<PAGE>

                     UNITED STATES 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

     For the transition period from                to 
                                    --------------    -------------

                        Commission file number:  33-13789LA

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

  
            Delaware                                           95-4627253
-------------------------------                       --------------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification Number)

     1950 Sawtelle Boulevard, Suite 180, Los Angeles, California      90025
-------------------------------------------------------------------------------
              (Address of principal executive offices)               (Zip Code)

                             (310) 444-3300
-------------------------------------------------------------------------------
              (Issuer's telephone number, including area code)


                       
-------------------------------------------------------------------------------
            (Former name, former address and former fiscal year,
                       if changed since last report.)

Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

As of April 30, 1999, the issuer had 14,395,231 shares of common stock issued 
and outstanding.

Transitional Small Business Disclosure Format:  Yes [ ]  No [X]


<PAGE>

                                 YOU BET.COM, INC. 

                                       INDEX

PART I.   FINANCIAL INFORMATION                                            Page

      Item 1.  Financial Statements                                           

      Balance Sheets -- December 31, 1998, March 31, 1999 and
       Pro Forma at March 31, 1999......................................    3-4

      Statements of Operations -- Three months ended March 31, 
       1998 and 1999 and 1995 to March 31, 1999.........................      5

      Statements of Cash Flows -- Three months ended March 31,
       1998 and 1999, 1995 to March 31, 1999, and Pro Forma
       for the three months ended March 31, 1999........................    6-7

      Notes to Financial Statements -- Three months ended March 31,
       1998, 1999, and 1995 to March 31, 1999...........................   8-11

      Item 2.  Management's Discussion and Analysis or Plan of
               Financial Condition and Results of Operations                 12


PART II.  OTHER INFORMATION

      Item 2.  Changes in Securities                                         19

      Item 6.  Exhibits and Reports on Form 8-K                              20



                                       2
<PAGE>

                                YOUBET.COM, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                          PRO FORMA
                                                     DECEMBER 31,        MARCH 31,       AT MARCH 31,
                                                         1998               1999         1999 (NOTE 3)
                                                     ------------      ------------      ------------
<S>                                                  <C>               <C>               <C>
                                                                        (Unaudited)      (Unaudited)

ASSETS

Current assets:
   Cash                                              $  1,540,616      $  2,543,084      $ 37,661,594
   Stock subscriptions receivable                       2,100,000              --                --
   Receivables                                             50,364            64,801            64,801
   Prepaid expenses                                        22,344            63,483            63,483
   Other current assets                                    11,317            16,176            16,176
                                                     ------------      ------------      ------------

Total current assets                                    3,724,641         2,687,544        37,806,054
                                                     ------------      ------------      ------------

Property and equipment                                  1,700,211         1,871,523         1,871,523
Less:  Accumulated depreciation and amortization         (820,535)         (914,534)         (914,534)
                                                     ------------      ------------      ------------

Property and equipment, net                               879,676           956,989           956,989
                                                     ------------      ------------      ------------

Other assets:
   Deferred financing costs, net of amortization           31,395            78,817         2,040,817
   Deferred public offering costs                            --              49,395            49,395
   Deposits                                                17,537            17,037            17,037
                                                     ------------      ------------      ------------

Total other assets                                         48,932           145,249         2,107,249
                                                     ------------      ------------      ------------

Total assets                                         $  4,653,249      $  3,789,782      $ 40,870,292
                                                     ------------      ------------      ------------
                                                     ------------      ------------      ------------
</TABLE>

THE PRO FORMA COLUMN REFLECTS THE EFFECT OF THE APRIL 5, 1999 FINANCING
TRANSACTION ON THE MARCH 31, 1999 BALANCE SHEET (SEE NOTE 3).

                                       3

<PAGE>

                                YOUBET.COM, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                                  PRO FORMA
                                                                             DECEMBER 31,        MARCH 31,       AT MARCH 31,
                                                                                 1998               1999         1999 (NOTE 3)
                                                                             ------------      ------------      ------------
<S>                                                                          <C>               <C>               <C>
                                                                                                (Unaudited)       (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                          $    984,258      $  1,039,319      $  1,039,319
   Accrued compensation and related items                                         144,252           147,512           147,512
   Other accrued expenses                                                         451,127           528,866           528,866
   Current portion of capitalized lease obligations                               220,317           180,231           180,231
                                                                             ------------      ------------      ------------

Total current liabilities                                                       1,799,954         1,895,928         1,895,928

Notes payable                                                                        --                --          36,728,510
Capitalized lease obligations, less current portion                                60,134            47,678            47,678
                                                                             ------------      ------------      ------------

Total liabilities                                                               1,860,088         1,943,606        38,672,116
                                                                             ------------      ------------      ------------

Stockholders' equity (Note 2):
   Convertible preferred stock, $.001 par value (aggregate liquidation
      preference of $2,677,750 and $2,627,750 at December 31, 1998 and 
      March 31, 1999, respectively); authorized - 1,000,000 shares; 
      issued and outstanding - 107,110 shares and 105,110 shares at 
      December 31, 1998 and March 31, 1999, respectively                              107               105               105
   Common stock, $.001 par value; authorized - 50,000,000
       Shares; issued and outstanding - 13,970,268 shares
       at December 31, 1998 and 14,314,731 shares at
       March 31, 1999, respectively                                                13,970            14,315            14,315
   Additional paid-in capital                                                  42,326,397        43,224,232        43,576,232
   Accumulated deficit during development stage                               (37,825,941)      (39,972,999)      (39,972,999)
   Deferred compensation                                                       (1,161,372)         (859,477)         (859,477)
   Stock note receivable                                                         (560,000)         (560,000)         (560,000)
                                                                             ------------      ------------      ------------

Total stockholders' equity                                                      2,793,161         1,846,176         2,198,176
                                                                             ------------      ------------      ------------

Total liabilities and stockholders' equity                                   $  4,653,249      $  3,789,782      $ 40,870,292
                                                                             ------------      ------------      ------------
                                                                             ------------      ------------      ------------
</TABLE>

THE PRO FORMA COLUMN REFLECTS THE EFFECT OF THE APRIL 5, 1999 FINANCING
TRANSACTION ON THE MARCH 31, 1999 BALANCE SHEET (SEE NOTE 3).

