<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-QSB

[X]   Quarterly Report Under Section 13 or 15(d) of the
      Securities Exchange Act of 1934

       For the quarterly period ended March 31, 1999

[ ]    Transition Report Under Section 13 or 15(d)
       of the Securities Exchange Act of 1934

                        Commission File Number 0-21201

                                  iMALL, INC.
--------------------------------------------------------------------------------
   (Exact name of small business issuer as specified in its charter)

          Nevada                                    87-0553169
  ---------------------------------     -------------------------------------- 
 (State or other jurisdiction        (I.R.S. Employer Identification Number)
of incorporation or organization)

 233 WILSHIRE BOULEVARD, SUITE 820, SANTA MONICA, CALIFORNIA 90401           
-------------------------------------------------------------------------------
                   (Address of principal executive offices)
                                  (Zip Code)

                                (310) 309-4000
--------------------------------------------------------------------------------
                (Issuer's telephone number including area code)

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

Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

As of May 11, 1999, the Issuer had outstanding an aggregate of 17,690,899 common
shares, par value $0.008.
<PAGE>
 
                         PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

  The unaudited condensed consolidated financial statements of iMALL, Inc. and
subsidiaries (the "Company") as of March 31, 1999 and for the three-month
periods ended March 31, 1999 and 1998 are attached hereto.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

  The following Management's Discussion and Analysis of Financial Condition and
results of operations contains forward-looking statements involving risks and
uncertainties based on management's current expectations, estimates and
projections about the Internet industry and the evolution of on-line commerce
and electronic commerce services. All statements in this report related to the
Company's changing financial operations and expected future growth constitute
forward-looking statements. The actual results may differ materially from those
anticipated or expressed in such statements. The following discussion and
analysis of the Company's financial condition as of March 31, 1999 and the
Company's results of operations for the three month periods ended March 31, 1999
and 1998 should be read in conjunction with the Company's unaudited condensed
consolidated financial statements and notes thereto included elsewhere in this
Form 10-QSB. These results are not necessarily indicative of the results that
may be achieved by the Company for the entire year ending December 31, 1999.

OVERVIEW

  The Company is an electronic commerce enabler, providing fully integrated,
"one-stop" e-commerce solutions ("EC services"). The Company's unique e-commerce
solutions and integrated process allow businesses to create fully commerce
enabled Web sites or add transaction capabilities to their existing ones,
establish "Internet ready" merchant accounts online, and process customer orders
securely through the Company's proprietary payment gateway. To help increase
business' online sales, the Company's shopping portals and shopper services are
integrated into its e-commerce solutions. The Company's e-commerce solution,
merchantstuff.com, created jointly with First Data Merchant Services, is located
at http://www.merchantstuff.com. The Company's shopping portals are located at
http://www.stuff.com and http://www.imall.com. The Company's corporate site is
located at http://www.imallinc.com.

  In the fourth quarter of 1998, the Company launched its shopping portal,
located at www.stuff.com. This portal is a product-level search engine designed
specifically for online shopping. Visitors to stuff.com can search a proprietary
index of over a 2.5 million products offered among numerous merchants sites
across the Internet. The search experience is efficient and specific to products
for sale, in that it does not clutter the search results with generic keywords
or extraneous non-retail Web sites. Further, when the user clicks on a chosen
product in the listing of search results, the user is linked directly to the
relevant product page within the merchant Web site, rather than having to
restart a search from the top page of a merchant's Web site. The Company is
devoting marketing and advertising resources to the expansion of its Stuff.com
shopping portal during 1999. Stuff.com provides the Company revenues through
advertising sold on the site, royalties earned from referral fee contracts, fees
charged for uploading products and through sales of upgrades to the Company's EC
services.

  During the first quarter of 1999, the Company focused much of its resources on
the expansion of its EC services business through the establishment of 
additional marketing alliances and the further development of its e-commerce 
solutions.  In February, the Company also announced the completion of 
Merchantstuff, the first fully integrated e-commerce solution, which was 
developed jointly with First Data. The Company's e-commerce 
solutions may be customized to create "private-labeled" solutions for resale by 
some of the Company's marketing alliance partners.

