U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                    Form 10-Q

_X_      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

         EXCHANGE ACT OF 1934

         For the quarterly period ended June 30, 1999

___      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 For the transition period from ______ to ______

         Commission file number 1-10932


                         INDIVIDUAL INVESTOR GROUP, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                          13-3487784
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                            Identification No.)

             125 Broad Street, 14th Floor, New York, New York 10004
                    (Address of principal executive offices)

                               (212) 742-2277
                         (Registrant's telephone number)


Check  whether  the  registrant  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes X No____

State the number of shares  outstanding of each of the  registrant's  classes of
common  equity,  as of  the  latest  practicable  date:  As of  July  30,  1999,
registrant had outstanding  9,146,998 shares of Common Stock, $.01 par value per
share.



INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES

                                      INDEX




  Part I Financial Information                                           Page
                                                                         ----

     Item 1. Financial Statements


       Consolidated Condensed Balance Sheets (Unaudited)
       as of June 30, 1999 and December 31,1998                            3

       Consolidated Condensed Statements of Operations (Unaudited)
       for the three and six months ended June 30, 1999 and 1998           4

       Consolidated Condensed Statements of Cash Flows (Unaudited)
       for the six months ended June 30, 1999 and 1998                     5

       Notes to Consolidated Condensed Financial Statements (Unaudited)    6-10


     Item 2. Management's Discussion and Analysis of Financial Condition
             and Results of Operation                                      11-20

