-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VKMaYANQPhJ6c5vzh/1zLUOqV/93zg5/lrDQj8oD5VsqN1Il8rsF9+LhtrkGrrAi zrDQS07VrJfX2kGTWb6tmQ== 0000912057-00-015321.txt : 20000404 0000912057-00-015321.hdr.sgml : 20000404 ACCESSION NUMBER: 0000912057-00-015321 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 DATE AS OF CHANGE: 20000403 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINDWHAT COM INC CENTRAL INDEX KEY: 0001094808 STANDARD INDUSTRIAL CLASSIFICATION: 7389 IRS NUMBER: 880348835 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-30428 FILM NUMBER: 589542 BUSINESS ADDRESS: STREET 1: 121 WEST 27TH STREET STREET 2: SUITE 903 CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 2126332660 MAIL ADDRESS: STREET 1: 121 WEST 27TH STREET STREET 2: SUITE 903 CITY: NEW YORK STATE: NY ZIP: 10001 10-K 1 FORM 10-K U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) |X| ANNUAL REPORT ON UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999. |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from..................to.................... Commission file number: 0-27331 FINDWHAT.COM (Exact name of registrant as specified in its charter) Nevada 88-0348835 (State of Incorporation) (I.R.S. Employer Identification No.) 121 West 27th Street, Suite 903 New York, New York 10001 (212) 255-1500 (Address and telephone number of registrant's principal executive offices and principal place of business) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. /X/ Yes / / No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ State the aggregate market value of the voting and non-voting equity held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within 60 days prior to the date of filing. $61,807,359 based on the last sale price on March 29, 2000. State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date. 13,691,750 shares of common, $.001 par value as of March 27, 2000. DOCUMENTS INCORPORATED BY REFERENCE Proxy Statement for 2000 Annual Meeting of Stockholders. Forward-Looking Statements This document contains forward-looking statements which reflect the views of management with respect to future events and financial performance. These forward-looking statements are subject to certain uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other factors include, but are not limited to, the words "anticipates", "believes", "estimates", "expects", "plans", "projects", "targets" and similar expressions which identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date the statements were made. PART I Item 1. Description of Business BUSINESS Overview We are a developer and marketer of performance-based advertising services for the Internet. Currently, we offer two proprietary services: FindWhat.com, a pay-for-performance search engine and BeFirst.com, a web site optimization service. Our focus is to: o drive qualified traffic to Internet web sites, and o ensure that Internet users find what they are looking for when "surfing the web." Our services are designed to connect consumers who are most likely to purchase specific goods and services to businesses that provide those goods and services. The FindWhat.com search engine allows Internet users to enter a word or phrase describing what they want, called a keyword or search word, and click on "Find." Our search engine then displays a selection of web sites related to that keyword. Advertisers can determine where on the results page their web site link will appear for any given keyword search, through an open, automated bidding process. Advertisers submit bids for the amount they will pay for each consumer who clicks-through to their web sites. We have entered into relationships with Go2Net, LinkShare Corporation, Beasley Broadcasting and Inktomi. Our FindWhat.com search listing advertisement revenue is determined by multiplying the number of click-throughs on paid search results by the amounts bid for applicable keywords. Search listing revenue is earned based on click-through activity to the extent that the advertiser has deposited sufficient funds with us or collection is probable. Our banner advertising revenue is earned under the terms of our contractual arrangements with advertisers or advertising agencies. While we only launched our FindWhat.com search engine in September 1999, we have made significant progress in growing the number of advertisers and consumers. As of March 23, 2000, consumers could find relevant search listings for information, products and services from approximately 2,300 participating advertisers who had placed over 1.15 million search listings, up from approximately 1,200 advertisers and more than 750,000 search listings as of December 31, 1999. For the year to date through March 23, 2000, the FindWhat.com search engine had approximately 1.1 million paid click-throughs with an average price per paid click-through of $0.06. In all of 1999, the FindWhat.com search engine had approximately 35,000 paid click-throughs. Our BeFirst.com service, known as "web site optimization," increases the volume of relevant traffic to each client's business by improving the placement in the search results generated by Internet search engines. We achieve improved placement for our clients through our understanding of search engine algorithms and constant monitoring of search engine behavior. Our BeFirst.com service currently derives revenue from two sources: set-up fees charged to new clients and a per-click-through charge for each consumer the service generates for a client's web site. As of March 23, 2000, BeFirst.com had over 100 clients, including eBay, Avenue A, Ebags.com and Dr.Koop.com. We were organized under the laws of the State of Nevada under the name Collectibles America, Inc. in October 1995. We discontinued our business operations and transferred our assets to satisfy liabilities in 1997. In June 1999, we acquired 1,000 shares of common stock of BeFirst Internet Corporation, which was organized under the laws of the State of Delaware in March 1998, representing all of its outstanding capital stock. These shares were acquired from the holders in exchange for our issuance of 8,750,000 shares of our common stock. As the result of such exchange of stock, the stockholders of BeFirst Internet Corporation acquired control of us and BeFirst Internet Corporation became our wholly owned subsidiary. We changed our corporate name to BeFirst.com at the time of the acquisition. In September 1999, we changed our corporate name to FindWhat.com. At the time of our acquisition of BeFirst Internet Corporation, it had been in the business of developing and offering "web site optimization" services to Internet advertisers. Industry Overview Internet advertisers rely on web sites providing web directories or "search engines" as one of the means of supplying an audience for their web sites and advertising message. These search engines enable consumers to search the Internet for a listing of web sites matching a descriptive word or phrase and offer advertisers exposure to the Internet audience. In order to attract and keep users, these search engines have evolved into "portals" that deliver a vast array of content and services. Internet user's unmet search requirements. Portals attempt to increase the number and duration of visits to their sites in order to maximize graphical advertising opportunities. Increasing length of visits creates a conflict of interest between the consumer's desire to find what they are looking for in a quick and efficient manner and the portal. Additionally, the process for assigning results to user queries by traditional search engines may generate irrelevant results. Search engines that use technology based on invisible or descriptive tags are prone to post irrelevant and unassociated results because operators are free to tag their sites with irrelevant search terms to attract additional customer attention at low cost. 2 Ineffectiveness of traditional Internet advertising. Traditional Internet advertising primarily is in the form of banner or sponsorship advertising, which is typically priced with advertisers paying for viewers. Advertising with portals is typically expensive and available only to relatively large accounts, which limits the number of Internet advertising opportunities. We believe the pay-per-view model does not efficiently exploit the advertising potential and accountability of the Internet because advertisers are paying for viewers who may not be interested in their products or services. Lack of convergence between effective e-commerce and search engines. We believe that there is increasing frustration and discontent among consumers concerning the lack of comprehensive information regarding offers of consumer products and services by existing Internet search engines. Additionally, we believe that advertisers are looking for alternatives to traditional Internet advertising. This presents a market opportunity for the FindWhat.com search engine, which is designed as an e-commerce aggregator to improve the consumer search experience and more efficiently link advertisers with their target consumers. The FindWhat.com solution FindWhat.com FindWhat.com is designed as an e-commerce aggregator to improve the consumer search experience and link advertisers and consumers. We distinguish the FindWhat.com search engine from the "portal" search engine model - used by such sites as AltaVista, Excite, and Yahoo - by presenting an extremely clean, uncluttered interface. Unlike portals, which seek to keep consumers within their web site and have multiple graphical advertisements, our search result pages load quickly and consist of a list of 25 results per page. The top results for any keyword search are those companies that are most likely to have what the consumer wants to find. Consequently, we believe our FindWhat.com search engine offers consumers fast, simple and direct search results. By eliminating extraneous content and advertising, we eliminate a portal's inherent conflict between assisting consumers to locate relevant information and attempting to keep them within the portal's web site. Like the Yellow Pages, the FindWhat.com search engine is a commercial search tool for people or businesses that are actively looking for information or for goods or services to purchase. 3 The FindWhat.com search engine Search results on the FindWhat.com search engine are rank-ordered through a competitive bidding process in which each advertiser's bid represents the amount it will pay us for each consumer click-through. The advertiser with the highest bid is listed first in the search results, with the remaining advertisers appearing in descending order. Because advertisers must pay for each click-through to their web site, we believe that they select and bid only on those search words or phrases they believe are most relevant to their business offerings. We also employ editors and an automated editing program to insure that advertisers do not bid on irrelevant keywords. Benefits for consumers A better search result. We believe that the pay-for-performance model delivers a better and more relevant search result to Internet consumers, because companies actively promoting and selling the desired goods and services are positioned first in the results listings. A robust database. As of March 23, 2000, the FindWhat.com search engine listed paid results from approximately 2,300 advertisers who had placed more than 1.15 million search listings. Additionally, our search results not only deliver web sites that bid for position, the search is supplemented by Inktomi's robust database. Inktomi is an independent supplier that is not allied with any one search engine or portal. Ease of use. The FindWhat.com search engine focuses on delivering an easy-to-use, uncluttered interface that delivers a faster response with less confusion. The FindWhat.com site is particularly easy to navigate for the novice web user. Benefits to Advertisers Delivery of the target market. The FindWhat.com pay-for-performance search engine enables marketers to target their message directly at the consumers who are shopping for products or services in their category. They accomplish this precise targeting of qualified prospects by paying to reach consumers who have typed in keywords or phrases that describe their product and service offerings. Control. The advertiser maintains control over their listing in the FindWhat.com search results. Our clients can access their account and write or edit their company or product description at any time. We believe this capability is particularly useful to advertisers when they are running promotions or are featuring certain seasonal or holiday items or services. Ease of use. The FindWhat.com search engine advertiser interface is easy to access and use. Advertisers can establish an account online, although customer service is available via e-mail or a toll-free number. Reasonable start-up costs. Barriers to opening an account with the FindWhat.com search engine are low. Any company with a web site can utilize the FindWhat.com search engine. Participation in the system requires a minimum bid deposit of $25. The account is then charged for each consumer who clicks through to the bidder's web site. The minimum starting bid for a specific 4 keyword search result is $0.01. Efficiency and accountability. The FindWhat.com search engine brings efficiency and accountability to the purchase of Internet advertising and addresses what we believe is the most common objection marketers have when considering an Internet media buy - knowing what they are getting for their money. Advertisers can pick all the keywords that are relevant to their businesses, bidding the most for those that are most relevant and bidding less for those that are more distantly related to their core products. Pay for performance only. With the FindWhat.com search engine, advertisers are confident that they are not wasting their advertising dollars because they pay only for the prospects who come to their site. We believe the pay-per-click model delivers exactly the type of accountability advertisers are seeking. Evaluation. With our open automated bidding system, advertisers can evaluate the value of paying for a premium position. The search results page shows advertisers what their competitors are bidding for their positions and allows them to make competitive bids. The bidding for key words is automated in real time, so that results are instantaneous. Popular category key buys We also offer advertisers the opportunity to buy popular category keywords on our FindWhat.com search engine. These popular category topics present quick access choices for consumers who have not refined their search enough to type in a keyword that defines a narrow topic. Banner advertising on FindWhat.com In addition to the pay-for-performance bidding system, we offer opportunities to advertisers to buy traditional banner ad placements. Advertisers can choose from highly targeted placements, based on major search categories like travel or music or run-of-site banners. Keyword-specific and run of site banners appear at the top of the search result pages and at the top of information pages. There is no paid advertising on the FindWhat.com home page. 5 BeFirst.com Another service we offer to meet the needs of Internet e-commerce businesses we offer our BeFirst.com service, known as "web site optimization." The purpose of our BeFirst.com service is to increase the volume of traffic relevant to each client's business by improving the placement of our clients' web sites in the search results generated by Internet search engines. In providing "web site optimization" services, our technical staff analyzes the client's web site, including its main goals and objectives. We then focus on enhancing the probability that the web site will appear in a list of results in response to a consumer's inquiry on other popular search engines. The goal is a higher ranking on the list. The methods we use for a particular client might include providing suggestions as to how source codes in a client's web site should be restructured or modified to increase relevancy rankings. Additionally, we may create a new web site consisting of the client's desired promotional information which we submit to search engines. When a user clicks on a listing based on the web site created by us, the user is automatically forwarded to the client's main web site. We believe that our BeFirst.com web site optimization service is unique because each client's objectives are assessed on an individual basis, generating customized programs in an industry where standard "one size fits all" models typically prevail. Moreover, our BeFirst.com service seeks to optimize a client's site on up to 300 search engines, directories and online yellow pages, while other search optimization services generally limit their optimization techniques to a smaller number of search engines. As of March 23, 2000, BeFirst.com had over 100 clients, including eBay, Avenue A, Ebags.com and Dr.Koop.com. Strategy Increase number of advertisers We recruit advertisers to utilize our services primarily through direct sales efforts. Our sales staff targets e-commerce businesses and advertisers who they locate through on line research. Our sales staff usually contacts potential advertisers directly, utilizing telemarketing and e-mail. If warranted, our sales staff makes personal sales calls. Additionally, we sponsor trade shows in which we believe potential advertisers will be exposed to our services. Increase traffic Online traffic partnerships. 6 Our online traffic partnerships enable us to link our advertisers to consumers who may not otherwise use the FindWhat.com search engine. We have agreements with Go2Net, Mamma.com, WebInfoSearch and Cyber Networks, Inc. to provide search results on their meta-search engines. We also target heavily trafficked sites, browsers, community portals and Internet service providers. Traditional media strategies. We utilize traditional media strategies to generate unique users for the FindWhat.com search engine. To build brand awareness with consumers and drive traffic to the FindWhat.com web site, we use offline media including: public relations, telemarketing, radio and outdoor advertising in key markets. We believe offline media has proven to be highly effective for online media companies. Our online advertising includes targeted e-mail, banners and our affiliate program. See "Sales and Marketing." Affiliate program. Central to our Internet-based marketing is an affiliate program that allows other web sites to place the FindWhat.com search interface on their pages in the form of small boxes or banners. Our affiliate program drives traffic to the FindWhat.com site and also functions as an online branding program by placing the FindWhat.com logo on numerous sites around the web. Our affiliates earn money for each click-through generated by a search on their site. We attempt to place FindWhat.com links on high traffic, high profile web sites and pay other web site owners fees to provide the necessary incentive to enter into the link arrangement. Increase revenue Our objective is to expand advertiser participation and increase business and consumer transactions through our FindWhat.com search engine. We believe that if we build a solid foundation of active bidders and users, we will stimulate growth which should increase the efficiency of our service. A large and active base of advertisers will enable us to generate more relevant search results for consumers, which in turn should increase the number of consumers utilizing our services and clicking through on bidded results. Sales & Marketing Our sales and marketing efforts are coordinated out of our New York and Santa Monica offices. We currently employ seven full-time sales representatives. All of our representatives are compensated with salaries and performance-based bonuses. Our representatives report to supervisors and have direct communication with our Chief Executive Officer, who oversees our sales and marketing efforts. Consumer and business users We target online consumers who are actively shopping for goods and services or looking for information. To build brand awareness with consumers and drive traffic to the FindWhat.com web site, we use offline media including: public relations, telemarketing, radio and outdoor advertising in key markets. We believe offline media has proven to be highly effective for online media companies. Our online advertising includes targeted e-mail, banners and the affiliate program. 