  During the quarter, the Company also implemented its new next-generation 
computing architecture.  The platform, code named Emerald Lake, was in 
development for over a year and is intended to allow for dramatically increased
scalability, security, and reliability, while providing a more flexible 
architecture for implementing future enhancements.

                                       2
<PAGE>
 
  On March 8, 1999, the Company acquired all of the outstanding shares of common
stock of Pure Payments, Inc. ("Pure Payments"). Prior to this acquisition, the
Company had included Pure Payments' products and services as a key component of
the Company's EC services. Pure Payments' products and services allow for on-
line retailers to process credit card orders securely over the Internet. The
integration of Pure Payments' services into the EC services expedites the store
building process by eliminating many manual and time-consuming steps required to
integrate payment processing into a merchant's Internet storefront. Pure
Payments' products and services supports advanced credit card payment features
for on-line retailers and offers corporate purchase card processing, automatic
merchant sign-up, end-to-end system-wide monitoring, and transparent software
upgrades.


RESULTS OF OPERATIONS

Comparison of Three-Month Periods Ended March 31, 1999 and 1998

  Revenues. Revenues for the three months ended March 31, 1999 were $778,700
compared to $222,200 for the three months ended March 31, 1998, an increase of
$556,500 or 250%. The increase was due primarily to greater technology and
marketing spending as part of the Company's continued expansion of its EC
services focus during 1999. Management's goal is for its advertising revenues to
increase with the continued expansion of its product level search engine which
creates a substantial amount of new page views available for advertising. The
Company also received advertising revenues from customers where the Company
would pay web publishers with whom the Company had pre-existing relationships a
service fee for delivering the advertisements. The Company is responsible for
billing and collecting on these ads and assumes the risk of non-payment from
advertisers. Web site sales and related maintenance fees derived from the
Company's internal sales force increased as part of a planned effort to better
diversify the product selection on the www.imall.com shopping site. During the
first quarter of 1999, the Company continued the process of shifting resources
to develop its new businesses in electronic commerce.


  Cost of Revenues. The cost of revenues for the three months ended March 31,
1999 were $418,800 compared to $38,600 for the three months ended March 31,
1998, an increase of $380,200 or 985%. The profit margin decreased to 46% in the
three months ended March 31, 1999 from 83% in the three months ended March 31,
1998. Beginning in the fourth quarter of 1998 the Company received advertising
revenues from customers where the Company would pay web publishers with whom the
Company had pre-existing relationships a service fee for delivering the
advertisements. This fee is included in cost of revenues driving the profit
margin down from the relatively high margin realized on EC services. Cost of
revenues also includes labor and related costs to build Web sites as well as the
cost of any products sold on-line directly by the Company.

  Selling Expenses. Selling expenses for the three months ended March 31, 1999
were $447,000 compared to $403,800 for the three months ended March 31, 1998, an
increase of $43,200 or 11%. The increase is primarily due to increased spending
on the on-line advertising campaign. The Company spent $320,000 in this on-line
advertising campaign during the quarter in an attempt to increase its branding
and further promote its focus on on-line commerce.

                                       3
<PAGE>
 
  Product Development. Product development expenses for the three months ended
March 31, 1999 were $1,275,700 compared to $316,000 for the three months ended
March 31, 1998, an increase of $959,700 or 304%.   This increase is due to the
expansion of the Company's focus from Internet training and Web site sales
toward electronic commerce.  In January 1998, the Company created its Electronic
Commerce Services Group (ECSG) in a separate office in Provo, Utah.  This office
represents the technology arm of the Company and is focused on the development
of the Company's e-commerce software, creating the technology behind the new
product level search engine, rebuilding the overall technical infrastructure and
the programming of all Web sites that make up imall.com and the Company's
various partner malls.  The product development expenses consist primarily of
payroll and related costs for programmers and software developers in the ECSG
office as well as the software development costs incurred through the
acquisition of Pure Payments in March 1999.

