<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


(X)   QUARTERLY REPORT UNDER SECTION OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

For the quarterly period ended December 31, 1999

                                       OR

(   )  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

For the transition period from _______________ to __________________


                         Commission file number 0-21831

                       International Sports Wagering Inc.

        (Exact name of Small Business Issuer as specified in its charter)

                 Delaware                              22-3375134

     (State or other jurisdiction of                      (IRS Employer
      incorporation or organization)                   Identification No.)

  201 Lower Notch Road, Little Falls, NJ                 07424

    (Address of principal executive
              offices)                                (Zip Code)

Issuer's telephone number, including area code:  (973) 256-8181
                                                 --------------

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report) and (2) has been
subject to such filing requirement for the past 90 days.
Yes __X__     No _____

There were 8,659,326 shares of Common Stock outstanding at January 31, 2000.

Transitional Small Business Disclosure Format (check one):
Yes_____      No __X__


<PAGE>


                       International Sports Wagering Inc.
                                December 31, 1999
                                   FORM 10-QSB

                                      Index

                                                                            Page
                                                                            ----

Part I:  Financial Information

Item 1.  Financial Statements,

         Balance Sheets at December 31, 1999 (Unaudited)
         and September 30, 1999.                                               2

         Statements of Operations for the Three Months Ended December
         31, 1999 and 1998 and May 22, 1995 (date of inception) to
         December 31, 1999 (Unaudited)                                         3

         Statement of Changes in Stockholders' Equity for
         the Three Months Ended December 31, 1999 (Unaudited)                  4

         Statements of Cash Flows for the Three Months Ended December
         31, 1999 and 1998 and May 22, 1995 (date of inception) to
         December 31, 1999 (Unaudited)                                         5

         Notes to Financial Statements                                         6

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations or Plan of Operation           7-13

Part II: Other Information

Item 6.  Exhibits and Reports on Form 8-K                                     14

Signatures                                                                    15


<PAGE>


           Part I: Financial Information

Item 1. Financial Statements

                       International Sports Wagering Inc.
                          (A Development Stage Company)
                                 Balance Sheets

                                           December 31, 1999      Sept.30, 1999
                                              (Unaudited)           (Note 1)
                                           -----------------      -------------

Current assets:
  Cash and cash equivalents                  $    154,814         $   121,505
  Accounts receivable                               2,270              12,081
  Investments                                     744,503           1,435,525
  Prepaid expenses and other current assets        63,053              35,340
                                             ------------         -----------
       Total current assets                       964,640           1,604,451

Property and equipment, net                       354,138             430,910
Other assets                                        4,934               5,131
                                             ------------         -----------
       Total assets                          $  1,323,712         $ 2,040,492
                                             ============         ===========

                      Liabilities and Stockholders' Equity

Current liabilities:
  Deposits payable                           $     25,206         $    20,176
  Accounts payable                                 76,039              99,156
  Accrued expenses                                168,943             121,858
                                             -------------        -----------
      Total current liabilities                   270,188             241,190
                                             -------------        -----------

Stockholders' Equity:
  Preferred stock, par value $.001 per
   share; 2,000,000 shares authorized, none
   issued or outstanding                                -                   -
  Common stock, par value $.001 per
   share; 20,000,000 shares authorized,
   issued and outstanding 7,853,993
   and 7,852,993 shares, respectively               7,854               7,853
  Additional paid-in capital                   10,288,881          10,288,210
  Deficit accumulated during the
    development stage                          (9,243,211)         (8,496,761)
                                              ------------        ------------

     Total stockholders' equity                 1,053,524           1,799,302
                                              ------------        -----------

      Total liabilities and
        stockholders' equity                  $ 1,323,712         $ 2,040,492
                                              ===========         ===========



See accompanying notes to financial statements

                                      2

<PAGE>


                       International Sports Wagering Inc.
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)



                                                        May 22, 1995
                                 Three Months Ended  (Date of Inception)
                                   December 31,       to December 31,
                                  1999        1998         1999
                                  ----        ----         ----

Revenues                       $   7,271  $   4,356     $    58,259
                               ---------- ---------     -----------

