SCOOP INC/DE, 10KSB40, 1998-03-31

SCOOP INC/DE
10KSB40, 1998-03-31
COMPUTER PROCESSING & DATA PREPARATION

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
_________________

FORM 10-KSB

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 0-22281

SCOOP, INC.
(Exact name of Registrant as specified in its Charter)

DELAWARE 33-0726608
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2540 REDHILL AVENUE
SANTA ANA, CA 92705
(Address of principal executive offices)

714-225-6000
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

TITLE OF EACH CLASS: NAME OF EACH EXCHANGE ON WHICH REGISTERED:

Common Stock, $.001 Par Value Nasdaq SmallCap Market

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.

Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulations S-K is not contained herein and will not be contained to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB [ X ].

For the Fiscal Year Ended December 31, 1997, the Registrant's revenues
were $2,037,900.

The aggregate market value of the voting stock held by non-affiliates of
Registrant as of March 10, 1998, computed by reference to the closing sale
price of such stock on the Nasdaq SmallCap Market, was approximately
$4,063,242.

At March 10, 1998, Registrant had 5,501,214 shares of Common Stock, $.001
par value, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant's definitive Proxy Statement for its 1998 Annual
Meeting of Stockholders are incorporated by reference into Part III of this
report.

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WHEN USED HEREIN, THE WORDS "ANTICIPATE," "ESTIMATE," "PROJECT," "EXPECT" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE "EXCHANGE ACT"), AND ARE INTENDED TO BE COVERED BY THE
SAFE HARBORS CREATED THEREBY. ALTHOUGH SCOOP, INC. BELIEVES THAT THE
EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT
CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT.
SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS.
SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD
UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY
FROM THOSE ANTICIPATED, ESTIMATED, PROJECTED OR EXPECTED. AMONG THE KEY
FACTORS THAT MAY HAVE A DIRECT BEARING ON THE COMPANY'S OPERATING RESULTS ARE
THOSE LISTED IN THE SECTION TITLED "RISK FACTORS" IN PART I HEREOF.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

INTRODUCTION

Scoop, Inc. ("Scoop" or the "Company") is engaged in the business of
obtaining information content from third party providers and delivering the
content to customers in customized hard copy format through its Scoop Media
Services business and via the Internet through its Scoop Information Services
business.

Scoop Media Services is engaged in the business of selling custom-designed
reprints and framed wall displays of published articles from newspapers,
magazines and on-line publications. Scoop Media Services is currently the
exclusive provider of reproduction and reprint services for INVESTOR'S
BUSINESS DAILY, American City Business Journals and several other
publications. Scoop Media Services also sells reprints of news articles on a
non-exclusive basis for approximately 24 other publications. Scoop Media
Services products generated net sales of approximately $968,900 in 1995, $1.4
million in 1996, and $2.0 million in 1997. Currently, the Company derives
all of its sales from the Scoop Media Services division. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Scoop Information Services is a provider of personalized news services
designed to meet the needs of business professionals. On September 15, 1997
the Company launched its first Internet service, "SCOOP! DIRECT." Due to the
availability of several competitive products, the Company began work on an
upgraded version of SCOOP! DIRECT immediately following the September 15,
1997 product launch. This upgrade was introduced February 2, 1998 and was
called "INTELLISEARCH." The Company used substantially all of the proceeds
from its April 1997 initial public offering for the development of SCOOP!
DIRECT and INTELLISEARCH, capital equipment acquisitions and other operations
costs related to the services and on sales and marketing efforts associated
with the launch of the services. Unfortunately, Scoop has not been able to
generate revenue from these services or raise additional capital to continue
to fund the marketing and distribution of these services, nor has it been
able to find a strategic investor to provide such additional capital.
Consequently, in February 1998, the Company's Board of Directors voted to
stop development of SCOOP! DIRECT and INTELLISEARCH, lay off all staff
assigned to SCOOP! DIRECT and INTELLISEARCH and seek a buyer for Scoop
Information Services. There can be no assurance that the Company will be
successful in selling Scoop Information Services on favorable terms or at all.

THE COMPANY'S HISTORY

The Company commenced business operations in May 1990. The Company's
original business focused on the sale of media products promoting the re-use
or re-sale of articles published in business or financially-oriented
newspapers, trade and consumer magazines and other periodicals. The
Company's Scoop Media Services products currently include customized media
reprints of published articles and FAMEFRAME wall displays depicting articles
or cover pages from publications.

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In late 1993, the Company formed its Scoop Information Services division
which introduced business information products. This portion of the
Company's business originally involved the distribution of business
information electronically to customers by means of direct broadcast
facsimile and a private electronic mail, or e-mail, system. The Company's
first such product, MEDIAALERT, was introduced in late 1993. The Company
introduced a second product, HEALTHALERT, in mid-1994, focusing on medical
device manufacturers and the pharmaceutical industry.

The Company soon realized that its direct broadcast facsimile and private
e-mail delivery systems inevitably led to "information overload" on the part of
its customers and, as a result, ceased providing such earlier generation
business information products and commenced the development of technology for
its information services. The Company has spent approximately $3.5 million
since 1994 developing its on-line information services. See "Management's
Discussion and Analysis of Financial Condition and Results of Operation."

In 1996, the Company began developing a web-accessible, personalized news
service designed to meet the needs of business professionals. The Company
launched its first Internet service, "SCOOP! DIRECT," in September 1997 and an
upgraded version called "INTELLISEARCH" in February 1998. Due to a lack of
capital resources, the Company's Board of Directors voted in February 1998 to
stop development and marketing of SCOOP! DIRECT and INTELLISEARCH effective
February 12, 1998 and to actively seek a buyer for Scoop Information Services.

PRODUCTS AND SERVICES

SCOOP MEDIA SERVICES. Scoop Media Services specializes in converting
published articles from newspapers, magazines and on-line publications into
high-quality promotional tools to help businesses successfully promote their
products and services. Through relationships with approximately 24
publications throughout the United States, Scoop Media Services provides
custom-designed article reprints in hardcopy format, custom-designed article
reprints in an Internet-compatible format for Web posting and framed
promotional displays of printed articles.

SCOOP! DIRECT AND INTELLISEARCH. Through SCOOP! DIRECT and
INTELLISEARCH, the Company offers customers access to full-text articles from
1500 news and information sources, including well-recognized publications
such as THE WASHINGTON POST, FORBES, THE ECONOMIST and AMERICAN BANKER

Due to the unavailability of capital required for effective marketing and
distribution, Scoop has been unable to continue to market and distribute SCOOP!
DIRECT and INTELLISEARCH and instead is now actively searching for a purchaser
of the services.

SALES AND MARKETING STRATEGY

The Scoop Media Services business has a four person outbound telemarketing
team that actively solicits sales from companies that are the subject of
favorable news and media coverage. The Scoop Information Services business
discontinued sales and marketing efforts effective in February 1998 due to a
lack of capital.

RELATIONSHIP WITH CONTENT PROVIDERS

The Company's Scoop Media Services division has exclusive agreements with
seven publishers to produce and market media reprint products. One such
exclusive content provider, INVESTOR'S BUSINESS DAILY, presently accounts for
approximately 45.8% of the Company's annual revenue. Scoop Media Services also
markets reprints from many other publications on a non-exclusive basis. The
Company generally pays publishers a percentage royalty or a flat fee for
publication content.

COMPETITION

Scoop Media Services competitors generally fall into two categories. The
first of these is reprint service providers, which directly compete with Scoop
Media Services for exclusive publisher reprint contracts and for

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individual reprint projects. The two largest of these competitors are
Reprint Management Services and Reprint Services. The second category of
competitors is in-house reprint departments of certain publishers. These
in-house operations typically handle the majority of their publication's
reprint requests, but do not actively pursue reprint projects unrelated to
their publication.

TRADEMARKS AND PROPRIETARY RIGHTS

The Company has relied, and intends to continue to rely, upon trademark
and copyright law and trade secret protection. In addition, the Company
relies on confidentiality and/or license agreements with its employees,
strategic partners and others to protect its proprietary rights. The Company
has registered its FAMEFRAME trademark in the United States. There can be no
assurance that the steps taken, and anticipated to be taken, by the Company
to protect its intellectual property rights will be adequate or that third
parties will not infringe or misappropriate the Company's copyrights,
trademarks, tradenames, trade secrets, patents (if any) and similar
proprietary rights. In addition, there can be no assurance that other
parties will not assert infringement claims against the Company.

GOVERNMENT REGULATION

The Company is not currently subject to direct regulation by any
government agency, other than regulations applicable to business generally.

EMPLOYEES

As of March 1, 1998, the Company employed a total of 14 persons, including
four in sales and marketing, six in layout and operations and four in general
and administrative functions. None of the Company's employees is represented
by a labor union or is subject to a collective bargaining agreement. The
Company has never experienced a work stoppage and believes that its relations
with its employees are good.

RISK FACTORS

In addition to the matters set forth in the foregoing discussion of the
Company's business, the operations and financial results of the Company are
subject to the risks described below.

ABILITY TO CONTINUE AS A GOING CONCERN. The Company reported net losses
of approximately $602,700, $2,168,900, and $5,048,500 for 1995, 1996 and
1997, respectively. In addition, at December 31, 1995, 1996, and 1997 the
Company had an accumulated deficit of approximately $928,900, $3,374,100, and
$8,480,000, respectively, and stockholder equity (deficit) of approximately
($914,400), ($2,453,500), and $946,600, respectively. In light of the
Company's financial condition, the Company's ability to continue as a going
concern is dependent upon future events, including the profitability of its
Scoop Media Services business and its ability to secure additional sources of
financing. The Company's independent auditor has stated in its opinion that
these factors raise substantial doubt about the Company's ability to continue
as a going concern.

NEED FOR FUTURE FINANCING. The Company estimates that its current
financial resources will be sufficient to satisfy the Company's anticipated
working capital and capital expenditure requirements for the first four
months of 1998. The Company's operating plan anticipates that at the end of
April 1998, the Company will likely require substantial additional capital.
Thereafter, the Company may be required from time to time to seek additional
financing to fund operating losses and finance its business strategy,
including product development, expansion of sales and marketing and capital
expenditures. The Company may attempt to meet its capital requirements by
incurring indebtedness, issuing debt or selling assets, including its Scoop
Information Services division. There can be no assurance, however, that funds
will be available on terms favorable to the Company, that such funds will be
available when needed, or that the Company will have adequate cash flows from
operations for such requirements. Incurrence of debt or issuance of equity
securities could have an adverse effect on the price

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of the Common Stock, could restrict the Company's ability to pay dividends
and could result in further dilution to existing investors.

COMPETITION. The reprint business in which the Company's Scoop Media
Services unit competes is highly competitive. The Company competes for
exclusive reprint contracts and for individual reprint projects with other
reprint service providers, including Reprint Management Services and Reprint
Services. In addition, the Company competes for reprint projects with
in-house reprint departments of certain publishers. There can be no
assurance that the Company will be able to compete successfully with its
existing and future competitors.

DEPENDENCE UPON INVESTOR'S BUSINESS DAILY. The Company presently derives
paproximately 45.8% of its annual net sales from the sale of Scoop Media
Services products and services through its relationship with INVESTOR'S
BUSINESS DAILY. In March 1998, the Company entered into a new one year
distribution agreement with INVESTOR'S BUSINESS DAILY. If the agreement
between the Company and INVESTOR'S BUSINESS DAILY is terminated or the sales
generated through such relationship otherwise materially decrease, there is
no assurance that the Company will be able to replace lost revenue from Scoop
Media Services, which would have a material adverse effect upon the Company's
business, results of operations and financial condition.

MAINTENANCE CRITERIA FOR NASDAQ LISTING OF COMMON STOCK; RISKS OF
LOW-PRICED SECURITIES. The Common Stock has been trading on The Nasdaq
SmallCap Market. To maintain inclusion on The Nasdaq SmallCap Market, the
Company's Common Stock must continue to be registered under Section 12(g) of
the Exchange Act, and the Company must continue to have (i) net tangible
assets of at least $2,000,000 or net income of at least $500,000 in two of
the three previous years or market capitalization of at least $35,000,000,
(ii) a public float of at least 500,000 shares with a market value of at
least $1,000,000, (iii) at least 300 stockholders, (iv) a minimum bid price
of $1.00 per share and (v) at least two market makers. Unless the price of
the Company's Common Stock and the Company's financial condition improve from
their current state, the Company is at risk of being delisted from the Nasdaq
SmallCap Market. If the Company fails to maintain Nasdaq SmallCap Market
listing, the market value of the Common Stock would likely decline.