7 o Radio: Radio is our primary consumer advertising launch vehicle. By focusing on delivering the media message by region, we are attempting to create the perception that FindWhat.com is a major online presence in the selected market. We believe that radio is a highly effective medium for reaching Internet users. o Outdoor Advertising: In December 1999, we launched outdoor (billboard) campaigns in Los Angeles in selected high traffic locations. This billboard advertising has been obtained through our agreement with Van Wagner Outdoor. o Online Advertising: We operate an online banner campaign to promote FindWhat.com and our million dollar sweepstakes, featuring a "click and win" promotion. o Million Dollar Giveaway: Starting December 1999, we implemented a daily million dollar lottery. Registered consumers have the chance to win $1 million in a daily online lottery. We believe the million-dollar lottery provides an incentive to visit FindWhat.com repeatedly. A personalized e-mail greeting welcomes consumers back each time. The lottery has been arranged through a third party provider that guarantees payment of the sweepstakes in return for flat fees from us. o Public Relations: We have a public relations firm to exploit our contests and other media activities. Advertisers We believe businesses that become FindWhat.com search engine clients are those who are particularly interested in taking advantage of the growth of e-commerce by driving motivated consumers to their web sites efficiently. Our program to attract advertising clients includes: o Direct sales: Our sales staff targets companies with highly visible web-based promotional programs and advertisers who are using competitive services. o Business-oriented advertising: Because the barriers to opening an account with the FindWhat.com search engine service are low, virtually any company with a web site can try the service. To reach this larger market, we have supplemented our direct-sales program with an advertising campaign on business-oriented media. o Online promotion: Our online promotional program includes banner advertisements and preferred placement on search engines. o Trade Shows: We participate and sponsor industry trade shows, such as the Internet Search Engine Expo held in San Francisco in November 1999 and in New York in March 2000. We intend to participate in additional trade shows that attract advertisers and affiliates throughout 8 the year. o Customer service: To eliminate any perceived barriers to doing business with us, we attempt to deliver excellent customer service. We believe that superior customer service adds an extra level of value. BeFirst.com To obtain advertising clients for our BeFirst.com service, our sales force uses direct phone and Internet selling to a target client list culled from the large number of advertisers placing banner advertising on the top search service web sites as well as smaller advertisers placing advertisements on more targeted web sites. We anticipate that we will hire additional sales staff in order to increase the direct queries made to potential clients. We also intend to retain additional personnel or hire third party contractors to assist in data entry and technical aspects of our service so that we may service an increased client base. Revenue Model We generate revenue from: o search listing paid click-throughs on the FindWhat.com search engine, o banner advertising on the FindWhat.com search results pages, o set-up fees on our BeFirst.com service, and o click-through fees for BeFirst.com service. FindWhat.com search listing paid click-throughs. Our FindWhat.com search listing paid click-through revenue is determined by multiplying the number of click-throughs on paid search results by the amounts bid for applicable keywords. Paid click-through revenue is earned based on click-through activity to the extent that the advertiser has deposited sufficient funds with us or collection is probable. FindWhat.com banner advertising. Our banner advertising revenue is earned under the terms of our contractual arrangements with the advertiser or advertising agency, which generally provide for a fee for each click-thru on the banner advertisement. BeFirst.com set-up fees. We charge each new client a one-time fee for the web site optimization services to be performed by us for that client. BeFirst.com click-through fees. 9 Click-through rates are negotiated and generally vary based on the client's industry and the frequency with which words or phrases related to that industry are searched. The negotiated click-through rate is applied to the actual number of consumers clicking on the various search engine placements established by the BeFirst.com service on behalf of a client. Customers With an open bidding system that is automated, advertisers can evaluate the value to their company of paying for a premium position. They can see listed on the search results page exactly what their competitors are bidding for their positions and can outbid them, if they like. The auction is automated in real time, so results are instantaneous. The power of the model is demonstrated by the quality of the advertisers that have enlisted since September 1999 as shown in the following table: FindWhat.com Participating Companies Category Company Advertising Agency Avenue A Auctions Ebay Music Sonicnet/MTV Flowers PC Flowers & Gifts, Flower.com Pets Petstore.com Health DrKoop.com, allherb.com Travel Uniglobe.com Rewards mypoints.com Key Relationships Inktomi. We have an agreement with Inktomi Corporation, a data information provider, to provide supplemental data for the FindWhat.com search engine so that consumers will receive comprehensive search results in response to their search queries. Utilizing Inktomi's database of web sites, we can display search results in addition to the listings paid for by our advertisers. Go2Net, Inc. We have entered into an agreement with Go2Net, Inc. to post our search results on their Dogpile and MetaCrawler meta-search services. Go2Net is one of the Internet's leading networks, providing consumer services, business services and enabling services. Go2Net offers through the world wide web a network of branded properties and aggregated content in the categories of search and directory, personal finance, multi-player games, small business services and e-commerce solutions. Pursuant to our agreement, we issued Go2Net a warrant to purchase 725,000 shares of our common stock. 10 LinkShare. We launched an affiliate marketing program with LinkShare Corporation (http://www.linkshare.com) in early December 1999. This program offers web sites that are members of the LinkShare Network an opportunity to offer a link on their sites to our FindWhat.com search engine. LinkShare manages a network where merchants and affiliates may create an online marketplace, refer customers to each other, and place a value on that traffic. Beasley Broadcasting. We have entered into an agreement with Beasley Broadcasting to provide us with $3 million worth of radio and internet advertising. Beasley Broadcasting is the 16th largest radio broadcasting company in the United States based on 1998 gross revenues. After giving effect to pending acquisitions in Boston, Miami-Ft. Lauderdale, West Palm Beach and Augusta, Beasley Broadcasting will own and operate 36 stations, located in nine large and mid-sized markets in the eastern United States. Twelve of these stations are located in four of the nation's top 12 radio markets: Atlanta, Philadelphia, Boston and Miami-Ft. Lauderdale. Competition FindWhat.com We compete with portals, pure search engines, and pay-for-performance search engines. o Portals |*| Yahoo! |*| AOL |*| GO |*| iWon |*| Excite |*| MSN |*| AltaVistal |*| About |*| Netscape |*| Lycos |*| Snap o Pure search engines |*| Google |*| NorthernLight |*| LookSmart |*| DirectHits |*| HotBot |*| WebCrawler o Pay-for-performance search engines |*| GoTo |*| RocketLinks |*| HitsGalore |*| Kanoodle In addition, other companies may offer directly competing services in the future. Most providers of web directories, search and information services offer additional features and content that we have elected not to offer. We also compete with traditional off-line media such as television, radio and print for a share of advertising budgets. BeFirst.com We compete on the basis of our ability to anticipate changes in search engine technologies. We also seek to optimize our client's website for up to 300 search engines, directories and on-line "yellow pages," while we believe that our competitors typically focus on only the top 11 10 search engines. Since the advent of web site optimization services on the Internet, the number of companies offering such services has proliferated due to, among other reasons, the absence of substantial barriers to entry. This competition may continue to intensify. Such increased competition may lead to reductions in market prices for search engine optimization marketing and sales. While we do not believe that any one competitor or group of competitors is dominant in the web site optimization business, our principal competitors are: o Did-it.com o WebsiteResult.com Most of our current and potential competitors for our FindWhat.com search engine and our BeFirst.com service have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we have. These competitors may be able to respond more quickly to new or emerging technologies and changes in search engine requirements and to devote greater resources to the development, promotion and sale of their services than we can. Accordingly, we may not be able to compete successfully against our current or future competitors. Technology and Operations We believe high traffic Internet search engines / portals require a fast, reliable and secure infrastructure that can be easily expanded to maintain acceptable response times under the stress of growth. However, most new companies operate under considerable resource constraints that usually hinder the construction of networks that are fast, reliable and secure. We believe that while we have operated under the constraints of a new company, we have managed to create an infrastructure that provides us with an excellent base from which to grow our business. We believe our current infrastructure is suitably sized to give web surfers a positive feeling about their interaction with the FindWhat.com site. The physical components of our infrastructure are comprised of equipment made by some of the most recognized manufacturers in the business including Cisco and Intel. The software being used to power the FindWhat.com site is a combination of industry standard commercial software and our internally developed proprietary software. We believe that given the solid mix of industry standard equipment and software we are positioned to sustain the effects of considerable growth. We have provided for site backup services through mica.net (Michigan Internet Communication Association). We have hardware co-located at mica.net to replicate the FindWhat.com web site should a catastrophic event occur. This equipment includes three servers that could be used to replicate web servers, DNS servers and Database servers. In February 2000 we introduced a new technology called F.A.S.T. (FindWhat Advanced Search Technology.) F.A.S.T. is designed to read most simple plain English queries and, utilizing programmed intelligence, deliver relevant search results from the FindWhat.com proprietary database. F.A.S.T. was implemented to deliver more refined search results to FindWhat.com users and to give FindWhat.com advertisers more site traffic. F.A.S.T. processes 12 what the Findwhat.com user queries, then interprets the query based on intelligence programmed into the FindWhat.com system. F.A.S.T. interprets the query by comparing it to keywords purchased by advertisers and delivers what we believe will be an accurate outcome for the user. Early in our development, we placed a firewall between the outside world and our service. As currently configured, our firewall provides the ability to block out any traffic that is not required to operate the FindWhat.com web service. Intellectual Property We have pending United States federal applications with the Patent and Trademark Office for the marks "FindWhat.com," "BeFirst," "Be1st," "Find what you're looking for," "pay for placement" and "a better search result." In addition, we use and have common law rights in the marks "F.A.S.T.,""FindWhat Advanced Search Technology" and "Search and Win." In February 2000, we filed a patent application for our FindWhat.com search engine with the U.S. Patent and Trademark Office. This application is currently pending. While we rely on trade secrets and confidentiality provisions to protect our intellectual property, we also use a license from Inktomi as well as standard licenses contained in software we use, such as software supplied by Microsoft, in offering our web site search engine. We are not dependent on any third-party technology or service mark licenses in connection with our web site optimization business. However, we do rely upon common law trade secret, proprietary technology and confidentiality principles to protect our intellectual property rights. We have adopted a policy of requiring our employees and consultants to execute confidentiality agreements when they commence employment or are employed by us. These agreements generally provide that all confidential information developed or made known to employees and consultants during the course of their relationship with us is not to be disclosed to third parties, except under specific circumstances described in these agreements. In the case of employees, the agreements provide that inventions conceived by employees in the course of employment will be our exclusive property. The material risks associated with our intellectual property rights are discussed above under "Risk Factors." Regulations Governmental Regulations We are not currently subject to direct regulation by any government agency, other than regulations applicable to businesses generally, and there are currently few laws or regulations directly applicable to access to, or commence on, the Internet. However, due to the increasing popularity and use of the Internet, it is possible that various laws and regulations may be adopted with respect to the Internet, covering issues such as taxation, user privacy and characteristics and 13 quality of products and services. In 1998, the United States Congress established the Advisory Committee on Electronic Commerce which is charged with investigating and making recommendations to Congress regarding the taxation of sales by means of the Internet. The adoption of any such laws or regulations upon the recommendation of this Advisory Committee or otherwise may decrease the growth of the Internet, which could in turn decrease the demand for our products or services, our cost of doing business or otherwise have an adverse effect on our business, prospectus, financial condition, or results of operations. Moreover, the applicability to the Internet of existing laws governing issues, such as property ownership, libel and personal privacy is uncertain. Future federal or state legislation or regulations could have a material adverse effect on our business, prospects, financial conditions and results of operations. Facilities We have an executive, administrative and sales office in New York City, an executive and marketing office in Santa Monica, California, and an executive, administrative and techical facility in Fort Myers, Florida. Employees We currently have 35 employees, including our executive officers. We have approximately seven employees in sales and marketing, eighteen in technical and customer service, seven in administration and three executive officers. In addition, WPI Advertising, Inc., an affiliate of one of our executive officers, currently supplies us with certain services, including office space and additional staff support. Item 2. Properties. We lease approximately 3,200 square feet of office space in Fort Myers, Florida for current annual rent of $28,000. The lease commenced August 1, 1999 and has a three-year term. We share office space in New York with WPI Advertising, Inc., an affiliate of Robert D. Brahms, our Chief Executive Officer and director. We share office space in Santa Monica, California with V-Lite Corporation, an affiliate of Courtney P. Jones, our Chairman of the Board of Directors. Item 3. Legal Proceedings. We are not a party to any pending legal proceedings and are not aware of any threatened legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders. None. PART II Item 5. Market for Common Equity and Related Stockholder Matters. Price Range Of Common Stock From June 17, 1999 until October 7, 1999, our common stock traded on the OTC Bulletin Board under the symbol "FWHT." From October 7, 1999 to December 21, 1999, our common stock appeared in the National Quotation Bureau Inc.'s over-the-counter "pink sheets." Prior to June 17, 1999, our common stock was listed under the symbol "CAMJ" and traded infrequently. 14 The following table sets forth the high and low sales prices of our common stock for the periods indicated as reported by the NASD's OTC Bulletin Board or the National Quotation Bureau Inc.'s over-the-counter "pink-sheets": Quarter Ended High Low March 31, 2000 (through March 30, 2000)............................. $18.25 $5.375 December 31, 1999................. $ 9.25 $3.875 September 30, 1999................ $ 8.50 $3.00 June 30, 1999 (beginning June 17, 1999).......................... $ 7.25 $5.00 Such prices reflect inter-dealer quotations, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. On March 29, 2000, the last reported sale price of our common stock on the OTC Bulletin Board was $11.50 per share. The number of record holders of our common stock was 128 as of March 28, 2000. Dividend Policy. We currently do not anticipate paying cash dividends on our common stock at any time in the near future. We may never pay cash dividends or distributions on our common stock. Any credit agreements which we may enter into with institutional lenders may restrict our ability to pay dividends. Whether we pay cash dividends in the future will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements and any other factors that the board of directors decides is relevant. Recent Sales of Unregistered Securities. Set forth below in chronological order is information regarding the numbers of shares of common stock sold by FindWhat.com, the number of options and warrants issued by FindWhat.com, the consideration received by FindWhat.com for such shares, options and warrants and information relating to the section of the Securities Act or rules of the Securities and Exchange Commission under which exemption from registration was claimed in the past three years. None of these securities was registered under the Securities Act. 15 In October 1997, we sold 12,000,000 shares of common stock to a former officer for a purchase price of $15,000 pursuant to Section 4(2) of the Securities Act of 1933. In June 1999, we cancelled 8,600,000 shares of common stock contributed to us by Mr. Mick Jardine, and then effected a 1-for-2 reverse stock split of the remaining outstanding shares of common stock. Following the reverse split, in June 1999, we completed a private offering of 1,250,000 shares of common stock to 39 individual and corporate accredited investors purchasers for gross proceeds of $2,500,000. The certificates representing the shares of common stock were appropriately legended. In the opinion of Findwhat.com the issuance of these shares was exempt pursuant to Rule 506 of Regulation D under the Securities Act. In June 1999, we acquired all of the outstanding capital stock of BeFirst Internet Corporation in exchange for the issuance of 8,750,000 shares of common stock to Messrs. Courtney P. Jones, Craig A. Pisaris-Henderson, Robert D. Brahms, Peter Miller, Tony Garcia and Christopher Knight Whitaker, the former stockholders of BeFirst Internet Corporation. The certificates representing the shares of common stock were appropriately legended. In the opinion of FindWhat.com the issuance of these shares was exempt by pursuant to Section 4(2) of the Securities Act and the rules promulgated thereunder. In June 1999, we issued options under our 1999 Stock Incentive Plan to purchase up to an aggregate of 663,713 shares of our common stock to certain employees and non-employees of the Company at average weighted exercise prices of $2.17 and $2.00 per share, respectively. In September 1999, we issued options under our 1999 Stock Incentive Plan to purchase up to an aggregate of 62,000 shares of our common stock to certain employees and non-employees of the Company at average weighted exercise prices of $4.00 and $4.50 per share, respectively. In November 1999, we issued options under our 1999 Stock Incentive Plan to purchase up to an aggregate of 3,000 shares of our common stock to certain employees of the Company at an exercise price of $3.91 per share. In November 1999, we entered into an agreement with Global Financial Resources, Inc. for public investor relations services whereby we issued non-plan stock options to purchase up to 150,000 shares of our common stock at $3.75 per share. In March 2000, our agreement with Global Financial was terminated and 68,750 of the option shares vested. 16 In November 1999, we entered into an agreement to issue 41,750 shares of our common stock to Van Wagner Communications, LLC in consideration of $161,770 worth of advertising space. The certificates representing the shares of common stock were appropriately legended. In the opinion of FindWhat.com the issuance of these shares was exempt by pursuant to Section 4(2) of the Securities Act and the rules promulgated thereunder. In November 1999, we entered into an agreement to issue 50,000 shares of our common stock to David M. Medinis as consideration for consulting services. In December 1999, Mr. Medinis became a member of our board of directors. The certificates representing the shares of common stock were appropriately legended. In the opinion of FindWhat.com the issuance of these shares was exempt by pursuant to Section 4(2) of the Securities Act and the rules promulgated thereunder. In December 2000, we issued options under our 1999 Stock Incentive Plan to purchase up to 500 shares of our common stock to an employee at an exercise price of $4.12 per share. In January 2000, we entered into an agreement to issue 600,000 shares of our common stock to Beasley Broadcast Group in consideration of $3,000,000 worth of radio and on-line advertising. The certificates representing the shares of common stock were appropriately legended. In the opinion of FindWhat.com the issuance of these shares was exempt by pursuant to Section 4(2) of the Securities Act and the rules promulgated thereunder. In January 2000, we issued Cyber Networks, Inc., a strategic partner, a warrant to purchase 5,000 shares of our common stock at a purchase price of $5.50 per share. The warrant was appropriately legended. In the opinion of FindWhat.com the issuance of the warrant was exempt by pursuant to Section 4(2) of the Securities Act and the rules promulgated thereunder. In January 2000, we issued options under our 1999 Stock Incentive Plan to purchase up to an aggregate of 231,000 shares of our common stock to certain employees and non-employees at a weighted average exercise price $5.50 per share. In February 2000, we entered into an agreement to issue 500,000 shares of our common stock to Andrew Lessman and issued Mr. Lessman a warrant to purchase up to 125,000 shares of our common stock at a purchase price of $5.50 per share in consideration of a $2,000,000 cash investment. The certificates representing the shares of common stock and the warrant were appropriately legended. In the opinion of FindWhat.com the issuance of these shares and the warrant was exempt by pursuant to Section 4(2) of the Securities Act and the rules promulgated thereunder. 