AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 7, 2000

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

i3 MOBILE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 7373 51-0335259
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)

181 HARBOR DRIVE
THIRD FLOOR
STAMFORD, CONNECTICUT 06902
(203) 969-0020
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

STEPHEN G. MALONEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
i3 MOBILE, INC.
181 HARBOR DRIVE
THIRD FLOOR
STAMFORD, CONNECTICUT 06902
(203) 969-0020
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------

COPIES TO:

MICHAEL HIRSCHBERG, ESQ. MORRIS DEFEO, JR., ESQ.
PAUL J. POLLOCK, ESQ. LORRAINE MASSARO, ESQ.
PIPER MARBURY RUDNICK & WOLFE LLP MORRISON & FOERSTER LLP
1251 AVENUE OF THE AMERICAS 1290 AVENUE OF THE AMERICAS
NEW YORK, NY 10020 NEW YORK, NY 10104
(212) 835-6000 (PHONE) (212) 486-8000 (PHONE)
(212) 835-6001 (FACSIMILE) (212) 468-7900 (FACSIMILE)

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practical after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------------------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
- ------------------------------
------------------------

CALCULATION OF REGISTRATION FEE

- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------

Common Stock, $.01 par value............................. $65,000,000 $17,160(2)
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------

(1) Includes shares subject to the underwriters' overallotment option.

(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY
BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION,
DATED JANUARY 7, 2000

[INTELLIGENT INFORMATION LOGO]

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

i3 MOBILE, INC.

SHARES
COMMON STOCK
- --------------------------------------------------------------------------------

This is the initial public offering of i3 Mobile, Inc. We are offering
shares of our common stock. We anticipate that the initial
public offering price will be between $ and $ per share.

We have applied to list our common stock on the Nasdaq National Market under
the symbol "IIIM."

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 9.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS I3 MOBILE, INC.

Per Share $ $ $
Total $ $ $

We have granted the underwriters the right to purchase up to an additional
shares to cover any over-allotments.

DEUTSCHE BANC ALEX. BROWN

CREDIT SUISSE FIRST BOSTON

The date of this prospectus is , 2000
3
Inside Front Cover

[Description of Artwork:

FRONT COVER:

The front cover will be a single page with the i3 Mobile, Inc. logo centered
towards the upper middle section of the page with the company name superimposed
over the logo. The logo is in the center of an imaginary circle with seven
arrows pointing at its top and seven sound waves emanating from its bottom
towards the bottom half of the page. At the top of the page, on the other end
of the arrows is the following text forming the top half of the imaginary
circle:
ENTERTAINMENT, E-COMMERCE & ADVERTISING, NEWS, FINANCIAL INFORMATION,
SPORTS, INTERNET & INTRANET, WEATHER.

Behind the text is a graphic complementary to it:

- - a cloud with rain behind WEATHER;
- - a computer behind INTERNET & INTRANET;
- - sports equipment behind SPORTS;
- - old-fashioned stock ticker behind FINANCIAL INFORMATION;
- - newspaper behind NEWS;
- - clenched fist behind E-COMMERCE & ADVERTISING; and
- - theater mask behind ENTERTAINMENT.

The seven sound waves lead to seven oval pictures of different men and women
using wireless devices (pagers, cell phones) in various situations (in the
office, in the car, in the park, on the street), forming the bottom half of the
imaginary circle.

In the lower third of the page, there are three pictures of wireless devices
lined up next to each other (a Nokia cell phone, a PDA, and a Neopoint cell
phone) with different text messages on each one (horoscope, stock quote, and
sports score, respectively). Below that is the following text:
CONNECTING CONSUMERS, CONTENT & COMMERCE.

Centered at the bottom of the page is the "Powered by iii" logo.

INSIDE OF GATEFOLD OF FRONT COVER:

The inside of the gatefold of the cover features some of the same graphics
(cloud with rain; newspaper; sports equipment; computer; old-fashioned stock
ticker). There are also graphics of a wireless phone and a PDA in the
background as well. The i3 Mobile, Inc. corporate logo and the company name are
in the top left corner of the page. The bottom left corner has the following
text:
CONNECTING CONSUMERS, CONTENT & COMMERCE.

The page is divided into three sections by three large ovals with text in the
right side and graphics in the left side of each oval. On the top outer layer
of each oval box is the text:
AGGREGATION, PERSONALIZATION, DISTRIBUTION.

All three ovals are linked by sound waves.

The text of the AGGREGATION oval:
i3 Mobile, Inc. has acquired the rights to a wide range of content for
distribution to small-screen wireless devices from over 50 third party content
providers.

To the left of and under the text are 10 content provider logos (Dow Jones;
Sports Ticker; Associated Press; The Weather Channel; Los Angeles Times; The
Canadian Press; SmarTraveler; Comtex; FOX News; 1-800-flowers.com).

The text of the PERSONALIZATION oval:
i3 Mobile, Inc. has created proprietary systems to parse, filter and format
data based on personal parameters specified by our customers through the more
than 25 interactive wireless portals we have built for wireless network
operators and Web sites.

To the left of and under the text are five [screen shots] of various
Web-provisioning sites that i3 has built (Omnipoint Communications; AT&T;
The Weather Channel; Bell Mobility; Southwestern Bell Wireless).

The text of the DISTRIBUTION oval:
i3 Mobile, Inc. has developed a network of distribution relationships with some
of the most innovative wireless carriers and Web sites in North America, who
offer our services under the "Powered by iii" brand.

To the left of and under the text are logos of business partners through whom
iii distributes its services (AT&T, Southwestern Bell Wireless;US Cellular US
West; Cellular One; Omnipoint Communications; Pacific Bell; The Weather Channel)
and our "Powered by iii" logo.

Emanating from this oval are four sound waves that connect to pictures of
devices to which i3 delivers content: Nokia mobile phone, Neopoint phone,
PalmPilot, and pager.]
4

PROSPECTUS SUMMARY

This summary highlights selected information from this prospectus and may
not contain all the information that is important to you. To learn about this
offering and our business, you should carefully read the entire prospectus,
including the risk factors and our financial statements and related notes. In
this prospectus, references to "i3," "we," "our" and "us" refer to i3 Mobile,
Inc. unless the context requires otherwise. Unless otherwise indicated, we
present information in this prospectus assuming:

- the conversion of all outstanding shares of preferred stock into an
aggregate of 11,316,765 shares of common stock upon the closing of this
offering;

- our common stock will be sold at $ per share; and

- the underwriters have not exercised their over-allotment option to
purchase additional shares of common stock.

OUR BUSINESS

We are a leading provider of timely personalized information to users of
wireless communications devices in North America. We believe that we are
positioned to capitalize on the convergence of the growth in the use of digital
wireless communication devices and the rapidly increasing demand for and
availability of real-time content over the Internet. We currently provide
individually customized data services such as the delivery of stock quotes and
other financial information, news, weather, sports, entertainment, traffic and
travel information on both a one-way and interactive basis, as well as personal
e-mail, calendar and commerce applications.

We offer our products and services primarily through co-branded
distribution relationships with wireless network operators that offer our
products and services to their users on both a complimentary and subscription
basis. We believe that we are the only provider offering wireless network
operators comprehensive, end-to-end solutions for the delivery of personalized
content and information services through their networks. We also offer enabling
solutions to Internet media networks and corporate enterprises seeking to expand
their Internet- or intranet-based services through wireless communications
networks. At December 15, 1999, we had over 450,000 users of our products and
services, of which over 100,000 were paying subscribers.

We are currently providing private label and co-branded personalized
wireless information services under agreements with more than 15 wireless
network operators, collectively representing approximately 43 million wireless
phone subscribers at June 30, 1999, or more than 50% of the total North American
market of wireless phone users. These wireless network operators include
AirTouch Cellular, AT&T Wireless Services, Inc., Bell Mobility Cellular, Inc.
(Canada), Omnipoint Communications Services and SBC Communications, Inc.
including its subsidiaries Southwestern Bell Mobile Systems, Inc., Pacific Bell
and others. We are the provider of services such as "AT&T Personal News" and
Omnipoint's "InfoServices". Currently, we generate most of our revenue from
subscriptions for our products and services, and we expect to generate
additional revenue in the future from advertising sales and wireless electronic
commerce
3
5

transactions. We believe that the distribution capabilities and name recognition
of our distributors allow us to rapidly develop our business and sub-brand with
lower capital requirements than would be possible on a direct-to-user basis.

OUR MARKET OPPORTUNITY

We believe that wireless mobile data is emerging as a powerful new medium,
uniquely capable of creating value for its users through the ability to deliver
highly personalized, local, timely and interactive content and services.
According to DataQuest, wireless data subscribers will grow at a compound annual
rate of 82%, from 3 million in 1999 to 36 million in 2003, creating a market
with $3 billion in annual revenue. We believe that wireless communications
subscribers and Internet users will increasingly seek to combine the benefits
and convenience of each of these services by using the mobile data medium.
International Data Corporation predicts that the worldwide annual sales of
Internet handheld devices, such as wireless phones and personal digital
assistants, or PDAs, will grow at a compound annual rate of 62% from $1.2
billion in 1998 to $8.2 billion in 2002.

OUR STRATEGY

Our objective is to be the leading provider of personalized wireless data
products and services that provide information, entertainment and electronic
commerce. The key elements of our strategy are to:

- position i3 as the single-source wireless portal for wireless network
operators, Internet media networks and corporate enterprises;

- continue to build compelling products;

- grow our user base and build i3 brand awareness;

- expand and diversify our distribution relationships;

- develop advertising and transactional revenue; and

- advance our technology and content delivery systems.

COMPETITIVE ADVANTAGES

We believe that we have several competitive advantages in the emerging
mobile data medium, including:

SIGNIFICANT ESTABLISHED BASE OF USERS AND SUBSCRIBERS: We have
established a significant base of users and paying subscribers throughout
North America by delivering compelling products and services for mobile
individuals. We believe our base of users and paying subscribers represents
an attractive market for delivery of additional products and services,
including advertising and electronic commerce transactions.

UNIQUE PLATFORM OF PROPRIETARY TECHNOLOGY AND KNOW-HOW: We have
developed and acquired technology and systems that enable us to efficiently
manage the acquisition, filtering, customization and delivery of large
amounts of data on a daily basis for delivery to virtually all available
wireless networks
4
6

and devices. We are actively developing new applications to provide our
users and distributors with the ability to migrate to new and more powerful
technologies as they develop, including Internet browsing capabilities
using Wireless Applications Protocol, or WAP, which is a protocol designed
to work with the widest range of air interfaces.

ESTABLISHED DISTRIBUTION RELATIONSHIPS: We have distribution
agreements with a number of the leading wireless network operators serving
the North American market including AirTouch Cellular, AT&T Wireless
Services, Inc., Bell Mobility Cellular, Inc. (Canada), Omnipoint
Communications Services and SBC Communications, Inc. These relationships
give us access to a significant number of potential users and subscribers.
We believe these relationships position us to be the integrator of the
wireless network operator's content aggregation, message delivery, customer
profiling and customer service. We provide direct customer service to most
of our users. Also, in some cases, we directly bill our subscribers by
credit card. We work with wireless network operators, Internet media
networks and corporate enterprises to develop product packages, devise
marketing plans, promote services and support wireless user needs.

ROBUST PRODUCT AND SERVICE OFFERINGS: We believe that our ability to
provide customized, reliable, end-to-end solutions will enable our
distributors to distinguish their services in increasingly competitive
markets. We offer content from more than 50 providers and are constantly
evaluating new sources of content in response to user and subscriber
demand. We develop our product and service offerings in collaboration with
our distributors and will continue to enhance our products and services in
response to subscriber demand and technological feasibility.

RECENT DEVELOPMENTS

On December 22, 1999, we sold 8,248.33 shares of our Series F mandatorily
redeemable preferred stock for an aggregate purchase price of approximately
$32.7 million to a group of strategic and financial investors including NBC
Interactive Media, Inc., Sony Corporation of America, Sony Music Entertainment
Inc., MCI WorldCom, Inc., Clearnet Communications, Inc., GE Capital Equity
Investments, Inc., Bowman Capital Management funds and Keystone Venture V, L.P.
We believe that the investment in our company by these investors will provide us
with significant strategic benefits as we expand our business. As part of our
agreement with NBC Interactive Media, Inc., we have received $2.5 million in
television advertising rights from National Broadcasting Company, Inc., and we
have agreed to make our wireless distribution services available to NBC
Interactive Media, Inc. and its affiliates for use in connection with their
interactive content offerings. The investment by MCI WorldCom, Inc. was effected
by the conversion by an affiliate of MCI WorldCom of a $5 million promissory
note from i3. All of the shares of Series F mandatorily redeemable preferred
stock will convert into shares of common stock upon the completion of this
offering.
5
7

OUR OFFICES AND HISTORY

We were incorporated as Intelligent Information Incorporated under the laws
of the State of Delaware on June 28, 1991. On January 4, 2000, we changed our
name to i3 Mobile, Inc. Our principal executive office is located at 181 Harbor
Drive, Stamford, Connecticut, and our telephone number at that office is (203)
969-0020. In addition, we maintain offices at One Dock Street, Suite 500,
Stamford, Connecticut; 1237 Southridge Court, Suite 100, Hurst, Texas; and,
beginning February 1, 2000, 305 N.E. Loop, Hurst, Texas. Our Web site is located
at www.i3mobile.com. Information contained on our Web site does not constitute
part of this prospectus.

THE OFFERING

Common Stock offered by i3............ shares.
Common Stock to be outstanding after
this offering......................... shares.
Use of Proceeds....................... For expansion of sales and marketing,
further development of systems
infrastructure, funding operating
losses, working capital and general
corporate purposes, including
strategic alliances. See Use of
Proceeds for more detailed
information.
Proposed Nasdaq National Market
Symbol.............................. "IIIM"

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

The outstanding share information shown in the table above excludes:

- 1,805,359 shares of common stock issuable upon the exercise of warrants
as of September 30, 1999 at a weighted average of $3.19 per share, after
giving effect to the exercise of warrants to purchase 101,500 shares of
common stock in December 1999, and 123,725 shares of common stock
issuable upon the exercise of warrants issued after September 30, 1999 at
an exercise price per share of $7.92;

- an aggregate of 918,485 shares of common stock issuable upon the exercise
of outstanding stock options under our 1995 Stock Option Plan, of which
591,985 shares were issuable upon the exercise of outstanding stock
options issued as of September 30, 1999, at a weighted-average exercise
price per share of $1.99, and 326,500 shares were issuable upon the
exercise of outstanding stock options issued after September 30, 1999, at
an exercise price per share of $4.00; and

- 422,015 shares of common stock available for grant under our 1995 Stock
Option Plan as of September 30, 1999, which, as the result of stock
option grants after September 30, 1999, has been reduced to 95,515 shares
available for future grant as of the date of this prospectus.
6
8

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table summarizes our consolidated statement of operations
data for each of the years ended December 31, 1994, 1995, 1996, 1997 and 1998
and for the nine-month periods ended September 30, 1998 and 1999, and our
consolidated balance sheet data as of September 30, 1999. This information
should be read along with the consolidated financial statements and the related
notes included elsewhere in this prospectus.

The pro forma net loss per share data below for the year ended December 31,
1998 and the nine months ended September 30, 1999 reflect the conversion of all
of our outstanding shares of preferred stock into common stock as though this
event occurred as of their issuance date.

The pro forma summary consolidated balance sheet data below reflects the
following transactions as though these transactions occurred as of September 30,
1999:

- the sale on November 23, 1999 of 1,928.64 shares of Series E mandatorily
redeemable preferred stock for $3 million;

- the amendment on December 22, 1999 of the Series C convertible preferred
stock designation to provide for mandatory conversion into common stock
upon the completion of an initial public offering;

- the amendment on December 22, 1999 of our certificate of incorporation to
increase the authorized shares of common stock from 25,000,000 shares to
50,000,000 shares and to increase the authorized shares of preferred
stock from 25,000 shares to 50,000 shares;

- the conversion on December 22, 1999 of a five-year convertible note, a
portion of which was used to purchase 79.96 shares of Series F
mandatorily redeemable preferred stock at a price of $3,960.40 per share
and the balance of which was used to exercise a warrant to purchase
101,500 shares of common stock at an exercise price per share of $1.72;

- the conversion on December 29, 1999 of a five-year $5 million note
payable into 1,262.50 shares of Series F mandatorily redeemable preferred
stock at a price of $3,960.40 per share; and

- the sale on December 22, 1999 of 8,248.33 shares of Series F mandatorily
redeemable preferred stock for consideration of $32.7 million, including
the note conversions described above and television advertising rights
preliminarily valued at $2.5 million in pro forma total assets.

The pro forma as adjusted summary consolidated balance sheet data below
adjusts the pro forma information to give effect to each of the following items:

- the conversion of all of our outstanding shares of preferred stock into
11,316,765 shares of common stock; and

- the sale of shares of common stock offered by us after
deducting underwriting discounts and commissions and estimated offering
expenses, and the application of the estimated net proceeds. See Use of
Proceeds.
7
9

NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
------ ------ --------- ------- --------- ----------- ---------
(UNAUDITED) (AUDITED) (AUDITED) (AUDITED) (UNAUDITED) (AUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Net revenue...................... $ 214 $ 387 $ 645 $ 825 $ 1,405 $ 1,023 $ 1,325
Cost of revenue.................. 115 190 465 671 762 621 673
------ ------ ------- ------- ------- ------- -------
Gross profit..................... 99 197 180 154 643 402 652
Operating expenses............... 170 966 1,507 2,521 3,209 2,394 4,534
------ ------ ------- ------- ------- ------- -------
Operating loss................... (71) (769) (1,327) (2,367) (2,566) (1,992) (3,882)
Interest (income)
expense - net.................. 6 (22) (8) 81 329 228 290
------ ------ ------- ------- ------- ------- -------
Net loss......................... $ (77) $ (747) $(1,319) $(2,448) $(2,895) $(2,220) $(4,172)
====== ====== ======= ======= ======= ======= =======
Loss applicable to common
stock.......................... $ (77) $ (747) $(1,327) $(2,524) $(3,169) $(2,435) $(9,527)
====== ====== ======= ======= ======= ======= =======
Net loss per share - basic and
diluted........................ $(0.02) $(0.10) $ (0.18) $ (0.33) $ (0.42) $ (0.32) $ (1.60)
====== ====== ======= ======= ======= ======= =======
Shares used in computing net loss
per share...................... 4,670 7,282 7,552 7,554 7,554 7,554 5,966
Pro forma net loss per share -
basic and diluted
(unaudited).................... $ (0.28) $ (0.39)
======= =======
Pro forma shares used in
computing net loss per share
(unaudited).................... 10,455 10,785

AS OF SEPTEMBER 30, 1999
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 4,000 $ 31,850
Working capital............................................. 3,369 31,320
Total assets................................................ 5,442 35,792
Long-term debt, less current portion........................ 5,348 --
Mandatorily redeemable convertible preferred stock.......... 16,134 51,801
Total stockholders' equity (deficit)........................ (17,321) (17,189)

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

The outstanding share information shown in the table above excludes:

RISK FACTORS

You should carefully consider the following risks and other information in
this prospectus before you decide to buy our common stock. An investment in our
common stock involves a high degree of risk. Our business, financial condition
or operating results may suffer if any of the following risks actually occur.
Additional risks and uncertainties not currently known to us may also adversely
affect our business, financial condition or operating results. If any of these
risks or uncertainties occurs, the trading price of our common stock could
decline.

RISKS RELATED TO OUR BUSINESS

BECAUSE WE HAVE A LIMITED OPERATING HISTORY IN OUR CURRENT BUSINESS, OUR FUTURE
PROFITABILITY IS UNCERTAIN.

Although we were founded in 1991, the increased growth in digital wireless
capabilities and Internet use has occurred only recently and, as a result, the
focus of our business changed significantly. Therefore, the operating history of
our business in its current form is limited. When making your investment
decision, you should consider the risks, expenses and difficulties that we may
encounter or incur in a new and rapidly evolving market. We have spent limited
resources on promoting and marketing our products and services to our individual
and corporate customers. We expect to spend significant resources on expanding
our products and services and promoting our brand name for the foreseeable
future. Consequently, you should view us as an early stage enterprise
notwithstanding the fact that we have been engaged in our business for several
years. We face a number of risks encountered by early stage companies in the
wireless telecommunications industry. Our business strategy may not be
successful, and we may not successfully address these risks.

BECAUSE WE HAVE A HISTORY OF LOSSES AND EXPECT TO CONTINUE TO INCUR SIGNIFICANT
EXPENSES, WE EXPECT TO CONTINUE TO INCUR LOSSES.

We have incurred annual operating losses each year since our inception and
we expect to incur further losses for the foreseeable future. We have incurred
net losses of $4,172,000 for the nine months ended September 30, 1999,
$2,895,000 for the year ended December 31, 1998, $2,448,000 for the year ended
December 31, 1997, and $1,319,000 for the year ended December 31, 1996. As of
September 30, 1999, our accumulated deficit was $17,658,000. Because we expect
to continue to incur significant product development, sales and marketing, and
administrative expenses, we will need to generate significant revenues to become
profitable and sustain profitability on a quarterly or annual basis. We may not
achieve or sustain our revenue or profit goals, and our ability to do so depends
on a number of factors outside of our control, including the extent to which:

- there is market acceptance of commercial services utilizing our products;

- our competitors announce and develop, or lower the prices of, competing
products; and

- our distributors dedicate resources to selling our products and services.

9
11

As a result, we cannot predict if we will ever achieve profitability. In
addition, our failure to achieve profitability within the time frame expected by
our investors may adversely affect the market price of our common stock.

BECAUSE BOTH OUR BUSINESS MODEL AND THE USE OF WIRELESS DEVICES FOR DELIVERY OF
DATA SERVICES ARE EVOLVING AND UNPROVEN, WE CANNOT PREDICT WHETHER OUR PRODUCTS
AND SERVICES WILL GENERATE SUFFICIENT REVENUES.

Our business model is relatively new, is unproven and is likely to continue
to evolve. Accordingly, it may not be successful, and we may have to adjust it.
In addition, our future success depends on the continued increase in wireless
device use and the continued development of wireless devices as a viable medium
for the delivery of products and services. In particular, our success depends on
commercial validation that the use of wireless telephony and other wireless
devices, the use of the Internet and the need to obtain immediate personalized
and timely information will continue to grow and that mobile individuals, if
offered the opportunity, will increasingly use mobile devices to access the
Internet and/or Internet based information. We cannot predict whether demand for
our products and services will continue to develop, particularly at the volume
or prices that we need to become profitable. We intend to continue to develop
our business model as we explore opportunities domestically and internationally
and in new and unproven areas such as wireless electronic commerce.

Although wireless device and Internet usage is growing rapidly, we cannot
be certain that this growth will continue in its present form, or at all. We
believe our success ultimately will depend upon, among other things, our ability
to:

- increase awareness of i3's brand and the availability of our products and
services;

- continue to attract and retain wireless network operators to distribute
our products and services;

- continue to attract and retain subscribers;

- continue to develop distribution relationships with Internet media
networks and corporate enterprises;

- continue to develop relationships with content providers;

- continue to attract and retain electronic commerce companies; and

- continue to attract advertisers.

IF WIRELESS DEVICES ARE NOT WIDELY ACCEPTED FOR MOBILE DELIVERY OF CONTENT
SERVICES, OUR BUSINESS WILL SUFFER MATERIALLY.

Our future success depends upon on the acceptance of wireless
communications for delivery of content and Internet-based services. Most mobile
individuals currently use portable computers to access the Internet and remotely
retrieve real-time information and e-mail. Computers are generally designed for
the visual presentation of data, whereas wireless telephones and pagers
historically have been limited to messaging by letters, numbers and a finite
number of symbols. We

10
12

cannot assure you that wireless users will accept the use of handheld devices to
receive content or Internet-based services.

BECAUSE WE DEPEND UPON WIRELESS NETWORKS OWNED AND CONTROLLED BY OTHERS FOR
ACCESS TO SUFFICIENT CAPACITY AND LEVEL OF SERVICE QUALITY, WE MAY BE UNABLE TO
DELIVER OUR PRODUCTS AND SERVICES AND OUR USER BASE AND REVENUE COULD DECREASE.

Our ability to grow and achieve profitability partly depends on our ability
to access sufficient capacity on the networks of wireless carriers such as AT&T
Wireless Services and Omnipoint Communications Services and on the reliability
and security of their systems. All of our products and services are delivered
using transmission services provided by third parties. We depend on these
companies to provide uninterrupted and quality service and would not be able to
satisfy our users' needs if our wireless network operators fail to provide the
required capacity or level of service. In addition, our expenses would increase
and our profitability could be materially adversely affected if our wireless
network operators were to change their current fee structures.

BECAUSE WE DEPEND ON THIRD PARTIES TO MARKET AND DISTRIBUTE OUR PRODUCTS AND
SERVICES, IF THEIR EFFORTS ARE NOT SUFFICIENT OR EFFECTIVE, WE MAY NOT ACHIEVE
PROFITABILITY.

We rely substantially on the efforts of others to actively market and
distribute our wireless data services. In order to increase the value of our
products and services to our users and encourage demand for content delivery via
wireless devices, we must successfully promote our products and services to
distributors. If our distributors fail to create sufficient interest in content
delivery services via wireless devices, we may be unable to attract new users
and our business could suffer materially. We may not be able to control how
those who distribute and market our products and services perform and we cannot
be certain that their marketing efforts will be satisfactory. If the marketing
and/or distribution efforts of wireless network operators, Internet media
networks or corporate enterprises fail to result in new users, we may be unable
to attract new subscribers and our revenue could be adversely affected.

BECAUSE A FEW OF OUR WIRELESS NETWORK OPERATORS ACCOUNT FOR A HIGH PERCENTAGE OF
OUR REVENUE, A LOSS OF ANY OF THEM AS DISTRIBUTORS OF OUR PRODUCTS AND SERVICES
WOULD REDUCE OUR REVENUE.

To date, the largest distributors of our products and services in terms of
revenue generated have been Omnipoint Communications Services, SBC
Communications, Inc. and Bell Mobility Cellular, Inc. Subscription revenues
generated by users of these wireless networks together accounted for
approximately 60% of our total revenue for the nine months ended September 30,
1999 and 24% for the nine months ended September 30, 1998. In addition,
Omnipoint Communications Services alone accounted for over 35% of our total
revenue for the nine months ended September 30, 1999 and 31% for the nine months
ended September 30, 1998. We expect that we will generate a significant portion
of our revenue from a small number of wireless network operators for the
foreseeable future. Although we have agreements with these wireless network
operators, they generally are for

11
13

one- to three-year terms. Our growth depends on maintaining our relationships
with our existing wireless network operators and developing distribution
relationships with additional wireless network operators. If we lose any of our
existing wireless network operators our revenue would be significantly reduced,
which would harm our business.

BECAUSE OUR BUSINESS HAS GROWN RAPIDLY, WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE
OUR GROWTH.

Our growth has placed, and any further growth is likely to continue to
place, considerable strain on our management team and other personnel, our
internal accounting and management information systems and the third-party
systems on which we depend. If we fail to manage our growth effectively our
business would be adversely affected. We intend to use the net proceeds of this
offering to develop additional products and services and to accelerate our
growth. Our growth plans are likely to continue to place a significant strain on
our personnel, and we believe that our current accounting and management
information systems are inadequate to handle our anticipated growth. We are
actively attempting to hire new employees to help us manage our growth, and we
are evaluating supplementing or replacing our accounting and other systems to
enable us to manage our expansion. Our failure to hire additional personnel or
to improve our systems increases the risk that we will not be able to achieve
our growth objectives or, if achieved, we will not be able to manage our
operations effectively.

BECAUSE WE HAVE NON-EXCLUSIVE AGREEMENTS WITH THE WIRELESS NETWORK OPERATORS WHO
DISTRIBUTE OUR PRODUCTS AND SERVICES, OUR COMPETITORS MAY BE ABLE TO OBTAIN
ARRANGEMENTS SIMILAR TO OURS.

Our existing agreements with our wireless network operators are non-
exclusive. Some or all of our wireless network operators may decide to establish
relationships with our competitors. In addition, some of these wireless network
operators are, or could become, our competitors by offering the same or similar
products and services. If the wireless network operators who distribute our
products and services began competing directly with us or offering our
competitors' products and services, our business and growth prospects would
suffer.

BECAUSE OUR FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS, WE MAY
NOT MEET EXPECTATIONS OF INVESTORS AND ANALYSTS AND OUR STOCK PRICE MAY DECLINE.

The rapidly evolving wireless data communications market makes it difficult
to predict our operating results. Our profitability depends on a variety of
factors, including the following:

- continued growth in the use and quality of wireless communications
products;

- the rate at which we are able to acquire new users;

- our ability to generate subscriptions among our user base;

- changes in our revenue arrangements with wireless network operators;

12
14

- timing of introduction of new products and services;

- changes in pricing policies and product offerings by us or our
competitors;

- continued growth in Internet usage;

- our ability to enter into revenue generating relationships with content
and electronic commerce providers;

- costs associated with advertising, marketing and promotional efforts to
acquire subscribers;

- changes in our fee arrangements with advertisers, electronic commerce
providers and content providers; and

- capital expenditures and other costs and expenses related to improving
our business, expanding our operations and adapting to new technologies
and changes in subscriber preferences.

In addition, our operating expenses are based on our expectations of the
future demand for our products and services. Moreover, we frequently will incur
expenses in connection with integration and offering of new content, which are
likely to be incurred substantially in advance of related revenues. We may be
unable to adjust spending quickly enough to offset any unexpected demand
shortfall or delay in offering our products and services. As a result, our
operating results are likely to fluctuate from period to period. If we do not
meet expectations of investors and analysts in a particular quarter, the price
of our common stock could decline.

IF WE LOSE KEY MANAGEMENT OR OTHER PERSONNEL, WE MAY EXPERIENCE DELAYS IN OUR
PRODUCT DEVELOPMENT AND OUR GROWTH PROSPECTS.

We believe that our success depends upon the continued efforts of our
senior management and key technical personnel, including Stephen G. Maloney, our
president and chief executive officer. We have an employment agreement with Mr.
Maloney and we maintain key-man life insurance in the amount of $2,000,000 on
Mr. Maloney.

Our growth and success also depends on our ability to attract, hire and
retain additional highly qualified management, technical, marketing and sales
personnel. These individuals are in high demand and we may not be able to
attract the staff we need. The hiring process is intensely competitive, time
consuming and may divert the attention of our management from our operations.
Competitors and others may attempt to recruit our employees. If we lose the
services of any of our senior management or key technical personnel, or if we
fail to continue to attract qualified personnel, our business could suffer.

IF WE DO NOT OBTAIN ADDITIONAL CAPITAL ON ACCEPTABLE TERMS, WE MAY NOT BE ABLE
TO CONTINUE TO GROW OUR BUSINESS.

Our business does not generate the cash necessary to fund our operations.
In the past, we have met our capital needs through private sales of securities.
In

13
15

order to implement our strategy, we expect to spend significant amounts of money
to:

- advertise, market and promote our products and services;

- expand our technical infrastructure;

- enter into strategic relationships with content and electronic commerce
providers;

- create advanced customer care and operations centers; and

- fund operating losses and working capital.

We currently anticipate that our available cash resources, combined with
the net proceeds from this offering will be sufficient to fund our operating
needs for at least the next 24 months. Thereafter, we expect to require
additional financing in an amount that we cannot determine at this time. We may
need to raise funds through public or private debt or equity financings. If
funds are raised through the issuance of equity securities, the percentage
ownership of our then-current stockholders may be reduced and the holders of new
equity securities may have rights, preferences or privileges senior to those of
the holders of our common stock. If additional funds are raised through a bank
credit facility or the issuance of debt securities, the holder of this
indebtedness would have rights senior to the rights of the holders of our common
stock and the terms of this indebtedness could impose restrictions on our
operations. We may not be able to raise additional capital in the future on
terms acceptable to us, or at all. If alternative sources of financing are
insufficient or unavailable, we will be required to modify our growth and
operating plans in accordance with the extent of available funding.

IF WE ARE UNABLE TO MAINTAIN, IMPROVE AND DEVELOP OUR PRODUCTS AND SERVICES, WE
MAY NOT ACHIEVE PROFITABILITY.

We may not be able to develop and introduce new products, services and
enhancements that respond to technological changes, evolving industry standards
or customer needs and trends on a timely basis, in which case our business would
suffer. We believe that our future business prospects depend in part on our
ability to maintain and improve our current products and services and to develop
new ones on a timely basis. Our products and services will have to achieve
market acceptance, maintain technological competitiveness and meet an expanding
range of customer requirements. As a result of the complexities inherent in our
offerings, major new wireless data services and service enhancements may require
long development and testing periods. We may experience difficulties that could
delay or prevent the successful development, introduction or marketing of new
products and services and service enhancements. Additionally, our new products,
services and enhancements may not achieve market acceptance. Also, our
competitors may develop alternative technologies that gain broader market
acceptance than our products and services. If we cannot effectively maintain,
improve and develop products and services we may not be able to recover our
fixed costs or otherwise become profitable.

14
16

BECAUSE THE ADOPTION PERIOD FOR OUR PRODUCTS AND SERVICES BY THE CUSTOMERS OF
THE WIRELESS NETWORK OPERATORS, INTERNET MEDIA NETWORKS AND CORPORATE
ENTERPRISES WHO DISTRIBUTE OUR PRODUCTS AND SERVICES IS LONG, OUR STOCK PRICE
COULD DECLINE IF REVENUES ARE DELAYED.

We cannot predict the rate of adoption by wireless users of our services or
the price they may be willing to pay for our products and services in the
future. In addition, we may not successfully migrate our complimentary users to
subscription services through our marketing efforts. Fluctuations in our
operating performance are exacerbated by the length of time between our first
contact with a wireless network operator, Internet media network or corporate
enterprise and the first revenue from sales of products and/or services to the
end-user.

IF WE DO NOT CONTINUE TO OFFER DESIRED CONTENT, WE MAY NOT BE ABLE TO ATTRACT
AND RETAIN SUBSCRIBERS AND ADVERTISERS.

Currently, we rely on third parties, such as news, sports, weather and
financial information companies, to provide the content we offer our users. It
is important to our business that we maintain our existing relationships with
these content providers and enter into new relationships giving our users access
to content they find compelling. Our content agreements frequently are for
one-year terms and are non-exclusive. Our content providers may choose not to
renew their agreements with us or may terminate their agreements early if we do
not fulfill our contractual obligations. If that were to occur, we would need to
establish new relationships with other content providers, or we would face the
prospect of losing users. In addition, we cannot assure you that our content
providers will not raise the prices they charge for content. If the pricing
terms with our content providers change substantially, our revenues and
profitability would be affected. Our failure to maintain attractive and
compelling content could result in decreased numbers of users, which, in turn,
would result in decreased revenue.

IF COMPETITION FOR OUR PRODUCTS AND SERVICES INCREASES, IT COULD REDUCE OUR
MARKET SHARE AND DECREASE OUR REVENUE.

We face competition from a wide variety of businesses that provide products
and services that compete with some or all of our products and services. We also
face competition from new products which could affect our business. Generally,
our agreements with wireless network operators, wireless handheld device
manufacturers and content providers are non-exclusive. As a result, our
competitors may establish relationships that allow them to use the same products
and services. With time and capital, it would be possible for competitors to
replicate our services. Our current and potential competitors include:

- wireless data providers and portals, such as Wireless Knowledge, a joint
venture of Microsoft Corporation and Qualcomm Incorporated, MSN Mobile,
Datalink, Airflash, Phone.com, Microsoft Corporation, Yahoo!, Inc.,
InfoSpace.com and Saraide.com;

- wireless financial service providers, such as Aether Systems, Inc. and
724 Solutions Inc.; and

15
17

- wireless network operators, such as AT&T Wireless, Bell Atlantic Mobile,
Metricom, Inc., Nextel Communications, Inc., Omnipoint Communications
Services and Sprint PCS.