Costs and expenses
 Research and development
  expense                        232,146    185,493       4,029,240
 General and administrative
  expense                        556,502    477,488       5,706,494
                               ---------- ---------     -----------
                                 788,648    662,981       9,735,734
                               ---------- ---------     -----------

   Operating loss               (781,377)  (658,625)     (9,677,475)
                               ---------- ---------     -----------


Other income (expense)
  Interest income                 34,927     42,108         733,362
  Interest expense                   -          -          (299,098)
                               ---------- ---------     -----------
                                  34,927     42,108         434,264
                               ---------- ---------     -----------

   Net loss                    $(746,450) $(616,517)    $(9,243,211)
                               ========== =========     ===========

Net loss per share-
   basic and diluted           $   (0.10) $   (0.08)    $     (1.26)
                               ========== =========     ===========

Weighted average common
 shares outstanding-
 basic and diluted             7,853,841  7,819,660       7,344,565
                               =========  =========     ===========





See accompanying notes to financial statements

                                        3


<PAGE>


                       International Sports Wagering Inc.
                          (A Development Stage Company)
                        Statement of Stockholders' Equity
                  For the Three Months Ended December 31, 1999
                                   (Unaudited)





                                                           Deficit
                                                         Accumulated
                            Common Stock    Additional   During The
                          ---------------     Paid-In    Development
                          Shares   Amount     Capital       Stage       Total
                          ------- -------     -------       -----       -----

Balance at
 September 30,1999     7,852,993  $7,853  $10,288,210  $(8,496,761)  $1,799,302

Net loss for the
 three months ended
  December 31, 1999          --       --           --     (746,450)    (746,450)

Issuance of Common
Stock through
exercise of
options                    1,000       1          671           --          672
                       ---------  ------  -----------  -----------   ----------

Balance at
  December 31,1999     7,853,993  $7,854  $10,288,881  $(9,243,211)  $1,053,524
                       =========  ======  ===========  ===========   ==========




See accompanying notes to financial statements


                                        4


<PAGE>


                       International Sports Wagering Inc.
                          (A Development Stage Company)
                            Statements of Cash Flows
                                   (Unaudited)

                                                                 May 22, 1995
                                        Three Months Ended   (Date of Inception)
                                           December 31,          to December 31,
                                        1999         1998            1999
                                   ------------- -------------  ----------------
Cash Flows from
 Operating Activities:
  Net loss                        $   (746,450)  $   (616,517)  $ (9,243,211)
  Adjustment to reconcile net
   loss to net cash (Used in)
   operating activities:
  Depreciation and amortization         83,385         81,577      1,165,537
  Provision for doubtful accounts            -              -         79,497
  Issuance of options
   to consultants                            -              -         14,500
 Changes in assets and liabilities:
  Accounts receivable                    9,811           (956)       (81,767)
  Prepaid expenses and other
   current assets                      (27,713)       (31,663)       (63,053)
  Customer deposits                      5,030          1,195         25,206
  Other assets                             197          8,220         (8,336)
  Accounts payable                     (23,117)       (37,759)        76,039
  Accrued expenses                      47,085         (3,725)       168,943
                                  -------------  ------------   ------------
Net Cash (Used In)
 Operating Activities                 (651,772)      (599,628)    (7,866,645)
                                  -------------  ------------  -------------

Cash Flows from Investing
 Activities:
  Proceeds from sales of
   investments                       1,184,385      2,693,959     42,902,978
  Short-term investments              (493,363)    (1,900,000)   (43,647,481)
  Purchase of property
   and equipment                        (6,613)        (3,704)    (1,516,273)
  Proceeds from repayments
   of notes receivable                       -          5,577        100,000
  Issuance of notes receivable               -              -       (100,000)
                                  -------------  ------------  -------------
Net Cash Provided By (Used In)
 Investing Activities                  684,409        795,832     (2,260,776)
                                  -------------  ------------  -------------

Cash Flows from Financing
 Activities:
  Net proceeds from issuance
   of common stock                         672              -     10,282,235
                                  -------------  ------------  ------------
Net Cash Provided By Financing
 Activities                                672              -     10,282,235
                                  -------------  ------------  ------------
Net Increase in Cash
 and Cash Equivalents                   33,309        196,204        154,814

Cash and Cash Equivalents,
 Beginning of Period                   121,505        198,607              -
                                  -------------  ------------     ----------

Cash and Cash Equivalents,
 End of Period                    $    154,814   $    394,811   $    154,814
                                  =============  ============   ============



See accompanying notes to financial statements.

