PREDICT IT INC, SB-2/A, 1999-11-24

PREDICT IT INC
SB-2/A, 1999-11-24
BUSINESS SERVICES, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 23, 1999

REGISTRATION NO. 333-85163

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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PREDICT IT INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

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DELAWARE 7375 84-1433978
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

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694 EIGHTH AVENUE
NEW YORK, NEW YORK 10036
(212) 217-1200

(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)

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ANDREW P. MERKATZ
PRESIDENT
694 EIGHTH AVENUE
NEW YORK, NEW YORK 10036
(212) 217-1200

(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

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Copies to:
MICHAEL L. PFLAUM, ESQ.
MARLENE M. MARKARD, ESQ.
CAMHY KARLINSKY & STEIN LLP
1740 BROADWAY, 16TH FLOOR
NEW YORK, NEW YORK 10019-4315
(212) 977-6600

Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434
check the following box. / /

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

CALCULATION OF REGISTRATION FEE

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PROPOSED
MAXIMUM OFFERING PROPOSED
TITLE OF EACH CLASS ADDITIONAL AMOUNT PRICE PER MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED TO BE REGISTERED SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
-------------------------------- ----------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Common Stock, $0.01
par value........................ 103,448 shares $1.9375 $200,430.50 $55.42
Total....................................................................... $200,430.50 $55.42
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(1) Estimated solely for the purpose of calculating the registration fee under
Rule 457(c) under the Securities Act on the basis of the average of the bid
and asked price of our common stock as quoted on the OTC Electronic Bulletin
Board on November 22, 1999.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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- --------------------------------------------------------------------------------
<PAGE>

THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION DATED NOVEMBER , 1999

PREDICT IT INC.
10,310,198 SHARES OF COMMON STOCK

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

This prospectus covers an aggregate of 10,310,198 shares of our common
stock, which will be sold, from time to time, by some of our stockholders. We
will not receive any money from the stockholders when they sell their shares of
common stock, but we will receive monies upon the exercise of our stock options.

Our common stock is quoted on the OTC Electronic Bulletin Board under the
symbol "PRIT." On November 22, 1999, the price of our common stock as quoted on
the OTC Electronic Bulletin Board was $1.9375.

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

The securities offered hereby are speculative and involve a high degree of
risk. SEE "RISK FACTORS" COMMENCING ON PAGE 5.

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

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.

NOVEMBER 23, 1999

<PAGE>
You may rely only on the information contained in this prospectus. We have
not authorized anyone to provide information different from that contained in
this prospectus. Neither the delivery of the prospectus nor the sale of common
stock means that information contained in this prospectus is correct after the
date of this prospectus. This prospectus is not an offer to sell or solicitation
of an offer to buy these shares of common stock in any circumstances under which
the offer or solicitation is unlawful.

TABLE OF CONTENTS

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PAGE
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Prospectus Summary......................................................................................... 3
Summary Financial Information.............................................................................. 4
Risk Factors............................................................................................... 5
Special Note on Forward-Looking Statements................................................................. 13
Available Information...................................................................................... 13
Predict It................................................................................................. 13
Use of Proceeds............................................................................................ 14
Price Range of Common Stock................................................................................ 14
Dividend Policy............................................................................................ 14
Capitalization............................................................................................. 14
Selected Financial Data.................................................................................... 15
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 18
Business................................................................................................... 23
Management................................................................................................. 31
Executive Compensation and Other Information............................................................... 33
Stock Option Plan.......................................................................................... 35
Related Party Transactions................................................................................. 35
Principal Stockholders..................................................................................... 36
Selling Security Holders................................................................................... 38
Plan of Distribution....................................................................................... 40
Description of the Capital Stock........................................................................... 41
Shares Eligible for Future Sale............................................................................ 44
Legal Matters.............................................................................................. 44
Experts.................................................................................................... 44
Disclosure of Company Position on Indemnification for Securities Act Liabilities........................... 45
Index to Financial Statements.............................................................................. F-1
</TABLE>

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PROSPECTUS SUMMARY

PREDICT IT INC.

Our business is the development of interactive products, which are
distributed over the Internet. The Predict It business allows users to actively
participate by predicting the outcome of events and evaluating the results of
their participation and those of other users. Our innovative system, which is
patent pending as of the date of this registration statement, permits users to
pick and exchange predictions with other users. Predict It accumulates all user
picks into a database that, over time, allows Predict It to calculate the
accuracy of predictions for any set of events whose outcome can be measured
objectively. Our initial product offering, "Predict It Sports," allows users to
pick and exchange predictions on sporting events with other Predict It users. We
utilize our database to calculate the accuracy of those predictions and allow
other users to view the entries. Our system, unlike chat rooms, bulletin boards
and stock tracking systems, enables users to quickly find and view the
predictions of the best analysts, who in turn may earn money each time their
future predictions are viewed. Users may post predictions and view the
predictions of others free of charge.

We employ a co-branding strategy in which we form relationships with other
Internet distributors to market our product by creating a web site with Predict
It's content, while simultaneously maintaining the overall look and feel of our
partner's web sites. Predict It has targeted partnerships with Internet
companies that provide content which is relevant to Predict It's core existing
products, including Predict It Sports and Virtual Stock Exchange, described
below. Presently, revenues are principally earned by the sale of advertisements
either by us directly or on a revenue sharing basis with our distributors.
Unlike other businesses on the Internet that attempt to attract visitors by
accumulating numerous services within one web site, referred to within the
industry as a destination site, our strategy is to be a web site's partner by
providing unique, compelling and user-generated content that drives repeat
visits by Predict It users to the web sites of companies with which we have
created such co-branded partnerships.

On November 18, 1999, we introduced an end-to-end redesign of our
proprietary prediction system architecture. The new site,
www.sports.predictit.com, will enable users to gain access to global events
supported by real-time data feeds, in-depth analyst research tools, and
increased user/prediction earning opportunities.

On July 16, 1999, we launched the Predict It Network, which we plan to use
to integrate all of our current and future products, including Predict It
Sports, with products that we may acquire, such as Virtual Stock Exchange. The
Predict It Network of products is designed to allow for the easy integration of
additional products that we may develop or acquire. In addition, we built the
Predict It Network in such a way that it will support thousands of individual
communities of Predict It users within our network of co-branded partnership web
sites and other affiliated web sites. The Predict It Network can be accessed at
www.predictit.net.

On June 30, 1999, we purchased Virtual Stock Exchange, Inc. Please see the
"Selected Financial Data" and "Business" sections for a detailed account of this
transaction. Virtual Stock Exchange is an Internet-based stock market simulation
and forecasting company that operates www.VirtualStockExchange.com, which
services over 75,000 registered members and generates in excess of four million
page views per month. Consumers may access Virtual Stock Exchange directly via
its web site or through one of its many co-branded partners, including
Crosswalk.com, PlanetDirect.com and Collegestudent.com. We anticipate that
Virtual Stock Exchange will continue to operate as an independent Internet
property, but will exist within the Predict It Network.

We maintain our principal business operations at 694 Eighth Avenue, 5th
Floor, New York, NY 10036. Our telephone number is (212) 217-1200, and our web
sites include http://www.predictit.com, http://www.sports.predictit.com,
http://www.predictit.net, and http://www.VirtualStockExchange.com. The
information in our web sites is not incorporated by reference into this
prospectus.

3
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SUMMARY FINANCIAL INFORMATION

The summary financial information below is derived from and should be read
in conjunction with the financial statements, including the notes to the
financial statements, appearing elsewhere in this prospectus.

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PRO FORMA AS ADJUSTED FOR
ACQUISITION OF VIRTUAL
HISTORICAL STOCK
--------------------------------------------------------- EXCHANGE, INC.
SEPTEMBER 2, ---------------------------
1997 NINE MONTHS
(INCEPTION) NINE MONTHS ENDED ENDED
THROUGH YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER
DECEMBER 31, DECEMBER 31, --------------------------- DECEMBER 31, 30,
1997 1998 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
User fees............................. $ 7,712 $ 6,202 $ 3,461 $ 24,173 $ 10,558
Advertising........................... 6,000 6,000 93,209 56,736 152,302
-------- ---------- ---------- ------------ ------------ ------------
13,712 12,202 96,670 80,909 162,860
-------- ---------- ---------- ------------ ------------ ------------
Costs and expenses:
Site development/maintenance.......... 177,783 148,244 160,698 227,243 327,725
Selling, general and
administrative(2)................... $ 21,402 340,698 191,915 1,368,828 503,679 1,465,279
Amortization of intangibles(1)........ 122,338 489,352 367,014
Interest expense (income)............. 3,000 3,000 (30,338) 9,768 (23,050)
-------- ---------- ---------- ------------ ------------ ------------
21,402 521,481 343,159 1,621,526 1,230,042 2,136,968
-------- ---------- ---------- ------------ ------------ ------------
Net Loss before income tax.............. $(21,402) $ (507,769) $ (330,957) $ (1,524,856) $ (1,149,133) $ (1,974,108)
-------- ---------- ---------- ------------ ------------ ------------
-------- ---------- ---------- ------------ ------------ ------------
Net loss per share--basic and diluted... $ (.04) $ (.21) $ (.18) $ (.17) $ (.25) $ (.20)
-------- ---------- ---------- ------------ ------------ ------------
-------- ---------- ---------- ------------ ------------ ------------
Weighted average number of shares
outstanding........................... 488,412 2,381,327 1,784,508 8,790,775 4,581,327 9,890,775
-------- ---------- ---------- ------------ ------------ ------------
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AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1998 1999
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(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital...................................................................... $ 45,118 $ 858,156
Total assets......................................................................... 198,894 4,954,315
Long term debt......................................................................... 0 114,679
Total liabilities...................................................................... 72,729 974,334
-------- -----------
-------- -----------
Accumulated deficit.................................................................... (529,171) (2,054,027)
-------- -----------
-------- -----------
Total stockholders' equity............................................................. 126,165 3,179,981
-------- -----------
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(1) Represents amortization expense related to goodwill resulting from the
acquisition of Virtual Stock Exchange, which is being amortized over a
period of three years.

(2) Includes the impact of employment agreements entered into upon the
consummation of the acquisition of Virtual Stock Exchange, representing
additional costs of $114,000 and $57,000 for the year ended December 31,
1998 and the nine months ended September 30, 1999, respectively.

4
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RISK FACTORS

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS.

We were organized in September 1997 and first launched SportsCappers at
SportsCappers.com in March 1998. SportsCappers was relaunched in September 1998
and Predict It Sports was first launched in March 1999. In addition, on June 30,
1999 we acquired Virtual Stock Exchange, Inc., which was formed in 1997. Because
of our limited operating history, it is extremely difficult to evaluate our
business and prospects. Our revenue and income potential are unproven and our
business model is constantly evolving. Since the way in which the Internet is
used is constantly changing, we may need to further change our business model to
adapt to those changes. Frequent changes in organizational structure could
impose significant burdens on our management and our employees and could result
in loss of productivity or even increased attrition.

Any investment in our company must be considered in light of the problems
frequently encountered by companies in an early stage of development in new and
rapidly evolving markets. To address the risks we face, we must, among other
things:

o Maintain and enhance our brand;

o Expand our product and service offerings;

o Increase the amount of traffic to the Predict It Sports, Sports Predict
It, Virtual Stock Exchange, and Predict It Network web sites;

o Expend significant amounts to build brand awareness of our Predict It
services;

o Expand our distributor network;

o Attract, integrate, retain and motivate qualified personnel; and

o Maintain the leadership and quality of our services.

We cannot be certain that our business strategy, services or products will
be successful, and may need to adjust our plan, services or products in order to
enable our operations to become profitable.

SINCE WE HAVE A HISTORY OF NET LOSSES, WE EXPECT TO CONTINUE TO INCUR NET
LOSSES.

Our financial statements reflect that we have incurred losses since
inception, including a net loss of approximately $1,525,000 for the nine months
ended September 30, 1999. As of September 30, 1999, we had an accumulated
deficit of approximately $2,054,000. Although we expect our revenues to grow in
upcoming quarters, we expect to have increasing net losses and negative cash
flows for the foreseeable future. For a more detailed account of our historical
losses, please see the "Selected Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" sections. The
size of these net losses will depend, in part, on the rate of growth in our
revenues from our advertisers and distributor relationships, and on our
expenses. It is critical to our success that we continue to expend financial and
management resources to develop brand loyalty through marketing, promotion and
enhancement of our services. As a result, we expect that our operating expenses
will increase significantly for the foreseeable future. With increased expenses,
we will need to generate significant additional revenues to achieve
profitability. Consequently, it is possible that we may never achieve
profitability, and even if we do achieve profitability, we may not sustain or
increase profitability on a quarterly or annual basis in the future.

IF OUR OPERATING RESULTS DECREASE, THEN OUR STOCK PRICE MAY DECREASE AND YOU MAY
NOT BE ABLE TO RESELL YOUR SHARES AT OR ABOVE THE INITIAL OFFERING PRICE.

Our quarterly operating results may decrease significantly in the future
due to a variety of factors that could affect our revenues or our expenses in
any particular quarter. It is possible that in some future periods our results
of operations or other performance measures may be below the expectations of
public market analysts and investors. If this occurs, the price of our common
stock will likely fall.

5
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You should not rely on our results of operations during any particular
quarter as an indication of our future results for a full year or any other
quarter. Our quarterly revenues and operating results have varied significantly
in the past and may vary significantly in the future due to a number of factors,
including:

o Fluctuations in demand for our Internet services and applications,
including seasonality;

o Unexpected rescheduling or cancellation of our advertising orders and
distributor relationships;

o Our ability to develop and introduce new technology;

o Announcements and new technology introductions by our competitors;

o Our ability to attract and retain key personnel; and

o Costs relating to possible acquisitions and integration of technologies
or businesses.

Our operating expenses are based on our expectations of our future revenues
and are relatively fixed in the short term. Given our limited operating history,
user traffic on our web sites is extremely difficult to forecast accurately.
Moreover, obtaining new distributor relationships is time-consuming and depends
on many factors that we are not able to control. Therefore, it is difficult to
predict the number of distributor relationship customers that we will have in
the future. In particular, we intend to expend significant amounts to build
brand awareness of Predict It. We may be unable to adjust the amount of money we
spend on building brand awareness and developing distributor relationships
quickly enough to offset any unexpected revenue shortfall.

OUR BUSINESS MAY NOT SUCCEED BECAUSE OUR SERVICES AND APPLICATIONS ARE NOVEL AND
UNPROVEN.

We have not demonstrated the success of our Internet services and
applications and we will be successful only if Internet users adopt the usage of
our applications on the Predict It web sites. It is difficult to forecast the
extent and rate of user adoption of our services. We cannot assure you that
widespread acceptance of our services will occur.

OUR BUSINESS MAY NOT SUCCEED BECAUSE OUR BUSINESS REVENUE MODEL IS NOVEL AND
UNPROVEN.

We expect to generate substantially all of our future revenues through
Internet advertising and subscriptions. These methods of revenue generation are
relatively new and largely untested. Since the Internet advertising market is
new and rapidly evolving, we cannot yet gauge its effectiveness as compared to
traditional advertising media. Advertisers that traditionally relied on other
advertising media may be reluctant to advertise on the Predict It web sites
(believing that Internet advertising is less effective than traditional
advertising media for promoting their products and services). Consequently, they
may allocate only limited portions of their advertising budgets to advertising
on Predict It web sites. We may be required to find alternate means of revenue
generating if Internet advertising does not continue to grow or if we are
unsuccessful in increasing our advertising revenues.

IF OUR BUSINESS GROWS, OUR MANAGERIAL, FINANCIAL AND OPERATIONAL RESOURCES MAY
BE STRAINED.

We have experienced, and may continue to experience, rapid growth, which
has placed, and could continue to place, a significant strain on our managerial,
financial and operational resources. Any growth we may experience will result in
increased responsibility for existing and new management personnel. Effective
growth management will depend on the following:

o Our ability to integrate new personnel into our corporate structure;

o Improving our operational, management and financial systems and controls;
and

o Our capacity to recruit, train, motivate and manage employees.

We cannot assure you that our systems, procedures or controls will be
adequate to support our operations or that we will be able to manage any growth
effectively. If we do not manage growth effectively, then our expenses may
exceed our revenues.

6
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OUR LOSS OF ANDREW MERKATZ AND OTHER KEY PERSONNEL COULD IMPAIR OUR ABILITY TO
SUCCEED.

Our future success depends, in part, on the continued service of our key
management personnel, particularly Andrew Merkatz, our President, Robert Jacobs,
our Vice President of Business Development, Geordie Pace, our Senior Vice
President of Product Development, Desmond Glass, our Controller, Alana Oldham,
our Chief Technology Officer, Gary Cheng, our Vice President of Business
Development and Howard Yen, our Director of Technology. The loss of their
services, or the services of other key employees could impair our ability to
grow. Currently, we have employment agreements with Mr. Merkatz, Mr. Cheng,
Mr. Yen and Mr. Pace. For detailed accounts of these employment agreements,
please see the "Executive Compensation and Other Information" section.

Our future success also depends on our ability to attract, retain and
motivate highly skilled employees. Competition for employees in our industry is
intense. We may be unable to attract, assimilate or retain other highly
qualified employees in the future. In the past, we have experienced from time to
time, and we expect to continue to experience in the future, difficulty in
hiring and retaining highly skilled employees with appropriate qualifications.

IF WE NEED TO EXPAND OUR SALES AND SUPPORT ORGANIZATIONS IN ORDER TO INCREASE
MARKET AWARENESS OF OUR PRODUCTS AND SERVICES, WE WILL BE REQUIRED TO SPEND
SIGNIFICANT RESOURCES.

We will need to expand substantially both our advertising sales and
distributor sales operations and marketing efforts to increase market awareness
and sales of our products and services. We recently expanded our sales forces
and plan to hire additional sales personnel. Competition for highly-qualified
sales personnel is intense, and we may not be able to hire the kind and number
of sales personnel we are targeting. We will need to increase our staff to
support new distributors, a larger user base, and additional advertisers, and
the expanding needs of our existing customers. Hiring highly-qualified customer
service and support personnel is very competitive in our industry due to the
limited number of people available with the necessary technical skills and
understanding of the Internet.

IF WE ARE NOT ABLE TO DEVELOP THE PREDICT IT BRAND, WE MAY NOT BE ABLE TO GROW
OUR BUSINESS.

We believe that broader brand recognition and a favorable consumer
perception of the Predict It and Virtual Stock Exchange brands are essential to
our future success. Accordingly, we intend to continue pursuing an aggressive
brand-enhancement strategy, which will include mass market and multimedia
advertising, promotional programs and public relations activities. We intend to
incur significant expenditures on these advertising and promotional programs and
activities in the future. These expenditures may not result in a sufficient
increase in revenues to cover such advertising and promotion expenses. In
addition, even if brand recognition increases, the number of new users may not
increase. Further, even if the number of new users increases, the amount of
traffic on our web sites and the number of distribution partners may not
increase sufficiently to justify the expenditures. If our brand enhancement
strategy is unsuccessful, these expenses may never be recovered and we may be
unable to increase future revenues.

SINCE WE WILL NOT RECEIVE FUNDING FROM THIS OFFERING, WE ARE UNCERTAIN WE CAN
OBTAIN THE CAPITAL TO GROW OUR BUSINESS.

The common stock registered in the registration statement will provide no
funds to us but we will receive $58,876.25 upon the exercise of the options
registered in this Registration Statement. To fully realize our business
objectives and potential, we may require significant additional financing by
year-end 1999. Historically, we have been largely dependent upon private equity
financing when we required funds. We may need to raise additional funds in the
future to fund more aggressive brand promotion or more rapid expansion in order
to develop new or enhanced services, respond to competitive pressures, or make
acquisitions. We may be unable to obtain any required additional financing on
terms favorable to us. If adequate funds are not available on acceptable terms,
we may be unable to fund our expansion, successfully promote our brand, develop
or enhance services, respond to competitive pressures or take advantage of
acquisition opportunities. Additional financing may be debt, equity or a
combination of debt and equity. If we raise additional funds through the
issuance of equity securities, our stockholders may experience dilution of their
ownership interests and the newly issued securities may have rights superior to
those of the common stock. If we raise

7
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additional funds by issuing debt, we may be subject to limitations on our
operations, including limitations on the payment of dividends.

SINCE WE ARE IN THE PROCESS OF ESTABLISHING NAME RECOGNITION OF PREDICT IT,
CUSTOMER BASES AND FINANCIAL, TECHNICAL AND MARKETING RESOURCES, WE MAY NOT BE
ABLE TO EFFECTIVELY COMPETE AGAINST OUR CURRENT AND POTENTIAL COMPETITORS.

We may compete with Internet content providers for the same relationships
with third-party web sites. Our ability to compete depends on numerous factors,
many of which are outside of our control. These factors include:

o The quality of content;

o The ease of use of online services;

o The timing and market acceptance of new and enhanced online services; and

o Sales and marketing efforts by us and our competitors.

Many of our existing competitors, as well as potential new competitors,
have longer operating histories, greater name recognition, larger customer bases
and significantly greater financial, technical and marketing resources than we
do. This may allow them to devote greater resources than we can to the
development and promotion of their services. Many of these competitors offer a
wider range of services than we do. These services may attract users to our
competitors' sites and may consequently result in a decrease of traffic to our
site. These competitors may also engage in more extensive research and
development, adopt more aggressive pricing policies and make more attractive
offers to existing and potential employees, partners, advertisers and electronic
commerce partners. Our competitors may develop products and services that are
equal or superior to ours or that achieve greater market acceptance. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to better
address the needs of advertisers and businesses engaged in electronic commerce.
As a result, it is possible that new competitors may emerge and rapidly acquire
significant market share.

IF WE ARE REQUIRED TO EXPAND THE BREADTH AND DEPTH OF OUR SERVICES IN ORDER TO
INCREASE OUR REVENUES, WE MAY EXPEND SIGNIFICANT DEVELOPMENT RESOURCES, WHICH
MAY STRAIN OUR FINANCIAL, MANAGEMENT AND OPERATIONAL RESOURCES.

To increase our revenues, we will need to expand our operations by
promoting new or complementary products and by expanding the breadth and depth
of our services. Specifically, our future success will largely depend on
obtaining revenues from the facilitation of electronic commerce transactions.
The market for electronic commerce services is extremely competitive. Because we
have little experience in this market, we may experience limited success in this
market. If we expand our operations in this manner, we will require significant
additional development resources and such expansion may strain our management,
financial and operational resources. Our expansion into new product and service
offerings may not be timely or may not generate sufficient revenues to offset
their cost. If this occurs, we may be unable to recover our expenditures, which
may strain our financial, management and operational resources.

IF INTERNET USAGE DOES NOT GROW, WE MAY BE UNABLE TO EXECUTE OUR BUSINESS PLAN
TO GROW OUR OPERATIONS.

Our business will be unable to succeed if Internet usage does not continue
to grow or grows at significantly lower rates compared to current trends. The
continued growth of the Internet depends on various factors, many of which are
outside our control. These factors include:

o The Internet infrastructure may not be able to support the demands placed
on it, and its performance and reliability may decline as usage grows;

o Security and authentication concerns with respect to the transmission
over the Internet of confidential information, such as credit card
numbers and attempts by unauthorized computer users, so-called hackers,
to penetrate online security systems; and

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o Privacy concerns, including those related to the ability of web sites to
gather user information without the user's knowledge or consent.

OUR FAILURE TO ADAPT TO EVOLVING INTERNET TECHNOLOGIES AND CUSTOMER DEMANDS MAY
RETARD OUR FUTURE GROWTH.

To be successful, we must adapt to rapidly changing Internet technologies
by continually enhancing our products and services and introducing new services
to address our customers' changing needs. If we need to modify our services or
infrastructure to adapt to changes affecting providers of Internet services, we
could incur substantial development or acquisition costs. If we cannot adapt to
these changes, or do not sufficiently increase the features and functionality of
our products and services, our customers may switch to the product and service
offerings of our competitors. Furthermore, our competitors or potential
competitors may develop novel Internet applications that are equal or superior
to our services. As a result, demand for our services may decrease.

IF OUR SYSTEMS DO NOT PERFORM AS EXPECTED, OUR REVENUES MAY BE SIGNIFICANTLY
REDUCED.

