  centers, and communicates with the advertising objects and enterprise
  integration components while executing the campaign.

    Enterprise Integration. This component consists of objects that
  encapsulate the client's enterprise data relevant to the campaign and
  generate events that are communicated to the network services layer and
  advertising objects. The underlying enterprise data is not transferred and
  as such the integrity of a client's enterprise data is protected and
  preserved under our architecture. In addition to communicating client
  events to the campaign, actual campaign results are communicated back to
  the client's enterprise data. This two-way communication facilitates
  optimization of a business' operating systems and performance based on
  campaign results, as well as optimization of a campaign based upon current
  business data.

  We believe our technology architecture provides these distinct competitive
advantages:

  Real Time. Campaign optimization occurs in or near real time. Our MOJO
technology is structured to enable our clients to establish business rules
which will automatically optimize results in response to pre-defined events.
Real-time manual adjustments can be made interactively based on reports
received during ongoing campaigns.

  Flexibility. Our MOJO platform is designed to be flexible, supporting both
simple systems such as remote banner serving and click-through tracking as well
as more sophisticated ROI tracking and automated feedback. Marketing campaigns
can be modified in real time automatically or manually, based on changes in the
data encapsulated in various objects. These changes are communicated between
objects through a continuous communication loop facilitated by the publish and
subscribe messaging capabilities. Our architecture is also designed to be open
and compatible with most major enterprise software applications and systems.
Our MOJO technology is easy to integrate and implement because it uses an
industry standard language, XML, for its data encoding and communication.
MOJO's support for major industry standards also includes HTTP, CORBA and LDAP.

  Scability and Reliability. Our MOJO architecture is designed to scale in
anticipation of increased transaction demand and system load. Our architecture
is scalable by simply adding more servers to accommodate system data traffic.
The application logic is designed to remain unchanged as the transaction volume
grows. In addition, our technology uses automatic failure protection combined
with fault tolerance, which allows campaign requests to be served even if one
or more servers are down.

  We have invested significant amounts toward research and development to date.
Our expenses in this area totaled approximately $347,000, $556,000 and $816,000
in 1997, 1998 and the six months ended June 30, 1999, respectively.

                                       40
Sales and Marketing

  We market and sell our services primarily through our field sales force,
which included 53 sales people as of August 31, 1999. Currently, we have sales
offices and support operations in San Francisco, New York City and Hamburg, and
plan to open additional sales offices in Western Europe and Tokyo by the end of
1999. We intend to broaden our global presence by expanding our international
sales force and by entering into marketing agreements with international
partners.

  Sales leads are obtained primarily from two sources: direct leads and
strategic alliance leads. Direct leads are derived through field sales, client
referrals, our Web site, trade shows, and responses to our public relations and
marketing efforts. Strategic alliance leads are derived through companies that
offer complementary Internet solutions services. These companies include
traditional advertising agencies, Web site design, development and consulting
firms, enterprise resource planning vendors, interactive agencies, system
integrators, and creative and software tool kit companies. Our sales account
teams typically include an account manager, associate account managers, a
campaign manager and an account coordinator.

  We use a variety of marketing programs to build awareness of Mediaplex and
its service offerings. These include collateral marketing materials, online and
off-line advertising, press coverage and other public relations efforts, direct
marketing, trade shows, seminars and conferences, relationships with recognized
industry analysts, and the Mediaplex Web site.

Strategic Alliances

  An integral part of our strategy is to develop alliances with complementary
partners for sales, marketing and client development in the United States,
Europe and Asia. We currently have strategic relationships with companies in
the following categories:

  Internet Advertising. In August 1999, DoubleClick Inc., a leading provider of
online advertising services, and Mediaplex established a strategic alliance to
bridge the gap between non-personally identifiable online target data and an
advertiser's enterprise data. Through this relationship, we are able to
integrate our MOJO technology with DoubleClick's targeting system, known as
DART, thereby enabling creative messages in real time that are specifically
targeted to a consumer profile. Under our agreement with DoubleClick, we will
coordinate our efforts in DART-enabling the MOJO technology and jointly
marketing our services to prospective clients. The relationship also allows us
to use the DART system, where appropriate, and reduce our own serving costs as
we manage an increasing number of advertisements.

  Enterprise Resource Planning. In August 1999, we entered into an agreement
with SAP Labs, Inc., a subsidiary of SAP AG, an enterprise resource planning,
or ERP, software company. Under the terms of our agreement, we will create an
interface to SAP's R3 ERP system that will enable SAP's enterprise customers to
implement our MOJO technology in their e-commerce marketing initiatives.

  Internet Development and Consulting. In July 1999, we entered into a
preferred provider agreement with Icon Medialab, a global Internet architect
for companies integrating Internet-based technology with business strategies.
Icon Medialab's services include strategy consulting, system integration,
interface design and usability testing for enhanced customer relations. Under
our agreement with Icon Medialab, we will cross-refer clients and collaborate
on joint marketing and strategic consumer development programs. We also believe
that we will benefit from Icon Medialab's presence and marketing capabilities
in Europe.

  Cable Television Providers. In August 1999, Mediaplex and Across Media
Networks entered into a partnership to offer marketers the capability to match
a specific consumer with a specific offer, both on cable television and the
Internet, driven by business rules and relevant marketing data. Across Media
Networks designs and operates private label cable channels to enable cable
operators to outsource the creation of branded, advertiser-supported subscriber
information channels, and serves over three million subscribers in more than
75 cities nationwide. We will provide MOJO technology to Across Media Networks
exclusively in conjunction with online marketing and advertising programs for
its CityHits Internet business and clients.

                                       41
International Alliances. In April 1999, Zeron Capital Ltd., a Japanese
merchant bank, investment management and venture capital firm, invested $2.0
million in us, and in June 1999, invested an additional $3 million in us. Zeron
Capital Ltd. has agreed to use its best efforts to help secure our presence in
Japan, establish alliances with major companies in Japan and develop an
international presence in Asia. We believe that the Japanese market represents
significant growth opportunities for us and will allow us to expand in other
Asian markets. We are currently in discussions with Zeron Capital, Ltd. to
establish a joint venture to develop Japanese leads for our MOJO technology and
our campaign management services.

Our Clients

  As of June 30, 1999, Mediaplex had over 50 active clients. The following is a
list of our clients that purchased more than $50,000 in services from January
1, 1998 to June 30, 1999:

                                 Direct Clients
Ashford                                        Investor's Business Daily
     Buy Software                                   MacMall/Creative Computers
     Capstone Studio                                Majestic International
     DATEK Online Brokerage Services, Corp.         Music Maker
     DriveSavers                                    MyShopNow.com
     eCost/Creative Computers                       OfficeMax
     efax.com                                       PCMall/Creative Computers
     Flower Farm                                    ShopNow
     FreeShop                                       Strong Funds
     Fresh Flower Source                            uBid
     Hitachi Data Systems                           1800 DAYTRADE.com
Advertising Agencies

  .  McCann-Erickson for Silicon Graphics, Inc. and Siebel Systems
  .  Publicis & Hal Riney for Sprint PCS and Hewlett-Packard's Vectra, Brio,
     Kayak and Omnibook products

  In 1998, DATEK Online Brokerage Services, Corp. and uBid accounted for
approximately 56% and 21% of our revenues, respectively. In the first half of
1999, DATEK Online Brokerage Services, Corp., Publicis & Hal Riney and uBid
accounted for approximately 15%, 10% and 10% of our revenues, respectively.

Technical Support

  We provide extensive technical strategy and support throughout the
implementation and maintenance phases of the deployment of our services. This
support is comprised of three key components: Network Operations, Technical
Account Coordination and MOJO Implementation.

Network Operations

  Our network operations organization is responsible for ensuring our network
and servers are fault-tolerant. We have organized our network of servers to
provide significant protection against potential breakdown or outages.

                                       42
Technical Account Coordination

  We believe that our technical account procedures protect the client from data
loss. Each account team, comprised of a customer support manager, software
engineer and director of systems operations, holds frequent meetings to discuss
each ad campaign currently being conducted. These teams review each client's
campaign for which the team is responsible to ensure the client's program is
operating trouble-free.

  Our account coordinators also work with each publisher to provide smooth
technical implementation of the campaign, and test each technical aspect of the
campaign before it is launched.

MOJO Implementation

  Our engineering organization takes an in-depth and focused approach to the
implementation of our MOJO technology for each client's online campaign. Each
team meets with its clients to fully understand the client's environment, its
enterprise system and exactly how the MOJO technology needs to work within the
client's specific enterprise design. The team also works with the client to
define the campaign needs and then implements an appropriate plan based on the
campaign goals set by the client. Once MOJO is installed, the team performs
ongoing implementation and support of the client's campaign.

Intellectual Property

  To protect our proprietary rights, we rely generally on patent, copyright,
trademark and trade secret laws, and confidentiality agreements or licenses
with employees, consultants, vendors, clients and corporate parties. Despite
these protections, a third-party could, without authorization, disclose, copy
or otherwise obtain and use our technology or develop similar technology
independently.

  We currently have one patent pending in the United States relating to our
MOJO product architecture and technology. We cannot assure you that our
pending, or any future, patent application will be granted, that any existing
or future patent will not be challenged, invalidated or circumvented, or that
the rights granted under the patent that has issued or any patent that may
issue will provide competitive advantages to us. Many of our current and
potential competitors dedicate substantially greater resources to the
protection and enforcement of intellectual property rights, especially patents.
If a blocking patent has issued or issues in the future to a third-party, we
would need either to obtain a license to, or to design around, the patent. We
may not be able to obtain a license on acceptable terms, if at all, or design
around the patent, which could harm our ability to provide our services.

  We pursue the registration of our trademarks and service marks in the U.S.
and in other countries, although we have not secured registration of all of our
marks. As of June 30, 1999, we had no registered U.S. trademarks or service
marks; however, we have applied for registration of our Mediaplex and MOJO
trademarks. In addition, the laws of some foreign countries will not protect
our proprietary rights to the same extent as do the laws of the U.S., and
effective patent, copyright, trademark and trade secret protection may not be
available in these jurisdictions.

  We may, in the future, license our proprietary rights, in particular our MOJO
technology, to third parties. These licensees may fail to abide by compliance
and quality control guidelines with respect to our proprietary rights or take
actions that would severely harm our ability to use our proprietary rights and
our business.

  We attempt to avoid infringing known proprietary rights of third parties in
our product development efforts. We have conducted an independent patent search
for prior art related to our MOJO architecture. This patent search did not
uncover any references that would anticipate our patent claim; however, this
patent search was not exhaustive and may not have uncovered all prior art
applicable to our MOJO architecture. In addition, it is difficult to proceed
with certainty in a rapidly evolving technological environment in which there
exists numerous patent applications pending, many of which are confidential
when filed, with regard to similar technologies. If we were to discover that
our technology violates third-party proprietary rights, we might not be

                                       43
able to obtain licenses or continue offering our services based on our
technology without substantial reengineering. Any efforts to undertake this
reengineering might not be successful, and any necessary licenses might not be
available on commercially reasonable terms, if at all.

  Litigation for claims of infringement might not be avoided or settled without
incurring substantial expenses and damage awards. In addition, any of these
claims, even if not meritorious, could result in the expenditure of significant
financial and managerial resources and could result in injunctions preventing
us from delivering our services based on our technology or licensing our
technology to third parties or clients. These claims could harm our business.

  In the future, we may license technology that will be integrated with our
internally developed software and used in our services. We cannot assure you
that third-party technology licenses will become or will continue to be
available to us on commercially reasonable terms. The loss of any of these
technologies could harm our business. In addition, by licensing technology from
third parties, we may become susceptible to claims for infringement with
respect to this third-party technology. Even if we receive broad
indemnification from our licensors, third-party indemnitors are not always well
capitalized and may not be able to indemnify us in the event of infringement,
resulting in substantial exposure to us. Any infringement claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources in addition to potential product redevelopment costs and
delays, all of which could harm our business.

Competition

  The Internet media services market, which includes planning media campaigns,
buying advertising space, ad serving and tracking and reporting results of
advertising, is extremely competitive and likely to become more intense due to
the lack of significant barriers of entry. We believe that, in addition,
competition will continue to increase as a result of industry mergers,
partnerships and consolidation. Many of our existing competitors, as well as a
number of potential new competitors, have longer operating histories, greater
name recognition, larger client bases and significantly greater financial,
technical and marketing resources than we have. The following categories
represent current and potential competition:

  . online media planning and buying services, such as Avenue A;

  . ad serving companies, such as AdForce, DoubleClick and Engage
    Technologies, Inc.;

  . publisher networks which provide services directly to clients, such as
    Flycast Communications and 24/7 Media, Inc.;

  . organizations that manage affiliate programs, such as LinkShare; and

  . advertising agencies with in-house online media management capabilities,
    such as Lowe Interactive.

  We believe that our ability to compete depends upon many factors both within
and outside of our control, including:

  . effectiveness, ease of use, performance and features of our technology;

  . client perceptions of the effectiveness of our services and technology;

  . the price of our services;

  . our ability to service our clients effectively over a broad geographic
    basis; and

  . the timing and acceptance of new solutions and enhancements to existing
    solutions developed by us or our competitors.

                                       44
Employees

  As of August 31, 1999, we had 100 full-time employees. Of these employees, 24
were engaged in research and development, 53 were engaged in sales and
marketing and 23 were engaged in finance and administration. None of our
employees is represented by a labor union or a collective bargaining agreement.
We have not experienced any work stoppages and consider our relations with our
employees to be good.

Facilities

  We currently lease approximately 11,600 square feet of office space for our
headquarters in one building, located in San Francisco, California. We believe
we will need additional space in the near future and are currently in
negotiations to lease approximately 10,500 square feet of office space near our
headquarters in San Francisco. We cannot assure you that we will find adequate
space at a reasonable price. We also lease approximately 13,200 square feet of
a facility in San Jose, California that houses our research and development
organization and approximately 7,700 square feet in New York City for a sales
office. In addition, we use two third-party, fully-redundant co-location
facilities that house our Web servers in San Francisco and San Jose, California
and we are currently seeking to obtain additional co-location facilities in
other areas in the United States. We cannot assure you that we will be able to
locate and lease additional acceptable co-location space at a reasonable price.

Legal Proceedings

  From time to time, we may become involved in litigation relating to claims
arising from the ordinary course of our business. We believe that there are no
claims or actions pending or threatened against us, the ultimate disposition of
which would have a material adverse effect on us.

                                       45
MANAGEMENT

Directors and Executive Officers

  The following table sets forth certain information with respect to our
directors and executive officers as of August 31, 1999:
Name             Age                   Position
   --------------------------- --- --------------------------------------------
Gregory R. Raifman.........  40 Chairman of the Board of Directors and Chief
                                   Executive Officer

   Jon L. Edwards.............  39 President and Director

   Walter Haefeker............  38 Chief Operating Officer

   Ruiqing "Barclay" Jiang....  37 Chief Technology Officer

                                   Executive Vice President, Sales and
   Timothy M. Favia...........  37 Development

                                   Senior Vice President, Chief Financial
   Sandra L. Abbott...........  52 Officer and Secretary

   Robert M. Henely...........  47 Senior Vice President, Technical Operations

   M. Joy Fauvre..............  48 Senior Vice President, Marketing

   Alan M. Raifman............  45 Vice President, Business and Legal Affairs

   James DeSorrento ..........  56 Director

   Lawrence D. Lenihan, Jr. ..  34 Director

   Peter S. Sealey ...........  59 Director

   A. Brooke Seawell .........  51 Director
Gregory R. Raifman has served as our Chairman of the Board of Directors and
Chief Executive Officer since September 1998, and Chief Executive Officer and
sole director of MediaPlex, Inc., our former wholly-owned subsidiary since
April 1998. Since August 1993, Mr. Raifman has also served as a general partner
of Raifman & Edwards LLP, a law firm. Since September 1994, Mr. Raifman has
served as a managing member of PointBreak Ventures, LLC, a venture capital
firm. Mr. Raifman received an A.B. in economics and history from the University
of Michigan and a J.D. from Georgetown University Law Center.

  Jon L. Edwards has served as our President and a member of our board of
directors since April 1998. Since August 1993, Mr. Edwards has also served as a
general partner of Raifman & Edwards LLP. Since September 1994, Mr. Edwards has
served as a managing member of PointBreak Ventures, LLC. Mr. Edwards received
an A.B. in engineering science from Dartmouth College and a J.D. from
Georgetown University Law Center.

  Walter Haefeker has served as our Chief Operating Officer since September
1998. Since September 1994, Mr. Haefeker has served as a managing member for
PointBreak Ventures, LLC. From March 1994 to April 1995, Mr. Haefeker served as
chairman of the board of directors for CADIS Software, Ltd., a software
company. Mr. Haefeker received an Abitur in chemistry and physics from Theodor-
Heass Gymnasium, Pinneberg, Germany.

  Ruiqing "Barclay" Jiang has served as our Chief Technology Officer since
March 1999. Prior to joining Mediaplex, Mr. Jiang served as president of
Netranscend Software, Inc., an enterprise software company, from November 1996
until it was acquired by Mediaplex in March 1999. From October 1993 to
September 1997, Mr. Jiang served as an engineering manager for FutureLabs,
Inc., a software company. Mr. Jiang received a B.S. in computer science from
Xi'an Jiaotong University, China and an M.S. in applied statistics from
Louisiana State University.

  Timothy M. Favia has served as our Executive Vice President, Sales and
Development since January 1999. Prior to joining Mediaplex, Mr. Favia was a co-
founder of Oxygen Electronics, LLC, a distributor of electronic components,
where he served as managing partner from June 1997 to December 1998. From
January 1996 to May 1997, Mr. Favia served as vice president, western region,
of Open Port Technology, an Internet messaging

                                       46
services company. From July 1988 to January 1996, he served as director of
international sales for Thomson Software Products, a software company. Mr.
Favia received a B.A. in political science from Fairfield University.

  Sandra L. Abbott has served as a Senior Vice President and our Chief
Financial Officer and Secretary since August 1999. Prior to joining Mediaplex,
Ms. Abbott served as chief financial officer for 8x8, Inc., a manufacturer of
digital telecommunication products, from June 1995 to August 1999. From April
1991 to June 1995, Ms. Abbott served as controller for 8x8, Inc. Ms. Abbott
received a B.A. in political science from the University of California,
Riverside and an M.B.A. from Santa Clara University.

  Robert M. Henely has served as our Senior Vice President, Technical
Operations since March 1999. Prior to joining Mediaplex, Mr. Henely served as
director of engineering for Boole & Babbage, Inc., a software company, from
December 1997 to March 1999. From November 1981 to December 1997, Mr. Henely
served as a research and development manager at Hewlett-Packard Company.
Mr. Henely received a B.S. in economics from California State University, Chico
and an M.S. in econometrics from the University of California, San Diego.

  M. Joy Fauvre has served as our Senior Vice President, Marketing since July
1999. Prior to joining Mediaplex, Ms. Fauvre served as a marketing director for
Heller Financial, a commercial lender, from October 1994 to July 1999. From
June 1994 to October 1994, Ms. Fauvre served as acting advertising manager for
Qantas Airways, a commercial airline, and from August 1991 to January 1994, she
served as an account supervisor for D'Arcy Masius Benton & Bowles, an
advertising agency. Ms. Fauvre received a B.A. in theatre from the University
of California, Santa Barbara and an M.A. in theatre from Ball State University.