                                    5


<PAGE>


                       International Sports Wagering Inc.
                          Notes To Financial Statements



Note l - Basis of Presentation:

         The information at December 31, 1999 and for the three months ended
         December 31, 1999 and 1998, is unaudited, but includes all adjustments
         (consisting only of normal recurring adjustments) which in the opinion
         of management, are necessary to state fairly the financial information
         set forth therein in accordance with generally accepted accounting
         principles. The interim results are not necessarily indicative of
         results to be expected for the full fiscal year period. These financial
         statements should be read in conjunction with the audited financial
         statements for the year ended September 30, 1999 included in the
         Company's Annual Report on Form 10-KSB/A filed with the Securities and
         Exchange Commission.

         Footnote disclosures normally included in financial statements prepared
         in accordance with generally accepted accounting principles have been
         omitted in accordance with the published rules and regulations of the
         Securities and Exchange Commission.

Note 2 - Basic and Diluted Net Loss per Share:

         Basic and diluted net lass per common share is presented in accordance
         with SFAS 128, "Earnings Per Share" ("SFAS 128"). SFAS 128 was
         effective for financial statements for both interim and annual periods
         ending after December 15,1997.

         Basic net loss per share is computed by dividing net loss by the
         weighted average number of common shares outstanding during the
         applicable reporting periods. The computation of diluted net loss per
         share is similar to the computation of basic net loss per share except
         that the denominator is increased to include the number of additional
         common shares that would have been outstanding if the dilutive
         potential common shares had been issued. However, the Company's
         computations of dilutive net loss per share does not assume any
         conversion or exercise of securities as their effect is anti-dilutive
         for all periods presented.

         The weighted average number of shares used in the basic and diluted net
         loss per share computations for the three month periods ended December
         31, 1999 and 1998, and the period from May 22, 1995 (date of inception)
         to December 31, 1999 were 7,853,841, 7,819,660, 7,344,565,
         respectively.

         Common equivalent shares that could potentially dilute basic earnings
         per share in the future and that were not included in the computation
         of diluted loss per share because of anti-dilution were 2,980,278 and
         2,319,525 for three month periods ending December 31, 1999 and 1998,
         respectively.


                                        6


<PAGE>


Item 2. Management`s Discussion and Analysis of Financial
        Condition and Results of Operations or Plan of Operation

Financial Results

         For the three months ended December 31, 1999 the Company had a net loss
of $746,450 or $0.10 loss per share on a basic and fully diluted basis on the
7,853,841 weighted average common shares outstanding, compared with a net loss
of $616,517 or $ 0.08 loss per share on a basic and fully diluted basis on the
7,819,660 weighted average common shares outstanding for the three months ended
December 31, 1998. Revenues of $7,271 were reported for the three months ended
December 31, 1999, compared with revenues of $4,356 reported for the prior
period. The Company's revenues represent the net win (i.e. total amount wagered
less total amount paid out) of the System.

         The net win is affected by the success (or lack thereof) of the players
in making sports wagering bets. The System automatically seeks to induce
balanced betting action for play-by-play type wagers. It operates most
efficiently when there are a substantial number of wagers being placed through
the System simultaneously. When the number of wagers through the System is
modest, as it has been most of the time the System has been in operation, it is
more difficult to attempt to create balanced pools. This tends to result in a
lower net win. The wagering pools for traditional pre-game wagers, including
parlays, teasers and other exotic wagers, are more difficult to balance than
play-by-play wagers due to the larger size of those wagers, as well as the
decreased likelihood of multiple wagers being placed simultaneously. As the
proportion of traditional wagers increases, the Company's revenues, to the
extent they are based on net win, may be subject to increased volatility related
to the success (or lack thereof) of the players in making these types of sports
wagers.

