
<PAGE>
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 1999
                                                       REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 --------------
 
                                    FORM S-1
 
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                                 --------------
                                 ADFORCE, INC.
 
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                      <C>                                      <C>
               DELAWARE                                   7374                                  77-0505214
    (State or other jurisdiction of           (Primary standard industrial                   (I.R.S. employer
    incorporation or organization)             classification code number)                  identification no.)
</TABLE>
 
                    10101 NORTH DE ANZA BOULEVARD, SUITE 210
                          CUPERTINO, CALIFORNIA 95014
                                 (408) 873-3680
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)
 
                                 JOHN A. TANNER
                            CHIEF FINANCIAL OFFICER
                    10101 NORTH DE ANZA BOULEVARD, SUITE 210
                          CUPERTINO, CALIFORNIA 95014
                                 (408) 873-3680
 
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                               ------------------
 
                                   COPIES TO:
 
       GORDON K. DAVIDSON, ESQ.                  STEVEN M. SPURLOCK, ESQ.
      LAIRD H. SIMONS, III, ESQ.                 MICHAEL P. KENNEDY, ESQ.
         MARK A. LEAHY, ESQ.                      ERIC E. KEPPLER, ESQ.
       EDWARD M. URSCHEL, ESQ.             GUNDERSON DETTMER STOUGH VILLENEUVE
          FENWICK & WEST LLP                    FRANKLIN & HACHIGIAN, LLP
         TWO PALO ALTO SQUARE                     155 CONSTITUTION DRIVE
     PALO ALTO, CALIFORNIA 94306               MENLO PARK, CALIFORNIA 94025
            (650) 494-0600                            (650) 321-2400
 
                                ----------------
 
        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
                                ----------------
 
        If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. / /
 
        If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ________________
 
        If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ________________
 
        If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ________________
 
        If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
                                ----------------
 
                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<CAPTION>
                                                                       PROPOSED
                                                                       MAXIMUM
                   TITLE OF EACH CLASS                                AGGREGATE
              OF SECURITIES TO BE REGISTERED                      OFFERING PRICE(1)           AMOUNT OF REGISTRATION FEE
<S>                                                         <C>                             <C>
Common Stock, $0.001 par value per share..................           $55,000,000                       $15,290
</TABLE>
 
(1) Estimated solely for the purpose of computing the amount of the registration
    fee pursuant to Rule 457(o) under the Securities Act of 1933.
                               ------------------
 
        THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                   SUBJECT TO COMPLETION, DATED MARCH 2, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
UNDERWRITERS MAY NOT CONFIRM SALES OF THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BECOMES EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
<PAGE>
PROSPECTUS
 
                                         SHARES
 
                                     [LOGO]
 
                                  COMMON STOCK
 
        This is an initial public offering of common stock by AdForce, Inc. All
of the shares of common stock are being sold by AdForce. The estimated initial
public offering price will be between $    and $    per share.
 
                                 --------------
 
        There is currently no public market for the common stock. AdForce has
applied to have the common stock approved for quotation on the Nasdaq National
Market under the symbol ADFC.
 
                                 --------------
 
<TABLE>
<CAPTION>
                                                                  PER SHARE        TOTAL
                                                              -----------------  ----------
<S>                                                           <C>                <C>
Initial public offering price...............................          $          $
Underwriting discounts and commissions......................          $          $
Proceeds to AdForce, before expenses........................          $          $
</TABLE>
 
        AdForce has granted the underwriters an option for a period of 30 days
to purchase up to  additional shares of common stock.
 
                                 --------------
 
         INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
                    SEE "RISK FACTORS" BEGINNING ON PAGE 6.
 
                                 -------------
 
        NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
HAMBRECHT & QUIST
          LEHMAN BROTHERS
                    VOLPE BROWN WHELAN & COMPANY
                               CHARLES SCHWAB & CO., INC.
 
           , 1999
<PAGE>
                              [INSIDE FRONT COVER]
 
TITLE: THE ADFORCE ADVANTAGE
 
        The top half of the page contains three columns of text bearing the
headings "Buyers," "The AdForce Advantage" and "Sellers." The "Buyers" column
reads: "AdForce enables advertising agencies and advertisers to plan and manage
Internet advertising intelligently for maximum effectiveness. Ads can be
targeted to reach key audiences and tracked post-campaign to measure return on
investment." The "AdForce Advantage" column reads: "Centralized, online, on-time
ad delivery--AdForce simplifies the process of Internet ad management and
delivery. From beginning to end, AdForce offers a single, reliable
point-of-contact for both buyers and sellers of Internet advertising. From
planning and scheduling to auditing and billing, AdForce ensures fast and
accurate ad selection and delivery. Even better, AdForce customers do not need
to buy or maintain hardware or software." The "Sellers" column reads: "AdForce
helps Web sites maximize the value of their inventory enabling them to command
higher rates for their advertising space. AdForce's advanced inventory
forecasting system allows sellers to monitor sold and unsold inventory
accurately, allowing them to sell more inventory more effectively." The bottom
half of the page contains a large, rectangular bar bearing the name "AdForce"
with four smaller rectangles above the bar and four smaller rectangles below the
bar. The four rectangles above the central bar are connected to it by lines and
bear the labels "Advertisers" and "Ad Agencies." The four rectangles below the
central bar are connected to it by lines and bear the labels "Web Sites" and "Ad
Rep Firms."
 
                 [FLOW DIAGRAM UNDER SERVICES HEADING (P. 37)]
 
TITLE: LIFETIME CUSTOMER VALUE
 
        A circular flow chart containing four icons. The icon at the top of the
flow chart reads "Deliver Ad" and contains a truck graphic. A clockwise arrow
leads to an icon that reads "Track User Activity" and contains a lighthouse
graphic. Another clockwise arrow leads to an icon that reads "Measure Results"
and contains a chart graphic. A clockwise arrow leads to an icon that reads
"Target User" and contains a target graphic. A final arrow leads from the icon
that reads "Target User" to the icon that reads "Deliver Ad." Text at the center
of the flow chart reads: "Lifetime Customer Value--AdForce closed-loop marketing
services help advertisers find, attract and retain their target customers."
 
           [ICONS AT LEFT MARGIN UNDER SERVICES HEADING (PP. 37-38)]
 
        First icon reads "Media Planning" and contains a file folder graphic.
Second icon reads "Campaign Scheduling" and contains an appointment book
graphic. Third icon reads "Inventory Management" and contains a file boxes
graphic. Fourth icon reads "Targeting" and contains a target graphic. Fifth icon
reads "Ad Delivery" and contains a truck graphic. Sixth icon reads
"Transactions" and contains a lighthouse graphic. Seventh icon reads "Reporting"
and contains a chart graphic. Eighth icon reads "Auditing and Accounting" and
contains an abacus graphic. Ninth icon reads "Analysis" and contains a
microscope graphic.
 
                              [INSIDE BACK COVER]
 
TITLE: ADFORCE MAKE THE RIGHT IMPRESSION
 
        The AdForce logo is centered at the top of the page. A circular flow
chart is at the center of the page containing four icons. The icon at the top of
the flow chart reads "Deliver Ad" and contains a truck graphic. A clockwise
arrow leads to an icon that reads "Track User Activity" and contains a
lighthouse graphic. Another clockwise arrow leads to an icon that reads "Measure
Results" and contains a chart graphic. A clockwise arrow leads to an icon that
reads "Target User" and contains a target graphic. A final arrow leads from the
icon that reads "Target User" to the icon that reads "Deliver Ad." Text at the
center of the flow chart reads: "Lifetime Customer Value--AdForce closed-loop
marketing services help advertisers find, attract and retain their target
customers." The bottom of the page contains the text "End-To-End Ad Management."
Nine icons appear below this text representing media planning, campaign
scheduling, inventory management, targeting, ad delivery, transactions,
reporting, auditing and accounting and analysis.
<PAGE>
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                  PAGE
                                                                  -----
<S>                                                            <C>
Prospectus Summary...........................................           4
 
Risk Factors.................................................           6
 
Forward-Looking Statements...................................          17
 
Use of Proceeds..............................................          18
 
Dividend Policy..............................................          18
 
Capitalization...............................................          19
 
Dilution.....................................................          20
 
Selected Financial Data......................................          21
 
Management's Discussion and Analysis of Financial Condition
  and Results of Operations..................................          22
 
Business.....................................................          30
 
Management...................................................          43
 
Certain Transactions.........................................          55
 
Principal Stockholders.......................................          59
 
Description of Capital Stock.................................          61
 
Shares Eligible for Future Sale..............................          64
 
Underwriting.................................................          66
 
Legal Matters................................................          68
 
Experts......................................................          68
 
Additional Information.......................................          68
 
Index to Financial Statements................................         F-1
</TABLE>
 
        Information contained on our Web site is not a part of this prospectus.
 
        AdForce is one of our service marks. This prospectus also includes
trademarks and trade names of other companies.
 
                                       3
<PAGE>
                               PROSPECTUS SUMMARY
 
        THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD
CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY, INCLUDING "RISK FACTORS" AND THE FINANCIAL STATEMENTS,
BEFORE MAKING AN INVESTMENT DECISION.
 
                                    ADFORCE
 
        AdForce is a leading provider of centralized, outsourced ad management
and delivery services on the Internet. Our highly reliable, scalable technology
infrastructure and data center currently deliver up to 160 million ads per day.
Our services, AdForce for Advertisers and AdForce for Publishers, offer
sophisticated campaign design, inventory management, targeting, ad delivery,
tracking, measuring and reporting capabilities. Our services and technology
infrastructure leverage the advantages of Internet advertising and direct
marketing and allow our customers to:
 
        - Reach large or targeted audiences across multiple Web sites on our
          common platform;
 
        - Maximize return on advertising investments for advertisers and ad
          agencies;
 
        - Maximize the value of page view inventories for Web sites and ad rep
          firms;
 
        - Monitor and measure the effectiveness of ad campaigns in near real
          time;
 
        - Modify ad campaigns based on near real-time campaign performance data;
 
        - Aggregate large numbers of sites into a single network and segment the
          network into groups of special interest content such as "sports" or
          "finance"; and
 
        - Take advantage of direct marketing opportunities using sophisticated
          targeting technologies supported by our large and growing database of
          user information.
 
        By outsourcing the technically complex and operationally demanding ad
management and delivery functions to AdForce, our customers can utilize our high
performance systems, technology and personnel while focusing on their own core
competencies.
 
        The rapid expansion of the Internet has led to significant growth in
electronic commerce. The growth of the Internet generally and electronic
commerce in particular has spurred traditional businesses to devote larger
portions of their marketing budgets to Internet advertising, and has prompted
Internet and electronic commerce companies to increase their spending on
Internet advertising. Jupiter Communications estimates that spending on Internet
advertising will grow from $1.9 billion in 1998 to $7.7 billion in 2002, and the
Direct Marketing Association estimates that spending on Internet direct
marketing will grow from an estimated $603 million in 1998 to $5.3 billion in
2003.
 
        AdForce's objective is to be the primary technology and service
infrastructure for advertising and direct marketing on the Internet. We intend
to achieve our objective by enhancing and expanding our core technology
infrastructure, leveraging and expanding our customer base, maintaining our
neutrality between the buyers and sellers of advertising, leveraging our
database marketing capabilities and targeting additional advertising media as
they converge with the Internet.
 
        During 1998, we delivered 13.6 billion ads with increasing quarterly ad
volumes of 0.9 billion, 1.6 billion, 3.2 billion and 7.9 billion. Through
relationships with key customers, including GeoCities, Netscape, 24/7 Media,
2CAN Media and ModemMedia.PoppeTyson, we have achieved a broad reach over the
Internet. According to Media Metrix, an Internet research firm, in December 1998
AdForce served ads to approximately 58% of U.S. Internet users.
 
        We incorporated in California on January 16, 1996 as Imgis, Inc. and
intend to reincorporate in Delaware as AdForce, Inc. in March 1999. Our address
is 10101 North De Anza Boulevard, Suite 210, Cupertino, California 95014, and
our telephone number is (408) 873-3680.
 
                                       4
<PAGE>
                                  THE OFFERING
 
<TABLE>
<S>                                            <C>
Common stock offered by AdForce..............  shares
Common stock to be outstanding after this
offering.....................................  shares
Use of proceeds..............................  For general corporate purposes, including
                                               working capital. See "Use of Proceeds."
Proposed Nasdaq National Market symbol.......  ADFC
</TABLE>
 
                                 --------------
 
        ALL INFORMATION IN THIS PROSPECTUS RELATING TO ADFORCE'S CAPITAL STOCK,
OPTIONS AND WARRANTS IS AS OF DECEMBER 31, 1998. UNLESS OTHERWISE INDICATED, THE
INFORMATION IN THIS PROSPECTUS ASSUMES THAT THE OVER-ALLOTMENT OPTION WILL NOT
BE EXERCISED AND REFLECTS THE CONVERSION OF ALL PREFERRED STOCK INTO COMMON
STOCK, THE REINCORPORATION OF ADFORCE IN DELAWARE AND THE ADOPTION OF NEW
EMPLOYEE BENEFIT PLANS, ALL OF WHICH WILL OCCUR BEFORE THE CONSUMMATION OF THIS
OFFERING. ALL CAPITAL STOCK NUMBERS AND PER SHARE AMOUNTS IN THIS PROSPECTUS
HAVE BEEN ADJUSTED TO REFLECT THE EFFECT OF A TWO-FOR-ONE STOCK SPLIT THAT
OCCURRED IN FEBRUARY 1998. PLEASE SEE "CAPITALIZATION" FOR A MORE COMPLETE
DISCUSSION REGARDING ADFORCE'S CAPITAL STOCK, OPTIONS AND WARRANTS AND RELATED
MATTERS. THE TERMS "ADFORCE," "WE," "US" AND "OUR" REFER TO ADFORCE, INC., A
DELAWARE CORPORATION, AND ITS CALIFORNIA PREDECESSOR.
                                 --------------
 
        THE SUMMARY FINANCIAL DATA PRESENTED BELOW ARE DERIVED FROM THE
FINANCIAL STATEMENTS OF ADFORCE. THE PRO FORMA WEIGHTED AVERAGE COMMON SHARES
INCLUDE PREFERRED STOCK (ON AN AS-CONVERTED BASIS) AS WELL AS COMMON STOCK. THE
AS ADJUSTED BALANCE SHEET DATA SUMMARIZED BELOW REFLECT THE RECEIPT OF THE NET
PROCEEDS FROM THE SALE OF THE        SHARES OF COMMON STOCK OFFERED BY ADFORCE
AT AN ASSUMED INITIAL PUBLIC OFFERING PRICE OF $    AND AFTER DEDUCTING THE
ESTIMATED UNDERWRITING DISCOUNTS AND COMMISSIONS AND OFFERING EXPENSES.
 
                             SUMMARY FINANCIAL DATA
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                             PERIOD FROM     YEAR ENDED DECEMBER
                                                                          JANUARY 16, 1996           31,
                                                                           (INCEPTION) TO    --------------------
                                                                          DECEMBER 31, 1996    1997       1998
                                                                          -----------------  ---------  ---------
<S>                                                                       <C>                <C>        <C>
STATEMENT OF OPERATIONS DATA:
  Net revenue...........................................................      $      --      $     320  $   4,286
  Gross loss............................................................             --         (1,188)      (773)
  Loss from operations..................................................         (3,383)        (5,596)   (14,869)
  Net loss..............................................................         (3,452)        (5,704)   (15,020)
  Basic and diluted net loss per share..................................      $   (1.40)     $   (3.48) $   (5.28)
  Weighted average common shares -- basic and diluted...................          2,465          1,639      2,844
  Pro forma basic and diluted net loss per share........................                                $   (1.38)
  Pro forma weighted average common shares -- basic and diluted.........                                   10,877
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                          QUARTER ENDED
                                                                           --------------------------------------------
                                                                           MAR. 31,   JUNE 30,    SEPT. 30,   DEC. 31,
                                                                             1998       1998        1998        1998
                                                                           ---------  ---------  -----------  ---------
<S>                                                                        <C>        <C>        <C>          <C>
QUARTERLY STATEMENT OF OPERATIONS DATA:
  Net revenue............................................................  $     414  $     784   $   1,064   $   2,024
  Gross profit (loss)....................................................       (396)      (616)       (151)        390
  Net loss...............................................................     (2,483)    (3,910)     (3,807)     (4,820)
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                              DECEMBER 31, 1998
                                                                                            ----------------------
                                                                                             ACTUAL    AS ADJUSTED
                                                                                            ---------  -----------
<S>                                                                                         <C>        <C>
BALANCE SHEET DATA:
  Cash and cash equivalents...............................................................  $  10,045
  Working capital.........................................................................      7,975
  Total assets............................................................................     19,875
  Long-term portion of capital lease obligations..........................................      3,089
  Total stockholders' equity..............................................................     12,981
</TABLE>
 
                                       5
<PAGE>
                                  RISK FACTORS
 
        YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON STOCK.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. ANY OF THE
FOLLOWING RISKS COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS, RESULTS OF
OPERATIONS AND FINANCIAL CONDITION AND COULD RESULT IN A COMPLETE LOSS OF YOUR
INVESTMENT.
 
WE HAVE A LIMITED OPERATING HISTORY
 
        We were incorporated in January 1996 and have a limited operating
history. Before buying our common stock, you should consider the risks and
difficulties frequently encountered by early stage companies in new and rapidly
evolving markets, particularly those companies whose businesses depend on the
Internet. These risks and difficulties include, among other things, our
inability to predict future results of operations accurately due to our lack of
operating history and the unavailability of comparable business models. We
cannot assure you that our business strategy will be successful or that we will
address these risks and difficulties successfully. Please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
detailed information on our limited operating history.
 
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE AND OUR FUTURE OPERATING RESULTS
  REMAIN UNCERTAIN
 
        Our quarterly results of operations have varied in the past, and you
should not rely on quarter-to-quarter comparisons of our results of operations
as an indication of our future performance. It is likely that in future periods
our results of operations will be below the expectations of public market
analysts and investors. In this event, the price of our common stock would
likely decline. Our revenue and results of operations depend on a variety of
factors, many of which are beyond our control. These factors include:
 
        - the timing and costs of improvements in our ad management and delivery
          infrastructure, including the addition of more capacity;
 
        - our ability to satisfy and retain our existing customers;
 
        - any loss of existing customers due to consolidation in the industry;
 
        - the ability of our existing customers to maintain or increase their
          Internet traffic or market share;
 
        - our ability to expand our customer base and the timing of new
          customers commencing service with us;
 
        - changes in our pricing policies or those of our competitors resulting
          from competitive pressures and other factors;
 
        - our ability to provide reliable and scalable service, including our
          ability to avoid potential system failures;
 
        - the announcement or introduction of new technology or services by us
          or our competitors, including database marketing capabilities;
 
        - seasonal trends in our business; and
 
        - general economic and market conditions.
 
        We anticipate making significant capital expenditures as we increase the
capacity and reliability of our existing technology infrastructure and data
center. We also intend to open additional ad management and delivery centers in
the future. In addition, we intend to increase our sales and marketing
operations and to continue to allocate a large portion of our budget for
research and development. We would likely be unable to adjust spending quickly
enough to offset any unexpected revenue shortfall. If we have a shortfall in
revenue relative to our expenses, our business, results of operations and
financial condition
 
                                       6
<PAGE>
would be materially and adversely affected. Please see "Management's Discussion
and Analysis of Financial Condition and Results of Operations" for detailed
information on our quarterly results of operations.
 
WE HAVE A HISTORY OF LOSSES AND EXPECT FUTURE LOSSES
 
        We have not achieved profitability and expect to continue to incur net
losses on a quarterly and annual basis for the foreseeable future. We incurred
net losses of $3.5 million for the period from January 16, 1996 (inception) to
December 31, 1996, $5.7 million for the year ended December 31, 1997, and $15.0
million for year ended December 31, 1998. As of December 31, 1998, our
accumulated deficit was $24.2 million. We expect to continue to incur
significant operating and capital expenditures and, as a result, we will need to
generate significantly greater revenue than we have generated to date to achieve
and maintain profitability. In addition, our operating costs are relatively
fixed, and cannot be lowered quickly even if we fail to generate significant
revenue. Although we have experienced significant growth in revenue in recent
periods, we expect that future revenue growth, if any, will not be as rapid as
in recent periods. We may never achieve profitability on a quarterly or an
annual basis. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenue does not grow or grows more slowly than we anticipate, or if
operating or capital expenditures exceed our expectations and cannot be adjusted
accordingly, our business, results of operations and financial condition will be
materially and adversely affected. Please see "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for detailed information on our history of losses and expectation of
continued losses.
 
WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR OUR REVENUE
 
        We derive a substantial portion of our net revenue from a small number
of Web sites and ad rep firms. Our three largest customers for each quarter of
1998 represented 94%, 81%, 60% and 63%, respectively, of our net revenue. In
January 1999, three of our customers, GeoCities, 24/7 Media and Netscape,
accounted for approximately 71% of our net revenue. Our business, results of
operations and financial condition would be materially and adversely affected by
the loss of any of these customers or any significant reduction in net revenue
generated from these customers. Our customer agreements, including those with
GeoCities, 24/7 Media and Netscape, can generally be terminated at any time with
little or no penalty. Certain of our customers also use other ad management and
delivery systems for a portion of their ad serving needs and could reduce their
use of our services. Please see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for detailed information on our
customer concentration.
 
CONSOLIDATION IN THE INTERNET INDUSTRY MAY ADVERSELY AFFECT OUR RELATIONSHIPS
  WITH OUR CUSTOMERS
 
        Many of our principal customers are now and may in the future be
affected by rapid consolidation in the Internet industry. Our business, results
of operations and financial condition would be materially and adversely affected
by the loss of any of these customers or any significant reduction that we
derive from them. GeoCities, our largest customer, has entered into an agreement
to be acquired by Yahoo!. Netscape, another of our key customers, has entered
into an agreement to be acquired by America Online, one of our principal
stockholders. 2CAN Media recently entered into an agreement to be acquired by
AdSmart, a subsidiary of CMG Investments. CMG Investments owns Engage, which
recently acquired Accipiter, one of our competitors. Both Yahoo! and America
Online currently operate their own proprietary ad management and delivery
technologies. 24/7 Media acquired its own ad management and delivery technology
in 1998, and currently uses this technology to serve a portion of its
advertising needs. If our customers choose to use the proprietary ad serving
technologies of the companies that acquire them or other ad serving
technologies, our business, results of operations and financial condition would
be materially and adversely affected. Please see "Business--Key Customers" and
"--Competition" for detailed information on our customers and industry
consolidation.
 
                                       7
<PAGE>
INSUFFICIENT SYSTEM CAPACITY WOULD ADVERSELY AFFECT OUR BUSINESS
 
        Our success will be highly dependent on our ability to continue to scale
our technology infrastructure to meet the rapidly expanding market for Internet
advertising. If our traffic increases because of heightened demand from existing
or new customers, we will need to accommodate large increases in the number of
ads that we manage and deliver and the amount of data that we store. We will
also need to support the introduction of new and evolving types of advertising
and direct marketing that require greater system resources than traditional
banner ads. Our technology and infrastructure may not be able to support higher
volumes of ads, additional customers or new types of advertising or direct
marketing.
 
        We currently deliver ads from our data center in Costa Mesa, California,
and plan to begin delivering ads from an additional data center in Cupertino,
California in the second quarter of 1999. Although we have been successful in
scaling our system in the past, we may be unable to continue to scale our Costa
Mesa data center or begin operations from our second data center on time or
within budget. The uninterrupted performance of our data centers is critical to
our success. We expect to add more ad management and delivery centers to improve
redundancy and to increase capacity. Adding this new capacity will be expensive,
and we may not be able to do so successfully. In addition, we cannot assure you
that we will be able to protect our new or existing data centers from unexpected
events as we scale our systems. To the extent that we do not address any
capacity constraints effectively, our business, results of operations and
financial condition would be materially and adversely affected. Please see
"Business-- Technology and Data Center Operations" for detailed information on
our system capacity.
 
WE MUST BE ABLE TO RESPOND TO RAPID TECHNOLOGICAL CHANGE
 
        If we are unable to improve our technology infrastructure to respond to
technological change, changes in customer requirements or preferences, or
emerging new industry standards, our business, results of operations and
financial condition would be materially and adversely affected. The Internet and
the Internet advertising industry are characterized by rapid technological
change, changes in customer requirements and preferences, frequent new service
offerings and the emergence of new industry standards and practices that could
render our technology and systems obsolete. To remain competitive, we must
continue to improve the performance, functionality and features of our
technology infrastructure. We must be able to steadily increase our system
capacity, improve our existing services, and introduce new service offerings
without interrupting or interfering with our 24 hours a day, seven days a week
operation, and we must be able to do so in a timely and cost-effective manner.
We must ensure that our technology infrastructure is flexible enough to
accommodate technology advancements, including our ability to deliver ads to a
customer base that uses multiple browsers and multiple versions of those
browsers. We must also ensure that our technology infrastructure is flexible
enough to accommodate new customer requirements and preferences, such as the
delivery of "rich media" ads. We cannot assure you that we can make any of these
improvements in a timely or cost-effective manner, if at all. For example, in
August 1998, we encountered difficulties transitioning GeoCities from an on-site
ad server to our service, AdForce for Publishers, causing them to revert to
their existing on-site ad server for that month. The difficulties were resolved
and GeoCities resumed using our service in September 1998. Please see
"Business--Technology and Data Center Operations" for detailed information on
our technology infrastructure.
 
OUR SUCCESS WILL DEPEND ON ADVERTISERS AND AD AGENCIES ACCEPTING OUR SERVICES
 
        We currently have no agreements with individual advertisers, and ad
agencies account for only a small portion of our net revenue. If we fail to
develop advertisers and ad agencies as customers or do so more slowly than we
anticipate, our business, results of operations and financial condition would be
materially and adversely affected. The service and support requirements of
advertisers and ad agencies are significantly different from those of Web sites
and ad rep firms, and advertisers and ad agencies may not accept third-party
Internet ad management and delivery services or may not choose our services over
 
                                       8
<PAGE>
those offered by others. Moreover, advertisers and ad agencies may find Internet
advertising services to be too complex, ineffective or otherwise unsatisfactory
for managing and delivering their ad campaigns. Please see "Business--Industry
Background" and "--The AdForce Solution" for detailed information on the
challenges and benefits of Internet advertising for advertisers and ad agencies.
 
THE MARKET FOR INTERNET AD MANAGEMENT AND DELIVERY SERVICES IS EXTREMELY
  COMPETITIVE
 
        The market for Internet ad management and delivery services is extremely
competitive, and we expect this competition to increase in the future. We may be
unable to compete successfully, and competitive pressures may materially and
adversely affect our business, results of operations and financial condition.
Our ability to compete successfully in this market depends upon many factors
within and beyond our control, including:
 
        - the performance, reliability, ease of use and price of services that
          we or our competitors offer;
 
        - market acceptance of centralized, outsourced ad management and
          delivery systems as compared to internally-developed or site-specific
          software and hardware solutions;
 
        - our ability, relative to our competitors, to scale our technology
          infrastructure as our customer needs grow;
 
        - timeliness and market acceptance of new services and enhancements to
          existing services introduced by us or our competitors;
 
        - consolidation among existing customers, potential customers and our
          competitors;
 
        - sales and marketing efforts by us or our competitors; and
 
        - customer service and support efforts by us or our competitors.
 
        The market for Internet ad management and delivery services is still
evolving and is subject to intense competition as companies attempt to establish
a market presence. Some of our competitors are seeking to grow their market
presence without regard to profitability, which may result in significant price
reductions and reduced gross margins. This trend may lead us to reduce the
prices for our services in order to compete, which could materially and
adversely affect our net revenue and gross margins.
 
        A small number of Web sites account for a majority of the traffic on the
Internet, and this number is getting smaller, partly as a result of
consolidation. As the number of heavily-trafficked Web sites decreases, the
number of potential customers for our services also decreases, which can lead to
fewer customers for us and our competitors. Increased competition for the
remaining customers may result in price reductions, reduced gross margins and
loss of market share, any of which could materially and adversely affect our
business, results of operations and financial condition.
 
        We currently compete with providers of outsourced ad services, including
DoubleClick and MatchLogic, as well as providers of ad server software and
hardware solutions, such as NetGravity. Many of our current competitors have
substantially greater resources and more developed sales and marketing
strategies than we do. We may be unable to compete effectively against these
competitors now or in the future. In addition, several large Web sites, such as
America Online and Yahoo!, possess proprietary ad serving technologies and could
decide to enter the market for outsourced Internet advertising solutions, or
could reduce our customer base by acquiring existing or potential customers and
shifting those customers to their internal systems. As a result, it is possible
that new competitors may emerge and rapidly acquire significant market share.
Increased competition would likely result in price reductions, reduced gross
margins and loss of market share.
 
        Barriers to entering the Internet advertising market are relatively low.
We may encounter new competitors, such as Microsoft or IBM, that have longer
operating histories, greater name recognition,
 
                                       9
<PAGE>
larger customer bases or significantly greater financial, technical and
marketing resources than we do. These qualities may allow them to respond more
quickly than we can to new or emerging technologies and changes in customer
requirements or to devote greater resources than we can to the development,
promotion and sale of products and services. Our current and potential
competitors also may establish cooperative relationships or consolidate among
themselves or with third parties to increase their ability to address the needs
of prospective customers. New competitors may also engage in more extensive
research and development, undertake more far-reaching marketing campaigns, adopt
more aggressive pricing policies and make more attractive offers to existing and
potential employees, strategic partners and customers than we can. If such
companies decided to enter the market, we may be unable to compete effectively
against them. Please see "Business--Competition" for detailed information on
competition.
 
MANY OF OUR CUSTOMERS HAVE LIMITED OPERATING HISTORIES AND ARE UNPROFITABLE
 
        Many of our leading customers, including GeoCities, 24/7 Media and 2CAN
Media, have limited operating histories and have not achieved profitability. You
should evaluate the ability of these companies to meet their payment obligations
to us in light of the risks, expenses and difficulties encountered by companies
with limited operating histories, particularly in the evolving Internet market.
Some of our customers have failed to pay for our services on a timely basis. If
one or more of our customers is unable to pay for our services, or pays more
slowly than we anticipate, our business, results of operations and financial
condition could be materially and adversely affected. Please see "Business--Key
Customers" for a list of our key customers.
 
SYSTEM FAILURES OR DELAYS WOULD ADVERSELY AFFECT OUR BUSINESS
 
        Our operations are dependent on our ability to protect our computer
systems against damage from fire, water, power loss, telecommunications
failures, computer viruses, vandalism and other malicious acts, and similar
unexpected adverse events. Interruptions or slowdowns in our services have
resulted from the failure of our telecommunications providers to supply the
necessary data communications capacity in the time frame we require, as well as
from deliberate acts. Despite precautions we have taken, unanticipated problems
affecting our systems could in the future cause temporary interruptions or
delays in the services we provide. Our customers may become dissatisfied by any
system failure or delay that interrupts our ability to provide service to them
or slows our response time. Sustained or repeated system failures or delays
would affect our reputation, which would materially and adversely affect our
business, results of operations and financial condition. Slow response times or
system failures could also result from straining the capacity of our software or
hardware due to an increase in the volume of advertising delivered through our
servers. We do not carry business interruption insurance, and our business,
results of operations and financial condition could be materially and adversely
affected by any serious or prolonged emergency. Please see "Business--Technology
and Data Center Operations" for detailed information on our technology
infrastructure.
 
WE WILL INCREASINGLY DEPEND ON THE ABILITY TO TARGET ADVERTISEMENTS
 
        New technology allowing Internet advertisers to target their ads to
particular consumers will likely develop at a rapid pace in the near future. If
we are unable to continue to meet the needs of our customers or the marketplace
for more sophisticated advertising solutions, our business, results of
operations and financial condition would be materially and adversely affected.
As more advertisers demand such targeting solutions, we will need to develop
increasingly effective tools and larger databases that can provide greater
demographic precision in ad management and delivery. The development of these
tools and databases is technologically challenging and expensive. We cannot
assure you that we can develop any of these tools or databases in a
cost-effective and timely manner, if at all. In addition, the use of
demographically targeted advertisements may become subject to adverse
governmental regulation or public
 
                                       10
<PAGE>
pressure, which could deter some potential customers from using our services.
Please see "Business-- Services" for detailed information on our services and
planned service enhancements.
 
CONCERNS FOR PRIVACY ON THE INTERNET MAY ADVERSELY AFFECT OUR BUSINESS
 
        Increased regulation of privacy poses a potential risk to our business.
We have invested and continue to invest in technology that could make it easier
to target advertisements to users in specific demographic groups. Advocates of
privacy rights voice concern over the implications of such technology. The
resolution of privacy issues could adversely affect the growth both of the
Internet and of our business. Our business also depends on placing certain
information, often referred to as "cookies," on a user's hard drive without the
user's knowledge or consent. Our technology uses this information to track the
Web interactions of individual users and to limit the frequency with which the
user is shown a particular advertisement. Certain currently available Internet
browser programs allow users to modify their browser settings to disable this
information at any time or to prevent this information from being stored on
their hard drives. In addition, some Internet commentators, privacy advocates
and governmental bodies have suggested limiting or eliminating the use of this
information. The effectiveness of our technology and the success of our business
model would be severely limited by any reduction or limitation in the use of
such user information. Please see "Business--Services" for detailed information
on our services and planned service enhancements, and "--Privacy Policy" for
detailed information on our privacy policy.
 
OUR SUCCESS WILL DEPEND ON THE SUCCESS AND ACCEPTANCE OF THE INTERNET AS AN
  ADVERTISING MEDIUM
 
        The Internet advertising market has only recently begun to develop and
is evolving rapidly. This market may not prove to be viable or, if it becomes
viable, may not continue to grow. Our future growth largely depends on the
continued growth in Internet advertising generally, and on the willingness of
advertisers, ad agencies, Web sites and ad rep firms to outsource their Internet
advertising and direct marketing needs. Our growth also depends on our ability
to market our ad management and delivery services in a cost-effective manner to
a sufficiently large number of customers. If the Internet advertising market
fails to develop or develops more slowly than expected, or if our services do
not achieve market acceptance, our business, results of operations and financial
condition would be materially and adversely affected.
 
        Demand and market acceptance for Internet advertising services are
uncertain. Companies doing business on the Internet, including us, must compete
with traditional media, including television, radio, cable and print, for a
share of advertisers' total advertising budgets. Advertisers may be reluctant to
devote a significant portion of their advertising budgets to Internet
advertising if they perceive the Internet to be a limited or ineffective
advertising medium. Entities that have historically relied upon traditional
media for advertising may be reluctant to adopt new ways of conducting business,
exchanging information and advertising products and services on the Internet.
 
        Substantially all of our revenue is derived from the delivery of banner
advertisements. If advertisers determine that banner ads are ineffective or
unattractive as an advertising medium, we may be unable to make the transition
to any other form of Internet advertising. Also, there are "filter" software
programs that limit or prevent advertising from being delivered to a user's
computer. The commercial viability of Internet advertising, and our business,
results of operations and financial condition, would be materially and adversely
affected by Internet users' widespread adoption of these software programs.
Please see "Business--Industry Background" for detailed information on the
Internet advertising industry.
 
WE DEPEND ON THE VIABILITY AND CONTINUED GROWTH IN THE INTERNET INFRASTRUCTURE
 
        Our success is largely dependent upon the viability and continued growth
of the Internet infrastructure. We depend on the Internet infrastructure to
provide the performance, capacity and reliability needed to support the growth
of the Internet and Internet advertising. There have recently been
 
                                       11
<PAGE>
some highly publicized failures in the Internet network infrastructure, and
there are likely to be more in the future, which may have the effect of
undermining advertisers' confidence in the Internet as a viable commercial
medium. Particularly, if the Internet continues to experience an increase in
users, an increase in frequency of use or an increase in the capacity
requirements of users, we cannot assure you that the Internet infrastructure
will be able to support the demands placed upon it. Any actual or perceived
degradation in the performance of the Internet as a whole could undermine the
benefits of our services. In addition, the Internet could lose its viability as
a commercial medium due to delays in the development or adoption of new
technology required to accommodate increased levels of Internet activity or due
to increased government regulation. Changes in, or insufficient availability of,
telecommunications services to support the Internet could result in slower
response times and could hamper use of the Internet generally. If the Internet
infrastructure fails to support the growth of the Internet for any of these
reasons, our business, results of operations and financial condition would be
adversely affected. Even if the required infrastructure, standards, protocols
and complementary products, services and facilities are developed, we may be
required to spend heavily to adapt our solutions to emerging technologies.
Please see "Business-- Industry Background" for detailed information on the
Internet.
 
WE DEPEND ON OUR KEY PERSONNEL
 
        Our future success depends to a significant extent on the continued
service of our key technical, sales and senior management personnel and their
ability to execute our growth strategy. Recently, we have experienced
significant changes in our management team. One of our founders and former
President, Chad Steelberg, who originally developed some of our core
technologies, left AdForce in November 1998. In addition, in January 1999, we
hired a new Executive Vice President, Development and Operations, a new Vice
President, Sales and Business Development and a new Vice President, Marketing.
The loss of the services of any of our senior level management, or certain other
key employees, would likely have a material adverse effect on our business,
results of operations and financial condition. Our future performance will
depend, in part, on our ability to integrate our newly hired executive officers
effectively into our management team. We cannot assure you that our executive
officers, who have worked together for only a short time, will be successful in
carrying out their duties or running our company. Any dissent among executive
officers could adversely affect our ability to make strategic decisions quickly
in a rapidly changing market.
 
        Our future success also depends on our ability to attract, retain and
motivate highly skilled employees. Competition for employees in our industry is
intense. We may be unable to retain our key employees or to attract, assimilate
and retain other highly qualified employees in the future. We have from time to
time in the past experienced, and we expect in the future to continue to
experience, difficulty in hiring and retaining highly skilled employees with
appropriate qualifications. Please see "Management" for detailed information on
our key personnel.
 
OUR INABILITY TO MANAGE OUR GROWTH WOULD ADVERSELY AFFECT OUR BUSINESS
 
        We have grown our workforce substantially, from 52 employees on March
31, 1998 to 97 employees on December 31, 1998, and we plan to continue to expand
our research and development, data center operations, sales, marketing and
customer service organizations. Our growth has placed, and the anticipated
future growth in our operations will continue to place, a significant strain on
our management systems and resources. We expect that we will need to continue to
improve our financial and managerial controls and reporting systems and
procedures, and will need to continue to expand, train and manage our workforce.
If we are not able to manage our internal growth effectively to keep pace with
the expansion of the Internet advertising market or our competitors' growth, our
business, results of operations and financial condition would be materially and
adversely affected. Please see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for detailed information on our
internal growth.
 
                                       12
<PAGE>
WE DEPEND ON PROPRIETARY RIGHTS TO DEVELOP AND PROTECT OUR TECHNOLOGY
 
        Our success and ability to compete are substantially dependent on our
internally developed technologies and trademarks, which we protect through a
combination of patent, copyright, trade secret and trademark laws. We have filed
two patent applications in the United States. In addition, we have applied to
register certain trademarks in the United States. We cannot assure you that our
patent applications or trademark registrations will be approved. Even if they
are approved, our patents or trademarks may be successfully challenged by others
or invalidated. If our trademark registrations are not approved because third
parties own such trademarks, our use of these trademarks would be restricted
unless we enter into arrangements with the third-party owners, which may not be
possible on commercially reasonable terms.
 
        Our technology collects and utilizes data derived from user activity on
the Internet. Although we believe that we have the right to use this information
and to compile it in our database, we cannot assure you that any trade secret,
copyright or other protection will be available for such information. We also
cannot assure you that any of our proprietary rights will be viable or of value
in the future since the validity, enforceability and scope of protection of
certain proprietary rights in Internet-related industries are uncertain and
still evolving.
 
        We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.
 