  Alan M. Raifman has served as our Vice President, Business and Legal Affairs
since October 1998. Prior to joining Mediaplex, Mr. Raifman served as an
associate for Albert A. Rettig & Associates, a business services company, from
June 1997 through January 1999. Since July 1989, Mr. Raifman has also served as
a member of the board of directors for Little Cargo, Inc., a juvenile product
development company that he co-founded. Mr. Raifman received a B.A. in history
and a J.D. from Washington University.

  James DeSorrento has served as a member of our board of directors since
August 1999. Since June 1982, Mr. DeSorrento has served as chief executive
officer and chairman of the board of Triax Telecommunications Company, LLC and
its predecessor, Triax Communications Corporation, a cable television operating
company. Mr. DeSorrento received a B.A. in English from St. Michael's College.

  Lawrence D. Lenihan, Jr. has served as a member of our board of directors
since August 1999. Since January 1999, Mr. Lenihan has served as fund manager
for Pequot Capital Management, Inc., a venture capital firm. From October 1996
to December 1998, Mr. Lenihan served as fund manager for Dawson-Sanberg Capital
Management, a venture capital firm. From August 1993 to October 1996, Mr.
Lenihan served as a principal for Broadview Associates, an investment bank. Mr.
Lenihan also serves as a member of the boards of directors of Digital
Generation Systems, Inc., a provider of distribution services for ad agencies
and broadcasters, STM Wireless, Inc., a satellite and wireless-based
communications company, and Triken Technologies, Inc., a semiconductor-
processing equipment company, as well as several private companies. Mr. Lenihan
received a B.S.E.E. in electrical engineering from Duke University and an
M.B.A. from the Wharton School of Business at the University of Pennsylvania.

  Peter S. Sealey has served as a member of our board of directors since August
1999. Since September 1994, Dr. Sealey has served as an adjunct professor of
marketing at the Haas School of Business at the University of California,
Berkeley where he also has served as a co-director of the Center for Marketing
and Technology. Prior to that, Dr. Sealey was employed by the Coca Cola Company
for 24 years, where he held a series of senior management positions, including
senior vice president, global marketing. Dr. Sealey serves as a member of the
boards of directors of US Web/CKS, an Internet professional services firm,
Autoweb.com Inc., a consumer automotive Internet site, bamboo.com, a producer
of virtual tours for the real estate industry on the

                                       47
Internet, and Cybergold, Inc., an Internet-based direct marketing and
advertising company, as well as several private companies. Dr. Sealey received
a B.S.B.A. in business from the University of Florida, an M.I.A. in industrial
administration from Yale University, and an M.A. in management and Ph.D. in
management and information technology from the Peter F. Drucker Graduate
Management Center at The Claremont Graduate University.

  A. Brooke Seawell has served as a member of our board of directors since
August 1999. From January 1997 to August 1998, Mr. Seawell served as the
executive vice president of NetDynamics Inc., an enterprise network
applications server software company. From March 1991 to January 1997, Mr.
Seawell served as the senior vice president of finance and operations of
Synopsys Inc., an electronic design automation company. Mr. Seawell serves as a
member of the boards of directors of NVIDIA Corporation, a three-dimensional
graphics processor, Informatica Corporation, a data integration software
company and Accrue Software, Inc., an internet data collection and analysis
software company, as well as several private companies. Mr. Seawell received a
B.A. in economics and an M.B.A. in finance from Stanford University.

Board of Directors

  Our board of directors is currently comprised of six directors. Our restated
certificate of incorporation, to be filed upon the closing of this offering,
states that the board of directors will be divided into three classes as nearly
equal in size as possible with staggered, three-year terms. The term of office
of our Class I directors will expire at the annual meeting of stockholders to
be held in 2000; the term of office of our Class II directors will expire at
the annual meeting of stockholders to be held in 2001; and the term of office
of our Class III directors will expire at the annual meeting of the
stockholders to be held in 2002. Messrs. Lenihan and Sealey have been
designated as Class I directors; Messrs. Edwards and DeSorrento have been
designated as Class II directors; and Messrs. Raifman and Seawell have been
designated as Class III directors. At each annual meeting of the stockholders
after the initial classification, the successors to the directors whose terms
have expired will be elected to serve from the time of election and
qualification until the third annual meeting following their election or until
their successors have been duly elected and qualified, or until their earlier
resignation or removal, if any. In addition, our bylaws, to be adopted upon the
closing of this offering, provide that the authorized number of directors may
be changed by resolution of the board of directors. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the total number of directors. The classification
of our board of directors could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring,
control of Mediaplex. See "Description of Capital Stock."

  Each officer is elected by, and serves at the discretion of, the board of
directors or until his or her successor has been duly elected and qualified.
Each of our executive officers and directors, other than non-employee
directors, devotes his or her full time to our affairs. Our non-employee
directors devote the amount of time necessary to discharge their duties to us.
Gregory R. Raifman, our Chairman of the Board of Directors and Chief Executive
Officer is the brother of Alan M. Raifman, our Vice President, Business and
Legal Affairs. There are otherwise no family relationships among any of our
directors, officers or key employees.

Board Committees

  The board of directors has established an audit committee to meet with and
consider suggestions from members of management and our internal accounting
personnel, as well as our independent accountants, concerning our financial
operations. The audit committee also has the responsibility to review our
audited financial statements and consider and recommend the employment of, and
approve the fee arrangements with, independent accountants for both audit
functions and for advisory and other consulting services. The audit committee
is currently comprised of Messrs. DeSorrento and Seawell.

  The board of directors has also established a compensation committee to
review and approve the compensation and benefits for our key executive
officers, administer our equity incentive plans and make

                                       48
recommendations to the board of directors regarding such matters. The
compensation committee is currently comprised of Messrs. Lenihan and Sealey.

Compensation Committee Interlocks and Insider Participation

  Prior to establishing the compensation committee, the board of directors as a
whole performed the functions delegated to the compensation committee. No
member of the board of directors or the compensation committee serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our board of
directors or compensation committee.

Director Compensation

  Directors do not currently receive any cash compensation from us for their
service as members of the board of directors; however, directors are reimbursed
for all reasonable expenses incurred by them in attending board and committee
meetings. Employee and non-employee directors are also eligible to receive
options under our 1999 Stock Plan and employee directors are eligible to
participate in our 1999 Employee Stock Purchase Plan. In August 1999, Messrs.
DeSorrento and Seawell and Dr. Sealey were each granted an option to acquire
50,000 shares of common stock at an exercise price of $3.25 per share upon such
director's appointment to our board of directors. The options vest over a four
year period but may be exercised at any time. See "--Equity Incentive Plans."

Executive Compensation

  The following table sets forth the total compensation received for services
rendered to us during 1998 by our Chief Executive Officer and two of our other
executive officers. Except as set forth below, no other employee received
salary and bonus in 1998 in excess of $100,000. These three officers are
referred to as the named executive officers in this prospectus. In 1998,
Messrs. Gregory Raifman and Jon Edwards, general partners of Raifman & Edwards,
LLP, provided legal and management services to us, for which Raifman & Edwards,
LLP was paid approximately $197,000. See "Related Party Transactions." Except
as disclosed below and in "Related Party Transactions," we gave no bonuses,
stock-based compensation or other compensation to our named executive officers
in 1998.

                           Summary Compensation Table
Annual Compensation
                                                             -------------------
Name and Principal Position                                      Salary ($)
------------------------------------------------------------ -------------------
Gregory R. Raifman, Chief Executive Officer (1).............      $180,000

Jon L. Edwards, President (2)...............................       180,000

Walter Haefeker, Chief Operating Officer (3)................       150,000
--------
(1) The salary amount represents the amount Mr. Raifman would have earned if he
    had been employed by us for the entire year. Mr. Raifman's actual salary
    earned was $35,000.

(2) The salary amount represents the amount Mr. Edwards would have earned if he
    had been employed by us for the entire year. Mr. Edward's actual salary
    earned was $35,000.

(3) The salary amount represents the amount Mr. Haefeker would have earned if
    he had been employed by us for the entire year. Mr. Haefeker's actual
    salary earned in 1998 was $41,100.

  The 1999 annual base salary rates for Messrs. Raifman, Edwards and Haefeker
are $250,000, $250,000 and $225,000, respectively. In addition, we hired the
following executive officers in 1999 at the following annual salaries: Ruiqing
"Barclay" Jiang, $180,000; Timothy M. Favia, $175,000; Sandra L. Abbott,
$170,000; Robert Henely, $150,000; M. Joy Fauvre, $140,000; and Alan M.
Raifman, $90,000.

                                       49
Option Grants and Exercises in Last Fiscal Year and Fiscal Year End Option
Values

  No named executive officers were granted or held any options to purchase our
common stock at any time in 1998. In February 1999, however, Gregory R.
Raifman, Jon L. Edwards and Walter Haefeker were each granted options to
purchase 1,750,000, 1,500,000 and 1,250,000 shares of common stock,
respectively, at a purchase price of $0.50 per share, under our 1999 Stock Plan
of which 388,889 shares, 333,333 shares and 138,889 shares, respectively, had
vested as of December 31, 1998.

Employment Agreements

  In connection with our hiring and retention of each of Gregory R. Raifman,
Jon L. Edwards and Walter Haefeker, we entered into employment agreements in
which we agreed to pay each of them a specified base salary and options to
purchase our common stock, and each executive officer agreed to enter into a
three-year employment term with us. Upon the expiration of the three-year term,
employment with us becomes terminable at-will. All options vest at the rate of
1/6th of the shares on the six-month anniversary of the vesting commencement
date, and 1/36th of the shares per month thereafter as long as such optionee is
employed by us. The following table sets forth the stock options granted to
each executive officer under his employment agreement with us:
Exercise Price
Name                                              Options Granted    Per Share
------------------------------------------------- --------------- --------------
Gregory R. Raifman...............................    1,750,000        $0.50

Jon L. Edwards...................................    1,500,000         0.50

Walter Haefeker..................................    1,250,000         0.50
Under the terms of each employment agreement, if we terminate employment with
the executive officer without cause, we are required to pay him severance
payments of 1/13th of his base salary for each complete month previously
worked; however, the aggregate severance payments are not to exceed his annual
base salary. Additionally, each executive officer has agreed to not compete
with us or not solicit others from us for a period of one year following his
termination with us.

Equity Incentive Plans

  1997 Stock Plan. Our 1997 Stock Plan provides for the granting to employees
of incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and for the granting to employees and
consultants of nonstatutory stock options and stock purchase rights. As of
August 15 1999, options to purchase 243,000 shares of common stock were
outstanding under our 1997 Stock Plan. Our board of directors has determined
that no further options will be granted under the 1997 Stock Plan after this
offering. The 1997 Stock Plan provides that, if we merge with or into another
corporation or sell substantially all of our assets, each outstanding option
must be assumed or substituted for by the successor corporation. If the
successor corporation refuses to assume or substitute for the Mediaplex
options, the Mediaplex options will terminate as of the closing of the merger
or sale of assets.

  Amended and Restated 1999 Stock Plan. Our 1999 Stock Plan was initially
adopted by our board of directors and shareholders in February 1999. It was
amended and restated by our board of directors in August 1999, and we expect to
submit it to our stockholders for their approval prior to the closing of this
offering. If approved by the stockholders, the Amended and Restated 1999 Stock
Plan will become effective upon the closing of this offering.

  The Amended and Restated 1999 Stock Plan provides for the grant of incentive
stock options to employees, including officers and employee directors, and for
the grant of nonstatutory stock options and stock purchase rights to employees,
directors and consultants.

                                       50
We have reserved 12,000,000 shares of our common stock for issuance pursuant
to the Amended and Restated 1999 Stock Plan. In addition, commencing January 1,
2000, the number of shares reserved for issuance under the Amended and Restated
1999 Stock Plan will be increased by an amount equal to the least of (a)
1,000,000 shares, (b) 4% of the outstanding shares or (c) an amount determined
by our board of directors.

  Unless terminated sooner, the Amended and Restated 1999 Stock Plan will
automatically terminate ten years from the effective date of this offering.

  The administrator of our stock plan has the power to determine:

  . the terms of the options or stock purchase rights granted, including the
    exercise prices of the options or stock purchase rights;

  . the number of shares subject to each option or stock purchase right;

  . the exercisability of each option or stock purchase right; and

  . the form of consideration payable upon the exercise of each option or
    stock purchase right.

  In addition, the administrator has the authority to amend, suspend or
terminate the stock plan, so long as this action does not affect any shares of
common stock previously issued and sold or any option previously granted under
the Amended and Restated 1999 Stock Plan. The maximum number of shares covered
by an option that each optionee may be granted during a fiscal year is 500,000
shares. In addition, in connection with an optionee's initial employment with
us, the optionee may be granted an option covering an additional
500,000 shares.

  Options and stock purchase rights granted under our Amended and Restated 1999
Stock Plan are generally not transferable by the optionee, and each option and
stock purchase right is exercisable during the lifetime of the optionee only by
the optionee. Options granted under the Amended and Restated 1999 Stock Plan
must generally be exercised within three months after the end of the optionee's
status as an employee, director or consultant of Mediaplex, or within 12 months
after the optionee's termination by death or disability, but in no event later
than the expiration of the option's term.

  In the case of stock purchase rights, unless the administrator determines
otherwise, the restricted stock purchase agreement must grant us a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment or consulting relationship with us for any reason,
including death or disability. The purchase price for shares repurchased
pursuant to the restricted stock purchase agreement will be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of
the purchaser to us. The repurchase option will lapse at a rate determined by
the administrator.

  The exercise price of all incentive stock options granted under the Amended
and Restated 1999 Stock Plan must be at least equal to the fair market value on
the date of grant of the common stock underlying the option. The exercise price
of nonstatutory stock options and stock purchase rights granted under the
Amended and Restated 1999 Stock Plan is determined by the administrator, but
with respect to nonstatutory stock options intended to qualify as "performance-
based compensation" within the meaning of Section 162(m) of the Code, the
exercise price must be at least equal to the fair market value on the date of
grant of the common stock underlying the option. With respect to any
participant who owns stock possessing more than 10% of the voting power of all
classes of our outstanding capital stock, the exercise price of any incentive
stock option granted must be at least equal 110% of the fair market value on
the grant date and the term of the incentive stock option must not exceed five
years. The term of all other options granted under the Amended and Restated
1999 Stock Plan may not exceed ten years.

  The Amended and Restated 1999 Stock Plan provides that, in the event of a
merger of Mediaplex with or into another corporation, or a sale of
substantially all of our assets, each option and stock purchase right must be
assumed, or an equivalent option or stock purchase right substituted, by the
successor corporation. If the

                                       51
outstanding options and stock purchase rights are not assumed or substituted
for by the successor corporation, the optionees will fully vest in and have the
right to exercise their options or stock purchase rights. If an option or stock
purchase right becomes fully vested and exercisable in the event of a merger or
sale of assets, the administrator must notify the optionee that the option or
stock purchase right will be fully exercisable for a period of 15 days from the
date of notice and that the option or stock purchase right will terminate upon
the expiration of the 15-day period.

  1999 Employee Stock Purchase Plan. Our 1999 Employee Stock Purchase Plan was
adopted by our board of directors in August 1999, and we expect to submit it to
our stockholders for their approval prior to the closing of this offering. If
approved by the stockholders, the 1999 Employee Stock Purchase Plan will become
effective upon the closing of this offering. This plan is designed to allow our
eligible employees and the eligible employees of any participating subsidiaries
to purchase shares of common stock, at semi-annual intervals, with their
accumulated payroll deductions.

  We have reserved 400,000 shares of our common stock for issuance pursuant to
the 1999 Employee Stock Purchase Plan. In addition, commencing January 1, 2000,
the number of shares reserved for issuance under the 1999 Employee Stock
Purchase Plan will be increased by an amount equal to the least of: (a) 400,000
shares, (b) 2% of the outstanding shares on such date or (c) an amount
determined by our board of directors. As of the date of this prospectus, no
shares have been issued under the 1999 Employee Stock Purchase Plan.

  Our 1999 Employee Stock Purchase Plan, which is intended to qualify under
Section 423 of the Code, contains consecutive, overlapping, 24-month offering
periods. Each offering period includes four six-month purchase periods. The
offering periods generally start on the first trading day on or after May 1 and
November 1 of each year, except for the first offering period which commences
on the first trading day on or after the effective date of this offering and
ends on the last trading day on or before October 31, 2001.

  Employees are eligible to participate if they are customarily employed by us
or any participating subsidiary for at least 20 hours per week and more than
five months in any calendar year. However, employees may not be granted an
option to purchase stock under the 1999 Employee Stock Purchase Plan if they
either:

  . immediately after grant, own stock possessing 5% or more of the total
    combined voting power or value of all classes of our capital stock; or

  . hold rights to purchase stock under our 1999 Employee Stock Purchase Plan
    that accrue at a rate which exceeds $25,000 worth of stock for each
    calendar year.

  The 1999 Employee Stock Purchase Plan permits each participant to purchase
our common stock through payroll deductions of up to 10% of his or her
"compensation." Compensation is defined as the participant's base straight-time
gross earnings, overtime, shift premium and bonuses, but excludes other
compensation. The maximum number of shares a participant may purchase during a
single purchase period is 1,000 shares.

  Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each purchase period. The price of stock
purchased under the 1999 Employee Stock Purchase Plan is generally 85% of the
lower of the fair market value of the common stock either:

  . at the beginning of the offering period; or

  . at the end of the purchase period.

  In the event the fair market value at the end of a purchase period is less
than the fair market value at the beginning of the offering period, the
participants will be withdrawn from the current offering period following
exercise and automatically re-enrolled in a new offering period. The new
offering period will use the lower fair market value as of the first date of
the new offering period to determine the purchase price for future purchase
periods. Participants may end their participation at any time during an
offering period, and they will be paid their payroll deductions to date.
Participation ends automatically upon termination of employment with us.

                                       52
Rights granted under the 1999 Employee Stock Purchase Plan are not
transferable by a participant other than by will, the laws of descent and
distribution, or as otherwise provided under the 1999 Employee Stock Purchase
Plan. The 1999 Employee Stock Purchase Plan provides that, in the event of a
merger of Mediaplex with or into another corporation or a sale of substantially
all of our assets, each outstanding option may be assumed or substituted for by
the successor corporation. If the successor corporation refuses to assume or
substitute for the outstanding options, the offering period then in progress
will be shortened and a new exercise date will be set.

  Our board of directors has the authority to amend or terminate the 1999
Employee Stock Purchase Plan, except that no such action may adversely affect
any outstanding rights to purchase stock under the 1999 Employee Stock Purchase
Plan, provided that the board of directors may terminate an offering period on
any exercise date if the board of directors determines that the termination of
the 1999 Employee Stock Purchase Plan is in our best interests and the best
interests of our stockholders. The board of directors may in its sole
discretion amend the 1999 Employee Stock Purchase Plan to the extent necessary
and desirable to avoid unfavorable financial accounting consequences by
altering the purchase price for any offering period, shortening any offering
period or allocating remaining shares among the participants. Unless sooner
terminated by our board of directors, the 1999 Employee Stock Purchase Plan
will terminate automatically ten years from the effective date of this
offering.

