As filed with the Securities and Exchange Commission on January 26, 2000
Registration No. 333-

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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REPLAYTV, INC.
(Exact Name of Registrant as Specified in Its Charter)

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Delaware 4841 77-0465127

(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)

1945 Charleston Road
Mountain View, CA 94043-1201
(650) 210-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

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Earle H. "Kim" LeMasters, III
Chairman and Chief Executive Officer
ReplayTV, Inc.
1945 Charleston Road
Mountain View, CA 94043-1201
(650) 210-1000
(Name, Address Including Zip Code, and Telephone Number Including Area Code,
of Agent for Service)

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Copies to:

Mark A. Medearis Richard J. Sandler
Laura A. Donald DAVIS POLK & WARDWELL
Kristen A. Lamb 450 Lexington Avenue
Scott S. Ring New York, NY 10017
VENTURE LAW GROUP (212) 450-4000
A Professional Corporation
2800 Sand Hill Road
Menlo Park, CA 94025
(650) 854-4488

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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CALCULATION OF REGISTRATION FEE

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Title Of Each Class Of Securities To Be Registered Proposed Maximum Aggregate Offering Price(1) Amount Of Registration Fee
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Common Stock, par value $0.001.................... $150,000,000 $39,600
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(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(a) and Rule 457(o) under the
Securities Act.

The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and we are not soliciting offers to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

PROSPECTUS (Subject to Completion)
Issued January 26, 2000

[ReplayTV logo]

COMMON STOCK

-----------

We are offering shares of our common stock. This is our initial
public offering and no public market exists for our shares. We anticipate that
the initial public offering price will be between $ and $ per share.

-----------

We have applied to list our common stock on the Nasdaq National Market under
the trading symbol "RPLY."

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Investing in our common stock involves risks. See "Risk Factors" beginning on
page 10.

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PRICE $ A SHARE

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Price to Underwriting Discounts Proceeds to
Public and Commissions ReplayTV
-------- ---------------------- -----------

Per Share............... $ $ $
Total................... $ $ $

We have granted the underwriters the right to purchase up to an additional
shares of common stock to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers
on , 2000.

-----------

MORGAN STANLEY DEAN WITTER
BEAR, STEARNS & CO. INC.
CHASE H&Q
DEUTSCHE BANC ALEX. BROWN
WASSERSTEIN PERELLA SECURITIES, INC.

, 2000

[INSIDE FRONT COVER]

[COLOR ARTWORK]

TABLE OF CONTENTS

Page
----

Special Note About Forward-Looking Statements ........................... 4
Prospectus Summary ...................................................... 5
Risk Factors ............................................................ 10
Use of Proceeds ......................................................... 22
Dividend Policy ......................................................... 22
Capitalization .......................................................... 23
Dilution ................................................................ 24
Selected Financial Data ................................................. 25
Management's Discussion and Analysis of Financial Condition and Results
of Operations .......................................................... 26
Business ................................................................ 32
Management .............................................................. 47
Related Party Transactions .............................................. 57
Principal Stockholders .................................................. 60
Description of Capital Stock ............................................ 62
Shares Eligible for Future Sale ......................................... 65
Underwriters ............................................................ 67
Legal Matters ........................................................... 69
Experts ................................................................. 69
Additional Information Available to You ................................. 69
Index to Financial Statements............................................ F-1

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from the
information contained in this prospectus. We are offering to sell, and seeking
offers to buy, the 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 when this prospectus is
delivered or when any sale of our common stock occurs.

Until , 2000, all dealers that buy, sell or trade shares of
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.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this prospectus, including the
section entitled "Management's Discussion and Analysis of Financial Condition
and Result of Operations," that are based on our management's beliefs and
assumptions and on information currently available to our management. Forward-
looking statements include the information concerning our possible or assumed
future results of operations, business strategies, financing plans,
competitive position, potential growth opportunities, benefits resulting from
this offering and the effects of competition. Forward-looking statements
include all statements that are not historical facts and can be identified by
the use of forward-looking terminology such as the words "believes,"
"expects," "anticipates," "intends," "plans," "estimates" or similar
expressions.

Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these forward-
looking statements. You should not put undue reliance on any forward-looking
statements. We do not have any intention or obligation to update forward-
looking statements after we distribute this prospectus.

You should understand that many important factors, in addition to those
discussed elsewhere in this prospectus, could cause our results to differ
materially from those expressed in forward-looking statements. These factors
include our competitive environment, economic and other conditions in the
markets in which we operate, consumer and retailer preferences, alternative
technological advances, prices and supplies of components and cyclical and
seasonal fluctuations in our operating results.

PROSPECTUS SUMMARY

This summary highlights selected information in this prospectus, but it may
not contain all of the information that is important to you. To better
understand this offering, and for a more complete description of this offering,
you should read this entire prospectus carefully, including the "Risk Factors"
section and the financial statements and the notes to those statements, which
are included elsewhere in this prospectus. References in this prospectus to
"we," "our," "us" and the "Company" refer to ReplayTV, Inc. Information
contained in our web site, located at www.replaytv.com, does not constitute
part of this prospectus.

REPLAYTV

ReplayTV empowers television viewers to watch what they want when they want.
We have developed the ReplayTV Service as a living room portal through which
viewers can easily access, navigate, control and store television programming.
We believe the ReplayTV Service will transform the way consumers access
television programming, advertising and, ultimately, commerce services. We
believe our portal creates a new, more effective medium for advertisers,
content providers and cable and satellite system operators to target consumers.
Based on ReplayTV-sponsored survey data, viewers using the ReplayTV Service
watch and record more hours of television per week and find television viewing
more appealing than before using the ReplayTV Service. We believe this is
because the ReplayTV Service gives viewers greater choice and more control over
their television viewing.

The ReplayTV Service is currently delivered through a personal video
recorder, or PVR, designed and developed by us. The PVR is a device connected
to a television that employs a hard disk drive, software and other technology
to digitally record and access content. Through ReplayTV's combination of
proprietary software, hardware and media relationships, viewers personalize
their television viewing. The ReplayTV Service allows viewers to set up
personal channels that automatically record their favorite shows. Programs can
then be replayed "on demand," with no tapes to search or rewind. Viewers can
also search for programs based on a theme, a specific hobby or a favorite actor
or director. ReplayTV-enabled PVRs operate with existing broadcast, cable and
satellite infrastructures. In the future, we expect that our PVR technology
will be incorporated into other television-related consumer electronics devices
that will provide access to the ReplayTV Service.

Our goal is to build a major media company that benefits viewers, content
providers, advertisers and cable and satellite system operators.

. Benefits to Viewers. Just as consumers have achieved enhanced freedom and
control over their lives through automated teller machines, cellular
phones, the Internet and 24-hour grocery stores, we believe television
viewers want greater freedom and control with respect to their television
viewing. The ReplayTV Service provides this freedom and control by
enabling viewers to: watch what they want when they want; never miss
their favorite shows; locate, capture and record the best in television
from thousands of weekly programming choices; control live TV; and enjoy
personal television services with no monthly fees.

. Benefits to Content Providers. The ReplayTV Service allows content
providers to reach an audience that may not have watched particular shows
due to constraints including conflicts between broadcast times and their
own personal schedules. ReplayTV-sponsored surveys indicate that viewers
using the ReplayTV Service watch an average of about 2.5 more hours and
record an average of about seven more hours of television each week than
before they began using the ReplayTV Service. The ReplayTV Service also
enables television programmers and broadcasters to pro-actively compile
and promote their content, thereby creating an opportunity for greater
audience growth, loyalty, recognition and measurement. In addition, the
ReplayTV Service is being developed to facilitate an entirely new
paradigm for delivering programming, products and services to viewers.
ReplayTV anticipates that viewers will be able to simply

"point and click" when ordering merchandise, movies, sports events,
programming packages, games and other products and services.

. Benefits to Advertisers. We believe that our ReplayTV Service provides
advertisers a more effective way to deliver information to consumers, a
more efficient way to spend advertising budgets and a better way to
target audiences and identify, monitor and respond to consumers'
programming and purchasing preferences. The ReplayTV Service will enable
advertisers to more effectively target consumers who have actively
selected specific programs to watch and therefore are more likely to
watch an entire show. Advertisers will also be able to target advertising
to viewers who have created theme-based ReplayTV channels based on a
specific topic, such as "tennis." ReplayTV's basic PVR architecture can
support a wide range of additional innovative advertising services. For
example, advertisers may be able to purchase new advertising spots on
recorded shows with the use of lead-in and lead-out advertisements.

. Benefits to Cable and Satellite System Operators. The ReplayTV Service
enables cable and satellite system operators to enhance the
attractiveness of their existing and anticipated services to consumers.
We believe this will enable cable and satellite system operators to
increase acceptance of new service offerings and improve growth prospects
of existing lines of business. Key benefits offered to cable and
satellite system operators include: opportunities to reduce churn and
grow subscriber bases; enhanced appeal of premium offerings; enhanced
appeal of pay-per-view offerings; and a platform for new services for
better capacity utilization.

We intend to establish our proprietary ReplayTV Service as the leading
living room portal to enrich personal television viewing, advertising and
television commerce. We anticipate that, as a media company, the majority of
our revenues will be generated from the sale of advertising on the ReplayTV
Service. We also anticipate recognizing revenue from media sponsorships,
premium and near video-on-demand services and e-commerce via television, or TV-
commerce.

Our strategy includes the following key elements that leverage the benefits
of the ReplayTV Service:

. Enhance the living room experience by establishing the ReplayTV Service
as a portal to access personal television;

. Aggressively drive rapid market penetration through our manufacturing and
distribution relationships;

. Leverage the strength of our existing media relationships to deliver and
promote content;

. Create new and innovative advertising opportunities; and

. Develop enhanced services.

We plan to leverage our media relationships to expand our advertising and
sponsorship opportunities, offer unique programming content, differentiate the
ReplayTV Service and enhance the ReplayTV brand. We are pursuing strategic
relationships with television programmers, advertising agencies and other
potential media partners. For example, we are creating theme-based or branded
content areas called ReplayZones with NBC, Showtime and Turner. Our existing
equity investors include leading media companies such as Disney, Liberty Media,
NBC, Showtime, Time Warner and Tribune.

We announced our ReplayTV Service in January 1999 and began shipment of our
PVRs in April 1999. We intend to commence full-scale retail distribution
through leading consumer electronics companies this year and are pursuing
strategic manufacturing and distribution relationships to accelerate the market
penetration of ReplayTV-enabled products and rapidly grow our installed base of
viewers. For example, we have entered into an agreement with Matsushita-
Kotobuki Electronics Industries, Ltd., or MKE, a subsidiary of Matsushita

Electric Industrial Co., Ltd., the largest manufacturer of VCRs sold in North
America. MKE will initially market and sell PVRs under the Panasonic brand
featuring the ReplayTV logo. The retail launch with MKE is expected to occur in
mid-2000, and MKE is working to develop new consumer electronics devices that
incorporate ReplayTV technology. We are also in discussions with a number of
other consumer electronics companies, cable and satellite system operators and
manufacturers of cable and satellite set-top boxes regarding the manufacture,
marketing and distribution of ReplayTV-enabled products. For example, we have
entered into a non-binding letter of intent with EchoStar Communications
Corporation to incorporate the ReplayTV Service into its DISH Network satellite
set-top boxes and a non-binding letter of intent with Sharp for the manufacture
and distribution of ReplayTV-enabled PVRs. Our existing equity investors
include leading manufacturing and multi-channel distribution companies such as
EchoStar, MKE, Sharp and Time Warner. We intend to leverage these manufacturing
and distribution relationships to accelerate our market penetration and rapidly
grow our installed base of viewers. We believe that relying on MKE and others
in the future to manufacture, market and sell ReplayTV-enabled products will
allow us to focus our creative resources on promoting and enhancing the
ReplayTV Service.

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We were incorporated in California in August 1997 and changed our name to
Replay Networks, Inc. in June 1998. We changed our name to ReplayTV, Inc. in
January 2000 and intend to reincorporate in Delaware prior to the completion of
this offering. Our principal executive offices are located at 1945 Charleston
Road, Mountain View, California 94043. Our telephone number at that location is
(650) 210-1000.

THE OFFERING

Common stock offered................................ shares
Common stock to be outstanding after this offering.. shares
Use of proceeds..................................... We intend to use the net
proceeds of this offering
for working capital and
general corporate
purposes, including:
advertising to promote
the ReplayTV Service and
the ReplayTV brand;
subsidies related to the
manufacture of ReplayTV-
enabled products; product
development; and
expansion of our sales,
marketing and service
capabilities. See "Use of
Proceeds."
Proposed Nasdaq National Market symbol.............. RPLY

The number of shares of common stock to be outstanding after this offering
is estimated based on the number of shares outstanding on December 31, 1999 on
a pro forma basis to reflect the issuance of 5,627,267shares of Series F
preferred stock in January 2000 and the automatic conversion of all shares of
preferred stock, including the shares of Series F preferred stock issued in
January 2000, outstanding as of the date of this prospectus into shares of
common stock. It excludes 18,218,561 shares subject to outstanding options or
reserved for future grants or purchases pursuant to our stock option and
purchase plans and 6,666 shares of common stock subject to an outstanding
warrant. See "Management--Stock Plans" and "Description of Capital Stock."

Except as otherwise indicated, information in this prospectus is based on
the following assumptions:

. The conversion of all outstanding shares of preferred stock, including
the shares of Series F preferred stock issued in January 2000, into
shares of common stock on a one-for-one basis upon the closing of this
offering;

. No exercise of the underwriters' over-allotment option;

. Our reincorporation into Delaware at or before the closing of this
offering; and

. The filing of our amended and restated certificate of incorporation upon
the closing of this offering.

SUMMARY FINANCIAL INFORMATION

The following table sets forth a summary of our statement of operations data
for the periods presented. Please see "Use of Proceeds," "Capitalization" and
note 1 to our financial statements for the determination of the number of
shares used in computing actual and pro forma basic and diluted net loss per
share. The statement of operations data does not give effect to the issuance of
5,627,267 shares of Series F preferred stock in January 2000 or the issuance of
shares in this offering.

Period from Nine Months Period from
August 27, 1997 Ended September August 27, 1997
(Inception) Year Ended 30, (Inception)
to December 31, December 31, ----------------- to September 30,
1997 1998 1998 1999 1999
--------------- ------------ ------- -------- ----------------
(in thousands, except per share data)

Statement of Operations
Data:
Total costs and
expenses............... $ 155 $ 3,256 $ 1,555 $ 20,459 $ 23,870
Interest income
(expense), net......... -- (28) (4) 342 314
Net loss................ (155) (3,284) (1,559) (20,117) (23,556)
Basic and diluted net
loss per share......... $(0.08) $ (0.48) $ (0.23) $ (2.73) $ (3.35)
Basic and diluted
weighted average shares
used in computation of
net loss per share..... 2,026 6,889 6,880 7,359 7,037
Pro forma basic and
diluted net loss per
share.................. $(0.29) $ (0.84)
Pro forma basic and
diluted weighted
average shares......... 11,282 23,953

The following table summarizes our balance sheet data as of September 30,
1999:

. on an actual basis;

. on a pro forma basis to reflect the issuance of 5,627,267 shares of
Series F preferred stock in January 2000 and the automatic conversion of
31,368,852 shares of preferred stock, including the shares of Series F
preferred stock issued in January 2000, outstanding as of the date of
this prospectus into 31,368,852 shares of common stock; and

. on a pro forma basis as further adjusted to reflect the sale of
shares of common stock in this offering at an assumed initial
public offering price of $ per share after deducting estimated
underwriting discounts and commissions and estimated offering expenses.

As of September 30, 1999
-----------------------------
Pro Forma
Actual Pro Forma As Adjusted
------- --------- -----------
(in thousands)

Balance Sheet Data:
Cash, cash equivalents and short-term
investments.................................... $49,840 $111,240 $
Working capital................................. 46,038 107,438
Total assets.................................... 53,406 114,806
Total stockholders' equity...................... 47,999 109,399

RISK FACTORS

This offering involves a high degree of risk. You should carefully consider
the risks and uncertainties described below and the other information in this
prospectus before deciding whether to invest in shares of our common stock. If
any of the following risks actually materialize, our business, financial
condition or operating results could be materially adversely affected. This
could cause the trading price of our common stock to decline, and you may lose
part or all of your investment.

Risks Related to Our Business

We have recognized no operating revenues, and we will need to build an
installed base and enhance the features of our ReplayTV Service before we
can generate significant advertising revenues or achieve profitability.

As a media company, we will need to generate our revenues primarily from
sales of advertising and other media services. To date, we have recognized no
operating revenues, have incurred significant losses and have had substantial
negative cash flow, and we may never achieve profitability. As of September
30, 1999, we had an accumulated deficit of $23.6 million. We expect to incur
significant operating expenses over the next several years in connection with
the continued development and expansion of our business, including substantial
expenses related to advertising and subsidies to encourage purchases of
ReplayTV-enabled products. Although we have received limited proceeds from
shipments of our personal video recorders, these proceeds are considered
incidental to our business and therefore are not recognized as revenues. We do
not expect to generate significant revenues from advertising or other services
in 2000, and we may not be able to generate significant revenues thereafter.
As a result, we expect to continue to incur significant losses and negative
cash flow for the foreseeable future. With increased expenses, we will need to
generate significant revenues to achieve profitability. Consequently, we may
never achieve profitability, and even if we do, we may not sustain or increase
profitability on a quarterly or annual basis in the future.

We cannot be sure that the ReplayTV Service will generate a broad enough
viewer base to sustain our business.

Personal television services are a new and untested media format. The
ReplayTV Service is in an early stage of development, and many viewers,
retailers and potential media, advertising, consumer electronics and
distribution partners are not aware of its benefits. As a result, it is
uncertain whether the market will accept and demand the ReplayTV Service and
ReplayTV-enabled products. We believe that establishing the ReplayTV brand is
critical to attracting and retaining viewers and to enabling us to develop key
strategic relationships and advertising revenue opportunities. Our ability to
promote broad acceptance of the ReplayTV Service depends upon:

. successful marketing and distribution of ReplayTV-enabled products;

. continued development of new ReplayTV services and ReplayTV-enabled
products; and

. high quality customer support.

In addition, the introduction of new consumer electronics products is often
characterized by high rates of return following a product roll-out, as the
result of either product defects or lack of customer satisfaction with the
product category. ReplayTV-enabled products have been and in the future may be
subject to high return rates, which would impair our ability to establish
broad consumer acceptance of the ReplayTV Service.

If our retail launch is not successful, viewers and consumer electronics
manufacturers, distributors and other potential partners may not accept the
ReplayTV Service and ReplayTV-enabled products.

To date, we have generated shipments of ReplayTV-enabled personal video
recorders only through our web site, our 1-877-ReplayTV toll-free telephone
number and a limited number of online retailers. As of December 31, 1999, we
had shipped about 6,000 ReplayTV-enabled personal video recorders. Our success
depends on, among other things, our ability to expand our distribution through
relationships with consumer electronics companies and distributors. We plan to
begin our full-scale retail launch in mid-2000 with Matsushita-Kotobuki
Electronics Industries, Ltd., or MKE, a subsidiary of Matsushita Electric
Industrial Co., Ltd., which will market, sell and distribute ReplayTV-enabled
personal video recorders under the Panasonic brand featuring the ReplayTV
logo.

The launch requires, among other things, that:

. we educate consumers on the benefits of the ReplayTV Service and
ReplayTV-enabled personal video recorder, which will require an extensive
marketing campaign;

. MKE enter into distribution and promotional arrangements with major
national and regional retail chains;

. we commit a substantial amount of human and financial resources to
achieve successful retail distribution; and

. we coordinate our own sales, marketing and support activities with those
of MKE and other distributors and retailers.

We or our strategic partners may not achieve any or all of these objectives.
In addition, the launch may be delayed, consumers may perceive the ReplayTV-
enabled personal video recorder as too expensive or complex or the ReplayTV
Service as not sufficiently appealing, and our marketing campaign may not
effectively attract new viewers. Additionally, since we will rely on MKE and
other distributors and retailers to assist us with sales, marketing and
support activities, the success of the marketing process is not entirely
within our control. We do not control the time and resources that these third
parties devote to our business, and we cannot be sure that these parties will
perform as expected. Any of these events may reduce consumer demand and market
acceptance, diminish our brand and impair our ability to attract and retain
viewers of the ReplayTV Service.

We have established only a limited number of strategic relationships with
media partners, and we must rely on strategic relationships to enhance the
ReplayTV Service.

To be successful, we must establish and maintain strategic relationships
with leaders in the television media industry, including advertisers,
television programmers and broadcast companies. To date, we have established
only a limited number of strategic relationships with media partners, and
these relationships are in the early stages of development. We cannot be
certain that relationships with other media partners will be available to us
in the future or on terms favorable to us. These relationships are critical to
our success, and our failure to establish and maintain these relationships
would:

. limit the acceptance and use of the ReplayTV Service;

. impair our ability to obtain rights to content;

. impair our ability to deploy certain forms of advertising;

. impair our ability to generate revenues from multiple sources; and

. impair our ability to further enhance the ReplayTV brand.

Entering into strategic relationships is complicated because some of our
current and future media partners may decide to compete with us or to enter
into relationships with our competitors. For example, some of our current and
potential partners currently have relationships with our primary competitors
in the market for personal television services. In addition, we may not be
able to establish relationships with key participants in

the media industry if we have established relationships with competitors of
these key participants. Moreover, many potential partners may resist working
with us unless and until the ReplayTV Service and ReplayTV-enabled personal
video recorder have been introduced on a larger scale and have achieved market
acceptance. In order to induce media companies to partner with us, we may have
to share substantial portions of our revenues with them or provide other
incentives to them, which could limit our ability to achieve profitability or
result in dilution to existing investors.

If we fail to establish additional relationships with media partners, or if
our media partners fail to actively pursue additional business relationships
with us, we would not be able to execute our business plan and our business
would suffer significantly.

We need to create multiple revenue streams.

Our future growth and long-term success are dependent upon our ability to
generate multiple revenue streams. Our business model is particularly
dependent upon generating revenues from advertisers, who may not readily adopt
the personal television medium. We compete with traditional advertising media
such as print, radio and television for a share of advertisers' total
advertising budgets. If advertisers do not perceive personal television as an
effective advertising medium or are otherwise opposed to personal television,
they may be reluctant to devote a significant portion of their advertising and
marketing budgets to promotions on the ReplayTV Service.

Our long-term success will also depend in part upon securing multiple
revenue streams in addition to advertising, including premium subscription and
personalized pay-per-view services such as near video-on-demand, sponsorships
from content providers and other media partners and television-commerce. We
will need to work closely with media partners, cable and satellite system
operators, electronic commerce companies and consumer electronics
manufacturers to develop services in these areas. We may not be able to
effectively work with these parties to develop services that are sufficient to
justify their costs.

In addition, to attract and retain viewers and generate revenues from
advertising and other sources, we must continue to add capabilities to the
ReplayTV Service and introduce services that embody new technologies and, in
some instances, new industry standards. For example, version 2.0 of the
ReplayTV Service software, to be offered in conjunction with our full-scale
retail launch, provides advertising and sponsorship capabilities solely on
theme-based or branded content areas called ReplayZones. In order to generate
significant advertising revenues, we need to expand the capabilities of the
ReplayTV Service to permit full-motion video advertisements on multiple viewer
interfaces. We must also expand the capabilities of the ReplayTV Service to
permit premium subscription services, near video-on-demand and television-
commerce, none of which are currently available in version 2.0 of the ReplayTV
Service software. These features will not be available until the release of
future versions of the ReplayTV Service software. If we are unable to add
these features to the ReplayTV Service, or if we delay the introduction of
these capabilities, our ability to attract and retain viewers and generate
revenues will suffer.

Furthermore, early versions of ReplayTV-enabled products may not be capable
of accommodating new services and capabilities we introduce in the future. For
example, early versions of ReplayTV-enabled products may not have sufficient
memory to handle software upgrades required to provide full-motion video
advertisements and near video-on-demand capabilities. If early versions of
ReplayTV-enabled products cannot be upgraded to support new services we
introduce, our ability to generate revenues from these new services will
suffer.

We rely on third parties to manufacture, distribute and market our
products.

We currently rely on a single third party contract manufacturer,
Flextronics International, to manufacture ReplayTV-enabled personal video
recorders. We have entered into an agreement with MKE to manufacture and
distribute ReplayTV-enabled products, and we intend to enter into similar
relationships with other consumer electronics companies in the future. In
addition, we will rely significantly on our relationship with MKE to

establish our retail distribution channel. We will rely on MKE's sales force,
marketing budget and brand image to promote and support ReplayTV-enabled
products and the ReplayTV Service, both before and after our full-scale retail
launch. We currently anticipate that MKE will begin distributing ReplayTV-
enabled personal video recorders, manufactured by Flextronics, under the
Panasonic brand featuring the ReplayTV logo, in mid-2000.

We do not control the time and resources that third party manufacturers and
distributors devote to our business, and we cannot ensure that these parties
will perform as expected. The use of equipment manufacturers, particularly the
transition to new equipment manufacturers, subjects us to the risk of delays
and unforeseen problems such as defects, shortages of critical components and
cost overruns. In addition, we expect that these manufacturers will require
substantial lead times to manufacture sufficient quantities of ReplayTV-
enabled personal video recorders to satisfy demand. Any delays or unforeseen
problems could impair our full-scale retail launch and brand image and make it
difficult for us to attract and retain viewers. Furthermore, since our
relationships with some of these manufacturers are not based on exclusive
agreements, they may also support services that compete with us or offer
similar or greater support to our competitors. In addition, MKE may terminate
our agreements with them upon written notice to us. The loss of Flextronics,
MKE or any of our other manufacturers or distributors would require us to
identify and contract with alternative sources of manufacturing and
distribution, which may not be available to us when needed or on acceptable
terms. This outcome could harm our ability to compete effectively and achieve
market acceptance and brand recognition.

We are dependent on single suppliers for several key components and
services. If these suppliers fail to provide us with the products necessary
to manufacture our products and provide our services, we may be unable to
find alternative suppliers or deliver our services or ReplayTV-enabled
products to our customers on time.

We currently rely on sole suppliers for a number of the key components and
services used in ReplayTV-enabled personal video recorders. For example:

. Philips is the sole supplier of a number of semiconductors used in the
ReplayTV-enabled personal video recorder;

. Sony is the sole supplier of our MPEG2 encoder semiconductor device;

. Tribune is the sole supplier of program guide data; and

. Universal Electronics, Inc. is the sole supplier of our universal remote
controls and cable set-top box compatibility codes.

Philips, Sony and Tribune each have relationships with TiVo Inc., one of
our primary competitors in the market for personal television services. We
cannot be sure that these and other key components and services used in
ReplayTV-enabled personal video recorders will be available from these
suppliers when needed or, if available, that these components and services
will be available on favorable terms. In addition, we rely on the quality of
the products supplied to us and the program guide data and cable set-top box
compatibility information supplied to us. The number of alternative suppliers
available for these products and services may be very limited. If we or other
manufacturers of ReplayTV-enabled personal video recorders were unable to
obtain sufficient quantities of these components or accurate program guide
data, the search for and/or transition to alternate suppliers could result in
extensive delays, added expense or disruption in services or product
availability. In addition, we could have to re-engineer the ReplayTV-enabled
personal video recorder in order to incorporate alternative products or
services, which could render our products and services unavailable for
extended periods.

We have agreed to subsidize the cost of our personal video recorders, and
we may be unable to generate enough revenues to cover these subsidies and
other obligations.

We have agreed to subsidize the cost of our personal video recorders to
maintain attractive retail prices for ReplayTV-enabled products and to
encourage the manufacture of ReplayTV-enabled personal television products.
For example, we have agreed to subsidize MKE and expect to subsidize other
equipment manufacturers

in the future. We expect these subsidies to be one of our largest expense
items for the foreseeable future. If our competitors lower the retail price of
their products, we may have to increase the amount of our subsidies. Our
decision to subsidize the manufacturing cost of ReplayTV-enabled products is
based upon our belief that increasing our installed base as rapidly as
possible will help us obtain viewers, broaden market acceptance for personal
television and increase our future revenues. If these expectations are not
met, we may be unable to generate sufficient revenues to cover our expenses
and other obligations.

Intellectual property claims against us could be costly and could result in
the loss of significant rights.

We have been contacted by various parties that have asserted that our
personal television service violates patents, copyrights or other rights of
such parties. If any of these parties, or other parties that may assert
similar claims in the future, were to successfully litigate these claims
against us, the outcome of the litigation could:

. prevent us from manufacturing or licensing products or providing the
ReplayTV Service;

. cause the cancellation of new services;

. cause delays in product delivery and new service introduction; and

. require us to pay significant royalties or licensing fees.

In addition, litigation of these claims, whether or not they are
successful, could divert management's attention and resources away from our
business and otherwise be time-consuming and expensive.

The television industry is highly litigious, particularly in the area of
electronic program guides. Many patents relating to interactive television
technologies have been granted. For example, we are aware of patents relating
to pausing live television, electronic program guides, recording video on
hard-disk drives, viewer profiling and video compression, among others. In
some cases, we have been contacted by patent owners offering us the
opportunity to license their patents. Some of these patent owners have alleged
that ReplayTV is infringing their patents. In each case, we have evaluated the
patents to determine whether a license is necessary or desirable. Despite our
conclusion to date that no licenses are required, we cannot provide any
assurance that the respective patent owners would agree with our decision or
that they will not further pursue the matter by making a claim of infringement
against us.