         The increased loss for the three months ended December 31, 1999,
compared with the three months ended December 31, 1998, resulted primarily from:
professional fees which increased by $64,288 to $129,498 primarily due to
expenses associated with the renewal of the Company's OILS license as well as
work associated with pending licensing negotiations for the Company's products;
marketing expenses which increased by $48,310 to $140,828, primarily reflecting
an increase in advertising to promote the SportXction(TM) game for remote
wagering as well as additional marketing of SportXction(TM) for use in contests;
salary expenses, which increased by $27,073 to $295,923; travel expenses, which
increased by $18,140 to $24,494 primarily related to the increase in marketing
activity; and a decline in interest income which decreased by $7,181 to $34,927
due to reduced investments. These factors were partially offset by general
liability insurance expense, which decreased $17,429 to $19,467 due to lower
renewal rates; and software expense which decreased by $9,572 to $14,513.

         The Company incurred approximately $232,146 in research and development
costs for the three months ended December 31, 1999, compared with approximately
$185,493 for the comparable prior period.

         The Company continues to be in the development stage, with limited
revenues generated from the System. As of December 31, 1999, the Company had
cumulative net losses since inception of $9,243,211. It expects to continue to
incur substantial losses and negative cash flow at least through the fiscal year
ended September 30, 2000. Contributing to this are the fact that revenues
currently being generated are insignificant and the Company's

                                        7

<PAGE>


expectation that it will continue to incur substantial research and development
expenses for further product enhancement and development activities.

         As of December 31, 1999, the Company had liquid resources totaling
$899,317. These include cash and cash equivalents in the amount of $154,814, and
short term investments in the amount of $744,503. Investments are limited to
investment grade marketable securities with maturities of less than 18 months.
In January 2000, the Company raised an additional $1,000,000 as a result of the
sale of 800,000 shares of its Common Stock, par value $.001 per share, in a
private transaction to accredited investors, not registered under the Securities
Act of 1933, as amended. (see "Recent Events").

         The Company is in negotiations to license the SportXction(TM) software
for both domestic and foreign markets. These license opportunities include
wagering as well as non-wagering (primarily contests) uses of the software. The
Company expects that these agreements, when signed, will produce revenue that,
in conjunction with its existing resources, will be able to satisfy its cash
requirements for at least 36 months. There is no assurance however, that any of
these agreements will be signed. If these agreements are not signed, it may be
necessary for the Company to seek additional funding, or reduce its expenses by
curtailing its operations in Nevada, or both. If these agreements are not signed
and the Company is unable to raise additional funding on terms deemed
reasonable, then the Company will be required to curtail certain operations in
order to reduce its expenses. Based upon the anticipated reduction in its
expenses, the Company believes that existing resources will be sufficient to
satisfy its contemplated cash requirements for approximately 12 months. Capital
expenditures are expected to be limited to the purchase of additional computer
equipment and leasing additional computer equipment, most of which will be
required in connection with its activities relating to legal wagering from
remote sites in Nevada. Existing resources will fund these requirements.

Recent Developments

         The Company announced on December 6, 1999, that it had received final
approval for the Company's remote wagering system. This version allows players
to make legal sports wagers from PC's linked via telephone lines from remote
(non-sports book) locations anywhere throughout the State of Nevada. The System
accepts wagers by bettors who have established and funded accounts at gaming
establishments. This System was designed to run on a third-party secure private
network that assures that players are placing their wagers from within Nevada,
as required by regulations of the Nevada Gaming Authorities.

         The Company believes that this is the first system, which has received
final approval by Nevada Gaming Authorities, which allows players to place
sports wagers from PC's at remote sites. This System operates in the following
manner: the sports book signs up patrons, allowing them to establish accounts,
deposit and withdraw funds. The Company operates the centralized system at its
Hub facility, running consolidated wagering pools across the participating
sports books, which receive share of the revenue. Remote wagering by means of a
PC is currently available through four sports books (one of these four
establishments also has Player Betting Stations in one of its casinos,
permitting play-by-play wagering). These establishments are inter-linked with
the Hub via telephone lines. One Hub system services both the in-casino and
remote wagering systems.