  General and Administrative Expenses. General and administrative expenses for
the three months ended March 31, 1999 were $2,403,000 compared to $773,600 for
the three months ended March 31, 1998, an increase of $1,629,400 or 211%.  This
increase was primarily due to higher payroll expense during 1999 accounting for
approximately $1.1 million. The mix of employees employed during the first
quarter of 1999 contained a significantly higher number of high-end programmers
and developers as well as a new highly experienced management staff versus those
on payroll during the first quarter of 1998.  The Company's continuing
operations had approximately 140 employees during the first quarter of 1999
versus approximately 60 employees during the first quarter of 1998.  Increases
in legal and travel expense accounted for the majority of the remaining
increase.

  Other Expense, net. Other expense increased by $39,800 because the Company
expensed certain fixed assets that it determined to be obsolete or no longer in
use.

  Interest Income, net. Net interest income for the three months ended March 31,
1999 was $120,200 compared to a net interest income of $65,200 for the three
months ended March 31, 1998, an increase of $55,000. This increase was because
in 1998 the interest from short-term debt securities was not recognized until
they were sold subsequent to March of 1998.

  Income from Discontinued Operations. The income from discontinued operations
for the three months ended March 31, 1999 was $78,900 compared to $25,600 in the
three months ended March 31, 1998. The seminar division comprised of the
majority of the discontinued operations, all of which were discontinued in
August 1998. The gain was primarily from the sale of the assets relating to the
former seminar division.

                                       4
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES


  In the first quarter of 1999 the Company received the balance of $3,220,000
pertaining to the First Data Merchant Services Corporation ("First Data")
investment of 2,000,000 shares of the Company's common stock ("Common Stock").
First Data had previously funded an amount equal to $10,780,000 in connection
with its investment during the fourth quarter of 1998. The Company received
approximately $3,000,000 from the exercise of warrants and stock options during
the quarter.

  As of March 31, 1999, the Company had current assets of $12,358,000 with a
cash and cash equivalents balance of $11,833,700 and current liabilities of
$2,274,000.

  The Company is currently generating cash receipts (exclusive of financing
activities) of approximately $250,000 per month and incurring cash expenses in
the amount of approximately $1,400,000 per month. The Company anticipates
capital expenditures will total approximately $3,000,000 in 1999 of which
$823,000 has been spent through the first quarter of 1999. In March 1999 the
Company called its remaining outstanding convertible preferred stock. This
required paying a final dividend of approximately $200,000. The Company paid the
fourth quarter dividend on its Series A 9% Convertible Preferred Stock (the
"Convertible Preferred Stock") of $898,000 in the first quarter of 1999. The
Company may also spend funds to invest in various forms of advertising to
increase awareness of the Company and its services. In April of 1999 the Company
paid the agreed upon settlement of $750,000 with the Federal Trade Commission
which was previously disclosed and accrued for. If the Company is able to 
successfully implement its current business plan, the Company believes that it
will be able to fund its continuing operations with existing cash, cash 
expected to be generated by continuing operations and other sources for at least
the next twelve months.

  The Company's working capital requirements in the foreseeable future will
depend on a variety of factors including the Company's ability to implement its
business plan and generate positive cashflow.  If the Company does not generate 
positive cashflow, the Company will be required to raise additional capital 
through debt or equity financing. There can be no assurance, however, that the
Company will be able to successfully negotiate or obtain additional financing,
or that such financing will be on terms favorable or acceptable to the Company.
If adequate funds are not available or are not available at acceptable terms,
the Company's ability to finance its expansion, develop or enhance services or
products or respond to competitive pressures would be significantly limited. The
failure to secure necessary financing could have a material adverse effect on
the Company's business, prospects, financial condition and results of
operations.