We may be subject to claims of infringement and may be required to seek
patent licenses from third parties. A number of companies in the television
industry earn substantial profits from technology licensing, and the
introduction of new technologies such as ours is likely to provoke claims
and/or lawsuits from such companies. A successful claim of infringement
against us could result in a finding of significant monetary damages against
us. In addition, if we are unable to obtain an acceptable license from the
holder of the patent or other right or design around an asserted patent or
other right, we might have to cease manufacturing or licensing the ReplayTV-
enabled personal video recorder or providing the ReplayTV Service, or both,
which would eliminate our ability to generate revenues. On January 18, 2000, a
subsidiary of Gemstar International Group, Inc. sued TiVo, Inc., one of our
competitors, for allegedly infringing a patent related to recording of
television programming. This action seeks an injunction and damages. We cannot
assure you that Gemstar will not bring a similar action against us in the
future. If Gemstar were to bring such an action and be successful, it could
materially adversely impact our business. We and TiVo have been sued by
PhoneTel Communications, Inc. for allegedly infringing a patent related to
specifying an order for playback of recorded television programs.

In addition, we are aware that some media companies may attempt to form
organizations to develop standards and practices in the personal television
industry. These organizations or individual media companies may attempt to
require companies in the personal television industry to obtain copyright or
other licenses for the use of the companies' programming. A number of articles
have appeared in the press recently regarding the formation of a consortium of
broadcast and cable television networks called the Advanced Television
Copyright Coalition. Some of those articles have indicated that the coalition
is prepared to support litigation and to explore legislative solutions unless
the providers of personal television services and products agree to obtain
license agreements for the use of the companies' programming. We have received
letters and oral indications from a

number of content providers, including Fox Television, Universal Studios and
The Walt Disney Company, asserting their belief that our business activities
will require approvals and licenses from these content providers. In addition,
under our Network Service Agreement with Turner Broadcasting Systems, Inc.,
Turner reserved the right to assert any claims or rights against us. We are
also aware of similar indications from other content providers. Lawsuits or
other actions taken by these types of organizations or companies could make it
more difficult or impossible for us to introduce new services, delay
widespread consumer acceptance of our services, restrict our use of some
television content, increase our costs and materially adversely affect our
business.

We face intense competition from a number of sources, which may impair our
ability to generate viewers and future revenues.

The market for personal television services is new and evolving rapidly,
and we are unable to predict the future of the market. We expect competition
from a number of sources. We are likely to face intense direct competition
from companies such as TiVo Inc. and WebTV Networks Inc. These companies
offer, or have announced their intention to offer, products with one or more
of the ReplayTV Service's functions or features and, in some instances,
combine these features with Internet browsing, interactive capabilities or
traditional broadcast, cable or satellite television programming. Many of
these companies have greater brand recognition and market presence, a
significantly larger installed base and substantially greater financial,
marketing and distribution resources than we do. For example, Microsoft
Corporation owns and provides financial backing to WebTV. Some of these
companies also have established relationships with third party consumer
electronics manufacturers, satellite and cable operators, television
programmers, Internet service providers and others, which could make it harder
for us to compete with them and may make it difficult for us to establish
relationships and enter into agreements with these third parties. For example,
TiVo has manufacturing relationships with several consumer electronics
manufacturers and a distribution relationship with DirecTV, Inc. TiVo also
recently announced an agreement with Blockbuster Inc. to cross-market products
and services. In addition, TiVo and Liberate Technologies recently announced
an agreement to bundle Liberate's interactive television platform with TiVo's
service and market it to network operators, as well as to deliver personal
video recorder capabilities in connection with a new interactive television
service to be offered by America Online, Inc. under the brand name AOL TV.
Some of these competitors also have relationships with our strategic partners,
and a number of media partners that have invested in ReplayTV have also
invested in our competitors. WebTV has a distribution relationship with
EchoStar Communications Corporation, the operator of the DISH Network. In
addition, General Instrument Corporation and Charter Communications, Inc.
recently announced an agreement to manufacture and distribute set-top boxes
that provide personal video recorder capabilities. Faced with this
competition, we may be unable to expand our market share and attract an
increasing number of viewers to the ReplayTV Service.

Furthermore, we and our manufacturing partners also compete with consumer
electronics companies that may incorporate competing personal television
capabilities into future generations of their consumer electronics products.
We compete with consumer electronics products in the television and home
entertainment industry. The television and home entertainment industry is
characterized by rapid technological innovation, a small number of dominant
manufacturers and intense price competition. As a new product category,
personal television enters a market that is crowded with several established
services. The competition for consumer spending in the television and home
entertainment market is intense, and our services may compete with:

. VCRs and DVD players and recorders;

. video-on-demand services;

. interactive television services; and

. personal computers.

Many of these technologies, services or devices have an established market,
a broad viewer base and proven consumer acceptance. In addition, many of the
manufacturers and distributors of these competing technologies, services and
devices have substantially greater brand recognition, market presence,
financial resources, distribution channels, advertising and marketing budgets
and promotional and other strategic partners than we

do. Faced with this competition, we may be unable to effectively differentiate
the ReplayTV-enabled personal video recorder or the ReplayTV Service from
these technologies, services or devices.

The cost of ReplayTV-enabled personal video recorders will also impact
consumer choices in the home entertainment market, and many of the alternative
home entertainment devices and services may be purchased by consumers at lower
prices than a ReplayTV-enabled personal video recorder. Further, cable and
satellite services are already a large expense item for many households, and
consumers may be unwilling to make the additional expenditure required to
purchase a ReplayTV-enabled personal video recorder to complement these
services. In addition, since our Internet service provider's access numbers
require long distance calls for a portion of television households in the
United States, some potential ReplayTV viewers may have to pay recurring long
distance charges to connect to the ReplayTV Service network, which could
impact our ability to market ReplayTV-enabled personal video recorders in
these markets.

We may also compete with new and evolving forms of delivery of video
programs to viewers' homes. For example, a number of companies are developing
video-on-demand products and services, which would use broadband delivery
systems to feed video as demanded by viewers in real time. In addition, as
broadband delivery systems become more prevalent, it is possible that more and
more programs may be available for ordering, over the Internet or otherwise,
which may lessen the importance of broadcast television and weaken the appeal
of the ReplayTV Service. If these companies are successful in developing these
services, their products and services may be more appealing to viewers than
ours.

The market for personal television services is evolving rapidly, and we or
our strategic partners may not be able to adequately address this market.

Because of the early stage of the personal television industry, the life
cycle of our services is difficult to estimate. We or our strategic partners
may not be able to develop and introduce new services and enhancements that
respond to technological changes, evolving industry standards or consumer
preferences on a timely basis, or at all, in which case our business would
suffer. In addition, we cannot predict the rate of adoption by consumers of
our services and products which enable our service, or the price they will be
willing to pay for these services and products. As a result, it is extremely
difficult to predict our future prices for these services and the future size,
growth rate and profitability of this market.

We must integrate the ReplayTV Service with the products and services
provided by cable and satellite system operators.

We intend to enter into relationships for the distribution of the ReplayTV
Service with cable and satellite system operators and/or with the
manufacturers of set-top boxes that enable cable and satellite services. We
cannot be certain that these parties will be willing to enter into agreements
with us to directly integrate the ReplayTV Service into set-top boxes or that
we will be able to negotiate agreements on terms favorable to us.
Historically, cable and satellite system operators have been hesitant to
implement new services. In addition, cable and satellite system operators and
the manufacturers of cable and satellite receivers may choose to develop their
own services in competition with us or to enter into relationships with our
competitors. For example, General Instrument Corporation and Charter
Communications, Inc. recently announced an agreement to manufacture and
distribute set-top boxes that provide personal video recorder features. If we
fail to establish distribution relationships with cable and satellite system
operators or the manufacturers of set-top boxes, we may not be able to execute
our business plan, and our business could suffer significantly.

We must also work with cable and satellite system operators to ensure that
the ReplayTV Service and ReplayTV-enabled products are compatible with their
products and services. If a viewer using a ReplayTV-enabled personal video
recorder receives a cable or broadcast signal through a separate set-top box

rather than a receiver integrated with the ReplayTV Service, then the viewer
must input a number corresponding to the set-top box to enable the ReplayTV-
enabled personal video recorder to work with the particular set-top box. There
are hundreds of models of cable and satellite set-top boxes, with new designs
coming to market on a regular basis and, consequently, hundreds of
corresponding numbers. If we are unable to update these numbers in a timely
manner and adequately ensure that the ReplayTV Service is compatible with our
viewers' cable and satellite systems, we may not be able to attract and retain
viewers and our reputation may be harmed.

If we lose key management personnel, we may not be able to successfully
operate our business.

Our future performance will be substantially dependent on the continued
services of our senior management and other key personnel. The loss of any
members of our executive management team and our inability to hire additional
executive management could harm our business and results of operations. In
addition, we do not have term employment agreements with, or key man insurance
policies for, any of our key personnel.

We have recently hired several senior executive officers. Any inability by
these individuals to execute our business strategy and manage our growth
could harm our ability to generate revenues and achieve profitability.

Several members of our executive management team were hired in 1999,
including our Chief Executive Officer; Executive Vice President, ReplayTV
Service; Executive Vice President, Finance and Chief Financial Officer;
Executive Vice President, Sales and Marketing; and Executive Vice President,
Business Operations. These individuals have not previously worked together nor
with the other members of our management team and, therefore, may require time
to adequately familiarize themselves with the nature of our business and
operations and each other. We cannot assure you that these individuals will be
able to successfully work together or manage any growth we may experience. The
process of integrating these individuals into our management team may detract
from the operation of our business.

Failure to manage our growth could disrupt our business and impair our
ability to generate revenues.

Since we began our business in August 1997, we have significantly expanded
our operations. We anticipate continued expansion in our headcount, facilities
and infrastructure to support potential growth in our viewer base and to allow
us to pursue market opportunities. This expansion has placed, and will
continue to place, a significant strain on our management, operational and
financial resources and systems. Specific risks we face as our business
expands include:

. We may not be able to fulfill orders for ReplayTV-enabled products as
demand for the ReplayTV Service grows. We do not have experience in
manufacturing a large volume of ReplayTV-enabled products and may not be
able to accurately forecast and respond to consumer demand for our
products and services.

. We may be unable to successfully attract, integrate or retain
sufficiently qualified personnel. Competition for employees is intense in
the San Francisco Bay Area where we are based, especially for engineers
and personnel with the relevant and necessary media and television
experience.

. We must continually improve our systems to accommodate the growth of our
viewer base and add new features to the ReplayTV Service. The ability of
our systems to scale as we add new viewers and capabilities is unproven.
Our inability to accommodate additional viewers or to upgrade our
technology, systems or network infrastructure could adversely affect our
business, cause interruptions in the ReplayTV Service or delay the
introduction of new services.

. We will need to provide acceptable customer support. If we or our
distribution partners are unable to adequately support ReplayTV Service
viewers, our brand and our ability to generate and retain new viewers
will be harmed.

. We will need to improve our operational and financial systems to support
our expected growth, and any inability to do so will adversely impact our
business.

Seasonal trends in consumer and advertiser spending behavior may cause our
operating results to fluctuate in any period.

Our business model anticipates that a majority of our future revenues will
come from targeted commercials and other forms of television advertising
enabled by the ReplayTV Service. Expenditures by advertisers tend to be
seasonal and cyclical, reflecting overall economic conditions as well as
budgeting and buying patterns. A decline in the economic prospects of
advertisers or the economy in general could alter current or prospective
advertisers' spending priorities or increase the time it takes to close a sale
with our advertisers, which could cause our revenues from advertisements to
decline significantly in any given period.

In addition, we are subject to seasonality in consumer electronics product
sales, which have traditionally been much higher during the holiday shopping
season (occurring in the fourth quarter) than during other times of the year.
Although predicting consumer demand for our products will be very difficult,
we believe that sales of ReplayTV-enabled personal video recorders and
attraction of new viewers to the ReplayTV Service will be disproportionately
high during the holiday shopping season when compared to other times of the
year. Because we expect to subsidize the purchase price of ReplayTV-enabled
personal video recorders, we will incur greater costs and expenses when more
ReplayTV-enabled personal video recorders are sold.

If we are unable to raise additional capital on acceptable terms, our
ability to effectively manage growth and build a strong brand could be
harmed.

We expect that our existing capital resources, combined with the net
proceeds of this offering, will be sufficient to meet our cash requirements
through the next 12 months. We may be required to raise additional capital
sooner if consumer acceptance of the ReplayTV Service occurs more rapidly than
we expect or if we have to increase our subsidies earlier than we anticipate
to meet competitive retail pricing. In order to continue to grow our business,
we will have to raise additional capital, which may not be available on
acceptable terms. If we cannot raise necessary additional capital 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. If we raise additional capital through debt
financing, we may be subject to covenants limiting or restricting our
operations or future opportunities.

Risks Related to our Service and Technology

System failures, interruptions to the ReplayTV Service or product defects
may have a negative impact on our revenues, damage our reputation and
decrease our ability to attract new viewers.

Our ability to provide high quality products, service and customer support
is critical to our success because consumers of television-related products
are not accustomed to, and may not accept, interruptions in their television
service. Our ability to provide this service and support depends on the
efficient and uninterrupted operation of our computer and communications
systems. Substantially all of the computer and networking hardware systems
that form the backbone of the ReplayTV Service are housed in a facility
operated by Exodus Communications, Inc. in Santa Clara, California. We also
rely on UUNET Technologies, Inc. to provide an Internet connection for
communications between ReplayTV-enabled personal video recorders and the
ReplayTV Service network. Interruptions to the services provided by either
Exodus or UUNET would significantly impact the quality of the ReplayTV Service
which could impair our ability to retain existing viewers or attract new
viewers to the ReplayTV Service. Our network, communications hardware and
other operating systems for the ReplayTV Service are vulnerable to damage or
interruption from earthquakes, floods, fires, power loss, telecommunication
failures and similar events. They are also subject to break-ins, sabotage,
intentional acts of vandalism and similar misconduct.

In addition, our hardware and software may contain bugs. These types of
interruptions in the ReplayTV Service may reduce our revenues and profits. Our
business also will be harmed if consumers believe our service is unreliable.
In addition to placing increased burdens on our engineering staff, service
outages will create a flood of customer questions and complaints that must be
responded to by our or our partners' customer support personnel. Any frequent
or persistent system failures could irreparably damage our reputation and
brand.

We have detected and may continue to detect errors and product defects in
our software and ReplayTV-enabled personal video recorders. For example, the
hard disk used in the ReplayTV-enabled personal video recorder was originally
designed for use in personal computers, and as a result exhibits behaviors
that are viewed as typical and minimally disruptive when using a personal
computer but may result in the viewer momentarily facing a black television
screen when using the ReplayTV Service. In addition, ReplayTV viewers with
HDTV television sets are currently required to watch and record programming in
standard broadcast resolution as opposed to HDTV resolution. Any errors and
product defects can affect system uptime, result in returns and significant
warranty and repair costs and cause customer relations problems. For example,
as a result of errors and defects detected in product development, we have
experienced some delays in releasing new versions of our ReplayTV-enabled
personal video recorders. In addition, we have agreed to indemnify MKE in
connection with its manufacture and distribution of ReplayTV-enabled products.
Correcting errors in our software and hardware design requires significant
time and resources, which could delay future product releases and affect
market acceptance of the ReplayTV Service. Any delivery by us of products or
upgrades with undetected material product defects or software errors could
harm our credibility and market acceptance of the ReplayTV Service.

Our success depends on our ability to secure and protect patents,
trademarks and other proprietary rights.

Our success and ability to compete are substantially dependent upon our
internally developed technology. We rely on patent, trademark and copyright
law, trade secret protection and confidentiality or license agreements with
our employees, customers, partners and others to protect our proprietary
rights. However, the steps we take to protect our proprietary rights may be
inadequate. We are currently the assignee of two United States patents. We
have also filed patent applications and provisional patent applications
relating to important aspects of the ReplayTV technology and the ReplayTV
Service, including its features and capabilities. To date, none of these
patents has been granted, and we cannot assure you that any patents will ever
be granted, that any issued patents will protect our intellectual property or
that third parties will not challenge any issued patents. In addition, other
parties may independently develop similar or competing technologies designed
around any patents that may be issued to us. Our failure to protect our
proprietary rights could have a material adverse effect on our business.

Laws, regulations, agreements and standards that govern the television
industry and the delivery of programming could expose us to legal action if
we fail to comply or could require us to change our business.

Personal television and the delivery of television programming through the
ReplayTV Service and the ReplayTV-enabled personal video recorder represent a
new category in the television and home entertainment industries. As such, it
is difficult to predict what laws or regulations will govern our business.
Changes in the regulatory climate or the enforcement or interpretation of
existing laws could expose us to additional costs and expenses and could
require changes to our business. For example, copyright laws could be applied
or amended to restrict the capture or alteration of television programming,
which would materially adversely affect our business. It is unknown whether
existing laws and regulations will apply to the personal television market.
Therefore, it is difficult to anticipate the impact of current or future laws
and regulations on our business.

The Federal Communications Commission has broad jurisdiction over the
telecommunications and cable industries. Regulations adopted by the FCC may
directly affect us and the strategic partners on whom we substantially rely
for the marketing and distribution of ReplayTV-enabled personal video
recorders and the ReplayTV Service. As such, the effect of these regulations
may negatively impact the adoption of ReplayTV-enabled personal video
recorders and the use of the ReplayTV Service. In addition, the FCC could
promulgate new regulations or interpret existing regulations in a manner that
would cause us to incur significant compliance costs or force us to alter the
features or capabilities of the ReplayTV Service.

Several manufacturers, media companies and content delivery providers, such
as cable and satellite system operators, have developed and will continue to
develop standards that govern how these companies operate and interact with
one another. For example, cable modem manufacturers and cable operators are
developing standards

relating to cable systems and cable modems. Media companies, consumer
electronics companies, computer companies and semiconductor companies are
developing standards relating to copyright protection of media content. If we
are unable to develop services that comply with the agreements and standards
set by these consortiums, we may be prevented from marketing and distributing
ReplayTV-enabled personal video recorders and providing the ReplayTV Service.

We need to safeguard the security and privacy of our viewers' confidential
data, and any inability to do so may harm our reputation and brand and
could result in lawsuits.

The ReplayTV-enabled personal video recorder collects and stores viewer
preferences and other data that our viewers may consider confidential. Any
compromise or breach of the encryption and other security measures that we use
to protect this data could harm our reputation and expose us to potential
liability. Advances in computer capabilities, new discoveries in the field of
cryptography or other events or developments could compromise or breach the
systems we use to protect our viewers' confidential information. We may be
required to make significant expenditures to protect against security breaches
or to remedy problems caused by any breaches.

Viewers may be concerned about the use of personal information gathered by
the ReplayTV Service and the ReplayTV-enabled personal video recorder. We do
not release this data to third parties, and we are committed to complying with
all privacy laws and to protecting the confidentiality of our viewers. Privacy
concerns, however, could create uncertainty in the marketplace for personal
television and our services. In addition, privacy concerns or breaches, or
consumers' dissatisfaction with any privacy policy we may adopt, could reduce
demand for the ReplayTV Service, increase the cost of doing business as a
result of litigation costs or increased service delivery costs, or otherwise
harm our reputation and business.

Risks Related to this Offering and Our Common Stock

Purchasers of our common stock in this offering will suffer immediate and
substantial dilution and may be harmed by future debt or equity issuances.

The initial public offering price per share will significantly exceed our
net tangible book value per share. You will experience immediate dilution of
$ in the pro forma adjusted net tangible book value per share of common
stock, assuming an initial public offering price of $ per share. You also
will experience additional dilution when outstanding options and warrants are
exercised. If we raise additional capital through the issuance of equity
securities, the percentage ownership of our existing stockholders will
decline, you may experience dilution in net book value per share, and these
equity securities may have rights, preferences or privileges senior to those
of the holders of our common stock. Any debt financing, if available, may
involve covenants limiting or restricting our operations or future
opportunities.

Management has broad discretion as to how to use the proceeds from this
offering and may apply these proceeds to uses that do not increase our
revenues or market value.

We expect to spend a substantial amount, including amounts from the net
proceeds we receive in connection with this offering, to advertise and promote
the ReplayTV Service and the ReplayTV brand, to subsidize the retail price of
ReplayTV-enabled personal video recorders, to develop new services and for
other working capital and general corporate purposes. We have not determined
the specific amounts we intend to spend in any of these areas or the timing of
these expenditures. Consequently, management will have broad discretion with
respect to the use of the net proceeds from this offering. Because of the
number and variability of factors that determine our use of proceeds from this
offering, we cannot assure you that the uses will not vary from our current
intentions.

Our certificate of incorporation, bylaws and Delaware law contain
provisions that could discourage a third party from acquiring us and
consequently decrease the market value of your investment.

Some provisions of our certificate of incorporation and bylaws and of
Delaware law could delay or prevent a change of control or changes in our
management that a stockholder might consider favorable. Any delay or
prevention of a change of control or change in management could cause the
market price of our common stock to decline. For more information about
particular anti-takeover provisions, see "Description of Capital Stock."

Our stock price may be volatile after this offering and you may lose some
or all of your investment.

Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be determined by negotiations
between the representatives of the underwriters and us and may not be
indicative of the market price for the common stock that may develop after
this offering. We do not know the extent to which investor interest will lead
to the development of an active public market. You may not be able to resell
your shares of our common stock at or above the initial public offering price
and you may lose some or all of your investment as a result. We expect our
operating results to fluctuate significantly due to a number of factors, many
of which are described elsewhere in this prospectus. In addition to our
operating results, many factors may cause our stock price to fluctuate,
including:

. economic or market conditions generally or in the technology, television,
media or home entertainment industries;

. our failure to meet estimates of our financial performance by securities
analysts; and

. changes in estimates of our financial performance or changes in
recommendations by securities analysts.

An aggregate of 40,952,916 shares, or %, of our outstanding stock will
become eligible for resale in the public market between 180 days and one
year after this offering, and future sales of this stock may cause our
stock price to decline.

The market price of our common stock could drop as a result of sales of a
large number of shares of common stock in the market after this offering or in
response to the perception that sales of a large number of shares could occur.
We cannot predict the effect that future sales of common stock will have on
the market price of our common stock. Of the shares of our
common stock to be outstanding upon completion of this offering, the
shares offered hereby (plus any shares issued upon exercise of
the underwriters' over-allotment option) will be freely tradable. All of the
shares outstanding prior to the offering will be "restricted securities" as
the term is defined under Rule 144 promulgated under the Securities Act.
Unless sold pursuant to Rule 144, which provides for minimum holding periods,
public availability of information, and volume and manner restrictions on
sales, "restricted securities" cannot be sold without an effective
registration statement on file with the SEC. Based on shares outstanding as of
December 31, 1999, as adjusted to reflect the issuance of 5,627,267 shares of
Series F preferred stock in January 2000, these shares will be available for
sale in the public market as follows:

Number of Shares/
Percent Outstanding Date When Shares Become Available for Resale in the
After this Offering Public Market
------------------- ---------------------------------------------------

35,306,093 / % 180 days after the date of this prospectus pursuant to
agreements between the stockholders and the underwriters
or ReplayTV, provided that Morgan Stanley & Co.
Incorporated can waive this restriction at any time.
24,070,571 of these shares will also be subject to sales
volume restrictions under Rule 144 under the Securities
Act

5,646,823 / % Upon expiration of applicable one-year holding periods
under Rule 144, which will expire between , 2000
and January 25, 2001, subject to sales volume
restrictions under Rule 144

In addition, we intend to file a registration statement on Form S-8 under the
Securities Act to register an aggregate of 18,218,561 shares of common stock
reserved for issuance under our various stock plans.

USE OF PROCEEDS

We expect to receive net proceeds of about $ from this
offering, or $ if the underwriters exercise their over-allotment
option in full, assuming an initial public offering price of $ per
share, (based on the midpoint of the range set forth on the cover page of this
prospectus) after deducting the estimated underwriting discount and
commissions and estimated offering expenses. We estimate our offering expenses
to be about $ .

The principal reason for this offering is to raise capital for:

. subsidies related to the manufacture of ReplayTV-enabled products;

. advertising to promote the ReplayTV Service and ReplayTV brand;

. development of new products and services; and

. other working capital and general corporate purposes.

The amounts and timing of these expenditures will vary depending on a number
of factors, including competitive and technological developments and the rate
of growth, if any, of our business. We will retain broad discretion in the
allocation of the net proceeds of this offering. Because of the number and
variability of factors that determine our use of proceeds from this offering,
we cannot assure you that the uses will not vary from our current intentions.

Pending the uses described above, we will invest the net proceeds in short-
term, interest bearing, investment-grade securities. We cannot predict whether
the proceeds will be invested to yield a favorable return.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. In
addition, under our bank credit facility, we cannot pay dividends without our
bank's consent, with limited exceptions. We currently intend to retain any
future earnings to fund the development and growth of our business and do not
anticipate paying any cash dividends in the foreseeable future.

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 1999:

. on an actual basis;

. on a pro forma basis as further adjusted to reflect the sale of
shares of common stock in this offering at an assumed initial
public offering price of $ per share (based on the midpoint of the
range set forth on the cover page of this prospectus) after deducting the
estimated underwriting discount and commissions and estimated offering
expenses.

The capitalization information set forth in the table below is qualified
by, and you should read it in conjunction with, more detailed financial
statements and related notes and the information included under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this prospectus.

As of September 30, 1999
--------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands, except share
and per share data)

Cash, cash equivalents and short-term
investments................................... $ 49,840 $111,240 $
======== ======== ===
Line of credit................................. $ -- $ -- $
-------- -------- ---
Stockholders' equity (deficit):
Convertible Preferred Stock, issuable in
series, $0.001 par value; 27,137,306 shares
authorized, 25,741,585 shares issued and
outstanding actual; 35,077,301 shares
authorized, no shares issued and outstanding
pro forma; 5,000,000 shares authorized, no
shares issued and outstanding pro forma as
adjusted.................................... $ 26 $ -- $
Common Stock, $0.001 par value; 75,000,000
shares authorized, 9,209,194 shares issued
and outstanding actual; 75,000,000 shares
authorized, 40,578,046 shares issued and
outstanding pro forma; 200,000,000 shares
authorized, shares issued and
outstanding pro forma as adjusted........... 6 37
Additional paid-in capital................... 93,501 154,896
Notes receivable............................. (1,700) (1,700)
Unearned stock-based compensation............ (20,278) (20,278)
Deficit accumulated during development
stage....................................... (23,556) (23,556)
-------- -------- ---
Total stockholders' equity................. 47,999 109,399
-------- -------- ---
Total capitalization..................... $ 47,999 $109,399 $
======== ======== ===

This table excludes the following shares as of September 30, 1999:

. 6,666 shares of common stock issuable upon the exercise of an outstanding
warrant at an exercise price of $7.50 per share;

. 8,369,618 shares of common stock issuable upon the exercise of stock
options outstanding under our stock option plans at a weighted average
exercise price of $1.50 per share; and

. 1,210,924 shares of common stock available for issuance under our stock
option plans.

DILUTION

The pro forma net tangible book value of ReplayTV, Inc. as of September 30,
1999 was $109.4 million or $2.70 per share of common stock. Pro forma net
tangible book value per share represents the amount of total tangible assets
less total liabilities, divided by the number of shares of common stock
outstanding, after giving effect to the conversion of all outstanding shares
of preferred stock (including shares of preferred stock issued after September
30, 1999) into common stock immediately prior to the closing of this offering.
Assuming the sale by us of shares of common stock in this offering at an
assumed initial public offering price of $ per share, our pro forma net
tangible book value as of September 30, 1999 would have been $ million,
or $ per share of common stock. This represents an immediate increase in
pro forma net tangible book value of $ per share to our existing
stockholders and an immediate dilution in pro forma net tangible book value of
$ per share to new investors purchasing shares in this offering. The
following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share................. $
Pro forma net tangible book value per share as of September
30, 1999..................................................... $2.70
Increase per share attributable to new investors..............
-----
Pro forma net tangible book value per share after this
offering.......................................................
----
Dilution per share to new investors............................. $
====

The following table summarizes on a pro forma basis, as of September 30,
1999, the number of shares of common stock, including shares of preferred
stock to be converted into shares of common stock at the closing of this
offering, purchased from us, the total consideration paid to us and the
average price per share paid by existing stockholders and by new investors.
The information presented is based upon an assumed initial public offering
price of $ per share for shares purchased in this offering, before
deducting the estimated underwriting discount and commissions and estimated
offering expenses:

Shares Purchased Total Consideration
------------------ -------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ------------ ------- -------------

Existing stockholders... 40,578,046 % $131,863,000 % $3.25
New investors...........
---------- --- ------------ ---
Totals................ 100% $ 100%
========== === ============ ===

These tables assume no exercise of any outstanding stock options or
warrants to purchase common stock. As of December 31, 1999, there were:

. 10,789,637 shares of common stock issuable upon the exercise of stock
options outstanding at a weighted average exercise price of $3.05 per
share; and

. 6,666 shares of common stock issuable upon the exercise of an
outstanding warrant at an exercise price of $7.50 per share.

To the extent these options or warrants are exercised, there will be
further dilution to the new investors.

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with
our financial statements and related notes included elsewhere in this
prospectus and "Management's Discussion and Analysis of Financial Condition
and Results of Operations." The statement of operations data for the period
from August 27, 1997 (inception) to December 31, 1997 and for the year ended
December 31, 1998, and the balance sheet data as of December 31, 1997 and
1998, are derived from the audited financial statements included elsewhere in
this prospectus. The statement of operations data for the nine months ended
September 30, 1998 and 1999 and for the period from August 27, 1997
(inception) to September 30, 1999, and the balance sheet data as of September
30, 1999, are derived from our unaudited financial statements included
elsewhere in this prospectus and include all adjustments, consisting only of
normal recurring adjustments, necessary for the fair statement of this
information when read in conjunction with the audited financial statements and
related notes. The diluted net loss per share computation excludes potential
shares of common stock (preferred stock, options and warrants to purchase
common stock and common stock subject to repurchase rights that we hold),
since their effect would be antidilutive. See note 1 of the notes to financial
statements included elsewhere in this prospectus for a detailed explanation of
the determination of the shares used to compute actual and pro forma basic and
diluted net loss per share. The historical results are not necessarily
indicative of results to be expected for future periods.