        We have licensed, and we may license in the future, certain proprietary
rights to third parties. In particular, we have licensed our proprietary
software to America Online and Euroserve Media. In addition, prior to our
acquisition of Starpoint, Starpoint licensed its software to GeoCities and two
other parties. While we attempt to ensure that the quality of our brand is
maintained by these business partners, they may take actions that could
materially and adversely affect the value of our proprietary rights or our
reputation. In addition, we cannot assure you that these business partners will
take the same steps we have taken to prevent misappropriation of our solutions
or technologies.
 
THIRD PARTIES MAY ASSERT INFRINGEMENT CLAIMS AGAINST US OR OUR CUSTOMERS
 
        Third parties may assert infringement claims against us or our
customers. We do not believe that our technological processes infringe upon the
proprietary rights of others, but we cannot assure you that third parties will
not assert claims that we violate their rights. In addition, we believe that we
have the right to use the user data we collect for our database, but we cannot
assure you that third parties will not assert claims that we violate their trade
secrets or copyrights. Although there has not been any claim of this type in the
past, any claims or litigation, should they occur, could subject us to
significant liability for damages or could result in invalidation of our rights.
In addition, even if we prevail, litigation could be time-consuming and
expensive to defend, and could result in diversion of our time and attention,
which could materially and adversely affect our business, results of operations
and financial condition. Any claims or litigation from third parties might also
result in limitations on our ability to use the trademarks and other
intellectual property subject to these claims or litigations unless we enter
into arrangements with the third parties responsible for the claims or
litigation, which might be unavailable on commercially reasonable terms, if at
all.
 
                                       13
<PAGE>
OUR CONTRACTUAL RELATIONSHIP WITH AMERICA ONLINE MAY ADVERSELY AFFECT OUR
  BUSINESS
 
        We have granted to America Online a royalty-free, perpetual license to
our ad management and delivery technology, including source and object code, and
any improvements to it. Under the terms of this license agreement, America
Online could also require us to customize a version of our technology for the
exclusive use of America Online and its affiliates. We are obliged under the
license agreement to provide these services for an indefinite period of time
with little potential for significant profit, which could significantly strain
our development resources. We have also entered into a demographic data
agreement with America Online. Under the terms of this agreement, America Online
may elect to make demographic information available to us at any time within
three years, triggering substantial payment obligations from us even if we do
not use this information and even if we have contracted to obtain similar
information from an alternative source. If America Online makes the demographic
data available to us and then later limits or denies access to the demographic
information or significantly changes its advertising or privacy policies, our
ability to market our technology and services with enhanced targeting abilities
and to generate additional revenue could be severely limited, which would have a
material and adverse effect on our business, results of operations and financial
condition. Please see "Certain Transactions" for detailed information on our
relationship with America Online.
 
GOVERNMENT REGULATION OF THE INTERNET MAY ADVERSELY AFFECT OUR BUSINESS
 
        The applicability to the Internet of existing laws governing issues such
as property ownership, libel and personal privacy is uncertain. In addition,
governmental authorities may seek to further regulate the Internet with respect
to issues such as user privacy, pornography, acceptable content, electronic
commerce, taxation, and the pricing, characteristics and quality of products and
services. Finally, the global nature of the Internet could subject us to the
laws of a foreign jurisdictions in an unpredictable manner. Any new legislation
regulating the Internet could inhibit the growth of the Internet and decrease
the acceptance of the Internet as a communications and commercial medium, which
could have a material and adverse effect on our business, results of operations
and financial condition.
 
        The potential imposition of liability upon us for our content or
services could require us to implement measures to reduce our exposure to this
liability, which might require us to expend substantial resources or to
discontinue certain service offerings. While we carry general liability
insurance, this insurance may not be adequate to compensate us in the event we
become liable for our services. Any liability in excess of our insurance could
have a material and adverse effect on our business, results of operations and
financial condition.
 
        In addition, the growing use of the Internet has burdened the existing
telecommunications infrastructure and has caused interruptions in telephone
service. Telephone carriers have petitioned the government to regulate the
Internet and impose usage fees on Internet service providers. Any regulations of
this type could increase the costs of using the Internet and impede its growth,
which could in turn decrease the demand for our services or otherwise have a
material adverse effect on our business, results of operations and financial
condition.
 
POTENTIAL YEAR 2000 RISKS MAY ADVERSELY AFFECT OUR BUSINESS
 
        Beginning in the year 2000, the date fields coded in certain computer
systems and software products will need to accept four-digit entries in order to
distinguish between 21st century and 20th century dates. There is significant
uncertainty in the software industry regarding the potential effects associated
with Year 2000 compliance issues. To address these concerns, we have reviewed
internally developed software included in our ad management and delivery
systems. Further, we are working with our external suppliers and service
providers with respect to both third-party applications in our ad management and
delivery systems and third-party applications in our information technology
infrastructure
 
                                       14
<PAGE>
to ensure that these third-party systems and applications will be able to
interoperate with our hardware and software infrastructure where necessary and
support our needs into the year 2000. Based on these efforts, we believe we have
no significant Year 2000 issues within our systems or services. We have not
engaged in any official process designed to independently verify our Year 2000
readiness or to assess potential costs associated with Year 2000 risks, nor have
we procured any Year 2000 specific insurance or made any contingency plans to
address such risks. Further, we have not deferred any of our ongoing development
efforts to address Year 2000 issues, and do not anticipate any material payments
to vendors to remediate Year 2000 problems. However, there can be no assurance
that unanticipated costs associated with any Year 2000 compliance will not
exceed our present expectations and have a material adverse effect on our
business, financial condition and results of operations.
 
        We depend heavily on the uninterrupted availability of the Internet
infrastructure to conduct our business as a centralized management and delivery
service. We also rely heavily on the continued operations of our customers, in
particular Web sites hosting advertisements, for our revenue. We are thus
heavily dependent upon the success of the Year 2000 compliance efforts of the
many service providers that support the Internet, and the Year 2000 compliance
efforts of our customers. Interruptions in the Internet infrastructure affecting
us or our customers, or the failure of the Year 2000 compliance efforts of one
or more of our customers, could have a material adverse effect on our business,
results of operations and financial condition. Further, the purchasing patterns
of advertisers and ad agencies could be affected by Year 2000 issues as
companies expend significant resources to correct their current systems for the
year 2000. These expenditures may result in reduced funds available for Internet
advertising, which could in turn materially and adversely affect our business,
results of operations and financial condition. Please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Year
2000 Compliance" for detailed information on our Year 2000 readiness.
 
OUR FUTURE CAPITAL NEEDS ARE UNCERTAIN
 
        We expect the net proceeds from this offering, our current cash and cash
equivalents and borrowings from lease financings to meet our working capital and
capital expenditure needs for at least the next twelve months. After that, we
may need to raise additional funds, and we cannot be certain that we would be
able to obtain additional financing on favorable terms, if at all. Further, if
we issue equity securities, stockholders may experience additional dilution or
the holders of the new equity securities may have rights, preferences or
privileges senior to those of existing holders of common stock. If we cannot
raise funds, when needed, on acceptable terms, we may not be able to develop or
enhance our services, take advantage of future opportunities or respond to
competitive pressures or unanticipated requirements, which could seriously harm
our business, results of operations and financial condition. Please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" for detailed information on our
anticipated sources and uses of funds.
 
        We are devoting substantial resources to begin operations at our new
facility in Cupertino, California and will need to devote additional substantial
resources as we establish new ad management and delivery centers. Expenses may
include leasing real estate, purchasing equipment and hiring network,
administrative and customer support personnel. Moreover, we expect to make
significant investments in sales and marketing and the development of new
services as part of our business strategy. The failure to generate sufficient
cash flows or to raise sufficient funds to finance this growth could require us
to delay or abandon some or all of our plans or otherwise forego market
opportunities, making it difficult for us to respond to competitive pressures.
Please see "Business--Sales and Marketing" and "--Technology and Data Center
Operations" for detailed information on our expansion plans.
 
THE PRICE OF OUR COMMON STOCK IS LIKELY TO BE VOLATILE AND SUBJECT TO WIDE
  FLUCTUATIONS
 
        The market prices of the securities of Internet-related companies have
been especially volatile and these securities may be overvalued. Thus, the
market price of our common stock is likely to be subject
 
                                       15
<PAGE>
to wide fluctuations. If our revenue does not grow or grows more slowly than we
anticipate, or if operating or capital expenditures exceed our expectations or
cannot be adjusted accordingly, or if some other event adversely affects us, the
market price of our common stock could be materially and adversely affected. In
addition, if the market for Internet-related stocks or the stock market in
general experiences a loss in investor confidence or otherwise falls, the market
price of our common stock could be materially and adversely affected for reasons
unrelated to our business, results of operations and financial condition.
Investors may be unable to resell their shares of our common stock at or above
the offering price. In the past, companies that have experienced volatility in
the market price of their stock have been the subject of securities class action
litigation. If we were the subject of securities class action litigation, it
could result in substantial costs and a diversion of management's attention and
resources.
 
NO PUBLIC MARKET FOR OUR COMMON STOCK CURRENTLY EXISTS
 
        Prior to this offering, you could not buy or sell our common stock on a
public market. An active public market for our common stock may not develop or
be sustained after the offering. Although the assumed initial public offering
price was determined based on a number of factors, the initial public offering
price may significantly vary from the market price after the offering. Please
see "Underwriting" for detailed information on the factors used to determine the
initial public offering price.
 
CERTAIN PROVISIONS IN OUR CHARTER DOCUMENTS MAY DETER ACQUISITION BIDS FOR
  ADFORCE
 
        We have adopted a classified board of directors and our stockholders are
unable to call special meetings of stockholders, to act by written consent, to
remove any director or the entire Board of Directors without cause, or to fill
any vacancy on the Board of Directors. These provisions and other provisions
under Delaware law could make it more difficult for a third party to acquire us,
even if doing so would benefit our stockholders. Please see "Management" and
"Description of Capital Stock" for detailed information on these protective
provisions.
 
OUR OFFICERS AND DIRECTORS EXERT SUBSTANTIAL INFLUENCE OVER ADFORCE
 
        We anticipate that our executive officers, our directors and entities
affiliated with them will beneficially own, in the aggregate, approximately
    % of our outstanding common stock following the completion of this offering.
These stockholders may be able to exercise substantial influence over all
matters requiring approval by our stockholders, including the election of
directors and approval of significant corporate transactions. This concentration
of ownership may also have the effect of delaying or preventing a change in
control of AdForce. Please see "Management" and "Principal Stockholders" for
detailed information on our officers and directors.
 
WE WILL HAVE BROAD DISCRETION TO USE THE PROCEEDS OF THIS OFFERING
 
        We plan to use the proceeds from this offering for general corporate
purposes. Therefore, we will have broad discretion as to how we spend the
proceeds, which could be in ways with which you and the other stockholders would
not agree. It is also possible that we will invest the proceeds in ways that do
not yield a favorable return. Please see "Use of Proceeds" for detailed
information on our planned use of proceeds.
 
FUTURE SALES OF SHARES BY EXISTING STOCKHOLDERS COULD AFFECT OUR STOCK PRICE
 
        If our stockholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our common stock
could decline. Based on shares outstanding as of December 31, 1998, upon
completion of this offering we will have outstanding     shares of common stock
(assuming no exercise of the underwriters' over-allotment option). Of these
shares,     will be eligible for sale in the public market. After the lockup
agreements with the underwriters of this offering
 
                                       16
<PAGE>
expire 180 days from the date of this prospectus, an additional     shares will
be eligible for sale in the public market.
 
        These share numbers exclude 3,217,546 shares subject to outstanding
options and warrants and 702,768 shares reserved for future issuance under our
stock plans as of December 31, 1998. Please see "Management--Employee Benefit
Plans," "Shares Eligible for Future Sale" and "Underwriting" for detailed
information about the ability of our stockholders, option holders and warrant
holders to sell their shares after this offering.
 
YOU WILL INCUR SUBSTANTIAL DILUTION
 
        The initial public offering price is expected to be substantially higher
than the pro forma net book value per share of the outstanding common stock. As
a result, investors purchasing common stock in this offering will incur
immediate substantial dilution in the amount of $     . In addition, we have
issued options and warrants to acquire common stock at prices significantly
below the initial public offering price. To the extent these outstanding options
and warrants are exercised, there will be further dilution to investors in this
offering. Please see "Dilution" for detailed information on this dilution.
 
                           FORWARD-LOOKING STATEMENTS
 
        Certain statements under the captions "Prospectus Summary," "Risk
Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and elsewhere in this
prospectus are forward-looking statements. These forward-looking statements
include, but are not limited to, statements about our plans, objectives,
expectations and intentions and other statements contained in the prospectus
that are not historical facts. When used in this prospectus, the words
"expects," "anticipates," "intends," "plans," "believes," "seeks" and
"estimates" and similar expressions are generally intended to identify
forward-looking statements. Because these forward-looking statements involve
risks and uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by these
forward-looking statements, including our plans, objectives, expectations and
intentions and other factors discussed under "Risk Factors."
 
                                       17
<PAGE>
                                USE OF PROCEEDS
 
        We estimate that the net proceeds to us from the sale of the     shares
of common stock will be approximately $    million, at an assumed initial public
offering price of $    per share and after deducting the estimated underwriting
discounts and commissions and offering expenses. If the underwriters'
over-allotment option is exercised in full, we estimate that our net proceeds
will be approximately $    million.
 
        We intend to use the net proceeds from this offering primarily for
general corporate purposes, including working capital. We may also use a portion
of the net proceeds from this offering to acquire or invest in businesses,
technologies or services that are complementary to our business. We have no
present plans or commitments and are not currently engaged in any negotiations
with respect to any transactions. Pending such uses, we intend to invest the net
proceeds from this offering in short-term, interest-bearing, investment-grade
securities. Please see "Risk Factors--Our Future Capital Needs Are Uncertain"
and
"--We Will Have Broad Discretion to Use the Proceeds of this Offering."
 
                                DIVIDEND POLICY
 
        We have never declared or paid any cash dividends on shares of our
capital stock. We intend to retain any future earnings to finance future growth
and do not anticipate paying any cash dividends in the foreseeable future.
 
                                       18
<PAGE>
                                 CAPITALIZATION
 
        The following table sets forth (1) the actual capitalization of AdForce
as of December 31, 1998, (2) the capitalization as of that date on a pro forma
basis to give effect to the conversion of each outstanding share of preferred
stock into two shares of common stock upon the closing of this offering and (3)
the pro forma capitalization as adjusted to reflect the receipt of the net
proceeds from the sale of the        shares of common stock offered by AdForce
at an assumed initial public offering price of $
per share and after deducting the estimated underwriting discounts and
commissions and offering expenses.
 
        The information set forth in the table below is qualified by, and should
be read in conjunction with, the more detailed financial statements of AdForce
and the notes thereto appearing elsewhere in this prospectus.
 
<TABLE>
<CAPTION>
                                                                     DECEMBER 31, 1998
                                                            -----------------------------------
                                                                                     PRO FORMA
                                                             ACTUAL     PRO FORMA   AS ADJUSTED
                                                            ---------  -----------  -----------
                                                                      (IN THOUSANDS)
<S>                                                         <C>        <C>          <C>
Long-term portion of capital lease obligations............  $   3,089   $   3,089    $   3,089
                                                            ---------  -----------  -----------
Stockholders' equity:
  Preferred stock, $0.001 par value; 6,238,163 shares
    authorized, 4,733,559 shares issued and outstanding,
    actual; 5,000,000 shares authorized, no shares issued
    and outstanding, pro forma and pro forma as
    adjusted..............................................          5          --           --
  Common stock, $0.001 par value; 40,000,000 shares
    authorized, 5,016,603 shares issued and outstanding,
    actual; 100,000,000 shares authorized, pro forma and
    pro forma as adjusted; 14,483,721 shares issued and
    outstanding, pro forma;     shares issued and
    outstanding, pro forma as adjusted....................          5          14
  Additional paid-in capital..............................     39,879      39,875
  Deferred stock compensation.............................     (2,662)     (2,662)      (2,662)
  Note receivable from stockholder........................        (70)        (70)         (70)
  Accumulated deficit.....................................    (24,176)    (24,176)     (24,176)
                                                            ---------  -----------  -----------
    Total stockholders' equity............................     12,981      12,981
                                                            ---------  -----------  -----------
      Total capitalization................................  $  16,070   $  16,070    $
                                                            ---------  -----------  -----------
                                                            ---------  -----------  -----------
</TABLE>
 
        The outstanding share information set forth in the table above excludes:
 
        - 1,294,686 shares of common stock issuable upon the exercise of
          outstanding warrants, at a weighted average per share exercise price
          of $6.19;
 
        - 1,922,860 shares of common stock issuable upon the exercise of
          outstanding stock options, at a weighted average per share exercise
          price of $0.76;
 
        - 702,768 shares of common stock available for future grant under the
          1997 Plan;
 
        - 2,200,000 shares available for future grant under the 1999 Equity
          Incentive Plan or the 1999 Directors Stock Option Plan; and
 
        - 300,000 shares initially available for issuance under the 1999
          Employee Stock Purchase Plan, which number is subject to automatic
          annual increases up to a maximum of 3,000,000 shares over the term of
          the Purchase Plan.
 
                                       19
<PAGE>
                                    DILUTION
 
        The pro forma net tangible book value of AdForce as of December 31, 1998
was $9,379,000, or $0.65 per share of common stock. Pro forma net tangible book
value per share represents the amount of AdForce's total tangible assets less
total liabilities, divided by 14,483,721 shares of common stock outstanding
after giving effect to the conversion of all outstanding shares of preferred
stock into shares of common stock upon completion of this offering. After giving
effect to the receipt of the net proceeds from the sale of the     shares of
common stock offered by AdForce (based upon an assumed initial public offering
price of $    per share and after deducting the estimated underwriting discounts
and commissions and offering expenses), the pro forma net tangible book value of
AdForce as of December 31, 1998 would have been approximately $    million, or
$    per share. This represents an immediate increase in pro forma net tangible
book value of $    per share to existing stockholders and an immediate dilution
of $    per share to new investors purchasing shares at the initial public
offering price. The following table illustrates the per share dilution:
 
<TABLE>
<CAPTION>
<S>                                                                           <C>        <C>
Assumed initial public offering price per share.............................             $
  Pro forma net tangible book value per share as of December 31, 1998.......  $    0.65
  Increase per share attributable to new investors..........................
                                                                              ---------
Pro forma net tangible book value per share after offering..................
                                                                                         ---------
Dilution per share to new investors.........................................             $
                                                                                         ---------
                                                                                         ---------
</TABLE>
 
        The following table summarizes as of December 31, 1998, on the pro forma
basis described above, the number of shares of common stock purchased from
AdForce, the total consideration paid to AdForce and the average price per share
paid by existing stockholders and by investors purchasing shares of common stock
in this offering (before deducting the estimated underwriting discounts and
commissions and offering expenses):
 
<TABLE>
<CAPTION>
                                          SHARES PURCHASED       TOTAL CONSIDERATION
                                       ----------------------  -----------------------  AVERAGE PRICE
                                        NUMBER      PERCENT      AMOUNT      PERCENT      PER SHARE
                                       ---------  -----------  ----------  -----------  -------------
<S>                                    <C>        <C>          <C>         <C>          <C>
Existing stockholders................  14,483,721          %   $31,087,000          %     $    2.15
New investors........................
                                       ---------  -----------  ----------  -----------
  Total..............................                 100.0%   $               100.0%
                                       ---------  -----------  ----------  -----------
                                       ---------  -----------  ----------  -----------
</TABLE>
 
        The foregoing discussion and tables assume no exercise of any stock
options or warrants outstanding as of December 31, 1998. As of December 31,
1998, there were options and warrants outstanding to purchase a total of
3,217,546 shares of common stock with a weighted average exercise price of $2.94
per share. To the extent that any of these options or warrants are exercised,
there will be further dilution to new public investors. Please see
"Capitalization," "Management--Employee Benefit Plans" and Note 8 of Notes to
Financial Statements.
 
                                       20
<PAGE>
                            SELECTED FINANCIAL DATA
 
        The following selected financial data should be read in conjunction
with, and are qualified by reference to, the financial statements and notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing elsewhere in this prospectus. The statement of
operations data for the period from January 16, 1996 (inception) to December 31,
1996 and the years ended December 31, 1997 and 1998, and the balance sheet data
at December 31, 1996, 1997 and 1998, are derived from our financial statements,
which have been audited by Ernst & Young LLP, independent auditors, and (except
for the balance sheet as of December 31, 1996) are included elsewhere in this
prospectus. Historical results are not necessarily indicative of future results.
We have paid no cash dividends on our common stock.
 
<TABLE>
<CAPTION>
                                                                               PERIOD FROM
                                                                               JANUARY 16,
                                                                                  1996        YEAR ENDED DECEMBER
                                                                             (INCEPTION) TO           31,
                                                                              DECEMBER 31,    --------------------
                                                                                  1996          1997       1998
                                                                             ---------------  ---------  ---------
                                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                                          <C>              <C>        <C>
STATEMENT OF OPERATIONS DATA:
Net revenue................................................................     $      --     $     320  $   4,286
Cost of revenue:
  Data center operations...................................................            --         1,508      4,439
  Amortization of intangible assets and deferred stock compensation........            --            --        620
                                                                                   ------     ---------  ---------
    Total cost of revenue..................................................            --         1,508      5,059
                                                                                   ------     ---------  ---------
Gross loss.................................................................            --        (1,188)      (773)
                                                                                   ------     ---------  ---------
Operating expenses:
  Research and development.................................................         1,561         2,236      4,665
  Marketing and selling....................................................         1,485         1,054      4,863
  General and administrative...............................................           337         1,118      1,839
  Amortization of intangible assets and deferred stock compensation........            --            --      2,729
                                                                                   ------     ---------  ---------
    Total operating expenses...............................................         3,383         4,408     14,096
                                                                                   ------     ---------  ---------
Loss from operations.......................................................        (3,383)       (5,596)   (14,869)
Interest expense, net......................................................           (69)         (108)      (151)
                                                                                   ------     ---------  ---------
Net loss...................................................................     $  (3,452)    $  (5,704) $ (15,020)
                                                                                   ------     ---------  ---------
                                                                                   ------     ---------  ---------
Basic and diluted net loss per share.......................................     $   (1.40)    $   (3.48) $   (5.28)
                                                                                   ------     ---------  ---------
                                                                                   ------     ---------  ---------
Weighted average shares of common stock outstanding used in computing basic
  and diluted net loss per share...........................................         2,465         1,639      2,844
                                                                                   ------     ---------  ---------
                                                                                   ------     ---------  ---------
Pro forma basic and diluted net loss per share.............................                              $   (1.38)
                                                                                                         ---------
                                                                                                         ---------
Weighted average shares used in computing pro forma basic and
  diluted net loss per share...............................................                                 10,877
                                                                                                         ---------
                                                                                                         ---------
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                      -------------------------------
                                                                                        1996       1997       1998
                                                                                      ---------  ---------  ---------
<S>                                                                                   <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents...........................................................  $     681  $   1,680  $  10,045
Working capital (deficit)...........................................................        (22)     1,173      7,975
Total assets........................................................................      1,855      4,269     19,875
Long-term portion of capital lease obligations......................................         --      1,744      3,089
Total stockholders' equity..........................................................      1,078      1,375     12,981
</TABLE>
 
                                       21
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
        THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING BUT NOT
LIMITED TO STATEMENTS WITH RESPECT TO OUR FUTURE FINANCIAL PERFORMANCE, RESULTS
OF OPERATIONS, PLANS AND OBJECTIVES. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE CURRENTLY ANTICIPATED DEPENDING UPON A VARIETY OF FACTORS, INCLUDING THOSE
DESCRIBED BELOW UNDER THE SUB-HEADING, "FLUCTUATIONS IN RESULTS OF OPERATIONS."
 
OVERVIEW
 
        AdForce is a leading provider of centralized, outsourced ad management
and delivery services on the Internet. We began operations on January 16, 1996
as Imgis, Inc. and spent the first 15 months of our operations developing
technology that could be used to manage and deliver Internet advertising images
("ads") for advertisers, ad agencies, Web sites and ad rep firms. Initially, we
did not have an internal sales force dedicated to selling our services. To
generate business for AdForce, we relied primarily on the sales forces of ad rep
firms that used our services to manage and deliver ads to the Web site customers
they represented. In December 1997, we began to build a direct sales force to
allow us to penetrate the market for our services more effectively.
 
        We began delivering ads and recognizing revenue during the second
quarter of 1997 and increased our revenue as the ad volumes delivered by our ad
rep firm customers grew. 24/7 Media and its predecessor firms were responsible
for 92% of net revenue in 1997. In November 1997, we also contracted to deliver
ads for Netcom and Fortune City, and began to demonstrate the applicability of
our services to Web sites. In 1998, we continued to add customers with material
amounts of ad volume. 2CAN Media and Netscape began using our services in early
1998, and GeoCities began using our services in the latter half of June 1998.
Though we continue to derive the majority of our net revenue from a limited
number of customers, we broadened our customer base in 1998. In the first
quarter of 1998, 24/7 Media and Netcom accounted for 76% and 14%, respectively,
of our net revenue. By the fourth quarter, our top five customers, 24/7 Media,
GeoCities, Fortune City, 2CAN Media and Netscape, accounted for 27%, 26%, 10%,
6% and 6%, respectively, of our net revenue.
 
        In 1997 and 1998, we earned the vast majority of our revenue by managing
and delivering ads for ad agencies, Web sites and ad rep firms. We expect to
begin marketing our services directly to advertisers during 1999. We also
charged customers for other services, such as developing custom reports,
although revenue to date from these services has not been significant. We plan
to continue to develop and offer new services such as advanced consumer
targeting capabilities and expect that an increasing proportion of our revenue
will be generated by these services.
 
        We charge our customers based on each 1,000 ads delivered. Customers
with higher ad volumes than average generally receive discounts. During 1998,
the monthly volume of ads we delivered increased significantly as Internet
traffic increased and we gained market share. However, the average rate we
charged declined during 1998. We believe that pricing competition and
volume-based discounts were the primary reasons for this decline in average
rates charged. We expect those factors to cause future declines in average rates
charged.
 
        Our centralized ad management system has significant favorable cost
economies when compared to on-site ad delivery alternatives available to
individual Web sites. Our average cost to manage and deliver each ad is
significantly influenced by ad volume moving through our system. As we continue
to aggregate Web sites and their ad volumes on our system, and add additional
advertisers, ad agencies and ad rep firms as customers, we expect the average
cost to deliver each ad to decline. In addition, a portion of our research and
development efforts is devoted to continually improving the performance and
efficiency of our systems. As these efforts are integrated into our system, we
expect fewer resources will be required to deliver the same number of ads and
the average cost to deliver each ad will decline. We believe that these
favorable economies for centralized ad management will increase if greater and
greater
 
                                       22
<PAGE>
volumes are served by our system. During 1998, the average cost to deliver each
ad declined more significantly than the decrease in the average rate charged,
resulting in improved gross margins.
 
        In the operating areas of research and development, sales and marketing,
and general and administrative costs, the single most significant cost is
personnel, including the related payroll, facilities, and other overhead costs.
Historically, our personnel requirements in these operating areas have increased
at significantly lower rates than revenue.
 
        We have recorded deferred stock compensation expense for options granted
after February 1998. As of December 31, 1998, we had recorded aggregate deferred
stock compensation of $3.7 million; in addition, in January 1999, we recorded
additional deferred stock compensation of $4.7 million. The related stock
compensation expense is amortized over the vesting periods of the stock options.
AdForce recognized a total of $1.0 million in stock compensation expense during
1998. In addition, we recorded stock compensation expense of $1.4 million during
1998 related to the unvested founders' stock that was not repurchased. Since a
certain portion of these charges was related to persons involved in running data
center operations, we allocated that portion to cost of revenue, and thus
reduced our gross margin. The total charges to be recognized in future years
from amortization of deferred stock compensation, including amounts capitalized
in the first quarter of 1999, are anticipated to be approximately $3.9 million,
$2.0 million, $1.0 million and $404,000 for 1999, 2000, 2001 and 2002,
respectively.
 
        In February 1998, AdForce acquired StarPoint Software, Inc., principally
by exchanging AdForce shares for StarPoint shares. We accounted for this
transaction as a purchase with a total purchase price of $2.6 million. The
purchase price was primarily allocated to intangible assets, including purchased
technology that is being amortized over the respective lives of those assets;
and in-process technology of $100,000, which was expensed at the time of the
acquisition. Amortization charges of $849,000 related to this purchase were
recognized during 1998, and further amortization charges of $926,000, $587,000
and $46,000 are expected to be recognized in 1999, 2000 and 2001, respectively.
 
        We incurred net losses of $3.5 million for the period from January 16,
1996 (inception) to December 31, 1996, $5.7 million for the year ended December
31, 1997, and $15.0 million for year ended December 31, 1998. As of December 31,
1998, our accumulated deficit was $24.2 million. We expect to continue to incur
significant operating and capital expenditures and, as a result, we will need to
generate significantly greater revenue than we have generated to date to achieve
and maintain profitability. In addition, our operating costs are relatively
fixed, and cannot be quickly lowered even if we fail to generate significant
revenue. Although we have experienced significant growth in revenue in recent
periods, we expect the growth rate to decline substantially. We expect to
continue to incur net losses on a quarterly and annual basis for the foreseeable
future.
 
                                       23
<PAGE>
RESULTS OF OPERATIONS
 
        The following table sets forth certain line items from our unaudited
statements of operations and these line items as a percentage of net revenue for
the periods indicated. Annual statement of operations data may be found above
under "Selected Financial Data." Figures below are rounded to the nearest whole
percentage, and thus line items presenting subtotal and total percentages may
differ, due to rounding, from the sum of the percentages for each line item.
<TABLE>
<CAPTION>
                                                                    QUARTER ENDED
                                                  --------------------------------------------------
                                                   MAR. 31,     JUNE 30,     SEPT. 30,    DEC. 31,
                                                     1998         1998         1998         1998
                                                  -----------  -----------  -----------  -----------
                                                                    (IN THOUSANDS)
<S>                                               <C>          <C>          <C>          <C>
Net revenue.....................................   $     414    $     784    $   1,064    $   2,024
Cost of revenue:
  Data center operations........................         709        1,235        1,044        1,451
  Amortization of intangible assets and deferred
    stock compensation..........................         101          165          171          183
                                                  -----------  -----------  -----------  -----------
    Total cost of revenue.......................         810        1,400        1,215        1,634
                                                  -----------  -----------  -----------  -----------
Gross profit (loss).............................        (396)        (616)        (151)         390
Operating expenses:
  Research and development......................         818          972        1,241        1,634
  Marketing and selling.........................         613        1,221        1,389        1,640
  General and administrative....................         390          453          509          487
  Amortization of intangible assets and deferred
    stock compensation..........................         163          571          554        1,441
                                                  -----------  -----------  -----------  -----------
    Total operating expenses....................       1,984        3,217        3,693        5,202
                                                  -----------  -----------  -----------  -----------
Loss from operations............................      (2,380)      (3,833)      (3,844)      (4,812)
Interest income (expense), net..................        (103)         (77)          37           (8)
                                                  -----------  -----------  -----------  -----------
Net loss........................................   $  (2,483)   $  (3,910)   $  (3,807)   $  (4,820)
                                                  -----------  -----------  -----------  -----------
                                                  -----------  -----------  -----------  -----------
 
<CAPTION>
 
                                                            AS A PERCENTAGE OF NET REVENUE
                                                  --------------------------------------------------
<S>                                               <C>          <C>          <C>          <C>
Net revenue.....................................         100%         100%         100%         100%
Cost of revenue:
  Data center operations........................         171          158           98           72
  Amortization of intangible assets and deferred
    stock compensation..........................          24           21           16            9
                                                  -----------  -----------  -----------  -----------
    Total cost of revenue.......................         196          179          114           81
                                                  -----------  -----------  -----------  -----------
Gross margin....................................         (96)         (79)         (14)          19
Operating expenses:
  Research and development......................         198          124          117           81
  Marketing and selling.........................         148          156          131           81
  General and administrative....................          94           58           48           24
  Amortization of intangible assets and deferred
    stock compensation..........................          39           73           52           71
                                                  -----------  -----------  -----------  -----------
    Total operating expenses....................         479          410          347          257
                                                  -----------  -----------  -----------  -----------
Loss from operations............................        (575)        (489)        (361)        (238)
  Interest income (expense), net................         (25)         (10)           3           --
                                                  -----------  -----------  -----------  -----------
Net loss........................................        (600 )%       (499 )%       (358 )%       (238 )%
                                                  -----------  -----------  -----------  -----------
                                                  -----------  -----------  -----------  -----------
</TABLE>
 
                                       24
<PAGE>
NET REVENUE
 
        We experienced quarterly revenue growth in each quarter of 1998. When
compared to the immediately preceding quarter, quarterly net revenue grew by
97%, 89%, 36% and 90% during the first, second, third and fourth quarters of
1998, respectively. The increases in net revenue for all periods presented were
primarily due to increases in the volumes of ads that we delivered on behalf of
our customers, offset by declines in the average rates charged for delivering
these ads. The ad volume increases resulted from both the addition of new
customers and the growth in ad volumes experienced by many of our existing
customers as the market for Internet advertising increased. The declines in
average rates charged were primarily the result of competitive pricing pressure
and large-contract pricing. In 1998, we added several large customers with
significant ad volumes. We expect the pricing pressure from competitors and
discounts related to large-contract pricing to continue for at least the next
several quarters.
 
        The growth in net revenue between the first and second quarters of 1998
was due primarily to increased ad volumes delivered for 24/7 Media and, to a
lesser extent, to significant ad volume increases from Fortune City and several
new ad agency and Web site customers. The growth in net revenue between the
second and third quarters of 1998 was largely due to the revenue contribution of
GeoCities, which became a customer in late June 1998, and of ad agencies and
other Web sites that became customers during the third quarter. The increase in
net revenue from these customers in the third quarter was partially offset by a
decline in net revenue from 24/7 Media, as it moved a portion of its ad volume
from our systems to its own proprietary server. The revenue growth rate from the
second to the third quarter was significantly less than the revenue growth rate
in previous quarters as we encountered issues in transitioning GeoCities from an
on-site ad server to our service, AdForce for Publishers, causing them to revert
to their existing on-site ad server for the month of August 1998. The issues
were resolved and GeoCities resumed using our centralized service in September
1998, and our quarterly revenue growth rate in the fourth quarter returned to
earlier levels. The growth in net revenue between the third and fourth quarters
of 1998 was due to significantly greater net revenue from GeoCities, from 24/7
Media as it began to move ad volume from its proprietary server back to the
AdForce service, and from Netscape and other customers. Although Netscape became
a customer in the first quarter of 1998, it did not generate significant revenue
for us until the fourth quarter of 1998. We expect that future revenue growth,
if any, will not be as dramatic as in recent periods.
 
        Our net revenue increased from $320,000 in 1997 to $4.3 million in 1998.
We had no revenue in the period from January 16, 1996 (inception) to December
31, 1996 (the "Inception Period"). The annual increases in net revenue were
primarily due to the increased number of ads that we served on behalf of our
customers, offset in part by a decline in the average rates charged for serving
these ads. The increase in ad volume resulted both from the addition of new
customers and from increasing ad volumes for existing and new customers. The
decline in the average rates charged that we obtained for delivering ads
resulted from significant pricing pressure from competitors and volume-based
pricing discounts.
 
GROSS PROFIT (LOSS)
 
        Gross margin increased sequentially from negative 96% in the first
quarter to negative 79% in the second quarter to negative 14% in the third
quarter and to positive 19% in the fourth quarter of 1998. Although our average
rates charged declined during 1998 as a result of competition and discounts to
customers with large ad volumes, our average cost to manage and deliver ads
declined at a faster pace. Our average cost to manage and deliver each ad is
significantly influenced by ad volume moving through our system. When a larger
number of ads is delivered, the average cost to deliver each ad declines. In
addition, a portion of our research and development efforts is devoted to more
efficient design and deployment of capital assets used in managing and
delivering ads. As this work is integrated into the AdForce system, we expect
fewer resources will be required to deliver the same number of ads and the
average cost to deliver each ad will continue to decline.
 
                                       25
<PAGE>
        Total cost of revenue primarily consists of capital asset costs,
telecommunications costs, facilities costs, and personnel related costs incurred
to operate our data center. It also includes non-cash charges for amortization
of deferred stock compensation to data center personnel who received options
with exercise prices below the fair market value of the underlying shares on the
date of grant, as well as charges for amortization of intangible assets acquired
in the purchase of StarPoint.
 
        Our gross margin was negative 371% in 1997 and negative 18% in 1998. The
improvement in gross margin from 1997 to 1998 was primarily due to increased
revenue and an improved technology infrastructure that allowed us to deploy our
resources to deliver ads more efficiently. These efficiency improvements were
offset in part by declining average rates charged to our customers.
 
RESEARCH AND DEVELOPMENT EXPENSES
 
        Research and development expenses consist primarily of personnel and
related costs associated with developing technology, primarily software, for use
in providing our services to customers. These expenses increased sequentially
from the first quarter to the fourth quarter of 1998, as personnel were added to
enhance both features and performance of our services. In the fourth quarter of
1998, we also incurred consulting costs in connection with a review of our
technology in order to identify potential ways to enhance future performance and
reliability. Our research and development expenses were $1.6 million in the
Inception Period, $2.2 million in 1997 and $4.7 million in 1998. These expenses
increased primarily as a result of growth in the number of research and
development employees and, to a lesser extent, as a result of increases in
capital assets and facility expenses incurred to develop the software used to
deliver ads. We expect our research and development expenses to increase in
absolute dollars over the next several quarters.
 
MARKETING AND SELLING EXPENSES
 
        Our marketing and selling expenses during 1998 consisted primarily of
personnel and related costs, as well as costs for promotional activities
associated with raising brand awareness. In 1998, marketing and selling expenses
increased across all quarters presented, reflecting our decision, late in the
fourth quarter of 1997, to establish a direct sales force and to increase brand
awareness through marketing efforts. As a result, we significantly increased the
number of our sales and marketing employees and our promotional events, and
greatly expanded our capital asset base and facilities dedicated to marketing
and selling activities. We incurred no direct selling expenses in the Inception
Period or in 1997, and our marketing expenses in those periods consisted
primarily of personnel and related costs for the indirect marketing of our
services. In 1996, $954,000 of marketing expenses represented payments for key
word rights on certain Web sites under a marketing plan that was abandoned late
in 1996.
 
        Our marketing and selling expenses were $1.5 million in the Inception
Period, $1.1 million in 1997 and $4.9 million in 1998. The decline in marketing
and selling expenses from the Inception Period to 1997 was primarily the result
of the absence in 1997 of expenses related to key word rights that was recorded
in the Inception Period. The increase in marketing and selling expenses from
1997 to 1998 resulted primarily from our decision late in the fourth quarter of
1997 to establish a direct sales force and to increase market awareness through
substantial marketing efforts. We expect our marketing and selling expenses to
increase in absolute dollars over the next several quarters.
 
GENERAL AND ADMINISTRATIVE EXPENSES
 
        Our general and administrative expenses consist primarily of personnel
and related costs associated with providing executive, financial and legal
support to AdForce, in addition to other costs typically associated with
providing corporate infrastructure. General and administrative expenses
increased in each of the first three quarters of 1998, reflecting increases in
personnel and related costs. In the third quarter of 1998, a $59,000 charge was
made to general and administrative expenses in connection with the settlement of
a claim made by a former officer of AdForce. Since no similar charge occurred in
the fourth
 
                                       26
<PAGE>
quarter, general and administrative expenses were lower in the fourth quarter of
1998 than in the third quarter of 1998. Our general and administrative expenses
were $337,000 in the Inception Period, $1.1 million in 1997 and $1.8 million in
1998. These increases were primarily the result of increased personnel and
infrastructure to address the requirements of increased business volume. We
expect our general and administrative expenses to increase in absolute dollars
over the next several quarters.
 