In addition, there are other companies that have announced their intention
to enter the wireless data provider market, including America Online, Inc. and
TIBCO Software Inc. Many of our competitors and potential competitors have
significantly greater resources than we do. Furthermore, some competitors have
and others may develop a different approach to marketing the products and
services we provide in that subscribers may not be required to pay for the
wireless information provided. Competition could reduce our market share or
force us to lower prices to unprofitable levels. As a result, we may not be able
to compete successfully in our market.

IF WE FAIL TO OBTAIN CONSENT FROM WIRELESS NETWORK OPERATORS TO PROVIDE
ADDITIONAL PRODUCTS AND SERVICES TO USERS, INCLUDING ADVERTISING AND ELECTRONIC
COMMERCE, WE MAY NOT BE ABLE TO SELL NEW AND EXISTING PRODUCTS AND SERVICES AT A
PROFIT.

We generally must obtain the consent of the wireless network operators in
order to offer additional products and services to our users on their networks.
If wireless network operators limit the content or new products and services we
may offer their subscribers including advertising and electronic commerce, our
revenue could be adversely affected.

BECAUSE OUR DISTRIBUTORS MAY EXPERIENCE A HIGH RATE OF CUSTOMER TURNOVER, OUR
COSTS OF OPERATIONS COULD INCREASE AND OUR REVENUE COULD DECREASE.

Many providers in the personal communications services industry have
experienced a high rate of customer turnover. The rate of customer turnover may
be the result of several factors, including network coverage, reliability issues
such as blocked and dropped calls, handset problems, non-usage of phones, change
of employment, affordability and customer care concerns. Price competition and
other competitive factors could also increase customer turnover rates. When a
user chooses a new wireless services provider, he or she may or may not have the
opportunity to receive our products and services. We have little or no control
over customer turnover of our wireless network operators, and a high rate of
customer turnover could adversely affect our competitive position, results of
operations and our costs of, or losses incurred in, obtaining new subscribers.

BECAUSE WE DO NOT RECONCILE OUR USER AND SUBSCRIBER COUNTS WITH THOSE OF OUR
DISTRIBUTORS MORE FREQUENTLY THAN ON A QUARTERLY BASIS, THESE COUNTS MAY NOT
REFLECT THE ACTUAL NUMBER OF OUR USERS AND SUBSCRIBERS AT ANY PARTICULAR POINT
IN TIME.

We maintain a database of user profiles created by each user at the time
they register for our services and we derive our user and subscriber counts from
this database. This database is a component of our message delivery system and
is not a part of our financial reporting systems. Our experience indicates that
each month a number of users of our products and services may cancel their
agreements with us for a variety of reasons, including termination of their
subscriptions to our distributors' services. We continually update our database
of users and subscribers and generally reconcile our user and subscriber counts
with those of our distributors on a quarterly basis. Accordingly, the number of
users contained in our database at a particular point in time may not reflect
users or

16
18

subscribers that have recently cancelled their service with their wireless
network operator. Therefore, we cannot assure you that the user and subscriber
counts reflected in our database are accurate at any particular date.

BECAUSE WE MAY LOSE SOME OF OUR WIRELESS NETWORK OPERATOR RELATIONSHIPS DUE
TO CONSOLIDATION IN THE INDUSTRY, WE COULD LOSE A SIGNIFICANT PORTION OF OUR
USER BASE.

The wireless communications industry has experienced significant
consolidation among service providers. If one or more of the wireless network
operators that distribute our products and services were to consolidate with
another entity, the newly consolidated entity may choose to discontinue its
relationship with us or select one of our competitors to provide them with
products and services. This could have a significant negative impact on our
ability to generate revenues.

BECAUSE WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS OR AVOID
CLAIMS THAT WE INFRINGED THE PROPRIETARY RIGHTS OF OTHERS, WE MAY INCUR
SUBSTANTIAL COSTS TO DEFEND OR PROTECT OUR BUSINESS AND INTELLECTUAL PROPERTY.

Our success and competitive position depend, in large part, upon our
ability to develop and maintain the proprietary aspects of our technology. We
have taken steps to protect our technology, trademarks and other proprietary
rights. We have filed an application to register the mark "Powered by iii," in
the United States but we cannot be certain that we will be granted this
registration. We have registered the marks "Eyes on the Web," "Village Square,"
"News Alert Service," "Sports Alert Service," and "Intelligent Information
Incorporated" on the Principal Register of the United States Patent and
Trademark Office. We have filed a patent application for our information
messaging and advertising tagging system, Advanced Data Mining Advertising
Tagging and Transaction system, or ADMATTs. We also have a license agreement
with Portel Services Network, Inc. for Portel's patented process for transacting
some types of electronic commerce. If we fail to protect our intellectual
property, we may be exposed to expensive litigation or risk jeopardizing our
competitive position. The steps we have taken may be inadequate to protect our
technology and other intellectual property. We may have to litigate to enforce
our intellectual property rights, to protect our trade secrets or to determine
the validity and scope of the proprietary rights of others. This litigation
could result in substantial costs and the diversion of our management and
technical resources that would harm our business.

In addition, we joined the WAP Forum, which is an industry association of
wireless service, wireless equipment and software companies that has developed
worldwide standards for wireless information and telephony services on digital
mobile phones and other wireless devices. As a result of our affiliation with
the WAP Forum, we have agreed to license our intellectual property to other WAP
Forum members on fair and reasonable terms to the extent that the license is
required to develop non-infringing products under the specifications promulgated
by the WAP Forum. Each other member of the WAP Forum has entered into reciprocal
agreements. Although these agreements provide protections to prevent divulgence
or unauthorized use of such information, we cannot assure you that the other
members of the WAP Forum will take the steps necessary to protect our
proprietary information.

17
19

Although we have taken steps to avoid infringement claims from others,
these measures may not be adequate to prevent others from claiming that we
violated their patents, other trademarks or other proprietary rights. Any claim
of infringement could cause us to incur substantial costs defending against the
claim, even if the claim is invalid, and could distract our management from our
business. A party making a claim could secure a judgment that requires us to pay
substantial damages.

BECAUSE WE MAY NOT DEVELOP SIGNIFICANT REVENUES FROM ADVERTISING AND ELECTRONIC
COMMERCE, OUR BUSINESS MAY NOT GROW AS PLANNED.

We anticipate increasing our revenues from advertising and electronic
commerce transactions through our wireless portals. To generate additional
revenues from advertising and electronic commerce, we will have to continue to:

- increase our user base;

- attract users who purchase goods and services;

- obtain licenses, patents and other proprietary rights to use other
parties' intellectual property; and

- develop relationships with advertisers and electronic commerce companies.

BECAUSE WE INTEND TO EXPAND INTERNATIONALLY, WE WILL BE SUBJECT TO RISKS OF
CONDUCTING BUSINESS IN FOREIGN COUNTRIES.

If, as we anticipate, we expand our operations outside North America, we
will be subject to the risks of conducting business in foreign countries,
including:

- our inability to adapt our products and services to local cultural
traits, customs and mobile user preferences;

- our inability to locate qualified local employees, partners and
suppliers;

- the potential burdens of complying with a variety of foreign laws, trade
standards and regulatory requirements, including the regulation of
wireless telephony and the Internet and uncertainty regarding liability
for information retrieved and replicated in foreign countries; and

- general geopolitical risks, such as political and economic instability
and changes in diplomatic and trade relations.

If we fail to do any of the foregoing, or if we fail to increase our
revenues from advertising and electronic commerce transactions, we will not grow
as anticipated.

IF WE ACQUIRE OR INVEST IN ANOTHER COMPANY, THIS MAY DISRUPT OUR BUSINESS OR
DISTRACT OUR MANAGEMENT.

We have limited experience in acquiring businesses, technologies, services
or products. From time to time, we engage in discussions and negotiations with
companies regarding our acquiring or investing in these companies' businesses,
products, services or technologies. If we acquire or invest in another company,
we could have difficulty assimilating that company's personnel, operations,
products,

18
20

services, technology and software. In addition, the key personnel of the
acquired company may decide not to work for us. These difficulties could disrupt
our ongoing business, distract our management and employees, increase our
expenses and adversely affect our results of operations. Furthermore, we may
incur indebtedness or issue equity securities to pay for any future
acquisitions. The issuance of equity securities would be dilutive to our
existing stockholders. As of the date of this prospectus, we have no agreement
to enter into any material investment or acquisition transaction.

RISKS RELATED TO OUR TECHNOLOGY

IF WE DO NOT RESPOND EFFECTIVELY AND ON A TIMELY BASIS TO RAPID TECHNOLOGICAL
CHANGE, OUR PRODUCTS AND SERVICES MAY BECOME OBSOLETE AND WE MAY LOSE SALES.

The wireless and data communications industries are characterized by
rapidly changing technologies, industry standards, customer needs and
competition, as well as by frequent new product and service introductions. Our
products and services must also be compatible with the data networks of wireless
carriers. We must respond to technological changes affecting both our customers
and suppliers. We may not be successful in developing and marketing, on a timely
and cost-effective basis, new products and services that respond to
technological changes, evolving industry standards or changing customer
requirements. Our ability to grow and achieve profitability will depend, in
part, on our accomplishing all of the following in a timely and cost-effective
manner:

- effectively use and integrate new wireless and data technologies;

- continue to develop our technical expertise;

- enhance our wireless data, engineering and system design services;

- develop applications for new wireless networks; and

- influence and respond to emerging industry standards and other changes.

BECAUSE OUR NETWORK MAY BE VULNERABLE TO SECURITY RISKS, WE MAY INCUR
SIGNIFICANT COSTS TO PROTECT AGAINST THE THREAT OF SECURITY BREACHES OR TO
ALLEVIATE PROBLEMS CAUSED BY ANY BREACHES.

A significant barrier to the growth of wireless data services or
transactions on the Internet or by other electronic means has been the need for
secure transmission of confidential information. Unauthorized access, computer
viruses and other accidental or intentional actions could disrupt our systems.
We may incur significant costs to protect against the threat of security
breaches or to alleviate problems caused by such breaches. If a third party were
able to misappropriate our users' personal or proprietary information, we could
be subject to claims, litigation or other potential liabilities that could
materially adversely impact our revenue and may result in the loss of
subscribers.

19
21

IF WE EXPERIENCE ANY TYPE OF SYSTEMS FAILURE, IT COULD RESULT IN LOWER REVENUES,
INCREASED COSTS OR CLAIMS OF LIABILITY.

Our products and services depend on real-time, continuous information feeds
from our content providers including the Nasdaq Stock Market, Inc., The New York
Stock Exchange, Inc. and others. Our business strategy is focused on subscribers
that typically require timely receipt of information. Any disruption from our
satellite transmissions or backup landline transmissions could result in delays
in our subscribers' ability to receive information. We currently maintain a
backup generator system to deliver messages during power outages. We are also
upgrading our backup data center in Hurst, Texas, which is scheduled to be
operational during the second quarter of 2000. We cannot assure you that our
systems will operate effectively if we experience a hardware or software failure
or if there is an earthquake, fire or other natural disaster, a power or
telecommunications failure, an act of God or an act of war. A failure in our
systems could cause delays in transmitting data, and as a result we may lose
subscribers and users or face litigation that could involve material costs and
distract management from operating our business.

RISKS RELATED TO REGULATION OF THE INTERNET, WIRELESS TELEPHONY
AND SERVICES PROVIDERS

IF NEW LAWS AND REGULATIONS ARE ENACTED OR THE APPLICATION OR INTERPRETATION OF
EXISTING LAWS AND REGULATIONS CHANGES WE COULD INCUR COSTS IN ORDER TO COMPLY.

We are not currently subject to direct regulation by the Federal
Communications Commission or any other governmental agency, other than
regulations applicable to businesses in general. However, the wireless network
operators who distribute our products and services are subject to regulation by
the Federal Communications Commission and regulations that affect them could
increase our costs or reduce our ability to continue distributing our products
and services. In addition, there are an increasing number of laws and
regulations pertaining to wireless telephony and the Internet under
consideration in the United States and elsewhere. These current and potential
laws or regulations relate to, among other things:

- liability of information providers for the transmission of indecent,
obscene or offensive content over the Internet;

- liability of information for user privacy in respect of the collection,
distribution, disclosure, security, accuracy and other use of personal
information obtained from individuals accessing Internet sites; and

- taxation of the sale of goods and services over the Internet.

Moreover, the applicability to the Internet of existing laws governing
issues such as intellectual property ownership and infringement, copyright,
trademark, trade secret, obscenity, libel, employment and personal privacy is
uncertain and developing. Any new legislation or regulation, or the application
or interpretation of existing laws, may have a material and adverse effect on
our business, results of operations and financial condition.

20
22

IF WE ARE HELD LIABLE FOR ONLINE CONTENT PROVIDED BY THIRD PARTIES, OUR
INSURANCE COVERAGE MAY NOT BE ADEQUATE TO PROTECT US AND WE MAY INCUR
SUBSTANTIAL COSTS.

Various types of content may be accessed through our wireless portals. As a
distributor of content, we may be liable for claims against us based on a
variety of grounds, including defamation, obscenity, negligence, copyright or
trademark infringement or other grounds based on the nature, publication and
distribution of this content. These types of claims have been brought, sometimes
successfully, against providers of Internet services in the past. It is also
possible that if any information provided through our wireless portals contain
errors or false or misleading information or we fail to provide information to
subscribers on a timely basis, third parties could make claims against us for
losses incurred in reliance on such information or our failure to provide
information on a timely basis. Although we generally require that our content
providers indemnify us for liability based on their content and we carry general
liability insurance, our insurance may not cover potential claims of this type
or the indemnity or insurance limits may not be adequate to cover all costs
incurred in defense of potential claims or to indemnify us for all liability
that may be imposed. If we are found liable in excess of the amount of indemnity
or of our insurance coverage, we could be liable for substantial damages and our
reputation and business may suffer.

We also require our users to accept the terms and conditions of our online
contracts by executing agreements in order to receive our products and services.
Most of the agreements are executed through the use of an electronic signature,
meaning that each subscriber answers a number of questions in which he or she
agrees to be bound by the terms of the subscription agreement. Although
contracts containing electronic signatures have generally been enforced, this
area of the law is relatively new and may be subject to change. Accordingly, if
the law should develop in this area to hold that electronic signatures are not a
valid method of contract execution, we could lose the protections afforded to us
in the limitation of liability and disclaimer of liability provisions contained
in our subscription agreements.

RISKS RELATED TO THIS OFFERING

BECAUSE WE WILL HAVE BROAD DISCRETION IN USING THE NET PROCEEDS OF THIS
OFFERING, WE MAY NOT USE THE PROCEEDS TO THE SATISFACTION OF INVESTORS.

Our management will have broad discretion over the allocation of the net
proceeds from this offering as well as over the timing of their expenditure
without stockholder approval. We intend to use the net proceeds from this
offering for expansion of our sales and marketing operations, further
development of our systems infrastructure, funding operating losses, working
capital and other general corporate purposes, including strategic alliances. In
addition, we may use a portion of the proceeds for acquisitions or other
investments. It is likely, however, that our spending patterns will change
following this offering. As a result, you will be relying upon management's
judgment with only limited information about its specific intentions for the use
of the net proceeds of this offering. Our failure to apply these proceeds
effectively could cause our business to suffer.

21
23

IF AN ACTIVE TRADING MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, THEN THE
MARKET PRICE OF OUR COMMON STOCK COULD DECLINE OR YOU MAY BE UNABLE TO SELL YOUR
SHARES.

We cannot predict the extent to which an active trading market for our
common stock will develop or how liquid that market might become. As a result,
you may find it difficult to sell your shares and our share price may decline
below its initial public offering price. The initial public offering price will
be determined by negotiations between representatives of the underwriters and us
and may not be indicative of prices that will prevail in the trading market.

BECAUSE OUR COMMON STOCK PRICE, LIKE THAT OF MANY TECHNOLOGY COMPANIES, IS
LIKELY TO BE HIGHLY VOLATILE, THE MARKET PRICE OF OUR COMMON STOCK MAY BE LOWER
THAN YOU EXPECTED.

The market price of our common stock is likely to be highly volatile,
because the stock market in general, and the market for technology companies in
particular, has experienced significant volume and price fluctuations. You may
not be able to resell your shares following periods of volatility because of the
market's adverse reaction to that volatility. The trading prices of many
technology companies' stocks have reached historical highs within the last year
and have reflected relative valuations substantially above historical levels.
However, during the same period, these companies' stocks have also been highly
volatile and several companies' stocks have recorded lows well below their
historical highs. We cannot assure you that our stock will trade at the same
levels as other technology stocks.

Factors that could cause volatility in our common stock price include,
among other things:

- actual or anticipated variations in quarterly operating results;

- the introduction of new products or services or customer and/or
distributor discontent with our existing products or services;

- changes in financial estimates by securities analysts;

- conditions or trends generally affecting the Internet and wireless
services industry;

- changes in the market valuations of other Internet and wireless services
companies;

- announcements by us or our competitors of technological developments,
significant acquisitions, strategic partnerships or joint ventures;

- capital commitments;

- additions or departures of key personnel; and

- sales of common stock or other equity securities.

Many of these factors are beyond our control. These factors may materially
and adversely affect the market price of our common stock, regardless of our
operating performance.

22
24

BECAUSE OUR EARLY INVESTORS PAID SUBSTANTIALLY LESS THAN THE INITIAL PUBLIC
OFFERING PRICE WHEN THEY PURCHASED THEIR SHARES, NEW INVESTORS WILL INCUR
IMMEDIATE AND SUBSTANTIAL DILUTION IN THEIR INVESTMENT.

Investors purchasing shares in this offering will incur immediate and
substantial dilution in net tangible book value per share because the price that
investors pay will be substantially greater than the net tangible book value per
share of the shares acquired. This dilution is due in large part to the fact
that our earlier investors paid substantially less than the initial public
offering price when they purchased their shares. In addition, there are
currently options and warrants for the purchase of 2,847,569 shares of common
stock outstanding. To the extent such options and/or warrants are exercised in
the future, there will be further dilution to new investors.

BECAUSE WE EXPECT APPROXIMATELY SHARES OF COMMON STOCK TO BECOME
AVAILABLE FOR SALE 180 DAYS FROM THE DATE OF THIS PROSPECTUS, OUR SHARE PRICE
MAY BE LOWER THAN YOU EXPECT.

After this offering, we will have shares of common stock
outstanding. Sales of a substantial number of our shares of common stock in the
public market following this offering or the expectation of such sales could
cause the market price of our common stock to decline. All the shares sold in
this offering will be freely tradable. The remaining shares of common stock
outstanding after this offering will be available for sale in the public markets
as follows:

DATE OF AVAILABILITY FOR SALE NUMBER OF SHARES
- ----------------------------- ----------------

, 2000 (180 days after the date of
this prospectus).................................
At various times thereafter upon the expiration of
one-year holding periods...........................

Of these shares, shares are subject to a limitation on the number
of shares that can be sold in any three-month period. We are required, however,
to register the resale of substantially all of these shares upon demand
beginning six-months after the date of this prospectus. We also intend to file a
registration statement after consummation of this offering to register all
shares of common stock that we may issue to our employees under our stock option
plan. After this registration statement is effective, these shares will be
eligible for resale in the public market without restriction.

BECAUSE WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS, A THIRD-PARTY MAY BE
DISCOURAGED FROM ACQUIRING OUR COMPANY, WHICH COULD BENEFIT OUR STOCKHOLDERS.

i3 is a Delaware corporation. Anti-takeover provisions of Delaware law and
provisions contained in our certificate of incorporation and by-laws could make
it more difficult for a third party to acquire control of us, even if a change
in control would be beneficial to stockholders. These provisions include the
following:

- authorizing the board to issue preferred stock;

- prohibiting cumulative voting in the election of directors;

23
25

- limiting the persons who may call special meetings of stockholders; and

- establishing advance notice requirements for nominations for election of
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.

These provisions could have the effect of delaying, deterring or preventing
a change in the control of our company, could deprive our stockholders of an
opportunity to receive a premium for their common stock as part of a sale of our
company or may otherwise discourage a potential acquirer from attempting to
obtain control of us, which in turn could materially adversely affect the market
price of our common stock.

FORWARD LOOKING STATEMENTS

Many of the statements included in this prospectus contain forward-looking
statements and information relating to our company. We generally identify
forward-looking statements by the use of terminology such as "may," "will,"
"expect," "intend," "plan," "estimate," "anticipate," "believe," or similar
phrases. We base these statements on our beliefs as well as assumptions we made
using information currently available to us. Because these statements reflect
our current views concerning future events, these statements involve risks,
uncertainties and assumptions. Our actual future performance could differ
materially from these forward-looking statements. These forward-looking
statements involve a number of risks and uncertainties. Important factors that
could cause actual results to differ materially from our expectations include
those risks identified in the foregoing "Risk Factors," as well as other matters
not yet known to us or not currently considered material by us.

We caution you not to place undue reliance on these forward-looking
statements. All written and oral forward-looking statements attributable to us
or persons acting on our behalf are qualified in their entirety by those
cautionary statements.

24
26

USE OF PROCEEDS

We estimate that we will receive approximately $ million in net
proceeds from this offering, or $ million if the underwriters'
over-allotment option is exercised in full, based on an assumed initial public
offering price equal to $ per share and after deducting the underwriting
discounts and commissions and estimated expenses payable by us.

We expect to use the net proceeds from this offering for expansion of our
sales and marketing operations, further development of our systems
infrastructure, funding operating losses, working capital and other general
corporate purposes, including strategic alliances. In addition, we may use a
portion of the net proceeds for acquisitions or other investments. However, as
of the date of this prospectus, we have no agreement relating to any material
acquisition or investment.

We have not yet determined the amount of net proceeds to be used
specifically for each of the foregoing purposes. Accordingly, management will
have significant flexibility in applying the net proceeds of the offering.
Pending their use, we intend to invest the net proceeds of the offering in
short-term, investment grade interest-bearing instruments.

DIVIDEND POLICY

We have never declared or paid cash dividends on our common stock. We
intend to retain our earnings for use in the operation of our business and do
not anticipate paying any cash dividends on our common stock in the foreseeable
future.

25
27

CAPITALIZATION

The following table shows our capitalization as of September 30, 1999, on
an actual basis, a pro forma basis and a pro forma as adjusted basis.

The pro forma information below reflects the following transactions as
though these transactions occurred as of September 30, 1999:

- the sale on November 23, 1999 of 1,928.64 shares of Series E mandatorily
redeemable preferred stock for $3 million;

- the amendment on December 22, 1999 of the Series C convertible preferred
stock designation to provide for mandatory conversion into common stock
upon the completion of an initial public offering;

- the conversion on December 29, 1999 of a five-year $5 million note
payable into 1,262.50 shares of Series F mandatorily redeemable preferred
stock at a price of $3,960.40 per share; and

The pro forma as adjusted information adjusts the pro forma information to
give effect to each of the following items:

- the conversion of all of our outstanding preferred stock into 11,316,765
shares of common stock; and

- the sale of shares of common stock offered by us, after
deducting underwriting discounts and commissions and estimated offering
expenses, and the application of the estimated net proceeds. See Use of
Proceeds.

26
28

SEPTEMBER 30, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)

Cash and cash equivalents................................... $ 4,000 $ 31,850
======== ========
Short-term debt and current portion of long-term debt....... 130 29
Long-term debt, less current portion........................ 5,348 --
Mandatorily redeemable preferred stock:
Series B mandatorily redeemable preferred stock, $.01 par
value; 1,705 shares authorized; 1,705 shares issued and
outstanding, actual and pro forma; no shares issued and
outstanding, pro forma as adjusted...................... 1,454 1,454
Series D mandatorily redeemable preferred stock, $.01 par
value; 843 shares authorized; 843 shares issued and
outstanding, actual and pro forma; no shares issued and
outstanding, pro forma as adjusted...................... 1,229 1,229
Series E mandatorily redeemable preferred stock, $.01 par
value; 9,643.2 shares authorized; 7,714.56 shares issued
and outstanding, actual and 9,643.2 shares issued and
outstanding, pro forma; no shares issued and
outstanding, pro forma as adjusted...................... 16,451 16,451
Series F mandatorily redeemable preferred stock, $.01 par
value; 8,248.33 shares authorized; no shares issued and
outstanding, actual and 8,248.33 shares issued and
outstanding, pro forma; no shares issued and
outstanding, pro forma as adjusted...................... -- 32,667
Subscriptions receivable.................................... (3,000) --
-------- --------
Total mandatorily redeemable preferred stock............ $ 16,134 $ 51,801 --
-------- --------
Stockholders' equity:
Series C convertible preferred stock, $.01 par value;
2,194 shares authorized; 2,194 shares issued and
outstanding, actual and pro forma; no shares issued and
outstanding pro forma as adjusted.......................
-------- --------
Common stock, $.01 par value; 25,000,000 shares
authorized, actual; 50,000,000 shares authorized, pro
forma and pro forma as adjusted; 7,554,000 shares issued
and outstanding, actual, 7,655,500 shares issued and
outstanding pro forma; shares issued and
outstanding, pro forma as adjusted...................... 76 77
Additional paid-in capital.................................. 4,601 4,775
Notes receivable from stockholders.......................... (37) (37)
Deferred compensation....................................... (73) (73)
Accumulated deficit......................................... (17,658) (17,701)
Treasury stock at cost, 1,885,000 shares.................... (4,230) (4,230)
-------- --------
Total stockholders' equity (deficit)...................... $(17,321) $(17,189)
-------- --------
Total capitalization...................................... $ 4,291 $ 34,641
======== ========

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

The outstanding share information shown in the table above excludes:

- 1,805,359 shares of common stock issuable upon the exercise of warrants as
of September 30, 1999 at a weighted average of $3.19 per share, after
giving effect to the exercise of warrants to purchase 101,500 shares of
common stock in December 1999, and 123,725 shares of common stock issuable
upon the exercise of warrants issued after September 30, 1999 at an
exercise price per share of $7.92;

- 422,015 shares of common stock available for grant under our 1995 Stock
Option Plan as of September 30, 1999, which, as the result of stock option
grants after September 30, 1999, has been reduced to 95,515 shares
available for future grant as of the date of this prospectus.

27
29

DILUTION

Our pro forma net tangible book value at September 30, 1999 was
$ million or $ per share of common stock. "Pro forma net tangible
book value" per share represents the amount of our pro forma total tangible
assets reduced by the amount of our total liabilities, divided by the number of
pro forma shares of common stock outstanding as of September 30, 1999. Our pro
forma as adjusted net tangible book at September 30, 1999, assuming no changes
in our pro forma net tangible book value other than the sale of
shares of common stock in this offering at an assumed initial
offering price of $ per share and application of estimated net proceeds of
$ from such sale after deducting the underwriting discounts and
commissions and estimated offering expenses, would have been approximately
$ or $ per share. This represents an immediate increase in pro
forma net tangible book value of $ per share to existing stockholders and an
immediate dilution of $ per share to new investors. Immediate dilution is
the difference between the purchase price per share paid by a new investor and
the net tangible book value of each share immediately after this offering. The
following table illustrates this per share dilution.

Assumed initial public offering price per share............. $
Pro forma net tangible book value per share as of
September 30, 1999.................................... $
Increase per share attributable to new investors.......
------
Pro forma as adjusted net tangible book value per share
after this offering....................................
------
Dilution per share to new investors....................... $
======

The following table summarizes at September 30, 1999:

- the number of shares of common stock purchased by existing stockholders,
the total consideration and the average price per share paid to us for
those shares;

- the number of shares of our common stock purchased by new investors, the
total consideration and the price paid by them for these shares; and

- the percentage of shares purchased by the existing stockholders and new
investors and the percentages of consideration paid to us for these
shares.

SHARES PURCHASED TOTAL CONSIDERATION
------------------ -------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------- ------- -------- -------- -------------

Existing stockholders.................. % $ % $
New investors..........................
------- --- ------- ---
Total............................. 100% $ 100% $
======= === ======= ===

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

The outstanding share information shown in the table above excludes:

- - 1,805,359 shares of common stock issuable upon the exercise of outstanding
warrants as of September 30, 1999 at a weighted average exercise price per
share of $3.19, after giving effect to the exercise of warrants to purchase
101,500 shares of common stock in December 1999, and 123,725 shares issuable
upon exercise of outstanding warrants issued after September 30, 1999 at an
exercise price per share of $7.92;

- - an aggregate of 918,485 shares of common stock issuable upon the exercise of
outstanding stock options under our 1995 Stock Option Plan, of which 591,985
shares were issuable upon the exercise of outstanding stock options as of
September 30, 1999, at a weighted-average exercise price per share of $1.99,
and 326,500 shares were issuable upon the exercise of outstanding stock
options issued after September 30, 1999, at a price per share of $4.00; and

- - 422,015 shares of common stock available for grant under our 1995 Stock Option
Plan as of September 30, 1999, which, as a result of stock option grants after
September 30, 1999, has been reduced to 95,515 shares available for future
grant as of the date of this prospectus.

28
30

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data set forth below as of
December 31, 1997 and 1998 and for the fiscal years ended December 31, 1996,
1997 and 1998 and as of and for the nine months ended September 30, 1999 are
derived from the audited consolidated financial statements which are included
elsewhere in this prospectus. The selected consolidated financial data as of
December 31, 1996 is derived from the audited consolidated financial statements
not included in this prospectus. The selected consolidated financial data as of
and for the fiscal years ended December 31, 1994 and 1995 and for the nine
months ended September 30, 1998 are derived from our unaudited consolidated
financial statements. The unaudited consolidated financial statements include,
in the opinion of our management, all adjustments, consisting only of normal
recurring adjustments, that we consider necessary for the fair presentation of
the information set forth.

The selected consolidated financial data should be read along with such
consolidated financial statements and the related notes and the section of the
prospectus entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
------ ------ ------- ------- ------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Net revenue................................. $ 214 $ 387 $ 645 $ 825 $ 1,405 $ 1,023 $ 1,325
Cost of revenues............................ 115 190 465 671 762 621 673
------ ------ ------- ------- ------- ------- -------
Gross profit................................ 99 197 180 154 643 402 652
------ ------ ------- ------- ------- ------- -------
Operating expenses:
Sales and marketing....................... 18 110 180 234 584 382 1,278
General and administrative................ 152 856 1,327 2,287 2,625 2,012 3,256
------ ------ ------- ------- ------- ------- -------
Total operating expenses.................. 170 966 1,507 2,521 3,209 2,394 4,534
------ ------ ------- ------- ------- ------- -------
Operating loss.............................. (71) (769) (1,327) (2,367) (2,566) (1,992) (3,882)
Interest expense (income) - net............. 6 (22) (8) 81 329 228 290
------ ------ ------- ------- ------- ------- -------
Net loss.................................... $ (77) $ (747) $(1,319) $(2,448) $(2,895) $(2,220) $(4,172)
====== ====== ======= ======= ======= ======= =======
Loss applicable to common stock............. $ (77) $ (747) $(1,327) $(2,524) $(3,169) $(2,435) $(9,527)
====== ====== ======= ======= ======= ======= =======
Net loss per share - basic and diluted...... $(0.02) $(0.10) $ (0.18) $ (0.33) $ (0.42) $ (0.32) $ (1.60)
====== ====== ======= ======= ======= ======= =======
Shares used in computing net loss per
share..................................... 4,670 7,282 7,552 7,554 7,554 7,554 5,966

DECEMBER 31, SEPTEMBER 30,
-------------------------------------------- -------------
1994 1995 1996 1997 1998 1999
----- ------ ------- ------- ------- -------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents........................ $ 3 $ 139 $ 1,168 $ 215 $ 166 $ 4,000
Working capital.................................. (95) 229 756 (533) (687) 3,369
Total assets..................................... 29 262 1,343 375 682 5,442
Long-term debt, less current portion............. 46 -- 646 573 455 5,348
Mandatorily redeemable preferred stock........... -- -- 1,138 1,412 2,500 16,134
Total stockholders' equity (deficit)............. (248) 201 (916) (2,488) (3,578) (17,321)

29
31

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

The following discussion of our financial condition and results of
operations should be read together with the financial statements and the related
notes included in another part of this prospectus and which are deemed to be
incorporated into this section. This discussion contains forward-looking
statements that involve risks and uncertainties.

OVERVIEW

i3 Mobile, Inc. is a leading provider of timely personalized information to
users of wireless communications devices in North America. We were founded in
February 1991 as Intelligent Information Incorporated and began operations in
1992 with the launch of our Quote Alert Service, a stock quote and related
financial information product offered directly to our subscribers. Between 1992
and 1996, the primary distribution channel for our products and services was
paging carriers. During this period, we entered into distribution agreements
with a number of the leading paging carriers to distribute our personalized
content services and on-demand products on their networks. In late 1996, we
expanded our product and service focus and signed our first distribution
agreement with a wireless telephony network operator and launched our products
and services on the digital personal communication services, or PCS, network of
Omnipoint Communications Services. The Omnipoint launch included both alert
products, which are messages sent to a subscriber when our network detects that
a specific event has occurred based on that individual's information profile,
and on-demand content products, which are messages sent to a subscriber shortly
after information is requested.

Our Omnipoint launch was followed in 1997 by our introduction of tiered
subscription service offerings on the PrimeCo PCS network. That year we also
deployed our first wireless microbrowser-based products on AT&T's PocketNet
platform in conjunction with Phone.com. In 1998, we expanded our distribution
network by entering into agreements with other digital wireless network
operators such as Bell Mobility Cellular, Inc. (Canada), SBC Communications,
Inc., including its subsidiaries Pacific Bell, Southwestern Bell Mobile Systems,
Inc. and others, and US Cellular. In 1999, we entered into distribution
agreements with additional wireless network operators, such as AirTouch
Cellular, Clearnet PCS, MTT Mobility (Canada) and US West Wireless as well as
AT&T Wireless Services, which offers subscription, electronic commerce and
advertising-supported services to its customers. In 1999, we also introduced
electronic commerce through 1-800-FLOWERS and advertising-supported services
through Omnipoint consisting of tagged messaging to complimentary users. During
1999 we also began offering certain of our services in conjunction with The
Weather Channel through its Weather.com Internet site as our first offering to
an Internet media network.

We develop highly personalized, local, timely and interactive wireless
content products and services that meet the needs of our users. We currently
distribute these products and services primarily through wireless network
operators, and, to a lesser extent, through Internet media networks and
corporate enterprises. Our strategy is to position i3 as the single-source
wireless portal supplier for our distributors by building compelling products
and continually enhancing our

30
32

proprietary technology. We intend to diversify our distribution relationships,
to further expand our user and subscriber bases and to develop advertising and
transaction revenue streams. We work closely with our distributors to develop
specific content applications and marketing plans and build and host user
provisioning interfaces such as Web sites, interactive telephone response
systems and device-based wireless portals. Our distributors typically provide us
with some or all of the following services: marketing, planning and support,
Internet promotion, local sales force and point of sale promotion, and delivery
of messages over their networks.

Our distribution agreements generally are non-exclusive, have terms of one
to three years and may be terminated by either party, with or without cause. We
believe that our distribution model gives us the opportunity to substantially
increase both the number of users and subscribers while minimizing our sales and
marketing expenses. As revenue is generated from non-subscription sources such
as advertising and electronic commerce, we believe that sales and marketing
costs will become a smaller percentage of our total revenue per user.