                                        8


<PAGE>


         On January 12, 2000, the Company sold to accredited investors in a
private transaction not registered under the Securities Act of 1933, as amended,
800,000 shares of the Company's Common Stock, for $1,000,000, or $1.25 per
share. The Company also agreed that if by April 11, 2000 it did not enter into a
subsequent transaction relating to the licensing of its proprietary software and
intellectual proprietary, pursuant to which subsequent transaction the Company
is to receive at least $7.5 million during the period of three years after the
date of the subsequent transaction, then it would either (a) refund to the
investors a total of $520,000 or (b) deliver to the investors a total of 866,667
additional shares. The Company was required to determine by no later than
February 11, 2000 which of the foregoing alternatives it would elect if the
subsequent transaction does not occur. The Company has subsequently informed the
investors that it would implement option (a), above, if a subsequent transaction
did not occur which satisfied the required conditions. The Company also agreed
to promptly file a Registration Statement with the Securities and Exchange
Commission in order to register all the shares. The Company believes that it was
in the best interest of the Company and its stockholders to enter into this
transaction because the proceeds of this transaction plus the Company's existing
resources (a) provide the Company with the funds necessary to continue its
business and its research and development activities while pursuing negotiation
of several domestic and international licensing opportunities; and (b) help the
Company in its attempt to meet the Net Tangible Asset requirements for continued
listing on NASDAQ(SmallCap).

         The Company has recently expanded the capabilities of its
SportXction(TM) sports wagering system to allow other types of traditional
pre-game wagers including round-robins, teasers and other exotic wagers. In
January 2000, these enhancements were approved by the Nevada Gaming Authorities.
These enhancements have not yet been released for use in live money wagering.

         Utilization of the SportXction(TM) sports wagering system in casinos
and other gaming establishments has been disappointing to date. The Company
believes this is due to a variety of factors including players having to learn a
new game, lack of effective advertising means to address players in casinos who
are largely tourists, the inconvenience for local players to have to visit a
major casino in order to play and the fact that the System is currently
operational in only two casinos. In order to encourage more potential players to
wager through the System, the Company adapted the System to permit limited time
periods of free play and practice betting during the course of a sporting event.
It also introduced other new features and enhancements to the System to attract
additional players and increase wagering. Despite these new features and
enhancements, the revenue generated by the casino based player betting stations
remains small, and is likely to remain insufficient to avoid continuing loses by
the Company for the foreseeable future.

         Although the current version of the System can be, and has been used
for contests by accumulating "play dollars", the Company is in the process of
enhancing the System by creating a version specifically for use for non-wagering
contests. This contest version allows the player to earn points for making
correct picks. The number of picks which can be made can be limited. The points
earned will be related to the odds of the outcome occurring, such that picking
the underdog side would earn more points than picking the favorite side, if the
pick turns out to be correct. The contest version can be connected to an
advertising module through which the player can earn the right to make more
picks, by watching advertisements, thereby increasing his ability to earn
contest points.

                                        9

<PAGE>



         SportXction(TM) may also be used legally throughout the United States
in conjunction with contests for prizes, and for wagering in much of the world
outside of the U.S. The Company believes that these venues represent the most
significant market for its products, which have been adapted for use on the
Internet. The Company is aggressively pursuing several foreign and non-Nevada
domestic marketing opportunities. All opportunities specifically exclude
accepting wagers from players in the U.S., or from other venues, where it is
illegal. The Company's marketing is focused in several areas: (i) pre-game and
play-by-play wagering from remote (non-casino) locations within the State of
Nevada using a secure private network, (ii) pre-game and play-by-play wagering
on the Internet or private networks in those foreign countries where it is
legal, and (iii) non-wagering applications, including games and contests
nationally, over the Internet, where the Company intends to derive revenue from
advertising, merchandising, and data-mining. All wagering products and systems
may require approval by the appropriate local gaming authorities.

         In order to reduce its expenses, it is possible that the Company will
close its in-casino SportXction(TM) play-by-play wagering installations in
Nevada. The Company now provides that capability from homes and other remote
(non-casino) locations, where the economics are far more favorable as the
Company does not have to purchase, supply and maintain the equipment utilized by
players (such as PCs, modems, monitors, printers, etc) and telephone lines. The
Company will no longer emphasize the marketing of the in-casino version of its
System to gaming establishments in Nevada.