AMORTIZATION OF INTANGIBLE ASSETS AND DEFERRED STOCK COMPENSATION
 
        In each of the four quarters of 1998, we recognized expense for the
amortization of deferred stock compensation to personnel who had been granted
options with an exercise price deemed to be below the fair market value of the
underlying common stock on the date of grant for financial reporting purposes.
In connection with our acquisition of StarPoint in February 1998, intangible
assets are being amortized to operations over the respective lives of those
assets. In addition, approximately $100,000 of the initial consideration was
allocated to the value of purchased in-process technology. This purchased
in-process technology had not achieved technological feasibility at the time of
the acquisition and, therefore, did not qualify for capitalization under
generally accepted accounting principles. Accordingly, the portion of the
purchase price allocated to purchased in-process technology was charged to
operations in the first quarter of 1998.
 
INTEREST EXPENSE, NET
 
        Interest expense, net was $69,000 in the Inception Period, $108,000 in
1997 and $151,000 in 1998. In each period, interest expense resulted primarily
from interest on bridge financings and capital equipment leases, offset in part
in 1997 and 1998 by interest income earned on cash balances resulting from
equity and capital lease financings.
 
FLUCTUATIONS IN RESULTS OF OPERATIONS
 
        Our quarterly results of operations have varied in the past, and you
should not rely on quarter-to-quarter comparisons of our results of operations
as an indication of our future performance. It is likely that in future periods
our results of operations will be below the expectations of public market
analysts and investors. In this event, the price of our common stock would
likely decline. Our revenue and results of operations depend on a variety of
factors, many of which are beyond our control. Please see "Risk Factors--Our
Quarterly Operating Results May Fluctuate and Our Future Operating Results are
Uncertain" for a list of such factors.
 
        We anticipate making significant capital expenditures as we increase the
capacity and reliability of our existing technology infrastructure and data
center. We also intend to open additional ad management and delivery centers in
the future. In addition, we intend to increase our sales and marketing
operations and to continue to allocate a large portion of our budget for
research and development. We would likely be unable to adjust spending quickly
enough to offset any unexpected revenue shortfall. If we have a shortfall in
revenue in relation to our expenses, then our business, results of operations
and financial condition would be materially and adversely affected.
 
LIQUIDITY AND CAPITAL RESOURCES
 
        Since inception, we have financed our operations primarily from sales of
preferred stock and capital lease financings and, to a significantly lesser
extent, net proceeds from the issuance of notes payable and proceeds from sales
of common stock.
 
        Net cash used in operating activities was $2.3 million in the Inception
Period, $5.6 million in 1997 and $9.6 million in 1998. In each period, net cash
used in operating activities resulted primarily from our net loss offset
partially by non-cash charges for depreciation and amortization and, in 1998,
also offset partially by amortization of intangible assets and deferred stock
compensation. Net cash used in investing
 
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activities was $1.4 million in the Inception Period, $163,000 in 1997 and $1.2
million in 1998. In each period, net cash used in investing activities was
primarily the result of capital expenditures for equipment used in operating our
data center from which ads are managed and delivered.
 
        Net cash provided by financing activities was $4.3 million in the
Inception Period, $6.7 million in 1997 and $19.1 million in 1998. In the
Inception Period, net cash provided by financing activities resulted primarily
from net proceeds from the issuance of preferred stock and notes payable. In
1997, net cash provided by financing activities resulted primarily from net
proceeds from the issuance of preferred stock and proceeds from a sale-leaseback
transaction. In 1998, net cash provided by financing activities resulted
primarily from net proceeds from the issuance of preferred stock and notes
payable, offset slightly, by principal payments on capital lease obligations.
 
        At December 31, 1998, our principal sources of liquidity were $10.0
million of cash and cash equivalents and $2.1 million of availability under an
equipment lease line. At that date, we had commitments of $1.1 million for
capital expenditures. These commitments are primarily related to equipping a
second data center and to existing facilities expansion. In February 1999, we
executed a lease line agreement for an additional $4.0 million. We expect
capital expenditures to be at least $9.0 million through the remainder of 1999
and at least $14.0 million in 2000. These expenditures will be primarily for
computer hardware and software, office furniture and equipment, and leasehold
improvements. A significant portion of the equipment may be acquired under
capital leases. At December 31, 1998, we had minimum lease payment obligations,
including interest, of $5.6 million under capital leases and $3.6 million under
operating leases. Please see Note 6 of Notes to Financial Statements. We will
also have to pay America Online quarterly fees totaling at least $10.0 million
for the first three years after they give us access to certain demographic data.
We are uncertain as to when, if ever, such demographic data may be made
available to us.
 
        We believe that our existing cash and cash equivalents, and the net
proceeds from this offering will be sufficient to fund our operating activities,
capital expenditures and other obligations for at least the next 12 months.
However, if thereafter we are not successful in raising capital as required and
on terms acceptable to us, it could have a material adverse effect on our
business, results of operations and financial condition. If additional funds are
raised from the issuance of equity securities, the percentage ownership of our
stockholders would be reduced.
 
NEW ACCOUNTING PRONOUNCEMENTS
 
        In March 1998, the American Institute of Certified Public Accountants
(the "AICPA") issued SOP No. 98-1, "ACCOUNTING FOR THE COSTS OF COMPUTER
SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE." SOP No. 98-1 requires entities
to capitalize certain costs related to internal-use software once certain
criteria have been met. We will be required to implement SOP No. 98-1 for the
year ending December 31, 1999. We do not expect that the adoption of SOP No.
98-1 will have a material impact on our financial position or results of
operations.
 
        In April 1998, the AICPA issued SOP No. 98-5, "REPORTING ON THE COSTS OF
START-UP ACTIVITIES." SOP No. 98-5 requires that all start-up costs related to
new operations must be expensed as incurred. In addition, all start-up costs
that were capitalized in the past must be written off when SOP No. 98-5 is
adopted. We will be required to implement SOP No. 98-5 for the year ending
December 31, 1999. Because we have not capitalized any start-up costs to date,
we do not expect that the adoption of SOP No. 98-5 will have a material impact
on our financial position or results of operations.
 
        In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES." SFAS No. 133 establishes methods for
derivative financial instruments and hedging activities related to those
instruments, as well as other hedging activities. We will be required to
implement SFAS No. 133 for the year ending December 31, 2000. Because we do not
currently hold any derivative instruments and do
 
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not engage in hedging activities, we do not expect that the adoption of SFAS No.
133 will have a material impact on our financial position or results of
operations.
 
YEAR 2000 COMPLIANCE
 
        Many computer systems and software products are coded to accept only two
digit entries in the date code field. These date code fields will need to accept
four-digit entries in order to distinguish between 21(st) century and 20(th)
century dates. As a result, many companies' software and computer systems may
need to be upgraded or replaced in order to comply with these Year 2000
requirements.
 
        In the ordinary course of our business, we have evaluated the internally
developed software included in our ad management and delivery system, and
believe that this software is generally Year 2000 compliant, meaning that the
use or occurrence of dates on or after January 1, 2000 will not materially
affect the performance of this software or the ability of this software to
correctly create, store, process and output data involving dates. However, this
year we intend to implement internal Year 2000 testing procedures for our
software, and we may learn that certain of our software does not contain all of
the necessary software routines and codes necessary for the accurate
calculation, display, storage and manipulation of data involving dates. In
certain cases, we have warranted to customers that Year 2000 compliance issues
will not adversely affect the performance of our ad management and ad delivery
services. If our customers experience Year 2000 problems with our services, they
could assert claims against us for damages. Our standard service agreements
provide warranties of performance in accordance with our specifications, and we
may need to incur costs to address Year 2000 problems that our customers
encounter through the use of our services. To date we have not received any Year
2000 related claims regarding our services.
 
        We are also working with our external suppliers and service providers
with respect to both third-party applications in our ad management and delivery
system and third-party applications in our information technology infrastructure
to ensure that these third-party systems and applications will be able to
interoperate with our hardware and software infrastructure where necessary and
support our needs into the year 2000. Where possible, we have sought assurances
from our suppliers that we believe are critical to our business that their
products are Year 2000 compliant. While we have received assurances as to the
Year 2000 compliance of some of these third-party products, we generally do not
have any contractual rights with these providers if their software or hardware
fails to function due to Year 2000 issues. If these failures do occur, we may
incur unexpected expenses to remedy any problems, including purchasing
replacement hardware and software.
 
        Though we will continue these efforts, we do not believe we have
significant Year 2000 issues within our systems or services. Because we believe
we are Year 2000 compliant, we have not engaged any third parties to
independently verify our Year 2000 readiness, nor have we assessed potential
costs associated with Year 2000 risks, procured any Year 2000 specific insurance
coverages or made any contingency plans to address such risks. Further, we have
not deferred any of our ongoing development efforts to address Year 2000 issues.
However, there can be no assurance that unanticipated costs associated with any
Year 2000 compliance will not exceed our present expectations and have a
material adverse effect on our business, results of operations and financial
condition.
 
        We depend on the uninterrupted availability of the Internet
infrastructure to conduct our business as a centralized ad delivery and
management service. We also rely on the continued operations of our customers,
in particular Web sites hosting advertisements, for our revenue. We are heavily
dependent upon the success of Year 2000 compliance efforts of the many service
providers that support the Internet, and the Year 2000 compliance efforts of our
customers. Interruptions in the Internet infrastructure affecting us or our
customers, or failure of the Year 2000 compliance efforts of one or more of our
customers, could have a material adverse effect on our business, results of
operations and financial condition. The purchasing patterns of advertisers and
agencies could be affected by Year 2000 issues as companies expend significant
resources to correct their current systems for the year 2000; these expenditures
may result in reduced funds available for Internet advertising, which could in
turn materially and adversely affect our business. Please see "Risk Factors--
Potential Year 2000 Risks May Adversely Affect Our Business."
 
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                                    BUSINESS
 
        THE FOLLOWING BUSINESS SECTION CONTAINS FORWARD-LOOKING STATEMENTS
RELATING TO FUTURE EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF ADFORCE, WHICH
INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS
PROSPECTUS.
 
OVERVIEW
 
        AdForce is a leading provider of centralized, outsourced ad management
and delivery services on the Internet. Our highly reliable, scalable technology
infrastructure and data center currently deliver up to 160 million ads per day.
Our services, AdForce for Advertisers and AdForce for Publishers, offer
sophisticated campaign design, inventory management, targeting, ad delivery,
tracking, measuring and reporting capabilities. Our services and technology
infrastructure leverage the advantages of Internet advertising and direct
marketing and allow our customers to:
 
        - Reach large or targeted audiences across multiple Web sites on our
          common platform;
 
        - Maximize return on advertising investments for advertisers and ad
          agencies;
 
        - Maximize the value of page view inventories for Web sites and ad rep
          firms;
 
        - Monitor and measure the effectiveness of ad campaigns in near real
          time;
 
        - Modify ad campaigns based on near real-time campaign performance data;
 
        - Aggregate large numbers of sites into a single network and segment the
          network into groups of special interest content such as "sports" or
          "finance;" and
 
        - Take advantage of direct marketing opportunities using sophisticated
          targeting technologies supported by our large and growing database of
          user information.
 
        By outsourcing the technically complex and operationally demanding ad
management and delivery functions to AdForce, our customers can utilize our high
performance systems, technology and personnel while focusing on their own core
competencies.
 
        During 1998, we delivered 13.6 billion ads with increasing quarterly ad
volumes of 0.9 billion, 1.6 billion, 3.2 billion and 7.9 billion. Our net
revenue increased sequentially from $414,000 in the first quarter of 1998 to
$2.0 million in the fourth quarter of 1998. Through relationships with key
customers, including GeoCities, Netscape, 24/7 Media, 2CAN Media and
ModemMedia.PoppeTyson, we have achieved a broad reach over the Internet.
According to Media Metrix, an Internet research firm, in December 1998 AdForce
served ads to approximately 58% of U.S. Internet users.
 
INDUSTRY BACKGROUND
 
    THE EMERGENCE OF THE INTERNET AS AN ADVERTISING MEDIUM
 
        The Internet has emerged as an important mass medium for advertising and
direct marketing, communication and electronic commerce. International Data
Corporation ("IDC"), a firm specializing in online research and analysis,
estimates that Internet users numbered approximately 100 million in 1998 and
will grow to more than 320 million in 2002. The rapid expansion of the Internet
has led to significant growth in electronic commerce. IDC estimates that
purchases of goods and services over the Internet will increase from $32 billion
in 1998 to $426 billion in 2002. The growth of the Internet generally and of
electronic commerce in particular has spurred traditional businesses to devote
larger portions of their marketing budgets to Internet advertising, and has
prompted Internet and electronic commerce companies to increase their spending
on Internet advertising. The Direct Marketing Association ("DMA") estimates that
advertisers and direct marketers spent approximately $284 billion in 1998 on all
forms of media in the United States, up from $264 billion in 1997. Growth in
Internet advertising and direct marketing during this period, though
significantly smaller in absolute dollars, outpaced the growth of traditional
advertising
 
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and direct marketing. Jupiter Communications, another online research firm,
estimates that spending on Internet advertising will grow from $1.9 billion in
1998 to $7.7 billion in 2002, while the DMA estimates that spending on Internet
direct marketing will grow from an estimated $603 million in 1998 to an
estimated $5.3 billion in 2003.
 
    ADVANTAGES OF INTERNET ADVERTISING AND DIRECT MARKETING
 
        The Internet offers significant advantages over traditional media as a
medium for advertising and direct marketing. We believe that the advantages
described below will lead advertisers to continue to increase spending on
Internet advertising and direct marketing.
 
        ABILITY TO REACH LARGE OR TARGETED AUDIENCES.  As a global medium with
no geographic boundaries, the Internet enables advertisers to reach local,
national and international audiences. The Internet also affords advertisers the
opportunity to target ads to specific geographic regions, to specific interest
groups by targeting multiple Web sites with a particular "content," and to
consumers with specific demographic profiles.
 
        INTERACTIVITY.  Unlike the broadcast model of traditional media, the
Internet is a truly interactive mass medium. Advertisers receive immediate
feedback on the effectiveness of their ad campaigns and can actually close sales
online. Advertisers can control the number of times a user sees an ad, rotate
ads in sequence for that user and build highly accurate user profiles through
transaction information, registration procedures and anonymous matching
techniques.
 
        ABILITY TO TRACK, MONITOR AND MEASURE ADVERTISING EFFECTIVENESS.  The
Internet allows advertisers to track, monitor and measure the effectiveness of
their ad campaigns, and provides the flexibility to control those campaigns
dynamically in near real time. Advertisers can measure the number of times users
view a particular ad, how often users respond or "click through" to that ad and
ultimately make a purchase or other transaction, and certain other
characteristics of the user. Based on this data, advertisers can modify ad
messages and placement quickly and efficiently to maximize ad campaign
effectiveness, resulting in higher response rates. For this reason, Internet
advertising provides advertisers the potential to achieve higher returns on
their investments than currently achievable through traditional media.
 
        GREATER FLEXIBILITY AND REDUCED COSTS.  In contrast to traditional media
advertising, Internet advertising and direct marketing typically involve shorter
lead times on scheduling, faster placement and less time-consuming, less
expensive production of the ads so that Internet advertisers can
cost-effectively launch ad campaigns on short notice in response to specific
needs or events. In addition, once an ad campaign is launched, advertisers can
easily and inexpensively change its content, scope and frequency of delivery in
response to feedback in order to ensure that an effective message is delivered
to consumers.
 
    CHALLENGES OF MANAGING AND DELIVERING EFFECTIVE INTERNET ADVERTISING
 
        The dynamic nature and rapid growth of the Internet are steadily
increasing the challenges and infrastructure requirements of delivering
effective advertising.
 
        DISAGGREGATED NATURE OF THE INTERNET.  The large number of Web sites and
the dispersed nature of the Internet audience make it difficult for advertisers
and ad agencies to identify and target specific customer segments with specific
ad campaigns. Advertisers and ad agencies often need to book ad campaigns across
hundreds of sites to obtain the necessary reach, number of desired ad
impressions and target audience. This complex and labor-intensive process
includes identifying sites with specific characteristics, understanding their
technical capabilities and contractual terms, identifying their available
inventory of desired page views, preparing their Web pages to accept the proper
ads, reserving and delivering ads and tracking results. In addition, Web sites
operating an ad server independently from a network of other Web sites typically
find that they do not generate enough data from their own users to build an
effective database of Web users and their response patterns that would enable
sophisticated ad targeting.
 
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        COMPLEX, RAPIDLY CHANGING TECHNOLOGY.  Delivering and tracking hundreds
of ad campaigns, with response times measured in milliseconds, to millions of
Internet users who click through to thousands of Web sites requires complex
networking, computing, applications and database technologies. In addition, as
browser vendors upgrade their software, advertisers pursue richer forms of
Internet advertising incorporating sound, motion and other advanced features. As
other interdependent technologies evolve, a delivery system must be updated
continually to accommodate the rapid pace of technological change. Advertisers,
ad agencies, Web sites and ad rep firms typically do not have the requisite
technological capabilities.
 
        SIGNIFICANT OPERATING COSTS AND REQUIREMENTS.  Developing, building,
operating and maintaining an ad management and delivery system is costly and
time-consuming. It requires one or more large and complex data centers with
multiple, complex network connections and back-up capabilities. Further, to
maintain reliable performance 24 hours a day, seven days a week, these systems
must be maintained around the clock by highly specialized operations personnel.
For most advertisers, ad agencies, Web sites and ad rep firms, these operating
burdens can create a substantial diversion of investment from their core
competencies.
 
        RAPID GROWTH OF WEB SITES.  Successful Web sites are experiencing rapid
growth in the number of pages and ads they deliver per day, with larger portal
sites delivering hundreds of millions of ads per day. Scaling ad management and
delivery capabilities at these sites requires significant investment in
technology operations infrastructure. The failure to develop a scalable solution
can materially and adversely impact revenue growth for these sites.
 
        TRUSTED REPORTING AND RESULTS.  Unlike traditional broadcast media,
Internet ads are delivered to individuals one ad at a time. For this reason,
Internet advertising campaigns are typically measured and billed by the exact
number of ad impressions delivered and, in many cases, the exact number of
click-throughs and transactions. Advertisers, ad agencies and other parties
prefer third-party verification of ad delivery results to use as a basis of
determining campaign costs and effectiveness.
 
        PRIVACY.  The use of more precise targeting capabilities by Internet
advertisers will increase the challenges of preserving user privacy. Technology
advancements, strategic partnerships and evolving business practices will be
required to balance privacy concerns with the demand for more precise targeting
capabilities.
 
    NEED FOR A CENTRALIZED, OUTSOURCED INTERNET ADVERTISING AND DIRECT MARKETING
     SOLUTION
 
        The rapid growth of the Internet as an advertising medium has made the
management and delivery of effective advertising and direct marketing mission
critical for advertisers, ad agencies, Web sites and ad rep firms. Because of
the significant technical, operational and resource challenges of ad management
and delivery, and the need to aggregate both users and data, we believe there is
a need for an outsourced, centralized Internet advertising and direct marketing
technology infrastructure provider that delivers the unique advantages of
Internet advertising while allowing advertisers, ad agencies, Web sites and ad
firms to focus on their core competencies. This infrastructure must provide high
performance and advanced functionality and be highly reliable and readily
scalable.
 
THE ADFORCE SOLUTION
 
        AdForce provides the technology and infrastructure that advertisers, ad
agencies, Web sites and ad rep firms need to exploit the unique potential of
Internet advertising and direct marketing. Our turnkey solutions for
advertisers, ad agencies, Web sites and ad rep firms offer sophisticated ad
delivery, inventory management, targeting, tracking, measuring and reporting
capabilities built on our technology platform. Our outsourced services and
infrastructure allow our customers to focus on their core competencies, while
leveraging our systems for quick time-to-market, low entry and maintenance
costs, reliability and scalability. During 1998, we delivered 13.6 billion ads
with increasing quarterly volumes of 0.9 billion, 1.6 billion, 3.2 billion and
7.9 billion. To date, we have increased our 30-day ad impression rate to well
 
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over 4 billion, with per day volumes of up to 160 million. Our key Web site
customers include GeoCities and Netscape; our key ad rep customers include 24/7
Media and 2CAN Media; and our key ad agency customers include
ModemMedia.PoppeTyson and USWeb. According to Media Metrix, an Internet research
firm, in December 1998 AdForce served ads to approximately 58% of U.S. Internet
users.
 
    BENEFITS FOR ADVERTISERS AND AD AGENCIES
 
        - AdForce for Advertisers enables advertisers and ad agencies to
          schedule, target, manage and deliver ad campaigns efficiently across
          the entire Internet. Advertisers and ad agencies are able to track and
          monitor ad campaign results using our data reporting and analysis
          capabilities. Our measuring of ads delivered, which result in
          advertising billings, are audited by a third party to ensure that
          advertisers and agencies can have confidence in our results.
 
        - The intuitive client interface of AdForce for Advertisers, which is
          installed on our customers' personal computers and permits
          communications with our systems over the Internet, aids advertisers
          and ad agencies in the media planning process. Through this interface,
          advertisers and ad agencies can build a schedule for their campaigns
          by checking and reserving Web site inventories, and then specifying
          the content, targeting criteria, type of media and the dates, times
          and frequency that their ads should appear. Through this interface,
          advertisers and ad agencies can also monitor ongoing campaigns, and
          adjust priorities or change ads to maximize the value of each ad
          delivered.
 
        - We store detailed information regarding every ad delivery in a manner
          that allows broad and flexible reporting. In addition to
          click-throughs, we track the activity of prospects who act on an ad,
          either through making a purchase or through completing a survey or
          registration form. This information enables advertisers to track and
          measure the effectiveness of a campaign and maximize its value. We
          offer numerous reports covering various facets of an ad campaign with
          the ability to consolidate data across multiple Web sites.
 
        - Our services enable advertisers and ad agencies to utilize our large
          and growing database to target ad campaigns using a wide variety of
          criteria, thereby increasing the value of their ad dollars. In
          addition, our strategic relationship with Experian will permit
          targeting through the use of detailed consumer demographic data. We
          believe our targeting capabilities allow advertisers and agencies to
          deliver ads that are less repetitious, more relevant and more likely
          to match a particular user's interests. These capabilities allow ad
          agencies to differentiate themselves from their competitors, provide
          additional value-added services to their clients and create additional
          revenue opportunities.
 
        - By relying on our outsourced solution and our technology
          infrastructure, advertisers and ad agencies can focus on their core
          competencies such as media planning, contract creation and direct
          marketing.
 
    BENEFITS TO WEB SITES AND AD REP FIRMS
 
        - AdForce for Publishers provides the infrastructure that Web sites need
          to maximize sales of advertising space, increase the value of their
          page views, and differentiate themselves from their competition.
          AdForce for Publishers also allows entities that operate multiple Web
          sites and ad rep firms to aggregate multiple sites and pages within
          sites into a single network. The network can then be subdivided based
          on content to create special interest groups such as "sports" or
          "finance" to maximize the value of a Web site's inventory.
 
        - Our outsourced solution provides Web sites and ad rep firms the
          advanced technology required for the complex processes of managing and
          delivering Internet advertising. In addition, our outsourced solution
          allows Web sites and ad rep firms to avoid the significant hardware,
          software and personnel costs associated with site-specific software
          services and to benefit from the scalability of our technology
          infrastructure.
 
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        - Our Inventory Management System provides detailed reporting on current
          and estimated future ad inventory. The system ensures that ad
          campaigns are delivered evenly, smoothing the potential effects of
          unexpected traffic increases. In addition, the system monitors each
          active ad campaign, adjusting for differences in Web site traffic, to
          ensure that ads are delivered as scheduled to achieve maximum yield
          from a Web site's ad inventory. Because we enable Web sites and ad rep
          firms to track, monitor and measure ad inventory consistently, our
          customers can sell more premium ad space.
 
        - Our advanced targeting and reporting capabilities enable Web sites and
          ad rep firms to maximize their advertising revenues by delivering to
          their advertisers more valuable ad impressions that are more likely to
          result in a click-through or other action.
 
        - AdForce for Publishers allows ad rep firms to aggregate a number of
          Web sites in order to measure and manage available inventory. In
          addition, our services allow ad rep firms to schedule multiple
          campaigns across multiple sites as simply as scheduling a single site.
 
STRATEGY
 
        AdForce's objective is to be the primary technology and service
infrastructure for advertising and direct marketing on the Internet. Our
strategy to achieve our objective consists of the following key elements:
 
        ENHANCE AND EXPAND OUR CORE TECHNOLOGY.  Our technology infrastructure
has enabled us to become a leading provider of centralized, outsourced
advertising and direct marketing services on the Internet. The ability of our
technology and infrastructure to scale as Internet advertising has grown has
been a competitive advantage. In addition, by steadily increasing our ad volumes
in 1998, we have been able to reduce the cost of ad management and delivery. We
intend to continue to invest heavily in research and development activities to
enhance the performance and functionality of our core technology. In addition,
we intend to continue to invest in enhancing the reliability, scalability,
performance and cost efficiency of our data center infrastructure. We plan to
open an additional data center in the second quarter of 1999 that will
significantly increase our ad delivery capacity. The AdForce core technology has
been designed to facilitate developing new features and functionality. During
1999, we also plan to continue to develop new services and capabilities for our
customers.
 
        LEVERAGE AND EXPAND CUSTOMER BASE.  We seek to maintain, develop and
enhance existing and new revenue streams from our current customer base of ad
agencies, Web sites and ad rep firms, as well as from new customers. Our current
customer base, including GeoCities, Netscape, 24/7 Media and 2CAN Media,
substantially increased their Internet traffic during 1998, and we plan to
increase our revenue from these customers to the extent their Web traffic
continues to grow by continuing to provide them high value ad management and
delivery services. In addition to our recurring ad management and delivery
services, we anticipate developing additional sources of revenue by offering
advanced reporting, targeting and data analysis and by delivering ads in rich
media formats such as audio, video and animation. We intend to attract and
retain new customers by promoting the AdForce brand as the leading provider of
outsourced advertising and direct marketing services on the Internet, increasing
our sales and marketing activities and developing new services and leading
technologies. To facilitate this, we intend to continue promoting our solutions
through online and offline advertising, an extensive public relations campaign,
strategic alliances and other promotional activities. As our network of
customers grows, we believe that our position as a primary provider of
technology infrastructure for ad management and delivery will be reinforced.
 
        MAINTAIN NEUTRALITY.  Our customers rely on us to provide accurate,
unbiased services and information. In order to fill this role as a trusted
intermediary, we believe it is essential that we not compete with our customers
and avoid any media bias. We provide the technology infrastructure to maximize
the ad sales of Web sites and ad rep firms. For this reason, we have avoided
selling advertising and putting ourselves in competition with our customers. In
addition, we provide the tools and
 
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infrastructure advertisers use to efficiently schedule and effectively deliver
complex campaigns on the Internet and to learn more about their prospects and
customers. We also avoid media buying or campaign or creative development that
would place us in competition with our existing and potential customers.
Instead, we are committed to continuing to develop the AdForce brand to be
synonymous with reliability, technical competence, comprehensiveness and
neutrality.
 
        LEVERAGE DATABASE MARKETING CAPABILITIES.  Our proprietary technology
infrastructure, substantial ad impression volumes and customer relationships
allow us to aggregate significant data regarding specific prospect and customer
behavior. This data is critical to developing a targetable database of user
profiles for advertisers. We intend to use this data to provide additional
database marketing services to our customers so that advertisers are able to
reach targeted audiences more effectively and Web sites are able to provide a
more valuable inventory. Leveraging our strategic relationship with Experian, we
intend to provide advanced targeting and database marketing services to our
customers based on demographic and lifestyle profiles. This demographic
targeting will allow advertisers and direct marketers to engage in relationship
marketing by permitting them to identify their audiences very specifically. In
order to maintain a clear focus on user privacy, we have developed AdSecure, a
product that substitutes an encrypted code for all personally identifiable
information.
 
        TARGET ADDITIONAL ADVERTISING MEDIA.  As other forms of media (E.G.,
interactive television and addressable cable boxes) converge with the Internet,
we may be able to leverage our extensive knowledge and leading technology in
interactive advertising solutions to penetrate these media. In addition, we
believe much of our industry expertise and developed technology may be
transferable to more traditional advertising media, such as newspaper,
television, radio and cable, that may benefit from centralized, outsourced ad
management solutions.
 
SERVICES
 
        We provide centralized, outsourced ad management and delivery services
that address the requirements of buyers and sellers of Internet advertising and
direct marketing. The buyers, primarily advertisers and ad agencies, are served
by AdForce for Advertisers. The sellers, primarily Web sites and ad rep firms,
are served by AdForce for Publishers. We provide the following functions for our
customers:
 
        [INSERT FLOW DIAGRAM HERE]
 
        [icon]    MEDIA PLANNING. Reflecting the media planner's workflow,
                  AdForce for Advertisers organizes the steps in planning and
                  executing Internet advertising. Media planners can utilize
                  in-house databases or commercial third-party research to
                  select sites and build a media plan.
 
        [icon]    CAMPAIGN SCHEDULING. Advertisers, ad agencies, Web sites and
                  ad rep firms can use a Java client application to create and
                  schedule ad campaigns over the Internet. An ad campaign wizard
                  guides users as they build a campaign, allowing them to
                  specify the schedule, content units, frequency and targeting
                  criteria, and then submit the ad for delivery. AdForce for
                  Advertisers organizes campaigns to reflect the typical
                  workflow of an ad agency and transmits traffic instructions to
                  many Web sites. AdForce for Publishers allows Web sites and ad
                  rep firms to view and manage all of the campaigns running
                  throughout their Web sites.
 
        [icon]    INVENTORY MANAGEMENT. AdForce for Publishers' automated
                  Inventory Management System ("IMS") gives Web sites and ad rep
                  firms detailed information about current and future inventory,
                  allowing them to sell available media space more precisely.
                  When an ad campaign is booked, IMS uses historical data to
                  forecast available inventory for specified targets throughout
                  the schedule and establishes the delivery frequency for each
                  group of ads. Automatically checking each ad campaign in
                  progress, IMS regularly adjusts for variations in site traffic
                  and updates available
 
                                       35
<PAGE>
                  inventory while factoring in other ad campaigns. IMS ensures
                  that all ad campaigns are delivered on schedule, so Web sites
                  get maximum value for their inventory.
 
        [icon]    TARGETING. Serving ads from a central data center, we can
                  employ more comprehensive targeting databases than local ad
                  servers, offering more targeting options and far greater
                  targeting accuracy. Our customers can target campaigns using a
                  range of criteria, including domain/SIC code, content area,
                  keyword, geography, schedule and site-provided data. Our
                  advanced targeting capabilities enable Web sites to deliver
                  high value ad impressions for advertisers, reaching the people
                  who are most likely to respond to the ad. Web site visitors
                  are shown ads that are more relevant, less repetitious and
                  more likely to match their interests.
 
        [icon]    AD DELIVERY. Our ad delivery system delivers ads quickly,
                  consistently, on schedule and on target. Because we provide
                  the technology infrastructure, our customers have no hardware,
                  software, networks or backup systems to purchase or maintain.
                  Our scalable architecture handles millions of decisions per
                  second in order to serve targeted ads in near real time. We
                  have begun to deliver a variety of rich media formats, such as
                  audio, video and animation, to create a more compelling user
                  experience. Our infrastructure offers our customers built-in
                  redundancy, the security of operating 24 hours a day, 7 days a
                  week, and capacity to handle both traffic growth and
                  fluctuations.
 
        [icon]    TRANSACTIONS. Our transactions feature records user activity
                  in addition to click-throughs for such actions as requesting
                  information, registering for a service or purchasing a
                  product. The resulting data are made available through reports
                  that help Web sites demonstrate the effectiveness of campaigns
                  on their Web site and record their share of transactions
                  generated by traffic on their Web site. The resulting data
                  also help advertisers and ad agencies interpret results and
                  manage the effectiveness of their campaigns.
 
        [icon]    REPORTING. We use detailed information accumulated from every
                  ad delivered and consolidated across multiple Web sites to
                  provide our customers with dozens of accurate, timely reports.
                  We ensure that ad impressions are counted accurately, whether
                  they are delivered from our data center, the user's browser
                  cache or a proxy server. Our reporting features provide Web
                  sites and advertisers with reports containing information they
                  need in HTML or Microsoft Excel format. Advertisers and ad
                  agencies can optimize ad campaigns for best results, and media
                  planners can adjust priorities, targeting criteria and ad
                  rotation, or swap in new ads, to maximize the value of
                  campaigns in progress.
 
        [icon]    AUDITING AND ACCOUNTING. We provide audited statements that
                  detail the number of ads delivered, click-throughs and
                  transactions for auditing and accounting purposes. ABC
                  Interactive, a leading Internet auditing service, provides a
                  monthly audit of ads delivered and click-throughs that enables
                  us to provide a statement to each customer, ensuring greater
                  accuracy and saving the customer time. Our reports help
                  automate and streamline billing operations by reducing the
                  need for manual data processing. All information required to
                  generate invoices is available in a readily usable format,
                  exportable to Microsoft Excel and accounting software using a
                  simple data transfer.
 
        [icon]    ANALYSIS. Advertisers, ad agencies, Web sites and ad rep firms
                  can use the information stored in our data center to conduct
                  post-campaign analysis of results, explore trends and examine
                  "what-if" scenarios. By integrating user profile information
                  such as Voyager Profiles from Millward Brown Interactive, a
                  leading market research firm, we allow advertisers and ad
                  agencies to characterize users who viewed and responded to
                  their campaigns and to improve future media plans and their
                  return on advertising
 
                                       36
<PAGE>
                  spending. Web sites and ad rep firms can conduct analyses that
                  help them to increase their revenues from their Web traffic.
 
PLANNED SERVICE ENHANCEMENTS
 
        ADFORCE TRACKING.  We intend to continue to enhance user tracking
capabilities. While maintaining the anonymity and privacy of users, advertisers
will be able to track and record user activity related to ad campaigns to
compare customer acquisition costs using different ads on different sites and to
track information such as the value and frequency of purchases.
 
        DEMOGRAPHIC TARGETING.  We have been developing demographic targeting
capabilities and expect to make these capabilities available to advertisers, ad
agencies, Web sites and ad rep firms. Our targeting services will build upon our
strategic relationship with Experian and will serve dynamically targeted ads to
users based on their demographic and lifestyle profiles. User demographics will
be identified by linking user "cookies" to known demographic information with
the user's permission. As part of our demographic targeting strategy, we have
developed a technology called AdSecure that maintains user privacy by
substituting all personally identifiable information with an encrypted ID
allowing us to anonymously match an Internet user to existing direct market
demographic data. Demographic targeting will increase the value of Internet
marketing and allow marketers to reach their desired prospects more readily,
generating increased revenue for publishers and for us.
 
        BANNER CO-OP SERVICE.  Small Web sites and individual home page
publishers often trade ad impressions on their pages in return for promotional
advertising on other sites within an ad network or across the Internet. Home
page publishers typically have fewer of their ads served on the network than the
number of ads they serve on their home page, allowing the network owner to sell
the remaining inventory to earn revenue. We are developing a banner co-op
service that will enable ad networks and larger sites to provide home page
publishers the ability to serve banner ads on their home page in exchange for
advertising space in the network or larger site. The banner co-op will leverage
our existing technology and infrastructure to provide a system capable of
handling over a million individual home page publishers and their ad campaigns.
 
TECHNOLOGY AND DATA CENTER OPERATIONS
 
        Our ad management and ad delivery infrastructure employs advanced
technology and a robust data center to deliver ads 24 hours a day, 7 days a
week, for leading ad agencies, Web sites and ad rep firms.
 
    THE ADFORCE AD MANAGEMENT AND DELIVERY SYSTEM
 
        Our proprietary ad management and delivery system is divided into five
subsystems: Ad Management, Campaign Deployment, Ad Delivery, Data Analysis and
Reporting. In building these subsystems, we have developed a significant amount
of proprietary software while also leveraging industry-standard hardware and
software and leading third-party technology wherever possible.
 
        AD MANAGEMENT SUBSYSTEM.  Our Ad Management Subsystem consists of our
client application software (the "Client"), our Inventory Management System
("IMS") and an Administrative Database. The Client is loaded onto the customer's
personal computer and is used to communicate with our system over the Internet
to design, input, change and monitor ad campaigns and to request and receive
reports. Customers also use the Client to validate their desired ad campaigns
against our IMS system, a software engine that uses proprietary algorithms to
forecast available ad inventory on a given Web site or in an AdForce-supported
network, and to create daily campaign schedules. Customer instructions delivered
via the Client are then recorded in our Administrative Database for deployment
by the Campaign Deployment Subsystem.
 
        CAMPAIGN DEPLOYMENT SUBSYSTEM.  Our Campaign Deployment Subsystem
consists of a set of processes to transmit campaign schedules and ads from the
Administrative Database to the Targeting
 
                                       37
<PAGE>
Database in the Ad Delivery Subsystem. These processes are run nightly and
periodically during each day to update schedule information and place new
campaigns into production. Because we are able to run this process many times
each day, customers can insert new campaigns and change existing campaigns
within an hour of notifying them.
 
        AD DELIVERY SUBSYSTEM.  The Ad Delivery Subsystem consists of Ad
Delivery servers, Ad Selector servers and the Targeting Database. The Ad
Delivery servers handle ad requests coming in from the Internet, log those
requests into the Data Analysis Subsystem for reporting purposes, and ask the Ad
Selector servers which ad should be served to the requesting user. The Ad
Selector servers choose the ads to be delivered to the particular user using a
patent-pending object-framework technology and by accessing information in the
Targeting Database. The Ad Selector servers provide that information to the Ad
Delivery servers, and the right ad is then served to the user.
 
        DATA ANALYSIS SUBSYSTEM.  The Data Analysis Subsystem consists of
database and other applications for processing and storing transaction data
logged from the Ad Delivery servers. This information is then used by the
Reporting Subsystem and by IMS. These data repositories are also used for data
mining and transaction correlation. Although our database does not allow
specific individuals to be individually identified, we have built and will
continue building consumer profiles using information compiled in these data
repositories to use in targeting ad campaigns.
 
        REPORTING SUBSYSTEM.  The Reporting Subsystem also has database and
processing applications that allow us to provide industry standard and custom
reports to our customers using data from the Data Analysis Subsystem. Customers
access this subsystem by logging requests with the Administrative Database
Reports are then made available to the customer through the Client and or by
e-mail.
 
    DATA CENTER OPERATIONS
 
        We deliver our services from a central data center located at our
development, operations and client services facility in Costa Mesa, California.
This data center houses an extensive array of servers, multiple databases,
multiple terabytes of hard disk storage and routing equipment connecting AdForce
to the Internet using several fiber optic providers, giving us sufficient
capacity for growth and failover capability. We recently signed a sublease for
an additional facility in Cupertino, California, which will approximately triple
our current data center space. We plan to move our existing Cupertino
headquarters into the office portion of this space and to begin data center
operations by the end of the second quarter of 1999.
 
        We manage our systems closely to ensure that we maintain excellent
up-time performance and consistent ad delivery. Our systems are self-monitored
by automated tools that measure system performance, including central processing
unit usage levels, disk usage, network and bandwidth usage, report processing
times and the response time of the system to ad requests. We also have
operations staff monitoring the systems 24 hours per day, 7 days per week.
 
        In building and maintaining our system, we have focused on reliability,
scalability, performance and operating cost. For reliability, we maintain "hot
failovers" or running standby servers for components within each subsystem so
that a given server can fail and the system itself will continue to function
without interruption. We use caching in the Ad Delivery subsystem to ensure ads
will continue to be served to our customers based on last available information
even if the back-end subsystems fail entirely. We have the backup power and
additional air conditioning needed for reliable data center operations, and use
multiple bandwidth network providers so that we have redundant capacity for use
in case of failover. We also protect our data by using an off-site data backup
service.
 
        We have aggressively scaled our system throughout 1998 by adding
additional servers or other equipment within subsystems as needed, and by
improving the performance of the subsystems themselves. We are also continuing
our development efforts to improve the performance of components within each
subsystem with a view to increasing capacity and improving response times while
reducing overall ad delivery costs.
 
