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AllAdvantage nixes pending IPO

The 15-month-old company, which pays members to surf the Web in exchange for viewing ads, pulls the plug on its plans to go public, citing adverse market conditions.

AllAdvantage, an incentive-to-surf start-up, has pulled the plug on its plans to go public.

The Hayward, Calif.-based company filed a request for withdrawal of its S-1 filing with the Securities and Exchange Commission on Friday, citing adverse market conditions.

The 15-month-old company, which pays members to surf the Web in exchange for viewing ads, filed to sell 15 million shares to the public for between $8 and $10 in early February, according to its S-1 filing. But since that time, the market for dot-coms has taken a beating.

Public companies that target advertising to Net users haven't escaped the market's malcontent. Shares of ad networks such as DoubleClick and Engage have fallen 70 percent to 80 percent from their all-time highs. That doesn't bode well for AllAdvantage, which doesn't have a clear-cut path to profitability.

"We incurred net losses of $37.1 million from inception, March 24, 1999, through December 31, 1999 and $65.6 million for the three months ended March 31, 2000. We expect to continue to incur operating losses for the foreseeable future," stated an amended filing from June 2.

"Our revenues may never exceed our expenses, and we may never achieve profitability," the filing stated.

AllAdvantage's business model has been called into question because its member costs have exceeded its revenues. According to a filing in early June, the company paid $32.7 million to members from December to March, but made only $9.1 million for the same period.

To control the exorbitant costs associated with its business, in June AllAdvantage slashed the number of hours it will pay members to surf, causing some members to scoff. About 7 million people worldwide are registered with AllAdvantage, and about 2 million actually use the program, according to a company spokesman.

The company named Jacques Clay, previously a Hewlett-Packard vice president, as its chief operating officer.