Year 2000

  Many currently installed computer systems, hardware and software products are 
coded to accept only two digit entries in the date code field and cannot
distinguish 21st century dates from 20th century dates. These date code fields
will need to distinguish 21st century dates from 20th century dates, and as a
result, many companies' software and computer systems may need to be upgraded or
replaced in order to comply with "Year 2000" requirements.

 Internal Systems

  The Company's business is dependent on its operating systems and the programs 
that run on them to deliver services to its customers and to manage its 
business.  These programs include hardware and software supplied by third 
parties, as well as software the Company has developed.

  The Company believes that its operating systems and the programs that run on 
them are Year 2000 compliant because the Company purchased such operating 
systems and programs during 1998 from suppliers that represented them to be Year
2000 compliant.

  Nonetheless, the Company has appointed a Y2K Compliance Team, which has 
designed and begun implementing a five-phase plan to mitigate possible Year 2000
effects on the Company's business and systems.

  Awareness Phase:  Consists of increasing Company awareness of Year 2000 issues
through education of all appropriate levels of management by the Y2K Compliance 
Team.

  Inventory Phase: Involves identifying all components of the Company's systems 
that may be impacted by Year 2000 issues, including hardware, software, 
suppliers and proprietary systems.

  Assessment Phase: Includes testing essential internal hardware and software 
systems as well as non-information technology systems; verifying compliance by 
third party vendors, merchants and business partners; assessing the impact of 
compliance (or non-compliance) by third party vendors, merchants and business 
partners; and developing a plan to repair all systems in need of correction.

  Remediation Phase: Consists of implementing the plan to repair, replace or 
retire those systems identified as needing correction in the Assessment Phase, 
and testing all repaired and replaced systems installed for Year 2000 
compliance.

  Contingency Planning Phase: Involves developing the Company's response to 
failure of mission critical systems and other major risks related to Year 2000 
compliance.

   At the present time, the Company has completed the Awareness Phase and the
Inventory Phase. The Company recently initiated the Assessment Phase, and
expects to substantially complete it, along with the Remediation Phase, by the
end of second quarter 1999. The Company plans to complete the Contingency
Planning Phase by mid-third quarter 1999.

  There can be no assurance, however, that the Company will succeed in
addressing all Year 2000 issues. If the Company fails to complete its five-phase
plan, or if the Company fails to detect any Year 2000 problems during a
particular phase of testing, the Company could be subject to a material
interruption of its business or other consequences, which could have a material
adverse effect on the Company's results of operations and financial condition.
While the Company does not presently expect such a material interruption to
occur, the Company believes its worst case scenario would involve an
unanticipated defect in one or more of its critical hardware or software systems
or those of a critical outsourcing or business partner, resulting in the
inability of the Company to maintain and operate its Web sites or process
transactions generated by its Web sites, thereby interrupting the Company's
business and exposing the Company to contract and other claims against it by its
customers, merchants and business partners.

  Furthermore, Year 2000 issues may affect the purchasing patterns of merchants
and advertisers as such merchants and advertisers expend development and
financial resources to remediate their current systems.

  The Company has entered into several business agreements, such as the
Investment Agreement with First Data, in which the Company warrants that it is
Year 2000 compliant. Any failure by the Company to achieve Year 2000 readiness
would thus result in a breach of such agreements and expose the company to
potential liabilities which could have a material adverse effect on the
Company's results of operations and financial condition.

 Systems of Vendors, Merchants and Business Partners

  The Company could be affected by failure of its vendors, merchants and
business partners to have systems that are Year 2000 compliant. For example, if
the Company's credit card processors are not Year 2000 compliant, the Company
will not be able to process credit card sales. The Company is not presently
aware of any existing third party Year 2000 issues that would materially affect
the Company. Regardless, as part of Company's Assessment Phase, the Company will
make inquiries to verify compliance by third party vendors. If current or future
vendors, merchants or business partners fail to achieve Year 2000 compliance, it
could result in a material adverse effect on the Company's results of operations
and financial condition.

