PREDICT IT INC, SB-2/A, 2000-05-16

PREDICT IT INC
SB-2/A, 2000-05-16
BUSINESS SERVICES, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2000

REGISTRATION NO. 333-85163
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

PREDICT IT INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

<TABLE>
<S> <C> <C>
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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268 W. 44TH STREET, 5TH FLOOR
NEW YORK, NEW YORK 10036
(212) 217-1200
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------

ANDREW P. MERKATZ
PRESIDENT
PREDICT IT INC.
268 W. 44TH STREET, 5TH FLOOR
NEW YORK, NEW YORK 10036
(212) 217-1200
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------

Copies to:

MICHAEL L. PFLAUM, 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. / /
------------------------

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 MAY , 2000

[PREDICT IT LOGO]

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

PREDICT IT INC.

13,189,152 SHARES OF COMMON STOCK

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

This prospectus covers an aggregate of 13,189,152 shares of our common
stock, which will be sold from time to time by the stockholders named on page
35. 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 "PRITE." On May 12, 2000, the price of our common stock as quoted on the
OTC Electronic Bulletin Board was $0.6825.

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

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.

MAY 15, 2000

<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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................................... 3
Summary Financial Information.............................................................................. 4
Risk Factors............................................................................................... 5
Special Note on Forward-Looking Statements................................................................. 7
Available Information...................................................................................... 7
Predict It................................................................................................. 9
Use of Proceeds............................................................................................ 9
Price Range of Common Stock................................................................................ 9
Dividend Policy............................................................................................ 10
Capitalization............................................................................................. 10
Selected Financial Data.................................................................................... 11
Management Discussion and Analysis of Financial Condition And Results of Operations........................ 13
Business................................................................................................... 17
Management................................................................................................. 26
Executive Compensation and Other Information............................................................... 28
Stock Option Plan.......................................................................................... 29
Related Party Transactions................................................................................. 30
Principal Stockholders..................................................................................... 31
Selling Security Holders................................................................................... 35
Plan of Distribution....................................................................................... 38
Description of The Capital Stock........................................................................... 39
Shares Eligible for Future Sale............................................................................ 44
Legal Matters.............................................................................................. 44
Experts.................................................................................................... 45
Disclosure of Company Position on Indemnification for Securities Act Liabilities........................... 45
Index to Financial Statements.............................................................................. F-1
</TABLE>

2
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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
participate actively 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 strategy in which we enter into partner relationships with
other Internet companies to market our product by creating a web site with
Predict It's content, while simultaneously maintaining the overall look and feel
of our partners' web sites. Presently, revenues are principally earned by the
sale of advertisements either by us directly or on a revenue sharing basis with
our partners. Unlike other businesses on the Internet that attempt to attract
visitors by providing many services on one web site, our strategy is to attract
visitors 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 partnerships.

On June 30, 1999, we purchased Virtual Stock Exchange, Inc. Virtual Stock
Exchange is an Internet-based stock market simulation and forecasting company
that operates www.VirtualStockExchange.com, which services over 100,000
registered members and generates in excess of 4.5 million page views per month.
Consumers may access Virtual Stock Exchange directly via its web site or at
other web sites, including Crosswalk.com, PlanetDirect.com and
Collegestudent.com. Virtual Stock Exchange is a separate Predict It product that
can also be accessed at the Predict It Network web site, www.predictit.net.
Please see the "Selected Financial Data" and "Business" sections for a detailed
account of this transaction.

On March 13, 2000, we commenced a private offering of units consisting of
shares of Series B Preferred Stock and warrants to purchase shares of our common
stock. On April 14, 2000, we issued an aggregate of 43 units to new and existing
shareholders.

We maintain our principal business operations at 268 W. 44th Street,
5th Floor, New York, New York 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.

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.

<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------
SETPEMBER 2, PRO FORMA AS ADJUSTED FOR
1997 ACQUISITION OF VIRTUAL STOCK
(INCEPTION) EXCHANGE, INC.
THROUGH YEAR ENDED DECEMBER 31, ----------------------------
DECEMBER 31, ---------------------------- YEAR ENDED DECEMBER 31,
1997 1998 1999 1999
------------ ------------ ------------ ----------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
User fees...................................... $ 7,712 $ 4,519 $ 11,616
Advertising.................................... 6,000 174,517 233,610
-------- ---------- ------------ ------------
13,712 179,036 245,226
-------- ---------- ------------ ------------
Costs and expenses:
Site development/maintenance................... 177,783 406,778 573,805
Selling, general and administrative(2)......... $ 21,402 340,698 2,786,164 2,882,615
Amortization of intangibles(1)................. 244,676 489,352
Interest expense (income)...................... 3,000 856 8,144
-------- ---------- ------------ ------------
21,402 521,481 3,438,474 3,953,916
-------- ---------- ------------ ------------
Net loss before income tax....................... $(21,402) $ (507,769) $ (3,259,438) $ (3,708,690)
======== ========== ============ ============
Net loss per share--basic and diluted............ $ (.04) $ (.21) $ (.37) $ (.37)
======== ========== ============ ============
Weighted average number of shares outstanding.... 488,412 2,381,327 8,872,400 9,972,400
======== ========== ============ ============
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
----------------------------
<S> <C>
BALANCE SHEET DATA:
Working capital........................................................................... $ (680,986)
Total assets.............................................................................. 4,027,249
Long term debt............................................................................ 51,773
Total liabilities......................................................................... 1,864,517
============
Accumulated deficit....................................................................... (3,788,609)
============
Total stockholders' equity................................................................ 2,162,732
============
</TABLE>

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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 $57,000 for the year ended December 31, 1999.

4
<PAGE>
RISK FACTORS

WE HAVE A HISTORY OF NET LOSSES AND EXPECT TO INCUR ADDITIONAL LOSSES IN THE
FUTURE.

We have incurred losses since inception, including a net loss of
approximately $3,259,438 for the year ended December 31, 1999. As of December
31, 1999, we had an accumulated deficit of approximately $3,788,609. 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. The size of these
net losses will depend, in part, on the rate of growth in our revenues from our
advertisers and from our partners, and on our expenses. In addition, our fixed
monthly operating expenses in the short term consist of obligations to our
employees, landlord, and certain vendors in the aggregate amount of
approximately $250,000. In the event we do not generate the amount of revenue we
expect, we may not be able to adjust these obligations quickly enough to offset
any revenue shortfall. 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.

WE MAY NEED TO INCREASE OUR SPENDING IN CERTAIN KEY AREAS.

We believe that in order to continue to grow our business, we must make
significant expenditures to

o develop broader brand recognition for our core products and services;

o enhance the technology of our current products and services; and

o develop new products and services, such as in the area of politics and
entertainment.

These goals can be achieved through fee and co-promotion based partnerships,
revenue sharing arrangements with third parties, product acquisitions, and
internal development. Although we believe that we currently have enough
financing to cover our significant expenditures in these areas until December
2000, the costs for these undertakings may be greater than what we currently
anticipate. In such event, the additional financing that would be required may
not be available at that time on terms favorable to us. If we are not able to
achieve these goals, there may be a significant negative impact on our ability
to continue to follow our current business model.

GROWTH OF OUR BUSINESS MAY STRAIN OUR MANAGERIAL, FINANCIAL AND OPERATIONAL
RESOURCES.

We have experienced, and may continue to experience, rapid growth. Between
May 15, 1999 and May 15, 2000, we hired 32 employees. We expect to hire an
additional 6 employees by the end of 2000 in an effort to develop our products
and technology and expand our sales force. Our failure to attract and retain
highly qualified employees may disable our growth and may distract the efforts
of our existing personnel. If we do experience growth, it could 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. Our effective growth management will depend on the
following:

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

o Ensuring that our operational, management and financial systems and
controls continue to operate efficiently; and

o Our ability to recruit, train, motivate, manage and retain highly skilled
employees in light of the intense level of competition in our industry.

We cannot be certain 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 our growth effectively, our expenses may exceed
our revenues and we may never achieve profitability.

SYSTEM FAILURE COULD SIGNIFICANTLY REDUCE OUR REVENUES.

The servers that host our web sites are backed-up by remote servers, but we
cannot be certain 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 depend on
Internet service providers, online service providers and other web site
operators for access to our web sites. Each of these

5
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providers has experienced significant outages in the past and could experience
outages, delays and other difficulties due to system failures unrelated to our
systems. Further, our systems are vulnerable to damage or interruption from
fire, flood, power loss, telecommunications failure, break-ins, earthquake and
similar events. Any system failure, including network, software or hardware
failure, that causes an interruption in our service could result in reduced
visits to our web sites and, therefore, reduced revenues.

WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY BECAUSE OUR COMPETITORS ARE MORE
ESTABLISHED AND HAVE GREATER RESOURCES THAN WE DO.

The interactive sports and stock categories are rapidly evolving and are
very competitive. There are no substantial barriers to entry in this market. 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 a loss of market share, any of which would
decrease our ability to achieve profitability.

Many of our existing competitors, such as Sandbox.com and
HollywoodStockExchange.com, 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 products
and services. Many of our competitors offer a wider range of services than we
do. Our competitors' services may attract users to their sites and may
consequently result in decreased visits to our sites. Our 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 may
establish relationships among themselves or with third parties to better address
the needs of advertisers and businesses engaged in electronic commerce.

OUR SUCCESS DEPENDS ON THE ACCEPTANCE OF THE INTERNET AS AN ADVERTISING MEDIUM.

Due to our limited operating history, it is difficult to evaluate our
ability to generate revenues. Our current business model is to generate a
substantial portion of all of our future revenues through Internet advertising.
Since this method of revenue generation is relatively new and largely untested,
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 generating revenue if Internet
advertising does not continue to grow or if we are unsuccessful in increasing
our advertising revenues.

PROVISIONS IN OUR CERTIFICATE OF INCORPORATION, BYLAWS, AND CERTIFICATE OF
DESIGNATION OF OUR SERIES B PREFERRED STOCK MAY PREVENT OR DELAY A CHANGE OF
CONTROL.

Provisions of our certificate of incorporation, bylaws, certificate of
designation of our Series B Preferred Stock, and provisions of applicable
Delaware law may discourage, delay or prevent a merger or other change of
control that you may consider favorable, as they may have the effect of
discouraging potential takeover attempts or making it more difficult for
stockholders to change management. In addition, our certificate of incorporation
allows our board of directors to issue up to 10,000,000 shares of preferred
stock, including the 1,000,000 shares of our Series A Preferred Stock and
430,001 shares of our Series B Preferred Stock which are currently outstanding,
and determine the price and the terms, including preferences and voting rights,
of those shares without stockholder approval. This ability to issue additional
shares of our preferred stock could, among other things:

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; or

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

6
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WE MAY BE DELISTED FROM THE OTC ELECTRONIC BULLETIN BOARD ON MAY 17, 2000.

Our common stock is quoted on the OTC Electronic Bulletin Board, a NASD
sponsored and operated quotation system for equity securities. We are not
currently filing reports under the Securities and Exchange Act and will not do
so until this registration statement and our registration statement on Form 8-A
are declared effective by the Commission. If such registration statements are
not declared effective prior to May 17, 2000, we may not be able to maintain our
listing on the OTC Electronic Bulletin Board. Consequently, our shareholders may
have difficulty determining the fair market value of our common stock and we may
be unable to obtain required future financing.

SINCE OUR SHARES ARE "PENNY STOCKS," YOU MAY BE UNABLE TO RESELL THEM IN THE
SECONDARY MARKET.

A "penny stock" is an equity security with a market price of less than
$5.00 per share which is not listed on the Nasdaq or a national securities
exchange. Due to the extra risks involved in an investment in penny stocks,
federal securities laws and regulations require broker/dealers who recommend
penny stocks to persons other than their established customers and accredited
investors to make a special written suitability determination for the purchaser,
provide them with a disclosure schedule explaining the penny stock market and
its risks, and receive the purchaser's written agreement to the transaction
prior to the sale. These requirements limit the ability of broker/dealers to
sell penny stocks. Also, because of the extra requirements, many broker/dealers
are unwilling to sell penny stocks at all. Since our shares are currently "penny
stocks," you may be unable to resell the stock you buy in this offering and
could lose your entire investment.

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. Therefore, 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.

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. 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.

7
<PAGE>

We 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 which is contained in the entire 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, you can review the entire registration statement and the exhibits
and schedules filed with it. Statements contained in this prospectus regarding
the contents of any contract or any other document are not necessarily complete,
and therefore, you should review the filed exhibits for the complete details of
such contract or other document. You may read and copy any document that we file
at the Public Reference Room.

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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 268 W.
44th Street, 5th Floor, New York, New York 10036. Our telephone number is
212-217-1200, and our web sites include http://www.predictit.com,
http://www.sports.predictit.com and http://www.VirtualStockExchange.com.

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 $57,528.75 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 "PRITE." 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
October 1, 1999-December 31, 1999....................................... $ 2.09 $ 1.25
January 1, 2000-March 31, 2000.......................................... $ 2.21 $ 1.06
April 1, 2000-May 12, 2000.............................................. $ 1.38 $ 0.58
</TABLE>

On May 12, 2000, the closing bid price as quoted by the OTC Electronic
Bulletin Board for our common stock was $.6825. As of May 12, 2000, there were
approximately 25 holders of record of our common stock.

There is no public trading market for any of our preferred stock, options
or warrants.
- ------------------
(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.

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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 and Series B Preferred Stock do not pay any dividends.

CAPITALIZATION

The following table sets forth, as of December 31, 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.

<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------
ACTUAL
-----------------
<S> <C>
Current liabilities:
Accounts payable and accrued expenses.............................................. $ 1,086,824
Loans payable to stockholders, net of debt discount of $438,222.................... 561,778
Capital lease obligations-current portion.......................................... 64,142
Notes payable, stockholders........................................................ 100,000
Long-term liabilities:
Capital lease obligations.......................................................... 51,773
-----------
Total liabilities.................................................................... 1,864,517
-----------
Preferred stock, $.01 par value, 5,000,000 shares authorized, 1,000,000 shares
Series A issued and outstanding at December 31, 1999 (stated at liquidation
preference)........................................................................ 3,000,000

Common stock, $.01 par value, 25,000,000 shares authorized, 11,303,448 shares issued
and outstanding at December 31, 1999 (exclusive of 500,000 shares held in
escrow)............................................................................ 113,034
Additional paid-in capital......................................................... 3,595,529
Deficit............................................................................ (3,788,609)
Unearned compensation.............................................................. (757,222)
-----------
Total stockholders' equity........................................................... 2,162,732
-----------
Total liabilities and stockholders' equity........................................... $ 4,027,249
===========
</TABLE>

10
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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 such shares 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. No shares were released
in January 2000 because the specified milestones were not met, but this portion
of the escrowed shares may be released in January 2001 with the remainder of the
escrowed shares if the milestones for the second period are met.

Set forth below is selected financial data of Predict It Inc. as of
December 31, 1999, and for the years ended December 31, 1999 and 1998. The
statements of operations and the balance sheet data as of December 31, 1999 and
for the years ended December 31, 1999 and 1998 have been derived from the
audited financial statements of Predict It Inc. included elsewhere in this
prospectus. Also set forth below is summary unaudited pro forma financial data
of Predict It Inc. The unaudited pro forma as adjusted statement of operations
data for the year ended December 31, 1999 is presented as if the acquisition of
Virtual Stock Exchange, Inc. had occurred as of the beginning of the period
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 period 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.

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<PAGE>

<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------
SEPTEMBER 2, PRO FORMA AS ADJUSTED FOR
1997 ACQUISITION OF VIRTUAL STOCK
(INCEPTION) EXCHANGE, INC.
THROUGH YEAR ENDED DECEMBER 31, ----------------------------
DECEMBER 31, ---------------------------- YEAR ENDED DECEMBER 31,
1997 1998 1999 1999
------------ ------------ ------------ ----------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
User fees...................................... $ 7,712 $ 4,519 $ 11,616
Advertising.................................... 6,000 174,517 233,610
-------- ---------- ------------ ------------
13,712 179,036 245,226
-------- ---------- ------------ ------------
Costs and expenses:
Site development/maintenance................... 177,783 406,778 573,805
Selling, general and administrative(2)......... $ 21,402 340,698 2,786,164 2,882,615
Amortization of intangibles(1)................. 244,676 489,352
Interest expense (income)...................... 3,000 856 8,144
-------- ---------- ------------ ------------
21,402 521,481 3,438,474 3,953,916
-------- ---------- ------------ ------------
Net loss before income tax....................... $(21,402) $ (507,769) $ (3,259,438) $ (3,708,690)
======== ========== ============ ============
Net loss per share--basic and diluted............ $ (.04) $ (.21) $ (.37) $ (.37)
======== ========== ============ ============
Weighted average number of shares outstanding.... 488,412 2,381,327 8,872,400 9,972,400
======== ========== ============ ============
</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.

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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 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 "PRITE."

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 market 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.

In November 1999, we entered into a three year agreement with Sportsline
USA, Inc., an on-line sports content provider. We will design, produce, host,
operate, maintain and support three different versions of Sportsline's online
sports prediction service on behalf of Sportsline. Sportsline will then sell
advertising within the online prediction services. The agreement provides for us
to make annual payments to Sportsline of $250,000. The payments are being
accounted for as deferred promotion expenses and are being amortized over a
twelve-month period. We shall receive net advertising revenue generated in
association with the agreement up to $250,000 (the "annual recoupment") during
the twelve-month periods immediately following the launch of Sportsline's first
online prediction service. If the net advertising revenue satisfies the annual
recoupment during any of the twelve-month periods, the parties will share net
advertising revenue on a 50/50 basis until the next anniversary of the launch
date. In addition, Sportsline will promote the online prediction services within
its network over the three year term. The agreement also provides for us to pay
expenses related to marketing the online prediction services outside of
Sportsline's network up to a maximum of $250,000 over the three year term. We
intend to make these payments from existing funds and funds generated from
ongoing operations.

On December 8, 1999, certain existing stockholders and a former director
made bridge loans to us in the aggregate amount of $1,000,000. The loans, which
were immediately convertible into equity of the company, were evidenced by
1-year promissory notes in the aggregate amount of $1,000,000 plus interest,
accruing at a rate of 10% per year, compounded annually. In conjunction with the
bridge loans, we issued warrants to purchase an aggregate of 625,000 shares of
our common stock at an exercise price of $1.60 per share. On April 14, 2000,
pursuant to the terms of a private offering, these bridge loans were converted
into 10 units consisting of 100,000 shares of Series B Preferred Stock and
additional warrants to purchase 1,000,000 shares of our common stock at an
exercise price of $1.50 per share.