If the Common Stock ceases to be included on the Nasdaq SmallCap Market,
the Common Stock could become subject to rules adopted by the Securities and
Exchange Commission (the "Commission") regulating broker-dealer practices in
connection with transactions in "penny stocks." Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on Nasdaq,
provided that current price and volume information with respect to
transactions in such securities is provided). The penny stock rules require
a broker-dealer, prior to engaging in a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the Commission which provides information
about penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the
customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or
in a writing prior to effecting the transaction and must be given to the
customer in writing before or with the customer's confirmation. In addition,
the penny stock rules require that prior to a transaction in a penny stock
not otherwise exempt from these rules, the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to
these penny stock rules.

POSSIBLE ADVERSE EFFECT OF FUTURE SALES OF SECURITIES ON MARKET PRICE. The
availability for public sale of additional shares of Common Stock could have
a material adverse effect on the price of and any market for the Common
Stock. As of March 10, 1998, there were 5,501,214 shares of Common Stock
outstanding, excluding 2,077,054 shares underlying warrants and options. In
addition, the Company may issue additional Common Stock or preferred stock or
other securities convertible into Common Stock in connection with future
financing transactions or acquisitions, which issuance could have a material
adverse effect on the market price of the Common Stock.

Of the 5,501,214 shares outstanding as of March 10, 1998, 2,716,148 shares
were registered under the Securities Act in connection with the Company's
initial public offering and are therefore freely tradeable without further
registration following the expiration or termination of any "lock-up"
agreements unless owned by an "affiliate" of the Company. The Company also
has granted certain registration rights with respect to the Common Stock
underlying all of the Company's outstanding warrants and intends to register
the resale of the Common Stock underlying the options granted under the
Company's Stock Incentive Plan. Approximately 2.3 million outstanding shares
of Common Stock are "restricted securities" as defined in Rule 144 under the
Securities Act and may not be sold unless registered under the Securities Act
or sold pursuant to an exemption therefrom. Substantially all of the shares
of Common Stock which are "restricted securities" have satisfied the holding
period under Rule 144.

Approximately 1.1 million of the registered shares of Common Stock and
approximately 2.1 million restricted shares of Common Stock are subject to
lock-up agreements which prohibit the holder from transfering the shares
without the prior written consent of Shamus Group, Inc., the managing
underwriter for the Company's initial public offering. These lock-up
agreements expire on April 8, 1998. Accordingly, on April 9, 1998,
approximately 3.2 million shares will be released from the lock-up
restrictions and available for trading. Sales of these shares could adversely
affect prevailing market prices for the Common Stock.

ITEM 2. DESCRIPTION OF PROPERTIES

The Company presently leases approximately 6,400 square feet of office
space in Santa Ana, California. The lease rate for the Company's Santa Ana
office space is currently $7,607 per month with certain increases over time.
The lease expires in September 2000.

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In August 1997, the Company entered into a non-cancelable lease of office
space in Irvine, California. The initial lease rate for the Irvine facility
was $24,572 per month, and the initial termination date of the lease was
September 2000. The Company vacated the Irvine facility in February 1998 and
is currently negotiating a termination of the lease with its landlord.

ITEM 3. LEGAL PROCEEDINGS

On February 6, 1998, Marc Levin and Arnold H. Simon, two of the Company's
stockholders, filed an action against the Company, as well as The Boston
Group, L.P. ("Boston Group") and Shamus Group, Inc., ("Shamus"). Boston
Group acted as the dealer-manager in the Company's private equity offering in
May 1996, and Shamus served as the managing underwriter in the Company's
initial public offering in April 1997. The complaint alleges, among other
things, that the Company "intentionally interfered" with the plaintiffs'
economic advantage by "conspiring" with Boston Group to arrange for the
withdrawal of an alleged consent given to plaintiffs by Shamus concurrently
with the Company's initial public offering in which plaintiffs were released
from lock-up provisions contained in the private offering documents. The
complaint seeks compensatory damages and exemplary damages against the
Company, Boston Group and Shamus, as well as declarative and injunctive
relief against Shamus. The Company intends to vigorously defend itself
against these charges.

On February 26, 1998, The Irvine Company filed a complaint against the
Company alleging, among other things, that the Company breached the lease
agreement between the Company and The Irvine Company dated August 6, 1997
(the "Irvine Lease"). The complaint seeks compensatory damages against the
Company. The Company is currently negotiating a settlement with The Irvine
Company with respect to this matter.

Except as described above, there are no material legal proceedings pending
or, to the knowledge of management, threatened against Scoop.

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

None

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The common stock of the Company commenced trading on April 9, 1997 on the
Nasdaq SmallCap Market under the symbol "SCPI". The following table sets forth
for the fiscal periods indicated the high and low closing prices for the Common
Stock as reported by Nasdaq.

<TABLE>
<CAPTION>
1997
------------------
HIGH LOW
----- -----
<S> <C> <C>
Quarter Two (Commencing April 9, 1997) $7 $4 1/4
Quarter Three 5 1/6 2 21/32
Quarter Four 5 1/8 0 3/4

</TABLE>
As of March 25, 1998, there were approximately 270 holders of record of the
Company's Common Stock. The Company does not intend to declare any cash
dividends in the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS OF THE COMPANY'S FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S FINANCIAL STATEMENTS AND
RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

Since the Company began operations in May 1990, it has provided publishing
services while also developing its information service business. The
Company's Scoop Media Services unit sells custom-designed reprints and framed
wall displays of published articles from newspapers, magazines and on-line
publications. Prior to February 1998, the Company's Scoop Information
Services division was developing a web-accessible personalized news service
design to meet the needs of business professionals.

The Scoop Media Services business information product line has generated
substantially all of the Company's net sales to date. In 1997, the Company
focused its sales efforts on the growth of the reprint business. In line with
this focus, the Company has entered into exclusive contracts with seven
publishers, including INVESTORS BUSINESS DAILY and American City Business
Journals, to produce and market reprint products from such publications. The
Company intends to attempt to further increase its sales of media reprints
through the addition of new contractual relationships.

The Company initiated development of its Scoop Information Services
division technology in early 1994. These efforts were principally financed
through contributions by the Scoop Media Services business in 1994 and 1995.
In the first half of 1996, the Company completed various rounds of private
funding. The private placements completed in April through July 1996 netted
the Company approximately $1.4 million and enabled the Company to accelerate
its pace of investment in the Scoop Information Services business. Since
1994, the Company has invested approximately $3.5 million in the development
of the its two on-line news services, SCOOP! DIRECT and INTELLISEARCH
including expenditures in development expenses, capital equipment, and
content acquisition.

Due to a lack of capital resources, the Company's Board of Directors voted
to stop development and marketing of SCOOP! DIRECT and INTELLISEARCH and the
related technology in February 1998 and to actively seek a buyer for Scoop
Information Services.

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RESULTS OF OPERATIONS

The following table sets forth for the periods indicated, certain financial
data as a percentage of total net sales for the fiscal years ended December 31,
1996 and 1997.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997
------- ------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 59.7% 53.0%
------- ------
Gross profit 40.3% 47.0%
Operating expenses:
Research and development 43.1% 125.1%
Sales and marketing 28.4% 49.7%
General and administrative 122.2% 104.9%
Other operating expenses 0.0% 19.0%
------- ------
Total operating expenses 193.7% 298.8%
------- ------
Operating loss (153.4)% (251.8)%
Interest expense 1.9% (4.1)%
------- ------
Loss before provision for income taxes (155.3)% (247.7)%
Provision for income taxes 0.1% 0.1%
------- ------
Net loss (155.4)% (247.8)%

</TABLE>

YEAR ENDED DECEMBER 31, 1997, AS COMPARED TO THE YEAR ENDED DECEMBER 31, 1996

NET SALES. Net sales increased 46.0% for the year ended December 31,
1997 to $2,037,900 from $1,395,900 in the year ended December 31, 1996. The
Company continued sales efforts on the growth of the Scoop Media Services
product line while introducing the SCOOP! DIRECT service in September 1997.
Net sales from Scoop Media Services accounted for effectively all of the
Company's net sales for 1997.

Net sales from the Company's new product line, SCOOP! DIRECT, totaled
$3,000 for the year ended December 31, 1997. No net sales are expected in
1998 from Scoop Information Services as the Company decided to lay off sales
and engineering staff and stop developing its Scoop Information Services in
February 1998. The Company has announced plans to seek partners or a buyer
for Scoop Information Services.

Net sales of the Scoop Media Services product line increased 45.8% for the
year ended December 31, 1997 to $2,034,900 from $1,395,900 in the year ended
December 31, 1996. The growth in net sales was principally driven by the
Company's focused efforts to expand sales of reprints. Net sales of reprints
increased 68.9% for the year ended December 31, 1997 to $1,575,400 from
$932,600 in the year ended December 31, 1996. This growth in reprint sales
resulted primarily from the increased sales generated through the Company's
relationship with INVESTOR'S BUSINESS DAILY and expansion of reprint sales
from non-exclusive publication relationships. The Company has been the
exclusive provider of content reprints for INVESTOR'S BUSINESS DAILY since
August 1995 and derived approximately 45.8% of total net sales for the year
ended December 31, 1997 from the sale of reprints of INVESTOR'S BUSINESS
DAILY content.

COST OF SALES. Cost of sales increased 29.7% for the year ended
December 31, 1997 to $1,080,800 from $833,200 in the year ended December 31,
1996. The increase in cost of sales was primarily driven by higher royalty
fees and production costs associated with the growth of reprint sales.
Overall, gross profits increased $394,400 for the year ended December 31,
1997 compared to the same period of 1996.

Cost of sales consists primarily of the production costs, subscriptions,
shipping and various usage, permission, and royalty fees arising from the
reproduction of printed and electronic content for the Scoop Media Services'
product line.

<PAGE>

Costs for the operation of Scoop Information Services were included in
research and development expense for the years ended December 31, 1997 and
1996.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development ("R&D")
expenses increased 323.5% for the year ended December 31, 1997 to $2,548,500
from $601,700 in the year ended December 31, 1996. The increase in R&D
expenses was primarily driven by additional development team staffing,
technology license fees, and the creation of the Scoop Information Services
operations center.

R&D expenses in the 1997 and 1996 periods also include the cost of content
acquisition from UMI Company ("UMI"), the principal content supplier of Scoop
Information Services, and a prior content supplier for the purpose of
developing Scoop Information Services technology. Expenses for content
acquisition in the year ended December 31, 1997 were $164,000 versus
$269,800 in the comparable 1996 period. In October 1996, the Company signed
a content agreement with UMI. Costs for UMI content have been incurred as
R&D expense in 1996 and 1997.

The license fees and costs associated with software licensed from third
parties for the development of the Company's information service have all
been expensed.

Also driving the increase in R&D expenses was the creation of the Scoop
Information Services operations data center. Operations data center expenses
include the cost of networking, telecommunications, computer equipment, and
computer operators.

In February 1998, the Company decided to significantly reduce R&D expenses
as a result of the decision to discontinue the marketing and development of
Scoop Information Services.

SALES AND MARKETING EXPENSES. Sales and marketing expenses increased
155.5% for the year ended December 31, 1997 to $1,013,000 from $396,500 in
the year ended December 31, 1996. The increase was driven by increased sales
and marketing activity related to the launch of SCOOP! DIRECT. Also
contributing to the sales and marketing cost increase in 1997 was the
addition of a direct corporate sales force focused on SCOOP! DIRECT.

Scoop Media Services sales and marketing expenses increased with the
higher sales volumes; sales commissions and marketing expenses were higher as
sales increased and the Company introduced new promotion materials.

The Company's February 1998 decision to discontinue the Scoop Information
Services business resulted in the elimination of sales and marketing
positions directly related to that business.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative ("G&A")
expenses increased 25.0% for the year ended December 31, 1997 to $2,137,700
from $1,710,300 in the year ended December 31, 1996. The increase in G&A
expenses was primarily attributable to additional salary expenses resulting
from the expansion of the management team, recruiting fees relating to the
Company's hiring activities and various costs associated with being a public
company.

The Company has decided to significantly reduce overall expenses in
conjunction with Company's decision to discontinue the Scoop Information
Services business. The Company significantly decreased its G&A support staff
until future financing can be achieved.

OTHER OPERATING EXPENSES. Other operating expenses totaling $338,800
were reported in the year ended December 31, 1997. The expense reflects the
estimated settlement costs of the Company's vacated facility. Also included
is the net book value of the leasehold improvements at the Company's vacated
facility. No comparable expenses were reported in 1996.

INTEREST INCOME. Interest income, net of expense, for the year ended
December 31, 1997 was $82,400 compared to $21,500 of net expense in the year
ended December 31, 1996. Net interest income in the 1997 period was
primarily attributable to the Company having interest bearing assets as a
result of its initial public offering.