  Part II Other Information

     Item 2. Changes in Securities                                         21


     Item 4. Submission of Matters to a Vote of Security Holders           21


     Item 5. Other Information                                             22


     Item 6. Exhibits and Reports on Form 8-K                              23

  Signatures                                                               24





INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) June 30, December 31, ASSETS 1999 1998 ------------- ------------- Current assets: Cash and cash equivalents $2,332,163 $4,752,587 Investments (Note 2) 7,506,376 877,231 Accounts receivable (net of allowances of $378,479 in 2,920,807 2,356,126 1999 and $391,328 in 1998) Investment in discontinued operations (Note 3) 142,534 282,383 Prepaid expenses and other current assets 860,499 512,641 ------------- ------------- Total current assets 13,762,379 8,780,968 Investment (Note 2) 2,638,356 - Deferred subscription expense 359,746 576,237 Property and equipment - net 1,806,430 586,007 Security deposits 372,735 469,627 Other assets 249,513 374,404 ------------- ------------- Total assets $19,189,159 $10,787,243 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $2,547,398 $2,191,765 Accrued expenses 674,458 519,887 Deferred advertising revenue 1,433,371 138,097 ------------- ------------- Total current liabilities 4,655,227 2,849,749 Deferred advertising revenue 1,583,013 - Deferred subscription revenue 2,246,072 2,246,422 ------------- ------------- Total liabilities 8,484,312 5,096,171 ------------- ------------- Stockholders' Equity: Preferred stock, $.01 par value, authorized 2,000,000 shares, 10,000 issued and outstanding in 1999 and 1998 100 100 Common stock, $.01 par value, authorized 40,000,000 shares, 9,119,665 issued and outstanding in 1999; authorized 18,000,000 shares, 8,490,851 issued and outstanding in 1998 91,197 84,909 Additional paid-in capital 29,833,913 27,595,151 Accumulated deficit (25,517,453) (21,922,595) Accumulated other comprehensive gain (loss) 6,297,090 (66,493) ------------- ------------- Total stockholders' equity 10,704,847 5,691,072 ------------- ------------- Total liabilities and stockholders' equity $19,189,159 $10,787,243 ============= ============= See Notes to Consolidated Condensed Financial Statements
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, -------------------------------- --------------------------------- 1999 1998 1999 1998 ------------- ------------- ------------- ------------- Revenues: Print Publications $3,385,090 $3,310,144 $7,133,937 $7,034,696 Online Services 318,547 351,386 571,516 580,807 ------------- ------------- ------------- ------------- Total revenues 3,703,637 3,661,530 7,705,453 7,615,503 ------------- ------------- ------------- ------------- Operating expenses: Editorial, production and distribution 2,684,104 2,968,414 5,439,822 5,868,888 Promotion and selling 1,824,526 1,606,059 3,676,002 3,248,728 General and administrative 1,359,985 1,743,493 2,532,476 2,893,153 Depreciation and amortization 151,575 78,268 248,405 151,579 ------------- ------------- ------------- ------------- Total operating expenses 6,020,190 6,396,234 11,896,705 12,162,348 ------------- ------------- ------------- ------------- Operating loss from continuing operations (2,316,553) (2,734,704) (4,191,252) (4,546,845) Interest and other income 39,827 13,708 596,394 43,663 ------------- ------------- ------------- ------------- Net loss from continuing operations (2,276,726) (2,720,996) (3,594,858) (4,503,182) Discontinued operations (Note 3) Loss from discontinued operations - (258,619) - (636,079) ------------- ------------- ------------- ------------- Net loss ($2,276,726) ($2,979,615) ($3,594,858) ($5,139,261) ============= ============= ============= ============= Basic and dilutive loss per common share: Continuing operations ($0.25) ($0.37) ($0.40) ($0.62) Discontinued operations $0.00 ($0.04) $0.00 ($0.09) ------------- ------------- ------------- ------------- Net loss per share ($0.25) ($0.41) ($0.40) ($0.71) ============= ============= ============= ============= Average number of common shares used in computing basic and dilutive loss per common share 9,016,759 7,286,385 8,902,315 7,245,021 See Notes to Consolidated Condensed Financial Statements
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, ----------------------------------- 1999 1998 ------------- ------------- Net loss ($3,594,858) ($5,139,261) Less: Loss from discontinued operations - (636,079) ------------- ------------- Loss from continuing operations (3,594,858) (4,503,182) Reconciliation of net loss to net cash used in operating activities: Depreciation and amortization 248,405 151,579 Stock option and warrant transactions 160,862 - Loss on sale of equipment - 1,258 Gain on sale of investments (503,215) - Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable (564,681) 461,594 Prepaid expenses and other current assets (378,361) 10,667 Deferred subscription expense 216,491 (53,858) Security deposits 96,892 - Increase (decrease) in: Accounts payable and accrued expenses 510,204 855,973 Deferred advertising revenue 239,931 9,370 Deferred subscription revenue (350) (203,523) ------------- ------------- Net cash used in operating activities (3,568,680) (3,270,122) ------------- ------------- Cash flows from investing activities: Purchase of property and equipment (1,457,346) (65,684) Proceeds from sale of equipment - 1,051 Proceeds from sale of investments 990,729 - Increase in investments (753,076) - Net cash provided by discontinued operations 139,849 122,175 ------------- ------------- Net cash (used in) provided by investing activities (1,079,844) 57,542 ------------- ------------- Cash flows from financing activities: Proceeds from exercise of stock options 2,228,100 398,152 Proceeds from issuance of common stock - 5,000,000 ------------- ------------- Net cash provided by financing activities 2,228,100 5,398,152 ------------- ------------- Net (decrease) increase in cash and cash equivalents (2,420,424) 2,185,572 Cash and cash equivalents, beginning of period 4,752,587 3,533,622 ------------- ------------- Cash and cash equivalents, end of period $2,332,163 $5,719,194 ============= ============= Supplemental schedule of noncash investing and financing activities: The Company acquired 19.9% of the then-outstanding shares of common stock of VentureHighway.com Inc. The purchase price is payable in the form of advertising for VentureHighway in the Company's magazines and websites during the next 30 months. The purchase price had a stated value of $3.2 million, and is recorded on the Company's June 30, 1999 balance sheet at a fair value of $2.6 million (See Note 2). See Notes to Consolidated Condensed Financial Statements
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated condensed financial statements include the accounts of Individual Investor Group, Inc. and its subsidiaries (collectively, the "Company"). Such financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes as required by generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report for the year ended December 31, 1998 on Form 10-K. 2. INVESTMENTS Investments included in Current Assets Investments are in equity securities and are carried at fair market value. The aggregate fair value of such investments was $7,506,376 and $877,231 at June 30, 1999 and December 31, 1998, respectively. Gross unrealized holding gains were $6,452,303 and $86,477 at June 30, 1999 and December 31, 1998, respectively. Gross unrealized holding losses were $155,213 and $152,970 at June 30, 1999 and December 31, 1998, respectively. Unrealized gains and losses are shown as accumulated other comprehensive gain (loss), which is a component of stockholders' equity (see Note 6). The Company currently owns 175,000 shares of Wit Capital Group, Inc. Class C Common Stock. Wit Capital is an online investment banking and brokerage firm. The Company's stake in Wit Capital was acquired in 1997 as 250,000 shares of Series A Preferred Stock valued at $250,000, and was converted into 175,000 shares of Class C Common Stock due to a 7-for-10 reverse split of Class C Common Stock and the completion of Wit Capital's IPO on June 4, 1999. The investment is recorded on the Company's June 30, 1999 balance sheet at $5,950,000 based upon the June 30, 1999 closing price of Wit Capital Common Stock on the Nasdaq National Market. The Company may not transfer or dispose of the Class C Common Stock (or any interest in such shares) until 180 days from the completion of the IPO (i.e., until December 1, 1999), at which point it will automatically convert into Common Stock and will not be subject to any lock-up. The Company could realize a significant gain with respect to this investment, although there can be no assurance that the Company ultimately will realize any value with respect to its shares of Wit Capital. As of August 9, 1999, the value of the Company's investment in Wit Capital has declined to $3,171,875. On June 2, 1999, the Company and Kirlin Holding Corp. ("Kirlin") entered into a Securities Purchase Agreement ("Securities Purchase Agreement") pursuant to which the Company acquired 300,000 shares ("Investor Shares") of common stock of Kirlin for $750,000, representing 4.9% of the then-outstanding shares of Kirlin's common stock (the share amount has been restated to reflect a 2-for-1 stock split effected July 30, 1999). The purchase price was paid from the Company's working capital. Kirlin contributed all the proceeds of this sale to the capital of its subsidiary, VentureHighway.com Inc. ("VentureHighway"), in which the Company has a 19.9% stake. Kirlin filed a registration statement registering the resale of the Investor Shares under the Securities Act of 1933 and is obligated to use its best efforts to cause the registration statement to become effective as soon as practicable thereafter. The investment in Kirlin is recorded on the Company's June 30, 1999 balance sheet at $1,471,950 based upon the June 30, 1999 closing price of Kirlin's common stock on the Nasdaq Small-Cap Market. The Company could realize a significant gain with respect to this investment, although there can be no assurance that the Company ultimately will realize any value with respect to its shares of Kirlin. As of August 9, 1999, the value of the Company's investment in Kirlin has increased to $2,062,500. Kirlin (Nasdaq: KILN) is a holding company engaged in securities brokerage, securities trading and merchant banking activities through its primary operating subsidiary, Kirlin Securities, Inc. Kirlin Securities is a full service, retail oriented brokerage firm and is a member of the NASD. Other Investment On June 2, 1999, the Company, Kirlin and VentureHighway (at the time a wholly-owned subsidiary of Kirlin), entered into an agreement ("Agreement") pursuant to which the Company acquired 2,484 newly issued shares of common stock of VentureHighway, representing 19.9% of the then-outstanding shares of common stock (the other 80.1% of which continue to be held by Kirlin). The purchase price is payable in the form of advertising for VentureHighway in the Company's magazines and websites during the next 30 months. The purchase price had a stated value of $3.2 million, and is recorded on the Company's June 30, 1999 balance sheet at a fair value of $2.6 million. VentureHighway owns and operates VentureHighway.com, a branded website designed to serve as an interactive portal for the matching of companies seeking funding with qualified investors seeking to fund such companies, and the facilitation of private placements and public offerings of securities of companies. There currently is no public market for VentureHighway securities, and there is no assurance that the Company will realize any value with respect to its investment in VentureHighway. 