On February 14, 2000, Dawntreader Fund I LP, an existing shareholder, made
a bridge loan to us in the amount of $300,000. The loan which was immediately
convertible into equity of the company, was evidenced by a one-year promissory
note in the amount of $300,000, plus interest, accruing at the rate of 10% per
year, compounded annually. In conjunction with the bridge loan, we issued
warrants to purchase an aggregate of 187,500 shares of our common stock at an
exercise price of $1.60 per share. On April 14, 2000, pursuant to the terms of a
private offering, this bridge loan was converted into 3 units consisting of
30,000 shares of

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<PAGE>

Series B Preferred Stock and warrants to purchase 300,000 shares of our common
stock at an exercise price of $1.50 per share.

On March 15, 2000, we received a bridge loan in the aggregate amount of
$1,000,000. The loan which was immediately convertible into equity of the
company, was evidenced by one-year promissory notes in the aggregate amount of
$1,000,000, plus interest, accruing at a rate of 10% per year, compounded
annually. In conjunction with the bridge loan, we issued warrants to purchase an
aggregate of 625,000 shares of our common stock at an exercise price of $1.60
per share. On April 14, 2000, pursuant to the terms of a private offering, this
bridge loan was converted into 10 units consisting of 100,000 shares of Series B
Preferred Stock and warrants to purchase 1,000,000 shares of our common stock at
an exercise price of $1.50 per share.

In March 2000, we entered into an agreement with China Interactive Media
Group ("CIMG") to establish an on-line prediction company to be known as Predict
It China (the "Venture"). Under the terms of the agreement, CIMG will provide
initial financing, management and operating infrastructure for the Venture while
we will license its proprietary technology and intellectual capital to the
Venture in exchange for a royalty of 10% of future revenue earned by the
Venture. We will have a 30% initial ownership in the Venture. No initial capital
contribution is required from either venture. The Venture's losses will be
funded and charged to CIMG and any future profits will be credited to CIMG to
the extent of previous losses incurred with any remaining profits earned 30% by
us and 70% by CIMG.

On March 13, 2000, we commenced a private offering of units consisting of
shares of Series B Preferred Stock and warrants to purchase shares of our common
stock. As a result of this offering, on April 14, 2000 we raised $4,300,000 and
issued to new and existing shareholders 43 units, consisting of an aggregate of
430,001 shares of Series B Preferred Stock and warrants to purchase an aggregate
of 4,300,010 shares of common stock. A total of 23 of these units were issued to
our former noteholders as a result of their conversion of promissory notes
totalling $2,300,000. In conjunction with this offering, warrants to purchase an
aggregate of 812,500 shares of common stock that were originally issued in
connection with the bridge loans received from Dawntreader Fund I LP, Robert H.
Lessin Venture Capital LLC and Patriot Capital Limited (issued in conjunction
with the February 14, 2000 and March 15, 2000 bridge loans) were cancelled.
After taking into account the conversion of $2,300,000 of existing bridge loans
and after deducting commission and legal expenses, we received $1,700,000 in new
funds.

RESULTS OF OPERATIONS--YEAR ENDED DECEMBER 31, 1999 VS. YEAR ENDED DECEMBER 31,
1998

REVENUES

Revenues increased to $179,036 for the year ended December 31, 1999, from
$13,712 for the year ended December 31, 1998. The increase in revenues was
primarily due to the fact that we did not commence significant revenue
generating activities in 1998. In addition, the acquisition of Virtual Stock
Exchange has significantly increased Predict It's membership, enabling us to
receive favorable advertising rates. Revenue for the year ended December 31,
1999 was from advertising revenues ($174,517) and analyst subscriptions
($4,519). Of this increase in advertising revenue, $127,617 is attributable to
the acquisition of Virtual Stock Exchange.

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 $407,000 for
the year ended December 31, 1999 which includes approximately $82,000 of
amortization expense related to capitalized software costs and $249,000 in web
site hosting and maintenance costs. Site development costs incurred during the
year ended December 31, 1998 were approximately $178,000, including $90,000 of
amortization expense related to capitalized software costs and $25,000 in web
hosting and maintenance costs.

SELLING, GENERAL AND ADMINISTRATIVE

Selling general and administrative costs increased $2,445,466 from $340,698
for the year ended December 31, 1998 to $2,786,164 for the year ended
December 31, 1999. Staffing costs increased from $109,000 to $1,308,000. The
increase is attributable to our increase in personnel from 3 to 28 full-time
individuals. Operating costs increased from $26,333 in the year ended
December 31, 1998 to $197,871 in the

14
<PAGE>
year ended December 31, 1999 primarily due to rent, utilities and insurance
expenses. Professional fees for the year ended December 31, 1999 and 1998 were
$611,173 and $88,382, 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 year ended December 31, 1999 was $244,676
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 web site 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.

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
December 31, 1999, we had approximately $734,574 in cash.

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 plan to expand our sales and marketing
programs while conducting more aggressive brand promotions.

YEAR 2000 COMPLIANCE

To date, we have not experienced any disruption in our services as a result
of, nor has any third-party vendor on which we depend been affected by, the
commencement of the year 2000. Although we do not anticipate that our web sites
will be affected by the year 2000, if we, or third-party providers of hardware,
software and communications services, fail to remedy any year 2000 issues, the
result could be lost revenues, increased operating expenses, the loss of
customers and other business interruptions, any of which could harm our
business. The failure to adequately address year 2000 compliance issues in the
delivery of products and services to our customers could result in claims
against us of misrepresentation or breach of contract and related litigation,
any of which could be costly and time consuming to defend.

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<PAGE>
Our worst case scenario for year 2000 problems would be the failure of our
Version 3 products and Oracle database, resulting in loss of data. To protect
against the failure of our Version 3 and Oracle database in the year 2000, we
have implemented 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 will be required to 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 still occur.

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BUSINESS

PREDICT IT

OVERVIEW

Our business is the development of interactive products, which are
distributed through the Internet. The Predict It product allows users to
participate actively 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 then calculates the accuracy of these
predictions and allows users to view those results. 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 March 1, 2000, we entered into an agreement with China Interactive Media
Group to establish an online prediction company to be known as Predict It China.
Under this agreement, China Interactive is bringing our Internet technology and
business models to the Asian Internet market. Predict It China is based in
Beijing and began operations in March 2000. Under the terms of the agreement,
China Interactive is providing initial financing, the core management team, and
operating support for Predict It China, while we are contributing to Predict It
China's proprietary technology and intellectual capital. In connection with this
agreement, on March 2, 2000, we entered into a license agreement with Predict It
China, LLC. Under this agreement, Predict It China is bringing our Internet
technology and business models to the Asian Internet market. Under the terms of
the agreement, Predict It China is obligated to pay us a fee for the license.

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 22.5% 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. No shares were released in January
2000 because the specified milestones were not met. However, the entire escrow
amount may be released in January 2001 if the latter targets are met. Virtual
Stock Exchange's business is an interactive web site 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 100,000 registered members and generates in excess of 4.5 million
page views per month. Consumers may access Virtual Stock Exchange directly via
its web site or through other web sites, including Crosswalk.com,
Planetdirect.com and Collegestudent.com.

We market our product by entering into partnerships with relevant industry
and news content providers. We earn revenue principally by the sale of
advertisements either by us directly or on a revenue sharing basis with our
partners. Unlike other businesses on the Internet, our strategy is to provide
unique, compelling and user-generated content that encourages repeat visits to
our web sites and those of our 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,

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<PAGE>
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 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 web sites designed to hold users' attention
for extended time periods 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 encourage visits and
increase repeat visits to their sites.

THE PREDICT IT SOLUTION

We believe one of the major problems with the Internet is that every web
site is competing to become the most visited web site on the Internet. Building
brand loyalty and attracting visits 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 web sites has been to incorporate the 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 web site without altering the overall look and feel of
their own web site. This allows web sites to attract new users and retain
existing users without having to hire new staff, install new software or buy new
hardware. We believe the Predict It solution is well positioned to benefit from
this trend.

In short, Predict It will offer its users:

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 introduced
as SportsCappers in March 1998 and re-introduced 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

18
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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 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 concept. 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 of information.

On November 10, 1999, we entered into a three-year agreement with
Sportsline USA, Inc. an on-line content provider, pursuant to which we have
agreed to design, produce, host, operate, maintain and support different
versions of Sportsline's online sports prediction service. This agreement
restricts us from providing any sports content or sports-related services to
Sportsline's domestic competitors. In addition, we have agreed not to sell to or
accept advertising from or to advertise on the websites of competitors of
Sportsline during the term of this agreement. We do not believe that these
restrictions will have a negative impact on our other business activities as we
believe that entering into an exclusive agreement with one of the largest
Internet sports content providers will generate more users for our products and
services than entering into additional relationships with Sportsline's
competitors.

On November 18, 1999, we introduced a redesigned web site,
www.sports.predictit.com, enabling users to gain access to global events using
up-to-the-minute information, increased research capabilities, and additional
features.

On July 16, 1999, we introduced the Predict It Network web site, which we
plan to use to integrate all of our current and future products, including
Predict It Sports and Virtual Stock Exchange, with products that we may acquire.
This will allow us to integrate additional products and services that we may
develop or acquire. In addition, we built the Predict It Network web site so
that, as the number of users increases, all of our users will be able to access
our web sites at one time. Our Predict It Network web site is located 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 100,000 registered members and
generates in excess of 4.5 million page views per month. Consumers may access
Virtual Stock Exchange directly via its web site or through other web sites,
including Crosswalk.com, Planetdirect.com and Collegestudent.com. For a period
of nine months following the Virtual Stock Exchange acquisition, Messrs. Cheng
and Yen, the principle founders of Virtual Stock Exchange served on our
management team as Vice President of Business Development and Director of
Technology, respectively. Effective as of March 1, 2000, Messrs. Cheng and Yen
resigned from their respective offices in order to pursue other opportunities.
However, Mr. Cheng will continue to serve as a member of our board of directors.

PREDICT IT DATA SYSTEM

Predict It has developed a patent-pending database 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 our patent-pending
database system, Predict It Sports, enables users to enter predictions on
sporting events. Our system then stores the user's predictions, allowing other
users access to the entered prediction. Upon conclusion of the sporting

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event being predicted, our system calculates/tabulates the accuracy of the
predictions and allows other users to view the entries and the results. Our
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 our system can be modified for expansion into other areas of interest
(politics, for example), based upon modifications to our database to include the
underlying information for the subject matter of the new area in which our
system would be used.

PREDICT IT SYSTEM FEATURES

FOR USERS

o Live Demo. Anonymous users navigating the system see live data. 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 Advanced Research Capability. The cornerstone of the Predict It concept
is the up-to-the-minute 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 Up-to-the-minute Earnings Reports. Earnings are calculated and posted to
users' accounts immediately following each event for which predictions
were posted.

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

FOR PUBLISHERS

o Branding. Publishers incorporate their site's logo, design and
functionality together with the Predict It product to create a custom
menu so the users feel as though they are still in the publisher's site.
In addition, our products can be customized to the publisher's
specifications, 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.

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 Up-to-the-minute information. We have signed contracts with
SportsTicker, owned in part by ESPN, and PC Quote, to provide the latest
information to the users of our sports and financial products.

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 artificially to
increase earnings balances.

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<PAGE>
CUSTOMERS AND DISTRIBUTORS

We generate revenues from advertising sold on our site and on our partners'
sites. We optimize our revenues by entering into partnerships with other web
sites 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 partner relationships with limited marketing and advertising expenditures.
Our partner relationships allow us to attract visits to our web sites and those
of our partners based on the strength of our partners' marketing and advertising
efforts. In return for providing our partners with content and their ability to
increase their advertising revenue, we generally share 50% of our partners'
advertising revenue that our Predict It service generates from our partners' web
sites. We believe that this creates an attractive opportunity for establishing
partner relationships since we provide our partner with free content and
increased advertising revenue opportunities and because our product encourages
users to make repeat visits to our partners' sites.

Our current partners are:

o CBS Sportsline
o Didax (Crosswalk)
o MyWay.com
o DBC Sports
o Sports.com (Sportsline)
o Vegas Insider (Sportsline)
o CMP
o Venture Catalyst
o Nando Media
o LA Times
o Carolina Hurricanes
o Meadowlands Racetrack
o Sportal UK, Ltd
o Snowball/IGN.com
o TodaysSports.com
o Fuxito Worldwide, Inc
o College Student.com
o Rouze Media
o Soccerage.com
o The Sports Daily
o Voice Media
o Soccer Alliance
o Wall Street Gals
o Bettors World
o Investor Links
o Web On-Site
o Acceleration Software
o Silly Sports
o The Daily Spread
o SHGoddess
o MLB Fans
o SportsRumble
o Sport Hits

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o Women's Basketball
o Football USA
o Aces Sportsbook
o American Digital Media
o NFL Fans
o SSG Online
o GLE Sports
o Bet Maker
o The Prescription.com
o The Jaguar Syndicate
o Sport Chip
o Troutsports
o Hockeysfuture (Beano)
o Square Circle Media
o The Black World Today
o S & H Gaming
o Singled In
o EnterSports
o Street Insider
o Gay Financial Network
o Market Voyager
o SportsJuice.com
o US Fans
o Sportstation
o Smart Ray Network
o Scrum.com

Each web page of our web site is designed to optimize potential advertising
opportunities without diminishing the overall user experience. The layout
generally is configured to allow for 1 larger and 3 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 $25, 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
December 31, 1999, we had entered into one barter arrangement in which we
provided 875,000 impressions per month for three months and the customer
provided the same.

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 our products and services. 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 interactive sports and stocks categories are rapidly evolving and very
competitive. Although there are no substantial barriers to entry in this market,
we believe we can discourage potential competitors from entering the market by
demonstrating leadership in the following areas: audience reach, compelling
content, operational excellence, strategic alliances, functionality of the web
site, scalability of technology, brand recognition and member affinity and
loyalty.

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

o Interactive game-based communities, such as Sandbox.com, Smallworld.com
and HollywoodStockExchange.com; and

o Community-generated ratings and advice web sites, such as Deja.com,
Clearstation.com, Inforocket.com, I-Exchange.com, Raging Bull.com and
Epinions.com

We believe that other competitive sites that provide for online sports
pools, sweepstakes, and competition in financial market predictions present an
opportunity for us rather than a competitive threat, since our products and
services 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 our
products and services 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 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 visits to 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
partners also have established collaborative relationships with certain of our
competitors or potential competitors, and other frequently-visited web sites.
Accordingly, we cannot be certain that we will be able to grow our membership
base, usage levels and advertiser customer base at historical levels or retain
our current members, usage levels or advertiser customers. Advertisers may find
other web sites more attractive if web usage grows at a faster rate on the web
sites of competitors and thus, our partners 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.

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<PAGE>
TECHNOLOGY

As of May 15, 2000, 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 24-hour basis using a pager gateway
with a 15-minute response 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 for our internet enabled prediction exchange system. 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.

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,

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<PAGE>
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 May 15, 2000, we had 32 full-time employees, including 6 in sales and
business development, 20 in product development/technology and 6 in corporate
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 268 W. 44th Street, 5th Floor, New York, New York 10036. 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
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.

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MANAGEMENT

The following table sets forth certain information with respect to our
executive officers, directors and key employees as of May 15, 2000:

<TABLE>
<CAPTION>
NAME AGE COMPANY POSITION AND OFFICES HELD
- ---------------------------------------------- --- ---------------------------------------------
<S> <C> <C>
Andrew P. Merkatz............................. 31 President and Director
Desmond Glass................................. 30 Corporate Controller
Robert Jacobs................................. 39 Senior Vice President of Business Development
Geordie Pace.................................. 36 Senior Vice President of Product Development
Alana Oldham.................................. 30 Chief Technology Officer
Jeffrey Berman................................ 31 Vice President of International Business
Development
Gary Cheng.................................... 25 Director
Andrew Weissman............................... 32 Secretary and Director
Ajmal Khan.................................... 38 Director
Carol Lee..................................... 41 Director
</TABLE>

Andrew P. 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 Corporate
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.

Robert Jacobs, age 39, 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 joining 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 36, 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. From 1994 to 1996, Mr. Pace served as Special
Projects Manager at the University of Missouri, College of Engineering.

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

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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.

Jeffrey Berman, age 31, has served as Vice President of International
Business Development since March 27, 2000. From 1997 to 2000, Mr. Berman served
in marketing and business development capacities and, most recently, Senior
Manager, Business Development at SportsLine.com. From 1994 to 1997, Mr. Berman
served as Regional Marketing Manager for Falk Associates Management Enterprises,
subsidiary of SFX Entertainment. Mr. Berman holds a B.A. in Public Policy from
Duke University and an M.B.A. from Georgetown University.

Gary Cheng, age 25, has served as a Director of Predict It since 1999. From
July 1999 to March 1, 2000, Mr. Cheng served as our Vice President of Business
Development. From 1997 to 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. From August 1996 to 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.

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 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.

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.

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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, 1999:

<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>
Andrew P. Merkatz(1) ....... 1999 $ 87,499.95 0 0 0 945,475 0 0
Chief Executive Officer 1998 $ 0 0 0 0 0 0 0
and Director
Robert Jacobs............... 1999 $ 102,500.04 0 0 0 27,250 0 0
1998 $ 39,023.48 0 0 0 81,750 0 0
</TABLE>

- ------------------
(1) Mr. Merkatz became our President and Chief Executive Officer on May 19, 1999

OPTION GRANTS IN 1999

Set forth below is information on grants of stock options for our executive
officers for the fiscal year ended December 31, 1999.

<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>
Andrew P. Merkatz......................... 537,198 30% $ 2.00 5/18/02
Andrew P. Merkatz......................... 168,006 9.3% $ 2.62 5/18/02
Andrew P. Merkatz......................... 9,421 .5% $ 1.75 5/18/02
Andrew P. Merkatz......................... 15,971 .8% $ 2.00 5/18/02
Andrew P. Merkatz......................... 214,879 12% $ 3.75 5/18/04
Desmond Glass............................. 70,000 3.9% $ 1.50 9/27/02
Alana Oldham.............................. 120,000 6.7% $ 2.00 7/27/02
Geordie Pace.............................. 15,000 .8% $ 1.50 9/27/02
Geordie Pace.............................. 100,000 5.5% $ 2.30 6/03/02
</TABLE>

COMPENSATION ARRANGEMENTS

On May 19, 1999, we entered into an Employment Agreement with Mr. Merkatz.
Mr. Merkatz'sinitial employment term expires on May 19, 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, November 18, 1999 and
February 18, 2000, Mr. Merkatz received options to purchase 9,421 shares of our
common stock at an exercise price of $1.75 per share, 15,971 shares of our
common stock at an exercise price of $2.00 per share and 62,050 shares of our
common stock at an exercise price of $1.38 per share,respectively, 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

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<PAGE>
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'semployment for any reason other than "for cause"
Mr. Pace will be entitled to 30 days' salary and accrued vacation and bonus.