                                       4
<PAGE>

                                YOUBET.COM, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED
                                                                             MARCH 31,                    1995
                                                                ------------------------------       TO MARCH 31,
                                                                     1998              1999               1999
                                                                -------------     ------------       -------------
<S>                                                             <C>               <C>                <C>
Revenues                                                        $          -      $    460,606       $     724,399

Operating expenses:
   Network operations                                                149,212           412,276           2,585,691
   Research and development                                          230,304           359,243           4,588,009
   Sales and marketing                                               156,555           475,788           3,254,644
   General and administrative                                        442,599           615,620           6,795,183
   Depreciation and amortization                                      75,795            95,735             926,556
   Non-cash compensation                                           1,223,232           657,545           7,237,428
                                                                ------------      -------------      --------------

   Total operating expenses                                        2,277,697         2,616,207          25,387,511
                                                                ------------      -------------      --------------

Loss from operations                                              (2,277,697)       (2,155,601)        (24,663,112)

Other income (expense):
   Interest expense                                                  (69,176)           (7,444)           (778,365)
   Amortization of deferred financing costs                          (12,164)           (7,848)           (127,394)
   Release of forfeiture restrictions on common
      stock owned by officers/major stockholders                           -                 -          (7,875,000)
   Discount on conversion of bridge loans, accounts
      payable and employee deferred salaries into
      common stock and warrants                                            -                 -          (1,423,311)
   Fair value of warrants issued for financing costs                (361,200)                -          (5,061,886)
   Interest income                                                        37            25,249             189,223
   Consulting revenues                                                                       -             164,602
   Other                                                            (109,703)           (1,414)            (98,858)
                                                                ------------      ------------       -------------

   Total other income (expense)                                     (552,206)            8,543         (15,010,989)
                                                                ------------      ------------       -------------

Loss before provision for state income and franchise taxes        (2,829,903)       (2,147,058)        (39,674,101)

Provision for state income and franchise taxes                             -                 -             (19,073)
                                                                ------------      ------------       -------------

Net loss                                                        $ (2,829,903)     $ (2,147,058)     $  (39,693,174)
                                                                ------------      ------------      --------------
                                                                ------------      ------------      --------------

Net loss per  share - basic and diluted                         $      (0.29)     $      (0.15)
                                                                ------------      ------------
                                                                ------------      ------------

Weighted average number of  shares                                 9,603,994        14,059,310
                                                                ------------      ------------
                                                                ------------      ------------
</TABLE>

                                       5
<PAGE>

                                YOUBET.COM, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                             STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                           PRO FORMA
                                                                                                           FOR THE
                                                                                                             THREE 
                                                            THREE MONTHS ENDED                              MONTHS
                                                                 MARCH 31,                  1995              ENDED
                                                     ------------------------------      TO MARCH 31,        MARCH 31,
                                                         1998              1999             1999           1999 (NOTE 3)
                                                     ------------      ------------      ------------      -------------
<S>                                                  <C>               <C>               <C>               <C>
Increase (Decrease) in Cash and Cash Equivalents

Cash flows from operating activities:
   Net loss                                          $ (2,829,903)     $ (2,147,058)     $(39,693,174)     $ (2,147,058)
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating
     activities:
      Depreciation and amortization                        75,795            95,735           926,556            95,735
      Amortization of deferred financing
       costs                                               12,164             7,848           127,394             7,848
      Lease restructuring and other costs                  64,750             1,237            71,877             1,237
      Reduction of loan from settlement
       agreement                                             --                --             (20,000)             --
      Non-cash compensation                             1,584,432           657,545         7,237,428           657,545
      Discount on conversion of bridge
        loans, accounts payable and employee
        deferred salaries into common stock
        and warrants                                         --                --           1,423,311              --
      Fair value of warrants issued for
        financing costs                                      --                --           5,061,886              --
      Release of forfeiture restrictions on
        common stock owned by officers/major
        stockholders                                         --                --           7,875,000              --
      Changes in operating assets and
        liabilities:
          (Increase) decrease in:
            Receivables                                     3,917           (14,437)          (34,801)          (14,437)
            Prepaid expenses                               12,512           (41,139)          (80,158)          (41,139)
            Other current assets                          (13,270)           (4,857)            7,387            (4,857)
            Deposits                                         --                 500           (71,000)              500
          Increase (decrease) in:
            Accounts payable                               15,326            55,061         1,107,319            55,061
            Accrued compensation and related
              items                                      (100,539)            3,262           347,178             3,262
            Accrued interest payable                       65,781              --             533,415              --
            Other accrued expenses                            808           111,500           562,628           111,500
            State income taxes payable                       (726)             --                (800)             --
                                                     ------------      ------------      ------------      ------------

Net cash used in operating activities                  (1,108,953)       (1,274,803)      (14,618,554)       (1,274,803)
                                                     ------------      ------------      ------------      ------------