 Non-Information Technology Systems 

  The Company could be affected by failure of non-information technology systems
and devices used by the Company in its business, such as building systems. The
Company plans to test such systems for Year 2000 compliance during its
Assessment Phase. However, failure of such systems could have a material adverse
effect on the Company's results of operations and financial condition.

 Infrastructure

  As with similarly situated Internet and other companies, the Company relies
upon various governmental agencies, utility companies and telecommunication
service companies, including Internet and other service providers, that are
outside of the Company's control. Failure of such parties to have systems that
are Year 2000 compliant may result in an interruption in, or a failure of,
certain normal business activities or operations, which could have a material
adverse effect on the Company's results of operations and financial condition.

 Costs to Address the Company's Year 2000 Issues

  To date, the Company has not incurred any material costs associated with Year
2000 compliance. Moreover, based on the Company's assumptions that its own
systems are Year 2000 compliant, the Company does not expect to incur any
material costs in the future associated with Year 2000 compliance, with the
exception of internal staff costs and expenditures. Should the Company's
assumptions prove inaccurate, the Company could be required to incur material
costs of unknown magnitude.

  In addition to its efforts to confirm its Year 2000 compliance, the Company
also endeavors to mitigate the risks associated with other system failures. To
that end, the Company currently has in place dual Internet connectivity,
redundant air conditioning systems, redundant hardware and an on-site emergency
generator. Furthermore, the Company has plans to begin implementation of
redundant installation and facilities during 1999. There can be no assurance,
however, that the Company will not experience system outages that, if
sufficiently severe, could have a material adverse effect on the Company's
results of operations and financial condition.

  The above discussion regarding costs and risks is based on the Company's best
current estimates given information that is currently available to it, and is
subject to change. 


                          PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

  The Company is a defendant in various legal proceedings in the ordinary course
of business, but is aware of no legal proceedings which appear at this time as
if they might have a material impact on its financial position, results of
operations or business.

ITEM 2 (c)

Recent Sales of Unregistered Securities

  On March 8, 1999, the Company issued a combined total of 450,000 shares of
Common Stock and options to acquire common stock in exchange for all of the
outstanding shares of Common Stock of Pure Payments, Inc. These issuances were
exempt from registration under Section 4(2) of the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

   None

                                       5

<PAGE>
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  A special meeting of the stockholders of the Company was held on February 5,
1999. The stockholders approved the issuance to First Data (or certain
successors or permitted transferees) of (A) 460,000 shares of Common Stock, (B)
a warrant to purchase 5,000,000 shares (subject to certain antidilution
adjustments) of Common Stock (the "Warrant"), and (C) shares of Common Stock
issuable upon the exercise of the Warrant. The results of the voting at the
special meeting were as follows:

<TABLE>
<CAPTION>
       <S>             <C>       <C>       <C> 
          For          Against   Abstain   Broker Non-Votes
       ----------      -------   -------   ----------------
       12,359,548       50,321    28,651          0

</TABLE>

  In February 1999, holders of approximately 70% of the Company's outstanding 
Convertible Preferred Stock approved by written consent an amendment to the
Certificate of Designation, Preferences and Rights of the Convertible Preferred 
Stock that eliminated a downward adjustment of the conversion price thereof.


ITEM 5. OTHER INFORMATION

   None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit 10.1 - First Amendment to lease dated as of March 31, 1999 between
     the Company and Searise Associates, LLC.

     Exhibit 10.2 - Form of Indemnification Agreement between the Company and
     its officers and directors
     
     Exhibit 27 - Financial Data Schedule

(b)  No reports on Form 8-K were filed during the quarter ended March 31, 1999.


                                  SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                      iMALL, INC.
                  