401(k) Plan

  In February 1997, we adopted a 401(k) plan to provide eligible employees with
a tax preferential savings and investment program. Employees become eligible to
participate in the 401(k) plan on the first day they perform an hour of service
for us, at which point we classify them as participants. They may elect to
reduce their current compensation by up to the lesser of 15% of eligible
compensation or the statutorily prescribed annual limit, currently $10,000, and
have this reduction contributed to the 401(k) plan. The 401(k) plan permits,
but does not require, us to make additional matching contributions to the
401(k) plan on behalf of eligible participants. All contributions made by and
on behalf of participants are subject to a maximum contribution limitation
currently equal to the lesser of 25% of their compensation or $30,000 per year.
At the direction of each participant, the trustee of the 401(k) plan invests
the assets of the 401(k) plan in selected investment options. Contributions by
participants or by us to the 401(k) plan, and income earned on plan
contributions, are generally not taxable to the participants until withdrawn,
and contributions by us, if any, are generally deductible by us when made. To
date, we have made no contributions to the 401(k) plan on behalf of
participants.

Limitations on Directors' Liability and Indemnification

  Our amended and restated certificate of incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for any of the following:

  . any breach of their duty of loyalty to the corporation or its
    stockholders;

  . acts or omissions not in good faith or that involve intentional
    misconduct or a knowing violation of law;

  . unlawful payments of dividends or unlawful stock repurchases or
    redemptions; or

  . any transaction from which the director derived an improper personal
    benefit.

  This limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

  Our amended and restated certificate of incorporation provides that we may
indemnify our directors, officers and employees to the fullest extent permitted
by law. We believe that indemnification under our bylaws

                                       53
covers at least negligence and gross negligence on the part of indemnified
parties. Our bylaws also permit us to secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of his
or her actions in such capacity, regardless of whether our bylaws would permit
indemnification.

  We have entered into agreements to indemnify our directors and executive
officers, in addition to indemnification provided for in our bylaws. These
agreements, among other things, provide for indemnification of our directors
and executive officers for expenses, judgments, fines and settlement amounts
incurred by them in any action or proceeding arising out of their services as
directors or executive officers or at our request. We believe that these
provisions and agreements are necessary to attract and retain qualified persons
as directors and executive officers.

  At present, there is no material litigation or proceeding pending involving
any of our directors or officers in which indemnification is required or
permitted, and we are not aware of any threatened material litigation or
proceeding that might result in a claim for indemnification.

                                       54
RELATED PARTY TRANSACTIONS

  Since our inception in September 1996, we have never been party to, and we
have no plan to be a party to, any transaction or series of similar
transactions in which the amount involved exceeded or will exceed $60,000 and
in which any director, executive officer or holder of more than 5% of our
common stock had or will have an interest, other than as described under
"Management" and the transactions described below.

  Michael Schwartz, Raifman & Edwards LLP, PointBreak Ventures, LLC and Eugene
Jarvis were involved in our initial funding. Michael Schwartz and Eugene Jarvis
served as our initial officers and directors. Neither Mr. Schwartz nor Mr.
Jarvis is currently affiliated with us. Gregory R. Raifman and Jon L. Edwards,
two of our current executive officers, are general partners of Raifman &
Edwards LLP and are managing members of, and hold substantial interests in,
PointBreak Ventures, LLC. Walter Haefeker, also a current executive officer,
holds a substantial interest in PointBreak Ventures, LLC. Following our
inception in September and October 1996, we issued 2,460,000 shares to Michael
Schwartz for a nominal amount, 350,000 shares to Raifman & Edwards LLP in
consideration primarily for legal services rendered, and 250,000 shares to
PointBreak Ventures, LLC, in consideration primarily for business and financial
consulting services rendered. All shares initially issued to Raifman & Edwards
LLP have been transferred to R&E Holdings, LLC, a limited liability company in
which Messrs. Gregory R. Raifman and Jon L. Edwards are managing members. In
October 1996, we also issued 800,000 shares to Eugene Jarvis for $40,000 and in
January 1997, we issued an additional 800,000 shares to Mr. Jarvis for $40,000.

  In March 1999, R&E Holdings, LLC acquired 947,009 shares of our common stock
by converting a promissory note from us in the amount of $71,000 that had been
issued for unpaid legal fees, and 4,643,228 shares of our common stock by
converting a promissory note in the amount of $232,000 acquired by R&E
Holdings, LLC from Michael Schwartz.

  Raifman & Edwards LLP provided legal and management services to us in the
period from inception to December 31, 1996, and the years ended December 31,
1997 and 1998 of approximately $22,000, $67,000 and $197,000, respectively. No
legal services were provided by Raifman & Edwards LLP to us in the six months
ended June 30, 1999.

  In connection with his employment by us in January 1999, we issued a warrant
to purchase 500,000 shares of our common stock at an exercise price of $0.50
per share to Timothy M. Favia, one of our current executive officers. The
warrant may be exercised prior to January 10, 2002 by Mr. Favia only if a
number of milestones that are in the control of Mr. Favia, ourselves, or both
of us, are met prior to January 2000. As of the date of this prospectus,
several of these milestones have been met.

  In connection with our acquisition of Netranscend Software, Inc. in March
1999, we issued to Ruiqing "Barclay" Jiang, one of our current executive
officers and formerly the sole shareholder of Netranscend Software, Inc., a
promissory note in the principal amount of $430,000, payable in four annual
installments and an aggregate of 1,979,000 shares of common stock valued at
$2.6 million. Of the shares issued, 300,000 are currently being held in escrow
to cover breaches of representations and warranties made by Mr. Jiang and
Netranscend Software, Inc. in the agreement and plan of reorganization executed
in connection with the acquisition.

  In February 1999, we sold an aggregate of 1,206,000 shares of Series A
preferred stock to investors at a purchase price of $1.25 per share. In June
1999, we sold an aggregate of 4,500,000 shares of Series B preferred stock to
investors at a purchase price of $2.00 per share. In August 1999, we sold an
aggregate of 4,000,000 shares of Series C preferred stock to investors at a
purchase price of $3.59 per share. The shares of Series A, Series B and Series
C preferred stock will automatically convert into an aggregate of 9,706,000
shares of common stock upon the closing of this offering. The holders of
converted shares of Series C preferred stock are entitled to demand and piggy-
back registration rights. See "Description of Capital Stock--Registration
Rights."

                                       55
The investors in the preferred stock included the following entities that
hold 5% or more of our stock or that are affiliated with our directors or
executive officers, or both:
Shares of       Shares of       Shares of
                                  Series A        Series B        Series C
Investor                       Preferred Stock Preferred Stock Preferred Stock
------------------------------ --------------- --------------- ---------------
5% Stockholder Entities
 Affiliated with a Mediaplex
 Director or Executive
 Officer:
 Entities affiliated with
  James DeSorrento (1)(2).....     160,000          140,000              --
 Entities affiliated with A.
  Brooke Seawell (1)(3).......          --           75,000              --
 Entities affiliated with
  Gregory R. Raifman and
  Jon L. Edwards (1)(4).......          --               --          19,360
 Entities affiliated with
  Lawrence D. Lenihan,
  Jr.(1)(5)...................          --               --       1,671,309
Other 5% Stockholders
 Zeron Capital Ltd. (6).......          --        2,625,000              --
 The Goldman Sachs Group, Inc.
  (7).........................          --               --       1,392,758
--------
(1) James DeSorrento, A. Brooke Seawell, Gregory R. Raifman, Jon L. Edwards and
    Lawrence D. Lenihan, Jr. are each members of our board of directors.

(2) All shares are held of record by DeSorrento Revocable Trust under an
    agreement dated 12/17/80.

(3) All shares are held of record by Seawell Revocable Trust, A. Brooke Seawell
    & Patricia C. Seawell, trustees.

(4) All shares are held of record by R&E Holdings, LLC. Messrs. Gregory R.
    Raifman and Jon L. Edwards are the managing members and beneficial owners
    of R&E Holdings, LLC. Each of Mr. Raifman and Mr. Edwards disclaims
    beneficial ownership of these shares, except to the extent of his
    respective pecuniary interest therein.

(5) Represents 1,483,484 shares of Series C preferred stock held of record by
    Pequot Private Equity Fund, L.P. and 187,825 shares of Series C preferred
    stock held or record by Pequot Offshore Private Equity Fund, Inc. Mr.
    Lenihan is the fund manager for Pequot Capital Management, Inc. He
    disclaims beneficial ownership of these shares except to the extent of his
    pecuniary interest therein.

(6) Includes 1,500,000 shares held of record by Odyssey Venture Partners and
    1,000,000 shares held of record by Argossy Limited. Argossy Limited and
    Odyssey Venture Partners are funds affiliated with Zeron Capital Ltd. Zeron
    Capital Ltd. also holds a warrant to purchase 125,000 shares of Series B
    preferred stock.

(7) Includes 139,276 shares of Series C preferred stock purchased by Stone
    Street Fund L.P., an affiliate of The Goldman Sachs Group, Inc.
--------
  In connection with the sale of our Series B preferred stock in June 1999, we
issued a warrant to purchase 125,000 shares of Series B preferred stock, at an
exercise price of $2.00 per share, to Zeron Capital, Ltd., a 5% stockholder.
After this offering, the warrant will be exercisable into a like number of
shares of our common stock. The warrant may be exercisable at any time prior to
its expiration in June 2002.

  In connection with the sale of our Series B preferred stock in June 1999 to
Zeron Capital, Ltd., we issued a warrant to purchase 150,000 shares of Series B
preferred stock, at an exercise price of $2.00 per share, and a warrant to
purchase 100,000 shares of common stock, at a purchase price of $0.50 per
share, to Retail Ventures International, Inc., a financial advisor to us. After
this offering, the warrant to purchase Series B preferred stock will be
exercisable into a like number of shares of our common stock. The warrants may
be exercisable at any time prior to their expiration in June 2002.

  In September 1999, we entered into an oral agreement with R&E Holdings, LLC
to sublease a portion of the space we currently occupy at our headquarters in
San Francisco, California. The sublease terms and payments paid by us to R&E
Holdings, LLC are substantially similar to the lease terms and payments paid by
R&E Holdings, LLC to the landlord. To date, we have paid R&E Holdings, LLC a
total of approximately $74,000 for these lease payments.

                                       56
PRINCIPAL STOCKHOLDERS

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

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

  . each of our named executive officers;

  . each of our directors; and

  . all directors and executive officers as a group.

  Except as otherwise noted, the address of each 5% stockholder listed in the
table is c/o Mediaplex, Inc., 131 Steuart Street, Fourth Floor, San Francisco,
California 94105. The table includes all shares of common stock issuable within
60 days of August 15, 1999, upon the exercise of options and warrants
beneficially owned by the indicated stockholders on that date based on options
and warrants outstanding as of August 15, 1999. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to shares. To
our knowledge, except under applicable community property laws or as otherwise
indicated, the persons named in the table have sole voting and sole investment
control with respect to all shares beneficially owned. The applicable
percentage of ownership for each stockholder is based on shares of common stock
outstanding as of August 15, 1999, together with applicable options and
warrants for that stockholder. Shares of common stock issuable upon exercise of
options and warrants beneficially owned are deemed outstanding for the purpose
of computing the percentage ownership of the person holding those options and
warrants, but are not deemed outstanding for computing the percentage ownership
of any other person.
Percent of
                                         Number of      Shares Outstanding
                                         Shares of      ----------------------
                                        Common Stock     Before       After
Name                                 Beneficially Owned Offering    Offering
-----------------------------------  ------------------ ---------   ----------
R & E Holdings, LLC (1)............      10,296,265           41.8%
Zeron Capital Ltd. (2).............       2,625,000           10.7
 44 Church Street
 Hamilton HM12
 Bermuda
Pequot Capital Management, Inc.
 (3)...............................       1,671,309            6.8
 500 Nyala Farm Road
 Westport, CT 06880
The Goldman Sachs Group, Inc. (4)..       1,392,758            5.7
 85 Broad Street
 New York, NY 10002
Gregory R. Raifman (5).............      12,296,265           46.7
Jon L. Edwards (6).................      12,046,265           46.1
Ruiqing "Barclay" Jiang (7)........       2,001,000            8.1
Walter Haefeker (8)................       1,250,000            4.8
Lawrence D. Lenihan, Jr. (9).......       1,671,309            6.8
James DeSorrento (10)..............         350,000            1.4
A. Brooke Seawell (11).............         125,000              *
Peter S. Sealey (12)...............          50,000              *
All executive officers and
 directors as a group (13 persons)
 (13)..............................      19,276,907           65.8
--------
  *Less than 1%
 (1) Messrs. Raifman and Edwards are the managing members and the beneficial
     owners of R&E Holdings, LLC.

 (2) Includes 1,500,000 shares held of record by Odyssey Venture Partners and
     1,000,000 shares held of record by Argossy Limited. Argossy Limited and
     Odyssey Venture Partners are venture funds affiliated with Zeron Capital
     Ltd. Also includes a warrant held by Zeron Capital Ltd. to purchase
     125,000 shares.

                                       57
(3) Represents 1,483,484 shares held of record by Pequot Private Equity Fund,
     L.P. and 187,825 shares held of record by Pequot Offshore Private Equity
     Fund, Inc. Pequot Private Equity Fund, L.P. and Pequot Offshore Private
     Equity Fund, Inc. are managed by Pequot Capital Management, Inc.

 (4) Includes 139,276 shares held of record by Stone Street Fund 1999, L.P., an
     affiliate of The Goldman Sachs Group, Inc.

 (5) Represents 10,296,265 shares held of record by R&E Holdings, LLC, 250,000
     shares held of record by PointBreak Ventures, LLC and 1,750,000 shares
     issuable upon the exercise of options exercisable within 60 days of August
     15, 1999. Mr. Raifman is one of the beneficial owners of R&E Holdings, LLC
     and PointBreak Ventures, LLC. Mr. Raifman disclaims beneficial interest of
     the shares held by R&E Holdings, LLC and PointBreak Ventures, LLC, except
     to the extent of his pecuniary interest in those entities.

 (6) Represents 10,296,265 shares held of record by R&E Holdings, LLC, 250,000
     shares held of record by PointBreak Ventures, LLC and 1,500,000 shares of
     common stock issuable upon the exercise of options exercisable within 60
     days of August 15, 1999. Mr. Edwards is one of the beneficial owners of
     R&E Holdings, LLC and PointBreak Ventures, LLC. Mr. Edwards disclaims
     beneficial interest of the shares held by R&E Holdings, LLC and PointBreak
     Ventures, LLC, except to the extent of his pecuniary interest in those
     entities.

 (7) Includes 22,000 shares issuable upon the exercise of options exercisable
     within 60 days of August 15, 1999.

 (8) Represents 1,250,000 shares issuable upon the exercise of options
     exercisable within 60 days of August 15, 1999.

 (9) Represents 1,671,309 shares beneficially owned by Pequot Capital
     Management, Inc. See note (3). Mr. Lenihan is the fund manager of Pequot
     Capital Management, Inc. Mr. Lenihan disclaims beneficial ownership of
     these shares, except to the extent of his pecuniary interest in that
     entity.

(10) Represents 300,000 shares held of record by DeSorrento Revocable Trust, of
     which Mr. DeSorrento is the beneficial owner and 50,000 shares issuable
     upon the exercise of options exercisable within 60 days of August 15,
     1999.
(11) Represents 75,000 shares held of record by Seawell Revocable Trust, A.
     Brooke Seawell & Patricia C. Seawell, trustees. Mr. Seawell is one of the
     beneficial owners of the Seawell Revocable Trust and 50,000 shares
     issuable upon the exercise of options exercisable within 60 days of August
     15, 1999.

(12) Represents 50,000 shares issuable upon the exercise of options exercisable
     within 60 days of August 15, 1999.

(13) See notes (5) through (12). Includes an aggregate of 4,705,333 shares
     issuable upon exercise of options held by our officers exercisable within
     60 days of August 15, 1999.

                                       58
DESCRIPTION OF CAPITAL STOCK

General

  Our restated certificate of incorporation, which will become effective upon
the closing of this offering, authorizes the issuance of up to 150,000,000
shares of common stock, par value $0.0001 per share, and 10,000,000 shares of
undesignated preferred stock, par value $0.0001 per share, the rights and
preferences of which may be established from time to time by our board of
directors. As of August 15, 1999, we had outstanding 14,898,865 shares of
common stock and 9,706,000 shares of redeemable convertible preferred stock,
which will automatically convert into 9,706,000 shares of common stock upon the
completion of this offering. As of August 15, 1999, we had 120 stockholders.

Common Stock

  Each holder of common stock will be entitled to one vote for each share on
all matters to be voted upon by the stockholders, and there will be no
cumulative voting rights. Subject to preferences to which holders of preferred
stock issued after the sale of the common stock in this offering may be
entitled, holders of common stock will be entitled to receive ratably any
dividends that may be declared from time to time by the board of directors out
of funds legally available for that purpose. Please see "Dividend Policy." In
the event of our liquidation, dissolution or winding up, holders of our common
stock will be entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock. Holders of common stock
have no preemptive or conversion rights or other subscription rights and there
are no redemption or sinking fund provisions applicable to the common stock.
All outstanding shares of common stock are, and the shares of common stock
offered by us in this offering, when issued and paid for, will be, fully paid
and nonassessable. The rights, preferences and privileges of the holders of
common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of preferred stock that we may designate in
the future.

Preferred Stock

  Upon the closing of this offering, the board of directors will be authorized,
subject to any limitations prescribed by law, without stockholder approval,
from time to time to issue up to an aggregate of 10,000,000 shares of preferred
stock, $0.0001 par value per share, in one or more series, each series to have
rights and preferences, including voting rights, dividend rights, conversion
rights, redemption privileges and liquidation preferences, as may be determined
by the board of directors. The rights of the holders of common stock will be
subject to, and may be adversely affected by, the rights of holders of any
preferred stock that may be issued in the future. The issuance of preferred
stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, a majority of our outstanding voting stock. We have
no present plans to issue any shares of preferred stock.

Warrants

  At August 15, 1999, there were outstanding warrants to purchase up to 275,000
shares of Series B preferred stock at an exercise price of $2.00 per share and
warrants to purchase up to 600,000 shares of common stock at an exercise price
of $0.50 per share. Upon completion of this offering, the warrants to purchase
shares of Series B preferred stock will become exercisable to purchase 275,000
shares of common stock.

Registration Rights

  The holders of 4,000,000 shares of Series C preferred stock, referred to as
"registrable securities," are entitled to certain rights with respect to
registration of such shares under the Securities Act. These rights are provided
under the terms of an investor rights agreement between us and the holders of
registrable securities.