STOCK OPTION PLAN

On April 28, 1999, upon completion of the reverse acquisition, our 1999
Stock Option Plan became effective. On March 10, 2000, our 1999 Stock Option
Plan was amended to reserve a total of 3,000,000 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.

On March 10, 2000, our 1999 Stock Option Plan was amended to reserve a
total of 3,000,000 shares of common stock for issuance over the ten-year term of
our 1999 Stock Option Plan. Currently, there are 3,000,000 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.

29
<PAGE>
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.

On December 8, 1999, existing shareholders, including Keith Rosenbloom, who
was serving as a director at such time, Asia World Holdings Inc., Commonwealth
Associates, L.P., Michael Falk, Dawntreader Fund I LP and Robert Priddy made
bridge loans to Predict It in the aggregate amount of $1,000,000. The loans were
evidenced by promissory notes for an aggregate amount of $1,000,000, plus
interest accruing at the rate of 10% per year. In conjunction with the bridge
loans, we issued warrants to purchase an aggregate of 625,000 shares of our
common stock.

On March 15, 2000, each of Patriot Capital and Robert H. Lessin Venture
Capital LLC made a bridge loan to us in the amount of $500,000. Each loan was
evidenced by a one-year promissory note in the amount of $500,000, plus
interest, accruing at a rate of 10% per year, compounded annually. In
conjunction with these loans, we issued to each of these entities a warrant to
purchase 312,500 of our common stock at an exercise price of $1.60 per share.

On April 14, 2000, we issued 23 units consisting of an aggregate of 230,000
shares of our Series B Preferred Stock and warrants to purchase an aggregate of
2,300,000 shares of our common stock to Dawntreader Fund I LP, Commonwealth
Associates, L.P., Falk Family Foundation, Michael Falk, Asia World Holdings
Ltd., Ed Shea, Robert Priddy, Robert O'Sullivan Family Trust, and Keith
Rosenbloom, existing security holders, in exchange for the conversion of their
outstanding notes totalling $2,300,000. Commonwealth Associates, L.P. acted as a
placement agent in this transaction. As part of their compensation for their
services as placement agent, we issued to Commonwealth Associates, L.P. a unit
purchase option to purchase 8.6 units consisting of an aggregate of 86,000
shares of Series B Preferred Stock and warrants to purchase 860,000 shares of
common stock at an exercise price of $100,000 per unit. In conjunction with this
private offering, warrants to purchase 187,500 shares of common stock held by
Dawntreader Fund I LP were cancelled. We have engaged Commonwealth to explore
additional private placement equity financings for us.

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.

30
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of our common stock as of May 15, 2000, 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 11,982,402 (including 500,000 shares
being held in escrow pending Predict It achieving certain milestones) shares of
common stock outstanding as of May 15, 2000.

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED OWNERSHIP
- ---------------------------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
Dawntreader Fund I LP ............................................................ 4,271,402 (2) 30.8%
188 West 22nd Street, 11th Floor
New York, NY 10011
Gary Cheng ....................................................................... 954,832 (3) 8.0%
c/o Predict It Inc.
268 West 44th St., 5th Floor
New York, NY 10036
Howard Yen ....................................................................... 954,832 (3) 8.0%
c/o Predict It Inc.
268 West 44th St., 5th Floor
New York, NY 10036
GEM France ....................................................................... 918,381 (4) 7.6%
712 Fifth Avenue, 7th Floor
New York, NY 10019
Robert Priddy .................................................................... 772,926 (5) 6.1%
c/o Commonwealth Associates
830 3rd Avenue
New York, NY 10022
Asia World Holdings .............................................................. 1,693,330 (6) 12.7%
The China Building
Queens Rd.
Hong Kong
Commonwealth Associates .......................................................... 2,363,093 (7) 17.0%
830 3rd Avenue
New York, NY 10022
Venture Catalyst Inc. ............................................................ 1,227,403 (8) 10.2%
3420 Ocean Park Blvd., Suite 3026
Santa Monica, CA 90405
Robert H. Lessin Venture Capital LLC ............................................. 1,000,000 (9) 7.7%
c/o Wit Capital Group, Inc.
826 Broadway, 7th Floor
New York, NY 10003
</TABLE>

31
<PAGE>

Patriot Capital .................................................................. 1,000,000(11) 7.7%
The Tropic Isle Building
Road Town
Tortola, British Virgin Islands

Belvedere Consultancy ............................................................ 1,000,000(12) 7.7%
c/o Commonwealth Associates
830 3rd Avenue
New York, NY 10022

Andrew P. Merkatz ................................................................ 335,842(13) 2.8%
c/o Predict It Inc. -- -
268 West 44th St., 5th Floor
New York, NY 10036

Andrew Weissman .................................................................. 4,271,402(14) 30.8%
c/o Dawntreader Fund I LP -
188 West 22nd Street, 11th Floor
New York, NY 10011

Carol Lee ........................................................................ 0 *
c/o The Prospero Group 517-1177
West Hastings Street
Vancouver, B.C., Canada V6E 2K3

Robert Jacobs .................................................................... 27,250 (15) *
c/o Predict It Inc.
268 West 44th St., 5th Floor
New York, NY 10036

Ajmal Khan ....................................................................... 259,243 (16) 2.1%
c/o Verus Capital Corp.
1177 W. Hastings Street, Suite 2000
Vancouver, B.C., Canada V6E 2K3

Alana Oldham ..................................................................... 0 (17) *
c/o Predict It Inc.
268 West 44th St., 5th Floor
New York, NY 10036

Geordie Pace ..................................................................... 0 (18) *
c/o Predict It Inc.
268 West 44th St., 5th Floor
New York, NY 10036

Desmond Glass .................................................................... 0 (19) *
c/o Predict It Inc.
268 West 44th St., 5th Floor
New York, NY 10036

All Executive Officers and Directors 6,155,420 43.7%
as a group (9 persons).......................................................... -------------- -
</TABLE>

32
<PAGE>
- ------------------
* 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) Represents (i) an immediately exercisable warrant to purchase 156,250
shares of common stock at an exercise price of $1.60 per share;
(ii) 2,415,152 shares of our common stock; (iii) 85,000 shares of Series B
Preferred Stock, convertible into 850,000 shares of our common stock; and
(iv) an immediately exercisable warrant to purchase 850,000 shares of
common stock at an exercise price of $1.50 per share. Dawntreader
Fund I LP is a partnership controlled by DT Advisors LLC. The investment
decisions of DT Advisors LLC are made by Robert H. Lessin, who holds a
majority interest in such entity.

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

(4) GEM France is beneficially owned by GEM Group, LP, whose investment
decisions are made by Chris Brown.

(5) Represents (i) 141,676 shares of common stock; (ii) an immediately
exercisable warrant to purchase 31,250 shares of common stock at an
exercise price of $1.60 per share; (iii) 30,000 shares of Series B
Preferred Stock, convertible into 300,000 shares of our common stock; and
(iv) an immediately exercisable warrant to purchase 300,000 shares of our
common stock at an exercise price of $1.50 per share.

(6) Represents (i) 380,830 shares of common stock; (ii) an immediately
exercisable warrant to purchase 312,500 shares of common stock at an
exercise price of $1.60 per share; (iii) 50,000 shares of Series B
Preferred Stock, convertible into 500,000 shares of our common stock; and
(iv) an immediately exercisable warrant to purchase 500,000 shares of our
common stock at an exercise price of $1.50 per share. Asia World Holdings
is benefically owned by Clifford Ng.

(7) Represents (i) 416,683 shares of common stock; (ii) an immediately
exercisable warrant to purchase 53,906 shares of common stock at an
exercise price of $1.60 per share; (iii) 8,625 shares of Series B Preferred
Stock, convertible into 86,250 shares of our common stock; (iv) an
immediately exercisable warrant to purchase 86,250 shares of our common
stock at an exercise price of $1.50 per share; and (v) a unit purchase
option to purchase 8.6 units consisting of 86,000 shares of Series B
Preferred Stock, and warrants to purchase 860,000 shares of common stock at
an exercise price of $1.50 per share. Commonwealth Associates, L.P. is
beneficially owned by Michael Falk.

(8) Represents 1,227,403 shares of common stock, acquired privately from Gary
Cheng, Howard Yen, Tom Courts, and Paul Yahnke, all of whom are existing
shareholders of Predict It. Investment decisions at Venture Catalyst are
made by Donald Speer.

(9) Represents (i) 50,000 shares of Series B Preferred Stock, convertible into
500,000 shares of our common stock; and (ii) an immediately exercisable
warrant to purchase 500,000 shares of our common stock at an exercise price
of $1.50 per share. Robert H. Lessin Venture Capital LLC is benefically
owned by Robert H. Lessin.

(10) Represents the shares beneficially owned by Dawntreader Fund I LP, listed
in footnote (2) above, and the shares beneficially owned by Robert H.
Lessin Venture Capital LLC, listed in footnote (9) above. Mr. Lessin
disclaims beneficial ownership for all of the shares beneficially owned by
Dawntreader Fund

(Footnotes continued on next page)

33
<PAGE>
(Footnotes continued from previous page)

I LP, with the exception of those shares beneficially owned by him through
his limited partnership interest in Dawntreader Fund I LP and his general
partnership interest in DT Advisors LLC, the general partner of Dawntreader
Fund I LP.

(11) Represents (i) 50,000 shares of Series B Preferred Stock, convertible into
500,000 shares of our common stock; and (ii) an immediately exercisable
warrant to purchase 500,000 shares of our common stock at an exercise price
of $1.50 per share. Patriot Capital is benefically owned by Silas K.F.
Chou.

(12) Represents (i) 50,000 shares of Series B Preferred Stock, convertible into
500,000 shares of our common stock; and (ii) an immediately exercisable
warrant to purchase 500,000 shares of our common stock at an exercise price
of $1.50 per share. Belvedere Consultancy is beneficially owned by Fok Yau
Man.

(13) 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 have
vested 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,
of which one-third shall have vested on May 19, 2000 and the remaining
two-thirds shall vest every six months thereafter in one-sixth increments.
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, of which one-third
shall have vested on May 19, 2000 and the remaining two-thirds shall vest
every six months thereafter in one-sixth increments. Mr. Merkatz also holds
an option to purchase 15,971 shares of our common stock at an exercise
price of $2.00 per share, of which one-third shall have vested on May 19,
2000 and the remaining two-thirds shall vest every six months thereafter in
one-sixth increments. Mr. Merkatz also holds an option to purchase 62,050
shares of our common stock at an exercise price of $1.38 per share, of
which one-third shall have vested on May 19, 2000 and the remaining
two-thirds shall vest every six months thereafter in one-sixth increments.
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 have
vested on May 19, 2000 and the remaining two-thirds shall vest every six
months thereafter in one-sixth increments upon attaining certain targets.
This option is not subject to anti-dilution protection.

(14) Represents (i) 2,415,152 shares of our common stock; (ii) an immediately
exercisable warrant to purchase 156,250 shares of common stock at an
exercise price of $1.60 per share; (iii) 85,000 shares of Series B
Preferred Stock, convertible into 850,000 shares of our common stock; and
(iv) an immediately exercisable warrant to purchase 850,000 shares of
common stock at an exercise price of $1.50 per share held by Dawntreader
Fund I LP of, which Mr. Weissman is Senior Vice President. Mr. Weissman
disclaims beneficial ownership of such shares and warrants.

(15) 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.

(16) Represents (i) 210,000 shares of common stock and (ii) 49,243 shares of
Series A Preferred Stock convertible into 49,243 shares of our common stock
held by Verus Capital Corp., of which Mr. Khan is founder and President.
Mr. Khan disclaims beneficial ownership of such shares.

(17) 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.

(18) Mr. Pace holds 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 of which shall

(Footnotes continued on next page)

34
<PAGE>
(Footnotes continued from previous page)

vest every six months thereafter in one-sixth increments. Mr. Pace also
holds an option to purchase 15,000 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 six months thereafter in
one-sixth increments.

(19) 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
May 15, 2000 and covered by this prospectus; and

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

<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF SHARES REGISTERED IN NUMBER OF SHARES
BENEFICIALLY OWNED THIS BENEFICIALLY OWNED
NAME OF SELLING SECURITY HOLDER PRIOR TO THE OFFERING OFFERING AFTER THE OFFERING
- ------------------------------------------------------ --------------------- ---------------- ------------------
<S> <C> <C> <C>
Tom Courts............................................ 290,706(2) 190,706 100,000
Dawntreader Fund I LP................................. 4,271,402 2,415,152 1,856,250(3)
Keith M. Rosenbloom................................... 2,502,467(4) 49,999 2,035,785(5)(10)
Robert Jacobs......................................... 27,250(6) 81,750 27,250
Paul Yahnke........................................... 71,996 71,996 0
GEM France............................................ 918,381 918,381 0
Snowmass Technologies LLC............................. 81,697 81,697 0
Falk Family Foundation................................ 98,742(7) 70,841 27,901
Michael S. Falk....................................... 2,461,835(8) 70,841 1,974,311(7)(10)
Robert A. O'Sullivan Family Trust..................... 23,226(9) 16,664 6,562
Robert L. Priddy...................................... 772,926(10) 141,676 631,250
Gary N. Mansfield..................................... 16,664 16,664 0
Ron Moschetta......................................... 49,999 49,999 0
Commonwealth Associates, L.P.......................... 2,363,093(11) 416,683 1,946,410
Navigator Holdings Corp............................... 546,600(12) 546,600 0
Sprott Capital S.A.................................... 546,600(12) 546,600 0
Century Capital Corp.................................. 382,716 382,716 0
Perth Management Corp................................. 525,992(13) 525,992 0
Rock Capital Corp..................................... 365,575 365,575 0
Salter Street Management Corp......................... 516,815(14) 516,815 0
National Day Corporation.............................. 512,936(15) 512,936 0
Asia World Holdings, Ltd.............................. 1,380,830(16) 380,830 1,000,000
Bright Outlook Consultants, Ltd....................... 370,575 370,575 0
Pyrennes Investments Limited.......................... 522,118(17) 522,118 0
Verus Capital Corp.................................... 259,243(18) 259,243 0
Harold W. Gorden...................................... 10,000 10,000 0
Mid-Continental Securities Corp....................... 7,500 7,500 0
Howard Yen............................................ 954,832(19) 954,832 0
Gary Cheng............................................ 954,832(19) 954,832 0
Scott Appleby......................................... 176,634 176,634 0
Venture Catalyst, Inc................................. 1,227,403 1,227,403 0
John B Lowy........................................... 7,500 7,500 0
Vision Consulting International Inc................... 282,402 282,402 0
Alan M. Bass.......................................... 2,500 2,500 0
Sharon Brasure........................................ 10,000 10,000 0
</TABLE>

35
<PAGE>

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

(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 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 an option to purchase, for a period of one year, 100,000 shares
of common stock at an exercise price of $.60 per share, all of which shall
have vested by May 15, 2000. The securities underlying the option to
purchase 100,000 shares are not being registered under this registration
statement.

(3) Represents (i) an immediately exercisable warrant to purchase 156,250
shares of common stock at an exercise price of $1.60 per share;
(ii) 85,000 shares of Series B Preferred Stock, convertible into 850,000
shares of our common stock; and (iii) an immediately exercisable warrant to
purchase 850,000 shares of common stock at an exercise price of $1.50 per
share. These securities are not being registered under this registration
statement.

(4) 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.

(5) Includes (i) 4,000 shares of Series B Preferred Stock, convertible into
40,000 shares of our common stock; (ii) an immediately exercisable warrant
to purchase 40,000 shares of common stock at an exercise price of $1.50 per
share; and (iii) an immediately exercisable warrant to purchase 9,375
shares of common stock at an exercise price of $1.60 per share. These
securities are not being registered under this registration statement.

(6) Represents 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. Does not include an option to purchase 27,250
shares of common stock at an exercise price of $2.30 per share.

(7) Includes (i) 1,063 shares of Series B Preferred Stock, convertible into
10,630 shares of our common stock; (ii) an immediately exercisable warrant
to purchase 10,630 shares of common stock at an exercise price of $1.50 per
share; and (iii) an immediately exercisable warrant to purchase 6,641
shares of common stock at an exercise price of $1.60 per share. These
securities are not being registered under this registration statement.

(Footnotes continued on next page)

36
<PAGE>
(Footnotes continued from previous page)

(8) Includes 70,841 shares of common stock that are directly owned and 416,683
shares of common stock that are held by Commonwealth Associates.

(9) Includes (i) 250 shares of Series B Preferred Stock, convertible into 2,500
shares of our common stock; (ii) an immediately exercisable warrant to
purchase 2,500 shares of common stock at an exercise price of $1.50 per
share; and (iii) an immediately exercisable warrant to purchase 1,562
shares of common stock at an exercise price of $1.60 per share. These
securities are not being registered under this registration statement.

(10) Includes (i) 30,000 shares of Series B Preferred Stock, convertible into
300,000 shares of our common stock; (ii) an immediately exercisable warrant
to purchase 300,000 shares of our common stock at an exercise price of
$1.50 per share; and (iii) an immediately exercisable warrant to purchase
31,250 shares of common stock at an exercise price of $1.60 per share.
These securities are not being registered under this registration
statement.

(11) Includes (i) 8,625 shares of Series B Preferred Stock, convertible into
86,250 shares of our common stock; (ii) an immediately exercisable warrant
to purchase 86,250 shares of common stock at an exercise price of $1.50 per
share; (iii) a unit purchase option to purchase 8.6 units, consisting of
86,000 shares of Series B Preferred Stock, convertible into 860,000 shares
of common stock and a warrant to purchase 860,000 shares of common stock,
at an exercise price of $1.50 per share; and (iv) an immediately
exercisable warrant to purchase 53,906 shares of common stock at an
exercise price of $1.60 per share. These securities are not being
registered under this registration statement.

(12) 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.

(13) 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.

(14) 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.

(15) 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.

(16) Represents (i) 50,0000 shares of Series B Preferred Stock, convertible into
500,000 shares of common stock; and (iii) warrants to purchase
500,000 shares of our common stock at an exercise price of $1.50 per share.
These securities are not being registered under this registration
statement.

(17) 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.

(18) Represents (i) 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; and (ii) 210,000 shares of our common stock.

(19) Includes 250,000 shares of our common stock held in escrow pending the
achievement of certain milestones.

37
<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

38
<PAGE>
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.

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.