In order to increase awareness of our products and services, our
distributors may offer their subscribers the opportunity to receive a limited
data product selection on their wireless device free of charge. Since content
providers that supply our complimentary content can leverage their existing
products in the new wireless medium marketplace with significant co-branding
opportunities, they typically provide their content at little or no
out-of-pocket cost to us. While we do not receive subscription revenue from
users of complimentary services, in certain cases, we receive nominal fees per
subscriber from our distributors and have the opportunity to add advertising
taglines to user content for which we can charge advertising fees. As a result
of our entry into the personal communications services marketplace in late 1996
and the expansion of our wireless network operator distribution base in 1998, we
have experienced accelerating user growth. The number of users of our products
and services was approximately 29,000 as of December 31, 1997, 107,000 as of
December 31, 1998 and 395,000 as of September 30, 1999.

We believe that our future success will depend on our ability to deliver a
variety of wireless content and advertising and electronic commerce products and
services through our distributors. Our objectives will require significant
capital expenditures and increased operating expenses in the next several years.
Accordingly, we expect to continue operating at a substantial loss for the
foreseeable future. Our objectives include:

- expanding our network of distributors to include additional wireless
network operators, Internet media networks and corporate enterprises;

- expanding our product development, sales, marketing and technology staffs
to support emerging demand, opportunities and technologies;

- expanding our focus to include additional international markets;

- expanding our product offerings in content, commerce and technology;

- expanding our advertising and promotional activities; and

31
33

- further developing our technology platforms, operational capabilities and
infrastructure.

RESULTS OF OPERATIONS

We have received the majority of our revenue from subscription fees for
personalized news and information products and services delivered to users via
wireless devices, such as digital PCS phones, pagers and PDAs. Our content
services include:

- tiered packages offering users choices from a wide range of news and
information selections to create a personalized content delivery profile,
typically billed on a monthly subscription basis;

- on-demand information products offering users the ability to request from
and receive information on their wireless devices, typically billed on a
per-request basis;

- complimentary services offering users the ability to receive daily
information from a limited range of general news content providers at no
charge; and

- wireless portal applications offering users with Internet-enabled phones
employing microbrowser technology to both create personalized content
delivery profiles and receive content on demand, which is billed
partially on a subscription basis and partially on a per-request basis.

Our products and services are offered to subscribers on a monthly,
quarterly and annual basis based on pricing models designed to generate a high
volume of subscribers. Individual subscription services renew automatically
until the subscriber cancels. We expect our individual service offerings to
continue to decline in price from current levels, but expect per subscriber
revenue to increase over time as the number of our products and services
purchased by subscribers increases. In building our subscriber base, we capture
information on each user which we will use in delivering targeted advertising
and electronic commerce transactions to that user. Although revenues to date
have been nominal for targeted advertising and electronic commerce transactions,
we also receive a percentage of the value of any electronic commerce
transactions that we facilitate and anticipate that we will receive additional
revenue from hosting secure wireless electronic commerce authentication
services. Advertising revenues are recognized in the month that the advertising
messages are sent. We also provide software design and customization services to
our distributors and usually charge either a one-time fee or fees on a time and
material basis for these services.

We offer complimentary services to build awareness of our products and
services and generate advertising revenue. We believe that by offering certain
products and services to users on a complimentary basis we will accelerate the
awareness and usage of our services and migrate users to pay for subscription-
based products and services. We recognize subscriber revenue when products and
services are provided or rendered. Deferred revenue is comprised of payments
received from our resellers in advance of wireless information services being
rendered. These revenues are included net of volume discounts to our
subscribers. In addition to our subscriber revenue, we plan to derive
advertising and electronic commerce revenues from both complimentary service
users and subscribers in the future.

32
34

Cost of revenues consists primarily of costs associated with purchasing our
content, royalty payments and distribution fees. Distribution fees are paid to
wireless network operators for allowing us to use their network to deliver
advertising and electronic commerce-enabling messages and for delivery of
content to our direct subscribers. We pay our content providers either a flat
monthly fee, a fee based on the number of users requesting the content, a fee
based on a percentage of our revenues generated from the content they provide, a
fee based on the number of on-demand messages requested or a combination of
these arrangements. Management believes that the cost of revenues and gross
margins on our related party revenues are not significantly different from the
cost of revenues and gross margins we earned on our third party revenues.

Sales and marketing expenses consist primarily of advertising and
promotions, sales and marketing personnel, travel and entertainment, and brand
management. Additionally, we pay some of our distributors a marketing fee for
the acquisition and retention of their subscribers. These fees are based on a
flat fee per subscriber or on a percentage of revenue generated from that
subscriber. We believe that sales and marketing expenses will increase as we
develop new markets and implement programs to increase awareness of our products
and services.

General and administrative expenses consist primarily of employee
compensation and related costs for customer care, general corporate and business
development personnel, along with rent, travel and other infrastructure costs.
Product development costs, including all costs incurred to establish the
technological feasibility of our products and services, are expensed as
incurred. Costs incurred subsequent to the establishment of technological
feasibility and prior to the general release of the product have not been
capitalized as such amounts are not significant. Depreciation and amortization
expenses consist primarily of depreciation expenses arising from our operations
centers and other property and equipment purchases and amortization of a license
agreement with Portel Services Network, Inc.

Net interest expense is comprised primarily of interest on our indebtedness
to the Connecticut Development Authority and Intelligent Investment Partners,
Inc. Interest income consists primarily of interest earned on cash equivalents.

Our expense levels are based, in part, on our expectations regarding future
revenues. As a result, any changes in revenues relative to our expectations
could cause significant changes in our operating results. We face a number of
risks and uncertainties encountered by early stage companies, particularly those
in rapidly evolving markets such as the wireless telecommunications and the
Internet industries. Due to the foregoing factors, the following period to
period comparisons of our revenue levels and operating results may not be
meaningful and should not be relied on to predict our future performance.

NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1999

Net Revenue. Subscription based revenue increased 30% from $1,023,000 for
the nine months ended September 30, 1998 to $1,325,000 for the nine months ended
September 30, 1999. This increase was primarily due to the recognition of
revenues from the successful 1998 launches of PrimeCo PCS, Bell Mobility, and
SBC Communications and the growth of our subscriber base as a result of our
agreements with other wireless network operators, particularly Omnipoint Commu-

33
35

nications Services. The percentage revenue increase lagged substantially behind
the percentage increase in users due to an increase in users receiving our new
complimentary services and a decrease in the price of individual subscription
services. Revenue generated by subscribers of Omnipoint Communications Services,
SBC Communications and Bell Mobility together accounted for approximately 60% of
our total revenue for the nine months ended September 30, 1999 and 24% for the
nine months ended September 30, 1998. In addition, Omnipoint Communications
Services alone accounted for over 35% of our total revenue for the nine months
ended September 30, 1999 and 31% for the nine months ended September 30, 1998.
Net revenues from SkyTel Communications, Inc., a related party, decreased from
$109,000 for the nine months ended September 30, 1998 to $88,000 for the nine
months ended September 30, 1999. Only $23,000 of the net revenues from SkyTel in
1999 is included as net revenues from related parties. In February 1999, SkyTel
liquidated its ownership of our common stock and Series A preferred stock and
relinquished its seat on our board of directors. Subsequent to these actions it
was no longer considered a related party. We expect that we will generate a
significant portion of our revenue from users utilizing services from a
relatively small number of wireless network operators for the foreseeable
future.

Cost of Revenue. Total cost of revenues were comparable for the nine
months ended September 30, 1998 and September 30, 1999, increasing from $621,000
to $673,000. Because of the increase in content delivery to our users and the
increase in the number of content providers, our content-related costs for the
nine months ended September 30, 1999 were 36% higher than our costs for the nine
months ended September 30, 1998. This increase in content-related costs was
offset by a $48,000 reduction during this period in distribution fees payable
primarily to paging carriers as a result of our elimination of unprofitable
two-way paging services during the fourth quarter of 1998.

Sales and Marketing Expenses. Sales and marketing expenses increased by
235% from $382,000 for the nine months ended September 30, 1998 to $1,278,000
for the nine months ended September 30, 1999. This increase during 1999 was
attributable to increased compensation expenses, including the hiring of
additional sales and marketing personnel, and the expansion of our marketing
programs to increase market awareness of our company and our products and
services. Additionally, our expenses increased during 1999 because we expanded
our cooperative advertising program and established a market development fund
program with some of our distributors to provide them with an incentive to
expand our respective subscriber bases.

General and Administrative Expenses. General and administrative expenses
increased by 62% from $2,012,000 for the nine months ended September 30, 1998 to
$3,256,000 for the nine months ended September 30, 1999. This increase was
primarily due to increased compensation costs from the addition of general
corporate and business development personnel, increased professional fees, rent
and other related infrastructure expenses.

Interest Expense (Income), Net. Net interest expense increased by 27% from
$228,000 for the nine months ended September 30, 1998 to $290,000 for the nine
months ended September 30, 1999. The increased interest expense on the
$5,000,000 note payable to Intelligent Investment Partners, Inc. for the nine
months ended September 30, 1999 was offset by one-time interest charges in the
nine

34
36

months ended September 30, 1998 for the issuance of warrants to purchase shares
of common stock in connection with loans made to us.

Net Loss. We incurred net losses of $2,220,000 for the nine months ended
September 30, 1998 and $4,172,000 for the nine months ended September 30, 1999.
The increase in net loss was attributable to the substantial increase in our
operating expenses, in particular our general and administrative expenses.

FISCAL YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

Net Revenue. Subscription-based revenues increased from $645,000 for the
year ended December 31, 1996, and $825,000 for the year ended December 31, 1997
to $1,405,000 for the year ended December 31, 1998. In 1996 our revenue was
comprised primarily of subscriber revenues from paging carriers and a corporate
enterprise project for Aetna US Healthcare to create subscription-based
services. As a result of entering into a distribution relationship with
Omnipoint Communications Services, our revenues increased during 1997. During
the year ended December 31, 1997, we received 14% of our revenues from our new
wireless telephony distribution agreement with Omnipoint Communications Services
and 19% from an enterprise project for Bank of America to create
subscription-based services. The increase in 1998 was primarily due to entering
into new distribution agreements with PCS wireless network operators and the
further development of our Omnipoint Communications Services relationship. In
1998, we received 40% of our revenues from Omnipoint Communications Services.
Net revenues from SkyTel Communications, Inc., a related party, were $217,000
for the year ended December 31, 1996, $149,000 for the year ended December 31,
1997 and $160,000 for the year ended December 31, 1998. Throughout these periods
the pricing of individual services has decreased. However, the impact of these
individual price decreases has been offset by increases in service offerings and
increased subscribers.

Cost of Revenue. The cost of providing our products and services increased
from $465,000 for the year ended December 31, 1996, to $671,000 for the year
ended December 31, 1997, to $762,000 for the year ended December 31, 1998. We
received content for the year ended December 31, 1996 at a relatively high cost.
Many of our content provider agreements had minimum fees unrelated to actual
usage. The cost of revenue for the year ended December 31, 1997 increased at a
greater rate than revenue because of our increased costs for providing weather
content and complimentary equipment and services associated with new financial
services for a two-way paging network. During 1998, we terminated our higher-
cost content agreements. Additionally in 1998, with the introduction of PCS
services, we were able to enter into lower cost content provider agreements, and
with the reduction of paging service offerings, we were able to reduce expenses
related to our usage of paging equipment and networks.

Sales and Marketing Expenses. Sales and marketing expenses increased from
$180,000 for the year ended December 31, 1996, to $234,000 for the year ended
December 31, 1997, and to $584,000 for the year ended December 31, 1998. The
increase in 1997 was primarily attributable to increased compensation costs. The
increase for the year ended December 31, 1998 was attributable to the initiation
of an aggressive marketing program during the year to attract new users and
subscribers and the addition of sales and marketing personnel to attract new
distributors.

35
37

General and Administrative Expenses. General and administrative expenses
increased from $1,327,000 for the year ended December 31, 1996, to $2,287,000
for the year ended December 31, 1997, and to $2,625,000 for the year ended
December 31, 1998. These increases were the result of personnel and related
infrastructure costs, such as office hardware, network systems and software. The
increase in 1997 includes $507,000 of general and administrative expense related
to our former subsidiary, Strategic Communications Corp. Strategic
Communications Corp. had no significant impact in other years as it was
purchased in November 1996 and disposed of in January 1998.

Interest Expense (Income), Net. Net interest expense (income) was ($8,000)
for the year ended December 31, 1996, $81,000 for the year ended December 31,
1997 and $329,000 for the year ended December 31, 1998. Interest expense, net in
1997 was primarily the result of incurring $750,000 of debt to the Connecticut
Development Authority on December 30, 1996. Interest expense, net in 1998
includes interest on the debt to Connecticut Development Authority and one-time
interest charges for the issuance of warrants to purchase shares of common stock
in connection with loans made to us.

Net Loss. We incurred losses of $1,319,000 for the year ended December 31,
1996, $2,448,000 for the year ended December 31, 1997, and $2,895,000 for the
year ended December 31, 1998. Our net loss for each of these three years
increased primarily as a result of increased operating expenses in those years.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception we have financed our operations primarily through sales
of our equity securities and the issuance of long-term debt, which has resulted
in aggregate net proceeds of $18,550,000 through September 30, 1999. In February
1999, we repurchased 1,885,000 shares of our common stock and 3,770 shares of
our Series A preferred stock from a stockholder for $8,000,000 in cash and notes
and issued a warrant to purchase 500,000 shares of our common stock at an
exercise price of $3.00 per share. In connection with this repurchase, we paid
$3,000,000 in cash and delivered a $5,000,000 promissory note. This note was
converted into Series F mandatorily redeemable preferred stock in December 1999.

As of September 30, 1999, we had $4,000,000 in cash and cash equivalents
and a subscription receivable by an existing stockholder for the purchase of
additional shares of Series E convertible preferred stock which was received in
November 1999 for an additional $3,000,000 in cash.

Net cash used in operating activities was $868,000 for the year ended
December 31, 1996, $2,381,000 for the year ended December 31, 1997, $2,644,000
for the year ended December 31, 1998, $1,916,000 for the nine months ended
September 30, 1998 and $4,013,000 for the nine months ended September 30, 1999.
The principal use of cash in each of these periods was to fund our losses from
operations.

Net cash provided by financing activities was $1,995,000 for the year ended
December 31, 1996, $1,446,000 for the year ended December 31, 1997, $2,652,000
for the year ended December 31, 1998, $1,767,000 for the nine months ended
September 30, 1998 and $8,157,000 for the nine months ended September 30, 1999.
Cash provided by financing activities in each of these periods was primarily
attributable to proceeds from sales of our equity securities and the issuance of

36
38

debt. In December 1996, we executed a note agreement with the Connecticut
Development Authority, which provided loan proceeds to us of $750,000. The note
bears interest initially at the rate of 8.25% and is adjusted annually to the
federal reserve rate for five-year treasury securities plus 2.5%. Principal
payments under the terms of the agreement began in 1997. In December 1999, a
portion of this note was converted into shares of Series F mandatorily
redeemable preferred stock, and the remainder was used to exercise warrants for
shares of our common stock.

Cash used in investing activities was $99,000 for the year ended December
31, 1996, $17,000 for the year ended December 31, 1997, $57,000 for the year
ended December 31, 1998, $57,000 for the nine months ended September 30, 1998,
and $310,000 for the nine months ended September 30, 1999. Cash used in
investing activities relates primarily to cash purchases of fixed assets.
Additionally, we acquired Strategic Communications Corp. in 1996 for $98,000 and
entered into a license agreement for a technology patent for which we paid
$100,000 during 1999.

As of September 30, 1999, our estimated capital expenditures for the next
12 months consist of approximately $3,500,000 for the expansion of our operation
centers in Connecticut and Texas and approximately $750,000 for a consulting
project to upgrade our internal billing system and data warehousing system. We
also plan to increase our sales and marketing and general and administrative
expenses significantly in 2000. We also expect to expend significant capital
resources on operating expenses for day-to-day operations, infrastructure,
general corporate and business development personnel, sales and marketing
personnel and programs and other working capital needs to grow our business
domestically and internationally. The amounts and timing of these expenditures
may vary depending on a number of factors, including the amount of cash
generated by our operations, competitive and technological developments, the
nature of any acquisitions identified and the rate of growth of our business.

In December 1999 we received consideration of approximately $32,667,000
from the sale of 8,248.33 shares of Series F mandatorily redeemable preferred
stock to a group of strategic and financial investors. The $32,667,000 of
consideration includes $24,850,000 of cash proceeds, $5,000,000 from the
conversion of our note payable from the former Series A preferred stockholder,
$317,000 from the conversion of a portion of our outstanding note payable from
the Connecticut Development Authority and $2,500,000 in television advertising
rights from National Broadcasting Company, Inc. We have also agreed to make our
wireless distribution services available to NBC Interactive Media Inc. and its
affiliates for use in connection with their interactive content offerings.

Upon completion of this offering, all outstanding shares of our preferred
stock will convert into shares of common stock. We believe that the net proceeds
from this offering, together with fundings from private financings and our
current cash and cash equivalents, will be sufficient to meet our anticipated
cash needs for working capital and capital expenditures for at least the next 24
months.

We cannot assure you that the assumptions of revenue and expense on which
our forecasts are based will prove to be accurate. In addition, we are
continually reviewing acquisition opportunities, however, we have no present
understanding or agreement relating to any material acquisition. Our financial
results may vary as a result of a number of factors, many of which are beyond
our control and any of

37
39

which could cause our business to suffer. In addition, because the market for
wireless data products and services is new and evolving, it is difficult to
predict future financial results. Our expenses are based in part on our
expectations regarding future revenues. As a result, if our revenues do not meet
our expectations, our financial results will likely suffer.

If additional funding is required, we may seek such funding through public
or private financings or other arrangements. Adequate funds may not be available
when needed or may not be available on terms favorable to us. If additional
funds are raised by issuing equity securities, dilution to existing stockholders
may result. If funding is insufficient at any time in the future, we may be
unable to develop or enhance our services, take advantage of business
opportunities, respond to competitive pressures or grow our business as we hope.
This could have a material adverse effect on our business, financial condition
and results of operations.

YEAR 2000 COMPLIANCE ISSUES

Many currently installed computer systems and software products are coded
to accept or recognize only two digits rather than four digits to define the
year in the date code field. These systems and software products will need to
accept four digit year entries to distinguish 21st century dates from 20th
century dates. Systems and products that are not corrected to do this could
cause a disruption of operations including a temporary inability to deliver
messages, process transactions, send invoices or engage in other normal business
activities.

We maintain a significant number of computer software systems and operating
systems across our company that are potentially subject to year 2000 problems.
We have taken extensive steps to prepare for the year 2000 transition. We
believe that we have run all of our applications on hardware and operating
systems that we have determined are year 2000 compliant. We believe that all of
our computer hardware has been inventoried and checked against the
manufacturers' year 2000 compliance declarations. We believe that all
non-compliant hardware has been upgraded, if possible, or replaced. We believe
that all third-party software, including operating systems and applications,
have been inventoried and checked against the manufacturers' compliance
statements. We believe that we have upgraded and corrected software as
recommended and provided by the manufacturers.

We are also continuing to seek assurances from third parties on whom we
rely and whose potential year 2000 problems could affect our business. We have
been advised by our data providers, communications providers, device
manufacturers, wireless network operators, and Internet media networks and
corporate enterprises that their systems that might impact our own systems are
year 2000 compliant. We have developed a contingency plan to deal with failures
that may occur during the year 2000 transition which involves alternate ways of
providing mission-critical functions if they fail. The most likely worst case
scenario would be the failure of the landline or wireless networks that carry
data to us or from us to our distributors and users. If this happens, we would
not be able to deliver our products and services to our distributors and users
and we may lose revenue. Although we have taken the steps described above to
make our systems year 2000 compliant, we may experience material problems and
expenses associated with year 2000 compliance that could adversely affect our
business, results of operations and financial condition. If the assurances that
we have

38
40

received from third parties are false or inaccurate, we may experience
disruption resulting in additional expense and loss of revenue.

We are also subject to outside forces that might generally affect industry
and commerce, such as year 2000 compliance failures by utility or transportation
companies. If our distributors and customers experience disruptions related to
our services and systems, they may initiate litigation against us even if the
disruptions were caused by their own systems or software provided by others.

We have purchased most of our equipment within the last four years, which
has kept the costs of year 2000 compliance efforts to a minimum. All non-
compliant software and equipment has been upgraded or replaced and our total
costs relating to year 2000 compliance have been less than $100,000. Based on
our review of compliance to date, we do not expect any future costs related to
year 2000 compliance to be material.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have limited exposure to financial market risks, including changes in
interest rates. We do not currently transact business in foreign currencies and,
accordingly, are not subject to exposure from adverse movements in foreign
currency exchange rates. Our exposure to market risks for changes in interest
rates relates primarily to corporate debt securities. We place our investments
with high credit quality issuers and, by policy, limit the amount of the credit
exposure to any one issuer. Our general policy is to limit the risk of principal
loss and ensure the safety of invested funds by limiting market and credit risk.
All highly liquid investments with a maturity of less than three months at the
date of purchase are considered to be cash equivalents.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use (SOP 98-1). SOP 98-1 provides guidance
for determining whether computer software is internal-use software, and guidance
on accounting for the proceeds of computer software originally developed or
obtained for internal use and then subsequently sold to the public. It also
provides guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. The impact of adopting SOP 98-1, which
was adopted for our fiscal year ending December 31, 1999, was minimal.

In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 137 which delays the effective date of
SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133, as amended, is to be effective for us beginning in 2001. SFAS No. 133
establishes accounting and reporting standards for derivative financial
instruments and hedging activities related to those instruments, as well as
other hedging activities. Because we do not currently hold any derivative
financial instruments and do not engage in hedging activities, the adoption of
SFAS No. 133 is not expected to have any impact on our consolidated financial
position, results of operations or cash flows.

39
41

OUR BUSINESS

COMPANY OVERVIEW

We are a leading provider of timely personalized information to users of
wireless communications devices, such as mobile phones, pagers and personal
digital assistants, or PDAs, in North America. We believe that we are positioned
to capitalize on the convergence of the growth in the use of digital wireless
communication devices and the rapidly increasing demand for and availability of
real-time content over the Internet. We currently provide individually
customized data services such as the delivery of stock quotes and other
financial information, news, weather, sports, entertainment, traffic and travel
information on both a one-way and interactive basis, as well as personal e-mail,
calendar and commerce applications.

We are currently providing private label and co-branded personalized
wireless information services, such as "AT&T Personal News" and Omnipoint's
"InfoServices," under agreements with more than 15 wireless network operators,
collectively representing approximately 43 million wireless phone subscribers at
June 30, 1999, or more than 50% of the total North American market of wireless
phone users. These wireless network operators include AirTouch Cellular, AT&T
Wireless Services, Inc., Bell Mobility Cellular, Inc. (Canada), Omnipoint
Communications Services, and SBC Communications, including its subsidiaries
Southwestern Bell Mobile Systems, Inc., Pacific Bell and others. Currently, we
generate most of our revenue from subscriptions for our products and services,
and we expect to generate additional revenue in the future from advertising
sales and wireless electronic commerce transactions. We believe that
distribution capabilities and name recognition of our distributors will allow us
to rapidly develop our business and sub-brand with lower capital requirements
than would be possible on a direct-to-user basis.

INDUSTRY BACKGROUND

MARKET OPPORTUNITY: EMERGENCE OF A NEW MEDIUM

We believe that wireless mobile data is emerging as a powerful new medium,
uniquely capable of creating value through the ability to deliver highly
personalized, local, timely and interactive content and services. According to
DataQuest, wireless data subscribers will grow at a compound annual growth rate
of 82% from 3 million subscribers in 1999 to 36 million subscribers in 2003,
creating a market

40
42

with more than $3 billion in annual revenue. The emergence of the mobile data
medium is being driven by the convergence of four major trends:

- the rapid growth of digital wireless communications networks and
subscribers;

- the development of the Internet as a commercial medium and resource for
real-time personalized information and entertainment;

- the shift in media away from traditional broad-based content distribution
to more localized, segmented and targeted formats that more effectively
address user and advertiser needs; and

- the development of software, applications and standard specifications
supporting mobile data communications.

GROWTH IN WIRELESS COMMUNICATIONS

The wireless telephony market worldwide has grown significantly in recent
years and this growth is expected to continue. According to International Data
Corporation, the number of wireless phone subscribers in the United States is
expected to grow at a compound annual growth rate of 13.4% from 64.4 million at
the end of 1998 to 120.7 million at the end of 2003. On a global basis,
International Data Corporation expects the number of wireless phone subscribers
to increase at a compound annual growth rate of 28.9%, from 303.4 million at the
end of 1998 to 1.08 billion at the end of 2003. The United States currently lags
many countries in Western Europe and Asia in both penetration of wireless
subscribers and the rate of growth in aggregate penetration. We believe the
principal drivers of the rapid growth of wireless subscribers are:

- technological advancements which have reduced the cost and improved the
quality and functionality of both wireless network infrastructure and
end-user wireless devices;

- increased geographic coverage of wireless networks;

- the convenience and utility of wireless telephony relative to wired
alternatives; and

- widespread acceptance of wireless communications into every day business
and personal life.

As wireless network coverage has expanded, the availability and
functionality of wireless service has increased significantly. The factors
discussed above are contributing to accelerating subscriber penetration and
increased usage per subscriber. This is particularly evident within certain
demographic groups, such as the white-collar workforce, where wireless
communication has become an important business tool. The Gartner Group estimates
that at September 30, 1999, one-third of the workforce in the United States
subscribed to wireless phone service.

At the same time, falling prices of wireless services and increased
functionality of handsets have made wireless services widely available for new
wireless users in general. New handsets and other handheld computing devices
designed specifically to manage data applications and access the Internet have
also improved the ease of use of wireless data services.

41
43

GROWTH IN INTERNET SERVICES

The Internet marketplace is also experiencing rapid growth as a medium for
sharing information and conducting business transactions. International Data
Corporation estimates that the number of worldwide Web users reached
approximately 142 million at the end of 1998 and is forecasted to grow at a
compound annual growth rate of 29% to approximately 398 million by the end of
2002. By 2001, International Data Corporation expects the total value of
transactions conducted over the Web to exceed $398 billion. This user growth and
revenue potential have increased and expanded the availability of Internet
content and service offerings, including e-mail, financial information and
transactions, news, wholesale and retail sales, educational information and
entertainment applications. These applications have positioned the Internet as a
necessary daily resource of information for a substantial portion of the
population.

With the expanding acceptance of the Internet as a vital personal resource,
there is increased competition among Web sites for users. This has prompted
Internet companies to seek innovative means to increase the number of
subscribers and subscriber retention. In addition, corporate intranets have
become a vital business communications tool and source of information for mobile
workers. We believe that since individuals and businesses have become accustomed
to and reliant upon accessing various categories of information easily and
immediately through the Internet and corporate intranets, they are now demanding
this information when not connected to a computer.

EVOLUTION OF MEDIA

Media is the creation of information and entertainment content distributed
to those who have a need to use it. We believe economic value has been and will
continue to be created by companies that acquire, create and aggregate
information and by companies that distribute it to end-users. Initially,
newspapers and magazines, and later radio and broadcast television, created
content that appealed to a mass audience, driven by advertising revenue as the
primary source of revenue for the content creator. As the number of channels for
content distribution has increased, creators and distributors of content need to
distinguish their services from those of their competitors. As a result, media
content has become more targeted to specific audiences and delivers more
specialized information. For example, radio developed all-news stations and then
all-sports stations. Cable television migrated to a subscription-based revenue
model and developed multiple channels addressing the needs and interests of more
defined groups. Now the Internet offers content to appeal to even more targeted
audiences.

We believe that one of the principal drivers of the growth of the Internet
as a commercial medium is its ability to create value through the delivery of
highly specialized, interactive, local and personally relevant content to users.
We also believe that advertisers, businesses and individuals benefit from the
ability to communicate and transact with each other in more direct and efficient
ways on the Internet. With existing Internet technology, advertising can be
directed to specific individuals based on their demographic profiles. We believe
significant additional value for advertisers, businesses and individuals can be
created through the

42
44

extension of targeted advertising by utilizing wireless telecommunications
technology.

TECHNOLOGY, APPLICATIONS AND STANDARDS DEVELOPMENT

New software developments in the area of wireless content delivery have
made it possible for users to demand, retrieve and interact with personalized
content and an expanding range of applications over wireless devices. The
development of micro-browser standards such as WAP and specific applications and
content designed for the wireless environment have enabled the critical link
between information available on the Internet and wireless networks. New
generations of wireless transmission technologies, including those commonly
referred to as 2.5G and 3G, promise to dramatically increase the capacity and
speed of wireless networks and expand the functionality and the range of
applications available in the wireless data medium to levels equal to or
exceeding those available from wireline networks.

THE i3 MOBILE SOLUTION

As dependence on access to information, e-mail services, corporate
intranets and other Internet-based services increases, we believe that mobile
individuals will continue to seek many of the same benefits provided by the
Internet on hand-held wireless devices. We believe our products and services
combine the most useful features of Internet and wireless telephony technologies
to enable the distribution of personalized information through this new mobile
data medium. We believe that we provide comprehensive solutions for each of the
following groups.

MOBILE INDIVIDUALS

As individuals become more reliant on mobile communications, we believe
their demand for timely access to local, regional, national and global
information of personal value or interest will increase. They will also seek to
receive this information in a convenient manner and on their choice of wireless
device through any wireless network.

Our technology and products and services allow the mobile individual to
demand and receive relevant, personalized information through a wireless device.
Our users create customized information profiles through wireless network
operators and i3 co-branded Web sites and interactive voice response systems. We
believe that creating personal profiles for individual users, our ability to
monitor data streams, and identifying and delivering information based on those
personal profiles provides substantial value to mobile individuals.

WIRELESS NETWORK OPERATORS

Wireless network operators are seeking to offer data services in addition
to voice telephony in order to increase revenue per unit generated by additional
billable services, differentiate their service offerings from their competitors,
increase customer loyalty and increase minutes of use. To offer these new data
services, carriers need wireless data service expertise, simple implementation
with minimal capital investment, and access to aggregated content and
applications that are tailored to wireless devices and networks. In order to
deliver personalized information and Internet-based services to their wireless
subscribers, wireless

43
45

network operators must provide personalized data products as well as customer
service and billing.

We believe that we are the only comprehensive end-to-end provider offering
wireless network operators a complete solution for the delivery of personalized
content and information services to their subscribers. We have agreements with
many leading providers of news, financial, weather, sports, and other sources of
information, such as the Associated Press, Dow Jones, The Weather Channel,
SportsTicker, and Fox News, and can bundle these products and offer them in
packages customized for wireless network operators. We offer wireless network
operators content aggregation, applications development and integration, content
filtering and parsing, individual customer profiling and personalization,
billing services, customer care services, and delivery of messages in volume.
This allows wireless network operators to outsource these services, thereby
minimizing their time and capital expenditures required to provide these
services.

Effective wireless data systems must function seamlessly over diverse
networks, devices and operating systems. We support and develop applications for
a wide variety of wireless protocols that allow wireless devices to display
Internet-based information, including applications for Wireless Application
Protocol, or WAP, a series of specifications that allow wireless phones to
display Internet-based information. Further, because our technology allows
messaging to devices using new technologies, we provide wireless network
operators with a migration path to Internet browsing capabilities as equipment,
content availability, and networks evolve to support this new functionality.

INTERNET MEDIA NETWORKS AND CORPORATE ENTERPRISES

Internet media networks and corporate enterprises need to deliver the
content they provide through new distribution channels in order to create
enhanced value for existing Web services to generate additional revenue. In
order to create this new revenue and enhanced value, Internet media networks and
corporate enterprises need access to wireless distribution channels and the
ability to publish their content on multiple wireless data platforms. We provide
digital content providers with access to our distribution relationships with
wireless network operators. We have direct relationships with a number of
leading wireless network operators representing more than 50% of the market for
wireless phone users in North America. In addition, our technology can deliver a
message initiated by any of our Internet media networks or corporate enterprise
distributors to any Short Message Service, or SMS, enabled digital handset. We
also provide digital content providers with the means to repackage their content
for delivery through a wide variety of wireless data protocols such as SMS
applications, UP.Link, WAP, microbrowser applications and various voice
applications.

ADVERTISERS AND ELECTRONIC COMMERCE COMPANIES

Advertisers and electronic commerce companies are seeking additional
channels to market their products and/or services. We believe that advertisers
will benefit from the wireless data medium's ability to expand their
distribution reach and to target specific advertisements and product messages to
specific users. We also believe that electronic commerce companies will benefit
as the increased

44
46

convenience and ease of use of wireless devices results in higher transaction
volume.

We provide advertisers and electronic commerce companies with the ability
to target messages to large numbers of individuals based on their specific user
profiles. Prior to the Internet, this could not be accomplished on such a large
scale without considerable cost and expense. According to the 1999 Yankee Group
Mobile User Survey, more than half of the respondents indicated that they would
accept advertisements and promotions in order to receive complimentary wireless
content. We have developed a patent-pending engine system, Advanced Data Mining
Advertising Tagging and Transaction system, or ADMATTs, that matches personal
profile and demographic data with advertising targeting information. In
addition, we are developing electronic commerce applications and have licensed
patented technology that will allow mobile users to conduct electronic commerce
transactions on a secure, interactive basis. In the future, we expect our
advertising and electronic commerce applications to be enhanced with location
specific applications.

45
47

[i3 Mobile, Inc. FLOW CHART]

Description of Artwork:

The headline at the top reads: "i3 Mobile, Inc."

Below the headline, there are the following three headings (from left to
right): "Aggregation," "Personalization," and "Distribution."

Below the heading, "Aggregation," is a box containing the following text:

"Filtering & Parsing Engines: Content & Advertising" Below the box is a
graphic in the shape of an arrow pointing to the box. This arrow graphic
contains the following text:

"Raw Data Feeds: Ascii, HTML, XML and Others."

Below this arrow graphic is a connected box containing the following text
separated by lines:

"Content Providers", "Media", "Enterprise Data", "Advertising", and "E-
Commerce."

Below the heading, "Personalization," is a box containing the following
text:

"Personal Profile Database"

Below the box is a graphic in the shape of an arrow pointing to the box and
to another box below the arrow. This next box contains the following text:

"WWW, Voice & Device-Based Provisioning."

Below this box is an arrow graphic containing the following text: "Needs,
Interests." This arrow graphic also points to a "stick figure" image labeled
"Mobile Individual."

Below the heading, "Distribution," is a box containing the following text:

"Universal Messaging Gateway"

Below the box are three graphics in the shape of arrows pointing to the box
and to another box below the arrow. The three arrow graphics contain the
following text (going left to right): "SMS", "WAP/UP.Link" and "Voice." The next
box below these arrow graphics contains the following text separated by lines:

"Wireless Networks", "PCS", "Digital Cellular", "Paging" and "Wireless
ISPs".

To the left of this box are three arrow graphics pointing to three graphics
of wireless devices: wireless phone, pager and personal digital assistant. Next
to these wireless device graphics is an arrow which points to the previously
described "stick figure" image labeled "Mobile Individual."

At the bottom of the page are three boxes containing the following text:

- Universal wireless publishing and distribution for Content Providers

- Marriage of content and wireless provides personalized services for the
Mobile Individual

- Single source for aggregated content and services for Wireless Network
Operators

Below these three boxes is the following text:

"Benefits to Constituent."