                                       59
Beginning 180 days following the date of this prospectus, holders of at least
25% of the then outstanding registrable securities may require on up to two
occasions that we register their shares for public resale. We are obligated to
register these shares only if the outstanding registrable securities have an
anticipated public offering price of at least $5.5 million. Also, holders of
registrable securities may require once per 12-month period that we register
their shares for public resale on Form S-3 or similar short-form registration,
provided we are eligible to use that form, if the value of the securities to be
registered is at least $1.0 million; however, we may defer this registration
for 120 days in view of market conditions. Furthermore, in the event we elect
to register any of our shares of common stock for purposes of effecting any
public offering, the holders of registrable securities are entitled to include
their shares of common stock in the registration, but we may reduce the number
of shares proposed to be registered in view of market conditions. These
registration rights will not be applicable with respect to this offering. All
expenses in connection with any registration, other than underwriting discounts
and commissions, will be borne by us. All registration rights will terminate
five years following the consummation of this offering, or, with respect to
each holder of registrable securities, at the time the holder is entitled to
sell all of its shares in any three-month period under Rule 144 of the
Securities Act.

Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws and
Delaware Law

  Certain provisions of Delaware law and our amended and restated certificate
of incorporation and bylaws could make the following more difficult:

  . the acquisition of us by means of a tender offer;

  . the acquisition of us by means of a proxy contest or otherwise; or

  . the removal of our incumbent officers and directors.

  These provisions, summarized below, are expected to discourage certain types
of coercive takeover practices and inadequate takeover bids. These provisions
are also designed to encourage persons seeking to acquire control of us to
negotiate first with our board. We believe that the benefits of increased
protection of our potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging such proposals because negotiation of these
proposals could result in an improvement of their terms.

  Election and Removal of Directors. Our board of directors is divided into
three classes. The directors in each class will serve for a three-year term,
one class being elected each year by our stockholders. For more information on
the classified board, see the section entitled "Management--Board of
Directors." This system of electing and removing directors may tend to
discourage a third party from making a tender offer or otherwise attempting to
obtain control of us because it generally makes it more difficult for
stockholders to replace a majority of the directors.

  Stockholder Meetings. Under our bylaws, only the board of directors, the
chairman of the board, the chief executive officer and the president may call
special meetings of stockholders.

  Requirements for Advance Notification of Stockholder Nominations and
Proposals. Our bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election as
directors, other than nominations made by or at the direction of the board of
directors or a committee of the board.

  Delaware Anti-Takeover Law. We are subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a business
combination with an interested stockholder for a period of three years
following the date the person became an interested stockholder, unless the
business combination or the transaction in which the person became an
interested stockholder is approved in a prescribed manner. Generally, a
business combination includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested

                                       60
stockholder. Generally, an interested stockholder is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status did own, 15% or more of a
corporation's voting stock. The existence of this provision may have an anti-
takeover effect with respect to transactions not approved in advance by the
board of directors, including discouraging attempts that might result in a
premium over the market price for the shares of common stock held by
stockholders.

  Elimination of Stockholder Action By Written Consent. Our certificate of
incorporation eliminates the right of stockholders to act by written consent
without a meeting.

  Elimination of Cumulative Voting. Our certificate of incorporation and bylaws
do not provide for cumulative voting in the election of directors.

  Undesignated Preferred Stock. The authorization of undesignated preferred
stock makes it possible for the board of directors to issue preferred stock
with voting or other rights or preferences that could impede the success of any
attempt to change control of us. These and other provisions may have the effect
of deferring hostile takeovers or delaying changes in control or management of
us.

  Amendment of Charter Provisions. The amendment of any of the above provisions
would require approval by holders of at least 66 2/3% of the outstanding common
stock.

Transfer Agent and Registrar

  The transfer agent and registrar for our common stock is Chase Mellon
Shareholder Services.

Nasdaq National Market Listing

  We have applied for the listing of our shares on the Nasdaq National Market
under the symbol "MPLX."

                                       61
SHARES ELIGIBLE FOR FUTURE SALE

  Sales of substantial amounts of our common stock in the public market after
the offering could adversely affect the market price of our common stock and
our ability to raise equity capital in the future on terms favorable to us.

  After this offering,      shares of our common stock will be outstanding,
assuming that the underwriters do not exercise the over-allotment option, and
based on shares outstanding as of August 15, 1999. Of these shares, all of the
     shares sold in this offering will be freely tradable without restriction
or further registration under the Securities Act, unless these shares are
purchased by "affiliates" as that term is defined in Rule 144 under the
Securities Act. The remaining shares of common stock held by existing
stockholders are "restricted securities" as that term is defined in Rule 144
under the Securities Act. Restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rule 144 or 701 under the Securities Act, which rules are summarized
below.

  As a result of the contractual restrictions described below and the
provisions of Rules 144, 144(k) and 701, the 24,604,865 restricted shares will
be available for sale in the public market as follows:

         Eligibility of Restricted Shares for Sale in the Public Market
At the effective date.............................................     45,000
   90 days after the effective date..................................     85,814
   180 days after the effective date................................. 15,880,717
   More than 180 days after the effective date.......................  8,593,334
Resale of 15,730,717 of the restricted shares that will become available for
sale in the public market starting 180 days after the effective date will be
limited by volume and other resale restrictions under Rule 144 because the
holders are our affiliates.

Rule 144

  In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year is entitled to sell, within any three-month
period, a number of shares that is not more than the greater of:

  . 1% of the number of shares of common stock then outstanding, which will
    equal approximately      shares immediately after this offering; or

  . the average weekly trading volume of our common stock on the Nasdaq
    National Market during the four calendar weeks before a notice of the
    sale on Form 144 is filed.

  Sales under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current public information about us.

  Under Rule 144(k), a person who has not been one of our affiliates at any
time during the three months before a sale, and who has beneficially owned the
restricted shares for at least two years, is entitled to sell the shares
without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.

Rule 701

  In general, under Rule 701 of the Securities Act as currently in effect, any
of our employees, consultants or advisors who purchase shares from us under a
stock option plan or other written agreement can resell those shares 90 days
after the effective date of this offering in reliance on Rule 144, but without
complying with some of the restrictions, including the holding period,
contained in Rule 144.

                                       62
Lock-Up Arrangements

  Including our executive officers and directors, holders of a total of
24,304,051 shares of common stock (including preferred stock convertible into
common stock), warrants to purchase a total of 875,000 shares of common stock
and options to purchase 4,705,333 shares of common stock have agreed not to
sell or otherwise dispose of any unrestricted shares of common stock for a
period of 180 days after the date of this prospectus without the prior written
consent of Lehman Brothers Inc. In addition, all options granted under our
Amended and Restated 1999 Stock Plan are subject to similar lock-up
arrangements pursuant to an agreement between the optionee and us.

                                       63
UNDERWRITING

  Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, the underwriters named
below, for whom Lehman Brothers Inc., SG Cowen Securities Corporation and U.S.
Bancorp Piper Jaffray Inc. are acting as representatives, have each agreed to
purchase from us the number of shares of common stock shown opposite its name
below:
Number of
     Underwriters                                                       Shares
     ------------                                                      ---------
Lehman Brothers Inc............................................
       SG Cowen Securities Corporation................................
       U.S. Bancorp Piper Jaffray Inc. ...............................
                                                                       --------
       Total..........................................................
                                                                       ========
The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement. It also provides that, if any of the
shares of common stock are purchased by the underwriters under the underwriting
agreement, all of the shares of common stock that the underwriters have agreed
to purchase under the underwriting agreement, must be purchased. The conditions
contained in the underwriting agreement include the requirement that:

  . the representations and warranties made by us to the underwriters are
    true;

  . that there is no material change in the financial markets; and

  . we deliver to the underwriters customary closing documents.

  The representatives have advised us that the underwriters propose to offer
the shares of common stock directly to the public at the public offering price
set forth on the cover page of this prospectus. The representatives have also
advised us that the underwriters propose to offer the shares of common stock to
dealers, who may include the underwriters, at this public offering price less a
selling concession not in excess of $     per share. The underwriters may
allow, and the dealers may reallow, a concession not in excess of $     per
share to brokers and dealers. After the offering, the underwriters may change
the offering price and other selling terms.

  We have granted to the underwriters an option to purchase up to
additional shares of common stock, exercisable solely to cover over-allotments,
if any, at the public offering price less the underwriting discount shown on
the cover page of this prospectus. The underwriters may exercise this option at
any time until 30 days after the date of the underwriting agreement. If this
option is exercised, each underwriter will be committed, so long as the
conditions of the underwriting agreement are satisfied, to purchase a number of
additional shares of common stock proportionate to the underwriter's initial
commitment as indicated in the table above and we will be obligated, under the
over-allotment option, to sell the shares of common stock to the underwriters.

  We have agreed, that, without the prior consent of Lehman Brothers Inc., we
will not, directly or indirectly, offer, sell or otherwise dispose of any
shares of common stock or any securities that may be converted into or
exchanged for any shares of common stock for a period of 180 days from the date
of this prospectus. All of our executive officers and directors and
stockholders holding 24,304,051 shares of our capital stock, including our
preferred stock, and holders of options and warrants to purchase 5,580,333
shares, have agreed under lock-up agreements that, without the prior written
consent of Lehman Brothers Inc., they will not, directly or indirectly, offer,
sell or otherwise dispose of any shares of common stock or any securities that
may be converted into or exchanged for any shares of common stock for the
period ending 180 days after the date of this prospectus. See "Shares Eligible
for Future Sale."

  Before this offering, there has been no public market for the shares of
common stock. The initial public offering price will be negotiated between the
representatives and us. In determining the initial public offering

                                       64
price of the common stock, the representatives will consider, among other
things and in addition to prevailing market conditions:

  . our historical performance and capital structure;

  . estimates of our business potential and earning prospects;

  . an overall assessment of our management; and

  . the above factors in relation to market valuations of companies in
    related businesses.

  We have applied to have our common stock approved for quotation on the Nasdaq
National Market under the symbol "MPLX."

  We have agreed to indemnify the underwriters against liabilities, including
liabilities under the Securities Act and liabilities arising from breaches of
the representations and warranties contained in the underwriting agreement, and
to contribute to payments that the underwriters may be required to make for
these liabilities.

  Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purposes of pegging, fixing or
maintaining the price of the common stock.

  The underwriters may create a short position in the common stock in
connection with the offering. This means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create
a short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.

  The representatives also may impose a penalty bid on underwriters and selling
group members. This means that, if the representatives purchase shares of
common stock in the open market to reduce the underwriters' short position or
to stabilize the price of the common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members that sold
those shares as part of the offering.

  In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of these purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
an offering.

  Neither we 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 we nor
any of the underwriters makes any representation that the representatives will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.

  Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
the sale is made.

  Purchasers of the shares of common stock offered in this prospectus may be
required to pay stamp taxes and other charges under the laws and practices of
the country of purchase, in addition to the offering price listed on the cover
page of this prospectus.

  The representatives have informed us that they do not intend to confirm sales
to discretionary accounts that exceed 5% of the shares of common stock offered
by them.

  At our request, the underwriters have reserved up to      shares of the
common stock offered by this prospectus for sale to our officers, directors,
employees and their family members and to our business associates at the
initial public offering price set forth on the cover page of this prospectus.
These persons must commit to purchase no later than the close of business on
the day following the date of this prospectus. The number of shares available
for sale to the general public will be reduced to the extent these persons
purchase the reserved shares.

                                       65
LEGAL MATTERS

  The validity of the shares of common stock offered hereby will be passed upon
for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Fenwick & West LLP, Palo Alto, California will pass upon
legal matters for the underwriters. As of the date of this prospectus, WS
Investments, an investment partnership composed of certain current and former
members of and persons associated with Wilson Sonsini Goodrich & Rosati,
Professional Corporation, and certain individual attorneys of this firm,
beneficially own a total of 43,116 shares of our common stock.

                                    EXPERTS

  The financial statements of Mediaplex, Inc., as of and for the six months
ended June 30, 1999, as of December 31, 1998 and 1997, for each of the two
years in the period ended December 31, 1998, and for the period from September
10, 1996 (inception) to December 31, 1996 included in this prospectus and the
financial statement schedule included in the registration statement have been
so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.

  The financial statements of Netranscend Software, Inc. (a development stage
company) as of December 31, 1998 and 1997, for each of two years in the period
ended December 31, 1998, and for the period from November 27, 1996 (inception)
to December 31, 1998 included in this prospectus have been so included in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

  We have filed with the Securities and Exchange Commission under the
Securities Act of 1933 a registration statement on Form S-1, including the
exhibits filed with the registration statement, with respect to the shares to
be sold in this offering. This prospectus does not contain all the information
contained in the registration statement. For further information with respect
to us and the shares to be sold in this offering, we refer you to the
registration statement. Statements contained in this prospectus as to the
contents of any contract, agreement or other document to which we make
reference are not necessarily complete. In each instance, we refer you to the
copy of the contract, agreement or other document filed as an exhibit to the
registration statement, each statement being qualified in all respects by the
more complete description of the matter involved.

  You may read and copy all or any portion of the registration statement or any
reports, statements or other information we file at the Commission's public
reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of
these documents upon payment of a duplicating fee, by writing to the
Commission. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Our Commission
filings, including the registration statement, will also be available to you on
the Commission's Internet site, http://www.sec.gov.

  We intend to send to our stockholders annual reports containing audited
consolidated financial statements and quarterly reports containing unaudited
financial statements for the first three quarters of each fiscal year.

                                       66
Mediaplex, Inc.

                         Index to Financial Statements
Pages
                                                                           -----
MEDIAPLEX, INC.

Report of Independent Accountants.........................................  F-2

Balance Sheets............................................................  F-3

Statements of Operations..................................................  F-4

Statements of Changes in Stockholders' Equity (Deficit)...................  F-5

Statements of Cash Flows..................................................  F-6

Supplemental Disclosure of Cash Flows.....................................  F-7

Notes to Financial Statements.............................................  F-8

PRO FORMA FINANCIAL INFORMATION

Overview.................................................................. F-21

Pro Forma Statement of Operations......................................... F-22

Notes to Pro Forma Financial Information.................................. F-23

NETRANSCEND SOFTWARE, INC.

Report of Independent Accountants......................................... F-24

Balance Sheets............................................................ F-25

Statements of Operations.................................................. F-26

Statements of Shareholders' Equity (Deficit).............................. F-27

Statements of Cash Flows.................................................. F-28

Notes to Financial Statements............................................. F-29
F-1
Report of Independent Accountants

To the Board of Directors and Stockholders of Mediaplex, Inc.

The recapitalization described in Note 1 to the financial statements has not
been consummated at September 2, 1999. When it has been consummated, we will be
in a position to furnish the following report:

  "In our opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Mediaplex, Inc. (the "Company") at
December 31, 1997 and 1998, and June 30, 1999, and the results of operations
and its cash flows for the period from September 10, 1996 (inception) to
December 31, 1996, the years ended December 31, 1997 and 1998, and the six
months ended June 30, 1999, in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above."

                                          /s/ PricewaterhouseCoopers LLP
San Francisco, California
July 30, 1999
except for Note 10,
which is as of
September 1, 1999

                                      F-2
Mediaplex, Inc.

                                 Balance Sheets
December 31,
                                          ------------------------   June 30,
                                             1997         1998         1999
                                          -----------  -----------  -----------
Assets
Current Assets:
  Cash and cash equivalents.............  $   141,994  $   374,567  $ 7,602,205
  Accounts receivable, net of allowance
   of $20,211, $37,367 and $183,367 as
   of December 31, 1997 and 1998 and
   June 30, 1999, respectively..........        3,967      936,497    3,888,361
  Other current assets..................           --           --       62,933
                                          -----------  -----------  -----------
   Total current assets.................      145,961    1,311,064   11,553,499
  Property and equipment, net...........      110,546      105,921    1,030,699
  Goodwill and intangible assets, net of
   accumulated amortization of $250,811
   as of June 30, 1999..................           --           --    2,758,924
  Other assets..........................        5,000       27,030       86,573
                                          -----------  -----------  -----------
   Total assets.........................  $   261,507  $ 1,444,015  $15,429,695
                                          ===========  ===========  ===========
Liabilities and Stockholders' Equity
 (Deficit)
Current Liabilities:
  Accounts payable......................  $   379,122  $ 1,528,600  $ 1,941,756
  Payables to stockholders..............       48,873      139,701      127,281
  Advance from stockholder..............           --      262,750           --
  Accrued liabilities...................      150,067      422,177    2,930,697
  Deferred revenues.....................      142,400      479,764    1,364,096
  Notes payable to stockholders, current
   portion..............................           --      339,569       50,000
  Capital lease obligations, current
   portion..............................       11,463           --           --
  Other liabilities.....................           --        1,039       19,854
                                          -----------  -----------  -----------
   Total current liabilities............      731,925    3,173,600    6,433,684
Notes payable, stockholders.............       64,569      232,161      372,765
Capital lease obligations...............       23,072           --           --
                                          -----------  -----------  -----------
   Total liabilities....................      819,566    3,405,761    6,806,449
Commitments (Note 6)
Stockholders' Equity (Deficit):
  Convertible preferred stock; issuable
   in series; $0.0001 value; authorized
   8,206,000 shares; 5,706,000 shares
   issued and outstanding; liquidation
   preference of $10,507,500 at June 30,
   1999.................................           --           --          571
  Common stock, $0.0001 par value;
   authorized 10,000,000, 40,000,000,
   and 40,000,000 shares, respectively;
   11,318,566, 6,984,302 and 14,839,539
   shares issued and outstanding at
   December 31, 1997 and 1998 and June
   30, 1999, respectively...............        1,132          698        1,484
  Additional paid-in capital............      813,355    1,482,685   20,238,846
  Warrants..............................           --           --      432,354
  Deferred stock compensation...........           --      (53,371)  (3,232,130)
  Receivable from sale of Series B
   preferred stock......................           --           --     (240,000)
  Accumulated deficit...................   (1,372,546)  (3,391,758)  (8,577,879)
                                          -----------  -----------  -----------
   Total stockholders' equity
    (deficit)...........................     (558,059)  (1,961,746)   8,623,246
                                          -----------  -----------  -----------
   Total liabilities and stockholders'
    equity (deficit)....................  $   261,507  $ 1,444,015  $15,429,695
                                          ===========  ===========  ===========
The accompanying notes are an integral part of these financial statements.

                                      F-3
Mediaplex, Inc.

                            Statements of Operations
September 10,
                              1996            Years Ended            Six Months Ended
                         (inception) to      December 31,                June 30,
                          December 31,  ------------------------  ------------------------
                              1996         1997         1998         1998         1999
                         -------------- -----------  -----------  -----------  -----------
                                                                  (unaudited)
Revenues................   $      --    $   425,877  $ 3,588,094  $ 1,521,895  $ 7,322,572
Cost of revenues........          --        445,372    2,770,567    1,212,773    5,761,199
                           ---------    -----------  -----------  -----------  -----------
  Gross profit..........          --        (19,495)     817,527      309,122    1,561,373

Operating expenses:
  Sales and marketing...      22,704        480,756      819,641      394,626    1,647,288
  Research and
   development..........      48,834        347,130      555,736      220,003      815,659
  General and
   administrative.......      30,948        256,413      636,651      325,073    1,081,697
  Stock-based
   compensation.........     152,694         11,000      577,525      151,427    2,965,683
  Amortization of
   goodwill and
   intangibles..........          --             --           --           --      250,811
                           ---------    -----------  -----------  -----------  -----------
    Total operating
     expenses...........     255,180      1,095,299    2,589,553    1,091,129    6,761,138
                           ---------    -----------  -----------  -----------  -----------
    Loss from
     operations.........    (255,180)    (1,114,794)  (1,772,026)    (782,007)  (5,199,765)
Interest income
 (expense), net.........          --         (2,572)    (247,186)    (233,934)      13,644
                           ---------    -----------  -----------  -----------  -----------
  Net loss..............   $(255,180)   $(1,117,366) $(2,019,212) $(1,015,941) $(5,186,121)
                           =========    ===========  ===========  ===========  ===========
Net loss per share--
 basic and diluted......   $   (0.07)   $     (0.13) $     (0.25) $     (0.11) $     (0.43)
                           =========    ===========  ===========  ===========  ===========
Weighted average shares
 used to compute net
 loss per share--basic
 and diluted............   3,795,714      8,457,464    8,186,127    9,408,557   12,070,449
                           =========    ===========  ===========  ===========  ===========
Pro forma net loss per
 share--basic and
 diluted (unaudited)....                             $     (0.25)              $     (0.38)
                                                     ===========               ===========
Weighted average shares
 used to compute pro
 forma net loss per
 share--basic and
 diluted (unaudited)....                               8,186,127                13,501,001
                                                     ===========               ===========
The accompanying notes are an integral part of these financial statements.