Any system failure, including network, software or hardware failure, that
causes an interruption in our service or a decrease in responsiveness of Predict
It could result in reduced user traffic on our web sites and, therefore, reduced
revenues. The servers that host our web sites are backed-up by remote servers.
Although we believe our current back-up methods are adequate, we cannot assure
you that the back-up servers will not fail or cause an interruption in our
service. Our web sites could also be affected by computer viruses, electronic
break-ins or other similar disruptions. Our users and customers depend on
Internet service providers, online service providers and other web site
operators for access to our web sites. Each of these providers has experienced
significant outages in the past, and could experience outages, delays and other
difficulties due to system failures unrelated to our systems. Our systems are
vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, break-ins, earthquake and similar events. Our
insurance policies have low coverage limits and may not adequately compensate us
for losses that may occur due to interruptions in our service.

IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR ARE HELD LIABLE
FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, WE MAY BE FORCED TO
DEVOTE SIGNIFICANT TIME, ATTENTION AND MONEY IN ORDER TO DEFEND SUCH CLAIMS.

Third parties may infringe or misappropriate our patents, trademarks or
other proprietary rights, which could injure our reputation and our business. We
have filed for patents on our services, but no action has yet been taken on our
applications. We may be subject to or may initiate proceedings in the United
States Patent and Trademark Office, which may demand significant financial and
management resources. While we enter into confidentiality agreements with our
employees and consultants, and generally control access to and distribution of
our proprietary information, the steps we have taken to protect our proprietary
rights may not prevent misappropriation. In addition, we do not know whether we
will be able to defend our proprietary rights since the validity, enforceability
and scope of protection of proprietary rights in Internet-related industries is
uncertain and still evolving. Although we believe our products and information
system do not infringe upon the proprietary rights of others, there can be no
assurance that third parties will not assert infringement claims against us.
From time to time in the ordinary course of business we may be subject to claims
of alleged infringement of the trademarks and other intellectual property rights
of third parties. These claims and any resultant litigation, should it occur,
could subject us to significant liability for damages. In addition, even if we
prevail, litigation could be time-consuming and expensive to defend, and could
result in the diversion of our time and attention. Any claims from third parties
may also result in limitations on our ability to use the intellectual property
subject to these claims unless we are able to enter into agreements with the
third parties making these claims.

IF A NEW LAW OR NEW GOVERNMENT REGULATION IS PROMULGATED PERTAINING TO THE
INTERNET, IT COULD DECREASE THE DEMAND FOR OUR SERVICES OR INCREASE OUR COST OF
DOING BUSINESS.

Since we are an Internet-based business, any new law or regulation
pertaining to the Internet, or the application or interpretation of existing
laws, could decrease the demand for our services increase our cost of

9
<PAGE>

doing business. There is, and will likely continue to be, an increasing number
of laws and regulations pertaining to the Internet. These laws or regulations
may relate to liability for information retrieved from or transmitted over the
Internet, online content regulation, user privacy, taxation and the quality of
products and services. Furthermore, the growth and development of electronic
commerce may prompt more stringent consumer protection laws that may impose
additional burdens on electronic commerce companies as well as companies like us
that provide electronic commerce services. Moreover, the applicability to the
Internet of existing laws governing intellectual property ownership and
infringement, copyright, trademark, trade secret, obscenity, libel, employment,
personal privacy and other issues is uncertain and developing. We file tax
returns in such states as required by law based on principles applicable to
traditional businesses. However, one or more states could seek to impose
additional income tax obligations or sales tax collection obligations on
out-of-state companies, such as ours, which engage in or facilitate electronic
commerce. A number of proposals have been made at state and local levels that
could impose such taxes on the sale of products and services through the
Internet or the income derived from such sales. Such proposals, if adopted,
could substantially impair the growth of electronic commerce and adversely
affect our opportunity to become profitable. Legislation limiting the ability of
the states to impose taxes on Internet-based transactions recently has been
enacted by the Untied States Congress. However, this legislation, known as the
Internet Tax Freedom Act, imposes only a three-year moratorium, which commenced
October 1, 1998 and ends on October 21, 2001, on state and local taxes on
(i) electronic commerce where such taxes are discriminatory and (ii) Internet
access unless such taxes were generally imposed and actually enforced prior to
October 1, 1998. It is possible that the tax moratorium could fail to be renewed
prior to October 21, 2001. Failure to renew this legislation would allow various
states to impose taxes on Internet-based commerce. The imposition of such taxes
could adversely affect our ability to become profitable.

SINCE WE HAVE ENTERED INTO REVENUE-SHARING CONTRACTS WITH THIRD PARTIES, SUCH
EXPOSURE MAY SUBJECT US TO LEGAL RISKS AND POSSIBLE LIABILITIES.

As part of our business, we have entered into, and plan to continue to
enter into, agreements with sponsors, content providers and service providers,
under which we will be entitled to receive a share of revenues from the purchase
of goods and services by users of our online properties. In addition, we plan to
enter into agreements with merchants, under which we will be entitled to receive
a share of revenues from the purchase of goods and services by users of our
online properties. Such arrangements may expose us to additional legal risks and
uncertainties, including potential liabilities to consumers of such products and
services. Although we carry general liability insurance, our insurance may not
cover potential claims of this type or may not be adequate to indemnify us for
all liability that may be imposed. Some of the risks that may result from these
arrangements with businesses engaged in electronic commerce include:

o Potential liabilities for illegal activities that may be conducted by
participating merchants;

o Product liability or other tort claims relating to goods or services sold
through third-party commerce sites;

o Consumer fraud and false or deceptive advertising or sales practices;

o Breach of contract claims relating to merchant transactions;

o Claims that materials included in merchant sites or sold by merchants
through these sites infringe third-party patents, copyrights, trademarks
or other intellectual property rights, or are libelous, defamatory or in
breach of third-party confidentiality or privacy rights; and

o Claims relating to any failure of merchants to appropriately collect and
remit sales or other taxes arising from electronic commerce transactions.

Even to the extent that such claims do not result in material liability,
investigating and defending such claims could cause a strain on our finances,
damage our reputation and distract the attention of our management.

10
<PAGE>

IF WE EVER DECIDE TO COLLECT PERSONAL INFORMATION ABOUT OUR USERS, WE MAY FACE
POTENTIAL LIABILITY FOR INVASION OF PRIVACY.

Although we have a policy against using personal information, current
computing and Internet technology allows us to collect personal information
about our users. We may decide in the future to compile and provide such
information to our corporate customers and electronic commerce partners. If we
begin collecting such information, we may face potential liability for invasion
of privacy for compiling and providing to our corporate customers and electronic
commerce partners information based on questions asked by users and visitors on
our web sites. Because we may not obtain permission from users to distribute
this information, we may potentially face liability for invasion of privacy.

SINCE OUR OFFICERS AND DIRECTORS OWN A LARGE PERCENTAGE OF OUR OUTSTANDING
SHARES, THEY ARE ABLE TO SIGNIFICANTLY INFLUENCE MATTERS REGARDING STOCKHOLDER
APPROVAL.

Our executive officers and directors beneficially own in the aggregate
approximately 45.9% of our outstanding common stock. These stockholders may be
able to exercise control over all matters requiring approval by our
stockholders, including the election of directors and the approval of
significant corporate transactions. This concentration of ownership may also
have the effect of delaying or preventing an acquisition or change in control of
Predict It, which could significantly reduce our stock price.

IF WE REGISTER ADDITIONAL SHARES, THEN SUCH REGISTRATION MAY REDUCE THE MARKET
FOR OUR COMMON STOCK.

The shares registered by this prospectus have not previously been
registered. Assuming that no existing options are exercised and that the
Series A preferred stock is not converted, there would be a total of
11,803,448 shares (including 500,000 shares of common stock currently being held
in escrow pending Predict It achieving certain milestones) outstanding as of the
date of this prospectus. The 10,310,198 shares being registered, which include
shares issued upon exercise of certain of our options and conversion of the
Series A preferred stock, represent 87.3% of the outstanding shares of our
common stock. Future sales of significant numbers of shares of our common stock
in the public market could have a depressing effect on the prevailing market
price of the common stock, which might also diminish our ability to raise
capital through subsequent offerings of securities. If we decide to pay
preferred dividends in shares of our common stock, this too could depress the
market for our common stock if the recipients of those common stock dividends
were to sell those newly issued shares.

WE ARE LISTED ON THE OTC ELECTRONIC BULLETIN BOARD, WHICH CAN BE A VOLATILE
MARKET.

Our common stock is quoted on the OTC Electronic Bulletin Board, a NASD
sponsored and operated quotation system for equity securities. The OTC
Electronic Bulletin Board was introduced as an alternative to the NQB Pink
sheets for trading over-the-counter securities. It is a more limited trading
market than the NASDAQ SmallCap, and timely, accurate quotations of the price of
our common stock may not always be available. You may expect trading volume to
be low in such a market. Consequently, the activity of only a few shares may
affect the market and may result in wide swings in price and in volume.

Our common stock may be subject to the requirements of Rule 15g-9,
promulgated under the Securities Exchange Act of 1934, as amended, if the price
of our common stock remains below $5.00 per share. Under such rule,
broker-dealers who recommend low-priced securities to persons other than
established customers and accredited investors must satisfy special sales
practice requirements, including a requirement that they make an individualized
written suitability determination for the purchaser and receive the purchaser's
consent prior to the transaction. The Securities Enforcement Remedies and Penny
Stock Reform Act of 1990 also requires additional disclosure in connection with
any trades involving a stock defined as a penny stock. Generally, the Commission
defines a penny stock as any equity security not traded on an exchange or quoted
on NASDAQ that has a market price of less than $5.00 per share. The required
penny stock disclosures include the delivery, prior to any transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
with it. Such requirements could severely limit the market liquidity of the
securities and the ability of purchasers to sell their securities in the
secondary market. Our common stock was initially quoted on the OTC Bulletin
Board at $3.50 per share, but as of November 22, 1999 the share price was
$1.9375, and there can be no assurances that the price per share will not remain
below $5.00 per share.

11
<PAGE>

SINCE THE MARKET FOR STOCKS OF INTERNET COMPANIES HISTORICALLY HAS EXPERIENCED
EXTREME PRICE AND VOLUME FLUCTUATIONS, OUR SHARES MAY EXPERIENCE EXTREME PRICE
AND VOLUME FLUCTUATIONS.

The market for the stocks of Internet-related companies has experienced
extreme price and volume fluctuations. The market price of our common stock may
be volatile and may decline. In the past, securities class action litigation has
often been instituted against companies following periods of volatility in the
market price of their securities. If instituted against us, regardless of the
outcome, litigation could result in substantial costs and a diversion of our
management's attention and resources.

IF HOLDERS OF OUR OPTIONS EXERCISE THEIR OPTIONS, THEN SUCH EXERCISE MAY DILUTE
OUR COMMON STOCK AND SALES OF THE SHARES MAY REDUCE THE PRICE OF OUR COMMON
STOCK.

The existence of 1,792,504 options may make it more difficult for us to
raise capital when necessary and may depress the market price of our common
stock in any market that may develop for such securities. Future sales of a
substantial number of shares of our common stock in the public market could
reduce the market price of the stock. It could also impair our ability to raise
additional capital by selling more of our common stock.

PROVISIONS IN OUR CHARTER OR AGREEMENTS MAY PREVENT OR DELAY A CHANGE OF
CONTROL.

Provisions of our certificate of incorporation and bylaws and provisions of
applicable Delaware law may discourage, delay or prevent a merger or other
change of control that a stockholder may consider favorable. Our board of
directors has the authority to issue up to 5,000,000 shares of preferred stock
and to determine the price and the terms, including preferences and voting
rights, of those shares without stockholder approval. We have issued 1,000,000
shares of Series A preferred stock, convertible into 1,000,000 shares of our
common stock. Although we have no current plans to issue additional shares of
our preferred stock, any such issuance could, among other things:

o Have the effect of delaying, deferring or preventing an acquisition or a
change in control of Predict It;

o Discourage bids for our common stock at a premium over the market price;
or

o Adversely affect the market price of, and the voting and other rights of
the holders of, our common stock.

Furthermore, we are subject to certain Delaware laws that could have the
effect of delaying, deterring or preventing a change in control of our company.
One of these laws prohibits us from engaging in a business combination with any
interested stockholder for a period of three years from the date the person
became an interested stockholder, unless certain conditions are met. In
addition, certain provisions of our certificate of incorporation and by-laws,
and the significant amount of common stock held by our executive officers,
directors and affiliates, could together have the effect of discouraging
potential takeover attempts or making it more difficult for stockholders to
change management. These provisions could have the effect of discouraging
potential takeover attempts.

IF OUR SYSTEMS OR MATERIAL THIRD-PARTY SYSTEMS ARE NOT YEAR 2000 COMPLIANT, THEN
WE MAY LOSE REVENUES AND INCUR SIGNIFICANT COSTS.

Many currently installed computer systems and software products are coded
to accept or recognize only two digit entries in the date code field. These
systems and software products will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and software used by many companies and governmental agencies may need
to be upgraded to comply with such Year 2000 requirements or risk system failure
or miscalculations causing disruptions of normal business activities. The
failure of our internal systems, or any material third-party systems, to be Year
2000 compliant would have a material adverse effect on our business. All of our
systems were designed subsequent to October 1997, well after the Year 2000
compliance problem was identified. Accordingly, all of the systems we have
developed use four digits to identify the year rather than two digits. We are
also contacting our third-party vendors, licensors and providers of hardware,
software and services regarding their Year 2000 readiness. While we expect that
our precautionary measures have reduced or eliminated any significant impact of
Year 2000 issues, there is no assurance this will be the case. In addition,
there is no assurance that any Year 2000 problems that may be experienced by our
customers or suppliers will not have a negative impact on Predict It. See the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000 Compliance" section of this prospectus for a more detailed
discussion.

12
<PAGE>

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

Some of the statements contained in or incorporated by reference in this
prospectus discuss our plans and strategies for our business or state other
forward-looking statements. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of identifying
them. These forward-looking statements reflect the current views of our
management; however, various risks, uncertainties and contingencies could cause
our actual results, performance or achievements to differ materially from those
expressed in, or implied by, these statements, including the following:

o the success or failure of our efforts to implement our business strategy;
and

o the other factors discussed under the heading "Risk Factors" and
elsewhere in this prospectus.

We assume no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. For a
discussion of important risks of an investment in our securities, including
factors that could cause actual results to differ materially from results
referred to in the forward-looking statements, see the "Risk Factors" section.
You should carefully consider the information set forth under the caption the
"Risk Factors" Section. In light of these risks, uncertainties and assumptions,
the forward-looking events discussed in or incorporated by reference in this
prospectus might not occur.

AVAILABLE INFORMATION

We will file reports, proxy statements and other information with the
Securities and Exchange Commission. Such reports, proxy statements and other
information can be inspected and copied, at the Public Reference Room of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at the Northeast Regional Office of the Commission located at Seven
World Trade Center, Suite 1300, New York, New York 10048 and at the Midwest
Regional Office of the Commission located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the Commission at
1-800-SEC-0330 for further information on the public reference rooms. Our
Commission filings will also be available to the public from the Commission's
web site at http://www.sec.gov.

We have filed a registration statement with the Commission on Form SB-2,
under the Securities Act of 1933, with respect to the securities described in
this prospectus. This prospectus, filed as part of the registration statement,
does not contain all of the information set forth in the registration statement
and the exhibits and schedules filed with the registration statement. For
further information about us, and our common stock described by this prospectus,
reference is made to the registration statement and to the exhibits and
schedules filed with it. Statements contained in this prospectus regarding the
contents of any contract or any other document to which reference is made are
not necessarily complete, and, in each instance where a copy of such contract or
other document has been filed as an exhibit to the registration statement,
reference is made to the copy so filed, each such statement being qualified in
all respects by such reference. Any document we file may be read and copied at
the Public Reference Room.

PREDICT IT

Predict It Corp., the immediate predecessor to Predict It Inc., was
incorporated under the laws of the State of Delaware on August 11, 1998 as
SPORTSCAPPERS, INC. Predict It Corp. was the successor to the business of
SPORTSCAPPERS, INC., a Colorado corporation incorporated in September 1997,
which merged in August 1998 into SPORTSCAPPERS, INC., a Delaware corporation. We
changed our name to "Predict It Corp." on January 4, 1999. On April 28, 1999,
Predict It Corp. merged with and into WDC Development, Inc. WDC Development was
the surviving corporation and it changed its name to "Predict It Inc." The post-
merger business of Predict It Inc. is the pre-merger business of Predict It
Corp. and its predecessors. On June 30, 1999, through a wholly-owned Delaware
subsidiary of Predict It Inc., we purchased Virtual Stock Exchange, Inc., a
Delaware corporation. We maintain our principal business operations at 694
Eighth Avenue, 5th floor, New York, NY 10036. Our telephone number is
212-217-1200, and our web sites include http://www.predictit.com,
http://www.sports.predictit.com, http://www.predictit.net and
http://www.VirtualStockExchange.com. The information in our web sites is not
incorporated by reference into this prospectus.

13
<PAGE>
USE OF PROCEEDS

We will not receive any part of the proceeds from the sale by our
stockholders of our common stock. However, we will receive $58,876.25 from our
stockholders upon the exercise of stock options registered in this Registration
Statement. The proceeds will be used for general corporate purposes to grow
Predict It's business.

PRICE RANGE OF COMMON STOCK

Our common stock is currently quoted on the OTC Electronic Bulletin Board
under the symbol "PRIT." There was no active market for Predict It's securities
until April 28, 1999(1). The following table sets forth the high and low bid
price information for the common stock as quoted on the OTC Electronic Bulletin
Board for the periods indicated. The quotations reflect inter-dealer prices,
without retail mark-ups, mark-downs or commissions, and may not represent actual
transactions.

<TABLE>
<CAPTION>
COMMON STOCK
-------------------
HIGH BID LOW BID
-------- -------
<S> <C> <C>
October 1, 1998 through December 31, 1998............................... $ 0 $ 0
January 1, 1999-March 31, 1999.......................................... $ 1.50 $ 0
April 1, 1999-June 30, 1999............................................. $ 4.25 $ 1.87
July 1, 1999-September 30, 1999......................................... $ 2.93 $ 1.03
</TABLE>

On November 22, 1999, the closing bid price as quoted by the OTC Electronic
Bulletin Board for our common stock was $1.9375. As of November 15, 1999, there
were approximately 25 holders of record of our common stock.

There is no public trading market for any of our preferred stock or
options.

- ------------------
(1) Prior to the reverse merger, Predict It Inc. (then named WDC Development,
Inc.) was listed on the OTC Electronic Bulletin Board from November 1998
through April 27, 1999.

DIVIDEND POLICY

We have never declared or paid cash dividends on our common stock. We
presently intend to retain any earnings for use in the business and do not
anticipate paying cash dividends in the foreseeable future. Any future cash
dividends will be at the discretion of the board of directors and will depend on
our earnings, financial condition, cash flows, capital requirements and other
considerations that the board of directors may consider relevant. Our Series A
Preferred Stock does not pay any dividends.

CAPITALIZATION

The following table sets forth, as of September 30, 1999 the capitalization
of Predict It Inc. The following table should be read in conjunction with the
financial statements and notes thereto of Predict It Inc., Virtual Stock
Exchange, Inc. and the unaudited pro forma financial statements included
elsewhere in this prospectus.

14
<PAGE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------
ACTUAL
------------------
<S> <C>
Current liabilities:
Accounts payable and accrued expenses............................................. $ 847,655
Long-term liabilities:..............................................................
Capital lease obligations......................................................... 14,679
Notes payable, stockholders....................................................... 100,000
Accrued interest.................................................................. 12,000
----------
974,334
----------

Preferred stock, $.01 par value, 5,000,000 shares authorized, 1,000,000 shares
Series A issued and outstanding at September 30, 1999 (stated at liquidation
preference)....................................................................... 3,000,000

Common stock, $.01 par value, 25,000,000 shares authorized, 11,200,000 shares issued
and outstanding at September 30, 1999 (exchange of 500,000 shares held in
escrow)........................................................................... 112,000
Additional paid-in capital........................................................ 2,957,563
Deficit........................................................................... (2,054,027)
Unearned compensation.......................................................... (835,555)
----------
3,179,981
----------
$4,154,315
----------
----------
</TABLE>

SELECTED FINANCIAL DATA

On April 28, 1999, Predict It Corp. merged with and into WDC Development,
Inc. WDC Development was the surviving corporation and changed its name to
"Predict It Inc." In the merger, all of the outstanding capital stock of Predict
It Corp. was converted into shares of common stock of the surviving corporation.
For accounting purposes, the merger has been treated as a recapitalization of
Predict It Corp. Financial statements prior to the merger are those of Predict
It Corp. The financial statements give retroactive effect to the conversion of
Predict It Corp. capital stock into Predict It Inc. common stock to reflect the
recapitalization.

On June 30, 1999, through a wholly-owned Delaware subsidiary of Predict It
Inc., we purchased 100% of the outstanding stock of Virtual Stock Exchange,
Inc., a Delaware corporation. In exchange, we issued to the 3 stockholders of
Virtual Stock Exchange an aggregate of 2,700,000 shares of our common stock,
representing approximately 23% of our outstanding common stock. Of the shares
issued, 500,000 shares will be held in escrow with 50% of such shares to be
released in January 2000, and the remaining 50% of which to be released in
January 2001, as long as the number of registered users and page views of the
combined activities exceeds certain specified amounts.

15
<PAGE>

Set forth below is selected financial data of Predict It Inc. as of
December 31, 1998, September 30, 1998, the period September 2, 1997 (inception)
through December 31, 1997, the year ended December 31, 1998, and the nine month
periods ended September 30, 1999 and 1998. The statements of operations and
balance sheet data as of and for the nine months ended September 30, 1999 and
1998 have been derived from the unaudited books and records of Predict It Inc.
The statements of operations and the balance sheet data as of and for the period
September 2, 1997 through December 31, 1997 and for the year ended December 31,
1998 have been derived from the audited financial statements of Predict It Inc.
included elsewhere in this prospectus. The selected financial data for the nine
months ended September 30, 1999 and 1998 include, in the opinion of management,
all adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial position and results of operations of Predict It
Inc. for such periods. The results of operations for the nine months ended
September 30, 1999 are not necessarily an indication of results for a full
fiscal year. Also set forth below are summary unaudited pro forma financial data
of Predict It Inc. The unaudited pro forma as adjusted statements of operations
data for the nine months ended September 30, 1999 and for the year ended
December 31, 1998 are presented as if the acquisition of Virtual Stock Exchange,
Inc. had occurred as of the beginning of the periods presented. The unaudited
pro forma as adjusted financial data has been prepared based on the audited and
unaudited financial statements of Virtual Stock Exchange, Inc.,which are
included elsewhere in this prospectus. The unaudited pro forma as adjusted
financial data is not intended to be an indication of the results that would
have occurred for the periods indicated or which may be realized in the future.
The selected financial data and summary unaudited pro forma as adjusted
financial data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the historical financial statements of Predict It Inc. and Virtual Stock
Exchange, Inc. and the notes thereto included elsewhere in the prospectus.

<TABLE>
<CAPTION>
PRO FORMA AS ADJUSTED FOR
HISTORICAL ACQUISITION OF VIRTUAL
------------------------------------------------------- STOCK EXCHANGE, INC.
SEPTEMBER 2, ---------------------------
1997 NINE MONTHS
(INCEPTION) NINE MONTHS ENDED ENDED
THROUGH YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER
DECEMBER 31, DECEMBER 31, ------------------------ DECEMBER 31, 30,
1997 1998 1998 1999 1998 1999
------------- ------------- --------- ----------- ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
User fees........................ $ 7,712 $ 6,202 $ 3,461 $ 24,173 $ 10,558
Advertising...................... 6,000 6,000 93,209 56,736 152,302
--------- --------- --------- ----------- ------------ ------------
13,712 12,202 96,670 80,909 162,860
--------- --------- --------- ----------- ------------ ------------
Costs and expenses:
Site development/maintenance..... 177,783 148,244 160,698 227,243 327,725
Selling, general and
administrative(2)............. $ 21,402 340,698 191,915 1,368,828 503,679 1,465,279
Amortization of Intangibles(1)... 122,338 489,352 367,014
Interest expense (income)........ 3,000 3,000 (30,338) 9,768 (23,050)
--------- --------- --------- ----------- ------------ ------------
21,402 521,481 343,159 1,621,526 1,230,042 2,136,968
--------- --------- --------- ----------- ------------ ------------
Net Loss before income tax......... $ (21,402) $(507,769) $(330,957) $(1,524,856) $ (1,149,133) $ (1,974,108)
--------- --------- --------- ----------- ------------ ------------
--------- --------- --------- ----------- ------------ ------------
Net loss per share--basic and
diluted.......................... $ (.04) $ (.21) $ (.18) $ (.17) $ (.25) $ (.20)
--------- --------- --------- ----------- ------------ ------------
--------- --------- --------- ----------- ------------ ------------
Weighted average number of shares
outstanding...................... 488,412 2,381,327 1,784,508 8,790,775 4,581,327 9,890,775
--------- --------- --------- ----------- ------------ ------------
--------- --------- --------- ----------- ------------ ------------
</TABLE>

16
<PAGE>

<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working Capital (deficit)......................................................... $ 45,118 $ 858,156
Total assets...................................................................... 198,894 4,154,315
Long term debt...................................................................... 0 114,679
Total liabilities................................................................... 72,729 974,334
---------- -----------
---------- -----------
Accumulated deficit................................................................. (529,171) (2,054,027)
---------- -----------
---------- -----------
Total stockholders' equity.......................................................... 126,165 3,179,981
---------- -----------
---------- -----------
</TABLE>

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

(1) Represents amortization expense related to goodwill resulting from the
acquisition of Virtual Stock Exchange, which is being amortized over a
period of three years.