We cannot be sure 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 75,000,000 shares of our common
stock, par value $.01 per share, and 10,000,000 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 75,000,000 shares of common stock.
As of May 15, 2000, we had issued and outstanding 11,982,402 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 May 15, 2000, 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 4,300,000 shares of our common stock for conversion of our issued and
outstanding Series B Preferred Stock;

o 3,000,000 shares of our common stock under our 1999 Stock Option Plan;

o 1,247,170 shares of our common stock for existing options;

o 4,925,000 shares of our common stock for existing warrants; and

o 1,720,000 shares of our common stock for an existing unit purchase
option.

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

39
<PAGE>
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 10,000,000 shares of preferred stock, par
value $.01 per share. As of April 14, 2000, 1,000,000 shares of our Series A
Preferred Stock were issued and outstanding, held by approximately 15 registered
holders and 430,001 shares of our Series B Preferred Stock were issued and
outstanding, held by 21 registered holders.

The holders of our Series A Preferred Stock have no voting power except as
is expressly provided under Delaware law. In addition, the holders of Series A
Preferred Stock have a liquidation preference over the holders of our common
stock in the event of our liquidation, dissolution or winding up. Furthermore,
each share of our Series A Preferred Stock is convertible at any time into one
share of our common stock at the option of the holders of Series A Preferred
Stock. The holders of our Series B Preferred Stock have the right to vote,
together with the holders of our common stock as one class, on all matters as to
which holders of our common stock shall be entitled to vote. In addition, the
holders of our Series B Preferred Stock have a liquidation preference over the
holders of our common stock and Series A Preferred Stock in the event of our
liquidation, dissolution or winding up in an amount in cash equal to $30.00 per
share plus an amount equal to accrued and unpaid dividends on each share of
Series B Preferred Stock. Our Series B Preferred Stock is immediately
convertible into our common stock at the option of the holders of Series B
Preferred Stock. In addition our Series B Preferred Stock is automatically
convertible upon the occurrence of specific events. Each share of our Series B
Preferred Stock is convertible into 10 shares of our common 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. In connection with our offering of Series B Preferred Stock we
have agreed with the purchasers to file a registration statement under the
Securities Act at our expense within six months of the final closing of such
offering with respect to the

40
<PAGE>

shares of common stock issuable upon conversion of the Series B Preferred Stock
and upon exercise of warrants. In addition, the purchasers are entitled to
certain "piggy back" registration rights. 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 39 options to purchase an aggregate of 2,058,025 shares of
our common stock representing the following:

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 $.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 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 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;

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 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.

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;

41
<PAGE>
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 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 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 15,971 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;

o an option to purchase 15,000 shares of our common stock at an exercise
price of $2.00 per share, of which one-third shall vest on November 19,
1999 and the remaining two-thirds shall vest every 6 months thereafter in
one-sixth increments;

o an option to purchase 20,000 shares of our common stock at an exercise
price of $2.00 per share, of which one-third shall vest on November 19,
1999 and the remaining two-thirds shall vest every 6 months thereafter in
one-sixth increments;

o two options to purchase 25,000 shares of our common stock at an exercise
price of $1.375 per share, of which one-third shall vest on January 20,
2001 and the remaining two-thirds shall vest every 6 months thereafter in
one-sixth increments.

o an option to purchase 20,000 shares of our common stock at an exercise
price of $1.375 per share, of which one-third shall vest on January 20,
2001 and the remaining two-thirds shall vest every 6 months thereafter in
one-sixth increments.

o four options to purchase 15,000 shares of our common stock at an exercise
price of $1.375 per share, of which one-third shall vest on January 20,
2001 and the remaining two-thirds shall vest every 6 months thereafter in
one-sixth increments.

o an option granted to purchase 7,500 shares of our common stock at an
exercise price of $1.375 per share, of which one-third shall vest on
January 20, 2001 and the remaining two-thirds shall vest every 6 months
thereafter in one-sixth increments.

42
<PAGE>
o an option granted to purchase 5,000 shares of our common stock at an
exercise price of $1.375 per share, of which one-third shall vest on
January 20, 2001 and the remaining two-thirds shall vest every 6 months
thereafter in one-sixth increments.

o an option granted to purchase 10,000 shares of our common stock at an
exercise price of $1.375 per share, of which one-third shall vest on
January 20, 2001 and the remaining two-thirds shall vest every 6 months
thereafter in one-sixth increments.

o an option to purchase 62,050 shares of our common stock at an exercise
price of $1.38 per share, of which one-third shall vest on May 19, 2000
and the remaining two-thirds shall vest every six months thereafter in
one-sixth increments.

WARRANTS

We have issued warrants to purchase an aggregate of 4,925,000 shares of our
common stock representing the following:

o a warrant to purchase 156,250 shares of our common stock at an exercise
price of $1.60 per share, exercisable immediately and expiring on
December 8, 2004;

o a warrant to purchase 9,375 shares of our common stock at an exercise
price of $1.60 per share, exercisable immediately and expiring on
December 8, 2004;

o a warrant to purchase 53,906 shares of our common stock at an exercise
price of $1.60 per share, exercisable immediately and expiring on
December 8, 2004;

o two warrants to purchase 6,640 shares of our common stock at an exercise
price of $1.60 per share, exercisable immediately and expiring on
December 8, 2004;

o a warrant to purchase 1,562 shares of our common stock at an exercise
price of $1.60 per share, exercisable immediately and expiring on
December 8, 2004;

o a warrant to purchase 31,250 shares of our common stock at an exercise
price of $1.60 per share, exercisable immediately and expiring on
December 8, 2004;

o a warrant to purchase 46,875 shares of our common stock at an exercise
price of $1.60 per share, exercisable immediately and expiring on
December 8, 2004;

o a warrant to purchase 312,500 shares of our common stock at an exercise
price of $1.60 per share, exercisable immediately and expiring on
December 8, 2004.

o a warrant to purchase 2,500 shares of common stock at an exercise price
of $1.50 per share, exercisable immediately and expiring on April 14,
2007;

o three warrants to purchase 100,000 shares of common stock at an exercise
price of $1.50 per share, exercisable immediately and expiring on April
14, 2007;

o from warrants to purchase 500,000 shares of common stock at an exercise
price of $1.50 per share, exercisable immediately and expiring on April
14, 2007;

o two warrants to purchase 75,000 shares of common stock at an exercise
price of $1.50 per share, exercisable immediately and expiring on April
14, 2007;

o a warrant to purchase 850,000 shares of common stock at an exercise price
of $1.50 per share, exercisable immediately and expiring on April 14,
2007;

o six warrants to purchase 50,000 shares of common stock at an exercise
price of $1.50 per share, exercisable immediately and expiring on April
14, 2007;

o a warrant to purchase 86,250 shares of common stock at an exercise price
of $1.50 per share, exercisable immediately and expiring on April 14,
2007;

o two warrants to purchase 10,625 shares of common stock at an exercise
price of $1.50 per share, exercisable immediately and expiring on April
14, 2007;

43
<PAGE>
o two warrants to purchase 300,000 shares of common stock at an exercise
price of $1.50 per share, exercisable immediately and expiring on April
14, 2007; and

o a warrant to purchase 40,000 shares of common stock at an exercise price
of $1.50 per share, exercisable immediately and expiring on April 14,
2007.

UNIT PURCHASE OPTION

We have issued a unit purchase option to our placement agent to purchase
8.6 units, consisting of 86,000 shares of Series B Preferred Stock, convertible
into 860,000 shares of common stock, and warrants to purchase 860,000 shares of
common stock at an exercise price of $1.50 per share, at an exercise price of
$100,000 per unit.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for Predict It's Common Stock is
Continental Stock Transfer & Trust, Inc. 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 11,982,402 (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 tradable 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 tradable without restriction or further registration. Also, 206,750
shares of our common stock underlying the options will, upon exercise of the
options, be freely tradable without restriction or further registration. In
conjunction with our private offering of units, our officers, directors and 5%
holders of our capital stock have agreed not to sell or transfer
7,815,556 shares of common stock being registered under this registration
statement, during the period commencing on March 7, 2000 and ending on the later
of (i) the six month anniversary of the final closing of our private offering of
units and (ii) the effective date of this registration statement.

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 is now a Managing
Director of Dawntreader Fund I LP, one of our principal stockholders.

44
<PAGE>
EXPERTS

This registration statement includes the consolidated financial statements
of Predict It Inc. and subsidiary, as of December 31, 1999, and for the years
ended December 31, 1999 and 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.

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. AND SUBSIDIARY

Financial Statements

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

Balance sheet as of December 31, 1999................................................................... F-3

Statements of operations for the years ended December 31, 1999 and 1998................................. F-4

Statements of changes in stockholders' equity for the years ended December 31, 1999 and 1998............ F-5

Statements of cash flows for the years ended December 31, 1999 and 1998................................. F-6

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

VIRTUAL STOCK EXCHANGE, INC.

Financial Statements

Independent auditors' report............................................................................ F-16

Balance sheets as of December 31, 1998 and June 30, 1999 (unaudited).................................... F-17

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-18

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-19

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-20

Notes to financial statements........................................................................... F-21

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

Unaudited pro forma statements of operations for the years ended December 31, 1999 and 1998 and the
notes thereto......................................................................................... F-23
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheet of Predict It Inc.
and its wholly owned subsidiary as of December 31, 1999 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the years in the two-year period then ended. 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 consolidated financial position of Predict It Inc. and
its wholly owned subsidiary as of December 31, 1999 and the results of their
operations and their cash flows for each of the years in the two-year period
then ended in conformity with generally accepted accounting principles.

Richard A. Eisner & Company, LLP
New York, New York
March 21, 2000, except for Note I,
as to which the date is April 14, 2000

F-2

<PAGE>
PREDICT IT INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash.............................................................................................. $ 734,574
Accounts receivable, net of allowance of $14,000.................................................. 69,619
Prepaid expenses and other current assets......................................................... 77,565
Deferred promotion expense........................................................................ 250,000
------------
Total current assets................................................................................ 1,131,758
Capitalized software costs, net of accumulated amortization of $87,581............................ 1,017,976
Computer equipment, net of accumulated depreciation of $95,490.................................... 550,172
Registered user base, net of accumulated amortization of $244,676................................. 1,223,378
Other assets...................................................................................... 103,965
------------
$ 4,027,249
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loans payable to stockholders, net of debt discount of $438,222................................... $ 561,778
Notes payable, stockholders....................................................................... 100,000
Accounts payable.................................................................................. 666,624
Accrued expenses.................................................................................. 420,200
Capital lease obligations--current portion........................................................ 64,142
------------
Total current liabilities........................................................................... 1,812,744
Long-term liabilities:
Capital lease obligations--noncurrent portion..................................................... 51,773
------------
1,864,517
------------
Commitments (Note H)
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized, 1,000,000 shares Series A issued and
outstanding (stated at liquidation preference)................................................. 3,000,000
Common stock, $.01 par value, 25,000,000 shares authorized, 11,303,448 shares issued and
outstanding (exclusive of 500,000 shares held in escrow)....................................... 113,034
Additional paid-in capital........................................................................ 3,595,529
Deficit............................................................................................. (3,788,609)
Unearned compensation............................................................................... (757,222)
------------
2,162,732
------------
$ 4,027,249
============
</TABLE>

See notes to consolidated financial statements
F-3
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1999 1998
----------- ---------
<S> <C> <C>
Revenue:
User fees.................................................. $ 4,519 $ 7,712
Advertising................................................ 174,517 6,000
----------- ---------
179,036 13,712
----------- ---------
Costs and expenses:
Site development/maintenance............................... 406,778 177,783
Selling, general and administrative........................ 2,786,164 340,698
Amortization of acquired intangible........................ 244,676
Interest expense, net...................................... 856 3,000
----------- ---------
3,438,474 521,481
----------- ---------
Net loss..................................................... $(3,259,438) $(507,769)
=========== =========
Net loss per share--basic and diluted........................ $ (.37) $ (.21)
=========== =========
Weighted average number of shares outstanding................ 8,872,400 2,381,327
=========== =========
</TABLE>

See notes to consolidated financial statements
F-4
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES A SERIES B
SERIES A CONVERTIBLE CONVERTIBLE
COMMON STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
PAR VALUE $.01 PAR VALUE $.01 PAR VALUE $.001 PAR VALUE $.001
--------------------- ---------------------- ----------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- -------- --------- ---------- -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998.........
Issuance of common stock for
cash..............................
Issuance of common stock as
settlement for accrued interest...
Issuance of common stock for
nonemployee services..............
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
Issuance of preferred stock for
cash.............................. 149,726 150
Net loss for the year ended
December 31, 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)
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......................
Issuance of shares in settlement of
accounts payable.................. 103,448 1,034
Warrants issued in connection with
loans from stockholders...........
Options issued to a consultant.....
---------- -------- --------- ---------- -------- ---- -------- ------
Balance at December 31, 1999....... 11,303,448 $113,034 1,000,000 $3,000,000 0 $ 0 0 $ 0
========== ======== ========= ========== ======== ==== ======== ======

COMMON STOCK
PAR VALUE $.001 ADDITIONAL
----------------- PAID-IN UNEARNED
SHARES AMOUNT CAPITAL DEFICIT COMPENSATION TOTAL
-------- ------ ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998......... 135,000 $ 136 $ 39,864 $ (21,402) $ 18,598
Issuance of common stock for
cash.............................. 165,000 165 99,835 100,000
Issuance of common stock as
settlement for accrued interest... 578 1 657 658
Issuance of common stock for
nonemployee services.............. 14,678 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....... 315,256 317 654,586 (529,171) 126,165
Issuance of preferred stock for
cash.............................. 249,850 250,000
Net loss for the year ended
December 31, 1999................. (3,259,438) (3,259,438)
Grant of options to employee by
stockholder....................... 5,729 5,729
Recapitalization in connection with
merger into WDC................... (315,256) (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...................... 182,778 182,778
Issuance of shares in settlement of
accounts payable.................. 148,966 150,000
Warrants issued in connection with
loans from stockholders........... 464,000 464,000
Options issued to a consultant..... 25,000 25,000
-------- ------ ---------- ----------- ---------- ----------
Balance at December 31, 1999....... 0 $ 0 $3,595,529 $(3,788,609) $ (757,222) $2,162,732
======== ====== ========== =========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-5

<PAGE>
PREDICT IT INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1999 1998
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................................. $ (3,259,438) $ (507,769)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization...................................................... 407,900 95,210
Stock issued for services.......................................................... 14,678
Compensation expense related to option grants...................................... 30,729
Amortization of unearned compensation.............................................. 182,778
Amortization of debt discount...................................................... 25,778
Changes, net of effects of acquisition, in:
Accounts receivable............................................................. (62,675)
Deferred promotion expense...................................................... (250,000)
Prepaid expenses and other assets............................................. (164,403) (13,203)
Accounts payable and accrued expenses......................................... 1,148,785 69,722
------------ ----------
Net cash used in operating activities................................................ (1,940,546) (341,362)
------------ ----------
Cash flows from investing activities:
Cost incurred to develop software.................................................. (1,041,062) (134,275)
Purchase of computer equipment..................................................... (480,478) (11,318)
Acquisition costs, net of cash acquired............................................ (34,051)
------------ ----------
Net cash used in investing activities................................................ (1,555,591) (145,593)
------------ ----------
Cash flows from financing activities:
Issuance of common and preferred stock, net........................................ 3,148,498 600,658
Loans from related parties......................................................... 1,000,000 60,000
Loan repayments to related parties................................................. (60,000)
Payments on capital lease obligation............................................... (31,559)
------------ ----------
Net cash provided by financing activities............................................ 4,116,939 600,658
------------ ----------
Net increase in cash................................................................. 620,802 113,703
Cash--beginning of year.............................................................. 113,772 69
------------ ----------
Cash--end of year.................................................................... $ 734,574 $ 113,772
============ ==========
Supplemental disclosure of cash flow information:
Interest paid during the year...................................................... $ 3,000
Supplemental disclosures of noncash investing and financing activities:
Issuance of common stock as settlement for accounts payable........................ $ 150,000
Issuance of common stock as settlement for interest................................ $ 658
Issuance of common stock for business combination.................................. $ 1,320,000
Granting of stock options to employee.............................................. $ 940,000
Issuance of common stock purchase warrants in connection with loan................. $ 464,000
Equipment purchased through capital leases......................................... $ 102,000
</TABLE>

See notes to consolidated financial statements
F-6
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1999

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 stockholders
of WDC held 4,000,000 common shares and 1,000,000 preferred shares. Accordingly,
upon completion of the merger, the stockholders of PIC owned 55.55% of the
outstanding common shares of WDC and the premerger stockholders of WDC owned
44.45% of the outstanding common shares of WDC. The 1,000,000 shares of
preferred stock owned by premerger stockholders 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 has been earned from
arrangements under which fees are based on the number of occasions a user views
an advertisement ("impression"). Revenue based on number of impressions is
recognized (i) at the time the guaranteed number of impressions occur or
(ii) as impressions occur over the term of the contract, where the contract
provides for the Company to earn a portion of the contract revenues based on the
number of impressions which occur as a percentage of the guaranteed number of
impressions. Revenue applicable to the portion of guaranteed impressions which
have not occurred at the balance sheet date is not recognized. Any revenues
which may be earned under fixed fee arrangements will be recognized in the month
the ads are exhibited.

F-7
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1999

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
2. BARTER ARRANGEMENT:

During 1999 the Company entered into an advertising barter transaction in
which the Company provided 875,000 impressions per month for three months and
the customer provided the same. As the Company has historically received or paid
cash for similar advertising transactions, it has recorded revenues at the lower
of the estimated fair value of the advertising surrendered or the estimated fair
value of the advertising received based on historical experience for similar
cash transactions. Barter advertising revenues, which amount to approximately
$28,800 in 1999, equal barter expenses. Barter expenses are included in selling,
general and administrative expenses in the accompanying statement of operations
for the year ended December 31, 1999.

3. 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.

4. 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 principally of external direct costs of materials
and services 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 commenced when the computer software was ready for its
intended use. Amortization expense for the years ended December 31, 1999 and
1998 was approximately $82,000 and $90,000, 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.

5. REGISTERED USER BASE:

The registered user base, which was acquired through the purchase of
Virtual Stock Exchange, Inc. (see Note C), is being amortized on a straight-line
basis over three years.

6. IMPAIRMENT OF LONG-LIVED ASSETS:

The Company evaluates the recoverability of its identifiable intangibles
and other long-lived assets in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed of". SFAS No. 121 requires recognition of
impairment of long-lived assets in the event the net book value of these assets
exceeds the estimated future undiscounted cash flows attributable to these
assets. The Company assesses potential impairment to its long-lived assets when
there is evidence that events or changes in circumstances have made recovery of
the asset's carrying value unlikely. Should an impairment exist, the impairment
loss would be measured based on the excess of the carrying value of the asset
over the asset's fair value.