Period from Nine Months Period from
August 27, 1997 Ended September August 27, 1997
(Inception) to Year Ended 30, (Inception) to
December 31, December 31, ----------------- September 30,
1997 1998 1998 1999 1999
--------------- ------------ ------- -------- ---------------
(in thousands, except per share data)

Statement of Operations
Data:
Costs and expenses:
Research and
development.......... $ 136 $ 1,961 $ 1,003 $ 4,814 $ 6,911
Programming and
content.............. -- -- -- 560 560
Sales and marketing... 10 764 293 8,735 9,509
General and
administrative....... 9 325 159 2,091 2,425
Hardware distribution
costs, net........... -- -- -- 770 770
Stock-based
compensation......... -- 206 100 3,489 3,695
------ ------- ------- -------- --------
Total costs and
expenses......... 155 3,256 1,555 20,459 23,870
------ ------- ------- -------- --------
Operating loss.......... (155) (3,256) (1,555) (20,459) (23,870)
Interest income
(expense), net......... -- (28) (4) 342 314
------ ------- ------- -------- --------
Net loss................ $ (155) $(3,284) $(1,559) $(20,117) $(23,556)
====== ======= ======= ======== ========
Basic and diluted net
loss per share......... $(0.08) $ (0.48) $ (0.23) $ (2.73) $ (3.35)
Basic and diluted
weighted average shares
used in computation of
net loss per share..... 2,026 6,889 6,880 7,359 7,037
Pro forma basic and
diluted net loss per
share.................. $ (0.29) $ (0.84)
Pro forma basic and
diluted weighted
average shares......... 11,282 23,953

As of December
31, As of
----------------- September 30,
1997 1998 1999
------- -------- ---------------
(in thousands)

Balance Sheet Data:
Cash, cash equivalents
and short-term
investments............ $ 103 $ 711 $ 49,840
Working capital
(deficit).............. 94 (392) 46,038
Total assets............ 144 1,068 53,406
Total stockholders'
equity (deficit)....... 125 (260) 47,999

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

This prospectus contains statements of a forward-looking nature relating to
future events or the future financial performance of ReplayTV. Prospective
investors are cautioned that forward-looking statements involve risks and
uncertainties, and that actual events or results may differ materially. In
evaluating such statements, prospective investors should specifically consider
the various factors identified in this prospectus, including the matters set
forth under the caption "Risk Factors," which could cause actual results to
differ materially from those indicated by such forward-looking statements.

Overview

ReplayTV was incorporated in August 1997, and through the first quarter of
1999, our operating activities consisted primarily of product and service
development. We continue to operate as a development stage company and have
not yet recognized any operating revenues from advertising or other sources.
In April 1999, we launched the ReplayTV Service and the ReplayTV-enabled PVR
via direct sales from our web site and toll free telephone number. More
recently, our products have become available through online retailers. We have
received proceeds from the shipment of ReplayTV-enabled PVRs; however, these
proceeds are considered incidental to our ongoing business and thus have been
reported as a reduction of the related hardware distribution costs in our
statement of operations. We do not intend to manufacture PVRs. Instead, we
intend to license our technology to partners to manufacture PVRs or
incorporate our technology in their consumer electronics products such as
VCRs, DVD players and recorders, set-top boxes or televisions. We recently
entered into such an agreement with MKE, and we intend to enter into similar
relationships with other consumer electronics companies in the future.

MKE initially will purchase from us a minimum number of ReplayTV-enabled
products manufactured by Flextronics and will market, sell and distribute
those products under the Panasonic brand name featuring the ReplayTV logo. We
will also work with MKE to jointly develop future ReplayTV-enabled products.
MKE will focus on hardware development while we will focus primarily on the
further development of the ReplayTV Service. MKE may also develop ReplayTV-
enabled products independent of us. We will work with MKE to develop and
establish customer service and support standards and processes for ReplayTV-
enabled products. We will also cooperate with MKE to market and promote the
ReplayTV Service and ReplayTV-enabled products. MKE will have primary
responsibility for promoting Panasonic-branded ReplayTV-enabled products while
we maintain primary responsibility for promoting the ReplayTV Service. MKE has
agreed to commit a minimum dollar amount toward the promotion and advertising
of ReplayTV-enabled products to be sold under the Panasonic brand. MKE has
agreed to exclusively deal with us in the area of personal video recorders for
the term of our agreement.

We anticipate that the majority of our revenues will be generated from the
sale of advertising on the ReplayTV Service. We will recognize advertising
revenue ratably over the period in which the advertising is displayed,
provided that no significant performance obligations remain. We do not expect
these revenues to become significant until we reach a substantially larger
installed viewer base and develop additional ReplayTV Service functionality.
We do not expect to generate significant revenues from advertising in 2000,
and we may not be able to generate significant revenues thereafter. As a
result, we expect to continue to incur significant losses and negative
operating cash flow for the foreseeable future.

We also anticipate recognizing revenues from future services, such as media
sponsorships, premium and near video-on-demand services and TV-commerce.
Revenues from media sponsorships will be recognized in the period in which the
programming is delivered, provided that no significant performance obligations
remain. Revenues from premium and near video-on-demand services will be
recognized during the period in which the services are provided to the
subscriber. Commissions revenue received for orders processed over the
ReplayTV Service will be recognized as we forward the order information to the
vendor. We do not generate any revenues from the provision of our basic
service.

Version 2.0 of our ReplayTV Service software, to be offered in conjunction
with our full-scale retail launch, will permit us to deliver certain limited
advertising; however, we are continuing to develop additional functionality to
enable us to deliver additional advertising and other services on the ReplayTV
Service in conjunction with various media partners. Version 2.0 will provide
advertising and sponsorship capabilities solely on theme-based or branded
content areas called ReplayZones. In order to generate significant advertising
revenues, we need to expand the capabilities of the ReplayTV Service to permit
full-motion video advertisements on multiple viewer interfaces. We also intend
to expand the capabilities of the ReplayTV Service to permit premium
subscription services, near video-on-demand and TV-commerce, none of which
will be included in version 2.0 of the ReplayTV Service software.

We expect to share a significant portion of the related advertising and
service revenues with our media partners. We also intend to enter into
agreements with multiple distribution partners to encourage more rapid
adoption of the ReplayTV Service. These agreements will provide for retail and
other distribution of ReplayTV-enabled products as well as subsidization of
hardware costs. Our decision to subsidize the manufacturing cost of ReplayTV-
enabled products is based upon our expectation that lower retail prices will
help us obtain viewers, broaden market acceptance for personal television and
increase our future revenues. If these expectations are not met, we may be
unable to generate sufficient revenues to cover our expenses and other
obligations.

Results of Operations

Nine Months Ended September 30, 1999 and 1998

Research and Development. Research and development expenses consist of
engineering personnel and related expenses, materials, connectivity costs and
outside consulting costs related to developing and enhancing the ReplayTV
Service and ReplayTV-enabled PVR. Total research and development expenses
increased to $4.8 million for the nine-month period ended September 30, 1999
from $1.0 million for the nine-month period ended September 30, 1998. The
increase was attributable to increased engineering personnel, consultants and
materials necessary to support the development and launch of the ReplayTV
platform and related service in April 1999. We expect that research and
development costs will continue to increase in the foreseeable future as we
continue to devote resources to develop additional functionality within the
ReplayTV Service.

Programming and Content. Programming and content expenses consist of
personnel and related expenses and outside consulting costs related to
developing and presenting content on the ReplayTV Service. Programming and
content expenses for the nine-month period ended September 30, 1999 were
$560,000. No programming and content costs were incurred during the nine-month
period ended September 30, 1998, as the ReplayTV Service was not launched
until April 1999. The increase was attributable to increased personnel
necessary for content development. We anticipate that programming and content
costs will continue to increase as we develop and provide additional services
and content within the ReplayTV Service.

Sales and Marketing. Sales and marketing expenses consist of advertising,
promotional activities, trade shows, personnel and related expenses and
outside consulting costs. Sales and marketing expenses increased to $8.7
million for the nine-month period ended September 30, 1999 from $293,000 for
the nine-month period ended September 30, 1998. The increase was attributable
to increased personnel and promotional costs associated with the promotion of
the commercial launch of the ReplayTV Service and ReplayTV-enabled PVR in
April 1999. We anticipate that sales and marketing expenses will continue to
increase as we support the full-scale retail launch of the ReplayTV-enabled
PVR in the year 2000. Starting in the second half of the year 2000, we expect
to incur additional sales and marketing expenses to support the sale of
advertising on the ReplayTV Service.

General and Administrative. General and administrative expenses consist of
personnel and related expenses and professional fees related to the
management, legal, finance, accounting and other administrative functions.
General and administrative expenses increased to $2.1 million from $159,000
for the nine-month

periods ended September 30, 1999 and 1998, respectively. The increase was the
result of increased personnel and consultants necessary to support our growth.
We expect that general and administrative expenses will continue to increase
in the foreseeable future.

Hardware Distribution Costs, Net. Hardware distribution costs, net, include
costs to manufacture and distribute the ReplayTV-enabled PVR net of the
proceeds from sales to customers. As we plan to transition the manufacturing
and distribution of our PVRs to MKE and other partners, sales of PVRs are
considered incidental to our business and, therefore, have been reflected as a
reduction of the related costs. Hardware distribution costs, net, were
$770,000 for the nine-month period ended September 30, 1999. During the
nine-month period ended September 30, 1999, we shipped about 3,000 PVRs and
incurred manufacturing and distribution costs of $4.2 million. Proceeds from
sales of PVRs were $3.4 million during the same period. We have agreed to
subsidize Matsushita in connection with their manufacturing and distribution
of ReplayTV-enabled PVRs in future periods. We expect the subsidies to
increase significantly as we increase our installed base.

Stock-Based Compensation. Stock-based compensation includes the
amortization of unearned employee stock-based compensation and expenses for
stock granted to consultants in exchange for services. In connection with the
grant of employee stock options, we recorded aggregate unearned stock-based
compensation of $23.5 million through September 30, 1999 and additional
unearned stock-based compensation of about $13.5 million for stock options
granted in October, November and December 1999. Employee stock-based
compensation expense is amortized over the vesting period of the options,
which is generally four years, using the multiple-option approach. We recorded
employee stock-based compensation expense of $3.0 million for the nine months
ended September 30, 1999. We currently expect to record employee stock-based
compensation expenses of about $4.0 million for the quarter ended December 31,
1999, $4.7 million for the quarter ending March 31, 2000 and $4.4 million for
the quarter ending June 30, 2000. We anticipate that these expenses will
decrease in future periods. Unearned stock-based compensation expense will be
reduced in future periods to the extent that options are terminated prior to
full vesting. We recorded expenses of $444,000 for the nine months ended
September 30, 1999 in connection with the vesting of stock options issued for
services. Expenses related to options granted to consultants may increase in
future periods if we grant additional options to consultants in exchange for
services or the fair value of our stock increases during the vesting period of
the options. We also recorded expenses of $71,000 for the nine months ended
September 30, 1999 in connection with common stock issued for services.

Interest Income (Expense), Net. Interest income (expense), net, consists of
interest earned on cash equivalents and short-term investments, offset by
interest expense related to bank borrowings and other financing lines.
Interest income (expense), net, was $342,000 for the nine-month period ended
September 30, 1999 and ($4,000) for the nine-month period ended September 30,
1998. The increase in interest income was due to higher average cash
equivalents and short-term investment balances from additional sales of
preferred stock completed in the first three quarters of 1999.

Provision for Income Taxes. We have incurred operating losses for all
periods from inception through September 30, 1999, and therefore have not
recorded a provision for income taxes. Our deferred tax asset primarily
consists of net operating loss carryforwards and nondeductible accruals and
allowances. We have recorded a valuation allowance for the full amount of our
net deferred tax assets, as the future realization of the tax benefit is not
currently likely.

As of December 31, 1998, we had net operating loss carryforwards for
federal and state tax purposes of about $1.9 million and $1.9 million,
respectively. These federal and state tax loss carryforwards are available to
reduce future taxable income and expire at various dates into the year 2018.
We expect that the amount of net operating loss carryforwards that could be
utilized annually in the future to offset taxable income will be limited by
"change in ownership" provisions of the Internal Revenue Code. This annual
limitation may result in the expiration of net operating loss carryforwards
before their utilization.

Year Ended December 31, 1998 and Period from Inception to December 31, 1997

Research and Development. Research and development expenses increased to
$2.0 million in fiscal 1998 from $136,000 for the period from inception to
December 31, 1997. The increase was the result of growth in ReplayTV's
engineering personnel, consultants and materials from inception throughout
1998.

Sales and Marketing. Sales and marketing expenses increased to $764,000 in
fiscal 1998 from $10,000 for the period from inception to December 31, 1997.
The increase was the result of increased personnel to support the commercial
launch of the ReplayTV Service and ReplayTV-enabled PVR in April 1999.

General and Administrative. General and administrative expenses increased
to $325,000 in fiscal 1998 from $9,000 for the period from inception to
December 31, 1997. The increase was the result of increased personnel costs to
support our overall growth.

Stock-Based Compensation. In connection with the grant of employee stock
options, we recorded unearned stock-based compensation of $857,000 for the
year ended December 31, 1998, which is being amortized over a four-year
vesting period using the multiple-option approach.

Interest Income (Expense), Net. Interest income (expense), net, was
$(28,000) and $0 for the year ended December 31, 1998 and for the period from
inception to December 31, 1997, respectively. The increase in interest expense
was due to interest paid on a convertible promissory note issued by one of our
founders.

Quarterly Results of Operations

The following table sets forth a summary of our unaudited quarterly
operating results for each of the seven quarters in the period ended September
30, 1999. This information has been derived from our unaudited financial
statements contained elsewhere in this prospectus and includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of this information when read in conjunction with our audited
financial statements and related notes. The amount and timing of our costs and
operating expenses generally will vary from quarter to quarter depending on
our level of actual and anticipated business activities. Our revenues, if any,
costs and operating results are difficult to forecast and will fluctuate, and
we believe that period-to-period comparisons of our operating results will not
necessarily be meaningful. As a result, you should not rely on them as an
indication of future performance.

Quarter Ended
-------------------------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30,
1998 1998 1998 1998 1999 1999 1999
-------- -------- --------- -------- -------- -------- ---------
(in thousands)

Statement of Operations
Data:
Costs and expenses:
Research and
development.......... $ 160 $ 297 $ 546 $ 958 $ 1,462 $ 1,148 $ 2,204
Programming and
content.............. -- -- -- -- -- 79 481
Sales and marketing... 6 50 237 471 1,484 3,259 3,992
General and
administrative....... 18 30 111 166 314 532 1,245
Hardware distribution
costs, net........... -- -- -- -- -- 167 603
Stock-based
compensation......... 12 24 64 106 200 915 2,374
----- ----- ----- ------- ------- ------- --------
Total costs and
expenses........... 196 401 958 1,701 3,460 6,100 10,899
----- ----- ----- ------- ------- ------- --------
Operating loss.......... (196) (401) (958) (1,701) (3,460) (6,100) (10,899)
Interest income
(expense), net......... 1 1 (6) (24) (33) 33 342
----- ----- ----- ------- ------- ------- --------
Net loss................ $(195) $(400) $(964) $(1,725) $(3,493) $(6,067) $(10,557)
===== ===== ===== ======= ======= ======= ========

Costs and expenses increased each quarter from the first quarter of 1998
through the first quarter of 1999 as we completed the development and
introduction of the ReplayTV Service and ReplayTV-enabled PVR. Costs and
expenses increased during the second and third quarters of 1999 as we
continued to enhance the functionality of the ReplayTV Service and increased
personnel and related costs in anticipation of the full-scale retail launch of
the ReplayTV-enabled PVR in 2000. We expect that future costs and expenses
will increase substantially for the foreseeable future due to subsidies of
ReplayTV-enabled products to reduce consumer prices and encourage the
distribution of our products and increased advertising and promotional
efforts.

Seasonality

Expenditures by advertisers tend to be seasonal and cyclical, reflecting
overall economic conditions as well as budgeting and buying patterns. A
decline in the economic prospects of advertisers or the economy in general
could alter current or prospective advertisers' spending priorities or
increase the time it takes to close a sale with our advertisers, which could
cause our revenues from advertisements to decline significantly in any given
period.

We are subject to seasonality in consumer electronics product sales, which
have traditionally been much higher during the holiday shopping season
(occurring in the fourth quarter) than during other times of the year.
Although predicting consumer demand for our products will be very difficult,
we believe that sales of ReplayTV-enabled products and attraction of new
viewers to the ReplayTV Service will be disproportionately high during the
holiday shopping season when compared to other times of the year. Because we
expect to subsidize the purchase price of ReplayTV-enabled products, we will
incur greater costs and expenses when more ReplayTV-enabled products are sold.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through private
sales of our equity securities. At September 30, 1999, we had raised $67.8
million from the sale of our preferred and common stock and had an accumulated
deficit of $23.6 million, and held cash, cash equivalents and short-term
investments totaling $49.8 million.

Our operating activities used cash in the amount of $13.5 million for the
nine months ended September 30, 1999, $2.5 million for fiscal 1998 and
$144,000 for the period from inception through December 31, 1997. This
negative operating cash flow resulted primarily from our net losses
experienced during these periods. Since inception, we have invested in the
development of our ReplayTV Service and ReplayTV-enabled PVRs and related
marketing efforts and hired additional personnel to support our growth.

Net cash used in investing activities totaled $36.9 million for the nine
months ended September 30, 1999, $149,000 for fiscal 1998 and $33,000 for the
period from inception through December 31, 1997. The net cash used was
primarily for the purchase of property and equipment and the purchase of
short-term investments in the third quarter of 1999. We will continue to
invest our cash in excess of current operating requirements in short-term,
interest-bearing, investment-grade securities, some of which are classified
for accounting purposes as cash equivalents and some as short-term
investments.

Our financing activities generated cash of $64.3 million for the nine
months ended September 30, 1999, $3.3 million for fiscal 1998 and $280,000 for
the period from inception through December 31, 1997. The issuance of preferred
stock to financial investors and strategic corporate partners generated net
proceeds of $67.8 million, or nearly this entire amount.

In June 1999, we entered into a line of credit agreement with a financial
institution. The line provides for the issuance to ReplayTV of up to $1.25
million on a non-formula basis subject to meeting a monthly liquidity
covenant. The line bears interest at the bank's prime rate plus 0.75% and
expires in May 2000. At September 30, 1999, we had no borrowings and a
$500,000 standby letter of credit to a vendor secured under this line.

In January 2000, we issued 5,627,267 shares of Series F preferred stock at
$11.00 per share resulting in net cash proceeds of about $61.4 million. Upon
the closing of this offering, all outstanding shares of Series F preferred
stock will be converted on a one-for-one basis into shares of common stock.
For the quarter ending March 31, 2000, the Company will record a non-cash
preferred stock dividend to reflect the beneficial conversion ratio as a
result of the difference between the issuance price of the Series F preferred
stock and the low end of the assumed initial price range of the common stock
in this offering.

As of September 30, 1999, our principal commitments consisted of our line
of credit and a facilities operating lease totaling $16.1 million through its
expiration in March 2006.

We expect to incur significant operating expenses over the next several
years in connection with the continued development and expansion of our
business. As a result, we expect to continue to incur significant losses and
negative cash flow for the foreseeable future. We expect to devote significant
resources to marketing the ReplayTV Service and to subsidizing our partners'
distribution of ReplayTV-enabled products. Although we believe that our
existing cash, cash equivalents, short-term investments and net proceeds from
this offering will be sufficient to satisfy our cash requirements for the next
12 months, there can be no assurance that we will not require additional
financing within this time frame. If market acceptance of our ReplayTV Service
is faster than expected or we increase the amount of subsidy per unit in order
to maintain competitive pricing within the retail market, we will devote
substantially more resources to subsidize our distribution partners than
currently anticipated. In addition, we will need to raise additional capital
beyond the next 12 months in order to fund the continued development and
distribution of the ReplayTV Service. We may not be able to raise additional
funds on terms acceptable to us, or at all. If additional funds are raised
through the sale of equity or convertible debt securities, our stockholders
may experience additional dilution, and these securities may have rights,
preferences or privileges senior to those of our stockholders.

BUSINESS

Overview

ReplayTV empowers television viewers to watch what they want when they
want. We have developed the ReplayTV Service as a living room portal through
which viewers can easily access, navigate, control and store television
programming. We believe the ReplayTV Service will transform the way consumers
access television programming, advertising and, ultimately, commerce services.
We believe our portal creates a new, more effective medium for advertisers,
content providers and cable and satellite system operators to target
consumers. Based on ReplayTV-sponsored survey data, viewers using the ReplayTV
Service watch and record more hours of television per week and find television
viewing more appealing than before using the ReplayTV Service. We believe this
is because the ReplayTV Service gives viewers greater choice and more control
over their television viewing.

The ReplayTV Service is currently delivered through a personal video
recorder, or PVR, designed and developed by us. The PVR is a device connected
to a television that employs a hard disk drive, software and other technology
to digitally record and access content. Through ReplayTV's combination of
proprietary software, hardware and media relationships, viewers personalize
their television viewing. The ReplayTV Service allows viewers to set up
personal channels that automatically record their favorite shows. Programs can
then be replayed "on demand," with no tapes to search or rewind. Viewers can
also search for programs based on a theme, a specific hobby or a favorite
actor or director. ReplayTV-enabled PVRs operate with existing broadcast,
cable and satellite infrastructures. In the future, we expect that our PVR
technology will be incorporated into other television-related consumer
electronics devices that will provide access to the ReplayTV Service.

We announced our ReplayTV Service in January 1999 and began shipment of our
PVRs in April 1999. We intend to commence full-scale retail distribution
through leading consumer electronics companies this year. Matsushita-Kotobuki
Electronics Industries, Ltd., or MKE, a subsidiary of Matsushita Electric
Industrial Co., Ltd., the largest manufacturer of VCRs sold in North America,
has agreed to market and sell PVRs under the Panasonic brand featuring the
ReplayTV logo. The retail launch with MKE is expected to occur in mid-2000,
and MKE is working to develop new consumer electronics devices that
incorporate ReplayTV technology. We believe that relying on MKE in the future
to manufacture, market and sell ReplayTV-enabled products will allow us to
focus our creative resources on promoting and enhancing the ReplayTV Service.
We are also in discussions with a number of other consumer electronics
companies regarding the manufacture, marketing and sale of ReplayTV-enabled
products.

The ReplayTV Service has been designed to enable advertisers, content
providers and cable and satellite system operators to exploit the dramatic
growth potential of PVRs. Paul Kagan Associates, Inc. estimates that there
will be about six million devices with PVR functionality installed in U.S.
households by 2002, with that number increasing to about 16 million by 2005,
representing about 15% of projected U.S. households in 2005. International
Data Corporation estimates that there will be about nine million devices with
PVR functionality installed in U.S. households by 2002, with that number
increasing to about 40 million by 2005, representing about 37% of projected
U.S. households in 2005.

Industry Background

More American households have televisions than have telephone service. The
average television adult in the United States spends about 4.3 hours per day
watching television. According to Kagan, there are about 100 million
television households in the United States, implying a market penetration of
nearly 98%. According to U.S. government data, the average American household
owns about 2.4 televisions.

The number of television programming options available to the average
viewer has increased significantly in recent years. The explosive growth in
the number of available channels has led to an overwhelmingly diverse
selection of programming through which viewers must sort. Viewers have
thousands of programming choices each week.

Television advertising remains the dominant medium for building general
awareness for consumer products and services. Kagan estimates that over $52
billion was spent on broadcast and cable television advertising in the U.S. in
1999. Over the past several decades, revenue from television advertising has
consistently increased despite the introduction of new technologies that
initially appeared to threaten traditional TV advertising, such as the remote
control and the VCR. Indeed, even in the face of viewer fragmentation, revenue
from television advertising has increased in every year but one since 1975.

The ubiquitous nature of television, its singular ability to reach large
and increasingly more targeted audiences, and the growing number of television
viewing choices are creating significant new challenges for viewers, content
providers, advertisers and system operators. These challenges create
opportunities for personal television service providers.

Challenges Faced by Viewers. Television has always provided viewers with
programming choices. However, with rapidly increasing numbers of channels and
programs, viewer choice now borders on confusion. Despite an increasing number
of available channels and programs, viewers continue to complain that they
cannot find anything that they want to watch. Viewers desire greater ease of
use, convenience and control in television viewing, particularly in light of
their decreasing leisure time. We believe today's television viewers want the
ability to:

. view the shows they want to watch at times that are convenient to them,
rather than at the times at which they are scheduled;

. easily find and record every episode of their favorite show whenever it
is on;

. easily navigate through available content offerings to locate interesting
programs to watch, especially when they do not have a particular show in
mind; and

. access expanded information about available programming content.

Challenges Faced by Content Providers. Competition for the attention of
television viewers has dramatically increased over the past decade. The
expansion of the cable and satellite broadcast infrastructure and the
subsequent proliferation of available channels have fragmented the television
audience. In addition, the emergence of rival media, such as the Internet and
DVDs, and even the videocassette, has further compounded the problem.

This fragmentation and broader competition has placed additional pressure
on content providers to attract more targeted audiences and to more
effectively evaluate viewer habits, preferences and frequency of watching
specific television shows. These developments make it increasingly more
difficult for content providers to attract more viewers. In order to do so,
content providers must:

. promote their shows more effectively and efficiently;

. continue to increase television usage in the face of alternative media;

. build their own brand recognition and loyalty; and

. provide viewers with easier access to their programs.

Challenges Faced by Advertisers. Despite declining market share and ratings
with respect to individual networks and programs, the cost of broadcast
advertising has increased. According to data from Nielsen Media Research, the
average cost of prime time advertisements on the major television networks
increased almost 28% between the 1994/95 season and the 1998/99 season. In
addition, cost constraints and the basic nature of traditional broadcast
television have placed limits on the length of messages that advertisers can
deliver. At the same time, advertisers have been forced to spend increasing
amounts to target desired demographic groups and

to spread their advertising budgets over an ever-expanding number of channels
and programs. As a result of these trends, advertisers must:

. target viewers by finding better ways to identify, measure and respond to
viewers' programming and purchasing preferences;

. deliver information to consumers more effectively; and

. spend advertising budgets as efficiently as possible.

Challenges Faced by Cable and Satellite System Operators. Cable and
satellite system operators continue to make heavy investments to upgrade their
broadband infrastructures in response to competitive pressures, growing
consumer demand for additional and better programming and the advent of new
technologies. In order to realize returns on these investments, system
operators face the challenge of increasing revenues through the launch of new
services without cannibalizing existing lines of business. Furthermore,
selling excess network capacity can provide additional returns on these
investments. In addition, reducing subscriber churn and growing subscriber
bases have become core strategic goals because the market valuations of cable
and satellite system operators are largely based on numbers of subscribers. As
a result of these trends, cable and satellite system operators must:

. provide new features and functionality in order to retain existing
customers and attract new customers;

. enhance the appeal of existing premium offerings, thereby increasing
premium penetration and reducing subscriber churn rates for premium
services;

. enhance the appeal of existing pay-per-view offerings, thereby increasing
pay-per-view buy rates; and

. launch new and enhanced services such as video-on-demand and TV-commerce
at the lowest possible cost to maximize returns.

The ReplayTV Service

We have developed the ReplayTV Service to become the living room portal
that allows viewers to easily store, navigate and control television viewing,
thereby creating a new medium for advertisers, content providers and cable and
satellite system operators. Through this new medium, content providers and
advertisers can promote and deliver their programming and commercial messages
more effectively to consumers. The ReplayTV Service has won several consumer
awards, including the "Best of Show" award in the video category announced at
the International Consumer Electronics Show in January 1999, the "Innovations
2000" award in both the video software and video hardware categories announced
at the International Consumer Electronics Show in January 2000 and David
Coursey's Showcase 1999 People's Choice Award.

Benefits to Viewers. Just as consumers have achieved enhanced freedom and
control over their lives through automated teller machines, cellular phones,
the Internet and 24-hour grocery stores, we believe television viewers want
greater freedom and control with respect to their television viewing
experiences. The ReplayTV Service provides this freedom and control by
enabling viewers to:

. Watch what they want when they want. With ReplayTV, viewers can watch
shows on their own schedules. Viewers can easily select, view or replay
television shows through a simple-to-use on-screen channel guide.
ReplayTV's interactive channel guide and clock are conveniently and
automatically updated and synchronized on a nightly basis when the
ReplayTV-enabled PVR dials into a secure remote server.

. Never miss their favorite shows. ReplayTV is unlike any VCR. Most viewers
use their VCRs only for viewing pre-recorded tapes rather than recording
their favorite shows, due to the complexity involved in programming the
VCR. ReplayTV uses a hard disk drive rather than videotape to record,
store and replay currently up to twenty hours of television programming
and content using MPEG2, a digital compression technology. Recordings are
activated at the touch of a button using ReplayTV's universal remote.

Programs can be easily configured into personal, or on-demand channels, so
that viewers will never miss their favorite shows.

. Locate, capture and record the best in television. ReplayTV enables
viewers to locate programs of interest, especially when they do not have
a particular show in mind to watch. With the ReplayTV Service, viewers
will be able to find and record programs that match their viewing
preferences so that when they are ready to watch TV, they will be able to
choose from a number of shows that interest them. The ReplayTV Service is
expected to feature unique and exciting program information, promotions
and content on theme-based or branded content areas called ReplayZones.
ReplayZones will allow viewers to easily navigate through the wide
variety of content that viewers might otherwise be unaware of.

. Control live TV. The ReplayTV Service offers real-time viewing features
not possible with VCRs, such as pause, multi-speed slow motion, rewind
and seven-second instant replay because the ReplayTV Service continuously
records the program being watched. In addition, viewers can use the fast
forward feature to catch up to the live broadcast in progress.