                                      May 14, 1999
                  
                                      By: /s/ RICHARD M. ROSENBLATT
                                        ---------------------------------------
                                          Richard Rosenblatt, Chairman of the
                                          Board and Chief Executive Officer

                                      By: /s/ ANTHONY P. MAZZARELLA
                                        ---------------------------------------
                                          Anthony P. Mazzarella
                                          Executive Vice President,
                                          Chief Financial Officer,
                                          Secretary/Treasurer, Director

                                       6
<PAGE>
 
                          IMALL, INC. AND SUBSIDIARIES

                      Condensed Consolidated Balance Sheet


<TABLE>
<CAPTION>
 
 
                                                                     March 31,     December 31,
                                                                       1999            1998
                                                                   -------------   -------------
                              ASSETS                                (Unaudited)
<S>                                                                <C>             <C>
Current Assets: 
     Cash and cash equivalents                                     $ 11,833,700    $ 11,180,700
     Accounts receivable, net                                           268,000         264,400
     Prepaid expenses                                                   163,200         144,000
     Other current assets                                                93,100         425,800
                                                                   ------------    ------------
Total Current Assets                                                 12,358,000      12,014,900
                                                                   ------------    ------------
Property and Equipment, Net                                           8,371,600       2,085,400
                                                                   ------------    ------------
Other Assets:
     Other assets                                                       166,100         152,700
     Net long-term assets of discontinued operations                         --         248,800
                                                                   ------------    ------------
           Total Other Assets                                           166,100         401,500
                                                                   ------------    ------------
Total Assets                                                       $ 20,895,700    $ 14,501,800
                                                                   ============    ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current Liabilities:
     Accounts payable                                              $    342,100    $  1,002,900
     Accrued expenses                                                   427,100         144,300
     Wages payable                                                      418,100         418,300
     Accrued legal costs                                                     --         193,600
     Deferred revenues                                                  168,800         254,500
     Dividends payable                                                       --         898,900
     Current portion of capitalized lease obligations                    42,900              --
     Net short term liabilities of discontinued operations              875,000         875,000
                                                                   ------------    ------------
 
          Total Current Liabilities                                   2,274,000       3,787,500
                                                                   ------------    ------------
Capitalized Lease Obligations, net of current portion                   105,100              --
                                                                   ------------    ------------
Commitments and Contingencies                                                --              --

Stockholders' Equity:
     Preferred stock, liquidation value of $0 and $16,411,500
       at March 31, 1999 and December 31, 1998 respectively,
       10,000,000 shares authorized, 0 and 4,102,879 shares
       issued and outstanding at March 31, 1999 and
       December 31, 1998, respectively                                       --      16,411,500
     Common stock, par value $.008; 37,500,000 shares
       authorized, 17,645,266 and 10,635,756 shares issued
       and outstanding at March 31, 1999 and
       December 31, 1998, respectively                                  141,200          85,100
     Additional paid-in capital                                      42,283,000      14,317,900
     Accumulated deficit                                            (23,502,600)    (19,695,200)
     Common stock held in treasury, at cost                            (405,000)       (405,000)
                                                                   ------------    ------------
          Total Stockholders' Equity                                 18,516,600      10,714,300
                                                                   ------------    ------------
Total Liabilities and Stockholders' Equity                         $ 20,895,700    $ 14,501,800
                                                                   ============    ============
</TABLE>





           See notes to condensed consolidated balance sheets.      

                                       7
<PAGE>
 
                          IMALL, INC. AND SUBSIDIARIES

                Condensed Consolidated Statements of Operations
                                 (Unaudited)  

<TABLE>
<CAPTION>


                                                                  For the Three Months Ended March 31,
                                                                  -----------------------------------
                                                                        1999             1998
                                                                       ------           ------
<S>                                                                <C>                     <C>
REVENUES                                                           $   778,700       $   222,200
COST OF REVENUES                                                       418,800            38,600
                                                                   -----------       -----------
   Gross Profit                                                        359,900           183,600