Use of Proceeds from Initial Public Offering

         On December 11, 1996, the Company's Registration Statement on Form SB-2
(Reg. No. 333-15005) relating to its IPO was declared effective, pursuant to
which it sold 1,725,000 units (including over-allotments) consisting of one
share of Common Stock and one redeemable warrant to purchase Common Stock at an
exercise price of $7.20 per share, for gross proceeds of $10,350,000. After
underwriting discounts and commissions, expenses paid to or for the benefit of
underwriters, and other costs of the IPO, net proceeds were approximately
$8,576,000.

         At or subsequent to the closing of the IPO, the Company expended
approximately $659,000 for repayment of certain Bridge Notes; approximately
$1,341,000 for the purchase of computer equipment including player betting
stations; approximately $701,000 for professional fees; approximately $404,000
for directors and officers liability insurance premiums; approximately $696,000
for marketing the System; approximately $132,000 for the purchase of a
condominium in Henderson, Nevada for use by its employees while traveling on
business in Nevada; and approximately $100,000 for a loan to an officer, which
has been fully repaid. After other expenses, including product enhancement and
development, sales and administration, approximately $899,317 remained in cash
and short-term, interest-bearing, investment grade securities as of December 31,
1999.

Year 2000 Issue

         The term "Year 2000 (`Y2K') Issue" is a general term used to describe
the various problems that may result from the improper processing of dates and
date-sensitive calculations by computers and other machinery as the year 2000 is
approached and reached. These problems generally arise from the fact that most
of the world's computer hardware and software have historically used only two
digits to identify the year in a date, often meaning that the computer

                                       10


<PAGE>


will fail to distinguish dates in the "2000's" from the date in the "1900's."
These problems may also arise from other sources as well, such as the use of
special codes and conventions in software that make use of the date field. The
Y2K computer software compliance issues may affect the Company and most
companies in the world. The Company's SportXction(TM) sports wagering System was
designed and developed during the past several years. As such, the Company
recognized Y2K problem and has attempted to write all of its proprietary
software utilizing four digits in order to avoid a Y2K problem. The Company also
utilizes a variety of software products in its database manufactured by
Microsoft Corporation, all of which are reported to be Y2K compliant. In
addition to information provided by Microsoft Corporation, the Company's
technical staff had discussions with vendors in order to determine whether such
vendors' products were Y2K compliant.

         The Company's technical staff of software engineers and programmers are
continuing to analyze and test the hardware and peripheral products that it
utilizes in its System to determine whether they are Y2K compliant. The
Company's staff attempts to identify any hardware or software with potential Y2K
problems; assess the magnitude of such problems, if any; remedy any such
problems that are found and test the solutions; and plan for any contingencies.

         Based upon its efforts to date, the Company does not believe that its
System requires any material modifications or replacements in order to be Y2K
compliant. The Company does not believe that the readiness of its customers and
suppliers to be Y2K compliant will have a material impact on the Company. The
Company has developed contingency plans relating to the Y2K problems to the
extent such plans are possible. These plans attempt to mitigate both internal
risks of the Y2K problem with any risks that may be impacted by the Company's
customers and suppliers. The Company believes, however, that due to the
widespread nature of potential Y2K issues, the contingency planning process is
an ongoing one which may require further modifications as the Company obtains
additional information regarding any Y2K problems affecting the Company's
systems and equipment and regarding the status of its suppliers and customers
regarding their becoming Y2K compliant.

         The System has been in full functional use since September 1997,
including the period since January 1, 2000. No significant Y2K problems have
been encountered during this period.

         Through December 31, 1999, the Company estimates that it has spent
approximately $46,000 in its efforts to achieve Y2K compliance, all of which has
been recognized as an expense in the Company's Statement of Operations. The
Company does not expect that any additional significant costs will need to be
incurred in its efforts to achieve Y2K compliance.

         The failure to correct a material Y2K problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Y2K problem, resulting in part from the uncertainty
of the Y2K readiness of the Company's customers and suppliers, the Company is
unable to determine at this time whether the consequences of any Y2K failures
will have a material impact on the Company's results of operations, liquidity or
financial condition.