. Enjoy personal television services with no monthly fees. With the
purchase of a ReplayTV-enabled PVR, the basic ReplayTV Service is
provided to viewers with no monthly fees and includes free software
upgrades and promotional content.

Benefits to Content Providers. The ReplayTV Service can enable television
programmers and broadcasters to proactively compile their content in ways that
will effectively promote their shows, thereby creating an opportunity for
greater audience growth, loyalty, recognition and measurement. Key benefits
offered to content providers include:

. Generating a larger audience. The ReplayTV Service allows content
providers to reach an audience that may have been unable to watch their
shows due to conflicts between broadcast times and their own personal
schedules. ReplayTV-sponsored surveys indicate that viewers using the
ReplayTV Service watch an average of about 2.5 more hours and record an
average of about seven more hours of television each week than before
they began using the ReplayTV Service. In addition, because these viewers
are able to watch programming on their own schedule with VCR-like
functionality, we believe they are more likely to actually watch the
whole show. The ReplayTV Service will allow content providers to create
ReplayZones that will deliver program information, promotions and content
on channels that are branded and edited by the content providers
themselves. In the future, we also plan to offer content providers the
opportunity to promote shows that are similar even if the shows are not
broadcast sequentially. Other future programming opportunities include
sponsoring premium personal channels and providing additional footage,
such as "director's cuts," of programs for ReplayTV viewers.

. Enhanced viewer loyalty and retention. We believe that the ability to
easily record programs using the ReplayTV Service will increase the
likelihood that viewers will continue viewing new episodes of a
particular series or show. For example, the show-based recording feature
allows viewers to automatically record every episode of their favorite
show. Viewers also can easily replay the shows they have recorded at
their convenience long after they have aired, thereby enhancing viewer
retention and loyalty.

. New platform for innovative content delivery. The ReplayTV Service is
being developed to facilitate an entirely new paradigm for delivering
programming, products and services to viewers. We anticipate that viewers
will be able to simply "point and click" when ordering merchandise,
movies, sports events, programming packages, games and other products and
services, thereby offering content providers a new way to attract viewers
and expand audiences.

Benefits to Advertisers. We believe that our ReplayTV Service will offer
advertisers a new platform that provides a more effective way to deliver
information to consumers, a more efficient way to spend advertising budgets and
a better way to target audiences and identify, monitor and respond to
consumers' programming and purchasing preferences. Key benefits offered to
advertisers include:

. More effective targeting of consumers. The ReplayTV Service creates a
platform for specialized advertising. The ReplayTV platform is expected
to provide more accurate audience measurement and

viewer data, while maintaining viewer privacy on an individual basis. The
ReplayTV Service will enable advertisers to more effectively target
consumers who have actively selected specific programs to watch and
therefore are more likely to watch an entire show. Advertisers will also
be able to target advertising to viewers who have created theme-based
ReplayTV channels based on a specific topic, such as "tennis."

. Platform for new advertising opportunities. ReplayTV's basic PVR
architecture can support a wide range of future innovative advertising
services. For example, advertisers may be able to purchase new
advertising on recorded shows with the use of lead-in and lead-out
advertisements. Viewers may also be able to click on banners or short,
full motion video commercials to obtain longer, infomercial-style
content. Ultimately, viewers may be able to purchase a featured product
or service using the remote control, creating an interactive on-air
shopping experience for the viewer.

Benefits to Cable and Satellite System Operators. The ReplayTV Service
enables cable and satellite system operators to enhance the attractiveness of
their existing and anticipated services to consumers. We believe this will
enable cable and satellite system operators to increase acceptance of new
service offerings and improve growth prospects of existing lines of business.
Furthermore, we believe that greater customer satisfaction will lead to
reduced subscriber churn rates and increase the operators' ability to market
to new customers. Key benefits offered to cable and satellite system operators
include:

. Opportunities to reduce churn and grow subscriber base. The ReplayTV
Service is designed to reduce viewer frustration, make programming
accessible to viewers on their schedule, assist viewers in navigating the
expanding programming universe and allow viewers to customize their
viewing experience based on their personal preferences. We expect that
these benefits will increase customer satisfaction with cable and
satellite subscriptions and, therefore, reduce subscriber churn. In
addition, these benefits provide system operators with new marketing
tools to convert households that have never subscribed to or have
cancelled cable or satellite services into paying subscribers.

. Enhanced appeal of premium offerings. We believe that there is a
significant portion of cable and satellite customers who do not subscribe
to premium channels such as HBO and Showtime because they lack the
ability to easily watch what they want when they want. By enabling
subscribers to view their favorite premium shows on their own schedules,
we believe that service operators can increase premium penetration and
retention rates.

. Enhanced appeal of pay-per-view offerings. Convenience increases pay-per-
view usage. For example, the buy rates, or movie purchases per month, for
households with access to more advanced cable or satellite technologies
known as near video-on-demand are more than three times those for
conventional pay-per-view systems. With future versions of the ReplayTV
Service, subscribers will be able to watch selected movies or events when
they want, with the ability to control how they view the movie or event
with features that exceed VCR functionality.

. Platform for new services and better capacity utilization. We expect that
the ReplayTV Service will provide new sources of revenue for system
operators, such as near video-on-demand or TV-commerce services. For
example, system operators could pre-deliver onto ReplayTV-enabled
products a variety of pay-per-view movies or events from which
subscribers could choose to purchase and view at their convenience. The
hard disk capacity of the ReplayTV Service can be used to store data
transmitted into viewers' homes during off- or non-peak hours, thereby
supporting data-intensive services such as near video-on-demand with
bandwidth for which there are few current applications.

ReplayTV Strategy

Our goal is to build a major media company by establishing our proprietary
ReplayTV Service as the leading living room portal to enrich personal
television viewing, advertising and TV-commerce. Our strategy to achieve this
goal includes the following key elements that leverage the benefits of the
ReplayTV Service:

Enhance the Living Room Experience. The ReplayTV Service is designed to
enhance the traditional living room experience. ReplayTV incorporates the best
personal computer technologies, such as hard drive storage, a search engine
and a microprocessor, while still maintaining the ease and comfort of living
room TV entertainment. Because we do not identify the ReplayTV Service as
either a personal computer or an Internet-based service, we believe the
ReplayTV Service will appeal to a broader range of viewers.

Aggressively Drive Rapid Market Penetration. We are focused on making
ReplayTV the standard for personal television, which depends upon vigorously
accelerating our market penetration.

. Partnership-based distribution model. Our strategy is to increase our
market penetration by incentivizing consumer electronics manufacturers
and cable and satellite system operators to deliver ReplayTV-enabled
products to their customers. We plan to license our technology to major
consumer electronics manufacturers to manufacture, distribute and market
ReplayTV-enabled units to customers. We have a manufacturing, marketing
and distribution agreement with MKE, a subsidiary of Matsushita Electric
Industrial Co., Ltd., the largest manufacturer of VCRs sold in North
America, and we intend to enter into similar relationships with other
consumer electronics companies in the future. We anticipate that future
versions of our service will be integrated into other consumer
electronics products, such as cable set-top boxes, satellite receivers,
DVD players, television sets and Internet access devices. By offering
consumers a broad array of ReplayTV-enabled products, we can expand the
infrastructure upon which our services may be offered and increase our
installed base.

. Lower consumer price point. We plan to subsidize the retail price of our
PVRs in order to lower the cost to the consumer. We anticipate that the
prices of our PVRs and size of the subsidy will generally decrease over
the long term as economies of scale and decreasing component costs reduce
manufacturing costs. We expect that component costs will decline largely
because our PVRs utilize components that are under continual pricing
pressure as a result of the proliferation of consumer electronics
products, such as DVD players and personal computer peripherals, that
incorporate many of these components.

. Multi-channel marketing to customers. We intend to dedicate substantial
resources to promoting the ReplayTV brand through multiple advertising
and marketing channels, including direct mail, infomercials, non-
infomercial television, radio, online and print advertising, and free-
standing inserts.

. Free ReplayTV Service and customer support. We have designed the ReplayTV
Service with customer needs in mind. The basic ReplayTV Service is
available free of charge to purchasers of ReplayTV-enabled products,
while the services offered by our competitors are subscription-based. We
also provide free promotional content and free upgrades, which we
download remotely without effort by the viewer. In addition, we provide
free customer support by e-mail and telephone.

Leverage the Strength of Our Existing Media Relationships. We are building
strong industry relationships by offering benefits to established industry
participants. The ReplayTV Service is designed to benefit broadcasters, cable
and satellite system operators, content companies and other existing industry
participants by offering new revenue opportunities while preserving
traditional revenue streams. Based on this model, we are building strong
relationships with some of the largest media companies in the world. For
example, we are creating ReplayZones for NBC, Showtime and Turner, and our
existing equity investors include Disney, Liberty Media, NBC, Showtime, Time
Warner and Tribune. Our ability to build strong industry relationships is
greatly enhanced by our senior management team, which has substantial high-
level experience in television programming, content development, advertising
and promotion, and media-related finance.

Create New and Innovative Advertising Opportunities. We believe our
ReplayTV portal will provide advertising opportunities that do not exist in
television today. For example, we plan to offer graphic and full-

motion advertising on the Replay Guide and other viewer interfaces,
transitional advertisements when the pause or other features are activated,
lead-in or lead-out advertisements inserted at the beginning or end of
recorded programs and, with the cooperation of content providers, targeted
advertisements inserted over existing broadcast messages.

Develop Enhanced Services. We plan to expand the revenue-generating
opportunities of the ReplayTV Service by working with and, in appropriate
cases, securing licenses from, strategic partners to include future generation
services such as premium subscription services, near video-on-demand, and TV-
commerce.

. Premium subscription services. We intend to offer subscriptions to a
premium service that would allow customers to create personalized
channels such as individualized news, sports, business and weather
channels containing segments of content that are automatically combined
according to viewer preferences. For example, we are working with CNN to
index its program segments by key word and deliver targeted segments to a
viewer's personal news channel based upon his or her customized
preferences. We believe that sponsorship of premium subscription services
by content providers will provide a new revenue stream.

. Near video-on-demand. We intend to offer near video-on-demand services
that would enable viewers to watch select pay-per-view movies at the
times convenient to them. A selection of pay-per-view movies would be
downloaded to the ReplayTV Service overnight, and viewers could then
choose a movie for viewing at their desired time for a one-time fee. With
future increases in both hard disk storage and transmission capacity, we
expect to be able to pre-deliver a substantial library of movies to the
ReplayTV Service, which viewers could conveniently access on a pay-per-
view basis.

. TV-commerce. As a living room portal, the ReplayTV interface provides
several TV-commerce opportunities. Similar to the Internet, we intend to
provide the viewer with access to one-click shopping for merchandise
offered by partners through the ReplayTV Service.

The ReplayTV Platform

The ReplayTV-enabled PVR. The ReplayTV Service is delivered through a
personal video recorder, or PVR, designed and developed by ReplayTV. The
ReplayTV-enabled PVR connects with a viewer's television set and cable or
satellite set-top box and employs a hard disk drive and software technology to
digitally record and replay analog or digital broadcast television signals. As
a viewer watches television, the ReplayTV-enabled PVR automatically records
the current program onto its hard disk, enabling the viewer to control live
television with features such as pause, rewind and multi-speed slow motion.
Using the ReplayTV remote control, the viewer can manipulate a live broadcast,
select shows to record or replay recorded shows stored on the hard disk. The
hard disk in the current model of the ReplayTV-enabled PVR can accommodate up
to 20 hours of recording under standard resolution, and we expect to introduce
an additional model that will accommodate 30 hours of standard recording
capacity in mid-2000.

The ReplayTV Network. The ReplayTV network forms the backbone of the
ReplayTV Service. ReplayTV-enabled PVRs automatically dial into the ReplayTV
network each night through a standard telephone line to receive downloads of
updated information. Through this connection, individual ReplayTV-enabled PVRs
are able to receive regular updates of Channel Guide data, advertisements and,
in the future, ReplayZone content. In addition, connecting to the ReplayTV
network allows ReplayTV-enabled PVRs to receive free software upgrades and to
automatically download new features of the ReplayTV Service. We expect that
current users of the ReplayTV Service will be upgraded to version 2.0 of the
ReplayTV Service software in mid-2000.

Communications services for the ReplayTV network are currently provided by
UUNET Technologies, Inc. The software for the ReplayTV network is currently
maintained in servers owned by ReplayTV and operated by Exodus Communications,
Inc. in a data center located in Santa Clara, California. ReplayTV has also
arranged for backup data center services at a second outside facility. We are
in the process of qualifying additional network communications providers in
order to incorporate redundancy in our network. We plan to enter into an
arrangement with an additional network provider in the near future, and then
to set up a duplicate data center in the eastern United States.

The ReplayTV Experience

The ReplayTV Service is designed for television viewers who want to watch
their favorite shows when they want to watch them, with no monthly fees. The
ReplayTV Service is customized for the traditional living room viewing
experience. With an easy-to-use interface, the ReplayTV Service allows viewers
to personalize their television viewing by:

. automatically recording television shows on a hard disk;

. controlling live television using features such as pause, rewind, multi-
speed slow motion and seven-second instant replay;

. easily finding the shows that interest them; and

. accessing specialized content on theme-based or branded content areas
called ReplayZones, to be available in version 2.0 of the ReplayTV
Service software.

Using the ReplayTV Service. The viewer navigates the ReplayTV Service using
the ReplayTV remote control. ReplayTV offers three basic interfaces--the
Channel Guide, the Replay Guide and, with the introduction of version 2.0 of
the ReplayTV Service software, ReplayZones--rather than just one access point.
The Channel Guide combines regularly updated television programming with
proprietary software to provide an interactive lineup of all channels
available to the viewer. The Replay Guide is an on-screen guide of personal
channels that viewers create based on shows they select to record or themes
they define to locate and record shows. ReplayZones are portals to access
theme-based programming focused around a category or a network. The viewer can
directly access the central screens through their corresponding remote control
buttons or by selecting them from the Main Menu, both of which are shown
below:

[SCREEN SHOTS OF 1. MAIN MENU, AND 2. REPLAYTV PVR AND REMOTE CONTROL]

Channel Guide. The ReplayTV Service includes an on-screen Channel Guide
that combines regularly updated television programming with proprietary
software to provide an interactive lineup of all channels available to the
viewer. The Channel Guide is shown here:

[SCREEN SHOT OF CHANNEL GUIDE SHOWING ALLY McBEAL]

The Channel Guide is updated nightly via an automatic download from the
ReplayTV Service and is based directly on the analog broadcast, cable or
satellite services that the viewer subscribes to, as specified by the viewer
during the on-screen setup process. If the viewer receives television from
more than one source, the Channel Guide presents all of the available
programming in one convenient guide. From the Channel Guide screen, the viewer
can either select a show to watch or select a show for recording at a later
time.

Finding shows to record. The ReplayTV Service allows the viewer to quickly
find a show for recording through its Find Shows feature. The viewer can
search by entering the show title, a part of the title, an actor or director
or even a topic. A sample search using the Find Shows feature is shown below:

[SCREEN SHOT OF FIND SHOWS SEARCH FOR "TENNIS"]

Once the ReplayTV Service completes a search, the viewer can choose to
record an episode of a particular show located by the Find Shows feature or
create a show-based ReplayTV channel that will automatically record every
episode of a selected show. A single-record ReplayTV channel is a channel that
the viewer has set up to record just one broadcast of a show. Only the chosen
show is recorded. A show-based ReplayTV channel set up by the viewer will
record every episode of a recurring show, whether it is broadcast daily or
weekly. When searching by topic, the viewer can also create a theme-based
ReplayTV channel that will automatically search for and record every show
related to that topic on an ongoing basis. For example, the viewer can create
a theme-based channel to record all shows related to the keyword "tennis." In
addition to capturing televised tennis matches, the tennis-themed ReplayTV
channel would also record a biography about a famous tennis player or a show
about the history of tennis at Wimbledon.

Recording shows. The ReplayTV Service allows the viewer to record a show
with the touch of a button without programming exact start times or channel
settings. Once the viewer has identified a particular show, the viewer simply
presses the Record button on the remote control to record the show for future
viewing. By pressing the Record button twice, the viewer creates a show-based
ReplayTV channel, which automatically records every episode of the show. The
viewer can also select shows to record by pressing the Select button on the
remote control and completing the Record Options screen, as shown below:

[SCREEN SHOTS OF 1. CHANNEL GUIDE SHOWING ALLY McBEAL, AND 2. RECORD
OPTIONS SCREEN]

Once a show has been selected for recording, the Channel Guide displays a
single solid red dot to confirm a guaranteed recording of a single show and
two solid red dots to confirm a guaranteed recording of a show-based ReplayTV
channel. Non-guaranteed recordings are represented by hollow red dots. The
ReplayTV Service will always record guaranteed shows, and will record non-
guaranteed shows if space is available on the hard disk at the time the show
is scheduled to air. The viewer manages hard disk space by setting up
guaranteed and non-guaranteed shows and by deleting recorded shows after they
have been watched.

ReplayZones. ReplayZones, to be available in version 2.0 of the ReplayTV
Service software, are portals to access theme-based programming around a
category or a network. ReplayZones, which are created by our media partners or
by ReplayTV, contain program information, promotions and content for viewers.
Viewers can browse through topical ReplayZones and choose programs to record.
For example, we plan to introduce a Movie Zone, where the viewer chooses movie
channels that are organized by genre, such as action adventure, romantic
comedy or drama. Once the viewer selects a particular channel from the
ReplayZone, it is added to the Replay Guide for future recording. By choosing
a genre represented within a ReplayZone instead of a specific program, a
viewer can record many programs automatically. ReplayZones are a dynamic part
of the ReplayTV Service, and we plan to continuously adapt them in order to
encourage repeated visits and use. In addition, through strategic
relationships with ReplayTV, television programmers and other content
providers can create their own branded ReplayZones with customized content and
promotions for viewers.

An example of a ReplayZone is shown here:

[SCREEN SHOT OF REPLAYZONE]

Replay Guide. Recorded shows are listed in the Replay Guide, shown below.
To watch a recorded show, the viewer selects a show from the Replay Guide and
chooses "Play" from the on-screen menu. All control features offered by the
ReplayTV Service, such as pause, rewind, multi-speed slow motion, fast
forward, seven-second instant replay and frame-by-frame advance, are available
while viewing a recorded ReplayTV show. Viewers can also cancel a recording
before it airs and change the recording options they had previously set for
any ReplayTV show.

[SCREEN SHOT OF REPLAY GUIDE]

Customer support. Viewers can access our free high-quality customer support
by e-mail and telephone.

ReplayTV Advertising Services

Advertisers have embraced every new avenue and medium to reach their
audience, but continue to favor television over other forms of media due to
its unique "living room" access and its broad reach. We believe that our
ReplayTV Service will offer advertisers a new platform that provides a more
effective way to deliver information to consumers, a more efficient way to
spend advertising budgets and a better way to target audiences and identify,
monitor and respond to consumers' programming and purchasing preferences. The
ReplayTV Platform is expected to provide more accurate audience measurement
and viewer data, while maintaining viewer privacy on an individual basis. This
should allow advertisers to better target advertisements at viewers who have
actively selected and chosen specific programs to watch.

Version 2.0 of the ReplayTV Service software will offer advertisers the
ability to advertise in theme-based or branded content areas called
ReplayZones. For example, a "health" zone focused on healthcare and fitness-
related programming would provide a target audience for pharmaceutical
companies and other advertisers seeking a health-focused demographic.
ReplayTV's basic PVR architecture can support a wide range of future
advertising services. In the future, we intend to offer a variety of
additional advertising opportunities through the ReplayTV Service, such as:

. graphic and full-motion video advertising on the Replay Guide and other
viewer interfaces;

. transitional advertising such as screen swipes when the pause button or
other features are activated;

. lead-in and lead-out advertising inserted at the beginning or end of
recorded programming; and

. targeted advertisements inserted over existing broadcast messages with
the cooperation of content providers.

Future Offerings

The ReplayTV Service is being developed to facilitate an entirely new
paradigm for delivering programming, products and services to viewers based on
TV-commerce. We anticipate that viewers will ultimately be able to use the
ReplayTV Service to simply "point and click" when ordering movies, sports
events, programming packages, games and other products and services. In
particular, we plan to expand the revenue-generating opportunities of the
ReplayTV Service by working with, and, in appropriate cases, securing licenses
from, strategic partners to include future generation services such as premium
subscription services, near video-on-demand, and TV-commerce.

. Premium Subscription Services. We intend to offer subscriptions to a
premium service that would allow customers to create personalized
channels, such as individualized news, sports, business and weather
channels containing segments of content that are automatically combined
according to viewer preferences. For example, we are working with CNN to
index its program segments by key word and deliver targeted segments to a
viewer's personal news channel based on his or her customized
preferences.

. Near Video-on-Demand. We intend to offer near-video-on-demand services
that would enable viewers to watch select pay-per-view movies at the
times convenient to them. A selection of pay-per-view movies would be
downloaded to the ReplayTV Service overnight, and viewers could then
choose a movie for viewing at their desired time for a one-time fee.

. TV-Commerce. We intend to provide the viewer with access to one-click
shopping for merchandise offered by partners, including sponsors of
ReplayZones, through the ReplayTV Service.

Media Relationships

As part of our strategy to become a major media company, we are pursuing
strategic relationships with television programmers, advertising agencies and
other potential media partners. Our existing equity investors include leading
media companies such as Disney, Liberty Media, NBC, Showtime, Time Warner and
Tribune.We plan to leverage our media relationships to expand our advertising
and sponsorship opportunities, offer unique programming content, differentiate
the ReplayTV Service and enhance the ReplayTV brand.

For example, we have entered into an agreement with Turner Broadcasting to
produce ReplayZones that highlight current and upcoming programming from the
Turner television networks. Turner and ReplayTV will jointly sell advertising
space on the Turner ReplayZones and will share advertising revenues. In
addition, we have agreed to work with Turner to develop future collaborative
offerings on the ReplayTV Service, including a CNN premium channel,
advertisements promoting Turner television programs and TV-commerce for Turner

products. We have also entered into agreements to produce ReplayZones with NBC
and Showtime, and we expect to enter into additional programming and
sponsorship relationships with other media companies in the future.

Distribution and Manufacturing Relationships

We are pursuing strategic relationships with consumer electronics
manufacturers, cable and satellite system operators and manufacturers of cable
and satellite receivers to manufacture, distribute and market ReplayTV-enabled
products. Our existing equity investors include leading manufacturing and
multi-channel distribution companies such as EchoStar, MKE, Sharp and Time
Warner. We intend to leverage these manufacturing and distribution
relationships to accelerate our market penetration and rapidly grow our
installed base of viewers.

All ReplayTV-enabled PVRs are currently manufactured by Flextronics
International, a third party contract manufacturer. In addition, we have
entered into an agreement with MKE, a subsidiary of Matsushita Electric
Industrial Co., Ltd., the largest manufacturer of VCRs sold in North America,
to manufacture, distribute and market ReplayTV-enabled PVRs under the
Panasonic brand featuring the ReplayTV logo. We anticipate that MKE will begin
distributing ReplayTV-enabled PVRs manufactured by Flextronics in mid-2000.
Under our agreement with MKE, MKE has been granted subsidies and favored
customer terms, as well as licenses to manufacture and distribute ReplayTV-
enabled PVRs incorporating our driver and client device software. We also
intend to enter into agreements with other equipment manufacturers to
integrate the ReplayTV Service into additional consumer electronics products,
such as DVD players, television sets and Internet access devices. We believe
that entering into strategic relationships with MKE and other consumer
electronics companies to manufacture and sell ReplayTV-enabled products will
enable us to focus our creative resources on promoting and enhancing the
ReplayTV Service. In addition, we intend to leverage these partners'
established retail distribution channels to drive the rapid market penetration
of the ReplayTV Service.

We also plan to establish distribution relationships with cable and
satellite system operators and manufacturers of cable and satellite set-top
boxes. We believe that strategic relationships with cable and satellite system
operators will enable us to rapidly expand our installed base of viewers.
Furthermore, we intend to enter into relationships with cable and satellite
equipment manufacturers to integrate the ReplayTV Service with cable set-top
boxes and satellite receivers and expand the distribution of the ReplayTV
Service.

To drive rapid market penetration, we anticipate that all of our agreements
with third-party manufacturers will require us to subsidize the manufacturing
cost of ReplayTV-enabled products for the foreseeable future in order to lower
the retail price to the consumer. We anticipate that the size of the subsidy
and the price of ReplayTV-enabled products will generally decrease over the
long term as the cost of manufacturing ReplayTV-enabled products declines due
to increases in volume and also as the costs of the components incorporated
into ReplayTV-enabled products decrease. We expect that component costs will
decline largely because our ReplayTV-enabled products utilize components that
are under continual pricing pressure as a result of the proliferation of
consumer electronics products, such as DVD players and personal computer
peripherals, that incorporate many of these components.

Sales and Marketing

ReplayTV's sales and marketing strategy is designed to establish the
ReplayTV brand, increase customer awareness of personal television and the
ReplayTV Service and build our installed base of viewers. Beginning in mid-
2000, we plan to initiate an aggressive marketing campaign to promote the
ReplayTV Service as the brand leader in the personal television market. This
multi-channel campaign will include infomercials, conventional television and
radio advertising, print, outdoor and online advertising, and free-standing
inserts, on both national and regional levels.

We anticipate that retail distribution will become the primary channel for
sales of ReplayTV-enabled products in 2000. Since we began shipping ReplayTV-
enabled PVRs in April 1999, we have sold PVRs to

consumers principally through our web site, www.replaytv.com, and our toll-
free number, 1-877-ReplayTV, as well as through online retailers such as
Amazon.com, Roxy.com and 800.com. MKE plans to launch the full-scale retail
distribution of ReplayTV-enabled PVRs under the Panasonic brand featuring the
ReplayTV logo in mid-2000 through major national and regional retail chains.
We intend to leverage the established retail distribution channels of MKE and
our other distribution partners to drive our installed base of ReplayTV
viewers. In addition, we intend to subsidize the cost of manufacturing
ReplayTV-enabled products in order to maintain an attractive retail price and
accelerate our market penetration.

MKE and our other distribution partners will take primary responsibility
for selling ReplayTV-enabled products to retailers and supporting the retail
channel through marketing, in-store promotions and sales force training.
However, we will guide the creative content of these marketing efforts in
conjunction with our broader marketing campaign. In addition, we will support
the sales and marketing efforts of MKE and our other distribution partners by
educating retailers about PVRs and the ReplayTV Service and by training their
sales teams.

The current version of our ReplayTV Service permits us to provide certain
limited advertising; however, we are continuing to develop additional
functionality to enable us to deliver additional advertising and other
services on the ReplayTV Service in conjunction with various media partners.
We expect to share a significant portion of the related advertising and
service revenues with these media partners. Beginning in the second half of
2000, we expect to build a direct sales force to market our advertising
inventory.

Research and Development

Our engineering efforts are focused on three main areas: hardware platform
engineering, client service software development and network infrastructure
development.

Hardware Platform Engineering. We have developed hardware reference
implementations (including both electrical and mechanical designs) and the
necessary platform-specific software to enable our partners to design,
manufacture and distribute a large number of products enabled by the ReplayTV
Service, including stand-alone devices, DVD players and cable and satellite
set-top boxes. Our implementations are used by our partners as the basis for
their own product designs, with each partner deciding how much of our
reference implementation it will use. We also develop and provide
documentation of our reference platform designs, as well as samples of various
elements of the platform-specific software. As with our agreement with MKE, we
anticipate that we will grant third-party manufacturers licenses to use our
client device and driver software to distribute and manufacture ReplayTV-
enabled devices and to develop improvements to the platform-specific software.
We work closely with our partners and with component suppliers and data
storage suppliers to lower the cost of the ReplayTV platform and to take
advantage of newly developed technologies. We intend to work with a broad
range of partners to develop our technology platform and to establish ReplayTV
as the leading platform in the personal television market.

Client Service Software Development. Because we plan ultimately to deliver
the ReplayTV Service on a variety of hardware platforms, we devote significant
engineering effort to building a flexible and robust client software
implementation of our network services. This client software is designed to
operate on many different platforms in a manner that provides a consistent and
clearly branded ReplayTV Service offering. Version 2.0 of the ReplayTV Service
software is currently in beta testing, and we plan to release it to coincide
with our full-scale retail launch in mid-2000. Viewers receive automatic
updates of the ReplayTV Service via the nightly download from the ReplayTV
Service network.

Network Infrastructure Development. The creation of content and advertising
by our partners and the aggregation, management and delivery of that content
to the ReplayTV Service requires a complex network infrastructure. We develop
tools that allow our media partners and advertisers to create content for the
ReplayTV Service quickly and easily, using non-technical personnel and
existing equipment. We also develop software to run on the ReplayTV Service
servers to verify the quality of that content and to deliver it to the correct
viewers.

Our research and development expenses totaled $136,000 for the period from
inception to December 31, 1997, $1,961,000 for the year ended December 31,
1998 and $4,814,000 for the nine months ended September 30, 1999. As of
December 31, 1999, we had 49 employees engaged in research and development
activities.

Competition

The market for home entertainment goods and services is intensely
competitive, rapidly evolving and subject to rapid technological change. We
believe that the principal competitive factors in this market are brand
recognition, performance, pricing, ease of use, features, installed base and
quality of service and support. Because the personal television market is new
and rapidly evolving, we expect to face significant barriers in our efforts to
secure broad market acceptance and will confront intense competition at
several different levels.