17 In February 2000, we issued options under our 1999 Stock Incentive Plan to purchase up to an aggregate of 20,000 shares of our common stock to certain non-employee directors at an exercise price of 5.75 per share. In March 2000, we issued a warrant to Go2Net, Inc. to purchase up to 725,000 shares of our common stock at a purchase price of $5.50 per share in connection with a strategic alliance. The warrant was appropriately legended. In the opinion of FindWhat.com the issuance of the warrant was exempt by pursuant to Section 4(2) of the Securities Act and the rules promulgated thereunder. Item 6. Selected Consolidated Financial Data. The following selected statements of operations date for the period from our inception on March 27, 1998 through December 31, 1998 and the year ended December 31, 1999 and the selected balance sheet data as of December 31, 1999 and 1998 are derived from our consolidated financial statements and related notes included elsewhere in this prospectus audited by Grant Thornton LLP, our independent certified public accountants. The pro forma balance sheet data is adjusted to reflect the issuance of 1,100,000 shares of common stock subsequent to December 31, 1999. Period from March 27, 1998 (date of Year ended inception) to December 31, December 31, 1999 1998 ----------- ----------- STATEMENT OF OPERATIONS DATA: Revenues $ 451,509 $ 58,818 Cost of revenues 394,402 36,837 ----------- ----------- Gross profit 57,107 21,981 Operating expenses Sales and marketing 369,086 General and administrative 1,472,287 44,146 Product development 54,058 45,000 ----------- ----------- Total operating expenses 1,895,431 89,146 ----------- ----------- Loss from operations (1,838,324) (67,165) Interest income, net 48,657 ----------- ----------- NET LOSS $(1,789,667) $ (67,165) =========== =========== Loss per share - basic and diluted $ (0.17) $ (0.01) =========== =========== Unaudited pro forma information (1): Increase in officer salaries $ 180,000 $ 270,000 =========== =========== Pro forma net loss after increase in officer salaries $(1,969,667) $ (337,165) =========== =========== Pro forma loss per share after increase in officer salaries $ (0.18) $ (0.04) =========== =========== Weighted-average number of common shares outstanding 10,781,765 8,750,000 =========== =========== December 31, 1999 December 31, 1999 December 31, 1998 Actual Pro Forma Actual ------ --------- ------ BALANCE SHEET DATA: Current assets $ 1,021,856 $ 3,021,856 $ 15,165 Total assets 1,266,880 3,266,880 16,525 Working capital 788,875 2,788,875 (23,525) Stockholders' equity (deficit) 1,027,536 3,027,536 (22,165) (1) The supplemental pro forma information is provided to show the impact of the addition of salaries with three officers of the Company effective July 1, 1999. The pro forma adjustments reflect salary increase effective July 1, 1999 as if the salaries hade been effective March 27, 1998. Item 7. Management's Discussion and Analysis or Plan of Operation. This management's discussion and analysis of financial condition contains forward-looking statements, the accuracy of which involve risks and uncertainties. We use words such as "anticipates," "believes," "plans," "expects," "future," "intends" and similar expressions to identify forward-looking statements. This management's discussion and analysis also contains forward-looking statements attributed to certain third parties relating to their estimates regarding the growth of the Internet, Internet advertising and online commerce markets and spending. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons. Overview We are a developer and marketer of performance-based advertising services for the Internet. Currently, we offer two proprietary services: FindWhat.com., a pay-for-performance search engine and BeFirst.com, a web site optimization service. Our focus is: o to drive qualified traffic to Internet web sites and o to ensure that Internet users find what they are looking for when "surfing the web." Our services are designed to connect consumers who are most likely to purchase specific goods and services to businesses that provide those specific goods and services. The FindWhat.com search engine, which launched in September 1999, allows Internet users to enter a word or phrase describing what they want, called a keyword. Our search engine then displays a selection of web sites related to that keyword. Advertisers can determine where on the results page their web site link will appear on any given keyword search through an open, automated bidding process. Advertisers submit bids for the amount they will pay for each 18 consumer who clicks-through to their web sites. Advertisers can change their bids at any time. The highest bidder receives the first listing with all other bidders listed in descending order. Each advertiser pays us the amount of its bid whenever a consumer clicks on the advertiser's listing in the FindWhat.com search results. Advertisers must pay for each click-through, so they bid only on keywords relevant to their offerings. We believe that the FindWhat.com search engine is an efficient system for advertisers - they pay only for prospects that come to their site. They can insure that those prospects are qualified by picking only those keywords that are most relevant to their business. Advertisers can choose exactly how much they are willing to pay per prospect, thereby maintaining precise control over the placement of their listings in the FindWhat.com search results and their cost of customer acquisition. While we only launched our FindWhat.com search engine in September 1999, we have made significant progress in growing the number of advertisers and consumers. As of March 23, 2000, consumers could find relevent search listings for informtion products and services from approximately 2,300 participating advetisers who had placed over 1.15 million search listings up from approximately 1,200 advetisers and more than 750,000 search lisitngs as of December 31, 1999. For the year to date through March 23, 2000, the FindWhat.com search engine had approximately 1.1 million paid click-throughs with an average price per paid click-throughs with an average price per paid click-through of $006. In all of 1999, the FindWhat.com search engine had approximately 34,000 paid click-throughs. The FindWhat.com search engine generates revenue consisting of search listing click-through fees and banner advertising. For the year ended December 31, 1999, revenue from the FindWhat.com search engine was immaterial. In order to generate significant revenues, we must increase substantially the number of advertisers we service and the volume of click-throughs to our clients' web sites. FindWhat.com search listing paid click-through revenue is determined by multiplying the number of click-throughs on paid search results by the amounts bid for applicable keywords. Search listing paid click-through revenue is recognized when earned based on click-through activity to the extent that the advertiser has deposited sufficient funds with us or collection is probable. FindWhat.com banner advertisement revenue is recognized when earned under the terms of the contractual arrangement with the advertiser or advertising agency, provided that collection is probable. We believe that our FindWhat.com search engine will be more attractive to advertisers as more consumers use it for their search needs and more attractive to consumers as more advertisers bid for placement in our search results. A significant component of our expenses consists of costs incurred to attract consumers to our service. To date, we have primarily attracted consumers through online and offline marketing, including radio and outdoor advertising as well as advertising on the Internet, and through our affiliates. We expect to continue to rely upon these sources for a significant proportion of consumer searches conducted on our service. Our future success is dependent upon reducing our consumer acquisition costs and increasing the revenue we derive from this traffic. In order to significantly increase revenues we will be required to incur a significant expansion of our operations, including hiring additional management and staff. These actual and proposed increases in marketing and personnel will significantly increase our operating expenses. 19 Our BeFirst.com web optimization service generates revenue from initial set-up fees charged to new clients and from click-through fees our clients pay for consumers who get to their web sites as a result of our efforts. BeFirst.com set-up fee charges are recognized at the time a new client signs up for the service and pays such fee. For the year ended December 31, 1999, set-up fee charges represented less than 10% of BeFirst.com revenues. BeFirst.com click-through fees are determined by multiplying the number of click-throughs to a client's web sites as a result of our efforts by the amount we charge per click-through. As of March 23, 2000, BeFirst.com had approximately 100 clients, including eBay, Avenue A, Ebags.com, and Dr.Koop.com. We were organized under the laws of the State of Nevada under the name Collectibles America, Inc. in October 1995. We discontinued our business operations and transferred our assets to satisfy liabilities in 1997. In June 1999, we acquired 1,000 shares of common stock of BeFirst Internet Corporation, which was organized under the laws of the State of Delaware in March 1998, representing all of its outstanding capital stock. These shares were acquired from the holders of such stock in exchange for our issuance to such stockholders of 8,750,000 shares of our common stock. As the result of such exchange of stock, the stockholders of BeFirst Internet Corporation acquired control of us and BeFirst Internet Corporation became our wholly owned subsidiary. We changed our corporate name to BeFirst.com at the time of the acquisition. Therefore, the following discussion is a discussion of the business of BeFirst Internet Corporation through the time of the acquisition. In September 1999, we changed our corporate name to FindWhat.com. We have a limited operating history. We began offering our BeFirst.com service in March 1998. Our FindWhat.com search engine was commercially launched in September 1999, but generated immaterial revenues in the fiscal year ended December 31, 1999. Our services have achieved only limited market acceptance to date. Our losses for the years ended December 31, 1999 and 1998 were $1,789,667 and $67,165, respectively. Our limited operating history and the uncertain nature of the markets we address or intend to address make prediction of our future results of operations difficult. Our operations may never generate significant revenues and we may never achieve profitable operations. Results Of Operations Year ended December 31, 1999 and period from inception (March 27, 1998) to December 31, 1998 Our fiscal year runs from January 1 through December 31. We began offering our Internet web site optimization service in March 1998 and we commercially launched our FindWhat.com(SM) search engine in September 1999. As a result of these factors, comparisons between the fiscal years ended December 31, 1998 and 1999 have limited meaning. 20 Revenue Revenue for the year ended December 31, 1999 increased to $451,509 compared to $58,818 for the period from inception (March 27, 1998) to December 31, 1998 as a result of growth in demand for our BeFirst.com service. Revenue from the FindWhat.com search engine was immaterial in 1999. We expect that FindWhat.com search listing paid click-through revenue and banner advertisement revenue will represent an increasing percentage of total revenue in future periods. Cost of Revenues Cost of revenues consists primarily of costs associated with designing and maintaining our web sites, providing the BeFirst.com service, fees paid to outside service providers like Inktomi that provide our unpaid listings, and fees paid to telecommunications carriers for Internet connectivity. Costs associated with providing the BeFirst.com service include salaries of related personnel and web site domain registration expenses for clients. Costs associated with maintaining our web sites include salaries of related personnel, depreciation of web site equipment, co-location charges for our web site equipment and software license fees. Cost of revenues increased to $394,402 for the year ended December 31, 1999 from $36,837 for the period from inception (March 27, 1998) to December 31, 1998. The increase was primarily due to the launch of the FindWhat.com search engine in September 1999 and the growth of our BeFirst.com service, including an increase in personnel associated with providing the BeFirst.com service, and the number of web site domain names registered. We anticipate cost of revenues will continue to increase as our traffic and number of advertisers increase. Operating Expenses Sales and Marketing. Sales and marketing expenses consist primarily of : o advertising expenditures for the FindWhat.com search engine, such as radio, outdoor and banner advertising campaigns and sponsorships, o promotional expenditures, including proprietary contests to attract consumers to the FindWhat.com web site and sponsorships of industry seminars, o revenue-sharing or other arrangements with our FindWhat.com affiliates, o fees to marketing and public relations firms, and o payroll and related expenses for personnel engaged in marketing, customer service and sales functions. With the exception of sales personnel salaries, most of our sales and marketing expenses relate to the FindWhat.com search engine. Advertising expenditures include campaigns for the FindWhat.com search engine in New York City and Los Angeles on local radio stations and billboards paid for with cash, as well as transactions in which we have exchanged shares of our restricted common stock for advertising. In November 1999, we issued 41,750 shares of common stock in exchange for outdoor advertising. 21 The term of the contract was four months, and we recorded $40,445 in non-cash advertising charges for the year ended December 31, 1999. The remainder of $121,335 was deferred and will be expensed over the term of the contract. In January 2000, we announced an equity investment and multi-year marketing agreement with Beasley Broadcast Group, the nation's 16th largest radio broadcasting company based on gross revenue. We will receive $3 million worth of radio advertising and online links and promotions across Beasley's media properties and Beasley will receive 600,000 shares of restricted FindWhat.com common stock. We will record a non-cash advertising charge of $4,425,000 over the two-year term of the contract. Promotional expenditures include the Search & Win $1 million Internet lottery game on our search engine web site, which began on December 16, 1999. Our agreements with affiliate web sites take different formats. Some agreements with web sites provide that we pay these web sites to direct traffic to our FindWhat.com search engine through online links placed on their sites or banner advertisements promoting our search engine on their sites. In addition, we have revenue-sharing agreements with affiliate web sites which integrate our search results into their web sites. The results are displayed without requiring a web surfer to leave the affiliate's web site. We also have revenue-sharing contracts with web sites called meta-search engines that aggregate the search offerings of several providers of search engines. These contracts provide that our search results are included in the aggregated search offerings on these sites. These contracts with other web sites are typically short term, generally expiring within a year or less. Our costs for traffic under these contracts vary widely and are generally incurred on a click-through basis where we pay for each consumer who clicks through to our service, or where we share the per-click revenue we derive from a consumer who clicks through directly to one of our advertiser's web sites. Our sales and marketing expense was $369,086 for the year ended December 31, 1999. We did not incur any sales and marketing expense prior to 1999. Our 1999 sales and marketing expense was related primarily to the launch of the FindWhat.com search engine in September 1999 and increased sales efforts related to our BeFirst.com service. Until June 30, 1999, an affiliate employed our sales force and we reimbursed the affiliate by paying a commission. As of July 1, 1999, the members of our sales force became our direct employees. We believe that continued investment in sales and marketing, including attracting consumers and advertisers to utilize the FindWhat.com search engine, is critical to attaining our strategic objectives and as a result, expect these costs to continue increasing in the future. General and Administrative. General and administrative expenses consist primarily of payroll and related expenses for executive and administrative personnel; facilities; insurance; professional services, including consulting, legal, and accounting fees; expenses and fees associated with the reporting and other obligations of a public company; travel and other general corporate expenses, as well as fees to affiliates which provide office space and other general and administrative services. Until July 1, 1999, our Chairman, Chief Executive Officer, and President/Chief Technology Officer did not receive salaries. General and administrative expenses increased to $1,472,287 for the year ended December 31, 1999 from $44,146 for the period from inception (March 27, 1998) to December 31, 1998. These increases were primarily due to increases in administrative 22 headcount and related expenses associated with the hiring of personnel, increased professional services, increased services provided by our affiliates, executive officer salaries, which were not incurred prior to July 1, 1999, and costs associated with being a public company beginning in June 1999, including the cost of directors' and officers' liability insurance expense. In December 1999, we issued options for the purchase of 68,750 shares of common stock to an investor public relations firm. The term of the contract was five and a half months, and we recorded $36,094 in non-cash general and administrative charges for the year ended December 31, 1999. The remainder of $108,281 was deferred and will be expensed over the term of the contract. We expect general and administrative expenses to continue to increase as we expand our staff and incur additional costs related to the growth of our business and compliance with the reporting obligations of a public company. Product Development. Product development expenses consist primarily of payroll and related expenses for personnel responsible for development of features and functionality for our BeFirst.com and FindWhat.com services, license fees for software used in product development and depreciation for related equipment, and consulting fees to a technical consultant. Product development increased to $54,058 for the year ended December 31, 1999 from $45,000 for the period from inception (March 27, 1998) to December 31, 1998, as a result of increased technical consulting services and increases in compensation expense, in part related to the development of the FindWhat.com search engine. In November 1999, we issued 50,000 shares of common stock to a technical consultant, who became a member of our Board of Directors in December 1999. The term of the contract is for one year, and we recorded $15,625 in non-cash technical consulting charges for the year ended December 31, 1999. The remainder of $171,875 was deferred and will be expensed over the term of the contract. We believe that continued investment in product development is critical to attaining our strategic objectives and as a result, expect product development expenses to continue increasing in the future. Interest Income, Net Interest income, net, consists primarily of earnings on our cash and cash equivalents, net of interest expense attributable to equipment leases and any taxes. Net interest income was $48,657 for the year ended December 31, 1999. We did not earn any interest income or incur any interest expense prior to 1999. Our 1999 interest income was primarily due to an increase in our average cash and cash equivalent balances following the receipt of funds from our June 1999 private placement of common stock. Net Loss As a result of the factors described above, our net loss increased to $1,789,667 for the year ended December 31, 1999 from $67,165 for the period from inception (March 27, 1998) to December 31, 1998. Liquidity and Capital Resources We have historically satisfied our cash requirements primarily through private placements of equity securities and the reliance on affiliated businesses owned by our executive officers. Through March 2000, we have raised approximately $4.5 million through equity financings. To date, space 23 and support services in New York City have been provided to us by WPI Advertising, Inc., an affiliate of our Chief Executive Officer, Robert D. Brahms. Through August 31, 1999, space and support services were provided to us in Florida by Internet Services International, Inc., an affiliate of our President, Craig Pisaris-Henderson. We have been billed for these services at competitive rates. Net cash used in operating activities totaled approximately $1,283,889 for the year ended December 31, 1999 and net cash provided by operating activities was $8,402 for the period from inception (March 27, 1998) through December 31, 1998. The increase in net cash used in the year ended December 31, 1999 was primarily attributable to cash used in marketing and sales efforts as well as general and administrative and product development expenses, partially offset by increases in revenue, stock option compensation and increases in other current assets. Net cash used in investing activities totaled approximately $260,056 for the year ended December 31, 1999 and $1,700 for the period from inception (March 27, 1998) through December 31, 1998. This increase resulted primarily from capital expenditures for equipment. Net cash provided by financing activities totaled approximately $2,444,174 for the year ended December 31, 1999. We did not have any financing activities in 1998. The activity in 1999 consisted of the net proceeds from a private placement of our common stock in June 1999 in which the Company issued 1,250,000 shares of common stock for $2.00 per share and received gross proceeds of $2.5 million. In February 2000, the Company completed a private placement of our common stock with an accredited investor. The Company issued 500,000 shares of common stock for $4.00 per share and received gross proceeds of $2.0 million. We also issued the investor 125,000 warrants to purchase our common stock at an exercise price of $5.50 per share. Our principal sources of liquidity consisted of $906,931 of cash and cash equivalents as of December 31, 1999. Although we have no material long-term commitments for capital expenditures, we anticipate an increase in capital expenditures consistent with anticipated growth of operations, infrastructure and personnel. We currently anticipate that the net proceeds from our private placements, together with cash flows from operations and anticipated financings, will be sufficient to meet the anticipated liquidity needs for working capital and capital expenditures over the next 12 months. In the future, we may seek additional capital through the issuance of debt or equity depending upon results of operations, market conditions or unforeseen opportunities. Our future liquidity and capital requirements will depend upon numerous factors. The pace of expansion of our operations will affect our capital requirements. We may also have increased capital requirements in order to respond to competitive pressures. In addition, we may need additional capital to fund acquisitions of complementary products, technologies or businesses. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties and actual results could vary materially as a result of the factors described 24 above. As we require additional capital resources, we will seek to sell additional equity or debt securities or obtain a bank line of credit. The sale of additional equity or convertible debt securities could result in additional dilution to existing stockholders. There can be no assurance that any financing arrangements will be available in amounts or on terms acceptable to us, if at all. Item 7A. Quantitative and Qualitative Disclosure about Market Risk. Not appplicable. Item 8. Financial Statements and Supplementary Data. The Company's balance sheet as of December 31, 1999, and the related statements of operations, stockholders' equity (deficit) and cash flows for the year ended December 31, 1999 and for the period from March 27, 1998 (date of inception) to December 31, 1998, together with the independent certified public accountants' report thereon appear on pages F-1 through F-17 hereof, and are incorporated herein by reference. Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. In August 1999, our board of directors retained Grant Thornton LLP as our independent accountants and dismissed Pritchett, Siler & Hardy, P.C., the accountants for Collectibles America, Inc., and Levine, Levine & Meyrowitz, CPAs, P.C., the accountants for BeFirst Internet Corporation. During the periods Pritchett, Siler & Hardy, P.C. and Levine, Levine & Meyrowitz, CPAs, P.C. were retained, there were no disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which would have caused them to make reference to the subject matter in connection with their reports. No accountants report prepared by the former auditors on our financial statements for either of the past two years contained an adverse opinion or disclaimer of opinion or was modified as to uncertainty, audit scope or accounting principles. Prior to engaging Grant Thornton LLP, neither we nor anyone acting on our behalf consulted with Grant Thornton LLP regarding the application of accounting principles to any specific transaction or the type of audit opinion that might be rendered on our financial statements. PART III Item 10. Directors and Executive Officers of the Registrant. Information required under this item is incorporated herein by reference to the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders pursuant to Regulation 14A. Item 11. Executive Compensation. 25 Information required under this item is incorporated herein by reference to the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders pursuant to Regulation 14A. Item 12. Security Ownership of Certain Beneficial Owners and Management. Information required under this item is incorporated herein by reference to the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders pursuant to Regulation 14A. Item 13. Certain Relationships and Related Transactions. Information required under this item is incorporated herein by reference to the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders pursuant to Regulation 14A. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) The following documents are filed as part of this Report. (1) The following Financial Statements are included in this Annual Report on Form 10-K on the pages indicated below: Independent Certified Public Accountants Report. F-2 Balance Sheets as of December 31, 1999 and 1998. F-3 Statement of Operations for the year ended December 31, 1999 and for the period from March 27, 1998 (date of inception) to December 31, 1998. F-4 Statement of Stockholders' Equity (Deficit) for the year ended December 31, 1999 and for the period from March 27, 1998 (date of inception) to December 31, 1998. F-5 Statement of Cash Flows for the year ended December 31, 1999 and for the period from March 27, 1998 (date of inception) to December 31, 1998. F-6
(b) Exhibits: Number Exhibit - - ------ ------- 2.1* Agreement and Plan of Reorganization dated June 17, 1999 by and among BeFirst Internet Corporation, Collectibles America, Inc. and Mick Jardine. 3.1* Articles of Incorporation of FindWhat.com (f/k/a Collectibles America, Inc.) 3.2* By-laws of FindWhat.com 3.3 Audit Committee Charter 10.1* Portal Services Agreement dated June 18, 1999 between Inktomi Corporation and BeFirst Internet Corporation. 10.2* Lease Agreement by and between Cambridge Management Associates and BeFirst.com Inc. 10.3* Agreement dated August 18, 1999 between Michigan Internet Communication Association and BeFirst.com Inc. 10.4* BeFirst 1999 Stock Incentive Plan 10.5* Form of Incentive Stock Option Agreement 10.6* Form of Non-Qualified Stock Option Agreement 10.7(R) Search Result Agreement, dated December 22, 1999, between the Registrant and Mamma.com. 10.8(R) Search Services Agreement, dated March 15, 2000, between the Registrant and Go2Net, Inc. 26 10.9 Advertising Agreement, dated January 14, 2000, between the Registrant and Beasley Internet Ventures, LLC. 10.10 Merchant Agreement, dated July 13, 1999, between the Registrant and LinkShare Corporation. 16.1** Letter from Pritchett, Siler & Hardy, P.C. 16.2** Letter from Levine, Levine & Meyrowitz, CPA's, P.C. 21 Subsidiaries of the Registrant 24 Power of Attorney 27 Financial Data Schedule * Incorporated by reference to the exhibit previously filed on September 14, 1999 with prior Form 10 of FindWhat.com (file no. 0-27331). ** Incorporated by reference to the exhibit previously filed on November 1, 1999 with Amendment No. 1 to FindWhat.com's prior Form 10 (file no 0-27331). (R) Please note that certain confidential commercial information has been redacted from some of the exhibits attached to this Form 10-K in order to preserve the confidentiality of such information. All of the confidential information which has been redacted is on file with the Securities and Exchange Commission. Exhibits to this Form 10-K which have had confidential information redacted are indicated as follows on the exhibit list above: (R). Within the exhibits to this Form 10-K, redacted material is indicated by the following sign where such redacted text would have appeared in the relevant exhibit: < < (**REDACTED**) (c) Reports on Form 8-K None 27 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FINDWHAT.COM Date: March 30, 2000 By: /s/ Robert D. Brahms --------------------------------- Robert D. Brahms, Chief Executive Officer In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title - - --------- ----- * - - ------------------------------------------ Chairman of the Board and Director Courtney P. Jones * - - ------------------------------------------ Chief Executive Officer and Director Robert D. Brahms (principal executive officer) * - - ------------------------------------------ President, Chief Technology Officer Craig A. Pisaris-Henderson and Director /s/ Michael S. Schulman - - ------------------------------------------ Chief Financial Officer Michael S. Schulman (principal financial and accounting officer) * - - ------------------------------------------ Director David Medinis * - - ------------------------------------------ Director Lee S. Simonson * - - ------------------------------------------ Director Kenneth E. Christensen *By /s/ Robert D. Brahms -------------------------------------- Robert D. Brahms Attorney-in-Fact 28 INDEX TO FINANCIAL STATEMENTS Page ---- Report of Independent Certified Public Accountants F-2 Balance Sheets F-3 Statements of Operations F-4 Statement of Stockholders' Equity (Deficit) F-5 Statements of Cash Flows F-6 Notes to Financial Statements F-7 - F-17 F-1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors FindWhat.com We have audited the accompanying balance sheets of FindWhat.com as of December 31, 1999 and 1998, and the related statements of operations, stockholders' equity (deficit) and cash flows for the year ended December 31, 1999 and for the period from March 27, 1998 (date of inception) to December 31, 1998. These financial statements are the responsibility of FindWhat.com's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of FindWhat.com as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the year ended December 31, 1999 and for the period from March 27, 1998 (date of inception) to December 31, 1998 in conformity with generally accepted accounting principles. GRANT THORNTON LLP New York, New York February 17, 2000 (except for Note P, as to which the date is March 15, 2000) F-2 FindWhat.com BALANCE SHEETS December 31, ASSETS
1999 1998 ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 906,931 $ 6,702 Accounts receivable 97,675 8,463 Prepaid expenses and other current assets 17,250 ----------- ----------- Total current assets 1,021,856 15,165 EQUIPMENT, FURNITURE AND FIXTURES - NET 242,429 1,360 OTHER ASSETS 2,595 ----------- ----------- Total assets $ 1,266,880 $ 16,525 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable and accrued expenses $ 134,773 $ 11,348 Current portion of capital lease obligation 7,025 Deferred income 31,402 19,353 Due to affiliate 59,781 7,989 ----------- ----------- Total current liabilities 232,981 38,690 CAPITAL LEASE OBLIGATION, less current portion 6,363 ----------- ----------- Total liabilities 239,344 38,690 STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock, $.001 par value; authorized, 500,000 shares; none issued and outstanding Common stock, no par value, authorized issued and outstanding, 1,000 shares at December 31, 1998 1,000 Common stock, $.001 par value; authorized, 50,000,000 shares; issued and outstanding, 12,591,750 shares at December 31, 1999 12,592 Additional paid-in capital 3,273,267 54,000 Deferred service costs (401,491) Accumulated deficit (1,856,832) (67,165) ----------- ----------- 1,027,536 (12,165) Less stock subscription receivable (10,000) ----------- ----------- Total stockholders' equity 1,027,536 (22,165) ----------- ----------- Total liabilities and stockholders' equity $ 1,266,880 $ 16,525 =========== ===========
The accompanying notes are an integral part of these statements. F-3 FindWhat.com STATEMENTS OF OPERATIONS
Period from March 27, 1998 (date of Year ended inception) to December 31, December 31, 1999 1998 ------------ ------------ Revenues $ 451,509 $ 58,818 Cost of revenues 394,402 36,837 ------------ ------------ Gross profit 57,107 21,981 Operating expenses Sales and marketing 369,086 General and administrative 1,472,287 44,146 Product development 54,058 45,000 ------------ ------------ Total operating expenses 1,895,431 89,146 ------------ ------------ Loss from operations (1,838,324) (67,165) Interest income, net 48,657 ------------ ------------ NET LOSS $ (1,789,667) $ (67,165) ============ ============ Loss per share - basic and diluted $ (0.17) $ (0.01) ============ ============ Unaudited pro forma information (i): Increase in officer salaries $ 180,000 $ 270,000 ============ ============ Pro forma net loss after increase in officer salaries $ (1,969,667) $ (337,165) ============ ============ Pro forma loss per share after increase in officer salaries $ (0.18) $ (0.04) ============ ============ Weighted-average number of common shares outstanding 10,781,765 8,750,000 ============ ============
(i) The supplemental pro forma information is provided to show the impact of the addition of salaries with three officers of the Company effective July 1, 1999. The pro forma adjustments reflect salary increases effective July 1, 1999 as if the salaries had been effective March 27, 1998. The accompanying notes are an integral part of these statements. F-4 FindWhat.com STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (Note B) Year ended December 31, 1999 and period from March 27, 1998 (date of inception) to December 31, 1998
Common stock, Common stock, no par value $.001 par value Additional Deferred ---------------------- ----------------------- paid-in service Shares Amount Shares Amount capital cost --------- -------- ---------- -------- ----------- --------- Issuance of common stock 1,000 $ 1,000 $ 9,000 Executive compensation 45,000 --------- -------- ----------- Net loss Balance at December 31, 1998 1,000 1,000 54,000 Reclassification of no par value common stock into $.001 common stock (1,000) (1,000) 2,500,000 $ 2,500 (250) Issuance of common stock in connection with private placement 1,250,000 1,250 2,432,704 Issuance of common stock, in connection with acquisition of BeFirst Internet Corporation 8,750,000 8,750 (8,750) Issuance of common stock for consulting and advertising services 91,750 92 349,188 $(293,210) Fair value of options issued for services 144,375 (108,281) Fair value of stock options granted to consultants and nonemployees 266,000 Executive compensation 36,000 Receipt of stock subscription Net loss --------- -------- ---------- -------- ----------- --------- Balance at December 31, 1999 $ 12,591,750 $ 12,592 $ 3,273,267 $(401,491) ========= ======== ========== ======== =========== ========= Stock Accumulated subscription deficit receivable Total ----------- ------------ ------------ Issuance of common stock $(10,000) Executive compensation $ 45,000 Net loss $ (67,165) (67,165) ------------ -------- ----------- Balance at December 31, 1998 (67,165) (10,000) (22,165) Reclassification of no par value common stock into $.001 common stock 1,250 Issuance of common stock in connection with private placement 2,433,954 Issuance of common stock, in connection with acquisition of BeFirst Internet Corporation Issuance of common stock for consulting and advertising services 56,070 Fair value of options issued for services 36,094 Fair value of stock options granted to consultants and nonemployees 266,000 Executive compensation 36,000 Receipt of stock subscription 10,000 10,000 Net loss (1,789,667) (1,789,667) ----------- --------- ----------- Balance at December 31, 1999 $(1,856,832) $ $ 1,027,536 =========== ========= ===========
The accompanying notes are an integral part of this statement. F-5 FindWhat.com STATEMENTS OF CASH FLOWS
Period from March 27, 1998 (date of Year ended inception) to December 31, December 31, 1999 1998 ----------- ----------- Cash flows from operating activities Net loss $(1,789,667) $ (67,165) Adjustments to reconcile net loss to net cash (used in) provided by operating activities Depreciation 33,405 340 Stock options granted to consultants and nonemployees 266,000 Executive compensation 36,000 45,000 Common shares issued for consulting and advertising services, net 56,070 Options issued for services, net 36,094 Changes in operating assets and liabilities Accounts receivable (89,212) (8,463) Other current assets (17,250) Other assets (2,595) Accounts payable and accrued expenses 123,425 11,348 Deferred income 12,049 19,353 Due to affiliate 51,792 7,989 ----------- ----------- Net cash (used in) provided by operating activities (1,283,889) 8,402 ----------- ----------- Cash flows from investing activities Purchase of equipment (260,056) (1,700) ----------- ----------- Cash flows from financing activities Gross proceeds from private placement 2,500,000 Payment of financing costs (64,796) Payments made on capital leases (1,030) Receipt of stock subscription 10,000 ----------- ----------- Net cash provided by financing activities 2,444,174 ----------- ----------- INCREASE IN CASH AND CASH EQUIVALENTS 900,229 6,702 Cash and cash equivalents at beginning of period 6,702 ----------- ----------- Cash and cash equivalents at end of period $ 906,931 $ 6,702 =========== =========== Supplemental noncash investing and financing activities Capital lease obligations for purchase of equipment $ 14,418 Capital contributions for stock subscription $ 10,000
The accompanying notes are an integral part of these statements. F-6 FindWhat.com NOTES TO FINANCIAL STATEMENTS December 31, 1999 and 1998 NOTE A - NATURE OF BUSINESS BeFirst.com was organized under the laws of the State of Nevada and, beginning June 17, 1999, conducts its operations through its wholly-owned subsidiary, BeFirst Internet Corporation. In September 1999, the Company changed its name from BeFirst.com to FindWhat.com ("FindWhat" or the "Company"). FindWhat.com is a developer and marketer of performance-based advertising services for the Internet. FindWhat offers two services: FindWhat.com, a pay-for-position search engine which launched in September 1999 and BeFirst.com, a web site optimization service. The Company charges an initial set-up fee to enhance a client's web page using key words and utilizes software that tracks click-through rates. The Company operates in one reportable business segment. NOTE B - BASIS OF PRESENTATION The consolidated financial statements include the accounts of FindWhat.com and its wholly-owned subsidiary, BeFirst Internet Corporation. On June 17, 1999, Collectibles America, Inc. ("Collectibles"), a nonoperating public company with immaterial net assets, acquired 100% of the outstanding common stock of BeFirst Internet Corporation, whose date of inception was March 27, 1998 (the "Acquisition"). The Acquisition resulted in the owners and management of BeFirst Internet Corporation having effective control of the combined entity. Concurrent with the Acquisition, Collectibles changed its name to BeFirst.com. In September 1999, BeFirst.com changed its name to FindWhat.com. Under generally accepted accounting principles, the Acquisition is considered to be a capital transaction in substance, rather than a business combination. That is, the Acquisition is equivalent to the issuance of stock by BeFirst Internet Corporation for the net monetary assets of Collectibles (now FindWhat), accompanied by a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the Acquisition is identical to that resulting from a reverse acquisition, except that no goodwill is recorded. Under reverse takeover accounting, the post-reverse-acquisition comparative historical financial statements of the "legal acquirer," Collectibles (now FindWhat), are those of the "accounting acquirer" (BeFirst Internet Corporation). Accordingly, the financial statements of FindWhat.com for the period from March 27, 1998 through December 31, 1998, are the historical financial statements of BeFirst Internet Corporation for the same period. The basic structure and terms of the Acquisition and related F-7 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE B (continued) events, all of which are deemed to have occurred simultaneously on June 17, 1999, together with the applicable accounting effects, were as follows: o FindWhat.com cancelled 8,600,000 unissued shares of common stock and effected a 2-to-1 reverse stock split of its outstanding shares of common stock, resulting in a decrease in the number of outstanding shares to 2,500,000. o FindWhat.com issued 1,250,000 post-split shares of common stock in a private placement for $2.00 per share in cash (see Note K). o FindWhat.com acquired all of the outstanding shares of common stock of BeFirst Internet Corporation in exchange for 8,750,000 post-split shares of FindWhat.com. The common stock exchanged, in addition to the existing FindWhat.com shares outstanding, collectively resulted in the recapitalization of the Company. Earnings per share ("EPS") calculations include the Company's change in capital structure for all periods presented. o The sole officer and director of FindWhat.com was replaced by a board of directors from BeFirst Internet Corporation. o The Company adopted a 1999 Stock Incentive Plan (see Note M) for employees. NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. 2. Equipment, Furniture and Fixtures Equipment, furniture and fixtures are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Depreciation expense consists of the depreciation of computer equipment and furniture. F-8 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE C (continued) 3. Revenues The Company derives revenues from the following sources: through set-up fees charged to new BeFirst clients, through click-through rates charged for the traffic the BeFirst service generates to its clients' Web sites and through search listing click-throughs and banner advertisements on the FindWhat.com search engine. Revenue is recognized when the set-up services are completed and as click-throughs are generated. 4. Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in determining 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. 5. Basic and Diluted Loss Per Share Basic and diluted loss per share is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding during each period. All stock options have been excluded from the calculation of diluted loss per share as their effect would have been antidilutive (see Note M). The issuance of 8,750,000 shares as described in Note B has been reflected as of March 27, 1998. 6. Deferred Service Costs Deferred service costs, which is shown as a reduction to stockholders' equity, consists of the value of common stock and stock options issued for services that will be provided to the Company in future periods. 