17
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Predict It Inc. provides user-generated prediction services on the
Internet. The innovative patent-pending system objectively measures, identifies
and ranks users, who are known as analysts, based on their prediction
performance in event categories such as sports, finance, politics, and
entertainment. The Predict It system then compensates these analysts when other
Predict It analysts seek out their opinions. The Predict It web site engine
lends itself to any set of events whose outcomes can be measured objectively and
which occur with some regularity. Currently, Predict It offers predictive
services for sports and finance, but we plan to expand our product offerings
into additional product categories, including politics and entertainment.
Predict It Inc. is publicly traded on the OTC Electronic Bulletin Board under
the symbol "PRIT."

On April 28, 1999, Predict It completed a reverse merger with WDC
Development, Inc. in which we merged with and into WDC Development. WDC
Development was the surviving corporation and changed its name to "Predict It
Inc." The post-merger business of Predict It Inc. is identical to the pre-merger
business of Predict It Corp. and its predecessors. For accounting purposes, the
merger has been treated as a recapitalization of Predict It Corp. For tax
purposes, the merger was a tax-free exchange of equity securities. The
historical activities of WDC Development were limited to capital raising
activities, all of which were completed at or prior to the merger.

On June 30, 1999, through a wholly-owned Delaware subsidiary of Predict It
Inc., we acquired Virtual Stock Exchange, Inc., a company engaged in predictive
stock markets simulations through its web site, www.VirtualStockExchange.com.
The acquisition was made in connection with our expansion into the area of
financial predictive services. As a result of the acquisition, we have
recognized approximately $1,468,000 of goodwill on our Balance Sheet. The
goodwill is being amortized over a three-year period.

1999 PLAN OF OPERATION

Prior to September 30, 1999, we primarily derived our revenue from the
sales of analyst predictions. In April 1999, we began to offer our analysts'
predictions without any charge. The revenues for the second and third quarter of
1999 were derived primarily from the sale of advertising contracts. Advertising
revenue agreements typically include the delivery of impressions on our web
sites and co-branded distributor web sites. An impression is the viewing of
promotional material on a web page, which may include banner advertisements,
links, buttons or other text images. Revenue based on number of impressions is
recognized at the time a substantial portion of the guaranteed number of
impressions occur. Revenue applicable to the portion of guaranteed impressions
which have not occurred at the balance sheet date is not recognized. We
anticipate that revenues for the fourth quarter of 1999 will be derived mainly
from the sale of advertisement contracts.

RESULTS OF OPERATIONS--9 MONTHS ENDED SEPTEMBER 30, 1999 VS. 9 MONTHS ENDED
SEPTEMBER 30, 1998

REVENUES

Revenues increased to $96,670 for the nine months ended September 30, 1999,
from $12,202 for the nine months ended September 30, 1998. The increase in
revenues was primarily due to the fact that we did not commence significant
revenue generating activities in 1998 until the second quarter. In addition, the
acquisition of Virtual Stock Exchange has significantly increased Predict It's
membership, enabling us to

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receive favorable advertising rates. Revenue for the nine months ended
September 30, 1999 was from advertising revenues ($93,209) and analyst
subscriptions ($3,461).

SITE DEVELOPMENT AND MAINTENANCE EXPENSE

Site development and maintenance expense consist primarily of web site
hosting, maintenance expenses and amortization related to capitalized software
costs. Site development and maintenance expense was approximately $161,000 for
the nine months ended September 30, 1999 which includes approximately $28,000 of
amortization expense related to capitalized software costs and $63,117 in web
site hosting and maintenance costs. Site development costs incurred during the
nine months ended September 30, 1998 were approximately $148,000, including
$4,000 of amortization expense related to capitalize software costs and $14,000
in web hosting and maintenance costs.

SELLING, GENERAL AND ADMINISTRATIVE

Selling general and administrative costs increased $1,176,000 from $192,000
for the nine months ended September 30, 1998 to $1,368,000 for the nine months
ended September 30, 1999. Staffing costs increased from $75,000 to $608,000. The
increase is attributable to our increase in personnel from 3 to 20 full-time
individuals. Operating costs increased from $19,750 in the nine months ended
September 30, 1998 to $88,623 in the nine months ended September 30, 1999
primarily due to rent and insurance expenses. Professional fees for the nine
months ended September 1999 and 1998 were $447,376 and $58,787, respectively.
The increase is primarily due to professional fees resulting from increased
regulatory filing expenses and consulting fees for public relations.

AMORTIZATION OF INTANGIBLES

Amortization expense for the nine months ended September 30, 1999 was
$122,000 representing the amortization of the registered user base acquired from
Virtual Stock Exchange.

RESULTS OF OPERATIONS--YEAR ENDED DECEMBER 31, 1998 VS. SEPTEMBER 2, 1997
(INCEPTION)
THROUGH DECEMBER 31, 1997

REVENUES

Revenues increased to $13,700 for the year ended December 31, 1998, from $0
for the period September 2, 1997 (Inception) to December 31, 1997. The increase
in revenues occurred due to the fact that we commenced revenue generating
activities in 1998. Advertising revenue increased to $6,000 and analyst
subscription revenue increased to $7,700 for the year ended December 31, 1998,
from $0 for the period from inception to December 31, 1997.

SITE DEVELOPMENT AND MAINTENANCE EXPENSE

Site development and maintenance expense consist primarily of web site
hosting, maintenance expenses and amortization related to capitalized software
costs. Site development and maintenance expense was $178,000 for the year ended
December 31, 1998 which includes $90,000 of amortization expense related to
capitalized software costs, $65,000 paid to a former source provider for the
transition to a new web site and $23,000 in web site hosting and maintenance
costs. Included in the $90,000 of amortization expense is approximately $49,000
of unamortized software costs which were deemed to be impaired, and written off,
as a result of rebuilding the site through a new provider. Site development
costs in 1997 were capitalized until the launch of our website in April 1998.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative costs increased $320,000 from $21,000
in 1997 to $341,000 in 1998. Staffing costs increased from $9,000 to $141,000.
The increase is attributable to having three employees in 1998 as compared to
one in 1997. Operating costs increased from $3,000 in 1997 to $44,000 in 1998
primarily due to increased rent and moving costs as a result of our moving into
new office space in the third quarter of 1998. Professional fees for consulting,
legal and accounting services increased from $9,000 to $95,000. Marketing
expenses increased from $0 in 1997 to $45,000 in 1998 due to Internet
advertising of $23,000 and $20,000 in travel and entertainment.

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LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations through the private
placement of our preferred stock and the sale of our common stock. As of
September 30, 1999, we had approximately $1,626,000 in cash. We have entered
into an agreement with Vision Consulting to develop Version 3 pursuant to which
we are obligated to pay Vision Consulting $700,000. We believe that our existing
cash balances will be sufficient to meet anticipated cash requirements for the
next twelve months. We may, nonetheless, seek additional financing to support
our activities during the next twelve months or thereafter. There can be no
assurance, however, that additional capital will be available to us on
reasonable terms, if at all, when needed or desired.

Our capital requirements depend on numerous factors, including (i) market
acceptance of Predict It's services; (ii) the amount of resources we devote to
investments in our product development; and (iii) the resources we devote to
sales and marketing.

We anticipate that we will continue to evaluate possible investments in
business, products and technologies, and plans to expand its sales and marketing
programs while conducting more aggressive brand promotions.

YEAR 2000 COMPLIANCE

STATE OF READINESS

We have completed our assessment of the Year 2000 readiness of our
operating, financial and administrative systems, including the hardware and
software that support our systems. Our assessment plan consisted of:
(i) quality assurance testing of our internally developed proprietary software;
(ii) contacting third-party vendors and licensors of material hardware, software
and services that are both directly and indirectly related to the delivery of
our services to our users; (iii) contacting vendors of third-party systems; (iv)
assessing repair and replacement requirements; (v) implementing repair or
replacement; and (vi) creating contingency plans in the event of Year 2000
failures.

RISKS

We are not currently aware of any Year 2000 compliance problems relating to
our systems that would have a material adverse effect on our business, results
of operations and financial condition, without taking into account our efforts
to avoid or fix such problems. Our primary product, Version 3 of our database,
and web application has been developed by Vision Consulting. We tested this
product in October 1999 and we found no indication that the product will not
be Year 2000 compliant.

We are heavily dependent on a significant number of third-party vendors to
provide both network services and equipment. A significant Year 2000-related
disruption of the network, services or equipment that third-party vendors
provide to us could cause our members and visitors to consider seeking alternate
providers or cause an unmanageable burden on its technical support, which in
turn could materially and adversely affect our business, financial condition and
results of operations. We do not believe that the costs involved in ensuring
that our internal systems are Year 2000 compliant are significant because all of
our internal mission-critical hardware and enterprise software vendors and
systems are certified Year 2000 compliant. These material vendors are as
follows:

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<PAGE>

VENDOR RELATIONSHIPS THAT INCLUDE A SUPPORT CONTRACT

<TABLE>
<CAPTION>
VENDOR PRODUCT YEAR 2000 COMPLIANCE STATUS
- ---------------------------------------- ---------------------------- ----------------------------------------
<S> <C> <C>
Cisco Systems........................... Routers & switches Received statement of compliance
Sun Microsystems........................ Ultra 10/Enterprise 250/450 Received statement of compliance
Server Hardware
SunMicrosystems......................... Solaris 7 Operating System Received statement of compliance
Oracle.................................. Oracle 8.X Database Received statement of compliance
Veritas................................. Volume manager/Net back- Received statement of compliance
Up/File system/Database
Edition Software
ATG..................................... Dynamo 4.1.0 Received statement of compliance
Application Server
Foundry Networks........................ ServerIron Received statement of compliance
Hardware Load Balancer
Red Hat................................. Linux 6.0 Received statement of compliance
Operating System
S&P Comstock............................ Provides datafeed Received statement of compliance

Sportsticker............................ Provides datafeed Problem identified and resolved
programmatically by Predict It
</TABLE>

VENDORS THAT DO NOT INCLUDE A SUPPORT CONTRACT

3rd Party Network Dependancies
Bell Atlantic........................... Provides office T-1 line Awaiting statement of compliance
Frontier Global......................... Hosts company website Received statement of compliance
</TABLE>

Most of our computer hardware is new, but in the event any of our hardware
malfunctions, we will replace it. We do not expect to incur material costs to
replace any such defective hardware. Our internal office network is supported by
Microsoft NT and related products including Microsoft office. These products are
certified Year 2000 compliant. Our financial accounting system is outsourced and
we have received assurances from our third-party vendor that the supporting
systems will be Year 2000 compliant by the end of 1999. We are in the process of
contacting the lessor of our corporate headquarters to assess the status of
Year 2000 compliance of our offices.

Our servers are hosted at Frontier Global Center, which has provided us
with a Year 2000 Compliance Statement.

There can be no assurance that we will not discover Year 2000 compliance
problems in our systems that will require substantial revision. There also can
be no assurance that third-party software, hardware or services incorporated
into our material systems will not need to be revised or replaced, all of which
could be time consuming and expensive. In addition, there can be no assurance
that governmental agencies, utility companies, Internet access companies,
third-party service providers and others outside of our control will be
Year 2000 compliant. The failure by such entities to be Year 2000 compliant
could result in a systematic failure beyond our control, such as a prolonged
Internet, telecommunications or electrical failure, which could also prevent us
from delivering our services to our customers, decrease the use of the Internet
or prevent

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users from accessing our web sites, which could result in our inability to
service our users and could materially impair our success.

WORST CASE SCENARIO AND CONTINGENCY PLAN

Our reasonably likely worst-case scenario is that our Version 3 products
and our Oracle database fail in the year 2000, resulting in loss of data, which
would damage the value of our information and may damage the Predict It brand.
Our failure to fix or replace our internally developed proprietary software or
third-party software, hardware or services on a timely basis could result in
lost revenues, increased operating costs, the loss of customers and other
business interruptions, any of which could have a material, adverse effect on
our business, results of operations, and financial condition. Moreover, the
failure to adequately address Year 2000 compliance issues in our internally
developed proprietary system could result in claims of mismanagement,
misrepresentation, or breach of contract and related litigation, which could be
costly and time consuming to defend.

To protect against the failure of our Version 3 and Oracle database in the
year 2000, we intend to implement Raid 0+1 Oracle mirroring and striping for
fail over and an Oracle Replication Server, nightly back-ups, and an archive log
so that we can recover all data up to the time of a potential system failure
caused by Year 2000 failure. In the event of a Year 2000 failure we would devote
resources to correct it. Due to our skilled in-house developers and the strength
of our existing vendor relationships, we believe we will be able to respond
promptly to any failures that may occur. We are relying upon third-party Year
2000 certifications that we have already received.

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BUSINESS

PREDICT IT

BACKGROUND

Predict It Corp., the immediate predecessor to Predict It Inc., was
incorporated under the laws of the State of Delaware on August 11, 1998 as
SPORTSCAPPERS, INC. Predict It Corp. was the successor to the business of
SPORTSCAPPERS, INC., a Colorado corporation incorporated in September 1997,
which merged in August 1998 into SPORTSCAPPERS, INC., a Delaware corporation. We
changed our name to "Predict It Corp." on January 4, 1999. On April 28, 1999,
Predict It Corp. merged with and into WDC Development, Inc. WDC Development was
the surviving corporation and changed its name to "Predict It Inc." The post-
merger business of Predict It Inc. is the pre-merger business of Predict It
Corp. and its predecessors. For accounting purposes, the merger has been treated
as a recapitalization of Predict It Corp. For tax purposes, the merger was a
tax-free exchange of equity securities. On June 30, 1999, through a wholly-owned
Delaware subsidiary of Predict It, we purchased Virtual Stock Exchange, Inc., a
Delaware corporation.

The historical activities of WDC Development were limited to capital
raising activities, all of which were completed at or prior to the merger.
Accordingly, in the following discussion, all references to our business relates
to the business of Predict It Corp. and its predecessors prior to the merger and
Predict It Inc. following the merger with WDC Development.

OVERVIEW

Our business is the development of interactive products, which are
distributed through the medium of the Internet. The Predict It product allows
users to actively participate by predicting the outcome of events and evaluating
the results of their participation with those of other Predict It users. The
Predict It product also lends itself to calculating predictions for any set of
events whose outcome can be measured objectively. Our initial product offering,
"Predict It Sports," allows users to pick and exchange predictions on sporting
events with fellow users. Our database engine then calculates the accuracy of
these predictions and allows users to view the entries. Our system, unlike chat
rooms, bulletin boards and stock tracking systems, enables users to quickly find
and view the predictions of the best analysts, who in turn earn money each time
their predictions are viewed. Users may post predictions and view the
predictions of others free of charge.

On July 16, 1999, we launched the Predict It Network, which we plan to use
to integrate all of our current and future products, including Predict It
Sports, with products that we may acquire, such as Virtual Stock Exchange. The
Predict It Network of products is designed to allow for the easy integration of
additional products that we may develop or acquire. In addition, we built the
Predict It Network in such a way so as to support the individual communities of
Predict It users who registered for Predict It through accessing the web-sites
of our network of co-branded partnership web sites and affiliated sites. Our
Predict It Network can be accessed at www.predictit.net.

On June 30, 1999, through a wholly-owned Delaware subsidiary of Predict It
Inc., we acquired 100% of the stock of Virtual Stock Exchange, Inc., a Delaware
corporation. In exchange, we issued 2,700,000 shares of our common stock,
representing approximately 23% of our outstanding common stock. Of the shares
issued, 500,000 shares will be held in escrow with 50% of such shares to be
released in January 2000 and the remaining 50% to be released in January 2001,
as long as the number of registered users and page views for the combined
entities exceeds certain specified amounts. Virtual Stock Exchange's business is
an interactive Internet application where individuals create and manage
hypothetical stock portfolios, conduct mock trading, and compete with other
members for prize money, generally not to exceed $1,000 per month, based on
their portfolio performance. The web site also provides quotes and research on
United States financial markets through links to other sites, and a forum for
individuals to exchange ideas with other members on a variety of

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<PAGE>

investment topics. Virtual Stock Exchange operates www.VirtualStockExchange.com,
which services over 75,000 registered members and generates in excess of four
million page views per month. Consumers may access Virtual Stock Exchange
directly via its web site or through one of its many co-branded partners,
including Crosswalk.com, Planetdirect.com and Collegestudent.com.

We employ a co-branded strategy, by which we market our product through a
distributor network of relevant industry and news content providers. Revenues
principally are earned by the sale of advertisements either by us directly or on
a revenue sharing basis with our distributors. Unlike other businesses on the
web who are trying to establish a destination site, our strategy is to be a web
site's partner by providing unique, compelling and user-generated content that
drives repeat traffic to our web partners.

INDUSTRY BACKGROUND

The Internet has emerged as a mass-market global medium for communications,
information and online commerce, enabling millions of users to obtain and share
information, and interact and conduct business electronically. Industry analyst
International Data Corporation estimates that the number of Internet users was
approximately 97 million at the end of 1998 and will reach approximately
320 million by the end of 2002, representing a compound annual growth rate of
approximately 35%. The growth in Internet usage is being driven by several
factors, including an increasing base of computers in the home and in the
workplace, advancements in the performance and speed of personal computers,
improvements in network infrastructure, more convenient, faster and cheaper
access to the Internet and increased public awareness of benefits of using the
Internet.

In addition to its benefits for individuals, the Internet provides
businesses with a new method for delivering product information, as well as
marketing and selling products and services. As the Internet has grown, many
businesses have recognized the Internet as an important vehicle for
communicating with customers and changing traditional business processes and
practices. As businesses have turned to the Internet as a new way to reach
consumers, they have developed content-rich web sites designed to hold users'
attention for extended time periods. More recently, new technology has enabled
commercial transactions to be conducted over the Internet, creating the
opportunity for business-to-consumer and business-to-business electronic
commerce. According to International Data Corporation, worldwide electronic
commerce revenue was approximately $32 billion in 1998 and is expected to grow
to more than $425 billion in 2002, representing a compound annual growth rate of
approximately 90%.

We believe that the creation of content-rich web sites is an emerging
market opportunity. Properly developed, these consumer-friendly web sites may
alter the way businesses interact with their customers. Nevertheless,
significant shortcomings in the way users interact with the Internet must be
overcome for this market opportunity to be fully realized. In short, web sites
need new ways to drive traffic and increase repeat visits to their sites.

THE PREDICT IT SOLUTION

We believe that one of the major problems with the Internet is that every
web site is competing to become the destination site for online users. To build
brand loyalty and drive traffic to a web site has become increasingly costly,
with intense competition and constant upgrades and enhancements required by web
developers who are trying to keep up with competitors by adding new content to
keep users at the site for extended periods and to create demand for users to
return to the site.

The answer for many of these content sites and web portals has been to
incorporate the non-core business content of other, third party, web-sites, in
order to increase speed to market for new features and enhancements to the site.
By incorporating the content of other, third party, web sites, these web sites
are able to maintain their business focus of growing their membership bases and
attracting new users to their sites. Predict It provides a solution for these
content sites by providing its customers with a comprehensive, ready to use
product, that can be incorporated within the customers website without altering
the overall look and feel of their own web site. This allows web sites to
develop new traffic and retain existing users without having to hire new staff,
install new software or buy new hardware. We believe that the Predict It
solution is

24
<PAGE>

well positioned to benefit from this trend. Predict It aims to create a similar
repeat user base for its co-branded customers by using sports, stocks, and other
compelling content to capture and retain users.

In short, Predict It will offer its customers:

o A comprehensive, ready to use product, designed to hold users' attention
and encourage repeat visits by providing content that retains the look
and feel of the customer's existing site;

o New revenue opportunities;

o Detailed reports on usage patterns and registered users; and

o Reliability, performance and scalability.

PRODUCTS AND SERVICES

Our initial product is Predict It Sports, which was originally launched as
SportsCappers in March 1998 and re-launched in September 1998. Predict It Sports
is a sports information service that contains content and quantitative opinions
on sporting events that are user-generated. It permits tracking of the accuracy
of members' sports predictions and displays them in a manner that encourages
competition and motivates repeat visits to the site. The service caters to
sports fans that want to exercise their competitive nature by competing against
other users. The site documents the performance of registered users and allows
viewing of prior and future predictions of top performers based on their
historical success. Entering predictions is free to anyone who visits the site
and wishes to participate. In addition, as an added incentive to encourage
repeat site utilization, registered users share in a unique revenue structure
that pays registered users each time their predictions are viewed. Incentive
payments are presently paid at the rate of $10 per 1,000 pages viewed, so that
more money is earned each time a user's prediction is viewed. This encourages
usage by some of the very best amateur analysts and makes the site a compelling
destination for sports enthusiasts. We believe that our service is more
appealing to users of other sports information services since our service caters
to sports fans who want to exercise their sports expertise by competing against
other sports enthusiasts. Our site now focuses on football, basketball, hockey
and baseball, and has the potential to expand into other global sports markets
by extending coverage to international sports, including rugby, cricket and
track and field.

The Predict It Sports product is the first of several sites to be developed
using the Predict It engine. Other usages may include financial information,
current events, and entertainment. According to Intelligent Worldwide, an
industry analyst, 71% of online users look for general news, 59% access
entertainment information, 50% look for sports information, and 40% use the web
to monitor stocks or other investments. The potential of these markets presents
opportunities for us to expand our Predict It database engine.

On July 16, 1999, we launched the Predict It Network, which we plan to use
to integrate all of our current and future products, including Predict It
Sports, with products that we may acquire, such as Virtual Stock Exchange. The
Predict It Network of products is designed to allow for the easy integration of
additional products that we may develop or acquire. In addition, we built the
Predict It Network in such a way so as to support the individual communities of
Predict It users who registered for Predict It through accessing the web-sites
of our network of co-branded partnership web sites and affiliated sites. Our
Predict It Network can be accessed at www.predictit.net.

On June 30, 1999, through a wholly-owned Delaware subsidiary of Predict It
Inc., we purchased Virtual Stock Exchange, Inc., a Delaware corporation. Virtual
Stock Exchange's business is an interactive Internet application where
individuals create and manage hypothetical stock portfolios, conduct mock
trading, and compete with other members for prize money, generally not to exceed
$1,000 per month, based on their portfolio performance. The web site also
provides quotes and research on United States financial markets through links to
other sites, and a forum for individuals to exchange ideas with other members on
a variety of investment topics. Virtual Stock Exchange operates
www.VirtualStockExchange.com, which services over 75,000 registered members and
generates in excess of four million page views per month. Consumers may

25
<PAGE>

access Virtual Stock Exchange directly via its web site or through one of its
many co-branded partners, including Crosswalk.com, Planetdirect.com and
Collegestudent.com. Messrs. Cheng and Yen, the principle founders of Virtual
Stock Exchange, have signed employment agreements with us and have joined our
management as Vice President of Business Development and Director of Technology,
respectively. Please see the "Executive Compensation and Other Information"
section for an additional description of the employment contracts of Messrs.
Cheng and Yen.

PREDICT IT DATA SYSTEM

Predict It has developed a proprietary data-system (which includes
data-model, system architecture, SQL calls, mathematical formulae and
user/administration interface) which lends itself to any set of events whose
outcome can be measured objectively. The initial product on the System, Predict
It Sports, enables users to enter predictions on sporting events. The System
then stores the user's predictions, allowing other users access to the entered
prediction. Upon conclusion/tabulation of the sporting event being predicted,
the System calculates the accuracy of the predictions and allows other users to
view the entries and the results. The System ranks the top analysts based on the
accuracy of their predictions, and this information is made available to other
users. The logical structures underlying the Predict It System can be modified
for expansion into other areas of interest (politics, for example), based upon
modifications to the System's database to include the underlying data-structures
for the subject matter of the new area in which the System would be used.