3. DISCONTINUED OPERATIONS On April 30, 1998 the Company's Board of Directors decided to discontinue the Company's investment management services business. As a result, the operating results relating to investment management services have been segregated from continuing operations and reported as a separate line item on the consolidated condensed statements of operations. The investment management services business was principally conducted by a wholly-owned subsidiary of the Company, WisdomTree Capital Management, Inc. ("WTCM"). WTCM served as general partner of (and is an investor in) a domestic private investment fund. The Company is also a limited partner in the fund. As a result of the Board's decision to discontinue the investment management services business, WTCM is dissolving the domestic investment fund, liquidating its investments and distributing the net assets to all investors as promptly as possible. In 1998, the Company recorded provisions to accrue for its share of any net operating losses of the domestic fund and related costs that are expected to occur until the fund liquidates its investments. The Company believes that adequate provision has been made for any remaining net operating losses and related material costs associated with these discontinued operations. The Company, through WTCM and another wholly-owned subsidiary, also provided investment management services to an offshore private investment fund. On May 21, 1998 the sole voting shareholder of the offshore fund, in consultation with WTCM, resolved to wind up the fund and appointed a liquidator to distribute the assets of the fund to its investors in accordance with Cayman Islands law. Substantially all of the fund assets were distributed in cash to its investors by December 31, 1998. The Company has no investment in the offshore fund. In January 1999, the domestic investment fund distributed cash to its partners totaling $1,189,510, of which $139,849 was received by the Company and was used to reduce its net investment in discontinued operations. At June 30, 1999, the domestic investment fund had remaining net assets of approximately $1,446,848. The Company's net investment in discontinued operations of $142,534 at June 30, 1999, represents its share of the net assets of the domestic investment fund, less any costs associated with discontinuing the investment management services business. 4. STOCK OPTIONS During the three and six months ended June 30, 1999, the Company granted 40,100 and 97,600 options, respectively, to purchase the Company's Common Stock; 228,701 and 628,814 options, respectively, were exercised (providing proceeds of $668,774 and $2,228,099, respectively); and 30,100 and 45,433 options were canceled, respectively. Of the total options granted, 67,600 were granted under the Company's stock option plans, 30,000 shares were granted outside of the plans, and all expire at various dates through June 2009. 5. LOSS PER COMMON SHARE Net loss per basic and dilutive common share for the three and six month periods ended June 30, 1999 and 1998 were computed using the weighted average number of common shares outstanding during each period. The exercise of stock options and warrants were not assumed in the computation of loss per common share, as the effect would have been antidilutive. 6. COMPREHENSIVE INCOME Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," requires the disclosure of comprehensive income (loss), defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss). Comprehensive income (loss) for the three and six months ended June 30, 1999 and 1998, respectively, is presented in the following table:
Three Months Ended June 30, Six Months Ended June 30, 1999 1998 1999 1998 ------------- ------------- ------------- ------------- Net loss $ (2,276,726) $ (2,979,615) $ (3,594,858) $ (5,139,261) Other comprehensive gain: Net unrealized gain on investments (see Note 2) 6,334,239 - 6,363,583 - ------------- ------------- ------------- ------------- Total comprehensive income (loss) $ 4,057,513 $ (2,979,615) $ 2,768,725 $ (5,139,261) ============= ============= ============= =============
7. SEGMENT INFORMATION In 1998, the Company adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," which changes the way the Company reports information about its operating segments. Accordingly, the prior year's information has been restated to be consistent with the current year presentation. The Company's business segments are focused on providing research and analysis of investment information to individuals and investment professionals through two operating segments: Print Publications and Online Services. The Company's Print Publications operations publishes and markets Individual Investor magazine, a personal finance and investment magazine, Ticker, a magazine for investment professionals, and Individual Investor's Special Situations Report, a financial investment newsletter. The Company's Online Services operations include Individual Investor Online (www.individualinvestor.com) and InsiderTrader.com (www.insidertrader.com). Substantially all of the Company's operations are within the United States. The table below presents summarized operating data for the Company's two business segments, consistent with the way such data is utilized by Company management in evaluating operating results. The accounting policies utilized in the table below are the same as those described in Note 1 of the Notes to Condensed Consolidated Financial Statements, as well as the consolidated financial statements and footnotes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Operating contribution represents the difference between operating revenues less operating expenses (before general and administrative ("G&A") and depreciation and amortization expenses).