8
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations to date primarily from the $5.9
million in proceeds from its initial public offering in April 1997 and the
proceeds of earlier private sales of Common Stock totaling approximately $2.5
million. At December 31, 1997, the Company had approximately $1.5 million in
cash and cash equivalents. Subsequent to December 31, 1997, the Company
continued to experience operating losses and, as a result, the Company had
approximately $340,000 in cash and cash equivalents at March 25, 1998.

In 1997 and 1996, the Company used $4.1 million and $1.7 million,
respectively, in operating cash flows primarily to fund the creation of
SCOOP! DIRECT and INTELLISEARCH and additional expenses including expansion
of the management team in 1996. The Company is committed under its contract
with UMI to pay minimum royalty payments of approximately $570,000 in 1998
and $652,500 in 1999. In addition, the Company is committed under its
contract with INVESTOR'S BUSINESS DAILY to pay minimum royalty payments of
approximately $400,000 in 1998.

At December 31, 1997, the Company had obligations of approximately
$116,500 under equipment leases and debt instruments under which it financed
the capital equipment purchases. The lease on the Company's office space in
Santa Ana, California is at a rate of $7,607 per month, subject to certain
increases, and expires in September 2000. The Company vacated its Irvine,
California facility in December 1997 and is currently negotiating a
termination of the lease agreement with respect to that facility.

In February 1998, the Company stopped development and marketing of its
Scoop Information Services unit. As a result, the Company's capital
requirements for 1998 are expected to decrease from those in 1997.

The Company's ability to continue as a going concern is dependent upon
future events, including its ability to secure additional sources of
financing or find a strategic investment partner. These factors raise
substantial doubt about its ability to continue as a going concern. The
Company believes that its existing cash and cash equivalents will be adequate
to meet its capital needs for the first four months of 1998. The Company's
current operating plan shows that at the end of April 1998, the Company will
require substantial additional capital. The Company has not been successful
in obtaining additional financing to date and there can be no assurance that
it will be able to obtain such additional financing at all or that, if it
does, that such additional financing will be obtainable on terms favorable to
the Company.

YEAR 2000

The Company has conducted a review of its computer systems to identify the
systems that could be affected by the "Year 2000" issue and is developing an
implementation plan to resolve the issue. The Year 2000 problem is a result
of computer programs being written using two digits (rather than four) to
define the applicable year. Any of the Company's programs that have
time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in major system failure or
miscalculations. The Company presently believes that, with modifications to
existing software and converting to new software, the Year 2000 problem will
not pose significant operational problems for the Company's computer systems
as so modified and converted.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, Financial Accounting Standards Board ("FASB") issued SFAS No.
130, "Reporting Comprehensive Income." SFAS 130 establishes standards for the
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general purpose financial
statements. SFAS 130 is effective for fiscal years beginning after December
15, 1997 and will result in an additional statement that reports comprehensive
income.

<PAGE>

In June 1997, FASB also issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 establishes standards for the
way public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
SFAS 131 is effective for financial statements for fiscal periods beginning
after December 15, 1997. The Company does not believe that the adoption of
SFAS 131 will have a significant impact on the presentation of its financial
statements.

ITEM 7. FINANCIAL STATEMENTS

The financial statements of the Company and its subsidiaries required to be
included in this Item 7 are set forth in Item 13 of this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Incorporated by reference to Registrant's definitive Proxy Statement for its
annual meeting of stockholders, which will be filed with the Securities and
Exchange Commission within 120 days from December 31, 1997.

ITEM 10. EXECUTIVE COMPENSATION

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

ITEM 13. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS, SCHEDULE, AND REPORTS ON
FORM 8-K

1. Financial Statements of the Company

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors............................................ F-1
Balance Sheet as of December 31, 1997..................................... F-2
Statements of Operations for the years ended
December 31, 1997 and 1996.......................................... F-3
Statements of Stockholders' Equity (Deficit)

</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
for the years ended December 31, 1997 and 1996................. F-4
Consolidated Statements of Cash Flows for the years
ended December 31, 1997 and 1996............................... F-5 - F-6
Notes to Consolidated Financial Statements........................... F-7 - F-16

</TABLE>

<PAGE>

2. (a) The following documents are filed as part of this report:

<TABLE>
<S> <C>
3.1 Certificate of Incorporation of Registrant*
3.2 By-laws of Registrant*
4.1 Form of Common Stock Certificate*
4.2 Form of Representative Warrant*
4.3 Form of Consultant Warrant*
4.4 Warrant dated October 18, 1996 issued to Bell & Howell*
4.5 Form of Subscription Supplement and Registration Rights
Agreement*
4.6 Form of Lock-Up Agreement*
10.1 1996 Stock Incentive Plan of Scoop, Inc. dated April
23, 1996*
10.2 Promissory Note dated February 19, 1997 payable to City
National Bank C/F Gabriel Kaplan, Trustee, Rotunda
Productions, Inc. MPPP ("Kaplan")*
10.3 Common Stock Purchase Warrant dated February 19, 1997
granted to Kaplan*
10.4 Contract between the Company and INVESTOR'S BUSINESS
DAILY*
10.5 Lease Agreement between Scoop, Inc. and Village Plaza
Associates, LLC dated September 9, 1996*
10.6 Agreement between the Company and UMI Company dated
October 17, 1996*
10.7 Form of Indemnification Agreement*
10.8 Consulting Agreement with Michael Baum*
10.9 Settlement Agreement and General Release dated February
24, 1997 between the Company and Stanley Berk, et al*
10.10 Common Stock Purchase Warrant dated February 24, 1997
granted to Stephen P. Gromson*
10.11 Option Agreement between Karl Karlsson and Stanley Berk
dated February 24, 1997*
10.12 Lease Agreement between Scoop, Inc. and The Irvine
Company dated August 6, 1997**
10.13 Distribution Agreement between the Company and
INVESTOR'S BUSINESS DAILY dated as of February 1, 1998
10.14 Stock Option Agreement between the Company and Rand
Bleimeister
10.15 Stock Option Agreement between the Company and Michael
Baum
11.1 Statement re computation of per share earnings
27.1 Financial Data Schedule
</TABLE>
* Incorporated by reference to the Registrant's
Registration Statement on Form SB-2 (No. 333-15129) declared effective on
April 9, 1997.

<PAGE>
** Incorporated by reference to the Registrant's Form 10-
QSB for the quarter ended September 30, 1997.

b) Report on Form 8-K

None

13
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

DATED: March 30, 1998 Scoop, Inc.

By: /s/ Rand Bleimeister
__________________________________________
Rand Bleimeister, Chief Executive Officer,
President and Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE

<S> <C> <C>
/s/ Rand Bleimeister
__________________________ Chief Executive Officer, President, March 30, 1998
Rand Bleimeister Chief Financial Officer and Chairman
of the Board

/s/ Kristy Allan
__________________________ Controller
Kristy Allan (Principal Accounting Officer) March 31, 1998

/s/Michael Baum
__________________________ Director March 31, 1998
Michael Baum

/s/ Karl Magnus-Karlsson
__________________________ Director March 31, 1998
Karl Magnus-Karlsson

</TABLE>

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Scoop, Inc.:

We have audited the accompanying balance sheet of Scoop, Inc. (the Company)
as of December 31, 1997 and the related statements of operations, stockholders'
equity and cash flows for the years ended December 31, 1997 and 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Scoop, Inc. as of December
31, 1997 and the results of its operations and its cash flows for the years
ended December 31, 1997 and 1996 in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming Scoop,
Inc. will continue as a going concern. As more fully described in Notes 1 and
11 to the financial statements, the Company has incurred recurring operating
losses, has an accumulated deficit of $8,480,400 and has limited working capital
at December 31, 1997. The Company's ability to continue as a going concern is
dependent upon future events, including its ability to secure sufficient
additional sources of financing to repay its obligations as they become due and
generate revenues sufficient to cover its cost structure. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.

/s/ DELOITTE & TOUCHE LLP
Costa Mesa, California
March 5, 1998

F-1
<PAGE>

SCOOP, INC.
BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>

ASSETS
1997
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 1,512,600
Accounts receivable, net of allowance for
doubtful accounts of $37,500 . . . . . . . . . . . . . . 141,100
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 47,000
Income tax refund receivable. . . . . . . . . . . . . . . .

--------------
Total current assets . . . . . . . . . . . . . . . . . . 1,700,700

EQUIPMENT, net (Note 3) . . . . . . . . . . . . . . . . . . 792,100
--------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,492,800
--------------
--------------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:

Accounts payable. . . . . . . . . . . . . . . . . . . . . . $ 567,800
Accrued payroll (Note 10) . . . . . . . . . . . . . . . . . 165,900
Accrued royalty (Note 10) . . . . . . . . . . . . . . . . . 406,200
Other accrued liabilities (Note 9). . . . . . . . . . . . . 289,800
Current portion of capital lease obligations (Note 9) . . . 73,500
--------------
Total current liabilities. . . . . . . . . . . . . . . . 1,503,200

CAPITAL LEASE OBLIGATIONS, net of current
portion (Note 9). .. . . . . . . . . . . . . . . . . . . 43,000

COMMITMENTS AND CONTINGENCIES (Note 9). . . . . . . . . . .

STOCKHOLDERS' EQUITY:
Preferred stock $.001 par value; 5,000,000 shares
authorized; no shares issued or outstanding. . . . . . .
Common stock, $.001 par value; 20,000,000 shares
authorized; 5,501,214 shares issued and
outstanding (Notes 2 and 5). . . . . . . . . . . . . . . 5,400
Additional paid-in capital. . . . . . . . . . . . . . . . . 9,146,000
Accumulated deficit . . . . . . . . . . . . . . . . . . . . (8,480,400)
Deferred compensation . . . . . . . . . . . . . . . . . . . 275,600
--------------
Total stockholders' equity . . . . . . . . . . . . . . . 946,600
--------------
$ 2,492,800
--------------
--------------
</TABLE>
See accompanying notes to financial statements

F-2
<PAGE>

SCOOP, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996

1997 1996
<S> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . $ 2,037,900 $ 1,395,900
Cost of sales. . . . . . . . . . . . . . . . . . . 1,080,800 833,200
------------ ------------
Gross profit. . . . . . . . . . . . . . . . . 957,100 562,700

Operating expenses:
Research and development (Note 11). . . . . . . 2,548,500 601,700
Selling and marketing . . . . . . . . . . . . . 1,013,000 396,500
General and administrative. . . . . . . . . . . 2,137,700 1,710,300
Other expense . . . . . . . . . . . . . . . . . 388,800 0
------------ ------------
6,088,000 2,708,500

Operating loss . . . . . . . . . . . . . . . . . . (5,130,900) (2,145,800)
Interest income (expense), net (Note 4). . . . . . 82,400 (21,500)
------------ ------------
Loss before provision for income taxes . . . . . . (5,048,500) (2,167,300)
Provision for income taxes (Note 8). . . . . . . . (1,600) (1,600)
------------ ------------
Net loss.. . . . . . . . . . . . . . . . . . . . . $(5,050,100) $(2,168,900)
------------ ------------
------------ ------------
Basic and diluted loss per share
(Note 1). . . . . . . . . . . . . . . . . . . . $ (1.01) $ (0.68)
------------ ------------
------------ ------------
</TABLE>

See accompanying notes to financial statements

F-3
<PAGE>

SCOOP, INC.
STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated Deferred
Shares Amount Capital Deficit Compensation Total
------ ------ ------- ------- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996 2,516,635 $ 2,500 $ 12,000 $ (928,900) $ (914,400)
Issuance of shares in repayment of
debt (Note 10) 71,760 100 154,900 155,000
Net proceeds form issuance of
common stock (Note 6) 113,248 100 224,900 225,000
Proceeds from issuance of common
stock (Note 10) 20,000 40,000 40,000
Stock bonus (Note 6) 39,663 81,800 81,800
Ascribed value of transferred shares
(Note 6) 50,800 50,800
Issuance of shares (Note 10) 64,527 100 161,200 (161,300) 0
Increase in redemption value of
redeemable common stock (Note 5) (115,000) (115,000)
Net loss (2,168,900) (2,168,900)
Deferred compensation
(Notes 6 and 7) 192,200 192,200
-------------------------------------------------------------------------------------
BALANCE, December 31, 1996 2,825,833 2,800 725,600 (3,374,100) 192,200 (2,453,500)

Increase in redemption value of
redeemable common stock (Note 5) (56,200) (56,200)
Termination of redemption rights
associated with certain shares
of common stock (Notes 2 and 5) 926,664 900 2,357,800 2,358,700
Issuance of common stock in initial
public offering, (Note 2) 1,657,050 1,700 5,842,700 5,844,400
Stock options and warrants exercised 91,667 219,900 219,900
Deferred compensation
(Notes 4, 6 and 7) 83,400 83,400
Net loss (5,050,100) (5,050,100)
-------------------------------------------------------------------------------------
BALANCE, December 31, 1997 5,501,214 $ 5,400 $9,146,000 $(8,480,400) $275,600 $ 946,600
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