                                       11


<PAGE>


Safe Harbor Statement

         The preceding "Y2K problem" discussion contains various forward-looking
statements which represent the Company's beliefs or expectations regarding
future events. When used in the "Y2K problem" discussion and elsewhere in this
Management's Discussion and Analysis, the words "believes," "expects,"
"estimates," "may" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements include, without
limitation, the estimated cost of becoming Y2K compliant and the Company's
belief that its System and equipment will be and remain Y2K compliant and that
the readiness of its customers and suppliers to be Y2K compliant will not have a
material impact on the Company. All forward-looking statements involve a number
of risks and uncertainties that could cause the actual results to differ
materially from the projected results, including problems that may arise on the
part of third parties. Factors that may cause these differences include, but are
not limited to, the availability of qualified personnel and other information
technology resources; the ability to identify and correct all date sensitive
lines of computer code or to replace embedded computer chips in affected systems
or equipment; and the actions of governmental agencies or other third parties
with respect to Y2K problems. If the modifications and conversions required to
make the Company Y2K compliant are not made or are not completed on a timely
basis, the resulting problems could have a material impact on the operations of
the Company. This impact could, in turn, have a material adverse effect on the
Company's results of operations and financial condition.

         Except for the historical information contained herein, this quarterly
report on Form 10-QSB contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
include, but are not limited to, the ability of the Company to retain any gaming
licenses required in order for the Company to be able to continue to operate the
System, the ability of the Company to attract adequate numbers of players to its
SportXction(TM) game, the ability of the Company to develop and market other
opportunities for its product, the length of time that the Company's liquid
resources will last, the likelihood that the Company's modified system for
betting from remote locations will continue to be approved by the Nevada Gaming
Authorities, the ability of the Company to generate revenue from wagering at
remote locations in Nevada or from advertising in conjunction with non-wagering
applications of the Company's technology, including contests, the ability of the
Company to attract a sufficient number of players for wagering in casinos or
other gaming establishments and/or from remote locations, the ability of the
Company to utilize its System for wagering on the Internet or private networks
in those foreign countries where it is legal to do so and to attract a
sufficient number of players, the ability of the Company to adequately reduce
its expenses, the likelihood that any pending licensing negotiations being
conducted by the Company will result in the grant of licenses by the Company or
that the terms thereof will be favorable to the Company and the length of time
that the Company's cash resources will last. Investors are cautioned that
forward-looking statements are inherently uncertain. Actual performance and
results of operations may differ materially from those projected or suggested in
the forward-looking statements due to certain risks and uncertainties,
including, without limitation, ability of the Company to attract adequate
numbers of players to the SportXction(TM) game and ability of the Company to
develop and market other opportunities for its product. Additional information
concerning certain risks or uncertainties that would cause actual results to
differ materially from those projected or suggested in

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<PAGE>


the forward-looking statements is contained in the Company's filings with the
Securities and Exchange Commission, including those risks and uncertainties
discussed in its Prospectus dated December 11, 1996 and its Form 10-KSB/A for
the fiscal year ended September 30, 1999. The forward-looking statements
contained herein represent the Company's judgement as of the date of this
report, and the Company cautions reader not to place undue reliance on such
matters.










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<PAGE>


II:  Other Information


Item 6.  Exhibits and Reports on Form 8-K


          (a)    Exhibits

                 27 - Financial Data Schedule


          (b)    Reports on Form 8-K

                 No reports on Form 8-K were filed by the Company during the
 quarter ended December 31, 1999.






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<PAGE>


                                   SIGNATURES

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

                                              International Sports Wagering Inc.





Dated:  February 11, 2000                     By: /s/ Barry Mindes
                                                  ------------------------------
                                                  Barry Mindes, Chairman of the
                                                  Board of Directors
                                                  (Principal Executive Officer)



Dated:  February 11, 2000                     By: /s/ Bernard Albanese
                                                  ------------------------------
                                                  Bernard Albanese, President,
                                                  Treasurer and Director
                                                  (Principal Financial Officer)








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