7. LOSS PER SHARE:

Basic and diluted net loss per share is computed based on the weighted
average number of common shares outstanding for the years and gives retroactive
effect to the shares issued in the recapitalization. At December 31, 1999,
3,968,475 potential common shares resulting from exercise of outstanding options
and warrants,

F-8
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1999

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
conversion of preferred stock or issuance of contingent shares are not included
in the calculation of diluted net loss per share as their effect would be
anti-dilutive.

8. 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.

9. ADVERTISING EXPENSE:

Advertising is expensed as incurred. Advertising expense amounted to
approximately $263,000 and $23,000 for the years ended December 31, 1999 and
1998, respectively.

10. 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.

11. COMPREHENSIVE INCOME:

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

12. 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.

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 as early as January 2000
and the remaining shares 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/or December 31, 2000, respectively. If the milestones are
not achieved, the shares will be returned to the Company and cancelled. The
milestones as of December 31, 1999 were not achieved, however the entire 500,000
shares may be released based on attaining cumulative amounts of registered users
as of December 31, 2000. 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

F-9
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1999

NOTE C--ACQUISITION--(CONTINUED)
acquisition were 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. Effective as of March 1, 2000, the two former stockholders
resigned from the Company.

The $1,368,000 purchase price, including costs related to the acquisition,
has been allocated as follows:

<TABLE>
<S> <C>
Cash............................................................................ $ 13,949
Accounts receivable............................................................. 6,944
Computer equipment.............................................................. 35,913
Registered user base............................................................ 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>

The following unaudited pro forma information for the years ended December
31, 1999 and 1998 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>
YEAR ENDED DECEMBER 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Pro forma revenue................................................................ $ 268,426 $ 80,909
Pro forma net loss............................................................... $(3,708,690) $(1,149,133)
Pro forma net loss per share--basic and diluted.................................. $ (.37) $ (.25)
Pro forma weighted average number of shares outstanding.......................... 9,972,400 (a) 4,581,327(a)
</TABLE>

- ------------------
(a) reflects the 2,200,000 shares issued in the acquisition as if issued on
January 1, 1998

NOTE D--NOTES AND LOANS PAYABLE TO STOCKHOLDERS

[1] 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 December 31, 1999, the Company had
outstanding loans payable to two stockholders in the amount of $100,000 at
an interest rate of 8%. On March 3, 2000, the stockholders agreed to forgive
the interest and have the loan repaid in four equal monthly installments of
$25,000 beginning March 15, 2000. Interest expense on the loans for the year
ended December 31, 1999 was $4,000.

[2] On December 8, 1999, the Company entered into loan agreements with certain
existing stockholders and issued notes aggregating $1,000,000. The loan is
for a one-year term with interest at 10% compounded annually. At the option
of the holder, upon the first round of financing by the Company subsequent
to the issuance of these notes, the notes or any portion of the notes may be
converted into the securities offered in

F-10
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1999

NOTE D--NOTES AND LOANS PAYABLE TO STOCKHOLDERS--(CONTINUED)
such financing. The number of securities received upon conversion will equal
the dollar amount of principal and accrued interest divided by the offering
price paid by other investors in such financing. Interest is payable
semi-annually on June 8, 2000 and December 8, 2000 and is payable at the
holder's option in shares of common stock valued at $1.60 per share.

In connection with the loan agreements, the Company issued five year
warrants to purchase an aggregate of 625,000 shares of common stock at $1.60 per
share. The Company valued the warrants at $.74 per warrant based on a
Black-Scholes pricing model. The resultant value of $464,000 has been accounted
for as a debt discount and is being amortized to interest expense over the
one-year term of the loans.

In February and March 2000, the Company entered into agreements with
stockholders for additional loans aggregating $1,300,000 under the same terms
described above and issued warrants to purchase an aggregate of 812,500 shares
of common stock at $1.60 per share.

On April 14, 2000, the Company converted the $2,300,000 of loans into
230,000 shares of Series B Preferred Stock and warrants to purchase 230,000
shares of common stock (see Note I).

NOTE E--STOCK OPTIONS

On April 28, 1999, upon completion of the merger with WDC, the Company
adopted the 1999 Stock Option Plan which, is amended, provides for option grants
to key employees, officers and consultants to purchase up to 3,000,000 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 exercisable upon grant and the options
for the 81,750 shares which expire in October 2003 become exercisable 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 stockholder 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 stockholder at an exercise price of $.245 per share.
Compensation expense of $5,729 was charged to operations in connection with such
grant.

See Note H for additional grants of stock options.

Activity related to stock options during the years ended December 31, 1999
and 1998, including options described in Note H, are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1999 1998
--------------------- ------------------
WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE
SHARES PRICE SHARES PRICE
--------- -------- ------ --------
<S> <C> <C> <C> <C>
Outstanding at beginning of year..................................... 81,750 $ 0.25
Granted.............................................................. 1,761,725 2.05 81,750 $ 0.25
--------- ------
Outstanding at end of year........................................... 1,843,475 1.97 81,750 0.25
========= ======
Exercisable.......................................................... 213,917 0.46
=========
</TABLE>

F-11
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1999

NOTE E--STOCK OPTIONS--(CONTINUED)
As set forth in Note B [8], 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 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 1999 and 1998 was approximately $1.45
and $.17, 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 years ended December 31,
1999 and 1998 would have been approximately $(3,727,000) and $(513,000) and
$(.42) and $(.22), respectively.

NOTE F--INCOME TAXES

The Company provides for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". 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. The Company is on a
cash basis for tax purposes. 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 in 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 December 31, 1999, the Company has a net operating loss carryforward
of approximately $2,571,000 which expires in 2019, the utilization of which may
be subject to limitations as a result of changes in stock ownership.

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

<TABLE>
<CAPTION>
DECEMBER 31,
1999
------------
<S> <C>
Deferred tax assets:
Net operating loss carryforward................................................................... $1,131,000
Deferred compensation............................................................................. 94,000
Excess of liabilities over assets resulting from use of cash basis for tax purposes............... 303,000
----------
1,528,000
Deferred tax liability:
Excess of book basis over tax basis of registered user base....................................... (538,000)
----------
Net deferred assets................................................................................. 990,000
Less valuation allowance............................................................................ (990,000)
----------
$ 0
==========
</TABLE>

F-12
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1999

NOTE F--INCOME TAXES--(CONTINUED)
The following presents the income tax benefit and related increase in the
valuation allowance. For the period 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>
DECEMBER 31,
----------------------
1999 1998
- ---------------------------------------------------------------------------------------- ---------
<S> <C> <C>
Deferred:
Federal............................................................................... $(547,000) $(142,000)
State................................................................................. (365,000) (81,000)
--------- ---------
Total income tax benefit......................................................... (912,000) (223,000)
Valuation allowance..................................................................... 912,000 223,000
--------- ---------
Income tax benefit...................................................................... $ 0 $ 0
========= =========
</TABLE>

NOTE G--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 were 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 H--COMMITMENTS

1. LEASE AGREEMENTS:

The Company had two month-to-month agreements to sublease office space
through September 1999.

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. The Company also
purchased equipment under capital leases which expire through 2002. At
December 31, 1999, future minimum lease payments under the leases are as
follows:

<TABLE>
<CAPTION>
OFFICE CAPITAL
DECEMBER 31, SPACE LEASES
- ---------------------------------------------------------------------- -------- --------
<S> <C> <C>
2000.................................................................. $145,707 $ 75,401
2001.................................................................. 150,084 52,424
2002.................................................................. 154,590 3,103
2003.................................................................. 159,228
2004.................................................................. 164,004
Thereafter............................................................ 111,784
-------- --------
$885,397 130,928
========
Amount representing interest.......................................... 15,013
--------
Capital lease obligation.............................................. 115,915
Current portion....................................................... 64,142
--------
Long-term portion..................................................... $ 51,773
========
</TABLE>

F-13
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1999

NOTE H--COMMITMENTS--(CONTINUED)
At December 31, 1999, assets recorded under capital leases and related
accumulated amortization amounted to approximately $137,000 and $17,000,
respectively. Amortization of assets recorded under capital leases is included
in depreciation expense.

Rent expense was approximately $77,000 and $14,000 for the years ended
December 31, 1999 and 1998, respectively. Other assets in the accompanying
balance sheet include a security deposit for the lease of approximately $86,000.
Prepaid expenses at December 31, 1999 includes approximately $36,000 of prepaid
rent.

2. 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-dilution protection. As a result of the
anti-dilution protection, upon the consummation of the acquisition of VSE, the
President was granted options to purchase an additional 168,006 shares of common
stock at an exercise price of $2.62 per share. In addition, in August 1999, as a
result of the Company's grant of stock options to employees, the President 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
grant at $2.00 has been deferred and is being charged to operations ratably over
the vesting period. Compensation expense charged to operations for the year
ended December 31, 1999 was $182,778. 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, as amended, provides for an annual base salary of
$130,000 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.

3. 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 year ended December 31, 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 $80,000 were charged to operations for the year ended December 31, 1999.

4. LICENSE AND PROMOTION AGREEMENT:

In November 1999, the Company entered into a three year agreement with an
on-line content provider (the "provider"). The Company will design, produce,
host, operate, maintain and support three different versions of the Company's
website on behalf of the provider. The provider will then sell advertising on
the co-branded versions. The agreement provides for the Company to make annual
payments to the provider of $250,000. The

F-14
<PAGE>
PREDICT IT INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1999

NOTE H--COMMITMENTS--(CONTINUED)
payments are being accounted for as deferred promotion expenses and are being
amortized over a twelve-month period. The Company shall receive net advertising
revenue, as defined, generated in association with the agreement up to the
$250,000 (the "annual recoupment") during the twelve-month periods immediately
following the launch. If the net advertising revenue satisfies the annual
recoupment during any of the twelve-month periods, the parties will share net
advertising revenue on a 50/50 basis until the next anniversary of the launch
date. In addition, the provider will promote the co-branded website within its
network over the three year term. The agreement also provides for the Company to
pay expenses related to the marketing platform outside of the provider's network
up to a maximum of $250,000 over the three year term.

NOTE I--SUBSEQUENT EVENTS

In January 2000, the Company agreed to settle with a consultant for
development work performed to launch Version 3 of the Company's website, which
services were performed in 1999. The Company issued 178,954 shares of its common
stock in full settlement of amounts owed to the consultant. The value of the
shares, amounting to approximately $247,000 ($1.38 per share) based on a 30 day
average of the Company's closing market price, will be included in capitalized
software costs.

In March 2000, the Company entered into an agreement with China Interactive
Media Group ("CIMG") to establish an on-line prediction company to be known as
Predict It China (the "Venture"). Under the terms of the agreement, CIMG will
provide initial financing, management and operating infrastructure for the
Venture while the Company will license its proprietary technology and
intellectual capital to the Venture in exchange for a royalty of 10% of future
revenue earned by the Venture. The Company will have a 30% initial ownership in
the Venture. No initial capital contribution is required from either venturer.
The Venture's losses will be funded and charged to CIMG and any future profits
will be credited to CIMG to the extent of previous losses incurred with any
remaining profits earned 30% by the Company and 70% by CIMG.

In March 2000, the Company commenced an offering of up to 80 Units (a
minimum of 40 Units), each Unit consisting of 10,000 shares of Series B
convertible preferred stock ("Series B Stock"), having a stated value of $10.00
per share and seven-year warrants to purchase 100,000 shares of the Company's
common stock at an exercise price of $1.50 per share, subject to certain
adjustments. The purchase price per Unit is $100,000. Each share of Series B
Stock is convertible at any time into 10 shares of common stock, subject to
certain anti-dilution protection, entitled to one vote for each share of common
stock issuable upon conversion and has a liquidation value of $30.00 per share
ranking pari passu with the Company's Series A preferred stock. The Series B
Stock will automatically convert into common stock upon the occurrence of
certain events, including a public offering of the Company's securities. On
April 14, 2000, the Company completed the offering of 43 units of which, 23
units were issued upon conversion of $2,300,000 in loans and 20 units were sold
for net proceeds of approximately $1,684,000.

On April 3, 2000, the Company increased the number of authorized common
shares from 25,000,000 to 75,000,000 and the number of preferred shares from
5,000,000 to 10,000,000.

F-15
<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-16
<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-17
<PAGE>
VIRTUAL STOCK EXCHANGE, INC.
STATEMENTS OF OPERATIONS

<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>
Revenue:
User fees......................................... $ 19,149 $ 16,461 $ 15,082 $ 7,097
Advertising....................................... 50,736 10,949 59,093
--------- -------- --------- ---------
19,149 67,197 26,031 66,190
--------- -------- --------- ---------
Costs and expenses:
Site development/maintenance...................... 25,305 49,460 35,504 167,027
Selling, general and administrative............... 10,663 48,981 16,032 39,451
Interest expense, net............................. 2,000 6,768 2,000 7,288
--------- -------- --------- ---------
37,968 105,209 53,536 213,766
--------- -------- --------- ---------
Net loss............................................ $ (18,819) $(38,012) $ (27,505) $(147,576)
========= ======== ========= =========
</TABLE>

F-18
<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-19
<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
---------------- ------------ -------- ---------
<S> <C> <C> <C> <C>
(UNAUDITED)
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-20
<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-21
<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-22
<PAGE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
1999.

The unaudited pro forma statement of operations for the year ended
December 31, 1999 is 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 period presented. The pro forma
statement has 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 statement is not intended to
be indicative of the results that would have occurred on the date indicated or
which may be realized in the future.

F-23
<PAGE>
PREDICT IT INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999

<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........................................... $ 4,519 $ 7,097 $ 11,616
Advertising......................................... 174,517 59,093 233,610
----------- ---------- ------------
179,036 66,190 245,226
----------- ---------- ------------
Costs and expenses:
Site development/maintenance........................ 406,778 167,027 573,805
Selling, general and administrative................. 2,786,164 39,451 $ 57,000(b) 2,882,615
Amortization of acquired intangible................. 244,676 244,676(a) 489,352
Interest expense (income)........................... 856 7,288 8,144
----------- ---------- ----------- ------------
3,438,474 213,766 301,676 3,953,916
----------- ---------- ----------- ------------
Net loss.............................................. $(3,259,438) $ (147,576) $ (301,676) $ (3,708,690)
=========== ========== =========== ============
Net loss per share.................................... $ (0.37) $ (0.37)
=========== ============
Weighted average number of shares outstanding......... 8,872,400 9,972,400(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 estimated 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>
Registration fees.......................................... $ 5,348.09
Printing and engraving expenses............................ $ 80,000.00
Legal fees and expenses.................................... $100,000.00
Auditors' accounting fees and expenses..................... $100,000.00
-----------
Miscellaneous expenses..................................... $ 14,651.91
-----------
Total.................................................... $300,000.00
===========
</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 April 14, 2000, certain accredited investors and existing stockholders
purchased 43 units consisting of an aggregate of 430,001 shares of Series B
Preferred Stock, convertible into 4,300,010 shares of common stock, and warrants
to purchase an aggregate of 4,300,000 shares of our common stock for a total of
$4,300,000. The warrants have an exercise price of $1.50 per share. Of these
units, 23 units were issued to Dawntreader Fund I LP, Commonwealth Associates,
L.P., Falk Family Foundation, Michael Falk, Asia World Holdings Ltd., Ed Shea,
Robert Priddy, Robert O'Sullivan Family Trust, Keith Rosenbloom and Robert H.
Lessin Venture Capital LLC, existing security holders, as a result of the
conversion of their notes totalling $2,300,000. In connection with these
issuances of shares and warrants to accredited investors and existing
stockholders, we relied on the statutory exemptions provided by Section 4(2) of
the Securities Act of 1933 and Regulation D promulgated thereunder, because
these issuances did not involve public offerings.

On March 15, 2000, certain accredited investors made a bridge loan to us in
the aggregate amount of $1,000,000. The loan was evidenced by one-year
promissory notes in the aggregate amount of $1,000,000, plus interest, which
shall accrue at a rate of 10% per year, compounded annually. In conjunction with
the bridge loan, we issued warrants to purchase an aggregate of 625,000 shares
of our common stock at an exercise price of $1.60 per share. In connection with
these issuances of warrants to existing stockholders, 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 February 18, 2000, we issued to Andrew P. Merkatz, our President and
Chief Executive Officer, an option to purchase 62,500 shares of our common stock
at an exercise price of $1.38 per share. In connection with the issuance of this
stock option to our President and Chief Executive Officer, 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. In connection with the
issuance of this stock option to our President and Chief Executive Officer, we

II-1
<PAGE>
relied on the statutory exemptions provided by Section 4(2) of the Securities
Act of 1933, because this issuance did not involve public offerings.

On February 14, 2000, Dawntreader Fund I LP, an existing shareholder, made
a bridge loan to us in the amount of $300,000. The loan was evidenced by a
one-year promissory note in the amount of $300,000, plus interest, which shall
accrue at the rate of 10% per year, compounded annually. In conjunction with the
bridge loan, we issued warrants to purchase an aggregate of 187,500 shares of
our common stock at an exercise price of $1.60 per share. In connection with
these issuances of warrants to existing stockholders, 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 January 20, 2000, we issued to each of Lee Nesser and Sherri Holloway,
employees, options to purchase 25,000 shares of our common stock at an exercise
price of $1.375 per share. In addition, we issued to Justin Model, an employee,
an option to purchase 20,000 shares of our common stock at an exercise price of
$1.375 per share. We also issued to each of Kristina Frantz, John Pavlakis,
Abraham Liu and Helene Kim, employees, options to purchase 15,000 shares of our
common stock at an exercise price of $1.375 per share. We also issued to
Yitzchok Aaronson, an employee, an option to purchase 7,500 shares of our common
stock at an exercise price of $1.375 per share. We also issued to Nomi Altabef,
an employee, an option to purchase 5,000 shares of our common stock at an
exercise price of $1.375 per share. Furthermore, we issued to Deborah Margulies,
an employee, an option to purchase 10,000 shares or our common stock at an
exercise price of $1.375 per share. In connection with the issuances of these
stock options, 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.

In January 2000, we issued to Vision Consulting International Inc., one of
our vendors, 178,954 shares of 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 December 8, 1999, we issued to Keith Rosenbloom, who was serving as a
director at such time and who is an existing shareholder, and various other
existing stockholders, including Dawntreader Fund I LP, Robert O'Sullivan, Falk
Family Foundation, Michael Falk, Commonwealth Associates, L.P., Robert Priddy
and Asia World Holdings Ltd., immediately exercisable warrants to purchase an
aggregate of 625,000 shares of our common stock at an exercise price of $1.60
per share. In connection with the issuances of these stock options to one of our
former directors and certain existing stockholders, 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 November 19, 1999, we issued to Andrew P. Merkatz, our President and
Chief Executive Officer, an option to purchase 15,971 shares of our common stock
at an exercise price of $2.00 per share. We also issued to Harry Charles, an
employee, an option to purchase 15,000 shares of our common stock at an exercise
price of $2.00 per share. In addition, we issued to Kossi Kpante, an employee,
an option to purchase 20,000 shares of our common stock at an exercise price of
$2.00 per share. In connection with the issuances of these 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 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 the issuance of this stock option 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., one
of our vendors, 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 Corporate
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

II-2
<PAGE>
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 the issuances of these 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 P. 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 the issuance of this stock
option to our President and Chief Executive Officer, 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 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 the issuances of these
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 P. 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 to our President and Chief Executive Officer, 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 the issuances of these
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.