PREDICT IT SYSTEM FEATURES

FOR USERS

o Live Demo. Anonymous users navigating the system see live data, not static
Internet mock-ups. Seeing current games and current user records encourages
participation.

o Easy Registration. A two-tier registration system makes it easy for users to
get started. The first tier registration, which gives users total access,
requires only the user's nickname, email address and password. To receive
their earnings payments, users must complete the more personal name, address
and telephone fields.

o Intuitive Pick Entry. The layout of the pick entry page makes it easy for
novice sports fans to participate.

o Robust Custom Query Engine. The cornerstone of the Predict It engine is the
real-time reporting system, which allows users to find the top performers in
any category over any period of time. Users can gather further information by
viewing the details associated with anyone's record to see how these top
performers accomplished their impressive track records.

o Real Time Earnings Reports. Earnings are calculated and posted to users'
accounts in real time.

o User Registration Management. These controls allow users to easily change
their email address, password and contact information.

FOR PUBLISHERS

o Co-Branding. Publishers incorporate their site's logo, design and navigation
links together with the Predict It navigation links to create a custom menu
bar for their users. The Predict It generic functionality is served in a frame
next to their custom menu bar, so the users feel as though they are still in
the publisher's site.

o Private Label Branding. The generically-designed functionality pages can be
customized to integrate the publisher's design, providing enhanced branding
opportunities.

o Advertising Management. Using the DoubleClick Dart system, publishers have
access to a powerful and flexible advertising management system, which can be
used independently of or in conjunction with the publishers' existing
advertising management system.

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<PAGE>
FOR INTERNAL ADMINISTRATORS

o Easy Expansion into New Sports. All of the world's major sports leagues are
already loaded into the database and can be activated within seconds. If a
real time feed is not incorporated or is not available for that sport, all of
the tools exist to manually input the events and results.

o Real Time Data Feed. Provided by SportsTicker, owned in part by ESPN, we have
signed a contract and begun programming specification for a real-time
data-feed that will fully automate the Predict It system, allowing for the
spontaneous system-generation of sporting events. This will lay the groundwork
for our incorporating more data-intensive markets, like financial markets.

SYSTEM INTEGRITY CONTROLS

o Pick Entry. The system traps for and eliminates all of the possible ways that
users may attempt to enter picks on events already underway.

o Earnings. The system controls for users who may repeatedly access their own
picks or the picks of their friends in an attempt to artificially increase
earnings balances.

CUSTOMERS AND DISTRIBUTORS

We generate revenues from advertising sold on our site and on our
distributor's co-branded sites. We optimize our revenues by utilizing a
co-branded model to attract advertisers to specific market niches. In this way,
we can expand our opportunities to reach more users who will view the services
that we offer.

Consequently, our strength lies in our ability to generate revenue through
our distributor relationships with limited marketing and advertising
expenditures. Our distributor relationships allow us the opportunity to attract
traffic to the co-branded sites based on the strength of our distributor
marketing and advertising efforts. In return for providing our distributors with
content and the ability for them to increase their advertising revenue, we
generally share 50% of our distributors' advertising revenue that our Predict It
service generates from the distributors' co-branded pages. We believe that this
creates an attractive opportunity for establishing distributor relationships
since we provide our distributors with free content and increased advertising
revenue opportunities and because our product encourages users to make repeat
visits to the site.

Our current distributors are:

o SportsWorld (Broadcast.com);

o SportServer (Nando Media/McClatchey Newspapers);

o DBC Sports (Data Broadcasting Corporation);

o The Sports Network;

o The Sports Daily;

o SportsFeed;

o Silly Sports;

o Gaming Guide;

o Bettors World;

o Bettors Luck;

o Sport Hits;

o The Daily Spread;

o SH Goddess;

o MLB Fans

o Tornado Report

o Sports Rumble

o Aces Sports

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o Alpha Sim Interactive

o YourPortal.com (Acceleration Software)

o EnterSports

o Los Angeles Times

o web On-Site

o CMP Media

o Scoops Wrestling

o Investorlinks

o Planetdirect

o Crosswalk

o Collegestudent.com

o CanesHockey.com

Each web page of the Predict It service is designed to optimize potential
advertising opportunities without diminishing the overall user experience. The
layout generally is configured to allow for 2 larger and 4 smaller
advertisements. This design allows the site to generate a high potential cost
per thousand without alienating the viewer. We anticipate that the bulk of
advertising to be priced on a cost per thousand basis. At present, our rates are
$20, with discounts for volume purchases. In certain circumstances, we may elect
to accept advertising purchases on a cost-per-click or cost-per-lead basis or
barter basis. We may use this rate structure when the potential revenue is
projected to be greater than a cost per thousand basis or if excess inventory is
available. Through September 30, 1999, we have not entered into any barter
arrangements.

As the Internet advertising market matures, online advertising decisions
will increasingly be made on the ability of a web site to reach certain
demographics desired rather than on the ability to deliver bulk viewers. We
believe that we are in a position to take advantage of this opportunity because
of the nature of the Predict It product offering. Our initial target market of
United States and international sports information and financial markets
represents an attractive demographic for potential advertisers since the sports
and finance areas have historically generated substantial users with favorable
demographics.

COMPETITION

The market for Internet users and advertisers is new and rapidly evolving.
Competition is intense and is expected to increase significantly in the future.
The number of web sites on the Internet competing for consumer's attention and
spending has proliferated and we expect that competition will continue to
intensify.

We compete directly or indirectly for advertisers, viewers, members and
content providers with competitors that fall within the following two
categories:

o Providers of fantasy sports games such as Small World Sports and Wall
Street Sports; and

o Syndicated content offering providers such as Pick' Em Sports.

We believe that other competitive sites that provide for online sports
pools, sweepstakes, and competition in financial market predictions present an
opportunity for us since our Predict It products can be used as tools for
individuals who are avid participants at these other sites. By providing a
source of knowledge to viewers, we believe that our products will encourage
users of these sites to visit our sites to view the predictions of our members.

We anticipate that the number of direct and indirect competitors will
increase in the future. This could result in price reductions for advertising,
reduced margins, greater operating losses or loss of market share, any of which
would materially adversely affect our business, results of operations and
financial condition.

We also compete for visitors with many Internet content providers and
Internet service providers, including web directories, search engines, shareware
archives, content sites, commercial online services and sites maintained by
Internet service providers, as well as thousands of Internet sites operated by
individuals and government and educational institutions. These competitors
include free information, search and content

28
<PAGE>

sites or services, such as America Online, CNET, CNN/Time Warner, Excite,
Infoseek, Lycos, Microsoft, Netscape and Yahoo!. We also compete with the
foregoing companies, as well as traditional forms of media such as newspapers,
magazines, radio and television, for advertisers and advertising revenues. We
believe that the principal competitive factors in attracting advertisers
includes the amount of traffic on our web site, brand recognition, customer
service, the demographics of our members and viewers, our ability to offer
targeted audiences and the overall cost-effectiveness of the advertising medium
we offer. We believe that the number of Internet companies relying on web-based
advertising revenue will increase substantially in the future. Accordingly, we
will likely face increased competition, resulting in increased pricing pressures
on our advertising rates which could in turn have a material adverse effect on
our business, results of operations and financial condition.

Many of our existing and potential competitors, including web directories
and search engines and large traditional media companies, have longer operating
histories in the web market, greater name recognition, larger customer bases and
significantly greater financial, technical and marketing resources than we have
currently. Our competitors may be able to undertake more extensive marketing
campaigns for their brands and services, adopt more aggressive advertising
pricing policies and make more attractive offers to potential employees,
distribution partners, commerce companies, advertisers and third-party content
providers. Advertisers may perceive Internet content providers and Internet
service providers, including web directories, search engines, shareware
archives, sites that offer professional editorial content, commercial online
services and sites maintained by Internet service providers as more desirable
web sites for placement of advertisements.

In addition, substantially all of our current advertising customers and
distributors also have established collaborative relationships with certain of
our competitors or potential competitors, and other high-traffic web sites.
Accordingly, we cannot be certain that we will be able to grow our membership
base, traffic levels and advertiser customer base at historical levels or retain
our current members, traffic levels or advertiser customers. Advertisers may
find other web sites more attractive if web traffic grows at a faster rate on
the web sites of competitors and thus, our distributors may decline to renew
their agreements with us. We may not be able to compete successfully against our
current or future competitors and competition could have a material adverse
effect on our business, results of operations and financial condition.

TECHNOLOGY

As of November 15, 1999, our public web site, www.Predictit.com, which
features the Predict It Sports service, is currently hosted and maintained by
Frontier Global Center. Frontier Global Center provides a guaranteed 99.7%
uptime and monitors all aspects of the servers on a twenty-four hour basis using
a pager gateway with a 15-minute reponse time in off-hours. Frontier Global
Center provides an on-call telephone line answered 24 hours a day by on-duty
engineers and maintains UPS systems capable of maintaining power on battery for
several hours.

Predict It services are written in Java using an Oracle database and run on
a Unix platform. The system was designed using state-of-the-art technology and
is fully scalable with respect to anticipated increases in traffic.

INTELLECTUAL PROPERTY

Predict It seeks to protect its proprietary rights, but its actions may be
inadequate to protect its patents, trademarks or other proprietary rights to
prevent others from claiming violations of their proprietary rights. Predict It
has one patent application on file with the United States Patent and Trademark
Office. Predict It enters into confidentiality agreements with its employees,
consultants and distributors, and generally controls access to and distribution
of its proprietary information. Despite Predict It's efforts to protect its
proprietary rights from unauthorized use or disclosure, parties may attempt to
disclose, obtain or use its proprietary information. The steps Predict It has
taken may not prevent misappropriation of its proprietary information. Third
parties may infringe or misappropriate Predict It's proprietary rights, which
could have a material adverse effect on Predict It's business, results of
operations and financial condition. The validity, enforceability and scope of
protection of proprietary rights in Internet-related industries is uncertain and
still evolving.

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<PAGE>
Furthermore, third parties may assert infringement claims against Predict
It. Claims relating to infringement of the trademarks and other intellectual
property rights of third parties and any resultant litigation, should it occur,
could subject Predict It to significant liability for damages and could result
in the invalidation of Predict It's proprietary rights. In addition, even if
Predict It prevails, any litigation could be time-consuming and expensive to
defend, and could result in the diversion of management's time and attention,
any of which could materially adversely affect Predict It's business, results of
operations and financial condition. Any claims from third parties may also
result in limitations on Predict It's ability to use the trademarks and other
intellectual property subject to those claims unless Predict It enters into
agreements with the third parties responsible for those claims. However, such
third-party agreements may be unavailable on commercially reasonable terms.

We seek to protect our copyrights, service marks, trademarks, trade dress
and trade secrets through a combination of laws and contractual restrictions,
such as confidentiality agreements. For example, we attempt to register our
trademarks and service marks in the United States and internationally. However,
effective trademark, service mark, copyright and trade secret protection may not
be available in every country in which our services are made available online.

We currently own a number of Internet domain names, including
PredictIt.com, SportsCappers.com Predictit.net, and VirtualStockExchange.com.
Domain names generally are regulated by Internet regulatory bodies. The
relationship between regulations governing domain names and laws protecting
trademarks and similar proprietary rights is unclear. We, therefore, may be
unable to prevent third parties from acquiring domain names that infringe or
otherwise decrease the value of our trademarks and other proprietary rights.

NEW AND EXISTING REGULATION ON THE INTERNET

We are subject to the same federal, state and local laws as other companies
conducting business on the Internet. Today, there are relatively few laws
specifically directed towards online services. However, due to the increasing
popularity and use of the Internet and online services, it is possible that laws
and regulations will be adopted with respect to the Internet or online services.
These laws and regulations could cover issues such as online contracts, user
privacy, freedom of expression, pricing, fraud, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security. Currently, applicability to the Internet of existing laws
governing issues such as property ownership, copyrights and other intellectual
property issues, taxation, libel, obscenity and personal privacy is uncertain.

Several states have proposed legislation that would limit the uses of
personal user information gathered online or require online services to
establish privacy policies. The Federal Trade Commission also has recently
started a proceeding with one online service regarding the manner in which
personal information is collected from users and provided to third parties.
Changes to existing laws or the passage of new laws intended to address these
issues could directly affect the way we do business or could create uncertainty
in the marketplace. This could reduce demand for our services or increase the
cost of doing business as a result of litigation costs or increased service
delivery costs, or could otherwise harm our business. In addition, because we
offer our services to users worldwide, foreign jurisdictions may claim that we
are required to comply with their laws. In some jurisdictions, we may be
required to collect value-added taxes on our fees. Our inadvertent failure to
comply with foreign laws could subject us to penalties ranging from fines to
bans on our ability to offer our services.

EMPLOYEES

As of November 15, 1999, we had 20 full time employees, including 7 in
sales and marketing, 9 in product development/technology and 4 in general and
administrative functions. From time to time, we also employ independent
contractors to support our engineering, marketing, sales and support and
administrative organizations. We depend on our key personnel to manage our
business effectively in a rapidly changing market. For a more detailed account
of our key personnel, please see the "Risk Factors" and "Management" sections.

FACILITIES

We are headquartered in New York City, where we lease approximately
4,900 square feet at 694 Eighth Avenue, 5th Floor, New York, New York. The term
of this lease is 6 years, 2 months and the average monthly payment over the term
of the lease is $12,935. We believe that our existing facilities are adequate to

30
<PAGE>
meet our current and foreseeable requirements or that suitable additional or
substitute space will be available as needed.

LEGAL PROCEEDINGS

Predict It is not a party to any material legal proceedings.

MANAGEMENT

The following table sets forth certain information with respect to our
executive officers, directors and key employees as of November 1, 1999:

<TABLE>
<CAPTION>
NAME AGE COMPANY POSITION AND OFFICES HELD
- ---------------------------------------------- --- ---------------------------------------------
<S> <C> <C>
Andrew Merkatz................................ 31 President and Director
Desmond Glass................................. 30 Controller
Robert Jacobs................................. 38 Senior Vice President of Business Development
Geordie Pace.................................. 35 Senior Vice President of Product Development
Alana Oldham.................................. 30 Chief Technology Officer
Gary Cheng.................................... 25 Vice President of Business Development
and Director
Howard Yen.................................... 25 Director of Technology
Andrew Weissman............................... 32 Secretary and Director
Ajmal Khan.................................... 38 Director
Keith Rosenbloom.............................. 38 Director
Carol Lee..................................... 41 Director
</TABLE>

Andrew Merkatz, age 31, became the President of Predict It as of May 17,
1999. Immediately prior to joining Predict It, from 1998 to 1999, Mr. Merkatz
was the Vice President of Corporate Development and Finance for FLOORgraphics,
Inc., an out-of-home media company based in Princeton, New Jersey. Between 1995
and 1998, he was the Chief Financial Officer and Chief Operating Officer of
SiteSpecific, Inc., a New York-based Interactive Marketing Agency that he
assisted in founding in 1995. Mr. Merkatz began his career in 1990 as a Private
Equity Analyst for Interlaken Capital, Inc., in Greenwich, Connecticut. He
received his B.A. in Economics from the University of Pennsylvania and his
M.B.A. from Harvard University Graduate School of Business Administration.

Desmond Glass, age 30, joined Predict It in September 1999 as its
Controller. Prior to that, between May 1996 and 1999, Mr. Glass worked at
Primedia, where he served as Controller of Automobile Magazine and the Modern
Bride Group. Prior to serving as a Controller at Primedia, Mr. Glass worked in
the acquisition department at Primedia, where Mr. Glass performed financial due
diligence for acquisition candidates. Between 1994 and 1996, Mr. Glass held a
senior position within the internal audit department of Capital Cities/ABC.
Prior to his affiliation with ABC, between 1990 and 1994, Mr. Glass worked at
Deloitte & Touche LLP, where he was responsible for clients in the financial and
manufacturing industries. Mr. Glass is a member of the Institute of Chartered
Accountants and attained his Bachelor of Commerce degree from University College
Dublin, Ireland.

31
<PAGE>

Robert Jacobs, age 38, has served as Vice President of Business Development
for Predict It since July 1998 and as Senior Vice President of Business
Development since June 1999. Between 1990 and 1998, Mr. Jacobs was employed by
Bergen Brunswig Corporation, holding several sales and management positions of
increasing responsibility. Prior to Bergen Brunswig, Mr. Jacobs was a Director
of LaRae Enterprises, a private investment banking firm focusing primarily on
mergers and acquisitions. Mr. Jacobs received a B.A. in Psychology from UCLA.

Geordie Pace, age 35, joined Predict It in June 1999 as its Senior Vice
President of Product Development. Prior to that, Mr. Pace worked at PaceKim
Partners, the Internet consulting agency that he co-founded in 1998. Between
1997 and 1998, Mr. Pace was Director of Production and Technology for CKS New
York (now USWEB/CKS), where he was responsible for creating interactive
strategies for such clients as Audi, Duracell, and W.W. Grainger. Between 1996
and 1997, Mr. Pace served as Associate Creative Director and Director of
Production at SiteSpecific Inc., a New York-based Interactive Marketing Agency
that was acquired by CKS in 1997.

Alana Oldham, age 30, has served as our Chief Technology Officer since July
1999. Between June 1998 and July 1999, Ms. Oldham served as the Director of
Technology of Pixelpark, an international e-commerce Internet agency which is a
subsidiary of Bertelsmann AG. At Pixelpark, Ms. Oldham built strategic and
technical teams and created e-business solutions for clients such as Proctor &
Gamble, The Museum of Modern Art and Radio Shack. Prior to joining Pixelpark,
Ms. Oldham served as a technology innovator for companies, including THINK New
Ideas, where she was a technical producer from August 1995 to March 1996, and
Sun Microsystems where she was a programmer from October 1993 to September 1994.

Gary Cheng, age 25, joined Predict It in July 1999 as its Vice President of
Business Development and as a Director. Between 1997 and July 1999, Mr. Cheng
served as the President of Virtual Stock Exchange, a New York-based stock market
simulation, message board and prediction company, which he co-founded in 1997.
Between August 1996 and 1997, Mr. Cheng served as a consultant at Systems &
Computer Technology Corporation, where he helped develop and launch their Web
for Faculty and Advisors product. Mr. Cheng holds a B.S. in Electrical
Engineering from Cornell University.

Howard Yen, age 25, joined Predict It in July 1999 as its Director of
Technology. In 1997, Mr. Yen focused primarily on all technical aspects of
Virtual Stock Exchange. Between 1995 and 1996, Mr. Yen worked as a software
designer at theglobe.com, which is a large portal on the Internet. Mr. Yen
helped build theglobe.com's proprietary chat system. In 1996, he worked as an
Internet Consultant with Siegel & Gale, a subsidiary of Saatchi & Saatchi, which
is an advertising agency. Mr. Yen holds a B.S. in Electrical Engineering from
Cornell University.

Andrew Weissman, age 32, has been the Secretary and a Director of Predict
It since 1998. Since June 1998, Mr. Weissman has been a Senior Vice President
with the Dawntreader Fund I LP, which is a venture capital fund focused on early
stage Internet companies. Between November 1997 and June 1998, Mr. Weissman was
the President of Virtuosity Press, a start-up company formed to acquire the
copyrights to out-of-print and out-of-stock books. Between October 1997 and
1998, Mr. Weissman was Senior Counsel at America Online, and was responsible for
structuring and negotiating content distribution, marketing and
e-commerce-related transactions with AOL's largest distributors. He has also
practiced media and corporate law in Washington, D.C. and New York City, and
holds a B.A. in Economics from Wesleyan University and a J.D., magna cum laude,
from Georgetown University.

Ajmal Khan, age 38, has served as a Director of Predict It since 1999. In
1989, Mr. Khan founded Verus Capital Corp., a diversified investment group, and
has served as its President since its inception. He has been involved in
successfully structuring and syndicating North American real estate and
corporate acquisitions. Verus' principal activities involve the ownership of
hotels, venture capital financing, corporate acquisitions, and several
franchising and licensing joint ventures. Since February 1999, Mr. Khan has
served as a Director of Wattage Monitor, Inc., which provides electric rate
information over the Internet. Since October of 1998, Mr. Khan has served as a
Director of Advanced Bodymetrics, Inc., a publicly-traded high-tech company
dedicated to developing sports wristwatches that are able to monitor and display
various functions of the human body. Since July of 1998, Mr. Khan has also
served as a Director of iParty Corp., a publicly-traded company dedicated to
providing information and services with respect to coordinating parties

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<PAGE>
and events. Since June 1999, Mr. Khan has also served as a Director of On2.com
Inc., a publicly-traded company that develops broadband video compression.

Keith Rosenbloom, age 31, has served as a Director of Predict It since
1998. Since 1992, Mr. Rosenbloom has been employed as Director of Merchant
Banking at Commonwealth Associates, L.P., which provides investment services on
the Internet. Mr. Rosenbloom holds a B.A. from Yale University.

Carol Lee, age 41, has served as a Director of Predict It since 1999. Since
1990, Ms. Lee has been employed at The Prospero Group, a real estate investment
company, where she has served as President since 1999. Between 1990 and 1998,
Ms. Lee served as Vice President of Prospero. Ms. Lee holds a Bachelor of
Commerce from the University of British Columbia and an M.B.A. from Harvard
University.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

During the last five years, none of the directors, executive officers or
control persons of Predict It have been:

o A party to a bankruptcy proceeding;

o Convicted in a criminal proceeding;

o Subject to any order, judgment or decree permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in
any type of business, securities or banking activities; or

o Found to have violated a federal or state securities or commodities law.

DIRECTOR COMPENSATION

Compensation of Directors consists solely of reimbursement of their
expenses for attending meetings.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

SUMMARY COMPENSATION TABLE

The following table sets forth all compensation awarded to our Chief
Executive Officer and all of our executive officers who received compensation in
excess of $100,000 for the fiscal year ended December 31, 1998:

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------------
AWARDS
-----------------------
ANNUAL COMPENSATION SECURITIES PAY-OUTS
------------------------------------ RESTRICTED UNDERLYING -----------------------
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION AWARDS SARS PAY-OUTS COMPENSATION
- ------------------------------- ---- ------------- ----- ------------ ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tom Courts(1) ................. 1998 $ 84,583 0 0 0 0(2) 0 0
Chief Executive Officer and 1997 $ 8,500 0 0 0 0 0 0
Director
</TABLE>

- ------------------
(1) Mr. Courts resigned as President and Chief Executive Officer on May 15,
1999.

(2) In 1999, Mr. Courts was awarded options to purchase an aggregate of 225,000
shares of our common stock.

OPTION GRANTS IN 1998

Set forth below is information on grants of stock options for our executive
officers for the fiscal year ended December 31, 1998.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
% OF TOTAL OPTIONS
NUMBER OF GRANTED TO EMPLOYEES EXERCISE PRICE
NAME OPTIONS GRANTED IN FISCAL YEAR PER SHARE EXPIRATION DATE
- ------------------------------------------ --------------- -------------------- -------------- ---------------
<S> <C> <C> <C> <C>
Robert Jacobs............................. 81,750(1) 100% $ .245 10/02/03
</TABLE>

33
<PAGE>
- ------------------

(1) Upon the merger of Predict It Corp. into WDC Development, Inc., Mr. Jacobs'
prior option to purchase 14,678 shares of Series B Preferred Stock of
Predict It Corp. at an exercise price of $1.3636 per share was converted
into an option to purchase 81,750 shares of our common stock at an exercise
price of $.245 per share.

COMPENSATION ARRANGEMENTS

On May 17, 1999, we entered into an Employment Agreement with Mr. Merkatz.
Mr. Merkatz's initial employment term expires on May 17, 2002. Mr. Merkatz
currently receives a base salary of $140,000 per year, which is subject to
review by management, and any merit increases will be subject to our company
policy. Under the terms of the agreement, Mr. Merkatz is eligible to receive a
bonus for services rendered, subject to the discretion of our Compensation
Committee. Upon executing his employment agreement, Mr. Merkatz received options
to purchase 537,198 shares of common stock at an exercise price of $2.00 per
share. Such options vest in equal portions over three years and have
anti-dilution protection. As a result of this anti-dilution protection, upon the
consummation of the Virtual Stock Exchange acquisition, Mr. Merkatz received an
option to purchase 168,006 shares of our common stock at an exercise price of
$2.62 per share, vesting in accordance with the above option. Also as a result
of the anti-dilution protection, and as a result of our issuance of additional
stock options to our employees, on August 18, 1999, Mr. Merkatz received an
option to purchase 9,421 shares of our common stock at an exercise price of
$1.75 per share, vesting in accordance with the above options. In addition,
Mr. Merkatz received a performance-based option to purchase 214,879 shares of
our common stock at an exercise price of $3.75 per share which is scheduled to
vest as follows: (i) 50% of the performance-based option shall vest on May 1,
2000 if the number of registered users of Predict It exceeds 312,500 by such
date and the page views of Predict It for April 2000 exceed 25,000,000; and
(ii) the remaining 50% of the performance-based option shall vest on May 1, 2001
if the number of registered users of Predict It exceeds 937,500 by such date and
the page views of Predict It for April 2001 exceed 85,714,275. However, in the
event the performance-based goals for the May 1, 2000 vesting schedule are not
met by such date, then if by May 1, 2001 the number of registered users of
Predict It exceeds 1,125,000 and the page views of Predict It for April 2001
exceed 102,857,130, then the whole performance-based option shall vest on
May 1, 2001. Such option does not have anti-dilution protection. In the event we
terminate Mr. Merkatz's employment for any reason other than "for cause,"
Mr. Merkatz will be entitled to 180 days advance written notice of the
termination and 30 days' salary.

