U.S. SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549

                               FORM 10-KSB

[ X ]     Annual report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 [Fee Required] for the fiscal year ended: 
          December 31, 1998
          -----------------

[   ]     Transition report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 [No Fee Required] for the transition period
          from ___________ to __________

COMMISSION FILE NUMBER:  33-37751-D
                         ----------

                           SOFTLOCK.COM, INC.
                           ------------------
             (Name of small business issuer in its charter)

           DELAWARE                                         84-1130229   
-------------------------------                          ----------------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                        Identification No.)

                          399 ALEXANDER STREET
                       ROCHESTER, NEW YORK  14607
                       --------------------------
           (Address of principal executive offices) (Zip Code)

Issuer's telephone number:  (716) 546-1970
                            --------------

Securities to be registered under Section 12(b) of the Act:  None
                                                             ----

Securities registered under Section 12(g) of the Act:  None
                                                       ----

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 at least the past 90 days.  Yes   X     No 
                                    -----      -----

Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B contained herein, and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment
to this Form 10-KSB.  [ X ]

Issuer's revenues for its most recent fiscal year:  $109,402
                                                    -----------

Aggregate market value of voting stock held by non-affiliates as of March
19, 1999:  $5,703,225 
           ----------

Shares of Common Stock, $0.01 par value, outstanding as of March 19, 1999:
9,688,208 
---------

Documents incorporated by reference:  Exhibits to Issuer's Registration
Statement on Form S-18, No. 33-37751-D.

<PAGE>

                            TABLE OF CONTENTS

                                                                 Page
                                                                 ----

Item 1.  Description of Business                                   1

Item 2.  Description of Property                                  21

Item 3.  Legal Proceedings                                        21

Item 4.  Submission of Matters to a Vote of Security Holders      22

Item 5.  Market Price of the Registrant's Common Stock and
          Related Security Holder Matters                         23

Item 6.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations                     24

Item 7.  Financial Statements                                     28

Item 8.  Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                     28

Item 9.  Directors and Executive Officers, Promoters and
          Control Persons; Compliance With Section 16(a) of
          the Exchange Act                                        29

Item 10.  Executive Compensation                                  32

Item 11.  Security Ownership of Certain Beneficial Owners
          and Management                                          37

Item 12.  Certain Relationships and Related Transactions          38

Item 13.  Exhibits, Financial Statements and Reports on Form 8-K  39









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                           SOFTLOCK.COM, INC.

                               FORM 10-KSB


                                 PART I

INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS REPORT CONTAINS
"FORWARD-LOOKING STATEMENTS" WHICH CAN BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY, SUCH AS "BELIEVES," "EXPECTS," "MAY," "WILL,"
"SHOULD" OR "ANTICIPATES" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS
THEREON OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY.  SEE
"ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS." 
 NO ASSURANCE CAN BE GIVEN THAT THE FUTURE RESULTS COVERED BY THE
FORWARD-LOOKING STATEMENTS WILL BE ACHIEVED.  THE FOLLOWING MATTERS INCLUDE
CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT FACTORS WITH RESPECT TO SUCH
FORWARD-LOOKING STATEMENTS, INCLUDING CERTAIN RISKS AND UNCERTAINTIES, THAT
COULD CAUSE ACTUAL RESULTS TO VARY MATERIALLY FROM THE FUTURE RESULTS
COVERED IN SUCH FORWARD-LOOKING STATEMENTS.  OTHER FACTORS COULD ALSO CAUSE
ACTUAL RESULTS TO VARY MATERIALLY FROM THE FUTURE RESULTS COVERED IN
FORWARD-LOOKING STATEMENTS.

ITEM 1.  DESCRIPTION OF BUSINESS.

BACKGROUND

     SoftLock.com, Inc. ("SoftLock.com" or the "Company") was incorporated
under the name Fieldcrest Corporation in the State of Delaware in December,
1989, for the primary purpose of seeking out acquisitions of properties,
businesses or merger candidates, without limitation as to the nature of the
business operations or geographic area of the acquisition candidate.  In
August 1991, the Company completed an initial public offering, receiving
proceeds of $47,250 from the sale of 4,725,000 Units, consisting of Common
Stock and Class A and B Warrants (the "Warrants").  The Company's offering
was subject to the Colorado Securities Act, which required the placement
into escrow of $19,440 of the net proceeds of the offering until the
completion of a transaction or series of transactions whereby at least 50%
of the gross proceeds received from the sale of Units in the offering was
committed for use in one or more specific lines of business.  The escrow
condition had not been satisfied as of the fourth anniversary of the
initial public offering, and accordingly, the Company distributed those
funds pro rata to those persons who were owners of the shares of Common
Stock purchased in the offering.  The Warrants which were included in the
Units sold in the public offering expired February 12, 1999.

     On July 28, 1998, the Company and SoftLock Services, Inc. ("SSI")
consummated an Agreement and Plan of Reorganization whereby the Company
acquired all of the issued and outstanding common shares of SSI in exchange
for the issuance of 7,097,266 shares of the Company's Common Stock.  The
Company has accounted for the transaction as a reverse acquisition under
the purchase method of accounting.  The fiscal year of the Company was
changed from March 31 to December 31 to correspond to the fiscal year of
SSI.

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     Subsequent to the reverse acquisition of SSI, the Company changed its
name from Fieldcrest Corporation to SoftLock.com, Inc. to better reflect
the ongoing business of the Company.  The Company's trading symbol was also
changed to "SLCK".  The Company's Common Stock currently trades on the over
the counter Bulletin Board.  In August 1998, the Company effected a 1 for
50 reverse split of its Common Stock.  All numbers in this Report reflect
the reverse split.

     Except as otherwise noted, all references to the "Company" include
SoftLock.com, Inc. and its subsidiary, SSI.

BUSINESS OF THE COMPANY

     The Company, through its wholly owned subsidiary, SSI, provides a
system that allows commercial web sites to sell digital content on demand. 
Publishers of digital products, including research reports, newsletters,
electronic books and software, use the Company's software to "SoftLock-
enable" their products.  These products may then be freely distributed on
the Internet or by CD-ROM.  When a prospective end-user receives a
SoftLock-enabled product, the prospect can view a portion of the final
product (i.e. "demo" the product).  The prospect can then instantly
purchase access to the complete product 24 hours a days, seven days a week
via the World Wide Web, e-mail or fax.  The end-user then has permanent
access to the product for the user's own use.  The end-user is also
encouraged to copy the product and redistribute it to friends or colleagues
because SoftLock-enabled products automatically return to "demo" mode and
invite another purchase when copied from one context to another.

     The Company's patented system (US #5,509,070) for information commerce
allows commercial web sites to sell their electronic information simply and
securely.  Because SoftLock-enabled content can be instantly purchased and
re-distributed, but not pirated, the technology is useful in many markets,
but especially for information "publishing" web sites (news, media,
finance, research, etc.).  Until now, commercial "publishers" (a generic
term for the owner of the intellectual property, which includes traditional
print publishers, web-based information services, media and research sites)
have hesitated to place their most valuable content on the Internet because
it has been too easy to infringe their copyright, make unlimited numbers of
copies, and redistribute their information products. As a result,
publishers either give away less valuable content in hopes of generating
traffic for advertising revenue, or they password-protect their web site
and charge subscription fees for access.  The Company believes neither
approach really works: few sites are popular enough for significant ad
rates and subscription sites exclude casual users and deter first-time
purchases, while affording publishers little real protection--content and
passwords can still be pirated.

     The Company has introduced a third business model for commercial web
sites. Rather than giving content away or requiring visitors to subscribe
to all of a site's content in advance, publishers can now charge for
specific content on demand.  Most importantly, the content remains secure
and generates revenue NO MATTER HOW MANY TIMES IT IS COPIED AND
REDISTRIBUTED.  With the Company's product, publishers are now able to sell
their most compelling and valuable content.

     The three main software elements of the Company's system are Authoring
(so publishers can SoftLock-enable their content), Client (for users to
purchase and view SoftLock-enabled content) and Server (for providing the
various SoftLock.com services: web and telephony systems for key vending

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and credit card clearing, database systems, etc.).   Since HTML and Adobe
Acrobat Portable Document Format (PDF) files are the de facto standard for
publishing documents online, the Company's next generation system will
target these two main "platforms."  Subsequent releases of the SoftLock.com
system will add support for additional "platforms."

HOW IT WILL WORK

     It will be very easy for publishers to adopt the SoftLock.com system.
The Company will provide easy to use tools for publishers to "SoftLock-enable"
their documents. Publishers will specify a few parameters (such as
price, which parts of the document are free in the sample and which parts
must be purchased) and will then save the file and receive all SoftLock.com
benefits: turnkey E-commerce, the Chain Reaction Channel, the SoftLock.com
Affiliate System, and intellectual property security, among others.

     The SoftLock.com system will also be quick and easy for prospects. 
When visiting a publisher's web site a prospect would click on a normal
hyperlink. The prospect would then be able to view a portion of the
document and with a simple click would be invited to purchase the document
or pass it on to another prospect.

     This purchase button is linked to www.softlock.com where server
software will determine whether the requisite SoftLock.com client software
is on the prospect's computer.  If not, the server will automatically
download and install any required software (after obtaining permission from
the customer). When SoftLock.com's client software is set up (or if it is
already set up from a previous purchase), the prospect will be taken
through a quick purchase process where name, address and credit card
information will be gathered. Finally, the server will give instant access
to the complete document by generating and installing a key on the user's
system that is unique to that product and that user's computer. 
Alternative purchase methods work similarly, albeit slower.  If the
purchaser uses 1-800-SOFTLOC, for instance, their purchase information will
be submitted to the Company's interactive voice response system via touch-tones.

     The SoftLock.com client software will work in a very straightforward
manner.  Whenever a user tries to display a document that uses the
SoftLock.com security method, the SoftLock.com plug-in will check for a
valid key for this document on their machine.  If there is a valid key, it
will decrypt and display the complete document.  If the key is missing or
is invalid, then it will only display the free sample content and invite a
purchase.

     Throughout the process, both prospects and customers will be
encouraged to pass along the content to their friends and colleagues. 
Other than the fact that the document will be coming from a friend in e-mail
rather than from a publisher's web site, the SoftLock.com system
operates exactly the same way. The PDF document would display in Acrobat
Reader, the prospect can peruse the sample and can purchase the complete
document at any time simply by clicking a button.

THE CHAIN REACTION CHANNEL

     The Company believes its patented system of software products and
vending services will revolutionize information commerce, because it builds
copyright protection, payment processing, and a

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distribution system right into the product.  Rather than resist the user's
natural tendency to copy and redistribute digital content (as other systems
do), the Company actually makes redistribution work to the publisher's
advantage:

     -    Prospects can easily view free, limited "samples" of electronic
information (for example, document abstracts and initial sections).  The
prospect is encouraged to send the sample to anyone who might be interested
in it.

     -    When prospects try to see more than is in a sample, they are
invited to purchase the complete product. One mouse click brings them to 
www.SoftLock.com  where they enter their name, address and credit card
information (all major credit cards are accepted) to obtain a unique key or
password.  (Alternatively, prospects may dial 1-800-SOFTLOC with their
touch-tone phone, or use paper mail, e-mail or fax.)

     -    The unique key automatically and permanently unlocks the full
product on that customer's computer.  (Publishers determine the product's
price, and optionally may disallow printing, cutting and pasting, etc.)

     -    The customer also is encouraged to send the full product to
anyone who might be interested in it.  However, when the full product is
electronically copied or e-mailed to someone else, it automatically re-locks
and becomes a sample again.  Sending a key along with the product
will not unlock the sample since the key is specific to the original
purchaser's computer.

     -    When new prospects try to see more than is in the sample, they,
too, are invited to purchase the complete product.

     By facilitating the electronic purchase of a full product by those
sampling it, the Company turns browsers into customers.  By encouraging
redistribution to colleagues and friends, the Company turns prospects and
customers into distributors. Publishers sell not only to their prospects,
they end up selling to the friends and colleagues of their prospects, too. 
For example,

     Tom was unwilling to subscribe to an analytic research service
     for $395 per year.  But he eagerly purchased a $25 article from
     their web site that analyzed recent merger activity in his
     industry.  It was important to his job, the price was reasonable
     and it was convenient.  Furthermore, when Tom e-mailed the
     article to other vice presidents at his company, seven of them
     also paid the $25 fee; so did fifteen people who report to those
     vice presidents. The analytic research service received a total
     of $575, all thanks to Tom, who was unwilling to purchase a $395
     yearly subscription.

     The SoftLock.com transaction system effectively leverages its
geometric expansion power to create a new, virtual sales channel for
publishers. The Company calls its new system, which is currently in
development, the "Chain Reaction Channel(TM)". The Chain Reaction Channel
is a true sales channel even though there are no employees, no bricks and
no mortar. For instance, in the previous example, while the analytic
research service sold one report directly to Tom (their web site visitor),
the Chain Reaction Channel sold 22 copies (to Tom's colleagues).  As is
true for any sales channel, when the Chain Reaction Channel sells a
product, the Company earns a sales commission (estimated at 10-20%).

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     In addition to dramatically increasing sales, the Chain Reaction
Channel also decreases costs.  Within the Channel, prospects and customers
distribute the electronic products themselves, so printing and distribution
costs (i.e., manufacturing, warehousing, shipping, returns, etc.) are
dramatically reduced.  Furthermore, significant reductions can be realized
in direct marketing expenditures since, as explained below, the Chain
Reaction Channel is a HYBRID of a direct marketing and a sales system.

     MARKETING

     The Company believes the Chain Reaction Channel to be a no-cost,
highly targeted, direct marketing mechanism: prospects send samples to pre-
qualified acquaintances based on their knowledge of the document and of
their acquaintance.  Furthermore, since the recipient knows the sender, the
receiver is much more likely to read what's sent, to be interested in it
and to purchase the document.

     Expanding upon this, the Company believes the Chain Reaction Channel
also offers publishers (and the Company) a unique source of marketing data.
When purchasing a product, customers enter basic name and address
information along with credit card data.  To this basic information, the
Company's system invites customers to voluntarily provide additional
information desired by the publisher (perhaps in return for a discount or
some other incentive). Proprietary Company technology will also track the
"lineage" of document purchases (i.e., A sent a document to B; B purchased
it and sent a copy to C, etc.), and can cross correlate these data with
publisher-supplied profiles of the content itself.  For instance, profiles
might range from broad, classic demographic categories (i.e. "this document
appeals to 30-35 year old females of median income") to very narrow
document-specific topics (i.e. "a report on Latin American derivative
trading during weekends in 1997").