II-3
<PAGE>
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 this stock option to our former
President and Chief Executive 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 this 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.*
4.4 Form of Promissory Note, dated December 8, 1999, February 14, 2000 and March 15, 2000.*
4.5 Form of Warrant, dated December 8, 1999, February 14, 2000 and March 15, 2000.*
4.6 Certificate of Designation of Series B Preferred Stock.*
4.7 Unit Purchase Option to Commonwealth Associates, L.P.*
5.1 Opinion and Consent of Camhy Karlinsky & Stein LLP.*
10.1 1999 Stock Option Plan, as amended.*
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.*
10.8 License and Promotion Agreement by and between Registrant and SportsLine USA, Inc.***
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -------------------------------------------------------------------------------------------------------
<S> <C>
10.9 License Agreement by and between Registrant and Predict It China, LLC**
10.10 Form of Subscription Agreement by and between Registrant and the subscribers of units.*
10.11 Limited Liability Company Agreement by and between the Registrant and China Interactive Media Group,
LLC.
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
*** Filed herewith. Certain portions of this exhibit have been omitted herein
and filed separately with the Secretary of the Securities and Exchange
Commission pursuant to a request for confidential treatment of the redacted
portions.

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; and

(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 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-5
<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 15TH DAY OF MAY 2000.

PREDICT IT INC.

By: /s/ ANDREW P. MERKATZ
-------------------------------
Andrew P. Merkatz
President and Chief Executive
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
- ------------------------------------------ ----------------------------------------------- ---------------

<S> <C> <C>
/s/ ANDREW P. MERKATZ President and Director (Principal Executive May 15, 2000
- ------------------------------------------ Officer)
Andrew P. Merkatz

/s/ DESMOND GLASS Corporate Controller (Principal Accounting May 15, 2000
- ------------------------------------------ Officer)
Desmond Glass

/s/ ANDREW WEISSMAN* Director May 15, 2000
- ------------------------------------------
Andrew Weissman

/s/ AJMAL KHAN* Director May 15, 2000
- ------------------------------------------
Ajmal Khan

/s/ CAROL LEE* Director May 15, 2000
- ------------------------------------------
Carol Lee

/s/ ANDREW P. MERKATZ
- ------------------------------------------
* BY POWER OF ATTORNEY
</TABLE>

II-6
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------------------------------
<S> <C>
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.*
4.4 Form of Promissory Note, dated December 8, 1999, February 14, 2000 and March 15, 2000.*
4.5 Form of Warrant, dated December 8, 1999, February 14, 2000 and March 15, 2000.*
4.6 Certificate of Designation of Series B Preferred Stock.*
4.7 Unit Purchase Option to Commonwealth Associates, L.P.*
5.1 Opinion and Consent of Camhy Karlinsky & Stein LLP.*
10.1 1999 Stock Option Plan, as amended.*
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.*
10.8 License and Promotion Agreement by and between Registrant and SportsLine USA, Inc.***
10.9 License Agreement by and between Registrant and Predict It China, LLC**
10.10 Form of Subscription Agreement by and between Registrant and the subscribers of units.*
10.11 Limited Liability Company Agreement by and between the Registrant and China Interactive Media Group LLC.
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
*** Filed herewith. Certain portions of this exhibit have been omitted herein
and filed separately with the Secretary of the Securities and Exchange
Commission pursuant to a request for confidential treatment of the redacted
portions.
- ------------------

<PAGE>

"RTC" means the material omitted has been filed separately with the
Secretary of the Securities and Exchange Commission with an application
requesting confidential treatment.

LICENSE AND PROMOTION AGREEMENT

This License and Promotion Agreement (this "Agreement") is entered into as of
November 10th 1999 (the "Effective Date") by and between SportsLine USA, Inc.
("SPLN"), a Delaware corporation with its principal place of business at 6340 NW
5th Way, Fort Lauderdale, Florida 33309 and PredictIt, Inc. ("Company"), a
Delaware corporation with its principal place of business at 694 8th Ave., 5th
Floor, New York, NY 10036 and recites and provides as follows:

RECITALS

1. SPLN and/or its affiliates operate certain sports-oriented online
services distributed via various platforms including but not limited to
on the World Wide Web (the "Web") portion of the Internet including the
CBS SportsLine service (the "SportsLine Service"), the Vegas Insider
service (the "Vegas Insider Service"), and tips.sports.com (the "Tips
Service").

2. Company operates an end user generated online sports prediction-service
(the "Company Service") distributed via various platforms including but
not limited to on the Web at URL http://www.predictit.com.

3. For purposes of this Agreement, "Internet" shall mean a global network
of interconnected computer networks, each using the Transmission
Control Protocol/Internet Protocol (and/or such other standard network
interconnection protocols as may be adopted from time to time), which
is used to transmit content that is directly or indirectly delivered to
a computer or other digital electronic device for display to an
end-user, whether delivered through online browsers, commercial online
services, offline browsers (a browser that allows users to access a
site without requiring an online connection) or through push
technology, electronic mail, broadband distribution (high bandwidth
above 56kb), satellite, wireless or otherwise.

4. Company agrees to design, produce, host, operate, maintain and support
three different co-branded private label versions of the Company
Service on behalf of SPLN and its affiliates in accordance with the
terms and conditions of this Agreement (each, a "Co-Branded Service";
and collectively the "Co-Branded Services").

AGREEMENT

NOW THEREFORE, for and in consideration of the mutual terms and conditions set
forth herein, and other good and valuable consideration, the adequacy of which
are hereby acknowledged, the parties agree as follows:

1. Recitals. The Recitals are incorporated herein by reference.

2. Term. This Agreement shall commence on the Effective Date and shall
continue for a period of three (3) years from the date of launch of the
first Co-Branded Company Service, unless earlier terminated as provided
herein (the "Term"). For purposes of the foregoing, the date of launch
shall be the date on which the first Co-Branded Service is generally
available to end users (the "Launch Date"). SPLN and Company shall use
commercially reasonable efforts to ensure that all Co-Branded Services
are generally available to end users no later than ninety (90) days
after the Effective Date.

3. Co-Branded Service.

a) Design ,Creation and Maintenance of Co-Branded Services.
Company shall design, develop and maintain the following three
(3) versions of the Co-Branded Service:

i) A version co-branded for the SportsLine Service (the
"SportsLine Co-Branded Service") which shall be
accessible at the second level domain sportsline.com
(or other second level domain designated in the sole
and exclusive discretion of SPLN) under a "predictit"
tertiary domain (i.e., predictit.sportsline.com) or
other third level domain

CONFIDENTIAL AND PROPRIETARY

-1-

<PAGE>

mutually agreed upon between the parties. The
SportsLine Co-Branded Service shall each have the
"look and feel" of the SportsLine Service as
designated by SPLN in its sole discretion, with
mutually agreed upon Company and SPLN co-branding.
All navigation within the pages of the SportsLine
Co-Branded Service shall link only to other pages
within the SportsLine Co-Branded Service (i.e., all
links will stay in-channel on the "sportsline.com"
domain) or to the SportsLine Service. SPLN shall have
the option of designing and hosting an intermediate
"jump page" on its servers which shall provide
information about the SportsLine Co-Branded Service
and provide links for SportsLine Service end users to
register for and log-in to the SportsLine Co-Branded
Service. Company will launch the SportsLine
Co-Branded Service only upon final written approval
from SPLN. Company shall be solely responsible for
all programming content of the SportsLine Co-Branded
Service subject to the SportsLine Service Content
Standards attached hereto as Exhibit A and subject to
change with prior written notice to Company. SPLN
shall have the right to demand immediate removal of
any content on the SportsLine Co-Branded Service that
it (or CBS) finds objectionable in its sole
discretion. SPLN shall have the right to approve and
modify, in the sole and exclusive discretion of SPLN,
the SportsLine Co-Branded Service end user terms of
service.

ii) A version co-branded for the Vegas Insider Service
(the "Vegas Co-Branded Service") which shall be
accessible at the second level domain
vegasinsider.com (or other second level domain
designated in the sole and exclusive discretion of
SPLN) under a "predictit" tertiary domain (i.e.,
predictit.vegasinsider.com or other third level
domain mutually agreed upon between the parties). The
Vegas Co-Branded Service shall have the "look and
feel" of the Vegas Insider Service as designated in
the sole and exclusive discretion of SPLN with
mutually agreed upon Company and SPLN co-branding.
All navigation within the pages of the Vegas
Co-Branded Service shall link only to other pages
within the Vegas Co-Branded Service (i.e., all links
will stay in-channel on the "vegasinsider.com"
domain) or to the Vegas Insider Service. SPLN shall
have the option of designing and hosting an
intermediate "jump page" on its servers which shall
provide information about the Vegas Co-Branded
Service and provide links for Vegas Insider Service
end users to register for and log-in to the Vegas
Co-Branded Service. Company will launch the Vegas
Co-Branded Service only upon final written approval
from SPLN. Company shall be solely responsible for
all programming content of the Vegas Co-Branded
Service subject to the Vegas Insider Service Content
Standards attached hereto as Exhibit B and subject to
change with prior written notice to Company. SPLN
shall have the right to demand immediate removal of
any content on the Vegas Co-Branded Service that it
finds objectionable in its sole discretion. SPLN
shall have the right to approve and modify, in the
sole and exclusive discretion of SPLN, the Vegas
Insider Co-Branded Service end user terms of service.

iii) A version co-branded for the Tips Service (the "Tips
Co-Branded Service") which shall be accessible at the
second level domain sports.com (or other second level
domain designated in the sole and exclusive
discretion of SPLN) under a "predictit" tertiary
domain (i.e., predictit.sports.com or other third
level domain mutually agreed upon between the
parties). The Tips Co-Branded Service shall have the
"look and feel" of the Tips Service as designated in
the sole and exclusive discretion of SPLN with
mutually agreed upon Company and SPLN co-branding.
All navigation within the pages of the Tips
Co-Branded Service shall link only to other pages
within the Tips Co-Branded Service (i.e., all links
will stay in-channel on the "sports.com" domain) and
to the Tips Service. SPLN shall have the option of
designing and hosting an intermediate "jump page" on
its servers which shall provide information about the
Tips Co-Branded Service and provide links for Tips
Service end users to register for and log-in to the
Tips Co-Branded Service. Company will launch the Tips
Co-Branded Service only upon final written approval
from SPLN. Company shall be solely responsible for
all programming content of the

CONFIDENTIAL AND PROPRIETARY

-2-

<PAGE>

SportsLine Co-Branded Service subject to the Tips
Service Content Standards attached hereto as Exhibit
C and subject to change with prior written notice to
Company. SPLN shall have the right to demand
immediate removal of any content on the Tips
Co-Branded Service that it finds objectionable in its
sole discretion. SPLN shall have the right to approve
and modify, in the sole and exclusive discretion of
SPLN, the Tips Co-Branded Service end user terms of
service.

iv) "SPLN Materials" shall mean any proprietary images,
artwork, text, graphics (including, without
limitation the SportsLine Service user interface, the
Vegas Insider Service user interface and the Tips
Service user interface) or other information or
materials owned, controlled by or licensed to SPLN
and/or its affiliates and provided to Company
hereunder.

b) Hosting and Operation. Company shall host the Co-Branded
Services on a 24/7 basis on servers owned by Company at the
domains set forth in sub-section 3(a) above and in conformance
with the Co-Branded Services Operating Standards set forth in
Exhibit F attached hereto.

c) Co-Branded Service Features.

i) At a minimum, the SportsLine Co-Branded Service shall
provide a platform for SportsLine Co-Branded Service
end users to (a) make predictions on upcoming
sporting events, and (b) to view both past and future
predictions of other SportsLine Co-Branded Service
end users and end users of other similar Company
Services other than the Co-Branded Company Services
(it being understood that such other end users shall
not be identified according to the Company Service
through which they are participating). In addition,
the prediction performance of each participating end
user will be tracked and rated according to Company's
rating system, the results of which shall be made
generally available to all SportsLine Co-Branded
Service end users in a format acceptable to SPLN.
Each SportsLine Co-Branded Service end user will be
rewarded by Company every time such end user's future
predictions are viewed by other end users in the
Company System in accordance with Section 3(c)(iv)
below. For purposes of this Agreement, "Company
System" shall mean the aggregate of Co-Branded
Services and other non-SPLN branded Company Services.
The SportsLine Co-Branded Service shall be limited to
"straight-up" (win/lose) prediction types (i.e., no
odds or against the spread predictions) and no
wagering line of any kind may be used in conjunction
with the SportsLine Co-Branded Service. The
SportsLine Co-Branded Service shall consist of all
elements and functionality of the Company Service as
of the Effective Date, except as directed by SPLN. In
addition, at no additional cost to SPLN, Company
shall integrate into the SportsLine Co-Branded
Service all new features developed by Company.
Revenue from any such additional service features
integrated into the SportsLine Co-Branded Service
shall be shared by the parties in a mutually agreed
upon manner, subject to SPLN prior written approval.

ii) At a minimum, the Vegas Co-Branded Service shall:
provide a platform for Vegas Insider Co-Branded
Service end users to, (a) make predictions on
upcoming sporting events, and (b) to view both past
and future predictions of other similar Vegas
Co-Branded Service end users and end users of other
Company Services other than the Co-Branded Company
Services (it being understood that such other end
users shall not be identified according to the
Company Service through which they are
participating). In addition, the prediction
performance of each participating end user will be
tracked and rated according to Company's rating
system, the results of which will be made generally
available to all Vegas Co-Branded Service end users
in a format acceptable to Vegas Insider. Each Vegas
Co-Branded Service end user will be rewarded by
Company every time an end user's future predictions
are viewed by other end users in the Company System
in

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accordance with Section 3(c)(iv) below. The Vegas
Insider Co-Branded Service shall consist of all
elements and functionality of the Company Service as
of the Effective Date, except as directed by SPLN. In
addition, at no additional cost to SPLN, Company
shall integrate into the Vegas Co-Branded Service all
new features developed by Company, subject to SPLN
prior written approval. Revenue from any such
additional service features integrated into the Vegas
Co-Branded Service shall be shared by the parties in
a mutually agreed upon manner.

iii) At a minimum, the Tips Co-Branded Service shall
provide a platform for Tips Co-Branded Service end
users to, (a) make predictions on upcoming sporting
events, and (b) to view both past and future
predictions of other similar Tips Co-Branded Service
end users and end users of other Company Services
other than the Co-Branded Company Services (it being
understood that such other end users shall not be
identified according to Company Service through which
they are participating). In addition, the prediction
performance of each participating end user will be
tracked and rated according to Company's rating
system, the results of which will be made generally
available to all Tips Co-Branded Service end users in
a format acceptable to SPLN. Each Tips Co-Branded
Service end user will be rewarded by Company every
time an end user's future predictions are viewed by
other end users in the Company System in accordance
with Section 3(c)(iv) below. The Tips Co-Branded
Service shall consist of all elements and
functionality of the Company Service as of the
Effective Date, except as directed by SPLN. In
addition, at no additional cost to SPLN, Company
shall integrate into the Tips Co-Branded Service all
new features developed by Company, subject to SPLN
prior written approval. Revenue from any such
additional service features integrated into the Tips
Co-Branded Service shall be shared by the parties in
a mutually agreed upon manner.

iv) Company shall, at Company's sole expense, compensate
end users of the Co-Branded Services in accordance
with the following: (a) end users of the Co-Branded
Services that post predictions on future sporting
events shall earn a credit in the amount of one cent
(US $0.01) for each other end user of the Company
System (regardless of the service through which the
end user is participating) that draws a page view
containing such predictions. For purposes of
calculating such credits, the maximum credit to which
an end user posting predictions is entitled shall be
(US one cent $0.01) per prediction access. For
purposes of the foregoing, a "prediction access"
shall mean a single page view per calendar day of a
posting end users' predictions within a single sports
category (e.g. NFL) by a unique end user other than
the end user whose predictions are viewed (it being
understood that within a single calendar day, any one
page view shall count towards a credit regardless of
the number of page views and the number of
predictions posted within a single category). Once an
end user accumulates credits equivalent to ten
dollars (US $10.00) or greater. Company shall tender
payment, denominated in US funds, equivalent to the
dollar and cent value of the user's accrued credits
for the most recent period reported. Accrued credits
are calculated by taking the end user's lifetime
accrued credits less the value of any payments
previously issued to such end user by Company. Users
who have earned money will receive payment by check
sent through US Mail during the month following the
end of the quarter in which the money was accrued.
The Co-Branded Services shall provide end users of
the Co-Branded Services with an online accounting
function for end users of the Co-Branded Services to
view real-time page views of such end users'
predictions and compensation balance and the date on
which the compensation payment will sent to such end
user. Company will provide SPLN with quarterly
reporting of all payments made to end users of the
Co-Branded Services.