</TABLE>

See accompanying notes to financial statements

F-4
<PAGE>

SCOOP, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss. . . . . . . . . . . . . . . . $(5,050,100) $(2,168,900)
Adjustments to reconcile net loss to net cash
Used in operating activities:
Depreciation and amortization . . . . . . . . 195,000 105,400
Stock bonus (Note 6). . . . . . . . . . . . . 81,800
Ascribed value of transferred shares (Note 6) 50,800
Deferred compensation . . . . . . . . . . . . 83,400 192,200
Changes in:
Accounts receivable . . . . . . . . . . . . (25,200) (93,800)
Publishing materials. . . . . . . . . . . . 14,600
Income tax refund receivable. . . . . . . . 15,400 1,800
Other assets. . . . . . . . . . . . . . . . 8,200 (8,200)
Prepaid expenses. . . . . . . . . . . . . . 140,500 (187,500)
Accounts payable. . . . . . . . . . . . . . 152,800 187,000
Accrued payroll . . . . . . . . . . . . . . 32,900 36,000
Accrued royalty . . . . . . . . . . . . . . 122,000 134,200
Other accrued liabilities . . . . . . . . . 257,500 (1,600)
----------- -----------
Net cash used in operating activities. . (4,067,600) (1,656,200)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment . . . . . . . . . . . . (611,600) (166,700)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable to stockholder. . . (88,000)
Repayment of note payable -other. . . . . . . . (57,500)
Repayment of capital lease obligations. . . . (122,300) (56,300)
Borrowings under line of credit (Note 4). . . 150,000 (150,000)
Repayment of line of credit (Note 4) . . . . (150,000)
Proceeds from bridge notes (Note 4). . . . . . 300,000 400,000
Repayment of bridge notes (Note 4). . . . . . (300,000) (400,000)
Repayment of covenant-not-to-compete
obligation . . . . . . . . . . . . . . . . . (12,600) (16,700)
Proceeds from issuance of common stock
Note 2). . . . . . . . . . . . . . . . . . 6,064,300 265,000
Proceeds from issuance of redeemable
common stock. . . . . . . . . . . . . . . . 2,187,500
----------- -----------
Net cash provided by financing activities. 5,929,400 2,084,000
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . 1,250,200 261,100

CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . . . 262,400 1,300
----------- -----------
End of period . . . . . . . . . . . . . . . . . $ 1,512,600 $ 262,400
----------- -----------
----------- -----------

</TABLE>

See accompanying notes to financial statements

F-5
<PAGE>

SCOOP, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>

1997 1996
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
<S> <C> <C>
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . $ 27,700 $ 32,200
---------- ---------
---------- ---------
Income taxes . . . . . . . . . . . . . . . . $ 1,600 $ 3,200
---------- ---------
---------- ---------

SCHEDULE OF NONCASH INVESTING AND FINANCING
TRANSACTIONS
Contractual obligations incurred for the
acquisition of equipment. . . . . . . . . $ 61,100 $ 125,000
---------- ---------
---------- ---------
Release of contractual obligation under
noncompetition agreement. . . . . . . . . $ 68,000
----------
----------
Increase in redemption value of redeemable
shares of common stock (Note 5) . . . . . $ 56,200 $ 115,000
---------- ---------
---------- ---------
Common stock issued in repayment of debt. . $ 155,000
---------
---------
Termination of redemption rights associated
with certain shares of Common stock
(Notes 2 and 5) . . . . . . . . . . . . . $2,357,800
----------
----------

</TABLE>

See accompanying notes to financial statements
F-6
<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION--Scoop, Inc. (the Company), was incorporated in
California in May 1990. On November 5, 1993, the Company formed a
wholly-owned subsidiary, Newsmakers Information Services, Inc. (Newsmakers
or the subsidiary). In November 1996, the Company merged the subsidiary
into itself. The accompanying financial statements have been restated to
reflect this reorganization, which has been accounted for on a basis
similar to a pooling of interests. In March 1997, the Company
reincorporated in the state of Delaware. The accompanying financial
statements include the effects of the reincorporation and resulting
increase in the number of common stock authorized to 20,000,000 shares and
the authorization of 5,000,000 shares of preferred stock.

DESCRIPTION OF BUSINESS--The Company has been principally engaged in
developing SCOOP!, an internet delivered business information service, and
marketing printed media reproductions. In February 1998, the Company
announced its plan to discontinue the marketing and further development of
Scoop!. During the years ended December 31, 1997 and 1996, the Company had
incurred approximately $2,548,000 and $601,700 respectively, for the
research and development of Scoop! and as discussed in Notes 7 and 9 has
entered into long-term contractual agreements enabling the Company to
access certain proprietary database information utilized in the Scoop!
business. The Company plans to continue its printed media production
business which for the years ended December 31, 1997 and 1996 provided
substantially all of the Company's revenues.

GOING CONCERN AND MANAGEMENT'S PLANS--Through December 31, 1997, the
Company has incurred significant operating losses, has an accumulated
deficit of $8,480,400 and has limited working capital. The Company's
ability to continue as a going concern is dependent upon future events,
including its ability to secure additional sources of financing. These
factors raise substantial doubt about the Company's ability to continue as
a going concern. The Company believes that cash and cash equivalents on
hand as of December 31, 1997, will be adequate to meet its capital needs
for at least the next four months. The Company's current operating plan
shows that at the end of such four-month period, the Company will require
substantial additional capital. The Company is in the process of seeking
additional capital and assessing their ability to sell assets as a means of
raising funds. There can be no assurance, however, that additional
financing will be available at all or that, if available, such financing
will be obtainable on terms favorable to the Company.

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 years. Actual
results could differ from those estimates.

CONCENTRATION OF CONTENT PROVIDERS--The Company's content providers
for its media services include approximately four content providers for
which the Company acts on an exclusive outsourcing agency basis, and
approximately 24 additional content providers for which the Company acts as
outsourcing agent on a nonexclusive basis and a smaller number of content
providers for which the Company acts on a project-by-project basis. One
exclusive content provider presently provides the content for approximately
45.8% of the Company's annual revenue.

CASH AND CASH EQUIVALENTS--Cash and cash equivalents include cash on
hand and investments purchased with original maturities of three months or
less.

F-7
<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

EQUIPMENT--Equipment is stated at cost, net of accumulated
depreciation. Depreciation is computed using the straight-line method over
a four-year period for computer and office equipment. Leasehold
improvements are amortized over the term of the related lease if less than
the estimated service life.

The Company accounts for long-lived assets (primarily equipment) under
Statement of Financial Accounting Standards (SFAS) No. 121, ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
DISPOSED OF. This statement requires impairment losses to be recognized
for long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows are not sufficient to recover the
assets' carrying amount. The statement also requires that assets to be
disposed of should be written down to fair value less selling costs.

REVENUE RECOGNITION--Revenues from product sales are recognized upon
shipment of product to customers who principally consist of corporate and
professional entities. The Company offers credit to its customers,
performs ongoing credit evaluations and generally does not require
collateral.

INCOME TAXES--Income taxes are recorded in accordance with SFAS No.
109, ACCOUNTING FOR INCOME TAXES. This statement requires the recognition
of deferred tax assets and liabilities to reflect the future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. Measurement of the deferred items is based on
enacted tax laws. In the event the future consequences of differences
between the financial reporting basis and tax basis of the Company's assets
and liabilities result in a deferred tax asset, SFAS No. 109 requires an
evaluation of the probability of being able to realize the future benefits
indicated by such asset. A valuation allowance related to a deferred tax
asset is recorded when it is more likely than not that some portion or all
of the deferred tax asset will not be realized.

SOFTWARE DEVELOPMENT COSTS--Development costs incurred in the
research and development of new software products and enhancements to
existing software products are expensed as incurred until technological
feasibility has been established. After technological feasibility is
established, any additional costs would be capitalized in accordance with
SFAS No. 86, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD,
LEASED OR OTHERWISE MARKETED. Through December 31, 1997, software
development has been substantially completed concurrent with the
establishment of technological feasibility, and accordingly, no costs have
been capitalized to date.

STOCK SPLIT--In May 1996, the Company effected a 1,006.654-for-1
stock split of its then outstanding common stock. All share and per share
amounts included in the accompanying financial statements have been
restated to reflect the stock split.

NET LOSS PER COMMON SHARE--As of December 31, 1997, the Company
adopted SFAS 128, Earnings Per Share. SFAS No. 128 requires the Company to
report basic earnings per share, as defined therein, which excludes common
share equivalents from the earnings per share computation, and diluted
earnings per share, as defined therein, which is calculated similar to the
Company's primary earnings per share. Earnings per share amounts for all
periods presented have been restated to conform to the requirements of
SFAS 128. The weighted average number of common shares and redeemable
common shares outstanding used in determining basic and diluted loss per
share was 5,022,000 in 1997 and 3,213,000 in 1996.

F-8
<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

RECENTLY ISSUED ACCOUNTING STANDARDS--In June 1997, the Financial
Accounting Standards Board (FASB) issued SFAS No. 130, REPORTING
COMPREHENSIVE INCOME. SFAS 130 establishes standards for the reporting and
display of comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general purpose financial statements.
SFAS 130 is effective for fiscal years beginning after December 15, 1997
and will result in an additional statement that reports comprehensive
income.

In June 1997, FASB issued SFAS 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. SFAS 131 establishes standards for the
way public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major
customers. SFAS 131 is effective for financial statements for fiscal years
beginning after December 15, 1997. The Company does not believe that the
adoption of SFAS 131 will have a significant impact on the presentation of
its financial statements.

2. INITIAL PUBLIC OFFERING

On April 16, 1997, the Company completed its initial public offering
of 1,450,000 shares of common stock at $4.50 per share, resulting in
proceeds to the Company of approximately $5.0 million, net of underwriting
discounts and commissions and offering expenses. In May 1997, the Company
sold an additional 207,050 shares of common stock at $4.50 per share
pursuant to the exercise of the underwriters' over-allotment option,
resulting in additional net proceeds to the Company of approximately
$800,000. Upon the completion of the initial public offering, the
mandatory redemption rights associated with 926,664 shares of common stock
terminated. As a result of the termination of the redemption rights, the
Company reclassified manditorily redeemable common stock to equity. (Note
5)

3. EQUIPMENT

Equipment consists of the following at December 31, 1997:

<TABLE>
<CAPTION>
<S> <C>
Computer equipment $ 905,400
Furniture and fixtures 143,300
Leasehold improvements 96,600
----------
1,145,300
Accumulated depreciation and amortization (353,200)
----------
$ 792,100
----------
----------
</TABLE>
Included in equipment is equipment held under capital leases amounting
to $316,300 at December 31, 1997, net of accumulated depreciation of
$199,800.

4. LINE OF CREDIT AND BRIDGE NOTES

BRIDGE NOTES--In February 1997, two separate individuals each
loaned $75,000 to the Company in exchange for the Company's promissory
notes. The borrowings were unsecured, provided for

F-9

<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

interest at 9.5% and matured upon the completion of the initial public
offering. In April 1997, the Company repaid both bridge notes in full.

In February 1997, the Company borrowed $150,000 from a shareholder of
the Company. The loan was unsecured, accrued interest at 9.75% and matured
April 30, 1997. As additional consideration of the loan, the Company
granted to this shareholder a warrant to purchase 15,000 shares of the
Company's common stock at $4.50 per share. The estimated fair value
(determined using an option pricing model) of the warrants, $30,100, was
recorded as an increase to paid-in capital and was amortized over the term
of the two-month loan. The warrants became exercisable in February 1998.
The Company repaid the bridge note in full in April 1997.

LINE OF CREDIT--In February 1997, the Company entered into a credit
agreement with an independent third party, which provided for maximum
borrowings of $150,000. The line of credit was collateralized by accounts
receivable, accrued interest at 9.5% and had a commitment term expiring in
August 1997. In lieu of paying a loan processing fee, the Company granted
to this individual a warrant to purchase up to 15,750 shares of the
Company's common stock at $5.50 per share. The Company recorded expense
equivalent to the fair value of the warrants (determined using an option
pricing model) totaling approximately $19,400. The warrants became
exercisable in March 1998. The Company repaid all borrowings and
terminated the credit facility in June 1997.