46
48

STRATEGY

Our objective is to be the leading provider of personalized wireless data
products and services that provide information, entertainment and electronic
commerce. The key elements of our strategy are:

POSITION i3 AS THE SINGLE-SOURCE WIRELESS PORTAL FOR OUR DISTRIBUTORS

We intend to become our distributors' principal data services provider and
the integrator of content and information services to the distributors' customer
base by providing innovative, Web-based, value-added products and services and
electronic commerce applications. Our distribution relationships allow us to
access our distributors' customers, leverage the name recognition of our
distributors in local markets and deliver value to advertisers, Internet media
networks and corporate enterprises through our large base of established users.
We intend to provide our users and distributors with the ability to migrate to
new technologies as they develop, including WAP and Internet browsing
capabilities.

CONTINUE TO BUILD COMPELLING PRODUCTS

We will continue to build compelling products by aggregating and delivering
relevant content to the mobile user in a manner that is cost effective and
beneficial to our distributors. In order to satisfy the needs of the mobile
individual, we will continue to develop our product offerings in a variety of
personal and commercial information categories that are appealing, relevant and
personalized to mobile individuals and that address the local and regional
interests of individual users. We intend to continue to develop innovative,
interactive and electronic commerce applications that enhance the functionality
of the wireless data medium for our users.

GROW OUR USER BASE AND BUILD i3 BRAND AWARENESS

We will continue to leverage our distribution relationships and diversify
our marketing initiatives to increase our user base and build awareness of our
services and our brand. As users become accustomed to and realize the benefit of
receiving information on their wireless devices, we believe they will subscribe
for additional services. We actively seek to migrate our complimentary users to
subscription services through direct and co-operative marketing efforts with our
distributors. We also intend to increase our brand awareness independently and
by capitalizing on our co-branding "Powered by iii(TM)" marketing strategy which
leverages the extensive marketing and advertising resources and efforts of our
wireless network operator and Internet media network and corporate enterprise
distributors.

EXPAND AND DIVERSIFY OUR DISTRIBUTION RELATIONSHIPS

We will continue to seek to increase the number of our distribution
relationships both domestically and on a global basis in order to increase our
user base and develop diversified distribution channels. We have established
distribution relationships with more than 15 wireless network operators,
collectively representing approximately 43 million wireless phone subscribers at
June 30, 1999, or more than 50% of the total North American market of wireless
phone users, and we believe that we can leverage these relationships to migrate
our

47
49

products and services to other distribution channels. In this regard, we believe
that both Internet media and corporate enterprises will utilize our proprietary
technologies, know-how and services to enable wireless delivery of their
content. We have identified enterprises such as Internet auction, banking,
portal and stock-trading sites as potential clients for our services and believe
that we can enable these businesses to communicate and interact with their
customers via wireless devices.

DEVELOP ADVERTISING AND TRANSACTIONAL REVENUE

We believe that advertising and wireless electronic commerce transactions
represent a significant revenue generating opportunity. We currently have the
capacity to deliver in excess of 12 million targeted advertising impressions per
month through the use of our patent-pending wireless advertising engine. As the
wireless mobile data medium matures with technological advances and increased
user awareness, we believe that users will desire to transact business on a
wireless basis. We intend to continue to develop and license technology to offer
users access to a wide variety of electronic commerce opportunities. We have
secured a mix of exclusive and non-exclusive licenses and anticipate securing
additional licenses to enable us to deliver turnkey solutions and platforms to
digital content providers. The technologies underlying these licenses include
critical security and authentication capabilities. We believe that these
licenses give us a strategic advantage to become a leading provider of wireless
electronic commerce transactions in a secure environment.

ADVANCE OUR TECHNOLOGY AND CONTENT DELIVERY SYSTEMS

We will continue to invest in our underlying proprietary filtering
capabilities and content delivery abilities to ensure that we are capable of
meeting the growing demand for our products and services. Our strategy is to
continue to maintain our platform's compliance with all major data standards for
delivery of our products and services on wireless networks and devices. We
believe that our technology enables us to rapidly adapt our platforms to new
technology, devices and protocols. We have dedicated resources in anticipation
of and to capitalize on the emergence of these new technologies, including
WAP-based Internet browsing. In this regard, we utilize our own research and
development efforts as well as the research and development performed by many of
our business relationships, including handset manufacturers, wireless network
operators and content and electronic commerce companies.

PRODUCTS AND SERVICES

We create products and services targeted to the mobile individual. We are
focused on providing personalized content, advertising and electronic commerce
services to the wireless users' devices such as mobile phones, pagers and PDAs.
Through our distribution relationships we offer individual wireless subscribers
the ability to determine the type, amount and frequency of information they
desire. We have developed a portfolio of products and services that allow our
distributors to add value to their businesses and customer relationships by
providing personalized content and information to mobile individuals through
wireless devices.

48
50

CURRENT PRODUCTS AND SERVICES

Our interactive wireless portals are designed to provide mobile individuals
with personalized information regardless of the type of wireless device, network
infrastructure or protocol chosen by or for them. Information can be accessed in
either our notification/alert or interactive/on-demand content delivery formats.

We believe that a key element of our wireless portals is the creation of
personal profiles that detail each user's unique interests. Our users create
specific information profiles through co-branded interactive Web sites,
interactive telephone response systems, phone-based Internet microbrowsers or
our own or distributors' customer service centers. Content requested by the user
is transmitted from our operations center to a wireless network operator's
switching facility and on from there to the customer's wireless device. We
believe that our technology's capability to monitor data streams and identify
and deliver information which is based on to those personal profiles provides
substantial value to users.

Our distributors offer our products and services in a mix of complimentary
and subscription service packages as follows:

Complimentary Service. We offer our users the opportunity to receive a
limited product selection free of charge. This service enables users to receive
daily messages from a basic tier of content providers. For example, all AT&T
Digital PCS subscribers are entitled to select one content provider from among
ABCNews.com, Bloomberg.com, ESPN.com, Excite.com or The Weather Channel. Users
must first register for our service by visiting a distributor's Web site which
we co-brand and host or by calling a customer service center. Our experience
indicates that complimentary service enables us to demonstrate the value of our
services, including personalized content, to mobile individuals and provides a
base from which to generate subscriptions. We also have the capacity to add
advertising taglines to complimentary services messages, thereby generating
additional revenues for ourselves and our distributors. In some cases we are
also compensated by wireless network operators for complimentary services.

Subscription Services. We generally offer two paid subscription levels,
basic service and advanced service. By subscribing to either service level for a
monthly fee, subscribers are able to receive personalized messages throughout
the day. For example, a subscriber who has chosen to receive New York Yankees
scores might receive updated scores from a current game at the end of the fifth
inning and as the game ends. We estimate that the typical basic service
subscriber receives between 10 and 30 messages per selected content provider per
month, or an average of 30 to 90 total subscription messages per month in
addition to complimentary messages. We estimate that the typical advanced
service subscriber receives between 10 and 30 messages per selected content
provider per month, or an average of 80 to 240 total subscription messages per
subscriber per month in addition to complimentary messages. Currently, the price
of our basic service ranges from $2.99 to $4.99 per month, and the price of our
advanced service ranges from $5.99 to $12.99 per month.

49
51

CONTENT DELIVERY FORMATS

Our technology allows us to tailor message formats to maximize the message
length permitted by a user's particular wireless device. Messages typically
range between 40 characters and 240 characters but we can format the messages to
be as brief as 20 characters or as long as permitted by the user's wireless
device and wireless network carrier. Our technology permits subscribers to
select from two distinct message formats:

Notification Services. Triggered Alert/Notification Messages are sent to a
subscriber when our network detects a specific event has occurred which is time-
sensitive and relevant to that subscriber's information profile. For example, a
subscriber might request that we send an alert if there is a severe weather
watch issued for Topeka, Kansas, if IBM's stock price moves 2%, or if traffic
information becomes available for a specific street or highway at a particular
time of day.

Timed Notification Messages allow each subscriber to individually determine
the designated time for message delivery. Subscribers can tailor their message
delivery format to maximize the utility of each message. For example, a
subscriber may request to receive the weather forecast for Fairfax, Virginia
every day before getting dressed in the morning, local news for Sacramento,
California mid-morning or the winning lottery numbers immediately after the
drawing.

Interactive Services. Our subscribers can interact with their wireless
device to quickly access content on demand depending on the type of wireless
network and device. Under the interactive services model, content is sent at the
request of subscribers and we send a response to the wireless network operator
within seconds to be distributed to the user. Wireless users can interact by
two-way SMS and menu-driven microbrowser capabilities, including WAP and
Phone.com's UP.Link, on their wireless devices. For example, a subscriber may
request a real-time stock quote for a company that is in the news, or a weather
forecast for a city while traveling there, or a report on the score for a
sporting event in progress.

CONTENT CATEGORIES

We deliver global and national as well as regional and local content which
is available in selected locations based on the content's relevance to the
regional markets. For example, the results of a curling tournament are available
to interested users in Western Canada and subscribers in New York may obtain
scores for the New York Mets. In addition, local traffic conditions and weather
can be provided for both of those markets.

Similar to established Internet portals, we offer users access to diverse,
popular information that is categorized by major topical headings. Most of our
content is offered in English. Some of our products and services are also
offered in French and Spanish. We currently offer content to over 40,000
Canadian subscribers in both French and English. We are currently evaluating
Spanish content services aimed at the United States market. Our scaleable system
has the capability to process content in additional languages as demand
requires.

Our content is categorized into a number of product groups, including news,
weather, sports, business and finance, travel, entertainment and others. The
availability of particular content categories depends on the wireless network to

50
52

which our users subscribe. The following are some of the product groups and
services that we offer:

NEWS PRODUCTS
As-issued Breaking News
Headline News
Canadian Headline News
Local News
International News
Political News
Technology News
Health/Medical News
Real Estate News

WEATHER PRODUCTS
Daily Weather Forecasts
Severe Weather Alerts
3-day Forecasts
Travel Weather (multi-city)
Regional Weather Headlines
Marine Forecasts

TRAVEL PRODUCTS
Traffic Conditions
Flight Arrival and Departure
Information

SPORTS PRODUCTS
Real-time Scores
Score Roundups (timed/on-demand)
Pro Sports Stats and Standings
Auto/Truck Racing Results
Sports News Headlines
Pro Sports Team News
Breaking Sports News
Golf Leaderboards
Skiing/Snowboarding Reports
Horse Racing Results
Sports Trivia
Tennis Results

BUSINESS AND FINANCE PRODUCTS
Real-time Stock Price Movement Alerts
Real-time Stock Quotes
Mutual Fund Quotes
Market Indices
Breaking Financial News
Business News Headlines
Industry News Headlines
Company News Alerts by ticker

TRANSACTIONAL APPLICATIONS
Reminder Service
Interactive Advertising
On-demand Stock Quotes

MESSAGING APPLICATIONS
E-mail Gateway
Web-Messaging Gateway

ENTERTAINMENT PRODUCTS
Entertainment News Headlines
Horoscopes
Joke of the Day
Lottery Results
Soap Opera Updates
Movie Reviews From Roger Ebert
Concert Updates
"News Of The Weird" from C. Shepard
Roxy Roxborough's Sports Odds
Celebrity Birthdays
This Day in History
Thought for Today
Quote of the Day
Daily Trivia Question
Bible Quotes

51
53

CONTENT RELATIONSHIPS

We have agreements with media and information companies pursuant to which
they provide high-quality content to our users. We offer content providers the
opportunity to leverage their existing information in a new medium at little or
no incremental cost to them and with significant co-branding opportunities.
While each of our content agreements contain varying terms, our standard form of
content agreement has an initial term of three years and automatically renews
for continuous one year terms unless one of the parties provides notice that it
does not intend to renew the agreement. The amount we pay to the content
provider is either a flat monthly fee, a fee based on the number of subscribers,
a fee based on percentage of revenue received by i3 derived from revenue
generated from the content they provide, the number of content messages
requested or a combination of the four. Some of the content providers with which
we have existing relationships, either directly or through wireless network
operator distributors, include:

ABCNews.com
American Stock Exchange
Accu Weather
Associated Press:
- AP Wire
- LATAM (Latin American)
Bloomberg L.P.
Canadian Exchange Group
Canadian Press
COMTEX Scientific Corporation
- Agence France Presse
- Business Wire
- Knight Ridder
- PRNewswire
- Thomson Publishing
- Ziff Davis Wire
Dow Jones
Environment Canada
ESPN.com
Excite.com
FlyteComm
GTE/NOAA (weather)
infoUSA
InteliHealth
Interactive Sports Wire
L.A. Times
Lottery Canada
Lotto Net
Metro Network
NASDAQ
New York Stock Exchange
News America Digital Publishing
- Fox News
- Fox Sports
- Fox Market Wire
Reuters Health Information Services
Inc.
Sacramento Bee
SkyWords
SportsTicker
Sports Wire
Street Software Technology, Inc.
Tampa Tribune
Tourdates
TravInfo
Trustar Limited
Universal New Media:
- Eugenia Last
- Roger Ebert
University Wire
The Weather Channel

EMERGING PRODUCTS AND SERVICES

We are continually expanding our products and services based on perceived
market opportunities. We believe all of these products and services represent
additional potential sources of revenue.

52
54

Advertising. In many cases, we have the capacity to attach advertising
taglines to the end of content messages being delivered to individuals. Our
patent-pending engine system, ADMATTs, matches personal profile and demographic
data with targeted advertising information. We currently have the capacity to
deliver in excess of 12 million targeted advertising impressions per month. For
example, when a user in Denver, Colorado receives a message from The Weather
Channel with the weather forecast for Vail, Colorado, we have the capability to
tag the weather message with a short advertisement for a local ski area ticket
discount or a sale at a local ski shop.

Initially, we believe that this new advertising medium will be compared in
scope and pricing to the Internet. As such, we believe we have established our
advertising rates to compare favorably with average Internet portal cost-per-
thousand impressions rates. As advertisers accept this new advertising medium,
we believe that we will be able to charge them a premium rate based on our
ability to reach a large number of mobile individuals with highly targeted and
location specific messages.

Electronic Commerce. Our current electronic commerce platform offers
personal calendar alert functions and permits users to place an order for a
product or service from their wireless device. This capability not only provides
us with an opportunity to share in the revenue from an electronic commerce sale,
but it also motivates the user to use the wireless device to contact the vendor.
In addition, we believe this results in increased usage over the wireless device
and, accordingly, additional revenues for the wireless network operator. We have
secured a mix of exclusive and non-exclusive licenses and anticipate securing
additional licenses to enable us to deliver secure wireless electronic commerce
solutions.

When used by Internet electronic commerce sites, we believe our technology
enhances the level of user interaction and service, as the relationship with the
customer is no longer confined to desktop transactions. Although our electronic
commerce platform is in the early stage of development, we have existing
technology which is capable of enabling wireless electronic commerce
transactions. We are engaged in creating advanced wireless electronic commerce
applications which include mobile banking, stock trading, online auction, travel
service bidding and online shopping solutions. We believe revenue from enabling
electronic commerce companies for wireless transactions can include fee-based
development activities, per-transaction pricing, and receiving a portion of
revenue generated from goods or services sold.

For example, through our relationships with 1-800-FLOWERS and Vermont Teddy
Bear, a user may set up a reminder for a friend's birthday through the Internet.
At a pre-set date and time prior to the event, a message is transmitted to his
or her wireless device which alerts him or her of the upcoming birthday. This
alert message contains the details of the friend's birthday, along with a
tagline providing a gift suggestion and a special toll-free number to call to
initiate a transaction. Under this arrangement, we will receive a portion of the
revenues generated from this electronic commerce transaction.

We believe that the electronic commerce market presents significant revenue
potential for us and we are currently in discussions with a number of additional
companies that conduct electronic commerce on the Internet.

53
55

E-mail and Personal Information Management Applications. We believe that
e-mail and personal calendar information are among the most important content
services for mobile individuals. Our e-mail development efforts are focused on
adding additional filtering features and other functionality to our e-mail
gateway platform. We are now developing the technology to allow a user to direct
his or her e-mail normally received at a workstation location, such as an
office, to his or her wireless device. We are also developing the technology to
allow the user to remotely interact with his or her desktop e-mail/scheduling
applications to enable the remote receipt of and response to e-mail messages.

Location-Based Services. We are working to provide services that are based
on the user's geographical location as he or she travels. We have conducted a
successful trial of location-coded notification services with a wireless network
operator, and intend to utilize new location technologies to enhance our ability
to provide more localized information for mobile individuals. For example, a New
York subscriber could receive Arizona weather reports while he or she is
traveling in Phoenix. Other services that may be useful to a user's specific
location include traffic, restaurant/business/ATM location information, as well
as targeted advertising and electronic commerce programs.

Voice Recognition and Text-to-Speech Applications. We are developing a
system that allows a user to interact with our products and services using voice
recognition and text-to-speech technology. These applications allow users to
access our services through the voice channel on their wireless phones, rather
than the data channel. We believe that voice-based services can provide an
effective means for on-demand content delivery and triggered notification. To
support our efforts in this area, we are working with several industry leaders
on voice product prototypes, including serving as a development partner for
Nuance's Voyager voice browser platform.

In-Vehicle Applications. We are participating with major automotive
manufacturers in the development of and trials of various platforms and services
for in-vehicle applications. We are developing systems that will allow a user to
obtain critical information while travelling in a car, including directions and
traffic information. We intend to combine this functionality with our voice
recognition product to allow a user to speak to an in-vehicle device to request
information.

DISTRIBUTION RELATIONSHIPS

WIRELESS NETWORK OPERATORS

We have entered into relationships with a number of leading
telecommunications carriers and wireless network operators in order to
facilitate widespread distribution of our services and to grow our user base. We
have established relationships with wireless network operators that represent
more than 50% of the North American market for wireless phone users at June 30,
1999. Marketing fee arrangements provide incentives to our wireless network
operator distributors to promote our products and services. Although the terms
of each wireless network operator distribution agreement differ, the standard
agreement we use is non-exclusive, has a term of one to three years,
automatically renews for continuous one year terms and may be terminated by
either party on notice, with or without cause.

54
56

Some of the wireless network operators with which we have distribution
relationships include:

AT&T Wireless PrimeCo PCS
- AT&T Digital PCS SBC Communications Inc.
- AT&T PocketNet - Southwestern Bell Mobile
AirTouch Cellular Systems, Inc.
Bell Mobility Cellular, Inc. (Canada) - Pacific Bell
BellSouth Wireless Data - Cellular One (Boston,
Cellular One of Oregon Baltimore, Washington, D.C.)
CFW Wireless SkyTel
Clearnet PCS Triton PCS
MTT Mobility (Canada) TSR Wireless
Omnipoint Communications Services United States Cellular
PageMart U.S. West Wireless

ENTERPRISES

We believe that we provide a powerful enabling technology that allows
Internet media networks and corporate enterprises to extend the reach of their
services through the use of wireless devices. We can derive revenue from this
service for Internet media networks and corporate enterprises in a number of
ways, including fees for development services, licensing fees and
transaction-based pricing and per user subscription fees. We currently have
agreements with Cahners Business Information/Wireless Week, RotoNews and The
Weather Channel/Wireless Weather. We are in discussions with additional
businesses such as Internet auction, banking, portal and stock-trading sites to
enable these enterprises to communicate with their customers when they are not
at their desktops.

Internet Media Networks. We believe that these enterprises have begun to
consider wireless as a viable vehicle to deliver Web site content to their
users. Because our platform is compatible with all major data standards and
wireless transmission protocols we are capable of providing a complete outsource
solution that allows Internet media networks to deliver wireless portal
services. For example, Weather.com uses our technology to provide subscribers
with branded weather content, formerly only available on the Internet, via their
wireless devices.

Corporate Enterprises. Our technology can also enable corporations to
extend their information and services to customers and employees using wireless
devices. This can include e-mail, calendar and inventory applications,
notifications and corporate intranet access. Enterprise data can be supplemented
with our news and information content based on the needs of service users. We
are in discussions with numerous companies to provide these types of services.
We believe this market will provide us with additional opportunities to
facilitate and expand the use of electronic commerce. We believe enterprises
that might use our services to provide solutions to their employees and/or
customers include banking, stock trading, healthcare, package delivery and
manufacturing. For example, an enterprise could notify a user on their wireless
device of the results of medical laboratory tests or the time a package was
delivered to the recipient, or, in the case of an auction site, users could use
their wireless devices to receive auction updates. We can derive revenues by
charging fees to complete a

55
57

transaction even in those cases where we may not receive a portion of the
revenues of the actual sale.

OUR END-TO-END SOLUTION FOR OUR DISTRIBUTORS

We believe that we are the only comprehensive end-to-end provider of
wireless data services offering wireless network operators, Internet media
networks and corporate enterprise distributors a complete solution for the
delivery of personalized content and information. We offer these distributors
several critical components with which to build co-branded wireless portals. We
typically provide all of the following services to our wireless network operator
relationships, and generally provide the messaging gateway, personalization and
software development components to our Internet media network and corporate
enterprise relationships:

- Content Aggregation. We acquire content from over 50 content providers
who deliver general, broad-based information as well as locale and user
profile specific content.

- Content Filtering and Parsing. Our proprietary technology is designed to
extract only that content which is relevant to our users from the data we
receive. We send specific messages on a timely basis to specific users
based on their individual profiles or interactive requests.

- Profiling and Personalization. We maintain individual information,
network, and device profiles for each of our more than 450,000 users.
These profiles detail information which the user has indicated is of
personal value. Our content filtering and parsing engines work in
conjunction with our profiling system to provide personalized information
to our users.

- Messaging Gateway. Our products work with every major network protocol
for transmission of messages between our operating center and the systems
of our wireless network operator distributors. We currently maintain
connectivity to over 600 messaging switches around North America,
including but not limited to those of our wireless network operator
distributors.

- Operations, Billing, Customer Care and Reporting. We ensure timely and
accurate delivery of our services through our operations center, which is
staffed continuously. We provide user billing and live-operator customer
care services on behalf of our distributors and provide them with
detailed reporting on user numbers and behavior.

- Software Development. We typically create customized co-branded Web-
based systems in conjunction with each of our distributors which allow
users to create individual profiles and subscribe for services over the
Internet. We also develop customized interactive voice response systems
with many of our distributors. In some cases, we create proprietary
protocols with our distributors to accommodate unique infrastructure and
high transport volume.

56
58

SALES AND MARKETING

Our sales and marketing activities are focused on entering into additional
agreements with wireless network operators, Internet media networks and
corporate enterprises who will market our products and services using our
"Powered by iii(TM)" co-branding campaign. Our marketing efforts have also been
targeted towards accelerating the adoption of our services by mobile
individuals. By relying on the sales and marketing strength of our wireless
network operators, we are able to focus our capital on broadening our product
offering and incorporating technological advances. We currently employ 20 sales
and marketing professionals and intend to expand this group significantly during
2000.

We have implemented a number of initiatives supporting our distributors'
retail sales efforts and accelerating adoption of our services by mobile
individuals. These initiatives include:

- Cooperative Advertising Program. We offer a cooperative advertising
program for distributors who offer our services under the "Powered by
iii(TM)" sub-brand. Through this program, we provide reimbursement for
advertising and promotional materials used to support the sale of our
services to mobile individuals.

- Market Development Funds. We make available market development funds for
use by our distributors to promote specific products and services and to
increase sales in targeted markets. We work with our distributors to
identify appropriate media and geography for the efforts we fund.

- On-Device Promotions. We have begun promoting our services to mobile
individuals directly on their wireless devices. We currently send service
availability notification messages including instructions on selected
networks on how to activate our services to our distributors' subscribers
who have not yet signed up for our services. For some of our
complimentary service users we have begun attaching periodic promotional
messages to content messages aimed at selling subscription services to
these customers.

- "Powered by iii(TM)" Advertising. As an additional means of increasing
customer awareness and demand for our services we intend to continue to
implement advertising and promotional campaigns addressed directly to
mobile individuals. For example, we plan to advertise in markets where we
have a high density of potential customers such as California or South
Florida, each of which has three wireless network operators offering our
services.

TECHNOLOGY AND SYSTEMS

We believe that one of our principal strengths is our proprietary
internally developed technology. Our systems have been designed to provide a
robust, scalable and network and device independent platform for creation and
delivery of all of our products. We acquire, filter and parse data streams for
content, advertising and commerce applications, provide user profile
provisioning and personalization system, and our wireless delivery gateway.

57
59

Our various components run on a number of operating systems to satisfy the
requirements of our content providers and distributors, but all are integrated
in a common network architecture. Each component has been designed for modular
scalability so that our current architecture can accommodate more content,
advertising and commerce relationships and greater messaging volume.

CONTENT ACQUISITION, FILTERING AND PARSING SYSTEMS

Our engines for content aggregation and filtering have been designed to
accept virtually any type of data formatting and volume of data. We offer our
content providers the option to provide us their data in flat text files,
tab-delimited files, HTML, XML or any other number of content syndication
formats. We retrieve data from content providers under license through auto-ftp
robots or our own proprietary HTML filtering technology, or we accept data
delivery through established two-way connectivity with our content providers. In
the case of our stock quote alert products, for example, we receive data through
satellite on over 300,000 securities on a constant basis from our financial
content providers, with a dedicated network connection for backup purposes.

Our filtering and parsing engines determine relevance of information in the
data we receive and create various types of messages for our end users' devices.
We have created proprietary technology to efficiently monitor the large volume
of data entering our operating system and to identify particular information
that is relevant to our individual end users. Our parsing engines then use
proprietary algorithms to transform relevant data into messages of various
lengths and formats. For example, our engines create 100, 140, 150 and 240
character messages targeted for different types of message displays on various
devices. In addition, our engines create full-word 3-day weather forecasts, and
50 character same day weather forecast messages with word abbreviations (such as
"t-stms" instead of "thunderstorms"), from the same data. Our systems have been
refined over time to handle high data volume and rapid message creation, and we
tag messages with expiration designations and priority of delivery. These
expiration designations indicate to our wireless network operator distributors'
system how long a message should try to be delivered, and which messages, such
as on-demand stock quotes, should be delivered first.

We have developed a patent-pending proprietary system, ADMATTs, our
advertising and commerce platform. This system matches advertising tags and
commerce opportunity tags with specific messages based on user information
profiles and the content of the messages. For example, our system can monitor
weather data for temperature and humidity and can insert into a weather forecast
message an advertising tag for a soft drink when the temperature exceeds 85
degrees. In addition, the system can monitor a user's commerce preferences to
insert electronic commerce opportunity tags into our reminder system. For
example, if a user chooses to be reminded of a child's birthday, our system will
insert an embedded phone number for a children's gift manufacturer into the
reminder message. This system is designed to work with high volumes of messages
and multiple vendors and to provide data on user preferences to our electronic
commerce distributors.

58
60

PROFILE PROVISIONING AND PERSONALIZATION SYSTEM

We allow our end users to create personalized profiles through Web-based
interfaces, interactive voice response systems and microbrowser-based
interfaces. We provide updated user profiles in each of these systems, and
automatically reflect user-initiated changes made in one system in each of the
other systems. We handle secure credit card transactions through Web-based, IVR
and handset microbrowser interfaces.

Our Web and interactive voice response systems currently utilize load-
balanced hardware integrated into our Web server environment for redundancy and
to manage rapid growth. Our next generation Web-based system will employ a
distributed application model for even greater scalability and performance.

Each of our user's personalized information profiles is queried by our
content parsing engines to determine appropriate message delivery. For example,
we monitor our sports information data for a user's selected team and when
scores appear for that team, create a message for that user's device
characteristics and deliver that message through appropriate protocols to that
user's wireless network operator. Our personalization engines have been designed
for scalability and can currently handle more than four times the 450,000
profiles we currently service.

WIRELESS DELIVERY GATEWAY AND NETWORK OPERATIONS

Our wireless delivery gateway provides the means to send customized content
to most types of mobile handheld devices. Our gateway provides message transport
utilizing several paging protocols and various protocols for SMS, including
SMPP, UCP, SMTP, SNPP, TNPP, TAP and others. The gateway also supports the
protocols and mark-up languages compatible with Phone.com's UP.Link servers and
microbrowsers, and the WAP servers and microbrowsers of various other
manufacturers. Our gateway provides delivery through all major wireless
networks, including the CDMA, TDMA, GSM, iDEN, Mobitex, Flex, ReFlex, RAM and
other air interfaces.

We have written applications in the WML, HDML, VxML, and VoxML mark-up
languages to work with new microbrowser gateways and protocols and emerging
voice browser platforms. These new applications provide the basis for the next
generation of our wireless information portals and are focused on enhancing the
Internet functionality of wireless devices. For example, our technology enables
a WAP-enabled handset to become a platform for two-way interactive services such
as directory lookups and remote personal information manager connectivity.

Handling a high volume of message input and output is crucial to our end
users and wireless network operator distributors. Our operating center currently
handles approximately 800,000 messages per day and is capable of providing
message transport of five times that volume. We are also in the process of
building a new data center in Connecticut which is expected to provide capacity
for 20,000,000 messages per day. We currently anticipate that our new data
center will be operational by the end of the first quarter of 2000.

Our data center is designed to utilize mirrored server technology, load-
balancing components, backup power supplies, backup generator systems and
redundant network interfaces to eliminate service interruptions because of
single

59
61

points of failure. In addition, in order to provide service to our subscribers
if a disaster should occur in our Connecticut facility, we are upgrading our
redundant data center in Hurst, Texas, with plans for this upgraded facility to
be operational during the second quarter of 2000. Each system component in the
Connecticut and Texas facilities has been designed to scale for significantly
larger service volume.

RESEARCH AND DEVELOPMENT

Our research and development strategy is to anticipate market needs and to
implement the technological advancements necessary to meet these needs. This
strategy is consistent with our history. In the early stages of our development,
we created the proprietary platforms that allowed us to provide deliverable
wireless products when the wireless data market began to develop. We believe we
developed one of the first profile-based stock quote alert products in North
America, one of the first applications for capturing user profiles for wireless
delivery and one of the first notification applications for Phone.com's
microbrowser and many other innovations. We have senior level management who are
specifically assigned to direct our research and development efforts. In
addition, a team of individuals from a number of different departments is
selected to develop and implement each research and development project. We
actively solicit feedback from wireless network operators, content providers,
and Internet media networks and corporate enterprises to determine changes in
market needs and user demands. Our research and development strategy consists of
the following:

INDUSTRY STANDARDS

As an active participant in the development of the wireless data industry,
we share our expertise with various industry groups and with technology
alliances. As a result, we share in the benefits from research performed by many
of our industry contemporaries, including wireless network operators, content
providers, technology vendors, and electronic commerce providers. For example,
as a member of the WAP Forum, we have agreed to license our intellectual
property to other WAP members on fair and reasonable terms to the extent that
the license is required to develop non-infringing products under the
specifications promulgated by the WAP Forum. Each other member of the WAP Forum
has entered into a reciprocal agreement.

PROTOTYPE DEVELOPMENT

Our research and development group develops prototypes of new products and
systems. Prototypes are created in response to specific wireless network
operator trials, new technology relationships and our ongoing product
development efforts. When a prototype is targeted for production, our research
and development group transfers information and strategy to our systems and
technology group for implementation into commercial products.

OTHER RESEARCH AND DEVELOPMENT INITIATIVES

In support of our strategy of network and device independence, we continue
to develop applications that will allow us to offer our products and services to
any user, regardless of his or her selected wireless device. We are also
concentrating

60
62

our efforts on new wireless telephones, pagers and PDAs, and on creation of
products that work in conjunction with UP.Link, WAP, the Palm OS and associated
network browsing solutions, Windows CE, EPOC and other applications. We believe
this strategy will allow us to remain competitive when and if a major protocol
achieves market dominance.

RESEARCH RELATIONSHIPS

In support of our research and development efforts, we have formed
alliances with several companies and organizations. Our relationships with these
companies are strategic in nature. We seek to ensure that our products work with
the hardware and protocols of leading wireless data infrastructure providers.
These include Short Message Service Center, or SMSC, manufacturers Logica
Aldiscon and ADC NewNet, and Comverse, and Wireless Application Protocol gateway
and microbrowser manufacturers Nokia, Phone.com and CMG Telecommunications. For
example, we are one of a select number of North American WAP application
developers selected to work with Nokia and, as part of that relationship, we
jointly showcase our offerings at major industry trade fairs. In addition, we
have development agreements with location-based technology provider SignalSoft,
transaction security provider Diversinet and voice recognition and browser
technology provider Nuance Communications. We have also entered into
distribution relationships with Neopoint and Motorola. Each of these
relationships has been developed in order to further our product offerings and
means of distribution.

COMPETITION

The market for our services is becoming increasingly competitive. The
potential adoption of an industry standard may make it easier for new market
entrants to offer some or all of the services we offer and may make it easier
for existing competitors to introduce some or all of the services they do not
now provide, or improve the quality of their services. We expect that we will
compete primarily on the basis of the functionality, price, breadth and quality
of our products and services. Our current and potential competitors include:

- entities that have announced their intentions to become wireless data
providers, such as America Online, Inc. and TIBCO Software Inc.;

- wireless financial services providers, such as Aether Systems, Inc. and
724 Solutions, Inc.; and

- wireless network operators, such as AT&T Wireless, Bell Atlantic Mobile,
Metricom, Inc., Nextel Communications, Inc., Omnipoint Communications
Services and Sprint PCS.

Many of our existing and potential competitors have substantially greater
financial, technical, marketing and distribution resources than we do.
Additionally, many of these companies have greater name recognition and more
established

61
63

relationships with our target customers. Furthermore, these competitors may be
able to adopt more aggressive pricing policies and offer customers more
attractive terms than we can.

GOVERNMENT REGULATION

We are not currently subject to direct federal, state or local government
regulation, other than regulations that apply to businesses generally. The
wireless network operators with which we contract to provide airtime are subject
to regulation by the Federal Communications Commission. Therefore, indirectly,
changes in FCC regulations could affect the availability of wireless coverage
these carriers are willing or able to sell to us.

We could also be adversely affected by developments in regulations that
govern or may in the future govern the Internet, the allocation of radio
frequencies or the placement of cellular towers. Due to the increasing
popularity and use of the Internet, there is an increasing number of laws and
regulations pertaining to the Internet. In addition, a number of legislative and
regulatory proposals are under consideration by various agencies and commissions
in the United States and elsewhere. Laws or regulations may be adopted, and in
some countries have already been adopted, with respect to the Internet relating
to liability for information retrieved from or transmitted over the Internet,
online content regulation, user privacy, taxation and quality of products and
services. Moreover, the applicability to the Internet of existing laws governing
issues such as intellectual property ownership and infringement, copyright,
trademark, trade secret, obscenity, libel, employment and personal privacy is
uncertain and developing. Uncertainty and new regulations could increase our
costs and prevent us from delivering some or all of our services.

DATA PROTECTION

Legislative proposals have been made in the United States that would afford
broader protection to owners of databases of information such as stock quotes
and sports scores. If enacted, this legislation could result in an increase in
the price of services that provide data to wireless communications devices and
could create potential liability for unauthorized use of this data.

INTERNET TAXATION

A number of legislative proposals have been made at the federal, state and
local level that would impose additional taxes on the sale of goods and services
over the Internet and certain states have taken measures to tax Internet-related
activities. Although Congress recently placed a three-year moratorium on state
and local taxes on Internet access or on discriminatory taxes on electronic
commerce, existing state or local laws were expressly excepted from this
moratorium. Further, once this moratorium is lifted, some type of federal and/or
state taxes may be imposed upon electronic commerce. This legislation, or other
attempts at regulating commerce over the Internet, may substantially impede the
growth of commerce on the Internet and, as a result, adversely affect our future
opportunity to derive financial benefit from those activities.