                                       38
<PAGE>
KEY CUSTOMERS
 
        We believe our continued success depends on establishing a broad
customer base within each of the primary categories of advertisers, ad agencies,
Web sites and ad rep firms. We plan to begin marketing our services directly to
advertisers in 1999. Some of our key customers in the other three categories
include the following:
 
<TABLE>
<S>                         <C>                         <C>
       AD AGENCIES                  WEB SITES                  AD REP FIRMS
--------------------------  --------------------------  --------------------------
  ModemMedia.PoppeTyson             GeoCities                   24/7 Media
       VR Services                   Netscape                   2CAN Media
          USWeb                    FortuneCity              Euroserve-InterAd
    Magnet Interactive              Encompass                 Adauction.com
        Latitude90                    Netcom                    TVMV, Inc.
        OgilvyOne                    GoTo.com                .tmc Ad Network
                                   PGATOUR.com
                                    Match.Com
                                  Virtual Vegas
                                  Hoovers Online
</TABLE>
 
        We typically are the primary or sole ad management and delivery service
provider for our Web site customers. For example, we serve all paid
advertisements for GeoCities through our systems and the majority of paid
advertisements for Netscape.
 
        In addition to our direct Web site customers, we also serve ads on
hundreds of Web sites that ad rep firms represent, including such sites as
MapQuest, AT&T, Reuters-Yahoo, Blizzard Entertainment and Earthlink, which are
customers of 24/7 Media, and 123 Greetings, Family Tree Maker and SecureTax,
which are customers of 2CAN Media. Further, we reach a wide variety of
additional Web sites on ad campaigns we manage and serve for our ad agency
customers.
 
SALES AND MARKETING
 
        Our primary sales strategy is to sell directly to major Web sites, large
ad agencies and ad rep firms. We sell our services in the United States through
a 21-person sales and marketing organization. These employees are located in
Silicon Valley, Southern California, New York and Northern Virginia. In
addition, we leverage the sales organizations of our ad rep customers to provide
our services to the sites they represent.
 
        We have focused and will continue to focus our sales and marketing
efforts on establishing service relationships with large, high volume users of
Internet advertising such as GeoCities, Netscape, 24/7 Media and 2CAN Media. In
addition, we are increasingly targeting sales to advertisers and ad agencies. We
rely on our sales and marketing team, our senior management and our customer
service personnel to promote and sustain these relationships.
 
        We use a variety of marketing programs to generate demand for our
products, build market awareness, develop customer leads and establish business
relationships. Our marketing activities include preparing market research and
collateral materials, determining market requirements, managing press coverage
and other public relations activities, identifying potential customers,
participating in trade events, seminars and conferences, and establishing and
maintaining close relationships with recognized industry analysts.
 
CUSTOMER SERVICE AND SUPPORT
 
        We believe that a high level of customer service and support is critical
to the successful marketing and sale of our services. We have established a
comprehensive professional organization that provides account management,
technical support, training and ongoing client services for our customers. Our
customer service personnel are available 24 hours a day, 7 days a week, to
assist customers as needed,
 
                                       39
<PAGE>
and are currently located in California and New York. We plan to establish
additional service and support sites as required by customers.
 
COMPETITION
 
        The market for Internet advertising and related products and services is
still evolving and is subject to intense competition as companies attempt to
establish a market presence. We expect that competition will increase as
industry consolidation causes certain early entrants in the marketplace to merge
or be acquired. We currently compete with providers of outsourced ad servers and
related services, including DoubleClick and MatchLogic, as well as providers of
ad server software and equipment services, such as NetGravity. Many of our
current competitors have substantially greater resources and more developed
sales and marketing strategies than we do. We cannot assure you that we will be
able to compete effectively against such competitors now or in the future.
 
        Another principal source of competition is Web sites that use
internally-developed Internet advertising and direct marketing services. These
Web sites include America Online, one of our principal stockholders, and Yahoo!.
America Online and Yahoo! have announced their intentions to acquire two of our
major customers, Netscape and GeoCities, respectively. Following these
acquisitions, either Netscape or GeoCities, or both, might transition their
systems to the proprietary systems of their acquirors, which would materially
and adversely affect our business, results of operations and financial
condition. In addition, 24/7 Media, another of our principal customers, acquired
its own ad management and delivery technology in 1998, and currently uses this
technology to serve a portion of its advertising needs. If 24/7 Media were to
cease doing business with us or enter into competition with us, it would
materially and adversely affect our business, results of operations and
financial condition. Finally, a fourth major customer, 2CAN Media, was recently
acquired by AdSmart, a subsidiary of CMG Investments. CMG Investments also owns
Engage, which recently merged with Accipiter, a supplier of ad server software
and equipment services. If 2CAN Media were to transition its business from us to
Accipiter, it would materially and adversely affect our business, results of
operations and financial condition.
 
        We may also encounter a number of potential new competitors that have
longer operating histories, greater name recognition, larger customer bases and
significantly greater financial, technical and marketing resources than we do.
These qualities may allow them to respond more quickly than we can to new or
emerging technologies and changes in customer requirements. It may also allow
them to devote greater resources than we can to the development, promotion and
sale of their products and services. These competitors might also engage in more
extensive research and development, undertake more far-reaching marketing
campaigns, adopt more aggressive pricing policies and make more attractive
offers to existing and potential employees, strategic partners, advertisers and
Web sites. If such companies decided to enter the market, we cannot assure you
that we would be able to compete against them effectively.
 
INTELLECTUAL PROPERTY
 
        Our success and ability to compete are substantially dependent on our
internally developed technologies and trademarks, which we protect through a
combination of patent, copyright, trade secret and trademark laws. We have filed
two patent applications in the United States. In addition, we have applied to
register certain trademarks in the United States. We cannot assure you that our
patent applications or trademark registrations will be approved. Even if they
are approved, our patents or trademarks may be successfully challenged by others
or invalidated. If our trademark registrations are not approved because third
parties own such trademarks, our use of these trademarks would be restricted
unless we enter into arrangements with the third-party owners, which may not be
possible on commercially reasonable terms.
 
        Our technology collects and utilizes data derived from user activity on
the Internet. Although we believe that we have the right to use this information
and to compile it in our database, we cannot assure you that any trade secret,
copyright or other protection will be available for such information. We also
 
                                       40
<PAGE>
cannot assure you that any of our proprietary rights will be viable or of value
in the future since the validity, enforceability and scope of protection of
certain proprietary rights in Internet-related industries are uncertain and
still evolving. We believe that factors such as the technological and creative
skills of our personnel, new service offerings, brand recognition and reliable
customer service are more essential to establishing and maintaining our
technology leadership position than the legal protection of our technology.
There can be no assurance that others will not develop technologies that are
similar or superior to our technology.
 
        We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.
 
        We have licensed, and we may license in the future, certain proprietary
rights to third parties. In particular, we have licensed our proprietary
software to America Online and Euroserve Media. In addition, prior to our
acquisition of Starpoint, Starpoint licensed its software to GeoCities and two
other parties. While we attempt to ensure that the quality of our brand is
maintained by these business partners, they may take actions that could
materially and adversely affect the value of our proprietary rights or our
reputation. We cannot assure you that these business partners will take the same
steps we have taken to prevent misappropriation of our solutions or
technologies. Please see "Certain Transactions" for detailed information on our
license to America Online.
 
        Third parties may assert infringement claims against us or our
customers. We do not believe that our technological processes infringe upon the
proprietary rights of others, but we cannot assure you that third parties will
not assert claims that we violate their rights. In addition, we believe that we
have the right to use the user data we collect for our database, but we cannot
assure you that third parties will not assert claims that we violate their trade
secrets or copyrights. Although there has not been any claim of this type in the
past, any claims and resultant litigation, should they occur, could subject us
to significant liability for damages or could result in invalidation of our
rights. In addition, even if we prevail, litigation could be time-consuming and
expensive to defend, and could result in diversion of our time and attention,
which could materially and adversely affect our business, results of operations
and financial condition. Any claims or litigation from third parties might also
result in limitations on our ability to use the trademarks and other
intellectual property subject to these claims or litigations unless we enter
into arrangements with the third parties responsible for the claims or
litigation, which might be unavailable on commercially reasonable terms, if at
all.
 
PRIVACY POLICY
 
        We believe that issues relating to the privacy of Internet users and the
use of personal information about these users are critically important as the
Internet and its commercial use grow. We have adopted a detailed policy
outlining the permissible uses of information about users and the extent to
which such information may be shared with others. Our customers must acknowledge
and agree to this policy when registering to use our service. We do not sell or
license to third parties any personally identifiable information about users. We
use information about users to improve marketing and promotional efforts and to
analyze usage patterns. We comply with all relevant privacy initiatives in the
industry, and we are a member of the TRUSTe program, an independent non-profit
organization that audits the privacy statements of Web sites and adherence
thereto. Moreover, we have an independent accounting firm regularly audit these
privacy and business practices to ensure compliance with all legal and industry
accepted privacy standards.
 
                                       41
<PAGE>
EMPLOYEES
 
        As of December 31, 1998, we had 97 employees, including 42 in
engineering and data center operations, 21 in sales and marketing, 19 in client
services and 15 in general administration. Other than as described in
"Management--Employment Agreements and Severance Agreements," none of these
individuals is bound by an employment agreement. We believe that we have good
relationships with our employees. We have never had a significant work stoppage,
and none of our employees is represented under a collective bargaining
agreement. We believe that our future success will depend in part on our ability
to attract, integrate, retain and motivate highly qualified technical and
managerial personnel and upon the continued service of our senior management and
key technical personnel. Competition for qualified personnel in our industry and
geographical locations is intense, and there can be no assurance that we will be
successful in attracting, integrating, retaining and motivating a sufficient
number of qualified personnel to conduct our business in the future. See "Risk
Factors--We Depend on Our Key Personnel."
 
FACILITIES
 
        Our headquarters, including our principal administrative and marketing
facilities, are located in approximately 10,578 square feet of office space in
Cupertino, California. The lease on 6,553 square feet of this facility expires
in March 1999; the lease on the remaining portion expires in June 2003. Our
principal data center, product development, operations and client services
facilities are located in approximately 18,362 square feet of office space in
Costa Mesa, California; the lease on this facility extends through April 2004.
We have sales personnel in both California offices, and in a New York City
office of approximately 1,000 square feet. The lease for the New York office
expires in December 1999.
 
        We recently executed a sublease for a facility in Cupertino with
approximately 41,151 square feet, which includes a data center with fully
installed infrastructure. This sublease extends through April 2003. We plan to
relocate our headquarters to this new space, and to begin data center operations
in this new data center, by the second quarter of 1999. We will attempt to
sublet the remaining 4,025 square feet of our existing Cupertino space, and to
sublet on a short-term basis approximately 40% of the office space in our new
Cupertino headquarters. We believe our Cupertino and Costa Mesa facilities will
be adequate to meet our needs for the foreseeable future.
 
LEGAL PROCEEDINGS
 
        We are not currently subject to any material legal proceedings. We may
from time to time become a party to various legal proceedings arising in the
ordinary course of our business.
 
                                       42
<PAGE>
                                   MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
 
        The following table sets forth certain information with respect to the
executive officers and directors of AdForce as of the date of this prospectus.
 
<TABLE>
<CAPTION>
NAME                               AGE      POSITION
-----------------------------      ---      -------------------------------------------------------
<S>                            <C>          <C>
Charles W. Berger............          45   Chief Executive Officer, President and Chairman of the
                                            Board
Harish S. Rao................          57   Executive Vice President, Development and Operations
John A. Tanner...............          40   Executive Vice President and Chief Financial Officer
A. Dee Cravens...............          58   Vice President, Marketing
Anthony P. Glaves............          41   Vice President, Sales and Business Development
Rex S. Jackson...............          38   Vice President, General Counsel and Secretary
Eric Di Benedetto(1)(2)......          33   Director
Mark P. Gorenberg(1).........          44   Director
J. Neil Weintraut(2).........          40   Director
Dirk A. Wray.................          40   Director
</TABLE>
 
------------------------
 
(1) Member of Compensation Committee
 
(2) Member of Audit Committee
 
        CHARLES W. BERGER joined AdForce in July 1997 as Chairman and Chief
Executive Officer and became President in February 1999. From March 1993 to June
1997, Mr. Berger was Chairman and Chief Executive Officer of Radius, Inc. (now
Digital Origin, Inc.), a developer and manufacturer of computer displays and
graphic and video technologies. Prior to joining Radius, Inc., Mr. Berger was
Senior Vice President of Worldwide Sales, Operations and Support of Claris
Corporation (now FileMaker, Inc.), a maker of database software for groups and
individuals, from 1992 to 1993. From 1989 to 1992, he held several positions at
Sun Microsystems, Inc., a provider of hardware, software and services for the
Internet, where he served as President of Sun Microsystems Federal, Inc. from
1991 to 1992, Vice President of Business Development from 1990 to 1991 and Vice
President, Product Marketing from 1989 to 1990. From 1982 to 1989, Mr. Berger
was employed by Apple Computer, Inc., a maker of personal computing products,
serving as Vice President and General Manager of Apple Integrated Systems from
1988 to 1989, Vice President of Marketing from 1986 to 1988, Vice President,
Business Development from 1985 to 1986 and Treasurer from 1982 to 1985. Mr.
Berger received his Bachelor of Science in business administration from Bucknell
University and a Masters of Business Administration from the University of Santa
Clara. He serves on the boards of directors of Digital Origin, Inc. and Splash
Technology, Inc. as well as the boards of the University of Santa Clara and the
Kyle Foundation.
 
        HARISH S. RAO joined AdForce in January 1999 as Executive Vice
President, Development and Operations. From February 1997 to December 1998, Mr.
Rao served as Vice President Engineering in the Network & Service Management
Business Unit at Cisco Systems, Inc., a supplier of networking products for the
Internet, where he was responsible for Cisco's Service Management System and
focused on end-to-end service architecture and technology development for
management of frame relay, ATM and IP networks. From July 1992 to January 1997,
Mr. Rao was Senior Vice President of TCSI Corporation, a provider of software
products and services for carrier networks management, where he managed
operations and development both domestically and internationally. Mr. Rao
received his B.E. and M.E. degrees from the University of Bombay, and his Ph.D.
in control systems engineering from the University of Houston.
 
        JOHN A. TANNER joined AdForce in November 1997 as Vice President,
Finance and Administration and Chief Financial Officer and became Executive Vice
President in September 1998. From October 1995 to November 1997, Mr. Tanner held
several positions with Network Computing Devices, Inc., a manufacturer of
network computers, server software, and other related software products and
services,
 
                                       43
<PAGE>
where he served as Vice President and Controller in 1997, Corporate Controller
from 1995 to 1997 and Director of Corporate Accounting in 1995. From 1990 to
October 1995, Mr. Tanner was employed by Aspect Telecommunications Corporation,
a manufacturer of computerized telephonic switching devices, complementary
software, and related services, where he served in several positions, most
recently as Corporate Planning and Reporting Manager. Mr. Tanner received his
Bachelor of Arts in English from San Jose State University.
 
        A. DEE CRAVENS joined AdForce in January 1999 as Vice President,
Marketing. From March 1998 to January 1999, Mr. Cravens was President of
Ensemble Solutions, Inc., an electronic distribution company, and, from March
1996 to March 1998, he served as Vice President, Corporate Marketing at Adaptec,
Inc., a manufacturer of SCSI, fiber channel and RAID products. From August 1992
to March 1996, Mr. Cravens served as Vice President, Marketing at Radius, Inc.
(now Digital Origin, Inc.), a developer and manufacturer of computer displays
and graphic and video technologies. From 1989 to 1992, Mr. Cravens was President
of The Cravens Group, Inc., a marketing consulting firm. Mr. Cravens received
his Bachelor of Arts and Masters in communications from San Jose State
University. Mr. Cravens serves on the board of directors of Ensemble, a private
company.
 
        ANTHONY P. GLAVES joined AdForce in January 1999 as Vice President,
Sales and Business Development. From March 1998 to January 1999, Mr. Glaves
served as Senior Vice President, Strategic Relations and Business Development
for ImproveNet, Inc., a web-based service providing product and contractor
information to consumers for home improvement projects. From 1983 to November
1997, Mr. Glaves held several positions with Time Incorporated Magazine Company,
a magazine publisher, including Vice President, Publisher and Vice President and
Associate Publisher of Sunset Magazine from May 1994 to November 1997 and Vice
President, Publisher of Southern Accents Magazine from April 1989 to May 1994.
Mr. Glaves received his Bachelor of Science in business administration from San
Diego State University.
 
        REX S. JACKSON joined AdForce in August 1998 as Vice President, General
Counsel and Secretary, and served on an interim basis as AdForce's Executive
Vice President, Development and Operations from August 1998 to January 1999.
Prior to joining AdForce, Mr. Jackson was with Read-Rite Corporation, a
manufacturer of thin film recording heads for the disk and tape drive
industries, where he served as Vice President, Business Development and General
Counsel from April 1997 to August 1998, and Vice President, General Counsel and
Secretary from September 1992 to April 1997. Mr. Jackson received his A.B.
degree in political science from Duke University, and his J.D. degree from
Stanford University.
 
        ERIC DI BENEDETTO has served as a member of AdForce's Board of Directors
since December 1997, and has been a co-founder and general partner of
Convergence Partners, L.P., an information technology venture capital firm,
since April 1997. From April 1991 to June 1997, Mr. Di Benedetto was the
managing director of U.S. venture capital funds managed by BANEXI, the merchant
banking arm of Banque Nationale de Paris. From 1989 to 1991, Mr. Di Benedetto
was a workout and restructuring specialist with the PARGESA/Lambert Brussels
Group, an international investment holding company, and, from 1988 to 1989, he
was a mergers and acquisitions associate covering defense electronics for
Bankers Trust Co., a financial services company. Mr. Di Benedetto received his
Bachelor of Arts in mathematics and physics from Lycee Perier, Marseilles,
France and his Masters of Business Administration from E.S.S.E.C., Paris,
France. He serves on the boards of directors of the following private companies:
AdAuction.com, Inc., Decisive Technology Corporation, Magnifi, Inc. and
PaymentNet, Inc.
 
        MARK P. GORENBERG has served as a member of AdForce's Board of Directors
since December 1996. Mr. Gorenberg joined Hummer Winblad Venture Partners, a
venture capital fund focused exclusively on software investments, since July
1990, and has served as a partner in the firm since 1993. From 1989 to 1990, Mr.
Gorenberg was a Senior Software Manager in Advanced Product Development at Sun
Microsystems, Inc., a provider of hardware, software and services for the
Internet. Mr. Gorenberg received his Bachelor of Science in electrical
engineering from the Massachusetts Institute of Technology, his
 
                                       44
<PAGE>
Masters in electrical engineering from the University of Minnesota, and his
Masters in engineering management from Stanford University. He serves on the
boards of directors of the following private companies: Envive Corporation and
Escalade Corporation.
 
        J. NEIL WEINTRAUT has served as a member of AdForce's Board of Directors
since December 1996, and is a founder and has been a partner of 21st Century
Internet Venture Partners, a venture capital firm, since its inception in
October 1996. From June 1987 to May 1996, Mr. Weintraut was a partner at
Hambrecht & Quist, an investment banking firm, where he led the Enterprise
Software practice, and later the Internet practice. From 1984 to 1985, Mr.
Weintraut worked as an engineer at Daisy Systems, Inc., a developer of computer
aid automation, and, from 1983 to 1984, he was an engineer working in
supercomputer design at International Business Machines Corporation, an
information technology company. Mr. Weintraut received his Bachelor of Science
in electrical engineering from Drexel University and his Masters of Business
Administration from The Wharton School of Business. He serves on the boards of
directors of the following private companies: CareerBuilder, Inc. and GreenTree
Nutrition, Inc.
 
        DIRK A. WRAY is a co-founder of AdForce, its original chief executive
officer and has served as a member of AdForce's Board of Directors from its
inception to December 1996 and again since November 1998. Since May 1998, Mr.
Wray has served as President and Vice Chairman of Omnigon, Inc., a full service
electronic-commerce company. From January 1994 to January 1998, Mr. Wray served
as President and Chief Financial Officer of Covenant Care, Inc., an
international long-term health care provider. Mr. Wray received his Bachelor of
Science in marketing from Michigan State University, his Masters of Business
Administration from Southern Methodist University, and his Masters of
International Management from The American Graduate School of International
Management. He serves on the boards of directors of the following private
companies: Covenant Care, Inc., Casa Reha GmbH and Omnigon, Inc.
 
        Our Board of Directors is currently comprised of five directors and has
two vacancies. Directors are elected by the stockholders at each annual meeting
of stockholders and serve for one year or until their successors are duly
elected and qualified. However, our Bylaws provide, following the offering, for
the division of our Board of Directors into three classes as nearly equal in
size as possible with staggered three-year terms. The term of office of our
Class I directors will expire at the annual meeting of stockholders to be held
in 1999; the term of office of our Class II directors will expire at the annual
meeting of stockholders to be held in 2000; and the term of office of our Class
III directors will expire at the annual meeting of the stockholders to be held
in 2001. At each annual meeting of the stockholders, beginning with the 1999
annual meeting, the successors to the directors whose terms will then expire
will be elected to serve from the time of their election and qualification until
the third annual meeting following their election or until their successors have
been duly elected and qualified, or until their earlier resignation or removal,
if any. Messrs. Weintraut and Wray have been designated as Class I directors;
Messrs. Di Benedetto and Gorenberg have been designated as Class II directors;
and Mr. Berger has been designated as a Class III director. The classification
of our Board of Directors could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring,
control of AdForce.
 
        Under the Amended and Restated Certificate of Incorporation, America
Online has the right to elect one director to the Board of Directors so long as
America Online holds at least 728,332 shares of common stock (appropriately
adjusted for any stock split, dividend, combination or other recapitalization).
This right expires in July 2008.
 
BOARD COMMITTEES
 
        We have established an Audit Committee and a Compensation Committee. The
Audit Committee reviews AdForce's internal accounting procedures and consults
with and reviews the results and scope of the audit and other services provided
by AdForce's independent accountants. The Audit Committee of our Board of
Directors consists of Messrs. Di Benedetto and Weintraut. The Compensation
Committee reviews
 
                                       45
<PAGE>
and approves the compensation and benefits for our key executive officers and
establishes and reviews general policies relating to compensation and benefits
of AdForce's employees. The Compensation Committee of our Board of Directors
consists of Messrs. Di Benedetto and Gorenberg.
 
DIRECTOR COMPENSATION
 
        Directors of AdForce do not receive cash compensation for their services
as directors, but are reimbursed for all reasonable expenses incurred in
connection with their attendance at meetings of the Board of Directors and
committee meetings of the Board of Directors.
 
        In February 1999, our Board of Directors adopted the 1999 Directors
Stock Option Plan and reserved a total of 200,000 shares of common stock for
issuance under the 1999 Directors Stock Option Plan. We expect our stockholders
to approve the 1999 Director Stock Option Plan in March 1999. Members of our
Board of Directors who are not employees of AdForce, or any parent, subsidiary
or affiliate of AdForce, are eligible to participate in the 1999 Directors Stock
Option Plan. Option grants under the 1999 Directors Stock Option Plan are
automatic and nondiscretionary, and the exercise price of the options will be
the fair market value of the common stock on the date of grant.
 
        We will initially grant to each eligible director who first becomes a
member of our Board of Directors on or after the effective date of this offering
an option to purchase 10,000 shares of common stock on the date he or she
becomes a member of our Board of Directors. We will initially grant to each
eligible director who first becomes a member of our Board of Directors before
the effective date of this offering an option to purchase 10,000 shares of
common stock immediately following the first annual meeting of stockholders of
AdForce after the effective date of this offering. Immediately following each
annual meeting of stockholders of AdForce after an eligible director's initial
grant, that director will automatically be granted an additional option to
purchase 5,000 shares of common stock if he or she has served continuously as a
member of our Board of Directors for a period of at least one year since the
date of his or her initial grant under this Plan. The options have ten year
terms. They will terminate seven months following the date the director ceases
to be a director or a consultant to AdForce, twelve months if the termination is
due to death or disability. All options granted under the 1999 Directors Stock
Option Plan will vest as to 25% of the shares on the anniversary of the date of
grant and as to 2.08% of the shares each month thereafter, provided the optionee
continues as a member of our Board of Directors or as a consultant to AdForce.
In the event of a merger or other transaction in which AdForce is not the
surviving corporation, all options issued under the 1999 Directors Stock Option
Plan will accelerate and become exercisable in full before the consummation of
the transaction. Any options not exercised within seven months of the corporate
transaction will expire.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
        Prior to February 1999, our Board of Directors did not have a
compensation committee and all compensation decisions were made by the full
Board of Directors. On and after February 26, 1999, our Compensation Committee
will make all compensation decisions. No interlocking relationship exists
between our Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company, nor has an
interlocking relationship existed in the past.
 
                                       46
<PAGE>
EXECUTIVE COMPENSATION
 
        The following table sets forth all compensation awarded to, earned by or
paid for services rendered to AdForce in all capacities during 1998 by our chief
executive officer and our other executive officers or former executive officers
who earned at least $100,000 in 1998 ("Named Executive Officers").
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                       LONG-TERM
                                                                     COMPENSATION
                                                                     -------------
                                                                        AWARDS
                                              ANNUAL COMPENSATION    -------------
                                                                      SECURITIES
                                             ----------------------   UNDERLYING      ALL OTHER
NAME AND PRINCIPAL POSITIONS                  SALARY(1)     BONUS       OPTIONS     COMPENSATION
-------------------------------------------  -----------  ---------  -------------  -------------
<S>                                          <C>          <C>        <C>            <C>
Charles W. Berger .........................   $ 250,000          --           --      $  42,188(2)
  President and Chief Executive Officer
 
Chad E. Steelberg(3) ......................     162,692   $  75,000      101,000(4)       3,000(5)
  Former President
 
John A. Tanner ............................     148,398          --       45,000             --
  Executive Vice President and Chief
  Financial Officer
</TABLE>
 
------------------------------
(1) Messrs. Rao, Cravens and Glaves were hired as executive officers in January
    1999 and are compensated at annual rates of $215,000, $185,000 and $150,000,
    respectively. Mr. Jackson was hired as an executive officer in August 1998
    and is compensated at an annual rate of $150,000. See "--Employment
    Agreements and Severance Agreements."
 
(2) Represents forgiveness of indebtedness evidenced by a promissory note issued
    by Mr. Berger to AdForce in connection with the exercise of his option to
    purchase 900,000 shares of common stock. See "Certain Transactions."
 
(3) Mr. Steelberg resigned from his position as AdForce's President in November
    1998.
 
(4) These options terminated in November 1998 upon termination of Mr.
    Steelberg's employment. See "--Employment Agreements and Severance
    Agreements."
 
(5) Represents amount paid to Mr. Steelberg as expense allowances.
 
                                       47
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
 
        The following table sets forth each stock option grant during 1998 to
our Named Executive Officers. No stock appreciation rights were granted to these
individuals during 1998.
 
                             OPTION GRANTS IN 1998
 
<TABLE>
<CAPTION>
                                                                                              POTENTIAL REALIZABLE
                                                                                                VALUE AT ASSUMED
                                                                                                ANNUAL RATES OF
                                     NUMBER OF     PERCENTAGE OF                                  STOCK PRICE
                                    SECURITIES     TOTAL OPTIONS                                APPRECIATION FOR
                                    UNDERLYING      GRANTED TO       EXERCISE                    OPTION TERM(4)
                                      OPTIONS      EMPLOYEES IN      PRICE PER   EXPIRATION   --------------------
NAME                                GRANTED(1)        1998(2)        SHARE(3)       DATE         5%         10%
----------------------------------  -----------  -----------------  -----------  -----------  ---------  ---------
<S>                                 <C>          <C>                <C>          <C>          <C>        <C>
Charles W. Berger.................          --              --              --           --          --         --
 
Chad E. Steelberg.................       1,000(5)           0.1%     $    1.50     07/25/08   $       0(5) $       0(5)
                                       100,000(5)           6.5           1.50     08/14/08           0(5)         0(5)
 
John A. Tanner....................      45,000             2.9            0.70     06/10/08   $  19,810  $  85,218
</TABLE>
 
--------------------------
 
(1) All of these options were immediately exercisable and were incentive stock
    options that were granted at fair market value and vest over four years at
    the rate of 25% of the shares subject to the option on the first anniversary
    of the vesting start date specified in the Stock Option Agreement and 2.08%
    per month thereafter. Unvested shares are subject to AdForce's right of
    repurchase upon termination of employment. Upon certain changes in control
    of AdForce, vesting will accelerate as to all shares that are then unvested.
    Options expire ten years from the date of grant. See "--Employee Benefit
    Plans" and "--Employment Agreements and Severance Agreements" for a
    description of the material terms of these options.
 
(2) Based on options to purchase 1,533,411 shares of common stock of AdForce
    granted during 1998 or issued in connection with the assumption of options
    granted by StarPoint Software, Inc.
 
(3) Options were granted at an exercise price equal to the fair market value of
    our common stock on the date of grant, as determined by our Board of
    Directors. The exercise price may be paid in cash, in shares of our common
    stock valued at fair market value on the exercise date or through a cashless
    exercise procedure involving a same-day sale of the purchased shares.
    AdForce may also finance the option exercise by lending the optionee
    sufficient funds to pay the exercise price for the purchased shares.
 
(4) Potential realizable values are net of the exercise price but before any
    payment of taxes, and are based on the assumption that our common stock
    appreciates at the annual compounded rate shown from the date of grant until
    the expiration of the ten-year term. The 5% and 10% assumed annual rates of
    stock price appreciation are mandated by the rules of the Securities and
    Exchange Commission and do not represent our estimate or projection of
    future common stock prices.
 
(5) These options terminated in November 1998 upon termination of Mr.
    Steelberg's employment. See "--Employment Agreements and Severance
    Agreements."
 
        Mr. Rao was hired in January 1999 and was granted a ten-year option to
purchase 360,000 shares of our common stock at an exercise price of $1.50 per
share. The option vests over three years at the rate of 33% of the shares
subject to the option on the first anniversary of the vesting start date
specified in the Stock Option Agreement and 2.79% per month thereafter. Mr.
Cravens was hired in January 1999 and was granted a ten-year option to purchase
175,000 shares of our common stock at an exercise price of $1.50 per share. The
option vests over four years at the rate of 25% of the shares subject to the
option on the first anniversary of the vesting start date specified in the Stock
Option Agreement and 2.08% per month thereafter. Mr. Glaves was hired in January
1999 and was granted a ten-year option to purchase 175,000 shares of our common
stock at an exercise price of $1.50 per share. The option vests over four years
at the rate of 12 1/2% of the shares subject to the option on the six month
anniversary of the vesting start date specified in the Stock Option Agreement
and 2.08% per month thereafter. Mr. Jackson was hired in July 1998 and was
granted a ten-year option to purchase 180,000 shares of our common stock at an
exercise price of $1.50 per share. The option vests at the same rate as those of
Mr. Cravens.
 
                                       48
<PAGE>
        None of our Named Executive Officers exercised any option in 1998. The
table below sets forth the number of shares of common stock covered by both
exercisable and unexercisable stock options held as of December 31, 1998 by each
of our Named Executive Officers. Also reported are values of "in-the-money"
options, which represent the positive spread between the respective exercise
prices of outstanding stock options and an assumed initial public offering price
of $     per share.
 
<TABLE>
<CAPTION>
                                         NUMBER OF SECURITIES
                                        UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                        OPTIONS AT DECEMBER 31,      IN-THE-MONEY OPTIONS AT
                                                 1998                   DECEMBER 31, 1998
                                      ---------------------------  ----------------------------
NAME                                  EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
------------------------------------  ------------  -------------  -------------  -------------
<S>                                   <C>           <C>            <C>            <C>
Charles W. Berger...................          --             --             --             --
 
Chad E. Steelberg(1)................          --             --             --             --
 
John A. Tanner......................     225,000(2)          --      $              $
</TABLE>
 
------------------------
 
(1) All of Mr. Steelberg's outstanding options terminated on November 20, 1998,
    according to the terms of the Settlement Agreement and Release dated the
    same date. See "--Employment Agreements and Severance Agreements."
 
(2) The options are subject to AdForce's right of repurchase, which lapsed with
    respect to 25% of the shares upon Mr. Tanner's completion of 12 months of
    service from the vesting start date and an additional 2.08% per month
    thereafter. As of December 31, 1998, AdForce's right of repurchase had
    lapsed with respect to 60,930 shares.
 
EMPLOYEE BENEFIT PLANS
 
        1997 STOCK PLAN.  In April 1997, our Board of Directors adopted the 1997
Stock Plan and in June 1997 our stockholders approved it. The Board of Directors
reserved 1,200,000 shares of our common stock for issuance under the 1997 Stock
Plan, which number was increased by our Board of Directors to 2,400,000 in July
1997 and 4,000,000 in December 1997. As of December 31, 1998, options to
purchase 1,443,742 shares of our common stock had been exercised (of which
52,216 shares were repurchased by AdForce), options to purchase 1,905,706 shares
of our common stock were outstanding under the 1997 Stock Plan with a weighted
average exercise price of $0.76 and 702,768 shares of our common stock were
available for future grants. Following the closing of this offering, no
additional options will be granted under the 1997 Stock Plan. Options granted
under the 1997 Stock Plan are subject to terms substantially similar to those
described below with respect to options to be granted under the 1999 Equity
Incentive Plan. However, options granted under the 1997 Stock Plan become fully
vested if not assumed or substituted by the successor corporation in connection
with a merger or asset sale. The 1997 Stock Plan also provides for the issuance
of restricted stock.
 
        STARPOINT SOFTWARE, INC. 1996 STOCK PLAN.  In connection with AdForce's
acquisition of StarPoint Software, Inc., AdForce assumed all options outstanding
under the StarPoint Stock Plan at the closing of the acquisition. These assumed
options will remain effective until exercised for AdForce's common stock or
until they terminate or expire in accordance with their terms. Options granted
under the StarPoint Plan are subject to terms substantially similar to those
described below with respect to options to be granted under the 1999 Equity
Incentive Plan. However, options granted under the StarPoint Plan become fully
vested if not assumed or substituted by the successor corporation in connection
with a merger or asset sale. No options will be granted in the future under the
StarPoint Plan. As of December 31, 1998, options to purchase 13,783 shares of
common stock had been exercised, and options to purchase 17,154 shares of common
stock were outstanding under the StarPoint Plan.
 
        1999 EQUITY INCENTIVE PLAN.  In February 1999, our Board of Directors
adopted, and in March 1999 we expect our stockholders to approve, our 1999
Equity Incentive Plan. We reserved
 
                                       49
<PAGE>
2,000,000 shares for issuance under the 1999 Equity Incentive Plan. Our 1999
Equity Incentive Plan will become effective on the effective date of this
offering and will serve as the successor to our 1997 Stock Plan. Options granted
under the 1997 Stock Plan and the StarPoint Plan before their termination will
remain outstanding according to their terms, but no further options will be
granted under the 1997 Stock Plan or the StarPoint Plan after the effective date
of this offering. Shares that: (a) are subject to issuance upon exercise of an
option granted under our 1999 Equity Incentive Plan that cease to be subject to
such option for any reason other than exercise of such option; (b) have been
issued pursuant to the exercise of an option granted under our 1999 Equity
Incentive Plan that are subsequently forfeited or repurchased by AdForce at the
original purchase price; (c) are subject to an award granted pursuant to a
restricted stock purchase agreement under our 1999 Equity Incentive Plan that
are subsequently forfeited or repurchased by AdForce at the original issue
price; or (d) are subject to stock bonuses granted under our 1999 Equity
Incentive Plan that otherwise terminate without shares being issued, will again
be available for grant and issuance under our 1999 Equity Incentive Plan. In
addition, any authorized shares not issued or subject to outstanding grants
under the 1997 Stock Plan on the effective date of this offering and any shares
issued under the 1997 Stock Plan that are forfeited or repurchased by AdForce or
that are issuable upon exercise of options granted pursuant to the 1997 Stock
Plan or that expire or become unexercisable for any reason without having been
exercised in full, will no longer be available for grant and issuance under the
1997 Stock Plan but will be available for grant and issuance under our 1999
Equity Incentive Plan. Our 1999 Equity Incentive Plan will terminate in February
2009, unless sooner terminated in accordance with its terms. Our 1999 Equity
Incentive Plan authorizes the award of options, restricted stock awards and
stock bonuses, each an "Award." No person will be eligible to receive more than
1,500,000 shares in any calendar year pursuant to Awards under our 1999 Equity
Incentive Plan, except that a new employee of AdForce will be eligible to
receive up to 1,800,000 shares in the calendar year in which he or she commences
employment. Our Compensation Committee administers our 1999 Equity Incentive
Plan and has the authority to construe and interpret our 1999 Equity Incentive
Plan and any agreement made under it, grant Awards and make all other
determinations necessary or advisable for the administration of our 1999 Equity
Incentive Plan.
 
        Our 1999 Equity Incentive Plan provides for the grant of both incentive
stock options that qualify under Section 422 of the Internal Revenue Code of
1986, as amended, and nonqualified stock options. We can grant incentive stock
options only to employees of AdForce or of a parent or subsidiary of AdForce. We
can grant nonqualified stock options and all other Awards other than incentive
stock options to employees, officers, directors, consultants, independent
contractors and advisors of AdForce or any parent or subsidiary of AdForce.
However, such consultants, independent contractors and advisors must render bona
fide services not in connection with the offer and sale of securities in a
capital-raising transaction. The exercise price of incentive stock options must
be at least equal to the fair market value of AdForce's common stock on the date
of grant. The exercise price of incentive stock options granted to stockholders
who hold our securities with more than 10% of our voting power must be at least
equal to 110% of that value. The exercise price of nonqualified stock options
must be at least equal to 85% of the fair market value of AdForce's common stock
on the date of grant. The maximum term of options granted under our 1999 Equity
Incentive Plan is ten years. Awards granted under our 1999 Equity Incentive Plan
may not be transferred in any manner other than by will or by the laws of
descent and distribution and may be exercised during the lifetime of the
optionee only by the optionee. Options granted under our 1999 Equity Incentive
Plan generally expire three months after the termination of the optionee's
service to AdForce or a parent or subsidiary of AdForce. However, in the case of
death or disability, the options generally may be exercised up to 12 months
following the date of death or termination of service. Options will generally
terminate immediately upon termination for cause. If AdForce dissolves or
liquidates or a "change in control" transaction occurs, outstanding Awards may
be assumed or substituted by the successor corporation, if any. Our Compensation
Committee has the discretion to accelerate the vesting of any Award upon the
occurrence of any of these events.
 
        See "Director Compensation" for a description of our 1999 Directors
Stock Option Plan.
 