5. REDEEMABLE SHARES OF COMMON STOCK

In July 1996, the Company completed two separate private placements
(the May and June Private Placements) aggregating 926,664 shares of common
stock (the Redeemable Shares) for $2,178,200 (net of offering costs of
$592,400). The Redeemable Shares were to be redeemed by the Company in the
event that the Company failed to complete an initial public offering of its
common stock and to have it's common stock quoted for trading on a national
securities exchange or NASDAQ by December 1998. The redemption price was
equal to the greater of the issuance price plus a return of 10% compounded
annually, or the aggregate fair market value. During the year ended
December 31, 1997 and 1996, the Company increased the manditorily
redeemable common stock and accumulated deficit by $56,200 and $115,000,
respectively, to increase the carrying value of the Redeemable Shares to
approximate redemption value.

In connection with the May and June Private Placements, the Company
issued to each purchaser of redeemable common stock an equal number of
cancelable warrants for aggregate consideration of $9,300, the deemed value
of the warrants.

Upon completion of the Company's initial public offering (Note 2), the
mandatory redemption rights associated with the 926,664 shares of common
stock terminated and the cancelable warrants became null and void. As a
result of the termination of the redemption rights and cancellation
warrants, the Company reclassified the redeemable shares to equity.

6. STOCKHOLDERS' EQUITY

STOCK BONUS--In April 1996, the Company issued an aggregate of 34,663
shares of the Company's common stock at a deemed fair market value of $2.00
per share as a stock bonus to 14 key employees or consultants of the
Company. Compensation expense of $69,300 was recorded in connection with
this stock bonus.

F-10

<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

In July 1996, the Company issued 5,000 shares of the Company's common
stock as a stock bonus to an employee. Compensation expense of $12,500
($2.50 per share) was recorded concurrent with the issuance of the common
stock, which the Company's Board of Director's deemed to be the fair value
of the stock at the date of grant.

PRIVATE PLACEMENT OF STOCK - In April 1996, the Company completed the
private placement of 113,248 shares of its common stock, yielding net
proceeds of $225,000.

OTHER - During the year ended December 31, 1996, the Company's then
president and majority stockholder gifted certain shares of his
personally-held common stock to various directors, consultants and
employees of the Company. These transactions resulted in the Company's
recording an increase to general and administrative expense and additional
paid-in capital of $50,800 for the year ended December 31, 1996.

OPTIONS - In February 1997, in settlement of various disputes arising
between the Company, the Company's chairman and two stockholders of the
Company, the Company agreed to pay to these stockholders a total of
$60,000 in twelve equal monthly payments of $5,000 and granted to one
stockholder a warrant to purchase 11,250 shares of the Company's common
stock. Additionally, the Chairman has granted to the other stockholder an
option to purchase 11,250 shares of his personally- held stock. Both the
option and the warrant expire in three years, are exercisable and have
exercise prices of $5.40.

7. STOCK OPTION PLANS

STOCK OPTION PLAN - In April 1996, the Company adopted its 1996 Stock
Incentive Plan (the 1996 Plan), as subsequently amended in October 1996,
which provides for the grant of stock options and other awards to certain
officers, key employees, consultants or other persons affiliated with the
Company. The maximum number of shares of common stock that may be issued
pursuant to the 1996 Plan is 1,500,000. As of December 31, 1997, the
Company has granted options to purchase an aggregate of 662,500 shares of
the Company's common stock at prices ranging from $2.00 to $5.00 per share,
which the Company's Board of Directors deemed to be equal to, or in excess
of, fair market value of the common stock at the dates of grants, to
employees of the Company. Additionally, options have been granted for the
purchase of up to 276,063 common shares at prices ranging from $2.00 to
$5.00 per share to certain nonemployees of the Company. The Company will
record compensation expense equivalent to the fair value of the options
granted to nonemployees, totaling approximately $150,000. The compensation
expense will be recorded ratably over the vesting periods of the
respective options. For the years ended December 31, 1996 and 1997, the
Company has recorded $41,000 and $83,400, respectively, of deferred
compensation expense associated with these option grants.

In September 1997, the Company adopted the Rand Bleimeister Stock
Option Plan (the Bleimeister Plan), which provided for the grant of stock
options and other awards to the Company's Chief Executive Officer. The
maximum number of shares of common stock that may be issued pursuant to the
Bleimeister Plan is 350,000. Following the adoption of such plan, the
Company granted options to purchase an aggregate of 350,000 shares of the
Company's common stock at a price of $3.75 per share.

F-11

<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

CONSULTANT WARRANTS - In June 1996, the Company granted warrants to
purchase up to 200,000 shares of the Company's common stock at a price of
$2.55 per share, which the Company deemed to be equal to the fair market
value of the stock at the date of grant, to certain consultants of the
Company. As these warrants vested upon grant, the Company recorded
compensation expense equivalent to the fair market value of these warrants,
totaling $119,200. In connection with the May and June Private Placements,
the Company granted warrants to purchase up to 92,667 shares of common
stock at a price of $3.30 to its underwriter.

CONTENT PROVIDER WARRANTS - In October 1996, the Company entered into
an agreement with a third party giving the Company the right to access and
resell certain proprietary database information. Pursuant to such
agreement, the Company granted warrants to purchase up to 550,000 shares of
the Company's common stock with exercise prices of $6.50 (300,000 shares),
$10.00 (150,000 shares), and $15.00 (100,000 shares) to a third party. As
these warrants vest immediately, the Company recorded compensation expense
equivalent to the fair value of the warrants totaling approximately
$32,000.

The following table summarizes the activity under the 1996 Plan, the
Rand Bleimeister Plan, and with common stock warrant activity for the
periods indicated:

WEIGHTED WEIGHTED
AVERAGE AVERAGE
OPTIONS EXERCISE EXERCISE
OUTSTANDING PRICE WARRANTS PRICE
----------- --------- -------- -------
<S> <C> <C> <C> <C>
Outstanding at December 31, 1995 -
Granted 242,500 $2.00 200,000 $ 2.55
245,000 2.50 92,667 2.30
20,000 3.00 300,000 6.50
14,000 4.00 150,000 10.00
101,000 5.00 100,000 15.00
--------- -------
Outstanding at December 31, 1996 622,500 2.76 842,667 $ 6.84

Granted 1,299,063 4.00 203,667 5.31
Exercised (25,000) 2.00 (66,667) 2.55
Cancelled (269,000) 2.98 (92,667) 2.75
--------- -------
Outstanding at December 31, 1997 1,627,563 3.76 887,000 7.24
--------- -------
--------- -------
Options and warrants exercisable
at December 31, 1997 305,688 2.96 683,333 7.74
--------- -------
--------- -------

</TABLE>

F-12

<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

Options Outstanding Options Exercisable
------------------------------------ -------------------
Weighted
Range of Average Weighted Weighted
Exercise Remaining Average Average
Prices Shares Life Price Shares Price
------ ------ ---- ----- ------ -----
(Years)
<S> <C> <C> <C> <C> <C>
$2.00 - $4.00 920,188 9.0 $3.02 220,813 $2.32
$4.00 - $5.00 706,875 9.0 4.72 84,875 4.64
--------- -------
1,627,063 9.0 3.76 305,688 2.96
--------- -------
--------- -------

<CAPTION>
Warrants Outstanding Warrants Exercisable
------------------------------------ --------------------
Weighted
Range of Average Weighted Weighted
Exercise Remaining Average Average
Prices Shares Life Price Shares Price
------ ------ ---- ----- ------ -----
(Years)
<S> <C> <C> <C> <C> <C>
$2.55 - $ 6.50 337,000 9.0 $4.22 133,333 $2.55
$6.50 - $15.00 550,000 9.0 9.00 550,000 9.00
--------- --------
887,000 9.0 7.18 683,333 7.74
--------- --------
--------- --------
</TABLE>

SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, encourages but
does not require companies to record compensation cost for employees stock
option grants. The Company has chosen to continue to account for employee
option grants using Accounting Principles Board (APB) No. 25. No
compensation expense has been recognized for employee stock option grants.
Had compensation expense for the employee stock option grants been
determined based on fair value at the grant dates consistent with SFAS No.
123, the Company's net loss and net loss per share for the year ended
December 31, 1997 and 1996 would have been reduced to the pro forma amounts
indicated below:

1997 1996
---- ----
<S> <C> <C>
Pro Forma Net Loss $(5,693,200) $(2,425,100)
Basic and Diluted Loss Per Share (Pro Forma) $(1.13) $(0.75)

</TABLE>

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1996: zero dividend yield,
expected volatility of 80% (1997), 1% (1996), risk-free interest rate of
6.5% (1997), 5.2% (1996) and expected lives of ten years.

F-13
<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

8. INCOME TAXES

The reconciliation of income tax expense computed at U.S. federal
statutory rates to income tax expense is as follows for the years ended
December 31:

<TABLE>
<CAPTION>
1997 1996
---- ----

<S> <C> <C>
Tax at U.S. federal statutory rates $(1,701,000) $ (759,000)
State income taxes (223,000) (107,200)
Other 26,600 10,300
Change in valuation allowance 1,899,000 857,500
----------- ----------
Total income tax expense $ 1,600 $ 1,600
----------- ----------
----------- ----------
</TABLE>

Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and
(liabilities) are as follows at December 31, 1997:

<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
State income taxes $ 500
Depreciation (17,700)
Accruals not currently deductible 89,200
Net operating losses 3,006,000
-----------
3,078,000
Valuation allowance (3,078,000)
-----------
Total net deferred tax assets $ -
-----------
-----------
</TABLE>

At December 31, 1997, the Company has federal and state tax loss
carryforwards of approximately $7,500,000 and $3,800,000 which expire in
2011 and 2001, respectively. Utilization of these federal and state loss
carryforwards is limited to approximately $300,000 annually as a result of
Internal Revenue Code Section 382 change of ownership rules

9. COMMITMENTS AND CONTINGENCIES

In August 1997, the Company entered into a non-cancelable operating
lease for its principal facility (Irvine) which extended through September
2000. The Company vacated its prior facility (Santa Ana) and moved into
the Irvine facility October 1997. The Company recorded a reserve of
approximately $330,000 which was equal to the net present value of the
remaining lease payments and the net book value of the leasehold
improvements associated with the vacated Santa Ana facility.

In December 1997, the Company determined it would vacate the Irvine
facility and return to the Santa Ana facility. The Company recorded a
$370,000 reserve associated with vacating the Irvine facility which equals
the initial cash settlement offer from the Irvine landlord for early
termination of the lease and the net book value of the leasehold
improvements. The remaining reserve originally established for vacating
the Santa Ana facility was reversed.

F-14
<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

The Company leases certain equipment under capital lease agreements.
Rent expense for the years ended December 31, 1997 and 1996, exclusive of
the reserves for early termination of facility leases, was $178,600 and
$39,000, respectively.

Minimum annual payments under these lease agreements, excluding the
vacated Irvine facility, as follows:

Capital Operating
Leases Leases
------ ------
Year ending December 31:
<S> <C> <C>
1998 $ 87,400 $ 92,200
1999 40,000 96,000
2000 7,200 74,100
--------- ---------
Total minimum lease payments 134,600 $ 262,300
Amount representing interest (18,100) ---------
--------- ---------
Present current value of future
minimum lease payments 116,500
Current Portion (73,500)
---------
Long-term portion $ 43,000
---------
---------

</TABLE>

CONTRACTUAL AGREEMENTS - As discussed in Note 7, the Company has
entered into an agreement with a third party enabling the Company to access
and resell certain proprietary database information. The terms of the
agreement provide for minimum royalty payments of $570,000 (1998) and
$652,500, (1999) during the initial term of this agreement.

During the year ended December 31, 1997, the Company entered into an
agreement with an independent third party enabling the Company to reprint
certain newspaper articles. The terms of the agreement provide for minimum
royalty payments of $400,000 for the year ending December 31, 1998.

LITIGATION - The Company is currently involved in litigation
incidental to its business. In the opinion of management, the ultimate
resolution of such litigation will not have a significant effect on the
accompanying financial statements. Additionally, in February 1998, two of
the Company's shareholders filed suit against the Company. The suit
alleges among other things, that the Company conspired with each of the
underwriters involved with the Company's private and public stock offerings
to prevent the plaintiffs from being released from certain lock-up
provisions contained in the private offering documents. The Company
believes these charges are without merit and intends to vigorously defend
itself against these charges. The Company does not believe that the
ultimate outcome will have a significant effect on its financial position
or result of operations.

10. RELATED PARTY TRANSACTIONS

CONVERTED NOTE PAYABLE - In October 1995, a stockholder loaned the
Company $150,000 in exchange for an 8% promissory note convertible into
71,760 shares of the Company's common stock. In June 1996, the Company
exercised its right of redemption and issued to this stockholder 71,760
shares of common stock.

F-15

<PAGE>

SCOOP, INC.