Personal television competes in a consumer electronics market that is
crowded with several established products and services, especially products
delivering television programming and other home video entertainment. PVRs and
the ReplayTV Service compete with products and technologies that have
established markets and proven consumer support, including VCRs, DVD players,
cable and satellite television systems and personal computers. In addition,
many of the manufacturers and distributors of these products have more
strategic partners and greater brand recognition, market presence, financial
resources, distribution channels, advertising and marketing budgets and
promotional and other strategic partners than we do. To be successful, we
believe we will need to spend significant resources to develop consumer
awareness of the ReplayTV Service and the personal television product
category.

Our ability to establish an installed base will depend on consumers
purchasing ReplayTV-enabled PVRs. Many consumers who have purchased VCRs, DVD
players or other home video entertainment products may be reluctant to
purchase PVRs. The ReplayTV-enabled PVR and the ReplayTV Service do, however,
offer several advantages over traditional home video entertainment products,
including:

. an on-air guide to television programming updated on a nightly basis;

. the ability to digitally store and retrieve up to 20 hours of television
programming using the current model of the ReplayTV-enabled PVR, and up
to 30 hours of programming using an additional model we expect to
introduce in mid-2000;

. the ability to pause and rewind live television, and fast forward to
catch up to live broadcasts in progress;

. the ability to record every episode of a given show at the click of a
button;

. the ability to search and navigate television shows by theme based on a
viewer's customized preferences; and

. specialized programming and content, including ReplayZones.

In addition to competition from established consumer electronics products,
we face competition from companies that offer personal television
capabilities. For example, TiVo Inc. markets a PVR that includes a hard disk
drive and features similar to those of the ReplayTV-enabled PVR. Although the
TiVo PVR is less expensive to purchase than the ReplayTV-enabled PVR, TiVo
charges viewers a monthly subscription fee for its service, unlike the basic
ReplayTV Service, which is free to the customer. TiVo currently offers a one-
time lifetime subscription fee, resulting in an overall cost of the TiVo
product substantially equivalent to that of the ReplayTV-enabled PVR. We also
face competition from companies that intend to combine personal video recorder
features with Internet access, interactive television features and/or
broadcast, cable or satellite television reception into a single medium. For
example, WebTV Networks, Inc., a subsidiary of Microsoft Corporation, and
EchoStar Communications Corporation have released products that combine
Internet access with an electronic program guide and offer features similar to
those of the ReplayTV-enabled PVR. The WebTV personal television service is
offered on a monthly subscription fee basis. TiVo recently announced an
agreement with Blockbuster Inc. to

jointly develop the capability to deliver products and video-on-demand
services. In addition, TiVo and Liberate Technologies have announced an
agreement to bundle Liberate's interactive television platform with TiVo's
service and market it to network operators, as well as to deliver PVR
capabilities in connection with a new interactive television service to be
offered by America Online, Inc. under the brand name AOL TV. While some of
these competitive products and services offer fewer services than the ReplayTV
Service, we do not currently offer Internet or interactive television
features.

We may also face additional competition as a result of future technological
developments. For example, cable and satellite system operators could in the
future offer video-on-demand services that might reduce consumer demand for
personal television services. As broadband delivery systems become more
prevalent, it is possible that more and more programs may be available for
ordering, over the Internet or otherwise, which may lessen the importance of
broadcast television and weaken the appeal of the ReplayTV Service.

Patents and Intellectual Property

We have adopted a proactive patent and trademark strategy designed to
protect our technology and intellectual property. We are the assignee of two
United States patents, have filed twelve United States patent applications and
have filed four international patent applications. Our pending patent
applications relate to our technology, including hardware, software and the
ReplayTV Service features and appearance; however, these patent applications
may never result in the issuance of patents.

We have filed trademark applications covering substantially all of our
trade dress, logos and slogans, including:

. ReplayTV logo .Watch What You Want When You Want
. ReplayTV .Zone
. Primetime. Anytime. .It's Television Made Personal

These applications are currently pending with the United States Patent and
Trademark Office. We also have international trademark applications pending
for our ReplayTV logo. We have licensed the use of our name and logo to some
of our strategic partners.

The emerging enhanced television industry is highly litigious, particularly
with respect to patent infringement and other intellectual property claims. In
some cases we have been contacted by patent owners offering us the opportunity
to license their patents. Some of these patent owners have alleged that we are
infringing their patents.

Trademarks

Our trademarks are listed above. All other trademarks and service marks
appearing in this prospectus are trademarks or service marks of the respective
companies that use them.

Employees

As of December 31, 1999, we had 127 full-time employees, including 58 in
product management and engineering, five in programming and content, 15 in
sales and marketing, 27 in business operations, nine in finance and
administration and 13 in customer care. We expect our workforce to increase
substantially over the next 12 months. We believe our employee relations are
good.

Facilities

We have 61,728 square feet of space in a facility located in Mountain View,
California, under a lease that expires in March 2006. We believe that our
current facilities are adequate to meet our needs through the end of 2000, at
which time we may need to lease additional space.

Legal Matters

We are aware that media companies and other organizations may support
litigation or explore legislative solutions unless the members of the personal
television industry agree to obtain license agreements for the use of certain
programming. We have received letters and oral indications from a number of
content providers, including Fox Television, Universal Studios and The Walt
Disney Company, asserting their belief that our business activities and those
of some of our competitors will require approvals and licenses from these
content providers. In addition, under our Network Service Agreement with
Turner Broadcasting Systems, Inc., Turner has reserved the right to assert any
claims or rights against us. In addition, we and TiVo have been sued by
PhoneTel Communications, Inc. for allegedly infringing a patent related to
specifying an order for playback of recorded television programs.

MANAGEMENT

Executive Officers and Directors

The names and ages of our executive officers and directors as of December
31, 1999 are as follows:

Name Age Position(s)
- ---- --- -----------

Earle H. "Kim"
LeMasters, III......... 50 Chief Executive Officer and Chairman of the Board
Anthony J. Wood......... 34 President, Products and Director
Layne L. Britton........ 44 Executive Vice President, ReplayTV Service
Craig W. Dougherty...... 43 Executive Vice President, Finance and Chief Financial Officer
Alexander Gray.......... 42 Executive Vice President, Business Operations
Bruce L. Kaplan......... 50 Executive Vice President, Sales and Marketing
Jeffrey Berg (1)........ 52 Director
Kevin L. Bohren......... 42 Director
Sky D. Dayton (1)....... 28 Director
William R. Hearst III
(1).................... 50 Director

- --------
(1) Member of audit committee and compensation committee.

Earle H. "Kim" LeMasters, III has served as Chief Executive Officer and
Chairman since September 1999. Previously, Mr. LeMasters worked as a freelance
television writer from June 1999 to September 1999 and served as Executive
Producer at Twentieth Television from May 1996 to June 1999. From June 1992 to
May 1996, Mr. LeMasters served as President of Stephen J. Cannell Productions,
a television production company which was acquired by New World Television in
1996. From 1976 to 1990, Mr. LeMasters was employed by CBS Television, serving
most recently as President of CBS Entertainment. Mr. LeMasters holds a
Bachelor of Arts from the University of California at Los Angeles.

Anthony J. Wood founded ReplayTV and has served as President, Products
since November 1999 and as a director since August 1997. From August 1997 to
August 1999, he served as Chairman and from November 1997 to August 1999 he
served as President and Chief Executive Officer. Previously, Mr. Wood served
as Vice President of Internet Authoring at Macromedia from March 1996 to
September 1997. From January 1995 to March 1996, Mr. Wood co-founded and
served as President and Chief Executive Officer of iband, Inc., which was
acquired by Macromedia in 1996. From August 1990 to January 1995, he founded
and served as President and Chief Executive Officer of SunRize Industries, a
developer of audio hardware and software. Mr. Wood holds a Bachelor of Science
in Electrical Engineering from Texas A&M University.

Layne L. Britton has served as Executive Vice President, ReplayTV Service
since June 1999. From October 1997 to May 1999, Mr. Britton served as
Executive Vice President of Business Operations at United Paramount Networks.
From October 1996 to October 1997, he served as President and Chief Operating
Officer of Ticketmaster Ventures, a ticketing and merchandising company
acquired by Home Shopping Network in 1997. Previously, Mr. Britton was
employed as Vice President of Business Affairs at CBS Entertainment, as
Vice President of Business Affairs at NBC Entertainment, and as Director of
Business Affairs at The Dick Clark Company, Inc. Mr. Britton holds a Bachelor
of Arts from Loyola University and a Juris Doctorate from the UCLA School of
Law.

Craig W. Dougherty has served as Executive Vice President, Finance and
Chief Financial Officer since November 1999. Previously, Mr. Dougherty was
employed at Union Bank of California from 1979 to October 1999, serving most
recently as Executive Vice President and Manager of the Specialized Industries
Group, which provides corporate financing to the entertainment, media,
communication, telecom and retailing industries. Mr. Dougherty was also
President of the Private Capital Group, a merchant banking arm that provides
equity and mezzanine financing for privately held growth companies. Mr.
Dougherty holds a Bachelor of Arts in Economics and French from Tufts
University.

Alexander Gray has served as Executive Vice President, Business Operations
since November 1999. From July 1997 to November 1999, Mr. Gray was employed at
Lucent Technologies, serving most recently as Vice President and General
Manager of Internet Communications, a business unit developing a family of
next-generation Internet-oriented communications systems. Previously, Mr. Gray
was employed by Octel Communications, serving as Senior Vice President of
Operations from January 1996 to July 1997 and as Vice President and Chief
Information Officer from December 1992 to January 1996. Mr. Gray holds a
Bachelors of Science in Computer Science and a Masters in Electrical
Engineering from Washington University.

Bruce L. Kaplan has served as Executive Vice President, Sales and Marketing
since November 1999. Previously, Mr. Kaplan served as President of Kaplan &
Co., a marketing consulting firm, from February 1990 to September 1999. From
March 1990 to February 1999, Mr. Kaplan also served as Executive Vice
President of Fattal & Collins, a wholly-owned subsidiary of Grey Advertising.
From January 1997 to February 1998, Mr. Kaplan served as Vice Chairman of
American Cybercast, an online entertainment company. Mr. Kaplan holds a
Bachelor of Arts in Political Science and a Juris Doctorate from the
University of California at Los Angeles.

Jeffrey Berg has served as a director since April 1999. Since November
1994, Mr. Berg has served as Chairman and Chief Executive Officer of
International Creative Management, a talent agency. Since November 1997, he
has served as a director of Oracle Corporation, an enterprise software
company. Mr. Berg holds a Bachelor of Arts from the University of California
at Berkeley and a Masters of Liberal Arts from the University of Southern
California.

Kevin L. Bohren has served as a director since July 1998. Since October
1998, Mr. Bohren has been employed as a private investor. From January 1997 to
October 1998, Mr. Bohren served as President and Chief Executive Officer of
Traveling Software (now LapLink.com), a leading manufacturer of remote
communications software. From March 1983 to January 1997, Mr. Bohren was
employed at Compaq Corporation, serving most recently as Vice President,
Desktop Division. Mr. Bohren holds a Bachelor of Arts in Geography from the
University of Minnesota.

Sky D. Dayton has served as a director since April 1999. Since June 1999,
Mr. Dayton has been a co-founder of eCompanies LLC, an incubator of Internet
start-ups. Mr. Dayton founded Earthlink Network, an Internet service provider,
in May 1994 and served as its Chairman until January 2000. Mr. Dayton remains
a director of Earthlink.

William R. Hearst III has served as a director since March 1999. Since
January 1995, Mr. Hearst has been a Partner at Kleiner Perkins Caufield &
Byers, a venture capital firm. From May 1995 until August 1996, he was the
Chief Executive Officer for @Home Network, a high speed Internet access and
consumer online services company. Previously, Mr. Hearst served as Editor and
Publisher of the San Francisco Examiner from 1984 until 1995. Mr. Hearst is a
director of Juniper Networks, Excite@Home, Com21 and Hearst-Argyle Television.
Mr. Hearst holds a Bachelor of Arts in Mathematics from Harvard College.

Board Composition

We currently have authorized six directors. Currently, each director is
elected for a period of one year at our annual meeting of stockholders and
serves until the next annual meeting or until his successor is duly elected
and qualified. Beginning at the first annual meeting of stockholders after the
annual meeting of stockholders at which we have at least 800 stockholders, the
board of directors will be divided into three classes, each serving staggered
three-year terms: Class I, whose term will expire at the first annual meeting
of stockholders after our first annual meeting of stockholders at which we
have 800 stockholders; Class II, whose term will expire at the second annual
meeting of stockholders after our first annual meeting of stockholders at
which we have 800 stockholders; and Class III, whose term will expire at the
third annual meeting of stockholders after our first annual meeting of
stockholders at which we have 800 stockholders. As a result, only one class of
directors will be elected at each annual meeting of our stockholders, with the
other classes continuing for the remainder of their respective terms. Our
officers are appointed by the board of directors and serve at the discretion
of the board of directors. There are no family relationships among any of our
directors or executive officers.

Board Compensation

Our directors do not currently receive compensation for their services as
members of the board of directors, except for reimbursement for reasonable
travel expenses relating to attendance at board meetings. Employee directors
are eligible to participate in our 1997 stock option plan and 1999 stock plan
and will be eligible to participate in our 2000 employee stock purchase plan.
Nonemployee directors are eligible to participate in our 1997 stock option
plan and 1999 stock plan and will be eligible to participate in our 2000
directors' stock option plan. See "Stock Plans."

In July 1998, we granted Kevin L. Bohren an option to purchase 120,000
shares of common stock at $0.03 per share. The option becomes exercisable at
the rate of 1/3rd of the total number of shares on July 27, 1999 and 1/36th of
the total shares per month thereafter. In April 1999, we granted Mr. Bohren an
option to purchase 80,000 shares of common stock at $0.25 per share. The
option becomes exercisable at the rate of 1/3rd of the total number of shares
on April 23, 2000 and 1/36th of the total shares per month thereafter. We
entered into a consulting relationship with Mr. Bohren in March 1999, pursuant
to which he has earned an aggregate of $71,666 and have issued him an
aggregate of 38,720 shares of restricted stock as of December 31, 1999.

In April 1999, we granted Sky D. Dayton and Jeffrey Berg each an option to
purchase 200,000 shares of common stock at $0.25 per share. These options
become exercisable at the rate of 1/3rd of the total number of shares on April
28, 2000 and 1/36th of the total shares per month thereafter.

In April 1999, we granted Anthony J. Wood an option to purchase 275,000
shares of common stock at $0.275 per share. The option becomes exercisable at
the rate of 1/12th of the total number of shares per month from and after
August 1, 2000.

In September 1999, we granted Earle H. "Kim" LeMasters, III an option to
purchase 2,500,000 shares of common stock at $4.00 per share. The option is
immediately exercisable, but the underlying shares are subject to a repurchase
option in favor of us which lapses at the rate of 1/8th of the total number of
shares on March 13, 2000 and 1/48th of the total shares per month thereafter.

Board Committees

In January 2000, the board of directors established the audit committee and
the compensation committee. The compensation committee currently consists of
Jeffrey Berg, Sky D. Dayton and William R. Hearst III. The functions of the
compensation committee are to:

. review and approve the compensation and benefits for our executive
officers and grant stock options under our stock option plans; and

. make recommendations to the board of directors regarding these matters.

The audit committee consists of Jeffrey Berg, Sky D. Dayton and William R.
Hearst III. The functions of the audit committee are to:

. make recommendations to the board of directors regarding the selection of
independent auditors;

. review the results and scope of the audit and other services provided by
our independent auditors; and

. review and evaluate our audit and control functions.

Compensation Committee Interlocks and Insider Participation

The members of the compensation committee of the board of directors are
currently Jeffrey Berg, Sky D. Dayton and William R. Hearst III, none of whom
has ever been an officer or employee of ReplayTV. None of our executive
officers serves as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving on our
board of directors or compensation committee. Before establishing

the compensation committee in January 2000, the board of directors as a whole
performed the functions delegated to the compensation committee.

Executive Compensation

The following table sets forth the compensation received for services
rendered to us during the year ended December 31, 1999 by the two individuals
who served as Chief Executive Officer during 1999 and the four other most
highly compensated executive officers during the year ended December 31, 1999.

Summary Compensation Table

Long-Term
Compensation
Annual Compensation Awards
-------------------------------------- ------------
Securities
Name and Principal Salary Other Annual Underlying All Other
Position ($) Bonus ($)(7) Compensation ($) Options (#) Compensation ($)
- ------------------ -------- ------------ ---------------- ------------ ----------------

Earle H. "Kim"
LeMasters, III(1)...... $109,154 -- 2,500,000 --
Chairman and Chief
Executive Officer
Anthony J. Wood(2)...... 144,250 -- 275,000 --
President, Products
Layne L. Britton(3)..... 140,000 -- 1,120,000 --
Executive Vice
President, ReplayTV
Service
Craig W. Dougherty(4)... 41,667 $25,000 600,000 --
Executive Vice
President, Finance and
Chief Financial Officer
Alexander Gray(5)....... 41,667 -- 600,000 --
Executive Vice
President, Business
Operations
Bruce L. Kaplan(6)...... 40,000 $12,000 30,000 500,000 --
Executive Vice
President, Sales and
Marketing

- --------
(1) Mr. LeMasters commenced employment with us in September 1999. On an annual
basis, Mr. LeMasters' salary for the fiscal year ended December 31, 1999
would have been $360,000 plus reimbursement of expenses up to $50,000.
(2) Mr. Wood served as Chief Executive Officer until August 1999. In
September 1999, he was appointed President, Products. The amount excludes
deferred compensation of $84,500 which Mr. Wood earned during the fiscal
year ended December 31, 1998 but which was paid to him during the fiscal
year ending December 31, 1999. Effective January 1, 2000, the board of
directors approved raising Mr. Wood's annual salary to $250,000.
(3) Mr. Britton commenced employment with us in July 1999. On an annual
basis, Mr. Britton's salary for the fiscal year ended December 31, 1999
would have been $240,000, plus reimbursement of up to $50,000 of
relocation expenses.
(4) Mr. Dougherty commenced employment with us in November 1999. On an annual
basis, Mr. Dougherty's salary for the fiscal year ended December 31, 1999
would have been $250,000. Mr. Dougherty is entitled to a signing bonus of
$50,000 to $100,000, the actual amount of which has not yet been
determined by the board of directors. Mr. Dougherty must repay 100% of
this bonus in the event he resigns or is terminated with cause within 12
months following his start date and 50% of this bonus in the event he
resigns or is terminated with cause between 12 and 24 months following his
start date. The $25,000 of other annual compensation represents a
relocation allowance.
(5) Mr. Gray commenced employment with us in November 1999. On an annual
basis, Mr. Gray's salary for the fiscal year ended December 31, 1999
would have been $250,000.

(6) Mr. Kaplan commenced employment with us in November 1999. On an annual
basis, Mr. Kaplan's salary for the fiscal year ended December 31, 1999
would have been $240,000. The $30,000 of other annual compensation
represents a relocation allowance.
(7) Other than Mr. Kaplan, who received a guaranteed bonus, each officer is
eligible to receive a bonus for the year ended December 31, 1999, the
amounts of which have not yet been determined by the board of directors.

Option Grants

The following table provides summary information regarding stock options
granted to the two individuals who served as Chief Executive Officer during
the year ended December 31, 1999 and the four other most highly compensated
executive officers during the year ended December 31, 1999. No stock
appreciation rights were granted to these individuals during the year. The
options were granted pursuant to the 1997 stock option plan and the 1999 stock
plan.

Options granted to Messrs. LeMasters, Dougherty, Gray and Britton are
exercisable for all option shares; however, any shares purchased upon exercise
of these options are subject to repurchase by us at the original exercise
price per share upon the termination of the optionee's employment with us.
This right of repurchase lapses over time, with the shares issuable upon
exercise of options held by each of Messrs. LeMasters, Dougherty and Gray
vesting as to 1/8th of the shares on the six month anniversary of the vesting
commencement date specified in the respective option agreement, or March 13,
2000 in the case of Mr. LeMasters and May 1, 2000 in the cases of Mr.
Dougherty and Mr. Gray, and with 1/48th of the shares in each case vesting
each month thereafter. Shares purchased by Mr. Britton pursuant to his
exercise of options are similarly subject to our repurchase; however, these
shares vest at the rate of 1/48th per month beginning June 30, 1999.
Additionally, the option granted to Mr. Wood becomes exercisable at the rate
of 1/12th of the total number of shares on September 1, 2000 and 1/12th of the
total number of shares each month thereafter, and the option granted to
Mr. Kaplan becomes exercisable at the rate of 1/8th of the total number of
shares on May 1, 2000 and 1/48th of the total number of shares each month
thereafter.

The percentages below are based on a total of 10,882,500 shares subject to
options granted by us during the year ended December 31, 1999 to all of our
employees and consultants, including the executive officers named in the
table. The exercise price per share of each option was equal to the fair
market value of the common stock as determined by the board of directors on
the date of grant. The potential realizable value is calculated assuming the
fair market value on the date of grant appreciates at the indicated rate for
the entire term of the option and that the option is exercised at the exercise
price and sold on the last day of its term at the appreciated price. All
options have a term of ten years. Stock price appreciation of 5% and 10% is
assumed pursuant to the rules of the Securities and Exchange Commission. There
can be no assurance that the actual stock price will appreciate over the ten-
year option term at the assumed rates of 5% and 10% or at any other defined
rate. Unless the market price of the common stock appreciates over the option
term, no value will be realized from the option grants made to the below named
executive officers.

Option Grants in 1999

Individual Grants
-------------------------------------------
Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of Stock
Securities Options Price Appreciation For
Underlying Granted in Exercise Option Term
Options Fiscal Price Expiration ----------------------
Name Granted (#) 1999 ($/Share) Date 5% 10%
- ---- ----------- ---------- --------- ---------- ---------- -----------

Earle H. "Kim"
LeMasters, III......... 2,500,000 22.97% $4.00 9/13/09 $6,288,946 $15,937,425
Anthony J. Wood......... 275,000 2.53 0.275 4/27/09 47,560 120,527
Layne L. Britton........ 1,120,000 10.29 0.625 5/31/09 440,226 1,115,620
Craig W. Dougherty...... 600,000 5.51 5.00 10/31/09 1,886,684 4,781,227
Alexander Gray.......... 600,000 5.51 5.00 10/31/09 1,886,684 4,781,227
Bruce L. Kaplan......... 500,000 4.59 5.00 10/31/09 1,572,237 3,984,356

Option Exercises and Holdings

The following table provides summary information concerning the shares of
common stock represented by outstanding stock options held by the two
individuals who served as Chief Executive Officer during the year ended
December 31, 1999 and the four other most highly compensated executive
officers during the year ended December 31, 1999. Since there was no public
trading market for our common stock as of December 31, 1999, the values
realized and the values of unexercised options at December 31, 1999 are based
on the fair market value of our common stock of $8.00 per share as determined
by our board of directors on December 29, 1999. Therefore, these values are
calculated based on the value of $8.00 per share, less the applicable exercise
price per share, multiplied by the number of shares underlying these options.

Aggregated Option Exercises in 1999 and Fiscal Year-End Option Values

Number of Securities
Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options
Acquired December 31, 1999 at December 31, 1999
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------- ---------- ----------- ------------- ----------- -------------

Earle H. "Kim"
LeMasters, III......... 250,000 $1,000,000 2,250,000 -- $9,000,000 --
Anthony J. Wood......... -- -- -- 275,000 -- $2,124,375
Layne L. Britton........ 1,120,000 8,260,000 -- -- -- --
Craig W. Dougherty...... 200,000 600,000 400,000 -- 1,200,000 --
Alexander Gray.......... 100,000 300,000 500,000 -- 1,500,000 --
Bruce L. Kaplan......... -- -- -- 500,000 -- 1,500,000

Change of Control Agreements

We entered into an Offer Letter with Earle H. "Kim" LeMasters, III which
entitles Mr. LeMasters to 12 months accelerated vesting of his options and
restricted stock in the event there is a change of control within 18 months
following his commencement of employment with us and acceleration of 75% of
the then unvested options and restricted stock held by him in the event there
is a change of control after 18 months following his commencement of
employment. In addition, Mr. LeMasters is entitled to 12 months severance and
an additional 12 months accelerated vesting of his unvested options or
restricted stock in the event he is terminated without cause or resigns with
good reason following a change of control.

We entered into Offer Letters with Craig W. Dougherty and Bruce L. Kaplan
which entitle each such officer to six months severance and accelerated
vesting equal to the greater of 12 months or 50% of the then unvested stock
options or restricted stock held by him in the event he is terminated without
cause or resigns for good reason within 12 months following a change of
control transaction.

We entered into Offer Letters with Layne L. Britton and Alexander Gray
which entitle each such officer to accelerated vesting equal to the greater of
12 months or 50% of the then unvested stock options or restricted stock held
by him in the event he is terminated without cause or resigns for good reason
within 12 months following a change of control.

Stock Plans

1999 Stock Plan. Our 1999 stock plan provides for the grant of incentive
stock options to employees, including employee directors, and of nonstatutory
stock options and stock purchase rights to employees, directors and
consultants. The purposes of the 1999 stock plan are to attract and retain the
best available personnel, to provide additional incentives to our employees
and consultants and to promote the success of our business. The

1999 stock plan was originally adopted by our board of directors and approved
by our stockholders in August 1999. As of December 31, 1999, an aggregate of
4,230,000 shares were reserved for issuance under the 1999 stock plan, options
to purchase 3,680,000 shares of common stock were outstanding under the 1999
stock plan at a weighted average exercise price of $4.38 per share, 550,000
shares had been issued upon exercise of options or pursuant to restricted
stock purchase rights at a weighted average purchase price of $4.55 per share
and no shares remained available for future grant. In January 2000, the board
of directors amended the 1999 stock plan to increase the total number of
shares reserved for issuance under the plan by 5,470,000 shares, so that an
aggregate of 9,700,000 shares are reserved as of the date of this offering,
and to provide for an automatic annual increase on the first day of each of
our fiscal years beginning in 2001 through 2009 equal to the greater of
4,000,000 shares or 6% of our outstanding common stock on the last day of the
immediately preceding fiscal year. In addition, the 1999 stock plan was
amended to provide that up to 7,600,000 shares of common stock that either
return to our 1997 stock option plan upon cancellation of options issued under
that plan or are shares of stock issued under our 1997 stock option plan that
we repurchase when the holder terminates his or her employment or consulting
relationship with us shall become available for issuance under the 1999 stock
plan. As currently structured, the maximum aggregate number of shares that are
approved for issuance over the ten-year term of our 1999 stock plan is
62,300,000 (including the maximum number of shares that may become available
for issuance under the plan as a result of award cancellations and repurchases
under our 1997 stock option plan). These amendments to the 1999 stock plan
will be submitted for approval by our stockholders prior to the completion of
this offering. Unless terminated earlier by the board of directors, the 1999
stock plan will terminate in August 2009.

The 1999 stock plan may be administered by the board of directors or a
committee of the board, each known as the administrator. The administrator
determines the terms of options and stock purchase rights granted under the
1999 stock plan, including the number of shares subject to the award, the
exercise or purchase price, and the vesting and/or exercisability of the award
and any other conditions to which the award is subject. No employee may
receive awards for more than 5,000,000 shares under the 1999 stock plan in any
fiscal year. Incentive stock options granted under the 1999 stock plan must
have an exercise price of at least 100% of the fair market value of the common
stock on the date of grant. The plan does not impose restrictions on the
exercise or purchase price applicable to nonstatutory stock options and stock
purchase rights, although we expect that nonstatutory stock options and stock
purchase rights granted to our Chief Executive Officer and our four other most
highly compensated officers will generally equal at least 100% of the grant
date fair market value. Payment of the exercise or purchase price may be made
in cash or any other consideration allowed by the administrator.

With respect to options granted under the 1999 stock plan, the
administrator determines the term of options, which may not exceed ten years
(or five years in the case of an incentive stock option granted to a holder of
more than 10% of the total voting power of all classes of our stock).
Generally, an option is nontransferable other than by will or the laws of
descent and distribution, and may be exercised during the lifetime of the
optionee only by such optionee. In certain circumstances, the administrator
has the discretion to grant nonstatutory stock options with limited
transferability rights. Stock options are generally subject to vesting,
meaning that the optionee earns the right to exercise the option over a
specified period of time only if he or she continues to provide services to
ReplayTV over that period. Stock issued pursuant to stock purchase rights
granted under the 1999 stock plan is generally subject to a repurchase right
exercisable by ReplayTV upon the termination of the holder's employment or
consulting relationship with us for any reason (including death or
disability). This repurchase right will lapse in accordance with the terms of
the stock purchase right determined by the administrator at the time of grant.

If we are acquired by another corporation, each outstanding option and
stock purchase right may be assumed or an equivalent award substituted by our
acquiror. If our acquiror did not agree to assume or substitute outstanding
awards, those awards would terminate to the extent they had not been exercised
prior to consummation of the transaction. Outstanding awards, the number of
shares remaining available for issuance under the plan, the number of shares
added to the plan each year under the plan's evergreen provision and the
annual per-employee share limit will each adjust in the event of a stock
split, stock dividend or other similar

change in our capital. The administrator has the authority to amend or
terminate the 1999 stock plan, but no action may be taken that materially and
adversely impairs the rights of any holder of an outstanding option or stock
purchase right without the holder's consent. In addition, we must obtain
stockholder approval of amendments to the plan as required by applicable law.

1997 Stock Option Plan. Our 1997 stock option plan was adopted by our board
of directors in August 1997 and approved by our stockholders in November 1997.
The 1997 stock option plan provides for the grant of incentive stock options
to employees (including employee directors) of incentive stock options and the
grant of nonstatutory stock options to employees, consultants and directors.
As of December 31, 1999 an aggregate of 9,070,000 shares of common stock were
reserved for issuance under the 1997 stock option plan, options to purchase
7,109,637 shares of common stock at a weighted average exercise price of $1.55
per share were outstanding, 1,831,439 shares with a weighted average purchase
price of $0.39 per share had been issued upon exercise of options and 128,924
shares remained available for future grant. In January 2000, the board of
directors amended the 1997 stock option plan to increase the total number of
shares reserved for issuance under the plan by 530,000 shares to an aggregate
of 9,600,000 shares. In addition, at that time, the 1997 stock option plan was
also amended to provide that up to 7,600,000 shares of stock subject to
options issued under the plan that would otherwise become available for grant
under the plan upon cancellation of such options and sold under the plan that
we repurchase upon termination of the holder's employment or consulting
relationship with us shall become available for issuance under our 1999 stock
plan. Unless terminated earlier, the 1997 stock option plan will terminate in
August 2007.