Cash flows from investing activities:
   Purchases of property and equipment                    (56,656)         (174,287)       (1,537,605)         (174,287)
                                                     ------------      ------------      ------------      ------------

Net cash used in investing activities                     (56,656)         (174,287)       (1,537,605)         (174,287)
                                                     ------------      ------------      ------------      ------------

</TABLE>

                                       6
<PAGE>

                                YOUBET.COM, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                             STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                           PRO FORMA
                                                                                                            FOR THE
                                                                                                             THREE 
                                                            THREE MONTHS ENDED                               MONTHS
                                                                 MARCH 31,                  1995              ENDED
                                                     ------------------------------      TO MARCH 31,        MARCH 31,
                                                         1998              1999             1999           1999 (NOTE 3)
                                                     ------------      ------------      ------------      -------------
<S>                                                  <C>               <C>               <C>               <C>
Increase (Decrease) in Cash and Cash Equivalents

Cash flows from financing activities:
   Proceeds from exercise of stock options
     and warrants                                            --             381,266         1,450,266           381,266
   Increase in deferred financing costs                   (81,000)          (55,271)         (151,271)       (1,665,271)
   Proceeds from lease financing                             --                --             150,261              --
   Proceeds from sale of securities, net of
     offering costs                                          --             250,000        11,105,617           250,000
   Proceeds from advances and bridge loans:
       Related parties                                    410,000              --           2,218,862              --
       Unrelated parties                                  865,000              --           2,505,000              --
   Repayments of advances:
       Related parties                                       --                --            (127,875)             --
       Unrelated parties                                     --                --            (135,000)             --
   Payments on capitalized lease obligations                 --             (52,542)         (300,199)          (52,542)
   Proceeds from subscription receivable                     --           2,100,000         2,100,000         2,100,000
   Increase in deferred offering costs                       --             (49,395)          (49,395)          (49,395)
   Additional costs related to preferred stock
     financing                                               --            (122,500)         (122,500)         (122,500)
   Proceeds from notes payable                               --                --                --          36,728,510
                                                     ------------      ------------      ------------      ------------

Net cash provided by financing activities               1,194,000         2,451,558        18,643,766        37,570,068
                                                     ------------      ------------      ------------      ------------

Cash and cash equivalents:
   Net increase                                            28,391         1,002,468         2,487,607        36,120,978
   Cash at beginning of period                             52,895         1,540,616            55,477         1,540,616
                                                     ------------      ------------      ------------      ------------

   Cash at end of period                             $     81,286      $  2,543,084      $  2,543,084      $ 37,661,594
                                                     ------------      ------------      ------------      ------------
                                                     ------------      ------------      ------------      ------------
</TABLE>

THE PRO FORMA COLUMN REFLECTS THE EFFECT OF THE APRIL 5, 1999 FINANCING
TRANSACTION ON THE THREE MONTHS ENDED MARCH 31, 1999 STATEMENT OF CASH FLOWS
(SEE NOTE 3).

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION 
   (a) Cash paid for:

<TABLE>
       <S>                                           <C>               <C>               <C>               <C>
       Interest paid                                 $      7,554      $      7,444      $    124,827      $      7,444
                                                     ------------      ------------      ------------      ------------
                                                     ------------      ------------      ------------      ------------
</TABLE>

   (b) Non-cash transactions:
         During the quarter ended March 31, 1999, four employees and one former
           employee exercised 74,833 stock options in exchange for 74,833 common
           stock shares. To effect this cashless exercise, 37,417 stock options
           were forfeited. This cashless exercise resulted in a charge to 
           noncash compensation of $300,000.
         During the quarter ended March 31, 1999, the Company issued 13,505
           common stock shares to a consulting firm for $33,763 of services
           rendered.
         During the quarter ended March 31, 1999, the Company issued 20,000
           common stock shares from the conversion of 2,000 preferred stock
           shares.
         During the quarters ended March 31, 1998 and 1999, the Company incurred
           $0 and $55,650 non-cash compensation.

                                       7
<PAGE>

                                YOUBET.COM, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
            THREE MONTHS ENDED MARCH 31, 1998, 1999 AND 1995 TO DATE


NOTE 1--ORGANIZATION AND BASIS OF PRESENTATION

PRINCIPLES OF CONSOLIDATION

      Youbet.com, Inc., a Delaware corporation (formerly known as You Bet 
International, Inc.), You Bet!, Inc., a Delaware corporation and a 
wholly-owned subsidiary of Youbet.com, Inc., and Middelware Telecom 
Corporation, a California corporation and a wholly-owned subsidiary of You 
Bet!, Inc., are  collectively referred to herein as the "Company". 
Youbet.com, Inc. is the successor to You Bet International, Inc. through a 
merger transaction effective January 22, 1999. The subsidiaries of You Bet 
International, Inc. were also merged into Youbet.com. All intercompany  
accounts and transactions have been eliminated in consolidation.

BUSINESS

      Since mid-1995, the Company has been engaged in developing PC-based
proprietary communications software technology to be utilized by consumers for
online entertainment purposes. The Company's first service being offered to
subscribers is The You Bet Network, an interactive online horseracing network
that is broadcast over the Company's virtual private network.

DEVELOPMENT STAGE

      As of March 31, 1999, the Company is considered to be a development stage
entity, as it has not realized a significant amount of revenues from planned
principal operations. Accordingly, the Company has provided cumulative
statements of operations, and statements of cash flows for the period from
inception of development stage (January 1, 1995) through March 31, 1999.