Three Months Ended June 30, Six Months Ended June 30, ------------------------------- ------------------------------ 1999 1998 1999 1998 ------------- ------------- ------------- ------------- Revenues: Print Publications $3,385,090 $3,310,144 $7,133,937 $7,034,696 Online Services 318,547 351,386 571,516 580,807 ------------- ------------- ------------- ------------- $3,703,637 $3,661,530 $7,705,453 $7,615,503 ============= ============= ============= ============= Operating contribution (before G&A and depreciation and amortization expenses): Print Publications ($92,636) ($369,053) ($215,904) ($497,119) Online Services (712,357) (543,890) (1,194,467) (1,004,994) ------------ ------------- ------------- ------------- (804,993) (912,943) (1,410,371) (1,502,113) G&A and depreciation and amortization (1,511,560) (1,821,761) (2,780,881) (3,044,732) expenses Interest and other income 39,827 13,708 596,394 43,663 ------------- ------------- ------------- ------------- Net loss from continuing operations ($2,276,726) ($2,720,996) ($3,594,858) ($4,503,182) ============= ============= ============= =============
Net property and equipment as of June 30, 1999 increased approximately $1.2 million as compared to December 31, 1998 (primarily leasehold improvements and furniture connected with the relocation of the Company's corporate office in March 1999). The capital expenditures allocable to Print Publications, Online Services and corporate are approximately $0.7 million, $0.3 million, and $0.2 million, respectively. Additionally, investments as of June 30, 1999 increased approximately $9.3 million as compared to December 31, 1998. This was primarily due to an increase in the unrealized gain on Wit Capital (approximately $5.6 million), as well as investments in Kirlin Holding Corp. and VentureHighway.com Inc. (see Note 2). There were no other material changes from year-end 1998 in total assets, in the basis of segmentation, or in the basis of measurement of segment profit or loss. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Important Notice Concerning "Forward-looking Statements" in this Report 1. "Forward-looking Statements." Certain parts of this Report describe historical information (such as operating results for the three and six months ended June 30, 1999 and June 30, 1998, respectively), and the Company believes the descriptions to be accurate. In contrast to describing the past, various sentences of this Report indicate that the Company believes certain results are likely to occur after June 30, 1999. These sentences typically use words or phrases like "believes," "expects," "anticipates," "estimates," "will continue" and similar expressions. Statements using those words or similar expressions are intended to identify "forward-looking statements" as that term is used in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, projections of operating results for periods after June 30, 1999, concerning either a specific segment of the Company's business or the Company as a whole. For example, projections concerning the following are forward-looking statements: net revenues, operating expenses, net income or loss, contribution to overhead, number of subscribers, subscription revenues, revenues per advertising page, number of advertising pages, production expense per copy, page views, revenues per page view, marketing expenses, sales expenses, and general and administrative expenses. Any statement in this Report that does not describe a historical fact is deemed to be a forward-looking statement. 2. Actual Results May Be Different than Projections. Due to a variety of risks and uncertainties, actual results, however, may be materially different from the results projected in the forward-looking statements. These risks and uncertainties include those set forth in Item 2 (entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations") of Part I hereof, in Exhibit 99 hereof and elsewhere in this Report, and in Item 1 (entitled "Business") of Part I and in Item 7 (entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations") of Part II of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, filed with the Securities and Exchange Commission. 