On May 1, 1999, we entered into a Consulting Agreement with Verus Capital
Corp., one of our stockholders, for a two-year term ending April 30, 2001. Under
the agreement, Verus receives $10,000 per month plus authorized out-of-pocket
expenses for providing Predict It with consulting and advisory services relating
to its business. We have the right to terminate the agreement "for cause" and
Verus is restricted during the term of the agreement, and for two years
thereafter, from competing directly or indirectly with us by engaging in any
competitive business or by rendering any services to any competitor of ours,
except in a limited capacity as a passive investor in a publicly-traded company.

On June 9, 1999, we entered into an Employment Agreement with Geordie Pace.
Currently, Mr. Pace's base salary is $115,000 per year, which is subject to
review by management, and any merit increases will be subject to our company
policy. In addition to his base salary, Mr. Pace shall be eligible to receive an
annual bonus of up to $30,000 upon meeting certain conditions. Mr. Pace has been
granted an option to purchase 100,000 shares of common stock at an exercise
price of $2.30 per share. Such option will vest over three years with one-third
of the shares exercisable on June 9, 2000 and one-sixth of the shares
exercisable every six months thereafter. Mr. Pace is an at-will employee. In the
event we terminate Mr. Pace's employment for any reason other than "for cause"
Mr. Pace will be entitled to 30 days' salary and accrued vacation and bonus.

On June 30, 1999, we entered into an Employment Agreement with Howard Yen.
Mr. Yen's initial employment term expires on June 30, 2002. Mr. Yen currently
receives a base salary of $75,000 per year, which is subject to review by
management, and any merit increases will be subject to our company policy. Under
the terms of the agreement, Mr. Yen is eligible to receive a bonus up to $15,000
upon meeting certain conditions. In the event we terminate Mr. Yen for any
reason other than "for cause" Mr. Yen will be entitled to 30 days advance
written notice and 6 months' salary.

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<PAGE>
On June 30, 1999, we entered into an Employment Agreement with Gary Cheng.
Mr. Cheng's initial employment term expires on June 30, 2002. Mr. Cheng
currently receives a base salary of $75,000 per year, which is subject to review
by management, and any merit increases will be subject to our company policy.
Under the terms of the agreement, Mr. Cheng is eligible to receive a bonus up to
$15,000 upon meeting certain conditions. In the event we terminate Mr. Cheng for
any reason other than "for cause," Mr. Cheng will be entitled to 30 days advance
written notice and 6 months' salary.

STOCK OPTION PLAN

On April 28, 1999, upon completion of the reverse acquisition, our 1999
Stock Option Plan became effective. As of June 24, 1999, our 1999 Stock Option
Plan was amended to reserve a total of 1,500,000 shares of common stock, subject
to the approval of our stockholders.

OUR 1999 STOCK OPTION PLAN

Under our 1999 Stock Option Plan, key employees, officers, consultants and
directors are given an opportunity to acquire our shares. Our 1999 Stock Option
Plan provides for discretionary option grants, under which key employees,
officers, and consultants may be granted options to purchase our shares of
common stock at an exercise price not less than 85% of the fair market value of
our shares on the grant date. The options granted under our 1999 Stock Option
Plan may be either incentive stock options designed to meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended, or non-statutory
options not intended to satisfy such requirements. Options may be granted to
eligible individuals in our employ or service or in the service of any
subsequent corporation.

As of June 24, 1999, our 1999 Stock Option Plan was amended to reserve a
total of 1,500,000 shares of common stock for issuance over the ten-year term of
our 1999 Stock Option Plan. Currently, there are 1,500,000 reserved shares of
our common stock which remain available for issuance.

Options have maximum terms of ten years from the grant date. Options are
not assignable or transferable other than by will or by the laws of inheritance.
The option may be exercised only by the optionee. The optionee will not have any
rights with respect to our shares of common stock underlying the options until
the options are exercised and the option price is paid for the purchased shares.
Our Board of Directors has the authority to cancel outstanding options in return
for the grant of new options for the same or a different number of shares with
an exercise price based on the lower fair market value of our common stock on
the new grant date. However, our Board of Directors may terminate our 1999 Stock
Option Plan at any time. Our 1999 Stock Option Plan terminates on April 28,
2009.

If we are acquired by merger, consolidation or asset sale, or there is a
hostile change in control, each option granted under the 1999 Stock Option Plan
may be accelerated, and all unvested shares issued under the 1999 Stock Option
Plan may be immediately vested.

RELATED PARTY TRANSACTIONS

On May 1, 1999, we entered into a Consulting Agreement with Verus for a
two-year term, ending April 30, 2001. Under the agreement, Verus receives
$10,000 per month plus authorized out-of-pocket expenses for providing us with
consulting and advisory services relating to our business. Verus is one of our
stockholders and Ajmal Khan, one of our directors, is the President and founder
of Verus.

For information concerning employment and consulting agreements with, and
compensation of Predict It's executive officers and directors, see the
"Management--Employment and Consulting Contracts" section.

We believe that the terms of the foregoing transaction are no less
favorable to us than could have been obtained from non-affiliated third parties,
although no independent appraisals were obtained.

35
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of our common stock as of November 15, 1999 as follows:

o By each person who is known by Predict It to beneficially own more than
5% of Predict It's common stock, fully diluted;

o By each of Predict It's directors;

o By each officer named under the "Management--Executive
Compensation--Summary Compensation Table"; and

o By all executive officers and directors as a group.

Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to all shares
beneficially owned, subject to community property laws where applicable. The
percentages set forth in the table assume 11,803,448 (including 500,000 shares
being held in escrow pending Predict It achieving certain milestones) shares of
common stock outstanding as of November 15, 1999.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME AND ADDRESS COMMON STOCK PERCENTAGE OF
OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED BENEFICIAL OWNERSHIP
- ------------------------------------------------------------------------ ------------------- --------------------
<S> <C> <C>
Dawntreader Fund I LP
188 West 22nd Street,
11th Floor
New York, NY 10011.................................................... 2,415,152 20.5%
Gary Cheng
c/o Predict It Inc.
694 Eighth Avenue
New York, NY 10036.................................................... 1,261,683 (2) 10.7%
Howard Yen
c/o Predict It Inc.
694 Eighth Avenue
New York, NY 10036.................................................... 1,261,683 (2) 10.7%
GEM France
712 Fifth Avenue
7th Floor
New York, NY 10019.................................................... 918,381 7.7%
Thomas Courts
c/o Predict It Inc.
694 Eighth Avenue
New York, NY 10036.................................................... 675,982 (3) 5.7%
Andrew Merkatz
c/o Predict It Inc.
694 Eighth Avenue
New York, NY 10036.................................................... 0 (4) *
Keith Rosenbloom
c/o Commonwealth Associates, L.P.
830 Third Avenue
New York, NY 10022.................................................... 466,682 (5) 4.0%
Andrew Weissman
c/o Dawntreader Fund I LP
188 West 22nd Street,
11th Floor
New York, NY 10011.................................................... 2,415,152 (6) 20.5%
</TABLE>

36
<PAGE>

<TABLE>
<S> <C> <C>
Carol Lee
c/o The Prospero Group 517-1177
West Hastings Street
Vancouver, B.C.
Canada V6E 2K3........................................................ 0 *
Robert Jacobs
c/o Predict It Inc.
694 Eighth Avenue
New York, NY 10036.................................................... 27,250 (7) *
Ajmal Khan
c/o Verus Capital Corp.
1177 W. Hastings Street, Suite 2000
Vancouver, British Columbia
Canada V6E2K3......................................................... 10,000 (8) *
Alana Oldham
c/o Predict It Inc.
694 Eighth Avenue
New York, NY 10036.................................................... 0 (9) *
Desmond Glass
c/o Predict It Inc.
694 Eighth Avenue
New York, NY 10036.................................................... 0 (10) *
All Executive Officers and Directors
as a group (10 persons)............................................... 5,442,450 45.9%
</TABLE>

- ------------------
* Represents less than one (1%) percent

(1) Rule 13d-3 under the Securities exchange Act of 1934 provides the
determination of beneficial owners of securities. That rule includes as
beneficial owners of securities, any person who directly or indirectly has,
or shares, voting power and/or investment power with respect to such
securities. Rule 13d-3 also includes as a beneficial owner of a security any
person who has the right to acquire beneficial ownership of such security
within sixty days through means, including, the exercise of any options,
warrant or conversion of a security. Any securities not outstanding which
are subject to such options, warrants or conversion privileges are deemed to
be outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such person. Those securities are not
deemed to be outstanding for the purpose of computing the percentage of the
class by any other person.

(2) Includes 233,645 shares of common stock which are being held in escrow
pending Predict It's achievement of certain milestones.

(3) Includes the following: (i) an immediately exercisable option to purchase,
for a period of 5 years, 125,000 shares of common stock at an exercise price
of $.30 per share; and (ii) an option to purchase, for a period of one year,
100,000 shares of common stock, vesting in equal quarterly amounts, at an
exercise price of $.60 per share, 50,000 of which shall have vested on
November 15, 1999.

(4) Mr. Merkatz holds an option to purchase 537,198 shares of our common stock
at an exercise price of $2.00 per share, of which one-third shall vest on
May 19, 2000 and the remaining two-thirds shall vest every 6 months
thereafter in one-sixth increments. This option is subject to anti-dilution
protection. Mr. Merkatz also holds an option to purchase 168,006 shares of
our common stock at an exercise price of $2.62 per share, vesting in
accordance with the above option. In addition, Mr. Merkatz holds an option
to purchase 9,421 shares of our common stock at an exercise price of $1.75
per share, vesting in accordance with the above options. Mr. Merkatz also
holds an option to purchase 214,879 shares of common stock at an exercise
price of $3.75 per share, of which one-third shall vest on May 19, 2000 and
the remaining two-thirds shall vest every 6 months thereafter in one-sixth
increments upon attaining certain targets. This option is not subject to
anti-dilution protection.

37
<PAGE>
(5) Includes 416,683 shares of common stock that are held by Commonwealth
Associates, L.P., of which Mr. Rosenbloom is Director of Merchant Banking.
Mr. Rosenbloom disclaims beneficial ownership of such shares.

(6) Represents shares of common stock that are held by Dawntreader Fund I LP of,
which Mr. Weissman is Senior Vice President. Mr. Weissman disclaims
beneficial ownership of such shares.

(7) Represents an option to purchase 81,750 shares of common stock at an
exercise price of $.245 per share, of which 27,250 options vested on
July 19, 1999. Does not include an option to purchase 27,250 shares of
common stock at an exercise price of $2.30 per share, of which one-third
shall vest on June 24, 2000 and the remaining two-thirds shall vest every
6 months thereafter in one-sixth increments.

(8) Represents shares of common stock held by Verus Capital Corp., of which
Mr. Khan is founder and President. Mr. Khan disclaims beneficial ownership
of such shares.

(9) Ms. Oldham holds an option to purchase 120,000 shares of common stock at an
exercise price of $2.00 per share, of which one-third shall vest on
July 26, 2000 and the remaining two-thirds shall vest every 6 months
thereafter in one-sixth increments.

(10) Mr. Glass holds an option to purchase 70,000 shares of common stock at an
exercise price of $1.50 per share, of which one-third shall vest on
September 27, 2000 and the remaining two-thirds shall vest every 6 months
thereafter in one-sixth increments.

SELLING SECURITY HOLDERS

The following table shows for our stockholders the following information:

o The number of shares of our common stock beneficially owned by them as of
November 15, 1999 and covered by this prospectus; and

o The number of shares of common stock to be retained after this offering,
if any.

<TABLE>
<CAPTION>
COMMON STOCK(1)
------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
OWNED PRIOR TO AND BENEFICIALLY OWNED
NAME OF SELLING SECURITY HOLDER REGISTERED IN THE OFFERING AFTER THE OFFERING
- --------------------------------------------------------------------- -------------------------- ------------------
<S> <C> <C>
Tom Courts........................................................... 700,982(2) 50,000
Dawntreader Fund I LP................................................ 2,415,152 0
Keith M. Rosenbloom.................................................. 466,682(3) 0
Robert Jacobs........................................................ 109,000(4) 81,750
Paul Yahnke.......................................................... 225,421 0
GEM France........................................................... 918,381 0
Snowmass Technologies LLC............................................ 81,697 0
Falk Family Foundation............................................... 70,841 0
Michael S. Falk...................................................... 70,841 0
Robert A. O'Sullivan Family Trust.................................... 16,664 0
Robert L. Priddy..................................................... 141,676 0
Gary N. Mansfield.................................................... 16,664 0
Ron Moschetta........................................................ 49,999 0
Commonwealth Associates, L.P......................................... 416,683 0
Navigator Holdings Corp.............................................. 546,600(5) 0
Sprott Capital S.A................................................... 546,600(5) 0
Century Capital Corp................................................. 382,716 0
Perth Management Corp................................................ 525,992(6) 0
Rock Capital Corp.................................................... 365,575 0
Salter Street Management Corp........................................ 516,815(7) 0
National Day Corporation............................................. 512,936(8) 0
Asia World Holdings, Ltd............................................. 380,830 0
Bright Outlook Consultants, Ltd...................................... 370,575 0
Pyrennes Investments Limited......................................... 522,118(9) 0
Verus Capital Corp................................................... 49,243(10) 0
Harold W. Gorden..................................................... 10,000 0
Mid-Continental Securities Corp...................................... 7,500 0
</TABLE>

38
<PAGE>

<TABLE>
<CAPTION>
COMMON STOCK(1)
------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
OWNED PRIOR TO AND BENEFICIALLY OWNED
NAME OF SELLING SECURITY HOLDER REGISTERED IN THE OFFERING AFTER THE OFFERING
- --------------------------------------------------------------------- -------------------------- ------------------
<S> <C> <C>
John B Lowy.......................................................... 7,500 0
Vision Consulting International Inc.................................. 103,448 0
Alan M. Bass......................................................... 2,500 0
Sharon Brasure....................................................... 10,000 0
Leanne Donovan....................................................... 1,211 0
Robert Felch......................................................... 428 0
Jerry Gruenbaum...................................................... 1,850 0
Craig Hickok......................................................... 1,250 0
David G. Irwin....................................................... 2,500 0
Denise Johnson....................................................... 1,950 0
Jason E. Johnson..................................................... 1,950 0
K.D. Johnson......................................................... 1,950 0
Maile Johnson........................................................ 1,950 0
Aimee Masure......................................................... 1,250 0
James M. McCully..................................................... 1,000 0
Judith McCully....................................................... 1,000 0
Marla McCully........................................................ 500 0
Thomas Shakespear.................................................... 1,211 0
Stephen M. Siedow.................................................... 222,500 0
---------- --------
Total.............................................................. 10,804,131 131,750
</TABLE>

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

(1) We assume no purchase in this offering by any stockholder listed above of
any shares of our common stock and that each stockholder will sell all of
its shares being registered hereby.

(2) Includes the following: (i) an immediately exercisable option to purchase,
for a period of 5 years, 125,000 shares of common stock of an exercise
price of $.30 per share; and (ii) an option to purchase, for a period of
one year, 100,000 shares of common stock at an exercise price of $.60 per
share, of which 50,000 shares became exercisable on November 15, 1999.

(3) Includes 49,999 shares of common stock that are directly owned and 416,683
shares of common stock that are held by Commonwealth Associates, of which
Mr. Rosenbloom is Director of Merchant Banking. Mr. Rosenbloom disclaims
beneficial ownership of the stock held by Commonwealth Associates.

(4) Includes (i) an option to purchase 81,750 shares of common stock at an
exercise price of $.245 per share, of which 27,250 shares became
exercisable on July 19, 1999, and (ii) an option to purchase 27,250 shares
of common stock at an exercise price of $2.30 per share.

(5) Includes 163,884 shares of our common stock underlying 163,884 shares of
Series A Preferred Stock, convertible at any time at the option of the
holder.

(6) Includes 157,704 shares of our common stock underlying 157,704 shares of
Series A Preferred Stock, convertible at any time at the option of the
holder.

(7) Includes 154,953 shares of our common stock underlying 157,704 shares of
Series A Preferred Stock convertible at any time at the option of the
holder.

(8) Includes 153,789 shares of our common stock underlying 153,789 shares of
Series A Preferred Stock, convertible at any time at the option of the
holder.

(9) Includes 156,543 shares of our common stock underlying 156,543 shares of
Series A Preferred Stock, convertible at any time at the option of the
holder.

(10) Includes 49,243 shares of our common stock underlying 49,243 shares of
Series A Preferred Stock, convertible at any time at the option of the
holder.

39
<PAGE>
PLAN OF DISTRIBUTION

We are registering the shares of our common stock covered by this
prospectus.

We will pay the costs, expenses, and fees of registering the common stock,
but our stockholders will pay any underwriting or brokerage commissions and
similar selling expenses relating to the sale of shares of their common stock.

Our stockholders may sell our common stock at market prices prevailing at
the time of the sale, at prices related to the prevailing market prices, at
negotiated prices or at fixed prices, which may change. Our stockholders may
sell some or all of their common stock through:

o Ordinary brokers' transactions, which may include long or short sales;

o Transactions involving cross or block trades or otherwise on the NASDAQ
SmallCap Market;

o Purchases by brokers, dealers or underwriters as principal and resale by
those purchasers for their own accounts under this prospectus;

o Market makers or into an existing market for the common stock;

o Transactions in options, swaps or other derivatives; or

o Any combination of the selling options described in this prospectus, or
by any other legally available means.

In addition, our stockholders may enter into hedging transactions with
broker-dealers, who may engage in short sales of our common stock in the course
of hedging the positions they assume. Finally, our stockholders may enter into
options or other transactions with broker-dealers that require the delivery of
our common stock to those broker-dealers. Subsequently, the shares may be resold
under this prospectus.

In their selling activities, our stockholders will be subject to applicable
provisions of the Securities Exchange Act of 1934 and its rules and regulations,
including Regulation M, which may limit the timing of purchases and sales of our
common stock by our stockholders.

Those of our stockholders and any broker-dealers involved in the sale or
resale of our common stock may qualify as "underwriters" within the meaning of
Section 2 (11) of the Securities Act of 1933. In addition, the broker-dealers'
commissions, discounts, or concessions may qualify as underwriters' compensation
under the Securities Act of 1933. If any broker-dealer or any of our
stockholders qualify as an "underwriter," they will be subject to the prospectus
delivery requirements of Section 153 of the Securities Act of 1933.

In conjunction with sales to or through brokers, dealers or agents, our
stockholders may agree to indemnify such brokers, dealers or agents against
liabilities arising under the Securities Act of 1933. We do not know of any
existing arrangements between our stockholders and any other stockholder,
broker, dealer, underwriter or agent relating to the sale or distribution of our
common stock.

In addition to selling their common stock under this prospectus, our
stockholders may:

o Transfer their common stock in other ways not involving market makers or
established trading markets, including by gift, distribution or other
transfer; or

o Sell their common stock under Rule 144 of the Securities Act, if the
transaction meets the requirements of Rule 144.

We have advised our stockholders that, during the time each is engaged in
distribution of their common stock, each must comply with Rule 10b-5 and
Regulation M under the Securities Exchange Act of 1934. They must do all of the
following under those rules:

o Not engage in any stabilization activity in connection with our common
stock;

o Furnish each broker who may be offering our common stock on behalf of our
stockholders the number of copies of this prospectus required by each
broker; and

o Not bid for or purchase any of our common stock or attempt to induce any
person to purchase any of our common stock, other than as permitted under
the Securities Exchange Act of 1934.

40
<PAGE>
Any of our stockholders who may be "affiliated purchasers," as defined in
Regulation M, have been further advised that they must coordinate their sales
under this prospectus with each other and us for the purposes of Regulation M.

To the extent required under the Securities Act, a supplemental prospectus
will be filed, disclosing:

o The name of any such broker-dealers;

o The number of securities involved;

o The price at which such securities are to be sold;

o The commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable;

o That such broker-dealers did not conduct any investigation to verify the
information set out in this Prospectus, as supplemented; and

o Other facts material to the transaction.

There is no assurance that any of our stockholders will sell any of our
common stock.

We have agreed to keep the registration statement relating to the offering
and sale by our stockholders continuously effective until the earlier of the
sale of all their common stock or 12 months from the date of this prospectus.

DESCRIPTION OF THE CAPITAL STOCK

Our authorized capital stock consists of 25,000,000 shares of our common
stock, par value $.01 per share, and 5,000,000 shares of our preferred stock,
par value $.01 per share as set forth below.

Our Amended and Restated Certificate of Incorporation, By-laws and the
Registration Rights Agreement described below are included as exhibits to the
Registration Statement of which this prospectus forms a part.

COMMON STOCK

Our authorized common stock consists of 25,000,000 shares of common stock.
As of November 15, 1999, we had issued and outstanding 11,803,448 shares of
common stock (including 500,000 shares of common stock that are being held in
escrow pending Predict It achieving certain milestones). As of November 15,
1999, there were approximately 25 holders of record of our common stock. In
addition, we have reserved the following shares of common stock:

o 1,000,000 shares of our common stock for conversion of our issued and
outstanding Series A Preferred Stock;

o 1,500,000 shares of our common stock under our 1999 Stock Option Plan;
and

o 206,750 shares of our common stock for existing options.

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of our stockholders. Subject to
preferences that may be applicable to any outstanding shares of our preferred
stock, the holders of our common stock are entitled to receive ratably such
dividends as may be declared by the board of directors out of funds legally
available for such dividends. In the event of our liquidation, dissolution or
winding up, holders of our common stock will be entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation preferences of
any outstanding shares of preferred stock. Holders of common stock have no
preemptive rights and no right to convert their common stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are fully paid and
non-assessable. The rights, preferences and privileges of holders of common
stock are subject to the rights of holders of shares of any series of preferred
stock that we may designate and issue in the future.

PREFERRED STOCK

We are authorized to issue up to 5,000,000 shares of preferred stock, par
value $.01 per share. As of November 15, 1999, 1,000,000 shares of our Series A
Preferred Stock were issued and outstanding, held by approximately 15 registered
holders. The holders of our Series A Preferred Stock have no voting power

41
<PAGE>

except as is expressly provided under Delaware law. Each share of our Series A
Preferred Stock is convertible into one share of our common stock at the option
of the holders of Series A Preferred Stock.

Pursuant to our articles of incorporation, our board of directors has the
authority, without further action by the stockholders, to issue shares of our
preferred stock in one or more series and to fix the designation, powers,
preferences, privileges and relative participating, optional or special rights
of such stock, and the qualifications, limitations or restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of redemption
and liquidation preferences, any or all of which may be greater than the rights
of the common stock. Our board of directors, without stockholder approval, may
issue preferred stock with voting, conversion of other rights that could
adversely affect the voting power and other rights of the holder of our common
stock. Therefore, our preferred stock may be issued quickly, with terms that may
delay or prevent a change in control or make removal of management more
difficult. Additionally, the issuance of preferred stock may have the effect of
decreasing the market price of the common stock and may adversely affect the
voting and other rights of the holders of common stock.