62
64

INTELLECTUAL PROPERTY RIGHTS

We have filed an application to register the mark "Powered by iii," in the
United States. In addition, we have registered the marks "Eyes on the Web,"
"Village Square," "News Alert Service," "Sports Alert Service" and "Intelligent
Information Incorporated" on the Principal Register of the United States Patent
and Trademark Office. We also have pending applications to register the marks
"Eyes on the Web," "Village Square" and "Powered by iii" in Canada. This
prospectus also includes trade names, service marks and trademarks of other
companies. All other brand names or trademarks appearing in this prospectus are
the property of their respective holders.

We rely on a combination of copyright, trademark, service mark, trade
secret laws and contractual restrictions to establish and protect certain
proprietary rights in our services. We have applied for a patent covering
ADMATTs, which is a system that matches personal profile and demographic data
against advertising targeting information to attach advertising taglines to the
end of content messages being delivered to users. We have also entered into a
license agreement with Portel Services Network, Inc. for its method patent,
which allows us to involve a third party processing center or clearinghouse that
authenticates user orders in each electronic commerce transaction. Under the
terms of this agreement, we paid Portel $100,000 upon signing the agreement in
1999 and will pay an additional $75,000 to Portel in January 2000. In addition,
we have agreed to pay a royalty equal to five percent of gross revenue related
to electronic commerce through March 29, 2005 and May 8, 2007 for sales in the
United States and Canada, respectively.

The steps we have taken to protect our intellectual property may not prove
sufficient to prevent misappropriation of our technology or to deter independent
third-party development of similar technologies. The laws of certain foreign
countries may not protect our services or intellectual property rights to the
same extent as do the laws of the United States. We also rely on certain
technologies that we license from third parties including data feeds and related
software. These third-party technology licenses may not continue to be available
to us on commercially attractive terms. The loss of the ability to use such
technology could require us to obtain the rights to use substitute technology,
which could be more expensive or offer lower quality or performance, and
therefore have a material adverse effect on our business, financial condition or
results of operations.

Third parties could claim infringement by us with respect to current or
future services. As the number of entrants into our market increases, the
possibility of an infringement claim against us grows. We may be inadvertently
infringing a patent of which we are unaware. In addition, because patent
applications can take many years to issue, there may be a patent application now
pending of which we are unaware, which will cause us to be infringing when it
issues in the future. Any infringement claim, whether meritorious or not, could
be time-consuming, result in costly litigation, cause service installation
delays or require us to enter into royalty or licensing agreements. Royalty or
licensing agreements might not be available on terms acceptable to us or at all.
As a result, any claim could have a material adverse effect upon our business,
financial condition or results of operations.

As a member of the WAP Forum, we have agreed to license our intellectual
property to other WAP members on fair and reasonable terms to the extent that
the license is required to develop non-infringing products under the
specifications

63
65

promulgated by the WAP Forum. Each other member of the WAP Forum has entered
into a reciprocal agreement.

EMPLOYEES

As of December 31, 1999, we had 69 full-time employees and 2 part-time
employees. Management considers its relations with our employees to be good.
None of our employees are represented by a union.

PROPERTIES

Our principal executive office is located at 181 Harbor Drive, Stamford,
Connecticut. We currently operate four facilities under leases as follows:

APPROXIMATE
APPROXIMATE ANNUAL RENT LEASE
LOCATION SQUARE FOOTAGE IN 1999 EXPIRATION DATE
- -------- -------------- ----------- ---------------

181 Harbor Drive.................... 20,000 $63,000(1) March 2008
Stamford, CT
One Dock Street..................... 5,047 $81,000 March 2002
Stamford, CT
1237 Southridge Court............... 1,000 $25,000 February 2002
Hurst, TX
305 N.E. Loop....................... 10,035 $ --(2) January 2010
Hurst, TX

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

(1) The annual rent for 2000 is expected to be approximately $511,325.

(2) The annual rent for 2000 is expected to be approximately $110,385.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings. However, we may from
time to time become a party to various legal proceedings arising in the ordinary
course of our business.

64
66

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The names and ages of our executive officers, directors and key employees
as of December 31, 1999 are as follows:

EXECUTIVE OFFICERS AND DIRECTORS AGE POSITION
- -------------------------------- --- --------

Stephen G. Maloney.............. 42 President, Chief Executive Officer
and Director
Robert M. Unnold................ 52 Chairman of the Board
Michael Forbes.................. 38 Vice President, Marketing
Richard J. Rutkowski............ 48 Vice President, Technology and
Systems
Alan Katzman.................... 39 Vice President and General Counsel
Kevin W. Ryan................... 53 Vice President, Human Resources and
Administration
Jeffrey N. Klein................ 50 Vice President, Research and
Development
Donald G. Rossi................. 43 Vice President, Sales
Kerry J. Dale................... 43 Director
James A. Johnson................ 61 Director
J. William Grimes............... 58 Director
Donald F. Christino............. 42 Director
W. Peter Daniels................ 45 Director

KEY EMPLOYEES AGE POSITION
- ------------- --- --------

Robert Coletti.................. 45 Controller
Timothy S. Manny................ 29 Director, Product Development
Richard C. Haylon............... 37 Director, Operations

There is no family relationship between any director and executive officer
of i3 except that Robert Coletti is married to Stephen G. Maloney's sister.

STEPHEN G. MALONEY has served as our Chief Executive Officer since
September 1999. He has been our President and a director since he co-founded i3
with Mr. Unnold in 1991. From February 1987 to April 1994, Mr. Maloney was
Senior Vice President for Operations of Our Lady of Mercy Medical Center, a
teaching hospital located in the Bronx, New York. Prior to that, from February
1984 until January 1987, he served as Vice President, Ancillary Services at
Misericordia Medical Center.

ROBERT M. UNNOLD has been the Chairman of the Board since September 1999
and a director since 1991. Mr. Unnold co-founded i3 with Stephen G. Maloney in
1991 and served as our Chief Executive Officer from such time until September
1999. From 1989 until 1991 he served as a General Manager for Bell South/

65
67

Mobilecomm for the New York market. Mr. Unnold also founded Mincron SBC
Corporation, a software company, of which he was President and a director from
1979 to 1989 until its sale in 1999.

MICHAEL FORBES has served as our Vice President of Marketing since February
1999. From August 1996 until February 1999, Mr. Forbes was our Director of
Marketing. Prior to joining us, from August 1989 to July 1996, Mr. Forbes worked
for Columbia House Company, a direct retailer of various entertainment products
in a number of capacities, including Creative Director for Columbia House's
Video Club and Director of Sales Promotion for Columbia House's Music Club.

RICHARD J. RUTKOWSKI has served as our Vice President of Technology and
Systems since March 1999. From June 1996 to December 1998, Mr. Rutkowski was the
Director, Software Systems Development at Gerber Coburn, Inc., a company that
provides production equipment software systems for the ophthalmic industry. From
January 1986 to May 1996, he served in a number of capacities at Pitney Bowes,
Inc., including Director of Engineering-Product Development, Engineering
Manager-Scale Based Products and Engineering Manager-Systems.

ALAN KATZMAN has served as our Vice President and General Counsel since
March 1999. From April 1996 to February 1999, Mr. Katzman served as corporate
counsel and business development executive to Corechange, Inc., a technology
company with a focus on building information portals for Fortune 500 companies.
From January 1993 to January 1996, he served in similar capacities at Candle
Corporation, an independent software vendor.

KEVIN W. RYAN has been our Vice President of Human Resources and
Administration since February 1999. From July 1996 until February 1999 he was
our Manager of Health Information Services. Prior to joining us, from April 1994
to July 1996, he was President of Kevin Ryan Ltd., a management consulting firm.
From September 1990 to April 1994, Mr. Ryan served as President and Chief
Executive Officer at Franciscan Children's Hospital, located in Brighton,
Massachusetts.

JEFFREY N. KLEIN has been our Vice President of Research and Development
since January 1999. From June 1992 to December 1998, he served as our Vice
President of Technical Development. From September 1989 to May 1992, Mr. Klein
was President of Jeff Klein Aviation, a company that developed the Pilot Weather
Service, the predecessor of i3's Weather Alert Service.

DONALD G. ROSSI has been our Vice President of Sales since September 1999.
Prior to joining us, from August 1998 until September 1999, Mr. Rossi was a
Director of Sales and then Vice President of Sales for RTS Wireless, a leading
provider of gateways and infrastructure to the wireless industry. From March
1998 to August 1998, Mr. Rossi was a Director of Sales for Unwired Planet, now
known as Phone.com. From March 1994 to March 1998, Mr. Rossi was Vice President,
Sales and Marketing for AirMedia, Inc., a wireless data solutions company.

KERRY J. DALE was elected a director of i3 in August 1996. Since 1989, Mr.
Dale has been a General Partner of Keystone Venture Capital, a venture capital
investment company. Mr. Dale is a board member of a number of Keystone

66
68

Venture Capital portfolio companies. Mr. Dale also serves on the advisory board
of Jefferson Bank.

JAMES A. JOHNSON was elected a director of i3 in August 1998. Since 1987,
Mr. Johnson has been a managing general partner of Apex Investment Partners, a
Chicago-based venture capital firm, which he co-founded in 1987. Prior to 1987,
he was one of the three founding partners of Knightsbridge Partners, a private
investment firm. Previously, Mr. Johnson was associated with Beatrice Foods,
serving in a number of positions, including Chief Financial Officer of the
parent corporation and Senior Vice President of the US Foods operating
subsidiary. Mr. Johnson currently serves on the board of director White Cap
Industries, Inc., a retailer to professional contractors, and a number of
private companies.

J. WILLIAM GRIMES was elected a director of i3 in February 1999. Since
1996, Mr. Grimes has been a Member of BG Media Investors LLC, a company he
founded. BG Media Investors LLC is a private equity capital firm specializing in
investments in media and telecommunications companies. From 1994 until 1996, Mr.
Grimes was the Chief Executive Officer of Zenith Media, a media services agency.
From 1991 until 1993, he served as Chief Executive Officer of Multimedia, Inc.,
a diversified media company which merged into Gannett Co., Inc. in 1995. From
1988 through 1991, Mr. Grimes was President and Chief Executive Officer of
Univision Holdings, Inc., the largest Spanish language media company in the
United States. From 1982 through 1988, Mr. Grimes was President and Chief
Executive Officer of ESPN, Inc. Mr. Grimes serves on the board of directors of
InterVU, Inc. and is an Executive Director of the New School University's "Media
Management Program."

DONALD F. CHRISTINO was elected a director of i3 in July 1991. Since 1987,
Mr. Christino has been the President of Green Mountain Enterprises Inc., a
computer consulting company he founded.

W. PETER DANIELS was elected a director of i3 in July 1991. In November
1999, Mr. Daniels became the President and Chief Executive Officer of
Southampton Hospital in Southampton, New York. From January 1995 until November
1999, Mr. Daniels was the Chief Operating Officer of Winthrop University
Hospital in Mineola, New York.

ROBERT COLETTI has been our Controller since February 1995. From November
1993 to February 1995, he was a financial consultant to i3. Prior to that, from
July 1987 to October 1993, Mr. Coletti held a number of different positions,
including Finance Manager, with Weyerhaeuser Co./Shemin Nurseries, a nursery
wholesaler to landscape contractors. From 1981 to 1986, he was the plant
controller for The Allen Group/G&O Manufacturing, a company that manufactured
and distributed heat transfer units.

TIMOTHY S. MANNY has served as our Director of Product Development since
December 1, 1999. Prior to that, from March 1999 until December 1999, he was our
Manager of Business Development. Prior to joining us, from April 1996 to October
1998, Mr. Manny was Director of Operations for the Knowledge Group of
CareData.com, a company that markets Internet research software and search
engines. From April 1995 to April 1996, Mr. Manny was the Manager of Business
Development at Big Top Productions, a multimedia software publisher.

67
69

RICHARD C. HAYLON has served as our Director of Operations since March
1999. Prior to joining us, Mr. Haylon served as manager of Application
Development and Support at G.E. Capital from 1993 until March 1999.

BOARD COMMITTEES

COMPENSATION COMMITTEE

Our compensation committee currently consists of Messrs. Christino, Dale,
Grimes and Unnold. The compensation committee recommends, reviews and oversees
the salaries, benefits and stock options for our employees, directors and other
individuals compensated by us. The compensation committee also administers our
incentive compensation and benefit plans.

AUDIT COMMITTEE

Our audit committee currently consists of Messrs. Dale, Daniels and
Johnson. The audit committee reviews, acts on and reports to the board of
directors with respect to various auditing and accounting matters, including the
recommendation of our independent public accountants, the results and scope of
the audits and other services provided by our independent public accountants,
the performance of and the fees to be paid to our independent public
accountants, our accounting procedures and the adequacy of our internal
controls.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Our compensation committee consists of Messrs. Christino, Dale, Grimes and
Unnold. None of our executive officers has served as a member of the
compensation committee, or other committee serving an equivalent function, of
any other entity, whose executive officers served as a director of or a member
of our compensation committee.

BOARD COMPOSITION

Our board of directors consists of seven individuals. Each director is
elected for a one-year term at our annual meeting of stockholders and serves
until the next annual meeting or until his successor is duly elected and
qualified. The executive officers serve at the discretion of the board of
directors.

DIRECTOR COMPENSATION

We have no established compensation arrangements with our directors, but
directors may be reimbursed for their reasonable expenses incurred in connection
with the attendance at board and committee meetings. Directors are eligible to
receive options to purchase common stock under our option plans.

68
70

EXECUTIVE COMPENSATION

The following table shows all compensation earned for services rendered to
us by our chief executive officer and the three other most highly paid executive
officers of i3 whose annual salary and bonus exceeded $100,000 in the fiscal
years ended December 31, 1999, 1998 and 1997.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------- ----------------------
OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS
- --------------------------- ---- -------- ------------ ----------------------

Stephen G. Maloney............... 1999 $150,000 $12,000 --
President and Chief Executive 1998 126,810 7,500 12,500(3)
Officer(1) 1997 122,533 -- 12,500(4)
Robert M. Unnold................. 1999 $150,000 $12,000 --
Chairman of the Board(2) 1998 126,810 7,500 12,500(3)
1997 124,080 -- 12,500(4)
Jeffrey N. Klein................. 1999 $125,000 $ -- 25,500(5)
Vice President, 1998 114,000 7,000 18,100(6)
Research and Development 1997 96,000 7,680 17,000(7)
Kevin W. Ryan.................... 1999 $111,833 -- 20,500(8)
Vice President, Human 1998 96,000 -- 9,000(6)
Resources and Administration 1997 96,000 -- 9,000(7)

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

(1) Mr. Maloney was appointed Chief Executive Officer in September 1999.

(2) Mr. Unnold was our Chief Executive Officer until September 1999.

(3) Represents options to purchase shares of our common stock at $2.61 per
share.

(4) Represents options to purchase shares of our common stock at $1.94 per
share.

(5) Represents options to purchase 13,500 shares of our common stock at $4.00
per share and 12,000 shares of our common stock at $2.37 per share.

(6) Represents options to purchase shares of our common stock at $2.37 per
share.

(7) Represents options to purchase shares of our common stock at $1.76 per
share.

(8) Represents options to purchase 7,000 shares of our common stock at $2.37 per
share and 13,500 shares of our common stock at $4.00 per share.

69
71

OPTION GRANTS IN 1999

The following table shows information regarding options granted to the
named executive officers during the year ended December 31, 1999. We have not
granted any stock appreciation rights. None of the named executive officers
exercised any stock options during 1999.

INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(6)
OPTION IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED(1) YEAR(2) SHARE(3)(4) DATE(5) 5% 10%
- ---- ---------- ------------- ------------ ---------- --------- ---------

Stephen G. Maloney............. -- -- -- -- $ $
Robert M. Unnold............... -- -- -- --
Jeffrey N. Klein............... 25,500 4.7% $3.23 2009
Kevin W. Ryan.................. 20,500 3.8% $3.44 2009

- -------------------------
(1) All options were granted under our 1995 Stock Option Plan. All options were
incentive stock options which vest in annual installments over five years,
subject to immediate vesting in the event of a change in control of our
company.

(2) Based upon options to purchase an aggregate of 540,500 shares of our common
stock granted to employees in 1999.

(3) Certain of these options resulted in deferred compensation that will be
recognized over the vesting period.

(4) This figure represents the weighted average exercise price per share.

(5) The options have ten year terms, subject to earlier termination upon death,
disability or termination of employment.

(6) We recommend caution in interpreting the financial significance of the
figures representing the potential realizable value of the stock options.
They are calculated by multiplying the number of options granted by the
difference between a future hypothetical stock price and the option exercise
price and are shown pursuant to rules of the SEC. They assume that the fair
value of the common stock appreciates 5% or 10% each year based on the
initial public offering price, compounded annually, for ten years (the term
of each option). They are not intended to forecast possible future
appreciation, if any, of our stock price or to establish a present value of
options. Also, if appreciation does occur at the 5% or 10% per year rate,
the amounts shown would not be realized by the recipients until the year
2009. Depending on inflation rates, these amounts may be worth significantly
less in 2009, in real terms, than their value today.

YEAR-END OPTION VALUES

The following table provides information about options held as of December
31, 1999 by the named executive officers. No options were exercised by any
officer or director during 1999. The value of unexercised in-the-money options
at year-end is

70
72

based on the assumed initial public offering price of $ per share, less
the exercise price per share, multiplied by the number of shares underlying the
options.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------

Stephen G. Maloney.......... 12,500 12,500
Robert M. Unnold............ 12,500 12,500
Jeffrey N. Klein............ 57,340 46,760
Kevin W. Ryan............... 13,100 25,400

1995 STOCK OPTION PLAN

We adopted the 1995 Stock Option Plan on November 7, 1995. The plan
provides for grants of options to our designated employees, officers, directors
and consultants.

GENERAL. The plan, as amended, authorizes options to purchase up to
1,014,000 shares of our common stock. If options granted under the plan expire
or are terminated for any reason without being exercised, the shares of common
stock underlying such grant will again be available for grant under the plan.

ADMINISTRATION OF THE PLAN. The Board of Directors administers and
interprets the plan. The Board has the sole authority to:

- determine the employees and officers and consultants to whom grants will
be made under the plan;

- determine the type, size and terms of the grants to be made to each
optionee;

- determine the time when the grants will be made, the vesting period and
the duration of any applicable exercise or restriction period, including
the criteria for vesting; and

- deal with any other matters arising under the plan.

TYPES OF GRANTS. Grants under the plan may consist of:

- options intended to qualify as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code;

- nonqualified stock options that are not intended to so qualify;

- stock appreciation rights; and

- stock bonus awards.

ELIGIBILITY FOR PARTICIPATION. Grants may be made to any of our employees,
officers, directors and consultants. As of December 31, 1999, there were options
to purchase 918,485 shares of our common stock granted under the plan at
exercise prices ranging from $0.30 per share to $4.00 per share.

71
73

TERMS OF OPTIONS. The option exercise price will be determined by the
Board and may be equal to or greater than the fair market value of a share of
our common stock on the date of grant, provided that:

- the exercise price of an incentive stock option may be no less than the
fair market value of a share of our common stock on the date of grant;
and

- the exercise price of an incentive stock option granted to an employee
who owns more than 10% of our common stock will be no less than 110% of
the fair market value of a share of our common stock on the date of
grant.

The participant may pay the exercise price:

- by certified or bank cashier's check;

- by the surrender and delivery to us of shares of our common stock having
a fair market value equal to the purchase price of the stock issuable
upon exercise of the options are being exercised; or

- by delivery of a promissory note secured by a pledge of stock.

The board will determine the term of each option, except that the term of
an incentive stock option granted to an employee who owns more than 10% of the
common stock may not exceed five years from the date of grant.

STOCK APPRECIATION RIGHTS. The board may grant a right to receive a number
of shares or, in the discretion of the board, an amount in cash or a combination
of shares and cash, based on the increase in the fair market value of the shares
underlying the right during a stated period specified by the board. The board
may approve the grant of these stock appreciation rights related or unrelated to
stock options. Upon exercise of a stock appreciation right that is related to a
stock option granted, the holder of the related option will surrender the option
for the number of shares as to which the stock appreciation right is exercised
and will receive payment of an amount computed as provided in the stock
appreciation right award.

STOCK BONUS AWARDS. The board may also award cash and/or shares of common
stock to participants. These stock awards may be conditioned on the achievement
of performance goals and/or continued employment with us through a specified
period.

AMENDMENT AND TERMINATION OF THE PLAN. The board may amend or terminate
the plan at any time, except that it may not make any amendment without
stockholder approval that:

- increases the maximum number of shares as to which options may be granted
under the plan (except in the case of a merger, reorganization or similar
event);

- expands the class of employees or consultants entitled to receive
options, rights or awards under the plan;

- decreases the minimum purchase price at which options or rights may be
granted;

72
74

- extends the maximum term of options or rights granted under the plan;

- extends the term of the plan; or

- materially increases the benefits accruing to participants under the plan
who are subject to liability under Section 16(b) of the Exchange Act.

The board may terminate the plan at any time; provided, however, that the
term of the plan may not be longer than ten years from its commencement date.

TAX CONSEQUENCES. The following description of the tax consequences of
awards under the 1995 Stock Option Plan is based on present federal tax laws and
does not purport to be a complete description of the tax consequences of the
1995 Stock Option Plan. There are generally no federal tax consequences as to
the optionee or to us upon the grant of an option. On the exercise of an
incentive stock option, the optionee will not recognize any income, and we will
not be entitled to a deduction for tax purposes, although such exercise may give
rise to liability for the optionee under the alternative minimum tax provisions
of the Internal Revenue Code. However, if the optionee disposes of shares
acquired upon the exercise of an incentive stock option within two years of the
date of grant or one year of the date of exercise, the optionee will recognize
ordinary income, and we will be entitled to a deduction for tax purposes in the
amount of the excess of the fair market value of the shares of common stock on
the date of exercise over the option exercise price (or the gain on sale, if
less); the remainder of any gain, and any loss, to the optionee will be treated
as capital gain or loss to the optionee. On the exercise of a nonqualified stock
option, the amount by which the fair market value of common stock on the date of
the exercise exceeds the option exercise price will generally be taxable to the
optionee as ordinary income and will generally be deductible for tax purposes by
us. The disposition of shares acquired upon exercise of a non-qualified option,
or an incentive stock option, if after the one year and two year periods
described above, will generally result in capital gain or loss to the optionee
but will have no tax consequences to us.

SECTION 162(m). Under Section 162(m) of the Internal Revenue Code, we may
be precluded from claiming a federal income tax deduction for total remuneration
in excess of $1,000,000 paid to the chief executive officer or to any of the
other four most highly compensated officers in any one year. Total remuneration
would include amounts received upon the exercise of stock options. An exception
exists, however, for "performance-based compensation," including amounts
received upon the exercise of stock options pursuant to a plan approved by
stockholders that meets certain requirements. The plan has been approved by
stockholders and it is intended that grants of options thereunder meet the
requirements of "performance-based compensation."

FOUNDERS INCENTIVE PLAN

Our Founders Incentive Plan was adopted in May 1999 and is administered by
our compensation committee. The purpose of the plan is to reward our President
and Chief Executive Officer and Chairman of the Board if we meet certain
specific performance goals. In setting those goals, the compensation committee
will specify the applicable performance criteria and targets it will use for the
performance period. Each executive eligible under the plan may receive a cash
incentive of up

73
75

to 80% of his annual salary upon the achievement of these goals and objectives.
The performance criteria and targets will measure the following performance
measures:

- the achievement of a specified number of total subscribers and a
specified number of paying customers;

- the achievement of revenue targets;

- the signing of contracts with carriers;

- the obtaining of specified levels of financing; and

- the achievement of infrastructure initiatives.

EMPLOYMENT AGREEMENTS

We entered into employment agreements dated as of January 1, 1999 and
amended as of September 1, 1999, with each of Stephen G. Maloney, our Chief
Executive Officer and Robert M. Unnold, our Chairman of the Board. Both
agreements will expire on December 31, 2002 but automatically renew for
additional one year periods unless we give notice of termination at least 90
days before the expiration of the term. Pursuant to their respective agreements,
Mr. Maloney is employed as our President and Chief Executive Officer at an
annual salary of not less than $150,000, and Mr. Unnold is employed as Chairman
of the Board at an annual salary of not less than $150,000. If they meet certain
performance goals, Messrs. Maloney and Unnold are entitled to receive incentive
compensation of up to 80% of their respective base salaries. We maintain
separate key-man insurance policies of $2,000,000 for each of Messrs. Maloney
and Unnold. We have the right to terminate each agreement at any time and for
any reason. If we do so without cause, or if either individual terminates his
agreement for "good reason," however, we must continue to pay salary and
benefits until the later of 18 months from the date of termination or the
balance of the term. We are also obligated to pay a similar severance benefit
upon the death or disability of each individual.

We entered into an Employment and Royalty Agreement with Jeffrey N. Klein
on October 27, 1998 for a term beginning January 1, 1999 and ending on December
31, 2001. Pursuant to this agreement, Mr. Klein is employed as Vice President of
Research and Development at an annual salary of $125,000 with annual increases
of no less than 5%. Mr. Klein is also entitled to a monthly royalty payment of
2% of all of our gross revenues, including the revenues of any wholly-owned
subsidiary, up to a maximum of $500,000, of which he has received $29,000 as of
September 30, 1999. Either we or Mr. Klein may terminate the agreement at any
time upon 60 days notice. If we do so without cause or if the agreement is
terminated as a result of Mr. Klein's death or disability, we must continue to
pay salary and benefits until the earlier to occur of 18 months and the
remainder of the term. The royalty payment maximum must be paid regardless of
Mr. Klein's termination, death or disability.

74
76

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SALES OF OUR SECURITIES

Pursuant to a stock purchase agreement dated February 12, 1999, we sold a
total of 9,643.2 shares of our Series E mandatorily redeemable convertible
preferred stock to BG Media Investors L.P. for an aggregate purchase price of
$15,000,000. 7,714.56 shares were purchased in February 1999 for $12,000,000 and
1,928.64 shares were purchased in November 1999 for $3,000,000. Mr. Grimes, one
of our directors, is a member of BG Media Investors LLC, the General Partner of
BG Media Investors L.P. The Series E mandatorily redeemable convertible
preferred stock will convert into shares of our common stock immediately upon
the completion of this offering.

In June 1998, we issued warrants to purchase 350,000 shares of our common
stock at an exercise price of $3.50 per share to Keystone Venture IV, L.P. in
consideration for services rendered in connection with our 1998 financings. In
addition, pursuant to a stock purchase agreement dated December 22, 1999, we
sold 757.5 shares of Series F mandatorily redeemable convertible preferred stock
to Keystone Venture V, L.P. for an aggregate purchase price of $3,000,000. Mr.
Dale, one of our directors, is Vice President of Keystone IV MCGP, Inc., the
General Partner of Keystone Venture IV Management Company, L.P., which is the
General Partner of Keystone Venture IV, L.P. and Managing Director of Keystone V
Management Company, Inc., the General Partner of Keystone V Partners, L.P.,
which is the General Partner of Keystone Venture V, L.P.

Pursuant to a stock purchase agreement dated as of August 11, 1998, we
issued a total of 843 shares of our Series D mandatorily redeemable convertible
preferred stock to Apex Investment Fund III, L.P. and Apex Strategic Partners,
LLC for an aggregate purchase price of $1,001,000 in cash and notes payable. In
consideration for the notes payable, we issued warrants to purchase an aggregate
of 195,984 shares of our common stock at an exercise price of $3.00 per share to
the purchasers. In addition, in connection with our Loan Incentive Warrant Plan
which was established in September 1998, we issued warrants to purchase an
aggregate of 20,235 shares of our common stock to the purchasers at an exercise
price of $3.50 per share on March 8, 1999 in consideration of their loans of
$200,000 to us on November 18, 1998. This Loan Incentive Warrant Plan was
established to issue warrants to purchase shares of our common stock to our
lenders in consideration of loans made by them to us. Mr. Johnson, one of our
directors, is President of Stellar Investment Co., the Managing Member of Apex
Management III, LLC, which is the General Partner of Apex Investment Fund III,
L.P. He is also the Managing Member of Apex Strategic Partners, LLC. The Series
D mandatorily redeemable convertible preferred stock will convert into shares of
our common stock immediately upon the completion of this offering.

In connection with the preferred stock financings and issuance of common
stock to our founders, we granted registration rights to our preferred
stockholders and Messrs. Unnold, Maloney, Christino and Daniels, among others.
Upon exercise of these registration rights, these stockholders can require us to
file registration statements covering the sale of shares of common stock held by
them and may include the sale of their shares in registration statements
covering our sale of shares to the public.

75
77

LOANS FROM US

On May 12, 1999, we loaned Mr. Maloney, our President and Chief Executive
Officer, $100,000 evidenced by a promissory note bearing interest at a rate of
10% per annum. The entire balance of the note plus interest was repaid by Mr.
Maloney on May 26, 1999.

On September 29, 1999, we loaned Mr. Unnold, our Chairman of the Board,
$100,000 evidenced by a promissory note bearing interest at a rate of 10% per
annum. The entire principal balance of the note plus interest was repaid by Mr.
Unnold on October 4, 1999.

LOANS TO US

Mr. Coletti, our Controller, loaned us $40,000 on July 30, 1997 and $25,000
on October 10, 1997 pursuant to promissory notes bearing interest at a rate of
18% per annum. In August 1998, as a condition for us to receive financing in
connection with the Series D mandatorily redeemable preferred stock offering,
the interest rates were adjusted from 18% to 10%. These interest adjustments
were applied retroactively to January 1, 1998. The entire principal balance of
the notes plus interest was repaid to Mr. Coletti on February 16, 1999. In
connection with our Loan Incentive Warrant Plan, we issued to Mr. Coletti and
his designee warrants to purchase 31,805 shares of our common stock at an
exercise price of $3.50 per share on March 8, 1999.

Mr. Unnold, our Chairman of the Board, loaned us $22,000 on July 30, 1997,
$10,000 on April 3, 1998 and $17,000 on April 20, 1998 pursuant to promissory
notes which accrue interest at a rate of 18% per annum. In August 1998, as a
condition for us to receive financing in connection with the Series D
mandatorily redeemable preferred stock offering, the interest rates were
adjusted from 18% to 10%. These interest adjustments were applied retroactively
to January 1, 1998. The entire principal balance of the notes plus interest was
repaid to Mr. Unnold on February 16, 1999. In connection with our Loan Incentive
Warrant Plan, we issued to Mr. Unnold's designees warrants to purchase 18,708
shares of common stock at an exercise price of $3.50 per share on March 8, 1999.

Mr. Christino, one of our directors, loaned us $30,000 on July 30, 1997,
pursuant to a promissory note bearing interest at a rate of 18% per annum. In
August 1998, as a condition for us to receive financing in connection with the
Series D mandatorily redeemable preferred stock offering, the interest rates
were adjusted from 18% to 10%. These interest adjustments were applied
retroactively to January 1, 1998. The entire principal balance of the note plus
interest was repaid to Mr. Christino on February 16, 1999. In connection with
our Loan Incentive Warrant Plan, we issued to Mr. Christino warrants to purchase
15,429 shares of common stock at an exercise price of $3.50 per share on March
8, 1999.

In June 1998, we issued two notes payable totaling $400,000 to Apex
Investment Fund III, L.P. and Apex Strategic Partners, LLC. The notes bore
interest at a rate of 7% per annum and were due and payable on demand. In
connection with this issuance, two warrants were issued for the purchase of
195,984 shares of our common stock for $3.00 per share. These notes payable were
converted in August 1998 into Series D mandatorily redeemable convertible

76
78

preferred stock in connection with the issuance of the Series D mandatorily
redeemable preferred stock.

On November 18, 1998, we executed two promissory notes with Apex Investment
Fund III, L.P. and Apex Strategic Partners, LLC providing financing totaling
$200,000. The promissory notes bore interest at a rate of 10% per annum and were
due and payable on December 31, 1998. We repaid the note in February 1999. In
consideration for these notes, we issued two warrants to purchase 20,235 shares
of common stock at an exercise price of $3.50 per share to the holders on March
8, 1999.

OTHER TRANSACTIONS

Pursuant to a stock purchase agreement dated February 27, 1992, as amended,
we purchased all of the outstanding capital stock of Quotes Plus . . . , Inc., a
Colorado corporation, from Michael J. Pryslak and Dennis M. Roland. The payment
terms, as amended, provide that Messrs. Pryslak and Roland will collectively
receive a payment equal to 2.5% of our gross revenues on a monthly basis, but in
no event less than $3,000 per month. If, prior to January 1, 2003, the aggregate
of all monthly payments made to Messrs. Pryslak and Roland equals $6,000,000,
then we will have no further payment obligations to Messrs. Pryslak and Roland.
Otherwise, we must continue to make the monthly payment to Messrs. Pryslak and
Roland. If we pay $7,000,000 to Messrs. Pryslak and Roland before January 1,
2004, then our payment obligations to Messrs. Pryslak and Roland will cease. If,
however, we fail to pay to Messrs. Pryslak and Roland $7,000,000 prior to
January 1, 2004, then we must continue to make the monthly payment until we pay
a total of $8,000,000 to Messrs. Pryslak and Roland. In November 1998, we loaned
Messrs. Pryslak and Roland $53,000 in the aggregate on an unsecured basis to
purchase 42 shares of our Series C convertible preferred stock. The payments
generated under the agreement will initially be used to reduce the principal on
this outstanding loan. As of September 30, 1999, the loan had been reduced by
$16,000.

We believe that the transactions discussed above were made on terms no less
favorable to us than would have been obtained from unaffiliated third parties.
We have adopted a policy that requires all future transactions between us and
our officers, directors and affiliates to be on terms no less favorable than
could be obtained from unrelated third parties. These transactions were approved
by a majority of the disinterested members of our board of directors.

77
79

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding ownership of
our common stock, as of December 31, 1999, by:

- each person known to us to own beneficially more than 5% of our
outstanding common stock;

- each of our directors;

- each of our executive officers named in the summary compensation table;
and

- all of our directors and executive officers as a group.

Share ownership is based on 17,087,265 shares of common stock outstanding
immediately prior to this offering and assumes conversion of all outstanding
shares of preferred stock into shares of common stock. Share ownership in each
case includes shares issuable upon exercise of outstanding options and warrants
that are exercisable within 60 days of December 31, 1999, as described in the
footnotes below. Unless otherwise indicated, the address for each stockholder is
c/o i3 Mobile, Inc., 181 Harbor Drive, Stamford, Connecticut 06902.