7. Reclassifications Certain amounts in the 1998 financial statements were reclassified to conform to the 1999 presentation. F-9 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE C (continued) 8. Significant New Accounting Pronouncements In September 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging Activities," which requires entities to recognize all derivatives in their financial statements as either assets or liabilities measured at fair value. SFAS No. 133 also specifies new methods of accounting for hedging transactions, prescribes the items and transactions that may be hedged and specifies detailed criteria to be met to qualify for hedge accounting. SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years beginning after June 15, 2000. The Company currently does not use derivative instruments as defined by SFAS No. 133. If it continues to not use these derivative instruments by the effective date, the adoption of this statement will have no effect on the results of operations or the financial position of the Company. In January 2000, the Emerging Issues Task Force reached a consensus on Issue No. 99-17, "Accounting for Advertising Barter Transaction," to be effective for transactions entered into after January 20, 2000. The consensus states that advertising barter transactions should be accounted for at fair value and the fair value recognized be disclosed in the financial statements, if there is verifiable objective evidence provided by sufficient cash transactions received by the seller of the advertising or similar advertising. Accordingly, the Company will record barter transactions, if any, at their estimated fair value, prospectively, beginning January 2000. NOTE D - EQUIPMENT, FURNITURE AND FIXTURES Equipment, furniture and fixtures at December 31, 1999 and 1998 consist of the following: 1999 1998 -------- -------- Computer equipment $193,921 Furniture and fixtures 67,835 $ 1,700 Leased equipment 14,418 -------- -------- 276,174 1,700 Less accumulated depreciation (33,745) (340) -------- -------- $242,429 $ 1,360 ======== ======== F-10 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE E - ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses at December 31, 1999 and 1998 consist of the following: 1999 1998 -------- -------- Accounts payable and other $ 64,818 $ 9,332 Professional fees 24,955 871 Salaries and bonuses 1,145 Database license 45,000 -------- -------- $134,773 $ 11,348 ======== ======== NOTE F - RELATED PARTY TRANSACTIONS The Company shares space in New York and California with WPI Advertising Inc. ("WPI") and V-Lite Corporation ("V-Lite"), respectively, whose owners are also the shareholders and officers of the Company. The total amount paid to V-Lite for the year ended December 31, 1999 was approximately $7,000. Through June 30, 1999, the Company paid a 30% commission to WPI for sales generated by WPI. The commission covered sales costs as well as rent allocation and other administrative costs provided by WPI. These expenses for the period ended December 31, 1999 and December 31, 1998 were approximately $100,000 and $18,000, respectively, of which approximately $50,000 and $9,000, respectively, are included in general and administrative expenses and $50,000 and $9,000, respectively, are included in marketing and sales expenses. Beginning July 1, 1999, the Company hired its own sales staff and entered into a revised arrangement with WPI whereby an allocation of the above-mentioned rent and administrative expenses is apportioned to the Company. The total amount allocated to WPI for the year ended December 31, 1999 is approximately $54,000, which is included in general and administrative expenses. Total amounts due to WPI at December 31, 1999 and 1998 were approximately $60,000 and $8,000, respectively. Through July 31, 1999, the Company shared space in Florida with Internet Solutions International ("ISI"), whose owner is also the shareholder and officer of the Company. The total amount paid to ISI during the year ended December 31, 1999 was approximately $24,000. Beginning August 1, 1999, the Company signed a lease (with an unrelated lessor) and moved its technical operations out of ISI's offices. F-11 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE F (continued) In November 1999, the Company also hired WPI to purchase airtime to several radio stations on behalf of the Company. Total amount charged to the Company for the period ended December 31, 1999 was approximately $35,000, which represents the regular rates charged by these stations during their normal course of business. NOTE G - DEFERRED INCOME Deferred income at December 31, 1999 represents advance deposits made by the Company's clients against future click-throughs for search listing advertisements on the FindWhat.com search engine. Revenue will be recognized as click-throughs are made to a client's website. Total deferred revenue recorded for the year ended December 31, 1999 was approximately $35,000, of which approximately $3,000 was recognized in 1999. Deferred income at December 31, 1998 represents advance deposits made by the Company's clients for future BeFirst click-through sales. NOTE H - COMMITMENTS AND CONTINGENCIES Beginning August 1, 1999, the Company leased office space under the terms of an operating lease that expires in 2002. Future minimum payments under noncancellable operating leases consisted of the following at December 31, 1999: 2000 $28,400 2001 30,000 2002 23,400 ------ $81,800 ======= In addition, the Company has entered into service agreements with various Internet providers, all with terms of one year or less. These agreements allow the Company to connect to the Internet with sufficient capacity so that the FindWhat.com Web site can handle current and anticipated traffic. NOTE I - CONCENTRATION OF FINANCIAL INSTRUMENTS The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and cash equivalents with European American Bank. In general, through the year, such instruments exceeded the FDIC insurance limit of $100,000. F-12 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE J - MAJOR CUSTOMERS During the year ended December 31, 1999, one customer provided approximately 30% of the Company's revenues. The loss of this customer, without an appropriate replacement, may have a material effect on the Company's business. Management does not believe any such loss will occur as long as the Company continues to provide competitive service. NOTE K - PRIVATE PLACEMENT In June 1999, a private placement to offer 1,250,000 shares of $.001 par value common stock at a price of $2.00 per share was completed by the Company. The proceeds from the offering were used as follows: (a) upgrades to transactions processing systems; (b) the hiring of additional sales and technical personnel; (c) development of the FindWhat.com search engine, which was launched in September 1999; and (d) purchase of additional computer hardware and software. As a result of the private placement, approximately $65,000 of legal costs were incurred, which are being reflected as a reduction to additional paid-in-capital. NOTE L - COMMON STOCK AND STOCK OPTIONS ISSUED FOR SERVICES In November 1999, the Company issued 41,750 shares of common stock for outdoor advertising at a closing market price of $3.875 per share. The term of the contract is for four months. Total noncash advertising charges for the year ended December 31, 1999 recorded by the Company were $40,445, which is included in marketing and sales expense. The remainder of $121,335 was deferred and will be expensed over the term of the contract. On November 28, 1999, the Company issued 50,000 shares of common stock to a consultant of the Company for services at a closing market price of $3.75 per share. The term of the contract is for one year. Total noncash consulting charges for the year ended December 31, 1999 recorded by the Company were $15,625, which is included in product development expenses. The remainder of $171,875 was deferred and will be expensed over the term of the contract. F-13 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE L (continued) In November 1999, the Company issued options for the purchase of 150,000 shares of common stock to an investor public relations firm at a price of $3.75 per share. The contract was subsequently terminated in March 2000 and 68,750 option shares vested. The term was amended to five and a half months. Total noncash charges for the year ended December 31, 1999 recorded by the Company were $36,094, which is included in general and administrative expenses. The remainder of $108,281 was deferred and will be expensed over the term of the contract. NOTE M - STOCK INCENTIVE PLAN In June 1999, the Board of Directors of the Company adopted the 1999 Stock Incentive Plan ("the Plan"). The total number of shares reserved and available for distribution to the Company's key employees, officers, directors, consultants and other agents and advisors under this Plan as of December 31, 1999 were 1,000,000 shares. Awards under the Plan consist of stock options (both qualified and non-qualified options), restricted stock awards, deferred stock awards and stock appreciation rights. During the year ended December 31, 1999, the Company granted 495,501 options under the terms of the Plan to its employees and 233,712 options to nonemployees. Total expense recognized for stock options given to nonemployees amounted to approximately $266,000, which is included as a noncash charge in the statement of operations for the year ended December 31, 1999. The Company has adopted the provisions of Statement of Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock Based Compensation," that relate only to pro forma disclosures required by SFAS No. 123 for employee plans. It applies APB Opinion 25, "Accounting for Stock Issued to Employees," and does not recognize compensation expense for its stock-based compensation plans for employees. If the Company had elected to recognize compensation expense based upon the fair value at the grant date for awards under these plans, consistent with the methodology prescribed by SFAS No. 123, then the Company's net loss and loss per share would be increased to the pro forma amounts indicated below: Year ended December 31, 1999 Actual Pro forma ----------------------------- ----------- ----------- Net loss $(1,789,667) $(2,129,541) =========== =========== Loss per share - basic and diluted $(0.17) $(0.20) ====== ====== F-14 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE M (continued) The fair value of these options for the year ended December 31, 1999 was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: Volatility 50% Risk-free rate 6% Expected life 5 years Vesting requirements 1 year Forfeiture rate 0% Expected dividends 0 The weighted-average fair value of all Plan options granted during the year ended December 31, 1999 was $1.22, and the weighted-average exercise price was $2.29. The maximum life of the option is five years. Stock option activity under the Plan during the year ended December 31, 1999 is summarized below: Weighted- average exercise Options price ------- ----- Balance, December 31, 1998 0 $ -- Granted 729,213 $2.30 Canceled (6,000) $3.33 --------- 723,213 ========= The following table summarizes information concerning currently outstanding and exercisable stock options under the Plan: Weighted- average Weighted- Weighted- Range remaining average average of exercise Number contractual exercise Number exercise price outstanding life (years) price exercisable price ----------- ----------- ------------ --------- ----------- --------- $2.00 - $2.20 661,713 4.47 $2.11 555,713 $2.14 $3.87 - $4.50 61,500 4.72 $4.20 25,000 4.50 -------- ------- 723,213 4.49 $2.29 580,713 $2.24 ======= ===== ======= F-15 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE N - DATABASE LICENSE In August 1999, the Company acquired a database license from Inktomi, Inc., which requires minimum aggregate payments of $600,000 over the three-year life of the contract. The Company accounts for this license as an executory contract and records expense as the service is provided. As of December 31, 1999, the minimum payments of $90,000 under the license have been expensed. NOTE O - INCOME TAXES At December 31, 1999, the Company has operating loss carryforwards of approximately $1,300,000, which expire through 2019. The future availability of such carryforwards may be limited based on certain changes in stock ownership. For financial statements purposes, a valuation allowance equal to the amount of the net deferred tax asset at December 31, 1999 has been recognized, as the realization of such deferred tax asset is uncertain. Components of the Company's deferred tax asset at December 31, 1999 and 1998 are as follows: 1999 1998 --------- --------- Stock option compensation $ 120,838 Net operation loss carryforwards 520,550 $ 9,000 Capital expenditures 77,145 --------- --------- 718,533 9,000 Valuation allowance (718,533) (9,000) --------- --------- Net deferred tax asset $ -- $ -- ========= ========= NOTE P - SUBSEQUENT EVENTS On January 12, 2000, the Company entered into an advertising agreement with Beasley Internet Ventures LLC ("Beasley") whereby the Company will issue 600,000 shares of common stock to Beasley. Under the terms of the contract, Beasley will provide $3,000,000 of advertising to the Company over a two-year period. The Company will record the noncash advertising charge of $4,425,000 over the term of the contract. On January 28, 2000, the Board of Directors of the Company amended its 1999 Stock Incentive Plan (see Note M) to increase the total number of shares reserved and available for distribution to the Company's key employees, officers, directors, consultants and other agents to 1,900,000 shares, subject to shareholder approval in June 2000. F-16 FindWhat.com NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1999 and 1998 NOTE P - SUBSEQUENT EVENTS (continued) On February 11, 2000, the Company completed a private placement of 500,000 shares of common stock for $2 million and a warrant to purchase an additional 125,000 shares of common stock at a price of $5.50 per share. These warrants expire on February 11, 2005 and have a fair value of $628,750. On March 15, 2000, the Company entered into an agreement with Go2Net, Inc. ("Go2Net") whereby Go2Net will provide metasearch services to the Company through its network of web sites. The term of the agreement is for one year. Pursuant to the agreement, Go2Net will receive warrants to purchase 725,000 shares of the Company's common stock at a price of $5.50 per share. These warrants have a fair value of $10,200,000 and will be expensed over a one-year period. F-17 EX-3.3 2 EXHIBIT 3.3 EXHIBIT 3.3 FINDWHAT.COM AUDIT COMMITTEE CHARTER I. PURPOSE The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities. The Audit Committee shall provide assistance to the directors in fulfilling their responsibility to the stockholders, relating to corporate accounting, reporting practices of the Corporation, and the quality and integrity of the financial reports of the Corporation. In doing so, it is the responsibility of the Audit Committee to maintain free and open communication between the directors, the independent auditors, the internal auditors, if any, or the entity performing the internal audit function, and the financial management of the Corporation. Consistent with this function, the Audit Committee should encourage continuous improvement of, and should foster adherence to, the Corporation's policies, procedures and practices. The Audit Committee's primary duties and responsibilities are to: o Serve as an independent and objective party to review periodically the Corporation's financial reporting process and internal control system. o Review and recommend to the directors, after consultation with the financial management of the Corporation, the independent accountants to be selected to audit the financial statements of the Corporation. o If applicable, review and concur with management's appointment, termination or replacement of the director of internal audit or the company performing the internal audit function. o Provide an open avenue of communication for the independent accountants, financial and senior management, the internal auditing department, and the Board of Directors. The Audit Committee will primarily fulfill these responsibilities by carrying out the activities enumerated in Section IV of this Charter. II. COMPOSITION As long as the Corporation meets the requirements to qualify as a small business filer under the rules of the Securities and Exchange Commission, the Audit Committee shall be comprised of two or more directors as determined by the Board of Directors, each of whom shall be independent directors and free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his or her independent judgment as a member of the Audit Committee. After the Corporation ceases to qualify as a small business filer under the rules of the Securities and Exchange Commission, the Audit Committee shall be comprised of three or more directors as determined by the Board of Directors, each of whom shall be independent directors and free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his or her independent judgment as a member of the Audit Committee. The definition of an "independent director" is outlined in the attached Appendix A. All members of the Audit Committee shall have a working familiarity with basic finance and accounting practices, and, after the Corporation no longer qualifies as a small business filer under the rules of the Securities and Exchange Commission, at least one member of the Audit Committee shall have accounting or related management expertise. The Board of Directors shall elect members of the Audit Committee at the annual meeting of the Board of Directors or until their successors shall be duly elected and qualified. Unless the full Board of Directors elects a Chair, the members of the Audit Committee may designate a Chair by majority vote of the full Audit Committee membership. III. MEETINGS The Audit Committee shall meet at least annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Audit Committee should meet at least annually with management, the director of the internal auditing department, if any, and the independent accountants in separate executive sessions to discuss any matters that the Audit Committee or each of these groups believe should be discussed privately. IV. RESPONSIBILITIES AND DUTIES To fulfill its responsibilities and duties, the Audit Committee shall: DOCUMENTS/REPORTS REVIEW 1. Review and update this Charter periodically as conditions dictate. 2. Review the Corporation's annual financial statements with management and the independent accountants to determine that the independent accountants are satisfied with the disclosure and content of the financial statements to be presented to stockholders. Any changes in accounting principles should be reviewed. 3. Review with the independent accountants, the Corporation's internal auditor or the company performing the internal audit function, if any, and financial and accounting personnel, the adequacy and effectiveness of the accounting and financial controls of the 2 Corporation, and elicit any recommendations for the improvement of such internal controls or particular areas where new or more detailed controls or procedures are desirable. This inquiry should place particular emphasis on the adequacy of internal controls to expose any payment, transactions, or procedures that might be deemed illegal or otherwise improper. 4. Review with financial management and the independent accountants the quarterly reports on Form 10-Q. The Chair of the Audit Committee may represent the entire Audit Committee for the purposes of this review. INDEPENDENT ACCOUNTANTS 5. After consultation with the financial management of the Corporation, recommend to the Board of Directors the selection of the independent accountants, considering the independence and effectiveness, and with management's recommendations approve the fees and other compensation to be paid to the independent accountants. On an annual basis, the Audit Committee should review and discuss with the accountants all significant relationships the accountants have with the Corporation to determine the accountants' independence. 6. Review the performance of the independent accountants and approve any proposed discharge of the independent accountants when circumstances warrant. 7. Periodically consult with the independent accountants out of the presence of management about internal controls and the fullness and accuracy of the Corporation's financial statements. FINANCIAL REPORTING PROCESSES 8. In consultation with the independent accountants and the internal auditors, if any, review the Corporation's financial reporting processes, both internal and external. 9. Consider and approve, if appropriate, major changes to the Corporation's auditing and accounting principles and practices as suggested by the independent accountants, management or the internal auditing department. 3 PROCESS IMPROVEMENT 10. Review with financial management of the Corporation and independent accountants the results of their analysis of significant financial reporting issues and practices, including changes in, or adoptions of, accounting principles and disclosure practices. Also review with financial management and the independent accountants their qualitative judgments about the appropriateness of accounting principles and financial disclosure practices used or proposed to be used. 11. Review any significant disagreements among management and the independent accountants or the internal auditing department or the company engaged to perform the internal audit function, if any, in connection with the preparation of the financial statements. ETHICAL AND LEGAL COMPLIANCE 12. Review periodically Corporation policy statements to determine the appropriateness of the Corporation's code of ethics. 13. Inquire whether management has established a system to review, monitor and enforce its code of ethics. 14. Inquire whether management has a review system in place to ensure that the Corporation's financial statements and other reports filed with governmental organizations satisfy legal requirements. 15. Report together with the financial management of the Corporation the results of the annual audit to the Board of Directors. If requested by the Board of Directors, invite the independent accountants to attend the full Board of Directors meeting to assist in reporting the results of the annual audit or to answer other directors' questions. 16. Review, with the Corporation's counsel, legal compliance matters including corporate securities trading policies. 17. Review, with the Corporation's counsel, any legal matter that could have a significant impact on the Corporation's financial statements. 18. Investigate any matter brought to its attention within the scope of its duties, with the power to retain outside counsel for this purpose, if in its judgment, that is appropriate. 4 APPENDIX A: DEFINITION OF INDEPENDENCE FOR PURPOSES OF AUDIT COMMITTEE SERVICE DEFINITION: Members of the Audit Committee shall be considered independent if they have no relationship to the Corporation that may interfere with the exercise of their independence from management and the Corporation. o been employed by the Corporation or its affiliates in the current or past three years; o accepted any compensation from the Corporation or its affiliates in excess of $60,000 during the previous fiscal year (except for board service, retirement plan benefits, or non-discretionary compensation); o an immediate family member who is, or has been in the past three year, employed by the Corporation or its affiliates as an executive officer; o been a partner, controlling shareholder or an executive officer of any for-profit business to which the Corporation made, or from which it received, payments (other than those which arise solely from investments in the Corporation's securities) that exceed five percent of the Corporation's consolidated gross revenues for that year, or $200,000, whichever is more, in any of the past three years; or o been employed as an executive of another entity where any of the Corporation's executives serve on that entity's compensation committee. EX-10.7 3 EXHIBIT 10.7 EXHIBIT 10.7 SEARCH RESULT AGREEMENT This is to acknowledge a content integration agreement between FindWhat.com ("PARTNER") and Mamma.com ("Mamma.com"). PARTNER and Mamma.com agree to the following: 1. Mamma.com will include PARTNER search results in the "meta search" returns that result from queries at the http://www.mamma.com service. Mamma.com will list Partner's search results ahead of all other search engines and directories. At least one of PARTNER's search results will appear among the top five of all results displayed for at least 50% of all search queries and, in all events, at least one Partner's search results will appear on the first page of results. Mamma.com will include at least two additional such results in the first four result pages. Mamma.com will clearly label the results provided by PARTNER as those of FindWhat.com. PARTNER must provide Mamma.com with the PARTNER's top ranked search results for every, and all, queries to be displayed on www.Mamma.com. 2. Payments: PARTNER will pay Mamma.com [**Redacted**] revenue generated by visits ("click-through revenue") sent to PARTNER site as a result of the search returns described in paragraph 1 above. 