NOTES TO FINANCIAL STATEMENTS

REPURCHASE OF STOCK - Pursuant to an agreement dated October 5, 1995,
as subsequently amended, the Company repurchased all of the shares that
were then owned by a co-founder and former officer of the Company in
exchange for a $12,000 cash payment and a $88,000 promissory note. This
stock repurchase resulted in a decrease in capital of $2,500 and an
increase of $97,500 in accumulated deficit. In addition, the Company
agreed to issue to this former officer 64,527 shares of the Company's
common stock. In July 1996, the Company issued these shares and recorded
an addition to common stock and paid-in capital and a reduction to
accumulated deficit of $161,300 ($2.50 per share).

The unsecured noninterest-bearing $88,000 note payable issued in
connection with the stock repurchase from the co-founder was repaid in full
in January 1996.

The Company also entered into a noncompetition agreement with the
former officer. Under the terms of the agreement, payments of $2,000 were
to be made in monthly installments over a term of five years, beginning
December 1995. The Company established the related asset and liability
associated with this agreement, based upon an imputed interest rate of 8%.
Amortization expense of $9,300 and $19,700 was recorded for the years ended
December 31, 1997 and 1996, respectively. In October 1997, the Company
and the former officer agreed to terminate the non-competition agreement,
resulting in the Company reversing the $68,000 obligation and asset under
the non-competition agreement

OTHER - In April 1996, the Company entered into an agreement with its
former counsel to issue 20,000 shares of common stock for $2.00 per share,
which the Company's Board of Directors deemed to be the fair value of the
stock at the date of the agreement. The Company issued the shares in June
1996, yielding net proceeds of $40,000.

SEVERANCE - In February 1997, a co-founder resigned from the positions
of President and Chief Executive Officer of the Company. The Company and
the co-founder entered into a severance agreement providing for twelve
equal monthly payments of approximately $12,000. As of December 31, 1997,
the Company has approximately $48,000 of remaining payments under such
agreement, which is included within accrued payroll in the accompanying
balance sheet.

11. SUBSEQUENT EVENTS

In December 1997, the Company determined that it would discontinue the
marketing and further development of Scoop!. The plan for such
discontinuance was approved by the Board of Directors and announced in
February 1998. During the years ended December 31, 1997 and 1996, the
Company had incurred approximately $2,548,000 and $601,700, respectively,
for the research and development of Scoop! and as discussed in notes 7 and
9, has entered into long-term contractual agreements enabling the Company
to access certain proprietary database information utilized in the Scoop!
business. As a result of this determination, the Company recorded expense
associated with the write-off of certain software licensing rights of
approximately $229,000, which is included within research and development
expense in the accompanying statement of operations. In order to further
reduce costs, the Company terminated several employees in February 1998.
As a result, the Company will record expense for severance pay of
approximately $250,000 during the three months ended March 31, 1998.

F-16

<PAGE>

AGREEMENT

THIS AGREEMENT is made and entered into effective as of February 1, 1998
by and between Investor's Business Daily ("IBD") and Scoop, Inc. ("SCOOP").

SCOPE OF AGREEMENT

1. IBD grants to SCOOP an exclusive license to create, promote, and
distribute promotional reprints, wall displays, Website displays and other
editorial reuse media merchandise (collectively, "derivative media products")
featuring any IBD Content (as hereinafter defined). IBD agrees that the license
granted herein shall give SCOOP the right to grant third parties the right to
display IBD content on third party Websites. In conjunction with this license,
IBD grants to SCOOP the right to use all mastheads from IBD publications and
such logotypes and graphics as are necessary for the production of the
derivative media products. For purposes of this Agreement, the term "IBD
Content" shall mean any and all individual articles, news items, graphics,
photographs, features, lists, columns and screen shots from any current or
future IBD publications, whether published in printed or electronic form.

2. This Agreement does not apply to those items, such as logotypes or other
trademarks that might appear with certain IBD content, to which IBD does not
have intellectual property rights.

ROYALTIES

3. In exchange for the license granted herein, SCOOP will pay IBD royalties
in an amount equal to thirty-five percent (35%) of the gross sales price of all
reprints, twenty-five percent (25%) of wall displays and other derivative media
products featuring IBD Content sold by SCOOP and forty percent (40%) of the fees
charged by SCOOP for granting Website display rights featuring IBD Content.
Royalties will be payable by the end of the month immediately following the
month in which payments are collected.

4. SCOOP agrees to pay IBD a minimum of $400,00 in royalties for the
initial term of this Agreement. If SCOOP has paid less than $400,000 in
royalties for the initial term of this Agreement, then within thirty (30) days
following the expiration of the term, SCOOP shall pay IBD the difference between
$400,000 and the aggregate amount of royalties paid to IBD prior thereto.

MARKETING BY SCOOP, INC.

5. SCOOP will market the aforementioned derivative media products through
phone, fax, and mailing efforts, and may use other media as well. SCOOP may
also us customer advertising and sales support materials to promote reprints,
wall displays, Website displays and other derivative media products featuring
IBD Content. All such promotional efforts and materials production undertaken
by SCOOP will be paid for by SCOOP.

1
<PAGE>

CO-MARKETING AND PROMOTION

6. During the term of this Agreement, IBD will publish the SCOOP toll-free
number and reference reprints as a service offering in IBD's "vanity box". On
occasion and on a space available basis, IBD will run display advertisements in
editions of each IBD print publication and on IBD's Website and on-line
publications promoting the use of reprints, wall displays and Website displays
featuring IBD Content and identifying SCOOP as the exclusive source for
obtaining such derivative media products. Such advertising shall be at no
expense to SCOOP. IBD will refer to SCOOP all inquiries received by IBD
regarding reprints, wall displays and Website displays.

PHOTOGRAPHS AND GRAPHICS

7. IBD grants to SCOOP editorial reprint usage rights and re-user rights of
photos and graphics owned by IBD and used in IBD publications and will, at no
charge to SCOOP, provide expedient access to all such photos, graphics, or color
separations required by SCOOP in the production of reprints, wall displays,
Website displays or other derivative media products. To smooth access to photos
and graphics, IBD will, when possible, structure freelance photo and graphic
contracts to include reprint usage and re-user rights. IBD will indemnify SCOOP
and hold SCOOP harmless from any liability arising from actions brought by any
photographer or artist against SCOOP for the use of such materials

SUPPLY OF CONTENT

8. At no expense to SCOOP, IBD will make all IBD Content available to SCOOP
for purposes of design and production of derivative media products pursuant to
this Agreement. This supply shall include at least 3 copies of each new issue
of all IBD publications.

PRICING

9. Both parties to agree.

MONTHLY REPORTS AND AUDIT RIGHTS

10. SCOOP will provide IBD with monthly activity status reports and at IBD's
request, samples of IBD derivative media products produced by SCOOP. IBD will,
upon request, be granted audit rights of gross receipts to ensure accurate
royalty payments. Such audits must be arranged with at least fifteen days prior
notice and must not unreasonably interfere with SCOOP's daily conduct of
business. IBD shall pay the costs of any such audit unless it is determined
that there has been as underpayment in the royalties due IBD hereunder equal to
5% or more, in which case audit costs shall be borne by SCOOP.

2
<PAGE>

RIGHTS OF REVIEW

11. SCOOP shall submit all promotional materials making any reference to, or
representation on behalf of, IBD, to IBD for approval prior to use. Such
approval shall not be unreasonably withheld, and will be deemed granted unless
IBD notifies SCOOP otherwise within two weeks of the receipt of such request for
approval.

12. SCOOP shall have the right to reformat IBD Content and to make aesthetic
and artistic alterations to IBD Content in connection with designing, marketing
and selling derivative media products. SCOOP shall not, however, make any
editorial or substantive alterations to IBD Content without the prior consent of
IBD.

TERM OF AGREEMENT

13. The initial term of this Agreement shall expire one year from the date
hereof.

MISCELLANEOUS PROVISIONS

14. This Agreement constitutes the entire agreement of the parties
concerning the subject matter hereof and supersedes all prior written or oral
Agreements, understandings and negotiations with respect to the subject matter
hereof.

15. This Agreement shall not be modified, amended or supplemented and no
provision hereof shall be waived, except pursuant to a written instrument signed
by both parties in the case of a modification, amendment or supplement, or by
the waiving party in the case of a waiver.

16. If any provision if this agreement is declared by any court or
arbitrator to be illegal or invalid, the validity of the remaining portions
shall not be affected thereby, and illegal or invalid portions shall be deemed
not a part of this agreement.

17. This Agreement may not be transferred or assigned by either party
without the prior written consent of the other party; provided, however, that
any assignment made in connection with a merger or sale of substantially all of
the assets of a party shall not require such consent.

18. This Agreement shall be construed in accordance with, and all disputes
arising hereunder shall be governed by, the internal laws of the State of
California without regard to the choice of law principles thereof. Any action
to enforce or interpret this Agreement will be brought in Orange County,
California.

19. All notices and requests in connection with this Agreement shall be in
writing and deemed given as of the day they are either by messenger, delivery
service, facsimile or other means, or three business days after the same is sent
via United States of America mails, postage prepaid, certified or registered,
return receipt requested, and addressed as set forth below:

3
<PAGE>

If to SCOOP: Scoop, Inc.
2540 Red Hill Avenue
Santa Ana, CA 92705
Attn: Rand Bleimeister, CEO

If to IBD: Investor's Business Daily

-------------------------------
-------------------------------
Attn:
--------------------------

Either party may change the address to which the other party shall
deliver notices or requests by written notice to the other.

21. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of which taken together shall
be deemed to be one and the same instrument.

IN WITNESS WHEREOF, IBD and SCOOP HAVE executed this Agreement as of
the date first set forth above.

INVESTOR'S BUSINESS DAILY SCOOP, INC.

By: [SIGNATURE] By: /s/ Rand Bleimeister
--------------------------------- ------------------------------
Its: Publisher Its: Chairman & CEO
------ ----------------- ----- ----------

<PAGE>

RAND BLEIMEISTER
NON-QUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT, dated as of February 19, 1998, is made by and between
Scoop, Inc., a Delaware corporation hereinafter referred to as "Company," and
Rand Bleimeister, Chairman of the Board and Chief Executive Officer of the
Company, hereinafter referred to as "Optionee":

WHEREAS, the Company granted the Optionee an Option to purchase shares
of its Common Stock in connection with the commencement of the Optionee's
employment with the Company in September 1997; and

WHEREAS, the Company's Board has determined that it would be to the
advantage and best interest of the Company and its shareholders to amend certain
terms of the Option previously granted to the Optionee as an inducement for the
Optionee to remain in the service of the Company or its Subsidiaries and as an
incentive for increased efforts during such service; and

WHEREAS, the Company and the Optionee desire to set forth the revised
terms of said Option in this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

ARTICLE I.

DEFINITIONS

Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates. All capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the
Plan.

SECTION 1.1. AGREEMENT

"Agreement" shall mean this Rand Bleimeister Non-Qualified Stock
Option Agreement.

SECTION 1.2. BOARD

"Board" shall mean the Board of Directors of the Company.

<PAGE>

SECTION 1.3. CODE

"Code" shall mean the Internal Revenue Code of 1986, as amended.

SECTION 1.4. COMMITTEE

"Committee" shall mean the Compensation Committee of the Board,
or another committee of the Board, as appointed from time to time by the Board
to administer option grants, plans and terms, provided, however, that Optionee
shall not serve on such Committee for purposes of administering this Agreement.

SECTION 1.5. COMPANY

"Company" shall mean Scoop, Inc., a Delaware corporation.

SECTION 1.6. DIRECTOR

"Director" shall mean a member of the Board.

SECTION 1.7. EXCHANGE ACT

"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

SECTION 1.8. FAIR MARKET VALUE

"Fair Market Value" of a share of Common Stock as of a given date
shall be (i) the closing price of a share of Common Stock on the principal
exchange on which shares of Common Stock are then trading, if any (or as
reported on any composite index which includes such principal exchange), on the
trading day previous to such date, or if shares were not traded on the trading
day previous to such date, then on the next preceding date on which a trade
occurred, or (ii) if Common Stock is not traded on an exchange but is quoted on
Nasdaq or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by Nasdaq or such successor quotation system;
or (iii) if Common Stock is not publicly traded on an exchange and not quoted on
Nasdaq or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Committee (or the Board, in the case of
Options granted to Independent Directors) acting in good faith and in accordance
with 10 California Code of Regulations ("CCR") 260.140.50.

SECTION 1.9. GRANT DATE

"Grant Date" shall mean September 4,1997.

SECTION 1.10. OFFICER

"Officer" shall mean an officer of the Company, as defined in
Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the future.

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<PAGE>

SECTION 1.11. OPTION

"Option" shall mean the non-qualified stock option to purchase
Common Stock of the Company granted under this Agreement.