REGISTRATION RIGHTS

In connection with our acquisition of Virtual Stock Exchange, Messrs.
Cheng, Yen and Appleby, who received in the aggregate 2,700,000 shares of our
common stock (including 500,000 shares of common stock that are being held in
escrow pending Predict It achieving certain milestones) pursuant to such
acquisition, are entitled to certain rights with respect to the registration of
such shares under the Securities Act. They are entitled to certain demand
registration rights pursuant to which they may require Predict It to file a
registration statement under the Securities Act at our expense with respect to
all or a portion of the shares of common stock held by either of them, their
affiliates and permitted transferees, and we are required to use commercially
reasonable efforts to effect such registration. If Predict It proposes to
register any of its securities under the Securities Act, either for its own
account or for the account of other security holders (other than a registration
of our securities filed on Form S-4 or S-8 of the Securities Act), Messrs.
Cheng, Yen and Appleby are entitled to certain "piggy back" registration rights
pursuant to which they may require us to include all or a portion of their
shares in such registration. In addition, pursuant to his employment agreement,
Mr. Merkatz is entitled to certain "piggy back" registration rights pursuant to
which he may require us to include all or a portion of his shares in such
registration. All of these registration rights are subject to certain conditions
and limitations, among them the right of an underwriter of an offering to limit
the number of shares included in such registration, and our right not to effect
a demand registration during the period starting with the fourteenth day
immediately preceding the date of an anticipated filing by us of, and ending on
a date ninety (90) days following the effective date of, a registration
statement pertaining to this offering.

OPTIONS

We have issued 25 options to purchase an aggregate of 1,792,504 shares of
our common stock representing the following:

o an option to purchase 100,000 shares of our common stock at an
exercise price of $.60 per share, vesting in quarterly amounts over
a period of one year, commencing April 28, 1999;

o an option to purchase 537,198 shares of our common stock at an
exercise price of $2.00 per share, of which one-third shall vest on
May 19, 2000 and the remaining two-thirds shall vest every 6 months
thereafter, in one-sixth increments commencing May 19, 1999;

o an option to purchase 125,000 shares of our common stock at an
exercise price of $.30 per share, which vested as of January 11,
1999;

o an option to purchase 100,000 shares of our common stock at an
exercise price of $2.30 per share, of which one-third shall vest on
June 4, 2000 and the remaining two-thirds shall vest every 6 months
thereafter, commencing as of June 24, 1999 in one-sixth increments;

o an option to purchase 40,000 shares of our common stock at an
exercise price of $2.30 per share, of which one-third shall vest on
June 4, 2000 and the remaining two-thirds shall vest every 6 months
thereafter, commencing as of June 24, 1999 in one-sixth increments;

42
<PAGE>

o an option to purchase 27,250 shares of our common stock at an
exercise price of $2.30 per share, of which one-third shall vest on
June 24, 2000 and the remaining two-thirds shall vest every
6 months thereafter, commencing as of June 24, 1999 in one-sixth
increments;

o an option to purchase 10,000 shares of our common stock at an
exercise price of $2.30 per share, of which one-third shall vest on
November 23, 1999 and the remaining two-thirds shall vest every
6 months thereafter, commencing as of June 24, 1999 in one-sixth
increments;

o an option to purchase 81,750 shares of our common stock at an
exercise price of $.245 per share, vesting over 3 years, commencing
as of July 19, 1999;

o an option to purchase 214,879 shares of common stock at an exercise
price of $3.75 per share, of which one-third shall vest on May 19,
2000 and the remaining two-thirds shall vest every 6 months
thereafter, commencing as of May 19, 1999 in one-sixth increments;

o an option to purchase 30,000 shares of common stock at an exercise
price of $2.00 per share, of which one-third shall vest on July 21,
2000 and the remaining two-thirds shall vest every 6 months
thereafter, commencing as of July 27, 1999 in one-sixth increments;

o an option to purchase 120,000 shares of our common stock at an
exercise price of $2.00 per share, of which one-third shall vest on
July 26, 2000 and the remaining two-thirds shall vest every
6 months thereafter, commencing as of July 27, 1999 in one-sixth
increments;

o an option to purchase 4,000 shares of our common stock at an
exercise price of $2.00 per share, of which one-third shall vest on
July 26, 2000 and the remaining two-thirds shall vest every
6 months thereafter, commencing as of July 27, 1999 in one-sixth
increments;

o an option to purchase 25,000 shares of common stock at an exercise
price $2.00 per share, of which one-twelfth shall vest on
January 27, 2000 and the remaining eleven-twelfths shall vest every
3 months thereafter, commencing as of July 27, 1999 in one-twelfth
increments;

o an option to purchase 70,000 shares of our common stock at an
exercise price of $1.50 per share, of which one-third shall vest on
September 27, 2000 and the remaining two-thirds shall vest every 6
months thereafter, in one-sixth increments, commencing as of
September 27, 1999;

o an option to purchase 35,000 shares of our common stock at an
exercise price of $1.50 per share, of which one-third shall vest on
September 27, 2000 and the remaining two-thirds shall vest every 6
months thereafter, in one-sixth increments, commencing as of
September 27, 1999;

o three options to purchase 15,000 shares of our common stock at an
exercise price of $1.50 per share, of which one-third shall vest on
September 27, 2000 and the remaining two-thirds shall vest every 6
months thereafter, in one-sixth increments, commencing as of
September 27, 1999;

o two options to purchase 10,000 shares of our common stock at an
exercise price of $1.50 per share, of which one-third shall vest on
September 27, 2000 and the remaining two-thirds shall vest every 6
months thereafter, in one-sixth increments, commencing as of
September 27, 1999;

o two options to purchase 5,000 shares of our common stock at an
exercise price of $1.50 per share, of which one-third shall vest on
September 27, 2000 and the remaining two-thirds shall vest every 6
months thereafter, in one-sixth increments, commencing as of
September 27, 1999;

o an option to purchase 20,000 shares of our common stock at an
exercise price of $1.50 per share, of which one-third shall vest on
October 15, 2000 and two-thirds shall vest every 6 months
thereafter, in one-sixth increments, commencing as of October 15,
1999;

o an option to purchase 9,421 shares of our common stock at an
exercise price of $1.75 per share, of which one-third shall vest on
May 19, 2000 and the remaining two-thirds shall vest every 6 months
thereafter, in one-sixth increments.

o an option to purchase 168,006 shares of our common stock at an
exercise price of $2.62 per share, of which one-third shall vest on
May 19, 2000 and the remaining two-thirds shall vest every 6 months
thereafter, in one-sixth increments.

43
<PAGE>
TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for Predict It's Common Stock is
Continental Stock Transfer & Trust, Inc., subject to confirmation by the board
of directors. As neither the convertible preferred stock nor the options is
registered, Predict It acts as its own Transfer Agent and Registrar as to such
securities.

SHARES ELIGIBLE FOR FUTURE SALE

We currently have 11,803,448 (including 500,000 shares that are being held
in escrow pending Predict It achieving certain milestones) shares of common
stock outstanding, of which 9,000,000 shares are freely tradeable without
restriction or further registration under the Securities Act of 1933. However,
any shares purchased by an affiliate of ours will be subject to the resale
limitations of Rule 144 under the Securities Act of 1933. An affiliate is a
person who has a control relationship with us. The remaining shares of common
stock are held by us. Rule 144 provides that a person who has satisfied a
one-year holding period for any restricted shares may sell within any
three-month period an amount of restricted shares that does not exceed the
greater of:

o one percent of that class of outstanding shares; or

o the average weekly trading volume of that class of securities during
the four calendar weeks prior to such sale.

Sales under Rule 144 are also subject to certain manner of sale provisions,
notice requirements and the availability of current public information about us.
In addition, under Rule 144, persons who are not affiliated with us and who have
held their restricted shares for at least two years are not subject to the
quantity limitations or the manner of sale restrictions.

In addition, 1,000,000 shares of our common stock underlying the shares of
Series A Preferred Stock will, upon conversion of the Series A Preferred Stock,
be freely tradeable without restriction or further registration. Also, 206,750
shares of our common stock underlying the options will, upon exercise of the
options, be freely tradeable without restriction or further registration.

REGISTRATION RIGHTS

Upon completion of this offering, the holders of 2,700,000 shares of our
common stock (including 500,000 shares of common stock being held in escrow
pending Predict It achieving certain milestones, and 752,077 shares of common
stock underlying 752,077 options to purchase common stock), or their permitted
transferees, will be entitled to certain rights with respect to the registration
of such shares under the Securities Act. Please see "Description of Capital
Stock--Registration Rights" for a description of such rights. Upon registration,
these shares will become freely tradeable without restriction under the
Securities Act. Any sales of securities by these stockholders could have a
material adverse effect on the trading price of our common stock.

LEGAL MATTERS

The validity of the common stock offered under this prospectus will be
passed upon for us by our counsel, Camhy Karlinsky & Stein LLP, New York, New
York. An attorney affiliated with Camhy Karlinsky & Stein LLP may be deemed to
have beneficial ownership of 2,415,152 shares of our common stock, although such
beneficial ownership is disclaimed.

EXPERTS

This registration statement includes the financial statements of Predict It
Inc., as of December 31, 1998, for the period from September 2, 1997 (inception)
through December 31, 1997 and for the year ended December 31, 1998, and the
financial statements of Virtual Stock Exchange, Inc. as of December 31, 1998 and
for the period from January 7, 1997 (inception) through December 31, 1997 and
for the year ended December 31, 1998, which have been audited by Richard A.
Eisner and Company, LLP, independent certified public accountants. These
financials have been included herein in reliance upon the audit reports
appearing elsewhere herein, given upon the authority of said firm as experts in
accounting and auditing.

44
<PAGE>
DISCLOSURE OF COMPANY POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our certificate of incorporation and by-laws provide that we shall
indemnify all directors and officers of ours to the fullest extent permitted by
Delaware Law. Under such provisions, any director or officer, who in his
capacity as such is made or threatened to be made, party to any suit or
proceeding, shall be indemnified if it is determined that such director or
officer acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of Predict It. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and persons controlling Predict It pursuant to the foregoing
provision, or otherwise, we have been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.

We maintain directors' and officers' liability insurance providing
aggregate coverage of $5,000,000.

45
<PAGE>
PREDICT IT INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
CONTENTS PAGE
- -------------------------------------------------------------------------------------------------------- ----

<S> <C>
PREDICT IT INC.

Financial Statements

Independent auditors' report............................................................................ F-2

Balance sheets as of December 31, 1998 and September 30, 1999 (unaudited)............................... F-3

Statements of operations for the period from September 2, 1997 (inception) through December 31, 1997,
the year ended December 31, 1998 and the nine months ended September 30, 1998 (unaudited) and
September 30, 1999 (unaudited)........................................................................ F-4

Statements of changes in stockholders' equity for the period from September 2, 1997 (inception) through
December 31, 1997, the year ended December 31, 1998 and the nine months ended September 30, 1999
(unaudited)........................................................................................... F-5

Statements of cash flows for the period from September 2, 1997 (inception) through December 31, 1997,
the year ended December 31, 1998 and the nine months ended September 30, 1998 (unaudited) and
September 30, 1999 (unaudited)........................................................................ F-6

Notes to financial statements........................................................................... F-7

VIRTUAL STOCK EXCHANGE, INC.
<S> <C>

Financial Statements

Independent auditors' report............................................................................ F-15

Balance sheets as of December 31, 1998 and June 30, 1999 (unaudited).................................... F-16

Statements of operations for the period from January 7, 1997 (inception) through December 31, 1997, the
year ended December 31, 1998 and the six months ended June 30, 1998 (unaudited) and June 30, 1999
(unaudited)........................................................................................... F-17

Statements of changes in stockholders' equity (Capital Deficiency) for the period from January 7, 1997
(inception) through December 31, 1997, the year ended December 31, 1998 and the six months ended
June 30, 1999 (unaudited)............................................................................. F-18

Statements of cash flows for the period from January 7, 1997 (inception) through December 31, 1997, the
year ended December 31, 1998 and the six months ended June 30, 1998 (unaudited) and June 30, 1999
(unaudited)........................................................................................... F-19

Notes to financial statements........................................................................... F-20
<CAPTION>

UNAUDITED PRO FORMA FINANCIAL STATEMENTS
<S> <C>

Unaudited pro forma statements of operations for the nine months ended September 30, 1999 and for the
year ended December 31, 1998 and the notes thereto.................................................... F-22
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Predict It Inc.
New York, New York

We have audited the accompanying balance sheet of Predict It Inc. as of
December 31, 1998 and the related statements of operations, changes in
stockholders' equity and cash flows for the year then ended and for the period
from September 2, 1997 (inception) through December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Predict It Inc. as of December 31,
1998 and the results of its operations and its cash flows for the year then
ended and for the period from September 2, 1997 (inception) through December 31,
1997 in conformity with generally accepted accounting principles.

Richard A. Eisner & Company, LLP

New York, New York
April 28, 1999

With respect to Note I, June 9, 1999,
Note C June 30, 1999 and
Note E, July 6, 1999

F-2
<PAGE>
PREDICT IT INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER30,
1998 1999
------------ --------------
(CONSOLIDATED)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash.............................................................................. $113,772 $1,625,927
Accounts receivable............................................................... 36,739
Prepaid expenses and other current assets......................................... 4,075 169,824
-------- ----------
Total current assets................................................................ 117,847 1,832,490
Capitalized software costs, net of accumulated amortization of $5,374 and
$33,647........................................................................ 59,121 675,848
Property and equipment, net of accumulated depreciation of $5,253 and $20,089..... 12,798 203,367
Registered user base, net of accumulated amortization of $122,338................. 1,345,716
Other assets...................................................................... 9,128 96,894
-------- ----------
$198,894 $4,154,315
-------- ----------
-------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............................................. $ 72,729 $ 847,655
Long-term liabilities:
Capital lease obligations......................................................... 14,679
Notes payable, stockholders....................................................... 100,000
Accrued interest.................................................................. 12,000
-------- ----------
72,729 974,334
-------- ----------
Commitments (Notes E and I)
Stockholders' equity:
Series A convertible preferred stock, $.001 par value, 1,000,000 shares
authorized, 250,000 shares issued and outstanding in 1998...................... 250
Series B convertible preferred stock, $.001 par value, 1,000,000 shares
authorized, 183,338 shares issued and outstanding in 1998...................... 183
Common stock, $.001 par value, 2,000,000 shares authorized, 315,256 shares issued
and outstanding in 1998........................................................ 317
Preferred stock, $.01 par value, 5,000,000 shares authorized, 1,000,000 shares
Series A issued and outstanding at September 30, 1999 (stated at liquidation
preference).................................................................... 3,000,000
Common stock, $.01 par value, 25,000,000 shares authorized, 11,200,000 shares
issued and outstanding at September 30, 1999 (exchange of 500,000 shares held
in escrow)..................................................................... 112,000
Additional paid-in capital........................................................ 654,586 2,957,563
Deficit........................................................................... (529,171) (2,054,027)
Unearned compensation............................................................. (835,555)
-------- ----------
126,165 3,179,981
-------- ----------
$198,894 $4,154,315
-------- ----------
-------- ----------
</TABLE>

See notes to financial statements

F-3
<PAGE>
PREDICT IT INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SEPTEMBER 2,
1997
(INCEPTION)
THROUGH NINE MONTHS ENDED
DECEMBER 31, YEAR ENDED SEPTEMBER 30,
DECEMBER 31, ------------------------
1997 1998 1998 1999
------------ ------------ --------- -----------
(UNAUDITED) (CONSOLIDATED)
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue:
User fees............................................. $ 7,712 $ 6,202 $ 3,461
Advertising........................................... 6,000 6,000 93,209
---------- --------- -----------
13,712 12,202 96,670
---------- --------- -----------
Costs and expenses:
Site development/maintenance.......................... 177,783 148,244 160,698
Selling, general and administrative................... $ 21,402 340,698 191,915 1,368,828
Amortization of acquired intangible................... 122,338
Interest expense (income)............................. 3,000 3,000 (30,338)
-------- ---------- --------- -----------
21,402 521,481 343,159 1,621,526
-------- ---------- --------- -----------
Net loss................................................ $(21,402) $ (507,769) $(330,957) $(1,524,856)
-------- ---------- --------- -----------
-------- ---------- --------- -----------
Net loss per share--basic and diluted................... $ (.04) $ (.21) $ (.18) $ (.17)
-------- ---------- --------- -----------
-------- ---------- --------- -----------
Weighted average number of shares outstanding........... 488,412 2,381,327 1,784,508 8,790,775
-------- ---------- --------- -----------
-------- ---------- --------- -----------
</TABLE>

See notes to financial statements

F-4
<PAGE>

PREDICT IT INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON
SERIES A SERIES B STOCK
SERIES A CONVERTIBLE CONVERTIBLE PAR
COMMON STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK VALUE
PAR VALUE $.01 PAR VALUE $.01 PAR VALUE $.001 PAR VALUE $.001 $.001
---------------------- ----------------------- ------------------ ------------------ --------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
---------- -------- --------- ---------- -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock
for cash and equipment
($6,700)................. 94,500
Issuance of common stock
for cash................. 40,500
Net loss for the period
September 2, 1997
(inception) through
December 31, 1997........
--------
Balance at December 31,
1997..................... 135,000
Issuance of common stock
for cash................. 165,000
Issuance of common stock
as settlement for accrued
interest................. 578
Issuance of common stock
for nonemployee
services................. 14,678
Issuance of preferred
stock for cash........... 250,000 $250
Issuance of preferred
stock for cash........... 183,338 $ 183
Net loss for the year
ended December 31,
1998.....................
-------- ---- -------- ------ --------
Balance at December 31,
1998..................... 250,000 250 183,338 183 315,256
Issuance of preferred
stock for cash........... 149,726 150
Net loss for the nine
months ended
September 30, 1999.......
Grant of options to
employee by
stockholder..............
Recapitalization in
connection with merger
into WDC................. 5,000,000 $ 50,000 (250,000) (250) (333,064) (333) (315,256)
Sale of preferred and
common stock, net of
issuance costs........... 4,000,000 40,000 1,000,000 $3,000,000
Issuance of shares in
connection with
acquisition, exclusive of
500,000 shares held in
escrow................... 2,200,000 22,000
Unearned compensation
relating to grant of
stock options............
Amortization of unearned
compensation.............
---------- -------- --------- ---------- -------- ---- -------- ------ --------
Balance at September 30,
1999 (unaudited)......... 11,200,000 $112,000 1,000,000 $3,000,000 0 $ 0 0 $ 0 0
---------- -------- --------- ---------- -------- ---- -------- ------ --------
---------- -------- --------- ---------- -------- ---- -------- ------ --------

ADDITIONAL
PAID-IN UNEARNED
AMOUNT CAPITAL DEFICIT COMPENSATION TOTAL
------ ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Issuance of common stock
for cash and equipment
($6,700)................. $ 95 $ 9,905 $ 10,000
Issuance of common stock
for cash................. 41 29,959 30,000
Net loss for the period
September 2, 1997
(inception) through
December 31, 1997........ $ (21,402) (21,402)
------ ---------- ----------- ----------
Balance at December 31,
1997..................... 136 39,864 (21,402) 18,598
Issuance of common stock
for cash................. 165 99,835 100,000
Issuance of common stock
as settlement for accrued
interest................. 1 657 658
Issuance of common stock
for nonemployee
services................. 15 14,663 14,678
Issuance of preferred
stock for cash........... 249,750 250,000
Issuance of preferred
stock for cash........... 249,817 250,000
Net loss for the year
ended December 31,
1998..................... (507,769) (507,769)
------ ---------- ----------- ----------
Balance at December 31,
1998..................... 317 654,586 (529,171) 126,165
Issuance of preferred
stock for cash........... 249,850 250,000
Net loss for the nine
months ended
September 30, 1999....... (1,524,856) (1,524,856)
Grant of options to
employee by
stockholder.............. 5,729 5,729
Recapitalization in
connection with merger
into WDC................. (317) (49,100) 0
Sale of preferred and
common stock, net of
issuance costs........... (141,502) 2,898,498
Issuance of shares in
connection with
acquisition, exclusive of
500,000 shares held in
escrow................... 1,298,000 1,320,000
Unearned compensation
relating to grant of
stock options............ 940,000 $ (940,000) 0
Amortization of unearned
compensation............. 104,445 104,445
------ ---------- ----------- ---------- ----------
Balance at September 30,
1999 (unaudited)......... $ 0 $2,957,563 $(2,054,027) $ (835,555) $3,179,981
------ ---------- ----------- ---------- ----------
------ ---------- ----------- ---------- ----------
</TABLE>

See notes to financial statements.

F-5
<PAGE>

PREDICT IT INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SEPTEMBER 2,
1997
(INCEPTION) NINE MONTHS ENDED
THROUGH YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31,
1997 1998 1998 1999
------------ ------------ ----------- --------------
(UNAUDITED) (CONSOLIDATED)
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................................ $(21,402) $ (507,769) $(330,957) $ (1,524,856)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization......................... 1,122 95,210 19,687 156,227
Stock issued for services............................. 14,678 14,678
Compensation expense related to option grants......... 5,729
Amortization of unearned compensation................. 104,445
Changes, net of effects of acquisition, in:
Accounts receivable................................ (29,795)
Prepaid expenses and other assets................ (13,203) (6,870) (249,591)
Accounts payable and accrued expenses............ 3,007 69,722 17,544 757,384
-------- ---------- --------- ------------
Net cash used in operating activities................... (17,273) (341,362) (285,918) (780,457)
-------- ---------- --------- ------------

Cash flows from investing activities:
Cost incurred to develop software..................... (15,925) (134,275) (53,855) (645,000)
Purchase of computer equipment........................ (11,318) (7,252) (160,272)
Acquisition costs, net of cash acquired............... (34,051)
-------- ---------- --------- ------------
Net cash used in investing activities................... (15,925) (145,593) (61,107) (839,323)
-------- ---------- --------- ------------

Cash flows from financing activities:
Issuance of common and preferred stock, net........... 33,267 600,658 350,658 3,148,498
Loans from related parties............................ 60,000 60,000
Loan repayments to related parties.................... (60,000) (60,000)
Payments on capital lease obligation.................. (16,563)
-------- ---------- --------- ------------
Net cash provided by financing activities............... 33,267 600,658 350,658 3,131,935
-------- ---------- --------- ------------
Net increase in cash.................................... 69 113,703 3,633 1,512,155
Cash--beginning of period............................... 69 69 113,772
-------- ---------- --------- ------------
Cash--end of period..................................... $ 69 $ 113,772 $ 3,702 $ 1,625,927
-------- ---------- --------- ------------
-------- ---------- --------- ------------

Supplemental disclosure of cash flow information:
Interest paid during the period....................... $ 3,000 $ 3,000

Supplemental disclosures of noncash investing and
financing activities:
Issuance of common stock for equipment................ $ 6,700
Issuance of common stock as settlement for accrued
interest........................................... $ 658 $ 658
Issuance of common stock for business combination..... $ 1,320,000
Granting of stock options............................. $ 940,000
</TABLE>

See notes to financial statements

F-6
<PAGE>

PREDICT IT INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1999 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 IS UNAUDITED)

NOTE A--THE COMPANY AND OPERATIONS

On April 28, 1999, Predict It Corp. ("PIC"), which was formed in August
1998 in connection with the reincorporation of Sportscappers, Inc. (which was
incorporated on September 2, 1997), was merged with and into WDC Development,
Inc. ("WDC"), a non-operating public shell company. In connection with the
merger, each of the common and preferred shares of PIC were exchanged for
5.5659453 shares of WDC's common stock, resulting in the issuance of 5,000,000
common shares of WDC. Immediately prior to the merger, the existing shareholders
of WDC held 4,000,000 common shares and 1,000,000 preferred shares. Accordingly,
upon completion of the merger, the shareholders of PIC owned 55.55% of the
outstanding common shares of WDC and the premerger shareholders of WDC owned
44.45% of the outstanding common shares of WDC. The 1,000,000 shares of
preferred stock owned by premerger shareholders of WDC are nonvoting and
convertible into 1,000,000 shares of common stock of WDC. Upon completion of the
merger, WDC's Board of Directors consisted of three members from PIC and two
members from WDC. WDC's assets at the date of the merger consisted of $2,898,498
in cash, representing the proceeds remaining from $3,000,000 received on April
28, 1999 in exchange for the issuance of 1,000,000 shares of preferred stock and
$37,200 received in February and March 1999 in exchange for the issuance of
3,720,000 shares of common stock. Following the merger, WDC changed its name to
Predict It Inc. (the "Company").

The merger has been accounted for as a recapitalization of PIC together
with the issuance of 3,720,000 common shares and 1,000,000 preferred shares in
exchange for net proceeds of $2,898,498. The remaining 280,000 common shares of
WDC outstanding at the date of the merger are recorded by a charge to additional
paid-in capital for their par value of $2,800. Retroactive effect has been given
to the recapitalization in the accompanying financial statements and all per
share amounts and numbers of shares have been adjusted to reflect the exchange
ratio.