3. Payment terms: PARTNER will pay Mamma.com within 30 days of receipt of documentation of the number of visits sent from links described in paragraph 1 above. Partner may review Mamma.com's records on reasonable notice to verify the accuracy of such documentation. 4. Confidentiality: The terms of the agreement between Mamma.com and PARTNER are strictly confidential and not to be disclosed without prior approval by the other party. 5. Announcements: Both parties will mutually approve any announcement of this agreement prior to its release. Approval will cover the content of the announcement and the timing of its release. 6. TERM: ONE YEAR FROM DATE OF EXECUTION UNLESS TERMINATED IN ACCORDANCE WITH PARAGRAPH 7 BELOW. 7. Termination: After an initial minimum term of 6 months, either party may terminate this agreement with 30 days written notice. If terminated in the middle of a month, payments will be pro-rated for the final month. MAMMA.COM RESERVES THE RIGHT TO TERMINATE THIS AGREEMENT AT ANY TIME AT ITS SOLE DISCRETION IF IT REASONABLY DEEMS THAT THE SEARCH RESULTS PROVIDED BY THE PARTNER ARE UNACCEPTABLE WITH REGARDS TO THEIR RELEVANCE AND QUALITY. PARTNER RESERVES THE RIGHT TO TERMINATE THIS AGREEMENT AT ANY TIME IN ITS SOLE DISCRETION IF IT REASONABLY DEEMS THAT THE CONTENT AND/OR QUALITY OF THE MAMMA.COM HAS CHANGED IN AN UNFAVORABLE MANNER. 8. Logos/Trademark: PARTNER hereby grants Mamma.com a license to use PARTNER's trademark "FINDWHAT.COM" and associated logo (to be supplied by PARTNER) on the Mamma.com service solely as described herein. 9. Indemnification: Mamma.com agrees to indemnify, defend and hold PARTNER, its successors, officers, directors and employees harmless from any and all actions, causes of action, claims, demands, costs, liabilities, expenses (including reasonable attorneys' fees) and damages arising out of or in connection with any claim relating to the Mamma.com Service. PARTNER agrees to indemnify, defend and hold Mamma.com, its successors, officers, directors and employees harmless from any and all actions, causes of action, claims, demands, costs, liabilities, expenses (including reasonable attorneys' fees) and damages arising out of or in connection with any claim relating to the FINDWHAT.COM. 10. Exclusivity: This agreement is non-exclusive. 11. Content ownership and license: Each party will retain all right, title and interest in all content and intellectual property in its service. 12. Notices, etc.: Any notice required or permitted by this Agreement shall be deemed given if delivered by registered mail, postage prepaid, addressed to the other party at the address shown at the beginning of this Agreement or at such other address for which such party gives notice hereunder. Delivery shall be deemed effective three (3) days after deposit with postal authorities. 13. Severability: If any provision of this Agreement shall be held by a court of competent jurisdiction to be contrary to law, such provision shall be changed and interpreted so as to best accomplish the objectives of the original provision to the fullest extent allowed by law and the remaining provisions of this Agreement shall remain in full force and effect. 14. Complete Understanding: This Agreement, including all Exhibits attached hereto and hereby incorporated by reference, constitutes the final, complete and exclusive agreement between the parties with respect to the subject matter hereof, and supersedes any prior or contemporaneous agreement, either written or oral. 15. Force Majeure: Except with respect to obligations to make payments hereunder, neither party shall be deemed in default hereunder, nor shall it hold the other party responsible for, any cessation, interruption or delay in the performance of its obligations hereunder due to causes beyond its reasonable control including, but not limited to, earthquake, flood, fire, storm or other natural disaster, act of God, labor controversy or threat thereof, civil disturbance or commotion, disruption of the public markets, war or armed conflict or the inability to obtain sufficient materials, supplies, labor, transportation, power or other essential commodity or service required in the conduct of its business, including internet access, or any change in or the adoption of any law, ordinance, rule, regulation, order, judgment or decree. 16. Independent Contractors: The parties are independent contractors. This Agreement shall not be construed to create a joint venture or partnership between the parties. Neither party shall be deemed to be an employee, agent, partner or legal representative of the other for any purpose and neither shall have any right, power or authority to create any obligation or responsibility on behalf of the other. 17. Mamma.com may not alter the display of FindWhat.com search results in any manner. Mamma.com shall not save or cache any search results provided by FindWhat.com but shall merely display to its Website visitors the search results provided by the link of FindWhat.com. Mamma.com shall not in any manner solicit or, directly or indirectly, enter into any listing or advertisement agreement with an advertiser constituting a search result supplied by PARTNER. Agreed and Accepted: Mamma.com /s/ Andrew Morgan FindWhat.com /s/ Stacey Roarty --------------------------- --------------------------- Name: Andrew Morgan Name: Stacey Roarty -------------------------------- ----------------------------------- Its: V.P. Sales Its: Director --------------------------------- ------------------------------------ Date: December 22, 1999 Date: -------------------------------- ----------------------------------- EX-10.8 4 EXHIBIT 10.8 EXHIBIT 10.8 SEARCH SERVICES AGREEMENT THIS SEARCH SERVICES AGREEMENT (this "Agreement") is entered into as of March 7, 2000, by and between Go2Net, Inc., a Delaware corporation having its principal place of business at 999 Third Avenue, Suite 4700, Seattle, WA 98109 ("Go2Net"), and FindWhat.com, a Nevada corporation having its principal place of business at 520 Broadway, Suite 230, Santa Monica, CA 90401 ("Partner"). RECITALS WHEREAS, Go2Net offers and provides metasearch services through its network of Web sites, currently available through, but not limited to, the Uniform Resource Locators ("URL(S)") www.go2net.com, www.metacrawler.com, and www.dogpile.com (collectively, the "GO2NET METASEARCH SERVICE") which enable users to simultaneously search the World Wide Web using multiple third-party search engines by entering a query or request for information in a search box posted on a World Wide Web site, which submits those queries or requests to the Go2Net Metasearch Service; WHEREAS Partner has developed a full-text World Wide Web search engine and/or a directory service currently accessible through the URL www.findwhat.com, which provides users with results based upon search queries. WHEREAS, Partner wishes to have its Search Results (defined below) used and incorporated in the Go2Net Metasearch Services (as defined below) on the terms and conditions set forth herein; NOW THEREFORE, in exchange for the mutual promises herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows: 1. DEFINITIONS. "AGENCY COMMISSIONS" shall mean the portion of fees, payable to Partner as the result of Paid Click Throughs and Fee-Based Referrals, which are payable by Partner to unaffiliated third parties in reasonable consideration for sales, marketing, and distribution efforts. Partner shall document all Agency Commissions that impact the Payments as part of the monthly Report (as set forth in paragraphs 3.2 and 3.3 respectively). FindWhat shall not deduct Agency Commissions in excess of 15% per Paid Click Through or Fee-Based Referral when calculating the Payment. Additionally, FindWhat shall not apply deductions of Agency Commissions to greater than 17.5% of the aggregate number of Paid Click Throughs and Fee-Based Referrals when calculating the Payment. "CLICK THROUGH(S)" shall mean each instance in which a user of the Go2Net Metasearch Service is directed/referred to a Web site as the result of that user directing an Internet browser to access that Web site via a hypertext link posted within a Search Result. "DOGPILE" shall mean the Go2Net metasearch engine that processes user search queries directed to the Internet domain dogpile.com. "EFFECTIVE DATE" shall mean the earlier of to occur of (i) May 1, 2000 or (ii) the first date on which Go2Net incorporates Search Results on the Results Pages PROVIDED, HOWEVER, that Go2Net shall not be obligated to include Search Results in the Results Pages until such time as Go2Net shall have received the duly executed and delivered Warrant. "FEE-BASED REFERRAL(S)" shall mean each instance in which a user of the Partner Search Engine is directed/referred to a Web site as the result of that user directing an Internet browser to access that Web site via a hypertext link posted by the Partner Search Engine, and a third party has agreed to pay a Referral Fee to Partner in exchange for each such referral. "INTELLECTUAL PROPERTY" means any intellectual property or proprietary rights, including but not limited to, copyright rights (including rights in audiovisual works), moral rights, trademark (including logos, slogans, trade names, service marks), patent rights (including patent applications and disclosures), know-how, inventions, rights of priority, and trade secret rights, recognized in any country or jurisdiction in the world. "METACRAWLER" shall mean to the Go2Net metasearch engine that processes user search queries directed to the Internet domain metacrawler.com. "NET REFERRAL FEES" shall mean Referral Fees less Agency Commissions applied thereto. "PAID CLICK THROUGH(S)" shall mean only those Click Throughs for which third parties have agreed to pay a Referral Fee to Partner. "PARTNER SEARCH ENGINE" means the full-text World Wide Web search engine(s) and/or directory service(s) under the name of, and/or which is/are operated, licensed, controlled, owned, leased, by, Partner, which can currently be accessed through the URL www.findwhat.com, as Partner may update the same from time to time. "PARTNER SITE" means Partner's site on the World Wide Web with the following URL: www.findwhat.com. "REFERRAL FEE(S)" means the dollar amount payable to Partner by third parties in exchange for each Paid Click Through and each Fee-Based Referral. Referral Fees shall not result in such cases that Paid Click Throughs and Fee-Based Referrals result directly from (i) a user repeatedly accessing the Search Results without the intent to perform a search and for the sole purpose of generating revenues for Go2Net under this Agreement, or by a bot, macro program, Internet agent, or any other automatic means, or (ii) malicious Paid Click Throughs (which, for purpose of this Agreement, means any user who repeatedly accesses the Search Results for the purpose of increasing the payments an advertiser must make to FindWhat). "RESULTS PAGE(S)" shall mean each page in the Go2Net Metasearch Service that contains Search Results and/or search results from other third party World Wide Web search engines and/or directory services. "SEARCH RESULT(S)" shall mean the information provided to the Go2Net Metasearch Service by the Partner Search Engine, which shall include descriptive text and a hypertext link to a Web page, in response to a user query submitted to the Partner Search Engine by any of the Go2Net Metasearch Service. Partner may limit the Search Results to those results that may earn a Referral Fee. "WARRANT" shall mean the warrant to purchase 725,000 shares of the Common Stock of Partner at an exercise price of $5.50 per share, executed and delivered by Partner to and in the name of Go2Net, in the form attached hereto as Exhibit A. 2. THE LICENSE. 2.1 GRANT. Subject to the terms and conditions of this Agreement, Partner hereby grants to Go2Net during the Term the non-exclusive, royalty free, worldwide license to use the Partner Search Engine as part of the Go2Net Metasearch Service and to display the Search Results. To the extent the use of the Partner Search Engine and display of the Search Results is deemed to be reproduction, transmission, or distribution, Go2Net is further granted a non-exclusive, royalty-free, worldwide license to use, transmit, distribute, and publicly display the Partner Search Engine and Search Results so as to enable users of the Go2Net Metasearch Service to search the Web using the Partner Search Engine and access the Search Results. -2- 2.2 RIGHT TO INCLUDE IN SEARCH RESULTS. The foregoing license includes the right of Go2Net to query the Partner Search Engine in real-time for each search conducted on the Go2Net Metasearch Service, and to format the Search Results in a Results Page(s), and to include advertising, sponsorships, links, and other messaging and promotions on the Results Page(s). 3. OPERATIONS. 3.1 INCLUSION IN SEARCH RESULTS. Subject to user customization and any applicable performance standards, in response to the users' submission of search queries, Go2Net shall include the display of Search Results (i) on the second Results Page of Dogpile and (ii) on one or more Results Pages of MetaCrawler in a manner consistent with the then current text-based implementation on the Results Pages of MetaCrawler. 3.1.1 CHANGES TO PARTNER SEARCH ENGINE. Partner shall provide Go2Net timely notice of changes to Partner Search Engine results formatting, and Partner shall actively work with Go2Net to provide the Go2Net Metasearch Service with continuous access to the Search Results. 3.2 PAYMENTS. Within 30 calendar days, following the end of each calendar month during the term of this Agreement, Partner shall pay to Go2Net [**Redacted**] 3.2.1 EXAMPLE: [**Redacted**] 3.3 REPORTS AND RECORDS. With each payment made under this Agreement, Partner shall provide to Go2Net a written report with the information and data, reasonably requested by Go2Net, related to the Search Results, Paid Click Throughs, Fee-Based Referrals, the average monthly Referral Fee, Agency Commissions, and revenues derived by Partner. Go2Net reserves the right to contest the contents of such report and the respective payment amount within thirty (30) days of receipt of such report. In the event of such a contest, the parties agree to use good faith efforts to resolve any dispute within thirty (30) days of the notice of such contest from Go2Net. Upon the expiration of such thirty (30) day period, the parties agree to refer any unresolved disputes to arbitration, in accordance with the commercial arbitration rules of the American Arbitration Association then in effect. Each party shall maintain true and complete records relating to its respective performance under this Agreement, all of which shall accurately reflect to actual underlying data. 3.4 AUDITS. Partner agrees that, given written notice of three (3) business days, at the expense of Go2Net, Go2Net, and/or parties duly authorized by Go2Net, shall have the right to audit the records of Partner to confirm compliance with the terms of this Agreement. Any such audit shall be conducted during normal business hours and shall not unduly interfere with Partner's ability to conduct business. Partner agrees that, in the event that Go2Net demonstrates that discrepancies equal to, or greater than, five percent (5%) exist, Partner shall pay to Go2Net all costs associated with such audits. 3.5 AUTHORIZE.NET. Go2Net and Partner will work together in good faith to evaluate a mutually agreeable plan for allowing Authorize.Net merchants to enter into Referral Fee arrangements. The terms and conditions of such a plan, including any compensation to Go2Net, are to be mutually agreed upon by the parties. 4. TERM. 4.1 TERM. The term of this Agreement shall commence on the Effective Date and continue for a period of one (1) year after the Effective Date, unless earlier terminated as set forth herein (the "TERM"). -3- 5. MINIMUM PERFORMANCE STANDARDS. 5.1 On a search by search basis, Go2Net shall not be obligated to include Search Results, if Partner fails to deliver such Search Results in compliance with Go2Net's proprietary algorithm for the respective Go2Net Metasearch Service, including with respect to response time and relevancy, as consistently applied to all third party search engines by Go2Net within the respective Go2Net Metasearch Service. 5.2 Go2Net shall not otherwise be obligated to include the Search Results, if the following events occur and Go2Net delivers written notice thereof to Partner: (a) Partner fails to deliver Search Results that are reasonably relevant to the respective user searches, as reasonably determined by Go2Net;or (b) Partner delivers Search Results which, in the determination of Go2Net, (i) include content that may violate applicable law or infringe upon third party rights; or (ii) include content that may be defamatory, obscene or otherwise objectionable; PROVIDED, HOWEVER, that Partner shall have the right to deliver the Search Results, if within fifteen (15) days of such written notice, Partner complies with the foregoing standards in the reasonable judgment of Go2Net. 5.3 Notwithstanding the foregoing minimum performance requirements, each of the parties reserves its respective rights to remove, in its sole discretion, any material or content from pages hosted by it, which it reasonably believes may violate applicable law, third party rights or is otherwise objectionable; and Go2Net reserves the right to adjust the volume of searches submitted to Partner and the proportional mix of results included on the Results Page(s) in order to maintain the quality of the Go2Net Metasearch Service. 6. PROPRIETARY RIGHTS. 6.1 OWNERSHIP. Partner understands and agrees that Go2Net is the exclusive holder of and shall retain, all right, title and interest in and to the Go2Net Metasearch Service, including without limitation all Intellectual Property therein. Go2Net understands and agrees that Partner is the exclusive owner of and holds and shall retain, all right, title, and interest in and to the Partner Search Engine, including without limitation all Intellectual Property therein. 6.2 INTELLECTUAL PROPERTY. If a party desires to use any of the other party's Intellectual Property the requesting party will obtain the appropriate approvals and guidelines for use of the other party's Intellectual Property from the other party. Nothing herein shall grant a party any right, title or interest in the other party's Intellectual Property. At no time during or after the term of this Agreement shall a party challenge or assist others to challenge the other party's Intellectual Property or the registration thereof or attempt to register any trademarks, marks, or trade names confusingly similar to those or the other party. 7. CONFIDENTIALITY. 7.1 CONFIDENTIAL INFORMATION. Each party (the "RECEIVING PARTY") acknowledges that by reason of its relationship to the other party (the "DISCLOSING PARTY") hereunder, the Receiving Party will have access to certain information and materials, including the terms of this Agreement, concerning the Disclosing Party's business, plans, technology, products, and services that are confidential and of substantial value to the Disclosing Party, the value of which would be impaired if such information were disclosed to third parties ("CONFIDENTIAL INFORMATION"). The Receiving Party agrees that it shall not use in any way for its own account or the account of any third party, nor disclose to any third party, any such Confidential Information revealed to it by the Disclosing Party. The Receiving Party shall take every reasonable precaution to protect the confidentiality of Confidential Information. Upon request by the Receiving Party, the Disclosing Party shall advise -4- whether or not it considers any particular information to be Confidential Information. The Receiving Party shall not publish any technical description of the Disclosing Party's Confidential Information beyond any descriptions published by the Disclosing Party. In the event of expiration or termination of this Agreement, there shall be no use or disclosure by the Receiving Party of any Confidential Information of the Disclosing Party, and the Receiving Party shall not develop any software, devices, components, or assemblies utilizing the Disclosing Party's Intellectual Property. 7.2 EXCLUSIONS. Confidential Information does not include any information that the Receiving Party can demonstrate by written records: (a) was known to the Receiving Party prior to its disclosure hereunder by the disclosing party; (b) is independently developed by the Receiving Party; (c) is or becomes publicly known through no wrongful act of the Receiving Party; (d) has been rightfully received from a third party whom the Receiving Party has reasonable grounds to believe is authorized to make such disclosure without restriction; (e) has been approved for public release by the Disclosing Party's prior written authorization; or (f) must be produced or disclosed pursuant to applicable law, regulation or court order, provided that the receiving party provides prompt advance notice thereof to enable the disclosing party to seek a protective order or otherwise prevent such disclosure. In addition, Go2Net and Partner may disclose the existence and terms of this Agreement in connection with a potential acquisition of substantially the entire business of the other party, or a private or public offering of securities of either party. 8. REPRESENTATIONS AND WARRANTIES. 8.1 Partner represents and warrants to Go2Net: that it has the right to grant the rights hereunder; that it holds the necessary rights to permit the use of the Search Results for the purposes of this Agreement; that its entry into this Agreement does not violate any agreement with any other party; that its performance under this Agreement will conform to applicable U.S. laws and government rules and regulations; that the use, reproduction, distribution, transmission, or display of the Search Results, as contemplated by this Agreement will not (i) violate applicable local, state or Federal law or infringe upon any Intellectual Property rights or other rights of third parties; or (ii) contain any material that is defamatory or otherwise any material that promotes wrongful conduct that would constitute a criminal offense or give rise to civil liability. 9. LIMITATION OF LIABILITY AND DISCLAIMER. 