SECTION 1.12. RULE 16b-3

"Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.

SECTION 1.13. SECRETARY

"Secretary" shall mean the Secretary of the Company.

SECTION 1.14. SECURITIES ACT

"Securities Act" shall mean the Securities Act of 1933, as
amended.

SECTION 1.15. SUBSIDIARY

"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one (1) of the other corporations in such chain.

SECTION 1.16. TERMINATION OF DIRECTORSHIP

"Termination of Directorship" shall mean the time when the
Optionee ceases to be a Director of the Company for any reason including, but
not by way of limitation, a termination by resignation, failure to be
re-elected, death, disability or retirement. The Board, in its sole and
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Directorship.

SECTION 1.17. Termination of Employment

"Termination of Employment" shall mean the time when the Optionee
no longer serves as an Officer of the Company for any reason including, but not
by way of limitation, a termination by resignation, termination for cause,
death, disability or retirement. The Board, in its sole and absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment.

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<PAGE>

ARTICLE II.

GRANT OF OPTION

SECTION 2.1. GRANT OF OPTION

In consideration of the Optionee's agreement to serve as Chairman
of the Board and Chief Executive Officer of the Company and for other good and
valuable consideration, effective as of the Grant Date, the Company irrevocably
grants to the Optionee the option to purchase any part or all of an aggregate of
three hundred fifty thousand (350,000) shares of its Common Stock upon the terms
and conditions set forth in this Agreement.

SECTION 2.2. PURCHASE PRICE

As of the date of this Agreement, the purchase price of the
shares of stock covered by the Option shall be $1.375 per share without
commission or other charge.

SECTION 2.3. CONSIDERATION TO COMPANY

In consideration of the granting of this Option by the Company,
the Optionee agrees to render faithful and efficient services to the Company or
a Subsidiary, with such duties and responsibilities as the Company shall from
time to time prescribe. Nothing in this Agreement shall confer upon the
Optionee any right to continue as an employee of the Company or any Subsidiary,
or as a director of the Company, or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are hereby expressly
reserved, to discharge the Optionee at any time for any reason whatsoever, with
or without cause.

SECTION 2.4. ADJUSTMENTS IN OPTION

In the event that the Committee or the Board determines that any
dividend or other distribution (whether in the form of cash, Common Stock, other
securities, or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Committee's or
Board's sole discretion, affects the Common Stock such that an adjustment is
determined by the Committee or the Board to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Agreement or with respect to the Option, then the
Committee or the Board may, in such manner as it may deem equitable:

(a) adjust any or all of the number and kind of shares of Common
Stock (or other securities or property) subject to the Option, and

(b) adjust any or all of exercise price with respect to the
Option.

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<PAGE>

In its sole and absolute discretion, and on such terms and conditions as it
deems appropriate, the Committee or the Board may provide by action taken prior
to the occurrence of such transaction or event, that upon such event, such
option, right or award be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices.

ARTICLE III.

PERIOD OF EXERCISABILITY

SECTION 3.1. COMMENCEMENT OF EXERCISABILITY

(a) Subject to Sections 3.3 and 3.4, the Option shall become
exercisable in thirteen (13) cumulative installments as follows:

(i) The first installment shall consist of twenty-five
percent (25%) of the shares covered by the Option and shall become
exercisable on the first anniversary of the Grant Date (i.e., September 4,
1998).

(ii) The second through thirteenth installments each shall
consist of six and one quarter percent (6.25%) of the shares covered by the
Option and shall become exercisable on a quarterly basis as follows: the
second installment shall become exercisable beginning on the date fifteen
(15) months following the Grant Date (i.e., December 4, 1998) and one
additional installment will become exercisable every three months
thereafter (i.e., on the dates eighteen (18) months, twenty-one (21)
months, twenty-four (24) months, etc. following the Grant Date), with the
thirteenth installment becoming exercisable on the fourth anniversary of
the Grant Date.

(b) No portion of the Option which is unexercisable at the time
that both Termination of Directorship and Termination of Employment have
occurred shall thereafter become exercisable.

SECTION 3.2. DURATION OF EXERCISABILITY

The installments provided for in Section 3.1 are cumulative.
Each such installment which becomes exercisable pursuant to Section 3.1 shall
remain exercisable until it becomes unexercisable under Section 3.3.

SECTION 3.3. EXPIRATION OF OPTION

The Option may not be exercised to any extent by anyone after the
first to occur of the following events:

(a) The expiration of ten (10) years from the date the Option
was granted; or

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<PAGE>

(b) The expiration of two (2) years from the date that both
Termination of Directorship and Termination of Employment have occurred for any
reason other than a termination by the Company for cause, including such
Termination of Directorship and Termination of Employment resulting from
Optionee's resignation, failure to get re-elected, death, permanent and total
disability (within the meaning of Section 22(e)(3) of the Code), or a
termination by the Company without cause; or

(c) The expiration of three (3) months from the date that both
Termination of Directorship and Termination of Employment have occurred as a
result of termination by the Company for cause.

SECTION 3.4. ACCELERATION OF EXERCISABILITY

In the event of the merger or consolidation of the Company with
or into another corporation, or the acquisition by another corporation or person
or related group of persons of all or substantially all of the Company's assets
or fifty percent (50%) or more of the Company's then outstanding voting stock,
at the effective date of such event this Option shall be immediately exercisable
as to all of the shares covered hereby, notwithstanding that this Option may not
yet have become fully exercisable under Section 3.1(a); provided, however, that
this acceleration of exercisability shall not take place if this Option becomes
unexercisable under Section 3.3 prior to said effective date.

ARTICLE IV.

EXERCISE OF OPTION

SECTION 4.1. PERSON ELIGIBLE TO EXERCISE

During the lifetime of the Optionee, only the Optionee may
exercise the Option or any portion thereof. After the death of the Optionee,
any exercisable portion of the Option may, prior to the time when the Option
becomes unexercisable under Section 3.3, be exercised by Optionee's personal
representative or by any person empowered to do so under the deceased Optionee's
will or under the then applicable laws of descent and distribution.

SECTION 4.2. PARTIAL EXERCISE

Any exercisable portion of the Option or the entire Option, if
then wholly exercisable, may be exercised in whole or in part at any time prior
to the time when the Option or portion thereof becomes unexercisable under
Section 3.3; provided, however, that each partial exercise shall be for not less
than one hundred (100) shares (or the minimum installment set forth in Section
3.1, if a smaller number of shares) and shall be for whole shares only.

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<PAGE>

SECTION 4.3. MANNER OF EXERCISE

The Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary of the Company or his office of all of the
following prior to the time when the Option or such portion becomes
unexercisable under Section 3.3:

(a) A written notice complying with the applicable rules
established by the Board stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion; and

(b) (i) Full cash payment to the Secretary of the Company for
the shares with respect to which such Option or portion is exercised; or

(ii) With the consent of the Board, (A) shares of the
Company's Common Stock owned by the Optionee, duly endorsed for transfer to
the Company, with a Fair Market Value on the date of delivery equal to the
aggregate exercise price of the Option or exercised portion thereof, or (B)
shares of the Company's Common Stock issuable to the Optionee upon exercise
of the Option, with a Fair Market Value on the date of delivery equal to
the aggregate exercise price of the Option or exercised portion thereof; or

(iii) With the consent of the Board, a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code or successor provision)
and payable upon such terms as may be prescribed by the Board. The Board
may also prescribe the form of such note and the security to be given for
such note. The Option may not be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law; or

(iv) With the consent of the Board, property of any kind
which constitutes good and valuable consideration; or

(v) With the consent of the Board, a notice that the
Optionee has placed a market sell order with a broker with respect to
shares of the Company's Common Stock then issuable upon exercise of the
Option, and that the broker has been directed to pay a sufficient portion
of the net proceeds of the sale to the Company in satisfaction of the
Option exercise price; or

(vi) With the consent of the Board, any combination of the
consideration provided in the foregoing subparagraphs (i), (ii), (iii),
(iv) and (v); and

(c) A bona fide written representation and agreement, in a form
satisfactory to the Board, signed by the Optionee or other person then entitled
to exercise such Option or portion, stating that the shares of stock are being
acquired for the Optionee's own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act and then applicable rules and

7
<PAGE>

regulations thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion will indemnify the Company against and hold it
free and harmless from any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is contrary to
the representation and agreement referred to above. The Board may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Board may require an opinion of counsel acceptable to it to the
effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the Securities Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares; and

(d) Full payment to the Company (or any Subsidiary) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; with the consent of the Board, (i) shares of the
Company's Common Stock owned by the Optionee, duly endorsed for transfer, with a
Fair Market Value equal to the sums required to be withheld, or (ii) shares of
the Company's Common Stock issuable to the Optionee upon exercise of the Option
with a Fair Market Value equal to the sums required to be withheld, may be used
to make all or part of such payment; and

(e) In the event the Option or portion shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the Option.

SECTION 4.4. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES

The shares of stock deliverable upon the exercise of the Option,
or any portion thereof, may be either previously authorized but unissued shares
or issued shares which have then been reacquired by the Company. Such shares
shall be fully paid and nonassessable. The Company shall not be required to
issue or deliver any certificate or certificates for shares of stock purchased
upon the exercise of the Option or portion thereof prior to fulfillment of all
of the following conditions:

(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and

(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Board shall, in its absolute discretion, deem necessary or
advisable; and

8
<PAGE>

(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Board shall, in its absolute
discretion, determine to be necessary or advisable; and

(d) The receipt by the Company of full payment for such shares,
including payment of all amounts which, under federal, state or local tax law,
the Company (or any Subsidiary corporation) is required to withhold upon
exercise of the Option; and

(e) The lapse of such reasonable period of time following the
exercise of the Option as the Board may from time to time establish for reasons
of administrative convenience.

SECTION 4.5. RIGHTS AS SHAREHOLDER

The holder of the Option shall not be, nor have any of the rights
or privileges of, a shareholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and until
certificates representing such shares shall have been issued by the Company to
such holder.

ARTICLE V.

OTHER PROVISIONS

SECTION 5.1. ADMINISTRATION

The Committee shall have the power to interpret this Agreement
and to adopt such rules for the administration, interpretation and application
of the Agreement as are consistent therewith and to interpret, amend or revoke
any such rules. In its absolute discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Committee under this
Agreement except with respect to matters which under Rule 16b-3 or Section
162(m) of the Code, or any regulations or rules issued thereunder, are required
to be determined in the sole discretion of the Committee. All actions taken and
all interpretations and determinations made by the Committee or by the Board in
good faith shall be final and binding upon the Optionee, the Company and all
other interested persons. No member of the Committee or the Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Agreement or the Option.

SECTION 5.2. OPTION NOT TRANSFERABLE

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<PAGE>

such disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect, except to the extent that such disposition is permitted
by the preceding sentence.

SECTION 5.3. SHARES TO BE RESERVED

The Company shall at all times during the term of the Option
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.

SECTION 5.4. NOTICES

Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to Optionee at the address
given beneath Optionee's signature hereto. By a notice given pursuant to this
Section 5.4, either party may hereafter designate a different address for
notices to be given to such party. Any notice which is required to be given to
the Optionee shall, if the Optionee is then deceased, be given to the Optionee's
personal representative if such representative has previously informed the
Company of his status and address by written notice under this Section 5.4. Any
notice to be given under the terms of this Agreement shall be in writing and
shall be deemed duly given when received if personally delivered; the day after
it is sent, if sent for next-day delivery by a recognized overnight delivery
service (e.g., FedEx); and three days after being sent by certified or
registered United States mail, return receipt requested.

SECTION 5.5. TITLES

Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

SECTION 5.6. CONSTRUCTION

This Agreement shall be administered, interpreted and enforced
under the internal laws of the State of California without regard to conflicts
of laws thereof.

SECTION 5.7. CONFORMITY TO SECURITIES LAWS

The Optionee acknowledges that this Agreement is intended to
conform to the extent necessary with all provisions of the Securities Act and
the Exchange Act and any and all regulations and rules promulgated by the
Securities and Exchange Commission thereunder, including without limitation Rule
16b-3. Notwithstanding anything herein to the contrary, this Agreement shall be
administered, and the Option is granted and may be exercised, only in such a
manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

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<PAGE>

IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement effective as of the date first written above.

SCOOP, INC.