PERCENT OF SHARES
BENEFICIALLY OWNED
NUMBER --------------------------------
NAME AND ADDRESS OF SHARES BEFORE OFFERING AFTER OFFERING
- ---------------- ---------- --------------- --------------

Robert M. Unnold...................... 2,176,208(1) 12.7%
Stephen M. Maloney.................... 1,484,166(2) 8.7
Donald F. Christino................... 1,080,429(3) 6.3
W. Peter Daniels...................... 220,000 1.3
Jeffrey N. Klein...................... 57,340(4) *
Kevin W. Ryan......................... 13,100(4) *
Kerry J. Dale......................... 2,089,073(5) 11.8
c/o Keystone Venture IV, L.P.
1601 Market Street
Suite 2500
Philadelphia, PA 19103
James A. Johnson...................... 637,719(6) 3.7
c/o Apex Management III, LLC
233 Wacker Drive, Suite 900
Chicago, IL 60606
J. William Grimes..................... 4,821,600(7) 28.2
c/o BG Media Investors L.P.
399 Park Avenue, 19th Floor
New York, NY 10022
Keystone Venture IV, L.P. ............ 1,710,323(8) 9.7
1601 Market Street
Suite 2500
Philadelphia, PA 19103
BG Media Investors L.P. .............. 4,821,600 28.2
399 Park Avenue, 19th Floor
New York, NY 10022
MCI WorldCom, Inc..................... 1,131,250(9) 6.4
500 Clinton Center Drive Clinton, MS
39056
All directors and officers as a group
(13 persons)........................ 12,611,875 69.9

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

* less than 1% (one percent).

78
80

(1) Includes 2,000,000 shares of common stock issued to RMU Management LLC, an
entity controlled by Mr. Unnold, 18,708 shares of common stock issuable upon
the exercise of warrants at an exercise price of $3.50 per share held by Mr.
Unnold as custodian for the benefit of his two minor children and options to
purchase 12,500 shares of common stock.

(2) Includes options to purchase 12,500 shares of common stock.

(3) Includes 15,429 shares of common stock issuable upon the exercise of
warrants at an exercise price of $3.50 per share.

(4) Consists of shares of common stock issuable upon the exercise of stock
options.

(5) Consists of 1,063,000 shares of common stock and 584,465 shares of common
stock issuable upon the exercise of warrants at a weighted average exercise
price of $3.30 per share held by Keystone Venture IV, L.P. and 378,750
shares of common stock held by Keystone Venture V, L.P. Mr. Dale is a
director of III and Vice President of Keystone IV MCGP, Inc., the General
Partner of Keystone Venture IV Management Company, L.P., which is the
General Partner of Keystone Venture IV, L.P. Mr. Dale is also Managing
Director of Keystone V Management Company, Inc., the General Partner of
Keystone V Partners, L.P., which is the General Partner of Keystone Venture
V, L.P. Mr. Dale disclaims beneficial ownership of these shares except to
the extent of his pecuniary interest therein.

(6) Consists of 421,500 shares of common stock and 216,219 shares of common
stock issuable upon the exercise of warrants at a weighted average exercise
price of $3.05 per share held by Apex Investment Fund III, L.P. and Apex
Strategic Partners, LLC. Mr. Johnson is a director of III and President of
Stellar Investment Co., the Managing Member of Apex Management III, LLC,
which is the General Partner of Apex Investment Fund III, L.P. and the
Managing Member of Apex Strategic Partners, LLC. Mr. Johnson disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest therein.

(7) Consists of 4,821,600 shares of common stock held by BG Media Investors L.P.
Mr. Grimes is a director of III and Managing Member of BG Media Investors
LLC, the General Partner of BG Media Investors L.P. Mr. Grimes disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest therein.

(8) Includes 234,465 shares of common stock issuable upon the exercise of
warrants at an exercise price of $3.00 per share and 350,000 shares of
common stock issuable upon the exercise of warrants at an exercise price of
$3.50 per share.

(9) Consists of 631,250 shares of common stock and 500,000 shares of common
stock issuable upon the exercise of warrants at an exercise price of $3.00
per share.

79
81

DESCRIPTION OF CAPITAL STOCK

GENERAL

Our authorized capital stock consists of 50,000,000 shares of common stock,
of which 17,087,265 shares were issued and outstanding immediately prior to this
offering, and 50,000 shares of preferred stock, of which no shares will be
issued and outstanding upon the closing of this offering.

COMMON STOCK

Each share of common stock may be uncertificated or represented by a
certificate signed by an authorized officer of i3. Holders of our common stock
are entitled to one vote for each share held of record on all matters on which
stockholders may vote, including the election of directors. Holders of our
common stock are entitled to receive, if declared, such dividends and other
distributions in cash, stock or property from our assets or funds legally
available for such purposes subject to any dividend preferences that may be
attributable to preferred stock that may be authorized. Registered stockholders
may transfer their shares by surrendering to us or to our transfer agent their
share certificates duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer. If the shares are
uncertificated, we must receive proper transfer instruments from the registered
owner of uncertificated shares before we cancel those shares and issue new
shares to the transferee. Annual meetings of stockholders are held on the first
Tuesday in July or at such other date and time as designated by the board of
directors. At the annual meeting, the stockholders elect the directors by a
plurality vote. There are no preemptive, conversion, redemption or sinking fund
provisions applicable to our common stock. All outstanding shares of common
stock are fully paid and non-assessable. In the event of our liquidation,
dissolution or winding up, holders of common stock are entitled to share ratably
in the assets available for distribution.

PREFERRED STOCK

Our board of directors, without further action by the stockholders, is
authorized to issue an aggregate of 50,000 shares of preferred stock. Following
completion of this offering, no shares of preferred stock will be outstanding.
Our board of directors may, without stockholder approval, issue preferred stock
with dividend rates, redemption prices, preferences on liquidation or
dissolution, conversion rights, voting rights and any other preferences, which
rights and preferences could adversely affect the voting power of the holders of
common stock. Issuance of preferred stock, while providing desirable flexibility
in connection with possible acquisitions or other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or could
discourage or delay a third party from acquiring, a majority of our outstanding
common stock. We currently have no plans for new issuances of preferred stock.

The ability of the board of directors to establish the rights of, and to
issue, substantial amounts of preferred stock without the need for shareholder
approval, may have the effect of discouraging, delaying or preventing a change
in control. Such preferred stock, among other things, may be used to create
voting

80
82

impediments with respect to any changes in control or to dilute the stock
ownership of holders of common stock seeking to obtain control.

REGISTRATION RIGHTS OF STOCKHOLDERS

Following the offering, holders of an aggregate of 15,121,431 shares of our
outstanding common stock will be entitled to rights with respect to registration
of these shares of common stock under the Securities Act.

We have an agreement with these stockholders that gives them registration
rights. Subject to limitations provided in the agreement, including those in
lock-up agreements that these stockholders have signed relating to this
offering, these stockholders have the right, six months after this offering,
upon request of the holders and under certain circumstances and conditions, to
require us to register their shares of common stock under the Securities Act. We
have granted one demand registration right to each of the following: (i) Robert
M. Unnold, Stephen G. Maloney, Donald F. Christino and W. Peter Daniels, as a
group, (ii) BG Media Investors L.P., (iii) Apex Investment Fund II L.P. and Apex
Strategic Partners, LLC, as a group, and (iv) Keystone Venture IV, L.P. We have
also granted up to two demand registration rights to the purchasers of Series F
mandatorily redeemable preferred stock as a group for their shares of common
stock issuable upon conversion of their Series F mandatorily redeemable
preferred stock. In addition to these demand registration rights, and subject to
conditions and limitations provided in the applicable agreement, these
stockholders may require us to file an unlimited number of registration
statements on Form S-2 or Form S-3 under the Securities Act when either form is
available for our use, generally one year after this offering.

If we propose to register our securities under the Securities Act after
this offering, these stockholders and the holder of warrants to purchase up to
123,725 shares of our common stock will be entitled to notice of the
registration and to include their shares in the registration provided that the
underwriters of the proposed offering will have the right to limit the number of
shares included in the registration. We must pay for all expenses in connection
with these registrations, other than any underwriters' discounts and
commissions.

OPTIONS

As of the date of this prospectus, options to purchase an aggregate of
1,014,000 shares of stock may be granted under the 1995 Stock Option Plan. There
are 918,485 options outstanding under the plan at a weighted average exercise
price of $2.71 per share, of which 329,512 will be exercisable upon the
completion of this offering. Other than these options, we have not granted any
other options. Of these shares, shares will be immediately available for
sale in the public market 180 days after the date of this prospectus and the
balance of the shares will be available for sale upon our filing of a
registration statement after the offering relating to our stock options held by
officers, directors, employees and consultants. Upon completion of this
offering, we intend to file a registration statement on Form S-8 to register all
shares of common stock that we may issue under our stock option plans.

81
83

WARRANTS

As of the date of this prospectus, warrants were outstanding for the
purchase of 1,929,084 shares of common stock at a weighted average exercise
price of $3.50. Warrants to purchase up to an additional 110,000 shares of our
common stock may also be granted to NBC Interactive Media, Inc. or its
affiliates in connection with any definitive distribution agreements which may
be entered into in the future between i3 and NBC Interactive Media, Inc. or its
affiliates.

ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW

Section 203 of the Delaware General Corporation Law generally prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
interested stockholder attained such status with the approval of the board of
directors or unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
the corporation's outstanding voting stock. This statute could prohibit or delay
a change in control of i3 and could discourage potential acquisition proposals.

INDEMNIFICATION

Our certificate of incorporation provides that no director of i3 shall have
any personal liability to i3 or its stockholders for breach of fiduciary duty as
a director, except for liability:

- for breach of the director's duty of loyalty to i3 or its stockholders;

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- for payment of dividends or stock purchases or redemptions by the
corporation in violation of Section 174 of the Delaware General
Corporation Law; or

- for any transaction from which the director derived an improper personal
benefit.

As a result of this provision, i3 and our stockholders may be unable to
obtain monetary damages from a director for certain breaches of his or her
fiduciary duty. This provision does not, however, eliminate the directors'
fiduciary responsibilities and, in appropriate circumstances, equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. The provision also does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.

Our bylaws provides for the indemnification of our directors and officers
to the fullest extent authorized by the Delaware General Corporation Law. Such
indemnification may include, if we so decide, the right of the indemnified party
to be paid expenses in advance of any proceeding for which indemnification may
be had, provided that the payment of these expenses incurred by a director or
officer

82
84

in advance of the final disposition of a proceeding may be made only upon
delivery to us of an undertaking by or on behalf of the director or officer to
repay all amounts paid in advance if it is ultimately determined that the
director or officer is not entitled to be indemnified. In addition, our
certificate of incorporation provides that our employees and other agents, may
be indemnified in accordance with the Delaware General Corporation law to the
extent determined by our board of directors in its sole discretion.

LIMITATIONS ON STOCKHOLDER ACTION BY WRITTEN CONSENT

Our certificate of incorporation also provides that any action required or
permitted to be taken at a stockholders' meeting may be taken without a meeting,
without prior notice and without a vote, if the action is taken by persons who
would be entitled to vote at a meeting and who hold shares having voting power
equal to not less than the minimum number of votes of each class or series that
would be necessary to authorize or take the action at a meeting at which all
shares of each class or series entitled to vote were present and voted.

AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION

Under the Delaware General Corporation Law, the affirmative vote of a
majority of the shares entitled to vote on any matter is required to amend our
certificate of incorporation.

TRANSFER AGENT

The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.

LISTING

We have applied to list our shares of common stock on the Nasdaq National
Market under the symbol "IIIM."

83
85

SHARES ELIGIBLE FOR FUTURE SALE

Following this offering, we will have shares of common stock
outstanding. If the underwriters exercise their over-allotment option in full,
we will have shares of common stock outstanding. All the shares we sell
in this offering will be freely tradable without restriction or further
registration under the Securities Act, except that any shares purchased by our
affiliates, as that term is defined in Rule 144, may generally only be sold in
compliance with the limitations of Rule 144 described below.

The remaining shares of common stock outstanding following this
offering will be "restricted securities" as the term is defined under Rule 144.
We issued and sold these restricted securities in private transactions in
reliance on exemptions from registration under the Securities Act. Restricted
securities may be sold in the public market only if they are registered or if
they qualify for an exemption under Rule 144 or Rule 701 under the Securities
Act, as summarized below.

Taking into account the lock-up agreements, and assuming Deutsche Bank
Securities Inc. does not release stockholders from these agreements, the
following shares will be eligible for sale in the public market at the following
times:

- on the date of this prospectus, the shares sold in the offering
will be immediately available for sale in the public market;

- 180 days after the date of this prospectus, approximately
shares will be eligible for sale, of which will be
subject to volume, manner of sale and other limitations under Rule 144;
and

- the remaining shares will be eligible for sale under Rule 144 from
time to time upon the expiration of various one-year holding periods
after the expiration of the lock-up period applicable to those shares.

We have agreed with the underwriters that we will not issue any additional
shares of common stock or securities convertible into, exercisable for or
exchangeable for shares of common stock for a period of 180 days after the date
of this prospectus, except that we may grant options to purchase shares of
common stock under our 1995 Stock Option Plan or in connection with the
acquisition of companies, and issue shares of common stock upon the exercise of
outstanding options and warrants and in connection with the acquisition of
companies.

Our officers and directors and some of our other stockholders, who will
hold an aggregate of shares of common stock upon completion of this
offering, have agreed that they will not, without the prior written consent of
Deutsche Bank Securities Inc., offer, sell, pledge or otherwise dispose of any
shares of our common stock or any securities convertible into or exercisable or
exchangeable for, or any rights to acquire or purchase, any of our common stock,
or publicly announce an intention to effect any of these transactions, for a
period of 180 days after the date of this prospectus without the prior written
consent of Deutsche Bank Securities Inc., except that nothing will prevent any
of them from exercising outstanding options and warrants.

Following the expiration of the lock-up period, shares issuable upon
exercise of options we granted prior to the date of this prospectus will also be
available for

84
86

sale in the public market pursuant to Rule 701 under the Securities Act. Rule
701 permits resales of these shares beginning 90 days after the date of this
prospectus by persons other than affiliates.

In general, under Rule 144, a stockholder who owns restricted shares that
have been outstanding for at least one year is entitled to sell, within any
three-month period, a number of these restricted shares that does not exceed the
greater of:

- one percent of the then outstanding shares of common stock, or
approximately shares immediately after this offering; or

- the average weekly trading volume in the common stock on the Nasdaq Stock
Market during the four calendar weeks preceding the sale.

In other words, our affiliates must comply with the restrictions and
requirements of Rule 144, other than the one-year holding period requirement, to
sell shares of common stock which are not restricted securities.

Under Rule 144(k), a stockholder who is not currently, and who has not been
for at least three months before the sale, an affiliate of ours and who owns
restricted shares that have been outstanding for at least two years may resell
these restricted shares without compliance with the above requirements. The one-
and two-year holding periods described above do not begin to run until the full
purchase price is paid by the person acquiring the restricted shares from us or
an affiliate of ours.

As of the date of this prospectus, we have granted options to purchase
918,485 shares of common stock to specified persons pursuant to our option plan.
We intend to file, after the effective date of this offering, a registration
statement on Form S-8 to register approximately shares of common stock
reserved for issuance under our stock option plan. The registration statement on
Form S-8 will become effective automatically upon filing.

Shares issued under our 1995 Stock Option Plan, after the filing of a
registration statement on Form S-8 may be sold in the open market, subject, in
the case of some holders, to the Rule 144 limitations applicable to affiliates,
the lock-up agreements and vesting restrictions imposed by us. In addition,
following this offering, the holders of 15,121,431 shares of outstanding common
stock will, under some circumstances, have rights to require us to register
their shares for future sale.

85
87

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement, the
underwriters named below, through their representatives Deutsche Bank Securities
Inc. and Credit Suisse First Boston Corporation, have severally agreed to
purchase from us the following respective number of shares of common stock at
the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this prospectus:

NUMBER OF
UNDERWRITER SHARES
- ----------- ---------

Deutsche Bank Securities Inc. ..............................
Credit Suisse First Boston Corporation......................
--------
Total..................................................
========

The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares of common stock offered hereby are subject
to certain conditions precedent and that the underwriters will purchase all of
the shares of common stock offered hereby, other than those covered by the over-
allotment option described below, if any of these shares are purchased.

The underwriters propose to offer the shares of common stock to the public
at the initial public offering price set forth on the cover page of this
prospectus and to certain dealers at that price less a concession not in excess
of $ per share. The underwriters may allow, and these dealers may re-allow,
a concession of not more than $ per share to other dealers. After the
initial public offering, the offering price and other selling terms may be
changed by the representatives of the underwriters.

We have granted to the underwriters an option, exercisable not later than
30 days after the date of this prospectus, to purchase up to
additional shares of common stock at the initial public offering
price less the underwriting discounts and commissions set forth on the cover
page of this prospectus. The underwriters may exercise this option only to cover
over-allotments made in connection with the sale of the common stock offered in
this offering. To the extent that the underwriters exercise this option, each of
the underwriters will become obligated, subject to conditions, to purchase
approximately the same percentage of additional shares of common stock as the
number of shares of common stock to be purchased by it in the above table bears
to the total number of shares of common stock offered in this offering. We will
be obligated, pursuant to this option, to sell these additional shares of common
stock to the underwriters to the extent the option is exercised. If any
additional shares of common stock are purchased, the underwriters will offer the
additional shares on the same terms as those on which the shares
are being offered.

The underwriting fee is equal to the initial public offering price per
share of common stock less the amount paid by the underwriters to us per share
of common stock. We have agreed to pay the underwriters the following fees,
assuming either no exercise or full exercise by the underwriters of the
underwriters' over-allotment option:

86
88

TOTAL FEES
--------------------------------
WITHOUT WITH FULL
EXERCISE OF EXERCISE OF
FEE PER OVER-ALLOTMENT OVER-ALLOTMENT
SHARE OPTION OPTION
------- -------------- --------------

Fees paid by i3..............

In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $ .

We have agreed to indemnify the underwriters against certain specified
liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriters may be required to make in respect of any of these
liabilities.

Each of our officers and directors, certain stockholders and certain
holders of options and warrants to purchase our stock, has agreed not to offer,
sell, sell short, contract to sell, transfer, hypothecate, pledge or otherwise
dispose of, or enter into any transaction that is designed to, or could be
expected to, result in the disposition of any shares of our common stock or
other securities convertible into or exchangeable or exercisable for shares of
our common stock or derivatives of our common stock for a period of 180 days
after the effective date of the registration statement of which this prospectus
is a part, directly or indirectly, without the prior written consent of Deutsche
Bank Securities Inc. This consent may be given at any time without public
notice. We have entered into a similar agreement with the representatives of the
underwriters.

The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

In order to facilitate the offering of our common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of our common stock. Specifically, the underwriters may over-allot
shares of our common stock in connection with this offering, thus creating a
short position in our common stock for their own account. A short position
results when an underwriter sells more shares of common stock than that
underwriter is committed to purchase. Additionally, to cover these
over-allotments or to stabilize the market price of our common stock, the
underwriters may bid for, and purchase, shares of our common stock in the open
market. Finally, the representatives, on behalf of the underwriters, may also
reclaim selling concessions allowed to an underwriter or dealer if the
underwriting syndicate repurchases shares distributed by that underwriter or
dealer. Any of these activities may maintain the market price of our common
stock at a level above that which might otherwise prevail in the open market.
These transactions may be effected on the Nasdaq National Market or otherwise.
The underwriters are not required to engage in these activities and, if
commenced, may end any of these activities at any time.

At our request, the underwriters have reserved for sale, at the initial
public offering price, up to shares for our directors, officers,
employees, vendors, customers and other third parties. The number of shares of
our common

87
89

stock available for sale to the general public will be reduced to the extent
these reserved shares are purchased. Any reserved shares that are not purchased
by these persons will be offered by the underwriters to the general public on
the same basis as the other shares in this offering.

In December 1999, we issued and sold 252.5 shares of our Series F
mandatorily redeemable preferred stock to BT Investment Partners, Inc., an
affiliate of Deutsche Bank Securities Inc., at $3,960.40 per share for an
aggregate purchase price of $1,000,000. Upon completion of this offering, the
Series F mandatorily redeemable preferred stock held by BT Investment Partners,
Inc. will convert into 126,250 shares of our common stock on the same terms as
other investors in this Series F financing. BT Investment Partners, Inc. has
agreed not to transfer any of its shares of common stock to any non-affiliated
third party for a period of 180 days after the date of this prospectus. In
connection with this preferred stock financing, we granted registration rights
to the holders of the Series F mandatorily redeemable preferred stock, including
BT Investment Partners, Inc. Upon exercise of these registration rights, the
holders of the Series F mandatorily redeemable preferred stock can require us to
file registration statements covering the sale of shares of common stock held by
them and may include the sale of their shares in registration statements
covering our sale of shares to the public.

PRICING OF THIS OFFERING

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock will
be determined by negotiation among us and the representatives of the
underwriters. Among the primary factors to be considered in determining the
public offering price were:

- prevailing market conditions;

- our results of operations in recent periods;

- the present stage of our development;

- the market capitalization and stage of development of other companies
that we and the representatives of the underwriters believe to be
comparable to our business; and

- estimates of our business potential.

The estimated initial public offering price range set forth on the cover of this
preliminary prospectus is subject to change as a result of market conditions and
other factors.

EXPERTS

The consolidated financial statements as of December 31, 1998 and 1997 and
for each of the three years in the period ended December 31, 1998 and as of and
for the nine months ended September 30, 1999 included in this prospectus have
been so included in reliance on the report of PricewaterhouseCoopers LLP,

88
90

independent accountants, given on the authority of said firm as experts in
auditing and accounting.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us
by Piper Marbury Rudnick & Wolfe LLP, New York, New York. Certain legal matters
in connection with the offering will be passed upon for the underwriters by
Morrison & Foerster LLP, New York, New York.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1, including exhibits, schedules and any amendments with
respect to the common stock we are offering hereby. This prospectus is a part of
the registration statement and includes all of the information which we believe
is material to you in considering whether to make an investment in our common
stock. We refer you to the registration statement for additional information
about us, our common stock and this offering, including the full texts of the
exhibits, some of which have been summarized in this prospectus. The
registration statement is available for inspection and copying at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information about the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet
site that makes available the registration statement. The address of the SEC's
Internet site is http://www.sec.gov.

REPORTS TO STOCKHOLDERS

We intend to distribute to our stockholders annual reports containing
audited financial statements and will make available copies of quarterly reports
for the first three quarters of each fiscal year containing unaudited interim
financial information.

89
91

INTELLIGENT INFORMATION INCORPORATED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Accountants........................... F-2
Consolidated Balance Sheet as of December 31, 1997, 1998 and
September 30, 1999.......................................... F-3

Consolidated Statement of Operations for the years ended
December 31, 1996, 1997 and 1998 and for the nine months
ended September 30, 1998 (unaudited) and September 30,
1999...................................................... F-4

Consolidated Statement of Stockholders' Deficit for the
years ended December 31, 1996, 1997 and 1998 and for the
nine months ended September 30, 1999...................... F-5

Consolidated Statement of Cash Flows for the years ended
December 31, 1996, 1997 and 1998 and for the nine months
ended September 30, 1998 (unaudited) and September 30,
1999...................................................... F-6

Notes to Consolidated Financial Statements.................. F-7

F-1
92

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Intelligent Information Incorporated

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' deficit and of cash
flows present fairly, in all material respects, the financial position of
Intelligent Information Incorporated at December 31, 1997 and 1998 and September
30, 1999, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1998 and for the nine months
ended September 30, 1999, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP

Stamford, Connecticut
December 10, 1999

F-2
93

INTELLIGENT INFORMATION INCORPORATED

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)

SEPTEMBER 30, 1999
DECEMBER 31, ----------------------
----------------- PRO FORMA
1997 1998 ACTUAL (NOTE 2)
------- ------- -------- -----------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents................................. $ 215 $ 166 $ 4,000 $ 4,000
Accounts receivable, net of allowances (Note 2)........... 119 441 470 470
Notes receivable -- related parties (Note 9).............. - - 100 100
Prepaid expenses and other current assets................. 11 11 80 80
------- ------- -------- --------
Total current assets............................... 345 618 4,650 4,650
Fixed assets, net (Note 4)................................ 14 50 197 197
Intangible assets, net (Note 2)........................... - - 169 169
Deposits.................................................. 16 14 426 426
------- ------- -------- --------
Total assets....................................... $ 375 $ 682 $ 5,442 $ 5,442
======= ======= ======== ========
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................... $ 138 $ 169 $ 266 $ 266
Accrued liabilities (Note 5).............................. 98 244 752 752
Deferred revenue (Note 2)................................. 176 131 - -
Deferred revenue -- related parties (Note 9).............. 58 49 133 133
Current portion of long-term debt (Note 6)................ 107 118 130 5,130
Notes payable -- trade (Note 6)........................... 184 250 - -
Notes payable -- related parties (Note 9)................. 117 344 - -
------- ------- -------- --------
Total current liabilities.......................... 878 1,305 1,281 6,281
Long-term debt (Note 6)..................................... 573 455 5,348 348
------- ------- -------- --------
Commitments and contingencies (Note 8)
Total liabilities.................................. 1,451 1,760 6,629 6,629
------- ------- -------- --------
Mandatorily redeemable convertible preferred stock (Note
10)....................................................... 1,412 2,500 16,134 -
------- ------- -------- --------
Stockholders' deficit:
Convertible preferred stock (Note 10)..................... - - - -
Common stock; $.01 par value, 25,000,000 shares
authorized, 7,554,000, 7,554,000, 7,554,000 and
12,685,280 shares issued................................ 76 76 76 127
Additional paid-in capital................................ 2,398 4,530 4,601 20,684
Notes receivable from stockholders (Note 9)............... - (53) (37) (37)
Deferred compensation..................................... - - (73) (73)
Accumulated deficit....................................... (4,962) (8,131) (17,658) (17,658)
Treasury stock at cost, 1,885,000 shares.................. - - (4,230) (4,230)
------- ------- -------- --------
Stockholders' deficit..................................... (2,488) (3,578) (17,321) (1,187)
------- ------- -------- --------
Total liabilities, mandatorily redeemable
convertible preferred stock and stockholders'
deficit.......................................... $ 375 $ 682 $ 5,442 $ 5,442
======= ======= ======== ========

See accompanying notes to consolidated financial statements.
F-3
94

INTELLIGENT INFORMATION INCORPORATED

CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- ---------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -------
(UNAUDITED)

Net revenue -- trade.............. $ 428 $ 676 $ 1,245 $ 914 $ 1,302
Net revenue -- related parties.... 217 149 160 109 23
------- ------- ------- ------- -------
Net revenue....................... 645 825 1,405 1,023 1,325
Cost of revenue................... 465 671 762 621 673
------- ------- ------- ------- -------
Gross profit...................... 180 154 643 402 652
------- ------- ------- ------- -------
Operating expenses:
Sales and marketing............. 180 234 584 382 1,278
General and administrative...... 1,327 2,287 2,625 2,012 3,256
------- ------- ------- ------- -------
Operating expenses................ 1,507 2,521 3,209 2,394 4,534
------- ------- ------- ------- -------
Operating loss.................... (1,327) (2,367) (2,566) (1,992) (3,882)
Interest income................... (19) (15) (6) (1) (167)
Interest expense.................. 9 88 323 178 409
Interest expense -- related
parties......................... 2 8 12 51 48
------- ------- ------- ------- -------
Net loss.......................... (1,319) (2,448) (2,895) (2,220) (4,172)
------- ------- ------- ------- -------
Redemption of preferred stock..... - - - - (3,665)
------- ------- ------- ------- -------
Dividends on mandatorily
redeemable preferred stock...... (8) (76) (274) (215) (1,690)
------- ------- ------- ------- -------
Loss applicable to common stock... $(1,327) $(2,524) $(3,169) $(2,435) $(9,527)
======= ======= ======= ======= =======
Net loss per share -- basic and
diluted......................... $ (0.18) $ (0.33) $ (0.42) $ (0.32) $ (1.60)
======= ======= ======= ======= =======
Shares used in computing net loss
per share....................... 7,552 7,554 7,554 7,554 5,966
======= ======= ======= ======= =======
Pro forma net loss per share --
basic and diluted (Note 2)
(unaudited)..................... $ (0.28) $ (0.39)
======= =======
Shares used in computing
pro forma net loss per share
(Note 2) (unaudited)............ 10,455 10,785
======= =======

See accompanying notes to consolidated financial statements.

F-4
95

INTELLIGENT INFORMATION INCORPORATED

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(IN THOUSANDS, EXCEPT SHARE DATA)

SERIES A SERIES C NOTES
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE
--------------- --------------- ------------------ PAID-IN FROM DEFERRED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL STOCKHOLDERS COMPENSATION
------ ------ ------ ------ --------- ------ ---------- ------------ ------------

Balance at January 1,
1996............................. 3,770 $- - $- 7,540,000 $75 $1,237 $ - $ -
Issuance of common
stock........................... - - - - 14,000 1 25 - -
Issuance of warrants with Series
B preferred stock............... - - - - - - 90 - -
Issuance of warrants to debt
holders......................... - - - - - - 95 - -
Accretion of preferred
dividends....................... - - - - - - - - -
Net loss......................... - - - - - - - - -
------ -- ----- -- --------- --- ------ ---- ----
Balance at December 31, 1996..... 3,770 - - - 7,554,000 76 1,447 - -
Issuance of Series C preferred
stock........................... - - 864 - - - 879 - -
Issuance of warrants to preferred
stockholders.................... - - - - - - 52 - -
Issuance of warrants to debt
holders......................... - - - - - - 20 - -
Accretion of preferred
dividends....................... - - - - - - - - -
Net loss......................... - - - - - - - - -
------ -- ----- -- --------- --- ------ ---- ----
Balance at December 31, 1997..... 3,770 - 864 - 7,554,000 76 2,398 - -
Issuance of Series C preferred
stock........................... - - 1,330 - - - 1,579 - -
Issuance of warrants to debt
holders......................... - - - - - - 158 - -
Extension of warrants............ - - - - - - 213 - -
Accretion of preferred
dividends....................... - - - - - - - - -
Issuance of warrants for
financing fees.................. - - - - - - 182 - -
Notes receivable from
shareholders.................... - - - - - - - (53) -
Net loss......................... - - - - - - - - -
------ -- ----- -- --------- --- ------ ---- ----
Balance at December 31, 1998..... 3,770 - 2,194 - 7,554,000 76 4,530 (53) -
Repurchase of shares............. (3,770) - - - - - (105) - -
Repayment of notes receivable
from shareholders............... - - - - - - - 16 -
Issuance of warrants to debt
holders......................... - - - - - - 100 - -
Accretion of preferred stock
dividends....................... - - - - - - - - -
Deferred compensation - stock
options......................... - - - - - - 76 - (76)
Amortization of deferred
compensation.................... - - - - - - - - 3
Net loss......................... - - - - - - - - -
------ -- ----- -- --------- --- ------ ---- ----
Balance at September 30, 1999.... - $- 2,194 $- 7,554,000 $76 $4,601 $(37) $(73)
====== == ===== == ========= === ====== ==== ====

ACCUMULATED TREASURY
DEFICIT STOCK TOTAL
----------- -------- -----

Balance at January 1,
1996............................. $ (1,111) $ - $ 201
Issuance of common
stock........................... - - 26
Issuance of warrants with Series
B preferred stock............... - - 90
Issuance of warrants to debt
holders......................... - - 95
Accretion of preferred
dividends....................... (8) - (8)
Net loss......................... (1,319) - (1,319)
-------- ------- --------
Balance at December 31, 1996..... (2,438) - (915)
Issuance of Series C preferred
stock........................... - - 879
Issuance of warrants to preferred
stockholders.................... - - 52
Issuance of warrants to debt
holders......................... - - 20
Accretion of preferred
dividends....................... (76) - (76)
Net loss......................... (2,448) - (2,448)
-------- ------- --------
Balance at December 31, 1997..... (4,962) - (2,488)
Issuance of Series C preferred
stock........................... - - 1,579
Issuance of warrants to debt
holders......................... - - 158
Extension of warrants............ - - 213
Accretion of preferred
dividends....................... (274) - (274)
Issuance of warrants for
financing fees.................. - - 182
Notes receivable from
shareholders.................... - - (53)
Net loss......................... (2,895) - (2,895)
-------- ------- --------
Balance at December 31, 1998..... (8,131) - (3,578)
Repurchase of shares............. (3,665) (4,230) (8,000)
Repayment of notes receivable
from shareholders............... - - 16
Issuance of warrants to debt
holders......................... - - 100
Accretion of preferred stock
dividends....................... (1,690) - (1,690)
Deferred compensation - stock
options......................... - -
Amortization of deferred
compensation.................... - - 3
Net loss......................... (4,172) - (4,172)
-------- ------- --------
Balance at September 30, 1999.... $(17,658) $(4,230) $(17,321)
======== ======= ========

See accompanying notes to consolidated financial statements.

F-5
96

INTELLIGENT INFORMATION INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------- ----------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -------
(UNAUDITED)

Cash flows from operating activities:
Net loss................................................ $(1,319) $(2,448) $(2,895) $(2,220) $(4,172)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization....................... 11 45 19 12 72
Amortization of debt discount....................... - 23 35 30 14
Other............................................... (8) 90 459 374 231
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable........ 39 (106) (390) (311) (160)
(Increase) decrease in other current assets and
other assets.................................... 36 3 2 2 (481)
Increase (decrease) in accounts payable........... 52 76 31 (75) 22
(Decrease) increase in accrued liabilities........ (8) 31 149 345 508
Increase (decrease) in deferred revenue........... 329 (95) (54) (73) (47)
------- ------- ------- ------- -------
Net cash used in operating activities................... (868) (2,381) (2,644) (1,916) (4,013)
------- ------- ------- ------- -------
Cash flows from investing activities:
Acquisition of business............................... (98) - - - -
Purchase of intangible asset.......................... - - - - (100)
Purchase of fixed assets.............................. (1) (17) (57) (57) (210)
------- ------- ------- ------- -------
Net cash used in investing activities................... (99) (17) (57) (57) (310)
------- ------- ------- ------- -------
Cash flows from financing activities:
Proceeds from sales of preferred stock, net........... 1,220 1,129 2,154 1,769 11,944
Proceeds from issuance of notes payable - trade....... 750 200 650 650 -
Proceeds of issuance of notes payable - related
parties............................................. - 117 227 27 -
Proceeds from sale of common stock.................... 25 - - - -
Repurchase of common and preferred stock.............. - - - - (3,000)
Repayments of notes payable........................... - - (326) (679) (703)
Issuance of notes receivable - related parties........ - - (53) - (200)
Repayments of notes receivable - related parties...... - - - - 116
------- ------- ------- ------- -------
Net cash provided by financing activities............... 1,995 1,446 2,652 1,767 8,157
------- ------- ------- ------- -------
Increase (decrease) in cash and cash equivalents........ 1,028 (952) (49) (206) 3,834
Cash and cash equivalents at beginning of period........ 139 1,167 215 215 166
------- ------- ------- ------- -------
Cash and cash equivalents at end of period.............. $ 1,167 $ 215 $ 166 $ 9 $ 4,000
======= ======= ======= ======= =======
Supplemental disclosures of cash flow and non cash
activities:
Interest paid in cash................................. $ 2 $ 63 $ 88 $ 65 $ 119
Conversion of debt to mandatorily redeemable
preferred stock..................................... $ - $ - $ 400 $ 400 $ -
Conversion of preferred stock for debt................ $ - $ - $ - $ - $ 5,000
Accretion of preferred stock dividends................ $ 8 $ 76 $ 274 $ 215 $ 1,690

See accompanying notes to consolidated financial statements.

F-6
97

INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

NOTE 1 -- FORMATION AND OPERATIONS OF THE COMPANY:

Intelligent Information Incorporated ("III" or the "Company") was
incorporated in Delaware on June 28, 1991. The Company provides personalized
information to wireless phone and other wireless device users. Their services
enable wireless device users to have access to personalized information and
electronic commerce. The Company offers a range of individualized information
products, including customized stock quotes, news, weather, sports,
entertainment, traffic and travel information as well as personal e-mail,
calendar and commerce applications.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Significant accounting policies followed in the preparation of these
financial statements are as follows:

PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of the Company
and a majority-owned subsidiary acquired in 1996. This subsidiary was disposed
of in 1997 (see Note 3). All significant intercompany accounts and transactions
have been eliminated in consolidation.