SELLING EXPENSES                                                       447,000           403,800
PRODUCT DEVELOPMENT                                                  1,275,700           316,000
GENERAL AND ADMINISTRATIVE EXPENSES                                  2,403,000           773,600
                                                                   -----------       -----------
  Operating Loss                                                    (3,765,800)       (1,309,800)
                                                                   -----------       -----------
OTHER INCOME AND EXPENSES:
   Other Expense, net                                                  (39,800)               --
   Interest Income, net                                                120,200            65,200
                                                                   -----------       -----------
    Total Other Income, net                                             80,400            65,200
                                                                   -----------       -----------
LOSS BEFORE PROVISION FOR
   INCOME TAXES                                                     (3,685,400)       (1,244,600)
PROVISION FOR INCOME TAXES                                               1,600                --
                                                                   -----------       -----------
LOSS FROM CONTINUING OPERATIONS                                     (3,687,000)       (1,244,600)

DISCONTINUED OPERATIONS:
 (Loss) Income from operations                                         (17,100)           25,600
 Gain on sale of assets                                                 96,000                --
                                                                   -----------       -----------
INCOME FROM DISCONTINUED OPERATIONS                                     78,900            25,600
                                                                   -----------       -----------
NET LOSS                                                           $(3,608,100)      $(1,219,000)
                                                                   ===========       ===========
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED:
 Loss from continuing operations                                   $     (0.28)      $     (0.22)
 Income from discontinued operations                                      0.01                --
                                                                   -----------    --------------
 NET LOSS                                                          $     (0.27)      $     (0.22)
                                                                   ===========       ===========
WEIGHTED-AVERAGE SHARES OUTSTANDING                                 13,902,672         7,652,494
                                                                   ===========       ===========
</TABLE>


           See notes to condensed consolidated financial statements.

                                       8
<PAGE>
 
                          IMALL, INC. AND SUBSIDIARIES

                Condensed Consolidated Statements of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                                                       For the Three Months Ended March 31,
                                                                     ---------------------------------------
                                                                             1999              1998
                                                                            ------            ------       
<S>                                                                         <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

 Net loss                                                               $(3,608,100)      $(1,219,000)
 Adjustments to reconcile net
 loss to net cash used in operating activities:
   Income from discontinued operations                                      (78,900)          (25,600)
   Depreciation and amortization                                            417,200            78,000
   Changes in assets and liabilities, net of effects from purchase
   of Pure Payments Inc. in fiscal 1999:
      Accounts receivable                                                      (300)          (12,000)
      Prepaid expenses                                                      (14,400)          (30,400)
      Other current assets                                                  355,600             5,000
      Other assets                                                            4,300              (300)
      Accounts payable                                                     (660,800)          534,600
      Accrued expenses                                                      (25,600)          179,400
      Income tax receivable                                                      --             3,500
      Deferred revenues                                                     (85,700)            8,100
                                                                        -----------       -----------
       Net cash used in Operating Activities                             (3,696,700)         (478,700)
                                                                        -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase of property and equipment                                     (822,700)         (845,600)
    Increase in intangible assets                                                --           (33,400)
    Proceeds from sales of investments in marketable securities                  --         5,000,300
    Cash acquired in business acquisition                                   374,000                --
                                                                        -----------       -----------
       Net cash (used in) provided by Investing Activities                 (448,700)        4,121,300
                                                                        -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:

    Proceeds from issuance of common stock                                5,928,900                --
    Financing cost related to private placement of
      preferred stock                                                            --           (26,600)
    Principal payments on obligations under capital leases                   (1,900)           (5,200)
    Dividends paid                                                       (1,098,200)               --
                                                                        -----------       -----------
       Net cash provided by (used in) Financing Activities                4,828,800           (31,800)
                                                                        -----------       -----------
    Cash provided by continuing operations                                  683,400         3,610,800

    Cash used in discontinued operations                                    (30,400)       (1,096,300)
                                                                        -----------       -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                   653,000         2,514,500

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                         11,180,700         4,775,100
                                                                        -----------       -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $11,833,700       $ 7,289,600
                                                                        ===========       ===========
SUPPLEMENTAL CASH FLOW INFORMATION:

  Cash paid for interest                                                $     3,700       $     2,300
                                                                        ===========       ===========
  Income taxes paid                                                     $     4,800       $     2,600
                                                                        ===========       ===========
</TABLE>


            See notes to condensed consolidated financial statements.