By: /s/ Michael Baum
-----------------------------
Michael Baum
Director

OPTIONEE

/s/ Rand Bleimeister
- - - - ----------------------------
Rand Bleimeister

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

- - - - ----------------------------
Address

Optionee's Taxpayer
Identification Number:

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

<PAGE>

NON-QUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT, dated as of February 19, 1998, is made by and between
Scoop, Inc., a Delaware corporation hereinafter referred to as "Company," and
Michael Baum a director of the Company, hereinafter referred to as "Optionee":

WHEREAS, the Company previously granted the Optionee options to
purchase an aggregate of 115,000 shares of its Common Stock pursuant to The 1996
Stock Incentive Plan of Scoop, Inc. (the terms of which are hereby incorporated
by reference and made a part of this Agreement); and

WHEREAS, such options are evidenced by two Non-Qualified Stock Option
Agreements each dated July 31, 1996 between the Optionee and the Company's
predecessor, Scoop, Inc., a California corporation (collectively, the "Prior
Agreements"); and

WHEREAS, the Company's Board has determined that it would be to the
advantage and best interest of the Company and its shareholders to amend certain
terms of the options previously granted to the Optionee as an inducement for the
Optionee to remain in the service of the Company or its Subsidiaries and as an
incentive for increased efforts during such service; and

WHEREAS, the Company and the Optionee desire to set forth the revised
terms of said options in this Agreement and to supercede the Prior Agreements
with this Agreement;

ARTICLE I

DEFINITIONS

SECTION 1.1 - BOARD

"Board" shall mean the Board of Directors of the Company.

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<PAGE>

SECTION 1.2 - CODE

"Code" shall mean the Internal Revenue Code of 1986, as amended.

SECTION 1.3 - COMMITTEE

"Committee" shall mean the Compensation Committee of the Board,
or another committee of the Board, appointed as provided in Section 9.1 of the
Plan.

SECTION 1.4 - COMPANY

"Company" shall mean Scoop, Inc., a Delaware corporation.

SECTION 1.5 - DIRECTOR

"Director" shall mean a member of the Board.

SECTION 1.6 - EXCHANGE ACT

"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

SECTION 1.7 - GRANT DATE

"Grant Date" shall mean July 31, 1996.

SECTION 1.8 - OFFICER

"Officer" shall mean an officer of the Company, as defined in
Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the future.

SECTION 1.9 - OPTION

"Option" shall mean the non-qualified stock option to purchase
Common Stock of the Company granted under this Agreement.

SECTION 1.10 - PLAN

"Plan" shall mean The 1996 Stock Incentive Plan of Scoop, Inc.

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<PAGE>

SECTION 1.11 - RULE 16b-3

"Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.

SECTION 1.12 - SECRETARY

"Secretary" shall mean the Secretary of the Company.

SECTION 1.13 - SECURITIES ACT

"Securities Act" shall mean the Securities Act of 1933, as
amended.

SECTION 1.14 - SUBSIDIARY

SECTION 1.15- -TERMINATION OF DIRECTORSHIP

ARTICLE II

GRANT OF OPTION

SECTION 2.1 - GRANT OF OPTION

In consideration of the Optionee's agreement to continue to serve
on the Company's Board and for other good and valuable consideration, effective
as of the Grant Date, the Company irrevocably grants to the Optionee the option
to purchase any part or all of an aggregate of one hundred fifteen thousand
(115,000) shares of its Common Stock upon the terms and conditions set forth in
this Agreement.

SECTION 2.2 - PURCHASE PRICE

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The purchase price of the shares of stock covered by the Option
shall be $1.375 per share without commission or other charge.

SECTION 2.3 - CONSIDERATION TO COMPANY

In consideration of the granting of this Option by the Company,
the Optionee agrees to render faithful and efficient services as a Director of
the Company. Nothing in this Agreement or in the Plan shall confer upon the
Optionee any right to continue as a Director of the Company, or shall interfere
with or restrict in any way the rights of the Company and its Subsidiaries,
which are hereby expressly reserved, to discharge the Optionee at any time for
any reason whatsoever, with or without cause.

SECTION 2.4 - ADJUSTMENTS IN OPTION

The Committee shall make adjustments with respect to the Option
in accordance with the provisions of Section 10.3 of the Plan.

ARTICLE III

PERIOD OF EXERCISABILITY

SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY

(a) The Option is immediately exercisable with respect to 77,500
shares and the remaining 37,500 shares shall become exercisable on a quarterly
basis in eight (8) equal cumulative installments as follows: the first
installment shall become exercisable beginning on the date twenty-one (21)
months following the Grant Date (i.e., April 30, 1998) and one additional
installment will become exercisable every three months thereafter (i.e., on the
dates twenty-four (24) months, twenty-seven (27) months, thirty (30) months,
etc. following the Grant Date), with the eighth installment becoming exercisable
on the date forty-two (42) months following the Grant Date.

(b) No portion of the Option which is unexercisable at
Termination of Directorship shall thereafter become exercisable.

SECTION 3.2 - DURATION OF EXERCISABILITY

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<PAGE>

SECTION 3.3 - EXPIRATION OF OPTION

The Option may not be exercised to any extent by anyone after the
first to occur of the following events:

(a) The expiration of five (5) years from the Grant Date; or

(b) The expiration of two (2) years from the date of the
Optionee's Termination of Directorship if such termination results from
Optionee's removal, failure to get re-elected, death, permanent and total
disability (within the meaning of Section 22(e)(3) of the Code), or voluntary
resignation following the earlier of August 1, 1998 or the date that a change of
control of the Company occurs; or

(c) The expiration of three (3) months from the date of the
Optionee's Termination of Directorship if such termination results from the
Optionee's voluntary resignation prior to the earlier of August 1, 1998 or the
date that a change of control of the Company occurs.

SECTION 3.4 - ACCELERATION OF EXERCISABILITY

In the event of the merger or consolidation of the Company with
or into another corporation, or the acquisition by another corporation or person
or related group of persons of all or substantially all of the Company's assets
or fifty percent (50%) or more of the Company's then outstanding voting stock,
at the effective date of such event this Option shall be immediately exercisable
as to all of the shares covered hereby, notwithstanding that this Option may not
yet have become fully exercisable under Section 3.1(a); provided, however, that
this acceleration of exercisability shall not take place with respect to any
portion of this Option which becomes unexercisable under Section 3.3 prior to
said effective date.

ARTICLE IV

EXERCISE OF OPTION

SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE

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<PAGE>

SECTION 4.2 - PARTIAL EXERCISE

SECTION 4.3 - MANNER OF EXERCISE

(a) A written notice complying with the applicable rules
established by the Committee stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion; and

(b) (i) Full cash payment to the Secretary of the Company for
the shares with respect to which such Option or portion is exercised; or

(ii) With the consent of the Committee, (A) shares of the
Company's Common Stock owned by the Optionee, duly endorsed for transfer to
the Company, with a Fair Market Value on the date of delivery equal to the
aggregate exercise price of the Option or exercised portion thereof, or (B)
shares of the Company's Common Stock issuable to the Optionee upon exercise
of the Option, with a Fair Market Value on the date of delivery equal to
the aggregate exercise price of the Option or exercised portion thereof; or

(iii) With the consent of the Committee, a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code or successor provision)
and payable upon such terms as may be prescribed by the Committee. The
Committee may also prescribe the form of such note and the security to be
given for such note. The Option may not be exercised, however, by delivery
of a promissory note or by a loan from the Company when or where such loan
or other extension of credit is prohibited by law; or

(iv) With the consent of the Committee, property of any
kind which constitutes good and valuable consideration; or

(v) With the consent of the Committee, a notice that the
Optionee has placed a market sell order with a broker with respect to
shares of the Company's Common

6
<PAGE>

Stock then issuable upon exercise of the Option, and that the broker has
been directed to pay a sufficient portion of the net proceeds of the sale
to the Company in satisfaction of the Option exercise price; or

(vi) With the consent of the Committee, any combination of
the consideration provided in the foregoing subparagraphs (i), (ii), (iii),
(iv) and (v); and

(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that the shares of stock
are being acquired for the Optionee's own account, for investment and without
any present intention of distributing or reselling said shares or any of them
except as may be permitted under the Securities Act and then applicable rules
and regulations thereunder, and that the Optionee or other person then entitled
to exercise such Option or portion will indemnify the Company against and hold
it free and harmless from any loss, damage, expense or liability resulting to
the Company if any sale or distribution of the shares by such person is contrary
to the representation and agreement referred to above. The Committee may, in
its absolute discretion, take whatever additional actions it deems appropriate
to insure the observance and performance of such representation and agreement
and to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the Securities Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares; and

(d) Full payment to the Company (or any Subsidiary) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; with the consent of the Committee, (i) shares of
the Company's Common Stock owned by the Optionee, duly endorsed for transfer,
with a Fair Market Value equal to the sums required to be withheld, or (ii)
shares of the Company's Common Stock issuable to the Optionee upon exercise of
the Option with a Fair Market Value equal to the sums required to be withheld,
may be used to make all or part of such payment; and

7
<PAGE>

SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES

(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and

(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and

(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

(d) The receipt by the Company of full payment for such shares,
including payment of all amounts which, under federal, state or local tax law,
the Company (or any Subsidiary) is required to withhold upon exercise of the
Option; and

(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.

SECTION 4.5 - RIGHTS AS SHAREHOLDER

8
<PAGE>

ARTICLE V

OTHER PROVISIONS

SECTION 5.1 - ADMINISTRATION

The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. In its absolute discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan and this Agreement except with respect to matters which under Rule
16b-3 or Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the sole discretion of the
Committee. All actions taken and all interpretations and determinations made by
the Committee or by the Board in good faith shall be final and binding upon the
Optionee, the Company and all other interested persons. No member of the
Committee or the Board shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or the Option.

SECTION 5.2 - OPTION NOT TRANSFERABLE

Neither the Option nor any interest or right therein or part
thereof shall be sold, pledged, assigned, or transferred in any manner other
than by will or the laws of descent and distribution, unless and until such
Option has been exercised, or the shares underlying such Option have been
issued, and all restrictions applicable to such shares have lapsed. Neither the
Option nor any interest or right therein or part thereof shall be liable for the
debts, contracts or engagements of the Optionee or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

SECTION 5.3 - SHARES TO BE RESERVED

The Company shall at all times during the term of the Option
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.

SECTION 5.4 - NOTICES

9
<PAGE>

SECTION 5.5 - TITLES

Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

SECTION 5.6 - PRIOR AGREEMENTS

The Prior Agreements are hereby terminated and superceded in
their entirety by this Agreement and shall be of no further force or effect.

SECTION 5.7 - CONSTRUCTION

This Agreement shall be administered, interpreted and enforced
under the internal laws of the State of California without regard to conflicts
of laws thereof.

SECTION 5.8 - CONFORMITY TO SECURITIES LAWS

The Optionee acknowledges that the Plan is intended to conform to
the extent necessary with all provisions of the Securities Act and the Exchange
Act and any and all regulations and rules promulgated by the Securities and
Exchange Commission thereunder, including without limitation Rule 16b-3.
Notwithstanding anything herein to the contrary, the Plan shall be administered,
and the Option is granted and may be exercised, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

10
<PAGE>

IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement effective as of the date first written above.

SCOOP, INC.

By: /s/ Rand Bleimeister
--------------------------
Rand Bleimeister
Chief Executive Officer

OPTIONEE

/s/ Michael Baum
- - - - ----------------------------
Michael Baum

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

- - - - ----------------------------
Address

Optionee's Taxpayer
Identification Number:

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

<PAGE>

SCOOP, INC.

COMPUTATION OF NET LOSS PER SHARE

<TABLE>
<CAPTION>
1997 1996
--------- ----------
<S> <C> <C>
Weighted average shares outstanding....................... 4,790,000 2,711,000
Conversion of redeemable common stock.................... 232,000 502,000
----------- -----------
Weighted average shares used in calculation of net loss
share................................................... 5,022,000 3,213,000
----------- -----------
Net loss.................................................. $(5,050,100) $(2,168,900)
----------- -----------
Basic and diluted loss per share.......................... $ (1.01) $ (0.68)
----------- -----------

</TABLE>

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,512,600
<SECURITIES> 0
<RECEIVABLES> 178,600
<ALLOWANCES> (37,500)
<INVENTORY> 0
<CURRENT-ASSETS> 1,700,700
<PP&E> 1,145,300
<DEPRECIATION> (353,200)
<TOTAL-ASSETS> 2,492,800
<CURRENT-LIABILITIES> 1,503,200
<BONDS> 0
0
0
<COMMON> 5,400
<OTHER-SE> 941,200
<TOTAL-LIABILITY-AND-EQUITY> 2,492,800
<SALES> 2,037,900
<TOTAL-REVENUES> 2,037,900
<CGS> 1,080,800
<TOTAL-COSTS> 1,080,800
<OTHER-EXPENSES> 6,088,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (82,400)
<INCOME-PRETAX> (5,048,500)
<INCOME-TAX> 1,600
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,050,100)
<EPS-PRIMARY> (1.01)
<EPS-DILUTED> (1.01)

</TABLE>