USE OF ESTIMATES:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The markets
for the Company's services are characterized by intense competition, rapid
technological development, regulatory changes, and frequent new product
introductions, all of which could impact the future value of the Company's
assets. Operating results for the nine months ended September 30, 1999 are not
necessarily indicative of results that may be expected for the year ended
December 31, 1999.

UNAUDITED INTERIM FINANCIAL STATEMENTS:

The unaudited statements of operations and cash flows for the nine months
ended September 30, 1998 have been prepared in accordance with generally
accepted accounting principles for interim financial information and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles. The unaudited
financial statements include, in the opinion of management, all adjustments,
consisting only of normal recurring adjustments, that are considered necessary
for the fair presentation of the information in the financial statements. All
footnote disclosures included in these financial statements related to the nine
months ended September 30, 1998 are unaudited.
F-7
98
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

UNAUDITED PRO FORMA BALANCE SHEET:

Upon the closing of the Company's anticipated initial public offering, each
outstanding share of preferred stock, other than Series C preferred, will
automatically convert into 500 shares of common stock, with the aggregate number
of shares of common stock to be issued to each stockholder to be rounded up to
the nearest whole share. Additionally, a long-term note payable for $5,000
becomes immediately due and payable upon the Company's anticipated initial
public offering (Note 6). Both transactions have been reflected in the unaudited
pro forma balance sheet as if they occurred on September 30, 1999. These pro
forma amounts do not include the subsequent event transactions included in Note
13 and Note 14.

CASH AND CASH EQUIVALENTS:

Cash equivalents consist of highly liquid investments purchased with an
initial maturity of three months or less.

FIXED ASSETS:

Fixed assets are stated at cost and are depreciated using the straight-line
method over the estimated useful lives of the assets, which are between 1 and 3
years. Maintenance and repairs are charged to expense as incurred.

PRODUCT DEVELOPMENT COSTS/RESEARCH AND DEVELOPMENT:

Product development costs are charged to expense as incurred. All costs
incurred to establish the technological feasibility of the Company's products
and services have been expensed as general and administrative expenses. Costs
incurred subsequent to the establishment of technological feasibility and prior
to the general release of the product have not been capitalized as such amounts
are not significant.

LONG-LIVED ASSETS:

Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,
requires that long-lived assets and certain intangible assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. In such an event, the carrying value of
intangible assets is reviewed by management to determine if the value(s) may be
impaired. If this review indicates that the carrying amount(s) will not be
recoverable, as determined based on the estimated undiscounted cash flows
attributable to such asset(s) over the remaining amortization period, management
will reduce the carrying amount to recognize the impairment and recognize an
impairment loss. In December of 1997, the Company wrote off $64 of goodwill
related to the termination of the operations of Strategic Communications
Corporation ("SCC").

F-8
99
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

In 1999, the Company acquired a license to a technology patent. Under the
terms of the agreement, the Company paid the patent holder $100 in cash on
signing the agreement and will pay an additional $75 in January 2000. In
addition, the Company has agreed to pay a royalty equal to 5% of gross revenue
related to electronic commerce through March 29, 2005 and May 8, 2007 for sales
in the United States and Canada, respectively. The license is being amortized
using the straight-line method over the remaining life of the patent, 4.5 years.
At September 30, 1999, the accumulated amortization for the intangible asset was
$7.

REVENUE RECOGNITION:

The majority of the Company's revenues relate to their subscription based
services. The Company derives subscriber revenue from the delivery of
personalized information to wireless phones and other wireless devices.
Subscriber revenue consists of fixed monthly usage charges, transactional fees
based on the information delivered, or a combination of the two arrangements.
The Company recognizes subscriber revenue when products and services are
rendered or provided to subscribers or resellers. Deferred revenue is comprised
of payments received from the Company's resellers in advance of wireless
information services being rendered. As a part of its subscription based
revenue, the Company also provides software design and customization services to
its resellers and charges fees on a time and material basis for these services.
These revenues are recognized as services are rendered. Revenues are net of
volume discounts to customers. Advertising revenues, which are nominal to date,
are recognized in the month that the advertisement messages are sent.

COST OF REVENUES:

Cost of revenues consists primarily of costs associated with purchasing
content, royalty payments and distribution fees. Content providers are paid
either a flat monthly fee, a fee based on the number of users requesting the
content, a fee based on a percentage of the Company's revenues generated from
the content they provide, a fee based on the number of on-demand messages
requested or a combination of these arrangements. Distribution fees are paid to
wireless network operators to use their network to deliver advertising and
electronic commerce enabling messages and for delivery of content to direct
subscribers. Management believes that the cost of revenues and gross margins on
related party revenues are not significantly different from the cost of revenues
and gross margins earned on third party revenues.

CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS:

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade accounts receivable.
The Company controls this risk through credit approvals, credit limits and
monitoring procedures. The Company does not require collateral or other forms of
security. The Company can, however, limit the amount of information services
provided to its customers in the event of nonperformance. At September 30, 1999,
the Company's largest customer balance comprised 35% of the total outstanding
accounts receivable balance.

F-9
100
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

Total net revenue for the year ended December 31, 1996 from SkyTel
Communications, Inc. and US Healthcare, Inc. was $217 and $157, respectively.
Each of these customers comprised over 10% of total net revenues in 1996.

Total net revenue for the year ended December 31, 1997 from Bank of
America, SkyTel Communications, Inc., Omnipoint Communications, Inc. and
PageMart Wireless, Inc. was $160, $149, $112 and $86, respectively. Each of
these customers comprised over 10% of total net revenues in 1997.

Total net revenue for the nine months ended September 30, 1998 from
Omnipoint Communications, Inc. and SkyTel Communications, Inc. was $313 and
$109, respectively. Each of these customers comprised over 10% of total net
revenues for the period.

Total net revenue for the year ended December 31, 1998 from Omnipoint
Communications, Inc. and SkyTel Communications, Inc. was $566 and $160,
respectively. Each of these customers comprised over 10% of total net revenues
in 1998.

Total net revenue for the nine months ended September 30, 1999 from
Omnipoint Communications, Inc. and Bell Mobility Cellular, Inc. was $470 and
$193, respectively. Each of these customers comprised over 10% of total net
revenues for the period.

ALLOWANCE FOR DOUBTFUL ACCOUNTS:

The Company maintained an allowance for doubtful accounts of $42, $110 and
$217 at December 31, 1997 and 1998 and September 30, 1999, respectively.

INCOME TAXES:

The Company uses the liability method of accounting for income taxes, as
set forth in Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. Under this method, deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of assets and liabilities and net
operating loss carryforwards, all calculated using presently enacted tax rates.

SEGMENT INFORMATION:

In 1998, the Company adopted Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information
(SFAS No. 131). SFAS No. 131 supersedes SFAS No. 14, Financial Reporting for
Segments of a Business Enterprise, replacing the "industry segment" approach
with the "management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the Company's reportable segments. The
Company operates in one segment: wireless information provider services. SFAS
No. 131 also requires disclosures about products and services, geographic

F-10
101
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

areas, and major customers. The adoption of SFAS No. 131 had no impact on the
Company's financial statements for the periods presented.

STOCK COMPENSATION:

The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees (APB 25), and related interpretations in
accounting for its stock option plan and stock awards with the disclosure
provisions of Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation (SFAS 123). Under APB 25, compensation expense is
computed to the extent that the fair market value of the underlying stock on the
date of grant exceeds the exercise price of the employee stock option or stock
award. Compensation so computed is deferred and then recognized over the vesting
period of the stock option or award.

No stock compensation expense was recorded for the years ended December 31,
1996, 1997 and 1998. Stock compensation expense was $3 for the nine months ended
September 30, 1999.

EARNINGS (LOSS) PER SHARE:

The Company computes net loss per share pursuant to Statement of Financial
Accounting Standards No. 128, Earnings Per Share, and SEC Staff Accounting
Bulletin No. 98. Basic net loss per share is computed by dividing loss
applicable to common stockholders by the weighted average number of shares of
the Company's common stock outstanding during the period. Diluted net loss per
share is determined in the same manner as basic net loss per share except that
the number of weighted average shares is increased assuming exercise of dilutive
stock options and warrants using the treasury stock method and dilutive
conversion of the Company's preferred stock.

For the years ended December 31, 1996, 1997 and 1998 and for the nine
months ended September 30, 1998 and 1999, options to purchase 119,500, 229,100,
387,205, 229,100 and 591,985 shares of common stock, respectively, preferred
stock convertible into 2,595,500, 3,169,500, 4,256,000, 3,852,500 and 6,228,280
shares of common stock, respectively, and warrants to purchase 178,000, 510,875,
1,206,859, 1,056,859 and 1,906,859 shares of common stock, respectively, were
excluded from the calculation of diluted earnings per share since their
inclusion would be antidilutive for all periods presented.

Pro forma basic and diluted earnings per share have been calculated
assuming the conversion of all outstanding shares of preferred stock that are
mandatorily convertible upon the Company's anticipated initial public offering
into 5,131,280 shares of common stock, as if the shares had converted
immediately upon their issuance. Dividends on mandatorily redeemable preferred
stock have been excluded from the calculation of pro forma basic and diluted
earnings per share.

F-11
102
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

COMPREHENSIVE INCOME:

The Company has adopted, in 1999, the accounting treatment prescribed by
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income. The adoption of this statement had no impact on the Company's financial
statements for the periods presented.

RECLASSIFICATIONS:

Certain reclassifications have been made for consistent presentation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

In 1999, the Company adopted the American Institute of Certified Public
Accountants' Statement of Position 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use (SoP 98-1). SoP 98-1 provides
guidance for determining whether computer software is internal-use software, and
guidance on accounting for the proceeds of computer software originally
developed or obtained for internal use and then subsequently sold to the public.
It also provides guidance on capitalization of the costs incurred for computer
software developed or obtained for internal use. The adoption of SoP 98-1 did
not have a material impact on the Company's financial statements.

In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 137 which delays the effective date of
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133, as amended, is to be effective for the Company beginning in 2001. SFAS
No. 133 establishes accounting and reporting standards for derivative financial
instruments and hedging activities related to those instruments, as well as
other hedging activities. Because the Company does not currently hold any
derivative financial instruments and does not engage in hedging activities, the
adoption of SFAS No. 133 is not expected to have any impact on the consolidated
financial position, results of operations or cash flows of the Company.

NOTE 3 -- ACQUISITIONS:

In November 1996, the Company acquired 80% of the outstanding shares of
Strategic Communications Corporation ("SCC"). SCC provides real time mortgage
lending interest rates to its customers via wireless media. The acquisition was
accounted for using the purchase method and the assets and liabilities were
recorded at their fair value at the date of acquisition. Total consideration was
$98. The total goodwill recorded as a result of the acquisition of $93 was to be
amortized over a five-year period.

In November 1997, the Company suspended its funding of and,
correspondingly, the operations of SCC. In connection with the decision to
terminate the operations of SCC, the remaining goodwill of $64 at December 31,
1997 was written off. In January 1998, the Company sold its interest in SCC for
nominal consideration.

F-12
103
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

NOTE 4 -- FIXED ASSETS:

DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998 1999

Furniture and fixtures.................. $24 $63 $ 63
Equipment and computers................. 12 8 218
--- --- ----
36 71 281
Less - Accumulated depreciation......... 22 21 84
--- --- ----
$14 $50 $197
=== === ====

Depreciation expense related to fixed assets for the years ended December
31, 1996, 1997 and 1998 and for the nine months ended September 30, 1998 and
1999 was $8, $19, $19, $12 and $63, respectively.

NOTE 5 -- ACCRUED LIABILITIES:

The following table provides the major components of accrued liabilities:

DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998 1999
---- ---- -------------

Accrued interest........................ $ - $ - $252
Accrued professional fees............... 43 108 106
Accrued salaries and wages.............. 47 38 90
Accrued content......................... - 50 68
Accrued marketing expense............... - - 142
Other accrued liabilities............... 8 48 94
--- ---- ----
$98 $244 $752
=== ==== ====

F-13
104
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

NOTE 6 -- DEBT:

Debt and notes payable - trade consisted of the following at December 31,
1997 and 1998 and September 30, 1999:

DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998 1999

CURRENT PORTION OF LONG-TERM DEBT:
Five-year convertible note............ $126 $137 $ 149
Unamortized discount............. (19) (19) (19)
---- ---- ------
$107 $118 $ 130
==== ==== ======
NOTES PAYABLE - TRADE:
Demand note - December 1997......... $200 $ - $ -
Unamortized discount............. (16) - -
---- ---- ------
184 - -
Demand note - February 1998......... - 150 -
Demand note - April 1998............ - 100 -
---- ---- ------
$184 $250 $ -
==== ==== ======
LONG-TERM DEBT:
Five-year convertible note............ $630 $493 $ 372
Unamortized discount................ (57) (38) (24)
---- ---- ------
573 455 348
Five-year promissory note............. - - 5,000
---- ---- ------
$573 $455 $5,348
==== ==== ======

In December 1996, the Company executed a five-year convertible note with a
State of Connecticut business financing organization, which provided financing
totaling $750. In connection with this agreement, a warrant was issued to
purchase 101,500 shares of common stock for $1.72 per share (Note 11). The
relative fair value of these warrants of $95 has been recorded as a debt
discount and is being amortized over the term of the loan. The note bears
interest at a rate equal to the federal reserve rate for five year treasury
securities (6.07%, 5.77%, 4.45% and 5.80% at December 31, 1996, 1997 and 1998
and September 30, 1999) plus 2.5%. Principal payments under the terms of the
agreement commenced one year from the date of the agreement. The remaining
principal payments are as follows: 1999 -- $35; 2000 -- $149; 2001 -- $337.
Subsequent to July 1, 1999, the note is convertible into common stock at a price
of $2.46 per share at the option of the holder unless the Company repays the
note within five days of receiving notice of the holder's intent to convert. The
note has an effective interest rate of 11%. See Note 14 for related unaudited
subsequent event disclosure.

F-14
105
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

In December 1997, the Company executed a promissory note with a private
investor, providing financing totaling $200. The promissory note bears interest
at the rate of 10% per annum and was due and payable in February 1998. This note
was repaid in full in August 1998. In connection with the issuance, the private
investor received a warrant to purchase 100,000 shares of common stock for $3.00
per share (Note 11). The relative fair value of this warrant of $20 has been
recorded as a debt discount and is being amortized over the term of the note.
The effective interest rate on the note is 20%.

In February and April 1998, the Company executed promissory notes with a
private investor, providing financing totaling $150 and $100, respectively. The
promissory notes bear interest at a rate of 10% and were due and payable in
March 1998 and April 1998, respectively. In December 1998 the Company issued a
warrant to purchase 150,000 shares of common stock at $3.50 per share to the
noteholders (Note 11). As a result of the issuance, the Company has recorded the
fair value of the warrant of $75 as a charge directly against interest expense.
In February 1999 the notes were repaid in full. Repayment of these notes was
guaranteed by the holder of the Company's Series B mandatorily redeemable
preferred stock, a related party. The effective interest rate on these notes is
10%.

In June 1998, the Company issued two notes payable totaling $400 to a
private investor group. The notes bore interest at a rate of 7% per annum and
were due and payable on demand in cash or Series D preferred stock. In
connection with this issuance, two warrants were issued in August 1998 for the
purchase of 195,984 shares of the Company's common stock for $3.00 per share
(Note 11). The value of these warrants of $83 has been charged directly against
interest expense. These notes payable were converted in August 1998 into Series
D mandatorily redeemable convertible preferred stock ("Series D Preferred
Stock") in connection with the issuance of the Series D Preferred Stock.

In February 1999, the Company issued a $5,000 promissory note, a warrant to
purchase 500,000 shares of common stock and $3,000 of cash to redeem 3,770
shares of its Series A convertible preferred stock and 1,885,000 shares of its
common stock owned by Intelligent Investment Partners, Inc ("IIP"). IIP is a
wholly owned subsidiary of SkyTel Communications, Inc., a significant customer.
The promissory note, which matures on February 12, 2004, pays interest at a rate
of 10% per annum beginning after the first year. Interest is payable
semiannually thereafter until maturity. The long-term note payable becomes
immediately due and payable upon the Company's anticipated initial public
offering or a sale of the Company. The effective interest rate on this note is
9.8%. The warrants allow IIP to purchase 500,000 shares of the Company's common
stock at a price of $3.00 per share (Note 11). See Note 14 for related unaudited
subsequent event disclosure.

F-15
106
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

NOTE 7 -- INCOME TAXES:

No provision for federal or state income taxes has been made for the years
ended December 31, 1996, 1997 and 1998 and for the nine months ended September
30, 1999 given the Company's loss position in each year. At September 30, 1999,
the Company had net operating loss carryforwards of $10,645 which expire through
the year 2018. Net deferred tax assets at December 31, 1997 and 1998 and at
September 30, 1999 have been fully reserved due to the uncertainty of
realization.

The Company's gross deferred tax assets at December 31, 1997, 1998 and
September 30, 1999 were comprised of the following:

DECEMBER 31,
------------------ SEPTEMBER 30,
1997 1998 1999
------- ------- -------------

GROSS DEFERRED TAX ASSET:
Net operating loss carryforwards.... $ 2,003 $ 3,074 $ 4,719
Warrant issuances................. - 172 216
Interest accretion................ 10 26 143
Other............................. - 5 19
------- ------- -------
2,013 (3,277) (5,097)
Valuation allowance............... (2,013) (3,277) (5,097)
------- ------- -------
Net deferred taxes................ $ - $ - $ -
======= ======= =======

Under provisions of the Tax Reform Act of 1986, if certain substantial
changes in the Company's ownership should occur, there would be an annual
limitation on the amount of net operating loss carryforwards which could be
utilized. Due to this potential annual limitation, the net operating loss
carryforwards may expire prior to when otherwise utilizable.

NOTE 8 -- COMMITMENTS AND CONTINGENCIES:

LEASE AGREEMENTS:

The Company leases space in several buildings which is used for offices and
development facilities as well as various equipment, all subject to operating
leases. As of September 30, 1999, the minimum annual rental payments under the
terms

F-16
107
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

of such noncancelable leases which expire at various dates through 2008 are as
follows:

1999.................................................. $ 100
2000.................................................. 629
2001.................................................. 626
2002.................................................. 568
2003.................................................. 511
Thereafter............................................ 2,173
------
Total minimum lease payments.......................... $4,607
======

Rent expense for the years ended December 31, 1996, 1997 and 1998 and for
the nine months ended September 30, 1998 and 1999 amounted to $109, $109, $165,
$86 and $73, respectively.

During 1999, in connection with one of the Company's office leases, the
Company was required to provide a $400 security deposit.

LITIGATION:

The Company, in the ordinary course of business, is subject to various
legal proceedings. While it is impossible to determine the ultimate outcome of
these matters, it is management's opinion that the resolution of these matters
will not have a material adverse effect on the financial position or results of
operations of the Company.

OTHER AGREEMENTS:

The Company has agreements with wireless network operators who act as
resellers of III's products and services to their customers. These contracts
generally have one to three-year terms and are nonexclusive.

The Company maintains agreements with various content providers. The
content agreements frequently have one-year terms, are nonexclusive and can be
canceled by either party without notice.

III is a member of an industry association of wireless service, wireless
equipment and software companies that develops worldwide standards for wireless
information and telephony services on digital mobile phones and other wireless
devices. As a result of their affiliation with the organization, the Company has
agreed to license its intellectual property to other members on fair and
reasonable terms to the extent that the license is required to develop
noninfringing products under the specifications promulgated by the organization.
Each other member has entered into reciprocal agreements.

The Company maintains royalty agreements with certain individuals. These
agreements are discussed in further detail in Note 9.

F-17
108
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

NOTE 9 -- RELATED PARTY TRANSACTIONS:

REVENUE/DEFERRED REVENUE:

The Company had revenue and deferred revenue for services provided to
SkyTel Communications, Inc. IIP, a wholly owned subsidiary of Skytel, was a
holder of common and Series A preferred shares of the Company. In February 1999,
IIP's equity holdings in the Company were redeemed (see Note 6), and its seat on
the Board of Directors was relinquished. Subsequent to February 1999, they are
no longer considered a related party of III.

NOTES PAYABLE TO RELATED PARTIES:

The Company had outstanding borrowings totaling $117 and $144 as of
December 31, 1997 and 1998, respectively, payable to the Chairman of the Board
of Directors of the Company, an employee/officer of the Company, and a director
of the Company. These notes bore interest at a rate of 18% per annum and
repayment could be required at any time. In August 1998, as a condition for the
Company to receive financing in connection with the Series D mandatorily
redeemable preferred stock offering, the interest rates on these related party
notes were adjusted from 18% to 10%. These interest rate adjustments were
applied retroactively to January 1, 1998 and remained in effect through the
repayment of the notes. The note holders forgave $7 of related party interest
expense in 1998 related to this retroactive adjustment. These notes payable were
repaid in full in February 1999.

On November 18, 1998, the Company executed two promissory notes with a
stockholder of the Company providing financing totaling $200. The promissory
notes bore interest at a rate of 10% per annum and were due and payable on
December 31, 1998. In March 1999, the Company issued a warrant to purchase
20,235 shares of common stock at $3.50 per share to the noteholder under the
Company's Loan Incentive Warrant Plan (Note 11). The Company repaid the note in
February 1999.

NOTE RECEIVABLE FROM RELATED PARTIES:

The Company had an outstanding note receivable from the Chairman of the
Board of Directors totaling $100 as of September 30, 1999. The note accrues
interest at the rate of 10% per annum.

On May 12, 1999, the Company loaned the President and Chief Executive
Officer $100 at an interest rate of 10% per annum. The entire balance, plus
interest, was repaid on May 26, 1999.

ROYALTY AGREEMENTS:

The Company maintains a royalty agreement with two current stockholders of
the Company. The agreements provide for the payment of royalties of 2 1/2% of

F-18
109
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

gross revenues on a monthly basis, but in no event less than $3 per month, with
a maximum aggregate payment of $6,000 adjustable up to a maximum of $8,000 as
defined in the agreement. Total royalties expensed under the terms of the
agreement were $11, $39, $32, $23 and $33 for the years ended December 31, 1996,
1997 and 1998 and for the nine months ended September 30, 1998 and 1999,
respectively. In November 1998, the Company loaned the two shareholders $53 on
an unsecured basis to purchase Series C convertible preferred stock. The
royalties generated under the agreement subsequent to November 1998 will be used
to reduce the loan outstanding to the Company. The balance outstanding on these
loans were $53 and $37 at December 31, 1998 and September 30, 1999,
respectively.

The Company maintains a royalty agreement with a current employee. The
original agreement provided for the payment of royalties based on the number of
subscribers with a maximum royalty payment of $750. In 1999, in connection with
an employment agreement, the royalty agreement was amended to be based on a
percentage of gross revenues, as defined in the agreement. The maximum royalty
was also reduced by $250 for the cumulative salary paid to the employee. The
employee is entitled to a monthly royalty payment of 2% of gross revenues. Total
royalties expensed under the terms of the royalty agreement were $12, $15, $29,
$20 and $26 for the years ended December 31, 1996, 1997 and 1998 and for the
nine months ended September 30, 1998 and 1999, respectively.

NOTE 10 -- PREFERRED STOCK:

Preferred stock consisted of the following at December 31, 1997 and 1998
and September 30, 1999:

DECEMBER 31,
---------------- SEPTEMBER 30,
1997 1998 1999
------ ------ -------------

MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK:
Series B.......................... $1,412 $1,436 $ 1,454
Series D.......................... - 1,064 1,229
Series E.......................... - - 16,451
Subscriptions receivable on Series
E preferred stock.............. - - (3,000)
------ ------ -------
Total mandatorily
redeemable convertible
preferred stock........ $1,412 $2,500 $16,134
====== ====== =======
CONVERTIBLE PREFERRED STOCK AT PAR
VALUE:
Series A.......................... $ - $ - $ -
Series C.......................... - - -
------ ------ -------
$ - $ - $ -
====== ====== =======

F-19
110
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

SERIES A CONVERTIBLE PREFERRED STOCK:

In February 1995, the Company issued 3,770 shares of Series A convertible
preferred stock to IIP for $150 per share. Upon the issuance, 40% of the
Company's common stock was owned by IIP, a holding company, which is wholly
owned by SkyTel Communications, Inc., a significant customer.

In February 1999, the Company redeemed all 3,770 shares of its Series A
convertible preferred stock and 1,885,000 shares of its common stock owned by
IIP. The aggregate redemption price of the Series A preferred stock and the
common stock of $8,000 is payable as follows: $3,000 in cash upon closing of the
transaction and $5,000 in a promissory note which matures on February 12, 2004
(Note 6). In addition a warrant to purchase 500,000 shares of the Company's
common stock at a price of $3.00 per share was issued to IIP. This warrant
expires February 11, 2004 (Note 11). This warrant has a fair value of $460 which
has been applied to the value of the common and preferred stock repurchased. The
redemption of the preferred stock resulted in $4,230 recorded as treasury stock
and a $3,665 charge to accumulated deficit that is included in "loss applicable
to common stock".

SERIES B MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:

In August 1996, the Company issued 1,421 shares of Series B mandatorily
redeemable preferred stock to a private investor group for $879.66 per share. In
connection with the issuance of the Series B mandatorily redeemable preferred
stock, warrants were issued to the investor group to purchase 153,000 shares of
common stock for $1.76 per share (Note 11). These warrants were not exercised
and expired on August 31, 1997.

Also, in connection with the issuance of the Series B mandatorily
redeemable preferred stock, the investor group was granted options to purchase
an additional 284 shares of Series B mandatorily redeemable preferred stock at a
price of $879.66. These options were exercisable at the option of the holder at
any time prior to August 31, 1997. Further if the Company fulfilled certain
criteria as outlined in the stock agreement and, if the investor group did not
exercise its option, the Company had the option to issue and sell to the
investor group, and the investor group was required to buy, 284 shares of Series
B mandatorily redeemable preferred stock at a price of $879.66. The Company
fulfilled the criteria as outlined in the Series B agreement and, accordingly,
the investor group purchased 284 shares of Series B mandatorily redeemable
preferred stock on February 27, 1997.

The relative fair value of the warrants and options granted in conjunction
with the Series B preferred stock of $90 was recorded as a discount to the
Series B preferred stock value and is being amortized as preferred stock
dividends over the period until the earliest possible redemption date.

F-20
111
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

SERIES C CONVERTIBLE PREFERRED STOCK:

From July 1997 through December 1997, the Company sold 476 and 388 shares
of Series C convertible preferred stock to private investors at prices of
$879.66 per share and $1,187.00 per share, respectively. During 1998, the
Company changed the number of authorized shares of its Series C convertible
preferred stock to 2,194 and sold an additional 1,330 shares of its Series C
convertible preferred stock to private investors for $1,187.00 per share.
Related parties purchased 430 of the 1,330 shares issued in 1998. In connection
with these issuances, a warrant was issued for the purchase of 74,910 shares of
common stock for $3.00 per share (Note 11).

SERIES D MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:

In August 1998, the Company converted two outstanding notes payable into
Series D preferred stock and sold additional shares of Series D preferred stock
to a private investor group. The notes were issued to the private investor group
in June 1998. The carrying value of the notes of $407 was converted into Series
D preferred stock at $1,187.00 per share (Note 6). A total of 843 shares of
Series D preferred stock were sold at a price of $1,187.00 per share for total
consideration of $1,001 of cash and converted notes payable.

SERIES E MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:

In February 1999, the Company sold to a private investor group, 7,714.56
shares of Series E mandatorily redeemable convertible preferred stock at a price
of $1,555.50 per share for $12,000. The investor contracted to purchase an
additional 1,928.64 shares of Series E mandatorily redeemable convertible
preferred stock at $1,555.50 per share on the first anniversary date or, at the
investor's discretion, prior thereto, for $3,000. See related subsequent event
disclosure in Note 13.

CONVERSION FEATURES, RIGHTS AND PREFERENCES:

All preferred stock is convertible at any time into shares of common stock
at the option of the holder according to a 500-to-1 conversion rate. Each series
of preferred stock includes anitdilution and conversion price adjustment
provisions that may increase the conversion ratio for these shares in the event
of a sale by the Company of additional shares of common stock at a price below
the conversion price for such shares. Automatic conversion of Series B, Series D
and Series E mandatorily redeemable preferred stock occurs upon the closing of
an initial public offering or sale or merger of the Company provided certain
defined minimum proceeds and per share requirements are met. The conversion of
preferred stock into a total of 5,131,280 shares of common stock is reflected in
the unaudited pro forma consolidated balance sheet at September 30, 1999. See
related unaudited subsequent event disclosure in Note 14.

F-21
112
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

Series C preferred stock is not entitled to any voting rights. Series B
preferred stock is entitled to vote on certain matters and Series D preferred
stock and Series E preferred stock are entitled to voting rights afforded to
common stockholders in proportion to the number of common shares into which
their preferred shares are convertible.

The Series B mandatorily redeemable preferred stock and Series C preferred
stock are entitled to receive dividends when and if declared by the board of
directors. The Series D and Series E mandatorily redeemable preferred stock
accrue dividends cumulatively at a rate of 10% per share per annum. This
cumulative dividend is being recorded by a charge to accumulated deficit and an
increase to the carrying values of the Series D and Series E preferred shares.
The state in which the Company is incorporated does not preclude companies from
accruing when a stockholders' deficit exists. Such dividends may only be paid at
the discretion of the board of directors and are payable upon the conversion of
the related shares into common stock upon the closing of an initial public
offering. All accumulated dividends shall be forfeited in the event of a public
offering where the value of III is equal to or greater than $152,000,000. In the
event of liquidation of the Company, the Series B, Series D and Series E
preferred stockholders are entitled to receive, on a pro rata basis, prior and
in preference to Series C preferred stock, the stated value per share for each
outstanding share plus accrued but unpaid dividends.

Series B preferred stock is mandatorily redeemable based on certain
predefined events subsequent to December 31, 2003, but no later than June 30,
2004, at a price per share equal to $879.66 per share, without any dividends.
The Series D preferred stock and Series E preferred stock is mandatorily
redeemable based on certain predefined events subsequent to December 31, 2003,
but no later than June 30, 2004, at a price which equates to the investor
receiving a 20% internal rate of return on their initial investment of $1,187.00
and $1,555.50 per share, respectively.

F-22
113
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

The total preferred shares authorized was 10,000 at December 31, 1997 and
1998 and 20,000 at September 30, 1999. The Company's preferred stock issued and
outstanding consisted of the following shares at December 31, 1997 and 1998 and
September 30, 1999:

DECEMBER 31, SEPTEMBER 30,
-------------- -------------
1997 1998 1999
----- ----- -------------

MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK:
Series B, $.01 par value
Shares issued and outstanding.... 1,705 1,705 1,705
Series D, $.01 par value
Shares issued and outstanding.... - 843 843
Series E, $.01 par value
Shares issued and outstanding.... - - 7,714.56
CONVERTIBLE PREFERRED STOCK:
Series A, $.01 par value
Shares issued and outstanding.... 3,770 3,770 -
Series C, $.01 par value
Shares issued and outstanding.... 864 2,194 2,194

NOTE 11 -- COMMON STOCK:

COMMON STOCK WARRANTS:

The Company had outstanding stock purchase warrants as follows. In this
table, "Debt financings" refers to warrants issued to noteholders, while
"Services related to 1998 capital raising" refers to warrants issued in
consideration for assistance provided to the Company in obtaining debt and
preferred stock financing.

DECEMBER 31, SEPTEMBER 30,
-------------------- -------------
1997 1998 1999
------- --------- -------------

Debt financings................. 201,500 547,484 747,484
Series B preferred stock........ 234,465 234,465 234,465
Series C preferred stock........ 74,910 74,910 74,910
Services related to 1998 capital
raising....................... - 350,000 350,000
Series A preferred stock
redemption.................... - - 500,000
------- --------- ---------
510,875 1,206,859 1,906,859
======= ========= =========
Weighted Average exercise price
per share..................... $2.75 $3.10 $3.12

F-23
114
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

In connection with the Company's 1996 debt financing (Note 6), a warrant
was issued for the purchase of 101,500 shares of common stock for $1.72 per
share. This warrant is exercisable at the option of the holder and expires on
December 31, 2003. The relative fair value of this warrant of $95 has been
recorded as additional paid-in capital and as a discount to the debt. See Note
14 for related unaudited subsequent event disclosure.

In December 1997, a warrant was issued to the Series B preferred
stockholders, a related party, for the purchase of 234,465 shares of common
stock of the Company for $3.00 per share. This warrant was issued in
consideration for the Series B stockholder giving up its 12% cumulative
dividend. This cumulative dividend was to be paid as of the sale or initial
public offering of the Company. The elimination of the dividend was a condition
for the Company to receive the Series C convertible preferred stock financing.
The warrant is exercisable at the option of the holder and originally expired on
December 31, 1998. In April 1998 the expiration date of this warrant was
extended to December 31, 2001 in consideration for the continued financial
support of the Series B stockholder. The warrants' original fair value of $52
was charged as a preferred dividend immediately upon issuance in 1997 and the
fair value of the extension of the expiration date of $123 was immediately
charged as a preferred dividend in 1998.

In connection with the issuance of the Series C convertible preferred stock
in 1997 (Note 10), two warrants were issued for the purchase of an aggregate of
74,910 shares of common stock for $3.00 per share. The warrants are exercisable
at the option of the holder and had an original expiration date of December 31,
1998. In April 1998 the expiration dates of these warrants were extended to
December 31, 2001 in consideration for the continued financial support of the
holders. The fair value of the extension of the expiration dates of $39 was
immediately charged as a preferred dividend in 1998.

In December 1997, in connection with the issuance of a $200 promissory note
(Note 6), a warrant was issued to the private investor for the purchase of
100,000 shares of common stock of the Company for $3.00 per share. The warrant
is exercisable at the option of the holder and had an original expiration date
of December 31, 1998. The relative fair value of the warrant of $20 was
amortized to interest expense over the term of the note. In April 1998 the
expiration date for this warrant was extended to December 31, 2001 in
consideration for the continued financial support of the lender. The fair value
related to the extension of the expiration date of $52 was immediately charged
as interest expense in 1998.

In connection with the issuance of the Company's June 1998 notes to private
investors, two warrants were issued in August 1998 to purchase an aggregate of
195,984 shares of the Company's common stock at a price of $3.00 per share.
These notes to private investors were converted into Series D preferred stock in
August 1998. These warrants expire on July 31, 2003. The fair value of the
warrant of $83 was immediately recorded as interest expense in 1998.

F-24
115
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

In consideration for assistance provided in raising capital during 1998, a
warrant was issued in June 1998 to the holder of the Series B preferred stock, a
related party, for the purchase of 350,000 shares of common stock for $3.50 per
share in June 1998. This warrant is exercisable at the option of the holder and
expires on December 31, 2001. As a result of the issuance, the fair value of the
warrant of $182 has been charged to general and administrative expense in 1998.

In December 1998 a warrant to purchase 150,000 shares of the Company's
common stock at a price of $3.50 per share was issued to a holder of the
Company's notes payable for financing provided to the Company (Note 6). This
warrant expires on December 31, 2001. As a result of this issuance, the Company
has recorded the fair value of the warrant of $75 as a charge to interest
expense in 1998.