Following this offering, the terms of awards issued under our 1997 stock
option plan are generally the same as those that may be issued under our 1999
stock plan, except with respect to the following features. The 1997 stock
option plan does not provide for the issuance of stock purchase rights, and it
does not impose an annual limitation on the number of shares of stock subject
to options that may be granted to any individual employee during a fiscal
year.

2000 Employee Stock Purchase Plan. Our 2000 employee stock purchase plan
was adopted by the board of directors in January 2000 and will be submitted
for approval by our stockholders prior to completion of this offering. An
aggregate of 1,000,000 shares of common stock were reserved for issuance under
the 2000 purchase plan, none of which have been issued as of the date of this
offering. The number of shares reserved for issuance under the 2000 purchase
plan will be subject to an automatic annual increase on the first day of each
of our fiscal years beginning in 2001 through 2009 equal to the lesser of
500,000 shares, 2% of our outstanding common stock on the last day of the
immediately preceding fiscal year, or a lesser number of shares as the board
of directors determines. The 2000 purchase plan becomes effective upon the
date of this offering. Unless terminated earlier by the board of directors,
the 2000 purchase plan will terminate in January 2020.

The 2000 purchase plan, which is intended to qualify under Section 423 of
the Internal Revenue Code, will be implemented by a series of overlapping
offering periods of approximately 24 months' duration, with new offering
periods (other than the first offering period) commencing on May 1 and
November 1 of each year. Each offering period will generally consist of four
consecutive purchase periods of six months' duration, at the end of which an
automatic purchase will be made for participants. The initial offering period
is expected to commence on the date of this offering and end on April 30,
2002; the initial purchase period is expected to begin on the date of this
offering and end on October 31, 2000, with subsequent purchase periods ending
on April 30, 2001, October 31, 2001 and April 30, 2002. The 2000 purchase plan
will be administered by the board of directors or by a committee appointed by
the board. Our employees (including officers and employee directors), or of
any majority-owned subsidiary designated by the board, are eligible to
participate in the 2000 purchase plan if they are employed by us or any such
subsidiary for at least 20 hours per week and more than five months per year.
The 2000 purchase plan permits eligible employees to purchase common stock
through payroll deductions, which in any event may not exceed 15% of an
employee's base salary. The purchase price is equal to the lower of 85% of the
fair market value of the common stock at the beginning of each offering period
or at the end of each purchase period, subject to certain adjustments as
provided in the plan. Employees may end their participation in the 2000
purchase plan at any time during an offering period, and participation ends
automatically on termination of employment.

An employee is not eligible to participate in the 2000 purchase plan if
immediately after the grant of an option to purchase stock under the plan such
employee would own stock and/or hold outstanding options to purchase stock
equaling 5% or more of the total voting power or value of all classes of our
stock or stock of our subsidiaries, or if such option would permit an
employee's rights to purchase stock under the 2000 purchase plan at a rate
that exceeds $25,000 of fair market value of such stock for each calendar year
in which the option is outstanding. In addition, no employee may purchase more
than 3,000 shares of common stock under the 2000 purchase plan in any one
purchase period. If the fair market value of the common stock on a purchase
date is less than the fair market value at the beginning of the offering
period, each participant in that offering period shall automatically be
withdrawn from the offering period as of the end of the purchase date and re-
enrolled in the new 24 month offering period beginning on the first business
day following the purchase date.

If we merge or consolidate with or into another corporation or sell all or
substantially all of our assets, each right to purchase stock under the 2000
purchase plan will be assumed or an equivalent right substituted by our
acquiror. If our acquiror did not agree to assume or substitute stock purchase
rights, any offering period and purchase period then in progress would be
shortened and a new exercise date occurring prior to the closing of the
transaction would be set. Outstanding awards, the number of shares remaining
available for issuance under the plan, the number of shares added to the plan
each year under the plan's evergreen provision and the maximum number of
shares that may be purchased by a participant during a purchase period will
each adjust in the event of a stock split, stock dividend or other similar
change in our capital. Our board of directors has the power to amend or
terminate the 2000 purchase plan and to change or terminate offering periods
as long as such action does not adversely affect any outstanding rights to
purchase stock thereunder. However, the board of directors may amend or
terminate the 2000 purchase plan or an offering period even if it would
adversely affect outstanding options in order to avoid our incurring adverse
accounting charges.

2000 Directors' Stock Option Plan. The 2000 directors' stock option was
adopted by the board of directors in January 2000 and will be submitted for
approval by our stockholders prior to completion of this offering. It will
become effective upon the date of this offering. An aggregate of 300,000
shares of common stock were reserved for issuance under the 2000 directors'
plan, all of which remain available for future grants. In addition, the 2000
directors' plan provides that as of January 1 of each year beginning in 2001
and ending in 2009, the aggregate number of shares available to be issued
under the plan will automatically be increased by the number of shares
necessary to cause the number of shares then available for issuance under the
plan to be restored to 300,000 shares, provided that the maximum number of
shares that will be available for issuance under the plan over the ten-year
term of the plan will not exceed 3,000,000 shares. The 2000 directors' plan
provides for the grant of nonstatutory stock options to our nonemployee
directors. The 2000 directors' plan is designed to work automatically without
administration; however, to the extent administration is necessary, it will be
performed by the board of directors. To the extent they arise, it is expected
that conflicts of interest will be addressed by abstention of any interested
director from both deliberations and voting regarding matters in which a
director has a personal interest. Unless terminated earlier, the 2000
directors' plan will terminate in January 2010.

The 2000 directors' plan provides that each person who becomes a
nonemployee director after the completion of this offering will be granted a
nonstatutory stock option to purchase 50,000 shares of common stock on the
date on which such individual first becomes a member of our board of
directors. In addition, on the date of each annual stockholders meeting after
completion of this offering, each nonemployee director who will continue
serving on the board following the meeting and who has been a director of
ReplayTV for at least six months prior to the meeting date will be granted an
option to purchase 15,000 shares of common stock.

All options granted under the 2000 directors' plan will have a term of ten
years and an exercise price equal to the fair market value of our common stock
on the date of grant and will generally be nontransferable, except in certain
limited circumstances to family members and family trusts or similar entities.
The options to purchase 50,000 shares granted to directors joining our board
after this offering will vest in installments as to one-third of the
underlying shares on each of the first, second and third anniversaries of the
option grant date. The options to purchase 15,000 shares granted to directors
annually on the date of our stockholders meetings will vest as to all

underlying shares on the first anniversary of the option grant date. If a
nonemployee director ceases to serve as a director for any reason other than
death or disability, he or she may, but only within 90 days after the date he
or she ceases to be a director, exercise options granted under the 2000
directors' plan. If he or she does not exercise the option within such 90-day
period, the option shall terminate. If a director's service terminates as a
result of his or her disability or death, or if a director dies within three
months following termination for any reason, the director or his or her estate
will have 12 months after the date of termination or death, as applicable, to
exercise options that were vested as of the date of termination. In addition,
if ReplayTV determines that a director has engaged in fraud, embezzlement or
similar acts against us, or if a director has disclosed information that is
confidential to ReplayTV or engaged in any conduct constituting unfair
competition against us, we have the right to suspend or terminate that
director's right to exercise an option under the 2000 directors' plan.

If we are acquired by another corporation, each option outstanding under
the 2000 directors' plan will be assumed or equivalent options substituted by
our acquiror, unless our acquiror does not agree to such assumption or
substitution, in which case the options will terminate upon consummation of
the transaction to the extent not previously exercised. In connection with any
acquisition, each director holding options under the 2000 directors' plan will
have the right to exercise his or her options immediately before the
consummation of the merger as to all shares underlying the options, including
shares which would not have been vested and exercisable but for the
acquisition. Outstanding awards, the number of shares remaining available for
issuance under the plan, the number of shares to be granted to new directors
and to directors annually on stockholder meeting dates, and the number of
shares automatically added to the plan each year will each adjust in the event
of a stock split, stock dividend or other similar change in capital. Our board
of directors may amend or terminate the 2000 directors' plan as long as such
action does not adversely affect any outstanding option and we obtain
stockholder approval for any amendment to the extent required by applicable
law.

Limitation of Liability and Indemnification Matters

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

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

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

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

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

This limitation of liability does not apply to liabilities arising under
the federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission. Our certificate of
incorporation and bylaws provide that we shall indemnify our directors and
executive officers and may indemnify our other officers and employees and
other agents to the fullest extent permitted by law. We believe that
indemnification under our bylaws covers at least negligence and gross
negligence on the part of indemnified parties. Our bylaws also permit us to
secure insurance on behalf of any officer, director, employee or other agent
for any liability arising out of his or her actions in that capacity,
regardless of whether the bylaws would permit indemnification.

We have entered into agreements to indemnify our directors and executive
officers in addition to the indemnification provided for in our bylaws. These
agreements, among other things, provide for indemnification of our directors
and executive officers for expenses specified in the agreements, including
attorneys' fees, judgments, fines and settlement amounts incurred by a
director or executive officer in any action or proceeding arising out of his
or her services as a director or executive officer of ReplayTV or any
subsidiary of ReplayTV. In addition, we maintain directors' and officers'
insurance. We believe that these provisions and agreements are necessary to
attract and retain qualified persons as directors and executive officers.

At present, we are not aware of any pending or threatened litigation or
proceeding involving a director, officer, employee or agent in which
indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding that might result in a claim for such
indemnification.

RELATED PARTY TRANSACTIONS

Agreements with Management

In March 1999, we entered into a consulting relationship with Kevin L.
Bohren, pursuant to which Mr. Bohren has earned an aggregate of $71,666 as of
December 31, 1999. We have also issued to Mr. Bohren an aggregate of 38,720
shares of restricted stock as of December 31, 1999.

In September 1997, we sold Anthony J. Wood 6,000,000 shares of common stock
at $0.0005 per share pursuant to a Common Stock Purchase Agreement. In March
1999, we entered into a Revised Offer Letter with Mr. Wood which entitles him
to a salary of $150,000 per year, 12 months accelerated vesting of his options
and restricted stock and 12 months severance in the event he is terminated
without cause or resigns with good reason, and full vesting with respect to
the 6,000,000 shares of restricted stock held by Mr. Wood in the event he is
replaced as Chief Executive Officer. Mr. Wood's 6,000,000 shares of restricted
stock vested in September 1999 when Earle H. "Kim" LeMasters, III became Chief
Executive Officer. In April 1999, we granted Mr. Wood an option to purchase
275,000 shares of common stock at $0.275 per share which vests with respect to
1/12th of the total number of shares on August 1, 2000 and 1/12th of the total
number of shares each month thereafter.

In July 1999, we entered into an Offer Letter with Layne L. Britton. The
agreement entitles Mr. Britton to a salary of $240,000 per year and
reimbursement of up to $50,000 of relocation expenses. In the event Mr.
Britton is terminated without cause or resigns for good reason, he is entitled
to nine months accelerated vesting of his restricted stock and severance
benefits equal to six months of salary and 50% of the bonus paid to him during
the prior year. If Mr. Britton is terminated without cause or resigns for good
reason within 12 months following a change of control, he is instead entitled
to the greater of 12 months accelerated vesting or acceleration of 50% of his
then unvested options and restricted stock. In connection with his
commencement of employment, we granted Mr. Britton an option to purchase
1,120,000 shares of common stock at $0.625 per share. The option was exercised
in full but is subject to a right of repurchase at cost in our favor in the
event Mr. Britton ceases employment with us. Our repurchase option lapses at
the rate of 1/48th of the total shares per month.

In September 1999, we entered into an Offer Letter with Earle H. "Kim"
LeMasters, III. The agreement entitles Mr. LeMasters to a salary of $360,000
per year and reimbursement of expenses of up to $50,000 per year. In September
1999, we granted Mr. LeMasters an option to purchase 2,500,000 shares of
common stock at $4.00 per share. The option has been partially exercised, but
the underlying shares are subject to a right of repurchase at cost in our
favor in the event Mr. LeMasters ceases employment with us. Our repurchase
option lapses at the rate of 1/8th of the total number of shares on March 13,
2000 and 1/48th of the total shares per month thereafter. Mr. LeMasters is
entitled to 12 months accelerated vesting of all stock and options held by him
in the event there is a change of control within 18 months following his
commencement of employment with us and acceleration of 75% of his restricted
stock and options in the event there is a change of control after 18 months
following his commencement of employment. In addition, Mr. LeMasters is
entitled to 12 months severance and an additional 12 months accelerated
vesting in the event he is terminated without cause or resigns with good
reason following a change of control.

In October 1999, we entered into an Offer Letter with Craig W. Dougherty.
The agreement entitles Mr. Dougherty to a salary of $250,000 per year, a
relocation bonus of $25,000 and severance benefits equal to six months salary
in the event he is terminated or resigns with good reason. In addition, Mr.
Dougherty is entitled to a signing bonus of between $50,000 and $100,000. He
must repay 100% of this bonus if he resigns or is terminated with cause during
the first year of his employment with us and 50% of this bonus if he resigns
or is terminated with cause during the second year of his employment with us.
In November 1999, we granted Mr. Dougherty an option to purchase 600,000
shares of common stock at $5.00 per share. The option has been partially
exercised, but the underlying shares are subject to a right of repurchase at
cost in our favor in the event Mr. Dougherty ceases employment with us. Our
repurchase option lapses at the rate of 1/8th of the total number of shares on
May 1, 2000 and 1/48th of the total shares per month thereafter. Mr. Dougherty
is entitled to six

months accelerated vesting of his unvested options or restricted stock in the
event he is terminated without cause or resigns with good reason.
Alternatively, Mr. Dougherty is entitled to accelerated vesting equal to the
greater of 12 months or 50% of the then unvested stock options and restricted
stock held by him in the event he is terminated without cause or resigns for
good reason within 12 months following a change of control.

In October 1999, we entered into an Offer Letter with Alexander Gray. The
agreement entitles Mr. Gray to a salary of $250,000 per year. In November
1999, we granted Mr. Gray an option to purchase 600,000 shares of common stock
at $5.00 per share. The option has been partially exercised, but the
underlying shares are subject to a right of repurchase at cost in our favor in
the event Mr. Gray ceases employment with us. Our repurchase option lapses at
the rate of 1/8th of the total number of shares on May 1, 2000 and 1/48th of
the total shares per month thereafter. Mr. Gray is entitled to six months
accelerated vesting and six months severance in the event he is terminated
without cause or resigns with good reason. Alternatively, Mr. Gray is entitled
to accelerated vesting equal to the greater of 12 months or 50% of the then
unvested stock options or restricted stock held by him in the event he is
terminated without cause or resigns for good reason within 12 months following
a change of control.

In October 1999, we entered into an Offer Letter with Bruce L. Kaplan. The
agreement entitles Mr. Kaplan to a salary of $240,000 per year, a guaranteed
first year bonus of $72,000 and a relocation bonus of $30,000. In November
1999, we granted Mr. Kaplan an option to purchase 500,000 shares of common
stock at $5.00 per share which becomes exercisable at the rate of 1/8th of the
total number of shares on May 1, 2000 and 1/48th of the total per month
thereafter. Mr. Kaplan is entitled to six months accelerated vesting and six
months severance in the event he is terminated without cause or resigns with
good reason. Alternatively, Mr. Kaplan is entitled to accelerated vesting
equal to the greater of 12 months or 50% of the then unvested stock options or
restricted stock held by him in the event he is terminated without cause or
resigns for good reason within 12 months following a change of control.

We have entered into indemnification agreements with each of our executive
officers and directors. These indemnification agreements may require us to
indemnify these persons against liabilities that may arise by reason of their
status as officers or directors, other than liabilities arising from willful
misconduct of a culpable nature, and to advance their expenses as a result of
any proceeding against them.

Loans to Management

The following executive officers have issued full recourse promissory notes
in our favor in connection with their early exercise of stock options issued
pursuant to their original stock option agreements under the 1997 stock option
plan and the 1999 stock plan:

Date of Principal Interest
Name Note Amount Date Due Rate
- ---- -------- ---------- -------- --------

Earle H. "Kim" LeMasters, III............. 9/23/99 $1,000,000 9/22/04 5.98%
Layne L. Britton.......................... 7/1/99 600,000 7/1/04 5.74
Layne L. Britton.......................... 7/1/99 100,000 7/1/04 5.74
Craig W. Dougherty........................ 11/15/99 1,000,000 11/15/04 6.08
Alexander Gray............................ 11/15/99 500,000 11/15/04 6.08

Private Placement Transactions

The following table summarizes the shares of preferred stock purchased by
executive officers, directors and 5% stockholders and persons and entities
associated with them in private placement transactions. Each share of
preferred stock converts into one share of common stock automatically upon the
closing of this offering. The shares of Series A preferred stock were sold at
$0.11 per share, the shares of Series B preferred stock were sold at $0.31 per
share, the shares of Series C preferred stock were sold at $0.632 per share,
the shares of Series D preferred stock were sold at $0.775 per share and the
shares of Series E preferred stock were sold at $7.50 per share. See
"Principal Stockholders."

Series A Series B Series C Series D Series E
Name Preferred Preferred Preferred Preferred Preferred
- ---- --------- --------- --------- --------- ---------

Entities affiliated with
KPCB Holdings (William R.
Hearst III)(1)............. -- -- -- 7,870,968 133,333
Anthony J. Wood............. 2,040,600 241,934 158,128 103,226 --
Kevin L. Bohren............. -- 645,160 395,324 51,612 --
Sky D. Dayton............... -- -- 790,648 -- 13,333
Layne L. Britton............ -- -- -- -- 8,394

- --------
(1) All shares are held by KPCB Holdings Inc., as nominee. Mr. Hearst is a
general partner of Kleiner Perkins Caufield & Byers and is a Vice
President of KPCB Holdings, Inc. He disclaims beneficial ownership except
to the extent of his pecuniary interest therein.

PRINCIPAL STOCKHOLDERS

The following table sets forth information known to us with respect to
beneficial ownership of our common stock as of December 31, 1999, as adjusted
to reflect the issuance of 5,627,267 shares of Series F preferred stock in
January 2000 and the sale of common stock offered in this offering, by:

. each person, or group of affiliated persons, known by us to own
beneficially more than 5% of our outstanding common stock,

. each director,

. the two individuals who served as chief executive officer and four other
most highly compensated executive officers during the fiscal year ended
December 31, 1999, and

. all directors and executive officers as a group.

Percent
Beneficially
Owned
-----------------
Number of Before After
Shares Offering Offering
---------- -------- --------

Anthony J. Wood.................................. 8,457,438 20.65%
KPCB Holdings Inc. .............................. 8,004,301 19.55
KPCB Holdings Inc.
2750 Sand Hill Road
Menlo Park, CA 94025
William R. Hearst III(1)......................... 8,004,301 19.55
KPCB Holdings Inc.
2750 Sand Hill Road
Menlo Park, CA 94025
Earle H. "Kim" LeMasters, III(2)................. 2,500,000 5.79
Kevin L. Bohren(3)............................... 1,194,149 2.91
Layne L. Britton................................. 1,128,394 2.76
Sky D. Dayton.................................... 803,981 1.96
Craig W. Dougherty(4)............................ 600,000 1.45
Alexander Gray(5)................................ 600,000 1.45
Jeffrey Berg..................................... -- * *
Bruce L. Kaplan.................................. -- * *
All directors and executive officers as a group
(10 persons).................................... 23,288,263 52.73% %

- --------
* Less than one percent of the outstanding shares of common stock.

(1) All shares are held by KPCB Holdings Inc., as nominee. Mr. Hearst is a
general partner of Kleiner Perkins Caufield & Byers and a Vice President
of KPCB Holdings, Inc. He disclaims beneficial ownership except to the
extent of his pecuniary interest therein.

(2) Includes 2,250,000 shares issuable upon exercise of an option which will
be exercisable within 60 days of December 31, 1999 but which are subject
to a right of repurchase at cost in our favor in the event Mr. LeMasters
ceases employment with us.

(3) Includes 63,333 shares issuable upon exercise of an option which will be
exercisable within 60 days of December 31, 1999.

(4) Includes 400,000 shares issuable upon exercise of an option which will be
exercisable within 60 days of December 31, 1999 but which are subject to a
right of repurchase at cost in our favor in the event Mr. Dougherty ceases
employment with us.

(5) Includes 500,000 shares issuable upon exercise of an option which will be
exercisable within 60 days of December 31, 1999 but which are subject to a
right of repurchase at cost in our favor in the event Mr. Gray ceases
employment with us.

Except as otherwise noted, the address of each person listed in the above
table is c/o ReplayTV, Inc., 1945 Charleston Road, Mountain View, CA 94043-
1201. Beneficial ownership is determined in accordance with the

rules of the Securities and Exchange Commission and includes voting or
investment power with respect to shares. To our knowledge, except under
applicable community property laws or as otherwise indicated, the persons
named in the table have sole voting and sole investment control with respect
to all shares beneficially owned. The applicable percentage of ownership for
each stockholder is based on 40,952,916 shares of common stock outstanding as
of December 31, 1999 on a pro forma basis to reflect the issuance of 5,627,267
shares of Series F preferred stock in January 2000 and the automatic
conversion of all shares of preferred stock, including the shares of Series F
preferred stock issued in January 2000, into shares of common stock, and an
assumed shares outstanding after the completion of this offering, in
each case, together with applicable options for that stockholder. Shares of
common stock issuable upon the exercise of options and other rights
beneficially owned that are exercisable within 60 days of December 31, 1999
are deemed outstanding for the purpose of computing the percentage ownership
of the person holding those options and other rights but are not deemed
outstanding for the purposes of computing the percentage ownership of each
other person. A portion of the shares issued or issuable upon exercise of
options in the table below is subject to repurchase by us at the original
purchase price in the event of termination of the holder's relationship as an
employee or director of ReplayTV, which repurchase right lapses over time. The
table assumes that the underwriters' over-allotment to purchase up to
shares of common stock is not exercised.

DESCRIPTION OF CAPITAL STOCK

Upon the completion of this offering, we will be authorized to issue
200,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of
undesignated preferred stock, $0.001 par value. The following description of
our capital stock is intended to be a summary and does not describe all
provisions of our certificate of incorporation or bylaws or Delaware law
applicable to us. For a more thorough understanding of the terms of our
capital stock, you should refer to our certificate of incorporation and
bylaws, which are included as exhibits to the registration statement of which
this prospectus is a part.

Common Stock

As of December 31, 1999, there were 40,952,916 shares of common stock
outstanding on a pro forma basis to reflect the issuance of 5,627,267 shares
of Series F preferred stock in January 2000 held by approximately 95
stockholders, which reflects the conversion of all outstanding shares of
preferred stock, including the shares of Series F preferred stock issued in
January 2000, into common stock. In addition, as of December 31, 1999, there
were options outstanding to purchase 10,789,637 shares of common stock and a
warrant outstanding to purchase 6,666 shares of common stock at an exercise
price of $7.50 per share, which expires on May 31, 2004. Upon completion of
this offering, there will be shares of common stock outstanding,
assuming no exercise of the underwriters' overallotment option or additional
exercise of outstanding options under our stock option plan and warrants.

The holders of common stock are entitled to one vote per share on all
matters to be voted upon by stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, holders of common stock are
entitled to receive ratably dividends as may be declared by the board of
directors out of funds legally available for that purpose. In the event of our
liquidation, dissolution or winding up, the holders of common stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any outstanding preferred stock. The common
stock has no preemptive or conversion rights, other subscription rights, or
redemption or sinking fund provisions. All outstanding shares of common stock
are fully paid and non-assessable, and the shares of common stock to be issued
upon completion of this offering will be fully paid and non-assessable.

Preferred Stock

Upon the closing of this offering, all outstanding shares of preferred
stock, including the shares of Series F preferred stock issued in January
2000, will be converted on a one-for-one basis into 31,368,852 shares of
common stock and automatically retired. Thereafter, the board of directors
will have the authority, without further action by the stockholders, to issue
up to 5,000,000 shares of preferred stock in one or more series and to
designate the rights, preferences, privileges and restrictions of each series.
The issuance of preferred stock could have the effect of restricting dividends
on the common stock, diluting the voting power of the common stock, impairing
the liquidation rights of the common stock or delaying or preventing our
change in control without further action by the stockholders. We have no
present plans to issue any shares of preferred stock.

Registration Rights

Following conversion of the preferred stock into common stock, the holders
of 31,368,852 shares of common stock and warrants to purchase 6,666 shares of
common stock are entitled to have their shares registered by us under the
Securities Act under the terms of an agreement between us and the holders of
these "registrable securities." Subject to limitations specified in the
agreement, these registration rights include the following:

The holders of at least 50% of the outstanding registrable securities may
require, on two occasions beginning six months after the date of this
prospectus, that we use our best efforts to register the registrable
securities for public resale, provided that the aggregate offering price for
these registrable securities is at least $5,000,000. This right is subject to
the ability of the underwriters to limit the number of shares included in this
offering in view of market conditions.

If we register any common stock, either for our own account or for the
account of other security holders, the holders of registrable securities are
entitled to include their shares of common stock in that registration. This
right is subject to the ability of the underwriters to limit the number of
shares included in this offering in view of market conditions.

The holders of at least 20% of the then outstanding registrable securities
may require us to register all or a portion of their registrable securities on
Form S-3 when use of this form becomes available to us, provided that the
proposed aggregate offering price is at least $500,000. The holders of
registrable securities may not exercise this right if we have already effected
two Form S-3 registrations previously demanded by the holders of registrable
securities during the preceding twelve-month period.

We will bear all registration expenses other than underwriting discounts
and commissions, except in the case of registrations on Form S-3 after the
first two such registrations, in which case the holders will bear the expenses
of registration. All registration rights terminate on the date five years
following the closing of this offering, or, with respect to each holder of
registrable securities, at the time when the holder is entitled to sell all of
its shares in any three month period under Rule 144 of the Securities Act.

Delaware Anti-Takeover Law and Provisions of our Certificate of Incorporation
and Bylaws

Provisions of Delaware law and our certificate of incorporation and bylaws
could make it more difficult for a third party to acquire us or to remove our
incumbent officers and directors. These provisions, summarized below, are
expected to discourage coercive takeover practices and inadequate takeover
bids and to encourage persons seeking to acquire control of ReplayTV to first
negotiate with us. We believe that the benefits of increased protection of our
ability to negotiate with the proponent of an unfriendly or unsolicited
acquisition proposal outweigh the disadvantages of discouraging these
proposals because, among other things, negotiation could result in an
improvement of their terms.

We are subject to Section 203 of the Delaware General Corporation Law,
which regulates corporate acquisitions. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a business combination
with an interested stockholder for a period of three years following the date
the person became an interested stockholder, unless:

. the board of directors approved the transaction in which the person
became an interested stockholder prior to the date the interested
stockholder attained this status;

. upon consummation of the transaction that resulted in the person's
becoming an interested stockholder, he or she owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding shares owned by persons who are directors and also
officers; or

. on or after the date of the business combination, it is approved by the
board of directors and authorized at an annual or special meeting of
stockholders.

A business combination generally includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. In general, an interested stockholder is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status, did own, 15% or more of a
corporation's voting stock.

Our certificate of incorporation and bylaws do not provide for the right of
stockholders to act by written consent without a meeting or for cumulative
voting in the election of directors. In addition, our certificate of
incorporation permits the board of directors to issue preferred stock with
voting or other rights without any stockholder action. Our certificate of
incorporation provides for the board of directors to be divided into three
classes, with staggered three-year terms, commencing at our first annual
meeting of stockholders following the date on which we have at least 800
stockholders. As a result, only one class of directors will be elected at each
annual meeting of stockholders. Each of the two other classes of directors
will continue to serve for the remainder

of its respective three-year term. These provisions, which require the vote of
stockholders holding at least two thirds of the outstanding common stock to
amend, may have the effect of deterring hostile takeovers or delaying changes
in our management.

Transfer Agent and Registrar

The transfer agent and registrar for the common stock is .
The transfer agent's address and telephone number is .

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for our common stock.
Future sales of substantial amounts of common stock in the public market could
adversely affect prevailing market prices. As described below, no shares
currently outstanding will be available for sale immediately after this
offering because of contractual restrictions on resale. Sales of substantial
amounts of our common stock in the public market after the restrictions lapse
could adversely affect the prevailing market price and impair our ability to
raise equity capital in the future.

Upon completion of the offering, we will have outstanding
shares of common stock. Of these shares, the shares sold in this
offering, plus any shares issued upon exercise of the underwriters'
overallotment option, will be freely tradable without restriction under the
Securities Act, unless purchased by our "affiliates" as that term is defined
in Rule 144 under the Securities Act. In general, affiliates include executive
officers, directors or 10% stockholders. Shares purchased by affiliates will
remain subject to the resale limitations of Rule 144.

The remaining 40,952,916 shares outstanding as of December 31, 1999, as
adjusted to reflect the issuance of 5,627,267 shares of Series F preferred
stock in January 2000, are restricted securities within the meaning of Rule
144. Restricted securities may be sold in the public market only if registered
or if they qualify for an exemption from registration under Rules 144, 144(k)
or 701 promulgated under the Securities Act, which are summarized below. Sales
of restricted securities in the public market, or the availability of these
shares for sale, could adversely affect the market price of the common stock.