                                       50
<PAGE>
        1999 EMPLOYEE STOCK PURCHASE PLAN.  In February 1999, our Board of
Directors adopted, and in March 1999 we expect our stockholders to approve, the
1999 Employee Stock Purchase Plan. We reserved a total of 300,000 shares of
common stock for issuance under the 1999 Employee Stock Purchase Plan. On each
January 1, the aggregate number of shares reserved for issuance under our 1999
Employee Stock Purchase Plan will be increased automatically by the number of
shares purchased under our 1999 Employee Stock Purchase Plan in the preceding
calendar year. The aggregate number of shares issued over the term of our 1999
Employee Stock Purchase Plan may not exceed 3,000,000 shares. Our Compensation
Committee administers our 1999 Employee Stock Purchase Plan and has the
authority to construe and interpret it. The Compensation Committee's decision in
such capacity will be final and binding. Our 1999 Employee Stock Purchase Plan
will become effective on the effective date of this offering. Employees
generally will be eligible to participate in our 1999 Employee Stock Purchase
Plan if they are customarily employed by AdForce or its parent or any
subsidiaries that AdForce designates for more than 20 hours per week and more
than five months in a calendar year. Employees who are or would become as a
result of being granted an option under our 1999 Employee Stock Purchase Plan 5%
stockholders of AdForce or its designated parent or subsidiaries are not
eligible to participate in our 1999 Employee Stock Purchase Plan. Under our 1999
Employee Stock Purchase Plan, we permit eligible employees to acquire shares of
AdForce's common stock through payroll deductions. Eligible employees may select
a rate of payroll deduction between 2% and 10% of their W-2 cash compensation
and are subject to certain maximum purchase limitations described in our 1999
Employee Stock Purchase Plan. A participant may change the rate of payroll
deductions or withdraw from an offering period by notifying AdForce in writing.
Participation in our 1999 Employee Stock Purchase Plan will end automatically
upon termination of employment for any reason. Each offering period under our
1999 Employee Stock Purchase Plan will be for two years and consist of four
six-month purchase periods. The first offering period is expected to begin on
the first business day on which price quotations for AdForce's common stock are
available on the Nasdaq National Market. Depending on the effective date of this
offering, the first purchase period may be more or less than six months long.
Offering periods and purchase periods thereafter will begin on February 1 and
August 1. The purchase price for AdForce's common stock purchased under our 1999
Employee Stock Purchase Plan will be 85% of the lesser of the fair market value
of AdForce's common stock on the first day of the applicable offering period or
the last day of each purchase period. The Compensation Committee will have the
power to change the duration of offering periods without stockholder approval,
if it announces such change at least 15 days before the beginning of the
offering period to be affected. Our 1999 Employee Stock Purchase Plan is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code. A participant cannot transfer the rights granted
under our 1999 Employee Stock Purchase Plan other than by will or the laws of
descent and distribution. Our 1999 Employee Stock Purchase Plan provides that,
if a proposed dissolution or liquidation of AdForce occurs, each offering period
that started before the closing of the proposed transaction will continue for
the duration of such offering period, provided that the Compensation Committee
may fix a different date for termination of our 1999 Employee Stock Purchase
Plan. Our 1999 Employee Stock Purchase Plan will terminate in February 2009,
unless earlier terminated pursuant to its terms. Our Board of Directors will
have the authority to amend, terminate or extend the term of our 1999 Employee
Stock Purchase Plan. However, no such action may adversely affect any
outstanding options previously granted under our 1999 Employee Stock Purchase
Plan and stockholder approval is required to increase the number of shares that
may be issued or to change the terms of eligibility under our 1999 Employee
Stock Purchase Plan. Nonetheless, our Board of Directors may make such
amendments to our 1999 Employee Stock Purchase Plan as our Board of Directors
determines to be advisable if the financial accounting treatment for our 1999
Employee Stock Purchase Plan is different than the financial accounting
treatment in effect on the date that our Board of Directors adopted our 1999
Employee Stock Purchase Plan.
 
        401(k) PLAN.  We sponsor the Imgis Retirement Savings Plan, a defined
contribution plan intended to qualify under Section 401 of the Internal Revenue
Code of 1986, as amended. All employees
 
                                       51
<PAGE>
who are 21 years old are eligible to participate and may enter the 401(k) Plan
as of the first day of any month. Participants may make pre-tax contributions to
the 401(k) Plan of up to 20% of their eligible earnings, subject to a
statutorily prescribed annual limit. We may make matching contributions on a
discretionary basis to the 401(k) Plan, but have not done so to date. Each
participant is fully vested in his or her contributions, any of our matching
contributions, and the investment earnings on either. Contributions by the
participants or AdForce to the 401(k) Plan, and the income earned on these
contributions, are generally not taxable to the participants until withdrawn.
Contributions by AdForce, if any, will generally be deductible by AdForce when
made. Participant and AdForce contributions are held in trust as required by
law. Individual participants may direct the 401(k) Plan's trustee to invest
their accounts in authorized investment alternatives.
 
EMPLOYMENT AGREEMENTS AND SEVERANCE AGREEMENTS
 
        AdForce and Mr. Berger are parties to a letter agreement dated June 27,
1997 governing his employment with AdForce. Under the agreement, AdForce agreed
to pay Mr. Berger an annual salary of $250,000 and to grant him an immediately
exercisable option under the 1997 Stock Plan to purchase 900,000 shares of
AdForce's common stock at an exercise price of $0.125 per share. Mr. Berger
exercised this option in full on June 30, 1997 and paid the purchase price of
the option, $112,500, by issuing a promissory note to AdForce that is secured by
a pledge of the common stock purchased and forgivable in four annual
installments, provided Mr. Berger remains an employee. On June 30, 1998,
AdForce's repurchase right with respect to the 900,000 shares began to lapse.
Mr. Berger vested as to 25% of the option shares on that date and began to vest
monthly thereafter as to 2.08% of the shares for so long as he remains an
employee of AdForce. The agreement provided for full vesting if (1) AdForce
merges or consolidates with or into another entity where more than 50% of the
combined voting power of the surviving corporation's securities outstanding
immediately after the transaction is owned by persons who were not stockholders
of AdForce immediately prior to such transaction or (2) the sale, transfer or
other disposition of all or substantially all of AdForce's assets, each a
"Change of Control," and in either case the option is not assumed by the
successor corporation. Finally, the agreement provided that, in the event (1) of
a Change of Control, (2) Mr. Berger's option is assumed and (3) his employment
is involuntarily terminated or Mr. Berger resigns for good reason (as defined in
his stock option agreement) within 24 months of the Change of Control, Mr.
Berger's option will become vested and AdForce's repurchase right will lapse
with respect to an additional number of shares equal to the number of shares
that would have vested if Mr. Berger served for an additional 12 months.
 
        In November 1998, AdForce and Mr. Berger entered into a letter agreement
regarding salary continuation and option vesting. Under the letter agreement, if
Mr. Berger's employment with AdForce is involuntarily terminated by AdForce
other than for "cause" or if Mr. Berger resigns for "good reason," Mr. Berger
will receive salary continuation at his current rate of salary and continuation
of vesting of his options or restricted stock vesting for a period of twelve
months following such termination. "Cause" is defined to include failure to
follow the written directions of the Board of Directors, dishonesty, gross
misconduct, fraud, or conviction for a felony. "Good reason" is defined to
include demotion, salary reduction or relocation.
 
        AdForce and Mr. Rao are parties to a letter agreement dated December 11,
1998 governing his employment with AdForce. Under the agreement, AdForce agreed
to pay Mr. Rao an annual salary of $215,000 and a performance bonus of $50,000,
and to grant Mr. Rao an option to purchase 360,000 shares of common stock at a
fair market value exercise price. AdForce's repurchase right will begin to lapse
and Mr. Rao will vest as to 33% of the shares subject to the option after one
year of service; the balance of the shares will vest monthly over the next 24
months of service.
 
        AdForce and Mr. Tanner are parties to an employment agreement dated
December 9, 1998 governing his employment with AdForce. Under the agreement,
which has a term of two years, AdForce agreed to pay Mr. Tanner a base salary of
$175,000 and an incentive bonus pursuant to AdForce's incentive
 
                                       52
<PAGE>
bonus plan. The agreement provides for an additional one year of vesting of Mr.
Tanner's existing options (1) if AdForce merges with or is acquired by another
company and is not the surviving entity, (2) if AdForce sells all or
substantially all of its assets or stock or (3) if any other reorganization or
business combination involving AdForce results in 50% or more of AdForce's
outstanding voting stock being transferred to different holders. Finally, if
AdForce terminates Mr. Tanner's employment prior to the end of the term of the
agreement other than for cause, death or disability, or if Mr. Tanner terminates
his employment for good reason (as defined in the agreement), Mr. Tanner will
receive a severance amount equal to his then-current base salary for 12 months
following the date of termination, plus benefits and any earned bonuses.
 
        AdForce and Mr. Cravens are parties to a letter agreement dated January
21, 1999 governing his employment with AdForce. Under the agreement, AdForce
agreed to pay Mr. Cravens an annual salary of $185,000 and a $25,000 signing
bonus, and granted Mr. Cravens an immediately exercisable option to purchase
175,000 shares of AdForce's common stock at a fair market value exercise price.
AdForce's repurchase right will lapse and Mr. Cravens will vest as to 25% of the
shares subject to the option after one year of service; the balance of the
shares will vest monthly over the next 36 months of service.
 
        AdForce and Mr. Glaves are parties to a letter agreement dated December
28, 1998, as revised on December 31, 1998, governing his employment with
AdForce. Under the agreement, AdForce agreed to pay Mr. Glaves an annual salary
of $150,000 and a maximum quarterly performance bonus of $25,000 (with the first
quarter's payment guaranteed) and granted him an immediately exercisable option
to purchase 175,000 shares of AdForce's common stock at a fair market value
exercise price. AdForce's repurchase right will lapse and Mr. Glaves will vest
as to 12.5% of the shares subject to the option after six months of service; the
balance of the shares will vest monthly over the next 42 months of service.
 
        AdForce and Mr. Jackson are parties to a letter agreement dated July 22,
1998 governing his employment with AdForce. Under the agreement, AdForce agreed
to pay Mr. Jackson an annual salary of $150,000 and granted him an immediately
exercisable option to purchase 180,000 shares of AdForce's common stock at a
fair market value exercise price. AdForce's repurchase right will lapse and Mr.
Jackson will vest as to 25% of the shares subject to the option after one year
of service; the balance of the shares will vest monthly over the next 36 months.
Upon certain Changes in Control of AdForce, vesting of Mr. Jackson's options
will accelerate in the same manner as Mr. Berger's.
 
        AdForce and Mr. Steelberg are parties to a Settlement Agreement and
Release dated November 20, 1998 relating to the termination of Mr. Steelberg's
employment with AdForce. The agreement provided that, in lieu of amounts
otherwise payable to Mr. Steelberg, AdForce would pay him $225,000, that all
outstanding shares of common stock held by Mr. Steelberg on the date of the
agreement would be deemed fully vested, and that all unexercised options to
purchase common stock would terminate. However, certain agreements between the
parties remain enforceable. The agreement also provided for a mutual release of
claims.
 
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY
 
        Our Amended and Restated Certificate of Incorporation limits the
liability of our directors to the maximum extent permitted by Delaware law.
Delaware law provides that a director of a corporation will not be personally
liable for monetary damages for breach of fiduciary duty as a director, except
for liability:
 
        - for any breach of the director's duty of loyalty to the corporation or
          its stockholders;
 
        - for acts or omissions not in good faith or that involve intentional
          misconduct or a knowing violation of law;
 
        - under section 174 of the Delaware General Corporation Law (the "DCGL")
          regarding unlawful dividends and stock purchases; or
 
                                       53
<PAGE>
        - for any transaction from which the director derived an improper
          personal benefit.
 
    As permitted by the DGCL, our Bylaws provide that:
 
        - we must indemnify our directors and officers to the fullest extent
          permitted by the DGCL, provided that each indemnified officer and
          director acted in good faith and in a manner that the officer or
          director reasonably believed to be in or not opposed to AdForce's best
          interests;
 
        - we may indemnify our other employees and agents to the same extent
          that we indemnify our officers and directors, unless otherwise
          required by law, our Amended and Restated Certificate of
          Incorporation, our Bylaws or any agreements;
 
        - we must advance expenses, as incurred, to our directors and officers
          in connection with a legal proceeding to the fullest extent permitted
          by the DGCL, subject to certain very limited exceptions; and
 
        - the rights conferred in our Bylaws are not exclusive.
 
        In addition to the indemnification required in our Amended and Restated
Certificate of Incorporation and our Bylaws, we intend to enter into indemnity
agreements, prior to the completion of this offering, with each of our current
directors and officers. We expect these agreements to provide, among other
things, for the indemnification of our officers and directors for all expenses
and liabilities incurred in connection with any action or proceeding brought
against them by reason of the fact that they are or were agents of AdForce. In
addition, we intend to obtain directors' and officers' insurance to cover our
directors, officers and certain employees for certain liabilities. We believe
that these indemnification provisions and agreements and this insurance are
necessary to attract and retain qualified directors and officers.
 
        The limitation of liability and indemnification provisions in our
Amended and Restated Certificate of Incorporation and Bylaws may discourage
stockholders from bringing a lawsuit against directors for breach of their
fiduciary duty. They may also reduce the likelihood of derivative litigation
against directors and officers, even though an action, if successful, might
otherwise benefit us and other stockholders. Furthermore, a stockholder's
investment may be adversely affected to the extent we pay the costs of
settlement and damage awards against directors and officers as required by these
indemnification provisions.
 
        At present, there is no pending litigation or proceeding involving any
of our directors, officers or employees regarding which indemnification by
AdForce is sought, nor are we aware of any threatened litigation that may result
in claims for indemnification.
 
                                       54
<PAGE>
                              CERTAIN TRANSACTIONS
 
        Since January 16, 1996 when we were incorporated, we have not been a
party to, and we have no plans to be a party to, any transaction or series of
similar transactions in which the amount involved exceeds $60,000 and in which
any director, executive officer or holder of more than 5% of our common stock
(or any member of the immediate family of any of the persons described above)
had or will have a direct or indirect interest other than as described, where
required, under "Management" and the transactions described below. The numbers
of shares of preferred stock and the per share prices of shares of preferred
stock described below are reported on an as-if-converted to common stock basis.
 
    LOANS AND SECURITIES ISSUANCES
 
        In April 1996, three of our founders, Chad Steelberg, Gary Steelberg and
Ryan Steelberg, assigned ownership rights in certain computer software valued at
$8,600 to AdForce in exchange for the issuance of 430,000 shares of common
stock, 860,000 shares of common stock and 430,000 shares of common stock,
repectively. Our fourth founder, Washington Holdings, L.P., a Nevada limited
partnership, acquired 2,000,000 shares of common stock for a purchase price of
$10,000. Dirk Wray, one of our directors, is a general partner of Washington
Holdings.
 
        In April 1996, AdForce acquired for a purchase price of $110,000 all of
the assets, properties and rights, including technology and other intellectual
property of Iron Mountain Global Information Systems, Inc., a California
corporation. Chad Steelberg, our former President, was also the President of
Iron Mountain Global Information Systems.
 
        In April 1996, Washington Holdings, L.P., loaned AdForce $670,000 at an
annual interest rate of 10%. The loan was secured by certain assets of AdForce.
 
        In June 1996, the Kuwait Investment Projects Company K.S.C., a Kuwait
company and a parent of IBL Corporation, loaned AdForce $1.0 million.
 
        In July 1996, IBL Corporation, a principal stockholder of AdForce,
loaned AdForce $997,500 at an annual interest rate of 11.03%. In connection with
the loan, AdForce granted IBL a warrant to purchase 123,400 shares of common
stock.
 
        In December 1996, we sold 1,200,914 shares of Series A Preferred Stock
to two investors. IBL Corporation purchased 797,950 shares of Series A Preferred
Stock in exchange for the cancellation of $997,500 owed by us and the
termination of a warrant to purchase 123,400 shares of common stock. In
addition, Washington Holdings, a Nevada limited partnership, purchased 402,964
shares of Series A Preferred Stock in exchange for the cancellation of $506,000
of indebtedness and the repayment of $119,000 owed by us. We also used $305,000
to repay indebtedness to Aurelius, Ltd., a British Virgin Island corporation.
Dirk Wray, one of our directors, is a representative of Aurelius, Ltd.
 
        Also in December 1996, we sold 2,054,636 shares of Series B Preferred
Stock to six investors. Hummer Winblad Venture Partners II L.P., Hummer Winblad
Technology Fund, II, L.P. and Hummer Winblad Technology Fund II-A, L.P.
purchased 957,542, 33,912 and 5,984 shares of Series B Preferred Stock,
respectively, for an aggregate purchase price of $1,251,785, or $1.255 per
share. The Hummer Winblad group of funds is a principal stockholder of the
Company, and Mark P. Gorenberg, one of our directors, is a partner at Hummer
Winblad Venture Partners, which is the general partner of these funds. In
addition, 21st Century Internet Fund, L.P. purchased 997,438 shares of Series B
Preferred Stock for a purchase price of $1,251,785, or $1.255 per share. 21st
Century Internet Fund, L.P. is one of our principal stockholders, and J. Neil
Weintraut, one of our directors, is a founder and managing member of 21st
Century Internet Managing Partners, LLC, which is the general partner of this
fund.
 
        Also in December 1996, as a condition of the purchase of Series B
Preferred Stock and as a condition to the repayment of certain indebtedness of
AdForce with the proceeds of such sale, AdForce
 
                                       55
<PAGE>
entered into certain agreements with certain of its founders. Pursuant to such
agreements, AdForce repurchased 7,886 shares of common stock and 1,605,014
shares of common stock from Chad Steelberg, our former President, and Washington
Holdings, L.P., a principal stockholder, respectively. Also, Chad Steelberg and
Ryan Steelberg granted AdForce repurchase rights with respect to shares owned by
them. Finally, Washington Holders, L.P. acknowledged transfer restrictions and
granted Messrs. Gorenberg and Weintraut an irrevocable proxy to elect to convert
402,964 shares of Series A Preferred Stock to common stock in the event of a
liquidation event resulting in proceeds to holders of Series A Preferred Stock
in excess of $1.255 per share.
 
        In June 1997, as part of his employment with AdForce, AdForce loaned
Charles W. Berger, our Chief Executive Officer, $112,500 to be used by Mr.
Berger to exercise his option to purchase 900,000 shares of common stock. The
loan, which was evidenced by a promissory note, is due in June 30, 2001 and
accrues interest at the annual rate of 6.8% per annum, compounded annually. The
promissory note is secured by the shares of common stock acquired by Mr. Berger
upon exercise of his option grant. However, Mr. Berger remains personally liable
for the payment of the promissory note, and Mr. Berger's assets, in addition to
the shares of common stock, may be applied to satisfy Mr. Berger's obligations
under the promissory note. The note and related interest are being forgiven
ratably over a period of four years of service/employment. At December 31, 1998,
AdForce forgave $42,188, and there remained $70,312 outstanding under the loan.
See "Management--Employment Agreements and Severance Agreements."
 
        In July 1997, we sold 1,733,616 shares of Series C Preferred Stock to
six investors. Hummer Winblad Venture Partners II, L.P., Hummer Winblad
Technology Fund II, L.P. and Hummer Winblad Technology Fund II-A, L.P.,
purchased 142,072, 5,032 and 888 shares of Series C Preferred Stock,
respectively, for an aggregate purchase price of $350,001, or $2.365 per share.
360 Capital Partners, L.P. also purchased 1,268,500 shares of Series C Preferred
Stock for a purchase price of $3,000,002. 360 Capital Partners, L.P. is one of
our principal stockholders. In addition, IBL Corporation purchased 169,134
shares of Series C Preferred Stock for a purchase price of $400,002. Finally,
21st Century Internet Fund, L.P. purchased 147,990 shares of Series C Preferred
Stock for a purchase price of $349,996.
 
        In November 1997, we sold 816,384 shares of Series C Preferred Stock to
two investors. Convergence Ventures I, L.P. purchased 784,672 shares of Series C
Preferred Stock for a purchase price of $1,855,749. In February 1998, we sold
60,994 shares of Series C Preferred Stock to Convergence Ventures I, L.P. for a
purchase price of $144,251 and 42,284 shares of Series C Preferred Stock to
Convergence Entrepreneurs Fund I, L.P. for a purchase price of $100,002. The
Convergence group of funds is a principal stockholder of the Company, and Eric
Di Benedetto, one of our directors, is a general partner of Convergence
Partners, L.P., which is the general partner of these funds.
 
        In March 1998, Hummer Winblad Venture Fund II, L.P., Hummer Winblad
Technology Fund II, L.P. and Hummer Winblad Technology Fund II-A, L.P. loaned
AdForce $480,000, $17,000 and $3,000 respectively. Each loan accrued interest at
8% per annum, compounded annually.
 
        In April 1998, we sold 1,457,532 shares of Series D Preferred Stock to
19 investors. Convergence Ventures I, L.P. and Convergence Entrepreneurs Fund I,
L.P. purchased 145,666 and 6,554 shares of Series D Preferred Stock,
respectively, for an aggregate purchase price of $1,045,000, or $6.865 per
share. Hummer Winblad Technology Fund II-A, L.P., Hummer Winblad Technology Fund
II, L.P. and Hummer Winblad Venture Fund II, L.P. also acquired 442, 2,506 and
70,774 shares of Series D Preferred Stock, respectively, by converting notes of
$3,000, $17,000 and $480,000, respectively, and accrued interest. In addition,
IBL Corporation purchased 72,832 shares of Series D Preferred Stock for a
purchase price of $499,992.
 
        In July 1998, in consideration of the holders of our Series D Preferred
Stock agreeing to certain amendments to our then effective Amended and Restated
Articles of Incorporation that, if not amended, would have triggered certain
anti-dilution protections benefiting the holders of Series D Preferred Stock, we
issued to the holders of our Series D Preferred Stock warrants to purchase up to
72,860 shares of
 
                                       56
<PAGE>
Series D Preferred Stock at an exercise price of $6.865 per share. The warrants
are exercisable on or before July 14, 2003. The Convergence group of funds, the
Hummer Winblad group of funds and IBL Corporation each received warrants to
purchase a number of shares equal to five percent of the number of shares of
Series D Preferred Stock that they held. See "Principal Stockholders."
 
        Also in July 1998, we sold 1,456,664 shares of Series E Preferred Stock
to America Online, Inc. for a purchase price of $9,999,998, or $6.865 per share.
America Online is one of our principal stockholders and has a right to appoint
one person to our Board of Directors that will continue following this offering.
In connection with the sale of Series E Preferred Stock to America Online, we
also issued to America Online a warrant to purchase up to 1,019,662 shares of
Series E Preferred Stock at an exercise price of $6.865 per share. The warrant
is exercisable on or before July 14, 2003.
 
    COMMERCIAL AGREEMENTS
 
        In August 1998, AdForce entered into a services agreement with 2CAN
Media. Two of AdForce's founders, Chad Steelberg and Ryan Steelberg, work for
2CAN Media. Chad Steelberg and Ryan Steelberg originally developed some of our
core technologies. In the services agreement, 2CAN Media agreed to use our
Internet advertising administration system as its exclusive advertising serving
technology. As of December 31, 1998, the agreement has generated $260,000 in net
revenue for AdForce.
 
        In connection with the July 1998 sale of Series E Preferred Stock to
America Online, AdForce also entered into a License Agreement and a Demographic
Data Agreement with America Online.
 
        LICENSE AGREEMENT.  Under the License Agreement, we licensed our
technology to America Online and its affiliates to be used internally by America
Online and on sites associated with America Online. The licensed technology
includes future enhancements to our technology and is warranted to perform
according to its specifications. The license is fully paid, nonexclusive,
perpetual, worldwide and nontransferable except for certain assignments and
includes source code. We can terminate the license only in the event of a
material, uncorrected breach of the License Agreement by America Online. For the
duration of the license, if requested, we will provide technical support,
development consultation and ad serving services on a cost or cost plus basis if
America Online is not in default. We will provide these services at cost if we
have access to the demographic data to be provided by America Online under the
Demographic Data Agreement and America Online is not in breach of the
Demographic Data Agreement. Otherwise, we can mark up the cost of our services
by certain percentages. To our knowledge, we would not agree to provide these
services on these terms to any other party. Under the License Agreement, America
Online will use commercially reasonable efforts to encourage others associated
with America Online to use our technology, and we will use reasonable efforts to
encourage our customers to use America Online in the sale of interactive
advertising. In either case, commission or revenue sharing obligations can
arise.
 
        DEMOGRAPHIC DATA AGREEMENT.  Under the Demographic Data Agreement,
America Online may authorize us to use demographic information about America
Online users in connection with the targeting and delivery of ads to these
users. The demographic information we receive from America Online will not
identify the user by name or address, and will only be able to be used for
serving targeted ads to America Online customers. We cannot use the demographic
data to serve ads from advertisers that America Online finds objectionable, or
from advertisers on a list provided by America Online. America Online may add
names to this list of advertisers at will, until the advertisers on the list
represent 25% of all ads served on the Internet. AdForce and America Online will
establish a timetable and procedure for the implementation of access to the data
subject to America Online's determination that targeted advertising has become a
generally accepted practice on the Internet. America Online reserves the right
to limit or discontinue access to demographic data in the event of adverse
publicity, legal claims or changes to America Online advertising and privacy
policies. After we have access to the demographic data, we will pay America
Online quarterly fees based on the greater of a certain percentage of the
consideration charged by us for
 
                                       57
<PAGE>
targeted advertising or a certain percentage of the incremental revenue charged
by us for the targeting feature. The fees we pay will total at least $10.0
million for the first three years after we are granted access to the demographic
data. The Demographic Data Agreement will expire on the earlier of July 14, 2002
or three years after we have access to the demographic data. America Online can
elect to renew the Demographic Data Agreement on the same terms and conditions
on a year-to-year basis with 90 days' notice, subject to establishing mutually
agreeable minimum annual fees. America Online can elect to terminate the
Demographic Data Agreement upon payment of a fee to us in the event a third
party offers more favorable terms for access to the demographic data and we do
not match those terms. The Demographic Data Agreement cannot be assigned or
transferred in connection with a change in control without the consent of
AdForce and America Online. To date, America Online has not determined that the
targeting of advertising has become a generally accepted practice, so we have
not had access to the demographic data. There is currently no final
implementation schedule or procedure for such access.
 
        We believe that the transactions described above were made on terms no
less favorable to us than could have otherwise been obtained from unaffiliated
third parties.
 
                                       58
<PAGE>
                             PRINCIPAL STOCKHOLDERS
 
        The following table sets forth certain information with respect to
beneficial ownership of our common stock as of December 31, 1998 by (1) each
stockholder known by us to be the beneficial owner of more than 5% of our common
stock; (2) each of our directors; (3) each of our Named Executive Officers; and
(4) all executive officers and directors as a group.
 
<TABLE>
<CAPTION>
                                                                            PERCENTAGE OF SHARES
                                                                           BENEFICIALLY OWNED(1)
                                                      NUMBER OF SHARES  ----------------------------
                                                        BENEFICIALLY      BEFORE          AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER                       OWNED         OFFERING      OFFERING(2)
----------------------------------------------------  ----------------  -----------  ---------------
<S>                                                   <C>               <C>          <C>
America Online, Inc.(3).............................      2,476,326           14.0%
360 Capital Partners, L.P.(4).......................      1,268,500            7.2
Mark P. Gorenberg(5)
  Funds affiliated with Hummer Winblad..............      1,222,836            6.9
Chad Steelberg(6)...................................      1,163,620            6.6
J. Neil Weintraut(7)
  21(st) Century Internet Fund, L.P.................      1,145,428            6.5
Eric Di Benedetto(8)
  Funds affiliated with Convergence Ventures........      1,047,778            5.9
IBL Corporation(9)..................................      1,043,556            5.9
Charles W. Berger(10)...............................        900,000            5.1
Dirk A. Wray(11)....................................        667,950            3.7
John A. Tanner(12)..................................        225,000            1.3
All executive officers and directors as a group (10
 persons)(13).......................................      5,388,992           30.4%
</TABLE>
 
------------------------------
 
   * Represents beneficial ownership of less than 1%.
 
 (1) Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission and represents sole or shared voting or
     sole or shared investment power with respect to securities. Unless
     otherwise indicated below, the persons and entities named in the table have
     sole voting and sole investment power with respect to all shares
     beneficially owned, subject to community property laws where applicable.
     Shares of common stock subject to options or warrants that are currently
     exercisable or exercisable within 60 days of December 31, 1998 are deemed
     to be outstanding and to be beneficially owned by the person holding the
     options or warrants for the purpose of computing the percentage ownership
     of that person, but are not treated as outstanding for the purpose of
     computing the percentage ownership of any other person.
 
 (2) Assumes that the underwriters' over-allotment option to purchase up to
            shares from AdForce is not exercised.
 
 (3) Represents (i) 1,456,664 shares held of record by America Online, Inc. and
     (ii) 1,019,662 shares subject to a warrant held by America Online, Inc.
     that is currently exercisable. The address of America Online, Inc. is 22000
     AOL Way, Dulles, Virginia 20166.
 
 (4) The address of 360 Capital Partners, L.P. is 360 East 22(nd) Street,
     Lombard, Illinois 60148.
 
 (5) Represents (i) 1,099,614 shares held of record by Hummer Winblad Venture
     Partners II, L.P., (ii) 70,774 shares held of record by Hummer Winblad
     Venture Fund II, L.P., (iii) 41,450 shares held of record by Hummer Winblad
     Technology Fund II, L.P., (iv) 7,314 shares held of record by Hummer
     Winblad Technology Fund II-A, L.P, (v) 3,538 shares subject to a warrant
     held by Hummer Winblad Venture Fund II, L.P. that is currently exercisable,
     (vi) 124 shares subject to a warrant held by Hummer Winblad Technology Fund
     II, L.P. that is currently exercisable, and (vii) 22 shares subject to a
     warrant held by Hummer Winblad Technology Fund II-A, L.P. that is currently
     exercisable. Mr. Gorenberg, one of our directors, is a partner of Hummer
     Winblad Venture Partners, which is the general partner of the above funds.
     The address of Mr. Gorenberg and each entity is 2 South Park, 2(nd) Floor,
     San Francisco, California 94107. Mr. Gorenberg disclaims beneficial
     ownership of the shares held by the above funds except to the extent of his
     pecuniary interest in the above funds.
 
 (6) Includes (i) 1,019,620 shares held of record by Mr. Steelberg and (ii)
     144,000 shares for which Mr. Steelberg has sole voting power. The address
     of Mr. Steelberg is c/o The Busch Firm, 2532 Dupont, Irvine, California
     92618.
 
                                       59
<PAGE>
 (7) Represents shares held by 21(st) Century Internet Fund, L.P. Mr. Weintraut,
     one of our directors, is a founder and managing member of 21st Century
     Internet Managing Partners, LLC, which is the general partner of this fund.
     The address of Mr. Weintraut and 21(st) Century Internet Fund, L.P. is 2
     South Park, 2(nd) Floor, San Francisco, California 94107. Mr. Weintraut
     disclaims beneficial ownership of the shares held by the above fund except
     to the extent of his pecuniary interest arising from his interest in the
     above fund.
 
 (8) Represents (i) 991,332 shares held of record by Convergence Ventures I,
     L.P., (ii) 48,838 shares held of record by Convergence Entrepreneurs Fund
     I, L.P., (iii) 7,282 shares subject to a warrant held by Convergence
     Ventures I, L.P. that is currently exercisable, and (iv) 326 shares subject
     to a warrant held by Convergence Entrepreneurs Fund I, L.P. that is
     currently exercisable. Mr. Di Benedetto, one of our directors, is a general
     partner of Convergence Partners, L.P., which is the general partner of the
     above funds. The address of each entity is 3000 Sand Hill Road, Building 2,
     Suite 235, Menlo Park, California 94025. Mr. Di Benedetto disclaims
     beneficial ownership of the shares held by the above fund except to the
     extent of his pecuniary interest arising from his interest in the above
     funds.
 
 (9) Represents (i) 1,039,916 shares held of record by IBL Corporation, and (ii)
     3,640 shares subject to a warrant held by IBL Corporation that is currently
     exercisable. The address of IBL Corporation is 136 Heber Avenue, Suite 304,
     Park City, Utah 84060.
 
 (10) Includes 562,500 shares that are subject to a repurchase right which
      lapses at the rate of 2.08% per month until June 30, 2001. Mr. Berger is
      our Chief Executive Officer, President and Chairman of our Board of
      Directors.
 
 (11) Includes 548,950 shares held of record by Washington Holdings, a Nevada
      limited partnership, and 119,000 shares for which Mr. Wray has sole voting
      power. Mr. Wray, one of our directors, is a general partner of Washington
      Holdings. Mr. Wray disclaims beneficial ownership of the shares held by
      Washington Holdings except to the extent of his pecuniary interest arising
      from his interest in Washington Holdings.
 
 (12) Includes 225,000 shares subject to options exercisable within 60 days of
      December 31, 1998 of which 154,710 remain subject to a repurchase right
      which lapses at the rate of 2.08% per month until June 30, 2001. Mr.
      Tanner is the Executive Vice President and Chief Financial Officer of
      AdForce.
 
 (13) Represents 5,761,414 shares held of record by current executive officers
      and directors as a group and 1,101,266 shares subject to options or
      warrants exercisable within 60 days of December 31, 1998 held by current
      executive officers and directors as a group.
 
                                       60
<PAGE>
                          DESCRIPTION OF CAPITAL STOCK
 
        Immediately following the closing of this offering, the authorized
capital stock of AdForce will consist of 100,000,000 shares of common stock,
$0.001 par value per share, and 5,000,000 shares of preferred stock, $0.001 par
value per share. As of December 31, 1998, assuming the conversion of all
outstanding preferred stock into common stock, there were outstanding 14,483,721
shares of common stock held of record by 147 stockholders, options to purchase
1,922,860 shares of common stock and warrants to purchase 1,294,686 shares of
common stock.
 
COMMON STOCK
 
        Subject to preferences that may apply to shares of preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as our Board of Directors may from time to time
determine. Holders of common stock are entitled to one vote for each share held
on all matters submitted to a vote of stockholders. Cumulative voting for the
election of directors is not authorized by AdForce's Certificate of
Incorporation, which means that the holders of a majority of the shares voted
can elect all of the directors then standing for election. The common stock is
not entitled to preemptive rights and is not subject to conversion or
redemption. Upon a liquidation, dissolution or winding-up of AdForce, the assets
legally available for distribution to stockholders would be distributed ratably
among the holders of the common stock and any participating preferred stock
outstanding at that time after payment of liquidation preferences, if any, on
any outstanding preferred stock and payment of other claims of creditors. Each
outstanding share of common stock is, and all shares of common stock to be
outstanding upon completion of this offering will be upon payment therefor, duly
and validly issued, fully paid and nonassessable.
 
PREFERRED STOCK
 
        Upon the closing of this offering, each outstanding share of preferred
stock will be converted into two shares of common stock. See Note 8 of Notes to
Financial Statements for a description of the preferred stock currently
outstanding. Following the offering, our Board of Directors will be authorized,
without any further vote or action by the stockholders and subject to
limitations prescribed by Delaware law, to issue up to 5,000,000 shares of
preferred stock in one or more series, to establish from time to time the number
of shares to be included in each such series, to fix the rights, preferences and
privileges of the shares of each series and any qualifications, limitations or
restrictions thereon, and to increase or decrease the number of shares of any
such series. Our Board of Directors may authorize the issuance of preferred
stock with voting or conversion rights that could adversely affect the voting
power or other rights of the holders of the common stock. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, have the
effect of delaying, deferring or preventing a change in control of AdForce and
might adversely affect the market price of the common stock and the voting and
other rights of the holders of common stock. We have no current plan to issue
any shares of preferred stock.
 
REGISTRATION RIGHTS
 
        After this offering, the holders of approximately 10,532,696 shares of
common stock and warrants to acquire common stock will be entitled to certain
rights with respect to the registration of those shares. As a result of an
Amended and Restated Investors' Rights Agreement dated as of July 15, 1998
between AdForce and certain stockholders of AdForce, the stockholders, holding
an aggregate of 9,244,152 shares of common stock of AdForce issuable upon
conversion of our Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, have
certain registration rights for their shares that they may exercise at any time
after 180 days following the closing of this offering. Under the Amended and
Restated Investors' Rights Agreement, holders of: (a) at least 30% of the voting
power of the outstanding Series B Preferred Stock, (b) 30% of the voting power
of the
 
                                       61
<PAGE>
outstanding Series C Preferred Stock, (c) a majority of the voting power of the
outstanding Series D Preferred Stock or (d) a majority of the voting power of
the outstanding Series E Preferred Stock may demand, by written request, that
AdForce file a registration statement under the Securities Act covering all or a
portion of their preferred stock, provided that, in the case of a registration
statement on a form other than a Form S-3, the registration statement has an
aggregate proposed offering price to the public, net of underwriters' discounts
and commissions, of at least $7,500,000 or, in the case of a registration on a
Form S-3, there is a reasonably anticipated aggregate offering price to the
public of at least $1,000,000 ($3,000,000 in the case of Series E Preferred
Stock). These stockholders may not demand more than three Form S-3 registrations
in total or more than two in any one year. These registration rights are subject
to AdForce's right to delay the filing of a registration statement not more than
once in a 12-month period, for not more than 90 days, after receiving the
registration demand in the case of a registration on a form other than a Form
S-3, and 60 days in the case of a registration on a Form S-3.
 
        In addition, the stockholders who are parties to the Amended and
Restated Investors' Rights Agreement, and holders of rights to acquire 100,176
shares of common stock, have certain "piggyback" registration rights. If AdForce
proposes to register any of its common stock under the Securities Act (other
than pursuant to the investors' demand registration rights noted above), these
stockholders may require AdForce to include all or a portion of their stock in
the registration; provided, however, that the managing underwriter, if any, of
the offering has certain rights to limit the amount of stock held by those
investors included in a registration to 30% of the aggregate shares included in
the offering.
 
        All registration expenses incurred in connection with the above
registrations will be borne by AdForce. Each selling stockholder will pay all
underwriting discounts and selling commissions applicable to the sale of his or
its stock.
 
        Demand and piggyback registration rights under the Amended and Restated
Investors' Rights Agreement will terminate with respect to a stockholder when
(1) that stockholder owns less than 1% of the outstanding securities of AdForce,
(2) that stockholder is able to sell all its shares in a three-month period
under Rule 144 of the Securities Act and (3) AdForce is subject to the reporting
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
 
ANTI-TAKEOVER PROVISIONS
 
    DELAWARE LAW
 
        Upon the closing of this offering, we will be subject to the provisions
of Section 203 of the Delaware General Corporation Law regulating corporate
takeovers. DGCL Section 203 prevents certain Delaware corporations, including
those whose securities are listed on the Nasdaq National Market, from engaging,
under certain circumstances, in a "business combination" with any "interested
stockholder" for three years following the date that that stockholder became an
"interested stockholder" of AdForce. For purposes of DGCL Section 203, a
"business combination" includes, among other things, a merger or consolidation
involving AdForce and the interested stockholders and the sale of more than 10%
of our assets. In general, DGCL Section 203 defines an "interested stockholder"
as any entity or person owning 15% or more of the outstanding voting stock of
AdForce and any entity or person affiliated with or controlled by or controlling
such entity or person.
 
        A Delaware corporation may "opt out" of the Anti-Takeover Law with an
express provision in its original certificate of incorporation or an express
provision in its certificate or incorporation or bylaws resulting from a
stockholders' amendment approved by at least a majority of the outstanding
voting shares. We have not "opted out" of the provisions of DGCL Section 203.
DGCL Section 203 could prohibit or delay mergers or other takeover or
change-in-control attempts with respect to AdForce and, accordingly, may
discourage attempts to acquire AdForce.
 
                                       62
<PAGE>
    CHARTER AND BYLAW PROVISIONS
 
        Our Amended and Restated Certificate of Incorporation and Bylaws provide
for the division of our Board of Directors into three classes as nearly equal in
size as possible with staggered three-year terms. Our stockholders are unable to
call special meetings of stockholders, to remove any director or the entire
Board of Directors without cause, or to fill any vacancy on our Board of
Directors. Any action required or permitted to be taken by our stockholders at
an annual meeting or a special meeting of the stockholders may only be taken if
it is properly brought before such meeting and may not be taken by written
consent in lieu of a meeting. The Bylaws provide that special meetings of the
stockholders may be called at any time by the Board of Directors, and must be
called upon the request of the Chairman of the Board of Directors, the Chief
Executive Officer, the President or by a majority of the members of the Board of
Directors. These provisions of our Amended and Restated Certificate of
Incorporation and Bylaws are intended to enhance the likelihood of continuity
and stability in the composition of the Board of Directors and to discourage
certain types of transactions that may involve an actual or threatened change of
control of AdForce. These provisions are designed to reduce the vulnerability of
AdForce to an unsolicited acquisition proposal and, accordingly, could
discourage potential acquisition proposals and could delay or prevent a change
in control of AdForce. These provisions are also intended to discourage certain
tactics that may be used in proxy fights but could, however, have the effect of
discouraging others from making tender offers for our shares and, consequently,
may also inhibit fluctuations in the market price of our shares that could
result from actual or rumored takeover attempts. These charges may also have the
effect of preventing changes in the management of AdForce. See "Risk
Factors--Certain Provisions in Our Charter Documents May Deter Acquisition Bids
for AdForce."
 
TRANSFER AGENT AND REGISTRAR
 
        The Transfer Agent and Registrar for AdForce's common stock is
ChaseMellon Shareholder Services, LLC.
 