                                      F-4
Mediaplex, Inc.

            Statements of Changes in Stockholders' Equity (Deficit)
Convertible
                  Preferred Stock    Common Stock
                  ---------------- ------------------
                                                                                            Receivable
                                                                                           from sale of
                                                       Additional              Deferred      Series B
                                                         Paid-in                Stock       Preferred   Accumulated
                   Shares   Amount   Shares    Amount    Capital    Warrants Compensation     Stock       Deficit       Total
                  --------- ------ ----------  ------  -----------  -------- ------------  ------------ -----------  -----------
Balance,
September 10,
1996
(inception).....         --  $ --          --  $   --  $        --  $     -- $        --    $      --   $        --  $        --
Issuance of
common stock for
cash and for
services........                    3,060,000     306      152,419                                                       152,725
Issuance of
common stock....                    1,600,000     160       79,840                                                        80,000
Net loss........                                                                                           (255,180)    (255,180)
                  ---------  ----  ----------  ------  -----------  -------- -----------    ---------   -----------  -----------
Balance,
December 31,
1996............         --    --   4,660,000     466      232,259        --          --           --      (255,180)     (22,455)
Issuance of
common stock....                    1,795,338     180      338,421                                                       338,601
Conversion of
payable to
stockholder for
common stock....                    4,643,228     464      231,697                                                       232,161
Issuance of
common stock for
services........                      220,000      22       10,978                                                        11,000
Net loss........                                                                                         (1,117,366)  (1,117,366)
                  ---------  ----  ----------  ------  -----------  -------- -----------    ---------   -----------  -----------
Balance,
December 31,
1997............         --    --  11,318,566   1,132      813,355        --          --           --    (1,372,546)    (558,059)
Repurchase of
common stock for
convertible note
payable.........                   (4,643,228)   (464)    (231,697)                                                     (232,161)
Beneficial
conversion
feature of note
payable to
stockholder.....                                           232,161                                                       232,161
Issuance of
common stock....                       76,000       7       37,993                                                        38,000
Issuance of
common stock for
services........                      232,290      23      151,404                                                       151,427
Stock-based
compensation....                                           286,079                                                       286,079
Deferred stock
compensation....                                           193,390              (193,390)                                    --
Amortization of
deferred stock
compensation....                                                                 140,019                                 140,019
Net loss........                                                                                         (2,019,212)  (2,019,212)
                  ---------  ----  ----------  ------  -----------  -------- -----------    ---------   -----------  -----------
Balance,
December 31,
1998............         --    --   6,983,628     698    1,482,685        --     (53,371)          --    (3,391,758)  (1,961,746)
Issuance of
common stock for
services........                       23,333       3       27,935                                                        27,938
Issuance of
common stock
upon acquisition
of Netranscend..                    1,979,000     198    2,569,068                                                     2,569,266
Issuance of
common stock
upon exercise of
options.........                       62,667       6        9,029                                                         9,035
Issuance of
Series A
preferred stock,
net of issuance
cost of
$46,701.........  1,206,000   121                        1,460,678                                                     1,460,799
Conversion of
note payable to
stockholder for
common stock....                      947,009      95       70,931                                                        71,026
Issuance of
Series B
preferred stock,
net of issuance
cost of
$741,632........  4,500,000   450                        8,257,918   432,354                 (240,000)                 8,450,722
Conversion of
note payable for
common stock....                    4,643,228     464      231,697                                                       232,161
Issuance of
common stock
upon exercise of
options in
connection with
waiver of
payable.........                      200,000      20       12,400                                                        12,420
Deferred stock
compensation....                                         6,116,505            (6,116,505)                                     --
Amortization of
deferred stock
compensation....                                                               2,937,746                               2,937,746
Net loss........                                                                                         (5,186,121)  (5,186,121)
                  ---------  ----  ----------  ------  -----------  -------- -----------    ---------   -----------  -----------
Balance, June
30, 1999........  5,706,000  $571  14,838,865  $1,484  $20,238,846  $432,354 $(3,232,130)   $(240,000)  $(8,577,879) $ 8,623,246
                  =========  ====  ==========  ======  ===========  ======== ===========    =========   ===========  ===========
The accompanying notes are an integral part of these financial statements.

                                      F-5
Mediaplex, Inc.

                            Statements of Cash Flows
September 10,
                             1996
                          (inception)        Years Ended            Six Months Ended
                              to            December 31,                June 30,
                         December 31,  ------------------------  ------------------------
                             1996         1997         1998         1998         1999
                         ------------- -----------  -----------  -----------  -----------
                                                                 (unaudited)
Cash flows from operat-
 ing activities:
 Net loss...............   $(255,180)  $(1,117,366) $(2,019,212) $(1,015,941) $(5,186,121)
 Adjustments to
  reconcile net loss to
  net cash used in
  operating activities:
 Depreciation and amor-
  tization..............       1,726        20,023       54,810       25,181      376,082
 Write-off of property
  and equipment.........          --            --       18,853           --           --
 Allowance for doubtful
  accounts..............          --        20,211       17,156        5,147      146,000
 Stock-based compensa-
  tion expense..........     152,694        11,000      577,525      151,427    2,965,683
 Interest expense re-
  lated to beneficial
  conversion feature of
  notes payable, stock-
  holder................          --            --      232,161      232,161           --
 Changes in assets and
  liabilities:
  Accounts receivable...          --       (24,178)    (949,686)    (627,475)  (3,097,826)
  Other assets..........      (1,650)       (3,350)     (22,030)     (28,662)    (122,476)
  Accounts payable......         800       378,322    1,149,477      729,760      203,566
  Payables to stock-
   holders..............      35,982       309,621       90,828       62,248           --
  Accrued liabilities...      37,203       112,864      272,110      236,946    2,447,236
  Deferred revenue......          --       142,400      337,364       61,093      884,332
  Other liabilities.....          --            --        1,039        3,038       18,815
                           ---------   -----------  -----------  -----------  -----------
   Net cash used in op-
    erating activities..     (28,425)     (150,453)    (239,605)    (165,077)  (1,364,709)
                           ---------   -----------  -----------  -----------  -----------
Cash flows from invest-
 ing activities:
 Purchase of property
  and equipment.........     (24,488)      (69,892)     (78,819)     (37,535)    (840,459)
                           ---------   -----------  -----------  -----------  -----------
   Net cash used in in-
    vesting activities..     (24,488)      (69,892)     (78,819)     (37,535)    (840,459)
                           ---------   -----------  -----------  -----------  -----------
Cash flows from financ-
 ing activities:
 Net proceeds from issu-
  ance of common stock..      80,031       338,601       38,000       38,000           --
 Net proceeds from issu-
  ance of Series A pre-
  ferred stock..........          --            --           --           --    1,198,049
 Net proceeds from issu-
  ance of Series B pre-
  ferred stock..........          --            --           --           --    8,450,722
 Proceeds from exercise
  of stock options......          --            --           --           --        9,035
 Payments of capital
  lease obligations.....          --        (3,380)     (24,753)      (6,834)          --
 Proceeds from notes
  payables--stockhold-
  ers...................          --            --      275,000      275,000           --
 Payment of notes pay-
  able--stockholders....          --            --           --           --     (225,000)
 Advance from sharehold-
  ers...................          --            --      262,750           --           --
                           ---------   -----------  -----------  -----------  -----------
   Net cash provided by
    financing activi-
    ties................      80,031       335,221      550,997      306,166    9,432,806
                           ---------   -----------  -----------  -----------  -----------
   Net change in cash
    and cash equiva-
    lents...............      27,118       114,876      232,573      103,554    7,227,638
Cash and cash equiva-
 lents at beginning of
 period.................          --        27,118      141,994      141,994      374,567
                           ---------   -----------  -----------  -----------  -----------
Cash and cash equiva-
 lents at end of peri-
 od.....................   $  27,118   $   141,994  $   374,567  $   245,548  $ 7,602,205
                           =========   ===========  ===========  ===========  ===========
The accompanying notes are an integral part of these financial statements.

                                      F-6
Mediaplex, Inc.

                     Supplemental Disclosure of Cash Flows
September 10,
                               1996         Years Ended       Six Months Ended
                          (inception) to   December 31,           June 30,
                           December 31,  ----------------- ----------------------
                               1996        1997     1998      1998        1999
                          -------------- -------- -------- ----------- ----------
                                                           (unaudited)
Cash paid for interest..      $   --     $  2,572 $  1,804  $    541   $   13,621
                              ======     ======== ========  ========   ==========
Noncash financing and
 investing activities:
 Issuance of common
  stock for
  acquisition...........      $   --     $     -- $     --  $     --   $2,552,910
                              ======     ======== ========  ========   ==========
 Issuance of note
  payable for
  acquisition...........      $   --     $     -- $     --  $     --   $  430,000
                              ======     ======== ========  ========   ==========
 Conversion of payables
  to stockholders to
  common stock..........      $   --     $232,161 $     --  $     --   $       --
                              ======     ======== ========  ========   ==========
 Conversion of
  stockholders' notes
  payable to common
  stock.................      $   --     $        $     --  $     --   $  303,187
                              ======     ======== ========  ========   ==========
 Repurchase of common
  stock in exchange for
  a note payable........      $   --     $     -- $232,161  $232,161   $       --
                              ======     ======== ========  ========   ==========
 Issuance of note
  payable to shareholder
  for settlement of
  outstanding payable to
  shareholder...........      $   --     $ 64,569 $     --  $     --   $       --
                              ======     ======== ========  ========   ==========
 Issuance of warrant to
  purchase common stock
  in connection with
  completing Series B
  preferred stock
  financing.............      $   --     $     -- $     --  $     --   $  432,354
                              ======     ======== ========  ========   ==========
 Conversion of advance
  from shareholder to
  Series A preferred
  stock.................      $   --     $     -- $     --  $     --   $  262,750
                              ======     ======== ========  ========   ==========
 Issuance of Series B
  preferred stock in
  exchange for note
  receivable............      $   --     $     -- $     --  $     --   $  240,000
                              ======     ======== ========  ========   ==========
 Exercise of common
  stock options in
  connection with waiver
  of payable to
  stockholder...........      $   --     $     -- $     --  $     --   $   12,420
                              ======     ======== ========  ========   ==========
 Purchase of equipment
  under capital leases..      $   --     $ 37,915 $  3,036  $  3,036   $       --
                              ======     ======== ========  ========   ==========
 Deferred stock
  compensation from
  issuance of options...      $   --     $     -- $193,390  $     --   $6,116,505
                              ======     ======== ========  ========   ==========
The accompanying notes are an integral part of these financial statements.

                                      F-7
Mediaplex, Inc.

                         Notes to Financial Statements

1. Business Activities and Summary of Significant Accounting Policies

Nature of Business

  Mediaplex, Inc. provides e-commerce and eBusiness solutions for online
marketing companies, advertisers and their advertising agencies. The Company's
service offerings include planning and execution of online media and marketing
campaigns, proprietary third-party ad serving to advertisers, and tracking and
reporting of an advertiser's return on investment ("ROI"), including evaluation
of online transactions.

Reincorporation

  In August 1999, the Company approved reincorporating in Delaware, changing
the name to Mediaplex, Inc. In connection with the reincorporation, the Company
authorized (i) an increase in the amount of authorized shares of common stock
to 150,000,000 and (ii) 10,000,000 shares of undesignated preferred stock. All
share data and stock option plan information has been restated to reflect the
reincorporation. The reincorporation is expected to be completed in 1999.

Netranscend Software, Inc. Acquisition

  On March 25, 1999, the Company acquired Netranscend Software, Inc., a Java-
based enterprise automation solutions software company, for a note payable of
$430,000, due in four annual installments (Note 5) beginning on the first
anniversary of the acquisition, and 1,979,000 shares of the Company's common
stock with an estimated fair value of $1.29 per share. Transaction costs of
$68,231 were incurred.

  The acquisition was accounted for using the purchase method of accounting.
The aggregate purchase price of $2,993,906, together with $15,836 of net
liabilities assumed, has been allocated based on the fair value of the assets
acquired. Goodwill and intangible assets, consisting of proprietary technology,
totaling $3,009,732 are being amortized over three years.

  The following pro forma results of operations reflect the combined results of
the Company and Netranscend Software, Inc. for the fiscal years ended December
31, 1997 and 1998 and have been prepared as though the entities had been
combined as of January 1, 1997 and 1998. The pro forma results do not reflect
any nonrecurring charges which resulted directly from the transaction.
1997         1998
                                                     -----------  -----------
                                                           (unaudited)
Revenues......................................... $   425,877  $ 3,558,094
   Net loss......................................... $(2,124,951) $(3,032,444)
   Net loss per share--basic and diluted............ $     (0.20) $     (0.30)
   Shares used in computing net loss per share--
    basic and diluted...............................  10,436,464   10,165,127
Unaudited Interim Financial Information

  The accompanying interim statements of operations and cash flows for the six
months ended June 30, 1998 are unaudited. The unaudited interim financial
statements have been prepared on the same basis as the annual financial
statements and, in the opinion of management, reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the
Company's results of operations and cash flows for the six months ended June
30, 1998. The financial data and other information disclosed in these notes to
consolidated financial statements related to this period are unaudited. Results
for the six months ended June 30, 1999 are not necessarily indicative of
results that may be expected for the full year.

                                      F-8
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

Use of Estimates

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

Concentration of Credit Risk

  Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of cash equivalents and accounts receivable.
The Company has cash equivalents and short-term investment policies that
require placement of these funds in financial institutions evaluated as highly
credit-worthy. The Company's credit risk is mitigated by the Company's ongoing
credit evaluation of its customers' financial condition. The Company does not
require collateral or other security to support accounts receivable and
maintains allowances for potential bad debts. At December 31, 1997, one
customer accounted for 67% of the outstanding accounts receivable. Four
customers accounted for 76% of the outstanding accounts receivable at December
31, 1998. At June 30, 1999, three customers represent 48% of outstanding
accounts receivable. One, two, four and five customers accounted for 91%, 77%,
80%, and 68% of revenues for the years ended December 31, 1997 and 1998, and
the six months ended June 30, 1998 and 1999, respectively.

Risks and Uncertainties

  The Company is subject to all of the risks inherent in an early stage company
in the Internet advertising industry. These risks include, but are not limited
to, a limited operating history, limited management resources, dependence upon
a consumer acceptance of the Internet, Internet related security risks and the
changing nature of the electronic commerce industry. The Company's operating
results may be materially affected by the foregoing factors.

Fair Value of Financial Instruments

  The Company's financial instruments include cash and cash equivalents,
borrowings, and accounts payable, and are carried at cost, which approximates
their fair value due to their short-term maturities.

Cash and Cash Equivalents

  All highly liquid instruments purchased with an original maturity of three
months or less are considered to be cash equivalents.

Property and Equipment

  Property and equipment are stated at cost less accumulated depreciation and
amortization. Maintenance and repairs are charged to operations as incurred.
Depreciation and amortization are based on the straight-line method over the
estimated useful lives of the related assets, which range from three to five
years. When assets are retired or otherwise disposed of, the cost and
accumulated depreciation and amortization are removed from the accounts, and
any resulting gain or loss is reflected in operations in the period realized.

Goodwill and Intangible Assets

  Goodwill and intangible assets consist of the excess of the purchase price
paid over identified intangible and tangible net assets resulting from the
acquisition of Netranscend Software, Inc. Due to the rapid

                                      F-9
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

technological changes occurring in the Internet industry, the goodwill and
intangible assets are amortized using the straight-line method over three
years, the period of expected benefit. Valuation of goodwill and intangible
assets is based on forecasted discounted cash flows and is reassessed
periodically. Cash flow forecasts are based on trends of historical performance
and management's estimate of future performance, giving consideration to
existing and anticipated competitive and economic conditions.

Impairment of Long-Lived Assets

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

Revenue Recognition

  Revenues are generated primarily from fixed fees from advertising campaign
management services. Advertising revenues are recognized ratably as impressions
are delivered over the period in which the advertisement is displayed, provided
that no significant Company obligations remain at the end of a period and
collection of the resulting receivable is probable. Company obligations
typically includes guarantees of minimum number of "impressions," or times that
an advertisement appears in pages viewed by users of the Company's online
properties. To the extent minimum guaranteed impressions are not met, the
Company defers recognition of the corresponding revenues until the remaining
guaranteed impression levels are achieved.

  Amounts payable to third-party Web sites for providing advertising space are
recorded as cost of revenues in the period the advertising impressions are
delivered.

Deferred Revenues

  Deferred revenues consist of advertising fees received or billed in advance
of delivery of the advertisement.

Research and Development

  Research and development costs are charged to expense as incurred.

Advertising Expenses

  The Company expenses the cost of advertising and promoting its services as
incurred. These costs are included in sales and marketing on the statements of
operations. The Company has not incurred any advertising expenses to date.

Stock-based Compensation

  The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion ("APB") No.
25, "Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation." Under APB No. 25,
compensation cost is recognized based on the difference, if any, on the date of
grant between the fair value of the Company's stock and the amount an employee
must pay to acquire the stock.

                                      F-10
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

  The Company accounts for non-employee stock-based awards in which goods or
services are the consideration received for the equity instruments issued in
accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force
No. 96-18, "Accounting for Equity Instruments that are Issued to Employees for
Acquiring, or in Conjunction with Selling, Goods or Services."

  The Company amortizes stock-based compensation recorded in connection with
certain stock option grants over the vesting periods of the related options.

Income Taxes

  In accordance with SFAS No. 109, "Accounting for Income Taxes," deferred
income taxes are recognized for the differences between the tax bases of assets
and liabilities and their financial reporting amounts based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. A valuation allowance is recognized for
deferred tax assets when it is more likely than not, based on available
evidence, that some portion or all of the deferred tax asset will not be
realized. Income tax expense or benefit is the tax payable or refundable,
respectively, for the period plus or minus the change during the period in
deferred tax assets and liabilities.