Our directors, executive officers and certain of our stockholders and
option holders have entered into lock-up agreements in connection with this
offering, as more fully described under "Underwriting," generally providing
that they will not offer, sell, contract to sell or grant any option to
purchase or otherwise dispose of our common stock or any securities
exercisable for or convertible into our common stock owned by them for a
period of 180 days after the date of this prospectus without the prior written
consent of Morgan Stanley & Co. Incorporated. Notwithstanding possible earlier
eligibility for sale under the provisions of Rules 144, 144(k) and 701, shares
subject to lock-up agreements will not be salable until these agreements
expire or are waived by Morgan Stanley & Co. Incorporated. Taking into account
the lock-up agreements, and assuming Morgan Stanley & Co. Incorporated does
not release stockholders from these agreements, the following shares will be
eligible for sale in the public market at the following times:

. Beginning on the date of this prospectus, only the shares sold
in this offering will be immediately available for sale in the public
market.

. Beginning 180 days after the date of this prospectus, about 9,411,088
shares will be eligible for sale pursuant to Rule 701, of which 7,708,720
are held by affiliates.

. Beginning 180 days after the date of this prospectus, about 1,824,434
shares will be eligible for sale pursuant to Rule 144(k), none of which
are held by affiliates.

. Beginning 180 days after the date of this prospectus, about 20,070,571
shares will be eligible for sale subject to volume, manner of sale and
other limitations under Rule 144, of which 12,366,210 are held by
affiliates.

. The remaining 5,646,823 shares will be eligible for sale pursuant to Rule
144 upon the expiration of various one-year holding periods during the
six months following 180 days after the date of this prospectus, none of
which are held by affiliates.

In general, under Rule 144 as currently in effect, after the expiration of
the lock-up agreements, a person who has beneficially owned restricted
securities for at least one year would be entitled to sell within any three-
month period a number of shares that does not exceed the greater of:

. one percent of the number of shares of common stock then outstanding
which will equal about shares immediately after this offering;
or

. the average weekly trading volume of the common stock during the four
calendar weeks preceding the sale.

Sales under Rule 144 are also subject to requirements with respect to
manner of sale, notice and the availability of current public information
about us. Under Rule 144(k), a person who is not deemed to have been our
affiliate at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years, is
entitled to sell his or her shares without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.

Rule 701, as currently in effect, permits our employees, officers,
directors or consultants who purchased shares pursuant to a written
compensatory plan or contract to resell these shares in reliance upon Rule 144
but without compliance with specific restrictions. Rule 701 provides that
affiliates may sell their Rule 701 shares under Rule 144 without complying
with the holding period requirement and that non-affiliates may sell their
shares in reliance on Rule 144 without complying with the holding period,
public information, volume limitation or notice provisions of Rule 144.

In addition, we intend to file registration statements under the Securities
Act as promptly as possible after the effective date to register shares to be
issued pursuant to our employee benefit plans. As a result, any options or
rights exercised under the 1999 stock plan, the 1997 stock option plan, the
2000 employee stock purchase plan, the 2000 directors' stock option plan or
any other benefit plan after the effectiveness of the registration statements
will also be freely tradable in the public market. However, such shares held
by affiliates will still be subject to the volume limitation, manner of sale,
notice and public information requirements of Rule 144 unless otherwise
resalable under Rule 701. As of December 31, 1999 there were outstanding
options for the purchase of 10,789,637 shares of common stock, of which
options to purchase 1,799,526 shares were exercisable.

UNDERWRITERS

Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the underwriters named below, for
whom Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc., Deutsche
Bank Securities Inc., Hambrecht & Quist LLC and Wasserstein Perella
Securities, Inc., are acting as representatives, have severally agreed to
purchase and we have agreed to sell to them, the respective number of shares
of common stock set forth opposite the names of these underwriters below:

Number of
Name Shares
---- ---------

Morgan Stanley & Co. Incorporated................................
Bear, Stearns & Co. Inc..........................................
Deutsche Bank Securities Inc.....................................
Hambrecht & Quist LLC............................................
Wasserstein Perella Securities, Inc..............................
-------
Total........................................................
=======

The underwriters are offering the shares of common stock subject to their
acceptance of the shares from us and subject to prior sale. The underwriting
agreement provides that the obligations of the several underwriters to pay for
and accept delivery of the shares of common stock offered by this prospectus
are subject to the approval of specified legal matters by their counsel and to
other conditions. The underwriters are obligated to take and pay for all of
the shares of common stock offered by this prospectus, except those shares
covered by the over-allotment option described below, if any shares are taken.

The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price set forth on the
cover page of this prospectus and a portion to some dealers at a price that
represents a concession not in excess of $ per share under the public
offering price. Any underwriter may allow, and these dealers may reallow, a
concession not in excess of $ per share to other underwriters or to other
dealers. After the initial offering of the shares of common stock, the
offering price and other selling terms may from time to time be varied by the
representatives.

We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to an aggregate of additional
shares at the public offering price set forth on the cover page of this
prospectus, less underwriting discounts and commissions. The underwriters may
exercise this option solely for the purpose of covering over-allotments, if
any, made in connection with the offering of the shares offered by this
prospectus. To the extent this option is exercised, each underwriter will
become obligated, subject to specified conditions, to purchase about the same
percentage of additional shares as the number set forth next to the
underwriter's name in the preceding table bears to the total number of shares
set forth next to the names of all underwriters in the preceding table. If the
underwriters exercise the over-allotment option in full, the total price to
the public for this offering would be $ , the total underwriting discounts
and commissions would be $ and the total proceeds to ReplayTV would be $
.

The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
common stock offered by them.

At our request, the underwriters have reserved up to shares of common
stock offered by this prospectus for sale at the initial public offering price
to some of our directors, officers, employees, business associates and related
persons of ReplayTV. The number of shares available for sale to the general
public will be reduced to the extent that these persons purchase these
reserved shares. Any reserved shares not so purchased will be offered by the
underwriters to the general public on the same basis as the other shares
offered by this prospectus.

ReplayTV has applied to list the common stock on the Nasdaq National Market
under the symbol "RPLY."

ReplayTV, our directors and executive officers and certain of our
stockholders and option holders have each agreed that, without the prior
written consent of Morgan Stanley & Co. Incorporated on behalf of the
underwriters, he, she or it will not, during the period ending 180 days after
the date of this prospectus:

. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock; or

. enter into any swap or other agreement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock,

whether any transaction described above is to be settled by delivery of common
stock or such other securities, in cash or otherwise.

The restrictions described in the immediately preceding paragraph do not
apply to:

. the issuance by us of shares of common stock upon the exercise of an
option or a warrant or the conversion of a security outstanding on the
date of this prospectus of which the underwriters have been advised in
writing;

. shares sold by us in this offering; or

. transactions by any person other than ReplayTV relating to shares of
common stock or other securities acquired in open market transactions
after the completion of this offering.

In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock
for their own account. In addition, to cover over-allotments or to stabilize
the price of the common stock, the underwriters may bid for, and purchase,
shares of common stock in the open market. Finally, the underwriting syndicate
may reclaim selling concessions allowed to an underwriter or a dealer for
distributing the common stock in the offering, if the syndicate repurchases
previously distributed shares of common stock in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the common
stock above independent market levels. The underwriters are not required to
engage in these activities, and may end any of these activities at any time.

ReplayTV and the underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.

Pricing of this Offering

Prior to this offering, there has been no public market for the common
stock. Consequently, the initial public offering price will be determined by
negotiations between us and the representatives of the underwriters. Among the
factors to be considered in determining the initial public offering price will
be:

. the future prospects of ReplayTV and its industry in general;

. earnings and certain other financial and operating information of
ReplayTV in recent periods; and

. the price-earnings ratios, price-sales ratios, market prices of
securities and certain financial and operating information of companies
engaged in activities similar to those of ReplayTV.

The estimated initial public offering price range set forth on the cover
page of this prospectus is subject to change as a result of market conditions
and other factors.

LEGAL MATTERS

The validity of the common stock in this offering will be passed upon by
Venture Law Group, A Professional Corporation, 2800 Sand Hill Road, Menlo
Park, California 94025. Mark Medearis, a Director of Venture Law Group, is our
Secretary. Legal matters in connection with this offering will be passed upon
for the underwriters by Davis Polk & Wardwell, 450 Lexington Avenue, New York,
New York 10017. As of the date of this prospectus, attorneys of Venture Law
Group and an investment partnership controlled by Venture Law Group
beneficially own an aggregate of 19,412 shares of our common stock.

EXPERTS

The financial statements of ReplayTV, Inc. as of December 31, 1997 and 1998
and for the period from August 27, 1997 (inception) to December 31, 1997 and
the year ended December 31, 1998 included in this prospectus have been so
included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

ADDITIONAL INFORMATION AVAILABLE TO YOU

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 with respect to the shares of common stock offered by
this prospectus. This prospectus does not contain all of the information set
forth in the registration statement and its exhibits and schedules. For
further information with respect to us and our common stock being offered, see
the registration statement and its exhibits and schedules. A copy of the
registration statement and its exhibits and schedules may be inspected without
charge at the public reference facilities maintained by the SEC located at
Room 1024, 450 Fifth Street, Washington, D.C. 20549 and at the SEC's regional
offices located at the Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of all or any part of the registration
statement may be obtained from these offices upon the payment of the fees
prescribed by the SEC. Information on the operation of the public reference
room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a
web site at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the SEC.

REPLAYTV, INC.
(a development stage company)

INDEX TO FINANCIAL STATEMENTS

Page
----

Report of Independent Accountants.......................................... F-2
Balance Sheet.............................................................. F-3
Statement of Operations.................................................... F-4
Statement of Stockholders' Equity (Deficit)................................ F-5
Statement of Cash Flows.................................................... F-6
Notes to Financial Statements.............................................. F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

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

The reincorporation described in Note 10 to the financial statements has not
been consummated as of January 26, 2000. When the reincorporation has been
completed, we will be in a position to furnish the following report:

"In our opinion, the accompanying balance sheets and the related
statements of operations, of stockholders' equity (deficit), and of
cash flows present fairly, in all material respects, the financial
position of ReplayTV, Inc. (a development stage company) at December
31, 1997 and 1998, and the results of its operations and its cash flows
for the period from August 27, 1997 (inception) to December 31, 1997
and the year ended December 31, 1998 in conformity with accounting
principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United
States which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above."

PricewaterhouseCoopers LLP

San Jose, California
August 31, 1999, except for Note 10,
which is as of January , 2000

F-2

REPLAYTV, INC.
(a development stage company)

BALANCE SHEET
(in thousands, except per share amounts)

Pro Forma
Stockholders'
December 31, Equity at
-------------- September 30, September 30,
1997 1998 1999 1999
----- ------- ------------- -------------
(unaudited)

ASSETS
Current assets:
Cash and cash equivalents........ $ 103 $ 686 $ 14,636
Short-term investments........... -- 25 35,204
Accounts receivable, net of
allowances of $0, $0 and $9..... -- -- 283
Inventory........................ -- -- 988
Prepaid expenses and other
current assets.................. 10 225 334
----- ------- --------
Total current assets............... 113 936 51,445
Property and equipment, net........ 31 132 1,708
Other assets....................... -- -- 253
----- ------- --------
Total assets....................... $ 144 $ 1,068 $ 53,406
===== ======= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Accounts payable................. $ 15 $ 682 $ 4,100
Accrued liabilities.............. 4 45 1,307
Notes payable to related party... -- 601 --
----- ------- --------
Total current liabilities.......... 19 1,328 5,407
----- ------- --------
Commitments and contingencies (Note
4)
Stockholders' equity (deficit):
Convertible Preferred Stock,
issuable in series, $0.001 par
value, 2,494, 8,237 and 27,137
shares authorized at December
31, 1997, 1998 and September 30,
1999 (unaudited), respectively;
2,494, 7,915 and 25,742 shares
issued and outstanding at
December 31, 1997, 1998 and
September 30, 1999 (unaudited),
respectively; 5,000,000 shares
authorized; no shares issued and
outstanding pro forma
(unaudited)..................... 3 8 26 $ --
Common Stock, $0.001 par value,
20,000, 30,000 and 75,000 shares
authorized at December 31, 1997,
1998 and September 30, 1999
(unaudited), respectively;
7,863, 6,970 and 9,209 shares
issued and outstanding at
December 31, 1997, 1998 and
September 30, 1999 (unaudited),
respectively; 200,000,000 shares
authorized and 34,951 shares
issued and outstanding pro forma
(unaudited)..................... 4 4 6 32
Additional paid-in capital....... 273 3,818 93,501 93,501
Notes receivable................. -- -- (1,700) (1,700)
Unearned stock-based
compensation.................... -- (651) (20,278) (20,278)
Deficit accumulated during
development stage............... (155) (3,439) (23,556) (23,556)
----- ------- -------- --------
Total stockholders' equity
(deficit)......................... 125 (260) 47,999 $ 47,999
----- ------- -------- ========
Total liabilities and stockholders'
equity (deficit).................. $ 144 $ 1,068 $ 53,406
===== ======= ========

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

F-3

REPLAYTV, INC.
(a development stage company)

STATEMENT OF OPERATIONS
(in thousands, except per share amounts)

Period from Period from
August 27, Nine Months August 27,
1997 Ended September 1997
(inception) to Year Ended 30, (inception) to
December 31, December 31, ----------------- September 30,
1997 1998 1998 1999 1999
-------------- ------------ ------- -------- --------------
(unaudited) (unaudited)

Costs and expenses:
Research and
development.......... $ 136 $ 1,961 $ 1,003 $ 4,814 $ 6,911
Programming and
content.............. -- -- -- 560 560
Sales and marketing... 10 764 293 8,735 9,509
General and
administrative....... 9 325 159 2,091 2,425
Hardware distribution
costs, net........... -- -- -- 770 770
Stock-based
compensation......... -- 206 100 3,489 3,695
------ ------- ------- -------- --------
Total costs and
expenses........... 155 3,256 1,555 20,459 23,870
------ ------- ------- -------- --------
Operating loss.......... (155) (3,256) (1,555) (20,459) (23,870)
Interest income
(expense), net......... -- (28) (4) 342 314
------ ------- ------- -------- --------
Net loss................ $ (155) $(3,284) $(1,559) $(20,117) $(23,556)
====== ======= ======= ======== ========
Basic and diluted net
loss per share......... $(0.08) $ (0.48) $ (0.23) $ (2.73) $ (3.35)
====== ======= ======= ======== ========
Basic and diluted
weighted average shares
used in computation of
net loss per share..... 2,026 6,889 6,880 7,359 7,037
====== ======= ======= ======== ========
Pro forma basic and
diluted net loss per
share (unaudited)...... $ (0.29) $ (0.84)
======= ========
Pro forma basic and
diluted weighted
average shares
(unaudited)............ 11,282 23,953
======= ========

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

F-4

REPLAYTV, INC.
(a development stage company)

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands)

Convertible Deficit
Preferred Accumulated Total
Stock Common Stock Additional Unearned During Stockholders'
------------- -------------- Paid-In Notes Stock-Based Development Equity
Shares Amount Shares Amount Capital Receivable Compensation Stage (Deficit)
------ ------ ------ ------ ---------- ---------- ------------ ----------- -------------

Issuance of Common Stock
at inception........... -- $ -- 7,863 $ 4 $ -- $ -- $ -- $ -- $ 4
Issuance of Series A
Preferred Stock, net... 2,494 3 -- -- 273 -- -- -- 276
Net loss................ -- -- -- -- -- -- -- (155) (155)
------ ---- ----- --- ------- ------- -------- -------- -------
Balance at December 31,
1997................... 2,494 3 7,863 4 273 -- -- (155) 125
Issuance of Series B
Preferred Stock, net... 2,258 2 -- -- 695 -- -- -- 697
Issuance of Series C
Preferred Stock, net... 3,163 3 -- -- 1,993 -- -- -- 1,996
Exercise of Common Stock
options................ -- -- 90 -- -- -- -- -- --
Repurchase of Common
Stock.................. -- -- (983) -- -- -- -- -- --
Unearned stock-based
compensation........... -- -- -- -- 857 -- (857) -- --
Stock-based
compensation........... -- -- -- -- -- -- 206 -- 206
Net loss................ -- -- -- -- -- -- -- (3,284) (3,284)
------ ---- ----- --- ------- ------- -------- -------- -------
Balance at December 31,
1998................... 7,915 8 6,970 4 3,818 -- (651) (3,439) (260)
Issuance of Series D
Preferred Stock, net
(unaudited)............ 10,194 10 -- -- 7,831 -- -- -- 7,841
Issuance of Series E
Preferred Stock, net
(unaudited)............ 7,633 8 -- -- 56,995 -- -- -- 57,003
Issuance of Common Stock
(unaudited)............ -- -- 2,239 2 1,782 (1,700) -- -- 84
Issuance of stock
options for services
(unaudited)............ -- -- -- -- 444 -- -- -- 444
Issuance of warrants to
purchase Series E
Preferred Stock
(unaudited)............ -- -- -- -- 30 -- -- -- 30
Unearned stock-based
compensation
(unaudited)............ -- -- -- -- 22,601 -- (22,601) -- --
Stock-based compensation
(unaudited)............ -- -- -- -- -- -- 2,974 -- 2,974
Net loss (unaudited).... -- -- -- -- -- -- -- (20,117) (20,117)
------ ---- ----- --- ------- ------- -------- -------- -------
Balance at September 30,
1999 (unaudited)....... 25,742 $ 26 9,209 $ 6 $93,501 $(1,700) $(20,278) $(23,556) $47,999
====== ==== ===== === ======= ======= ======== ======== =======

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

F-5

REPLAYTV, INC.
(a development stage company)

STATEMENT OF CASH FLOWS
(in thousands)

Period from Period from
August 27, August 27,
1997 Nine Months 1997
(inception) Ended September (inception)
to Year Ended 30, to
December 31, December 31, ----------------- September 30,
1997 1998 1998 1999 1999
------------ ------------ ------- -------- -------------
(unaudited) (unaudited)

Cash flows from
operating activities:
Net loss............... $(155) $(3,284) $(1,559) $(20,117) $(23,556)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Depreciation and
amortization........ 2 23 17 131 156
Stock-based
compensation........ -- 206 100 3,519 3,725
Changes in assets and
liabilities:
Accounts
receivable........ -- -- -- (283) (283)
Inventory.......... -- -- -- (988) (988)
Accounts payable
and other current
liabilities....... 19 739 398 4,649 5,407
Prepaid expenses
and other assets.. (10) (215) (55) (362) (587)
----- ------- ------- -------- --------
Net cash used in
operating
activities...... (144) (2,531) (1,099) (13,451) (16,126)
----- ------- ------- -------- --------
Cash flows from
investing activities:
Purchase of property
and equipment......... (33) (124) (63) (1,707) (1,864)
Purchase of short-term
investments........... -- (25) -- (35,179) (35,204)
----- ------- ------- -------- --------
Net cash used in
investing
activities...... (33) (149) (63) (36,886) (37,068)
----- ------- ------- -------- --------
Cash flows from
financing activities:
Proceeds from the
issuance of Common
Stock................. 4 -- -- 13 17
Proceeds from the sale
of Preferred Stock.... 276 2,693 698 64,844 67,813
Proceeds from
(repayment of) notes
payable............... -- 570 363 (570) --
----- ------- ------- -------- --------
Net cash provided
by financing
activities...... 280 3,263 1,061 64,287 67,830
----- ------- ------- -------- --------
Net increase (decrease)
in cash and cash
equivalents........... 103 583 (101) 13,950 14,636
Cash and cash
equivalents at the
beginning of the
period................ -- 103 103 686 --
----- ------- ------- -------- --------
Cash and cash
equivalents at the end
of the period......... $ 103 $ 686 $ 2 $ 14,636 $ 14,636
===== ======= ======= ======== ========
Supplemental disclosure
of cash flow
information:
Interest paid.......... $ -- $ -- $ -- $ 37 $ 37
===== ======= ======= ======== ========

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

F-6

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

Note 1--The Company and Its Significant Accounting Policies:

ReplayTV, Inc. (the "Company") was incorporated in California in August
1997, and through the first quarter of 1999, the Company's operating
activities consisted primarily of product and service development. The Company
continues to operate as a development stage company and has not yet recognized
any operating revenues from advertising or other sources. In April 1999, the
Company launched the ReplayTV Service and the ReplayTV-enabled personal video
recorder, or PVR, via direct sales from its web site and toll free telephone
number. More recently, the Company's products have become available through
online retailers. The Company has received proceeds from the shipment of
ReplayTV-enabled PVRs; however, these proceeds are considered incidental to
the Company's ongoing business and thus have been reported as a reduction of
the related hardware distribution costs in its statement of operations. The
Company does not intend to manufacture PVRs. Instead, it intends to license
its technology to partners to manufacture PVRs or incorporate ReplayTV's
technology in their consumer electronics products such as VCRs, DVD players
and recorders, set-top boxes or televisions. The Company recently entered into
such an agreement with Matsushita-Kotobuki Electronics Industries, Ltd., a
subsidiary of Matsushita Electric Industrial Co., Ltd. ("MKE"), and intends to
enter into similar relationships with other consumer electronics companies in
the future.

Unaudited interim results

The interim financial statements as of September 30, 1999 and for the nine
months ended September 30, 1998 and 1999 are unaudited. In the opinion of
management, these interim financial statements have been prepared on the same
basis as the audited financial statements and reflect all adjustments,
consisting only of normal, recurring adjustments necessary for the fair
presentation of the results of interim periods. The financial data and other
information disclosed in these notes to the financial statements for the
related periods are unaudited. The results of the interim periods are not
necessarily indicative of the results to be expected for any future periods.

Use of estimates

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

Cash and cash equivalents

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. The carrying
amount reported in the balance sheet for cash and cash equivalents
approximates its fair value.

Short-term investments

The Company classifies all investments in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" which requires investment
securities to be classified as either held to maturity, trading or available-
for-sale. All of the Company's investments are classified as available-for-
sale and are stated at fair market value which approximates cost.

F-7

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

The Company's short-term investments consist of a certificate of deposit of
$25,000 at December 31, 1998 and commercial paper of $35,204,000 at September
30, 1999. Unrealized gains or losses have been insignificant for all periods
presented.

Property and equipment

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method based upon the estimated useful lives of the assets
of one to five years.

Hardware distribution costs, net

The costs associated with manufacturing and distribution of the PVRs were
$4.2 million for the nine months ended September 30, 1999. Proceeds from sales
of the PVRs totaled $3.4 million during the same period. As the Company plans
to transition the manufacturing and distribution of its PVRs to MKE and other
partners, the sales of PVRs are considered incidental to its business.
Therefore, the Company has reflected the proceeds as a reduction of the
related hardware distribution costs. The Company has agreed to subsidize MKE
in connection with their manufacturing and distribution of ReplayTV-enabled
PVRs in future periods. The Company records a provision for estimated warranty
costs at the time of sale.

Net loss per share

Basic net loss per share is computed by dividing the net loss for the
period by the weighted average number of shares of Common Stock outstanding
during the period. Diluted net loss per share is computed by dividing the net
loss for the period by the weighted average number of common and potential
common equivalent shares outstanding during the period. The calculation of
diluted net loss per share excludes potential common shares if the effect is
antidilutive. Potential common shares are composed of Common Stock subject to
repurchase rights and incremental shares of Common Stock issuable upon the
exercise of stock options and warrants and Common Stock issuable upon
conversion of Preferred Stock.

F-8

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

The following table sets forth the computation of basic and diluted net
loss per share for the periods indicated:

Numerator:
Net loss.............. $ (155) $(3,284) $(1,559) $(20,117) $(23,556)
------ ------- ------- -------- --------
Denominator:
Weighted average
shares............... 2,315 6,889 6,880 7,735 7,174
Weighted average
shares of Common
Stock subject to
repurchase
agreements........... (289) -- -- (376) (137)
------ ------- ------- -------- --------
Denominator for basic
and diluted
calculation.......... 2,026 6,889 6,880 7,359 7,037
------ ------- ------- -------- --------
Basic and diluted net
loss per share......... $(0.08) $ (0.48) $ (0.23) $ (2.73) $ (3.35)
====== ======= ======= ======== ========

The following table sets forth the weighted average potential shares of
Common Stock that are not included in the diluted net loss per share
calculation above because to do so would be antidilutive for the periods
indicated:

Period from Nine Months Period from
August 27, Ended August 27,
1997 September 1997
(inception) to Year Ended 30, (inception) to
December 31, December 31, ------------ September 30,
1997 1998 1998 1999 1999
-------------- ------------ ----- ------ --------------
(unaudited) (unaudited)
(in thousands)

Weighted average effect
of dilutive securities:
Series A Preferred
Stock................ 242 2,494 2,494 2,494 2,197
Series B Preferred
Stock................ -- 1,460 889 2,258 1,507
Series C Preferred
Stock................ -- 439 -- 3,163 1,339
Series D Preferred
Stock................ -- -- -- 7,022 2,545
Series E Preferred
Stock................ -- -- -- 1,657 614
Warrant to purchase
Series E Preferred
Stock................ -- -- -- 1 1
Employee stock
options.............. 31 1,635 1,659 4,677 3,645
Common Stock subject
to repurchase
agreements........... 289 -- -- 376 137
--- ----- ----- ------ ------
562 6,028 5,042 21,648 11,985
=== ===== ===== ====== ======

Income taxes

Income taxes are accounted for using the asset and liability approach in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under the asset
and liability approach, a current tax liability or asset is

F-9

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

recognized for the estimated taxes payable or refundable on tax returns for
the current year. A deferred tax liability or asset is recognized for the
estimated future tax effects attributable to temporary differences and
carryforwards. The measurement of deferred tax assets is reduced, if
necessary, by the amount of any benefits that, based on available evidence,
are not expected to be realized.

Pro forma net loss per share (unaudited)

Pro forma net loss per share for the year ended December 31, 1998 and the
nine months ended September 30, 1999 is computed using the weighted average
number of common shares outstanding, including the conversion of the Company's
Convertible Preferred Stock into shares of the Company's Common Stock
effective upon the closing of the Company's initial public offering, as if
such conversion occurred at January 1, 1998 or at date of original issuance,
if later. The resulting unaudited pro forma adjustment includes an increase in
the weighted average shares used to compute basic and diluted net loss per
share of 4,393,000 and 16,594,000 for the year ended December 31, 1998 and
nine months ended September 30, 1999, respectively. The calculation of pro
forma diluted net loss per share excludes incremental Common Stock issuable
upon the exercise of stock options and warrants as the effect would be
antidilutive.

Comprehensive income

Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting comprehensive income and its components in financial statements.
Comprehensive income, as defined, includes all changes in equity (net assets)
during a period from non-owner sources. During the period from August 27, 1997
(inception) to December 31, 1997, the year ended December 31, 1998 and the
nine months ended September 30, 1998 and 1999 (unaudited) the Company has not
had any significant transactions that are required to be reported in
comprehensive income (loss).

Stock-based compensation

The Company accounts for stock-based compensation arrangements in
accordance with the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and complies with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." Under APB 25, unearned compensation is based on the difference,
if any, on the date of the grant, between the fair value of the Company's
stock and the exercise price. Unearned compensation is amortized and expensed
in accordance with Financial Accounting Standards Board Interpretation No. 28
using the multiple-option approach. The Company accounts for stock-based
compensation issued to non-employees in accordance with the provisions of SFAS
No. 123 and Emerging Issues Task Force No. 96-18, "Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services."

Concentration of risk

Financial instruments which potentially subject the Company to
concentration of credit risk consist primarily of cash equivalents and short-
term investments. Cash equivalents and short-term investments, primarily
composed of investments in money market funds and commercial paper, are
maintained with a single institution, and the composition and maturities are
regularly monitored by management. The carrying value of all financial
instruments approximate their respective fair value.

F-10

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

The Company relies on a single third-party contractor to manufacture the
ReplayTV-enabled PVRs. The Company also relies on other third party suppliers
to provide certain components necessary to manufacture the PVRs. The loss of
any manufacturer or supplier could delay or prevent the Company from
commercializing its services and have a material adverse effect on the
Company's business, financial position and results of operations.

Recent accounting pronouncements

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 is
effective for financial statements for years beginning after December 15,
1998. SOP 98-1 provides guidance over accounting for computer software
developed or obtained for internal use including the requirement to capitalize
specified costs and amortization of such costs. The adoption of the provisions
of SOP 98-1 during the fiscal year beginning January 1, 1999, did not have a
material effect on the financial statements.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. In July 1999, the Financial Accounting Standards Board issued SFAS
No. 137, "Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133". SFAS No. 137
deferred the effective date until the first fiscal quarter ending on or after
June 30, 2000. The Company will adopt SFAS No. 133 in its quarter ending June
30, 2000. The Company has not engaged in hedging activities or invested in
derivative instruments.

Note 2--Balance Sheet Components:

December 31,
-------------- September 30,
1997 1998 1999
------ ------ -------------
(unaudited)
(in thousands)

Property and equipment:
Computer equipment and software............. $ 33 $ 138 $1,101
Lab and manufacturing equipment............. -- 11 239
Office furniture and equipment.............. -- 8 524
----- ------ ------
33 157 1,864
Less: accumulated depreciation................ (2) (25) (156)
----- ------ ------
$ 31 $ 132 $1,708
===== ====== ======
Accrued liabilities:
Payroll and related expense................. $ 4 $ 45 $ 201
Warranty reserve............................ -- -- 67
Production costs............................ -- -- 319
Deferred rent............................... -- -- 180
Other....................................... -- -- 540
----- ------ ------
$ 4 $ 45 $1,307
===== ====== ======

F-11

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

Note 3--Line of Credit:

On June 10, 1999, the Company entered into a loan agreement (the
"Facility") with a bank. The Facility is secured by the Company's assets. The
Facility allows for borrowings of up to $1.25 million bearing interest at a
rate equal to the bank's prime rate plus 0.75% and expires in May 2000. The
Company must comply with certain financial covenants and conditions as
described in the Facility. The Company was in compliance as of September 30,
1999. As of September 30, 1999, no borrowings were outstanding under the
Facility. The Company has an outstanding Letter of Credit of $500,000 under
the loan agreement. Under the terms of the loan agreement, the Company is
prohibited from paying dividends without approval from the bank.