9.1 LIMITATION OF LIABILITY. NEITHER GO2NET NOR PARTNER MAKES ANY WARRANTY WHATSOEVER WITH REGARDS TO THE FEATURES, FUNCTIONS, PERFORMANCE, QUALITY, OR OTHER CHARACTERISTICS OF THE SERVICE EACH COMPANY PROVIDES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO EACH OTHER OR ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. GO2NET SHALL NOT BE LIABLE TO PARTNER OR ANY OTHER PARTY FOR ANY DAMAGES ARISING FROM THIRD PARTY UNAUTHORIZED ACCESS OR USE OF THE GO2NET METASEARCH SERVICE. PARTNER SHALL NOT BE LIABLE TO GO2NET OR ANY OTHER PARTY FOR ANY DAMAGES ARISING FROM THIRD PARTY UNAUTHORIZED ACCESS OR USE OF THE PARTNER SEARCH ENGINE. 9.2 DISCLAIMER. GO2NET MAKES NO OTHER WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, REGARDING THE GO2NET METASEARCH SERVICE, AND GO2NET SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. GO2NET DOES NOT WARRANT THAT THE OPERATION OF THE GO2NET METASEARCH SERVICE WILL BE UNINTERRUPTED OR ERROR-FREE. FURTHERMORE, GO2NET DOES NOT MAKE ANY REPRESENTATIONS REGARDING -5- THE USE OR THE RESULTS OF THE USE OF THE GO2NET METASEARCH SERVICE IN TERMS OF THEIR CORRECTNESS, ACCURACY, RELIABILITY OR OTHERWISE. 9.3 DISCLAIMER. PARTNER MAKES NO OTHER WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, REGARDING THE PARTNER SEARCH ENGINE, AND PARTNER SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. PARTNER DOES NOT WARRANT THAT THE OPERATION OF THE PARTNER SEARCH ENGINE WILL BE UNINTERRUPTED OR ERROR-FREE. FURTHERMORE, PARTNER DOES NOT MAKE ANY REPRESENTATIONS REGARDING THE USE OF THE SEARCH RESULTS OR THE USE OF THE PARTNER SITE IN TERMS OF THEIR CORRECTNESS, ACCURACY, RELIABILITY OR OTHERWISE. 10. TERMINATION. 10.1 TERMINATION FOR BREACH OR INSOLVENCY. Either party shall have the right to terminate this Agreement on written notice if (a) the other party ceases to do business in the ordinary course or is insolvent, i.e., unable to pay its debts in the ordinary course as they come due, or is declared bankrupt, or is the subject of any liquidation or insolvency proceeding which is not dismissed within ninety (90) days, or makes any assignment for the benefit of creditors, (b) the other party breaches any material term of this Agreement and fails to cure such breach within thirty (30) days after written notice thereof, or (c) the other party fails to timely make any payment hereunder. 10.2 EFFECT OF TERMINATION. Upon the expiration or termination of this Agreement: 10.2.1 Each party shall, within thirty (30) days of such expiration or termination return to other party or destroy all Confidential Information and all other material received from such other party. 10.2.2 All rights granted by Go2Net hereunder to Partner shall terminate. 10.2.3 All rights granted by Partner hereunder to Go2Net shall terminate. 10.3 SURVIVAL. Sections 3.2, 3.3, 3.4, 7, 8, 9, and 11 shall survive any expirations or terminations of this Agreement. 11. MISCELLANEOUS. 11.1 INDEMNIFICATION BY PARTNER. With respect to claims or actions against one or both parties by third parties insofar as such claim, demand or action is attributable to the acts or omissions of Partner, including without limitation claims based upon the violation of applicable law or infringement of Intellectual Property rights or other third party rights, or a breach by Partner of a representation and/or warranty made in this Agreement, Partner shall (i) indemnify Go2Net against any liability, cost, loss, or expense of any kind; and (ii) hold harmless Go2Net and save it from any liability, cost, loss, or expense of any kind. Go2Net shall have the right to select and control legal counsel for the defense of any such claim, demand or action and for any negotiations relating to any such claim, demand or action; however, to the extent any such claim is covered in full by this indemnity, Partner shall have the right, to such extent, to control the defense of such claim; and Partner must approve any settlement of any such claim, demand or action to the extent that such settlement imposes any restrictions on or requires Partner to contribute financially to such settlement. INDEMNIFICATION BY GO2NET. With respect to claims or actions against one or both parties by third parties insofar as such claim, demand or action is attributable to the acts or omissions of Go2Net, including without limitation claims based upon the violation of applicable law or infringement of -6- Intellectual Property rights or other third party rights, or a breach by Go2Net of a representation and/or warranty made in this Agreement, Go2Net shall (i) indemnify Partner against any liability, cost, loss, or expense of any kind; and (ii) hold harmless Partner and save it from any liability, cost, loss, or expense of any kind. Partner shall have the right to select and control legal counsel for the defense of any such claim, demand or action and for any negotiations relating to any such claim, demand or action; however, to the extent any such claim is covered in full by this indemnity, Go2Net shall have the right, to such extent, to control the defense of such claim; and Go2Net must approve any settlement of any such claim, demand or action to the extent that such settlement imposes any restrictions on or requires Go2Net to contribute financially to such settlement. 11.2 INJUNCTIVE RELIEF. The parties acknowledge that the breach or threatened breach of Section 7 would cause irreparable harm to the non-breaching party, the extent of which would be difficult to ascertain. Accordingly, each party agrees that, in addition to any other remedies to which a party may be legally entitled, a party may seek immediate injunctive relief in the event of a breach or threatened breach of such sections by the other party or any of the other party's employees or subcontractors. 11.3 ASSIGNMENT. Except as set forth herein, neither party may assign this Agreement, without the prior written consent of the other party. Notwithstanding the foregoing, either party may assign this Agreement to (a) to any affiliate, division, or subsidiary able to timely deliver the services contemplated by this Agreement, or (b) to any purchaser of all or substantially all of such party's assets or to any successor by way of merger, consolidation, or similar transaction. Subject to the foregoing, this Agreement will be binding upon, enforceable by, and inure to the benefit of the parties and their respective successors and assigns. 11.4 WAIVER AND AMENDMENT. No modification, amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by the party to be charged. No failure or delay by either party in exercising any right, power, or remedy under this Agreement shall operate as a waiver of any such right, power or remedy. 11.5 GOVERNING LAW. This Agreement shall be governed by the laws of the State of Washington without giving effect to the conflict of law principles thereof. 11.6 NOTICES, ETC. Any notice required or permitted by this Agreement shall be deemed given if delivered by registered mail, postage prepaid, addressed to the other party at the respective address shown at the beginning of this Agreement or at such other address for which such party gives notice hereunder. Delivery shall be deemed effective three (3) days after deposit with postal authorities. 11.7 INDEPENDENT CONTRACTORS. The parties are independent contractors with respect to each other. Each party is not and shall not be deemed to be an employee, agent, partner, joint venturer or legal representative of the other for any purpose and shall not have any right, power, or authority to create any obligation or responsibility on behalf of the other. 11.8 SEVERABILITY. If any provision of this Agreement shall be held by a court of competent jurisdiction to be contrary to law, such provision shall be changed and interpreted so as to best accomplish the objectives of the original provision to the fullest extent allowed by law and the remaining provisions of this Agreement shall remain in full force and effect. 11.9 COMPLETE UNDERSTANDING. This Agreement, including all Exhibits attached hereto and hereby incorporated by reference, constitutes the final, complete and exclusive agreement between the parties with respect to the subject matter hereof, and supersedes any prior or contemporaneous agreement, either written or oral. -7- 11.10 FORCE MAJEURE. Except with respect to obligations to make payments hereunder, neither party shall be deemed in default hereunder, nor shall it hold the other party responsible for, any cessation, interruption or delay in the performance of its obligations hereunder due to causes beyond its reasonable control including, but not limited to: earthquake, flood, fire, storm or other natural disaster, act of God, labor controversy or threat thereof, civil disturbance or commotion, disruption of the public markets, war or armed conflict or the inability to obtain sufficient material, supplies, labor, transportation, power or other essential commodity or service required in the conduct of its business, including internet access, or any change in or the adoption of any law, ordinance, rule, regulation, order, judgment or decree. 11.11 PUBLICITY. The parties shall cooperate to issue one or more joint press releases announcing this Agreement; such joint press release shall require the approval of both parties prior to issuance. As long as one party or the other has not provided the other party with notice of withdrawal of permission, the parties shall be permitted to use previously approved text with no further approvals subject to the text being substantially the same with allowance only of context and time. Except in the course of performing pursuant to this Agreement, the parties shall not publicize their relationship or the work done in connection with this Agreement without the prior written approval of the other party. The remainder of this page left blank intentionally. IN WITNESS WHEREOF, the parties have caused this Agreement to executed effective as of the day and year first set forth above. FINDWHAT, INC. GO2NET, INC. By: /s/ Craig A. Pisaris-Henderson By: /s/ Thomas M. Camp -------------------------------------- --------------------------- Craig A. Pisaris-Henderson Thomas M. Camp President and Chief Vice President, Business Technology Officer Development -8- EX-10.9 5 EXHIBIT 10.9 EXHIBIT 10.9 ADVERTISING AGREEMENT AGREEMENT made as of the 14th day of January, 2000 (the "EFFECTIVE DATE"), by and among BEASLEY INTERNET VENTURES, LLC, a Delaware limited liability company ("BEASLEY") and FINDWHAT.COM, a Nevada corporation (herein called "FINDWHAT"). ARTICLE I. GENERAL DEFINITIONS 1.1 "Affiliate" of the Person concerned shall mean a Person that directly or indirectly (through one or more intermediaries) controls, is controlled by, or is under common control with such Person concerned. 1.2 "Beasley Competitor" shall mean any Person, other than Beasley, who/which is engaged either directly, or indirectly through an Affiliate, in radio programming or radio program distribution whether free over-the-air, cable, telephone, local, microwave, direct broadcast satellite, via Internet or otherwise in North America. 1.3 "Beasley Radio Network" shall mean those radio stations listed on Exhibit C, attached hereto, as amended from time to time to reflect future acquisitions and dispositions of radio stations by Beasley and its Affiliates. 1.4 "Content" shall mean text, graphics, photographs, video, audio and/or other data or information relating to any subject and/or advertisements. 1.5 "Examination Commencement Date" shall have the meaning provided in Section 2.2(a). 1.6 "Findwhat Site" shall mean the Internet Web Site owned by Findwhat with a web address of www.findwhat.com, as may be changed from time to time. 1.7 "Internet" shall mean a global network of interconnected computer networks, each using the Transmission Control Protocol/Internet Protocol and/or such other standard network interconnection protocols as may be adopted from time to time, which is used to transmit Content that is directly of indirectly delivered to a computer or other digital electronic device for display to an end-user, whether such Content is delivered through on-line browsers, off-line browsers, or through "push" technology, electronic mail, broadband distribution, satellite, wireless or otherwise. 1.8 "Internet Web Site" or "Web Site" shall mean any site or service delivering Content on or through the Internet, including, without limitation, any on-line service such as America Online and Compuserve. 1.9 "Person" shall mean individual, partnership, corporation or organized group of persons, including agencies and other instrumentalities of governments and states. 1.10 "Term" shall mean the term specified in Article 3. 1.11 "Purchase Agreement" shall mean that Common Stock Purchase Agreement dated as of the Effective Date by and between Findwhat and Beasley. ARTICLE II. BEASLEY ADVERTISING 2.1 PLACEMENT AND PAYMENT OF ADVERTISING. (a) In exchange for the cash payments set forth and in accordance with Section 2.1(d), Beasley shall arrange for the placement of radio broadcast advertising on the Beasley Radio Network of the Findwhat Site and Findwhat's other products and services of the placement types set forth in the Advertising placement roster set forth in Exhibit A attached hereto, with an aggregate value of Three Million One Hundred Eighty Thousand Dollars ($3,180,000) (the "CONTRACTED ADVERTISING AMOUNT"). In the event that Beasley reduces the principal amount of the Note (as defined in Section 2.1(d) below) pursuant to Section 12.7 of the Purchase Agreement, the Contracted Advertising Amount shall automatically be reduced by an amount equal to such reduction in the principal amount of the Note. Beasley shall arrange for the placement of advertising among the stations in the Beasley Radio Network in accordance with the advertising plan in Exhibit B attached hereto. All advertising materials shall be subject to any applicable Beasley advertising guidelines and the standard Beasley preemption policies. (b) The value of all broadcast advertising provided hereunder shall be as provided in Exhibit B hereto. (c) Within twenty (20) days of the end of each calendar month, Beasley will provide to Findwhat monthly invoices (each, an "ADVERTISING INVOICE") dated as of the last day of the month in question (the "ADVERTISING INVOICE DATE") showing the (i) value attributable to each of the placement types with respect to the advertising purchased by Findwhat during the statement period and (ii) the value of total advertising purchased for the period in question (the "MONTHLY ADVERTISING AMOUNT") and the calculations performed to determine such value. (d) Within ten (10) business days of receipt of an Advertising Invoice, Findwhat shall pay to Beasley, by certified or cashier's check, an amount equal to the Monthly Advertising Amount, PROVIDED, HOWEVER, that Findwhat may elect, in its sole discretion, to offset such payment obligation by reducing the amounts owed under that certain Promissory Note, dated as of the date hereof, made by Beasley, in the aggregate principal amount of Three Million Dollars ($3,000,000) (the "Note"). Unless Findwhat provides Beasley written notice to the contrary within five (5) business days of receipt of an Advertising Invoice, Findwhat shall be deemed to have elected to reduce the principal amount owed by Beasley under the Note and any accrued interest thereon by the amount indicated in the Advertising Invoice in order to satisfy Findwhat's obligation under this Section 2.1(d). Such reduction shall be deemed to be made effective as of the Advertising Invoice Date. 2.2 ACCESS TO BOOKS AND RECORDS. (a) Beasley will maintain accurate books and records which report the value of advertising purchased by Findwhat and information from which the calculation can be derived. Findwhat may, at its own expense, examine those books and records on an annual basis. 2 Findwhat may request such an examination upon no less than ten (10) business days written notice to Beasley which shall commence on a date (the "EXAMINATION COMMENCEMENT DATE") mutually agreeable to Beasley and Findwhat. Such annual examination shall be completed within seven (7) days of the Examination Commencement Date. Findwhat may make its examination only during Beasley's usual business hours, and at the address set forth herein for the provision of notices to Beasley, unless otherwise notified. No such examination shall materially interfere with the normal business operations of Beasley. (b) Subject to the limitations of Section 2.2(a) hereof, if upon examination of Beasley's books and records, Findwhat determines that Beasley has failed to properly account for the value of advertising purchased by Findwhat hereunder, Findwhat shall advise Beasley in writing of the basis for its assertion, together with the information necessary to demonstrate Beasley's failure to properly account for the value of advertising purchased by Findwhat ("FINDWHAT'S OBJECTION"). If Beasley agrees with Findwhat, then Beasley will make appropriate adjustment(s) to the cumulative total of advertising to be run during the remainder of the Term. If Beasley disagrees with Findwhat's assertion, the parties shall negotiate in good faith to resolve any differences for a period of seven (7) days, after which time if the parties continue to disagree, they shall select a firm of independent certified public accountants of national recognition (other than a firm which then serves as the independent auditor for Beasley or Findwhat or any of their respective Affiliates) to resolve the matter, whose decision on the matter shall be binding. If Beasley and Findwhat are unable to agree on such a firm, then the regular independent auditors for Findwhat and Beasley shall mutually agree upon a third independent certified public accounting firm of national recognition, whose decision on the matter shall be binding. Beasley and Findwhat shall share equally the fees and expenses of the certified public accounting firm ultimately chosen. If Beasley has not received Findwhat's Objection within fourteen (14) days of the Examination Commencement Date, Findwhat shall be deemed to have been satisfied with the results of its examination and shall not be entitled to the remedies set forth in this Section 2.2(b). 2.3 SUSPENSION OF ADVERTISING. Beasley shall have the right to suspend and/or withdraw placement of all advertising that includes any trademark or tradename used by Findwhat, including but not limited to, "FINDWHAT" and "FINDWHAT.COM": (i) pending resolution of any third party claim alleging infringement of such third party's rights because of use by Findwhat in the United States of the tradename or trademark in question and/or (ii) during such time as Findwhat is enjoined from using the tradename or trademark in question in the United States on or in connection with the Findwhat Site and has not ceased use of the tradename or trademark in question. ARTICLE III. TERM The term of this Agreement shall begin as of the date hereof and shall continue in full force and effect for a period of two (2) consecutive years from the Effective Date (I.E., through and including January 13, 2002) unless it is terminated earlier in accordance with the terms and conditions stated herein (the "TERM"). 3 ARTICLE IV. WARRANTIES, REPRESENTATIONS AND COVENANTS 4.1 BEASLEY. Beasley represents and warrants that: (a) it has full power and authority to enter into and fully perform this Agreement; and (b) this Agreement has been duly authorized and is enforceable in accordance with its terms. 4.2 FINDWHAT. Findwhat represents and warrants that: (a) it has full power and authority to enter into and fully perform its obligations under this Agreement; and (b) this Agreement has been duly authorized and is enforceable in accordance with its terms. 4.3 FINDWHAT COVENANTS. Findwhat covenants that: (a) at all times during the Term, Findwhat shall comply with all applicable federal, state, local and foreign laws; (b) at all times during the Term, Findwhat shall maintain the Findwhat Site in a professional manner consistent with industry standards; (c) advertising material and any portion thereof created by or on behalf of Findwhat and furnished by Findwhat to Beasley and the use thereof shall not violate any law or infringe upon or violate the rights of any Person. (d) Findwhat shall prevent the Findwhat Site from ceasing to operate (i) more than two (2) consecutive hours per week over a sixty (60) day period or (ii) more than ten (10) consecutive days, PROVIDED, HOWEVER, that if the failure of the Findwhat Site to operate is as a result of circumstances beyond Findwhat's control, Findwhat shall not be deemed to be in breach of this Section 4.3(d)(ii) unless the Findwhat Site ceases to operate for more than twenty (20) consecutive days. ARTICLE V. INDEMNIFICATION 5.1 INDEMNIFICATION BY FINDWHAT. Findwhat shall indemnify Beasley, its members and each of their respective directors, officers, employees, Agents and representatives (hereinafter referred to collectively as "Beasley Indemnitees") against, and hold them harmless from, any and all losses, damages, costs, liabilities, claims, obligations and expenses, including reasonable legal fees and expenses, incurred or suffered by a Beasley Indemnitee, as incurred (payable promptly upon written request), arising from, in connection with or otherwise with 4 respect to any breach, misrepresentation, or other violation of any covenant, representation, warranty, term, condition or agreement of Findwhat contained in this Agreement. The foregoing indemnity is intended by Findwhat to cover all acts, suits, proceedings, claims, demands, assessments, adjustments, diminution in value, costs and expenses with respect to any and all of the specific matters in this indemnity set forth. 5.2 INDEMNIFICATION BY BEASLEY. Beasley shall indemnify Findwhat, its directors, officers, employees, Agents and representatives (hereinafter referred to collectively as "FINDWHAT INDEMNITEES") against, and hold them harmless from, any and all losses, damages, costs, liabilities, claims, obligations and expenses, including reasonable legal fees and expenses, incurred or suffered by a Findwhat Indemnitee, as incurred (payable promptly upon written request), arising from, in connection with or otherwise with respect to any breach, misrepresentation, or other violation of any covenant, representation, warranty, term, condition or agreement of Beasley contained in this Agreement. The foregoing indemnity is intended by Beasley to cover all acts, suits, proceedings, claims, demands, assessments, adjustments, diminution in value, costs and expenses with respect to any and all of the specific matters in this indemnity set forth. 