                                       63
<PAGE>
                        SHARES ELIGIBLE FOR FUTURE SALE
 
        Prior to this offering, there has been no market for our common stock,
and there can be no assurance that a significant public market for our common
stock will develop or be sustained after this offering. Future sales of
substantial amounts of common stock (including shares issued upon exercise of
outstanding options or warrants) in the public market after this offering could
adversely affect the prevailing market price of our common stock and could
impair our ability to raise equity capital in the future. Furthermore, since few
shares will be available for sale immediately after this offering due to certain
contractual and legal restrictions on resale described below, sales of
substantial amounts of our common stock in the public market after the
restrictions lapse could adversely affect the prevailing market price and our
ability to raise equity capital in the future.
 
        Upon completion of this offering, we will have outstanding        shares
of common stock based on shares outstanding at December 31, 1998, assuming no
exercise of the Underwriters' over-allotment option and no exercise of
outstanding options or warrants. Of this amount, the       shares sold in this
offering will be freely tradable in the public market without restriction or
further registration under the Securities Act, unless such shares are purchased
by any of our "affiliates" as that term is defined in Rule 144 under the
Securities Act. The remaining 14,483,721 shares held by existing stockholders
are "restricted securities" as that term is defined in Rule 144 under the
Securities Act. Most of the restricted shares are subject to lock-up agreements
with the underwriters, pursuant to which all of our directors and officers and
most of our stockholders have agreed not to transfer or dispose of, directly or
indirectly, any shares of common stock or any securities convertible into or
exercisable or exchangeable for shares of common stock, for a period of 180 days
after the date of this prospectus. Hambrecht & Quist LLC may release the shares
subject to the lock-up agreements in whole or in part at any time with or
without notice. Hambrecht & Quist LLC has no current plans to do so. Beginning
180 days after the date of the final prospectus, 12,574,440 of the restricted
shares will be eligible for sale in the public market under Rule 144 or Rule
701, although all but 7,704,484 shares will be subject to certain volume
limitations. The remaining restricted securities will become eligible for sale,
subject to certain volume limitations, on October 28, 1999.
 
    RULE 144
 
        In general, under Rule 144 as currently in effect, beginning 90 days
after the date of this prospectus, an affiliate of AdForce, or a person (or
persons whose shares are aggregated) who has beneficially owned restricted
shares for at least one year but less than two years, would be entitled to sell
within any three-month period a number of shares that does not exceed the
greater of:
 
        - 1% of the number of shares of common stock then outstanding
          (approximately       shares immediately after this offering); or
 
        - the average weekly trading volume of the common stock on the Nasdaq
          National Market during the four calendar weeks preceding the filing of
          a notice of sale with the Securities and Exchange Commission (the
          "Commission").
 
        Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements and to the availability of current public
information about us.
 
    RULE 144(K)
 
        Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner except one of our affiliates)
is entitled to sell such shares without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.
 
                                       64
<PAGE>
    RULE 701
 
        In general, under Rule 701 of the Securities Act as currently in effect,
any of our employees, officers, directors, consultants or advisors who purchased
shares from us in connection with a compensatory stock or option plan or other
written agreement is eligible to resell such shares 90 days after the effective
date of this offering in reliance on Rule 144, but without compliance with
certain restrictions, including the holding period contained in Rule 144.
However, all shares issued pursuant to Rule 701 are subject to lock-up
agreements and will only become eligible for sale at the earlier of the
expiration of the 180-day lock-up agreements or obtaining the prior written
consent of Hambrecht & Quist LLC or the other representatives of the
underwriters more than 90 days after this offering.
 
    REGISTRATION RIGHTS
 
        Upon completion of this offering, the holders of 10,532,696 shares of
our common stock and rights to acquire common stock, or their transferees, will
be entitled to certain rights with respect to the registration of their shares
under the Securities Act. See "Description of Capital Stock--Registration
Rights." After registration, these shares would be saleable without restriction
under the Securities Act.
 
    STOCK OPTIONS
 
        Within 90 days following this offering, we intend to file a registration
statement under the Securities Act covering all shares of common stock subject
to outstanding options granted under the 1997 Stock Plan or the StarPoint Plan
or reserved for issuance under our 1999 Equity Incentive Plan, our 1999
Directors Stock Option Plan or our 1999 Employee Stock Purchase Plan. Based on
the number of shares subject to options outstanding at December 31, 1998 and
currently reserved for issuance under all such plans, this registration
statement would cover approximately 5,125,628 shares. The registration statement
will automatically become effective upon filing. Accordingly, shares registered
under the registration statement will, subject to Rule 144 volume limitations
applicable to our affiliates, be available for sale in the open market
immediately after the 180-day lock-up agreements expire.
 
                                       65
<PAGE>
                                  UNDERWRITING
 
        Subject to the terms and conditions contained in the Underwriting
Agreement dated       , 1999, the underwriters named below, for whom Hambrecht &
Quist LLC, Lehman Brothers Inc., Volpe Brown Whelan & Company, LLC and Charles
Schwab & Co., Inc. are acting as representatives, have severally agreed to
purchase from AdForce the following respective numbers of shares of common
stock.
 
<TABLE>
<CAPTION>
                                                                   NUMBER OF
NAME                                                                SHARES
----------------------------------------------------------------  -----------
<S>                                                               <C>
Hambrecht & Quist LLC...........................................
Lehman Brothers Inc.............................................
Volpe Brown Whelan & Company, LLC...............................
Charles Schwab & Co., Inc.......................................
 
                                                                  -----------
Total...........................................................
                                                                  -----------
                                                                  -----------
</TABLE>
 
        The Underwriting Agreement provides that the obligations of the
underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in AdForce's business and the receipt of certain
certificates, opinions and letters from AdForce, its counsel and its independent
auditors. The nature of the underwriters' obligation is such that they are
committed to purchase all shares of common stock offered hereby if any of such
shares are purchased.
 
        The underwriters propose to offer the shares of common stock directly to
the public initially at the initial public offering price set forth on the cover
page of this prospectus and to certain dealers at such price less a concession
not in excess of $     per share. The underwriters may allow and such dealers
may reallow a concession not in excess of $     per share to certain other
dealers. After the initial public offering of the shares, the offering price and
other selling terms may be changed by the underwriters.
 
        We have granted to the underwriters an option, exercisable no later than
30 days after the date of this prospectus, to purchase up to     additional
shares of common stock at the initial public offering price, less the
underwriting discounts, set forth on the cover page of this prospectus. To the
extent that the underwriters exercise this option, each of the underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of common stock to be purchased by it shown in the
above table bears to the total number of shares of common stock offered hereby.
We will be obligated pursuant to this option to sell shares to the underwriters
to the extent the option is exercised. The underwriters may exercise such option
only to cover over-allotments made in connection with the sale of shares of
common stock offered hereby.
 
        The offering of the shares is made for delivery when, as and if accepted
by the underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
 
        We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriters may be required to make in respect thereof.
 
        AdForce and its officers, directors and certain other stockholders, who
will own in the aggregate     shares of common stock after the offering, have
agreed that they will not, without the prior written
 
                                       66
<PAGE>
consent of Hambrecht & Quist LLC, offer, sell, or otherwise dispose of any
shares of common stock, options or warrants to acquire shares of common stock or
securities exchangeable for or convertible into shares of common stock owned by
them for a period of 180 days following the date of this prospectus. AdForce has
agreed that it will not, without the prior written consent of Hambrecht & Quist
LLC, offer, sell, grant any option to purchase or otherwise dispose of any
shares of common stock or any securities exchangeable for or convertible into
shares of common stock for a period of 180 days following the date of this
prospectus, except that AdForce may issue, and grant options to purchase, shares
of common stock under its stock and employee stock purchase plans and under
currently outstanding options. Sales of such shares in the future could
adversely affect the market price of the common stock.
 
        Of the     shares of common stock to be sold in this offering, the
underwriters have reserved for sale, at the price to public set forth on the
cover page of this prospectus, up to     shares as follows: (1) at our request,
up to     shares for our directors, officers, employees and business associates
and (2) up to an additional     shares for the certain preferred stockholders in
connection with a preexisting contractual right between AdForce and those
preferred stockholders. See "Certain Transactions" and "Principal Stockholders."
As a result, the number of shares of common stock available for sale to the
general public will be reduced to the extent these persons purchase the reserved
shares. The underwriters will offer to the general public (on the same basis as
the other shares to be sold in this offering) any reserved shares that are not
so purchased.
 
        Prior to this offering, there has been no public market for the common
stock of AdForce. The initial public offering price for the common stock will be
determined by negotiation among AdForce and the underwriters. Among the factors
to be considered in determining the initial public offering price were
prevailing market and economic conditions, revenues and earnings of AdForce,
market valuations of other companies engaged in activities similar to AdForce,
estimates of the business potential and prospects of AdForce, the present state
of AdForce's business operations, AdForce's management and other factors deemed
relevant. The estimated initial public offering price range set forth on the
cover of this preliminary prospectus is subject to change as a result of market
conditions or other factors.
 
        Certain persons participating in this offering may over-allot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the common stock at levels above those which might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or effecting of any purchase for the purpose of pegging, fixing or
maintaining the price of the common stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. Penalty bids permit the underwriters to reclaim a selling
concession from a syndicate member in connection with the offering when shares
of common stock sold by the syndicate member are purchased in a syndicate
covering transaction. Such transactions may be effected on the Nasdaq National
Market, in the over-the-counter market, or otherwise. Such stabilizing, if
commenced, may be discontinued at any time.
 
        H&Q Imgis Investors, L.P. and Hambrecht & Quist California purchased
101,968 and 43,700 shares of Series D Preferred Stock, respectively, for an
aggregate purchase price of $1,000,011, or $6.865 per share, as part of an
equity financing on the same terms as all other participants in the financing
purchased their shares. In addition, in July 1998, we issued to H&Q Imgis
Investors, L.P., a warrant to purchase up to 5,048 shares of Series D Preferred
Stock at an exercise price of $6.865 per share, in consideration of agreeing to
certain amendments to our then effective Amended and Restated Articles of
Incorporation. Certain of the interests of H&Q Imgis Investors, L.P. and
Hambrecht & Quist California are beneficially owned by persons affiliated with
Hambrecht & Quist LLC.
 
                                       67
<PAGE>
                                 LEGAL MATTERS
 
        Fenwick & West LLP, Palo Alto, California, will pass upon the validity
of the shares of common stock offered hereby. Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP, Menlo Park, California, will pass upon
certain legal matters in connection with this offering for the underwriters. A
partnership comprised of certain partners of Fenwick & West LLP owns 3,640
shares of our common stock. A partnership comprised of certain partners of
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP owns 31,712 shares
of our common stock.
 
                                    EXPERTS
 
        Ernst & Young LLP, independent auditors, have audited our financial
statements and schedule at December 31, 1997 and 1998, and for the period from
January 16, 1996 (inception) through December 31, 1996 and for each of the two
years in the period ended December 31, 1998, as set forth in their report. We
have included our financial statements and schedule in the prospectus and
elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
 
        Ernst & Young LLP, independent auditors, have audited StarPoint
Software, Inc.'s financial statements at May 31, 1997, and for the period from
August 8, 1996 (inception) through May 31, 1997, as set forth in their report.
We have included StarPoint Software's financial statements in the prospectus and
elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
 
                             ADDITIONAL INFORMATION
 
        We have filed with the SEC a registration statement on Form S-1 with
respect to the common stock offered hereby. This prospectus, which constitutes a
part of the registration statement, does not contain all of the information set
forth in the registration statement or the exhibits and schedules which are part
of the registration statement. For further information with respect to AdForce
and the common stock, reference is made to the registration statement and the
exhibits and schedules thereto. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. Our SEC filings are also available to the
public from the SEC's Web site at http:// www.sec.gov.
 
        Upon completion of this offering, we will become subject to the
information and periodic reporting requirements of the Securities Exchange Act
and, in accordance therewith, will file periodic reports, proxy statements and
other information with the SEC. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the SEC's
public reference rooms and the Web site of the SEC referred to above.
 
                                       68
<PAGE>
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          -----
<S>                                                                                    <C>
ADFORCE, INC.:
  Report of Ernst & Young LLP, Independent Auditors..................................         F-2
  Balance Sheets as of December 31, 1997 and 1998....................................         F-3
  Statements of Operations for the Period from January 16, 1996 (Inception) to
    December 31, 1996 and the Years Ended December 31, 1997 and 1998.................         F-4
  Statements of Stockholders' Equity for the Period from January 16, 1996 (Inception)
    to December 31, 1996 and the Years Ended December 31, 1997 and 1998..............         F-5
  Statements of Cash Flows for the Period from January 16, 1996 (Inception) to
    December 31, 1996 and the Years Ended December 31, 1997 and 1998.................         F-6
  Notes to Financial Statements......................................................         F-7
 
STARPOINT SOFTWARE, INC.:
  Report of Ernst & Young LLP, Independent Auditors..................................        F-24
  Balance Sheet as of May 31, 1997 and November 30, 1997 (Unaudited).................        F-25
  Statements of Operations for the Period from August 8, 1996 (Inception) through May
    31, 1997, the Period From August 8, 1996 (Inception) through November 30, 1996
    (Unaudited) and the Six Months Ended November 30, 1997 (Unaudited)...............        F-26
  Statements of Shareholders' Equity (Net Capital Deficiency) for the Period from
    August 8, 1996 (Inception) through November 30, 1997 and the Six Months Ended
    November 30, 1997 (Unaudited)....................................................        F-27
  Statements of Cash Flows for the Period from August 8, 1996 (Inception) through May
    31, 1997, the Period From August 8, 1996 (Inception) through November 30, 1996
    (Unaudited) and the Six Months Ended November 30, 1997 (Unaudited)...............        F-28
  Notes to Financial Statements......................................................        F-29
</TABLE>
 
                                      F-1
<PAGE>
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
The Board of Directors and Stockholders
 
AdForce, Inc.
 
        We have audited the accompanying balance sheets of AdForce, Inc. as of
December 31, 1997 and 1998, and the related statements of operations, and
stockholders' equity, and cash flows for the period from January 16, 1996
(inception) to December 31, 1996 and for the years ended December 31, 1997 and
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
        We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of AdForce, Inc. at
December 31, 1997 and 1998, and the results of its operations and its cash flows
for the period from January 16, 1996 (inception) to December 31, 1996 and for
the years ended December 31, 1997 and 1998, in conformity with generally
accepted accounting principles.
 
San Jose, California
February 5, 1999,
 except for Note 11,
 as to which the date is March  , 1999
 
--------------------------------------------------------------------------------
 
        The foregoing report is in the form that will be signed upon the
completion of the reincorporation of AdForce in Delaware as described in Note 11
of Notes to Financial Statements.
 
                                          /s/ Ernst & Young LLP
 
San Jose, California
March 2, 1999
 
                                      F-2
<PAGE>
                                 ADFORCE, INC.
 
                                 BALANCE SHEETS
 
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                                        PRO FORMA
                                                                                  DECEMBER 31,        STOCKHOLDERS'
                                                                              --------------------   EQUITY DECEMBER
                                                                                1997       1998         31, 1998
                                                                              ---------  ---------  -----------------
                                                                                                       (UNAUDITED)
<S>                                                                           <C>        <C>        <C>
                                                       ASSETS
Current assets:
  Cash and cash equivalents.................................................  $   1,680  $  10,045
  Accounts receivable, net of allowances of $131 and $1,035 at December 31,
    1997 and 1998, respectively.............................................        239      1,160
  Prepaid expenses and other current assets.................................        404        575
                                                                              ---------  ---------
Total current assets........................................................      2,323     11,780
 
Property and equipment, net.................................................      1,946      4,208
 
Intangible assets, net......................................................         --      3,602
 
Other non-current assets....................................................         --        285
                                                                              ---------  ---------
Total assets................................................................  $   4,269  $  19,875
                                                                              ---------  ---------
                                                                              ---------  ---------
 
                                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................................  $     374  $   1,078
  Accrued compensation and related benefits.................................         85        458
  Other accrued liabilities.................................................        192        809
  Current portion of capital lease obligations..............................        499      1,460
                                                                              ---------  ---------
Total current liabilities...................................................      1,150      3,805
Long-term portion of capital lease obligations..............................      1,744      3,089
 
Commitments
 
Stockholders' equity:
  Convertible preferred stock, $0.001 par value: 6,238,163 shares
    authorized:
    Series A, 602,000 shares designated, 600,457 shares issued and
      outstanding as of December 31, 1997 and 1998, and none pro forma,
      aggregate liquidation preference at December 31, 1998 of $1,507.......          1          1      $      --
    Series B, 1,100,000 shares designated, 1,027,318 shares issued and
      outstanding as of December 31, 1997 and 1998, and none pro forma,
      aggregate liquidation preference at December 31, 1998 of $2,579.......          1          1             --
    Series C, 1,725,000 shares designated, 1,275,000 and 1,646,948 shares
      issued and outstanding as of December 31, 1997 and 1998, respectively,
      and none pro forma, aggregate liquidation preference at December 31,
      1998 of $7,790........................................................          1          1             --
    Series D, 786,500 shares designated, 730,504 shares issued and
      outstanding as of December 31, 1998, and none pro forma, aggregate
      liquidation preference at December 31, 1998 of $10,030................         --          1             --
    Series E, 1,238,163 shares designated, 728,332 shares issued and
      outstanding as of December 31, 1998, and none pro forma, aggregate
      liquidation preference at December 31, 1998 of $10,000................         --          1             --
  Common stock, $0.001 par value: 40,000,000 shares authorized: 3,270,330
    and 5,016,603 shares issued and outstanding as of December 31, 1997 and
    1998, respectively, and 14,483,721 shares issued and outstanding pro
    forma                                                                             3          5             14
  Additional paid-in capital................................................     10,623     39,879         39,875
  Deferred stock compensation...............................................         --     (2,662)        (2,662)
  Note receivable from stockholder..........................................        (98)       (70)           (70)
  Accumulated deficit.......................................................     (9,156)   (24,176)       (24,176)
                                                                              ---------  ---------        -------
Total stockholders' equity..................................................      1,375     12,981      $  12,981
                                                                              ---------  ---------        -------
                                                                              ---------  ---------        -------
Total liabilities and stockholders' equity..................................  $   4,269  $  19,875
                                                                              ---------  ---------
                                                                              ---------  ---------
</TABLE>
 
                            SEE ACCOMPANYING NOTES.
 
                                      F-3
<PAGE>
                                 ADFORCE, INC.
 
                            STATEMENTS OF OPERATIONS
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                              PERIOD FROM     YEARS ENDED DECEMBER
                                                           JANUARY 16, 1996           31,
                                                            (INCEPTION) TO    --------------------
                                                           DECEMBER 31, 1996    1997       1998
                                                           -----------------  ---------  ---------
<S>                                                        <C>                <C>        <C>
Net revenue..............................................      $      --      $     320  $   4,286
Cost of revenue:
  Data center operations.................................             --          1,508      4,439
  Amortization of intangible assets and deferred stock
    compensation.........................................             --             --        620
                                                                 -------      ---------  ---------
  Total cost of revenue..................................             --          1,508      5,059
                                                                 -------      ---------  ---------
Gross loss...............................................             --         (1,188)      (773)
Operating expenses:
  Research and development...............................          1,561          2,236      4,665
  Marketing and selling..................................          1,485          1,054      4,863
  General and administrative.............................            337          1,118      1,839
  Amortization of intangible assets and deferred stock
    compensation.........................................             --             --      2,729
                                                                 -------      ---------  ---------
Total operating expenses.................................          3,383          4,408     14,096
                                                                 -------      ---------  ---------
Loss from operations.....................................         (3,383)        (5,596)   (14,869)
Interest income..........................................             --             21        365
Interest expense.........................................            (69)          (129)      (516)
                                                                 -------      ---------  ---------
Net loss.................................................      $  (3,452)     $  (5,704) $ (15,020)
                                                                 -------      ---------  ---------
                                                                 -------      ---------  ---------
Basic and diluted net loss per share.....................      $   (1.40)     $   (3.48) $   (5.28)
                                                                 -------      ---------  ---------
                                                                 -------      ---------  ---------
Weighted average shares of common stock outstanding used
  in computing basic and diluted net loss per share......          2,465          1,639      2,844
                                                                 -------      ---------  ---------
                                                                 -------      ---------  ---------
Pro forma basic and diluted net loss per share...........                                $   (1.38)
                                                                                         ---------
                                                                                         ---------
Weighted average shares used in computing pro forma basic
  and diluted net loss per share.........................                                   10,877
                                                                                         ---------
                                                                                         ---------
</TABLE>
 
                            SEE ACCOMPANYING NOTES.
 
                                      F-4
<PAGE>
                                 ADFORCE, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                               CONVERTIBLE PREFERRED
                                                                       STOCK                COMMON STOCK
                                                               ----------------------  ----------------------    ADDITIONAL
                                                                SHARES      AMOUNT      SHARES      AMOUNT     PAID-IN CAPITAL
                                                               ---------  -----------  ---------  -----------  ---------------
<S>                                                            <C>        <C>          <C>        <C>          <C>
  Issuance of common stock to founders in partial
    consideration for intellectual property rights assigned
    to the Company...........................................     --       $  --       1,720,000   $       2      $       6
  Issuance of common stock...................................     --          --       2,003,000           2              8
  Repurchase of common stock.................................     --          --       (1,612,900)         (2)           (6)
  Issuance of Series A convertible preferred stock upon
    conversion of note payable, net of issuance costs of
    $97......................................................    600,457           1      --          --              1,408
  Issuance of Series B convertible preferred stock...........    110,000      --          --          --                550
  Conversion of Series B convertible preferred stock to
    common stock.............................................   (110,000)     --         220,000      --             --
  Issuance of Series B convertible preferred stock, net of
    issuance costs of $17....................................  1,027,318           1      --          --              2,560
  Net loss...................................................     --          --          --          --             --
                                                               ---------       -----   ---------       -----        -------
Balances at December 31, 1996................................  1,627,775           2   2,330,100           2          4,526
  Issuance of common stock...................................     --          --         940,230           1            116
  Forgiveness of stockholder note receivable.................     --          --          --          --             --
  Issuance of Series C convertible preferred stock, net of
    issuance costs of $72....................................  1,275,000           1      --          --              5,958
  Issuance of warrants.......................................     --          --          --          --                 23
  Net loss...................................................     --          --          --          --             --
                                                               ---------       -----   ---------       -----        -------
Balances at December 31, 1997................................  2,902,775           3   3,270,330           3         10,623
  Issuance of common stock...................................     --          --         868,439           1             90
  Deferred stock compensation related to certain options
    granted to employees.....................................     --          --          --          --              3,714
  Amortization of deferred stock compensation................     --          --          --          --             --
  Compensation related to acceleration of vesting of
    founders' stock..........................................     --          --          --          --              1,407
  Issuance of Series C convertible preferred stock and common
    stock in acquisition.....................................    309,738      --         877,834           1          1,684
  Issuance of Series C convertible preferred stock, net of
    issuance costs of $26....................................     62,210      --          --          --                269
  Issuance of Series D convertible preferred stock, net of
    issuance costs of $74....................................    730,504           1      --          --              9,954
  Issuance of Series E convertible preferred stock, net of
    issuance costs of $112...................................    728,332           1      --          --              9,887
  Forgiveness of stockholder note receivable.................     --          --          --          --             --
  Issuance of warrants.......................................     --          --          --          --              2,251
  Net loss...................................................     --          --          --          --             --
                                                               ---------       -----   ---------       -----        -------
Balances at December 31, 1998................................  4,733,559   $       5   5,016,603   $       5      $  39,879
                                                               ---------       -----   ---------       -----        -------
                                                               ---------       -----   ---------       -----        -------
 
<CAPTION>
 
                                                                                NOTE RECEIVABLE                     TOTAL
 
                                                               DEFERRED STOCK        FROM         ACCUMULATED   STOCKHOLDERS'
 
                                                                COMPENSATION      STOCKHOLDER       DEFICIT        EQUITY
 
                                                               ---------------  ---------------  -------------  -------------
 
<S>                                                            <C>              <C>              <C>            <C>
  Issuance of common stock to founders in partial
    consideration for intellectual property rights assigned
    to the Company...........................................     $  --            $  --           $  --          $       8
 
  Issuance of common stock...................................        --               --              --                 10
 
  Repurchase of common stock.................................        --               --              --                 (8)
 
  Issuance of Series A convertible preferred stock upon
    conversion of note payable, net of issuance costs of
    $97......................................................        --               --              --              1,409
 
  Issuance of Series B convertible preferred stock...........        --               --              --                550
 
  Conversion of Series B convertible preferred stock to
    common stock.............................................        --               --              --             --
 
  Issuance of Series B convertible preferred stock, net of
    issuance costs of $17....................................        --               --              --              2,561
 
  Net loss...................................................        --               --              (3,452)        (3,452)
 
                                                                    -------            -----     -------------  -------------
 
Balances at December 31, 1996................................        --               --              (3,452)         1,078
 
  Issuance of common stock...................................        --                 (112)         --                  5
 
  Forgiveness of stockholder note receivable.................        --                   14          --                 14
 
  Issuance of Series C convertible preferred stock, net of
    issuance costs of $72....................................        --               --              --              5,959
 
  Issuance of warrants.......................................        --               --              --                 23
 
  Net loss...................................................        --               --              (5,704)        (5,704)
 
                                                                    -------            -----     -------------  -------------
 
Balances at December 31, 1997................................        --                  (98)         (9,156)         1,375
 
  Issuance of common stock...................................        --               --              --                 91
 
  Deferred stock compensation related to certain options
    granted to employees.....................................        (3,714)          --              --             --
 
  Amortization of deferred stock compensation................         1,052           --              --              1,052
 
  Compensation related to acceleration of vesting of
    founders' stock..........................................        --               --              --              1,407
 
  Issuance of Series C convertible preferred stock and common
    stock in acquisition.....................................        --               --              --              1,685
 
  Issuance of Series C convertible preferred stock, net of
    issuance costs of $26....................................        --               --              --                269
 
  Issuance of Series D convertible preferred stock, net of
    issuance costs of $74....................................        --               --              --              9,955
 
  Issuance of Series E convertible preferred stock, net of
    issuance costs of $112...................................        --               --              --              9,888
 
  Forgiveness of stockholder note receivable.................        --                   28          --                 28
 
  Issuance of warrants.......................................        --                                               2,251
 
  Net loss...................................................        --               --             (15,020)       (15,020)
 
                                                                    -------            -----     -------------  -------------
 
Balances at December 31, 1998................................     $  (2,662)       $     (70)      $ (24,176)     $  12,981
 
                                                                    -------            -----     -------------  -------------
 
                                                                    -------            -----     -------------  -------------
 
</TABLE>
 
                            SEE ACCOMPANYING NOTES.
 
                                      F-5
<PAGE>
                                 ADFORCE, INC.
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                       PERIOD FROM     YEARS ENDED DECEMBER
                                                                    JANUARY 16, 1996           31,
                                                                     (INCEPTION) TO    --------------------
                                                                    DECEMBER 31, 1996    1997       1998
                                                                    -----------------  ---------  ---------
<S>                                                                 <C>                <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss..........................................................      $  (3,452)     $  (5,704) $ (15,020)
  Reconciliation of net loss to net cash used in operating
    activities:
  Depreciation and amortization...................................            158            797      3,006
  Amortization of deferred stock compensation and other
    compensation charges..........................................             --             --      2,459
  Loss on sale of assets..........................................             --             --        281
  Acquired in-process technology..................................            319             --        100
  Other non-cash charges..........................................             --             14         51
  Changes in operating assets and liabilities:
    Accounts receivable...........................................             --           (239)      (908)
    Prepaid expenses and other current assets and other
      non-current assets..........................................            (75)          (329)      (449)
    Accounts payable..............................................            566           (192)       239
    Accrued compensation and related benefits.....................             61             24         61
    Other accrued liabilities.....................................            150             42        587
                                                                          -------      ---------  ---------
      Net cash used in operating activities.......................         (2,273)        (5,587)    (9,593)
                                                                          -------      ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of technology and operating rights..................           (106)            --         --
  Proceeds from sale of assets....................................             --             --        105
  Capital expenditures............................................         (1,248)          (163)    (1,291)
                                                                          -------      ---------  ---------
      Net cash used in investing activities.......................         (1,354)          (163)    (1,186)
                                                                          -------      ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sale-leaseback transaction........................             --          1,033         --
  Principal payments on capital lease obligations.................             --           (248)      (923)
  Proceeds from issuance of common stock, net.....................              2              5         86
  Proceeds from issuance of preferred stock, net..................          3,014          5,959     19,594
  Proceeds from issuance of notes payable.........................          1,757             --        500
  Repayment of notes payable......................................           (465)            --       (113)
                                                                          -------      ---------  ---------
      Net cash provided by financing activities...................          4,308          6,749     19,144
                                                                          -------      ---------  ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS.........................            681            999      8,365
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..................             --            681      1,680
                                                                          -------      ---------  ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................      $     681      $   1,680  $  10,045
                                                                          -------      ---------  ---------
                                                                          -------      ---------  ---------
 
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid during the year for interest............................      $      69      $     126  $     457
                                                                          -------      ---------  ---------
                                                                          -------      ---------  ---------
 
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING/FINANCING ACTIVITIES
Property and equipment acquired under capital leases..............      $      --      $   1,458  $   3,389
                                                                          -------      ---------  ---------
                                                                          -------      ---------  ---------
Conversion of Series B convertible preferred stock into common
  stock...........................................................      $     550      $      --  $      --
                                                                          -------      ---------  ---------
                                                                          -------      ---------  ---------
Conversion of notes payable into Series A convertible preferred
  stock...........................................................      $   1,409      $      --  $      --
                                                                          -------      ---------  ---------
                                                                          -------      ---------  ---------
Conversion of notes payable and accrued interest into Series D
  convertible preferred stock.....................................      $      --      $      --  $     506
                                                                          -------      ---------  ---------
                                                                          -------      ---------  ---------
Issuance of Series C convertible preferred stock, common stock,
  and stock options for purchase of business......................      $      --      $      --  $   1,685
                                                                          -------      ---------  ---------
                                                                          -------      ---------  ---------
</TABLE>
 
                            SEE ACCOMPANYING NOTES.
 
                                      F-6
<PAGE>
                                 ADFORCE, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1998
 
1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
        Imgis, Inc. was incorporated in the state of California on January 16,
1996. AdForce is a provider of centralized, outsourced ad management and
delivery services on the Internet. AdForce's services offer sophisticated
campaign design, inventory management, targeting, ad delivery, tracking,
measuring and reporting capabilities.
 
        AdForce has incurred operating losses to date and had an accumulated
deficit of $24,176,000 at December 31, 1998. AdForce's activities have been
primarily financed through private placements of equity securities and capital
lease financings. AdForce may need to raise additional capital through the
issuance of debt or equity securities and capital lease financings. Such
financing may not be available on terms satisfactory to AdForce, if at all. If
adequate funds are not available, AdForce may be required to reduce its level of
spending.
 
    USE OF ESTIMATES
 
        The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
    CONCENTRATION OF CREDIT RISK
 
        AdForce sells and grants credit for its services to its customers
without requiring collateral or third-party guarantees. To date, all of
AdForce's customers are participants in the Internet industry, including ad
agencies, Web sites, and ad rep firms. Few companies in the Internet industry
have a demonstrated history of profitability, and, accordingly, granting
unsecured credit to such customers carries with it a significant risk of loss.
AdForce monitors its exposure for credit losses and maintains appropriate
allowances. During 1996, AdForce was still in the development stage and had no
revenues. During 1997, two customers accounted for approximately 79% and 13% of
net revenue. One customer accounted for approximately 85% of AdForce's net
accounts receivable at December 31, 1997. During 1998, three customers accounted
for 40%, 16% and 11% of net revenue. Two customers each accounted for
approximately 31% of AdForce's net accounts receivable at December 31, 1998.
 
    CASH AND CASH EQUIVALENTS
 
        AdForce considers all highly liquid investments with an original
maturity from the date of purchase of three months or less to be cash
equivalents. As of December 31, 1997 and 1998, cash equivalents consisted
primarily of investments in money market accounts and commercial paper, and
their cost approximated fair value. AdForce places its cash and cash equivalents
in high-quality U.S. financial institutions and, to date, has not experienced
any losses on any of its investments.
 
    FAIR VALUE OF FINANCIAL INSTRUMENTS
 
        Statement of Financial Accounting Standards ("FAS") No. 107,
"DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS," requires that fair
values be disclosed for most of AdForce's financial instruments. The carrying
amounts of cash and cash equivalents, accounts receivable, note receivable from
stockholder, current liabilities, and capital lease obligations are considered
to be representative of their respective fair values.
 
                                      F-7
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                               DECEMBER 31, 1998
 
1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    INTANGIBLE ASSETS, NET
 
        Intangible assets consist primarily of purchased technology and other
intangibles related to an acquisition accounted for using the purchase method
and the value of the warrant issued to data vendors. Amortization of the
purchased technology and other intangibles related to the acquisition is
provided on a straight-line basis over the respective useful lives of the
assets, which range from two to three years. Purchased in-process research and
development without an alternative future use was expensed when acquired.
Amortization of the warrant value will be provided on a straight-line basis over
a three year period, beginning upon the earlier of July 14, 1999 or the
commencement of activity under the related agreement.
 
        As of December 31, 1998, the Company has accumulated amortization
related to intangible assets of $849,000.
 
        AdForce identifies and records impairment losses on intangible assets
when events and circumstances indicate that such assets might be impaired. To
date, no such impairment has been recorded.
 
    DEPRECIATION AND AMORTIZATION
 
        AdForce records property and equipment at cost and calculates
depreciation using the straight-line method over the estimated useful lives of
the assets, generally three to five years. Equipment acquired under capital
leases is amortized on a straight-line basis over the shorter of its lease term
or estimated useful life, generally three to five years.
 
    ADVERTISING COSTS
 
        Advertising costs are charged to expense when incurred. No advertising
was incurred for the period from January 16, 1996 (inception) to December 31,
1996. Advertising expense was $93,000 and $125,000 for the years ended December
31, 1997 and 1998, respectively.
 
    REVENUE RECOGNITION
 
        To date, all of AdForce's revenues have been generated from the
provision of Internet advertising management and delivery services for its
customers. AdForce generally recognizes revenues based on the number of ads
delivered. Revenue is recognized at the time the service is delivered, provided
AdForce does not have any significant remaining obligations and collection of
the resulting receivable is probable.
 
    STOCK-BASED COMPENSATION
 
        AdForce has elected to follow Accounting Principles Board Opinion No.
25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES" (APB Opinion No. 25), and related
interpretations in accounting for its employee stock options because, as
discussed in Note 7, the alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123, "ACCOUNTING FOR STOCK-BASED
COMPENSATION" (FAS 123), requires the use of option valuation models that were
not developed for use in valuing employee stock options. Under APB Opinion No.
25, when the exercise price of AdForce's employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized. See pro forma disclosures of applying FAS 123 included in
Note 7.
 
                                      F-8
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
    RESEARCH AND DEVELOPMENT COSTS
 
        Costs incurred in the development of new software (and substantial
enhancements to existing software) to be used in connection with AdForce's
services are expensed to operations as incurred until technological feasibility
of such software has been established, at which time any additional costs would
be capitalized in accordance with FAS No. 86. Because AdForce believes that its
present process for developing software is completed essentially concurrently
with the establishment of technological feasibility, no research and development
costs have been capitalized to date.
 
    NET LOSS PER SHARE
 
        Basic and diluted net loss per share are presented in conformity with
FAS No. 128, "EARNINGS PER SHARE" ("FAS 128"), for all periods presented.
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 98,
common stock and convertible preferred stock issued or granted for nominal
consideration prior to the anticipated effective date of AdForce's initial
public offering must be included in the calculation of basic and diluted net
loss per share as if they had been outstanding for all periods presented. To
date, AdForce has not had any issuances or grants for nominal consideration. In
accordance with FAS 128, basic and diluted net loss per share has been computed
using the weighted average number of shares of common stock outstanding during
the period, less shares subject to repurchase.
 
    PRO FORMA NET LOSS PER SHARE AND PRO FORMA STOCKHOLDERS' EQUITY
 
        Pro forma net loss per share has been computed as described above and
also gives effect, under Securities and Exchange Commission guidance, to the
conversion of convertible preferred stock not included above that will
automatically convert upon completion of AdForce's initial public offering
(using the as converted method). If the offering contemplated by this prospectus
is consummated, all of the convertible preferred stock outstanding as of
December 31, 1998 will automatically be converted into an aggregate of 9,467,118
shares of common stock. Pro forma stockholders' equity at December 31, 1998, as
adjusted for the conversion of convertible preferred stock, is disclosed on the
balance sheet.
 
                                      F-9
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
        Historical and pro forma basic and diluted net loss per share are as
follows (in thousands, except per share amounts):
 
<TABLE>
<CAPTION>
                                                             PERIOD FROM      YEARS ENDED DECEMBER
                                                          JANUARY 16, 1996            31,
                                                           (INCEPTION) TO     --------------------
                                                          DECEMBER 31, 1996     1997       1998
                                                         -------------------  ---------  ---------
<S>                                                      <C>                  <C>        <C>
Historical:
Net loss...............................................       $  (3,452)      $  (5,704) $ (15,020)
                                                                -------       ---------  ---------
                                                                -------       ---------  ---------
Basic and diluted shares:
Weighted average shares of common stock outstanding....           3,665           2,836      4,443
Less weighted average shares subject to repurchase.....          (1,200)         (1,197)    (1,599)
                                                                -------       ---------  ---------
Weighted average shares of common stock outstanding
  used in computing basic and diluted net per loss
  share................................................           2,465           1,639      2,844
                                                                -------       ---------  ---------
                                                                -------       ---------  ---------
Basic and diluted net loss per share...................       $   (1.40)      $   (3.48) $   (5.28)
                                                                -------       ---------  ---------
                                                                -------       ---------  ---------
 
Pro forma:
Net loss...............................................                                  $ (15,020)
Weighted average shares of common stock outstanding
  used in computing basic and diluted net loss per
  share................................................                                      2,844
Adjusted to reflect the assumed conversion of
  convertible preferred stock from the date of
  issuance.............................................                                      8,033
                                                                                         ---------
Weighted average shares used in computing pro forma
  basic and diluted net loss per share.................                                     10,877
                                                                                         ---------
                                                                                         ---------
Pro forma basic and diluted net loss per share.........                                  $   (1.38)
                                                                                         ---------
                                                                                         ---------
</TABLE>
 
        If AdForce had reported net income, diluted net income per share would
have included the shares used in the computation of pro forma net loss per share
as well as approximately 1,953,414 and 3,217,546 common equivalent shares
related to outstanding options and warrants to purchase common stock not
included above for the years ended December 31, 1997 and 1998, respectively. The
common equivalent shares from options and warrants would be determined on a
weighted average basis using the treasury stock method.
 
    COMPREHENSIVE LOSS
 
        In June 1997, the Financial Accounting Standards Board issued FAS No.
130, "REPORTING COMPREHENSIVE INCOME" ("FAS 130"). FAS 130 establishes standards
for the reporting and display of comprehensive income and its components in a
full set of general purpose financial statements and is effective for fiscal
years beginning after December 15, 1997. AdForce adopted FAS 130 in the year
ended December 31, 1998. There was no impact on AdForce's financial statements
as a result of the adoption of FAS 130, as there is no difference between
AdForce's net loss reported and the comprehensive net loss under FAS 130 for the
periods presented.
 
                                      F-10
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    SEGMENT INFORMATION
 
        In June 1997, the Financial Accounting Standards Board issued FAS No.
131, "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION" ("FAS
131"). FAS 131 changes the way companies report selected segment information in
annual financial statements and requires companies to report selected segment
information in interim financial reports to stockholders. FAS 131 also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. AdForce adopted FAS 131 in the year ended
December 31, 1998. AdForce operates solely in one segment, the provision of
Internet advertising management and delivery services, and therefore there is no
impact on AdForce's financial statements of adopting FAS 131. For the year ended
December 31, 1998, sales to customers outside the United States were $375,000.
The majority of these sales were to customers in Europe.
 