Note 4--Commitments and Contingencies:

Operating leases

The Company leases office space under a noncancelable operating lease which
expires in March 2006. Rent expense totaled $9,000, $120,000, $77,000 and
$973,000 in 1997, 1998 and for the nine months ended September 30, 1998 and
1999 (unaudited), respectively.

Future minimum lease payments under noncancelable leases are as follows (in
thousands):

Years Ending December 31,
-------------------------

1999................................................................. $ 394
2000................................................................. 2,198
2001................................................................. 2,411
2002................................................................. 2,483
2003................................................................. 2,555
Thereafter........................................................... 6,019
-------
Total minimum lease payments....................................... $16,060
=======

Contingencies

From time to time, the Company may have certain contingent liabilities,
including intellectual property claims, that arise in the ordinary course of
its business activities. The Company accrues contingent liabilities when it is
probable that future expenditures will be made and such expenditures can be
reasonably estimated. In the opinion of management, there are no pending
claims for which the outcome is expected to result in a material adverse
effect on the financial position or results of operations or cash flows of the
Company.

F-12

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

Note 5--Income Taxes:

The Company incurred net operating losses for the period from August 27,
1997 (inception) to December 31, 1997 and the year ended December 31, 1998 and
accordingly, no provision for income taxes has been recorded. The tax benefit
is reconciled to the amount computed using the federal statutory rate as
follows:

Period from
August 27,
1997
(inception) to Year Ended
December 31, December 31,
1997 1998
-------------- ------------
(in thousands)

Federal statutory benefit........................ $53 $1,116
State taxes, net of federal benefit.............. 13 263
Future benefits not currently recognized......... (71) (1,365)
Nondeductible compensation....................... -- (82)
Other............................................ 5 68
--- ------
$-- $ --
=== ======

At December 31, 1998, the Company had approximately $1.9 million of federal
and $1.9 million of state net operating loss carryforwards available to offset
future taxable income which expire at various dates through 2018. Under the
Tax Reform Act of 1986, the amounts of and benefits from net operating loss
carryforwards may be impaired or limited in certain circumstances. Events
which cause limitations in the amount of net operating losses that the Company
may utilize in any one year include, but are not limited to, a cumulative
ownership change of more than 50%, as defined, over a three-year period.

Deferred tax assets and liabilities consist of the following:

December 31,
---------------
1997 1998
---------------
(in thousands)

Deferred tax assets:
Net operating loss carryforwards.......................... $ 53 $ 744
Accruals and allowances................................... 8 544
Research credits.......................................... 10 148
----- --------
Net deferred tax assets................................. 71 1,436
Valuation allowance....................................... (71) (1,436)
----- --------
$ -- $ --
===== ========

The Company has incurred losses since inception. Management believes that
based on the history of such losses and other factors, the weight of available
evidence indicates that it is more likely than not that the Company will not
be able to realize its deferred tax assets, and thus a full valuation reserve
has been recorded at December 31, 1997 and 1998.

F-13

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

Note 6--Convertible Preferred Stock:

Convertible Preferred Stock ("Preferred Stock") consists of the following:

Proceeds
Per Net of
Shares Shares Share Liquidation Issuance
Series Authorized Outstanding Amount Amount Costs
------ ---------- ----------- ------ ----------- --------
(in thousands, except per share amounts)

A....................... 2,494 2,494 $0.11 $ 276 $ 276
------ ------ ------- -------
Balance at December
31, 1997............. 2,494 2,494 276 276
B....................... 2,580 2,258 0.31 700 697
C....................... 3,163 3,163 0.63 1,999 1,996
------ ------ ------- -------
Balance at December
31, 1998............. 8,237 7,915 2,975 2,969
D (unaudited)........... 10,200 10,194 0.78 7,900 7,841
E (unaudited)........... 8,700 7,633 7.50 57,300 57,003
------ ------ ------- -------
Balance at September
30, 1999,
(unaudited).......... 27,137 25,742 $68,175 $67,813
====== ====== ======= =======

The above table excludes the Series F Preferred Stock financing which
occurred subsequent to September 30, 1999 (see Note 10).

The holders of the Convertible Preferred Stock have various rights and
preferences as follows:

Dividends

Holders of the Series A, Series B, Series C, Series D and Series E
Preferred Stock are each entitled to receive annual dividends of 8% per share,
when as and if declared by the Board of Directors prior to the declaration of
dividends to holders of Common Stock.

Conversion

Each share of Series A, Series B, Series C, Series D and Series E Preferred
Stock is convertible into shares of Common Stock based on a formula which
currently results in a one-for-one exchange ratio. This formula is subject to
adjustment, as defined, which essentially provides adjustments for holders of
the Preferred Stock in the event of dilutive issuances, stock splits,
combinations or other recapitalizations. Such conversion is automatic upon the
earlier of (i) the effective date of a public offering of Common Stock
resulting in an offering price of not less than $7.50 per share (appropriately
adjusted for any stock split, dividend, combination or other
recapitalizations) or (ii) written notice to the Company by the holders of at
least 66 2/3% of the then outstanding shares of Preferred Stock of their
intent to convert into shares of Common Stock.

Liquidation

In the event of liquidation, holders of the Series A Preferred Stock are
entitled to a per share distribution in preference to holders of Common Stock
equal to the Series A stated value of $0.11 plus any declared but unpaid
dividends. The holders of Series B Preferred Stock are entitled to a per share
distribution preference to holders of Common Stock equal to the Series B
stated value of $0.31 plus any declared but unpaid dividends. The holders

F-14

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

of Series C Preferred Stock are entitled to a per share distribution
preference to holders of Common Stock equal to the Series C stated value of
$0.63 plus any declared but unpaid dividends. The holders of Series D
Preferred Stock are entitled to a per share distribution preference to holders
of Common Stock equal to the Series D stated value of $0.78 plus any declared
but unpaid dividends. The holders of Series E Preferred Stock are entitled to
a per share distribution preference to holders of Common Stock equal to the
Series E stated value of $7.50 plus any declared but unpaid dividends. In the
event funds are sufficient to make a complete distribution to holders of
Series A, Series B, Series C, Series D and Series E as described above, the
remaining assets will be distributed ratably among the holders of Common
Stock.

Redemption

The holders of the Series A, B, C, D and E Preferred Stock have no
redemption rights.

Voting

The holders of the Series A, B, C, D and E Preferred Stock have one vote
for each share of Common Stock into which such Preferred Stock may be
converted.

Warrants for Preferred Stock

In connection with a loan agreement entered into in June 1999, the Company
issued a warrant to purchase 6,666 shares of Series E Preferred Stock to the
lender. The warrant may be exercised at any time between May 1999 and May 2004
at an exercise price of $7.50 per share. The warrant was recorded as a debt
discount at its estimated fair value of $30,000. The Company estimated the
fair value of the warrant using the Black-Scholes option pricing model using
the following assumptions: risk-free interest rate of 5.5%; volatility of 80%;
and an expected life of five years.

Note 7--Common Stock:

At December 31, 1997 and 1998, there were 7,863,000 and 6,970,000 shares
outstanding, respectively, of Common Stock issued to the founders of the
Company, affiliates and other nonrelated parties. At September 30, 1999, there
were 9,209,000 shares of Common Stock outstanding. A portion of the shares
sold are subject to a right of repurchase by the Company subject to vesting.
At December 31, 1997 and 1998 and September 30, 1999, there were approximately
983,000, 0 and 1,370,000 shares, respectively, subject to repurchase. In June
1998, the Company repurchased 983,000 shares of unvested Common Stock from a
founder of the Company at $0.0005 per share.

In July 1999, the Board of Directors approved a two-for-one stock split of
the Company's Common Stock and Preferred Stock with a corresponding adjustment
to outstanding stock options and warrants. All Common and Preferred converted
share and per share data in the accompanying financial statements have been
adjusted retroactively to give effect to the stock split.

In connection with Common Stock issued for services during the third
quarter of 1999, the Company recorded $71,000 of stock-based compensation
expense.

F-15

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

The Company has reserved shares of Common Stock as follows:

September 30,
1999
--------------
(unaudited)
(in thousands)

Conversion of Series A....................................... 2,494
Conversion of Series B....................................... 2,258
Conversion of Series C....................................... 3,163
Conversion of Series D....................................... 10,194
Conversion of Series E....................................... 7,633
Common Stock issued.......................................... 9,209
Exercise of options under the equity incentive plans......... 9,581
Exercise of warrants issued for Series E Preferred Stock..... 7
Undesignated................................................. 30,461
------
75,000
======

The above shares do not include shares reserved under the 2000 Employee
Stock Purchase Plan and 2000 Directors' Stock Option Plan (See Note 10).

Note 8--Stock Option Plan:

In November 1997, the Board of Directors adopted the 1997 Stock Option Plan
(the "1997 Plan") providing for the issuance of incentive and nonstatutory
stock options to employees, consultants and outside directors of the Company.
As of September 30, 1999, 9,070,000 shares are authorized for issuance under
the 1997 Plan.

In September 1999, the Board of Directors adopted the 1999 Stock Option
Plan (the "1999 Plan") providing for the issuance of incentive and non
statutory stock options to employees, consultants and outside directors of the
Company. As of September 30, 1999, 2,530,000 shares are authorized for
issuance under the 1999 Plan.

Under the 1997 and 1999 Plans, options may be granted at an exercise price
at the date of grant of not less than the fair market value per share for
incentive stock options and not less than 85% of the fair market value per
share for nonstatutory stock options, except for options granted to a person
owning greater than 10% of the total combined voting power of all classes of
stock of the Company, for which the exercise price of the option must be not
less than 110% of the fair market value. The fair market value of the
Company's common stock is determined by the Board of Directors. In determining
the fair market value on each grant date, the Board of Directors considered
among other things, the developmental stage of the Company, the absence of a
public trading market for the Company's securities and the nature of the
Company's business.

Options granted under the 1997 and 1999 Plans generally become exercisable
at a rate of 25% per year over four years and expire no later than ten years
after the grant date.

Under the 1999 Plan, a stock purchase right may be issued, either alone, in
addition to, or in tandem with other awards granted under the 1999 Plan and/or
cash awards made outside of the 1999 Plan. The purchase price of the shares
subject to the stock purchase right are determined by the Board. Shares
purchased using the stock purchase right are subject to the Company's option
to repurchase the shares from the purchaser at the purchaser's original cost
per share upon the voluntary or involuntary termination of the purchaser's
employment or consulting relationship for any reason, including death or
disability.

F-16

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

The following table summarizes information about stock option transactions
under the 1997 and 1999 Plans:

Period from
August 27, 1997 Nine Months
(inception) to Year Ended Ended
December 31, December 31, September 30,
1997 1998 1999
--------------- ---------------- ----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
(unaudited)
(in thousands, except per share amounts)

Outstanding at beginning of
period..................... -- $ -- 260 $0.01 2,567 $0.02
Granted below fair value.... -- 2,616 0.02 7,995 1.78
Granted at fair value....... 260 0.01 -- -- -- --
Exercised................... -- -- (90) 0.01 (1,929) 0.89
Canceled.................... -- -- (219) 0.01 (263) 0.10
--- ----- ------
Outstanding at end of
period..................... 260 0.01 2,567 0.02 8,370 1.50
=== ===== ======
Options vested.............. -- 219 432
=== ===== ======
Weighted average fair value
of options granted during
the period................. $0.01 $0.35 $4.71
===== ===== =====

At September 30, 1999, the Company had 1,210,924 shares available for
future grant under the 1997 and 1999 Plans.

The following table summarizes the information about stock options
outstanding and exercisable as of December 31, 1998:

Options Outstanding and Exercisable
-------------------------------------------------------------------
Weighted
Average
Remaining Weighted
Range of Number Contractual Average
Exercise Outstanding Life (in Exercise
Prices (in thousands) years) Price
----------- -------------- ----------- --------

$0.011-0.03 217 9.19 $0.015
0.25 2 10.00 0.25

The following table summarizes the information about stock options
outstanding and exercisable as of September 30, 1999 (unaudited):

$0.011-0.03 358 8.60 $0.028
0.25-0.375 35 9.32 0.25
0.625 30 9.46 0.625
2.00-4.00 9 9.58 2.15

F-17

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

The weighted average remaining contractual life of stock options
outstanding at December 31, 1998 and September 30, 1999 was 9.48 and 9.41
years, respectively.

Fair value disclosures

The Company applies the measurement principles of APB 25 in accounting for
its stock option plans. Had compensation expense for options granted been
determined based on the fair value at the grant date as prescribed by SFAS No.
123, the Company's net loss and net loss per share would have been decreased
to the pro forma amounts indicated below:

Net loss:
As reported......................... $ (155) $(3,284) $(1,559) $(20,117) $(23,556)
====== ======= ======= ======== ========
Pro forma........................... $ (155) $(3,166) $(1,496) $(18,464) $(21,785)
====== ======= ======= ======== ========
Basic and diluted net loss per
share:
As reported......................... $(0.08) $ (0.48) $ (0.23) $ (2.73) $ (3.35)
====== ======= ======= ======== ========
Pro forma........................... $(0.08) $ (0.46) $ (0.22) $ (2.51) $ (3.10)
====== ======= ======= ======== ========

The Company calculated the minimum fair value of each option grant on the
date of grant using the Black-Scholes option pricing model as prescribed by
SFAS No. 123 using the following assumptions:

Period from Period from
August 27, August 27,
1997 Nine Months 1997
(inception) Ended (inception)
to Year Ended September 30, to
December 31, December 31, --------------- September 30,
1997 1998 1998 1999 1999
------------ ------------ ------ ------ -------------
(unaudited) (unaudited)

Risk-free interest
rates.................. 5.5% 5.5% 5.5% 5.5% 5.5%
Expected lives (in
years)................. 5 5 5 5 5
Dividend yield.......... 0% 0% 0% 0% 0%
Expected volatility..... 0% 0% 0% 0% 0%

Because the determination of fair value of all options granted after such
time as the Company becomes a public entity will include an expected
volatility factor in addition to the factors described in the preceding
paragraph, the above results may not be representative of future periods.

Unearned stock-based compensation

In connection with certain stock option grants to employees, during the
year ended December 31, 1998 and the nine months ended September 30, 1999, the
Company recognized unearned stock-based compensation totaling $857,000 and
$22.6 million, respectively, which is being amortized over the vesting periods
of the related options, which is generally four years, using the multiple
option approach. Amortization expense recognized for the year ended December
31, 1998 and the nine months ended September 30, 1999 totaled approximately
$206,000 and $3.0 million, respectively. The Company also recorded
amortization expense of

F-18

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

$444,000 for the nine months ended September 30, 1999 in connection with stock
options issued for services. The Company estimated the fair value of the
options issued for services using the Black-Scholes option pricing model using
the following assumptions; risk-free interest rate of 5.5%; volatility of 80%;
and an expected life of two to five years.

The allocation of stock-based compensation expense by functional area would
be as follows:

Period from
Period from August 27,
August 27, Nine Months 1997
1997 Ended (inception)
(inception) to Year Ended September 30, to
December 31, December 31, ------------- September 30,
1997 1998 1998 1999 1999
-------------- ------------ ------------- -------------
(unaudited) (unaudited)
(in thousands)

Research and
development............ $ -- $163 $ 88 $ 920 $1,083
Programming and
content................ -- 15 4 1,221 1,236
Sales and marketing..... -- 15 1 407 422
General and
administrative......... -- 13 7 928 941
Hardware distribution
cost, net.............. -- -- -- 13 13
------ ---- ----- ------- ------
Total stock-based $206 $3,695
compensation......... $ -- $ 100 $ 3,489
====== ==== ===== ======= ======

Note 9--Related Party Transactions:

In September and October 1998 a certain founder of the Company received
convertible promissory notes in exchange for $570,000. The notes bore interest
at 20% per annum. In March 1999, the note and accrued interest of $628,000 was
repaid in full.

In July and September 1999, certain executives of the Company exercised
their stock options prior to vesting by issuance of full recourse promissory
notes to the Company. The aggregate notes of $1.7 million bear interest at a
rate of 5.74% through 5.98% per annum and are due in July and September 2004.
The notes are collateralized by the related 1,370,000 shares of Common Stock
issued, which are subject to the Company's right to repurchase. The net amount
outstanding has been reflected as a separate component of stockholders'
equity.

Note 10--Subsequent Events:

Reincorporation

In January 2000, the Company's Board of Directors authorized the
reincorporation of the Company in the State of Delaware. As a result of the
reincorporation, the Company is authorized to issue 200,000,000 shares of
$0.001 par value Common Stock and 5,000,000 shares of $0.001 par value
Preferred Stock. The Board of Directors has the authority to issue the
undesignated Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof. The par value and additional
paid-in capital related to the issuance of Preferred Stock and Common Stock
have been retroactively adjusted to reflect the reincorporation.

Stock option grants (unaudited)

During October, November and December 1999, the Company granted options to
purchase 2,401,000 shares of Common Stock to existing and new employees at a
weighted average exercise price of $5.25. In connection with these stock
option grants, the Company will recognize $11.8 million in unearned stock-
based compensation that will be amortized over the related vesting periods.

F-19

REPLAYTV, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information for the nine months ended September 30, 1998 and 1999 is
unaudited)

Promissory notes issued to related parties (unaudited)

In November 1999, certain executives of the Company exercised their stock
options prior to vesting by issuance of full recourse promissory notes to the
Company. The aggregate notes of $1.5 million bear interest at a rate of 6.08%
per annum and are due in November 2004. The notes are collateralized by the
related 300,000 shares of Common Stock issued, which are subject to the
Company's right to repurchase.

MKE Agreement (unaudited)

In December 1999, the Company entered into an agreement (the "Agreement")
with MKE. Under the Agreement, MKE will purchase from the Company ReplayTV-
enabled products currently manufactured by another third party and will
market, sell and distribute those products under the Panasonic brand name
featuring the ReplayTV logo. Also, the Company will work jointly with MKE to
develop ReplayTV-enabled products. During the term of the Agreement, the
Company will subsidize MKE for products that are shipped by or on behalf of
MKE.

Series F Preferred Stock (unaudited)

In January 2000, the Company issued 5,627,267 shares of Series F Preferred
Stock ("Series F") at $11.00 per share resulting in cash proceeds of $61.9
million. Each share of Series F has voting rights equal to the number of
shares of Common Stock into which such share is convertible. Holders of Series
F are entitled to receive annual dividends of $0.88 per share, when and if
declared by the Board of Directors, on a pari passu basis with the holders of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock, and prior to the Common
Stock. The Series F is convertible at any time into Common Stock at a one-for-
one exchange ratio. Such conversion is automatic upon the effective date of an
initial public offering provided the public offering price is at least $7.50
per share. In the event of any liquidation, dissolution or winding up of the
Company, the holders of Series F are entitled to receive an amount equal to
$11.00 per share, plus any declared but unpaid dividends, prior and in
preference to any holders of Common Stock. The Series F is redeemable at the
option of the Company on or at any time after February 15, 2004 or upon the
receipt by the Company in writing from the holders of not less than 66 2/3% of
the Preferred Stock of a request for redemption of their Preferred Stock, at a
redemption price equal to $11.00 per share, plus any declared but unpaid
dividends. For the first quarter ending March 31, 2000, the Company will
record a non-cash Preferred Stock dividend to reflect the beneficial
conversion ratio as a result of the difference between the issuance price of
the Series F and the estimated fair value of the Company's Common Stock.

2000 Stock Plans (unaudited)

In January 2000, the Company's Board of Directors approved the 2000
Directors' Stock Option Plan (the "2000 Directors' Plan") and the 2000
Employee Stock Purchase Plan (the "2000 ESPP"), which will become effective
immediately prior to the completion of an initial public offering. Under the
2000 Directors' Plan, a total of 300,000 shares have been reserved for future
issuance to nonemployee directors. The shares reserved under the 2000
Directors' Plan will be automatically reset to 300,000 shares on the first day
of each fiscal year beginning in 2001. Under the 2000 ESPP, a total of
1,000,000 shares have been reserved for future issuance. The shares reserved
will be subject to automatic annual increases on the first day of the fiscal
year beginning in 2001, equal to the lesser of 500,000 shares, 2% of the
outstanding Common Stock on the last day of the immediately preceding fiscal
year, or a lesser number of shares as determined by the board of directors.

F-20

[REPLAYTV LOGO]

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates except the
SEC registration fee and the NASD filing fee and the Nasdaq National Market
listing fee.

Amount
to be Paid
----------

SEC registration fee............................................ $ 39,600
NASD filing fee................................................. 15,500
Nasdaq National Market listing fee.............................. 95,000
Printing and engraving expenses................................. 200,000
Legal fees and expenses......................................... 400,000
Accounting fees and expenses.................................... 300,000
Blue Sky qualification fees and expenses........................ *
Transfer Agent and Registrar fees............................... *
Miscellaneous fees and expenses................................. *
--------
Total......................................................... *

- --------
* to be filed by amendment

Item 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law (the "Delaware 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"). Article XIV of our certificate of
incorporation (Exhibit 3.2 hereto) and Article VI of our bylaws (Exhibit 3.4
hereto) provide for indemnification of our directors, officers, employees and
other agents to the maximum extent permitted by Delaware Law. In addition, we
have entered into Indemnification Agreements (Exhibit 10.2 hereto) with our
officers and directors. The Underwriting Agreement (Exhibit 1.1) also provides
for cross-indemnification among ReplayTV and the underwriters with respect to
certain matters, including matters arising under the Securities Act.

Item 15. Recent Sales of Unregistered Securities

Since our incorporation in August 1997, we have issued and sold the
following securities:

1. On September 15, 1997, we sold 7,862,770 shares of common stock for
an aggregate purchase price of $3,931 to two investors.

2. On November 26, 1997, we sold 2,494,070 shares of Series A preferred
stock for an aggregate purchase price of $274,348 to two investors.

3. On March 11, 1998, we issued a promissory note in the aggregate
principal amount of $100,000 to one investor.

4. On April 10, 1998, we sold 1,451,610 shares of Series B preferred
stock for an aggregate purchase price of $450,000, including cancellation
of the $100,000 note described in 3 above, to four investors.

5. On June 29, 1998, we sold 806,448 shares of Series B preferred stock
for an aggregate purchase price of $250,000 to four investors.

II-1

6. On September 11, 1998, September 14, 1998, September 28, 1998,
October 6, 1998, October 15, 1998 and October 27, 1998 we issued six
promissory notes in the aggregate principal amount of $570,000 to one
investor.

7. On November 5, 1998, we sold 1,818,488 shares of Series C preferred
stock for an aggregate purchase price of $1,150,000 to three investors.

8. On November 19, 1998, we sold 1,344,096 shares of Series C preferred
stock for an aggregate purchase price of $850,000 to six investors.

9. On February 12, 1999, February 22, 1999 and March 11, 1999, we issued
three promissory notes in the aggregate principal amount of $1,500,000 to
one investor.

10. On March 24, 1999, we sold 10,193,544 shares of Series D preferred
stock for an aggregate purchase price of $7,900,000, including cancellation
of $80,000 of the notes described in 6 above and cancellation of the notes
described in 9 above, to twelve investors.

11. On May 31, 1999, we issued a warrant to purchase 6,666 shares of
Series E preferred stock to a lender in connection with a line of credit.

12. On July 16, 1999 and July 19, 1999, we issued two promissory notes
in the aggregate principal amount of $600,000 to two investors.

13. On July 30, 1999, we sold 6,886,663 shares of Series E preferred
stock for an aggregate purchase price of $52,249,973, including
cancellation of the notes described in 12 above, to 41 investors.

14. On August 16, 1999, we sold 666,666 shares of Series E preferred
stock for an aggregate purchase price of $5,000,000 to one investor.

15. On January 25, 2000, we sold 5,627,267 shares of Series F preferred
stock for an aggregate price of $61,899,937 to 12 investors.

16. From April 28, 1999 to December 31, 1999, we issued an aggregate of
322,507 shares of common stock to one director and 14 consultants outside
of our stock plans.

17. From November 19, 1997 to December 31, 1999, we issued options to
purchase an aggregate of 9,545,522 shares of common stock to employees,
directors and consultants pursuant to the 1997 stock option plan.

18. From August 26, 1999 to December 31, 1999, we issued options to
purchase an aggregate of 4,230,000 shares of common stock to employees,
directors and consultants pursuant to the 1999 stock plan.

The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as transactions by an issuer not involving any public offering.
In addition, certain issuances described in Items 1, 17 and 18 were deemed
exempt from registration under the Securities Act in reliance upon Rule 701
promulgated under the Securities Act. The recipients of securities in each
such transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates and warrants issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about us.

II-2

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

Number Description
------- -----------

1.1* Form of Underwriting Agreement.
3.1 Sixth Amended and Restated Articles of Incorporation of ReplayTV.
3.2 Amended and Restated Certificate of Incorporation of ReplayTV (as
proposed).
3.3 Amended and Restated Bylaws of ReplayTV.
3.4 Amended and Restated Bylaws of ReplayTV (as proposed).
4.1* Specimen Stock Certificate.
4.2 Warrant dated May 31, 1999 issued by the Company to Imperial
Bancorp.
5.1* Opinion of Venture Law Group regarding the legality of the common
stock being registered.
10.1 Sixth Amended and Restated Investors' Rights Agreement dated January
25, 2000 among ReplayTV and certain investors.
10.2 Form of Indemnification Agreement between ReplayTV and each of its
executive officers and directors.
10.3* 1997 Stock Option Plan (as amended) and forms of Stock Option
Agreements.
10.4* 1999 Stock Plan and forms of Stock Option Agreement and Restricted
Stock Purchase Agreement.
10.5 2000 Employee Stock Purchase Plan and form of Subscription
Agreement.
10.6 2000 Directors' Stock Option Plan and form of Stock Option
Agreement.
10.7 Offer Letter with Earle H. "Kim" LeMasters, III.
10.8 Offer Letter with Anthony J. Wood.
10.9 Offer Letter with Craig W. Dougherty.
10.10 Offer Letter with Bruce L. Kaplan.
10.11 Offer Letter with Alexander Gray.
10.12 Offer Letter with Layne L. Britton.
10.13*+ Master Collaboration Agreement dated December 20, 1999 between
ReplayTV and Matsushita-Kotobuki Electronics Industries, Ltd.
10.14*+ OEM Distribution Agreement dated December 20, 1999 between ReplayTV
and Matsushita-Kotobuki Electronics Industries, Ltd.
10.15*+ Manufacturing Agreement dated November 3, 1998 between ReplayTV and
Flextronics International USA, Inc.
10.16*+ Television Listings Agreement dated June 1, 1998, as amended October
26, 1998, between ReplayTV and Tribune Media Services, Inc.
10.17*+ Agreement dated February 1, 1999 between ReplayTV and Showtime
Networks Inc.
10.18*+ Agreement dated July 30, 1999 between ReplayTV and National
Broadcasting Company, Inc.
10.19*+ Network Service Agreement dated July 30, 1999 between ReplayTV and
Turner Broadcasting System, Inc.
10.20 Common Stock Purchase Agreement dated September 15, 1997 between
ReplayTV and Anthony J. Wood.
10.21 Consulting Agreements between ReplayTV and Kevin Bohren.
10.22* Lease Agreement dated January 27, 1999 between John Arrillaga,
Trustee, or his Successor Trustee, UTA dated July 20, 1977 (John
Arrillaga Survivor's Trust) as amended, and Richard T. Perry,
Trustee, or his Successor Trustee, UTA dated July 20, 1977 (Richard
T. Perry Separate Property Trust) as amended, and ReplayTV, as
amended.

II-3

Number Description
------ -----------

23.1 Independent Auditors' Consent.
23.2* Consent of Attorney (see Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.

- --------
*To be supplied by amendment.
+Confidential treatment requested as to certain portions of this Exhibit.

(b) Financial Statement Schedules

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or 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
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, 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 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 of 1933 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
of 1933, 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 of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Mountain View, State of
California on January 26, 2000.

REPLAYTV, INC.

By: /s/ Earle H. "Kim" LeMasters,
III
-----------------------------------
Earle H. "Kim" LeMasters, III
Chief Executive Officer and
Chairman

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, Earle H.
"Kim" LeMasters, III and Craig W. Dougherty and each of them, as his attorney-
in-fact, with full power of substitution, for him in any and all capacities,
to sign any and all amendments to this Registration Statement (including post-
effective amendments), and any and all Registration Statements filed pursuant
to Rule 462 under the Securities Act of 1933, as amended, in connection with
or related to the offering contemplated by this Registration Statement and its
amendments, if any, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be
signed by our said attorney to any and all amendments to said Registration
Statement.

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

Signature Title Date
--------- ----- ----

/s/ Earle H. "Kim" LeMasters, III Chief Executive Officer and January 26, 2000
____________________________________ Chairman (Principal
Earle H. "Kim" LeMasters, III Executive Officer)

/s/ Craig W. Dougherty Executive Vice President, January 26, 2000
____________________________________ Finance and Chief Financial
Craig W. Dougherty Officer (Principal
Financial and Accounting
Officer)

/s/ Jeffrey Berg Director January 26, 2000
____________________________________
Jeffrey Berg

/s/ Kevin L. Bohren Director January 26, 2000
____________________________________
Kevin L. Bohren

/s/ Sky D. Dayton Director January 26, 2000
____________________________________
Sky D. Dayton

/s/ William R. Hearst III Director January 26, 2000
____________________________________
William R. Hearst III

/s/ Anthony J. Wood Director January 26, 2000
____________________________________
Anthony J. Wood

II-5

EXHIBIT INDEX

Exhibit
Number Description
------- -----------

- --------
*To be supplied by amendment.
+Confidential treatment requested as to certain portions of this Exhibit.