The Company, which was in the development stage during 1997 and part of
1998 develops and distributes interactive Internet applications. The Company's
"prediction exchange" allows users to pick and exchange predictions with other
users. The Company's initial product offering, "Predict It! Sports", (originally
launched as Sportscappers in March 1998 and relaunched in September 1998) allows
users to pick and exchange predictions on sporting events with fellow users. The
database engine then calculates the accuracy of these predictions and allows
users to view the entries. Users may post predictions and view the predictions
of others free of charge. Revenues are principally earned by the sale of
advertisements either directly or on a revenue sharing basis with other websites
through which the product is marketed. In addition, through November 1998, users
were charged a transaction fee for accessing the predictions. Revenue is shared
with the users each time their predictions are viewed.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE RECOGNITION:

Transaction fees from users were recognized as revenue at the time
predictions were accessed by users. Advertising revenue is earned from both
fixed fee arrangements and fees based on the number of occasions a user views an
advertisement ("impression"). Revenues under fixed fee arrangements, which
provide for ads being shown month to month, are recognized in the month the ads
are exhibited. Revenue based on number of impressions is recognized at the time
a substantial portion of the guaranteed number of impressions occur. Revenue
applicable to the portion of guaranteed impressions which have not occured at
the balance sheet date is not recognized.

F-7
<PAGE>

PREDICT IT INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1999 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 IS UNAUDITED)

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

2. COMPUTER EQUIPMENT:

Computer equipment is stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over an estimated useful
life of three years.

3. SOFTWARE COSTS:

In accordance with Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" issued in March 1999
and adopted by the Company, qualifying costs incurred during the application
development stage, consisting of external direct costs of materials and services
and payroll and related benefits for employees who devoted time in connection
with obtaining or developing internal use software are capitalized. All other
costs incurred in connection with internal use software are expensed as
incurred. Capitalized software costs are being amortized on a straight-line
basis over an estimated useful life of two years. Amortization expense for the
year ended December 31, 1998 and for the nine months ended September 30, 1999
was approximately $90,000 and $28,000, respectively, and has been included in
site development/maintenance in the accompanying statements of operations.
Amortization for the year ended December 31, 1998, includes approximately
$49,000 for the write off of unamortized software costs which were deemed to be
impaired as a result of rebuilding the site through use of a new provider. Also,
site development/maintenance expense in 1998 includes compensation of $64,678
paid to the former source provider related to the transition to the new website.

4. LOSS PER SHARE:

Basic and diluted net loss per share is computed based on the weighted
average number of common shares outstanding for the periods and gives
retroactive effect to the shares issued in the recapitalization. Potential
common shares resulting from exercise of options are not included in the
calculation of diluted net loss per share as their effect would be
anti-dilutive.

5. STOCK-BASED COMPENSATION:

The Company accounts for its stock-based compensation plans using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25
("APB No. 25"), "Accounting for Stock Issued to Employees." Under the provisions
of APB No. 25, compensation arising from the grant of stock options is measured
as the excess, if any, of the quoted market price of the Company's common stock
at the date of the grant over the amount an employee must pay to acquire the
stock.

6. ADVERTISING EXPENSE:

Advertising is expensed as incurred. Advertising expense amounted to
approximately $0 (1997), $23,000 (1998), $19,000 (9 months--1998) and $184,000
(9 months--1999).

7. USE OF ESTIMATES:

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

F-8
<PAGE>

PREDICT IT INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1999 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 IS UNAUDITED)

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

8. COMPREHENSIVE INCOME:

The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS No. 130
establishes standards for reporting comprehensive income and its components in
financial statements. Comprehensive income, as defined, includes all changes in
stockholders' equity during a period from nonowner sources. Comprehensive loss
for the periods presented is the same as net loss.

9. SEGMENT INFORMATION:

The Company adopted the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information". SFAS 131 requires public
companies to report financial and descriptive information about their reportable
operating segments. The Company identifies its operating segments based on how
management internally evaluates separate financial information, business
activities and management responsibility. The Company believes that its
operations constitute a single, reportable segment.

10. UNAUDITED FINANCIAL STATEMENTS:

The financial information presented as of September 30, 1999 and for the
nine-month periods ended September 30, 1999 and 1998 is unaudited, but in the
opinion of management contains all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of such financial
information. Results of operations for interim periods are not necessarily
indicative of those to be achieved for full fiscal years.

NOTE C--ACQUISITION

On June 30, 1999, the Company acquired Virtual Stock Exchange, Inc.
("VSE"), a company which develops and distributes interactive internet
applications where users manage hypothetical stock portfolios and conduct mock
trading. VSE's stockholders exchanged all of their outstanding common stock for
2,700,000 shares of the Company's common stock, including 500,000 shares to be
held in escrow with 50% of such shares being released in January 2000 and the
remaining 50% to be released in January 2001, upon the Company attaining certain
specified amounts of registered users and page views as of December 31, 1999 and
December 31, 2000, respectively. If the milestones are not achieved, the shares
will be returned to the Company and cancelled. The acquisition is being
accounted for by the purchase method. The 2,200,000 shares issued in the
acquisition have been valued at $.60 per share representing fair value based on
the proceeds received on the issuance of shares in connection with the WDC
transaction on April 28, 1999 which coincides with the time when the terms of
the acquisition was agreed to. The 500,000 shares held in escrow to the extent
issued will be accounted for as compensation based on the value of the shares
issued at such dates. The accounts of VSE, including its results of operations,
have been included in the accompanying financial statements from the date of
acquisition.

In connection with the acquisition, the Company entered into three-year
employment agreements with two former stockholders of VSE which provide for
aggregate annual base salaries of $150,000 and annual aggregate bonuses not to
exceed $30,000.

F-9
<PAGE>

PREDICT IT INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1999 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 IS UNAUDITED)

The $1,368,000 purchase price has been allocated as follows:

<TABLE>
<S> <C>
Cash............................................................................ $ 13,949
Accounts receivable............................................................. 6,944
Computer equipment.............................................................. 35,913
Registered user base (a)........................................................ 1,468,054
Other assets.................................................................... 3,924
----------
Total assets.................................................................. 1,528,784
----------
Accounts payable and accrued expenses........................................... 17,542
Capital lease obligations....................................................... 31,242
Notes payable--stockholders..................................................... 100,000
Accrued interest................................................................ 12,000
----------
Total liabilities............................................................. 160,784
----------
$1,368,000
----------
----------
</TABLE>

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

(a) Being amortized on a straight-line basis over three years

The following unaudited pro forma information for the year ended December
31, 1998 and the nine months ended September 30, 1999 give effect to the
acquisition as though it occurred at January 1, 1998 and reflects the effect of
amortization of the acquired intangibles over a 3-year period and compensation
under the employment agreement with two former stockholders of VSE.

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1999 1998
----------------- ------------
<S> <C> <C>
Pro forma revenue.............................................................. $ 162,860 $ 80,909
Pro forma net loss............................................................. $(1,974,108) $ (1,149,133)
Pro forma net loss per share--basic and diluted................................ $ (.20) $ (.25)
Pro forma weighted average number of shares outstanding........................ 9,890,775 4,581,327
</TABLE>

NOTE D--RELATED PARTY TRANSACTIONS

During 1998, the Company borrowed and repaid $60,000 from two of its
stockholders at rates of 12%--15%. Interest expense related to such loans
amounted to $3,000 in 1998. At September 30, 1999, VSE has outstanding loans
payable to two stockholders in the amount of $100,000 at an interest rate of 8%.
Interest is payable semi-annually beginning January 1, 2000 and the principal is
due on June 1, 2002. Interest expense for the nine months ended September 30,
1999 was $2,000.

F-10
<PAGE>

PREDICT IT INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1999 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 IS UNAUDITED)

NOTE E--LEASE AGREEMENTS

On July 6, 1999, the Company entered into a six year and two months lease
for office space expiring August 2005 which provides for average monthly
payments over the term of the lease of approximately $13,000. Future minimum
lease payments under the lease at September 30, 1999 are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
- ----------------------------------------------------------------------------------
<S> <C>
2000............................................................................ $114,629
2001............................................................................ 148,974
2002............................................................................ 153,447
2003............................................................................ 158,052
2004............................................................................ 162,792
Thereafter...................................................................... 153,391
--------
$891,285
--------
--------
</TABLE>

The Company had two month to month agreements to sublease office space
through September 1999. Rent expense was approximately $14,000 (1998), $800
(1997), $6,000 (9 months--1998) and $29,000 (9 months--1999). Other assets in
the accompanying balance sheets include security deposits for the leases of
approximately $6,870 (1998) and $86,000 (1999). Prepaid expenses at
September 30, 1999 includes approximately $72,000 of prepaid rent.

NOTE F--STOCK OPTIONS

On April 28, 1999, upon completion of the merger with WDC, the Company
adopted the 1999 Stock Option Plan which provides for option grants to key
employees, officers and consultants to purchase up to 1,500,000 shares of common
stock at an exercise price not less than 85% of the fair market value on the
grant date. The options, which will have maximum terms of ten years, may be
either incentive stock options, which must be granted at no less than 100% of
market value or nonstatutory options. The plan terminates after ten years.

In October 1998 and January 1999, PIC granted options to purchase shares of
Series B Preferred stock to two officers at exercise prices equivalent to the
estimated fair value of the stock at date of grant. Upon the merger into WDC,
the options were converted, based on the exchange ratio, into options to
purchase 81,750 and 125,000 shares of the Company's common stock at exercise
prices of $.245 and $.30 per share, respectively. The options for 125,000
shares, which expire in January 2004, are exerciseable upon grant and the
options for the 81,750 shares which expire in October 2003 become exerciseable
in three equal installments on July 19, 1999, 2000 and 2001. Additionally, in
January 1999, one of such officers was granted an option by a major shareholder
to purchase shares of Series B preferred stock, which upon the merger into WDC,
was converted into an option to purchase 104,167 shares of the Company's common
stock from such shareholder at an exercise price of $.245 per share.
Compensation expense of $5,729 was charged to operations in the nine-month
period ended September 30, 1999 in connection with such grant.

See Note I for additional grants of stock options.

F-11
<PAGE>

PREDICT IT INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1999 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 IS UNAUDITED)

NOTE F--STOCK OPTIONS--(CONTINUED)

Activity related to stock options during the nine months ended September
30, 1999 and the year ended December 31, 1998, including options described in
Note F and Note I:

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 DECEMBER 31, 1998
--------------------- ------------------
WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE
SHARES PRICE SHARES PRICE
--------- -------- ------ --------
<S> <C> <C> <C> <C>
Outstanding at beginning of period................................... 81,750 $ 0.25
Granted.............................................................. 1,690,754 2.05 81,750 $ 0.25
--------- ------
Outstanding at end of period......................................... 1,772,504 $ 1.97 81,750 $ 0.25
--------- ------ ------ ------
--------- ------ ------ ------
Exercisable.......................................................... 152,250 $ .29
--------- ------
--------- ------
</TABLE>

As set forth in Note B[5], the Company applies APB No. 25 in accounting for
its stock option incentive plans and, accordingly, recognizes compensation
expense for the difference between the fair value of the underlying common stock
and the exercise price of the option at the date of grant. Pro forma information
regarding net income and earnings per share is required by Statement of
Financial Accounting Standards No. 123 ("SFAS 123") "Accounting for Stock-Based
Compensation" determined as if the Company had accounted for its employee stock
options under the fair value method of SFAS 123. The weighted average fair value
of options granted in 1998 and 1999 was approximately $.17 and $1.69,
respectively. Such fair value was determined using the Black-Scholes
option-pricing model with the following assumptions: dividend yield of 0%,
volatility of 70%, risk free interest rates of 4.62%-5.88%, and expected lives
of three to five years. For purposes of pro forma disclosures, the estimated
fair value of the options is amortized to expense over the vesting period of the
options. Had the Company elected to recognize compensation expense based on SFAS
123, pro forma net loss and net loss per share for the year ended December 31,
1998 and the nine months ended September 30, 1999 would have been approximately
$(513,000) and $(1,804,000) and $(.22) and $(.21), respectively.

NOTE G--INCOME TAXES

The Company provides for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
No. 109"). SFAS No. 109 requires deferred tax assets and liabilities to be
recognized for the future tax consequences attributable to net operating loss
carryforwards and for differences between the financial statement carrying
amounts and tax bases of assets and liabilities. Deferred tax assets are
reduced, if necessary, by a valuation allowance if it is more likely than not
that some portion or all of the deferred tax assets will not be realized.

The Company elected to be taxed as an S corporation under the Internal
Revenue Code and accordingly, the Company was not subject to federal, state or
local corporate income taxes as taxable income or loss flowed through directly
to its stockholders. The Company terminated its S corporation status during
August 1998 when it issued preferred stock and accordingly, effective at such
time, the Company's income tax status was converted from a S corporation to that
of a C corporation.

As of September 30, 1999 and December 31, 1998, respectively, the Company
has a net operating loss carryforward of approximately $1,695,000 and $170,000
which expires in 2019, the utilization of which may be subject to limitations as
a result of changes in stock ownership.

F-12
<PAGE>

PREDICT IT INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1999 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 IS UNAUDITED)

NOTE G--INCOME TAXES--(CONTINUED)

The tax effects of significant items comprising the Company's net deferred
tax asset and liability are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Deferred tax asset:
Net operating loss carryforward......................................... $ 780,000 $ 78,000
Less valuation allowance................................................ (233,666) (78,000)
--------- --------
Net deferred tax asset.................................................... 546,334 0
Deferred tax liability:
Excess of book basis over tax basis of registered user base............. (546,334)
--------- --------
Net....................................................................... $ 0 $ 0
--------- --------
</TABLE>

The following presents the income tax benefit and related increase in the
valuation allowance. For periods prior to August 1998, when the Company was
taxed as an S corporation the amounts are pro forma as if the Company was
taxable as a C corporation:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1997 1998 1998 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Deferred:
Federal..................................................... $ (6,000) $(142,000) $ (90,000) $(519,000)
State....................................................... (4,000) (81,000) (51,000) (182,000)
--------- --------- --------- ---------
Total income tax benefit................................. (10,000) (223,000) (141,000) (701,000)
Valuation allowance........................................... 10,000 223,000 141,000 701,000
--------- --------- --------- ---------
Income tax benefit............................................ $ 0 $ 0 $ 0 $ 0
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

NOTE H--PREFERRED STOCK

The Board of Directors has the authority, without further action by the
stockholders, to issue 5,000,000 shares of authorized preferred stock in one or
more series and to fix the designation, powers, preferences, privileges and
rights of such stock, and the qualifications, limitations or restrictions
thereof, including dividend rights, conversion rights, voting rights, terms of
redemption and liquidation preferences. The 1,000,000 shares of Series A
Preferred Stock, which was issued for $3,000,000 by WDC prior to the merger has
a liquidation preference of $3.00 per share or $3,000,000, is nonvoting, does
not provide for any dividend and is convertible into 1,000,000 shares of common
stock on a share for share basis.

NOTE I--COMMITMENTS

1. EMPLOYMENT AGREEMENTS:

In May 1999, the Company executed a three year employment agreement with
its President. The agreement provides for an annual salary of $140,000, subject
to increases at the discretion of the Compensation Committee of the Board of
Directors. The agreement also provides for a discretionary performance bonus as
determined by the Board. In connection with the employment agreement, the
Company granted options to the President to purchase 537,158 shares of common
stock at an exercise price of $2.00 per share which price was less than the
market value on date of grant. The options vest in equal annual installments
over three years and have anti-

F-13
<PAGE>

PREDICT IT INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1999 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 IS UNAUDITED)

NOTE I--COMMITMENTS--(CONTINUED)

dilution protection. As a result of the anti-dilution protection, upon the
consummation of the Virtual Stock Exchange acquisition, the President was
granted options to purchase an additional 168,006 shares of common stock at an
exercise price of $2.62 per share and, in August 1999, as a result of the
Company's grant of stock options to employees he was granted options to purchase
an additional 9,421 shares at an exercise price of $1.75 per share. All such
options vest in equal annual installments over three years. Compensation expense
of approximately $940,000 related to the option grants has been deferred and
will be charged to operations ratably over the vesting period. Compensation
expense charged to operations for the nine months ended September 30, 1999 was
$15,668. In addition, the President was granted five year performance based
options to purchase 214,879 shares of common stock of the Company at an exercise
price of $3.75 per share. Vesting of the options occurs as to 50% on May 1, 2000
and 50% on May 1, 2001 based on the number of registered users and page views
exceeding certain targets by such dates.

On June 9, 1999, the Company entered into a three-year employment agreement
with an employee which provides for an annual base salary of $115,000 and an
annual bonus not to exceed $20,000. In addition, the employee was granted an
option to purchase 100,000 shares of common stock at an exercise price of $2.30.
The option will vest in equal annual installments over three years.

2. CONSULTING AND OTHER AGREEMENTS:

On April 28, 1999, the Company entered into an agreement with the Company's
current Chairman (formerly the President and Chief Executive Officer), in
connection with his resignation. The agreement provides for payments aggregating
$62,500 and also provides for an option to purchase 100,000 shares of common
stock at $.60 per share which exercise price represented the fair value of the
common stock at date of grant. Accordingly, the option which was granted for
services to be rendered as Chairman did not result in a charge to operations for
the nine months ended September 30, 1999. The option vests quarterly through May
2000.

On May 1, 1999, the Company executed a two year consulting agreement with
Verus Capital Inc. ("Verus"), a stockholder of the Company, to provide business
advisory and consulting services for a monthly fee of $10,000. Consulting fees
of $50,000 were charged to operations for the nine-month period ended
September 30, 1999.

NOTE J--SUBSEQUENT EVENT

In October 1999, the Company issued 103,448 shares of its common stock in
partial settlement of outstanding payables to a third party vendor of $150,000.

F-14
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Virtual Stock Exchange, Inc.
New York, New York

We have audited the accompanying balance sheet of Virtual Stock Exchange, Inc.
as of December 31, 1998 and the related statements of operations, changes in
stockholders' equity (capital deficiency) and cash flows for the year then ended
and for the period from January 7, 1997 (inception) through December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Virtual Stock Exchange, Inc. as of
December 31, 1998 and the results of its operations and its cash flows for the
year then ended and for the period from January 7, 1997 (inception) through
December 31, 1997 in conformity with generally accepted accounting principles.

Richard A. Eisner & Company, LLP
New York, New York
July 27, 1999

F-15
<PAGE>

VIRTUAL STOCK EXCHANGE, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
--------------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash.............................................................................. $ 39,570 $ 13,949
Accounts receivable, net.......................................................... 16,532 6,944
--------- ---------
Total current assets.............................................................. 56,102 20,893
Capitalized software costs, net of accumulated amortization of $13,500 and
$18,000........................................................................ 4,500
Computer equipment, net of accumulated depreciation of $3,281 and $9,220.......... 19,374 35,913
Other assets...................................................................... 3,647 3,924
--------- ---------
$ 83,623 $ 60,730
--------- ---------
--------- ---------

LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses............................................. $ 1,303 $ 17,542
Accrued interest.................................................................. 12,000
Capitalized lease obligation--current portion..................................... 6,187 13,529
--------- ---------
Total current liabilities......................................................... 7,490 43,071
Capitalized lease obligation...................................................... 6,964 17,713
Notes payable--stockholders....................................................... 100,000 100,000
Accrued interest.................................................................. 8,000
--------- ---------
122,454 160,784
--------- ---------
Commitments
Capital deficiency:
Common stock, $10 par value, 1,500 shares authorized, 100 shares in 1998 and 107
shares in 1999 issued and outstanding.......................................... 1,000 1,070
Additional paid-in capital........................................................ 17,000 103,284
Accumulated deficit............................................................... (56,831) (204,408)
--------- ---------
(38,831) (100,054)
--------- ---------
$ 83,623 $ 60,730
--------- ---------
--------- ---------
</TABLE>

See notes to financial statements

F-16
<PAGE>

VIRTUAL STOCK EXCHANGE, INC.
STATEMENTS OF OPERATIONS

F-17
<PAGE>

VIRTUAL STOCK EXCHANGE, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)

<TABLE>
<CAPTION>
COMMON STOCK
PAR VALUE $10 ADDITIONAL
---------------- PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Issuance of common stock for services.................... 100 $1,000 $ 17,000 $ 18,000
Net loss for the period January 7, 1997 (inception)
through December 31, 1997........................... $ (18,819) (18,819)
---- ------ -------- --------- ---------
Balance at December 31, 1997............................. 100 1,000 17,000 (18,819) (819)
Net loss for the year ended December 31, 1998.......... (38,012) (38,012)
---- ------ -------- --------- ---------
Balance at December 31, 1998............................. 100 1,000 17,000 (56,831) (38,831)
Issuance of common stock for services.................... 7 70 86,284 86,354
Net loss for the six months ended June 30, 1999........ (147,577) (147,577)
---- ------ -------- --------- ---------
Balance at June 30, 1999 (unaudited)..................... 107 $1,070 $103,284 $(204,408) $(100,054)
---- ------ -------- --------- ---------
---- ------ -------- --------- ---------
</TABLE>

See notes to financial statements

F-18
<PAGE>
VIRTUAL STOCK EXCHANGE, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
JANUARY 7, 1997
(INCEPTION) SIX MONTHS ENDED
THROUGH YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, ---------------------
1997 1998 1998 1999
---------------- ------------ -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $(18,819) $(38,012) $(27,505) $(147,576)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization...................... 4,969 11,812 5,906 10,438
Issuance of common stock for services.............. 86,354
Changes in:
Accounts receivable.............................. (16,532) (5,497) 9,588
Other assets..................................... (3,647) (2,840) (277)
Accrued expenses and accrued interest............ 2,625 6,678 4,042 20,239
-------- -------- -------- ---------
Net cash used in operating activities................... (11,225) (39,701) (25,894) (21,234)
-------- -------- -------- ---------
Cash flows from investing activities:
Purchase of computer equipment........................ (2,414) (6,242)
-------- -------- -------- ---------
Cash flows from financing activities:
Loans from stockholders............................... 50,000 50,000
Repayments on capital lease obligations............... (848) (4,387)
-------- -------- -------- ---------
Net cash provided by financing activities............... 50,000 49,152 (4,387)
-------- -------- -------- ---------
Net increase (decrease) in cash......................... 36,361 3,209 (25,894) (25,621)
Cash--beginning of period............................... 36,361 36,361 39,570
-------- -------- -------- ---------
Cash--end of period..................................... $ 36,361 $ 39,570 $ 10,467 $ 13,949
-------- -------- -------- ---------
-------- -------- -------- ---------
Supplemental disclosure of cash flow information:
Interest paid during the period....................... $ 768
Supplemental disclosures of noncash investing and
financing activities:
Issuance of common stock for services................. $ 18,000 $ 86,354
Purchase of equipment through capital lease........... $ 13,999 $ 22,478
</TABLE>

See notes to financial statements

F-19
<PAGE>

VIRTUAL STOCK EXCHANGE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(INFORMATION WITH RESPECT TO JUNE 30, 1999 AND FOR THE PERIODS ENDED
JUNE 30, 1999 AND JUNE 30, 1998 IS UNAUDITED)

NOTE A--THE COMPANY AND OPERATIONS

Virtual Stock Exchange, Inc. ("VSE"), which was formed in January 1997,
develops and distributes interactive internet application where individuals
create and manage hypothetical stock portfolios, conduct mock trading, and
compete with other members for prize money based on their portfolio performance.
The web site also provides quotes and research on U.S. financial markets through
links to other sites and provides a forum for individuals to exchange ideas with
other members on a variety of investment topics.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] REVENUE RECOGNITION:

The Company offers a basic service which, starting in 1998, is free to
users. In addition, starting in 1998, the Company offers users a premium service
as an upgrade to the basic service, for a monthly user fee. User fees are
recognized as revenue pro rata over the subscription period.

Advertising revenue is earned from both fixed fee arrangements and fees
based on the number of occasions a user views an advertisement ("impression").
Revenues under fixed fee arrangements, which provide for ads being shown
month-to-month are recognized in the month the ads are exhibited. Revenue based
on number of impressions is recognized at the time the guaranteed number of
impressions occur, and thereafter in the period the impressions occur.

[2] COMPUTER EQUIPMENT:

Computer equipment is stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over an estimated useful
life of three years.

[3] SOFTWARE COSTS:

In accordance with Statement of Position 98-1, of the American Institute of
Certified Public Accountants "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" issued in March 1998 and adopted by the
Company, qualifying costs incurred during the application development stage,
consisting of external direct costs of materials and services incurred and
payroll and related benefits for employees who devoted time in connection with
obtaining or developing internal use software were capitalized. All other costs
incurred in connection with internal use software are expended as incurred.
Capitalized software costs are being amortized on a straight-line basis over an
estimated useful life of two years.