    NEW ACCOUNTING PRONOUNCEMENTS
 
        In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued SOP No. 98-1, "ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE
DEVELOPED OR OBTAINED FOR INTERNAL USE." SOP No. 98-1 requires entities to
capitalize certain costs related to internal-use software once certain criteria
have been met. AdForce will be required to implement SOP No. 98-1 for the year
ending December 31, 1999. AdForce does not expect that the adoption of SOP No.
98-1 will have a material impact on its financial position or results of
operations.
 
        In April 1998, the AICPA issued SOP No. 98-5, "REPORTING ON THE COSTS OF
START-UP ACTIVITIES." SOP No. 98-5 requires that all start-up costs related to
new operations must be expensed as incurred. In addition, all start-up costs
that were capitalized in the past must be written off when SOP No. 98-5 is
adopted. AdForce will be required to implement SOP No. 98-5 for the year ending
December 31, 1999. Because AdForce has not capitalized any start-up costs
through December 31, 1998, AdForce does not expect that the adoption of SOP No.
98-5 will have a material impact on its financial position or results of
operations.
 
        In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES." SFAS No.
133 establishes methods for derivative financial instruments and hedging
activities related to those instruments, as well as other hedging activities.
AdForce will be required to implement SFAS No. 133 for the year ending December
31, 2000. Because AdForce do not currently hold any derivative instruments and
do not engage in hedging activities, AdForce does not expect that the adoption
of SFAS No. 133 will have a material impact on its financial position or results
of operations.
 
                                      F-11
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
2.  BUSINESS COMBINATION
 
        In February 1998, AdForce acquired StarPoint Software, Inc.
("StarPoint"), a company that developed software to serve Internet advertising,
for (i) 309,738 shares of Series C preferred stock with a fair value of
$1,465,000, (ii) 877,834 shares of common stock and options to purchase 48,056
shares of common stock with an aggregate fair value of $220,000, (iii) $113,000
of debt and (iv) $162,000 in acquisition costs in a transaction that was
accounted for as a purchase.
 
        The purchase consideration was allocated to the acquired assets and
assumed liabilities based on fair values as follows (in thousands):
 
<TABLE>
<S>                                                           <C>
Current assets..............................................  $     19
Property and equipment......................................        77
Liabilities assumed.........................................      (645)
Purchased in-process technology.............................       100
Purchased technology........................................     1,669
Non-competition agreement...................................       540
Assembled workforce.........................................       200
                                                              --------
                                                              $  1,960
                                                              --------
                                                              --------
</TABLE>
 
        AdForce determined that $100,000 of the purchase price represented
purchased in-process technology that had not yet reached technological
feasibility and had no alternative future use. Accordingly, this amount was
expensed at the time of the acquisition. The value assigned to purchased
in-process technology was determined by identifying research projects in areas
for which technological feasibility had not been achieved and assessing the
completion date of the research and development effort. The state of completion
was determined by estimating the costs and time incurred to date relative to the
costs and time to be incurred to develop the purchased in-process technology
into commercially viable products, estimating the resulting net cash flows only
from the percentage of research and development efforts completed at the date of
acquisition, and discounting the net cash flows back to their present value. The
discount rate of 40% included a factor that took into account the uncertainty
surrounding the successful development of the purchased in-process technology
projects.
 
        The value of the purchased technology ($1,669,000) was determined by
discounting expected future cash flows of the existing developed technologies
taking into account the characteristics and applications of the technology, the
size of existing markets and growth rates of existing and future markets, as
well as an evaluation of past and anticipated service-life cycles. The discount
rate of 35% included a factor that took into account the uncertainty surrounding
the successful delivery of the purchased technology.
 
                                      F-12
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
2.  BUSINESS COMBINATION (CONTINUED)
        The following (unaudited) pro forma summary represents the consolidated
results of operations as if the acquisition of StarPoint had occurred at the
beginning of the period presented and is not intended to be indicative of future
results (in thousands except per share amounts).
 
<TABLE>
<CAPTION>
                                                              YEAR ENDED
                                                           DECEMBER 31, 1997
                                                          -------------------
<S>                                                       <C>
Pro forma net revenue...................................       $     437
Pro forma net loss......................................       $  (8,219)
Pro forma basic and diluted net loss per share..........       $   (3.27)
Number of shares used in pro forma basic and diluted per
  share calculation.....................................           2,517
</TABLE>
 
        The pro forma disclosures for the year ended December 31, 1998 have been
omitted because they are not materially different from the reported amounts as
the results of operations of StarPoint have been included since February 13,
1998. In-process research and development charges of $100,000 were excluded from
the pro forma net loss and pro forma net loss per share figures for the year
ended December 31, 1997. The number of shares used in the above pro forma per
share calculation assumes that the common stock issued to StarPoint on February
13, 1998 was issued and outstanding for the entire year of 1997. The pro forma
results are not necessarily indicative of what actually would have occurred if
the acquisition had been effected at the beginning of the period presented and
are not intended to be a projection of future results.
 
3.  PROPERTY AND EQUIPMENT
 
        Property and equipment consisted of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              --------------------
                                                                1997       1998
                                                              ---------  ---------
<S>                                                           <C>        <C>
Computer hardware and software..............................  $   2,648  $   6,475
Office furniture and equipment..............................        155        345
Leasehold improvements......................................         76        152
                                                              ---------  ---------
                                                                  2,879      6,972
Less accumulated depreciation and amortization..............        933      2,764
                                                              ---------  ---------
                                                              $   1,946  $   4,208
                                                              ---------  ---------
                                                              ---------  ---------
</TABLE>
 
        As of December 31, 1997 and 1998, property and equipment included
amounts acquired under capital leases of $2,491,000 and $5,140,000,
respectively, with related accumulated amortization of $740,000 and $1,714,000,
respectively. This includes property and equipment with a net book value of
$589,000 at December 31, 1998 that was acquired in 1996 and financed in 1997
through a sale-leaseback transaction.
 
                                      F-13
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
4.  RELATED PARTIES
 
        Two of AdForce's founders and current stockholders hold executive
management positions with one of AdForce's customers. Net revenue recognized
from sales to this customer was $260,000 during the year ended December 31,
1998.
 
5.  LICENSE AGREEMENT AND DEMOGRAPHIC DATA AGREEMENT
 
        In July 1998, AdForce entered into a License Agreement and a Demographic
Data Agreement with America Online, Inc. In addition, AdForce sold 728,332
shares of Series E convertible preferred stock to America Online for a purchase
price of $10,000,000. In connection with the sale of Series E convertible
preferred stock to America Online, AdForce also issued to America Online a
warrant to purchase up to 509,831 shares of Series E convertible preferred stock
at an exercise price of $13.73 per share. The warrant is exercisable on or
before July 14, 2003 (See Note 8).
 
        Under the License Agreement, AdForce licensed its technology to America
Online and its affiliates to be used internally by America Online and on sites
associated with America Online.
 
        Under the Demographic Data Agreement, America Online may authorize
AdForce to use demographic information about America Online users in connection
with the targeting and delivery of ads to these users. After AdForce has access
to the demographic data, AdForce will pay America Online quarterly fees based on
the greater of a certain percentage of the consideration charged for targeted
advertising or a certain percentage of the incremental revenue charged for the
targeting feature. Such fees will total at least $10,000,000 for the first three
years after America Online provides access to the demographic data. The term of
the Demographic Data Agreement will expire on the earlier of July 14, 2002 or
three years after AdForce has access to the demographic data. America Online can
elect to renew the Demographic Data Agreement on a year-to-year basis with 90
days' notice on the same terms and conditions, subject to establishing mutually
agreeable minimum annual fees. America Online can elect to terminate the
Demographic Data Agreement upon payment of a fee to AdForce in the event a third
party offers more favorable terms for access to the demographic data and AdForce
does not match such terms. To data, AdForce has not had access to the
demographic data and there is no final implementation schedule or procedure for
such access.
 
6.  COMMITMENTS
 
        AdForce leases its operating and administrative facilities under
non-cancelable operating lease agreements that expire in April 2004. Rent
expense was approximately $81,000, $210,000, and $536,000 for the period from
January 16, 1996 (inception) to December 31, 1996 and for the years ended
December 31, 1997 and 1998, respectively.
 
        During the years ended December 31, 1997 and 1998, AdForce executed five
lease-line agreements for a total of $8,000,000 in lease-line credit
availability. At December 31, 1998, related lease obligations bore interest at
an effective rate of 7.9% to 9.75% and were secured by the related property and
equipment. Approximately $2,110,000 in unused lease-line credit remained
available under lease agreements at December 31, 1998.
 
                                      F-14
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
6.  COMMITMENTS (CONTINUED)
        As of December 31, 1998, minimum lease payments under all noncancelable
lease agreements were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                            CAPITAL     OPERATING
                                                            LEASES       LEASES
                                                          -----------  -----------
<S>                                                       <C>          <C>
1999....................................................   $   1,943    $     918
2000....................................................       2,010          846
2001....................................................       1,415          846
2002....................................................         223          522
2003....................................................          --          448
Thereafter..............................................          --           60
                                                          -----------  -----------
Total minimum lease payments............................       5,591    $   3,640
                                                                       -----------
                                                                       -----------
Less amount representing interest.......................       1,042
                                                          -----------
Present value of minimum lease payments.................       4,549
Less current portion of captial lease obligations.......       1,460
                                                          -----------
Long-term portion of capital lease obligations..........   $   3,089
                                                          -----------
                                                          -----------
</TABLE>
 
7.  BORROWING ARRANGEMENTS
 
        During 1998, AdForce received funding from a private investor secured by
notes payable totaling $500,000. The notes payable plus accrued interest were
converted into 36,861 shares of Series D convertible preferred stock at a rate
of $13.73 per share during the year ended December 31, 1998.
 
        During the period from January 16, 1996 (inception) to December 31,
1996, AdForce received funding from three investors secured by notes payable
totaling $1,757,000. During the period from January 16, 1996 (inception) to
December 31, 1996, $1,506,000 of these notes payable plus accrued interest were
converted into Series A convertible preferred stock at a rate of $2.51 per
share. The remaining notes payable plus accrued interest of $465,000 were repaid
to the related note holders during the period from January 16, 1996 (inception)
to December 31, 1996.
 
8.  STOCKHOLDERS' EQUITY
 
    GENERAL
 
        In February 1998, AdForce's stockholders approved certain modifications
to AdForce's capital structure, including a two-for-one stock split of AdForce's
common stock, and a modification of the conversion ratio of all shares of
AdForce's preferred stock to common stock. All shares of preferred stock are now
convertible into two shares of common stock. In addition, the stockholders
approved the addition of 1,600,000 shares of common stock to the pool of shares
available for stock option grants under the 1997 Stock Plan. All common share
and per share amounts presented have been adjusted retroactively to reflect the
stock split.
 
                                      F-15
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
    CONVERTIBLE PREFERRED STOCK
 
        Each share of convertible preferred stock is convertible into common
stock at the conversion ratio in effect at the time of conversion (two-for-one
at December 31, 1998) and is subject to appropriate adjustment for common stock
splits, stock dividends, and similar transactions. Conversion is automatic upon
the closing of an initial public offering of common stock in which, with respect
to the Series A, B, and C convertible preferred stock, the aggregate gross
proceeds to AdForce are at least $15,000,000 and the minimum offering price is
at least equal to $6.275 per share, and, with respect to the Series D and E
convertible preferred stock, the aggregate proceeds (gross with respect to
Series D and net with respect to Series E) to AdForce are at least $20,000,000
and the minimum offering price is at least equal to $125,000,000 divided by the
number of shares of AdForce's common stock outstanding immediately prior to the
offering, assuming conversion of all convertible securities and the exercise of
all options and warrants. In addition, the Series A, B, and C convertible
preferred stock is convertible upon the written consent or agreement of the
holders of a majority of the respective series of preferred stock.
 
        Each holder of convertible preferred stock is entitled to a number of
votes equal to the number of shares of common stock into which such convertible
preferred stock is convertible.
 
        Each holder of convertible preferred stock is entitled to receive, when
and as declared by the Board of Directors, noncumulative dividends at the annual
rate of $0.20, $0.20, $0.38, $1.10, and $1.10 per share for Series A, B, C, D,
and E convertible preferred stock, respectively, payable in preference and
priority to any payment of any dividend on common stock.
 
        In the event of liquidation, the holders of convertible preferred stock
would be entitled to a liquidation preference equal to $2.51 per share for all
Series B convertible preferred stock, $4.73 per share for all Series C
convertible preferred stock and $13.73 per share for all Series D and E
convertible preferred stock, plus any declared but unpaid dividends on such
share, and if assets remain in the corporation that are legally available for
distribution, the holders of the Series B, C, D, and E convertible preferred
stock would receive from the remaining assets of the corporation available for
distribution to stockholders that portion of such assets equal to their pro rata
share of such assets based on the number of shares of common stock held by all
stockholders of the corporation, assuming the conversion to common stock of all
shares of Series A, B, C, D, and E convertible preferred stock. Then, and only
then, would the holders of Series A convertible preferred stock receive $2.51
per share, plus all declared but unpaid dividends. Any remaining assets would
then be distributed on a pro rata basis among the holders of Series A
convertible preferred stock and the holders of common stock.
 
    COMMON STOCK
 
        At December 31, 1998, AdForce had reserved 10,755,662 shares of its
common stock for issuance upon conversion of the outstanding shares of its
Series A, B, C, D, and E convertible preferred stock and shares of preferred
stock issuable upon the exercise of outstanding warrants, and 2,631,770 shares
of common stock for issuance upon exercise of options outstanding and available
under the 1997 Stock Plan and shares of common stock issuable upon the exercise
of outstanding warrants.
 
        A total of 1,449,620 shares of common stock issued to two of AdForce's
founders in 1996 are subject to certain repurchase rights held by AdForce. Such
repurchase rights lapsed immediately with respect to 25% of the shares and lapse
ratably with respect to the remaining shares over 36 months beginning in June
1996. During 1998, the founders ceased their employment with AdForce. AdForce
 
                                      F-16
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
elected not to exercise its repurchase right with respect to the remaining
256,195 shares subject to repurchase at that time. Compensation expense of
$1,407,000 was recorded in 1998 related to such shares based on the difference
between the exercise price and the fair value of such shares at the time the
founders ceased employment with AdForce.
 
        At December 31, 1998, 562,500 shares of common stock held by an officer
were subject to repurchase by AdForce at their original purchase price of $0.125
per share. Such repurchase rights lapse ratably over the 48-month vesting period
of the underlying options to purchase common stock.
 
        A total of 800,000 shares of common stock issued in conjunction with
AdForce's acquisition of StarPoint to three of StarPoint's founders, who are now
employees of AdForce, were subject to certain repurchase rights held by AdForce.
At December 31, 1998, 266,667 of these shares of common stock remained subject
to repurchase. The repurchase rights lapsed as to 22/48 of the shares on the
date of acquisition, as to 9/48 of the shares after the employees had completed
nine months of continuous employment at AdForce and as to 1/48 of these shares
each month thereafter.
 
    NOTE RECEIVABLE FROM STOCKHOLDER
 
        During 1997, AdForce received a note receivable from a stockholder of
AdForce upon his exercise of an option to purchase 900,000 shares of common
stock. As of December 31, 1998, 562,500 of the shares issued were subject to
repurchase by AdForce at the original exercise price. The repurchase rights
lapse ratably over the 48 month vesting period of the underlying option. The
note bears interest at 6.8% and is secured by the related stock. The note and
related interest is being forgiven ratably over a period of four years of
service/employment.
 
                                      F-17
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
 
    WARRANTS
 
        In association with certain transactions, AdForce issued warrants to
third parties for the purchase of AdForce's common stock and convertible
preferred stock. The warrants that remained outstanding at December 31, 1998
were as follows:
 
<TABLE>
<CAPTION>
                                                              SHARES UNDER                       EXPIRATION OF
       PARTY           CLASS OF STOCK      DATE OF ISSUANCE     WARRANT      EXERCISE PRICE     EXERCISABILITY
-------------------  -------------------  ------------------  ------------  ----------------  -------------------
<S>                  <C>                  <C>                 <C>           <C>               <C>
Vendor               Common stock         April 1997                6,142    $1.26 - $2.37    October 15, 2007
 
Leasing vendor       Series B             March 1997               27,889        $2.51        December 31, 2002
                       convertible
                       preferred stock
 
Leasing vendors      Series C             December 1997            59,197        $4.73        December 31, 2002
                       convertible                                                              through December
                       preferred stock                                                          2, 2007
 
Leasing vendor       Series D             September 1998           10,925        $13.73       September 29, 2008
                       convertible
                       preferred stock
 
Private Investors    Series D             July 1998                36,430        $13.73       July 14, 2003
                       convertible
                       preferred stock
 
Private Investor/    Series E             July 1998               509,831        $13.73       July 14, 2003
Data Vendor            convertible
                       preferred stock
</TABLE>
 
        Warrants to purchase 6,142 shares of common stock, included above,
expire on the earlier of October 15, 2007 or the filing by AdForce of an initial
public offering. Warrants to purchase 36,998 and 10,925 shares of Series C and
Series D convertible preferred stock, included above, expire on the later of
December 2, 2007 and September 29, 2008, respectively, or five years subsequent
to the filing by AdForce of an initial public offering. Warrants to purchase
36,430 shares of Series D convertible preferred stock and 509,831 shares of
Series E convertible preferred stock, included above, expire on the later of
July 14, 2003 or the closing of any merger, tender offer, or other transaction
in which all of the holders of AdForce's outstanding common stock and preferred
stock (if any) receive only cash or cash and other securities payable only in
cash. Warrants to purchase 400,000 shares of common stock issued to a data
vendor were exercised during 1998 but are subject to certain repurchase rights
held by AdForce. These repurchase rights lapsed as to 25% of the shares in April
1997 and 2.08% of the shares each month thereafter. As of December 31, 1998,
133,360 shares acquired pursuant to this warrant exercise remained subject to
AdForce's repurchase right.
 
                                      F-18
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
        AdForce has determined the value of all warrants granted to third
parties, excluding the value attributable to equity investments, to be
approximately $2,274,000 and will record the related expense over the term of
the respective agreements. AdForce recognized interest expense of $23,000 and
$56,000 during the years ended December 31, 1997 and 1998, respectively, related
to the estimated fair market value of these warrants.
 
    STOCK OPTION PLANS
 
        AdForce has elected to follow APB Opinion No. 25 and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FAS
No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION" ("FAS 123"), requires use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB Opinion No 25, when the exercise price of AdForce's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.
 
        During 1997, AdForce adopted the 1997 Stock Plan (the "Plan"). Under the
Plan, options to purchase common stock may be granted at no less than 85% of the
fair value of the underlying common stock on the date of the grant, as
determined by the Board of Directors. Options generally have a maximum term of
10 years and are exercisable immediately, but vest over a 48-month period. Under
the Plan, an optionee may exercise part or all of the options prior to the
stated vesting date. However, unvested shares are subject to repurchase, at
AdForce's option, upon a stockholder's termination of employment for any reason.
As of December 31, 1998, 763,088 of the shares issued upon exercise of stock
options, including the options exercised by an officer of AdForce that are
discussed under "NOTE RECEIVABLE FROM SALE OF COMMON STOCK," were subject to
repurchase by AdForce at the exercise price.
 
        In connection with the acquisition by AdForce of StarPoint as described
in Note 2, AdForce assumed all options outstanding under the StarPoint Software,
Inc. 1996 Stock Plan ("StarPoint Plan"). These options vest over a 48-month
period with 9/48 of the underlying shares vesting after the employee had
completed nine months of continuous employment at AdForce and 1/48 of the
underlying shares vesting each month thereafter.
 
        A summary of activity under the Plan and the StarPoint Plan is as
follows:
 
<TABLE>
<CAPTION>
                                              SHARES                                      WEIGHTED
                                           AVAILABLE FOR    OPTIONS       PRICE PER        AVERAGE
                                               GRANT      OUTSTANDING       SHARE      EXERCISE PRICE
                                           -------------  ------------  -------------  ---------------
<S>                                        <C>            <C>           <C>            <C>
  Shares authorized......................     2,400,000            --        --                  --
  Options granted........................    (2,360,098)    2,360,098   $0.125-$0.250     $   0.159
  Options exercised......................            --      (937,830)     $0.125         $   0.125
  Options canceled.......................        49,168       (49,168)     $0.153         $   0.153
                                           -------------  ------------  -------------
Balances at December 31, 1997............        89,070     1,373,100   $0.125-$0.250     $   0.183
  Shares authorized......................     1,600,000            --        --                  --
  Options granted........................    (1,485,085)    1,485,085   $0.250-$1.500     $   1.048
  Options assumed under Starpoint Plan...            --        48,056   $0.090-$0.360     $   0.264
  Options repurchased....................        52,216            --   $0.125-$0.250     $   0.204
  Options exercised......................            --      (519,695)  $0.090-$1.500     $   0.188
  Options canceled.......................       446,567      (463,686)  $0.090-$1.500     $   0.562
                                           -------------  ------------  -------------
Balances at December 31, 1998............       702,768     1,922,860   $0.125-$1.500     $   0.760
                                           -------------  ------------  -------------
                                           -------------  ------------  -------------
</TABLE>
 
                                      F-19
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
        The following table summarizes information concerning outstanding
options at December 31, 1998:
 
<TABLE>
<CAPTION>
                            OPTIONS OUTSTANDING
                -------------------------------------------
                                 WEIGHTED        WEIGHTED
   RANGE OF                  AVERAGE REMAINING    AVERAGE
   EXERCISE     NUMBERS OF   CONTRACTUAL LIFE    EXERCISE
    PRICES        SHARES        (IN YEARS)         PRICE
--------------  -----------  -----------------  -----------
<S>             <C>          <C>                <C>
   $0.125 -
    $0.250       1,016,950            8.88       $   0.228
    $0.700         162,250            9.42       $   0.700
    $1.500         743,660            9.32       $   1.500
                -----------            ---      -----------
   $0.125 -
    $1.500       1,922,860            9.10       $   0.760
                -----------            ---      -----------
                -----------            ---      -----------
</TABLE>
 
        All outstanding options to purchase common stock of AdForce were
exercisable at December 31, 1998. As of December 31, 1998, options to purchase
314,101 shares of common stock were vested.
 
        In connection with the grant of certain options to employees through
December 31, 1998, AdForce recorded deferred stock compensation of approximately
$1,052,000 for the aggregate difference between the exercise prices of those
options at their respective dates of grant and the deemed fair values for
accounting purposes of the shares of common stock subject to such options. Such
amount is included as a reduction of stockholders' equity and is being amortized
on a graded vesting method. The compensation expense of $1,052,000 in 1998
relates to options awarded to employees in all operating expense categories, as
well as employees in data center operations. This amount has not been separately
allocated between operating expense categories. In January 1999, AdForce granted
to employees options to purchase 777,000 shares of common stock with an exercise
price of $1.50 per share. AdForce estimates that it will record additional
deferred stock compensation of approximately $4,662,000 with regard to these
grants.
 
        Pro forma information regarding net loss is required by FAS 123,
computed as if AdForce had accounted for its employee stock options granted or
otherwise modified under the fair value-based accounting method of that
statement. The value for these options was estimated at the date of grant using
the minimum value method with the following weighted average assumptions:
 
<TABLE>
<CAPTION>
                                                                      1997           1998
                                                                    ---------  ----------------
<S>                                                                 <C>        <C>
Expected dividend yield...........................................      0.00%       0.00%
Weighted average risk-free interest rate..........................      5.00%   4.45% - 5.63%
Weighted average expected life....................................    4 years      5 years
</TABLE>
 
        The weighted average fair value of options granted during 1997 and 1998
with an exercise price equal to the fair value of AdForce's common stock on the
date of grant was $0.06. The weighted-average
 
                                      F-20
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
 
fair value of options granted during 1998 with an exercise price below the
deemed fair value of AdForce's common stock on the date of grant was $3.70.
 
<TABLE>
<CAPTION>
                                                                            1997       1998
                                                                          ---------  ---------
<S>                                                                       <C>        <C>
Pro forma net loss......................................................  ($  5,720) ($ 15,095)
                                                                          ---------  ---------
                                                                          ---------  ---------
Pro forma basic and diluted net loss per share..........................             ($   1.39)
                                                                                     ---------
                                                                                     ---------
</TABLE>
 
        For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. Future pro
forma net income (loss) results may be materially different from actual future
amounts reported.
 
9. ACQUISITION OF TECHNOLOGY AND OPERATING RIGHTS
 
        In January 1996, AdForce assumed the assets and liabilities of Iron
Mountain Global Information Systems, Inc. in exchange for a combination of
1,720,000 shares of common stock in AdForce valued at $0.005 per share, the
assumption of notes payable of $214,000 and an agreement to make a cash payment
of $106,000 to an investor in Iron Mountain Global Information Systems, Inc. The
net assets acquired included in-process software technology for use in the
business of Internet ad-serving. However, this technology was initially
developed for online real estate advertising and inquiry and subsequently proved
to be unusable for AdForce's current Internet advertising processes. This
software technology was abandoned during 1996 in favor of the development of new
software technology to satisfy projected market needs. Accordingly, the entire
value assigned to the acquired technology of $319,000 was expensed to Research
and Development during the period from January 16, 1996 (inception) to December
31, 1996.
 
10. INCOME TAXES
 
        Due to operating losses and the inability to recognize the benefits
therefrom, there is no provision for income taxes for the period from January
16, 1996 (inception) to December 31, 1996 and the years ended December 31, 1997
and 1998.
 
        Significant components of AdForce's deferred tax assets and liabilities
are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                             --------------------
                                                               1997       1998
                                                             ---------  ---------
<S>                                                          <C>        <C>
Deferred tax assets:
  Net operating loss carryforwards.........................  $   3,275  $   6,989
  Tax credit carryforwards.................................        221        380
  Other--net...............................................        204      1,214
                                                             ---------  ---------
Total deferred tax assets..................................      3,700      8,583
Valuation allowance........................................     (3,700)    (7,962)
                                                             ---------  ---------
Net deferred tax assets....................................  $      --  $     621
                                                             ---------  ---------
Deferred tax liability:
  Acquired intangibles.....................................         --        621
                                                             ---------  ---------
Net deferred tax assets and liabilities....................  $      --  $      --
                                                             ---------  ---------
                                                             ---------  ---------
</TABLE>
 
                                      F-21
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
10. INCOME TAXES (CONTINUED)
        FASB Statement No. 109 provides for the recognition of deferred tax
assets if realization of such assets is more likely than not. Based upon the
weight of available evidence, which includes AdForce's historical operating
performance and the reported cumulative net losses in all prior years, AdForce
has provided a full valuation allowance against its net deferred tax assets.
 
The valuation allowance increased by approximately $1,300,000 and $2,400,000
during the period from January 16, 1996 (inception) to December 31, 1996 and the
year ended December 31, 1997, respectively.
 
        As of December 31, 1998, AdForce had federal and state net operating
loss carryforwards of approximately $17,000,000. AdForce also had federal and
state research and development tax credit carryforwards of approximately
$250,000 and $130,000, respectively. The net operating loss and tax credit
carryforwards, if not utilized, will expire at various dates beginning in 2004.
 
        Utilization of the net operating loss and tax credit carryforwards may
be subject to a substantial annual limitation due to the "change in ownership"
provisions of the Internal Revenue Code of 1986, as amended, and similar state
provisions. The annual limitation may result in expiration of net operating loss
and tax credit carryforwards before utilization.
 
11. SUBSEQUENT EVENTS
 
        In February 1999, the Board of Directors approved the reincorporation in
the state of Delaware as AdForce, Inc. subject to stockholder approval.
 
        In February 1999, the Board of Directors adopted the 1999 Equity
Incentive Plan and reserved 2,000,000 shares for issuance thereunder, subject to
stockholder approval. The 1999 Equity Incentive Plan will become effective on
the effective date of the initial public offering and will serve as the
successor to the Plan. Options granted under the Plan before its termination
will remain outstanding according to their terms, but no further options will be
granted under the Plan after the effective date of the initial public offering.
The 1999 Equity Incentive Plan will terminate in February 2009, unless sooner
terminated in accordance with its terms. The 1999 Equity Incentive Plan
authorizes the award of incentive stock options and nonqualified stock options,
restricted stock awards and stock bonuses.
 
        In February 1999, the Board of Directors adopted the 1999 Employee Stock
Purchase Plan and reserved a total of 300,000 shares of common stock for
issuance thereunder, subject to stockholder approval. On each January 1, the
aggregate number of shares reserved for issuance under the 1999 Employee Stock
Purchase Plan will be increased automatically by the number of shares purchased
under the 1999 Employee Stock Purchase Plan in the preceding calendar year. The
aggregate number of shares issued over the term of the 1999 Employee Stock
Purchase Plan may not exceed 3,000,000 shares. The 1999 Employee Stock Purchase
Plan will become effective on the effective date of the initial public offering.
Employees generally will be eligible to participate in the 1999 Employee Stock
Purchase Plan if they are customarily employed by AdForce or its parent or any
subsidiaries that AdForce designates for more than 20 hours per week and more
than five months in a calendar year. Under the 1999 Employee Stock Purchase
Plan, eligible employees will be permitted to acquire shares of AdForce's common
stock through payroll deductions. Eligible employees may select a rate of
payroll deduction between 2% and 10% of their compensation and are subject to
certain maximum purchase limitations described in the 1999 Employee Stock
Purchase Plan. Each offering period under the 1999 Employee Stock Purchase Plan
will be for two years and consist of six-month purchase periods. The first
offering period is expected to begin on the first business day on which price
quotations for AdForce's common stock are available on the
 
                                      F-22
<PAGE>
                                 ADFORCE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
11. SUBSEQUENT EVENTS (CONTINUED)
Nasdaq National Market. Offering periods and purchase periods thereafter will
begin on February 1 and August 1. The purchase price for AdForce's common stock
purchased under the 1999 Employee Stock Purchase Plan is 85% of the lesser of
the fair market value of AdForce's common stock on the first day of the
applicable offering period or the last day of each purchase period. The 1999
Employee Stock Purchase Plan will terminate in February 1999, unless earlier
terminated pursuant to the terms of the 1999 Employee Stock Purchase Plan. The
Board of Directors will have the authority to amend, terminate, or extend the
term of the 1999 Employee Stock Purchase Plan.
 
        In February 1999, the Board of Directors adopted the 1999 Directors
Stock Option Plan and reserved a total of 200,000 shares of common stock for
issuance under the 1999 Directors Stock Option Plan, subject to stockholder
approval. Members of the Board of Directors who are not employees of AdForce, or
any parent, subsidiary or affiliate of AdForce, are eligible to participate in
the 1999 Directors Stock Option Plan. Option grants under the 1999 Directors
Stock Option Plan are automatic and nondiscretionary, and the exercise price of
the options is the fair market value of the common stock on the date of grant.
Each eligible director who first becomes a member of the Board of Directors on
or after the effective date of the initial public offering will initially be
granted an option to purchase 10,000 shares of common stock on the date he or
she becomes a member of the Board of Directors. Each eligible director who first
becomes a member of the Board of Directors prior to the effective date of the
initial public offering will receive an initial grant immediately following the
first annual meeting of stockholders of AdForce after the effective date of the
initial public offering, provided that he or she is elected a member of the
Board of Directors at the first annual meeting of stockholders. Immediately
following each annual meeting of stockholders of AdForce, each eligible director
will automatically be granted an additional option to purchase 5,000 shares of
common stock if he or she has served continuously as a member of the Board of
Directors for a period of at least one year since the date of his or her initial
grant under this Plan. The options have ten-year terms. They will terminate
seven months following the date the director ceases to be a director or a
consultant to AdForce, or twelve months if the termination is due to death or
disability. All options granted under the 1999 Directors Stock Option Plan will
vest as to 25% of the shares on the first anniversary of the date of grant and
as to 2.08333% of the shares each month thereafter, provided the optionee
continues as a member of the Board of Directors or as a consultant to AdForce.
In the event of a merger or other transaction in which AdForce is not the
surviving corporation, all options issued under the 1999 Directors Stock Option
Plan will accelerate and become exercisable in full prior to the consummation of
the transaction.
 
        In February 1999, AdForce executed a lease-line agreement for a total of
$4,000,000 in lease-line credit availability. Obligations under the lease-line
will be secured by the related equipment and will be payable over a 42 month
period.
 
        In February 1999, AdForce executed a noncancellable operating lease for
a facility in Cupertino, California that expires in April 2003. Future minimum
lease payments under the noncancellable lease agreement is as follows (in
thousands):
 
<TABLE>
<CAPTION>
<S>                                                                <C>
1999.............................................................  $     835
2000.............................................................      1,213
2001.............................................................      1,261
2002.............................................................      1,312
2003.............................................................        417
                                                                   ---------
Total minimum lease payments.....................................  $   5,038
                                                                   ---------
                                                                   ---------
</TABLE>
 
                                      F-23
<PAGE>
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
The Board of Directors and Stockholders
AdForce, Inc.
 
        We have audited the accompanying balance sheet of StarPoint Software,
Inc. as of May 31, 1997, and the related statements of operations, shareholders'
equity (net capital deficiency), and cash flows for the period from August 8,
1996 (inception) through May 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
 
        We conducted our audit 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 audit provides a reasonable basis for our opinion.
 
        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of StarPoint, Software,
Inc. at May 31, 1997, and the results of its operations and its cash flows for
the period from August 8, 1996 (inception) through May 31, 1997, in conformity
with generally accepted accounting principles.
 
San Jose, California
October 29, 1998
 
                                      F-24
<PAGE>
                            STARPOINT SOFTWARE, INC.
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                    MAY 31,    NOVEMBER 30,
                                                                      1997         1997
                                                                   ----------  -------------
                                                                                (UNAUDITED)
<S>                                                                <C>         <C>
                                           ASSETS
Current assets:
  Cash...........................................................  $   60,251   $    42,515
  Accounts receivable............................................      47,500        12,600
  Prepaid expenses and other current assets......................      12,278         6,139
                                                                   ----------  -------------
Total current assets.............................................     120,029        61,254
 
Property and equipment, net......................................      95,138        85,818
                                                                   ----------  -------------
Total assets.....................................................  $  215,167   $   147,072
                                                                   ----------  -------------
                                                                   ----------  -------------
 
                            LIABILITIES AND SHAREHOLDERS' EQUITY
                                  (NET CAPITAL DEFICIENCY)
Current liabilities:
  Accounts payable...............................................  $  113,854   $   128,273
  Accrued compensation and related benefits......................     172,415       336,313
  Other accrued liabilities......................................      45,483       235,548
  Deferred revenue...............................................      42,500        13,333
  Convertible promissory notes payable...........................     827,562     1,038,482
                                                                   ----------  -------------
Total current liabilities........................................   1,201,814     1,751,949
 
Commitments
 
Shareholders' equity (net capital deficiency):
  Convertible preferred stock, $0.0001 par value per share
    issuable in series:
      Authorized shares--5,000,000...............................
    Series B convertible preferred stock:
      Designated shares--1,500,000
      Issued and outstanding shares--none........................          --            --
  Common stock, $0.0001 par value:
    Authorized shares--15,000,000
    Issued and outstanding shares--2,544,918 at May 31, 1997 and
      2,858,512 at November 30, 1997.............................         254           286
  Additional paid-in capital.....................................      79,761       126,622
  Accumulated deficit............................................  (1,066,662)   (1,731,785)
                                                                   ----------  -------------
Total shareholders' equity (net capital deficiency)..............    (986,647)   (1,604,877)
                                                                   ----------  -------------
Total liabilities and shareholders' equity (net capital
  deficiency)....................................................  $  215,167   $   147,072
                                                                   ----------  -------------
                                                                   ----------  -------------
</TABLE>
 
                            SEE ACCOMPANYING NOTES.
 
                                      F-25
<PAGE>
                            STARPOINT SOFTWARE, INC.
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                              PERIOD FROM       PERIOD FROM
                                                             AUGUST 8, 1996    AUGUST 8, 1996
                                                              (INCEPTION)       (INCEPTION)     SIX MONTHS ENDED
                                                            THROUGH MAY 31,   THROUGH NOVEMBER    NOVEMBER 30,
                                                                  1997            30, 1996            1997
                                                            ----------------  ----------------  ----------------
                                                                                         (UNAUDITED)
<S>                                                         <C>               <C>               <C>
Revenues:
  Net revenue.............................................    $      5,000      $         --      $    110,267
  Cost of sales...........................................              --                --            23,530
                                                            ----------------        --------          --------
Gross margin..............................................           5,000                --            86,737
 
Operating expenses:
  Research and development................................         592,152           128,404           394,606
  Marketing and selling...................................         224,821                --            77,699
  General and administrative..............................         214,469            34,007           229,757
                                                            ----------------        --------          --------
Total operating expenses..................................       1,031,442           162,411           702,062
                                                            ----------------        --------          --------
Loss from operations......................................      (1,026,442)         (162,411)         (615,325)
 
Interest expense, net.....................................         (40,220)               --           (49,798)
                                                            ----------------        --------          --------
Net loss..................................................    $ (1,066,662)     $   (162,411)     $   (665,123)
                                                            ----------------        --------          --------
                                                            ----------------        --------          --------
</TABLE>
 
                            SEE ACCOMPANYING NOTES.
 
                                      F-26
<PAGE>
                            STARPOINT SOFTWARE, INC.
 
           STATEMENT OF SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
 
<TABLE>
<CAPTION>
                                                                                         TOTAL
                                                                                      SHAREHOLDERS'
                                        COMMON STOCK       ADDITIONAL                    EQUITY
                                   ----------------------    PAID-IN    ACCUMULATED   (NET CAPITAL
                                    SHARES      AMOUNT       CAPITAL      DEFICIT     DEFICIENCY)
                                   ---------  -----------  -----------  ------------  ------------
<S>                                <C>        <C>          <C>          <C>           <C>
Issuance of common stock to
  founders.......................  2,470,000   $     247    $  24,453    $       --    $   24,700
  Issuance of common stock.......     74,918           7        5,428            --         5,435
  Issuance of stock purchase
    warrants.....................         --          --       49,880            --        49,880
  Net loss.......................         --          --           --    (1,066,662)   (1,066,662)
                                   ---------         ---   -----------  ------------  ------------
Balance at May 31, 1997..........  2,544,918         254       79,761    (1,066,662)     (986,647)
  Issuance of common stock
    (unaudited)..................    313,594          32       36,756            --        36,788
  Issuance of stock purchase
    warrants (unaudited).........         --          --       10,105            --        10,105
  Net loss (unaudited)...........         --          --           --      (665,123)     (665,123)
                                   ---------         ---   -----------  ------------  ------------
Balance at November 30, 1997
  (unaudited)....................  2,858,512   $     286    $ 126,622    $(1,731,785)  $(1,604,877)
                                   ---------         ---   -----------  ------------  ------------
                                   ---------         ---   -----------  ------------  ------------
</TABLE>
 
                            SEE ACCOMPANYING NOTES.
 
                                      F-27
<PAGE>
                            STARPOINT SOFTWARE, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                    PERIOD FROM          PERIOD FROM
                                                   AUGUST 8, 1996      AUGUST 8, 1996
                                                    (INCEPTION)          (INCEPTION)            SIX MONTHS
                                                      THROUGH              THROUGH                 ENDED
                                                    MAY 31, 1997      NOVEMBER 30, 1996      NOVEMBER 30, 1997
                                                  ----------------  ---------------------  ---------------------
                                                                                    (UNAUDITED)
<S>                                               <C>               <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................    $ (1,066,662)        $  (162,411)           $  (665,123)
Reconciliation of net loss to net cash used in
  operating activities:
  Depreciation and amortization.................          19,294                 336                 15,559
  Amortization of discount on convertible notes
    payable.....................................          17,442                  --                 27,925
  Changes in operating assets and liabilities:
    Accounts receivable.........................         (47,500)                 --                 34,900
    Prepaid expenses and other current assets...         (12,278)            (12,278)                 6,139
    Accounts payable............................         113,854                 376                 14,419
    Accrued compensation and related benefits...         172,415              95,339                163,898
    Deferred revenue............................          42,500                  --                (29,167)
    Other accrued liabilities...................          45,483              12,008                190,065
                                                  ----------------          --------               --------
Net cash used in operating activities...........        (715,452)            (66,630)              (241,385)
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................        (114,432)             (8,070)                (6,239)
                                                  ----------------          --------               --------
Net cash used in investing activities...........        (114,432)             (8,070)                (6,239)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock and
  warrants, net.................................          80,015              27,600                 46,893
Proceeds from issuance of convertible notes
  payable.......................................         810,120              47,100                182,995
                                                  ----------------          --------               --------
Net cash provided by financing activities.......         890,135              74,700                229,888
                                                  ----------------          --------               --------
Net increase (decrease) in cash.................          60,251                  --                (17,736)
Cash at beginning of period.....................              --                  --                 60,251
                                                  ----------------          --------               --------
Cash at end of period...........................    $     60,251         $        --            $    42,515
                                                  ----------------          --------               --------
                                                  ----------------          --------               --------
</TABLE>
 
                            SEE ACCOMPANYING NOTES.
 
                                      F-28
<PAGE>
                            STARPOINT SOFTWARE, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                                  MAY 31, 1997
 
1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 
        StarPoint Software Inc. ("StarPoint") was incorporated on August 8, 1996
to provide software products for serving Internet advertising. StarPoint has
developed technology that is used to electronically place advertisements on
Internet web pages using highly sophisticated targeting techniques. It has
deployed such technology as part of a marketed software offering that
facilitates the delivery of Internet ads for a variety of market segments,
including (i) advertisers; (ii) advertising agencies; (iii) advertising
representation firms; and (iv) Internet service providers, content providers
(i.e., "Web sites"), and search engines. StarPoint's principal activities to
date have been recruiting personnel, performing research and development, and
building a sales and marketing function. StarPoint was in the development stage
through May 1997, when it first began generating revenues.
 
    INTERIM FINANCIAL STATEMENTS
 
        The accompanying balance sheet as of November 30, 1997 and the
statements of operations and cash flows for the period from August 8, 1996
(inception) through November 30, 1996 and the six month period ended November
30, 1997 are unaudited. In the opinion of management, the unaudited financial
statements have been prepared on the same basis as the audited financial
statements and include all adjustments, consisting of normal recurring entries,
necessary for a fair statement of the financial position, result of operations,
and cash flows for the interim periods. The results of operations for the
six-month period ended November 30, 1997 are not necessarily indicative of
operating results to be expected for the full fiscal year.
 
    USE OF ESTIMATES
 
        The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
    CONCENTRATION OF CREDIT RISK
 
        StarPoint markets, sells, and grants credit for its products to its
customers without requiring collateral or third-party guarantees. To date, all
of StarPoint's customers are participants in the Internet industry. Only a few
of all participants in the Internet industry have a demonstrated history of
profitability, and accordingly, unsecured credit granted to such customers
carries with it a greater risk of loss. StarPoint monitors its exposure for
credit losses and maintains appropriate allowances.
 
    DEPRECIATION AND AMORTIZATION
 
        StarPoint records property and equipment at cost and calculates
depreciation using an accelerated depreciation method over the estimated useful
life of the assets, generally three to seven years.
 
    ADVERTISING COSTS
 
        Advertising costs are charged to expense when incurred. Advertising
expense was $19,294 for the period from August 8, 1996 (inception) through May
31, 1997.
 
                                      F-29
<PAGE>
                            STARPOINT SOFTWARE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    REVENUE RECOGNITION
 
        StarPoint licenses software to end users under noncancelable license
agreements. Software license revenue is generally recognized at the time the
product has been shipped, provided StarPoint does not have any significant
remaining obligations and collection of the resulting receivable is probable.
Maintenance revenue is recognized ratably over the term of the related
agreement, which in most cases is one year. Revenue is recorded net of revenue
allowances.
 
    STOCK-BASED COMPENSATION
 
        StarPoint accounts for employee stock option grants in accordance with
Accounting Principals Board Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES" (APB Opinion No. 25). StarPoint grants stock options for a fixed
number of shares to employees with an exercise price equal to the fair value of
the shares at the date of grant and, accordingly, recognizes no compensation
expense for the employee stock option grants.
 
    RESEARCH AND DEVELOPMENT COSTS
 
        Costs incurred in the development of new software (and substantial
enhancements to existing software) used in the processes of StarPoint's Internet
advertisement serving services are expensed to operations as incurred until
technological feasibility of such software has been established, at which time
any additional costs would be capitalized in accordance with Statement of
Financial Accounting Standards No. 86, "ACCOUNTING FOR THE COSTS OF COMPUTER
SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE MARKETED" (FAS 86). Because StarPoint
believes that its present process for developing software is essentially
completed concurrently with the establishment of technological feasibility, no
costs have been capitalized to date.
 
2.  PROPERTY AND EQUIPMENT
 
        Property and equipment consist of the following:
 
<TABLE>
<CAPTION>
                                                                MAY 31, 1997
                                                                -------------
<S>                                                             <C>
Computer hardware and software................................    $ 101,172
Office furniture and equipment................................       13,260
                                                                -------------
                                                                    114,432
Less accumulated depreciation and amortization................       19,294
                                                                -------------
                                                                  $  95,138
                                                                -------------
                                                                -------------
</TABLE>
 
3.  COMMITMENTS
 
        StarPoint has leased its facility under a noncancelable operating lease
agreement which expires in November 1997. As of May 31, 1997, minimum lease
payments under the noncancelable lease agreement for the year ended May 31, 1998
was $37,125.
 
        Rent expense was approximately $60,500 for the period from August 8,
1996 (inception) through May 31, 1997.
 
                                      F-30
<PAGE>
                            STARPOINT SOFTWARE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
4.  CONVERTIBLE PROMISSORY NOTES PAYABLE
 
        During the period from August 8, 1996 (inception) through May 31, 1997,
StarPoint received funding from investors secured by convertible promissory
notes payable totaling $860,000. The notes bear interest at 6.5% and mature on
demand or on the stated maturity date which is from November 29, 1997 to March
4, 1998. Prior to the maturity date, the promissory notes and accrued interest
will automatically convert into preferred stock upon the closing of an equity
financing of StarPoint's preferred stock for an aggregate consideration of at
least $1,500,000.
 
        In connection with the convertible promissory notes issued, StarPoint
has issued warrants to purchase $172,000 of preferred stock at an exercise price
equal to the lower of $2.00 or the issuance price of the preferred stock at the
time of the financing. The warrants are exercisable at any time prior to
expiration and will expire at the earlier of: (i) five years, (ii) the merger or
consolidation of StarPoint into a third party pursuant to which StarPoint's
shareholders own less than 50% of the surviving entity, (iii) the sale of
substantially all of the assets of StarPoint, or (iv) the closing of an initial
public offering of common stock. StarPoint has allocated $49,880 of the proceeds
received from the issuance of the promissory notes to the value of the warrants.
The principal amounts of the convertible promissory notes were reduced by the
value assigned to the warrants, and such amount is being recognized as
additional interest expense over the life of the notes. StarPoint recognized
interest expense of $17,442 related to the estimated fair market value of the
warrants.
 
        As of May 31, 1997, StarPoint has reserved 526,624 shares of preferred
stock for issuance upon conversion of the convertible promissory notes and
exercise of stock purchase warrants. No warrants were exercised in the period
from August 8, 1996 (inception) through May 31, 1997.
 
5.  SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
 
    COMMON STOCK
 
        As of May 31, 1997, StarPoint has reserved 741,000 shares of its common
stock for issuance upon exercise of options outstanding and available under the
1996 Stock Plan.
 
        A total of 2,470,000 shares of common stock issued in 1996 to three of
StarPoint's founders and a consultant are subject to certain repurchase rights
held by StarPoint. Such repurchase rights lapse 10% immediately, 15% in August
1997, and the remainder ratably over 48 months beginning in September 1997. As
of May 31, 1997, 2,223,000 shares of common stock are subject to repurchase by
StarPoint at the original purchase price of $0.01 per share.
 
    STOCK OPTION PLANS
 
        StarPoint has elected to follow APB Opinion No. 25, and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123, "ACCOUNTING FOR STOCK-BASED
COMPENSATION" (FAS 123), requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB Opinion 25, when
the exercise price of StarPoint's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized.
 
        During the period from August 8, 1996 (inception) through May 31, 1997,
StarPoint adopted the 1996 Stock Plan (the Plan). Under the Plan, up to 741,000
shares of StarPoint's common stock may be
 
                                      F-31
<PAGE>
                            STARPOINT SOFTWARE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
5.  SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY) (CONTINUED)
granted to directors, employees, and certain consultants. Under the Plan,
options to purchase common stock may be granted at no less than 100% of the fair
value on the date of the grant as determined by the Board of Directors. Options
generally vest over a 48-month period and have a maximum term of ten years.
 
<TABLE>
<CAPTION>
                                                                         WEIGHTED
                                 SHARES                                   AVERAGE
                                AVAILABLE      OPTIONS      PRICE PER    EXERCISE
                                FOR GRANT    OUTSTANDING      SHARE        PRICE
                               -----------  -------------  -----------  -----------
<S>                            <C>          <C>            <C>          <C>
Shares authorized............     741,000            --    $        --   $      --
                                                           $    0.03 -
Options granted..............    (174,000)      174,000          $0.12   $    0.07
Options canceled.............       4,000        (4,000)   $      0.07   $    0.07
                               -----------  -------------
                                                           $    0.03 -
Balance at May 31, 1997......     571,000       170,000          $0.12   $    0.07
                               -----------  -------------
                               -----------  -------------
</TABLE>
 
        All outstanding options to purchase common stock of StarPoint were
exercisable at May 31, 1997. As of May 31, 1997, options to purchase 7,292
shares of common stock were vested. The weighted average remaining contractual
life of those options is approximately 9.7 years.
 
        Pro forma information regarding net income (loss) is required by FAS
123, which also requires that the information be determined as if StarPoint has
accounted for its employee stock options granted subsequent to December 31, 1994
under the fair value method of FAS 123. The fair value of these options was
estimated at the date of grant using the minimum-value method option-pricing
model. The following weighted average assumptions were used for the period ended
May 31, 1997: (i) a risk-free interest rate of 5%, (ii) a dividend yield of
zero, and (iii) a weighted average expected life of the option of four years.
The weighted average fair value of options granted during 1997 was $0.03.
 
        The effect of applying FAS 123 to StarPoint's stock option awards
resulted in a pro forma net loss of $1,066,915 for the period from August 8,
1996 (inception) through May 31, 1997.
 
6.  INCOME TAXES
 
        As of May 31, 1997, StarPoint had federal and state net operating loss
carryforwards of approximately $1,100,000. The net operating loss carryforwards
will expire at various dates beginning in 2005 through 2012, if not utilized.
 
        Utilization of the net operating losses may, in the future, be subject
to a substantial annual limitation due to the "change in ownership" provisions
of the Internal Revenue Code of 1986, as amended, and similar state provisions.
The annual limitation may result in the expiration of net operating losses
before utilization.
 
        As of May 31, 1997, StarPoint had deferred tax assets of approximately
$400,000. The net deferred tax asset has been fully offset by a valuation
allowance. The net valuation allowance increased by $400,000 during the period
from August 8, 1996 (inception) through May 31, 1997. Deferred tax assets
primarily relate to net operating loss carryforwards.
 
                                      F-32
<PAGE>
                            STARPOINT SOFTWARE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
7.  SUBSEQUENT EVENTS
 
        In June and October 1997, StarPoint amended the terms of the convertible
promissory notes to allow the holders to convert the outstanding principal and
accrued interest into Series B preferred stock at a conversion price of $0.60
per share upon the earlier of the maturity date or a change in control.
 
        In June, July, and October 1997, StarPoint received funding from
investors secured by convertible promissory notes payable totaling $192,500. The
notes bear interest at 6.5% and mature on demand or on the stated maturity date,
which is from June 13, 1998 to October 16, 1998. The promissory notes are
convertible into preferred stock at the then fair market value of such stock. In
connection with the convertible promissory notes issued, StarPoint has issued
warrants to purchase $96,250 of preferred stock at an exercise price equal to
the lower of $2.00 or the issuance price of the preferred stock at the time of
the financing.
 
        In December 1997, StarPoint entered into a definitive agreement to merge
with AdForce, Inc. (formerly Imgis, Inc.), a company providing a comprehensive
service infrastructure that facilitates the planning, scheduling, targeting,
delivery, monitoring, analysis, reporting of, and accounting for advertising on
the Internet. The merger became effective on February 13, 1998 and was accounted
for as a purchase by AdForce, Inc. AdForce, Inc. assumed all assets and
liabilities of StarPoint, issued 877,834 shares of common stock in exchange for
all outstanding common stock of StarPoint, and issued 309,738 shares of Series C
preferred stock for all outstanding preferred stock of StarPoint.
 
                                      F-33
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                                        SHARES
 
                                     [LOGO]
 
                                  COMMON STOCK
 
                                ---------------
 
                                   PROSPECTUS
 
                                ---------------
 
                               HAMBRECHT & QUIST
 
                                LEHMAN BROTHERS
 
                          VOLPE BROWN WHELAN & COMPANY
 
                           CHARLES SCHWAB & CO., INC.
 
                                   ---------
 
                                         , 1999
 
                                 --------------
 
        YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.
 
        NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES
TO PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF
THIS PROSPECTUS IN THAT JURISDICTION. PERSONS WHO COME INTO POSSESSION OF THIS
PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED TO INFORM
THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO THIS OFFERING AND THE
DISTRIBUTION OF THIS PROSPECTUS APPLICABLE TO THAT JURISDICTION.
 
        UNTIL         , 1999, ALL DEALERS THAT BUY, SELL OR TRADE IN OUR COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
        The expenses to be paid by the Registrant in connection with this
offering are as follows. All amounts other than the Securities and Exchange
Commission registration fee, the NASD filing fee and the Nasdaq National Market
application fee are estimates.
 
<TABLE>
<S>                                                                  <C>
Securities and Exchange Commission registration fee................  $  15,290
NASD filing fee....................................................      6,000
Nasdaq National Market listing fee.................................     95,000
Printing and engraving expenses....................................      *
Legal fees and expenses............................................      *
Accounting fees and expenses.......................................      *
Blue sky fees and expenses.........................................      *
Transfer agent and registrar fees and expenses.....................      *
Road show expenses.................................................      *
Miscellaneous......................................................      *
                                                                     ---------
  Total............................................................  $   *
                                                                     ---------
                                                                     ---------
</TABLE>
 
------------------------
 
*To be completed by amendment.
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
        Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act").
 
        As permitted by the Delaware General Corporation Law, the Registrant's
Second Amended and Restated Certificate of Incorporation, which will become
effective upon the closing of this offering, includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Registrant or its stockholders, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) under section 174 of the Delaware General
Corporation Law (regarding unlawful dividends and stock purchases) or (iv) for
any transaction from which the director derived an improper personal benefit.
 
        As permitted by the Delaware General Corporation Law, the Bylaws of the
Registrant provide that (i) the Registrant is required to indemnify its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law, provided that any indemnified officer and director acted in
good faith and in a manner which such officer and director reasonably believed
to be in or not opposed to the Registrant's best interests, (ii) the Registrant
may indemnify its other employees and agents as set forth in the Delaware
General Corporation Law, (iii) the Registrant is required to advance expenses,
as incurred, to its directors and officers in connection with a legal proceeding
to the fullest extent permitted by the Delaware General Corporation Law, subject
to certain very limited exceptions and (iv) the rights conferred in the Bylaws
are not exclusive.
 
        The Registrant intends to enter into Indemnification Agreements with
each of its current directors and officers to give such directors and officers
additional contractual assurances regarding the scope of the indemnification set
forth in the Registrant's Second Amended and Restated Certificate of
 
                                      II-1
<PAGE>
Incorporation and to provide additional procedural protections. At present,
there is no pending litigation or proceeding involving a director, officer or
employee of the Registrant regarding which indemnification is sought, nor is the
Registrant aware of any threatened litigation that may result in claims for
indemnification.
 
        Reference is also made to Section 7 of the Underwriting Agreement, which
provides for the indemnification of officers, directors and controlling persons
of the Registrant against certain liabilities. The indemnification provision in
the Registrant's Second Amended and Restated Certificate of Incorporation,
Bylaws and the Indemnification Agreements entered into between the Registrant
and each of its directors and officers may be sufficiently broad to permit
indemnification of the Registrant's directors and officers for liabilities
arising under the Securities Act.
 
        The Registrant, with approval by the Registrant's Board of Directors,
expects to obtain directors' and officers' liability insurance.
 
        See also the undertakings set out in response to Item 17.
 
        Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
 
<TABLE>
<CAPTION>
DOCUMENT                                                     EXHIBIT NUMBER
-----------------------------------------------------------  ---------------
<S>                                                          <C>
Underwriting Agreement (draft dated March  , 1999).........         1.1
Registrant's First Amended and Restated Certificate of
  Incorporation............................................         3.1
Registrant's Second Amended and Restated Certificate of
  Incorporation to be effective upon the closing of the
  offering.................................................         3.2
Registrant's Bylaws, as amended............................         3.3
Form of Indemnity Agreement to be entered into between the
  Registrant and its executive officers and directors......        10.1
</TABLE>
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES.
 
        The following table sets forth information regarding all securities sold
by the Registrant, or its California predecessor, since its incorporation on
January 16, 1996. Reference to warrants below assume full exercise of all
warrants. All preferred stock numbers are presented on an as-converted to common
stock basis, and all common stock numbers have been adjusted retroactively to
reflect a two-for-one stock-split that occurred in February 1998.
 
<TABLE>
<CAPTION>
                                                                                     AGGREGATE
                                                                         NUMBER OF   PURCHASE
CLASS OF PURCHASERS          DATE OF SALE       TITLE OF SECURITIES(1)   SECURITIES    PRICE     FORM OF CONSIDERATION
------------------------  -------------------  ------------------------  ---------  -----------  ------------------------
<S>                       <C>                  <C>                       <C>        <C>          <C>
4 shareholders            April 26, 1996       Common Stock              3,720,000  $    18,600  Assignment of software
                                                                                                 and cash
5 investors               May 30, 1996         Series B Preferred          220,000      550,000  Cash
                                               Stock(2)
IBL Corporation           July 15, 1996        Warrant to purchase              --           --  --(3)
                                               123,400 shares of Common
                                               Stock
2 former employees        August 7, 1996       Common Stock                  3,000           15  Cash
AMGIT Marketing, Inc.     December 2, 1996     Warrant to purchase              --           --  --(4)
                                               400,000 shares of Common
                                               Stock
2 investors               December 5, 1996     Series A Preferred Stock  1,200,914    1,503,500  Cancellation of debt
                                                                                                 owed by AdForce
6 investors               December 5, 1996     Series B Preferred Stock  2,054,636    2,578,568  Cash
</TABLE>
 
                                      II-2
<PAGE>
<TABLE>
<CAPTION>
                                                                                     AGGREGATE
                                                                         NUMBER OF   PURCHASE
CLASS OF PURCHASERS          DATE OF SALE       TITLE OF SECURITIES(1)   SECURITIES    PRICE     FORM OF CONSIDERATION
------------------------  -------------------  ------------------------  ---------  -----------  ------------------------
<S>                       <C>                  <C>                       <C>        <C>          <C>
2 investors               March 26, 1997       Warrant to purchase              --           --  --(5)
                                               55,778 shares of Series
                                               B Preferred Stock
BridgeGate Group          April 28, 1997       Warrant to purchase              --           --  --(6)
                                               6,142 shares of Common
                                               Stock
Arun Swami                June 4, 1997         Common Stock                  2,400          600  Services Rendered
6 investors               July 2, 1997         Series C Preferred Stock  1,733,616    4,100,002  Cash
2 investors               November 25, 1997    Series C Preferred Stock    816,384    1,930,748  Cash
Comdisco, Inc.            December 2, 1997     Warrant to purchase              --           --  --(7)
                                               73,996 shares of Series
                                               C Preferred Stock
2 investors               December 17, 1997    Warrant to purchase              --           --  --(8)
                                               44,398 shares of Series
                                               C Preferred Stock
Convergence Ventures I,   February 3, 1998     Series C Preferred Stock     60,994      144,251  Cash
L.P.
Convergence               February 3, 1998     Series C Preferred Stock     42,284      100,002  Cash
Entrepreneurs Fund I,
L.P.
9 shareholders            February 13, 1998    Common Stock                877,834           --  Exchange for Common
                                                                                                 Stock of StarPoint
                                                                                                 Software, Inc.(9)
17 shareholders           February 13, 1998    Series C Preferred Stock    619,476           --  Exchange for Preferred
                                                                                                 Stock of StarPoint
                                                                                                 Software, Inc.(9)
Comdisco, Inc.            March 6, 1998        Series C Preferred Stock     21,142       50,000  Cash
19 investors              April 27, 1998       Series D Preferred Stock  1,457,532   10,005,977  Cash and cancellation of
                                                                                                 debt owed by AdForce
19 investors              July 15, 1998        Warrant to purchase              --           --  --(10)
                                               72,860 shares of Series
                                               D Preferred Stock
America Online, Inc.      July 15, 1998        Series E Preferred Stock  1,456,664    9,999,998  Cash
America Online, Inc.      July 15, 1998        Warrant to purchase              --           --  --(11)
                                               1,019,662 shares of
                                               Series E Preferred Stock
AMGIT Marketing, Inc.     September 4, 1998    Exercise of warrant to      400,000        2,000  Cash
                                               purchase Common Stock
Jane Anderson             September 17, 1998   Common Stock                    960        1,440  Services rendered
Communications
Comdisco, Inc.            September 29, 1998   Warrant to purchase              --           --  --(12)
                                               21,850 shares of Series
                                               D Preferred Stock
Jane Anderson             October 28, 1998     Series D Preferred Stock      2,604       17,876  Services rendered
Communications
Ulrich Schmidt            October 28, 1998     Series D Preferred Stock        872        5,986  Cash
</TABLE>
 
                                      II-3
<PAGE>
<TABLE>
<CAPTION>
                                                                                     AGGREGATE
                                                                         NUMBER OF   PURCHASE
CLASS OF PURCHASERS          DATE OF SALE       TITLE OF SECURITIES(1)   SECURITIES    PRICE     FORM OF CONSIDERATION
------------------------  -------------------  ------------------------  ---------  -----------  ------------------------
<S>                       <C>                  <C>                       <C>        <C>          <C>
Officers, directors,      January 16, 1996 to  Exercise of options to    1,457,525  $   215,169  Cash(13)
employees and other       December 31, 1998    purchase Common Stock
eligible participants
</TABLE>
 
------------------------------
 
*   As part of the reincorporation of AdForce into Delaware, AdForce exchanged
                shares of its Common Stock,             shares of its
    convertible preferred stock and warrants to purchase             shares of
    its convertible preferred stock for             shares of Common Stock,
                shares of preferred stock and warrants to purchase
    shares of preferred stock, respectively.
 
(1)  Each share of Series A, Series B, Series C, Series D, and Series E
    Preferred Stock will convert automatically into two shares of common stock,
    respectively, upon the consummation of this offering.
 
(2)  Converted to Common Stock on December 5, 1996 as a condition to the Series
    B Preferred Stock financing.
 
(3)  Issued to IBL Corporation as consideration for a loan and terminated on
    December 5, 1996 as a condition to the Series B1 Preferred Stock financing.
 
(4)  In connection with a joint venture with AMGIT Marketing, Inc. to develop
    certain research and information products for database application services,
    AdForce granted AMGIT an option to purchase 400,000 shares of Common Stock
    in exchange for a 50% interest in a joint venture.
 
(5)  Issued to Venture Lending & Leasing Inc. and Robert Kingsbook as additional
    consideration to establish a credit line for acquisition of equipment and
    other corporate purposes.
 
(6)  Issued to BridgeGate Group as additional consideration for consulting
    services performed for AdForce.
 
(7)  Issued to Comdisco, Inc. as additional consideration to establish a credit
    line for equipment acquisitions.
 
(8)  Issued to Venture Lending & Leasing Inc. and Robert Kingsbook as additional
    consideration to establish a credit line for acquisition of equipment and
    other corporate purposes.
 
(9)  In connection with AdForce's acquisition of StarPoint, AdForce exchanged
    877,834 shares of Common Stock for StarPoint's Common Stock and 619,476
    shares (as converted to Common Stock basis) of Series C Preferred Stock for
    StarPoint's Preferred Stock.
 
(10) Issued to the holders of the Series D Preferred Stock in connection with
    the closing of the Series E Preferred Stock financing on July 15, 1998.
 
(11) Issued to America Online, Inc. in connection with AdForce's Series E
    Preferred Stock financing on July 15, 1998.
 
(12) Issued to Comdisco, Inc. as additional consideration for the extension of a
    credit line for equipment acquisitions.
 
(13) With respect to the grant of stock options, exemption from registration
    under the Securities Act was unnecessary in that none of such transactions
    involved a "sale" of securities as such term is used in Section 2(3) of the
                                  Securities Act.
 
                               ------------------
 
        All sales of common stock made pursuant to the exercise of stock options
were made in reliance on Rule 701 under the Securities Act or on Section 4(2) of
the Securities Act.
 
        All other sales were made in reliance on Section 4(2) of the Securities
Act and/or Regulation D promulgated under the Securities Act. These sales were
made without general solicitation or advertising. Each purchaser was a
sophisticated investor with access to all relevant information necessary to
evaluate the investment and represented to the Registrant that the shares were
being acquired for investment.
 
                                      II-4
<PAGE>
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
    (a)  The following exhibits are filed herewith:
 
<TABLE>
<CAPTION>
DOCUMENT                                                                              NUMBER
----------------------------------------------------------------------------------  -----------
<S>                                                                                 <C>
Underwriting Agreement (draft dated March  , 1999)................................         1.1
 
Agreement and Plan of Reorganization by and between Imgis, Inc. and StarPoint
  Software, Inc. dated December 19, 1997..........................................         2.1
 
Agreement and Plan of Merger by and between the Registrant and Imgis, Inc. dated
  February  , 1998................................................................         2.2
 
Registrant's First Amended and Restated Certificate of Incorporation..............         3.1
 
Registrant's Second Amended and Restated Certificate of Incorporation to be
  effective upon the closing of the offering......................................         3.2
 
Registrant's Bylaws, as amended...................................................         3.3
 
Specimen Stock Certificate........................................................         4.1+
 
Amended and Restated Investors' Rights Agreement by and between Imgis, Inc. and
  certain investors dated as of July 15, 1998.....................................         4.2
 
Amended and Restated Voting Agreement by and between Imgis, Inc. and certain
  investors dated as of July 15, 1998.............................................         4.3
 
Opinion of Fenwick & West LLP.....................................................         5.1+
 
Form of Indemnity Agreement to be entered into between the Registrant and its
  executive officers and directors................................................        10.1+
 
StarPoint Software, Inc. 1996 Stock Plan..........................................        10.2
 
Imgis, Inc. 1997 Stock Plan.......................................................        10.3
 
Registrant's 1999 Equity Incentive Plan and associated documents..................        10.4+
 
Registrant's 1999 Directors' Stock Option Plan and associated documents...........        10.5+
 
Registrant's 1999 Employee Stock Purchase Plan and associated documents...........        10.6+
 
Sublease by and between Concentric Network Corporation and Imgis, Inc. dated
  February 12, 1999...............................................................        10.7
 
Office Lease by and between De Anza Plaza II, LLC and Imgis, Inc. dated May 29,
  1998............................................................................        10.8
 
Office Lease Agreement between Imgis, Inc., and Two Town Center Associates dated
  December 20, 1996...............................................................        10.9+
 
First Amendment to Office Lease Agreement between Imgis, Inc. and Two Town Center
  Associates dated February 18, 1998..............................................        10.10
 
Letter Agreement between Imgis, Inc. and Charles W. Berger dated June 27, 1997....        10.11
 
Letter Agreement between Imgis, Inc. (dba "AdForce") and Charles W. Berger dated
  November 19, 1998...............................................................        10.12
 
Letter Agreement between Imgis, Inc. (dba "AdForce") and Harish S. Rao dated
  December 11, 1998...............................................................        10.13
 
Employment Agreement between Imgis, Inc. (dba "AdForce") and John A. Tanner dated
  December 9, 1998................................................................        10.14
 
Letter Agreement between Imgis, Inc. (dba "AdForce") and A. Dee Cravens dated
  January 21, 1999................................................................        10.15
</TABLE>
 
                                      II-5
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT                                                                              NUMBER
----------------------------------------------------------------------------------  -----------
<S>                                                                                 <C>
Letter Agreement between Imgis, Inc. (dba "AdForce") and Anthony P. Glaves dated
  December 28, 1998, as revised in December 31, 1998..............................        10.16
 
Letter Agreement between Imgis, Inc. and Rex S. Jackson dated July 22, 1998.......        10.17
 
Settlement Agreement between Imgis, Inc. (dba "AdForce") and Chad Steelberg dated
  November 20, 1998...............................................................        10.18
 
Loan Agreement between Imgis, Inc. and Venture Lending & Leasing, Inc. dated March
  26, 1997........................................................................        10.19
 
Loan and Security Agreement between Imgis, Inc. and Venture Lending & Leasing,
  Inc. dated December 16, 1997....................................................        10.20
 
Loan and Security Agreement between Imgis, Inc. and Venture Lending & Leasing II,
  Inc. dated December 16, 1997....................................................        10.21
 
Master Lease Agreement between Imgis, Inc. and Comdisco, Inc. dated December 2,
  1997............................................................................        10.22
 
Service Agreement between Imgis, Inc. and GeoCities dated May 14, 1998............        10.23**
 
Software License and Support Agreement between StarPoint Software, Inc. and
  GeoCities dated July 11, 1997...................................................        10.24**
 
Settlement Agreement between Imgis, Inc. and 24/7 Media, Inc. dated May 28,
  1998............................................................................        10.25**+
 
Services Agreement between Imgis, Inc. and 2CAN Media dated August 25, 1998.......        10.26**
 
Services Agreement between Imgis, Inc. and Netscape Communications, Inc. dated
  August 1, 1998..................................................................        10.27**
 
Demographic Data Agreement by and between America Online, Inc. and Imgis, Inc.
  dated as of July 15, 1998.......................................................        10.28**
 
License Agreement by and between America Online, Inc. and Imgis, Inc. dated as of
  July 15, 1998...................................................................        10.29**
 
Consent of Fenwick & West LLP (included in Exhibit 5.1)...........................        23.1+
 
Consent of Ernst & Young LLP, independent auditors................................        23.2
 
Power of Attorney (see Page II-5 of this Registration Statement)..................        24.1
 
Financial Data Schedule...........................................................        27.1
</TABLE>
 
------------------------
 
+   To be supplied by amendment.
 
**  Confidential treatment has been requested.
 
    (b) The following financial data schedule is filed herewith:
 
        Schedule II-- Valuation and Qualifying Accounts.
 
        All other financial statement schedules are omitted because the
information called for is not required or is shown either in the financial
statements or the notes thereto.
 
ITEM 17.  UNDERTAKINGS.
 
        The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.
 
        Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under
 
                                      II-6
<PAGE>
Item 14 above, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
 
        The undersigned Registrant hereby undertakes that:
 
        (1) For purposes of determining any liability under the Securities Act,
    the information omitted from the form of prospectus filed as part of this
    Registration Statement in reliance upon Rule 430A and contained in a form of
    prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
    497(h) under the Securities Act shall be deemed to be part of this
    Registration Statement as of the time it was declared effective.
 
        (2) For the purpose of determining any liability under the Securities
    Act, each post-effective amendment that contains a form of prospectus shall
    be deemed to be a new registration statement relating to the securities
    offered therein, and the offering of such securities at that time shall be
    deemed to be the initial bona fide offering thereof.
 
                                      II-7
<PAGE>
                                   SIGNATURES
 
        Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cupertino, State of
California, on the 26th day of February 1999.
 
<TABLE>
<S>                             <C>  <C>
                                ADFORCE, INC.
 
                                By:  /s/ CHARLES W. BERGER
                                     -----------------------------------------
                                     Charles W. Berger
                                     Chief Executive Officer, President and
                                     Chairman of the Board
</TABLE>
 
                               POWER OF ATTORNEY
 
        KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Charles W. Berger and John A. Tanner, and
each of them, his true and lawful attorneys-in-fact and agents with full power
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to sign any registration statement for the
same offering covered by the Registration Statement that is to be effective upon
filing pursuant to Rule 462(b) promulgated under the Securities Act, and all
post-effective amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done or by
virtue hereof.
 
        Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
 
<TABLE>
<CAPTION>
             NAME                         TITLE                    DATE
------------------------------  --------------------------  -------------------
 
<C>                             <S>                         <C>
PRINCIPAL EXECUTIVE OFFICER:
 
/s/ CHARLES W. BERGER           Chief Executive Officer,     February 26, 1999
----------------------------    President and Chairman of
Charles W. Berger               the Board
 
PRINCIPAL FINANCIAL OFFICER
AND
PRINCIPAL ACCOUNTING OFFICER:
 
/s/ JOHN A. TANNER              Executive Vice President     February 26, 1999
----------------------------    and Chief Financial
John A. Tanner                  Officer
</TABLE>
 
                                      II-8
<PAGE>
<TABLE>
<CAPTION>
             NAME                         TITLE                    DATE
------------------------------  --------------------------  -------------------
 
<C>                             <S>                         <C>
ADDITIONAL DIRECTORS:
 
/s/ ERIC DI BENEDETTO           Director                     February 26, 1999
----------------------------
Eric Di Benedetto
 
/s/ MARK P. GORENBERG           Director                     February 26, 1999
----------------------------
Mark P. Gorenberg
 
/s/ J. NEIL WEINTRAUT           Director                     February 26, 1999
----------------------------
J. Neil Weintraut
 
/s/ DIRK A. WRAY                Director                     February 26, 1999
----------------------------
Dirk A. Wray
</TABLE>
 
                                      II-9
<PAGE>
                                    ADFORCE
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                    DECEMBER 31, 1997 AND DECEMBER 31, 1998
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                  AMOUNTS
                                                                                CHARGED TO
                                                                  BALANCE AT     REVENUE,
                                                                 BEGINNING OF    COSTS, OR   WRITE-OFFS AND   BALANCE AT
                                                                     YEAR        EXPENSES      RECOVERIES     END OF YEAR
                                                                 -------------  -----------  ---------------  -----------
<S>                                                              <C>            <C>          <C>              <C>
1997
  Allowance for Doubtful Accounts..............................    $      --     $     131      $      --      $     131
1998
  Allowance for Doubtful Accounts..............................    $     131     $   1,355      $     451      $   1,035
</TABLE>
 
                                      S-1
<PAGE>
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
                                                                                      EXHIBIT
EXHIBIT TITLE                                                                         NUMBER
----------------------------------------------------------------------------------  -----------
<S>                                                                                 <C>
Underwriting Agreement (draft dated March  , 1999)................................         1.1
 
Agreement and Plan of Reorganization by and between Imgis, Inc. and StarPoint
  Software, Inc. dated December 19, 1997..........................................         2.1
 
Agreement and Plan of Merger by and between the Registrant and Imgis, Inc. dated
  February  , 1998................................................................         2.2
 
Registrant's First Amended and Restated Certificate of Incorporation..............         3.1
 
Registrant's Second Amended and Restated Certificate of Incorporation to be
  effective upon the closing of the offering......................................         3.2
 
Registrant's Bylaws, as amended...................................................         3.3
 
Specimen Stock Certificate........................................................         4.1+
 
Amended and Restated Investors' Rights Agreement by and between Imgis, Inc. and
  certain investors dated as of July 15, 1998.....................................         4.2
 
Amended and Restated Voting Agreement by and between Imgis, Inc. and certain
  investors dated as of July 15, 1998.............................................         4.3
 
Opinion of Fenwick & West LLP.....................................................         5.1+
 
Form of Indemnity Agreement to be entered into between the Registrant and its
  executive officers and directors................................................        10.1+
 
StarPoint Software, Inc. 1996 Stock Plan..........................................        10.2
 
Imgis, Inc. 1997 Stock Plan.......................................................        10.3
 
Registrant's 1999 Equity Incentive Plan and associated documents..................        10.4+
 
Registrant's 1999 Directors' Stock Option Plan and associated documents...........        10.5+
 
Registrant's 1999 Employee Stock Purchase Plan and associated documents...........        10.6+
 
Sublease by and between Concentric Network Corporation and Imgis, Inc. dated
  February 12, 1999...............................................................        10.7
 
Office Lease by and between De Anza Plaza II, LLC and Imgis, Inc. dated May 29,
  1998............................................................................        10.8
 
Office Lease Agreement between Imgis, Inc., and Two Town Center Associates dated
  December 20, 1996...............................................................        10.9+
 
First Amendment to Office Lease Agreement between Imgis, Inc. and Two Town Center
  Associates dated February 18, 1998..............................................        10.10
 
Letter Agreement between Imgis, Inc. and Charles W. Berger dated June 27, 1997....        10.11
 
Letter Agreement between Imgis, Inc. (dba "AdForce") and Charles W. Berger dated
  November 19, 1998...............................................................        10.12
 
Letter Agreement between Imgis, Inc. (dba "AdForce") and Harish S. Rao dated
  December 11, 1998...............................................................        10.13
 
Employment Agreement between Imgis, Inc. (dba "AdForce") and John A. Tanner dated
  December 9, 1998................................................................        10.14
 
Letter Agreement between Imgis, Inc. (dba "AdForce") and A. Dee Cravens dated
  January 21, 1999................................................................        10.15
 
Letter Agreement between Imgis, Inc. (dba "AdForce") and Anthony P. Glaves dated
  December 28, 1998, as revised in December 31, 1998..............................        10.16
 
Letter Agreement between Imgis, Inc. and Rex S. Jackson dated July 22, 1998.......        10.17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                      EXHIBIT
EXHIBIT TITLE                                                                         NUMBER
----------------------------------------------------------------------------------  -----------
<S>                                                                                 <C>
Settlement Agreement between Imgis, Inc. (dba "AdForce") and Chad Steelberg dated
  November 20, 1998...............................................................        10.18
 
Loan Agreement between Imgis, Inc. and Venture Lending & Leasing, Inc. dated March
  26, 1997........................................................................        10.19
 
Loan and Security Agreement between Imgis, Inc. and Venture Lending & Leasing,
  Inc. dated December 16, 1997....................................................        10.20
 
Loan and Security Agreement between Imgis, Inc. and Venture Lending & Leasing II,
  Inc. dated December 16, 1997....................................................        10.21
 
Master Lease Agreement between Imgis, Inc. and Comdisco, Inc. dated December 2,
  1997............................................................................        10.22
 
Service Agreement between Imgis, Inc. and GeoCities dated May 14, 1998............        10.23**
 
Software License and Support Agreement between StarPoint Software, Inc. and
  GeoCities dated July 11, 1997...................................................        10.24**
 
Settlement Agreement between Imgis, Inc. and 24/7 Media, Inc. dated May 28,
  1998............................................................................        10.25**+
 
Services Agreement between Imgis, Inc. and 2CAN Media dated August 25, 1998.......        10.26**
 
Services Agreement between Imgis, Inc. and Netscape Communications, Inc. dated
  August 1, 1998..................................................................        10.27**
 
Demographic Data Agreement by and between America Online, Inc. and Imgis, Inc.
  dated as of July 15, 1998.......................................................        10.28**
 
License Agreement by and between America Online, Inc. and Imgis, Inc. dated as of
  July 15, 1998...................................................................        10.29**
 
Consent of Fenwick & West LLP (included in Exhibit 5.1)...........................        23.1+
 
Consent of Ernst & Young LLP, independent auditors................................        23.2
 
Power of Attorney (see Page II-5 of this Registration Statement)..................        24.1
 
Financial Data Schedule...........................................................        27.1
</TABLE>
 
------------------------
 
+   To be supplied by amendment.
 
**  Confidential treatment has been requested.