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d) Co-Branded Service Customer Support. At no additional cost to
SPLN or its affiliates and at no cost to end users, Company
shall provide end users of each Co-Branded Service with the
following customer support services:

i) up-to-date online support information, including
FAQ's; telephone support during Company's regular
business hours as follows: Monday through Friday 9:00
a.m. to 6:00 p.m. Eastern Time. Company will provide
a dedicated phone mail extension for off-hours with a
call back to users provided on next business day.

ii) Email support with email response time by Company to
end users of each Co-Branded Service not to exceed
twenty-four (24) hours from receipt of end user
emails, or next business day during times outside of
the Company's regular business hours.

iii) At no additional cost to SPLN or its affiliates,
Company agrees to increase levels of customer service
(including, without limitation, hours of coverage,
quantity and quality of telephone service
representatives and email response) as necessary and
required to maintain the highest quality end user
experience.

e) Co-Branded Services Back End Technical Support. At no
additional cost to SPLN or its affiliates, Company shall
provide SPLN live emergency technical support via telephone on
a 24x7 basis. Company shall provide SPLN with any names, phone
numbers, email addresses and pager numbers required in
connection with the foregoing.

f) Continuation of Service. In the event that SPLN no longer
wishes to offer the Co-Branded Service to its end users, it
shall have the right to allow this Agreement to expire
pursuant to the terms hereof. In such case, Company shall stop
offering the Co-Branded Services to end users of the
Co-Branded Service upon such expiration, but will continue to
support services for all end users who registered for such
services during the Term prior to the expiration date.
Following the expiration or earlier termination of this
Agreement, SPLN shall have the right, but not the obligation:

i) to maintain a log-in portal or link on the SportsLine
Service, the Vegas Service and the Tips Service or
other service as designated in the sole and exclusive
discretion of SPLN or its affiliates to enable
existing end users to access the Company Service at a
mutually agreed upon version of the Company Service;
and

ii) if SPLN elects to provide such services, Company
shall be responsible for the orderly transfer of all
relevant data for end users at SPLN designated
domains to SPLN such that SPLN and/or its affiliates
can continue the provision of services for such end
users.

g) Services Exclusivity. Company will not provide any sports
content or sports-related services, or advertise with or on
behalf of any of the following parties within the domestic
(U.S.) market ("Services Competitors") during the Term.
Services Competitors include any Internet or Web
sports-related service (currently including, ESPN/ABC
Sports/Disney Sports, Fox/Sky/Times CNN/SI, Sports
Illustrated, CNN/HN Sports, sports content from The Sporting
News/., NBC Sports, MSNBC, MSG, Total Sports, Athlete
Direct/Pro Sports Xchange, Quokka, STATS, Inc., or any
affiliates of the foregoing). Services Competitors may be
modified from time to time based upon mutual agreement.

h) Advertising Exclusivity. Company will not sell or accept
advertising for any sports content or sports-related services
of any advertising competitors within the Remnant Inventory on
the SportsLine Co-Branded Service, as defined in Section 5
("each an "Advertising Competitor", collectively "Advertising
Competitors") during the Term. Advertising Competitors
include, but is not limited, to: (i) any Internet or Web
sports related service (including but not limited to

CONFIDENTIAL AND PROPRIETARY

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ESPN/ABC Sports/Disney Sports, Fox/Sky/Times, CNN/SI, Sports
Illustrated, CNN/HN Sports, sports content from The Sporting
News/Times Mirror Corp., NBC Sports, MSNBC, MSG, Total Sports,
Athlete Direct/Pro Sports Xchange, Quokka, STATS, Inc.,
Pangolin, The Mirror Group); (ii) the sports related division
of any commercial on-line service (including but not limited
to Microsoft Network, America Online, CompuServe, etc.); (iii)
the sports related division of any electronic or similar
sports service (regardless of whether such service is
accessible through the Internet or otherwise); (iv) any
Internet or Web based sports fantasy game service (e.g.,
Sandbox Entertainment); and (v) any retailer of sports-related
merchandise including but not limited to ProTeam.com,
FootLocker/Venator Group, Nike, The Sports Authority,
Fogdog/Sports Site and Copeland's Sports, Gear.com,
Shopsports.com, Global Sports Interactive etc. (or any of
their respective affiliates).

i) Communications. Company shall be exclusively responsible for
all communications with end users of the Co-Branded Services.
In the event an end user of the Co-Branded Services contacts
Company or Company receives a communication regarding SPLN, or
otherwise related to the subject matter of this Agreement
(including but not limited to or from end users of the
Co-Branded Services, or parties or organizations considered in
the trade as VIP (e.g., attorneys, the Better Business Bureau,
the United States Postal Service, governmental agencies and
consumer columnists or advocates)), Company shall immediately
forward such communications to SPLN and SPLN may handle such
communication in the sole and exclusive discretion of SPLN.

4. SPLN Obligations.

a) Service Promotion and Integration. Subject to the terms and
conditions herein, SPLN shall promote, or, as applicable,
cause its affiliates to promote, the Co-Branded Services as
set forth in Exhibit D attached hereto. Notwithstanding the
foregoing, SPLN reserves the sole and exclusive right to
provide substitute promotional placements and/or integration
of the Co-Branded Services of comparable value as determined
in cooperation with Company but in all events in the sole and
exclusive discretion of SPLN or its affiliates.

b) Registration Page. SPLN shall set up a fully automated
co-branded registration area on each of the SportsLine
Service, the Vegas Insider Service and the Tips Service
(collectively the "Co-Branded Services Registration Area")
which will allow end users of each respective service to
register for the SportsLine Co-Branded Service, the Vegas
Co-Branded Service and the Tips Co-Branded Service, as
applicable. SPLN or its affiliates shall transmit all such
data collected via the Co-Branded Service Registration Area to
Company as necessary for Company to provide such end users
immediate access to the version of the Co-Branded Service for
which such end user registered.

c) Dedicated Personnel: SPLN will make available to Company the
necessary personnel to oversee the relationship between the
parties as contemplated hereunder.

5. Advertising/Sponsorships: Responsibility for Sales. SPLN and its
affiliates shall have the sole and exclusive right to sell all
advertising inventory (as of the Effective Date banner ad space is
anticipated to be sized at approximately 468x60 pixels and shall be
positioned as a header at the top of each page of the Co-Branded
Services) in each Co-Branded Service, inclusive of all sponsorship(s)
(defined as a non-rotating advertising placement within the Co-Branded
Services). All advertising inventory shall be sold through the
SportsLine Network and the participants of which shall be determined in
SPLN's sole discretion. As used herein "SportsLine Network" means a
network of Web sites for which SPLN or its affiliates is providing
advertising sales services. SPLN will assign an advertising associate
to Company's account to coordinate advertising sales for the Co-Branded
Services. SPLN will use, and will cause its affiliates, as applicable,
to use commercially reasonable efforts to sell the advertising and
sponsorship inventory within the applicable Co-Branded Service at the
prevailing market rates, and shall manage all advertising, and
sponsorship

CONFIDENTIAL AND PROPRIETARY

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<PAGE>

inventory within the Co-Branded Services through proprietary SPLN or
third party advertising management software and tools as determined by
SPLN and its affiliates in their sole discretion.

a) "Net Advertising Revenue" shall mean the amounts actually
collected by the selling party for the sale of banner
advertising and sponsorships, other approved advertising or
sponsorships hereunder minus [RTC].

b) Unsold Inventory. Use of unsold advertising and sponsorship
inventory ("Remnant Inventory") in each Co-Branded Service
shall be subject to the following conditions:

i) SportsLine Co-Branded Service. Company and SPLN shall
share Remnant Inventory on a [RTC] basis. SPLN shall
have the right to sell run-of-site advertising and to
serve advertising promoting SPLN and its affiliates
within its share of Remnant Inventory. Company shall
have the right to sell its share of Remnant Inventory
in collaboration with similar selling by SPLN with
respect to SPLN-controlled (or SPLN affiliate
controlled) properties. Company will use commercially
reasonable efforts to sell the Remnant Inventory
within the SportsLine Co-Branded Service at the
prevailing market rates. Company's allocation of
available Remnant Inventory for sale shall be based
on the rolling historical average of Remnant
Inventory in the preceding calendar quarter subject
to any diminishment of available Remnant Inventory
resulting from sales during the current calendar
quarter. No Remnant Inventory may be sold, bartered
to or otherwise used for the benefit of any
Advertising Competitor, and shall be subject to SPLN
or, as applicable, SPLN affiliate advertising
guidelines. In addition, SPLN shall have the right to
remove any advertisement that SPLN or its applicable
affiliate and/or CBS reasonably finds objectionable.
Notwithstanding the foregoing, no advertising or
other promotion within the SportsLine Co-Branded
Service may promote gambling, pornography, alcohol,
any Advertising Competitors or any CBS competitors or
other objectionable advertising without SPLN's prior
written approval.

ii) Vegas Co-Branded Service. SPLN shall have the right
to serve advertising promoting SPLN and its
affiliates within [RTC] of Remnant Inventory on the
Vegas Co-Branded Service. Service. Company will have
the right to direct SPLN to serve advertisements that
promote the Vegas Co-Branded Service and other
mutually agreed upon co-branded products or services
on [RTC] of Remnant Inventory within the Vegas
Co-Branded Service.

iii) Tips Co-Branded Service. SPLN shall have the right to
run internal advertisements on [RTC] of Remnant
Inventory on the Tips Co-Branded Service. Company
will have the right to direct SPLN to serve
advertisements that promote the Tips Co-Branded
Service and other mutually agreed upon co-branded
products or services on [RTC] of Remnant Inventory
within the Tips Co-Branded Service.

c) Reporting. SPLN will provide Company with reports containing
advertising sales and click through performance in accordance
with Exhibit E attached hereto. Company will provide SPLN with
reports which contain information containing advertising sales
and traffic performance in accordance with Exhibit E. Delivery
of such reports will be in a mutually agreed upon electronic
format and schedule.

6. Financial Terms.

a) Promotional Fee. In consideration for the integration of the
Company Co-Branded Services and related promotion as set forth
herein, Company shall pay SPLN a guaranteed, non-refundable
fee of one million dollars ($1,000,000) payable in accordance
with the following:

CONFIDENTIAL AND PROPRIETARY

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<PAGE>

i) Annual Fee. Two hundred fifty thousand dollars
($250,000) upon execution of this agreement, and two
(2) payments of two hundred fifty thousand dollars
($250,000) each due and payable on the first and
second anniversaries of the Effective Date,
respectively.

ii) Marketing Fees. SPLN shall invoice Company over the
Term for all expenses and costs related to the Co-Op
Marketing Platform as described in Paragraph 4 of
Exhibit D, subject to a maximum of two hundred fifty
thousand dollars ($250,000).

b) Advertising and Sponsorship Revenue. Commencing on the Launch
Date, and on each anniversary of the Launch Date, Company
shall receive one hundred percent (100%) of Net Advertising
Revenue generated in association with the Co-Branded Services
up to an aggregate maximum of two hundred and fifty thousand
dollars ($250,000) (the "Annual Recoupment") during the twelve
(12) month period immediately following the Launch Date or an
anniversary of the Launch Date, as applicable. Notwithstanding
the foregoing, if Net Advertising Revenue satisfies the Annual
Recoupment during any year of the Term the parties shall share
Net Advertising Revenue on a 50/50 basis until the next
anniversary of the Launch Date at which time Company shall be
entitled to receive one hundred percent (100%) of Net
Advertising Revenue in accordance with this sub-section 6(b).

c) Production Costs. Company shall be solely responsible for all
costs associated with designing, producing, hosting,
operating, maintaining and supporting each Co-Branded Service,
including but not limited to, the provision of hosting
services, procuring system operating software and hardware,
all network and connectivity costs, and providing customer and
technical support as provided herein.

d) Other Revenue. Any other services and/or features offered as
part of the Co-Branded Services shall be on a mutually agreed
upon basis, including but not limited to the financial terms
thereof, and shall be subject to the written approval by SPLN.

e) Payments. SPLN shall remit payment of amounts due to Company
hereunder within [RTC] days of the end of each calendar
quarter.

7. User Data.

a) User Data. For the purposes of this Agreement, "User Data"
means all demographic information (including but not limited
to name, email address, mailing address, telephone number, and
any other identifying information collected) submitted by
users via the Co-Branded Service and/or the Co-Branded Service
Registration Area to either party during the Term. The parties
acknowledge that any individual end user of the Internet could
be a user of the Company Service and/or the SportsLine Service
and/or the Vegas Insider Service and/or the Tips Service
through activities unrelated to this Agreement and/or the
Co-Branded Service, and that user data gathered independent of
this Agreement and/or the Co-Branded Service will not be
deemed to be User Data for the purposes of this Agreement.
User Data will be deemed to be the joint property of the
parties during the Term, subject to SPLN's prior written
approval of any and all Company database-related activity (to
include but not be limited to the use of user data for direct
communication with end users via email or other intrusive
means of communications) and in accordance with the following
restrictions:

i) User Data shall be used solely for Company's own
purposes subject to applicable law, user privacy
requests and mutually agreed upon privacy guidelines
which must permit each party to comply with the
commercially reasonable certification guidelines
established by SPLN's and Company's respective
privacy certification authorities.

ii) Company will not sell, disclose, transfer or rent any
User Data to any third party.

CONFIDENTIAL AND PROPRIETARY

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iii) Company shall not use User Data to send unsolicited,
commercial e-mail (i.e., "spam") , absent a Prior
Business Relationship. For purposes of this
Agreement, a "Prior Business Relationship" means that
a user to whom commercial e-mail is being sent has
voluntarily either (i) engaged in a transaction with
Company, or (ii) provided information to Company
through a contest, registration, or other
communication, which included clear notice to the
user that the information provided could result in
commercial e-mail being sent to that user by Company.

iv) Upon the expiration or earlier termination of this
Agreement, all Company rights to the User Data
granted to Company hereunder shall terminate and
automatically revert to SPLN and Company shall
immediately discontinue the use of the User Data and
thereafter shall no longer use or have the right to
use the User Data.

v) This Section 7 shall survive the expiration or
earlier termination of this Agreement.

8. SPLN Services.

a) SportsLine Service. Other than as expressly provided herein
with respect to promotion and integration of the SportsLine
Co-Branded Service, SPLN shall have sole and absolute
discretion to determine all aspects of the operation of the
SportsLine Service and all matters relating to the content,
structure and sequence of material appearing on the SportsLine
Service. In addition, SPLN shall have sole and absolute
discretion to determine the amount and basis of any fee
charged to subscribers for use of the SportsLine Service, and
SPLN exclusively will bill for and collect all fees charged to
subscribers to use the SportsLine Service. Nothing in this
Agreement shall limit SPLN's rights regarding charges for any
aspect of the SportsLine Service (including any product or
service offered by SPLN, whether alone or in conjunction with
others, through means of the SportsLine Service).

b) Vegas Insider Service. Other than as expressly provided herein
with respect to promotion and integration of the Vegas
Co-Branded Service, SPLN shall have sole and absolute
discretion to determine all aspects of the operation of the
Vegas Insider Service and all matters relating to the content,
structure and sequence of material appearing on the Vegas
Insider Service. In addition, SPLN shall have sole and
absolute discretion to determine the amount and basis of any
fee charged to subscribers for use of the Vegas Insider
Service, and SPLN exclusively will bill for and collect all
fees charged to subscribers to use the Vegas Insider Service.
Nothing in this Agreement shall limit SPLN's rights regarding
charges for any aspect of the Vegas Insider Service (including
any product or service offered by SPLN, whether alone or in
conjunction with others, through means of the Vegas Insider
Service).

c) Tips Service. Other than as expressly provided herein with
respect to promotion and integration of the Tips Co-Branded
Service, SPLN shall have sole and absolute discretion to
determine all aspects of the operation of the Tips Service and
all matters relating to the content, structure and sequence of
material appearing on the Tips Service. In addition, SPLN
shall have sole and absolute discretion to determine the
amount and basis of any fee charged to subscribers for use of
the Tips Service, and SPLN exclusively will bill for and
collect all fees charged to subscribers to use the Tips
Service. Nothing in this Agreement shall limit SPLN's rights
regarding charges for any aspect of the Tips Service
(including any product or service offered by SPLN, whether
alone or in conjunction with others, through means of the Tips
Service).

9. Proprietary Rights and License.

a) SPLN Content and Marks. SPLN and its affiliates shall retain
all right, title, and interest in the SportsLine Service, the
Vegas Insider Service and the Tips Service and related
intellectual

CONFIDENTIAL AND PROPRIETARY

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<PAGE>

property, and to their respective logos, trademarks, service
marks, copyrights and all other intellectual property ("SPLN
Intellectual Property"). Subject to the terms and conditions
of this Agreement, SPLN hereby grants to Company a worldwide
license to use VI, SPLN Europe and SPLN's logos, trademarks,
and service marks in connection with Company's performance of
its obligations hereunder during the Term; provided that such
use is in accordance with VI, SPLN Europe and SPLN's
then-current trademark usage guidelines, as applicable.

b) Materials License. SPLN hereby grant, and shall cause its
applicable affiliates to grant, to Company, during the Term, a
non-transferable, non-exclusive, limited license to use the
SportsLine Materials solely as necessary to perform Company's
obligations herein.

c) Proprietary Rights. Company acknowledges and agrees that SPLN
and its affiliates own and shall retain all rights, title and
interest in and to the SportsLine Materials, including,
without limitation, all copies thereof and all rights to
patents, copyrights, trademarks, service marks, trade secrets
and other intellectual property rights inherent therein and
appurtenant thereto.

d) Expiration or Termination. Upon the expiration or earlier
termination of this Agreement, all Company rights to the
SportsLine Materials granted to Company hereunder shall
terminate and automatically revert to SPLN and Company shall
immediately discontinue the use of the SportsLine Materials
and thereafter shall no longer use or have the right to use
the SportsLine Materials.

e) Proprietary Notices. SPLN shall have the right to place
proprietary notices of SPLN and its suppliers on the
Co-Branded Services in accordance with the terms and
conditions of this Agreement.

f) Company Content and Marks. Except for content provided by SPLN
or its affiliates to Company and rights otherwise reserved to
SPLN, Company shall retain all right, title, and interest in
and to the Company Service and related intellectual property,
and Company's logos, trademarks, service marks, copyrights and
all other intellectual property ("Company Intellectual
Property"). Subject to the terms and conditions of this
Agreement, Company hereby grants to SPLN a worldwide license
to use Company's logos, trademarks, and service marks in
connection with SPLN's performance of its obligations
hereunder during the Term; provided that such use is in
accordance with Company's then-current trademark usage
guidelines. In addition, Company hereby grants to SPLN and its
affiliates a world-wide royalty free license to:

i) use, copy, display (privately or publicly), publish
and distribute the Co-Branded Services or any portion
thereof, together with all Company trademarks,
service marks, trade name, and logos related thereto
in any electronic medium and in connection with any
demonstration, promotion or advertisement of the
Co-Branded Services in any medium, whether now known
or hereinafter devised; and

ii) store, process, retrieve, and transmit the Co-Branded
Services, or any portion thereof, through the
SportsLine Service, the Vegas Insider Service, and
the Tips Service..

iii) SPLN's and its affiliates' rights hereunder shall
include, but not be limited to, SPLN's right to offer
end users of the Co-Branded Service the option of
printing and downloading the Co-Branded Service or
any portion thereof as a function of the SportsLine
Service generally. The foregoing licenses shall
terminate immediately upon any expiration or earlier
termination of this Agreement.

g) Approvals. Each party shall notify the other of its intended
use of the other party's' trademarks, logos or any other
associations that it desires to use in its advertising and
promotions and any such use shall be subject to the other
party's prior written consent, which consent shall not be

CONFIDENTIAL AND PROPRIETARY

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unreasonably withheld. The other party shall have seven (7)
days from the date of receipt of such notice to provide the
requesting party with a written response. Failure to respond
will be construed as consent.