BASIS OF PRESENTATION

      The accompanying financial statements are unaudited, but in the opinion of
management of the Company, contain all adjustments necessary to present fairly
the financial position at March 31, 1999, the results of operations for the
three months ended March 31, 1998 and 1999, and the cash flows for the three
months ended March 31, 1998 and 1999. These adjustments are of a normal
recurring nature. The balance sheet as of December 31, 1998 is derived from the
Company's audited financial statements.

      Certain information and footnote disclosures normally included in
financial statements that have been prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission, although
management of the Company believes that the disclosures contained in these
financial statements are adequate to make the information presented therein not
misleading. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1998, as filed with the Securities and
Exchange Commission.


                                       8
<PAGE>


                                YOUBET.COM, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
            THREE MONTHS ENDED MARCH 31, 1998, 1999 AND 1995 TO DATE

NOTE 1--ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

      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 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. The results of operations for the three months ended March 31, 1999
are not necessarily indicative of the results of operations to be expected for
the full year ending December 31, 1999.

      Certain prior period amounts have been reclassified to conform to the
current year presentation.

LOSS PER SHARE

      Basic earnings per share are calculated by dividing net loss by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share are calculated by dividing net loss by the basic shares
outstanding and all dilutive securities, including stock options, warrants,
convertible notes and preferred stock, but does not include the impact of
potential common shares which would be antidilutive.

      As of March 31, 1999, potential dilutive securities representing
10,581,710 shares of common stock were not included in the earnings per share
calculation since their effect would be anti-dilutive. Potential dilutive
securities consisted of 1,956,596 outstanding stock options, 7,574,014
outstanding common stock purchase warrants, and 105,110 shares of preferred
stock convertible into 1,051,100 shares of common stock. Basic and diluted
earnings per share are the same for all periods presented.

NOTE 2--STOCKHOLDERS' EQUITY

a.    ISSUANCE OF COMMON STOCK AND WARRANTS

      During the three months ended March 31, 1999, the Company issued 136,125
shares of common stock, in conjunction with the exercise of warrants and stock
options with exercise prices ranging from $2.50 to $5.25 per share, generating
gross proceeds to the Company of $381,266. 

      During the three months ended March 31, 1999, the Company issued 74,833 
shares of common stock in conjunction with the exercise of stock options by 
four employees and one former employee. In order to effect a cashless 
transaction, an additional 37,417 stock options were forfeited. This cashless 
exercise resulted in a charge to noncash compensation of $300,000.

      During the three months ended March 31, 1999, 2,000 shares of convertible
preferred stock were converted into 20,000 shares of common stock.

      During the three months ended March 31, 1999, the Company issued 100,000
shares of common stock at a price of $2.50 per share, generating gross proceeds
to the Company of $250,000.

                                       9
<PAGE>

                                YOUBET.COM, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
            THREE MONTHS ENDED MARCH 31, 1998, 1999 AND 1995 TO DATE


NOTE 2--STOCKHOLDERS' EQUITY (CONTINUED)

      During the three months ended March 31, 1999, the Company issued 13,505
shares of common stock in conjunction with the conversion of vendor debt of
$33,763.

      As final settlement for the finder's fee related to the preferred stock
financing in June 1998, additional fees of $122,500 are owed to the finder. The
fees are charged to additional paid-in capital and accrued at March 31, 1999. In
addition, 13,000 warrants with an exercise price of $.01 and 26,000 warrants
with an exercise price of $2.50 were issued to the finder. These warrants are
exercisable through March 2004.

b.    STOCK OPTIONS

      During the quarter ended March 31, 1999, deferred compensation of $55,560
was recorded as a result of the issuance of stock options being granted in
exchange for future services. Deferred compensation charged to operations for
the quarter ended March 31, 1999 was $657,545.

      During the quarter ended March 31, 1999, the Company granted various stock
options, as follows:

      (1)   The Company issued a stock option to its Executive Vice President
            and Chief Financial Officer under the 1998 Stock Option Plan to
            purchase 50,000 shares of common stock at an exercise price of
            $10.50 per share, the fair market price at the date of grant. The
            stock option vests in four equal annual installments commencing one
            year after the grant date, and is exercisable for a period of ten
            years.

      (2)   The Company issued a stock option to its Executive Vice President
            and Chief Operating Officer under the 1998 Stock Option Plan to
            purchase 100,000 shares of common stock at an exercise price of
            $10.50 per share, the fair market price at the date of grant. The
            stock option vests in four equal annual installments commencing one
            year after the grant date, and is exercisable for a period of ten
            years.

      (3)   Stock options were granted to employees to purchase 8,200 shares of
            common stock at an average price of $10.50 per share, which was the
            fair value on the date of grant. These options vest over four years
            and are exercisable for a period of five years.

      (4)   Stock options were granted to a consultant to purchase 5,000 shares
            of common stock at the fair value on the date of grant. These
            options vest 50% after the first year of service and the remainder
            vest upon achieving certain milestones. The options are exercisable
            for a period of five years.