Net Loss Per Share

  Net loss per share is presented in accordance with the provisions of SFAS No.
128, "Earnings per Share," and Staff Accounting Bulletin No. 98. Basic net loss
per share is computed based on weighted average number of shares of common
stock outstanding, while diluted net loss per share reflects the potential
dilution that would occur if preferred stock had been converted and stock
options and warrants had been exercised. Common equivalent shares from
preferred stock, stock options and warrants have been excluded from the
computation of diluted net loss per share as their effect would be
antidilutive.

Pro Forma Net Loss Per Share (unaudited)

  Pro forma net loss per share for the year ended December 31, 1998 and the six
months ended June 30, 1999 is computed based on the weighted average number of
common shares outstanding, including the exercise of all outstanding warrants
at June 30, 1999, and the assumed conversion of the Company's Series A and
B preferred stock into shares of the Company's common stock that will be
effective upon the closing of the Company's initial public offering, as if such
conversion had occurred on January 1, 1998 or at the date of original issuance,
if later. The resulting pro forma adjustment includes an increase in the
weighted average shares used to compute basic and diluted net loss per share of
0 and 1,430,552 for the year ended December 31, 1998 and the six months ended
June 30, 1999, respectively. The calculation of pro forma diluted net loss per
share excludes common stock subject to repurchase rights and incremental common
shares issuable upon the exercise of stock options.

Comprehensive Income

  The Company complies with the provisions of SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements. Comprehensive
income, as defined, includes all changes in equity (net assets) during a period
from non-owner sources. To date, the Company has not had any significant
transactions that are required to be reported in comprehensive income.

                                      F-11
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

Segment Information

  The Company complies with the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company operates in a
single business segment providing advertising campaign management services in
the United States.

2. Recently Issued Accounting Standards

  In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which defines derivatives, requires that
all derivatives be carried at fair value, and provides for hedge accounting
when certain conditions are met. SFAS No. 133 is effective for the Company in
fiscal 2000. Although the Company has not fully assessed the implications of
SFAS No. 133, the Company does not believe the adoption of this statement will
have a material effect on the Company's financial position, results of
operations, or cash flows.

  In March 1998, the Accounting Standards Executive Committee ("ASEC") issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 provides guidance on
when costs related to software developed or obtained for internal use should
the capitalized or expensed. The SOP is effective for transactions entered into
for fiscal years beginning after December 15, 1998. The Company has reviewed
the provisions of the SOP and does not believe the adoption of this standard
will have a material effect on the Company's financial position, results of
operations, or cash flows.

  In April 1998, the ASEC issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 requires the cost of start-up activities, including
organization costs, to be expensed as incurred. The Company does not expect
this pronouncement to have a material effect on the Company's financial
position, results of operations, or cash flows.

  In December 1998, the AICPA issued SOP 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions." SOP 98-9
amends SOP 97-2 and SOP 98-4 by extending the deferral of the application of
certain provisions of SOP 97-2 amended by SOP 98-4 through fiscal years
beginning on or before March 15, 1999. All other provisions of SOP 98-9 are
effective for transactions entered into in fiscal years beginning after March
15, 1999. We do not anticipate adoption of this pronouncement to have a
material effect on the Company's financial position, results of operations, or
cash flows.

3. Balance Sheet Data

  Property and equipment as of December 31, 1997, 1998 and June 30, 1999 are
summarized as follows:
December 31,
                                                ------------------   June 30,
                                                  1997      1998       1999
                                                --------  --------  ----------
Property and equipment, net:
  Computer equipment and software.............. $ 90,056  $161,336  $1,123,678
  Furniture....................................    4,321     5,369      93,076
  Leased equipment.............................   37,915        --          --
  Less: Accumulated depreciation and
   amortization................................  (21,746)  (60,784)   (186,055)
                                                --------  --------  ----------
                                                $110,546  $105,921  $1,030,699
                                                ========  ========  ==========
Depreciation and amortization expense was $20,023, $54,810, $25,181 and
$376,082 for the years ended December 31, 1997, 1998 and six-months ended June
30, 1998 and 1999, respectively.

                                      F-12
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

  Accrued liabilities as of December 31, 1997, 1998 and June 30, 1999 are
summarized as follows:
December 31,
                                                   -----------------  June 30,
                                                     1997     1998      1999
                                                   -------- -------- ----------
Accrued liabilities:
  Accrued cost of revenues........................ $ 94,440 $293,590 $2,628,865
  Accrued payroll-related costs...................   12,383   24,090    133,303
  Other accrued liabilities.......................   43,244  104,497    168,529
                                                   -------- -------- ----------
                                                   $150,067 $422,177 $2,930,697
                                                   ======== ======== ==========
4. Income Taxes

  The Company has incurred losses from inception through June 30, 1999.
Management believes that, based on the history of losses and other factors, the
weight of available evidence indicates it is more likely than not that the
Company will not be able to realize its deferred tax assets. Thus, a full
valuation reserve has been recorded at December 31, 1997 and 1998 and June 30,
1999. At December 31, 1997 and 1998, and June 30, 1999, the Company's fully
reserved deferred tax assets totaled $482,000, $1,057,000 and $1,937,000,
respectively.

  As of June 30, 1999, the Company has net operating loss carry forwards of
approximately $3,052,000 and $3,092,000 for federal and state income tax
purposes, respectively. The carryforwards will begin to expire in 2017 and 2012
for federal and state income tax purposes, respectively. For federal and state
tax purposes, a portion of the Company's net operating loss may be subject to
certain limitations on annual utilization due to changes in ownership, as
defined by federal and state tax laws. The amount of such limitations, if any,
has not yet been determined.

5. Notes Payable to Stockholders

  The Company's notes payable consist of the following:
December 31,
                                                     ---------------- June 30,
                                                      1997     1998     1999
                                                     ------- -------- --------
Convertible note payable to stockholder, 6% per
 annum, due July 1999............................... $64,569 $ 64,569 $     --
Convertible note payable to stockholder, 6% per
 annum, due April 2000..............................      --  232,161       --
Convertible notes payable to stockholder, 6% per
 annum, due August 1999.............................      --  150,000       --
Notes payable to stockholder, 6% per annum, due
 August 1999........................................      --  125,000   50,000
Note payable to stockholder.........................      --       --  372,765
                                                     ------- -------- --------
Total notes payable to stockholders.................  64,569  571,730  422,765
Less current portion................................      --  339,569   50,000
                                                     ------- -------- --------
                                                      64,569  232,161  372,765
                                                     ======= ======== ========
A law firm affiliated with a stockholder performed legal services for the
Company during 1996 and 1997. In July 1997, the Company issued a convertible
note payable to the law firm for $64,569 for these services. This note bore
interest at a rate of 6% per annum, and had a due date of July 1999. In March
1999, the Company converted the outstanding amount and accrued interest of
$6,458 into 947,009 shares of common stock at $0.075 per share. The law firm
subsequently transferred the shares to the stockholder.

  During 1996 and 1997 a founder of the Company purchased certained assets and
incurred expenses on behalf of the Company (Note 8). In June 1997, $232,161 of
the outstanding amount was converted into 4,643,228 shares of common stock at
$0.05 per share. In April 1998, the Company repurchased the

                                      F-13
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

4,643,228 shares from the founder at the original conversion price of $0.05 per
share with a convertible promissory note payable. The note bore interest at the
rate of 6% per annum, was due in April 2000, and was convertible into common
stock at $0.05 per share. The Company recorded the difference between the
conversion price of the note and the fair value of the common stock, or the
beneficial conversion feature, on the date the note was issued as additional
interest expense. In March 1999, this outstanding promissory note payable was
converted into 4,643,228 shares of common stock at $0.05 per share.

  In May 1998, the Company entered into two senior subordinated secured
convertible promissory notes and two senior subordinated secured promissory
notes with a stockholder. Under these agreements the stockholder advanced to
the Company a total of $275,000 bearing interest at the rate of 6% per annum.
The unpaid principal and accrued interest were payable on August 1, 1999,
however could be prepaid without penalty. In the event of any default, as
defined in the agreement, the holder could convert the outstanding amount and
accrued interest into preferred stock at the price that is applicable to the
preferred stock issued in the most recent round of financing. At December 31,
1998, the outstanding notes payable balance was $275,000. In May 1999, the
Company paid $225,000 along with the accrued interest to the stockholder. At
June 30, 1999, $50,000 remained outstanding.

  In connection with the Netranscend Software, Inc. acquisition in March 1999,
the Company agreed to pay $430,000 as a part of the purchase consideration.
This note is payable over four years, with the first payment of $110,000 due on
the first anniversary, $110,000 on the second anniversary, $100,000 on the
third anniversary and $110,000 on the fourth anniversary. The note payable has
been recorded at $372,765, net of a discount. The discount will be amortized as
interest expense over the four-year term of the note.

  The Company incurred interest expense of $17,015, $3,403 and $12,976 during
1998 and for the six months ended June 30, 1998 and 1999, respectively, in
connection with the notes payable to stockholders.

6. Commitments and Contingencies

Lease Agreements

  The Company leases office space under noncancelable operating lease
agreements that expire in 2002. The terms of the leases provide for rental
payments on a graduated scale. The Company recognizes rent expense on a
straight-line basis over the lease period, and has accrued for rent expense
incurred but not paid.

  Future minimum lease payments under noncancelable operating leases as of June
30, 1999 are as follows:
Six month period
      Ended December 31,
      ------------------
1999........................................................  $  212,883
Year Ended December 31,
      -----------------------
2000........................................................     327,966
        2001........................................................     338,583
        2002........................................................     332,176
        2002........................................................     148,295
                                                                      ----------
                                                                      $1,359,903
                                                                      ==========
Rent expense was $5,366, $41,555, $92,550, $12,105 and $125,704 for the
period ended December 31, 1996, the years ended December 31, 1997 and 1998 and
the six months ended June 30, 1998 and 1999, respectively.

                                      F-14
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

Severence Payments

  The Company has entered into employment agreements under which the employees
are entitled to receive severence payments totalling $825,000 if their
employment were terminated under certain conditions.

Legal Proceedings

  From time to time, the Company is subject to legal proceedings and claims in
the ordinary course of business. The Company is not currently aware of any
legal proceedings or claims that it believes will have, individually or in the
aggregate, a material adverse effect on its business, financial condition and
operating results.

7. Stockholders' Equity (Deficit)

Convertible Preferred Stock

  The Company is authorized to issue 8,206,000 shares of preferred stock, of
which 1,206,000 shares are designated as Series A preferred stock and 7,000,000
shares of which are designated as Series B preferred stock.

  Preferred stock at June 30, 1999 consisted of the following:
Shares                     Cash Proceeds
                                ----------------------                Net of
                                           Issued and  Liquidation   Issuance
Series                          Authorized Outstanding   Amount        Costs
------                          ---------- ----------- ----------- -------------
A.............................. 1,206,000   1,206,000  $ 1,507,500  $1,460,799
B.............................. 7,000,000   4,500,000    9,000,000   8,258,368
                                ---------   ---------  -----------  ----------
Total.......................... 8,206,000   5,706,000  $10,507,500  $9,719,167
                                =========   =========  ===========  ==========
The holders of convertible preferred stock have various rights and
preferences as follows:

 Voting Rights

  Each holder of Series A and Series B preferred stock is entitled to the
number of votes equal to the number of shares of common stock into which the
shares of preferred stock held by the holder can be converted. As of June 30,
1999, all preferred stock converts on a one-for-one basis into common stock.
Preferred stockholders can vote on all matters on which common stockholders are
entitled to vote.

 Dividends

  Holders of Series A and Series B preferred stock are entitled to
noncumulative dividends at the rate of $0.10 per share and $0.16 per share per
annum, respectively, before any dividend is paid on common stock. No dividends
on preferred stock or common stock have been declared by the Board of Directors
from inception through June 30, 1999.

 Liquidation

  In the event of (i) any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, or (ii) merger or consolidation of
the Company with or into another corporation, the holders of Series A and
Series B preferred stock are first entitled to receive, in preference to the
holders of common stock, an amount of $1.25 and $2.00, respectively, per share
plus all accrued but unpaid dividends. If assets and funds

                                      F-15
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

are insufficient for such distribution, the available funds will be distributed
ratably among the holders of Series A and Series B preferred stock in
proportion to the preferential amount each holder would have otherwise been
entitled to receive. After such distribution, any remaining funds will be
distributed ratably among the holders of common stock.

 Conversion Rights

  Each share of Series A and Series B preferred stock is convertible into
common shares, at the option of the holder, according to a conversion ratio,
subject to adjustment for dilution. Each share of preferred stock will
automatically be converted into common stock, at the then applicable conversion
rate, (i) in the event of the closing of an underwritten public offering of the
Company's securities in which the aggregate gross proceeds to the Company
exceeds $10,000,000 and an offering price per share exceeds $5.00, or (ii) when
the Company obtains the consent of a majority of the outstanding shares of
preferred stock.

  At June 30, 1999, the Company had reserved 1,206,000 shares and 7,000,000
shares of common stock for conversion of its Series A and Series B convertible
preferred stock.

Common Stock

  The Company is authorized to issue 40,000,000 shares of common stock. In July
1999, the Company amended its certificate of incorporation to increase the
number of authorized shares of common stock to 75,000,000 shares.

  The Company recognizes stock-based compensation upon the issuance of common
stock for less than the deemed fair market value and upon the issuance of
common stock in exchange for services. Accordingly, the Company recorded stock-
based compensation of $152,694, $11,000, $151,427, $151,427 and $27,938 for the
period ended December 31, 1996, the years ended December 31, 1997 and 1998 and
the six months ended June 30, 1998 and 1999, respectively.

Warrants

  In January 1999, the Company issued a warrant to an employee to purchase
500,000 shares of common stock at $0.50 per share upon completing certain
defined milestones. The warrant expires in January 2002. The holder of the
warrant is not entitled to any rights as a stockholder until the warrant is
exercised. The warrant was not exercisable at June 30, 1999, as the milestones
were not completed. The Company will recognize stock compensation expense
associated with the warrants based on the difference between the exercise price
and the fair value of the warrants on the date each of the milestones are met.

  In June 1999, in connection with services provided related to the issuance of
Series B preferred stock, the Company granted warrants to a non-employee,
exercisable for 275,000 shares of Series B convertible preferred stock and
100,000 shares of common stock at exercise prices of $2.00 per share and $0.50
per share, respectively. The warrants are exercisable by the holder at any time
until June 2002. The holder of warrant is not entitled to any voting rights.
The fair value of the warrants calculated using Black-Scholes model was
$432,354 and has been included in the offering costs of Series B convertible
preferred stock.

1997 Stock Plan

  The Company's 1997 Stock Plan provides for the granting to employees of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code and for the granting to employees and consultants of nonstatutory
stock options and stock purchase rights.

                                      F-16
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

  In November 1998, the Company granted options to purchase 505,667 shares of
common stock with exercise prices ranging from $0.05 to $0.30 to both former
and current employees for services previously rendered under the 1997 Stock
Plan. The options granted to former employees were immediately exercisable
until February 1999. For those options granted to current employees, the
Company recorded $193,390 in deferred stock compensation for the difference
between the exercise price and the assumed fair value of the common stock. For
the year ended December 31, 1998, the Company recorded stock compensation
expense of $140,019.

  The Company recorded the fair value for the options granted to former
employees as stock-based compensation expense of $286,079 in 1998. The fair
value of the options granted to the former employees were determined using a
Black-Scholes option-pricing model using a weighted average risk-free rate of
4.65% and a weighted average expected life of three months. No price volatility
was assumed because the Company's equity securities were not traded publicly.
No dividend yield was assumed as the Company has not paid dividends and has no
plans to do so.

1999 Stock Plan

  In February 1999, the Company adopted the 1999 Stock Plan (the "1999 Plan").
Options granted under the 1999 Plan may be either incentive stock options
("ISOs") or nonstatutory stock options ("NSOs"). ISOs may be granted only to
Company employees. NSOs may be granted to Company employees, directors and
consultants. The Company has reserved 9,000,000 shares of common stock for
issuance under the 1999 Plan. The 1997 Plan was amended in August 1999, raising
the number of shares reserved for issuance to 12,000,000.

  In the case of ISOs granted to an employee who, at the time of the option was
granted, owns stock representing more than 10% of the voting power of all
classes of stock, the term of the option will be five years from the date of
grant or shorter term as determined by the Board of Directors. The exercise
price of an ISO or NSO may not be less than 100% or 85%, respectively, of the
estimated fair value of the underlying stock on the date of grant and the
exercise price of an ISO or NSO granted to a 10% shareholder shall not be less
than 100% of the estimated fair value of the underlying stock on the date of
grant. Options generally become exercisable in equal increments over a four-
year vesting period and expire at the end of ten years from the date of grant,
or sooner if terminated by the Board of Directors.

  The following table summarizes option activity through June 30, 1999:
Options Outstanding
                            Shares    ---------------------------------------------------
                          Available   Number of   Exercise   Aggregate   Weighted Average
                          for Grants   Shares       Price      Price      Exercise Price
                          ----------  ---------  ----------- ----------  ----------------
Share authorized under
 the 1997 Plan               505,667
Granted.................    (505,667)   505,667  $0.05-$0.30    $91,935       $0.18
Cancelled...............          --         --           --         --          --
Exercised...............          --   (262,667) $0.05-$0.30    (19,035)       0.07
                          ----------  ---------  ----------- ----------       -----
Balance, December 31,
 1998...................          --    243,000  $      0.30     72,900       $0.30
Shares authorized under
 the 1999 Plan..........   9,000,000
Granted.................  (8,393,398) 8,393,398  $0.50-$1.80  4,775,841        0.57
Cancelled...............      10,700    (10,700) $0.50-$1.80    (18,350)       1.71
Exercised...............          --         --           --         --          --
                          ----------  ---------  ----------- ----------       -----
Balance, June 30, 1999..     617,302  8,625,698  $0.50-$1.80 $4,830,391       $0.56
                          ==========  =========  =========== ==========       =====
F-17
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

  The following table summarizes information for stock options outstanding at
June 30, 1999:
Options
                         Options Outstanding                                  Exercisable
             -----------------------------------------------------            -----------
                                                       Weighted
                                                        Average
                                                       Remaining
                                                      Contractual
             Exercise           Number                   Life                   Number
              Price           Outstanding               (Years)               Exercisable
             --------         -----------             -----------             -----------
$0.30               243,000                  8.0                    123,854
              0.50             7,992,360                  9.7                  1,781,970
              1.80               390,338                  9.9                         --
                               ---------                                       ---------
                               8,625,698                                       1,905,824
                               =========                                       =========
In connection with the stock option grants made during the six months ended
June 30, 1999, the Company recorded deferred stock compensation of $6,116,505,
which will be amortized over the vesting periods of the related stock options
through 2003. For the six months ended June 30, 1999, the Company recorded
stock compensation expense of $2,937,746 in connection with stock option
grants.

  Under SFAS No. 123, the Company is required to calculate the pro forma fair
market value of options granted and report the impact that would result from
recording the compensation expense. The fair value of option grants has been
estimated on the date of grant using the Black-Scholes option-pricing model
using a weighted average risk-free interest rate of 4.82% and a weighted
average expected life of 3.2 years. No price volatility was assumed because the
Company's equity securities were not traded publicly. No dividend yield was
assumed as the Company has not paid dividends and has no plans to do so.