                                       9
<PAGE>
 
                          IMALL, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

(1)  Interim Condensed Consolidated Financial Statements.

  The accompanying condensed consolidated financial statements have been
prepared by the Company and have not been audited. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows as
of the dates and for the periods presented herein have been made.

  Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission rules and regulations. It is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Form 10K-SB.
The results of operations for the three months ended March 31, 1999, are not
necessarily indicative of the operating results for the year ended December 31,
1999. The accounting policies followed by the Company are set forth in the notes
to the Company's consolidated financial statements in its Form 10K-SB.

(2)  Recent Accounting Pronouncements.

  In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income." SFAS
130 establishes standards for reporting comprehensive income and its components
in general-purpose financial statements. The statement is effective for fiscal
years beginning after December 15, 1997.  The Company did not have any
operations or transactions during 1999 or 1998 that would give rise to elements
of comprehensive income.

  In June 1997, the FASB issue SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 redefines the way publicly
held companies report information about segments. The statement is effective
for fiscal years beginning after December 15, 1997. Currently, management
makes decisions and assesses performance of the Company based on consolidated
operations and results.

  In February 1998, the FASB issued Statement of Financial Accounting Standard
No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits." This statement, which is effective for financial periods ending
after December 15, 1998, requires full disclosure of all pensions plans and
other postretirement benefit plans. The Company does not currently have any
pensions or other postretirement benefit plans.

  In June 1998, the FASB issued Statement of Financial Accounting Standard No.
133, "Accounting for Derivative Instruments and Hedging Activities." This
statement, which is effective for financial periods beginning after June 15,
1999, addresses the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities.
The Company has not historically or does not currently hold any derivative
instruments or participate in any hedging activities.

                                       10
<PAGE>
 
(3) Net Loss Per Common Share.

  Net loss per common share is based on the weighted-average number of common
shares outstanding for each period reported. In preparing the calculation of
earnings per share, the net loss was increased by $199,300 to $3,807,400 or
$0.27 per common share for the three months ended March 31, 1999 and by $450,000
to $1,669,000 or $0.22 per common share for the three months ended March 31,
1998 due to the effect of cumulative preferred stock dividends. The earnings per
share computation for the 1999 and 1998 period excludes 3.0 million and 1.6
million shares respectively for stock options/compensation plans, warrants
convertible into 2.7 million and 3.5 million shares of common stock as well as
6.25 million shares for convertible securities in 1998 because their effect
would have been antidilutive.

(4) Stock Options

  The Company has granted incentive stock options and nonqualified stock options
to officers, directors and key employees under a stock compensation plan at
prices not less than fair market value on the date of grant. The incentive and
nonqualified stock options become exercisable between one and four years from
the grant date. The incentive stock options have a maximum term of ten years
from the date of grant, or five years if the employee is a ten-percent
stockholder. The nonqualified stock options have a maximum term of ten years and
one day from the date of grant.

  The Company had outstanding options to acquire an aggregate of 2,444,000
shares at December 31, 1998.  During the three months ended March 31, 1999, the
Company granted a total of 632,000 new options, 66,000 options were exercised
and 27,000 options were cancelled during this period bringing the total
outstanding options at March 31, 1999 to 2,983,000.


(5) Acquisition

  On March 8, 1999, the Company acquired all of the outstanding shares of common
stock of Pure Payments, Inc. ("Pure Payments") in exchange for a combined total
of 450,000 shares of its common stock and options to purchase shares of its
common stock valued at approximately $6.0 million. Prior to this acquisition,
the Company had purchased Pure Payments' products and services, which allow for
on-line retailers to process credit card orders securely over the Internet for
use as part of its EC services.

                                       11