     Taken together, these data sources can reveal valuable "one-to-one"
and "community of interest" marketing information.  For example:

     A publisher might characterize a product as "interesting to 25-35
     year old males in mid-level management positions in Fortune 500
     companies."  After the product had been sold for a time, an
     analysis of the Company's marketing database would show
     particular redistribution "lineages."  For instance, it might
     show that Tom initially bought the product and then passed a
     locked sample to Mike.  Mike subsequently bought the complete
     product and then passed the locked sample to Jim, who also ended
     up buying the complete product.  Combining the publisher's
     "characterization" information with the "lineage" of this product
     tells us that Tom, Mike and Jim are a "community" interested in
     products for 25-35 year old males in mid-level positions in
     Fortune 500 companies. When Tom makes additional transactions
     through the Company's system, this data even becomes more
     valuable.

     The Company's method also minimizes customer privacy concerns. All
information obtained from the customer is routine and/or voluntarily
submitted.  In the example above, Tom, Mike and Jim were not required to
supply any information beyond what is typical when paying by credit card. 
It is the publisher who supplies the characterization information, and it
is the Company  which derives the valuable community of interest and
one-to-one data.  Furthermore, proprietary data security

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technology built into the Company's system allows the Company to assure
publishers and end-users alike that this data will not be misappropriated
or abused.

THE SOFTLOCK.COM AFFILIATE SYSTEM

     In an affiliate program, a vendor seeks alliances with referring sites
whose visitors are likely to purchase the vendor's products.  A link on the
referring site allows a prospect to easily and  conveniently purchase a
desired product from the vendor. The vendor effects the sale and the
referring site earns a referral fee of 5-10%.  Thus, the referring web site
effectively acts as distribution point or "store" for the vendor. 
Affiliate programs are truly win/win/win scenarios for customers, vendors
and stores. As a result, affiliate programs have become a standard web
marketing tactic.

     The key reason affiliate programs are so successful is because they
create effective sales opportunities: vendors appear in front of their best
prospects where and when they are most likely to buy.  Historically,
vendors of information-based products have not been able to use this
powerful technique because they were unable to protect their intellectual
property. 

     In addition to enabling sites to create their own affiliate program,
the Company is actively creating an Affiliate SYSTEM. The Company plans to
actively help facilitate and create demand for information products
(thereby increasing their sales and the Company's commissions) through the
SoftLock.com Affiliate System. The Company's Affiliate System will connect
a wide variety of information-providers (grouped into "channels," such as
the Financial Channel, the Consumer Channel, etc.) with a wide variety of
stores (grouped into "districts" such as the Financial District, the 
High-Tech District, etc.).  For example,

     TLG Inc., a financial information publisher would not sell its
     valuable TLG Reports online because of piracy concerns. The
     Company's technology removed those barriers and allowed TLG to
     sell their reports from their web site.  Furthermore, by joining
     SoftLock.com's Affiliate System, TLG was able to get instant
     exposure at a host of additional stores from which they could
     sell their reports.

     One of those stores was the web site of the Metropolitan Daily
     Press.  The Daily Press was happy to place a button on the web
     page that displayed closing mutual fund prices. This button
     enabled its users to purchase TLG reports for $5.00. The Daily
     Press was offering value-added content (more than a simple
     listing of prices, it could offer cutting edge analysis from a
     respected research service) that made its site more attractive
     and useful to its users while earning a referral fee.

     Mary was a little nervous about her $20,000 investment in Funds
     R Us and noticed the TLG button while checking Fund prices on the
     Daily press web site. The sample report was so timely,
     appropriate and reasonably priced she readily purchased the full
     report.  Indeed, the full report was so satisfying she sent it to
     10 other people in her investment club, many of whom had never
     even visited the Daily Press web site.  Nonetheless, their
     subsequent purchases translated into additional sales for TLG,
     referral fees for the Daily Press, and commissions for
     SoftLock.com.

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The Company believes all parties benefit from this system: publishers get
a turnkey affiliate system that offers a broad distribution of stores from
a wide variety of districts, yet there are no up-front fees, no e-commerce
projects to manage, no commerce servers to buy and no employees to manage.
Publishers are also able to control which stores may offer their content
and under what terms.

     Stores become more attractive to users by offering a broader selection
of more valuable content.  The Company believes that the truism, "you get
what you pay for" is generally accurate: if people are willing to pay for
it, it is more valuable than free content.  Furthermore, not only is this
attractive content available without charge to the store, the store is
actually paid when sales are made!  Indeed, the store can earn fees even
when users pass content on to associates (who may not even have visited
their store).

     The Company believes it will benefit from the Affiliate System
greatly, even though there are no specific charges to stores or publishers
for participation.  Rather, the Company is developing it to:

     -    Create demand for content by facilitating sales opportunities. As
in the above example, at the time and place that Mary was thinking about
her mutual fund, she had an opportunity to purchase a report.  It is far
less likely that Mary would have sought out TLG's site on her own.  Mary
might not know the company, she probably wouldn't know their URL and, in
light of other available investment information sites, she might assume she
would have to pay for an expensive subscription just to get the one report
she wants.  The Company believes that creating demand for content will
accelerate the transition from an emerging to a broad market.

     -    Build a SoftLock.com brand identity.  As more stores join the
Affiliate System, it becomes more attractive to publishers and as more
publishers join, it becomes more valuable to the stores.  Momentum starts
to build and at a certain point, a critical mass is reached and
SoftLock.com becomes the way to sell electronic information.  From that
point forward, the Company anticipates a future high growth rate.

     Thus, the Company's marketing programs, like its technology, will
capitalize on the web's potential for exponential growth.

PATENTS, INTELLECTUAL PROPERTY AND LICENSING

     The Company's patent (US #5,509,070) was issued on April 16, 1996. 
Authored by SSI's founder and the Company's President, Dr. Jonathan Schull,
the patent covers the computer and telecommunications technologies that
implement the Company's business. A fundamental, primary claim protects the
concept of a central key vending system for context-locked digital content. 
These keys unlock specific content in a particular context. The patent
defines "context-specific" broadly, and explicitly addresses non-hardware-
based contexts, such as voiceprints.  It also broadly defines digital
content to include essentially all digital information: documents, videos,
music, data files (for example, Excel .xls files), as well as executable
programs (for example, Excel itself).  A Continuation in Part which also
includes new material relating to the gathering and utility of the
Company's marketing data is pending with the U.S. Patent and Trademark
Office.

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     The Company has a registered trademark for SoftLock and has registered
the following Internet domains: www.passwords.com, www.passiton.com,
www.softlock.com. and www.selfpublish.com.  In addition, the Company uses
the easily remembered number (800)SOFTLOC for its telephone transaction
system.

     In June 1998, the Company entered into a Consulting Agreement with
Inso Providence Corporation ("Inso"), one of the key vendors in the
Document Management Industry, pursuant to which the Company provided
development and marketing services for Inso's Dyna family of products and
granted Inso a license to use the Company's software in its Dyna products.
During the term of the Inso Agreement, the Company provides up to three
hours per week or one on site day per month to Inso. The Company received
a $25,000 advance against licensing fees upon signing the Inso Agreement,
and receives $2,000 per month.  The Document Management Industry, in
particular, represents a significant opportunity for the Company, given the
existence of established vendors and their need for a document commerce
offering.  INSO and the Company are currently co-developing a SoftLock.com-
module to augment their large-scale corporate publishing systems.  This
module is currently scheduled for release in the first quarter of the year
2000.

     The Company's approach to redistributable but non-pirateable digital
products is applicable to the software and new media markets as well. 
However, while these are large and lucrative markets, a relatively small
number of well-entrenched, well-financed distributors are already in place
(Release Software, Time Warner, Liquid Audio, Music Blvd, etc.).  The
Company's patent applies to these markets, and the Company believes there
is a future (12-24 months out) business opportunity to license the
Company's patent to these companies and to other emerging markets, such as
computer based training.

MARKETING

     The Company intends to reach the market through a leveraged
combination of Direct, Reseller and OEM channels.  The Company intends to
sell its e-commerce service to web-based publishers and stores directly.
Through the Chain Reaction Channel and SoftLock.com Affiliate System, the
Company hopes to develop a network of resellers of its e-commerce service. 
These resellers will be drawn from companies focused on specific vertical
markets, such as financial and traditional publishing, or from companies
whose business is based on complementary technology, just-in-time printing
and e-commerce.

     The Company also plans to continue to build an OEM channel. Unlike
Resellers who will be interested in the Company's overall business
capabilities, the Company believes OEMs will be more interested in the
Company's core security and e-commerce technology.  For example, the
Company will be directly supporting the distribution of HTML and PDF
documents with the next release of its technologies. There are, however, a
number of other content distribution formats or "platforms" that would
benefit from the Company's core intellectual property protection technology
as well as its transaction vending system. The Company will develop
relationships with OEM partners who will adapt the Company's technology and
market the adapted technology and vending system for these new platforms.

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     The Affiliate System is intended to operate broadly across the
Internet, creating a distribution system linking a publisher with many
stores.  Once a prospect finds interesting content on ANY of these sites,
the Chain Reaction Channel can sell and resell that content down through
the pass-along chain.

     The Company believes the Affiliate System will build a prominent brand
identity for selling digital information over the Internet for the Company. 
Companies such as Yahoo and Amazon.com have proven the value of staking the
first branded claim in a valuable, new Internet business opportunity. The
Company believes the Affiliate System will grow rapidly through the actions
of the Company, its Resellers and OEMs and its high-reward and low-risk
appeal. The Company will earn a commission on each sale, and gather
valuable marketing data for resale. The Company's patent(s) will also be
licensed for both monetary and strategic gain.

     The Company estimates its markets in terms of the number of potential
customers, instead of dollars. The market research firm ActivMedia reports
that there were 414,000 active commercial web sites at the beginning of
1998 (double the number in 1997) and by 2002, they project there will be
1.6 million web sites online.  Nearly all of these sites are prospects for
the Company (except for the few who can survive using the advertiser or
subscription model).  The research firm IDC estimates that in the year
2002, 128 million people will be purchasing $400 billion worth of goods and
services over the Internet (103% compound annual growth over five years).

EVOLVING OPPORTUNITIES

     Initially, the Company intends to focus on the web-oriented,
information commerce market through direct and indirect means. The Company
will also expand its OEM position in the Document Management market.  Over
time, the Company anticipates that it will license it patent to companies
in the software, digital music or video markets.  Finally, marketing data
from these markets will be used to build and enhance the marketing database
business.

COMPETITION

     The Company believes its strength lies in its integration of
technologies and services from three distinct market areas: electronic
commerce, copyright protection, and data security. Companies operating in
each of these markets might be viewed as competitors, but since they offer
only partial, incomplete solutions, the Company believes they are not true
competitors.

     ELECTRONIC COMMERCE.  Electronic Commerce companies such as CyberCash,
TrustNet and OpenMarket sell technologies and services for secure payment,
back-end processing of orders, logistics and the shipping of goods. 
Information Commerce, which refers to the sale of information-based goods,
would seem to be a simple extension of E-commerce technology.  However,
several companies, such as Imark, First Virtual's Info Haus and Paul
Allen's IdeaMarket, that have attempted to combine E-commerce with
electronic delivery of unprotected, easy-to-pirate digital goods have gone
out of business or stopped selling digital goods. Similarly, the Company
believes that only companies providing valuable, up-to-the-minute, short-
life-time news with a minimal redistribution threat, such as the WALL
STREET JOURNAL will be successful at implementing revenue producing
subscription-model web sites.

                                   11

<PAGE>

     The Company believes the biggest concern in e-commerce is not
facilitating secure payments nor shipping of goods, but rather protecting
the lasting value of the publisher's digital product.  Unless information
merchants are confident that their first few digital sales will not be
their last, they will not offer their most valuable intellectual properties
in digital form.  As a result, copyright protection is of utmost importance
to the publishing community today.

     COPYRIGHT PROTECTION.  A number of companies offer copyright
protection products and services.  Digital watermark companies, such as
Digimarc, embed an indelible copyright notice into a digital document, and
copy protection companies, such as Rainbow and Aztech, attempt to prevent
unauthorized re-distribution.  The Company believes these approaches do not
solve the problem. Digital watermarks do not prevent piracy or
redistribution of electronic documents; they only make it possible to
prove, after the fact, that piracy has occurred.  Moreover, because
watermarks offer few clues to the pirate's identity, they provide little
real deterrence. Watermarks are potentially useful in preventing commercial
webmasters from appropriating content that they do not own, but they
neither prevent end user piracy nor facilitate information commerce.

     While copy protection or prevention techniques make piracy difficult,
they also inconvenience end-users who often need to backup and restore
data.   For this reason, and because it prevents publishers from exploiting
redistribution, copy prevention has been soundly rejected in the software
market.

     The Company believes that systems which prevent piracy while allowing,
and even exploiting, the exponential potential of end-user redistribution
are needed. This in turn requires that the content be consistently
protected.

     DATA SECURITY.  Data security companies (such as RSA) typically assume
that the sender and receiver of a document are trustworthy, whereas the
communication channel between them must be secured (for example, since you
and your bank have an interest in keeping your account information private,
protection is only required during transit).  To achieve this, data
security companies use public-key and other sophisticated encryption
technologies. Once information is transmitted, however, such systems
typically leave the data in an unprotected, easy-to-pirate form.

     In contrast, SoftLock.com's patented system does not assume that the
receiver is particularly trustworthy. The Company's system makes piracy
very difficult and compliance (payment and sanctioned-redistribution)
extremely gratifying. Using encryption technology (from RSA and other data
security companies), the Company's system ensures that the complete
document can only be decrypted in the presence of a valid, purchased, key. 
Since the decryption is done only as the data is being rendered on the
screen, there is never an unprotected copy of the document to be found on
the user's hard drive. Since the key required is specific to the authorized
computer, the product automatically becomes a sample again when it is
redistributed (thus providing copyright protection).  And since the sample
invites, facilitates, and instantly gratifies purchase from the next user
(and the next), the Company believes its system offers publishers an
effective and complete solution for Information commerce.

     COMPETITORS.   For at least five years, InterTrust has been developing
and publicizing a secure envelope system called the DigiBox, along with a
Rights Management system transaction processing

                                   12

<PAGE>

system.  Their vision is not only to facilitate purchase of digital goods
of ALL KINDS (documents, software, video, etc.) but to track and disperse
payments to ALL PARTIES in the so-called digital "value chain," which
consists of authors, editors, copy-editors, illustrators, proofreaders,
anthologists, and so on. InterTrust is not attempting to run the highly
complicated service business their technology is intended to support. 
Rather InterTrust is recruiting partners who will purchase, integrate and
customize InterTrust's complex and expensive technologies, and then run
information-security, service businesses in specific markets (such as
software, or healthcare). None of InterTrust's systems have been publicly
demonstrated.  InterTrust's first partner, originally called Rights
Exchange, is now called Reciprocal, Inc.

     Because Reciprocal, Inc.  is  positioning itself as a service business
for information commerce, it is probably the Company's closest competitor. 
Since Rights Exchange has yet to release its first system, however, it has
not been possible to test its efficacy against the claims made in the
marketing materials.  Further, the Company believes that if InterTrust and
Reciprocal do eventually deliver a system that mirrors the Company's model
of a software-only system that locks digital content to particular
contexts, these companies will likely become candidates to license the
SoftLock.com patent.