  The weighted average expected life was calculated based on the vesting period
and the expected life at the date of grant. The risk-free interest rate was
calculated based on rates prevailing during the grant periods and expected
lives of options at the date of grants.

  The weighted average fair values of options granted to employees for the year
ended December 31, 1998 and the six months ended June 30, 1999 were $1.06 and
$0.80, respectively.

  Had compensation expenses for option grants to employees been determined
under SFAS No. 123 the Company's net loss would have been as follows:
September 10,
                             1996
                          (inception)                                Six Months Ended
                              to       Year Ended December 31,           June 30,
                         December 31,  -------------------------  ------------------------
                             1996         1997          1998         1998         1999
                         ------------- -----------  ------------  -----------  -----------
Net loss--as reported...   $(255,180)  $(1,117,366) $ (2,019,212) $(1,015,941) $(5,186,121)
Net loss--pro forma.....   $(255,180)  $(1,117,366) $ (2,019,212) $(1,015,941) $(5,431,121)
Net loss per share--
 basic and diluted as
 reported...............   $   (0.07)  $     (0.13) $      (0.25) $     (0.11) $     (0.43)
Net loss per share--
 basic and diluted
 pro forma..............   $   (0.07)  $     (0.13) $      (0.25) $     (0.11) $     (0.45)
The pro forma net loss disclosures made above are not necessarily
representative of the effects on pro forma net income (loss) for future years
as options typically vest over several years and additional option grants are
expected to be made in future years.

                                      F-18
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

8. Related Party Transactions

  Related party balances consist of the following:
December 31,
                                                      ---------------- June 30,
                                                       1997     1998     1999
                                                      ------- -------- --------
Payables to stockholders............................. $19,203 $ 71,781 $ 71,781
Payables to founders.................................  29,670   67,920   55,500
                                                      ------- -------- --------
    Total payables to stockholders................... $48,873 $139,701 $127,281
                                                      ======= ======== ========
The Company incurred expenses of $21,547, $66,546, and $196,611 for the
period from September 10 (inception) to December 31, 1996 and the years ended
December 31, 1997 and 1998, respectively, in connection with legal and
consulting services performed by a law firm affiliated with a stockholder.

  During 1996 and 1997, founders of the Company purchased certain assets and
incurred expenses on behalf of the Company for a total of $274,661. In June
1997, $232,161 of the outstanding amount was converted into common stock (see
Note 5). During 1997 and 1998, $12,830 and $11,750 was paid back to the
founders, respectively. In 1998, a founder advanced the Company $50,000.

  In January 1999, the Company converted $12,420 of the payables to founders
into 200,000 shares of common stock in connection with the founder's exercise
of stock options.

  In May 1998, the Company entered into a sublease agreement, on a month-to-
month basis, for office space with a stockholder, who was the original tenant
of the office space. The Company paid $41,000, $9,000, and $42,000 during the
year ended December 31, 1998 and the six months ended June 30, 1998 and 1999,
respectively, to the shareholder.

  In June 1999, the Company entered into an agreement with a former employee
and stockholder, under which the stockholder will receive commissions on the
net proceeds (defined as gross revenue minus associated costs) generated from
certain customers. The agreement expires in July 2000.

9. Employee Benefit Plan

  The Company maintains a retirement and deferred savings plan for its
employees (the "401(k) Plan") that is intended to qualify as a tax-qualified
plan under the Internal Revenue Code. The 401(k) Plan provides that each
participant may contribute up to 15% of his or her pre-tax gross compensation
(up to a statutory limit). However, to date, the Company has not made
discretionary contributions under the 401(k) Plan. All amounts contributed by
participants and earnings on these contributions are fully vested at all times.

10. Subsequent Events

  In August 1999, the Company issued 4,000,000 shares of Series C convertible
preferred stock for net proceeds of $14,237,113. Included in this issuance a
stockholder also converted an outstanding note payable for $50,000 (Note 5) and
related accrued interest of $3,250 into 14,833 shares of Series C convertible
preferred stock, and this same stockholder also converted $16,252 of interest
accrued on a separate note payable into 4,527 shares of Series C convertible
preferred stock.

                                      F-19
Mediaplex, Inc.

                   Notes to Financial Statements--(Continued)

  In July and August 1999 the Company granted options to purchase 910,700
shares of common stock at an exercise price of $3.25 per share to employees and
directors. The Company expects to record deferred stock compensation of
approximately $3.4 million in conjunction with these grants, which is being
amortized over the four year vesting period of the related options.

  In August 1999, the Board of Directors adopted the 1999 Employee Stock
Purchase Plan (the "Purchase Plan") effective on the date of the Company's
initial public offering. The Purchase Plan reserved 400,000 shares for issuance
thereunder. Employees generally will be eligible to participate in the Purchase
Plan if they are customarily employed by the Company for more than 20 hours per
week and more than five months in a calendar year and are not 5% or greater
shareholders. Under the Purchase Plan, eligible employees may select a rate of
payroll deduction up to 10% of their compensation subject to certain maximum
purchase limitations. The Purchase Plan will be implemented in a series of
overlapping twenty-four month offering periods and beginning on the effective
date of the Company's initial public offering and subsequent offering periods
will begin on the first trading day on or after May 1 and November 1 of each
year. Purchases will occur on each April 30 and October 31 (the "purchase
dates") during each participation period. Under the Purchase Plan, eligible
employees will be granted an option to purchase shares of Common Stock at a
purchase price equal to 85% of the fair market value per share of Common Stock
on either the start date of the offering period or the end date of the offering
period, whichever is less. If the fair market value of the Common Stock at the
end of the purchase period is lower than the fair market value on the start
date of that offering period, then all participants in that offering period
will be automatically withdrawn from such offering period and re-enrolled in
the offering period immediately following. The Company amended the 1999 Stock
Plan in August 1999, increasing the number of shares reserved for issuance to
12,000,000.

11. Pro Forma Stockholders' Equity (unaudited)

  Pro forma stockholders' equity is computed to include the automatic
conversion of the pro forma outstanding shares of Series A and Series B
preferred stock into approximately 1,206,000 and 4,500,000 shares,
respectively, of common stock.

  At June 30, 1999, the pro forma effects of these transactions are as follows:
Pro Forma
                                                          Stockholders' Equity
                                            June 30,1999    At June 30, 1999
                                            ------------  --------------------
Preferred stock............................ $       571       $        --
Common stock...............................       1,484             2,055
Additional paid-in capital.................  20,238,846        20,238,846
Warrants...................................     432,354           432,354
Deferred stock compensation................  (3,232,130)       (3,232,130)
Receivable from sale of Series B preferred
 stock.....................................    (240,000)         (240,000)
Accumulated deficit........................  (8,577,879)       (8,577,879)
                                            -----------       -----------
  Total stockholders' equity............... $ 8,623,246       $ 8,623,246
                                            ===========       ===========
F-20
Mediaplex, Inc.

                        Pro Forma Financial Information

                                    Overview

  On March 25, 1999, the Company acquired Netranscend Software, Inc.,
("Netranscend") a Java-based enterprise automation solution software company.
The acquisition was accounted for using the purchase method of accounting and,
accordingly, the purchase price was allocated to the tangible and intangible
assets acquired and liabilities assumed on the basis of their fair values on
the acquisition date.

  The aggregate purchase price of $2,993,906 consisted of a note payable of
$430,000, due in four annual installments beginning on the first anniversary of
the acquisition, 1,979,000 shares of the Company's common stock with an
estimated fair value of $2,552,910, acquisition-related expenses of $68,231 for
miscellaneous transaction fees and $15,826 of net liabilities assumed. Of the
total purchase price, $3,009,732 was allocated to goodwill and intangible
assets, consisting of proprietary technology. The acquired goodwill and
intangible assets will be amortized over their estimated useful lives of three
years.

  The following unaudited pro forma consolidated statement of operations gives
effect to this acquisition as if it had occurred on January 1, 1998, by
consolidating the results of operations of Netranscend Software, Inc. for the
year ended December 31, 1998 with the results of operations of the Company for
the year ended December 31, 1998.

  The unaudited pro forma consolidated statement of operations are not
necessarily indicative of the operating results that would have been achieved
had the transactions been in effect as of January 1, 1998 and should not be
construed as being representative of future operating results.

  The historical financial statements of the Company and Netranscend are
included elsewhere in this Prospectus and the unaudited pro forma consolidated
financial information presented herein should be read in conjunction with those
financial statements and related notes.

                                      F-21
Mediaplex, Inc.

                       Pro Forma Statement of Operations
                                  (unaudited)
Year Ended December 31, 1998
                           ---------------------------------------------------
                            Mediaplex   Netranscend Adjustments     Pro Forma
                           -----------  ----------- -----------    -----------
Revenues.................. $ 3,588,094    $    --   $        --    $ 3,588,094
Cost of sales.............   2,770,567         --            --      2,770,567
                           -----------    -------   -----------    -----------
    Gross profit..........     817,527         --            --        817,527

Operating expenses:
  Sales and marketing.....     819,641      8,271            --        827,912
  Research and
   development............     555,736      1,717            --        557,453
  General and
   administrative.........     636,652         --            --        636,652
  Stock-based
   compensation...........     577,525         --            --        577,525
  Amortization of goodwill
   and intangibles........          --         --     1,003,244(A)   1,003,244
                           -----------    -------   -----------    -----------
    Total operating
     expenses.............   2,589,553      9,988     1,003,244      3,602,785
                           -----------    -------   -----------    -----------
    Loss from operations..  (1,772,026)    (9,988)   (1,003,244)    (2,785,238)
Interest expense, net.....    (247,186)        --            --       (247,186)
                           -----------    -------   -----------    -----------
    Net loss.............. $(2,019,212)   $(9,988)  $(1,003,244)   $(3,032,444)
                           -----------    -------   -----------    -----------
Net loss per share--basic
 and diluted(B)...........                                         $     (0.30)
                                                                   -----------
Weighted average shares
 outstanding(B)...........                                          10,165,518
                                                                   -----------
See accompanying Notes to Pro Forma Consolidated Financial Information

                                      F-22
Mediaplex, Inc.

                    Notes to Pro Forma Financial Information
                                  (unaudited)

  The following adjustments were applied to the Company's historical financial
statements and those of Netranscend Software, Inc. to arrive at the pro forma
consolidated financial information.

   (A) To record amortization of goodwill and purchased proprietary
       technology totaling $1,003,244 over the estimated period of benefit
       of three years.

   (B) Pro forma basic and diluted net loss per share for the year ended
       December 31, 1998 was computed using the weighted average number of
       common shares outstanding. Differences between historical weighted
       average shares outstanding and pro forma weighted average shares
       outstanding used to compute net loss per share result from the
       inclusion of shares issued in conjunction with the acquisition as if
       these shares were outstanding from January 1, 1998.

                                      F-23
Report of Independent Accountants

To the Board of Directors and Shareholders of
Netranscend Software, Inc.:

  In our opinion, the accompanying balance sheets and the related statements of
operations, of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of Netranscend Software, Inc. (a
development stage company) (the "Company") at December 31, 1997 and 1998 and
the results of its operations and its cash flows for period from November 27,
1996 (inception) to December 31, 1996, years ended December 31, 1997 and 1998,
and the period from November 27, 1996 (inception) to December 31, 1998 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.

                                          /s/ PricewaterhouseCoopers LLP

San Francisco, California
July 23, 1999

                                      F-24
Netranscend Software, Inc.
                         (a development stage company)

                                 Balance Sheets
December 31,
                                                             -----------------
                                                              1997      1998
                                                             -------  --------
Assets
Current assets:
  Cash and cash equivalents................................. $   --   $    530
  Prepaid expenses..........................................     114        78
                                                             -------  --------
    Total current assets....................................     114       608
Property and equipment, net.................................   3,149     1,746
                                                             -------  --------
    Total assets............................................ $ 3,263  $  2,354
                                                             =======  ========
       Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
  Payable due to shareholder................................ $ 6,126  $ 16,356
  Accrued liabilities.......................................   1,171       --
                                                             -------  --------
    Total current liabilities...............................   7,297    16,356
                                                             -------  --------
Shareholders' equity (deficit):
  Common stock: No par value; 10,000,000 shares authorized;
   3,000,000 shares issued and outstanding at December 31,
   1997 and 1998............................................   3,030     3,030
  Deferred stock compensation...............................     (30)      (10)
  Deficit accumulated during the development stage..........  (7,034)  (17,022)
                                                             -------  --------
    Total shareholders' equity (deficit)....................  (4,034)  (14,002)
                                                             -------  --------
    Total liabilities and shareholders' equity (deficit).... $ 3,263  $  2,354
                                                             =======  ========
The accompanying notes are an integral part of these financial statements.

                                      F-25
Netranscend Software, Inc.
                         (a development stage company)

                            Statements of Operations
Period from
                                                                    November 27,
                                                                        1996
                                                    Year Ended      (inception)
                                                   December 31,       through
                                                  ----------------  December 31,
                                                   1997     1998        1998
                                                  -------  -------  ------------
Operating expenses:
  Research and development....................... $ 1,405  $ 1,717    $  3,219
  Selling, general and administrative............   2,936    8,271      13,803
                                                  -------  -------    --------
    Total operating expenses.....................   4,341    9,988      17,022
                                                  -------  -------    --------
    Net loss..................................... $(4,341) $(9,988)   $(17,022)
                                                  =======  =======    ========
The accompanying notes are an integral part of these financial statements.

                                      F-26
Netranscend Software, Inc.
                         (a development stage company)

                  Statements of Shareholders' Equity (Deficit)
Deficit
                                                        Accumulated     Total
                            Common Stock     Deferred   during the  Shareholders'
                          ----------------    Stock     Development    Equity
                           Shares   Amount Compensation    Stage      (Deficit)
                          --------- ------ ------------ ----------- -------------
Balance at January 1,
 1997...................  3,000,000 $3,000     $--       $ (2,693)    $    307
Deferred stock
 compensation...........        --      30      (30)          --           --
Net loss ...............        --     --       --         (4,341)      (4,341)
                          --------- ------     ----      --------     --------
Balance at December 31,
 1997...................  3,000,000  3,030      (30)       (7,034)      (4,034)
Amortization of deferred
 stock compensation.....        --     --        20           --            20
Net loss................        --     --       --         (9,988)      (9,988)
                          --------- ------     ----      --------     --------
Balance at December 31,
 1998...................  3,000,000 $3,030     $(10)     $(17,022)    $(14,002)
                          ========= ======     ====      ========     ========
The accompanying notes are an integral part of these financial statements.

                                      F-27
Netranscend Software, Inc.
                         (a development stage company)

                            Statements of Cash Flows
Period from
                                                                   November 27,
                                                                       1996
                                                   Year Ended      (inception)
                                                  December 31,       through
                                                 ----------------  December 31,
                                                  1997     1998        1998
                                                 -------  -------  ------------
                                                                   (unaudited)
Cash flows from operating activities:
 Net loss....................................... $(4,341) $(9,988)   $(17,022)
 Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
  Depreciation and amortization.................   1,404    1,618       3,119
  Stock compensation expense....................      --       20          20
  Changes in current assets and liabilities:
    Prepaid expenses............................    (114)      36         (78)
    Accrued liabilities.........................   1,171   (1,171)         --
                                                 -------  -------    --------
      Net cash used in operating activities.....  (1,880)  (9,485)    (13,961)
                                                 -------  -------    --------
Cash flows from investing activities:
 Purchase of property and equipment.............  (1,174)    (215)     (4,865)
                                                 -------  -------    --------
      Net cash used in investing activities.....  (1,174)    (215)     (4,865)
                                                 -------  -------    --------
Cash flows from financing activities:
 Proceeds from issuance of common stock.........      --       --       3,000
 Proceeds from payables due to shareholder......   3,054   10,230      16,356
                                                 -------  -------    --------
      Net cash provided by financing
       activities...............................   3,054   10,230      19,356
                                                 -------  -------    --------
Net increase (decrease) in cash and cash
 equivalents....................................      --      530         530
Cash and cash equivalents at beginning of
 period.........................................      --       --          --
                                                 -------  -------    --------
Cash and cash equivalents at end of period...... $    --  $   530    $    530
                                                 =======  =======    ========
Supplemental disclosure of cash flow
 information:
 Deferred stock compensation from issuance of
  common stock.................................. $    30  $          $     30
                                                 =======  =======    ========
The accompanying notes are an integral part of these financial statements.

                                      F-28
Netranscend Software, Inc.
                         (a development stage company)

                         Notes to Financial Statements

1. Nature of Business

  Netranscend Software, Inc. (the "Company") was incorporated on November 27,
1996 as a California Corporation. The Company provides Java-based enterprise
automation solutions on the Internet and for intranets.

2. Summary of Significant Accounting Policies

Basis of presentation

  The Company has had limited operations to date and its activities have
consisted primarily of developing products and recruiting personnel.
Accordingly, the Company is considered to be in the development stage at
December 31, 1998, as defined in Statement of Financial Accounting Standards
("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises."

Use of estimates

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

Cash and cash equivalents

  The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

Property and equipment

  Property and equipment are stated at cost and depreciated on the straight-
line basis over the estimated useful lives of the asset, which is generally
three years. Upon sale or disposal, the Company removes the asset and
accumulated depreciation from its records and recognizes the related gain or
loss in results of operations.

Research and development costs

  The costs of establishing the technological feasibility of the Company's
software products or product enhancements are expensed as research and
development costs when incurred. The costs incurred subsequent to the
establishment of technological feasibility and prior to a product's general
release will be capitalized. All costs have been expensed to date.

Stock-based compensation

  The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of APB No. 25, "Accounting for Stock Issued to
Employees," and complies with the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Under APB No. 25, compensation cost
is recognized based on the difference, if any, on the date of grant between the
fair value of the Company's Stock and the amount an employee must pay to
acquire the stock.

                                      F-29
Netranscend Software, Inc.
                         (a development stage company)

                   Notes to Financial Statements--(Continued)

  The Company accounts for non-employee stock-based awards in which goods or
services are the consideration received for the equity instruments issued based
on the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.

Comprehensive Income

  The Company complies with the provisions of SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements. Comprehensive
income, as defined, includes all changes in equity (net assets) during a period
from non-owner sources. The Company has not had any significant transactions
that are required to be reported in comprehensive income.

Income Taxes

  Deferred tax assets and liabilities are determined based on the difference
between the financial statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amounts expected to be realized.

Concentration of Credit Risk

  Financial instruments which potentially subject the Company to concentration
of credit risk consist principally of cash and cash equivalents. The Company
deposits its cash and cash equivalents with a single major financial
institution, which deposits may exceed federal deposit insurance limits.

3. Related Party Transactions

  During the period from November 27, 1996 (inception) to December 31, 1998,
the sole principal shareholder purchased certain assets and incurred expenses
on behalf of the Company. The Company recorded such amounts due to the
shareholder as an interest-free loan. The amounts due to the shareholder at
December 31, 1997 and 1998 were $6,126 and $16,356, respectively.