                                       10
<PAGE>


                                YOUBET.COM, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
            THREE MONTHS ENDED MARCH 31, 1998, 1999 AND 1995 TO DATE


NOTE 3--SUBSEQUENT EVENTS

      On April 5, 1999, the Company issued $45,500,000 principal amount of 
11% Senior Convertible Discount Notes for cash proceeds of $36,738,510, which 
represents a discount of 11% per year, compounded semi-annually, to April 5, 
2001. The Company incurred approximately $1,610,000 of costs related to this 
offering and issued 50,000 warrants exercisable at $10.00 per share as a 
finder's fee. These warrants had an aggregate fair value of $352,000. The 
Notes begin accruing interest on April 5, 2001 at 11% per year, payable 
semi-annually. Principal and unpaid interest are due and payable on April 5, 
2004. The Notes plus accrued, unpaid interest are convertible at any time at 
the rate of $10 per common share, subject to reset provisions as defined in 
the Notes. Based on a valuation report prepared by an investment and merchant 
banking firm dated April 28, 1999, the Company has determined that the Notes 
conversion price at $10.00 per share was at fair market value. Accordingly, 
the Company will recognize a charge to operations of $352,000 over the five 
year maturity period. The conversion price resets one time at the earlier of 
(1) a placement, after April 5, 1999, of common stock and any securities 
convertible into common stock which raises at least $15 million gross 
proceeds to the Company or (2) April 5, 2000. In the event that a placement 
of common stock or convertible securities occurs first, the conversion price 
will be reset to the lesser of $10 per share or the lowest price per share at 
which the Company sells common stock after the date of the placement of 
common stock or convertible securities (excluding options, warrants and other 
convertible securities existing prior to April 5, 1999). In the event that 
the reset occurs on April 5, 2000, the conversion price will be reset to the 
lower of $10 per share or the average daily closing price for the ten-day 
period ending on April 5, 2000, but in no event less than $5 per share. The 
notes also contain customary financial covenants and restrictions limiting 
the ability of the Company to engage in certain financings, other 
transactions and dividend distributions.

      On April 9, 1999, the Company filed a registration statement with the 
Securities and Exchange Commission to permit the Company to sell 2,700,000 
shares of its common stock to the public and to permit certain warrant 
holders to exercise 675,000 of their warrants and sell the underlying common 
stock to the public.

      In May 1999, Youbet.com's Compensation Committee recommended to the 
Board of Directors the payment of certain performance-based bonuses to Fell & 
Company, Inc., David Marshall, Inc., and Mr. Fine. Fell & Company, Inc. would 
be paid an aggregate bonus equal to the amounts payable to Youbet.com by the 
Robert M. Fell Living Trust (the "Fell Trust") in connection with its 
purchase in 1998 of Series A Convertible Preferred Stock and stock purchase 
warrants. The amount of such indebtedness is $560,000, plus accrued interest. 
50% of such bonus would be credited upon approval of the Board of Directors 
in recognition of the completion of the placement of 11% Senior Convertible 
Discount Notes, 25% would be credited upon the completion of this offering, 
12 1/2% would be credited upon Youbet.com achieving 15,000 subscribers and 12 
1/2% would be credited upon Youbet.com achieving 25,000 subscribers. Any 
bonuses paid under the proposal to Fell & Company, Inc. would be applied to 
reduce amounts owed to Youbet.com by the Fell Trust. David Marshall, Inc. and 
Mr. Fine would each be granted a bonus of $300,000, payable as follows: 10% 
upon approval of the Board of Directors in recognition of the completion of 
the placement of the 11% Senior Convertible Discount Notes; 40% upon 
completion of this offering; 25% upon Youbet.com achieving 15,000 subscribers 
and 25% upon Youbet.com achieving 25,000 subscribers. The Board of Directors 
has not yet acted on these proposals. 

                                       11

<PAGE>


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

    THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS OF YOUBET.COM, SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL 
STATEMENTS AND THE RELATED NOTES INCLUDED ELSEWHERE IN THIS 10-QSB. THIS 
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND 
UNCERTAINTIES. YOUBET.COM'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE 
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS.
 
OVERVIEW
 
    Youbet.com intends to establish itself as the leading global brand name 
for online live event wagering. Youbet.com has initially focused its efforts 
primarily on the United States horse track racing industry and believes that 
its principal product, the You Bet Network, is currently the only legal 
system available for online wagering in the United States. Youbet.com 
believes that online communication is an ideal medium for live event 
wagering. First, online communication allows bettors instant access to vast 
amounts of historical performance data used in assessing potential wagers. 
Second, online communication offers the ability to sort and analyze such data 
in ways and at speeds that are unachievable manually. Third, online 
communication technology allows wagers to be placed from virtually any 
location within a jurisdiction where wagering is legal, thus freeing bettors 
from traditional site-specific wagering locations. In addition, the speed of 
electronic communication allows wagers to be placed and acknowledged in 
seconds.
 
    Youbet.com's initial product, the You Bet Network, is a PC-based system 
which utilizes the infrastructure of the Internet and a closed-loop private 
network with Internet access to provide up-to-the minute detailed information 
on races taking place at horse tracks nationwide. Youbet.com also delivers a 
live simulcast of most of these races directly to the subscriber's computer. 
In addition, subscribers can use the You Bet Network to transmit information 
and thereby facilitate wagers, using the system's icon-driven menus to fill 
out an electronic betting ticket with a brief series of mouse-clicks. The 
information is then transmitted electronically to a licensed account wagering 
entity, currently Mountain Laurel Racing, Inc., and Washington Trotting 
Association, Inc., both of which are subsidiaries of Ladbroke USA 
(collectively "Ladbroke"). Ladbroke accepts and processes the wager from its 
hub in Pennsylvania. After processing the wager, Ladbroke sends an electronic 
confirmation to the bettor through the You Bet Network. The round-trip time 
from information submission to acknowledgment is usually less than three 
seconds.
 
    Youbet.com currently derives revenue from the You Bet Network in three ways.
First, it charges a monthly subscription fee, currently $5.95 per month. Second,
it receives a fee from Ladbroke equal to fifty percent (50%) of the net
commissions to Ladbroke derived from wages placed by Youbet.com subscribers.
Third, it receives revenue from the sale of handicapping information.
 
    Since mid-1995, Youbet.com has been engaged in developing the You Bet
Network, its first service being offered to subscribers. Youbet.com has incurred
substantial software development costs since inception, which have been charged
to operations as research and development costs. Management believes that the
technological feasibility of Youbet.com's proprietary software technology has 
been established.
 
    As of March 31, 1999 Youbet.com was considered to be a development stage
entity as it had not realized a significant amount of revenues from planned
principal operations. During 1995, Youbet.com shifted its business strategy by
de-emphasizing consulting services and software licensing, as a result of which
Youbet.com became a development stage company.
 
    Youbet.com has expanded its operations in recent years and has grown to 
57 employees at March 31, 1999. Youbet.com expects to add additional 
personnel in the United States and plans to commence
 
                                      12
<PAGE>

operations and add personnel internationally as operations expand. Youbet.com 
currently expects to significantly increase its operating expenses in order 
to grow its sales and marketing operations, expand in international markets 
and upgrade and enhance its service and technologies. As a result of these 
and other factors, Youbet.com expects to incur significant losses at least 
through 1999.
 
    Youbet.com has incurred significant losses since inception, and as of 
March 31, 1999 had an accumulated net loss of $39,973,000. Included in this 
accumulated deficit is $21,598,000 in non-cash expenses related to the 
recording of the fair value of warrants and stock options charged to 
operations over the period of benefit, discount on conversion of bridge 
loans, accounts payable and employee deferred salaries into common stock and 
warrants, and the release of forfeiture provisions on certain shares of 
common stock. The recognition of these expenses did not affect working 
capital, net stockholders' equity (deficiency) or cash flows. The remaining 
deferred compensation at March 31, 1999 of $859,000 is expected to be 
amortized as compensation during 1999 and subsequent years. Youbet.com does 
not expect that these types of costs will continue at the previous levels.
 
    On January 22, 1999 Youbet.com became the successor to You Bet 
International, Inc. through a merger transaction. The subsidiaries of You Bet 
International, Inc. (You Bet!, Inc., a Delaware corporation, and Middleware 
Telecom Corporation, a California corporation) were also merged into 
Youbet.com.
 
RESULTS OF OPERATIONS
 
    THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED 
      MARCH 31, 1998
 
    REVENUES
 
    Revenues for the three months ended March 31, 1999 were $461,000, of 
which $435,000 represented Youbet.com's commission on the gross amount of 
each wager placed by its subscribers. The remaining $26,000 represented 
subscription fee revenue as Youbet.com commenced charging a monthly 
subscription fee to its subscribers in February 1999.
 
                                      13
<PAGE>

     In June 1997, Youbet.com and Ladbroke entered into a Telecommunication 
Facilitation Agreement which expires in November 2002. The agreement provides 
for Youbet.com to receive a fee from Ladbroke equal to fifty percent (50%) of 
the net commissions to Ladbroke derived from wagers placed by Youbet.com 
subscribers who use the Call-A-Bet System either through the computer 
graphics interface provided by Youbet.com or more traditional telephone 
communication. During the three months ended March 31, 1999, 94.4% of 
Youbet.com's revenues were generated from the Ladbroke agreement, and 
Youbet.com expects that approximately 60% of its revenues during the year 
ending December 31, 1999 will also be generated from the Ladbroke agreement. 
Youbet.com currently estimates that net commissions will exceed $1,000,000 
during the initial eighteen month period beginning January 1998 and ending 
June 1999. However, should net commissions be less than $1,000,000 during 
such eighteen month period, Ladbroke could elect to terminate the agreement, 
which could have a material adverse effect on Youbet.com.
 
    OPERATING EXPENSES
 
    NETWORK OPERATIONS.  Network operations costs consist primarily of 
salaries and costs to support the private network. Network operations costs 
increased by $263,000 or 176.3% to $412,000 for the three months ended March 
31, 1999 from $149,000 for the three months ended March 31, 1998 reflecting 
the continued development and expansion of the You Bet Network. Youbet.com 
expects network operations costs to increase significantly as the You Bet 
Network expands to support the growth in subscribers.
 
    RESEARCH AND DEVELOPMENT.  Research and development costs consist primarily
of salaries. Research and development costs increased $129,000 or 56.0% to
$359,000 for the three months ended March 31, 1999 from $230,000 for the three
months ended March 31, 1998 reflecting the hiring of developers and the
continued development of the You Bet Network. Youbet.com will continue to invest
in the development of the You Bet Network, which Youbet.com believes is critical
to achieving its strategic objectives and, as a result, expects research and
development costs to increase significantly in future periods.
 
    SALES AND MARKETING.  Sales and marketing expenses consist primarily of
marketing program expense and salaries. Sales and marketing expenses increased
by $319,000 or 203.9% to $476,000 for the three months ended March 31, 1999 from
$157,000 for the three months ended March 31, 1998. The increase in sales and
marketing reflects the expansion of Youbet.com's marketing activities as the
Youbet Network did not launch until the third quarter of 1998. Youbet.com
expects sales and marketing expenses to increase significantly to brand the You
Bet Network, grow its subscriber base, hire additional sales and marketing
personnel and expand internationally.
 
    GENERAL AND ADMINISTRATIVE.  General and administrative expenses consist 
principally of salaries, facilities expenses, legal and accounting and 
investor relations. General and administrative expenses increased by $173,000 
or 39.1% to $616,000 for the three months ended March 31, 1999 from $443,000 
for the three months ended March 31, 1998. The increases reflect a general 
increase in personnel related costs, legal and accounting fees, and general 
operating activity. Youbet.com expects that general

                                       14
<PAGE>

and administrative expenses will increase in future periods as it hires 
additional personnel to provide for the growth of the business.
 
    NON-CASH COMPENSATION.  Non-cash compensation relates to the recording of
the fair value of warrants and stock options charged to the period of benefit.
Non-cash compensation decreased $566,000 or 46.3% to $657,000 for the three
months ended March 31, 1999 from $1,223,000 for the three months ended March 31,
1998. The decrease is due to Youbet.com reducing the number of warrants and
stock options issued, offset by a $300,000 charge resulting from a cashless
exercise of stock options. Youbet.com expects that these costs will continue as
it issues warrants and stock options.
 
    LOSS FROM OPERATIONS
 
    As described above, Youbet.com has made a significant investment in
developing the You Bet Network to maintain its technological advantage and to
begin to brand and market the service. The loss from operations for the three
months ended March 31, 1999 decreased $122,000 or 5.4% to $2,155,000 from
$2,277,000 for the three months ended March 31, 1998. Youbet.com expects to
incur significant losses at least through 1999.
 
    OTHER INCOME (EXPENSE)
 
    NET INTEREST INCOME (EXPENSE).  Net interest income of $18,000 for the 
three months ended March 31, 1999 compares to $69,000 of net interest expense 
for the three months ended March 31, 1998. The net interest expense for the 
three months ended March 31, 1998 is the result of advances and bridge loans 
being outstanding during the period that were subsequently converted to 
common stock during the third quarter ended September 30, 1998. Youbet.com 
expects interest expense to increase significantly in 1999 as a result of the 
issuance in April 1999 of its 11% Senior Convertible Discount Notes. However, 
Youbet.com will not pay cash interest thereon until October 2001.

                                       15
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

    Youbet.com has financed its operations primarily through the sale of its
securities and short-term debt as Youbet.com has generated only negative cash
flow from operations since inception. Between December 5, 1995 and March 31,
1999, Youbet.com has received an aggregate of $18,795,000 in net proceeds from
the sale of common stock, Series A Convertible Preferred Stock and the exercise
of stock options, warrants and short term debt. At March 31, 1999 Youbet.com had
$2,543,000 in cash. Youbet.com's principal commitments consists of obligations
under capital leases.
 
    Net cash used in operating activities was $1,275,000 and $1,109,000 for 
the three months ended March 31, 1999 and 1998, respectively. The principal 
use of cash was to fund losses from operations. The increases in the net cash 
used in operating activities reflected a general increase in all levels of 
activity as Youbet.com developed the You Bet Network and commenced marketing 
activities during 1998.
 
    Net cash used in investing activities was $174,000 and $57,000 for the 
three months ended March 31, 1999 and 1998, respectively, for purchases of 
property and equipment.
 
    Net cash provided by financing activities was $2,452,000 and $1,194,000 
for the three months ended March 31, 1999 and 1998, respectively. Net cash 
provided by and used by financing activities consisted principally of 
proceeds from the exercise of stock options and warrants and the private 
placement of common stock. During the three months ended March 31, 1999, 
Youbet.com received $2,100,000 from stock subscription receivables, resulting 
from the sale of common stock and Series A Convertible Preferred Stock during 
December 1998, $381,000 from the exercise of stock options and warrants and 
$250,000 from the sale of common stock. Offsetting these receipts was 
$280,000 of deferred financing costs, payments of lease obligations, deferred 
offering costs and costs related to stock financing.
 
    During January 1999, Youbet.com sold 100,000 shares of common stock to a
private investor for a cash purchase price of $2.50 per share, resulting in
proceeds to Youbet.com of $250,000.
 
    During the quarter ended March 31, 1999, Youbet.com issued 136,125 shares of
common stock in conjunction with the exercise of warrants and stock options with
exercise prices ranging from $2.50 to $5.25, generating gross proceeds to
Youbet.com of $381,000.
 
                                       16
<PAGE>

    In April 1999, Youbet.com issued $45,500,000 principal amount of 11% 
Senior Convertible Discount Notes for cash proceeds of $36,728,510 
(generating proceeds of approximately $35,119,000), which represents a 
discount of 11% per year, compounded semi-annually to April 2001. The notes 
begin accruing interest in April 2001 at 11% per year, payable semi-annually. 
Principal and unpaid interest are due and payable on April 5, 2004. The notes 
plus accrued, unpaid interest are convertible at any time at the rate of $10 
per common share, subject to reset provisions as defined in the notes. The 
conversion price resets one time at the earlier of (1) a placement, after 
April 1999, of common stock and any securities convertible into common stock 
which raises at least $15 million gross proceeds to Youbet.com or (2) April 
5, 2000. In the event that a placement of common stock or convertible 
securities occurs first, the conversion price will be reset to the lesser of 
$10 per share or the lowest price per share at which Youbet.com sells common 
stock after the date of the placement of common stock or convertible 
securities (excluding options, warrants and other convertible securities 
existing prior to April 1999). In the event that the reset occurs on April 5, 
2000, the conversion price will be reset to the lower of $10 per share or the 
average daily closing price for the ten-day period ending on April 5, 2000, 
but in no event less than $5 per share.
 
    Youbet.com does not currently have any material commitments for capital
expenditures. However, Youbet.com anticipates that it will experience a
substantial increase in capital expenditures and lease commitments consistent
with Youbet.com's anticipated growth in operations and infrastructure, including
various capital expenditures associated with the expansion of operations into
foreign markets. Youbet.com anticipates that it will continue to experience
significant growth in its operating expenses for the foreseeable future and that
these expenses will be a material use of cash resources. Youbet.com believes
that its existing cash and the proceeds from the sale of the 11% Senior
Convertible Discount Notes, will be sufficient to meet its anticipated cash
needs for working capital and capital expenditures at least for the next twelve
months. Additionally, upon completion of the offering, Youbet.com intends to use
such proceeds to pursue the opportunities described in this prospectus.
 
IMPACT OF THE YEAR 2000
 
    The year 2000 risk is the result of computer programs being written using
two digits rather than four digits to define the applicable year. Computer
programs that have sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
 
    STATE OF READINESS
 
    Based on an internal assessment, Youbet.com believes that its software
programs, both those developed internally and purchased from material outside
vendors, are year 2000 compliant or will be by December 31, 1999. Youbet.com
began assessing its state of year 2000 readiness during October 1998. This
included reviewing the year 2000 compliance of the following:
 
    - Youbet.com's internally developed proprietary software incorporated in the
      You Bet Network;
 
    - Ladbroke's pool wagering and other software;
 
    - Third party handicapping information suppliers;
 
    - Third-party software vendors;
 
                                       17
<PAGE>

    Youbet.com will continue to require its vendors of material hardware and
software to provide assurances of their year 2000 compliance.
 
    COSTS
 
    To date, Youbet.com has incurred approximately $25,000 of costs in
identifying and evaluating year 2000 compliance issues. Most of Youbet.com's
expenses have related to, and are expected to continue to relate to, the
operating costs associated with time spent by employees in the evaluation year
2000 compliance matters. At this time, Youbet.com does not possess the
information necessary to estimate the potential costs of future revisions to
software relating to the You Bet Network should revisions be required or the
replacement of third-party software, hardware or services, if any, that are
determined to not be year 2000 compliant. Although Youbet.com believes that its
software programs, both developed internally and purchased from outside vendors
are either already year 2000 compliant or will be by December 31, 1999, failure
to identify non year 2000 compliant software could have a material and adverse
effect on Youbet.com's business, results of operations and financial condition.
 
    RISKS
 
    Youbet.com is not currently aware of any significant year 2000 compliance
problems relating to the You Bet Network or other software systems that would
have a material and adverse effect on business, results of operations and
financial condition. However, there can be no assurance that Youbet.com will not
discover year 2000 compliance problems in its proprietary software or other
third party software that will require a substantial investment to correct.
Youbet.com's inability to fix such hardware or software on a timely basis could
result in lost revenues, increased operating costs and other business
interruptions, any of which could have a material and adverse effect on
Youbet.com's business, results of operations and financial condition.
 
    Failure to adequately address year 2000 compliance issues in Youbet.com's
proprietary software or third party software could result in claims of
mismanagement, misrepresentation or breach of contract and related litigation,
which could be costly and time-consuming to defend. In addition, there can be no
assurance that utility companies, Internet network companies, Internet access
companies, third-party service providers and others outside Youbet.com's control
will be year 2000 compliant. The failure by these entities to be year 2000
compliant could result in a systemic failure beyond Youbet.com's control,
including, for example, a prolonged Internet, telecommunications or electrical
failure, which could also prevent Youbet.com from providing subscribers access
to the You Bet Network or other value added handicapping services any of which
would have a material and adverse effect on Youbet.com's business, results of
operations and financial condition.
 
    CONTINGENCY PLAN
 
    Although Youbet.com continues to evaluate its software for possible year
2000 compliance issues, Youbet.com believes that its software programs, both
those developed internally and purchased from material outside vendors, are
already year 2000 compliant or will be by December 31, 1999. Therefore,
Youbet.com does not have a formal contingency plan for a major year 2000
problem. Youbet.com's inability to locate or correct a significant year 2000
problem, if one exists, could result in an interruption in, or a failure of,
certain normal business activities or operations. In addition, year 2000
problems may affect sub-systems of the You Bet Network, such as the ability to
provide value added handicapping information. Any such failure could cause
Youbet.com's subscribers to seek alternate providers for online wagering. This
could require Youbet.com to incur significant unanticipated expenses to remedy
and could divert Youbet.com's management's time and attention, either of which
could have a material and adverse effect on business, results of operation and
financial condition.
 
                                       18
<PAGE>

                          PART II. OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

In April 1999, various warrantholders exercised their warrants into 53,500 
shares of Youbet.com common stock at $2.50 per share and 10,000 shares of 
Youbet.com common stock at $3.125 per share generating proceeds of $165,000.

In April 1999, the former outside General Counsel of Youbet.com exercised his 
options to purchase 7,000 shares of Youbet.com common stock at $2.50 per 
share generating proceeds of $17,500.

Additional information relating to the period covered by this Item 2 has been 
previously reported on the Form 10-KSB filed April 9, 1999.

                                       19

<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

     27 Financial Data Schedule (electronic filing only)

(b)  Reports on Form 8-K - Three Months Ended March 31, 1999:

     Youbet.com filed a Form 8-K on January 26, 1999, to report a name change 
     from You Bet International, Inc. to Youbet.com, Inc.

                                       20
<PAGE>

                               SIGNATURES

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


                                       YOUBET.COM, INC.
                                       --------------------------------
                                          (Registrant)


Date:  May 12, 1999                By: /s/ ROBERT M. FELL
                                       --------------------------------
                                       Robert M. Fell
                                       Chief Executive Officer


Date:  May 12, 1999                By: /s/ PHILLIP HERMANN
                                       --------------------------------
                                       Phillip Hermann
                                       Executive Vice President
                                         and Chief Financial Officer

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