In February 1999, the Company issued a warrant to IIP, as part of the
redemption price for its Series A preferred and common stock (Note 10). This
warrant allows IIP to purchase 500,000 shares of the Company's common stock at a
price of $3.00 per share, subject to adjustment. This warrant expires on
February 11, 2004. The value of this warrant of $460 was included in the
valuation of the treasury stock and the loss on redemption of Series A preferred
stock.

In September 1998 the Company authorized a Loan Incentive Warrant Plan that
provided for the issuance of warrants to purchase common stock of the Company to
the holders of notes payable. In March 1999, the Company issued warrants under
this plan to purchase 200,000 shares of the Company's common stock at a price of
$3.50 per share. The number of warrants was determined by a formula based on the
amount of the loan. This plan has now expired. These warrants were issued to
short-term notes payable holders and expire on December 31, 2001. The related
loans were repaid in February 1999. As a result of the issuance, the Company has
recorded the fair value of the warrants of $100 as a charge to interest expense.

COMMON STOCK RESERVED:

The Company has reserved shares of common stock as follows:

DECEMBER 31, SEPTEMBER 30,
---------------------- -------------
1997 1998 1999
--------- --------- -------------

Conversion of preferred
stock....................... 3,169,500 4,256,000 6,228,280
Stock options................. 229,100 387,205 591,985
Stock warrants................ 510,875 1,206,859 1,906,859
--------- --------- ---------
3,909,475 5,850,064 8,727,124
========= ========= =========

F-25
116
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

On June 11, 1997, the Company effected a 500-to-1 common stock split. All
references to common stock amounts, shares and per share data included in the
financial statements have been adjusted to give retroactive effect to the stock
split.

NOTE 12 -- STOCK OPTION PLAN:

The III stock option plan provides for the issuance of up to 1,014,000
shares of common stock outstanding through the granting of stock options to
employees, officers, consultants and directors. The board of directors has
complete authority to determine awards and establish the exercise price based on
the Board's estimate of fair value provided that the exercise price of the stock
option was no less than the fair value of a share of common stock on the date of
grant, and the exercise price of a stock option granted to an employee who owns
more than 10% of the common stock will be no less than 110% of the fair value of
a share of common stock on the date of grant. Such option grants prior to
September 15, 1999 vest over a period of five years. As of September 15, 1999,
new options granted will vest over a period of four years.

The following table describes the Company's stock option activity:

WEIGHTED AVERAGE
NUMBER OF EXERCISE PRICE
OPTIONS PER SHARE
--------- ----------------

Outstanding at January 1, 1996........... 155,000 $0.30
Canceled................................. (35,500) $0.30
-------
Outstanding at January 1, 1997......... 119,500 $0.30
Granted................................ 130,000 $1.76
Canceled............................... (20,400) $1.16
-------
Outstanding at December 31, 1997....... 229,100 $1.05
Granted................................ 162,555 $2.37
Canceled............................... (4,450) $2.37
-------
Outstanding at December 31, 1998....... 387,205 $1.59
Granted................................ 214,000 $2.74
Canceled............................... (9,220) $2.37
-------
Outstanding at September 30, 1999...... 591,985 $1.99
=======

F-26
117
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

The following summarizes the outstanding and exercisable options under the
Plan as of September 30, 1999:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ---------------------------------------------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER REMAINING EXERCISE NUMBER EXERCISE
EXERCISE PRICE OUTSTANDING LIFE PRICE OUTSTANDING PRICE
- -------------- ----------- ---------- -------- ----------- --------
(IN YEARS)

$0.30 111,100 1.0 $0.30 65,820 $0.30
$1.76 - $2.37 417,885 3.1 $2.20 78,477 $2.00
$3.11 - $4.00 63,000 3.4 $3.62 - -
------- -------
591,985 144,297
======= =======

If compensation expenses had been recognized based on the fair value of the
options at their grant date, in accordance with Statement of Financial
Accounting Standard No. 123 ("FAS 123"), pro forma results of operations would
be as follows:

DECEMBER 31, SEPTEMBER 30,
--------------------------- -------------
1996 1997 1998 1999
------- ------- ------- -------------

Loss applicable to common
stock:
As reported................ $(1,327) $(2,524) $(3,169) $(9,527)
Pro forma under FAS 123.... (1,364) (2,566) (3,231) (9,609)
Basic and diluted net loss
per share:
As reported................ ($ 0.18) ($ 0.33) ($ 0.42) ($ 1.60)
Pro forma under FAS 123.... ($ 0.18) ($ 0.34) ($ 0.43) ($ 1.61)

The estimated fair value at date of grant for options granted for the nine
months ended September 30, 1999 ranged from $.58 to $2.42. The option value is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted average assumptions:

Risk free interest rate............................. 5.8%
Expected dividend yield............................. 0
Expected life of option (years)..................... 4.83
Expected volatility................................. 0.0001%

F-27
118
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

As additional options are expected to be granted in future years and the
options vest over several years, the above pro forma results are not necessarily
indicative of future pro forma results.

The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
plans. Deferred compensation of $76 was recorded for the nine months ended
September 30, 1999. This represents compensation expense that will be recognized
over the remaining vesting period. Compensation expense of $3 was recorded for
the nine months ended September 30, 1999. No compensation expense has been
recognized for stock-based compensation plans for the years ended December 31,
1998, 1997 and 1996. The weighted average fair value of options granted during
1997, 1998 and the nine months ended September 30, 1999 is estimated as $.046,
$0.55 and $1.00, respectively.

NOTE 13 - SUBSEQUENT EVENTS:

NOTES RECEIVABLE - RELATED PARTIES:

In October 1999, the Company's note receivable from related parties of $100
was repaid in full.

STOCK OPTION ISSUANCES:

On October 19, 1999, the Company granted 52,000 stock options to employees
at an exercise price of $4.00 per share. The estimated fair value of the options
at that date resulted in deferred compensation of $118. The compensation expense
will be recognized over the option vesting period of four years. The total
compensation expense to be recognized in the fourth quarter of 1999 is $29.

On November 11, 1999, the Company granted 274,500 stock options to
employees at an exercise price of $4.00 per share. The estimated fair value of
the options at that date resulted in deferred compensation of $824. The
compensation expense will be recognized over the option vesting period of four
years. The total compensation expense to be recognized in the fourth quarter of
1999 is $206.

PREFERRED STOCK INVESTMENT:

On November 23, 1999, as discussed in Note 10, a private investor group, in
accordance with its contract with the Company, purchased an additional 1,928.64
shares of Series E mandatorily redeemable convertible preferred stock at a price
of $1,555.50 per share for $3,000. The Company's management is in the process of
determining the value of the beneficial conversion feature related to the
1,928.64 shares of Series E preferred stock purchased.

F-28
119
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

LEASE AGREEMENT:

In November 1999, the Company entered into a lease agreement with a third
party lessor for a facility in Hurst, Texas. The annual rent expense will be
$110. The lease term will commerce on February 1, 2000 and will expire on
January 31, 2010.

COMMITMENTS:

Through December 10, 1999, the Company had entered into contracts
committing the Company to $2,690 worth of expenditures for construction,
furniture and equipment related to their new operations center and headquarters
in Stamford, Connecticut.

NOTE 14 -- SUBSEQUENT EVENTS (UNAUDITED):

SERIES F PREFERRED STOCK ISSUANCES:

On December 22, 1999, the Company issued 8,248.33 shares of Series F
mandatorily redeemable convertible preferred stock at a price of $3,960.40 per
share for approximately $32,667 to private investor groups. Each share of Series
F preferred stock is convertible into 500 shares of the Company's common stock,
at the option of the holder, at any time, and is mandatorily convertible upon
the closing of a qualified public offering of the Company's common stock. The
Company is in the process of assessing the value of the beneficial conversion
feature related to the Series F preferred stock, if any. The conversion ratio is
adjusted in the event of future dilution, and the Series F preferred shares have
full voting rights.

The $32,667 of proceeds includes $24,850 of cash investments, including
$3,000 from a related party stockholder of the Company, $5,000 from the
conversion of an outstanding note payable, $317 from the conversion of a five-
year convertible note payable and $2,500 in television advertising rights from
National Broadcasting Company, Inc.

Subsequent to December 31, 2003, but not later than June 30, 2004, the
holders of the Series F preferred stock have the option to sell, and the Company
is required to buy, all the Series F preferred shares owned by the investor
groups at the greater of a 20% annual internal rate of return on the investment
or the private investor groups' pro rata share of the Company's market value
based on the findings of a mutually agreed upon appraiser as specified in the
put option agreement. The total number of Series F shares authorized is 8,248.33
with a par value of $.01.

In the event of an involuntary liquidation, the holders of the Series F
preferred shares are entitled to receive the stated value per share of the stock
together with any accrued and unpaid dividends before any payments to the other
stockholders of the Company. After payment of this amount to the holders of the
Series F preferred shares and payment to the other preferred stockholders of the
Company

F-29
120
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

in accordance with the Company's certificate of incorporation, the holders of
the Series F preferred shares are entitled to receive an additional amount until
they shall have received an aggregate of two times the stated value per share of
the stock. Dividends are payable when and if declared by the Company's board of
directors at a rate of 10% and are included within the 20% internal rate of
return guaranteed upon redemption. Any accrued but unpaid dividends will be
forgiven should the Company be sold or complete a qualified public offering.

On December 22, 1999, the Company entered into an agreement with the
Connecticut Development Association ("CDA") to exchange its five-year
convertible note payable to CDA for 79.96 shares of Series F preferred stock at
a conversion price of $3,960.40 per share and to exercise its warrant to
purchase 101,500 shares of common stock at a price of $1.72 per share. This
conversion may result in an extraordinary loss on redemption that would be
measured by the excess of the value of the preferred stock over the carrying
amount of the debt at the extinguishment date. In addition, CDA paid $500 in
cash for an additional 126.25 shares of the Series F mandatorily redeemable
preferred stock as of December 22, 1999.

On December 29, 1999, the Company entered into an agreement with MCI
WorldCom, Inc., parent company to SkyTel Communications, Inc. ("Skytel"), to
convert SkyTel's five-year $5,000 note payable into 1,262.5 shares of Series F
preferred stock at a conversion price of $3,960.40 per share. This conversion
may result in an extraordinary loss on redemption.

On December 24, 1999 the Company entered an agreement with National
Broadcasting Company, Inc. ("NBC"). In the agreement NBC is to provide $2,500
worth of television advertising rights to the Company in exchange for 631.25
shares of Series F mandatorily redeemable preferred stock issued to NBC
Interactive Media, Inc. This advertising can be on NBC, NBC's owned and operated
television stations or CNBC. The term of the agreement is two years effective
January 1, 2000. The Company will account for these services at fair value. In
addition, NBC Interactive Media, Inc. purchased 631.25 shares of Series F
mandatorily redeemable preferred stock for $2,500 in cash.

In conjunction with the Series F mandatorily redeemable preferred stock
offering, the Company issued a warrant to purchase 123,725 shares of common
stock at an exercise price of $7.92 per share and will pay $1,633 to an
investment banking firm pursuant to a binding agreement. This fee is in
consideration for acting as placement agent in connection with the Series F
mandatorily redeemable preferred stock offering. The warrant will have an
exercise price of $7.92 per share and will have a five year life.

F-30
121
INTELLIGENT INFORMATION INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

OTHER

On December 22, 1999, the Company made two amendments to its certificate of
incorporation. The first amendment increases the Company's authorized common
stock from 25,000,000 shares to 50,000,000 shares and increases the Company's
authorized preferred stock from 25,000 shares to 50,000 shares. The second
amendment provides for the mandatory conversion of the Series C preferred stock
into common stock upon a qualified initial public offering. These amendments
were approved by the Board of Directors and the stockholders, including, in the
case of the second amendment, a majority of the Series C stockholders.

On December 29, 1999, the Company entered into a two-year agreement with
NBC Interactive Media, Inc. This agreement provides NBC Interactive Media, Inc.
with contingent warrants to purchase shares of the Company's common stock at an
exercise price of $10.00 per share. These warrants are issued and become
exercisable upon the execution of agreements allowing the Company to distribute
content from NBC Interactive Media, Inc. or its affiliates. NBC Interactive
Media, Inc. will receive warrants to purchase 20,000 common shares for each
content distribution agreement it or any of its affiliates enters into with the
Company, or 30,000 shares for such an agreement reached prior to March 31, 2000.
The aggregate number of shares of common stock issuable under this contingent
warrant agreement is 110,000 shares. These warrants expire three years after
their issuance.

On January 4, 2000 the Company amended its certificate of incorporation to
change its name from Intelligent Information Incorporated to i3 Mobile, Inc.

F-31
122

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN
THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE SALE OF COMMON
STOCK MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE
DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH
THE OFFER OR SOLICITATION IS UNLAWFUL.

TABLE OF CONTENTS

PAGE
----

Prospectus Summary..................... 3
Risk Factors........................... 9
Forward Looking Statements............. 24
Use of Proceeds........................ 25
Dividend Policy........................ 25
Capitalization......................... 26
Dilution............................... 28
Selected Consolidated Financial Data... 29
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 30
Our Business........................... 40
Management............................. 65
Certain Relationships and Related
Transactions......................... 75
Principal Stockholders................. 78
Description Of Capital Stock........... 80
Shares Eligible for Future Sale........ 84
Underwriting........................... 86
Experts................................ 88
Legal Matters.......................... 89
Where You Can Find Additional
Information.......................... 89
Reports to Stockholders................ 89
Index to Consolidated Financial
Statements........................... F-1

UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATIONS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

[INTELLIGENT INFORMATION LOGO]
i3 MOBILE, INC.
SHARES
COMMON STOCK
DEUTSCHE BANC ALEX. BROWN

CREDIT SUISSE FIRST BOSTON
PROSPECTUS

, 2000
123

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses to be paid by i3 in connection with this offering, other than
underwriting discounts and commissions, are as follows. All amounts other than
the SEC registration fee, the NASD filing fee and the Nasdaq National Market
listing fee are estimates.

Securities and Exchange Commission registration fee......... $17,160
NASD filing fee............................................. 7,000
Nasdaq National Market listing fee.......................... 1,000
Printing and engraving expenses............................. *
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Blue Sky fees and expenses.................................. 2,500
Transfer Agent and Registrar fees and expenses.............. *
Miscellaneous expenses...................................... *
-------
Total:................................................. $ *
=======

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

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As permitted by Section 102 of the Delaware General Corporation Law, the
Restated Certificate of Incorporation of i3 (filed as Exhibit 3.1 to this
registration statement) eliminates its directors' personal liability to i3 or
its stockholders for monetary damages for a breach of fiduciary duty as a
director of i3, except:

- for any breach of the director's duty of loyalty to i3 or its
stockholders;

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- for payment of dividends or stock purchases or redemptions by the
corporation in violation of Section 174 of the Delaware General
Corporation Law; or

- for any transaction from which the director derived an improper personal
benefit.

As a result of this provision, i3 and its stockholders may be unable to obtain
monetary damages from a director for certain breaches of his or her fiduciary
duty to i3. This provision does not, however, eliminate the directors' fiduciary
responsibilities and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of non-monetary relief will remain available under

II-1
124

Delaware law. The provision also does not affect a director's responsibilities
under any other laws, such as the federal securities laws or state or federal
environmental laws.

The Amended Bylaws of i3 (filed as Exhibit 3.2 to this registration
statement) provide that i3 must indemnify its directors and officers to the
fullest extent permitted by the Delaware General Corporation Law and that it may
indemnify its employees and agents in accordance with Delaware law as determined
by i3's board of directors in its sole discretion. Under Section 145 of the
Delaware General Corporation Law, a Delaware corporation has the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation. The
corporation may indemnify such a person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with the action, suit or proceeding if the
person acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful, except that, in the case of an action by or in the right
of the corporation, judicial approval is required for indemnification in respect
of any claim, issue or matter as to which the person was adjudged to be liable
to the corporation. To the extent that a present or former director or officer
of a corporation is successful on the merits or otherwise in the defense of any
such action, suit or proceeding, the corporation must indemnify him or her
against the expenses (including attorney's fees) he or she actually and
reasonably incurred. Under Delaware law, the expenses of an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by a Delaware corporation in advance of the final
disposition of the action, suit or proceeding after delivery to the corporation
of an undertaking by or on behalf of the director or officer to repay such
amounts if it is ultimately determined that the director or officer is not
entitled to be indemnified. Expenses incurred by former directors and officers
or other employees and agents may be so paid on such terms and conditions, if
any, as the corporation deems appropriate.

The Underwriting Agreement (filed as Exhibit 1.1 to this registration
statement) provides for indemnification by the underwriters of i3 and its
officers and directors for certain liabilities arising under the Securities Act
of 1933, as amended, or otherwise.

The indemnification provision in i3's Restated Certificate of
Incorporation, Amended Bylaws and the Underwriting Agreement may be sufficiently
broad to permit indemnification of i3's directors and executive officers for
liabilities arising under the Securities Act of 1933, as amended.

i3 has obtained a Directors' and Officers' Liability and Private Company
Reimbursement Insurance Policy that insures its directors and officers against
the cost of defense, settlement or payment of a judgment under certain
circumstances.

II-2
125

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following securities were issued by i3 within the past three years and
were not registered under the Securities Act of 1933, as amended (the
"Securities Act").

(a) Pursuant to a Stock Purchase Agreement dated August 30, 1996, i3 issued
1,421 shares of Series B Convertible Preferred Stock and warrants to purchase up
to an additional 153,000 shares of common stock to Keystone Venture IV, L.P. in
consideration of an aggregate of $1,250,000 in cash. These warrants were not
exercised and expired. Subsequently, the Company issued a warrant to purchase
234,465 shares of common stock to Keystone Venture IV, L.P. in consideration for
the elimination of the right to receive dividends payable upon a sale or initial
public offering of i3. This warrant was exercisable at any time until December
31, 1998 at an exercise price of $3.00 per share. In April 1998, i3 extended the
expiration date of this warrant to December 31, 2001. Also, in connection with
the issuance of the Series B Convertible Preferred Stock, Keystone Venture IV,
L.P. purchased an additional 284 shares of Series B Convertible Preferred Stock
for $250,000 in cash in February 1998. All of these preferred shares will be
converted to common stock upon the completion of this offering.

(b) On December 30, 1996, i3 issued to Connecticut Development Authority
warrants to purchase 101,500 shares of common stock in connection with a loan to
us of $750,000. The warrants are exercisable at any time until December 31, 2003
at an exercise price of $1.72 per share. The warrants were exercised on December
22, 1999 by converting a portion of the outstanding loan equal to the aggregate
warrant exercise price.

(c) Between June 31, 1997 and October 16, 1998, twenty-one investors
purchased an aggregate of 2,194 shares of Series C Convertible Preferred Stock
for an aggregate consideration of $2,458,000. All of these shares will be
converted to common stock upon the completion of this offering. Additionally, i3
issued to each of G-II Family Partnership and Glenville Capital Partners L.P.
warrants to purchase 37,455 shares of our common stock at $3.00 per share in
connection with the Series C issuance. The warrants are exercisable at any time
until December 31, 1998 at an exercise price of $3.00 per share. In April 1998,
i3 extended the expiration date of these warrants to December 31, 2001.

(d) On December 17, 1997, i3 issued to Glenville Capital Partners, L.P.
warrants to purchase 100,000 shares of common stock in consideration of loans to
us aggregating $200,000. The warrants are exercisable at any time until December
31, 1998 at an exercise price of $3.00 per share. In April 1998, i3 extended the
expiration date of these warrants to December 31, 2001.

(e) On June 23, 1998, i3 issued to Keystone Venture IV, L.P. warrants to
purchase 350,000 shares of common stock in consideration for services rendered
in connection with 1998 financings. The warrants are exercisable at any time
until December 31, 2001 at an exercise price of $3.50 per share.

II-3
126

(f) Pursuant to a Stock Purchase Agreement dated as of August 11, 1998, i3
issued an aggregate of 843 shares of Series D Convertible Preferred Stock to
Apex Investment Fund III, L.P. and Apex Strategic Partners, LLC for an aggregate
purchase price of $1,001,000 in cash and converted notes payable. All of these
shares will be converted to common stock upon the completion of this offering.
As part of the issuance of the notes payable, i3 issued warrants to purchase an
aggregate of 195,984 shares of its common stock to Apex Investment Fund III,
L.P. and Apex Strategic Partners, LLC. The warrants are exercisable at any time
until July 31, 2003 at an exercise price of $3.00 per share.

(g) On December 1, 1998, i3 issued to Glenville Capital Partners, L.P. a
warrant to purchase 150,000 shares of common stock at an exercise price of $3.50
per share related to previously issued notes payable. These warrants are
exercisable at any time until December 31, 2001.

(h) Pursuant to a Stock Purchase Agreement dated December 1, 1998, and
consummated on February 12, 1999, i3 redeemed 3,770 shares of Series A
Convertible Preferred Stock and 1,885,000 shares of common stock from
Intelligent Investment Partners, Inc. for an aggregate purchase price consisting
of $3,000,000 in cash, a $5,000,000 10% promissory note and a warrant to
purchase 500,000 shares of common stock. This warrant is exercisable at any time
until February 11, 2004 at an exercise price of $3.00 per share. This promissory
note was converted into Series F mandarorily redeemable preferred stock in
December 1999.

(i) Pursuant to a Stock Purchase Agreement dated February 1, 1999, i3 sold
a total of 9,643.2 shares of Series E Convertible Preferred Stock to BG Media
Investors L.P. for an aggregate purchase price of $15,000,000. 7,714.56 shares
were purchased in February 1999 for $12,000,000 and 1,928.64 shares were
purchased in November 1999 for $3,000,000.

(j) On March 8, 1999, i3 issued warrants, in accordance with its Loan
Incentive Warrant Plan, to purchase an aggregate of 200,000 shares of common
stock in consideration for certain loans made to i3 by the following persons and
entities:

ISSUED TO: NO. OF SHARES
- ---------- -------------

Glenville Capital Partners, L.P. ........................ 113,823
Apex Investment Fund III, L.P. .......................... 19,251
Apex Strategic Partners, LLC............................. 984
Certain directors, officers and employees................ 65,942

All of the warrants listed above are exercisable at any time until December 31,
2001 at an exercise price of $3.50 per share.

II-4
127

(k) Pursuant to a Stock Purchase Agreement dated as of December 22, 1999,
i3 sold an aggregate of 8,248.33 shares of Series F Convertible Preferred Stock
for aggregate consideration of $32,667,000 to the following strategic and
financial investors:

PURCHASE
NAME NO. OF SHARES PRICE
---- ------------- ----------

NBC Interactive Media, Inc. 1,262.50 $5,000,000
Sony Corporation of America 505.00 2,000,000
Sony Music Entertainment Inc. 757.50 3,000,000
GE Capital Equity Investments, Inc. 1,262.50 5,000,000
Bowman Capital Management Funds 1,262.50 5,000,000
MCI WorldCom, Inc. 1,262.50 5,000,000
Keystone Venture V, L.P. 757.50 3,000,000
Susquehanna Partners, GP 378.75 1,500,000
Clearnet Communications, Inc. 340.87 1,350,000
BT Investment Partners, Inc. 252.5 1,000,000
Connecticut Development Authority 206.21 817,000

The aggregate consideration was paid in cash except for $2,500,000 in
television advertising rights from the National Broadcasting Company, Inc.,
$317,000 in conversion of a portion of an outstanding loan from Connecticut
Development Authority and $5,000,000 in conversion of a note payable from an
affiliate of MCI WorldCom, Inc. All of these shares will be converted to common
stock upon the completion of the initial public offering.

(l) As of the date of this prospectus, i3 had granted options to employees
under the 1995 Stock Option Plan to purchase an aggregate of 918,485 shares of
common stock at a weighted average exercise price of $2.71 per share.

The sale and issuance of securities in the transactions described set forth
in paragraphs (a) to (k) above were exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act or Regulation D
promulgated thereunder as transactions by an issuer not involving a public
offering where the purchasers were sophisticated investors who represented their
intention to acquire securities for investment only and not with a view to
distribution and received or had access to adequate information about i3.
Appropriate restrictive legends were affixed to the stock certificates issued in
these transactions, and the affixing of similar legends is required in
connection with any subsequent sales of any such securities.

The sale and issuance of the options described in paragraph (l) above were
exempt from registration under the Securities Act in reliance on Rule 701 as
transactions under a written compensatory benefit plan established by i3 for the
participation of its employees, directors, officers, consultants and advisors.

No underwriters were employed in any of the above transactions.

II-5
128

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

1.1 Underwriting Agreement.*
3.1 Restated Certificate of Incorporation filed with the
Secretary of State of the State of Delaware on February 16,
1999.
3.2 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 22, 1999.*
3.3 Certificate of Designations, Powers, Preferences and Rights
of Series F Convertible Preferred Stock filed with the
Secretary of State of the State of Delaware on December 22,
1999.*
3.4 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 22, 1999.*
3.5 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 29, 1999.*
3.6 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on January 4, 2000.*
3.7 Amended Bylaws of i3 adopted on July 30, 1998, as further
amended as of September 8, 1999.
4.1 Form of Common Stock Certificate.*
4.2 Fourth Amended and Restated Stockholders Agreement dated
December 22, 1999.*
4.3 1995 Stock Incentive Plan, as amended, as of July 13, 1999.
4.4 Third Amended and Restated Registration Rights Agreement
dated December 22, 1999.*
4.6 General Form of Warrant issued to other warrantholders.
5.1 Opinion of Piper Marbury Rudnick & Wolfe LLP*
10.1 Employment Agreement by and between i3 and Stephen G.
Maloney dated as of January 1, 1999 as amended September 9,
1999.
10.2 Employment Agreement by and between i3 and Robert M. Unnold
dated January 1, 1999, as amended September 9, 1999.
10.3 Employment and Royalty Agreement by and between i3 and
Jeffrey N. Klein dated October 27, 1998.
10.4 Agreement of Lease by and between i3 and Seaboard Property
Management, Inc. dated April 27, 1995, as amended.
10.4a Lease Modification Agreement between i3 and Seaboard
Property Management, Inc. dated February 1997.
10.5 Ridgewood Square Office Park Commercial Lease by and between
i3 and Ridgewood Square Ltd. dated February 7, 1997.
10.6 Agreement of Sublease by and between i3 and National
Westminster Bank, PLC, dated as of September 9, 1999.
10.7 Lease Agreement by and between i3 and Double Creek Capital
Corporation dated November 30, 1999.
10.8 Stock Purchase Agreement by and between i3 and Michael J.
Pryslak and Dennis M. Roland dated February 27, 1992, as
amended as of September 30, 1994 and further amended in
November 1998.

II-6
129

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.9 Master Service Agreement by and between i3 and AT&T Wireless
Services, Inc. dated November 3, 1998.**
10.10 Preferred Content License Agreement by and between i3 and
AT&T Wireless Service Data, Inc. d/b/a AT&T Wireless
Services dated May 1, 1997, as amended May 1, 1998.
10.11 Service Agreement by and between i3 and Bell Mobility
Cellular Inc. dated May 12, 1998.**
10.12 Service Reseller Agreement by and between i3 and Omnipoint
Communications Services dated November 8, 1996, as amended
July 10, 1998.**
10.12a Amendment to Service Reseller Agreement by and between i3
and Omnipoint Communications Services dated July 10, 1998.**
10.13 Services Agreement by and between i3 and Southwestern Bell
Mobile Systems, Inc. and Southwestern Bell Wireless Inc.
dated June 9, 1998.**
10.13a Amendment to Services Agreement by and between i3 and
Southwestern Bell Mobile Systems Inc. and Southwestern Bell
Wireless Inc. dated January 11, 1999.**
10.14 Service Agreement by and between i3 and AirTouch Cellular
dated April 30, 1999.**
10.15 Service Agreement by and between i3 and The Weather Channel
Enterprises, Inc. dated December 21, 1998.**
10.16 Letter Agreement by and between i3 and National Broadcasting
Company, Inc. dated December 24, 1999.
10.17 Letter Agreement by and between i3 and NBC Interactive
Media, Inc. dated December 29, 1999.
21.1 Subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Counsel (included in Exhibit 5.1).*
24.1 Power of Attorney (included on the signature page).
27.1 Financial Data Schedule.

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

* To be filed by amendment.

** Confidential treatment has been requested for certain portions of this
Exhibit pursuant to Rule 406 promulgated under the Securities Act.
Confidential portions of this Exhibit have been filed separately with the
Securities and Exchange Commission.

II-7
130

(b) Financial Statement Schedules

SCHEDULE
NUMBER DESCRIPTION
- -------- -----------

I Report of PricewaterhouseCoopers LLP on financial statement
schedule
II Valuation and Qualifying Accounts

II-8
131

SCHEDULE I

REPORT OF PRICEWATERHOUSECOOPERS LLP ON FINANCIAL STATEMENT SCHEDULE

SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

To the Board of Directors and Stockholders
of Intelligent Information Incorporated

Our audits of the consolidated financial statements referred to in our report
dated December 10, 1999 appearing on page F-2 in this Registration Statement on
Form S-1 of Intelligent Information Incorporated also included an audit of the
Financial Statement Schedule listed in Part II Item 16(b) of this Registration
Statement on Form S-1. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP

Stamford, Connecticut
December 10, 1999

II-9
132

SCHEDULE II

I3 MOBILE, INC.

VALUATION AND QUALIFYING ACCOUNTS

Allowance for doubtful accounts:
Balance, December 31, 1997.................................. $ 42,000
Provision................................................. 65,000
Recoveries................................................ 3,000
Charge-offs............................................... --
--------
Balance, December 31, 1998.................................. 110,000
Provision................................................. 131,000
Recoveries................................................ --
Charge-offs............................................... (24,000)
--------
Balance, September 30, 1999................................. $217,000
========

II-10
133

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as may be required by the underwriter
to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 14 of this
registration statement, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes:

(1) For the purpose of determining any liability under the Securities
Act of 1933, as amended, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
1933, as amended, shall be deemed to be part of this registration statement
as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

II-11
134

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Stamford,
State of Connecticut, on January 7, 2000.

i3 MOBILE, INC.

By: /s/ STEPHEN G. MALONEY
------------------------------------
Stephen G. Maloney
President and Chief Executive
Officer

Each person whose signature appears below hereby constitutes and appoints
Stephen G. Maloney his true and lawful attorney-in-fact and agent, with full
power and substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
registration statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying all that said attorney-in-fact and agent or his substitute or
substitutes, or any of them, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ STEPHEN G. MALONEY President and Chief Executive Officer and January 7, 2000
- ---------------------------------- Director
Stephen G. Maloney (Principal Executive Officer)

/s/ ROBERT COLETTI Controller January 7, 2000
- ---------------------------------- (Principal Financial and Accounting
Robert Coletti Officer)

/s/ ROBERT M. UNNOLD Chairman of the Board and Director January 7, 2000
- ----------------------------------
Robert M. Unnold

/s/ KERRY J. DALE Director January 7, 2000
- ----------------------------------
Kerry J. Dale

/s/ JAMES A. JOHNSON Director January 7, 2000
- ----------------------------------
James A. Johnson

/s/ J. WILLIAM GRIMES Director January 7, 2000
- ----------------------------------
J. William Grimes

II-12
135

SIGNATURE TITLE DATE
--------- ----- ----

/s/ DONALD F. CHRISTINO Director January 7, 2000
- ----------------------------------
Donald F. Christino

/s/ W. PETER DANIELS Director January 7, 2000
- ----------------------------------
W. Peter Daniels

II-13
136

EXHIBIT INDEX

SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------

1.1 Underwriting Agreement*.....................................
3.1 Restated Certificate of Incorporation filed with the
Secretary of State of the State of Delaware on February 16,
1999........................................................
3.2 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 22, 1999*...........................
3.3 Certificate of Designations, Powers, Preferences and Rights
of Series F Convertible Preferred Stock filed with the
Secretary of State of the State of Delaware on December 22,
1999*.......................................................
3.4 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 22, 1999*...........................
3.5 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 29, 1999.*
3.6 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on January 4, 2000.*
3.7 Amended Bylaws of i3 adopted on July 30, 1998, as further
amended as of September 8, 1999.............................
4.1 Form of Common Stock Certificate*...........................
4.2 Fourth Amended and Restated Stockholders Agreement dated
December 22, 1999*..........................................
4.3 1995 Stock Incentive Plan, as amended, as of July 13,
1999........................................................
4.4 Third Amended and Restated Registration Rights Agreement
dated December 22, 1999*....................................
4.6 General Form of Warrant issued to other warrantholders......
5.1 Opinion of Piper Marbury Rudnick & Wolfe LLP*...............
10.1 Employment Agreement by and between i3 and Stephen G.
Maloney dated as of January 1, 1999 as amended September 9,
1999........................................................
10.2 Employment Agreement by and between i3 and Robert M. Unnold
dated January 1, 1999, as amended September 9, 1999.........
10.3 Employment and Royalty Agreement by and between i3 and
Jeffrey N. Klein dated October 27, 1998.....................
10.4 Agreement of Lease by and between i3 and Seaboard Property
Management, Inc. dated April 27, 1995, as amended...........
10.4a Lease Modification Agreement between i3 and Seaboard
Property Management, Inc. dated February 1997...............

137

SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------

10.5 Ridgewood Square Office Park Commercial Lease by and between
i3 and Ridgewood Square Ltd. dated February 7, 1997.........
10.6 Agreement of Sublease by and between i3 and National
Westminster Bank, PLC, dated as of September 9, 1999........
10.7 Lease Agreement by and between i3 and Double Creek Capital
Corporation dated November 30, 1999.........................
10.8 Stock Purchase Agreement by and between i3 and Michael J.
Pryslak and Dennis M. Roland dated February 27, 1992, as
amended as of September 30, 1994 and further amended in
November 1998...............................................
10.9 Master Service Agreement by and between i3 and AT&T Wireless
Services, Inc. dated November 3, 1998**.....................
10.10 Preferred Content License Agreement by and between i3 and
AT&T Wireless Service Data, Inc. d/b/a AT&T Wireless
Services dated May 1, 1997, as amended May 1, 1998..........
10.11 Service Agreement by and between i3 and Bell Mobility
Cellular Inc. dated May 12, 1998**..........................
10.12 Service Reseller Agreement by and between i3 and Omnipoint
Communications Services dated November 8, 1996, as amended
July 10, 1998**.............................................
10.12a Amendment to Service Reseller Agreement by and between i3
and Omnipoint Communications Services dated July 10,
1998**......................................................
10.13 Services Agreement by and between i3 and Southwestern Bell
Mobile Systems, Inc. and Southwestern Bell Wireless Inc.
dated June 9, 1998**........................................
10.13a Amendment to Services Agreement by and between i3 and
Southwestern Bell Mobile Systems Inc. and Southwestern Bell
Wireless Inc. dated January 11, 1999**......................
10.14 Service Agreement by and between i3 and AirTouch Cellular
dated April 30, 1999**......................................
10.15 Service Agreement by and between i3 and The Weather Channel
Enterprises, Inc. dated December 21, 1998**.................
10.16 Letter Agreement by and between i3 and National Broadcasting
Company, Inc. dated December 24, 1999.
10.17 Letter Agreement by and between i3 and NBC Interactive
Media, Inc. dated December 29, 1999.
21.1 Subsidiaries of the Registrant..............................
23.1 Consent of PricewaterhouseCoopers LLP.......................
23.2 Consent of Counsel (included in Exhibit 5.1)*...............

138

SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------

24.1 Power of Attorney (included on the signature page)..........
27.1 Financial Data Schedule.....................................

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

* To be filed by amendment.