4. Property and Equipment

  Property and equipment as of December 31, 1997 and 1998 is summarized as
follows:
December 31,
                                                                 --------------
                                                                  1997    1998
                                                                 ------  ------
Property and equipment, net:
     Computer equipment and software............................ $4,651  $4,866
     Less: Accumulated depreciation and amortization............ (1,502) (3,120)
                                                                 ------  ------
                                                                 $3,149  $1,746
                                                                 ======  ======
F-30
Netranscend Software, Inc.
                         (a development stage company)

                   Notes to Financial Statements--(Continued)

5. Income Taxes

  During the period from November 27, 1996 (inception) through December 31,
1998 no income tax provision or benefit was recognized due to net operating
losses incurred during the periods for which a full valuation allowance was
recorded.

  The difference between the income tax benefit at the federal statutory rate
of 34% and the Company's effective tax rate is due to the recording of the
valuation allowance.

6. Shareholders' Equity

Common stock

  The Company is authorized to issue 10,000,000 shares of common stock. In
November 1996, the Company issued 3,000,000 shares of common stock to the sole
principal shareholder in exchange for a capital contribution made by the
shareholder. At December 31, 1998, total of 3,000,000 shares of common stock
was issued and outstanding.

Stock option plan

  The Company did not have a formal stock option plan. However, during 1997,
the Company issued nonstatutory stock options to three non-employees. The
Company did not reserve any specific number of shares of common stock for
issuance of the stock options. The options generally become exercisable in
equal increments over a eighteen-month vesting period and expire at the end of
five years from the date of grant or sooner if terminated by the Board of
Directors.

  In connection with the stock options grants made, the Company recorded a
deferred stock compensation of $30, which will be amortized over the vesting
period through February 1999.

  The following table summarizes option activity through December 31, 1998:
Options Outstanding
                                    -------------------------------------------
                                                                    Weighted
                                    Number of Exercise Aggregate    Average
                                     Shares    Price     Price   Exercise/Price
                                    --------- -------- --------- --------------
Shares:
     Granted.......................  59,000    $0.002    $118        $0.002
     Cancelled.....................      --        --      --            --
     Exercised.....................      --        --      --            --
                                     ------    ------    ----        ------
   Balance, December 31, 1997......  59,000    $0.002     118         0.002
     Granted.......................      --        --      --            --
     Cancelled.....................      --        --      --            --
     Exercised.....................      --        --      --            --
                                     ------    ------    ----        ------
   Balance, December 31, 1998......  59,000    $0.002    $118        $0.002
                                     ======    ======    ====        ======
As of December 31, 1997 and 1998 options to purchase 5,000 and 56,000 shares
of common stock were exercisable.

                                      F-31
Netranscend Software, Inc.
                         (a development stage company)

                   Notes to Financial Statements--(Continued)

  The following table summarizes information for stock options outstanding at
December 31, 1998:
Options
                  Options Outstanding         Exercisable
            ---------------------------------------------
                                   Weighted
                                    Average
                                   Remaining
                                  Contractual
            Exercise    Number       Life       Number
             Price    Outstanding   (Years)   Exercisable
            --------  ----------- ----------- -----------
$  0.002    59,000        3.7       56,000
                        ======                  ======
The pro forma disclosures for net loss and net loss per share have not been
presented as the results would be the same as the net loss and net loss per
share as reported.

7. Subsequent Events

  On March 25, 1999, the Company was acquired by Mediaplex, Inc. ("Mediaplex")
in exchange for a note issued to the Company's sole shareholder payable in four
annual installments, and for 1,979,000 shares of Mediaplex's common stock. The
note will be paid in annual installments of $110,000 due on March 25, 2000,
2001 and 2004 and $100,000 on March 25, 2003. Mediaplex delivered 1,679,000
common shares immediately after the closing date and deposited the remaining
300,000 common shares into an escrow fund. The escrow fund period expires two
years after the closing date, subject to fulfilling pending unsatisfied claims,
if any. At the end of the escrow period or resolution of the unsatisfied
claims, the remaining 300,000 common shares will be delivered to the sole
shareholder.

  All vested and unvested options of the Company were cancelled at the closing
date.

                                      F-32
[INSIDE BACK COVER OF PROSPECTUS CONTAINS CLIENTS' NAMES AND LOGOS]
Shares

                             [LOGO OF MEDIAPLEX]

                                  Common Stock

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

                                   PROSPECTUS
                                       , 1999

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

                                Lehman Brothers

                                    SG Cowen

                           U.S. Bancorp Piper Jaffray
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

  The following table sets forth the costs and expenses, other than the
underwriting discount payable by Mediaplex in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fee.
SEC registration fee............................................. $   19,460
   NASD filing fee..................................................      7,500
   Nasdaq National Market listing fee...............................     95,000
   Printing and engraving costs.....................................    250,000
   Legal fees and expenses..........................................    350,000
   Accounting fees and expenses.....................................    275,000
   Blue Sky fees and expenses.......................................      5,000
   Transfer agent and registrar fees................................     10,000
   Miscellaneous expenses...........................................     38,040
                                                                     ----------
     Total.......................................................... $1,050,000
                                                                     ==========
Item 14. Indemnification of Directors and Officers

  Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents, and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law.

  Article IX of the Registrant's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware law.

  Article VI of the Registrant's Amended and Restated Bylaws provides for the
indemnification of officers, directors and third parties acting on behalf of
the Registrant if such persons act in good faith and in a manner reasonably
believed to be in and not opposed to the best interests of the Registrant, and,
with respect to any criminal action or proceeding, the indemnified party had no
reason to believe his or her conduct was unlawful.

  The Registrant has entered into indemnification agreements with its directors
and executive officers, in addition to indemnification provided for in the
Registrant's Amended and Restated Bylaws, and intends to enter into
indemnification agreements with any new directors and executive officers in the
future.

  The Underwriting Agreement (Exhibit 1.1 hereto) provides for indemnification
by the Underwriters of the Registrant and its executive officers and directors
for certain liabilities, including liabilities arising under the Securities
Act, in connection with matters specifically provided in writing by the
Underwriters for inclusion in the Registration Statement.

Item 15. Recent Sales of Unregistered Securities

  During the past three years, the Registrant has issued unregistered
securities to a limited number of entities and persons as described below:

    (a) From September 1996 to August 15, 1999, the Registrant issued and
  sold common stock to various entities and persons at per share purchase
  prices, as follows:

     (1) In September and October 1996, the Registrant issued and sold to
         Michael Schwartz an aggregate of 2,460,000 shares at a purchase
         price of $0.0001 per share, in connection with the Registrant's
         founding;

                                      II-1
(2) In September 1996, the Registrant issued and sold 350,000 shares
         and 250,000 shares, to Raifman & Edwards LLP and PointBreak
         Ventures, LLC, respectively, at a purchase price of $0.0001 per
         share, in payment for past services rendered to the Registrant;

     (3) In October 1996 and January 1997, the Registrant issued and sold
         1,600,000 shares to Eugene Jarvis, at a purchase price of $0.05
         per share;

     (4) In December 1996, the Registrant issued and sold an aggregate of
         800,000 shares to Kuni Research, at a purchase price of $0.05 per
         share;

     (5) During 1997, the Registrant issued and sold 220,000 shares and
         995,338 shares to various employees and non-employee investors at
         a purchase price of $0.05 per share and $0.30 per share,
         respectively;

     (6) In June 1997, the Registrant issued a convertible promissory note
         to Michael Schwartz in payment for past services rendered, which
         was converted into 4,643,228 shares at a conversion rate of $0.05
         per share in June 1997. In April 1998, the Registrant repurchased
         these shares, and issued in exchange a convertible promissory note
         to Michael Schwartz. In July 1998, Michael Schwartz transferred
         these shares to Raifman & Edwards, LLP. In March 1999, Raifman &
         Edwards converted the principal and interest of this note into
         4,643,228 shares at a conversion rate of $0.05 per share;

     (7) In July 1997, the Registrant issued a convertible promissory note
         to Raifman & Edwards, LLP, in payment for past services rendered,
         which in March 1999 was converted into 947,009 shares at a
         conversion rate of $0.075 per share;

     (8) In February 1998, the Registrant issued and sold to employees and
         non-employee investors 76,000 shares at a purchase price of $0.50
         per share;

     (9) In June 1998, the Registrant issued and sold to an employee
         232,964 shares at a purchase price of $0.65 per share;

    (10) In January and March 1999, the Registrant issued and sold to two
         employees 13,333 shares and 10,000 shares, respectively, in
         payment for past services rendered; and

    (11) In January 1999, the Registrant, as part of a settlement agreement
         issued and sold to an employee 200,000 shares for an aggregate
         purchase price of $12,420 under our 1997 Stock Plan.

    (b) From October 31, 1996 to August 15, 1999, the Registrant issued to
  certain of its employees, officers, directors and consultants options to
  purchase an aggregate of 8,781,777 shares of common stock of the
  Registrant, at exercise prices ranging from $0.05 per share to $3.25 per
  share, pursuant to the Registrant's 1997 Stock Plan and 1999 Stock Plan,
  and Amended and Restated 1999 Stock Plan.

    (c) From October 31, 1996 to August 15, 1999, the Registrant issued an
  aggregate of 62,667 shares of common stock of the Registrant upon the
  exercise of options at exercise prices ranging from $0.05 to $0.30 per
  share.

    (d) On January 11, 1999, the Registrant issued to an employee a warrant
  to purchase an aggregate of 500,000 shares of common stock at an exercise
  price of $0.50 per share.

    (e) On January 26, 1999, the Registrant issued and sold an aggregate of
  1,206,000 shares of Series A preferred stock to 37 investors at a purchase
  price of $1.25 per share or an aggregate purchase price of $1,507,500.

    (f) On March 25, 1999, the Registrant issued and sold an aggregate of
  1,979,000 shares of common stock valued at $2,600,000 to Ruiquing Jiang in
  connection with the Registrant's acquisition of Netranscend Software, Inc.,
  of which Mr. Jiang was the sole shareholder.

    (g) On June 15, 1999, the Registrant issued and sold an aggregate of
  4,500,000 shares of Series B preferred stock to 36 investors at a purchase
  price of $2.00 per share, or an aggregate purchase price of $9,000,000.

                                      II-2
(h) On June 15, 1999, the Registrant issued to two investors warrants to
  purchase an aggregate of 275,000 shares of Series B preferred stock at an
  exercise price of $2.00 per share.

    (i) On June 19, 1999, the Registrant issued to an investor a warrant to
  purchase an aggregate of 100,000 shares of common stock at an exercise
  price of $0.50 per share.

    (j) On August 6, 1999, the Registrant issued and sold an aggregate of
  4,000,000 shares of Series C preferred stock to 14 investors at a purchase
  price of $3.59 per share, or an aggregate purchase price of $14,360,000.

  The issuances described in paragraphs (a) (1) through (10) and (d) through
(j) above were deemed to be exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act as transactions by an issuer
not involving a public offering. The sales of securities described in
paragraphs a(11), (b) and (c) above were deemed to be exempt from the
registration requirements of the Securities Act in reliance on Rule 701
promulgated under Section 3(b) of the Securities Act as transactions by an
issuer pursuant to compensatory benefit plans and contracts relating to
compensation as provided under such Rule 701. The recipients of securities in
each such transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. The issuance of
warrants to purchase stock described in paragraphs (h) and (i) above did not
require registration under the Securities Act, or an exemption therefrom,
insofar as such grants did not involve a "sale" of securities as such term is
used in Section 2(3) of the Securities Act. All recipients either received
adequate information about the Registrant or had access, through employment or
other relationships, to information about the Registrant.

Item 16. Exhibits and Financial Statement Schedules

  (a) Exhibits
Exhibit
 Number
 -------
1.1*   Form of Underwriting Agreement.

  2.1    Agreement and Plan of Reorganization between Registrant, Netranscend
          Software, Inc. and Ruiqing "Barclay" Jiang, dated March 8, 1999.

  3.1    Form of the Amended and Restated Certificate of Incorporation of the
          Registrant to be in effect after the closing of the offering made
          under this Registration Statement.

  3.2    Form of the Amended and Restated Bylaws of the Registrant to be in
          effect after the closing of the offering made under this Registration
          Statement.

  4.1    Warrant to purchase 500,000 shares of Common Stock of the Registrant,
          dated January 11, 1999, held by Timothy Favia.

  4.2    Warrant to purchase 100,000 shares of Common Stock of the Registrant,
          dated June 15, 1999, held by Retail Ventures International, Inc.

  4.3    Warrant to purchase 150,000 shares of Series B Preferred Stock of the
          Registrant, dated June 15, 1999, held by Retail Ventures
          International, Inc.

  4.4    Warrant to purchase 125,000 shares of Series B Preferred Stock of the
          Registrant, dated June 15, 1999, held by Zeron Capital, Inc.

  5.1*   Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.

 10.1    Form of Indemnification Agreement between the Registrant and each of
          its directors and officers.

 10.2    Amended and Restated 1999 Stock Plan and form of agreements
          thereunder.

 10.3    1999 Employee Stock Purchase Plan and form of agreements thereunder.

 10.4    1997 Stock Plan and form of agreements thereunder.

 10.5    Basic Lease Agreement, First Amendment and Basic Lease Information
          thereto, between R&E Holdings, LLC and Persis Corporation and BidCom,
          Inc., dated September 24, 1999, February 1, 1997 and July 31, 1998,
          respectively.
II-3
Exhibit
 Number
 -------
10.6    Sublease, dated July 9, 1999, with Telocity, Inc.

 10.7    Employment Agreement with Gregory R. Raifman, dated February 19, 1999.

 10.8    Employment Agreement with Jon L. Edwards, dated February 19, 1999.

 10.9    Employment Agreement with Walter Haefeker, dated February 19, 1999.

 10.10   Employment Agreement with Ruiqing "Barclay" Jiang, dated March 24,
          1999.

 10.11   Employment Agreement with Sandra L. Abbott, dated August 6, 1999.

 10.12+* Technology Integration and Services Agreement between the Registrant
          and DoubleClick, Inc., dated July 22, 1999.

 10.13   Investors' Rights Agreement, dated July 30, 1999.

 23.1    Consent of PricewaterhouseCoopers LLP, independent accountants.

 23.2    Consent of PricewaterhouseCoopers LLP, independent accountants.

 23.3*   Consent of Counsel (see Exhibit 5.1).

 24.1    Power of Attorney (see page II-5).

 27.1    Financial Data Schedule.
--------
 *To be filed by amendment.
 +Confidential treatment requested.

Item 17. Undertakings

  The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

  Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by a
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit 1 to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

  The undersigned Registrant hereby undertakes that:

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

    (2) For the purpose of determining any liability under the Securities
  Act, each post-effective amendment that contains a form of Prospectus shall
  be deemed to be a new registration statement relating to the securities
  offered therein, and the offering of such securities at that time shall be
  deemed to be the initial bona fide offering thereof.

                                      II-4
SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 2nd day of September, 1999.

                                          MEDIAPLEX, INC.

                                                  /s/ Gregory R. Raifman
                                          By:__________________________________
                                                     Gregory R. Raifman
                                                Chairman and Chief Executive
                                                          Officer

                               POWER OF ATTORNEY

  KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gregory R. Raifman and Sandra L. Abbott and each
of them singly, as true and lawful attorneys-in-fact and agents with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities to sign the Registration Statement filed herewith and
any or all amendments to said Registration Statement (including post-effective
amendments and registration statements filed pursuant to Rule 462 and
otherwise), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
granting unto said attorneys-in-fact and agents the full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the foregoing, as to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or his or her substitute, may lawfully do or
cause to be done by virtue hereof.

  Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
Signature                           Title                    Date
             ---------                           -----                    ----
/s/ Gregory R. Raifman         Chairman and Chief Executive  September 2, 1999
____________________________________  Officer (Principal
         Gregory R. Raifman           Executive Officer)

       /s/ Sandra L. Abbott          Senior Vice President, Chief  September 2, 1999
____________________________________  Financial Officer and
          Sandra L. Abbott            Secretary (Principal
                                      Accounting Officer)

        /s/ Jon L. Edwards           President and Director        September 2, 1999
____________________________________
           Jon L. Edwards

    /s/ Lawrence D. Lenihan, Jr.     Director                      September 2, 1999
____________________________________
      Lawrence D. Lenihan, Jr.

       /s/ Peter S. Sealey           Director                      September 2, 1999
____________________________________
          Peter S. Sealey
II-5
Signature                           Title                   Date
             ---------                           -----                   ----
/s/ James DeSorrento          Director                       September 2, 1999
____________________________________
          James DeSorrento

      /s/ A. Brooke Seawell          Director                       September 2, 1999
____________________________________
         A. Brooke Seawell
II-6
EXHIBIT INDEX
Exhibit
 Number
 -------
1.1*   Form of Underwriting Agreement.

  2.1    Agreement and Plan of Reorganization between Registrant, Netranscend
          Software, Inc. and Ruiqing "Barclay" Jiang, dated March 8, 1999.

  3.1    Form of the Amended and Restated Certificate of Incorporation of the
          Registrant to be in effect after the closing of the offering made
          under this Registration Statement.

  3.2    Form of the Amended and Restated Bylaws of the Registrant to be in
          effect after the closing of the offering made under this Registration
          Statement.

  4.1    Warrant to purchase 500,000 shares of Common Stock of the Registrant,
          dated January 11, 1999, held by Timothy Favia.

  4.2    Warrant to purchase 100,000 shares of Common Stock of the Registrant,
          dated June 15, 1999, held by Retail Ventures International, Inc.

  4.3    Warrant to purchase 150,000 shares of Series B Preferred Stock of the
          Registrant, dated June 15, 1999, held by Retail Ventures
          International, Inc.

  4.4    Warrant to purchase 125,000 shares of Series B Preferred Stock of the
          Registrant, dated June 15, 1999, held by Zeron Capital, Inc.

  5.1*   Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.

 10.1    Form of Indemnification Agreement between the Registrant and each of
          its directors and officers.

 10.2    Amended and Restated 1999 Stock Plan and form of agreements
          thereunder.

 10.3    1999 Employee Stock Purchase Plan and form of agreements thereunder.

 10.4    1997 Stock Plan and form of agreements thereunder.

 10.5    Basic Lease Agreement, First Amendment and Basic Lease Information
          thereto, between R&E Holdings, LLC and Persis Corporation and BidCom,
          Inc., dated September 24, 1999, February 1, 1997 and July 31, 1998,
          respectively.

 10.6    Sublease, dated July 9, 1999, with Telocity, Inc.

 10.7    Employment Agreement with Gregory R. Raifman, dated February 19, 1999.

 10.8    Employment Agreement with Jon L. Edwards, dated February 19, 1999.

 10.9    Employment Agreement with Walter Haefeker, dated February 19, 1999.

 10.10   Employment Agreement with Ruiqing "Barclay" Jiang, dated March 24,
          1999.

 10.11   Employment Agreement with Sandra L. Abbott, dated August 6, 1999.

 10.12+* Technology Integration and Services Agreement between the Registrant
          and DoubleClick, Inc., dated July 22, 1999.

 10.13   Shareholders' Rights Agreement, dated July 30, 1999.

 23.1    Consent of PricewaterhouseCoopers LLP, independent accountants.

 23.2    Consent of PricewaterhouseCoopers LLP, independent accountants.

 23.3*   Consent of Counsel (see Exhibit 5.1).

 24.1    Power of Attorney (see page II-5).

 27.1    Financial Data Schedule.
--------
 * To be filed by amendment.
 + Confidential treatment requested.