5.3 CONDUCT OF PROCEEDINGS. If any claim or proceeding covered by Sections 5.1 or 5.2 shall arise, the party which seeks indemnification (the "INDEMNIFIED PARTY") shall give written notice thereof to the other party (the "INDEMNITOR") promptly after the Indemnified Party learns of the existence of such claim or proceeding; PROVIDED, HOWEVER, that the Indemnified Party's failure to give the Indemnitor prompt notice shall not bar the Indemnified Party's right to indemnification unless such failure has materially prejudiced the Indemnitor's ability to defend the claim or proceeding. The Indemnitor shall have the right to employ counsel reasonably acceptable to the Indemnified Party to defend against any such claim or proceeding, or to compromise, settle or otherwise dispose of the same, if the Indemnitor deems it advisable to do so, all at the expense of the Indemnitor. The parties will fully cooperate in any such action, and shall make available to each other any books or records useful for the defense of any such claim or proceeding. 5.4 EXCLUSIVE REMEDY. Except with respect to third party claims for which each party shall fully indemnify the other in accordance with the procedures set forth in this Article 5 neither party shall be liable to the other party for any "business interruption" or any loss of profits, any indirect, incidental, special, punitive or consequential damages hereunder, whether foreseeable or not. 5.5 LIMITS ON AND CONDITIONS OF INDEMNIFICATION; THRESHOLD AND CAP. Notwithstanding any other provision hereof, no Indemnified Party shall be entitled to make a claim against an Indemnitor in respect of any breach of this Agreement except to the extent that the aggregate amount of such damages exceeds the amount of Thirty Thousand Dollars ($30,000); PROVIDED, HOWEVER, that once such aggregate has been exceeded, such Indemnitor shall be liable for the full amount of such damages. Notwithstanding any other provision of the Agreement, neither the indemnity obligation of Seller nor the indemnity obligation of Buyer shall exceed Three Million Dollars ($3,000,000). Notwithstanding the preceding sentence, any amount of damages counted toward the indemnity threshold and Three Million Dollar ($3,000,000) cap on Findwhat's indemnification obligations in Section 12.6 of 5 the Purchase Agreement shall also be counted against the indemnity threshold and cap on Findwhat's indemnification obligations in this Section 5.5. 5.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION RIGHTS. The several covenants, representations, warranties, terms, conditions or agreements contained herein, and the parties respective indemnification rights pursuant to Article 5, shall endure for the Term, at which time the same shall expire (except for Claims asserted during the Term). ARTICLE VI. REMEDIES 6.1 FINDWHAT'S RIGHT OF TERMINATION. The Agreement may be terminated by Findwhat if Findwhat is not then in material default, upon written notice to Beasley upon the occurrence of any of the following: (a) Beasley breaches any material term or condition of this Agreement or the Purchase Agreement and has failed to cure such breach within thirty (30) days following notice of default. The foregoing cure period will not apply to: (i) a term or condition for which a specific cure period is provided, or (ii) a breach incapable of being cured. (b) If the BRN Cume (as defined in Exhibit B, paragraph 2) drops below One Million Five Hundred Thousand (1,500,000) listeners. (c) If Beasley sells each and every one of the radio stations listed on Exhibit D in one or more transactions during the Term. 6.2 UPON TERMINATION. Upon termination of this Agreement pursuant to Section 6.1, the parties shall be released and discharged from any further obligation under this Agreement. Notwithstanding the foregoing, the rights and obligations of the parties with respect to Article 5 (Indemnification), Section 7.1 (Permitted Assignments), Section 7.3 (Notice) and Section 7.7 (Governing Law) hereof shall not terminate. 6.3 NO FORFEITURE OF FINDWHAT STOCK. As between Beasley and Findwhat, Findwhat agrees that under no circumstances are the shares of common stock of Findwhat, $.001 par value per share, issued to Beasley pursuant to the Purchase Agreement, returnable to Findwhat or subject to forfeiture. Findwhat covenants not to seek the return of the shares in any proceeding, between Beasley, its successors and assigns and Findwhat, its successors and assigns provided, however, the foregoing shall not limit Findwhat's right to enforce its rights under the Note. ARTICLE VII. GENERAL 7.1 PERMITTED ASSIGNMENTS. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No party may assign its respective rights and obligations, in whole or in part, under this Agreement without prior written consent of the other party hereto. Any attempt to assign this Agreement without such consent shall be void and of no effect ab initio. Notwithstanding the foregoing, a party hereto may assign this Agreement or any of its rights and obligations hereunder to any entity 6 controlling, controlled by or under common control with, such party, or to any entity that acquires such party by purchase of stock or by merger or otherwise, or by obtaining substantially all of such party's assets (the "PERMITTED ASSIGNEE"), provided that (i) no such assignment shall relieve the assigning party of any of its obligations under this Agreement; (ii) with respect to any assignments effected by Findwhat, no such Assignee (or any division thereof) is a Beasley Competitor and (iii) such Permitted Assignee shall agree in writing to be bound by the terms and conditions hereof. 7.2 SEVERABILITY. If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other Persons or circumstances, and such provision will be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect. 7.3 NOTICE. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand, sent by telecopy or sent, postage prepaid, by registered or certified mail, return receipt requested, or reputable overnight courier service and shall be deemed given when so delivered by hand, or if telecopied, when received, or if mailed, five business days after mailing (one business day in the case of express mail or overnight courier service), as follows: (a) if to Findwhat, Findwhat.com 121 West 27th Street Suite 903 New York, New York 10001 Tel: (212) 255-1500 Fax: (212) 989-4392 Attention: Chief Executive Officer with a copy to: Leonard D. Steinman, Esq. Tenzer Greenblatt LLP 405 Lexington Avenue New York, New York 10174 Tel: (212) 885-5524 Fax: (212) 885-5002 (b) if to Beasley, Beasley Internet Ventures, LLC 3033 Riviera Drive, Suite 200 Naples, Florida 34103 7 Tel: (941) 263-5000 Fax: (941) 434-8950 Attention: Caroline Beasley with a copy to: Joseph D. Sullivan, Esq. Latham & Watkins 1001 Pennsylvania Avenue, N.W. Suite 1300 Washington, D.C. 20004 Tel: (202) 637-2221 Fax: (202) 637-2201 7.4 INDEPENDENT CONTRACTORS. The parties to this Agreement are independent contractors. There is no relationship of partnership, joint venture, employment, franchise, or agency between the parties. No party shall have the power to bind any other party or incur obligations on any other party's behalf without such other party's prior written consent. 7.5 WAIVER. The waiver by any party of a breach or default of any provision of this Agreement by any other party shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of any party to exercise or avail itself of any right, power or privilege that it has, or may have hereunder, operate as a waiver of any right, power or privilege by such party except as otherwise specifically provided in this Agreement. 7.6 ENTIRE AGREEMENT. This Agreement, including any agreement incorporated herein by reference, and any Exhibits hereto or thereto, contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. No party shall be liable or bound to any other party in any manner by any representations, warranties or covenants relating to such subject matter except as specifically set forth herein. 7.7 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State. 7.8 SOLE BENEFIT. This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and such assigns, any legal or equitable rights hereunder. 7.9 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each party and delivered to each other party. 8 7.10 AMENDMENT. This Agreement may not be amended except by an instrument in writing signed on behalf of each party hereto. By an instrument in writing Beasley or Findwhat, as the case may be, may waive compliance by the other party with any term or provision of this Agreement that Beasley or Findwhat, as the case may be, was or is obligated to comply with or perform. 7.11 HEADINGS. The headings contained in this Agreement hereto are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized terms used in any Exhibit but not otherwise defined therein, shall have the meaning as defined in this Agreement. When a reference is made in this Agreement to a Section or Exhibit, such reference shall be to a Section of, or an Exhibit to, this Agreement unless otherwise indicated. 9 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first above written. BEASLEY INTERNET VENTURES, LLC By: BEASLEY FM ACQUISITION CORP., its Managing Member By: /s/ B. Caroline Beasley ---------------------------- Name: B. Caroline Beasley Title: Secretary FINDWHAT.COM By: /s/ Robert D. Brahms -------------------------- Name: Robert D. Brahms Title: chief Executive Officer 10 EX-10.10 6 EXHIBIT 10.10 EXHIBIT 10.10 MERCHANT AGREEMENT between LinkShare Corporation, a Delaware corporation ("LinkShare"), and the undersigned merchant ("Merchant" or "You"), dated July 13, 1999. The LinkShare Network-TM- includes member websites that are potential on-line sales affiliates for merchants ("LinkShare Sales Affiliates"). Using its proprietary LinkShare Synergy-TM- software, LinkShare offers services to facilitate establishing links between merchants and sales affiliates and tracking sales through those links. This Agreement contains the terms agreed to by the parties for Merchant's access to the LinkShare Network-TM- and use of LinkShare's services as an on-line merchant. 1. LINKSHARE NETWORK SERVICES. As a LinkShare merchant, Merchant may use the relevant area of a LinkShare Website (the "LSN Site") to post offers to establish Qualifying Links with LinkShare Sale Affiliates, receive and respond to any counteroffers and, if agreement is reached, conclude binding link exchange engagements with LinkShare Sales Affiliates. The detailed procedures and rules governing those activities will be the same as those applicable to LinkShare Merchants generally and posted on the LSN Site from time to time. 2. PRIVATE LABEL SERVICES. If you select LinkShare's optional Private Label Network Services, a special area of the LSN Site (the "PLN Site") under Your brand or distinctive name Network will be available for You to establish Qualifying Links with Your own sales affiliates who are not LinkShares Sales Affiliates ("PLN Sales Affiliates"). Attachment C to this Agreement is part of this Agreement if you have selected Private Label Network Services. 3. QUALIFYING LINKS; LICENSES SITES. A "Qualifying Link" is a hypertext link between the website of a LinkShare Sales Affiliate or PLN Sales Affiliate (in either case, a "Sales Affiliate") with whom You conclude an Engagement to a Licensed Site of Merchant, with that link being established through the interface of the LSN Site or the PLN Site using a code that is generated by LinkShare Synergy client server software You install in the server for Your relevant Licensed Site and an additional tracking code added at the LSN Site or PLN Site by LinkShare's software. A "Licensed Site" is each of Your Websites with the respective URLs identified below Your signature to this Agreement, as well as any "mirror site" You designate in writing to LinkShare at least ten business days before its first use in the LinkShare Network, in each case so long as the site is owned and operated by You. 4. LINKSHARE'S PRICES. You agree to pay LinkShare the application fees and charges provided for in the attached Pricing Schedule, as and when due. Your obligations to pay any unpaid fees and charges accruing before expiration or termination of this Agreement will survive expiration and termination. 5. MONTHLY REPORTS. Within ten business days after the end of each calendar month during which You have a Qualifying Link, LinkShare will provide You, online at a password-protected area of the LSN Site or PLN Site, with a report showing Your attributable Gross Sales, calculated as explained in the attached Pricing Schedule. To the extent Your Engagements provide for You to compensate a Sales Affiliate by a commission based on Gross Revenues from sales through the relevant Qualifying Link, that report will also show the commissions due from You to that Sales Affiliate for the month. Our obligation to furnish such reports or perform other tracking, date collection or reporting functions is conditioned on such links being properly established, formatted and maintained in accordance with LinkShare's requirements. 6. INTEROPERABILITY. LinkShare will provide You with the client server software for the interface of each Licensed Site with the LinkShare website contemplated by this Agreement. LinkShare will provide Merchant, at no separate charge, up to four hours of telephonic technical assistance with regard to installing the LinkShare software and establishing such interface. Additional technical assistance may be purchased as provided in the Pricing Schedule. All technical assistance will be provided on the same terms and conditions as LinkShare provides it to LinkShare Merchants generally. 7. CERTAIN OTHER AGREEMENTS OF MERCHANT. Merchant agrees that it will not, and will cause its corporate affiliates not to, directly or indirectly: (i) enter into any agreement, arrangement or understanding or engage in any course of conduct with the intent of reducing payments to which LinkShare otherwise would be entitled hereunder or to otherwise take unfair advantage of LinkShare or its services or that has any such effect, (ii) utilize or offer to affiliated or unaffiliated third parties any service or software package (whether proprietary to Merchant or a third party) that is in competition with or a substitute for the LinkShare software or services made available pursuant to this Agreement, or (iii) develop or actively assist a third party in the development of a system, software, network or service that is competitive with or could serve as a substitute for the LinkShare software, network or services made available pursuant to this Agreement. If this Agreement is terminated during the initial or any renewal term by LinkShare because of a material breach of this Agreement by You or for just cause, Your obligations under this Section 7 shall continue for a period of time after such termination equal in length to the unexpired balance of such term as of the time of such termination plus an additional twelve months. 8. TERM AND TERMINATION. (a) Unless terminated sooner as provided below, this Agreement will remain in effect for an initial term of six consecutive months beginning as of the date of this Agreement. Unless either party gives the other written notice of termination no later than ten business days prior to the expiration date of the then-existing initial or renewal term, this Agreement will automatically renew for consecutive twenty-four months terms. (b) Either party may terminate this Agreement if the other party materially breaches its obligations hereunder and such breach remains uncured for thirty days following written notice of the breach given to the breaching party. Any rights or remedies of either party arising out of a breach or violation of any terms of this Agreement by the other party will survive expiration or termination of this Agreement. (c) LinkShare may terminate or suspend Merchant's or any Sales Affiliate's access to all or part of the LinkShare Network, the LSN Site and the PLN Site for just cause, including, but not limited to, default in payment obligations to LinkShare or Sales Affiliates, inappropriate use, persistent failure to comply with the rules applicable to users generally, the posting of content that is libelous, defamatory, obscene, pornographic, "adult-oriented," relates to gambling or use of illegal substances, abusive or overly violent or LinkShare's good faith determination that Merchant's use adversely impacts LinkShare's reputation or good relations with its merchants and Sales Affiliates generally or violates any law or any third party's rights. 9. CERTAIN LIABILITY LIMITATIONS. (a) EXCLUSION OF WARRANTIES. TO THE FULLEST EXTENT PERMISSABLE PURSUANT TO APPLICABLE LAW, EACH PARTY DISCAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR NONINFRINGEMENT. (b) NO CONSEQUENTIAL DAMAGES. EXCEPT AS PROVIDED BELOW, NEITHER PARTY WILL HAVE ANY LIABILITY IN CONNECTION WITH OR RESULTING FROM THIS AGREEMENT OR ANY OF THE CONTEMPLATED LINKS, SERVICES, ACTIVITIES OR RELATIONSHIPS FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, RELIANCE OR SPECIAL DAMAGES, EVEN IF SUCH PARTY WAS AWARE THAT SUCH DAMAGES COULD RESULT. The foregoing exclusion shall not apply for the benefit of the breaching party in the case of any breach of the provisions relating to confidentiality or intellectual property, any breach of Section 7 or any purported termination of this Agreement not permitted by its terms. This section 9(b) shall survive failure of an exclusive or limited remedy. (c) MAXIMUM LIABILITY. EXCEPT AS PROVIDED BELOW, THE MAXIMUM AGGREGATE LIABILITY OF EACH PARTY UNDER OR RELATED TO THIS AGREEMENT IS LIMITED, FOR LINKSHARE, TO THE AMOUNT OF FEES ACTUALLY PAID TO LINKSHARE BY MERCHANT DURING THE TERM OF THIS AGREEMENT AND, FOR MERCHANT, TO THE AMOUNT OF FEES AND CHARGES PAID OR ACCURED DURING THE TERM. The foregoing limitation shall not apply for the benefit of the breaching party in the case of a breach of the provisions relating to confidentiality or intellectual property, a breach of Section 7 or a purported termination of this Agreement not permitted by its express terms. (d) This Section 9 will survive any expiration or termination of this Agreement. 10. MISCELLANEOUS. (a) The parties are independent contractors. Nothing in this Agreement and no course of dealing between the parties will confer upon Merchant any exclusive rights with respect to the LinkShare Network or LinkShare's software or services. (b) This Agreement may not be assigned by either party, in whole or in part, without the express prior written consent of the other party, which will not be unreasonably withheld or delayed. Reasonable grounds for LinkShare withholding any such consent shall include, without limitation, that a proposed assignee is a competitor or a corporate affiliate of a competitor. Assignment of this Agreement to a successor to substantially all of either party's business will not require the other party's consent, but LinkShare may terminate this Agreement if direct or indirect control of your on-line merchandising business is acquired by a LinkShare competitor. (c) This Agreement shall be governed by the internal laws of the State of New York. This Agreement is the entire agreement between the parties pertaining to its subject matter and all written or oral agreements, representations, warranties or covenants, if any, previously existing between the parties are canceled. The statements about the LinkShare Network or LinkShare's Software or services on its Website or otherwise are not representations, warranties or other contractual obligations. Any amendments of this Agreement must be in writing and signed by both parties. No failure or delay in exercising any power, right, or remedy under this Agreement will operate as a waiver. A waiver, to be effective, must be written and signed by the waiving party. EACH PARTY HAS READ THIS AGREEMENT, INCLUDING THE ATTACHED PRICING SCHEDULE, ATTACHMENT B AND, IF APPLICABLE, ATTACHMENT C, AND AGREES TO BE BOUND BY ALL THE TERMS AND CONDITINS HEREOF (INCLUDING SUCH ATTACHMENTS). LINKSHARE CORPORATION BeFirst.com - - ---------------------------------- By: /s/ Heidi S. Messer [Insert Name of Merchant] -------------------------------- By: /s/ Courtney Jones ------------------------------ Name/Title: Courtney Jones ---------------------- Chairman BeFirst ---------------------- LICENSED SITE URL(S) INITIALS OF PARTIES www.befirst.com - - ---------------------------------- ------------------------------------ www.findwhat.com - - ---------------------------------- ------------------------------------ EX-21 7 EXHIBIT 21 Exhibit 21 BeFirst Internet Corporation, a Delaware corporation EX-24 8 EXHIBIT 24 EXHIBIT 24 POWER OF ATTORNEY Each director and/or officer of FindWhat.com (the "Corporation") whose signature appears below hereby appoints Courtney Phillips Jones, Robert D. Brahms, and Craig A. Pisaris-Henderson as the undersigned's attorneys or any of them individually as the undersigned's attorney, to sign, in the undersigned's name and behalf and in any and all capacities stated below, and to cause to be filed with the Securities and Exchange Commission (the "Commission"), the Corporation's Annual Report on Form 10-K (the "Form 10-K") for the fiscal year ended December 31, 1999, and likewise to sign and file with the Commission any and all amendments to the Form 10-K, and the Corporation hereby also appoints such persons as its attorneys-in-fact and each of them as its attorney-in-fact with like authority to sign and file the Form 10-K and any amendments thereto granting to each such attorney-in-fact full power of substitution and revocation, and hereby ratifying all that any such attorney-in-fact or the undersigned's substitute may do by virtue hereof. IN WITNESS WHEREOF, we have hereunto set our hands this 27th day of March, 2000. SIGNATURE TITLE /s/ Courtney P. Jones Chairman of the Board of Directors - - ----------------------------------- Courtney P. Jones /s/ Robert D. Brahms Chief Executive Officer and Director - - ----------------------------------- Robert D. Brahms /s/ Craig A. Pisaris-Henderson President, Chief Technical Officer - - ----------------------------------- and Director Craig A. Pisaris-Henderson /s/ Michael Schulman Chief Financial Officer - - ----------------------------------- Michael Schulman /s/ David Medinis Director - - ----------------------------------- David Medinis /s/ Lee Simonson Director - - ----------------------------------- Lee Simonson /s/ Ken Christensen Director - - ----------------------------------- Ken Christensen EX-27 9 EXHIBIT 27
5 YEAR 9-MOS DEC-31-1999 DEC-31-1998 JAN-01-1999 MAR-27-1998 DEC-31-1999 DEC-31-1998 906,931 6,702 0 0 97,165 8,463 0 0 0 0 1,021,856 15,165 276,174 1,700 (33,745) (340) 1,266,880 16,525 232,981 38,690 0 0 0 0 0 0 12,592 1,000 1,014,944 (23,165) 1,266,880 16,525 451,509 58,818 451,509 58,818 (394,402) (36,837) 0 0 (1,895,431) (89,146) 0 0 48,657 0 (1,789,667) (67,165) 0 0 (1,789,667) (67,165) 0 0 0 0 0 0 (1,789,667) (67,165) (0.17) (0.01) (0.17) (0.01)
-----END PRIVACY-ENHANCED MESSAGE-----