EMPLOYEES

     The Company  currently employs two full time individuals in management
and sales and two part-time administrative employees in its Rochester, NY
office. The Company also employs one full-time manager, one full-time
marketing professional, one full-time administrative employee and one
full-time developer in its headquarters in Maynard, MA. The Company also
employs two full-time developers in home offices in Seattle, WA. None of the
Company's employees are the subject of a collective bargaining agreement. 
The Company believes that relations with its employees are good.

CUSTOMERS

     For the years ended December 31, 1998. and 1997, one customer
accounted for a total of approximately 37% and 50% of password revenues,
respectively.


                              RISK FACTORS

     The Company's shares of Common Stock are speculative in nature and
involve a high degree of risk.  Prospective investors should carefully
review all of the other information set forth in this Annual Report on Form
10-KSB and the Exhibits filed herewith.

LIMITED OPERATING HISTORY; ANTICIPATED FUTURE LOSSES

     The Company was formed in 1989 but did not engage in any business
activities until its acquisition of SSI. Until recently, SSI was engaged
primarily in research and development activities. As a result, the Company
has only a limited operating history on which investors can base an
evaluation of the Company's business and prospects.  The Company's
prospects must be considered in the light of the risks, uncertainties,
expenses and difficulties frequently encountered by companies in their
early stages

                                   13

<PAGE>

of development, particularly companies in the new and rapidly evolving
markets, such as online commerce, using new and unproven business models.

     In addition, the Company has suffered recurring losses from operations
since its inception and has recorded limited revenues to date and expect to
operate at a loss for the foreseeable future. For example, the Company
incurred a loss of ($609,232) for the fiscal year ended December 31, 1998,
and its accumulated retained earnings deficit is ($1,991,849) through
December 31, 1998.  The following have been, and are likely to continue to
be, the principal causes of the Company's losses:

     -    start-up costs, such as the costs of establishing facilities,
          building the Company's infrastructure and employing personnel;

     -    costs of developing the technology and systems used in the
          Company's software;

     -    costs of developing the Company's brand and corporate identity,
          including marketing and public relations costs.

DIFFICULTY IN PREDICTING RESULTS OF OPERATIONS

     Planning the development of the Company's business, and accurately
predicting its future revenues and expenses, is difficult because the
Company's business and the industry in which it competes are in the early
stages of development.  The Company also expects that, as in many new
industries, there will be intense competition.  The Company's potential
customers and users are and will be intensely competitive.  The Company's
potential customers may experiment with many different products until it
becomes apparent which products work best.  At this early stage of the
Company's growth, its business and financial condition could be damaged
materially by cancellation or non-renewal of existing or future client
contracts. As a result, the Company's revenues could fluctuate during any
fiscal year, which may, in turn, cause the price at which the Company's
stock trades to be subject to substantial volatility.  It is likely that in
one or more future quarters operating results will fall below the
expectations of securities analysts and investors.  If this happens, the
trading price of the Company's Common Stock would almost certainly be
materially and adversely affected.

     The Company expects to continue incurring net losses through 1999 as
it continues to develop products and expand its marketing strategy.  There
can be no assurance that the Company will achieve profitability in the
future or maintain profitability, if achieved, on a consistent basis.

NEW BUSINESS MODEL; DEPENDENCE ON CONTINUED GROWTH OF ONLINE COMMERCE

     The Company's business model is based on an analysis of consumer
behavior with respect to digital products and the development of an
alternative channel for the sale of digital content and a new transaction
processing infrastructure.  The market for the purchase of products and
services over the Internet is a new and emerging market.  The Company's
future revenues and profits and, in part, its business model depends on the
willingness of consumers to conduct online commerce and the demands of
companies for securely distributing proprietary content on the Internet.
Rapid growth in the use of and interest in the Internet and other online
services is a recent phenomenon.  This growth may not continue.  A
sufficiently broad base of consumers may not adopt, or continue to use, the
Internet as a

                                   14

<PAGE>

medium of commerce. Demand for and market acceptance of recently introduced
products and services over the Internet are subject to a high level of
uncertainty, and there are few proven products and services.  For the
Company's revenues to grow, consumers who have historically used
traditional means of commerce will instead need to elect to purchase
products and services online, and sellers of products and services will
need to adopt or expand use of the Internet as a channel of distribution.

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING

     Based upon the Company's current operating plan, the Company
anticipates that its currently available funds will be sufficient to
satisfy its anticipated needs for working capital, capital expenditures and
business expansion through the release of the Company's next generation
technology in the summer of 1999.  The Company anticipates the need to
acquire additional capital during calendar year 1999 to continue operations
and to fund additional product development and expansion plans. The
Although the Company is currently in discussion with a number of
prospective financing sources, the Company currently does not have any
commitments for additional financing.  The Company cannot be certain that
additional financing will be available when and to the extent the Company
would need it, or that it would be available on favorable terms. If
adequate funds are not available on acceptable terms, the Company may not
be able to fund its expansion, develop or enhance its products or services
or respond to competitive pressures.

EFFECTIVE MANAGEMENT OF GROWTH

     The Company's goal is to develop an alternative channel for the sale
of digital content through the development of new tools for publishers, a
new transaction processing infrastructure, and a number of related
marketing initiatives in 1999. The Company also may acquire other companies
which have businesses synergistic to that of the Company. Such expansion
could place a significant burden on the Company's existing resources, and
may require the Company to implement additional operating, software
development and financial controls, install additional reporting and
management information systems for transaction processing, customer
service, and financial reporting, improve coordination among marketing,
software development, and finance functions, increase capital expenditures
and to hire additional personnel. In addition, the Company would be
required to install additional reporting and management information systems
for transaction processing, customer service, and financial reporting.
There can be no assurance that the Company will be able to successfully
manage any substantial expansion of its business, including attracting and
retaining qualified personnel. A failure to do so could have a material
adverse effect on the Company's operating results.

PROPRIETARY RIGHTS AND LICENSES

     The Company's success depends in part on its ability to enforce
intellectual property rights for its technology and software, both in the
United States and in other countries.  The Company currently holds one
patent (US#5,509,970), which was issued on April 16, 1996, which covers the
computer and telecommunications technologies that implement the Company's
business. In addition to the protection provided by the patent, the
Company's software is protected by copyright and the use of contractual
restrictions (such as confidentiality agreements) and license agreements
that restrict the unauthorized distribution of the Company's proprietary
data.  The Company may file additional applications for patents,
copyrights, and trademarks as management deems appropriate.  While the
Company has

                                   15

<PAGE>

attempted to limit unauthorized use of its software products or the
dissemination of its proprietary information, no assurance can be given
that

     -    the Company be able to retain its proprietary software rights and
prohibit the unauthorized use of proprietary information;

     -    any patents, copyrights, or trademarks the Company may obtain
will be sufficiently broad to protect its  products, or that applicable law
will provide effective legal or injunctive remedies to stop infringement on
the Company's patent(s), trademarks, or copyrights;

     -    any patent, trademark, or copyright which  the Company obtains
will not be challenged, invalidated, or circumvented;

     -    intellectual property rights which the Company obtains will
provide competitive advantages; or

     -    the Company's competitors will not independently develop
technologies or products that are substantially equivalent or superior to
those of the Company and that are not covered by the Company's issued patent.

     In addition, if the Company's software products infringe upon the
rights of others, the Company may be subject to suit for damages or an
injunction to cease the use of such products.  Except as noted under "Legal
Risks," below, the Company is not currently aware of any claims or
infringements of the Company's software products upon the rights of others.

LEGAL RISKS

     The Company's wholly owned subsidiary, SSI, is one of approximately 18
defendants in an action in the United States District Court for the
Southern District of New York entitled E-DATA CORP. V. COMPUSERVE INC. ET
AL, filed August 23, 1995.  The action alleged infringement of the so-called
Freeny patent.  The plaintiff sought 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, the Court entered a Stipulated Order and Judgment that, based on
the interpretation of the claims of the subject patent as determined by the
Court in its May 13, 1998 Order, SSI has not in the past infringed, nor is
it now infringing, any claim of the subject patent because no method,
system or apparatus of SoftLock includes any of five specific limitations
set forth in the Court's May 13, 1998 Order. Judgment has been entered in
SSI's favor and the patent owner's claims have been dismissed on the
merits. The patent owner has indicated that it intends to appeal the
Stipulated Order and Judgment.  Although the Company and its counsel are
unable to predict the outcome of the appeal with any reasonable degree of
certainty, SSI and 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.  Liability lawsuits are also
risks to be considered.  The Company makes tools for protection of
intellectual

                                   16

<PAGE>

property, but there can be no assurance that such protections will not be
breached, resulting in lost revenues for which the Company might be held
responsible.  Similarly, the software which incorporates the Company's
tools can have adverse consequences which might lead to claims of liability
against the Company.

SUBSTANTIAL COMPETITION AND TECHNOLOGY

     There are many software developers and companies concentrating their
efforts on the issues related to the digital distribution of software and
content.  New technology and solutions that address these issues are
regularly being proposed and tested.  While management believes that the
Company's method for the marketing, distribution and sale of content on the
Internet is unique, there are numerous competitive methods and business
models under which the Company's prospective clients could choose to
distribute and/or sell their content. Some of these alternative
methodologies are supported by companies with substantially greater
personnel, financial resources and an established customer base available
to them than does the Company. There can be no assurance that the Company
will be able to convince its prospective customers of the merits of the
Company's system or that the Company will be able to compete with these
competitors successfully.

DOMAIN NAMES

     The Company currently holds the Internet domain name "softlock.com,"
as well as various other related names.  Domain names generally are
regulated by Internet regulatory bodies.  The regulation of domain names in
the United States and in foreign countries is subject to change. 
Regulatory bodies could establish additional top-level domains, appoint
additional domain name registrars or modify the requirements for holding
domain names.  As a result, the Company may not acquire or maintain the
"softlock.com" domain name in all of the countries in which the Company may
conduct business.

     The relationship between regulations governing domain names and laws
protecting trademarks and similar proprietary rights is unclear. 
Therefore, the Company could be unable to prevent third parties from
acquiring domain names that infringe or otherwise decrease the value of the
Company's trademarks and other proprietary rights.

LICENSES

     In the future, the Company may license portions of its intellectual
property, including its issued patent, to third parties.  To date, the
Company has granted a license to EarthWeb, LLC.

YEAR 2000 RISKS

     The risks posed by Year 2000 issues could adversely affect the
Company's business in a number of significant ways. Additionally, the
Company faces risks to the extent that suppliers of products, services and
systems purchased by the Company, and others with whom the Company does
business on a worldwide basis, do not have business systems or products
that comply with the Year 2000 requirements.  Additionally, the Internet
could face serious disruptions arising from the Year 2000 problem.

                                   17

<PAGE>

     The Company is currently expending resources to review its products
and services, as well as our internal management information systems in
order to identify and modify those products, services and systems that are
not Year 2000 compliant. The Company expects such  modifications will be
made on a timely basis and does not believe that the cost of such
modifications will have a material effect on its operating results.  The
Company, however, cannot guarantee that its own systems will be Year 2000
compliant in a timely manner, that any third parties who provide us with
products, services or systems will be Year 2000 compliant in a timely
manner, or that there will not be significant interoperability problems
among information technology systems which may utilize the Company's
technology.  The Company also cannot guarantee that consumers will be able
to visit the Company's Web site without serious disruptions arising from
the Year 2000 problem.  Given the pervasive nature of the Year 2000
problem, the Company cannot guarantee that disruptions in other industries
and market segments will not adversely affect the Company's business.

DEPENDENCE ON PERSONNEL

     The Company's ability to carry out its proposed activities is
dependent, to a substantial degree, on a limited number of personnel,
including Keith Loris, (Chief Executive Officer and Chairman), Jonathan
Schull (President), Martin Presberg (Vice President of Operations), Robert
Shuchatowitz (Director of Engineering), Leila Dillon (Director of
Marketing), Edward Hazen (Director of West Coast Development) and Neal
Gronlund (Programmer).  Of these, only Keith Loris and Jonathan Schull are
currently subject to employment agreements or employee non-compete
agreements. There can be no assurance that the Company will be able to
retain such personnel.  The Company's success is also dependent on the
Company's ability to recruit and motivate high quality personnel. If the
Company fails to retain the services of one or more of these persons or if
the Company is unable to attract a sufficient number of skilled employees,
the Company's operations may be adversely affected. The Company does not
currently maintain any key man insurance on any of its officers, directors,
or significant employees.

NO DIVIDENDS

     The Company has not paid any cash dividends on its Common Stock and
does not contemplate paying dividends in the foreseeable future.  It is
management's present intention to retain future earnings, if any, for use
in the Company's business.

SHARES ELIGIBLE FOR FUTURE SALE

     Of the 9,688,208 shares of our issued and outstanding Common Stock as
of the date of this Report, 9,276,666 shares are "restricted securities" as
that term is defined under Rule 144 promulgated under the Securities Act or
are restricted from sale by agreement with the Company. Of this amount,
7,097,266 shares will become available for sale under Rule 144 or otherwise
in late July 1999. Currently there is only a limited public market for the
Company's shares of Common Stock, and there can be no assurance that this
market will continue.  Sales of substantial amounts of shares of Common
Stock by shareholders pursuant to Rule 144 or otherwise could adversely
affect the then market price of the Company's stock and make it more
difficult for the Company to sell equity securities in the future at a time
and price which it deems appropriate.  The Company is unable to predict the
effect that

                                   18

<PAGE>

sales made in the future under Rule 144 or otherwise may have on the then
prevailing market price of the Common Stock.  The possibility exists that
the sale of these shares may have a depressive effect on the price of the
Company's Common Stock.

LOW VOLUME TRADING; POSSIBLE VOLATILITY OF STOCK PRICE

     The Company's Common Stock is listed for trading on the OTC Bulletin
Board, has traded in only small volumes and has been subject to a certain
amount of volatility in the price.  No assurance can be given that a more
active market will develop or that a shareholder will be able to liquidate
his/her investment without considerable delay, if at all.  Even should a
more active market develop, the price may remain volatile.  Factors such as
those discussed in this "Risk Factors" section may have a significant
impact upon the market price of the Company's Common Stock.  Due to the low
price of the Company's Common Stock, many brokerage firms may not be
willing to effect transactions in the Company's securities, particularly
because low-priced securities are subject to a Securities and Exchange
Commission rule that imposes additional sales practice requirements on
broker-dealers who sell low-priced (generally those below $5 per share)
securities.  Consequently, unless and until the market price for the
Company's Common Stock increases significantly, or until the Company's
Common Stock is admitted for trading on Nasdaq or another exchange,
brokerage firms may be reluctant to trade the Company's Common Stock.

PENNY STOCK REGULATION

     If the Company is unable to meet the Nasdaq listing or maintenance
requirements and the price per share of the Company's Common Stock were to
drop below $5.00 per share, then the Company's Common Stock would become
subject to certain "penny stock" rules promulgated by the Securities and
Exchange Commission.  Under such rule, broker-dealers who recommend "penny
stocks" to persons other than established customers and accredited
investors must make a special written suitability determination for the
purchaser and receive the purchaser's written agreement to a transaction
prior to sale.  Securities are exempt from this rule if the market price is
at least $5.00 per share.

     The SEC has adopted regulations that generally define a "penny stock"
to be an equity security that has a market price of less than $5.00 per
share, subject to certain exceptions.  Such exceptions include equity
securities listed on Nasdaq and equity securities of a company that has:
(a) net tangible assets of at least $2,000,000, if such company has been in
continuous operation for more than three years, or (b) net tangible assets
of at least $5,000,000, if such company has been in continuous operation
for less than three years, or (c) average revenue of at least $6,000,000
for the preceding three years.  Unless an exemption is available, the
regulations require the delivery, prior to any transaction involving a
penny stock, of a risk of disclosure schedule explaining the penny stock
market and the risks associated therewith.

CONTROL BY MANAGEMENT

     The officers and directors own approximately 44.13% of the Company's
currently outstanding Common Stock.  As a result, if the officers and
directors act together, they will have significant influence on the outcome
of all matters requiring shareholder approval (including the election and

                                   19

<PAGE>

removal of directors and any merger, consolidation or sale of all or
substantially all of the Company's assets) and significant influence on the
management and affairs of the Company.  Such influence could discourage
others from initiating potential merger, takeover or other change of
control transactions.  As a result, the market price of the Company's
Common Stock could be adversely affected.

ANTI-TAKEOVER PROVISIONS

     The Board of Directors of the Company has the authority to issue up to
2,000,000 shares of Preferred Stock, and to determine the price and the
terms (including preferences and voting rights) of those shares without
shareholder approval.  Although the Company has no current plans to issue
shares of Preferred Stock, any such issuances could:

     -    have the effect of delaying, deferring or preventing a change in
          control of the Company;

     -    discourage bids for the Common Stock at a premium, over the
          market price; or

     -    adversely affect the market price of, and the voting and other
          rights of the holders of, Common Stock.

     The Company is subject to certain Delaware laws that could have the
effect of delaying, deterring or preventing a change in control of the
Company.  In addition, certain provisions of the Company's Certificate of
Incorporation and By-laws, and the significant amount of Common Stock held
by the Company's officers and directors, could together have the effect of
discouraging potential takeover attempts or making it more difficult for
shareholders to change management.


            SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Some of the statements under "Description of Business," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and elsewhere in this Report and in the Company's periodic
filings with the Commission constitute forward-looking statements.  These
statements involve known and unknown risks, significant uncertainties and
other factors what may cause actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such forward-
looking statements.  Such factors include, among other things, those listed
under "Risk Factors" and elsewhere in this Report.

     In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "could," "expects," "plans,"
"anticipates," "believes," "estimates." "predicts," "potential" or
"continue" or the negative of such terms or other comparable terminology.

     Although we believe that the expectations reflected in the forward-
looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements.  Moreover, neither we nor
any other person assumes responsibility for the accuracy and completeness
of such statements.

                                   20

<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY.

     Through December 31, 1998, the Company's principal offices were
located in Rochester, New York and consisted of approximately 1,500 square
feet.  The offices were leased on a month-to-month basis, at a monthly
rental of $1,400, plus payment of certain incremental costs incurred by the
lessor and shared costs of the office complex.  The Company may terminate
the lease upon 60 days written notice to the lessor.

     On March 4, 1999, the Company signed a seven year lease on
approximately 15,600 square feet of office space at in Maynard, MA,
commencing June 1, 1999.  The monthly rental payments for the first year of
the lease is $7,448, which escalates to $14,219 during the second year and
$21,114 for the third through the seventh year of the lease.  The Company
is also obligated to pay additional amounts for the annual operation and
maintenance of the building and for taxes.

     Management believes that the Company's insurance policies provide
adequate coverage for the contents at all facilities. The lessor of each of
the Company's leased facilities is responsible for the building structure
itself.  The Company could have material adverse consequences if its
facilities were destroyed by fire or other disaster without a recovery
system in place.

ITEM 3.  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.

     SSI is one of approximately 18 defendants in an action in the United
States District Court for the Southern District of New York entitled E-DATA
CORP. 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.

     SSI answered the plaintiff's complaint and counterclaimed for a
declaratory judgment that the plaintiff's patent is invalid, unenforceable
and is not infringed by SSI.  On May 13, 1998, Judge Barbara S. Jones
signed a 44-page Opinion & Order in the action.  The Opinion & Order
provides the Court's determination of the claim scope under MARKHAM V.
WESTVIEW INSTRUMENTS, INC.  On March 12, 1999, the Court entered a
stipulated order and judgment that, based on the interpretation of the
claims of the Freeny patent as determined by the Court, the Company has not
in the past infringed, nor is it now infringing, any claim of the Freeny
patent because no method, system or apparatus of the Company includes any
of five specific limitations set forth in the Court's May 13, 1998, Order. 
Judgment has been entered in the Company's favor and the patent owner's
claims have been dismissed on the merits.  The Stipulated Order and
Judgment leaves open the possibility that the patent owner may appeal the
May 13, 1998, Order and the patent owner has said that it plans to do so.

                                   21

<PAGE>

     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 risks to be considered.  The Company makes tools for
protection of intellectual property, but there can be no assurance that
such protections will not be breached, resulting in lost revenues for which
the Company might be held responsible.  Similarly, the software which
incorporates the Company's tools can have adverse consequences which might
lead to claims of liability against the Company.

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

     On July 28, 1998, the following matters were approved by all of the
Company's directors and by shareholders holding 4,327,922 shares of Common
Stock, which represents a majority of the outstanding shares of Common
Stock of the Company, by consent, without calling a meeting of all of the
Company's shareholders, pursuant to applicable provisions of the General
Corporation Law of Delaware:

     (a)  An Amendment to the Company's Certificate of Incorporation to (i)
          change the Company's name from Fieldcrest Corp to SoftLock.com,
          Inc.; (ii) effect a 1 for 50 reverse split of the Company's
          outstanding Common Stock and warrants; (iii) reduce the number of 
          shares of preferred stock from 20,000,000 shares, $.00001 par
          value to 2,000,000, $.01 par value; and (iv) reduce the number of
          authorized shares of Common Stock from 500,000,000, $.0001 par
          value, to 25,000,000 shares, $.01 par value; and

     (b)  The adoption of the Stock Option Plan of 1998.

     The Company did not provide its shareholders with an annual report for
the fiscal year ended December 31, 1997.







                                   22

<PAGE>

                                 PART II

ITEM 5.  MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS.

     MARKET INFORMATION.  The Company's Common Stock began trading on the
Over the Counter Bulletin Board during the third quarter of 1996.

     The following table sets forth the high and low bid prices for the
Company's Common Stock for the past two years. The quotations reflect
inter-dealer prices, with retail mark-up, mark-down or  commissions, and
may not represent actual transactions.


                                        High Bid    Low Bid
                                        --------    -------
       1997         
           First Quarter                $0.01       $0.01
           Second Quarter               $0.01       $0.01
           Third Quarter                $0.01       $0.01
           Fourth Quarter               $0.01       $0.01
       1998                                              
           First Quarter                $0.01       $0.01
           Second Quarter               $0.04       $0.01
           Third Quarter (1)            $2.00       $1.13
           Fourth Quarter               $5.63       $1.03
       1999                                              
           First Quarter (2)            $7.75       $4.50
________________________
(1)  The acquisition of SSI was consummated and announced on July 28, 1998. 
     On August 10, 1998, the Company effected a one for fifty reverse stock
     split.
(2)  Through March 23, 1999.

     On March 23, 1999, the last reported bid and asked prices for the
Common Stock were $7.75 and $8.625, respectively. 

     HOLDERS.  As of March 19, 1999, the Company had approximately 164
holders of record of the Company's Common Stock.

     DIVIDENDS.  The payment of dividends by the Company is within the
discretion of its Board of Directors and depends in part upon the Company's
earnings, capital requirements, debt covenants and financial condition. 
Since its inception, the Company has not paid any dividends on its Common
Stock and does not anticipate paying such dividends in the foreseeable
future.  The Company intends to retain earnings, if any, to finance its
operations.

     RECENT SALES OF UNREGISTERED SECURITIES.     In March 1999, the
Company closed a private placement of 1,600,000 shares of Common Stock at
$1.25 per share to 59 accredited investors and two non-accredited
investors.  The Company claims the exemption provided by Section 4(2) of
the Securities Act of 1933, as amended, for transactions not involving a
public offering and Rule 506 of

                                   23

<PAGE>

Regulation D.  Two brokerage firms, Rocky Mountain Securities, Inc. and
Harveston Securities assisted in the sale of the private placement, for
which they received commissions of $34,020 and  $6,500, respectively.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

     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.

BACKGROUND

     The Company is a developer and marketer of software tools and password
vending services to allow for the secure distribution and sale of software
or content over digital media or networks, including the internet.  The
Company was classified as a development stage company until 1998, with its
activities directed primarily toward product research and development,
raising capital and marketing its products.  As of 1998, the Company's main
thrust has shifted from primarily research and development to exploring and
tapping new customers to market their products.

CORPORATE STRUCTURE

     The Company currently consists of SoftLock.com, Inc. and its wholly
owned operating subsidiary, SoftLock Services, Inc. ("SSI").  During the
year, the Company underwent a stock transfer and exchange of 7,097,266
shares of restricted common stock for all of the issued and outstanding
shares of SSI, wherein the owners of SSI became the majority owners of the
Company.  Prior to this transaction, the Company operated as a shell
company organized to locate and acquire an operating company.  All
operations presented herein are those of the acquired operating company.
This transaction also resulted in a change in reporting year from March 31
to December 31, the fiscal year end of SSI.

RESULTS OF OPERATIONS

     Total revenues for the year ending December 31, 1998 ("1998"), were
$109,402, a 1.2% decrease compared to $110,774 earned during the year ended
December 31, 1997 ("1997").  This slight decrease can be attributed to the
nearly offsetting changes in license and custom software design fees, which
decreased by nearly 44% (approximately $32,000) from $73,600 in 1997 to
$41,500 in 1998, and an increase in revenue from the Company's primary
product, the sale of passwords and vouchers, of nearly 71% (approximately
$27,000), from $37,480 in 1997 to $64,041 in 1998, reflecting an increase
in both the number and value of passwords sold.

     Gross profit was $86,236, or 78.8% of revenue in 1998, as compared
with $90,428, or 81.6% of revenue in 1997.  Although gross profit as a
percentage of password sales increased for 1998, it was offset by the
decline in licensing sales which generate a higher contribution to gross
margin.

                                   24

<PAGE>

     Selling, general and administrative expenses totaled $718,350 for 1998
as compared with $924,029 for the preceding year, a decrease of 22.3%.  The
primary reason for the decline relates to 1997 expenditures for outside
consultants engaged by the company to advise on corporate structuring and
financial strategies.  Overall, outside consulting decreased by nearly
$220,000 (77.2%) from $281,600 in 1997 to $64,200 in 1998.  In addition,
costs for 1997 include non-cash compensation of approximately $135,000. 
Savings from the reduction in the use of these outside consultants have
been partially offset by the cost of regulatory compliance as a result of
the Company becoming an SEC reporting company in July of 1998 and the
hiring of additional key personnel in the fourth quarter of 1998.

     Other income increased from $19,950 in 1997 to $24,616 in 1998.  This
increase relates to increased interest income during the period mostly on
earned interest from cash balances and other sources which increased from
less than $1,000 in 1997 to over $5,500 in 1998.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary source of liquidity has been proceeds from the
sale of securities in private placements, from which $559,000 was raised
during the year ended December 31, 1998 and $660,000 during the year 1997. 
Cash used in operations totaled $511,000 for the year ended December 31,
1998, as compared with $775,000 for the preceding year.  The company, which
was classified as a company in the development stage until 1998, has
incurred significant and recurring operating losses since inception,
including $609,232 in 1998 and $815,278 in 1997.  In addition, at December
31, 1998, the Company had working capital (current assets minus current
liabilities) and stockholders' equity deficits of $22,147 and $6,671,
respectively, as compared to working capital and stockholders' equity
surpluses of $29,456 and 46,829 in 1997.  The majority of the decrease in
working capital can be attributed to an increase in accrued expenses from
1997 to 1998.

     In February 1999, the Company completed a private placement of its
Common Stock for $2,000,000. The net proceeds from the placement will be
used to finance continued operations, product development and marketing.
Management considers this amount to be sufficient to sustain the working
capital needs projected by its current business plan for the immediate
future. Management's plans contemplate additional capital raising
initiatives in order to continue its business plan. The Company is
currently in discussion with a number of investment bankers concerning an
institutional private placement of its equity securities later in the year.

     The Company's future operating results will depend to a considerable
extent on its ability to rapidly and continuously develop, introduce, and
deliver existing and planned service products. Should the Company fail to
successfully complete the additional capital raising initiatives described
in the previous paragraph, it may be necessary to modify its business plan,
including the reduction or elimination of some current and planned software
development programs.

                                   25

<PAGE>

YEAR 2000 READINESS DISCLOSURE

     Based on the Company's assessment to date, the Company believes the
current versions of its software products and services are "Year 2000
compliant" that is, they are capable of adequately distinguishing twenty-
first century dates from twentieth century dates.  New products are being
designed to be Year 2000 compliant.  Although the Company's products have
undergone, or will undergo, the Company's normal quality testing
procedures, there can, however, be no assurance that the Company's products
will contain all necessary date code changes.  Furthermore, use of the
Company's products in connection with other products which are not Year
2000 compliant, including non-compliant hardware and software may result in
the inaccurate exchange of dates and result in performance problems or
system failure.  Any failure of the Company's products to perform,
including system malfunctions associated with the onset of year 2000, could
result in claims against the Company.  However, success of the Company's
Year 2000 compliance efforts may depend on the success of its customers in
dealing with the Year 2000 issue.

     Although the Company has not been a party to any litigation or
arbitration proceeding to date that involves Year 2000 compliance issues
with its products or services, there can be no assurance that the Company
will not in the future be required to defend its products or services in
such proceedings, or to negotiate resolutions of claims based on Year 2000
issues.  The costs of defending and resolving Year 2000-related disputes,
regardless of the merits of such disputes, and any liability of the Company
for Year 2000-related damages, including consequential damages, could have
a material adverse effect on the Company's business, results of operations
and financial condition.

     The Company's business depends on numerous systems that could
potentially be impacted by Year 2000 related problems.  Those systems
include, among others: hardware and software systems used by the Company to
deliver products and services to its customers (including software supplied
by third parties); communications networks such as the world wide web upon
which the Company depends to generate product orders; the internal systems
of the Company's customers and suppliers; software products sold to
customers; the hardware and software systems used internally by the Company
in the management of its business; and non-information technology systems
and services used by the Company in the management of its business, such as
power, telephone systems and building systems.

     The Company is currently in the process of evaluating its information
technology infrastructure in order to identify and modify any products,
services or systems that are not Year 2000 compliant.  Based on its initial
analysis of the systems potentially impacted by conducting business in the
twenty-first century, the Company is applying a phased approach to making
such systems, and accordingly, the Company's operations, ready for the year
2000.  Beyond awareness of the issues and scope of systems involved, the
phases of activities in process include: an assessment of specific
underlying computer systems, programs and hardware; renovation or
replacement of Year 2000 non-compliant technology; validation and testing
of critical systems certified by third-party suppliers to be Year 2000
compliant; and implementation of Year 2000 compliant systems.  The table
below describes the status and timing of such phased activities.

                                   26

<PAGE>

IMPACTED SYSTEMS           STATUS                     TARGETED COMPLETION

Software products sold
 to customers              Completed

Hardware and software      Testing and remediation    Third Quarter 1999
systems used to deliver
products and services

Communication networks     Assessment in process      Fourth Quarter 1999
used to carry products
and provide services

Hardware and software      Completed
systems used to manage
the Company's business

Non-information technology Systems upgraded or        Fourth Quarter 1999
systems and services       replaced, as appropriate,
                           testing and implementation

     In the event that any of the Company's significant suppliers or
customers does not successfully and timely achieve Year 2000 compliance,
the Company's business or operations could be adversely affected. This
could result in system failures or generation of erroneous information and
could cause significant disruption to business activities. The Company is
reviewing what further actions are required to make all software systems
used internally Year 2000 compliant as well as actions needed to mitigate
vulnerability to problems with suppliers and other third parties' systems.
Such actions include a review of vendor contracts and formal communication
with suppliers to request certification that products are Year 2000
compliant.

COSTS TO ADDRESS YEAR 2000 ISSUES

     The total cost of these Year 2000 compliance activities has not been,
and is not anticipated to be, material to the Company's business, results
of operations and financial condition. These costs and the timing in which
the Company plans to complete its Year 2000 modification and testing
processes are based on management's estimates. However, there can be no
assurance that the Company will timely identify and remedy all significant
Year 2000 problems, that remediation efforts will not involve significant
time and expense, or that such problems will not have a material adverse
effect on the Company's business, results of operations and financial
condition.







                                   27

<PAGE>

CONTINGENCY PLANS

     The Company does not presently have a contingency plan for handling
Year 2000 problems that are not detected and corrected prior to their
occurrence. Any failure of the Company to address any unforeseen Year 2000
issue could adversely affect the Company's business, financial condition
and results of operations.


ITEM 7.  FINANCIAL STATEMENTS.

     The Financial Statements set forth on pages  F-1 to F-13 of this
Report are incorporated herein by reference.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     The Company's principal independent accountants did not resign or
decline to stand for re-election nor were they dismissed during the
Company's two most recent fiscal years.  The Company's financial statements
for the years ended December 31, 1998  and 1997 were audited by Comiskey &
Company, P.C., which had been the auditor for the Company (formerly known
as Fieldcrest Corporation), prior to the reverse acquisition of SSI.

     There have been no disagreements between the Company and SSI and
Comiskey & Company, P.C. on matters of accounting and financial disclosure.







                                   28

<PAGE>

                                PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

IDENTIFICATION OF DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

     Set forth below is certain information regarding the directors,
executive officers and key employees of the Company as of the date hereof. 
Service with the Company prior to July 1998 was rendered to SSI.


                                                               OFFICER OR
NAME                     AGE  POSITION                       DIRECTOR SINCE
----                     ---  --------                       --------------

Keith Loris              40   Chief Executive Officer and        1998
                              Chairman of the Board 

Jonathan Schull, Ph.D.   46   President and Director             1992

Martin Presberg          35   Secretary, Vice President          1996
                              of Operations, Principal
                              Financial Officer

Rodney Conard            51   Director                           1996

Francis J. Knott         52   Director                           1996

Maurice LaFlamme         47   Director                           1996

     The Directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have
been elected and qualified. Officers of the Company are elected annually by
the Board of Directors and hold office until their successors are elected
and qualified.

     The following sets forth biographical information concerning the
Company's Directors and executive officers for at least the past five
years.

     KEITH LORIS, the Chief Executive Officer and Chairman of the Board,
has been an officer and director of the Company since September 1998. From
1995 until he joined the Company, Mr. Loris was vice president of marketing
and new business development at ServiceSoft Corporation of Boston, MA.
Previously, Mr. Loris was vice president of technology for the Desktop
Document Systems Division of Xerox Corporation from 1991 to 1995, and vice
president of technology for NYNEX Image Recognition Systems, Corp. from
1986 to 1991.  Mr. Loris received a Bachelors Degree in Biology from Vassar
College in 1979 and a Masters Degree in Computer Science from New York
University in 1986.

                                   29

<PAGE>

     JONATHAN SCHULL, PH.D. founded SSI in 1992, and has since served as
its president and as a director.  Prior to founding SSI,  Dr. Schull was a
tenured professor of Biological Psychology at Haverford College in
Haverford, PA. Dr. Schull received a B.S. from Reed College in 1975, and a
Ph.D. from the University of Pennsylvania in 1980.

     RODNEY J. CONARD has been a Director of SSI since November 1996.  In
1989, he founded Conard Associates, Inc., a consulting firm which helps
organizations achieve operational excellence and competitive success. Dr.
Conard holds a Ph.D. in Applied Performance Sciences and Organizational
Management. Prior to forming Conard Associates, Dr. Conard was a Director
with Coopers & Lybrand's Management Consulting Services in Boston, MA.

     FRANCIS J. KNOTT has been a Director of SSI since November 1996. He
served and Chairman of the Board from October 1997 to July 1998. In 1992,
he founded and has since served as president of ViTAL Resources, Inc., an
information age strategy advisor to multimedia communication firms,
regulatory bodies, and municipal, state, provincial, and national
governments in the United States and Canada. Mr. Knott was the founding CEO
of VSI Enterprises, Inc. (NASDAQ), a developer and marketer of video
conferencing systems.  He was a founding trustee and Board Member for 14
years of the Manufacturers Series Fund, Inc. Mr. Knott served from 1993-96
as the first Chairman of the Information Technology Board for the State of
Maryland. Mr. Knott recently served for three years as the President of the
International Teleconferencing Association (ITCA), and was inducted into
the Teleconferencing Industry Hall of Fame for his leadership contributions
to this emerging industry.

     MAURICE LAFLAMME has been a Director of SSI since November 1996.  As
an investor and adviser, Mr. LaFlamme was instrumental in restructuring the
company.  From 1976 to 1981, Mr. LaFlamme developed, owned, and
successfully sold Taco Villa, Inc. From 1981 to the present, he has been a
private investor and financial consultant.  Mr. LaFlamme was a director of
American Biophysics Corp. from 1992 to 1997.

     MARTIN PRESBERG has been an employee of the Company since January
1996.  He served as a Director of SSI from November 1996 to September 1998. 
He has been Secretary, Vice President of Operations and Principal Financial
Officer of the Company since August 1998. Before joining SoftLock, Mr.
Presberg was Financial and Technical Manager of Grassroots, Inc., a retail
shoe store in Rochester, NY.  From 1993 to 1996, Mr. Presberg worked in
video production, marketing research, and operations management.  Mr.
Presberg received a B.A. degree from Cornell University in 1986 and an MBA
from the Rochester Institute of Technology in 1993.

COMMITTEES

     The Company's audit committee consists of Francis J. Knott and Maurice
LaFlamme. The audit committee serves to oversee the financial management
and bookkeeping of the Company, and accepts the report from the Company's
independent auditors.

     The Company also has a Compensation Committee, which currently
consists of Francis J. Knott and Rodney Conard.  The Compensation Committee 
reviews salaries, bonuses, and other forms of compensation for officers and
key employees of the Company and its subsidiaries, and establishes
salaries, benefits, and other forms of compensation for new employees. In
addition, the Compensation

                                   30

<PAGE>

Committee reviews other matters concerning compensation and personnel as
the Board of Directors requests. The Compensation Committee will design the
Company's compensation to enable the Company to attract, retain, and reward
highly qualified executives, while maintaining a strong and direct link
between executive pay, the Company's financial performance, and total
stockholder return.  The Compensation Committee believes that officers and
certain other key employees should have a significant stake in the
Company's stock price performance under programs which link executive
compensation to stockholder return.

SIGNIFICANT EMPLOYEES

     The following employees make a significant contribution to the
business of the Company.

     LEILA DILLON, Director of Marketing, has been with the Company since
February 1999. She has overall responsibility for developing and managing
the Company's public relations and investor relations efforts.  Prior to
joining the Company, Ms. Dillon was the manager of marketing communications
at ServiceSoft Corporation, the leading provider of web-based customer
support technology.  Ms. Dillon received a B.A. degree in arts from the
University of New Hampshire in 1993.

     ROBERT SHUCHATOWITZ, Director of East Coast Development, has been with
the Company since December 1998. He has overall responsibility for managing
the development of the Company's next generation system due for release in
the summer of 1999. Mr. Shuchatowitz was the chief architect and project
leader for Xerox's character recognition products.  Most recently, he  had
his own software consulting firm.  Mr. Shuchatowitz received a B.S. in
mathematics and physics from Hebrew University in Israel in 1976 and an
M.S.E. in Biomedical Engineering from Case Western Reserve University in
1979.

     ED HAZEN, Director of West Coast Development, has been the Company's
chief programmer since he joined SSI in September 1994. From 1991 until
joining SSI, Mr. Hazen worked as a freelance programmer and consultant in
Rochester, NY.  In 1982, Mr. Hazen founded Resources, Incorporated, solar
heating and energy conservation system consultants, designers and
installers in Rochester, NY.  He served as president of Resources,
Incorporated from 1982 to 1991.  Mr. Hazen received a B.S. degree from
Rensselaer Polytechnic Institute in 1981.

     NEAL GRONLUND, Core Programmer, has been responsible for the
development of many of the Company's core algorithms and tools since June
1996. Mr. Gronlund worked as a programmer at the Boeing Corp. in Seattle,
WA from 1987 to 1997.  Mr. Gronlund received a B.S. degree in Electrical
Engineering from the University of Washington in 1972 and a Master of
Software Engineering degree from Seattle University in 1986.

FAMILY RELATIONSHIPS

     There are no family relationships between the officers and directors
of the Company.

                                   31

<PAGE>

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

     No officer, director, significant employee, promoter or control person
of the Company has been involved in any event of the type described in Item
401(d) of Regulation S-B during the past five years.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Not applicable.

ITEM 10.  EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

     The following table sets forth information regarding compensation paid
to the Company's CEO and the other executive Officers of the Company who
received in excess of $100,000 of salary and bonus from the Company during
the fiscal year ended December 31, 1998:

<TABLE>
<CAPTION>
                                                        Long-Term
                        Annual Compensation ($$)   Compensation Awards
                        ------------------------   -------------------
                                                   Restricted
Name and                                            Stock     Options        Other
Position             Year    Salary     Bonus       Awards     & SARs      Compensation
--------             ----    ------     -----       ------     ------      -------------
                              ($$)      ($$)         ($$)       (##)           ($$)

<S>                  <C>    <C>         <C>           <C>      <C>             <C>
Jonathan F. Schull,  1998   $87,500(1)  $21,633       -0-        -0-           $ -0-    
President            1997   $91,000(2)  $21,538       -0-        -0-           $ -0-    
                     1996   $22,804       -0-         -0-      2,156,781       $ -0-    

Keith Loris,         1998   $32,192(3)    -0-         -0-      1,182,870(4)    $ -0- 
CEO                  1997     -0-         -0-         -0-        -0-           $ -0- 
                     1996     -0-         -0-         -0-        -0-           $ -0- 
</TABLE>
________________________
(1)  Of this amount, $19,814 has not been paid and has been accrued by the
     Company.
(2)  Of this amount, $28,500 was not paid and has been accrued by the Company.
(3)  Mr. Loris was hired as CEO of the Company, effective September 1998.
(4)  Represents options vesting over 5 years.

COMPENSATION OF DIRECTORS

     Directors who are also employees of the Company receive no
compensation for serving on the Board of Directors.  With respect to
Directors who are not employees of the Company ("Non-Employee Directors"),
the Company annually grants such Directors options to purchase Common Stock
for their services as Directors, and reimburses them for all travel and
other expenses incurred in connection with attending Board of Directors and
committee meetings.

     For services as a Director during 1997, each Non-Employee Director
received options to purchase an aggregate of 67,420 shares of the Company's
Common Stock.  The options are exercisable at any time.  Directors received
one option to purchase 33,710 shares at $0.2403 per share, which expires
January 27, 2007, and one option to purchase 33,710 shares at $0.7787 per
share, which expires October 24, 2007.

                                   32

<PAGE>

     For services as a Director during 1998, each Non-Employee Director
received an option to purchase 36,407 shares of the Company's Common Stock,
and Francis J. Knott, the Chairman of the Board, received an option to
purchase 72,814 shares of Common Stock. These options are exercisable at
any time at $0.7787 per share and expire November 18, 2007.

     For services during 1999, each Non-Employee Director, and an advisor
to the Board of Directors, received an option to purchase 30,000 shares of
the Company's Common Stock. The options are exercisable at any time at
$1.9621 per share and expire January 31, 2009.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

     The Company has an employment agreement with Keith Loris, pursuant to
which Mr. Loris became CEO of the Company effective September 21, 1998, and
a Director.  Under the agreement, Mr. Loris  receives a base salary of
$135,000, and  is eligible for annual cash bonuses equal to 25% of his base
salary at the discretion of the Board of Directors after December 31, 2000. 
Mr. Loris was also granted options to purchase 1,182,870 shares of Common
Stock pursuant to the Company's 1998 Stock Option Plan, vesting over a five
year period in equal amounts at the conclusion of each anniversary of Mr.
Loris' employment with the Company; however, in the event the Company
receives $1 million or more in financing during the first two years of Mr.
Loris' employment, Mr. Loris' options will vest sooner, on the basis of
78,858 shares for each $1 million in financing up to a maximum of 236,574
shares for $3 million in financing.  As of March 19, 1999, the Company had
raised $2 million in financing under this agreement. The agreement is to
continue in effect unless earlier terminated upon 15 days notice by either
the Company or Mr. Loris, by Mr. Loris' death or disability or by the
Company for cause.

     Jonathan Schull, President, was the Company's CEO prior to the
appointment of Mr. Loris.  The Company has an employment agreement with Dr.
Schull which provides that he will continue to devote his full time efforts
to the Company through July 31, 2000, in consideration of a salary of
$91,000 per year.  From time to time during 1997 and 1998, Dr. Schull
agreed to have portions of his salary deferred rather than paid in cash in
order to apply available cash to the Company's pressing  operational needs. 
The deferred amounts have been accrued as an account payable by the
Company.  In 1997 and 1998, Mr. Schull received bonuses in the amount of
$21,578 and $21,633, respectively, which resulted in net compensation to
Mr. Schull in an amount equal to the amounts Mr. Schull owed to the Company
for interest for 1997 and 1998 pursuant to a note payable by Mr. Schull to
the Company.

1998 STOCK OPTION PLAN

     On July 28, 1998, the Company adopted the 1998 Stock Option Plan (the
"Plan") which provides for the issuance of options ("Options") to purchase
shares of Common Stock to key employees, officers, directors and
consultants of the Company.  A total of 3,000,000 shares have been reserved
for grant under the Plan and Options to purchase 2,092,962 shares had been
granted as of December 31, 1998. The purposes of the Plan are to encourage
stock ownership by employees, officers, directors and consultants of the
Company so that they may acquire or increase their proprietary interest in
the Company, to reward employees, officers, directors and consultants for
past

                                   33

<PAGE>

services to the Company and to encourage such persons to become employed by
or remain in the employ of or otherwise continue their association with the
Company and to put forth maximum efforts for the success of the business of
the Company.

     The Plan is administered by the Board of Directors.  At its
discretion, the Board may determine the persons to whom Options may be
granted and the terms thereof.  As noted above, the Board may issue Options
to members of the Board.

     The terms of any Options granted under the Plan are not required to be
identical as long as they are not inconsistent with the express provisions
of the Plan.  In addition, the Board may interpret the Plan and may adopt,
amend and rescind rules and regulations for the administration of the Plan.

     Options may be granted as incentive stock options ("Incentive
Options") intended to qualify for special treatment under the Internal
Revenue Code of 1986, as amended (the "Code"), or as non-qualified stock
options ("Non-Qualified Options") which are not intended to so qualify. 
Only employees of the Company, or any subsidiary of the Company, are
eligible to receive Incentive Options.  The period during which Options may
be exercised may not exceed ten years.  The exercise price for Incentive
Options may not be less than 100% of the fair market value of the Common
Stock on the date of grant; except that the exercise price for Incentive
Options granted to persons owning more than 10% of the total combined
voting power of the Common Stock may not be less than 110% of the fair
market value of the Common Stock on the date of grant and may not be
exercisable for more than five years.  The exercise price for Non-Qualified
Options may not be less than 10% of the fair market value of the Common
Stock on the date of grant.  The Plan defines "fair market value" as  (i)
the mean between the highest and the lowest quoted selling price of the
Company's Common Stock as reported on a national securities exchange;
provided that at least one sale of the Company's Common Stock occurred on
such exchange on such date, and, if not, then the closing price on the last
preceding date on which at least one sale on such exchange did occur, or
(ii) if the shares of Common Stock are not listed on a national securities
exchange, the value as determined by the Board in accordance with its
discretion in making a bona fide, good faith determination of fair market
value.

     The Plan contains provisions for proportionate adjustment of the
number of shares issuable upon the exercise of outstanding Options and the
exercise price per share in the event of stock dividends, recapitalizations
resulting in stock splits or combinations or exchanges of shares.

     In the event of the proposed dissolution or liquidation of the
Company, or any corporate separation or division, including, but not
limited to, split-up, split-off or spin-off, merger or consolidation of the
Company with another company in which the Company is not the survivor, or
any sale or transfer by the Company of all or substantially all its assets
or any tender offer or exchange offer for or the acquisition, directly or
indirectly, by any person or group for more than 50% of the then
outstanding voting securities of the Company, the Board may provide that
the holder of each Option then exercisable will have the right to exercise
such Option (at its then current Option Price) solely for the kind and
amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such dissolution, liquidation,
corporate separation or division, merger or consolidation, sale or transfer
of

                                   34

<PAGE>

assets or tender offer or exchange offer, by a holder of the number of
shares of Common Stock for which such Option might have been exercised
immediately prior to such dissolution, liquidation, or corporate separation
or division, merger or consolidation, sale or transfer of assets or tender
offer or exchange offer; or in the alternative the Board may provide that
each Option granted under the Plan will terminate as of a date fixed by the
Board; provided, however, that not less than 30 days written notice of the
date so fixed will be given to each recipient, who will have the right,
during the period of 30 days preceding such termination, to exercise the
Option to the extent then exercisable.  To the extent that Section 422(d)
of the Code would not permit this provision to apply to any outstanding
Incentive Options, such Incentive Options will immediately upon the
occurrence of the dissolution or liquidation, etc., be treated for all
purposes of the Plan as Non-Qualified Options and shall be immediately
exercisable as such.

     If the recipient ceases to be an employee, officer or director of, or
consultant to, the Company or a subsidiary (other than by reason of death,
disability or retirement), other than for cause, all Options theretofore
granted to such recipient but not theretofore exercised will terminate
three months after the date the recipient ceased to be an employee, officer
or director of, or consultant to, the Company.

     If the recipient ceases to be an employee, officer or director of, or
consultant to, the Company or a subsidiary or parent to the Company by
reason of termination for cause, all Options theretofore granted to such
recipient but not theretofore exercised will terminate on the date the
recipient ceases to be an employee, officer or director of, or consultant
to, the Company.

     If a recipient dies while an employee, officer or director of or a
consultant to the Company, or within three months after termination thereof
(other an for cause), all Options theretofore granted to such recipient,
whether or not otherwise exercisable, unless earlier terminated in
accordance with their terms, may be exercised by the recipient or by the
recipient's estate or by a person who acquired the right to exercise such
Options by bequest or inheritance or otherwise by reason of the death or
disability of the recipient, at any time within one year after the date of
death of the recipient.

     Options granted under the Plan are not transferable other than by will
or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, or the rules thereunder.  Options
may be exercised, during the lifetime of the recipient, only by the
recipient and thereafter only by his legal representative.

     The Board may suspend, terminate, modify or amend the Plan, but
without shareholder approval the Board may not materially increase the
number of shares as to which Options may be granted, change the eligibility
requirements for persons entitled to participate in the Plan or materially
increase the benefits to be received by any participant under the Plan. 
The Board may not adversely affect any Option previously granted without
the consent of the participant.  Unless sooner terminated, the Plan will
expire on July 28, 2008.

OPTION GRANTS

     The following table sets forth certain information regarding Options
to purchase shares of Common Stock issued to executive officers of the
Company during the fiscal year ended December 31, 1998:

                                   35

<PAGE>

                          OPTION GRANTS IN 1998

                         Number of         Percent of
                        Securities        Total Options
                        Underlying         Granted to     Exercise  Expiration
Name                  Options Granted   Employees in 1998   Price      Date
----                  ---------------   -----------------   -----      ----

Martin Presberg            40,452 (1)          3.0%        $0.8937    08-26-08
Keith Loris             1,182,870 (2)         86.4%        $0.8909    09-21-08
______________________________
(1)  The Options granted to Mr. Presberg vest over 3 years.
(2)  The Options granted to Mr. Loris vest over 5 years.


OPTION EXERCISES AND YEAR END OPTION VALUES

     The following table provides information on option exercises in fiscal
1998 by the executive Officers of the Company and the value of such
Officers' unexercised options at December 31, 1998:

                   AGGREGATED OPTION EXERCISES IN 1998
                       AND FISCAL YEAR-END VALUES

<TABLE>
<CAPTION>
                                           Number of Securities
                                          Underlying Unexercised       Value of Unexercised
                   Shares                   Options at Fiscal          In-the-Money Options
                  Acquired                     Year-End(#)           at Fiscal Year-End($)(1)
                     on      Value     ---------------------------  ---------------------------
Name              Exercise  Realized   Exercisable   Unexercisable  Exercisable   Unexercisable
----              --------  --------   -----------   -------------  -----------   -------------
<S>                  <C>      <C>       <C>          <C>            <C>           <C>
Keith Loris          0        0              0       1,182,870      $      0      $5,599,825
Martin Presberg      0        0         49,441          71,915      $248,076      $  360,810
</TABLE>
______________________________

(1)  Market value of underlying securities at fiscal year end, minus the
     exercise price.


LONG-TERM INCENTIVE PLANS

     The Company has no long term incentive plans other than its 1998 Stock
Option Plan.

REPORTING ON REPRICING OF OPTIONS/SARS

     Not applicable.







                                   36

<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth, as of the date hereof, the ownership
of the Company's Common Stock by (i) each director and executive officer of
the Company, (ii) all executive officers and directors of the Company as a
group, and (iii) all persons known by the Company to beneficially own more
than 5% of the Company's Common Stock.



                               SHARES OWNED       PERCENT OF COMMON STOCK
NAME AND ADDRESS               BENEFICIALLY (1)            OWNED
----------------               ------------                -----

Jonathan Schull                 2,484,612                  25.65%
36 Brunswick St.
Rochester, NY 14607

Keith Loris                       157,716(2)                1.60%
15 Oxbow Rd.
Concord, MA 01742

Francis J. Knott                  288,787(3)                2.93%
14 Stony Meadow Ct.
Lutherville, MD 21093

Rodney J. Conard                  534,215(4)                5.44%
74 Northeastern Blvd #22A
Nashua, NH 03062

Maurice LaFlamme                1,460,300(5)               13.48%
34 Weatherly Ct.
Jamestown, RI 02835

Martin Presberg                    87,421(6)                0.90%
293 Mulberry St.
Rochester, NY 14620

Gene Schull                       485,320                   5.01%
245 West 107th St.
Apt. 11C
New York, NY 10025

All directors and               5,013,051                  44.13%
executive officers
as a group (6 persons)
______________________
(1)  Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
     1934. Unless otherwise stated below, each such person has sole voting
     and investment power with respect to all such shares. Under Rule
     13d-3(d), shares not outstanding which are subject to options, Warrants,
     rights or conversion privileges exercisable within 60 days are deemed
     outstanding for the purpose of calculating the number and percentage
     owned by

                                   37

<PAGE>

     such person, but are not deemed outstanding for the purpose of
     calculating the percentage owned by each other person listed.
(2)  Includes 157,716 shares vested under an option to purchase 1,182,870
     shares at an exercise price of $0.8909 per share granted on September
     21, 1998, and vesting over a 5-year period.
(3)  Includes options to purchase 33,710 shares at $0.24 per share and
     106,524 shares at $0.78 per share.
(4)  Includes options to purchase 33,710 shares at $0.24 per share, 70,117
     shares at $0.78 per share, and 30,000 shares at $1.96 per share.
(5)  Includes options to purchase 1,011,307 shares at $0.18 per share,
     33,710 shares at $0.24 per share,70,117 shares at $0.78 per share, and
     30,000 shares at $1.96 per share.
(6)  Includes options to purchase 31,462 shares at $0.24 per share and
     33,710 shares at $0.78 per share.  Does not include an additional
     56,184 shares granted to Mr. Presberg vesting through the year 2001.

CHANGES IN CONTROL

     There are no understanding, arrangements or agreements known by
management at this time which would result in a change in control of the
Company.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

TRANSACTIONS WITH MANAGEMENT AND OTHERS

     In January 1997, the Company hired a company owned by Rodney J. Conard
to perform an executive search for the Company's CEO, which ultimately
resulted in Keith Loris being employed.  The Company issued Mr. Conard
173,405 shares of the Company's Common Stock on the basis of $0.24 per
share in payment of the fee of $41,667.  The shares were issued directly to
Mr. Conard at the request of Mr. Conard's company.

     In July 1997, Francis J. Knott loaned the Company $10,000 at 12.5%
interest.  The loan was due December 31, 1997.  On December 1, 1997, Mr.
Knott received payment of the loan and accrued interest on the basis of
$.7787 per share.

     In June 1996, Martin Presberg exercised an option to purchase 20,900
shares of the Company's Common Stock at $0.12 per share in consideration of
a note in the principal amount of $2,480 The note is nonrecourse, except as
to the shares of the Company's Common Stock, bears interest at 7.04% per
year and is due June 22, 2006.

     In June 1996, Jonathan Schull exercised an option to purchase
2,156,780 shares of the Company's Common Stock at $0.12 per share in
consideration of a note in the principal amount of $255,920 The note is
nonrecourse, except as to the shares of the Company's Common Stock, bears
interest at 7.04% per year and is due June 22, 2006. In 1997 and 1998, the
Company awarded Dr. Schull cash bonuses in the amount of $21,538 and
$21,633 respectively to cover interest payments due under the loan.

                                   38

<PAGE>

     In October 1996, in consideration of the payment of $20,000, the
Company granted Maurice LaFlamme an option to purchase 1,011,307 shares of
the Company's Common Stock at $.18 per share. The option expires on October
25, 1999.  The option provides Mr. LaFlamme certain registration rights for
the option and the underlying shares and contains cashless exercise
provisions.

ITEM 13.  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.

     (a)  The following documents are filed as a part of this Form 10-KSB:

          Consolidated Financial Statements of SoftLock.com, Inc.:

          Report of Independent Certified Public Accountants

          Consolidated Balance Sheet - December 31, 1998

          Consolidated Statements of Operations - Years ended December 31,
          1998 and 1997

          Consolidated Statements of Stockholders' Equity  - Years ended
          December 31, 1998 and 1997

          Consolidated Statements of Cash Flows - Years ended December 31,
          1998 and 1997

          Notes to Consolidated Financial Statements - December 31, 1998
          and 1997

Exhibits required to be filed are listed below and, except where
incorporated by reference, immediately follow the Financial Statements.

     Exhibit
     Number    Description
     ------    -----------

     2.1       Plan and Agreement of Reorganization among Fieldcrest Corp.,
               SoftLock Services, Inc. and  Jonathan Schull, dated May 22,
               1998  (1)

     3.1       Certificate of Incorporation, dated February 12, 1991 (2)

                                   39

<PAGE>

     3.2       Bylaws (3)

     3.3       Amended and Restated Certificate of Incorporation, filed
               with the State of Delaware on August 3, 1998 (4)

     3.4       Amended and Restated Bylaws (5)

     3.5       Amended and Restated Bylaws, dated March 1, 1999

     10.1      Employment Agreement, dated July 27, 1998, between
               SoftLock Services, Inc. and Jonathan Schull (6)

     10.2      1998 Stock Option Plan

     10.3      Employment Agreement, dated September 2, 1998, between
               SoftLock Services, Inc. and Keith Loris

     10.4      Lease, dated March 4, 1999, between SoftLock.com, Inc. and
               Wellesley/Rosewood Maynard Mills Limited Partnership

     10.5      Stock Option, dated October 25, 1996, granted by SoftLock
               Services, Inc. to Maurice R. LaFlamme

     21        Subsidiaries of the Company

     27        Financial Data Schedule
________________________
(1)  Incorporated by reference to Exhibit 2.1 to the Registrant's Annual
     Report on Form 10-KSB for the fiscal year ended March 31, 1998.
(2)  Incorporated by reference to Exhibit 3.1 to the Registrant's
     Registration Statement on Form S-18 (No. 33-37513-D).
(3)  Incorporated by reference to Exhibit 3.2 to the Registrant's
     Registration Statement on Form S-18 (No. 33-37513-D).
(4)  Incorporated by reference to Exhibit 3.1 to the Registrant's
     Current Report on Form 8-K, dated July 28, 1998.
(5)  Incorporated by reference to Exhibit 3.2 to the Registrant's
     Current Report on Form 8-K, dated July 28, 1998.
(6)  Incorporated by reference to Exhibit 10.1 to the Registrant's
     Current Report on Form 8-K, dated July 28, 1998.

     (b)  During the quarter ended December 31, 1998, the Company did not
          file any Current Reports on Form 8-K.

     (c)  Required exhibits are attached hereto or are incorporated by
          reference and are listed in Item 13(a)(3) of this Report.

     (d)  Required financial statements are attached hereto and are listed
          in Item 13 of this Report.









                                   40

<PAGE>



                           SoftLock.com, Inc.
                         (fka Fieldcrest Corp.)

                          Financial Statements
                       December 31, 1998 and 1997









<PAGE>

                                CONTENTS



                                                             Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS            F-1

BALANCE SHEET                                                 F-2

STATEMENTS OF OPERATIONS                                      F-3

STATEMENTS OF STOCKHOLDERS' EQUITY                            F-4

STATEMENTS OF CASH FLOWS                                      F-5

NOTES TO FINANCIAL STATEMENTS                              F-6 - F-13









<PAGE>

                REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



The Board of Directors and 
Stockholders of SoftLock.com, Inc.


We have audited the accompanying balance sheet of SoftLock.com, Inc., (fka
Fieldcrest Corp.) (a Delaware company) as of December 31, 1998, and the
related statements of operations, stockholders' equity, and cash flows for
each of the two years then ended.  These financial statements are the
responsibility of management.  Our responsibility is to express an opinion
on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SoftLock.com, Inc. (fka
Fieldcrest Corp.) as of December 31, 1998 and 1997, and the results of its
operations, its cash flows, and the changes in its stockholders' equity for
each of the two years then ended in conformity with generally accepted
accounting principles.


February 5, 1999
(Except Note 8, which
is dated March 12, 1999)
Denver, Colorado
                                                 COMISKEY & COMPANY
                                                 PROFESSIONAL CORPORATION



                                   F-1

<PAGE>

                           SOFTLOCK.COM, INC.
                         (FKA FIELDCREST CORP.)
                              BALANCE SHEET
                            DECEMBER 31, 1998



 ASSETS
CURRENT ASSETS
   Cash                                                        $   160,841 
   Accounts receivable                                               4,619 
                                                               ----------- 

      TOTAL CURRENT ASSETS                                         165,460 

 FURNITURE AND EQUIPMENT
   Computers                                                        42,428 
   Furniture and telephones                                          2,044 
                                                               ----------- 
                                                                    44,472 
   Less: accumulated depreciation                                   28,148 
                                                               ----------- 

                                                                    16,324 

 OTHER ASSETS
   Deposits                                                          1,058 
                                                               ----------- 

      TOTAL ASSETS                                             $   182,842 
                                                               =========== 

   LIABILITIES AND STOCKHOLDERS' EQUITY
 CURRENT LIABILITIES
   Accounts payable                                            $   106,114 
   Accrued payroll                                                  77,694 
   Obligations under capital lease - current                         3,018 
   Excise taxes payable                                                781 
                                                               ----------- 

      TOTAL CURRENT LIBILITIES                                     187,607 

 OTHER LIABILITIES
   Obligations under capital lease                                   1,906 

 STOCKHOLDERS' EQUITY
   Common stock, $0.01 par value, 25,000,000 shares
      authorized, 7,955,579 shares issued and outstanding           79,556 
    Preferred stock, $0.01 par value, 2,000,000
      shares authorized, no shares issued or outstanding                 - 
   Additional paid-in capital                                    2,174,502 
   Retained earnings deficit                                    (1,991,849)
   Less: Note receivable - exercise of options                    (268,880)
                                                               ----------- 

                                                                    (6,671)
                                                               ----------- 

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $   182,842 
                                                               =========== 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
                                   F-2

<PAGE>

                           SOFTLOCK.COM, INC.
                         (FKA FIELDCREST CORP.)
                        STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997



                                                    1998           1997
                                                ------------   ------------

 REVENUES
   Gross revenue, net of returns                $   109,402    $   110,774 

 EXPENSES
   Cost of revenues                                  23,166         20,346 
                                                -----------    ----------- 

         GROSS PROFIT                                86,236         90,428 

   Selling, general & administrative expenses       718,350        924,029 
                                                -----------    ----------- 

         LOSS FROM CONTINUING OPERATIONS           (632,114)      (833,601)

 OTHER INCOME (EXPENSE)
   Interest income                                   24,523         19,950 
   Interest expense                                    (440)          (833)
   Other income                                          93              - 
                                                -----------    ----------- 

         LOSS BEFORE INCOME TAXES                  (607,938)      (814,484)

    Income tax expense                                1,294            794 
                                                -----------    ----------- 

         NET LOSS                               $  (609,232)   $  (815,278)
                                                ===========    =========== 


 LOSS PER SHARE - BASIC                         $     (0.08)   $     (0.13)
                                                ===========    =========== 

 WEIGHTED AVERAGE SHARES - BASIC                  7,570,663      6,111,252 
                                                ===========    =========== 







THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
                                   F-3

<PAGE>

                           SOFTLOCK.COM, INC.
                         (FKA FIELDCREST CORP.)
                    STATEMENTS OF STOCKHOLDERS' EQUITY
             FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                                Additional                Note receivable
                       Number       Common        paid-in     Accumulated    exercise
                      of shares     stock         capital       deficit     of options       Total
                     ----------   ----------    -----------   ----------    ----------     -----------
<S>                   <C>          <C>           <C>           <C>           <C>            <C>
Balances as of
 January 1, 1997      5,661,342    $   56,614    $  954,541    $ (567,339)   $  (268,880)   $  174,936 

Issuance of common
 stock for cash,
 net of issuance
 costs                  793,826         7,938       651,849                                    659,787 

Grant of options
 for services                                        27,384                                     27,384 

 Net loss                   -             -             -        (815,278)           -        (815,278)
                     ----------    ----------    ----------    ----------    -----------    ---------- 

BALANCES AS OF
 DECEMBER 31, 1997    6,455,168        64,552     1,633,774    (1,382,617)      (268,880)       46,829 


Issuance of common
 stock for cash,
 net of issuance
 costs                  642,099         6,421       493,579           -              -         500,000 

Issuance of common
 stock in reverse
 acquisition            788,580         7,886       (18,216)          -              -         (10,330)

Debt converted to
 stock                    9,733            97         7,203                                      7,300 

Issuance of common
 stock for cash,
 net of issuance
 costs                   60,000           600        58,162                                     58,762 

 Net loss                   -             -             -        (609,232)           -        (609,232)
                     ----------    ----------    ----------    ----------    -----------    ---------- 

BALANCES AS OF
 DECEMBER 31, 1998    7,955,579    $   79,556    $2,174,502   $(1,991,849)   $  (268,880)   $   (6,671)
                     ==========    ==========    ==========    ==========    ===========    ========== 
</TABLE>










 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
                                   F-4

<PAGE>

                           SOFTLOCK.COM, INC.
                         (FKA FIELDCREST CORP.)
                        STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997



                                                    1998           1997
                                                ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                        $  (609,232)   $  (815,278)
Adjustments to reconcile
   net loss to net cash used
   by operating activies:
      Depreciation                                    8,281         12,880 
      Increase in other assets                          205            414 
      Increase in accounts payable                   39,925         12,471 
      Increase in excise taxes payable                  781              - 
      Increase in accrued compensation
         and related liabilities                     49,193         14,526 
                                                -----------    ----------- 

         Net cash used by operating
          activities                               (510,847)      (774,987)

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment               (8,531)        (8,570)
                                                -----------    ----------- 

         Net cash used by investing
          activities                                 (8,531)        (8,570)

CASH FLOWS FROM FINANCING ACTIVITIES
   Obligation assumed under capital leases            4,924              - 
   Proceeds from issuance of common stock           558,762        659,787 
   Deficit acquired in reverse acquisition           (3,330)             - 
   Options issued in exchange for
      services - non-cash                                 -         27,384 
                                                -----------    ----------- 

         Net cash provided by financing
          activities                                560,656        687,171 
                                                -----------    ----------- 

NET INCREASE (DECREASE) IN CASH                      41,278        (96,386)

CASH, BEGINNING OF PERIOD                           119,563        215,949 
                                                -----------    ----------- 

CASH, END OF PERIOD                             $   160,841    $   119,563 
                                                ===========    =========== 

SUPPLEMENTAL DISCLOSURE OF CASH
   FLOW INFORMATION:
   Cash paid during the year for interest       $       440    $       833 
                                                ===========    =========== 
   Cash paid during the year for
      income taxes                              $       513    $       794 
                                                ===========    =========== 



 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
                                   F-5

<PAGE>

                            SOFTLOCK.COM INC.
                         (FKA FIELDCREST CORP.)
                      NOTES TO FINANCIAL STATEMENTS
                       DECEMBER 31, 1998 AND 1997


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------
     DESCRIPTION OF THE BUSINESS
     SoftLock.com, Inc. (the Company) provides an alternative channel for
     the distribution and sale of documents over the Internet. 
     SoftLock.com, Inc.'s software tools and services allow publishers to
     freely distribute their content on the Internet.  When end-users wish
     to view the complete documents, they must purchase a password from the
     Company's transaction processing system.  Until January 1, 1998 the
     Company was considered a development stage company under SFAS No. 7.

     SoftLock.com, Inc. was incorporated in Delaware under the name
     Fieldcrest Corp.  As is more fully described in Note 5, the Company
     effected various stock splits and a Plan and Agreement of
     Reorganization with SoftLock Services, Inc.  All share and per share
     amounts have been restated to reflect these transactions.

     The accompanying financial statements include all of the accounts of
     SoftLock.com, Inc. and its wholly owned subsidiary SoftLock Services, Inc.

     ACCOUNTING METHOD
     The Company records revenues and expenses on the accrual method.

     REVENUE RECOGNITION
     Revenue from product sales is recognized when software tools and
     passwords are provided to customers.  The Company also enters into
     license agreements for certain of its products.  Revenues from such
     agreements are recognized based on the terms of the agreement.

     PROPERTY AND EQUIPMENT
     Property and equipment are recorded at cost.  Expenditures for
     renewals and improvements are capitalized while expenditures for
     repairs and maintenance are charged to operations as incurred. 
     Depreciation and amortization of property and equipment are computed
     by the straight-line method at rates adequate to allocate the cost of
     applicable assets over their estimated useful lives as follows:

               Computers                                 3 years
               Furniture and telephone equipment       3-7 years

     The Company reviews long-lived assets for impairment whenever events
     or changes in circumstances indicate that the carrying value of the
     asset is in excess of the sum of the undiscounted cash flows expected
     to result from the use of the asset and its eventual disposition.

     INCOME TAXES
     Pursuant to Statement of Financial Accounting Standards (SFAS) No.
     109, income taxes are provided for the tax effects of transactions
     reported in the financial statements, and consists of taxes currently
     due plus deferred taxes.  Deferred income taxes are provided for
     revenue and expense items reported in different periods for financial
     statement and income tax purposes.  The primary taxable and deductible
     temporary differences are the Company's issuance of options for
     services, resulting in additional compensation costs for financial,
     which are not deductible for tax purposes, carrying value of assets,
     and non-benefited operating loss carryforwards.



                                   F-6

<PAGE>

                            SOFTLOCK.COM INC.
                         (FKA FIELDCREST CORP.)
                      NOTES TO FINANCIAL STATEMENTS
                       DECEMBER 31, 1998 AND 1997


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     -----------------------------------------------------
     STATEMENT OF CASH FLOWS
     For the purpose of the statement of cash flows, the Company considers
     all highly liquid debt instruments purchased with an original maturity
     of three months or less to be cash equivalents.

     ADVERTISING AND MARKETING
     Advertising and marketing costs are generally charged to operations in
     the year incurred.  Total advertising and marketing costs were $13,755
     and $15,360 in 1998 and 1997, respectively.

     LOSS PER SHARE
     Loss per share has been computed using the weighted average number of
     shares outstanding.  Shares issued in the reverse acquisition
     described in Note 5 have been treated as outstanding since inception. 
     Diluted loss per share has not been presented, as the effect of
     dilutive securities would decrease per share loss.
     
     RESEARCH AND DEVELOPMENT
     Research and development costs are expensed as incurred.  Such
     expenses amounted to $104,453 and $90,852 in fiscal years 1998 and
     1997, respectively.

     FAIR VALUES OF FINANCIAL INSTRUMENTS
     Unless otherwise indicated, the fair value of all reported assets and
     liabilities which represent financial instruments (none of which are
     held for trading purposes) approximate the carrying values of such
     instruments.

     CONCENTRATION OF CREDIT RISK
     At certain times during the year, the Company has maintained cash
     balances in excess of federally insured limits with a single
     institution.

     USE OF ESTIMATES
     The preparation of the Company's financial statements, in conformity
     with generally accepted accounting principles, requires the Company's
     management to make estimates and assumptions that affect the amounts
     reported in these financial statements and accompanying notes.  Actual
     results could differ from those estimates.

2.   COMMITMENTS AND CONTINGENCIES
     -----------------------------
     CLASSIFICATION OF A GOING CONCERN
     The company, which was classified as a company in the development
     stage until 1998, has incurred significant and recurring operating
     losses since inception, including $609,232 in 1998 and $815,287 in
     1997.  In addition, at December 31, 1998, the Company had working
     capital and stockholders' equity deficits of $22,147 and $6,671,
     respectively.

     Subsequent to year-end, the Company raised approximately $1,925,000 in
     a private placement of its common stock.  Management considers this
     amount to be sufficient to meet the working capital needs projected by
     its business plan for the immediate future. Management's plans
     contemplate additional capital raising initiatives in order to
     continue its business plan. The company is currently in discussion
     with a number of investment bankers concerning an institutional
     private placement of its equity securities later in the year.

                                   F-7

<PAGE>

                            SOFTLOCK.COM INC.
                         (FKA FIELDCREST CORP.)
                      NOTES TO FINANCIAL STATEMENTS
                       DECEMBER 31, 1998 AND 1997


3.   LEASE COMMITMENTS
     -----------------
     The Company leases its principal operating location under a month-to-
     month operating lease agreement, which expires when 60 days notice is
     given.  The agreement provides for a monthly rental of $1,400 and also
     requires the Company to pay certain incremental costs incurred by the
     lessor and shared costs of the property. Office rent expense for each
     of the years ended December 31, 1998 and 1997 totaled $16,800.  The
     Company also leases a copier under a non-cancelable operating lease
     and reflects lease payments as expenses of the period to which they
     relate.  Total rental expense under this lease amounted to $890 for
     the year ended December 31, 1998.

     At December 31, 1998, the aggregate minimum rental payments due under
     non-cancelable operating leases are as follows:

               1999                $    1,452
               2000                     1,452
               2001                       605
               2002                         -
                                   ----------

                                   $    3,509
                                   ==========

     The Company also leases various pieces of equipment under capital
     leases as follows:

                                                   Current       Long-term
                                                 ------------   ------------

     Capital lease for computer equipment.
     Lease payments consisting of principal
     and interest of $268 due monthly.
     Final payment June 1999.                    $    1,796     $        - 

     Capital lease for computer equipment.
     Lease payments of principal and
     interest of $119 due monthly.  Final
     payment June 2001.                               1,222          1,906 
                                                 ----------     ---------- 

                                                 $    3,018     $    1,906 
                                                 ==========     ========== 

     Minimum payments on capitalized leases are as follows:

                Due by
             December 31,                          Amount
             ------------                          ------

               1999                              $    3,036
               2000                                   1,428
               2001                                     714
               Thereafter                                 -
                                                 ----------

                                                      5,178
               Less amount representing
                interest                                254
                                                 ----------
                                                 $    4,924
                                                 ==========



                                   F-8

<PAGE>

                            SOFTLOCK.COM INC.
                         (FKA FIELDCREST CORP.)
                      NOTES TO FINANCIAL STATEMENTS
                       DECEMBER 31, 1998 AND 1997


4.   INCOME TAXES
     ------------
     The Company has Federal net operating loss carryforwards totaling
     approximately $2 million which expire between 2012 and 2018.

     The components of the provision for income taxes are as follows:

                                                   1998            1997
                                                ------------   ------------

         Current income taxes paid or
              payable                            $    1,294     $      794 

         Increase in deferred tax assets                  -              - 
                                                 ----------     ---------- 

                                                 $    1,294     $      794 
                                                 ==========     ========== 

     Deferred income taxes are provided on temporary timing differences
     between financial statement and income tax reporting.  The components
     of deferred income tax assets and liabilities are as follows:

                                                    1998           1997
                                                ------------   ------------

         Total deferred tax liabilities          $        -     $        - 

         Deferred tax assets
           Option compensation costs                 60,700         60,700 
           Assets                                     4,500          4,300 
           Non-benefited loss carryforwards         523,000        316,000 
                                                 ----------     ---------- 

              Total deferred tax assets             588,200        381,000 
              Less: valuation allowance            (588,200)      (381,000)
                                                 ----------     ---------- 

              Net deferred tax assets            $        -     $        - 
                                                 ==========     ========== 

5.   STOCKHOLDERS' EQUITY
     --------------------
     STOCK SPLITS
     On January 23, 1997, the shareholders of SoftLock Services, Inc.
     approved a one hundred and fifty to one stock split to the
     shareholders of record as of January 23, 1997.

     As of July 28, 1998, and in connection with the Plan and Agreement of
     Reorganization described below, SoftLock Services, Inc. exchanged one
     share of stock for 224.7348 shares of SoftLock.com, Inc (fka
     Fieldcrest Corp.), and, on August 10, 1998, effected a 50 for 1 reverse
     stock split.  All share and per share amounts have been restated to
     reflect these transactions retroactively to inception.

     DEBT CONVERTED TO STOCK
     During the third quarter of 1998, a total of 9,733 shares of common
     stock were issued upon conversion of debt totaling $7,300.



                                   F-9

<PAGE>

                            SOFTLOCK.COM INC.
                         (FKA FIELDCREST CORP.)
                      NOTES TO FINANCIAL STATEMENTS
                       DECEMBER 31, 1998 AND 1997


5.   STOCKHOLDERS' EQUITY (CONTINUED)
     --------------------------------
     STOCK OFFERING
     On April 13, 1998, the Board of Directors approved the offering of
     642,099 shares of the Company's Common Stock at a price of $0.78 per
     share for a total of $500,000.  The offering terminated in June 1998
     upon the acceptance of an aggregate of subscriptions for $500,000.

     On November 20, 1998, the Board of Directors approved the offering of
     1,600,000 shares of the Company's Common Stock (the "Offering") at a
     price of $1.25 per share for a total of $2,000,000.  The offering was
     completed during February 1999, upon the acceptance of an aggregate of
     subscriptions for $2,000,000.  Proceeds of the offering are expected
     to be used for working capital and general business purposes.

     PLAN AND AGREEMENT OF REORGANIZATION
     As of July 28, 1998, the Company consummated a Plan and Agreement of
     Reorganization (the "Agreement") whereby it acquired all of the issued
     and outstanding shares of common stock of SoftLock Services, Inc. in
     exchange for 7,097,266 shares of the Company's "restricted" Common
     Stock.  As a result, SoftLock Services, Inc. became the wholly owned
     subsidiary of the Company, and the former shareholders of SoftLock
     Services, Inc. became 90% shareholders in the Company.  Existing
     options of the SoftLock Services, Inc. were exchanged for options in
     the Company for identical rights and in the same ratio as the exchange
     of common shares.

     The transaction has been accounted for as a reverse acquisition, with
     SoftLock Services as the accounting acquirer.  Fieldcrest has adopted
     the fiscal year end of December 31, which is the reporting year of the
     accounting acquirer.

     NOTE RECEIVABLE - EXERCISE OF OPTION
     In June 1996, key employees entered into promissory notes with the
     Company totaling $268,880 in order to exercise options granted to
     them.  These loans are due June 2006, and bear interest an 7.04
     percent per annum.  Loans are secured by collateral pledge of the
     shares purchased.   For each of the years ended December 31, 1998 and
     1997 the Company recognized $18,929 in interest revenue in connection
     with these notes.

     STOCK OPTION PLAN
     In January 1997, the shareholders of SoftLock Services, Inc. approved
     the 1996 Stock Option Plan (the "96 Plan"). When the 1998 Stock Option
     Plan (the "98 Plan") was approved on July 28, 1998 by the shareholders
     of SoftLock.com, Inc., the options issued by SoftLock Services, Inc.
     under the 96 Plan were replaced by options to purchase shares of
     SoftLock.com, Inc., and were deemed included in the 98 Plan.  The
     termination of the 96 Plan resulted in no changes to the vesting or
     exercise provisions to the holders of options under that plan, except
     that the number and price per share of the 96 options were adjusted
     for the stock transfer and exchange and subsequent stock splits.

     The 98 Plan was established as a compensatory plan to attract, retain,
     and provide equity incentives to selected persons to promote the
     financial success of the Company.  A total of 3,000,000 common shares
     have been reserved for grants under this plan.  The options may be
     granted as either incentive stock options (ISO's) or Non-Qualified
     Stock Options (NQSO's).  The Company has issued options for 1,368,343
     and 724,619 shares of its common stock for the years ended December
     31, 1998 and 1997, respectively, and has 907,038 options still
     available for grant at December 31, 1998.

                                  F-10

<PAGE>

                            SOFTLOCK.COM INC.
                         (FKA FIELDCREST CORP.)
                      NOTES TO FINANCIAL STATEMENTS
                       DECEMBER 31, 1998 AND 1997


5.   STOCKHOLDERS' EQUITY (CONTINUED)
     --------------------------------
     STOCK OPTION PLANS (CONTINUED)
     Also outstanding at December 31, 1998, are 1,011,307 options,
     originally issued by SoftLock Services, Inc., and replaced with
     options to purchase shares of SoftLock.com Inc.  These options were
     issued and outstanding prior to the 96 Plan, and therefore have not
     been  included under the 98 Plan.

     A summary of option activity is as follows (all values restated for
     stock splits):

                                           Weighted                  Weighted
                              Shares       Average                   Average
                              Under        Exercise     Options      Exercise
                              Option       Price        Exercisable  Price
                              ----------   -----------  -----------  ----------

     December 31, 1996         1,011,307   $    0.18    1,011,307    $    0.18

     Options granted             724,619        0.47      658,547         0.49
     Option exercised                  -                        -            
                               ---------   ---------    ---------    ---------

     Options outstanding
       as of December
       31, 1997                1,735,926        0.30    1,669,854         0.30

     1997 options vesting
       in 1998                         -                   22,024         0.24
     Options granted           1,368,343        0.94        5,117         1.95
     Options exercised                 -                        -            
                               ---------   ---------    ---------    ---------

     Options outstanding
       as of December
       31, 1998                3,104,269   $    0.58    1,696,995    $    0.31
                               =========   =========    =========    =========

     The options have an exercise price range of:

          Granted during 1997                     $0.08  -  0.78
          Granted during 1998                      0.89  -  1.95

          Outstanding at December 31, 1998        $0.08  -  1.95

     All of the options granted expire 10 years from the date of grant and
     have the following vesting characteristics:

                                                          Vested at
              Number of options     Vesting period     December 31, 1998
              -----------------     --------------     -----------------
                 
                  1,674,971          Immediately             1,674,971
                    207,428            3 years                  22,024
                     39,000            4 years                       -
                  1,182,870            5 years                       -
                  ---------                                  ---------

                  3,104,269                                  1,696,995
                  =========                                  =========

                                  F-11

<PAGE>

                            SOFTLOCK.COM INC.
                         (FKA FIELDCREST CORP.)
                      NOTES TO FINANCIAL STATEMENTS
                       DECEMBER 31, 1998 AND 1997


5.   STOCKHOLDERS' EQUITY (CONTINUED)
     --------------------------------
     PRO FORMA DISCLOSURE
     The Company applies Accounting Principles Board No. 25, Accounting for
     Stock Issued to Employees, and related interpretations in accounting
     for its plan.  As such, no compensation costs were recorded as of the
     date of grant.  The Company considered the effects of recognizing
     compensation cost pursuant to the provisions of Statement of Financial
     Accounting Standards No. 123, Accounting for Stock-Based Compensation,
     (SFAS No 123).  Using the Black-Scholes option pricing model, which
     takes into account the exercise price of the options, expected life,
     current price of the underlying stock, its expected volatility and
     dividends, and the risk-free interest rate, net loss would have been
     increased to the pro forma amounts as follows for the years ending
     December 31:

                               1998                     1997
                    -----------------------    -------------------------
                        As          Pro            As           Pro
                     Reported      Forma        Reported        Forma
                    ----------  -----------    -----------   -----------
          Net Loss  $(609,232)  $(1,202,525)   $(815,278)    $(969,335)
                    ==========  ============   ==========    ==========

     The average fair value of options granted during fiscal 1998 and 1997
     was $0.43 and $0.21, respectively.  The fair value of options is
     estimated on the date of grant using the Black-Scholes option-pricing
     model with the following weighted average assumptions:  risk-free
     interest rate of 5.88 percent for fiscal 1998 and ranging from 6.01 to
     6.58 percent for fiscal 1997; expected life of 10 years; dividend
     yield percentage of 0%;  and volatility of 15% for each of the two
     years ended December 31, 1998.

     STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
     The Financial Accounting Standards Board has recently released
     Statement of Financial Accounting Standards No. 130 - Reporting
     Comprehensive Income.  SFAS 130 requires companies to present
     comprehensive income (consisting primarily of net income items plus
     other direct equity changes and credits) and its components as part of
     the basic financial statements.  For the year ended December 31, 1998,
     the Company's financial statements do not contain any changes in
     equity, other than investments by and distributions to shareholders,
     that are required to be reported separately in comprehensive income.

6.   MAJOR CUSTOMERS
     ---------------
     For the years ended December 31, 1998 and 1997, one customer accounted
     for a total of approximately 37 percent and 50 percent of password
     revenues, respectively.

7.   LEGAL MATTERS
     -------------
     SoftLock is one of a large group of defendants in an action in the
     United States District Court for the Southern District of New York
     entitled E-Data Corp. vs. 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 attorney's fees and costs and disbursements.  SoftLock has
     answered the plaintiff's complaint and has counter-claimed for a
     declaratory judgement that the plaintiff's patent is invalid,
     unenforceable, and is not infringed upon by SoftLock.

                                  F-12

<PAGE>

                            SOFTLOCK.COM INC.
                         (FKA FIELDCREST CORP.)
                      NOTES TO FINANCIAL STATEMENTS
                       DECEMBER 31, 1998 AND 1997


7.   LEGAL MATTERS (CONTINUED)
     -------------------------
     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.

8.   SUBSEQUENT EVENTS
     -----------------
     PRIVATE EQUITY PLACEMENT
     Effective February 28, 1999, the Company completed its private
     placement offering upon the acceptance of subscriptions for $2 million
     (1.6 million shares).

     RELOCATION OF CORPORATE HEADQUARTERS
     As of March 4, 1999, the Company signed a lease for office space in
     Maynard, Massachusetts, with lease payments to begin on or about June
     1, 1999.  The office space is approximately 15,500 square feet and
     calls for rental payments of  $1,526,850 over the next seven years as
     follows:

            Future minimum
            Lease payments
          as of December 31,         Amount
          ------------------         ------

               1999                $   52,134
               2000                   136,770
               2001                   218,893
               2002                   253,370
               Thereafter             865,683
                                   ----------

                                   $1,526,850
                                   ==========

     LEGAL PROCEEDINGS
     On March 12, 1999, the court entered a stipulation order and judgement
     that, based on the interpretation of the claims of the subject patent
     as determined by the court in earlier orders, the Company has not in
     the past infringed, nor is it now infringing on any of the provisions
     established in the patent.  Judgement has been entered in SoftLock's
     favor and the present patent's owner's claims have been dismissed on
     its merits by the court.  As of the date of these financial
     statements, the patent owner has stated that he again intends to
     appeal this decision.



                                  F-13

<PAGE>

                               SIGNATURES
                               ----------

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.

Date:  March 29, 1999              SOFTLOCK.COM, INC.


                                   By /s/ KEITH LORIS
                                     -------------------------------
                                        Keith Loris,
                                        Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

    Signatures                Title                       Date
    ----------                -----                       ----

/s/ KEITH LORIS          Chief Executive Officer         March 29, 1999
-----------------------  (Principal Executive Officer)
Keith Loris              and Chairman of the Board



/s/ JONATHAN SCHULL      President and Director          March 29, 1999
-----------------------
Jonathan Schull



/s/ MARTIN PRESBERG      Vice President of Operations,   March 29, 1999
-----------------------  Secretary and Chief Financial
Martin Presberg          Officer (Principal Financial Officer)



/s/ RODNEY CONARD        Director                        March 29, 1999
-----------------------
Rodney Conard



/s/ FRANCIS J. KNOTT     Director                        March 29, 1999
-----------------------
Francis J. Knott



/s/ MAURICE LAFLAMME     Director                        March 29, 1999
-----------------------
Maurice LaFlamme