Amortization expense for the year ended December 31, 1998 and the period
from January 7, 1997 through December 31, 1997 was approximately $9,000 and
$4,500, respectively and has been included in site development/maintenance in
the accompanying financial statements. Amortization expense for the six months
ended June 30, 1999 and 1998 was $4,500 for each period.

[4] USE OF ESTIMATES:

[5] UNAUDITED FINANCIAL STATEMENTS:

The financial information presented as of June 30, 1999 and for the
six-month periods ended June 30, 1999 and 1998 is unaudited, but in the opinion
of management contains all adjustments (consisting of only normal recurring
accruals) necessary for a fair presentation of such financial information.
Results of operations for interim periods are not necessarily indicative of
those to be achieved for full fiscal years.

F-20
<PAGE>

VIRTUAL STOCK EXCHANGE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1998
(INFORMATION WITH RESPECT TO JUNE 30, 1999 AND FOR THE PERIODS ENDED
JUNE 30, 1999 AND JUNE 30, 1998 IS UNAUDITED)

NOTE C--RELATED PARTY TRANSACTIONS

The Company borrowed an aggregate of $108,000 from its founders at an
interest rate of 8% per annum. Interest expense related to such loans amounted
to $2,000 (1997), $6,000 (1998), $2,000 (6 months--1998) and $4,000
(6 months--1999). Interest is payable semi-annually beginning January 1, 2000
and the principal is due on June 1, 2002.

NOTE D--LEASE AGREEMENT

The Company had a lease for office space that expired on June 30, 1999. The
Company is continuing to lease the space on a month to month basis. Rent expense
was approximately none (1997), $7,000 (1998), $2,000 (6 months--1998) and $4,000
(6 months--1999). Other assets in the accompanying balance sheets include
security deposits for the leases of $3,647.

NOTE E--OBLIGATION UNDER CAPITAL LEASE

Minimum future lease payments under a capital lease agreement for each of
the remaining years and in the aggregate are:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ ---------
<S> <C> <C>
1999................................................................ $ 9,690
2000................................................................ 8,075 $20,220
2001................................................................ 12,948
2002................................................................ 6,611
-------- -------
Total minimum lease payments........................................ 17,765 39,779
Less amounts representing interest.................................. 4,614 8,537
-------- -------
Present value of minimum lease payments............................. 13,151 31,242
Less current portion of capital lease obligation.................... 6,187 13,529
-------- -------
Capital lease obligation, noncurrent................................ $ 6,964 $17,713
-------- -------
-------- -------
</TABLE>

Interest expense on capital lease obligations was approximately $1,000 for
the year ended December 31, 1998 and $3,000 for the six months ended June 30,
1999.

NOTE F--INCOME TAXES

The Company has elected to be taxed as an S corporation for federal and
state income tax purposes. The Company is subject to New York City corporate
income tax. Federal and state income taxes on the Company's income are the
responsibility of the individual stockholders.

NOTE G--SUBSEQUENT EVENT

On June 30, 1999, VSE was acquired by Predict It Inc.

F-21
<PAGE>

UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1999 AND FOR THE YEAR ENDED DECEMBER 31, 1998

The unaudited pro forma statements of operations for the nine months ended
September 30, 1999 and for the year ended December 31, 1998 are presented as if
the acquisition of Virtual Stock Exchange, Inc. ("VSE"), which was acquired on
June 30, 1999 in a transaction accounted for as a purchase, occurred at the
beginning of the periods presented. The pro forma statements have been prepared
based on the audited and unaudited financial statements of the Company and VSE,
which are included elsewhere in this Registration Statement. These pro forma
financial statements are not intended to be indicative of the results that would
have occurred on the dates indicated or which may be realized in the future.

F-22
<PAGE>

PREDICT IT INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
VIRTUAL
STOCK ADJUSTED
PREDICT IT INC. EXCHANGE, INC. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS CONSOLIDATED
--------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue:
User fees........................................... $ 7,712 $ 16,461 $ 24,173
Advertising......................................... 6,000 50,736 56,736
----------- -------- ------------
13,712 67,197 80,909
----------- -------- ------------
Costs and expenses:
Site development/maintenance........................ 177,783 49,460 227,243
Selling, general and administrative................. 340,698 48,981 $ 114,000(b) 503,679
Amortization of acquired intangible................. 489,352(a) 489,352
Interest expense.................................... 3,000 6,768 9,768
----------- -------- --------- ------------
521,481 105,209 603,352 1,230,042
----------- -------- --------- ------------
Net loss.............................................. $ (507,769) $(38,012) $(603,352) $ (1,149,133)
----------- -------- --------- ------------
----------- -------- --------- ------------
Net loss per share.................................... $ (0.21) $ (.25)
----------- ------------
----------- ------------
Weighted average number of shares outstanding......... 2,381,327 4,581,327(c)
----------- ------------
----------- ------------
</TABLE>

F-23
<PAGE>

PREDICT IT INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
VIRTUAL
STOCK ADJUSTED
PREDICT IT INC. EXCHANGE, INC. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL(1) ADJUSTMENTS CONSOLIDATED
--------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue:
User fees........................................... $ 3,461 $ 7,097 $ 10,558
Advertising......................................... 93,209 59,093 152,302
----------- ---------- ------------
96,670 66,190 162,860
----------- ---------- ------------
Costs and expenses:
Site development/maintenance........................ 160,698 167,027 327,725
Selling, general and administrative................. 1,368,828 39,451 $ 57,000(b) 1,465,279
Amortization of acquired intangible................. 122,338 244,676(a) 367,014
Interest expense (income)........................... (30,338) 7,288 (23,050)
----------- ---------- --------- ------------
1,621,526 213,766 301,676 2,136,968
----------- ---------- --------- ------------
Net loss.............................................. $(1,524,856) $ (147,576) $(301,676) $ (1,974,108)
----------- ---------- --------- ------------
----------- ---------- --------- ------------
Net loss per share.................................... $ (0.17) $ (0.20)
----------- ------------
----------- ------------
Weighted average number of shares outstanding......... 8,790,775 9,890,775(c)
----------- ------------
----------- ------------
</TABLE>

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

(1) For period from January 1, 1999 through June 30, 1999.

F-24
<PAGE>

PREDICT IT INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

(a) Represents amortization expense of intangible resulting from the
acquisition, which is being amortized over a period of 3 years.

(b) Represents the impact of employment agreements with two former
stockholders of VSE entered into upon consummation of the acquisition.

(c) Does not include 500,000 shares held in escrow which are issuable to
former VSE stockholders upon certain conditions being met.

F-25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The registrant's articles of incorporation eliminate the personal liability
of directors to the registrant or its stockholders for monetary damages for
breach of fiduciary duty to the extent permitted by Delaware law. The
registrant's articles of incorporation and by-laws provide that the registrant
shall indemnify its officers and directors to the extent permitted by Delaware
law, which authorizes a corporation to indemnify directors, officers, employees
or agents of the corporation in non-derivative suits if such party acted in good
faith and in a manner such party reasonably believed to be in or not opposed to
the best interest of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The Delaware General Corporation Act further provides that indemnification shall
be provided if the party in question is successful on the merits or otherwise.
The Company also has insurance policies which covers acts by directors and
officers of the Company.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, payable in
connection with the sale of the common stock being registered hereby. Except for
the Commission's registration fee, all expenses are estimated.

<TABLE>
<CAPTION>
ITEM AMOUNT
- --------------------------------------------------------------------- -----------
<S> <C>
SEC registration fee................................................. $ 4,057.60
Printing and engraving expenses...................................... $ 28,213.93
Legal fees and expenses.............................................. $ 30,000.00
Auditors' accounting fees and expenses............................... $ 65,000.00
Miscellaneous expenses............................................... $ 5,942.40
-----------
Total.............................................................. $133,213.93
-----------
-----------
</TABLE>

In addition, holders of the shares being registered under this registration
statement will be responsible for all selling commissions, transfer taxes and
related charges in connection with the offer and sale of the shares offered.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

On October 15, 1999, we issued to Kenneth Su, an employee, an option to
purchase 20,000 shares of our common stock at an exercise price of $1.50 per
share. In connection with this issuance of stock options to an employee, we
relied on the statutory exemptions provided by Section 4(2) of the Securities
Act of 1933, because this issuance did not involve a public offering.

On October 14, 1999, we issued to Vision Consulting International Inc.
103,448 shares of our common stock in exchange for services rendered.
In connection with this issuance, we relied upon the statutory exemptions
provided by Section 4(2) of the Securities Act of 1933, because this issuance
did not involve a public offering.

On September 27, 1999, we issued to Desmond Glass, our Controller, an
option to purchase 70,000 shares of our common stock at an exercise price of
$1.50 per share. We also issued to Drew Ruscil, an employee, an option to
purchase 35,000 shares of our common stock at an exercise price of $1.50 per
share. In addition, on September 27, 1999, we issued to each of Bill Levine,
Brian Stack and Geordie Pace, all employees, options to purchase 15,000 shares
of our common stock at an exercise price of $1.50 per share. Furthermore, on
September 27, 1999, we issued to each of Jihan Kim and Miranda Langan, both
employees, options to purchase 10,000 shares of our common stock at an exercise
price of $1.50 per share. Finally, on September 27, 1999, we issued to each of
Waisum Tam and Brendan McGovern, both employees, options to purchase 5,000
shares of our common stock at an exercise price of $1.50 per share. In
connection with these issuances of stock options to our employees, we relied on
the statutory exemptions provided by Section 4(2) of the Securities Act of 1933,
because these issuances did not involve public offerings.

On August 18, 1999, we issued to Andrew Merkatz, our President and Chief
Executive Officer, an option to purchase 9,421 shares of our common stock at an
exercise price of $1.75 per share. In connection with this

II-1
<PAGE>

issuance of stock options, we relied on the statutory exemptions provided by
Section 4(2) of the Securities Act of 1933, because this issuance did not
involve a public offering.

On July 27, 1999, we issued to Miranda Langan, an employee, an option to
purchase 30,000 shares of our common stock at an exercise price of $2.00 per
share. On July 27, 1999, we also issued to Alana Oldham, an employee, an option
to purchase 120,000 shares of our common stock at an exercise price of $2.00 per
share. In addition, on July 27, 1999, we issued to Joanne Van Wranken, an
employee, an option to purchase 4,000 shares of our common stock at an exercise
price of $2.00 per share. Finally, on July 27, 1999, we issued to Peter Norris,
an employee, an option to purchase 25,000 shares of our common stock at an
exercise price of $2.00 per share. In connection with these issuances of stock
options to our employees, we relied on the statutory exemption provided by
Section 4(2) of the Securities Act of 1933, because these issuances did not
involve public offerings.

On June 30, 1999, we acquired Virtual Stock Exchange, Inc. from its 3
stockholders, and in exchange for the business of Virtual Stock Exchange, we
issued to them an aggregate of 2,700,000 shares of our common stock. In
connection with private exchange of our common stock for a privately-held
business, we relied on the statutory exemption provided by Section 4(2) of the
Securities Act of 1933, because these issuances did not involve public
offerings.

On June 30, 1999, we issued to Andrew Merkatz, our President and Chief
Executive Officer, an option to purchase 168,006 shares of our common stock at
an exercise price of $2.62 per share. In connection with the issuance of this
stock option, we relied on the statutory exemption provided by Section 4(2) of
the Securities Act of 1933 because this issuance did not involve a public
offering.

On June 24, 1999, we issued to Robert Jacobs, an employee, an option to
purchase 27,250 shares of our common stock at an exercise price of $2.30 per
share. On June 24, 1999, we also issued to Brendan McGovern, an employee, an
option to purchase 10,000 shares of our common stock at an exercise price of
$2.30 per share. In addition, on June 24, 1999, we issued to Geordie Pace, an
employee, an option to purchase 100,000 shares of our common stock at an
exercise price of $2.30 per share. Finally, on June 24, 1999, we issued to Jihan
Kim, an employee, an option to purchase 40,000 shares of our common stock at an
exercise price of $2.30 per share. In connection with these issuances of stock
options to our employees, we relied on the statutory exemption provided by
Section 4(2) of the Securities Act of 1933, because these issuances did not
involve public offerings.

On April 28, 1999, we completed a merger with Predict It Corp. pursuant to
which we acquired the business of Predict It Corp. In connection with the
merger, we converted all of the outstanding capital stock of Predict It Corp.
into an aggregate of 5,000,000 shares of our common stock. In connection with
the exchange of Predict It Corp. stock, we relied on the statutory exemption
provided by Section 4(2) of the Securities Act of 1933, because these issuances
did not involve public offerings. On April 28, 1999, we completed an offering of
1,000,000 shares of our Series A Preferred Stock to several institutional
investors. We raised $3,000,000 from that offering, which was made pursuant to
the exemption from registration provided by Rule 506 of Regulation D,
promulgated under the Securities Act of 1933 as an offering solely to accredited
investors not involving any public offering.

On March 4, 1999, we completed an offering of 713,600 shares of our common
stock to several institutional investors. We raised $7,136 from that offering
which was made pursuant to the exemption from registration provided by Rule 504
of Regulation D, promulgated under the Securities Act of 1933 as an offering
solely to accredited institutional investors not involving any public offering.

On February 25, 1999, we completed an offering of 25,000 shares of our
common stock to 2 individuals and 1 entity in return for consulting services
provided to us. The offering was made pursuant to the exemption from
registration provided by Rule 504 of Regulation D, promulgated under the
Securities Act of 1933 as an offering solely to accredited investors not
involving any public offering.

On February 19, 1999, we completed an offering of 3,006,400 shares of our
common stock to several institutional investors. We raised $30,064 from that
offering which was made pursuant to the exemption from registration provided by
Rule 504 of Regulation D, promulgated under the Securities Act of 1933 as an
offering solely to institutional accredited investors not involving any public
offering.

On January 11, 1999, our predecessor, Predict It Corp., issued to Tom
Courts, our former President and Chief Executive Officer, an option to purchase
22,458 shares of Series B Preferred Stock at an exercise price of $1.6697 per
share. In connection with the issuance of a stock option to our former President
and Chief Executive

II-2
<PAGE>

Officer, we relied on the statutory exemption provided by Section 4(2) of the
Securities Act of 1933, because the issuance did not involve a public offering.
In connection with the reverse acquisition of Predict It Corp., the option was
converted into an option to acquire 125,000 shares of our common stock at an
exercise price of $.30 per share. The option is exercisable at any time and
expires on January 11, 2004.

On October 3, 1998, Predict It Corp. issued to Robert Jacobs, an employee,
an option to purchase 14,678 shares of Series B Preferred Stock at an exercise
price of $1.3636 per share. In connection with the issuance of a stock option to
an employee, we relied on the statutory exemption provided by Section 4(2) of
the Securities Act of 1933, because the issuance did not involve a public
offering. In connection with the reverse acquisition of Predict It Corp., the
option was converted into an option to acquire 81,750 shares of our common stock
at an exercise price of $.245 per share. The option is exercisable in three
equal amounts on each of July 19, 1999, July 19, 2000 and July 19, 2001.

On January 15, 1996, we issued 255,000 shares of our common stock to the
three original members of the Board of Directors. We raised $255 from that
issuance. In connection with the original issuance of stock to our initial Board
members, we relied on the statutory exemption provided by Section 4(2) of the
Securities Act of 1933, because these issuances did not involve public
offerings.

ITEM 27. EXHIBITS.

The following exhibits are filed as part of this registration statement:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger by and between Predict It Corp. and WDC Development, Inc.*
2.2 Agreement and Plan of Merger and Reorganization by and among the Registrant, PII Acquisition Corp.,
Virtual Stock Exchange, Inc., Gary Cheng, Howard Yen and Scott Appleby*
3.1 Certificate of Incorporation of the Registrant, as amended*
3.2 By-Laws of the Registrant*
4.1 Certificate of Designation of Series A Preferred Stock*
4.2 Specimen of Registrant's Common Stock*
4.3 Registration Rights Agreement by and among the Registrant, Gary Cheng, Howard Yen and Scott Appleby*
5.1 Opinion and Consent of Camhy Karlinsky & Stein LLP*
10.1 1999 Stock Option Plan*
10.2 Employment Agreement between Registrant and Andrew Merkatz*
10.3 Employment Agreement between Registrant and Howard Yen*
10.4 Transition Agreement between Registrant and Tom Courts*
10.5 Employment Agreement between Registrant and Gary Cheng*
10.6 Employment Agreement between Registrant and Geordie Pace*
10.7 Agreement by and between the Registrant and Vision Consulting International Inc.**
23.1 Consent of Camhy Karlinsky & Stein LLP**
23.2 Consent of Richard A. Eisner & Company, LLP**
24 Power of Attorney*
</TABLE>

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

* previously filed

** filed herewith

II-3
<PAGE>
ITEM 28. UNDERTAKINGS.

1. To file, during any period in which offers or sales of the securities
are being made, a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended

(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered may be reflected in the form of
prospectus filed with the Commission under Rule 424(b) if, in aggregate,
the changes in the volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;

(iii) To include any additional or changed material information on the
plan of distribution.

2. That, for the purpose of determining liability under the Securities Act
or 1933, it shall treat each post-effective amendment as a new registration
statement of the securities offered, and treat the offering of the securities at
that time as an initial bona fide offering.

3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remains unsold at the termination of
the offering.

To the extent that indemnification for liabilities arising under the
Securities Act or 1933 may be permitted to directors, officers and controlling
persons of the company pursuant to the provisions described in Item 15, or
otherwise, the company has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.

In the event a claim for indemnification against such liabilities, other
than the payment by the company of expenses incurred or paid by a director,
officer of controlling person of the company in the successful defense of any
action, suit or proceeding, is asserted by such director, officer or controlling
person in connection with the shares being registered hereby, the company will,
unless, in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question as to
whether such indemnification by the company against public policy as expressed
in the Securities Act of 1933 and will be governed by the final adjudication of
such issue.

II-4
<PAGE>
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM SB-2 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NEW YORK, STATE OF NEW YORK, ON THE 23RD DAY OF NOVEMBER, 1999.

PREDICT IT INC.

By: /s/ ANDREW MERKATZ
----------------------------------
Andrew Merkatz
President, Chief Executive Officer

By: /s/ DESMOND GLASS
----------------------------------
Desmond Glass,
Controller (Principal
Accounting Officer)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------- ------------------

<C> <S> <C>
/s/ ANDREW MERKATZ* President and Director November 23, 1999
- ------------------------------------------ (Principal Executive Officer)
Andrew Merkatz

/s/ ANDREW MERKATZ* Director November 23, 1999
- ------------------------------------------
Tom Courts

/s/ ANDREW MERKATZ* Director November 23, 1999
- ------------------------------------------
Andrew Weissman

/s/ ANDREW MERKATZ* Director November 23, 1999
- ------------------------------------------
Ajmal Khan

/s/ ANDREW MERKATZ* Director November 23, 1999
- ------------------------------------------
Keith Rosenbloom

/s/ ANDREW MERKATZ* Director November 23, 1999
- ------------------------------------------
Carol Lee

- ------------------------------------------
* By power of attorney
</TABLE>

II-5
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger by and between Predict It Corp. and WDC Development, Inc.*
2.2 Agreement and Plan of Merger and Reorganization by and among the Registrant, PII Acquisition Corp.,
Virtual Stock Exchange, Inc., Gary Cheng, Howard Yen and Scott Appleby*
3.1 Certificate of Incorporation of the Registrant, as amended*
3.2 By-Laws of the Registrant*
4.1 Certificate of Designation of Series A Preferred Stock*
4.2 Specimens of Registrant's Common Stock*
4.3 Registration Rights Agreement by and among the Registrant, Gary Cheng, Howard Yen and Scott Appleby*
5.1 Opinion and Consent of Camhy Karlinsky & Stein LLP*
10.1 1999 Stock Option Plan*
10.2 Employment Agreement between Registrant and Andrew Merkatz*
10.3 Employment Agreement between Registrant and Howard Yen*
10.4 Transition Agreement between Registrant and Tom Courts*
10.5 Employment Agreement between Registrant and Gary Cheng*
10.6 Employment Agreement between Registrant and Geordie Pace*
10.7 Agreement by and between the Registrant and Vision Consulting International Inc.**
23.1 Consent of Camhy Karlinsky & Stein LLP**
23.2 Consent of Richard A. Eisner & Company, LLP**
24 Power of Attorney*
</TABLE>

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

* previously filed
** filed herewith

<PAGE>

Exhibit 10.7

CONTRACT TERMS
--------------

The following terms shall govern the contract between Predict It, Inc. ("Predict
It") and Vision Consulting International Inc. ("Vision Consulting").

1. Predict It agrees to issue 103,448 shares of Predict It common stock in
return for an investment of $150,000 from Vision Consulting.

2. The price per share issued has been agreed at one dollar and forty-five
cents (US$1.45).

3. Predict It will apply the $150,000 investment made by Vision Consulting
against the cost of development work, performed by Vision Consulting prior
to the launch of the Version 3 product.

4. Predict It commits $100,000 to Vision Consulting in the form of a
guarantee to engage Vision Consulting to perform further, post Version 3
launch, development work equal to a value of $100,000. Predict It will
pre-pay $50,000 of the commitment on October 30th.

5. Predict It agrees to grant to Vision Consulting the exclusive right of
first refusal for all additional, post Version 3, development work. For
the purposes of this agreement this means that Vision Consulting will be
given the right to match all quotes obtained from other vendors for
development work anticipated by Predict It relating to the post-launch,
Version 3 product. If Vision Consulting decides to match the lowest quote
obtained, Predict It guarantees to engage Vision Consulting to perform
such development work. Predict It will make every reasonable effort to
ensure that all quotes received are from reputable vendors capable of
providing a level of service comparable to that provided by Vision
Consulting. Vision Consulting is under no obligation to match any quote
obtained by Predict It for future development work. This term shall be
valid for a period of one year from the date of this contract.

6. Predict It agrees to include the 103,448 shares of Predict It common stock
to be issued within the re-filing of Predict It's SB-2 document to be
filed with the SEC.

7. The Purchaser represents and warrants to the Company that the Shares are
being acquired by the Purchaser for its own account and not with a view to
the distribution, resale or other transfer thereof, except in compliance
with the Securities Act and applicable state securities laws.

8. Any controversy or claim arising out of or relating to this contract, or
the breach thereof, shall be settled by arbitration before a single
arbitrator selected in

<PAGE>

accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Arbitration as provided herein shall be the
exclusive means for determination of all matters as provided above, and
any decision and award of the arbitrator shall be final, binding and
conclusive upon the parties and such decision and award may be entered as
a final judgment in any court of competent jurisdiction. Neither of the
parties shall institute any action or proceeding in any court of law or
equity, state or federal, other than as may be necessary for purposes of
enforcement of the arbitrator's decision and award hereunder. The parties
agree that such arbitration shall be held in New York, New York and that,
except as otherwise determined by the arbitrator, each party shall be
responsible for its own fees and expenses associated with such arbitration
proceeding and for one-half of the costs imposed by the American
Arbitration Association (excluding the cost of filing an arbitration
claim, which shall be borne entirely by the party filing such claim).

Contract Acceptance
- -------------------

To signify acceptance of this contract, please sign below and return a copy to:

Predict It, Inc.
694, Eighth Avenue,
Fifth Floor,
New York, NY 10036.

Accepted this 14th day of October,1999.

Vision Consulting International, Inc.

By: /s/ John Crowley
----------------------------------

Name: John Crowley
Title: President

Predict It, Inc.

By: /s/ Andrew P. Merkatz

Name: Andrew P. Merkatz
Title: President

<PAGE>

Consent of Counsel

We hereby consent to the reference to our firm under the caption "Legal Matters"
in the Prospectus contained in the Registration Statement on Form SB-2, as
originally filed on August 13, 1999. In giving this consent, we do not thereby
admit that we are in the category of persons whose consent is required pursuant
to Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.

CAMHY KARLINSKY & STEIN LLP
New York, New York
November 23, 1999

<PAGE>
EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the inclusion in this Amendment No. 1 to the Registration
Statement on Form SB-2 (File No. 333-85163) of our report dated April 28, 1999
(June 9, 1999 as to Note I, June 30, 1999 as to Note C and July 6, 1999 as to
Note E) on the financial statements of Predict It Inc. and of our report dated
July 27, 1999 on the financial statements of Virtual Stock Exchange, Inc. We
also consent to the reference to our firm under the caption "Experts" in the
Prospectus.

RICHARD A. EISNER & COMPANY, LLP

New York, New York
November 19, 1999