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

                    U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2000
                        Commission file number: 1-13611

                               SOFTLOCK.COM, INC.
       (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                            <C>
                  DELAWARE                                      84-1130229
       (State or other jurisdiction of               (IRS Employer Identification No.)
       Incorporation or organization)
</TABLE>

               5 CLOCK TOWER PLACE, SUITE 440, MAYNARD, MA 01754
                    (Address of principal executive offices)

                                 (978) 461-5940
                          (Issuer's telephone number)

    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 Company 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 June 30, 2000, 13,071,736 shares of common stock, par value $0.01 per
share, were outstanding.

Transitional Small Business Disclosure Format (check one): Yes / / No /X/

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

<TABLE>
<CAPTION>
                                                                                                   PAGE
                                                                                                  NUMBER
                                                                                                 --------
<S>                     <C>        <C>                                                           <C>
PART I.                 FINANCIAL INFORMATION

                        Item 1.    Consolidated Financial Statements

                                   Consolidated Balance Sheet, (Unaudited) June 30, 2000.......       2

                                   Consolidated Statements of Operations (Unaudited) for the
                                     three months and six months ended June 30, 2000 and
                                     1999......................................................       3

                                   Consolidated Statements of Cash Flows (Unaudited) for the
                                     Six months ended June 30, 2000 and 1999...................       4

                                   Notes to Consolidated financial statements..................     5-8

                        Item 2.    Management's Discussion and Analysis of Financial Position
                                     and Results of Operations.................................    9-13

PART II.                OTHER INFORMATION

                        Item 1.    Legal Proceedings...........................................      13

                        Item 2.    Changes in Securities.......................................      14

                        Item 4.    Submissions of Matters to a Vote of Security Holders........      15

                        Item 5.    Other Information...........................................      15

                        Item 6.    Exhibits and Reports on Form 8-K............................      16

                                   Signatures..................................................      17
</TABLE>
<PAGE>
                               SOFTLOCK.COM, INC.

                           CONSOLIDATED BALANCE SHEET

                           JUNE 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
                                                              JUNE 30, 2000
                                                              -------------
                                                               (UNAUDITED)
<S>                                                           <C>
                                  ASSETS
CURRENT ASSETS:

Cash........................................................   $ 6,724,353
Accounts receivable.........................................       135,534
Prepaid expenses and other current assets...................       397,781
                                                               -----------
  Total current assets......................................     7,257,668

PROPERTY AND EQUIPMENT--net.................................     1,296,767

WEBSITE AND PRODUCT DEVELOPMENT COSTS--net..................     1,431,030

SECURITY DEPOSITS...........................................        54,381

PREPAID ROYALTIES...........................................        65,579

GOODWILL--Net...............................................     1,771,279
                                                               -----------
TOTAL ASSETS................................................   $11,876,704
                                                               ===========
                   LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:

Accounts payable............................................   $   384,007
Accrued expenses............................................     1,285,220
Current portion of obligations under capital leases.........       269,831
                                                               -----------
Total current liabilities...................................     1,939,058

OBLIGATIONS UNDER CAPITAL LEASES, less current portion......       661,273

OTHER LONG-TERM LIABILITIES.................................       119,105

COMMITMENTS AND CONTINGENCIES (Note 1)

REDEEMABLE CONVERTIBLE SERIES A and B PREFERRED STOCK
  (Aggregate liquidation preference of $13,012,678 at June
  30, 2000).................................................    11,555,867

STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, $0.01 par value; 50,000,000 shares authorized;
  13,071,736 shares issued and outstanding at June 30,
  2000......................................................       130,717
Deferred compensation.......................................    (1,686,278)
Deferred royalties..........................................    (1,100,576)
Additional paid-in capital..................................    15,923,260
Accumulated deficit.........................................   (15,396,842)
Notes receivable from officer and directors.................      (268,880)
                                                               -----------
Total stockholders' equity (deficiency).....................    (2,398,599)
                                                               -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................   $11,876,704
                                                               ===========
</TABLE>

                                       2
<PAGE>
                               SOFTLOCK.COM, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

     FOR THE THREE MONTHS AND SIX MONTHS JUNE 30, 2000 AND 1999 (UNAUDITED)

<TABLE>
<CAPTION>
                                     THREE MONTHS     THREE MONTHS
                                    ENDED JUNE 30,   ENDED JUNE 30,   SIX MONTHS ENDED   SIX MONTHS ENDED
                                         2000             1999         JUNE 30, 2000      JUNE 30, 1999
                                    --------------   --------------   ----------------   ----------------
                                                     (AS RESTATED)                        (AS RESTATED)
<S>                                 <C>              <C>              <C>                <C>
Net Revenues......................    $    90,812      $    18,014      $    103,546        $    66,112
Cost of Revenues..................         21,899            6,439            26,533             12,976
                                      -----------      -----------      ------------        -----------
Gross Profit......................         68,913           11,575            77,013             53,136
Research and Development
  Expense(1)......................        783,052          606,366         1,671,175            728,037
Selling and Marketing
  Expense(2)......................      1,182,694          248,406         2,328,841            302,746
General and Administrative
  Expense(3)......................      1,795,503        1,030,480         2,960,066          1,486,375
                                      -----------      -----------      ------------        -----------
Total Operating expenses..........      3,761,249        1,885,252         6,960,082          2,517,158
                                      -----------      -----------      ------------        -----------
Operating loss....................     (3,692,336)      (1,873,677)       (6,883,069)        (2,464,022)
Other income (expense):
  Interest expense................        (17,911)          (1,253)          (30,766)            (1,345)
  Interest income.................        126,992           19,160           238,636             32,788
                                      -----------      -----------      ------------        -----------
Loss before income tax
  (benefit).......................     (3,583,255)      (1,855,770)       (6,675,199)        (2,432,579)
Income tax expense (benefit)......             --               --                --                 --
                                      -----------      -----------      ------------        -----------
Net loss..........................     (3,583,255)      (1,855,770)       (6,675,199)        (2,432,579)
Beneficial conversion feature on
  convertible preferred stock,
  including accretion of dividends
  on Series A Preferred Stock of
  $262,502 at June 30, 2000.......       (131,251)              --        (9,774,947)                --
                                      -----------      -----------      ------------        -----------
Net loss attributable to common
  stockholders....................    $(3,714,506)     $(1,855,770)     $(16,450,146)       $(2,432,579)
                                      ===========      ===========      ============        ===========
Basic and diluted net loss per
  common share....................    $     (0.29)     $     (0.17)     $      (1.28)       $     (0.25)
                                      ===========      ===========      ============        ===========
Basic and diluted weighted average
  shares outstanding..............     12,872,391       10,664,193        12,867,671          9,671,299
                                      ===========      ===========      ============        ===========
</TABLE>

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

(1) including noncash compensation and consulting expense of $4,212 and $87,842
    for the three months ended June 30, 2000 and 1999, respectively, and $8,424
    and $92,054 for the six months ended June 30, 2000 and 1999, respectively.

(2) including noncash compensation and consulting expense of $60,694 and $41,087
    for the three months ended June 30, 2000 and 1999, respectively, and
    $121,388 and $43,299 for the six months ended June 30, 2000 and 1999,
    respectively.

(3) including noncash compensation and consulting expense of $213,736 and
    $568,812 for the three months ended June 30, 2000 and 1999, respectively,
    and $341,015 and $804,422 for the six months ended June 30, 2000 and 1999,
    respectively.

                                       3
<PAGE>
                               SOFTLOCK.COM, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

             FOR THE SIX MONTHS JUNE 30, 2000 AND 1999 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                SIX MONTHS       SIX MONTHS
                                                              ENDED JUNE 30,   ENDED JUNE 30,
                                                                   2000             1999
                                                              --------------   --------------
                                                                               (AS RESTATED)
<S>                                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................   $(6,675,199)     $(2,432,579)
  Adjustments to reconcile net loss to net cash used for
    operating activities:
    Depreciation and amortization...........................       422,686            8,561
    Noncash compensation and consulting expense.............       463,106          939,775
    Deferred rent expense...................................        62,810            7,000
    Services paid in common stock of the Company............         7,400          229,475
    Increase (decrease) in cash from:
      Accounts receivable...................................      (129,754)             619
      Prepaid expenses and other current assets.............      (122,950)        (107,433)
      Accounts payable......................................      (229,233)          83,873
      Accrued compensation and benefits.....................       364,200          (10,917)
      Other accrued expenses................................       123,799           74,888
                                                               -----------      -----------
      Net cash used for operating activities................    (5,713,135)      (1,206,738)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Payment of security deposits..............................       (23,098)              --
  Cash paid in acquisition of Chili Pepper, net.............      (329,139)              --
  Purchases of property and equipment.......................      (171,341)         (20,414)
                                                               -----------      -----------
      Net cash used for investing activities................      (523,578)         (20,414)

CASH FLOW FROM FINANCING ACTIVITIES:
  Principal payments on long-term debt......................       (73,261)          (5,075)
  Proceeds from issuance of Series A preferred, net of
    issuance costs..........................................     1,969,781               --
  Proceeds from issuance of Series B preferred, net of
    issuance costs..........................................     7,355,160               --
  Proceeds from issuance of common stock, net of issuance
    costs...................................................            --        3,037,478
  Proceeds from exercise of stock options...................        13,977               --
                                                               -----------      -----------
      Net cash provided by financing activities.............     9,265,657        3,032,403
                                                               -----------      -----------
NET INCREASE IN CASH........................................     3,028,944        1,805,251

CASH, BEGINNING OF PERIOD...................................     3,695,409          160,841
                                                               -----------      -----------
CASH, END OF PERIOD.........................................   $ 6,724,353      $ 1,966,092
                                                               ===========      ===========
</TABLE>

                                       4
<PAGE>
                               SOFTLOCK.COM, INC.

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

             FOR THE SIX MONTHS JUNE 30, 2000 AND 1999 (UNAUDITED)

<TABLE>
<CAPTION>
                                              THREE MONTHS     THREE MONTHS      SIX MONTHS       SIX MONTHS
                                             ENDED JUNE 30,   ENDED JUNE 30,   ENDED JUNE 30,   ENDED JUNE 30,
                                                  2000             1999             2000             1999
                                             --------------   --------------   --------------   --------------
<S>                                          <C>              <C>              <C>              <C>
  SUPPLEMENTAL DISCLOSURE OF CASH FLOW
    INFORMATION

  Cash paid during the period for
    interest...............................     $ 17,911          $ 1,344         $ 30,787         $ 1,436
                                                ========          =======         ========         =======
  Cash paid during the period for taxes....     $     --          $   733         $ 10,254         $   733
                                                ========          =======         ========         =======

  SUMMARY OF NONCASH FINANCING AND
    INVESTING ACTIVITIES

  Payable and accrued website development
    costs..................................     $     --          $    --         $116,426         $    --
                                                ========          =======         ========         =======
  Issuance of common stock for web
    development costs......................     $     --          $    --         $272,876         $    --
                                                ========          =======         ========         =======
  Capital lease obligation--property and
    equipment..............................     $378,215          $41,675         $664,000         $41,675
                                                ========          =======         ========         =======
</TABLE>

                                       5
<PAGE>
                               SOFTLOCK.COM, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 JUNE 30, 2000
                                  (UNAUDITED)

1. MANAGEMENT'S REPRESENTATION OF INTERIM FINANCIAL INFORMATION

    The accompanying consolidated financial statements have been prepared by
SoftLock.com, Inc. (the "Company") without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
disclosures normally included in financial statements, prepared in accordance
with generally accepted accounting principles, have been condensed or omitted as
allowed by such rules and regulations, and management believes that the
disclosures are adequate to make the information presented not misleading.

    These consolidated financial statements include all adjustments, which in
the opinion of management, are necessary to reflect a fair presentation of the
Company's financial position and results of operations. All such adjustments are
of a normal and recurring nature. The results for the six-month period ended
June 30, 2000 are not necessarily indicative of the results for the entire year
2000.

    These consolidated financial statements should be read in conjunction with
the audited consolidated financial statements for the year ended December 31,
1999 filed as part of the Company's Annual Report on Form 10-KSB/A.

    The Company has reviewed the status of its legal contingencies and believes
that there are no material changes from that disclosed in Form 10-KSB/A for the
year ended December 31, 1999.

    The Company's interim consolidated statements of operations and cash flows
for 1999 have been restated from amounts previously reported to reflect the
effects of the matters discussed in Note 9 of the Company's 1999 annual report
on Form 10-KSB/A.

2. PRIVATE PLACEMENT OF EQUITY SECURITIES

    On January 7, 2000, the Company received gross proceeds $500,004 ($492,445,
net of issuance costs) in exchange for 4,902 shares of the Company's Series A
Preferred Stock (the "Series A Preferred").

    In connection with the Series A Preferred transaction, the Company entered
into a Series A Preferred Stock Purchase Agreement dated as of December 30, 1999
as supplemented on January 7, 2000 (the "Purchase Agreement") with SI Venture
Fund II, L.P. ("SI"), Apex Investment Fund IV, L.P., Apex Strategic Partners IV,
LLC, (collectively, "Apex") and RSA Security Inc. ("RSA") (collectively, the
"Purchasers") and a Shareholders and Rights Agreement (the "Shareholders
Agreement") with the Purchasers and the then President and Chief Executive
Officer and the Chief Scientist of the Company. The Company also filed a
Certificate of Designation with the Delaware Secretary of State that states the
powers, preferences and rights of the Series A Preferred.

    On February 10, 2000, the Company issued 46,876 shares of Series B Preferred
Stock (the "Series B Preferred") to a group of investors, including affiliates
of Tudor Investment Corp. and Ritchie Capital, as well as investors in an
earlier round of financing, SI and Apex (collectively, the "Investors") for a
purchase price of $160 per share for an aggregate purchase price of $7,500,160
($7,355,160, net of issuance costs). Investors were also issued two warrants,
one of which becomes exercisable for an aggregate of 312,500 shares of common
stock if, as of August 15, 2000, the Company's registration statement for the
shares of common stock issuable upon conversion of the Series B Preferred is not
declared effective and the NASDAQ listing application for the common stock is
not accepted, and the second of which becomes

                                       5
<PAGE>
                               SOFTLOCK.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                 JUNE 30, 2000
                                  (UNAUDITED)

2. PRIVATE PLACEMENT OF EQUITY SECURITIES (CONTINUED)
exercisable for an aggregate of an additional 312,500 shares of common stock if,
as of November 15, 2000, these two conditions are not met.

    Ascent Venture Partners III, L.P. ("Ascent") also purchased 14,706 shares of
the Company's Series A Preferred for $102 per share for an aggregate purchase
price of $1,500,012 ($1,477,336, net of issuance costs) in February 2000. In
connection with the investment by Ascent, the Company agreed to appoint an
Ascent representative to its Board of Directors.

    In connection with the Series B Preferred transaction, the Company entered
into a Series B Preferred Stock and Warrant Purchase Agreement dated as of
February 10, 2000 (the "Purchase Agreement") with the investors and an Amended
and Restated Shareholders and Rights Agreement (the "Amended Shareholders
Agreement") with the Investors, the holders of the Series A Preferred and the
Company's then President and Chief Scientist. The rights and preferences of the
Series B Preferred are similar to those of the Series A Preferred.

    The Company recorded, immediately upon issuance, a preferred stock dividend
representing the value of the beneficial conversion feature on the issuance of
Series A and B preferred stocks. Such amount was limited to the proceeds
received from issuing the beneficial conversion securities or approximately
$9,324,941.

3. EARNINGS PER SHARE

    Basic and diluted net loss per share are computed using the weighted average
number of common shares outstanding during the periods presented. Earnings per
share exclude the effects of stock options, warrants and convertible preferred
stock because the inclusion of such securities would be anti-dilutive.

4. PREPAID ROYALTIES

    In December 1999, the Company entered into an agreement with Intel for the
use of certain of Intel's technology. In connection with such agreement, the
Company paid $75,000 and issued 224,514 shares of its common stock to Intel.
Under the agreement, the Company has the right to recoup a portion of the shares
issued if Intel fails to meet its performance obligations. The fair value of the
forfeitable shares has been recorded as a reduction of stockholders' equity. The
value of such forfeitable shares is remeasured at each reporting period until
such shares become nonforfeitable. The decrease from December 31, 1999 to
June 30, 2000 in the fair market value of the forfeitable shares at June 30,
2000 was $1,414,460.

5. ACQUISITION

    On May 12, 2000, the Company completed its acquisition of certain net assets
of Chili Pepper, Inc. ("Chili Pepper"), a Boston-based strategic marketing
consulting firm. Under the terms of the agreement, the Company issued 193,289
shares of the Company's common stock, $.01 par value, with an aggregate value of
$1,404,365, paid $351,090 in cash and incurred $50,000 in transaction costs
(collectively, the "Purchase Price"). The acquisition has been accounted for as
a purchase, and accordingly, the results of operations of the Chili Pepper
business have been included in the Company's consolidated financial statements
from the date of acquisition. The Purchase Price has been allocated to the net
assets acquired based upon their fair values. The Purchase Price exceeded the
fair value of the assets acquired and

                                       6
<PAGE>
                               SOFTLOCK.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                 JUNE 30, 2000
                                  (UNAUDITED)

5. ACQUISITION (CONTINUED)
liabilities assumed resulting in goodwill being recorded. Such goodwill is being
amortized over its estimated useful life of five years. The following is a
summary of the Purchase Price allocation.

<TABLE>
<S>                                                           <C>
Cash paid...................................................  $  351,090
Aggregate value of Common Stock.............................   1,404,365
Transaction costs...........................................      50,000
                                                              ----------
Total purchase price........................................  $1,805,455
                                                              ==========

Allocated to tangible assets acquired.......................  $   67,543

Allocated to liabilities assumed............................      39,488

Goodwill acquired...........................................   1,777,400
                                                              ----------
Total.......................................................  $1,805,455
                                                              ==========
</TABLE>

    The following supplemental pro forma financial information is provided to
reflect revenues, net loss and net loss per share, had the consummation of the
asset acquisition taken place at the beginning of each period presented below.

<TABLE>
<CAPTION>
                                                      FOR THE SIX     FOR THE SIX
                                                     MONTHS ENDED    MONTHS ENDED
                                                     JUNE 30, 2000   JUNE 30, 1999
                                                     -------------   -------------
<S>                                                  <C>             <C>
Revenue............................................   $   619,727     $   505,000
                                                      ===========     ===========
Net Loss...........................................   $(6,987,625)    $(2,627,990)
                                                      ===========     ===========
Earnings Per Share.................................   $     (0.54)    $     (0.27)
                                                      ===========     ===========
</TABLE>

    Under the terms of the agreement, 30% of the shares issued shall be entitled
to non-priority piggyback registration rights, under certain restrictions. Such
rights are subordinated to the registration rights of the holders of Series A
Preferred Stock and Series B Preferred Stock and to the registration rights of
Intel Corporation. In addition, the Company entered into an employment agreement
with one of the shareholders of Chili Pepper.

6. OFFICERS AND DIRECTORS

    Effective April 17, 2000, Scott W. Griffith was appointed as Chief Executive
Officer of the Company. In connection with that appointment, Mr. Griffith
entered into an employment agreement with the Company, as part of which, he was
granted a stock option to purchase 1,164,670 shares of common stock at an
exercise price of $8.50 per share, the fair market value of the Company's common
stock on the date of the grant.

    On May 5, 2000, the Company and Keith Loris, the former Chief Executive
Officer and President entered into a Separation Agreement. Pursuant to that
agreement, Mr. Loris shall engage in Transition Period Employment with the
Company until November 6, 2000. In connection with the Separation Agreement,
approximately 673,000 options to purchase shares of the Company's stock were
cancelled.

                                       7
<PAGE>
                               SOFTLOCK.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                 JUNE 30, 2000
                                  (UNAUDITED)

6. OFFICERS AND DIRECTORS (CONTINUED)
    On June 16, 2000 Mr. Loris resigned as a Director of the Company. Also on
that date, Ronald Dunn was elected to the board to replace Mr. Loris.

7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board ("FASB") issues
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The new standard
requires that all companies record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of
the derivatives and whether it qualifies for hedge accounting. Management is
currently assessing the impact of SFAS No. 133 on the consolidated financial
statements of the Company.

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin, ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements.
Management is currently assessing the impact of SAB No. 101 on the consolidated
financial statements of the Company.

                                       8
<PAGE>
ITEM 2.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
                             RESULTS OF OPERATIONS

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

    Certain statements contained in this report, including statements concerning
the Company's future cash and financing requirements, and other statements
contained herein regarding matters that are not historical facts, are
forward-looking statements. Forward-looking statements involve known and unknown
risks and uncertainties, which may cause the actual results in future periods to
differ materially from what is anticipated. You should read the following
discussion and analysis together with our consolidated financial statements for
the periods specified and notes included herein. Further reference should be
made to our annual report on Form 10-KSB/A for the year ended December 31, 1999.

BACKGROUND

    The Company provides a system that combines content management and context
marketing to allow commercial web sites to securely market and sell digital
content. Publishers of digital content, including research reports, newsletters
and electronic books, use the Company's system to package and securely
distribute their products while protecting their intellectual property. The
Company markets digital content through strategic relationships with many
affiliates who offer the digital content on their web sites. When a prospective
consumer accesses the content, the consumer can preview selected portions of the
final product. The consumer can then instantly purchase access to the complete
product twenty-four (24) hours a day, seven (7) days a week via the World Wide
Web. The consumer then has permanent access to the product for the consumer's
own use. Consumers are encouraged to pass along the digital content they have
purchased, but recipients can only preview the selected portions of the final
product chosen by the content provider until they complete the purchase process
themselves.

    The Company's patented persistent security technology (US #5,509,070) for
information commerce prevents electronic shoplifting (piracy) not just during
the initial download, but also when the digital content is passed from one
consumer to another, thus allowing commercial web sites to sell their electronic
information simply and securely. Because content offered by the Company can be
instantly purchased and re-distributed, but not pirated, the technology is
useful in many markets, especially information "publishing" web sites (news,
media, finance, research, etc.).

CORPORATE STRUCTURE

    Prior to July 1998, the Company was a public shell company organized to
locate and acquire an operating company. In July 1998, pursuant to a Plan and
Agreement of Reorganization, the Company exchanged 7,097,266 shares of its
restricted common stock for all of the issued and outstanding shares of SoftLock
Services, Inc. ("SSI"), and the owners of SSI became the majority owners of the
Company. The Company's only asset consists of shares of capital stock of SSI,
its wholly owned, operating subsidiary.

CHILI PEPPER ASSET ACQUISITION

    On May 12, 2000, the Company completed its acquisition of certain net assets
of Chili Pepper, Inc. ("Chili Pepper"), a Boston-based strategic marketing
consulting firm. Under the terms of the agreement, the Company issued 193,289
shares of the Company's common stock, $.01 par value, with an aggregate value of
$1,404,365, paid $351,090 in cash and incurred $50,000 of transaction cost
(collectively, the "Purchase Price"). The acquisition has been accounted for as
a purchase, and accordingly, the results of operations of the Chili Pepper
business have been included in the Company's consolidated financial

                                       9
<PAGE>
statements from the date of acquisition. The Purchase Price has been allocated
to the net assets acquired based upon their fair values, resulting in goodwill
of $1,777,400 being recorded. Such goodwill is being amortized over its
estimated useful life of five years.

    Under the terms of the agreement, 30% of the shares issued shall be entitled
to non-priority piggyback registration rights, under certain restrictions. Such
rights are subordinated to the registration rights of the holders of Series A
Preferred Stock and Series B Preferred Stock and to the registration rights of
Intel Corporation. In addition, the Company entered into an employment with one
of the shareholders of Chili Pepper.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 AS COMPARED TO THREE MONTHS ENDED
JUNE 30, 1999

    Total revenues for the three months ended June 30, 2000 were $90,812, a
404.1% increase as compared to $18,014 earned during the three months ended
June 30, 1999. The increase is a result of increased revenue from password
vending (the process by which documents are "unlocked" in the Company's system)
to $19,801 from $14,014 in 1999, a 41.3% increase, and the addition in 2000 of
outside advertising revenue from Chili Pepper and other eMerchandising services
of $71,011. For the three months ended June 30, 2000, the Company did not
receive any revenues from licensing, custom tools and programming, or consulting
and speaking fees. Revenues from such services for the three months ended
June 30, 1999 were $4,000.

    Cost of sales increased to $21,899 for the three months ended June 30, 2000
as compared to $6,439 for the three months ended June 30, 1999. The increase in
cost of sales is primarily related to an increase in costs associated with
outside advertising and other eMerchandising activities as well as an increase
in credit card transaction fees due to an increase in volume.

    Gross profit was $68,913, or 75.9% of revenue for the three months ended
June 30, 2000, as compared with $11,575, or 64.3% of revenue for the three
months ended June 30, 1999. The increase in gross margin is attributable to the
addition of outside advertising and eMerchandising services which have a higher
gross margin than does the Company's current transactional activities, partially
offset by an increase in both the fixed and variable transaction costs
associated with a higher number of transactions, a majority of which had a lower
average commission per unit.

    Operating expenses totaled $3,761,249 for the three months ended June 30,
2000 as compared with $1,885,252 for the same period in 1999, an increase of
$1,875,996. The increase is primarily due to costs associated with significant
staffing increases (from 18 employees at June 30, 1999 to 57 employees as of
June 30, 2000) to support the SoftLock eMerchandising system, related operating
and consulting costs, research and development costs, and other miscellaneous
administrative costs. Included in operating expenses are costs related to
noncash compensation and consulting transactions in the amounts of $278,642 and
$697,741 for the three months ended June 30, 2000 and 1999, respectively.

    Research and development costs increased to $783,052 for the three months
ended June 30, 2000 versus $606,366 for the same period in 1999, an increase of
$176,686. This increase is related to the additional staffing, as well as
outside consulting, in connection with the research and development of the
eMerchandising system and related proprietary software. Included in research and
development expenses are costs related to noncash compensation and consulting in
the amounts of $4,212 and $87,842 for the three months ended June 30, 2000 and
1999, respectively.

    Selling and marketing costs increased to $1,182,694 in the second quarter of
2000 as compared to $248,406 in the second quarter of 1999, an increase of
$934,288. This increase is primarily attributable to additional staffing and
outside consulting costs associated with the enrollment of content providers and
affiliates for the SoftLock Affiliate Network. Included in selling and marketing
expenses are costs related

                                       10
<PAGE>
to noncash compensation and consulting in the amounts of $60,694 and $41,087 for
the three months ended June 30, 2000 and 1999, respectively.

    General and administrative costs for the three months ended June 30, 2000
were $1,795,503 as compared to $1,030,480 for the same period in 1999, an
increase of $765,023. This increase relates primarily to additional staffing and
outside consulting costs incurred in the building of the management
infrastructure and support team for the eMerchandising system. Included in the
above costs are salaries and wages, consulting, and all other related operating
expenses. Also included in general and administrative expenses are costs related
to noncash compensation and consulting in the amounts of $213,736 and $568,812
for the three months ended June 30, 2000 and 1999, respectively.

    Other income, net increased to $109,081 for the three months ended June 30,
2000 from $17,907 for the same period in 1999. This change relates primarily to
investment earnings on the Company's cash reserves, which increased as a result
of the Company's private placement offerings of preferred stock.

    Net loss increased to $3,583,255 for the three months ended June 30, 2000
from $1,855,770 for the same period in 1999. The increase resulted primarily
from the increase in operating expenses. The Company's business plan calls for
higher losses in 2000 as the Company continues to develop products, hire the
personnel necessary to grow the business and expand its marketing strategy. The
Company anticipates that it will incur significant operating losses for the
remainder of 2000 and into 2001.

SIX MONTHS ENDED JUNE 30, 2000 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

    Total revenues for the six months ended June 30, 2000 were $103,546, a 56.6%
increase, as compared to $66,112 earned during the six months ended June 30,
1999. This increase was due to the addition of outside advertising revenue from
Chili Pepper and other eMerchandising of $71,011, partially offset by a decrease
of $33,500 in licensing fees, custom tools and programming and consulting and
speaking fees. For the six months ended June 30, 2000, revenue from password
vending (the process by which documents are "unlocked" in the Company's system)
remained constant from the levels reached for the same period ended June 30,
1999. This reflects higher volume offset by lower average commissions per unit
received by the Company particularly during their participation in the Stephen
King ebook launch. The Stephen King ebook provided the Company a unique
opportunity to participate in an event in the ebook merchandising space.
However, due to unexpected volumes, particularly on the first day of its
introduction when the book was given away for free by certain affiliates, the
Company was not able to fulfill all requested orders, thereby not realizing its
full profitability on each unit. While sales continue for the book in subsequent
months, albeit on a significantly lower volume, the Company is still generating
revenue from its release.

    Cost of sales increased to $26,533 for the six months ended June 30, 2000 as
compared to $12,976 for the six months ended June 30, 1999. The increase in
costs of sales is primarily due to the costs associated with the Company's
outside advertising and eMerchandising services and credit card transaction fees
associated with the transactional services.

    Gross profit was $77,013, or 74.4%, of revenue for the six months ended
June 30, 2000, as compared with $53,136, or 80.4%, of revenue for the six months
ended June 30, 1999. The increase in gross margin is attributable to the
addition of outside advertising and eMerchandising services which have a higher
gross margin then does the Company's current transactional activities, partially
offset by an increase in both the fixed and variable transaction costs
associated with a higher number of transactions, a majority of which had a lower
average commission per unit.

    Operating expenses totaled $6,960,082 for the six months ended June 30, 2000
as compared with $2,517,158 for the same period in 1999, an increase of
$4,442,924. The increase is primarily due to costs associated with significant
staffing increases (from 18 employees at June 30, 1999 to 57 employees as of
June 30, 2000) to support the SoftLock eMerchandising system, related operating
and consulting costs, research and development costs, and other miscellaneous
administrative costs. Included in operating

                                       11
<PAGE>
expenses are costs related to noncash compensation and consulting transactions
in the amounts of $470,827 and $939,775 for the six months ended June 30, 2000
and 1999, respectively.

    Research and development costs increased to $1,671,175 for the six months
ended June 30, 2000 versus $728,037 for the same period in 1999, an increase of
$943,138. This increase is related to the additional staffing, as well as
outside consulting, in connection with the research and development of the
eMerchandising system and related proprietary software. Included in research and
development expenses are costs related to noncash compensation and consulting in
the amounts of $8,424 and $92,054 for the six months ended June 30, 2000 and
1999, respectively.

    Selling and marketing costs increased to $2,328,841 in the first six months
of 2000 as compared to $302,746 in the first six months of 1999, an increase of
$2,026,095. This increase is primarily attributable to additional staffing and
outside consulting costs associated with the enrollment of content providers and
affiliates for the SoftLock Affiliate Network. Included in selling and marketing
expenses are costs related to noncash compensation and consulting in the amounts
of $121,388 and $43,299 for the six months ended June 30, 2000 and 1999,
respectively.

    General and administrative costs for the six months ended June 30, 2000 were
$2,960,066 as compared to $1,486,375 for the same period in 1999, an increase of
$1,473,691. This increase relates primarily to additional staffing and outside
consulting costs incurred in the building of the management infrastructure and
support team for the eMerchandising system. Included in the above costs are
salaries and wages, consulting, and all other related operating expenses. Also
included In general and administrative expenses are costs related to noncash
compensation and consulting in the amounts of $341,015 and $804,422 for the six
months ended June 30, 2000 and 1999, respectively.

    Other income, net increased to $207,870 for the six months ended June 30,
2000 from $31,443 for the same period in 1999. This change relates primarily to
investment earnings on the Company's cash reserves, which increased as a result
of the Company's private placement offerings of preferred stock.

    Net loss increased to $6,675,199 for the six months ended June 30, 2000 from
$2,432,579 for the same period in 1999. The increase resulted primarily from the
increase in operating expenses. The Company's business plan calls for higher
losses in 2000 as the Company continues to develop products, hire the personnel
necessary to grow the business and expand its marketing strategy. The company
anticipates that it will incur significant operating losses for the remainder of
2000 and into 2001.

    Management anticipates that the trend toward increased quarterly operating
expenses will continue in order to support increased marketing and promotional
efforts, to develop and release new products, to continue to build a strong
management team, to raise necessary capital, and to otherwise create the
infrastructure that the Company will need to provide its services in the future.

LIQUIDITY AND CAPITAL RESOURCES

    Cash used in operations totaled $5,713,135 for the six months ended
June 30, 2000 as compared with $1,206,738 for the same period in 1999. The
increase in cash used related primarily to the net loss sustained during the
period, plus a increase in accounts receivable and prepaid expenses of $129,754
and $122,950, respectively, and a increase in accounts payable of $229,233
offset by an increase in accrued compensation and benefits and other accrued
expenses of $364,200 and $123,799, respectively. At June 30, 2000, working
capital (current assets less current liabilities) totaled $5,318,609.

    Investing activities for the six months ended June 30, 2000 included, among
other things, cash paid for the acquisition of the Chili Pepper net assets of
$329,139, $171,341 of computer and software purchases and leasehold improvements
related to the building-out of the new main office as well as an increase in
security deposits of $23,098.

                                       12
<PAGE>
    The Company's primary source of liquidity continues to be proceeds from the
sale of securities in private placements. A total of $9,324,941 was raised in
the first two quarters of 2000, $1,969,781, net of commission and expenses,
through the issuance of 19,608 of Series A Preferred Stock and $7,355,160 net of
commissions and expenses, in the first two quarters of 2000 through the issuance
of 46,876 shares of Series B Preferred Stock. These funds will be used to
finance continued operations, product development and marketing.

    During the six months ended June 30, 2000, the Company financed the purchase
of certain computer hardware and office furniture totaling $664,000 through
capital leases.

    The Company, based upon its current operating plan, anticipates that its
currently available funds will be sufficient to satisfy its anticipated needs
for working capital, capital expenditures and business expansion through the
rest of this fiscal year. The Company's cash requirements depend upon many
factors, including, but not limited to, the Company's net cash flows from
operations, the length of time it may take for the Company to develop a market
for its products or services, the market acceptance of these products or
services and the response of competitors who may develop competing products or
services at lower costs. The Company may require additional financing over the
next twelve months. To the extent that the Company is unable to raise additional
financing, the Company may be required to eliminate current and planned software
development programs and other operating expenses. There can be no assurance
that the Company would be able to secure additional financing sources, or that
financing would be made available on terms favorable to the Company. The failure
to acquire additional financing when required could have a material adverse
effect on he Company.

    The Company plans to continue to develop, improve and enhance its product
offerings as part of its continuous plan for research and development.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    Other than as set forth below, the Company is not a party to any legal
proceedings which management believes to be material, and there are no such
proceedings which are known to be contemplated for which the Company anticipates
a material risk of loss.

    The Company is one of approximately 18 defendants in an action in the United
States District Court for the Southern District of New York entitled INTERACTIVE
GIFT V. COMPUSERVE INC. ET AL, filed August 23, 1995. The action alleges
infringement of the so-called Freeny patent. The plaintiff seeks judgment
declaring the validity of its patent and further declaring that each of the
defendants has infringed the plaintiff's patent, enjoining further infringement
and treble damages plus attorneys' fees and costs and disbursements.

    On March 12, 1999 judgment was entered in the Company's favor and the patent
owner's claims were dismissed on the merits. The patent owner filed a Notice of
Appeal to the Court of Appeals for the Federal Circuit, arguing error by the
District Court. The appeal (number 99-1324) stands fully briefed and oral
argument took place on February 7, 2000.

    Although the Company and its counsel are unable to predict the ultimate
outcome of the appeal with any reasonable degree of certainty, the Company and
the other defendants will continue to defend their positions vigorously.

    Other patent-related suits are possible, including legal actions, which
might be pursued to litigate or defend the Company's patent, and the outcomes
and expenses cannot be predicted with confidence. Liability lawsuits are also a
risk to be considered. The Company has developed software technology to protect
intellectual property, but there can be no assurance that such technology will
not be breached, resulting in lost revenues for which the Company might be held
responsible. Similarly, the software that

                                       13
<PAGE>
incorporates the Company's tools can have adverse consequences, which might lead
to claims of liability against the Company.

    The Company is subjected to this and other litigation from time to time in
the ordinary course of business. Although the amount of the liability, if any,
with respect to such litigation cannot be determined, in the opinion of
management, such liability, if any, will not have a material adverse effect on
the Company's financial condition, results of operations or cash flows.

ITEM 2.   CHANGES IN SECURITIES.

    Beginning in December 1999, the Company commenced a private placement
offering of 36,765 shares of the Series A Preferred at an offering price of $102
per share, pursuant to Section 4(2) of the Securities Act of 1933 (the "Act")
and Regulation D promulgated under the Act. The Company sold the Series A
Preferred to a group of investors: SI, Apex and RSA resulting in net proceeds of
approximately $3,210,604 from the closing on December 30, 1999 and approximately
$492,445 from the closing on January 7, 2000. The Company offered the shares on
a "best efforts" basis through officers and directors of the Company. The
Series A Preferred were offered for sale to accredited investors only, pursuant
to the exemptions from registration contained in Section 4(2) of the Act and
Regulation D promulgated under the Act. Each share of the Series A Preferred is
convertible into 100 shares of the Company's common stock, subject to certain
anti-dilution adjustments, at any time at the holder's option at a conversion
price of $1.02 per share of common stock. The holders of the Series A Preferred
are entitled to receive a quarterly dividend of $10.20 per share, prior to any
distribution to common shareholders, unless the Company offers the holders of
Series A Preferred the opportunity to register their underlying common stock in
connection with a qualifying public offering. The Series A Preferred also have a
liquidation preference over the common stock, and the holders of the Series A
Preferred are entitled to vote with the common shareholders as a single class.
Each share of Series A Preferred is entitled to the number of votes into which
that share is convertible into common stock. In connection with the placement of
the Series A Preferred, we issued 1,964 warrants convertible into the Series A
Preferred Stock. In February 2000, SI exercised all of those warrants.

    In connection with the Series A Preferred transaction, the Company entered
into a Shareholders' and Rights Agreement with the purchasers and the then
President and Chief Executive Officer and the Chief Scientist of the Company and
into a Registration Rights Agreement requiring registration of the underlying
common stock upon the occurrence of certain events. The Company also filed a
Certificate of Designation with the Delaware Secretary of State that states the
powers, preferences and rights of the Series A Preferred.

    In February 2000, Ascent purchased 14,706 shares of the Company's Series A
Preferred Stock for $102 per share for an aggregate purchase price of $1,500,012
resulting in net proceeds of $1,477,366. In connection with the investment by
Ascent, the Company agreed to appoint an Ascent representative to its Board of
Directors.

    Beginning in February 2000, the Company commenced a private placement
offering of 46,876 shares of the Series B Preferred at an offering price of $160
per share, pursuant to Section 4(2) of the Act and Regulation D promulgated
under the Act. The Company sold the Series B Preferred to a group of investors,
including affiliates of Tudor Investment Corp. and Ritchie Capital as well as to
SI and Apex, purchasers of the Series A Preferred, resulting in net proceeds of
approximately $7,355,160. The Company offered the shares on a "best efforts"
basis through officers and directors of the Company. The Series B Preferred were
offered for sale to accredited investors only, pursuant to the exemptions from
registration contained in Section 4(2) of the Act and Regulation D promulgated
under the Act. Each share of the Series B Preferred is convertible into 100
shares of the Company's common stock, subject to certain anti-dilution
adjustments, at any time at the holder's option. The Series B Preferred will
automatically convert into the underlying common stock upon a qualifying public
offering of the Company's common

                                       14
<PAGE>
stock or upon the election of two-thirds of the outstanding Series B Preferred.
The Series B Preferred also have a liquidation preference over the common stock,
and the holders of the Series B Preferred are entitled to vote with the common
shareholders as a single class. Each share of Series B Preferred is entitled to
the number of votes into which that share is convertible into common stock.

    Pursuant to a Registration Rights Agreement between the Company and the
holders of the Series B Preferred, such holders were also issued two warrants,
one of which becomes exercisable for an aggregate of 312,500 shares of common
stock if, as of August 15, 2000, the Company's registration statement for the
shares of common stock issuable upon conversion of the Series B Preferred Stock
is not declared effective and the NASDAQ listing application for the common
stock is not accepted. The second warrant becomes exercisable for an aggregate
of an additional 312,500 shares of common stock if, as of November 15, 2000,
these two conditions are not met.

    In connection with the Series B Preferred transaction, the Company entered
into a Series B Preferred Stock and Warrant Purchase Agreement dated as of
February 10, 2000 with the investors and an Amended and Restated Shareholders'
and Rights Agreement with the investors, the holders of the Series A Preferred
Stock and the Company's then President and Chief Executive Officer and its Chief
Scientist. The Company also filed a Certificate of Designation with the Delaware
Secretary of State that states the powers, preferences and rights of the
Series B Preferred.

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

    At the Company's annual meeting of stockholders held on June 16, 2000 (the
"Annual Meeting"), the stockholders considered the following matters, with
results as indicated below: i) electing Scott W. Griffith and Richard N. Gold as
Class I directors; ii) amending the Company's 1998 Stock Option Plan a) to
increase the number of shares of common stock available for grant pursuant to
the exercise of options thereunder by 2,000,000 shares; b) to permit assignment
of options by holders to entities qualified under ss.501(c)(3) of the Internal
Revenue Code as tax-exempt organizations entitled to receive charitable
contributions; and c) to provide for the laws of the Commonwealth of
Massachusetts as the governing laws; and iii) to ratify the selection of
Deloitte & Tocuhe LLP as independent certified public accountants for the
Company for the year ending December 31, 2000.

ITEM I) ELECTION OF DIRECTORS

<TABLE>
<CAPTION>
NOMINEE                                                        FOR         AGAINST     ABSTENTIONS
-------                                                   -------------   ----------   -----------
<S>                                                       <C>             <C>          <C>
Scott W. Griffith.......................................  17,675,969.00                 20,389.00

Richard N. Gold.........................................  17,692,858.00                  3,500.00

ITEM II) AMENDMENT TO THE STOCK OPTION PLAN

A) Increase the number of shares available for grant....  17,332,336.00   347,339.00    16,683.00

B) Permit assignment of options.........................  17,329,201.00   364,263.00     2,894.00

C) Provide for the laws of the Commonwealth of
  Massacusetts..........................................  17,552,959.00   141,316.00     2,083.00

ITEM III) RATIFICATION OF DELOITTE & TOUCHE LLP.........  17,572,892.00   123,216.00       250.00
</TABLE>

ITEM 5. OTHER INFORMATION

    On May 5, 2000, the Company and Keith Loris, the former Chief Executive
Officer and President entered into a Separation Agreement setting forth their
agreement whereby Mr. Loris would no longer serve as Chief Executive Officer as
of April 17, 2000 and would no longer serve as President as of May 5,

                                       15
<PAGE>
2000. Pursuant to that agreement, Mr. Loris shall engage in Transition Period
Employment with the Company until November 6, 2000.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
      <S>           <C>
      2.1           Assets Purchase Agreement entered into on May 12, 2000 by
                    and among SoftLock.com,Inc., a Delaware corporation, Chili
                    Pepper, Inc., a Massachusetts corporation, Alex Morrow and
                    Leighton Collis (incorporated by reference to Exhibit 2.1 to
                    the Registrant's Current Report on Form 8-K filed May 19,
                    2000)

      2.2           Escrow Agreement entered into on May 12, 2000 by and among
                    SoftLock.com, Inc., a Delaware corporation, Chili Pepper,
                    Inc., a Massachusetts corporation, and McGuire, Woods,
                    Battle & Boothe LLP, as escrow agent (incorporated by
                    reference to Exhibit 2.2 to the Registrant's Current Report
                    on Form 8-K filed May 19, 2000)

      2.3           Registration Rights Agreement entered into on May 12, 2000
                    by and between SoftLock.com, Inc., a Delaware corporation
                    and Chili Pepper, Inc., a Massachusetts corporation
                    (incorporated by reference to Exhibit 2.3 to the
                    Registrant's Current Report on Form 8-K filed May 19, 2000).

      10.1          Employment Agreement entered into on May 12, 2000, by among
                    and among SoftLock Services, Inc., a Delaware corporation
                    and wholly-owned subsidiary of SofLock.com,Inc.,
                    SoftLock.com, Inc., a Delaware corporation and Leighton
                    Collis (incorporated by reference to Exhibit 10.1 to the
                    Registrant's Current Report on Form 8-K filed May 19, 2000).

      10.2          General Release and Separation Agreement dated May 5, 2000,
                    between SoftLock.com, Inc., SoftLock Services, Inc. and
                    Keith Loris.

      Exhibit 27    Financial Data Schedule
</TABLE>

(b) Reports on Form 8-K

    Form 8-K filed on May 9, 2000

    The form announced that the letter of intent between Chili Pepper and the
    Company regarding acquisition of the outstanding stock of Chili Pepper was
    terminated and a letter of intent dated May 8, 2000 was entered into between
    Chili Pepper and the Company whereby the Company agreed to purchase certain
    assets of Chili Pepper.

    Form 8-K Filed May 19, 2000

    The form announced the consummation of the acquisition of certain assets of
    Chili Pepper by the Company.

                                       16
<PAGE>
                                   SIGNATURES

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

<TABLE>
<S>                                                    <C>  <C>
Date: August 14, 2000                                  SoftLock.com, Inc.

                                                       BY:  /s/ MICHAEL J. DZICZKOWSKI
                                                            ----------------------------------------
                                                            Michael J. Dziczkowski
                                                            Corporate Controller
                                                            (Principal Accounting Officer)
</TABLE>

                                       17