10. Representation and Warranties.

a) Each party represents and warrants that:

i) it has full power and authority to enter into this
Agreement and to grant the rights and licenses
granted hereunder;

ii) it will comply with all applicable laws, rules and
regulations governing the services to be performed
hereunder; and

iii) it possesses all copyright, trademark, patent, trade
secret and similar property and other rights which
are necessary for performance of this Agreement.

b) In addition, Company represents and warrants to SPLN that:

i) the Co-Branded Services, and all components thereof,
and all Company Intellectual Property shall be
Company's original creation or duly licensed to
Company and shall not infringe the patent, copyright,
trademark, trade secret or other proprietary right of
any third party;

ii) the SportsLine Co-Branded Service shall be in
compliance with the SPLN Service Content Standards.

iii) the Tips Co-Branded Service shall be in compliance
with the Tips Service Content Standards.

iv) the Vegas Co-Branded Service shall be in compliance
with the Vegas Insider Service Content Standards.

v) the Co-Branded Services shall be in compliance with
the Co-Branded Services Operating Standards attached
hereto as Exhibit F.

vi) all hardware/software used to provide the services
hereunder will prior to, during or after the calendar
year 2000, include or shall include, at no added cost
to SPLN, design and performance so that SPLN shall
not experience abnormally ending and/or invalid
and/or incorrect results from the Co-Branded Service.
The hardware/software used to provide the services
hereunder shall ensure year 2000 computability and
shall include, but not be limited to, date data
century recognition, calculations that accommodate
same century and multicentury formulas and date
values, and date data interface values that reflect
the century;

vii) there is no pending or, to the best of Company's
knowledge, threatened litigation, including court,
administrative or arbitral proceedings, which if
decided adversely to Company would interfere in any
material manner whatever with Company's or SPLN's
rights to use the produce, maintain and distribute
the Services as contemplated hereunder.

11. Confidentiality.

a) For purposes of this Agreement, "Confidential Information"
shall mean all information disclosed by either party to the
other party, including but not limited to the terms and
conditions of this Agreement or any other agreement between
the parties, trade secrets of the parties, any nonpublic

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information relating to a party's product plans, designs,
ideas, concepts, costs, prices, finances, marketing plans,
business opportunities, personnel, research, development or
know-how and any other nonpublic technical or business
information of a party, or such other information as may be
designated as confidential by the disclosing party. Without
limiting the generality of the foregoing, it is expressly
agreed between the parties that the following information will
be deemed to be Confidential Information, even if not
expressly so marked: the capabilities, technical descriptions
and source code (if any) relating to either party's released
or unreleased software products or services; the marketing and
promotion plans of each party's products or services; either
party's financial information and business practices or
policies; and each party's customer lists and customer
information.

b) All Confidential Information shall be treated as confidential
by the receiving party and may not be copied, reproduced,
published, disseminated or otherwise disclosed to any third
party (excluding affiliated companies of SPLN) without the
disclosing party's written consent or unless required by law.
Each party shall use its best efforts to cause any third
parties that may come into possession of any confidential
information to maintain the confidentiality of such
information.

c) Confidential Information shall not include information that:
(i) is now or subsequently becomes generally available to the
public through no fault or breach on the part of the receiving
party; (ii) the receiving party can demonstrate to have had
lawfully in its possession without an obligation of
confidentiality prior to disclosure hereunder; (iii) is
independently developed by the receiving party without the use
of any Confidential Information of the disclosing party as
evidenced by written documentation; or (iv) the receiving
party lawfully obtains from a third party who has the right to
transfer or disclose it and who provides it without any
obligation to maintain the confidentiality of such
information.

d) If this Agreement or any of its terms or any Confidential
Information must be disclosed under any law, rule or
regulation, the disclosing party shall (i) first give written
notice of the intended disclosure to the other party, within a
reasonable time prior to the time when disclosure is to be
made, (ii) redact mutually agreed upon portions of this
Agreement and any other Confidential Information to the
fullest extent permitted under any applicable laws, rules and
regulations, and (iii) submit a request, to be mutually agreed
upon by the parties, that such portions and other provisions
of this Agreement and/or any other Confidential Information
receive confidential treatment under the laws, rules and
regulations of the body or tribunal to which disclosure is
being made or otherwise be held in the strictest confidence to
the fullest extent permitted under the laws, rules or
regulations of any other applicable governing body.

e) Both parties acknowledge that the unauthorized disclosure or
use of Confidential Information could cause irreparable harm
and significant injury, the precise measure of which may be
difficult to ascertain. Accordingly, each party agrees that
the aggrieved party shall have the right to seek injunctive
relief from any breach of the confidentiality obligations of
this Section, in addition to all other rights and remedies to
which it may have. Both parties agree that each has and shall
retain ownership of all of its own Confidential Information,
and that upon the expiration or termination of this Agreement
each party shall return and shall not retain the Confidential
Information of the other party.

f) Upon the expiration of earlier termination of this Agreement,
each party shall return to the other all Confidential
Information of the other party, and shall certify its
compliance with the foregoing under oath if requested by the
other party.

g) This Section 11 shall survive the expiration or earlier
termination of this Agreement.

12. Insurance. Company shall provide and maintain, at its own expense,
general commercial liability

CONFIDENTIAL AND PROPRIETARY

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insurance, including product liability and advertising injury coverage,
with limits of not less than [RTC] underwritten by companies rated A or
better by A.M. Best, Aa or better by Moody's or AA or better by
Standard & Poors, and shall cause such policy or policies to be
endorsed to state that SPLN is an additional named insured thereunder.
A certificate of insurance evidencing such coverage shall be furnished
to SPLN within thirty (30) calendar days of the full execution of this
Agreement, and within ten (10) calendar days after any renewal or
replacement thereof. Company shall make all such policies available to
SPLN for inspection upon SPLN's request. Such insurance policy or
policies shall provide that the insurer shall not terminate or
materially modify such policy or remove SPLN as additional named
insured without prior written notice to SPLN at least thirty (30)
calendar days in advance thereof. A breach of this Section 12 shall be
deemed a material breach of this Agreement.

13. Indemnification.

a) Indemnification by Company. Subject to the conditions set
forth in sub-section (c) below, Company shall indemnify and
hold harmless SportsLine and its affiliated companies and
their respective officers, directors and employees from and
against, without limitation, any and all claims, costs,
liabilities, obligations, judgments, fines, penalties,
expenses or damages (including reasonable attorneys' fees and
court costs) arising from or related to any cause of action
brought against SLPN or any of its affiliated companies or
their respective officers, directors and employees by any
person or entity that is not a party to this Agreement (other
than Company's affiliated companies or their respective
officers, directors or employees) arising from or related to
(i) the Company Service, (ii) the Co-Branded Services, (iii)
any breach by Company of any representation or warranty set
forth in this Agreement, and (iv) in connection with any of
the foregoing, including, without limitation, claims by end
users with respect to payments due to such end users and any
claim of any regulatory agencies (e.g. FTC claims).

b) Indemnification by SPLN. Subject to the conditions set forth
in sub-section (c) below SPLN shall indemnify and hold
harmless Company and its affiliated companies and their
respective officers, directors and employees from and against,
without limitation, any and all claims, costs, liabilities,
obligations, judgments, fines, penalties, expenses or damages
(including reasonable attorneys' fees and court costs) arising
from or related to any cause of action brought against Company
or any of its affiliated companies or their respective
officers, directors and employees by any person or entity that
is not a party to this Agreement (other than SPLN's affiliated
companies or their respective officers, directors or
employees) arising from or related to any breach by SPLN of
any representation or warranty set forth in this Agreement.

c) Conditions Precedent to Duty of Indemnification.

i) Notice. A party seeking indemnification under this
section shall give prompt written notice to the
indemnifying party of the commencement or assertion
of any claim or action in respect of which such
indemnified party shall seek indemnification
hereunder.

ii) Settlement; Compromise; Admission of Liability. With
respect to any claim or action with respect to which
a party seeks indemnification, such party shall
obtain the prior written approval of the other party
before entering into or making any settlement,
compromise, admission or acknowledgment (whether by
agreement, consent judgment or otherwise) of the
validity of such claim or action, which approval may
be conditioned upon the procuring a release of the
other party and its affiliated companies and their
respective officers, directors and employees and
confidentiality of any such settlement or compromise,
and, in all events, which approval shall not be
unreasonably withheld.

d) Cooperation. The parties hereto shall extend reasonable
cooperation in connection with the defense of any third-party
action pursuant to this section and, in connection therewith,
shall furnish such records, information, and testimony and
attend such conferences, discovery proceedings,

CONFIDENTIAL AND PROPRIETARY

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hearings, trials, and appeals as may be reasonably requested.

e) Survival. This Section 13 shall survive the expiration or
earlier termination of this Agreement.

14. Limitation Of Liability. NOTWITHSTANDING ANYTHING STATED OR IMPLIED TO
THE CONTRARY HEREIN, EXCEPT WITH A PARTY'S DUTY OF CONFIDENTIALITY
(PURSUANT TO PARAGRAPH 11 ABOVE) AND INDEMNIFICATION (PURSUANT TO
PARAGRAPH 13 ABOVE) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR EXEMPLARY, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
INCLUDING BUT NOT LIMITED TO LOST PROFITS, IN ANY MANNER ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE BREACH OF ANY TERM, COVENANT,
REPRESENTATION, WARRANTY OR OBLIGATION CONTAINED HEREIN, EVEN IF
FORESEEABLE AND/OR ADVISED IN ADVANCE OF THE POSSIBLITY OF SUCH
DAMAGES. This Section 14 shall survive the expiration or earlier
termination of this Agreement.

15. Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, ALL SERVICES
PROVIDED BY EITHER PARTY HEREUNDER, INCLUDING BUT NOT LIMITED TO THE
USE OF HARDWARE AND/OR ANY SOFTWARE, ARE "AS IS' WITHOUT WARRANTY OF
ANY KIND, AND EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR
IMPLIED, OF ANY KIND WHATSOEVER INCLUDING BUT NOT LIMITED TO IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN
ADDITION, NEITHER PARTY SHALL BE RESPONSIBLE FOR THE LOSS OF DATA OR
SERVICES RESULTING FROM DELAYS, NONDELIVERIES, MIDSDELIVERIES, OR
SERVICE INTERRUPTION, NOR FOR THE ACCURACY, QUALITY OR NATURE OF
INFORMATION OBTAINED THROUGH ITS SERVICES, NOR THE CONSEQUENCES ARISING
FROM OR RELATED TO ANY VIRUSES TRANSMITTED THROUGH ITS SERVERS. This
Section 15 shall survive the expiration or earlier termination of this
Agreement.

16. Termination.

a) Except as otherwise expressly provided herein, in the event of
a material breach of this Agreement by either party, the other
party may terminate this Agreement on thirty (30) calendar
days' written notice to the breaching party unless the breach
is corrected within the thirty (30) day period. Termination
under this paragraph shall not affect the right of the
non-breaching party to recover damages from the breaching
party. No expiration or termination of this Agreement shall
affect or impair either party's rights or remedies under this
Agreement that have accrued or arisen as of or prior to such
termination. Following the effective date of termination, no
further obligations of either party to the other shall accrue
under this Agreement, provided that termination shall not
relieve either party of any obligations arising prior to the
effective date of termination.

b) In addition to termination under Section 16(a), SPLN shall
have the right to terminate this Agreement immediately:

i) in the event of a Change of Control of Company to a
SPLN competitor (including, without limitation
Advertising Competitors and Service Competitors) (for
purposes of the foregoing, a "Change of Control"
means (A) the consummation of a reorganization,
merger or consolidation or sale or other disposition
of substantially all of the applicable party's
assets; or (B) the acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1933, as amended) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under such Act)
of more than 50% of either (x) the then outstanding
shares of common stock of the applicable party; or
(y) the combined voting power of the then outstanding
voting securities of the applicable party entitled to
vote generally in the election of directors.); and

CONFIDENTIAL AND PROPRIETARY

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ii) without liability if Company breaches of the
SportsLine Service Content Standards, the Vegas
Insider Service Content Standards, or the Tips
Service Content Standards or any other restrictions
herein relating to gambling, pornography or alcohol.

17. Remedies. Except as otherwise specifically provided herein, the rights
and remedies granted to a party under this agreement are cumulative and
in addition to, and not in lieu of, any other rights or remedies which
the party may possess at law or in equity.

18. Relationship of the Parties. The parties to this Agreement are
independent contractors, and this Agreement shall not be construed to
create a partnership, joint venture, employment or principal agent
relationship between the parties. Each party shall be solely
responsible to compensate any employees, agents or representatives
employed or engaged by it to perform duties under this Agreement and
for all taxes, imposts, duties and all charges of any governmental
authority arising from its or his activities under this Agreement.
Neither SPLN nor Company, nor any person or entity employed by either
SPLN or Company, are authorized to make any warranty concerning the
other party or incur or assume any obligation or liability for the
other party.

19. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to be given or made when received (or upon
refusal of delivery) by overnight courier, U.S. mail, registered or
certified, first class, postage prepaid, or confirmed facsimile (with a
copy via one of the aforementioned forms of delivery promptly
thereafter) to the following address or addresses or such other address
or addresses as either party may designate in writing to the other in
accordance with this paragraph:

<S> <C>
If to SPLN: SportsLine USA, Inc. With a copy to: SportsLine USA, Inc.
6340 NW 5th Way 6340 NW 5th Way
Ft. Lauderdale, Florida 33309 Ft. Lauderdale, Florida 33309
Attn: President Attn: VP, Legal & Business Affairs
Facsimile: (954) 351-9175 Facsimile: (954) 351-9175

If to Company: Predict It Corporation
694 8th Avenue, 5th Floor
New York, NY, 10036
Attn: President
Facsimile: 212-217-1201
</TABLE>

20. Force Majeure. Neither party shall be in default of this Agreement if
failure to perform any obligation hereunder is caused by supervening
conditions beyond the party's control, including acts of God, civil
commotion, strikes, labor disputes, governmental demands or
requirements, or a service interruption from an underlying carrier or
service provider.

21. Press Releases. The parties intend to issue a mutually agreed upon
jointly developed press releases at a mutually agreed upon time
following the execution of this Agreement. Neither party will issue any
additional press releases regarding this Agreement or the relationship
between the parties without the prior written consent of the other
party, which shall not be unreasonably withheld.

22. Amendment; Waiver. No amendment to this Agreement shall be valid unless
such amendment is in writing and is signed by the party against whom
enforcement is sought. Any of the terms and conditions of this
Agreement may be waived at any time in writing by the party entitled to
the benefit thereof, but a waiver in one instance shall not be deemed
to constitute a waiver in any other instance. A failure to enforce any
provision of this Agreement shall not operate as a waiver of the
provision or of any other provision hereof.

CONFIDENTIAL AND PROPRIETARY

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23. Severability. In the event that any provision of this Agreement shall
be held to be invalid, illegal or unenforceable in any circumstances,
the remaining provisions shall nevertheless remain in full force and
effect and shall be construed as if the unenforceable portion or
portions were deleted.

24. Interpretation. This Agreement has been negotiated by the parties and
their respective counsel and shall be interpreted without any strict
construction in favor of or against either party.

25. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Florida. Company hereby consents to personal jurisdiction and venue in
a court of competent jurisdiction in Broward County, Florida or other
jurisdiction in which SPLN may have its principal place of business.

26. Assignment. Neither party may assign its rights nor delegate its duties
under this Agreement, in whole or in part, without the other party's
written consent (which will not be unreasonably withheld nor delayed),
except that SPLN may assign its rights or delegate its duties under
this Agreement, in whole or in part, without the Company's consent, to
a SPLN affiliate or in connection with a merger, reorganization or sale
of all, or substantially all, of SPLN's assets.

27. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes
all prior and/or contemporaneous agreements and understandings, written
or oral between the parties with respect to the subject matter hereof.

28. Headings. Section and paragraph headings are for convenience only and
shall not be deemed a part of this Agreement.

29. Execution in Counterparts. This Agreement may be executed by the
parties in counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement.

SportsLine USA, Inc. PredictIt, Inc.

By: /s/ Michael Levy By: /s/ Bob Jacobs
-------------------------------- ---------------------------
Name: Michael Levy Name: Bob Jacobs
Title: President Title: Sr. Vice President

CONFIDENTIAL AND PROPRIETARY

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EXHIBIT A

SPLN SERVICE CONTENT STANDARDS

Company shall not use the SportsLine Co-Branded Service to:

1. post, transmit, display, distribute or promote any unlawful,
threatening, abusive, libelous, defamatory, obscene, vulgar, offensive,
pornographic, profane, racist, sexually explicit or indecent material
of any kind;

2. encourage, promote, solicit or commit conduct that would constitute a
criminal offense, give rise to civil liability or otherwise violate any
local, state, national or international law;

3. post, transmit, display, distribute or promote in any way, information,
software, or other material that violates, plagiarizes or infringes the
rights of third parties including, without limitation, copyright
(including, without limitation, offering pirated computer programs or
links to such programs, information used to circumvent
manufacturer-installed copy-protect devices, including serial
registration numbers for software programs, or any type of cracker
utilities), trademark, patent, trade secret, rights of privacy or
publicity or any other proprietary right;

4. promote physical harm or injury against any group or individual;

5. promote or solicit for participation in multi-level marketing or
pyramid schemes;

6. post, transmit, display, distribute or promote material that exploits
children under eighteen (18) years of age;

7. post, transmit, display, distribute or promote material of any kind
which constitutes requests for money, petitions for signature, or chain
letters;

8. post, transmit, display, distribute or promote material of any kind
that contains a virus or other harmful component;

9. post, transmit, display, distribute or promote information or material
of any kind that constitutes or contains false or misleading
indications of origin or statements of fact;

10. send unsolicited bulk or commercial messages ("spam"). This includes,
but is not limited to, bulk mailing of commercial advertising,
informational announcements, charity requests, petitions for
signatures, and political or religious tracts. Such messages may only
be sent to those who have explicitly requested it.

11. post a single item to more than ten (10) newsgroups or mailing lists or
other similar groups or lists;

12. post to any newsgroup or mailing list or other similar groups or lists,
items which are off-topic (e.g. off-topic according to the charter of
the newsgroup or mailing list or other similar groups or lists or if
the item provoked complaints from regular readers of the newsgroup or
mailing list or other similar groups or lists for being off-topic);

13. develop pages on a Web site that consist of hyperlinks to Web sites
that are under construction and/or not fully operational.

14. develop pages on a Web site that consist of hyperlinks to content,
information or materials in violation of the rules contained in this
SportsLine Service Content Standards.

15. SportsLine may revise this SportsLine Service Content Standards from
time to time in its sole discretion and such revisions shall be
effective upon providing Company notice.

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EXHIBIT B

VEGAS INSIDER SERVICE CONTENT STANDARDS

Company shall not use the Vegas Co-Branded Service to: