UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

           FOR THE TRANSACTION PERIOD FROM_____________TO_____________

                        COMMISSION FILE NUMBER: 000-27411

                               PROMOTIONS.COM, INC.
             (Exact name of registrant as specified in its charter)

Delaware                                           13-3898912
---------------------------------                  -------------------
(State or other jurisdiction                       (I.R.S. Employer
of incorporation or organization)                  Identification No.)

                         11 West 19th Street, 10th Floor
                            New York, New York 10011
               (Address of principal executive offices) (Zip Code)

                                 (212) 242-8800
              (Registrant's telephone number, including area code)

Indicate by check mark |X| whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|.

      As of May 1, 2000, there were 14,267,569 shares of the registrant's common
stock outstanding.


                                       1
<PAGE>

                              PROMOTIONS.COM, INC.
                                    FORM 10-Q

                                TABLE OF CONTENTS

PART I            FINANCIAL INFORMATION                                     PAGE
                                                                            ----

Item  1.          Financial Statements

                  Condensed Balance Sheets as of March 31, 2000 (unaudited)
                  and December 31, 1999 ....................................   3

                  Condensed Statements of Operations for the three months
                  ended March 31, 2000 and 1999 (unaudited) ................   4

                  Condensed Statements of Cash Flows for the three
                  months ended March 31, 2000 and 1999 (unaudited) .........   5

                  Notes to Financial Statements ............................   6

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations ......................   8

Item 3.           Qualitative and Quantitative Disclosures
                  About Market Risk ........................................  18

PART II           OTHER INFORMATION

Item 1.           Legal Proceedings ........................................  18

Item 2.           Changes in Securities and Use of Proceeds ................  18

Item 3.           Defaults Upon Senior Securities ..........................  19

Item 4.           Submission of Matters to a Vote of Security Holders ......  19

Item 5.           Other Information ........................................  19

Item 6.           Exhibits and Reports on Form 8-K .........................  19

                  SIGNATURES ...............................................  20


                                       2
<PAGE>

Part 1.

Item 1. FINANCIAL STATEMENTS

                              PROMOTIONS.COM, INC.
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                           MARCH 31,     DECEMBER 31,
                                                                             2000            1999
                                                                             ----            ----
                                                                          (UNAUDITED)
<S>                                                                       <C>            <C>
                  ASSETS

Current assets:
  Cash and cash equivalents ...........................................   $27,559,279    $34,647,630
  Accounts receivable, net ............................................     4,502,441      2,396,853
  Prepaid expenses and other current assets ...........................     9,905,677      9,976,198
                                                                            ---------      ---------
    Total current assets ..............................................    41,967,397     47,020,681
                                                                           ----------     ----------
Fixed assets, net .....................................................     3,956,686      3,089,311
Restricted cash .......................................................     1,600,000             --
Other assets ..........................................................     1,813,169      3,615,465
                                                                            ---------      ---------
    Total assets ......................................................   $49,337,252    $53,725,457
                                                                          ===========    ===========

      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ....................................................    $3,156,872     $1,754,255
  Accrued liabilities .................................................     2,943,998      2,821,005
  Deferred revenues ...................................................       623,631        483,366
  Capital lease obligations ...........................................       296,898        290,640
  Notes payable-related party .........................................        50,000         66,667
                                                                               ------         ------
    Total current liabilities .........................................     7,071,399      5,415,933
                                                                            ---------      ---------
  Capital lease obligation, net of current portion ....................       361,832        436,424
  Deferred gain on sale of assets .....................................        15,584         17,531
                                                                               ------         ------
    Total liabilities .................................................     7,448,815      5,869,888
                                                                            ---------      ---------

Stockholders' equity:
  Common stock-par value $.01, 50,000,000 shares authorized, 14,241,244
    shares issued and outstanding at March 31, 2000
    (unaudited), and December 31, 1999, respectively ..................       142,412        142,412
  Additional paid-in capital ..........................................    68,013,172     67,969,343
  Accumulated deficit .................................................   (26,227,894)   (20,233,041)
  Deferred compensation ...............................................       (39,253)       (23,145)
                                                                              -------        -------
    Total stockholders' equity ........................................    41,888,437     47,855,569
                                                                           ----------     ----------
      Total liabilities and stockholders' equity ......................   $49,337,252    $53,725,457
                                                                          ===========    ===========
</TABLE>

         The accompanying notes are an integral part of these condensed
                              financial statements.


                                       3
<PAGE>

                              PROMOTIONS.COM, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                            THREE MONTHS ENDED
                                                  MARCH 31,
                                                  ---------
                                            2000            1999
                                            ----            ----
Revenues ...........................     $6,060,092      $1,318,628
Operating expenses:
  Product development ..............        841,218         108,705
  Sales and marketing ..............      8,943,662       1,327,456
  General and administrative .......      2,676,689         780,837
                                          ---------         -------
    Total operating expenses .......     12,461,569       2,216,998
                                         ----------       ---------
  Loss from operations .............     (6,401,477)       (898,370)
Interest income (expense), net .....        406,624          14,082
                                            -------          ------
Net loss attributable to common
  stockholders .....................    $(5,994,853)      $(884,288)
                                        ===========       =========

Basic and diluted net loss per share
  attributable to common
  stockholders .....................         $(0.42)         $(0.15)
                                             ======          ======

Weighted average shares of common
  stock used in computing basic and
  diluted net loss per share
  attributable to common
  stockholders .....................     14,241,244       5,714,184
                                         ==========       =========

         The accompanying notes are an integral part of these condensed
                              financial statements.


                                       4
<PAGE>

                                 PROMOTIONS.COM
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                       THREE MONTHS ENDED
                                                                                            MARCH 31,
                                                                                            ---------
                                                                                      2000            1999
                                                                                      ----            ----
<S>                                                                               <C>             <C>
Cash flows from operating activities:
  Net loss ....................................................................   $(5,994,853)     $(884,346)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization of fixed assets and patents .................       361,377         74,076
    Amortization of deferred compensation expense .............................        27,721         22,221
    Bad debt expense ..........................................................       292,696         50,694
    Interest payable converted into common stock ..............................            --         35,000
  Changes in operating assets and liabilities:
  Accounts receivable .........................................................    (2,398,284)       (14,751)
  Prepaid expenses and other current assets ...................................        70,521         15,848
  Other assets ................................................................     1,802,296       (181,452)
  Accounts payable ............................................................     1,402,617        258,838
  Accrued liabilities .........................................................       122,993        (77,599)
  Deferred revenue ............................................................       140,265        (12,037)
                                                                                      -------        -------
Net cash used in operating activities .........................................    (4,172,651)      (713,508)
                                                                                   ----------       --------
Cash flows from investing activity:
  Payment of security deposit .................................................    (1,600,000)            --
  Purchase of fixed assets ....................................................    (1,230,700)      (143,480)
                                                                                   ----------       --------
Net cash used in investing activity ...........................................    (2,830,700)      (143,480)
                                                                                   ----------       --------
Cash flows from financing activities:
  Proceeds from issuance of notes payable .....................................            --        120,000
  Principal payments on notes payable-related party ...........................       (16,666)       (22,222)
  Principal payments on capital lease obligations .............................       (68,334)       (20,809)
  Proceeds from issuance of class A mandatorily
   redeemable convertible preferred stock .....................................            --      3,575,000
                                                                                      -------      ---------
Net cash (used) provided by financing activities ..............................       (85,000)     3,651,969
                                                                                      -------      ---------
Net (decrease) increase in cash for the period ................................    (7,088,351)     2,794,981
Cash and cash equivalents, beginning of period ................................    34,647,630         17,573
                                                                                   ----------         ------
Cash and cash equivalents, end of period ......................................   $27,559,279     $2,812,554
                                                                                  ===========     ==========
Cash paid during the period for interest ......................................       $17,840         $4,284
                                                                                      =======         ======

Supplemental  disclosure of non-cash investing, financing and other activities:
Notes payable converted into common and preferred stock .......................            --     $1,390,000
Equipment acquired under capital leases .......................................            --        $46,755
Barter transactions ...........................................................      $629,011       $435,147
</TABLE>


         The accompanying notes are an integral part of these condensed
                              financial statements.


                                       5
<PAGE>

                              PROMOTIONS.COM, INC.

            NOTES TO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Promotions.com, Inc. (the "Company"), was incorporated and commenced operations
in the State of New York on January 8, 1996 as Webstakes, Inc. and was
reincorporated in the State of Delaware on June 5, 1996 as Netstakes, Inc. On
June 11, 1999 the Company changed its name to Webstakes.com, Inc. On January 31,
2000, the Company changed its name to Promotions.com, Inc. Promotions.com, Inc.
is a global internet promotion solutions company. Combining technology, data and
promotions expertise, the Company provides promotion solutions to help clients
achieve their overall marketing and business objectives. The Company generates
revenues through WEBSTAKES.COM, a web site dedicated to internet sweepstakes and
promotions; Promotions.com CUSTOM SOLUTIONS, a full service integrated internet
promotion services group; and Promotions.com DIRECT, which offers targeted email
and lead generation.

The Company has a limited operating history and its prospects are subject to the
risks, expenses and uncertainties frequently encountered by companies in the new
and rapidly evolving markets for Internet products and services. These risks
include the failure to develop and extend the Company's online service brand,
the rejection of the Company's services by web consumers, vendors and/or
advertisers the inability of the Company to maintain and increase the levels of
traffic on its online service, as well as other risks and uncertainties. In the
event that the Company does not successfully implement its business plan,
certain assets may not be recoverable.

2. INTERIM FINANCIAL INFORMATION

The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required under generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for the fair presentation of the
results of the interim periods presented in this filing have been made.
Operating results for the three month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000 or for any other future interim periods.

The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the financial statements
and footnotes thereto included in the Company's Form 10-K for the year ended
December 31, 1999, as filed with the Securities and Exchange Commission.

The Company has made certain reclassifications within its financial statements
to more accurately present the financial results of the Company. Accordingly,
certain prior period balances have been reclassified to conform to the current
period presentation.

3. NET LOSS PER SHARE

Basic loss per share is computed using the weighted-average number of common
shares outstanding during the period. Diluted loss per share is computed using
the weighted-average number of common and common stock equivalent shares
outstanding during the period. Common stock equivalent shares are excluded from
the computation if their effect is antidilutive.

As the Company reported net losses at March 31, 2000 and 1999, all 2,494,711 and
418,285 of the options and warrants outstanding at March 31, 2000 and 1999,
respectively, were antidilutive and therefore, there were no reconciling items
between basic and diluted loss per share for the three months then ended.


                                       6
<PAGE>

4. RECENT ACCOUNTING PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 expresses the views of the SEC staff in applying
generally accepted accounting principles to certain revenue recognition issues.
In March 2000, the SEC issued SAB No. 101A which delays the implementation date
of SAB 101 for registrants with fiscal years that begin between December 16,
1999 and March 15, 2000 no later than their second fiscal quarter provided that
they report a change in accounting principal in accordance with FASB Statement
No. 3, "Reporting Accounting Changes in Interim Financial Statements." However,
if registrants have not previously complied with generally accepted accounting
principles then they should apply the guidance in APB Opinion No. 20 for
correction of an error. The effect of implementing this standard is currently
being evaluated but is not expected to have a material effect on the company's
financial position or results of operations.


                                       7
<PAGE>

                              PROMOTIONS.COM, INC.

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

The following discussion of the financial condition and results of operations of
Promotions.com contains forward-looking statements relating to the future events
and the future performance of Promotions.com within the meaning of section 27A
of the Securities Exchange Act of 1933, as amended, and section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that
such statements involve risks and uncertainties. Promotions.com's actual results
and timing of certain events could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including, but
not limited to, those set forth under " Risk Factors" and elsewhere in this
report and in Promotions.com's other public filings on file with the Securities
& Exchange Commission.

OVERVIEW

During the three months ended March 31, 2000 and 1999, revenue was generated
primarily by promotion services. Principally all of the company's historical
revenues have been derived from the sale of promotion services. We expect to
derive substantially all of our revenues from the sale of promotion services for
the foreseeable future.

We recognize revenues from promotion services ratably over the period during
which we provide promotion services, provided that no significant obligations
remain and collection of the resulting receivable is reasonably assured.
Payments received from customers prior to providing promotion services are
recorded as deferred revenue and are recognized as revenue ratably as the
services are provided. With respect to revenue generated from our promotions
portal, WEBSTAKES.COM, we generally guarantee a minimum number of impressions,
or times that the customer's name, logo or other identifier appears in pages
viewed by visitors to WEBSTAKES.COM, and/or times that our visitors are
delivered to our customer's web site. To the extent that these minimum
guarantees are not met, we defer recognition of the corresponding revenues until
the guaranteed levels are achieved.

Promotions.com CUSTOM SOLUTIONS service provides custom turnkey solutions to
create and manage promotions on a customer's own web site. Revenues are derived
principally from contracts in which the company typically provides services for
the administration and implementation of the promotion. The contracts typically
include cancellation clauses ranging from 30 to 60 days. Since there are
significant up front customized design work incurred before a promotion begins,
the company recognizes the portion of revenue related to the customized design
work at the time the work is performed. The remaining revenue is recognized
ratably in the period in which the promotion is run, provided that no
significant company obligations remain.

Revenues include revenues from barter transactions in which we exchange
promotion services for advertising and prizes. Revenues from these barter
transactions are recorded as promotion revenues at the lower of the estimated
fair value of the goods or services received or delivered and are recognized
when we deliver the promotion services. Advertising expenses related to barter
are recognized when our advertisements are run on the reciprocal web site, which
is typically in the same period as the corresponding barter revenues are
recognized. Prize expenses related to barter are recognized when prizes are
awarded. In the three months ended March 31, 2000 and 1999, barter revenues were
10% and 33% of our total revenues. We expect that, as our cash revenues grow,
barter as a percentage of our revenues will decrease.

The period-to-period comparisons of our historical operating results should not
be relied upon as indicative of future performance. Our quarterly report should
be considered in light of the risks, expenses and difficulties encountered by
companies in the early stages of development, particularly companies in the
rapidly evolving stages of the Internet market. Although we have experienced
revenue growth in recent periods, we anticipate that we will incur operating
losses for the foreseeable future due to a high level of planned operating and
capital expenditures. In particular, we expect to increase our operating
expenses in order to expand our sales force and marketing personnel and to
develop, integrate and scale our technology.


                                       8
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 AND 1999

Revenues. Revenues primarily result from the sale of promotion services.
Revenues were approximately $6.1 million and $1.3 million for the three months
ended March 31, 2000 and 1999. We recorded barter revenues of approximately
$629,000 and $434,000 during the three months ended March 31, 2000 and 1999. The
period-to-period growth in revenues was primarily attributable to the increasing
number of marketers purchasing promotional services on the Company's on-line
media property and purchasing CUSTOM SOLUTIONS as well as larger longer-term
purchases by certain marketers. Approximately 149 customers purchased
promotional services during the three months ended March 31, 2000 as compared to
approximately 51during the three months ended March 31, 1999. No one customer
accounted for more than 10% of total revenues or accounts receivable for the
three months ended March 31, 2000. There can be no assurances that the online
promotion market will grow, customers will continue to purchase promotional
services, that customers will not make smaller and shorter term purchases, or
that market prices for Web-based promotional services will not decrease due to
competitive or other factors.

Product Development Expenses. Product development expenses include the personnel
costs associated with the design and development of WEBSTAKES.COM, our
promotions infrastructure and technology, as well as software licensing costs.
Product development expenses were approximately $841,000 million or 14% of total
revenues for the three months ended March 31, 2000, $109,000 for the three
months ended March 31, 1999, or 8% of total revenues. The period-to-period
increases in absolute dollars are primarily attributable to increases in the
number of engineers that develop and enhance the features and functionality of
WEBSTAKES.COM and the Company's increased focus on Promotions.com CUSTOM
SOLUTIONS services and the roll-out of new products. We believe that timely
deployment of new and enhanced products and technology is critical to attaining
our strategic objectives. Accordingly, we intend to continue recruiting and
hiring experienced product development personnel and to make additional
investments in product development. Consequently, the Company expects to incur
increased product development expenditures in absolute dollars in future
periods.

Sales and Marketing Expenses. Sales and marketing expenses consist primarily of
advertising costs, salaries and commissions of sales and marketing personnel,
costs of trade shows, conventions and marketing materials and other marketing
expenses. Sales and marketing expenses were approximately $8.9 million for the
three months ended March 31, 2000 or 148% of total revenues, $1.3 million for
the three months ended March 31,1999, or 101% of total revenues. The
period-to-period increases in sales and marketing expenses was primarily
attributed to an increase in advertising costs associated with the Company's
name change and aggressive marketing strategy. The increase was also due in part
to the growth of the Company and is due to increases in compensation expense
associated to the growth of the Company's sales force and marketing personnel
and an increase in sales commission associated with the increase in revenues.
Due to the growth of the Company, we anticipate that sales and marketing
expenses in absolute dollars will increase in future periods as we continue to
pursue an aggressive marketing strategy through advertising and continue to
expand our international operations, and continue to build our sales force.

General and Administrative Expenses. General and administrative expenses consist
primarily of services and related costs of general corporate functions,
including finance, accounting costs and facilities. General and administrative
expenses were approximately $2.7 million for the three months ended March 31,
2000, or 44% of total revenues, $781,000 for the three months ended March 31,
1999, or 59% of total revenues. The absolute dollar increase in general and
administrative expenses were primarily attributable to increased salaries and
related expenses associated with hiring additional personnel, and increased
professional fees and facility expenses to support the growth of our operations.
The increase was also due in part to an increase in allowance for doubtful
accounts. This increase in the allowance for doubtful accounts was the result of
an increase in cash revenues, and increase in the percentage of cash revenues
reserved for doubtful accounts. We expect to incur additional general and
administrative expenses as we hire additional personnel and incur additional
costs related to the growth of our business and operation as a public company.
We expect these expenses to include facilities expansion, investor relations
programs and professional service fees. Accordingly, we anticipate that general
and administrative expenses will continue to increase in absolute dollars. We
expect that general and administrative expenses will follow the pattern for a
growth company, increasing initially and then, once a certain revenue base is
achieved, decreasing, as a percentage of revenue as reflected in the percentage
decrease from the first quarter 1999 to the first quarter 2000.


                                       9

<PAGE>

Interest Income (Expense), Net. Interest income, net of expense, consists
primarily of interest earned on our cash balance and the interest expense on our
outstanding debt. We recognized net interest income of approximately $407,000
for the three months ended March 31, 2000, and net interest expense of $14,000
for the three months ended March 31, 1999. The increase was primarily
attributable to a higher average cash balance invested, principally due to
proceeds received from a private placement and initial public offering during
1999. Interest income in future periods is likely to go down as a result of a
reduction in average cash balances invested maintained by the Company and
changes in the prevailing interest rate of its investments.

Income Taxes. No income tax benefit is reflected in the financial statements as
a valuation allowance was provided for deferred tax assets relating to net
operating losses. As of December 31, 1999, we had approximately $20.0 million of
federal net operating loss carryforwards for tax reporting purposes to offset
future taxable income. Our federal net operating loss carry forwards expire in
the years 2012 through 2019.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through the private
and public placement of equity securities and the incurrence of indebtedness. On
September 24, 1999, we completed the initial public offering of 3,575,000 shares
of common stock for gross proceeds of $50.1 million and net proceeds of $44.9
million, after deducting expenses of the offering.

Net cash used in operating activities was approximately $4.2 million for the
three months ended March 31, 2000, compared to approximately $714,000 for the
three months ended March 31, 1999. The increase in cash used in operating
activities for 2000 was primarily due to the net loss of $5.9 million during the
period which resulted from costs incurred to support the Company's sales and
marketing efforts and the increased personnel required to manage the Company's
growing operations combined with higher levels of accounts receivable resulting
from increased revenues which was partially offset by increases in accounts
payable and accrued expenses.

Net cash used in investing activities was approximately $2.8 million for the
three months ended March 31, 2000 and $144,000 for the three months ended March
31, 1999. As of March 31, 2000, our principal capital commitments consisted of
obligations outstanding under operating and capital leases. All net cash used in
investing activities was used for capital expenditures, primarily the
acquisition of equipment. We estimate that our capital expenditures will be
approximately $8.0 million for 2000. We currently expect that our principal
capital expenditures through 2000 will relate to improvements to our technical
infrastructure and expansion of our headquarters.

Net cash used by financing activities was approximately $83,000 for the three
months ended March 31, 2000 compared to net cash provided by financing
activities of approximately $3.7 million for the three months ended March 31,
1999. Net cash used by financing activities in 2000 was primarily attributable
to principal payments made on notes payable and capital lease obligations. Net
cash provided by financing activities in 1999 was primarily attributable to our
private placements in January 1999. To date, we have made all payments due under
our equipment loan.

We have a financing agreement with a leasing company for the leasing of
equipment in an amount up to $1.0 million in operating and/or capital leases,
secured by certain accounts receivable and the equipment purchased pursuant to
the agreement. To date, we have leased approximately $659,000 of equipment under
the agreement. The leases have terms of up to three years and the interest rates
under the leases range from 8 1/2% to 13%. We are required to make monthly
payments of interest and principal under the leases.

We have a two-year sponsorship agreement with Excite under which Excite agreed
to promote WEBSTAKES.COM through ad banner placements and links to WEBSTAKES.COM
and its promotions on Excite.com, WebCrawler.com and Classified2000.com. We
prepaid Excite $5.6 million during 1999 for this two year agreement. At Home
Corporation, the parent company of Excite, is one of our principal stockholders.
Each quarter we recognize approximately $683,000 of expense related to this
agreement.

We have a service agreement with MatchLogic, a wholly owned subsidiary of
Excite, pursuant to which MatchLogic will provide ad serving and targeting, data
processing, analysis, enhancement and other services to Promotions.com. The term
of the agreement is two years. We prepaid MatchLogic $13.1 million, during 1999
for this two-year agreement. Each quarter we recognize approximately $1.5
million of expense related to this agreement.


                                       10

<PAGE>

In June 1999, we redeemed all outstanding shares of class A mandatorily
redeemable convertible preferred stock and 1,714,608 shares of common stock for
an aggregate amount of $24.0 million. To finance the redemption and to provide
working capital, we issued shares of new class B mandatorily redeemable
convertible preferred stock to a group of investors, including among others, At
Home Corporation, XL Ventures, a subsidiary of Big Flower Holdings, and
Travelers, for an aggregate purchase price of $40.0 million. Upon completion of
the initial public offering, the class B mandatorily redeemable convertible
preferred stock automatically converted into 6,666,668 shares of common stock.
The class A mandatorily redeemable convertible preferred stock and class B
mandatorily redeemable convertible preferred stock are not available for
reissue. The excess of the consideration paid to the holders of the class A
mandatorily redeemable convertible preferred stock over the carrying amount of
the class A mandatorily redeemable convertible preferred stock represents a
deemed dividend or return to the holders of the class A mandatorily redeemable
convertible preferred stock of $8.7 million.

Our capital requirements depend on numerous factors, including the amount of
resources the Company devotes to advertising and marketing our brand, the
resources the Company devotes to expanding our sales and marketing capabilities,
resources devoted to acquire or invest in complementary businesses,
technologies, products or services or to invest in geographic expansion.
Management believes that our cash on hand as of March 31, 2000 of $29.2 million
($1.6 million of which is restricted) together with cash flows will be
sufficient to meet our anticipated cash needs for working capital and capital
expenditures for our existing business for the next 12 months based on our first
quarter 2000 rate of cash use. However, we will need to raise additional funds
during 2000 in order to fund more rapid expansion, adopt a more aggressive
marketing strategy or in response to competitive pressures. There can be no
assurances that any required additional financing will be available on terms
favorable to us, or will be available at all. If adequate funds are not
available on acceptable terms, we may be unable to fund our expansion,
successfully promote our brand name, develop or enhance our services, respond to
competitive pressures or take advantage of acquisition opportunities. Any of
these events could have a material adverse effect on our business, results of
operations or financial condition.


                                       11

<PAGE>

RISK FACTORS

An investment in our Company involves a high degree of risk. You should consider
carefully the risks below, together with the other information contained in this
annual report, before you decide to invest in our Company. If any of the
following risks actually occur, our business, results of operations and
financial condition could be harmed, the trading price of our common stock could
decline and you could lose all or part of your investment.

RISKS RELATING TO OUR COMPANY AND OUR BUSINESS

OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT.

We were incorporated, and launched our first promotion, in January 1996.
Accordingly, we have a limited operating history upon which to evaluate our
operations and future prospects. In addition, our revenue model is evolving and
relies substantially upon the growth of promotion spending on the Internet and
our ability to become a full-service Internet promotion company. As an early
stage company in a new and rapidly evolving market, we face risks and
uncertainties relating to our ability to successfully implement our business
plan, which are described in more detail below. We may not successfully address
these risks.

WE HAVE NOT BEEN PROFITABLE AND MAY NOT BECOME PROFITABLE, IN WHICH EVENT OUR
BUSINESS AND STOCK PRICE WOULD BE ADVERSELY AFFECTED.

To date, we have not been profitable. We may never be profitable, or, if we
become profitable, we may be unable to sustain profitability. We expect to
continue to incur losses for the foreseeable future because we expect to
continue to spend significant resources to expand our business. Although we have
experienced revenue growth in recent periods, these growth rates may not be
sustainable or indicative of future growth. We reported a loss of $5.9 million
for the three months ended March 31, 2000. As of March 31, 2000, our accumulated
deficit was approximately $26.2 million. For us to make a profit, our revenues
will need to increase sufficiently to cover our costs and expenses.

A SIGNIFICANT PORTION OF OUR REVENUES HAVE BEEN DERIVED FROM BARTER
TRANSACTIONS, AND WE MAY NOT BE SUCCESSFUL IN GENERATING SUFFICIENT CASH
REVENUES TO COVER OUR COSTS AND EXPENSES IN THE FUTURE.

For the three months ended March 31, 2000, approximately 10% of our revenues
were derived from the trading of promotion services for advertising and prizes.
We do not receive cash for sales involving barter agreements. We expect that
barter agreements will continue to account for a significant portion of our
revenues in the future and we may not generate sufficient cash to pay our cash
expenses.

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE, WHICH MAY CAUSE THE PRICE OF OUR
COMMON STOCK TO DECREASE.

We expect our operating results to vary significantly from quarter to quarter
due to many factors discussed in this Risk Factors section, some of which are
beyond our control. It is possible that in future periods our results of
operations will be below the expectations of public market analysts and
investors. In this event, the price of our common stock would likely decrease.
You should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance.

The rapidly evolving market in which we operate and potential seasonal
fluctuations in promotional spending and Internet use make it difficult to
forecast our revenues accurately. Our operating expenses are based on our
expectations of future revenues and are relatively fixed in the short term.
Accordingly, we may not be able to adjust our spending in a timely manner to
compensate for any unexpected revenue shortfall. If we have a shortfall in
revenues in relation to our expenses, or if our expenses precede expected
revenues, then our results of operations and financial condition would be
materially adversely affected.


                                       12

<PAGE>

IF THE DEMAND FOR INTERNET PROMOTION SERVICES DOES NOT INCREASE, OUR BUSINESS
WILL BE HARMED.

Our success depends in part on the increased acceptance of online promotion
services. The market for Internet promotion services has only recently begun to
develop and is evolving rapidly. Most businesses have little or no experience
using the Internet for promotion purposes. As a result, many businesses have
allocated only a limited portion of their marketing budgets to Internet
promotion spending. An increase in the demand for these services is dependent in
part on the effectiveness of the promotions and the recognition of this
effectiveness by customers and potential customers. The market for Internet
promotion services may not grow and any growth may not be sustained.

IF WE ARE UNABLE TO ATTRACT VISITORS TO WEBSTAKES.COM AND THE WEB SITES OF OUR
CUSTOMERS, THE EFFECTIVENESS OF OUR PROMOTIONS WOULD BE REDUCED, AND OUR
BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION WOULD BE MATERIALLY
ADVERSELY AFFECTED.

Our future success depends upon our ability to continue to attract and retain
visitors with demographic characteristics desired by our clients to
WEBSTAKES.COM and the web sites of our customers. In addition, we guarantee our
clients that visitors will view their pages and/or link to their web sites a
minimum number of times. If we are unable to meet these minimum guarantees, we
will be required to defer recognition of the related revenues until the
guaranteed minimum is achieved. In addition, we will be required to provide
services to the customer for free until we are able to meet our guaranteed
minimum, which may reduce our promotion inventory in future periods.

IF WE ARE UNSUCCESSFUL IN BROADENING OUR PRODUCT OFFERINGS, OUR REVENUE GROWTH
WILL BE LIMITED.

To date, substantially all of our revenues have been derived from conducting
sweepstakes on the Internet. Our growth is largely dependent upon our ability to
leverage our sweepstakes expertise to become a full-service Internet promotion
company. In the event that we are unable to successfully implement our growth
strategy, our business, results of operations and financial condition would be
materially adversely affected.

WE FACE SIGNIFICANT COMPETITION, AND WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.

The market for Internet promotion services is intensely competitive. We expect
competition in our market to continue to intensify as a result of increasing
market size, greater visibility of the market opportunity for Internet promotion
services and minimal barriers to entry. Industry consolidation may also increase
competition. We compete with many types of companies, including both online and
offline promotion companies, large Internet publishers, search engine and other
Internet portal companies, a variety of Internet-based advertising networks and
other companies that facilitate the marketing of products and services on the
Internet. Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customers bases and significantly greater financial, technical and marketing
resources than we do. This may allow them to compete more effectively and be
more responsive to industry and technological change than us. We may not be able
to compete successfully and competitive pressures may reduce our revenues and
result in increased losses or reduced profits.

Our ability to compete depends on many factors both within and beyond our
control. These factors include:

      o     the success of the sales and marketing efforts of us and our
            competitors;

      o     the ease of use, performance, price and reliability of promotions
            offered by us and our competitors; and

      o     the timing and market acceptance of new promotion services developed
            by us and our competitors.

IF OUR CUSTOMERS DO NOT RENEW THEIR AGREEMENTS OR TERMINATE THEM PRIOR TO THEIR
SCHEDULED EXPIRATIONS, OUR REVENUES WILL BE REDUCED.

Our agreements with customers generally have terms ranging from one to 12
months. In addition, substantially all of our agreements permit our customers to
terminate their relationships with us on relatively short notice. Our customers
may not remain customers for the full term of their agreements or renew such
agreements when they expire.


                                       13
<PAGE>

OUR BRAND MAY NOT ACHIEVE THE RECOGNITION NECESSARY TO INCREASE OUR MEMBERSHIP
BASE AND ATTRACT CUSTOMERS.

To be successful, we must continue to build our brand identity. We believe that
the importance of brand recognition will increase as more companies enter our
market. We may not be successful in our marketing efforts or in increasing our
brand awareness.

SWEEPSTAKES REGULATIONS MAY LIMIT OUR ABILITY TO CONDUCT SWEEPSTAKES OR LIMIT
PARTICIPATION IN OUR SWEEPSTAKES, WHICH COULD ADVERSELY AFFECT OUR BUSINESS.

The sweepstakes industry is subject to extensive regulation on the local, state
and national levels, regardless of whether promotions are conducted online or
offline. Congress and many state attorneys general and legislatures recently
have announced regulatory initiatives aimed at the sweepstakes industry due to
recently reported deceptive industry practices. The publicity generated by these
initiatives may adversely affect demand for our services. Although we believe
that additional laws and regulations are likely to be enacted, we cannot predict
what they will be. Any new sweepstakes regulations may have a material adverse
affect on our business, results of operations and financial condition.
Additionally, the Internet is a new medium for sweepstakes, and it is difficult
to predict how existing laws and regulations will be interpreted.

OUR FAILURE TO MANAGE OUR GROWTH EFFECTIVELY COULD ADVERSELY AFFECT OUR
BUSINESS.

In order to successfully implement our business plan, we must grow
significantly. Our anticipated future growth will likely place a significant
strain on our management resources and systems. To manage our growth
effectively, we will need to continue to improve our operational, financial and
managerial controls and reporting systems and procedures, and we will need to
continue to expand, train and manage our workforce. If we do not manage our
growth effectively, our business, results of operations and financial condition
would be materially adversely affected.

WE MAY BE UNABLE TO INCREASE OUR SALES FORCE, WHICH WOULD HAVE A MATERIAL
ADVERSE EFFECT ON THE GROWTH OF OUR BUSINESS.

We need to substantially expand our sales force to increase market awareness and
sales of our promotion services. Competition for qualified sales personnel is
intense, and we might not be able to hire the quality and number of sales
personnel we require. New hires require extensive training and typically take
several months to achieve productivity. If we fail to effectively increase our
sales force, our business, results of operations and financial condition would
be materially adversely affected.

OUR BUSINESS MAY SUFFER IF WE ARE UNABLE TO RETAIN KEY PERSONNEL.

Our future success is substantially dependent upon the continued service of our
founders, Steven H. Krein, Chief Executive Officer, and Daniel J. Feldman,
President, and other executive officers. The loss of the services of any of our
executive officers could have a material adverse affect on our business. Many of
our executive officers have only been employed by us for a short time, including
our Chief Financial Officer, who joined us in April 1999 and our Chief Operating
Officer, who joined us in December 1999. We do not currently have "key person"
life insurance policies on any of our employees. We have employment agreements
only with Messrs. Krein and Feldman. Competition for senior management is
intense, and we may not be successful in attracting and retaining key personnel.

THE INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, AND ANY INFRINGEMENT
ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, COULD ADVERSELY AFFECT OUR
BUSINESS AND FINANCIAL CONDITION.

Third parties may infringe or misappropriate our patents, trademarks or other
intellectual property rights, which could have a material adverse effect on our
business, results of operations or financial condition. The actions we take to
protect our trademarks and other proprietary rights may not be adequate. In
addition, the validity, enforceability and scope of protection of proprietary
rights in Internet-related industries are uncertain and still evolving. Although
we have patent and trademark applications pending, none have been granted to
date.


                                       14
<PAGE>

Third parties may assert infringement claims against us. Any claims and any
resulting litigation, should they occur, could subject us to significant
liability for damages. In addition, even if we prevail, litigation could be
time-consuming and expensive to defend, and could result in the diversion of our
time and attention. Any claims from third parties may also result in limitations
on our ability to use the intellectual property subject to these claims unless
we are able to enter into contractual arrangements with the third parties making
these claims, which arrangements may not be available on commercially reasonable
terms.

WE MAY REQUIRE ADDITIONAL FINANCING TO EXPAND OUR BUSINESS, AND WE MAY NOT BE
ABLE TO OBTAIN ADDITIONAL FINANCING.

We may need to raise additional funds in the future in order to fund more
aggressive brand promotion or more rapid expansion, to develop new or enhanced
services, to respond to competitive pressures or to make acquisitions.
Additional financing may not be available on terms favorable to us, and may not
be available at all. If adequate funds are not available on acceptable terms, we
may be unable to fund our expansion, successfully promote our brand, take
advantage of acquisition opportunities, develop or enhance services or respond
to competitive pressures, any of which could have a material adverse effect on
our business, results of operations and financial condition. If additional funds
are raised by our issuing equity securities, stockholders may experience
dilution of their ownership interest and the newly issued securities may have
rights superior to those of the common stock. If additional funds are raised by
our issuing debt, we may be subject to limitations on our operations, including
limitations on the payment of dividends.

WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS FOR PRODUCTS GIVEN AS PRIZES IN
OUR PROMOTIONS AND FOR PRODUCTS SOLD BY OUR CUSTOMERS OVER THE INTERNET.

Consumers may sue us if any of the products we give as prizes are defective,
fail to perform properly or injure the user. We may also be sued by consumers
who purchase products that are offered or marketed through WEBSTAKES.COM.
Although our agreements with our customers typically contain provisions intended
to limit our exposure to these product liability claims, these limitations may
not eliminate our liability. Liability claims could require us to spend
significant time and money in litigation or pay significant damages. We do not
carry product liability insurance. As a result, any of these claims, whether or
not successful, could have a material adverse effect on our business, results of
operations and financial condition.

PRIVACY AND SECURITY CONCERNS MAY CAUSE CONSUMERS NOT TO PARTICIPATE IN OUR
PROMOTIONS, WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

An important feature of the services we provide our customers is our ability to
develop and maintain demographic and other information about consumers
participating in our promotions. Privacy and other security concerns may cause
consumers to resist providing us with personal data, which would reduce the
value of our services. Moreover, privacy and security concerns may inhibit
consumer acceptance of the Internet as a means of commerce. If privacy and other
security concerns of consumers are not adequately addressed, our business would
be materially adversely affected.

OUR GROWTH WILL DEPEND ON THE GROWTH OF INTERNET USAGE.

We depend on continued growth in the use of the Internet by businesses and
consumers. If electronic commerce does not grow or grows more slowly than
expected, the use of the Internet by businesses may decline or grow more slowly
than anticipated. In addition, the acceptance and growth in the use of the
Internet by consumers could be negatively affected by consumer concerns about
the security of electronic commerce transactions and privacy. Even if Internet
usage grows, the Internet infrastructure may not be able to support the demands
placed on it and its performance or reliability may decline.

WE MAY BE UNABLE TO RESPOND TO TECHNOLOGICAL CHANGE EFFECTIVELY.

Our industry is characterized by rapid technological change, frequent new
service introductions, changing consumer demands and evolving industry standards
and practices. Our inability to anticipate and effectively respond to these
changes on a timely basis would materially adversely affect our business,
results of operations and financial condition. Our future success will depend,
in part, on our ability to cost-effectively adapt to rapidly changing
technologies, to enhance existing services and to develop and introduce a
variety of new services to address changing demands of consumers and our clients
on a timely basis.


                                       15
<PAGE>

THE FAILURE OF OUR COMPUTER OR COMMUNICATIONS SYSTEMS MAY ADVERSELY AFFECT OUR
BUSINESS.

Our business depends on the efficient and uninterrupted operation of our
computer and communications systems. Any system failure, including network,
software or hardware failure, that causes an interruption in our service or
decreases the responsiveness of WEBSTAKES.COM or the web sites of our customers
could materially adversely affect our business. WEBSTAKES.COM could also be
affected by computer viruses, electronic break-ins or other similar disruptions.
Our insurance policies have coverage limits of $775,000 per occurrence and
therefore may not adequately compensate us for any losses that may occur due to
any interruptions in our service.

Frontier GlobalCenter, Inc. maintains all of our production servers at their
Manhattan Data Center. Our operations depend on Frontier's ability to protect
its own systems and our systems against damage from fire, power loss, water,
telecommunications failures, vandalism and other malicious acts, and similar
unexpected adverse events. Any disruption in the Internet access provided by
Frontier could have a material adverse effect on our business, results of
operations and financial condition.

WE DEPEND ON THE CONTINUED VIABILITY OF THE INTERNET INFRASTRUCTURE.

Our success depends upon the development and maintenance of a viable Internet
infrastructure. The current Internet infrastructure may be unable to support an
increased number of web users. The timely development of products such as
high-speed modems and communications equipment will be necessary to continue
reliable Internet access. Furthermore, the Internet has experienced outages and
delays as a result of damage to portions of its infrastructure. Such outages and
delays could adversely affect WEBSTAKES.COM and the level of traffic on our
customers' web sites. The effectiveness of the Internet may decline due to
delays in the development or adoption of new standards and protocols designed to
support increased levels of activity. If such new infrastructure, standards or
protocols are developed, we may be required to incur substantial expenditures to
adapt our services to the new technologies.

LAWS AND REGULATIONS PERTAINING TO THE INTERNET MAY ADVERSELY AFFECT OUR
BUSINESS.

There are an increasing number of laws and regulations pertaining to the
Internet. These laws and/or regulations may relate to liability for information
retrieved from or transmitted over the Internet, online content regulation, user
privacy, taxation and the quality of products and services. Moreover, the
applicability to the Internet of existing laws governing intellectual property
ownership and infringement, copyright, trademark, trade secret, obscenity,
libel, employment, personal privacy and other issues is uncertain and
developing. Any new law or regulation pertaining to the Internet, or the
application or interpretation of existing laws, could decrease the demand for
our promotion services, increase our cost of doing business or otherwise have a
material adverse effect on our business, results of operations and financial
condition. Please see "Business--Government Regulation and Legal Uncertainties."

CHANGES IN THE LAWS RELATING TO DATA COLLECTION AND USE PRACTICES AND THE
PRIVACY OF INTERNET USERS AND OTHER INDIVIDIUALS COULD HARM OUR BUSINESS

The U.S. federal and various state governments have recently proposed
limitations on the collection and use of information regarding Internet users.
In addition, in October 1998, the European Union adopted a directive that could
limit our ability to collect and use information regarding Internet users in
Europe. Since many of the proposed laws or regulations are just being developed,
we cannot yet determine the impact these regulations may have on our business.


                                       16
<PAGE>

In addition, growing public concern about privacy and the collection,
distribution and use of information about individuals has led to self-regulation
of these practices by the direct marketing industry and to increased federal and
state regulation. The Direct Marketing Association, or DMA, the leading trade
association of direct marketers, has adopted guidelines regarding the fair use
of this information which it recommends participants, such as us, should use. We
are also subject to various federal and state regulations concerning the
collection, distribution and use of information regarding individuals. As a
consequence of government legislation or regulation or enforcement efforts or
evolving standards of fair information collection practices, we may be required
to make changes to our business in ways that could diminish the effectiveness of
our business or its attractiveness to potential customers. Although our
compliance with the DMA's guidelines and applicable federal and state laws and
regulations has not had a material adverse effect on us, we cannot assure you
that the DMA will not adopt additional, more burdensome guidelines or that
additional, more burdensome federal or state laws or regulations, including
antitrust, consumer privacy and fair collection laws, will not be enacted or
applied to us or our customers, which could materially and adversely affect our
business, financial condition and results of operations.

OUR OFFICERS AND DIRECTORS MAY CONTROL US.

Our executive officers and directors in the aggregate, beneficially own
approximately 46% of our common stock. These stockholders may be able to
effectively exercise control over all matters requiring approval by our
stockholders, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may also have the effect
of delaying or preventing a change in control of us, which could have a material
adverse effect on our stock price.

THE SALE OF SHARES ELIGIBLE FOR FUTURE SALE IN THE OPEN MARKET COULD DEPRESS OUR
STOCK PRICE

Sales of significant amounts of common stock in the public market in the future
or the perception that sales will occur could materially and adversely affect
the market price of the common stock or our future ability to raise capital
through an offering of our equity securities. There are approximately 10,641,000
shares of common stock held by our stockholders that are "restricted
securities," as that term is defined in Rule 144 of the Securities Act of 1933.
Restricted securities may be sold in the public market only if registered or if
they qualify for an exemption for registration under Rules 144, 144(k), or 701
under the Securities Act. Currently, approximately 472,000 shares of the
restricted securities are eligible for sale in the public market under Rule 144
without volume limitations or further registration under the Securities Act, not
including approximately 3,528,000 shares held by our "affiliates," within the
meaning of the Securities Act. These 3,528,000 shares are eligible for public
sale subject to volume limitations. After June 14, 2000, approximately 6,667,000
additional shares of restricted securities will be eligible for sale in the
public market under Rule 144 subject to volume limitations. The holders of these
shares are entitled to require us to register their shares for public sale.

As of March 31, 2000, there are outstanding options to purchase 2,273,028 shares
of common stock which are eligible for sale in the public market from time to
time depending on vesting. In addition, there are outstanding warrants to
purchase up to 221,683 shares of common stock upon exercise. The securities
issued upon the exercise of such warrants will be "restricted securities," as
that term is defined in Rule 144 of the Securities Act, however, will be
eligible for sale in the public market pursuant to Rule 144 subject to volume
limitations.

OUR COMMON STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE

The market price of our common stock has been and will likely continue to be
highly volatile. The stock market has experienced significant price and volume
fluctuations and the market prices of securities of technology companies,
particularly Internet-related companies, have been highly volatile. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against the company
issuing the securities. This type of litigation could result in substantial
costs and a diversion of our management's attention and resources.


                                       17
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency Rate Fluctuations. Promotions.com's results of operations, financial
position and cash flows are not materially affected by changes in the relative
values of non-U.S. currencies to the U.S. dollar.

Market Risks. Our accounts receivable are subject, in the normal course of
business, to collection risks. We regularly assess these risks and have
established policies and business practices to protect against the adverse
effects of collection risks. As a result, Promotions.com does not anticipate any
material losses in this area.

Interest Rate Risk. Our investments are classified as cash and cash equivalents
with original maturities of three months or less. Therefore, changes in the
market's interest rates do not affect the value of the investments as recorded
by Promotions.com.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(A) Changes in Securities:

NONE.

(B) Use of Proceeds:

Pursuant to Rule 701 of Regulation S-K, the use of proceeds from the Company's
offering of common stock which commenced on September 24, 1999, is as follows as
of March 31, 2000:

Shares registered:                                                     3,575,000

Aggregate price of offering amount registered:                       $50,050,000

Shares sold:                                                           3,575,000

Aggregate price of offering amount sold                              $50,050,000

Director or indirect payments to directors,
  officers, general partners of the issuer or
  their associates, to persons owning ten
  percent or more of any class of equity
  securities of the issuer and to affiliates
  of the issuer:                                                            $-0-

Direct or indirect payments to others:                               $ 5,070,641

Net offering proceeds to the issuer after deducting expenses:        $44,979,359

Detail uses to date:*                                                $17,420,080

Working capital reserves:

Temporary investments in cash and cash equivalents:                  $27,559,279

* As of March 31, 2000, the proceeds used from our initial public offering were
used towards payments due to Excite and Matchlogic and for working capital and
general corporate purposes.


                                       18
<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE.

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

NONE.

ITEM 5. OTHER INFORMATION

NONE.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A)   Exhibits. The following is a list of exhibits filed as part of this report
      on Form 10-Q. Where so indicated by footnote, exhibits that were
      previously filed are incorporated by reference. For exhibits incorporated
      by reference, the location of the exhibit in the previous is indicated
      parenthetically except for those situations where the exhibit number was
      the same as set forth below.

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

 3.1(1)    Certificate of Incorporation
 3.2(1)    Certificate of Amendment to the Certificate of Incorporation,
           dated February 23, 1999
 3.3(1)    Certificate of Amendment to the Certificate of Incorporation,
           dated January 17, 1999
 3.4(1)    Certificate of Amendment to the Certificate of Incorporation,
           dated June 11, 1999
 3.5(1)    Amended and Restated Bylaws
 3.6(3)    Amended and Restated Bylaws dated September 29, 1999
 3.7(4)    Certificate of Ownership and Merger dated January 26, 2000
           10.1(1)(2)Netstakes, Inc. Stock Option Plan
           10.2(1)(2)1999 Equity Compensation Plan
10.3(1)    Master Lease Agreement No. L6731 with Leasing Technologies
           International, Inc. dated November 19, 1999
10.4(1)    Master Service Agreement between Registrant and Frontier Global
           Center dated February 8, 1999
           10.5(1)(2)Letter Agreement between Registrant and Steven H. Krein,
           dated June 11, 1999
           10.6(1)(2)Letter Agreement between Registrant and Daniel Feldman,
           dated June 11, 1999
10.7(1)    Stock Purchase Agreement dated June 11, 1999
10.8(4)    Master Lease Agreement between Registrant and 450 Westside Partners,
           LLC dated January 12, 2000
27.1*      Financial data schedule

* Filed herewith.
(1) Filed as an exhibit to the Registrants Registration Statement on Form S-1
    (Registration No. 333-80593) filed with the Commission on June 14, 1999,
    amended and incorporated herein by reference.
(2) Compensatory plans and arrangements for executives and others.
(3) Filed as an exhibit on Form 10-Q filed on November 15, 1999 and incorporated
    herein by reference.
(4) Filed as an exhibit on Form 10-K filed on March 30, 1999 and incorporated
    herein by reference.

(B) Reports on Form 8-K

Promotions.com filed one report on Form 8-K, on February 2, 2000, during the
three months ended March 31, 2000, announcing that on January 31, 2000 the
company changed its name from Webstakes.com, Inc. to Promotions.com, Inc.


                                       19
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.

Date: May 15, 2000           Promotions.com, Inc.


                             By: /s/ Thomas E. Brophy
                                 --------------------
                                     Thomas E Brophy
                                     Chief Financial Officer
                                     (Principal Financial and
                                     Accounting Officer Duly Authorized Officer)


                                       20