3. The Company Has No Duty to Update Projections. The forward-looking statements in this Report are current only on the date this Report is filed. After the filing of this Report, the Company's expectations of likely results may change, and the Company might come to believe that certain forward-looking statements in this Report are no longer accurate. The Company shall not have any obligation, however, to release publicly any corrections or revisions to any forward-looking statements contained in this Report, even if the Company believes the forward-looking statements are no longer accurate. Three and Six Months Ended June 30, 1999 as Compared to the Three and Six Months Ended June 30, 1998 Net Loss from Continuing Operations The Company's net loss from continuing operations for the three and six months ended June 30, 1999 decreased 16% and 20%, to $2,276,726 and $3,594,858, respectively, as compared to $2,720,996 and $4,503,182, respectively, in 1998. The decrease is primarily due to reduced general and administrative expenses as well as realized gains on the sale of investments that occurred in the first quarter of 1999. Print Publications operations provided a negative operating contribution (before deducting general and administrative ("G&A") and depreciation and amortization expenses) of $92,636 and $215,904 for the three and six months ended June 30, 1999, respectively, an improvement of 75% and 57%, respectively, from the prior year's negative operating contribution of $369,053 and $497,119, respectively. Individual Investor magazine provided a negative operating contribution (before deducting general and administrative ("G&A") and depreciation and amortization expenses) of $79,458 and $269,416 for the three and six months ended June 30, 1999, respectively, as compared to a negative operating contribution of $252,700 and $301,684, respectively, in 1998, an improvement of 69% and 11%, respectively. The change in operating contribution is primarily due to a decrease in production and distribution expenses, offset in part by a decrease in revenues. Ticker (sm) magazine provided a negative operating contribution (before deducting G&A and depreciation and amortization expenses) of $14,954 and a positive operating contribution (before deducting G&A and depreciation and amortization expenses) of $27,249 for the three and six months ended June 30, 1999, respectively, as compared to a negative operating contribution of $121,982 and $219,379, respectively, in 1998. The change in operating contribution is primarily attributable to increased advertising revenues, offset in part by increased promotion and selling costs associated with the increase in revenues. Ticker is expected to provide a positive contribution to overhead going forward. Special Situations Report provided a positive operating contribution (before deducting G&A and depreciation and amortization expenses) of $1,776 and $26,263 for the three and six months ended June 30, 1999, respectively, as compared to a positive operating contribution of $5,629 and $23,944, respectively, in 1998. The Company currently anticipates that the Print Publishing operations as a whole will be providing a positive contribution to overhead before year-end. Online Services operations provided a negative operating contribution (before deducting G&A and depreciation and amortization expenses) of $712,357 and $1,194,467 for the three and six months ended June 30, 1999, respectively, as compared to a negative operating contribution of $543,890 and $1,004,994, respectively, in 1998. The change in operating contribution is primarily attributable to lower advertising revenues for the Company's website, Individual Investor Online (www.individualinvestor.com), together with increased editorial and research costs, offset in part by lower production and development expenses. Advertising revenues for Individual Investor Online are expected to increase significantly in the third quarter of 1999, as compared to the second quarter of 1999. Operating Revenues Total revenues from continuing operations for the three and six months ended June 30, 1999 increased 1% and 1% to $3,703,637 and $7,705,453, respectively, as compared to $3,661,530 and $7,615,503, respectively, in 1998. Revenues for the Print Publications operations for the three and six months ended June 30, 1999 increased 2% and 1%, to $3,385,090 and $7,133,937, respectively, as compared to $3,310,144 and $7,034,696, respectively, in 1998. Revenues for the Online Services operations for the three and six months ended June 30, 1999 decreased 9% and 2%, to $318,547 and $571,516, respectively, as compared to $351,386, and $580,807, respectively, in 1998. Print Publications advertising revenues for the three and six months ended June 30, 1999 increased 11% and 5%, to $2,266,808 and $4,833,715, respectively, as compared to $2,047,147 and $4,610,990, respectively, in 1998. Ticker advertising revenues for the three and six months ended June 30, 1999 increased 33% and 54%, to $713,718 and $1,516,236, respectively, as compared to $537,974 and $986,905, respectively, in 1998. This increase relates primarily to an increase in advertising pages for the three and six months ended June 30, 1999 of approximately 26% and 42%, as well as an increase in the advertising net rate per page of 6.5% and 4.9%, respectively, when compared to 1998. Individual Investor advertising revenues for the three and six months ended June 30, 1999 increased 3% and decreased 8%, respectively, to $1,553,090 and $3,317,479, respectively, as compared to $1,509,173 and $3,624,085, respectively, in 1998. The three month increase for Individual Investor relates primarily to a higher advertising net rate per page of approximately 13%, partially offset by a reduction in advertising pages of approximately 10%, when compared to 1998. The six month decrease relates primarily to a reduction in advertising pages of approximately 17%, offset in part by an increase in the advertising net rate per page of approximately 13%, when compared to 1998. Print Publications circulation revenues for the three and six months ended June 30, 1999 decreased 9% and 4%, to $837,013 and $1,694,567, respectively, as compared to $918,905 and $1,769,861, respectively, in 1998. The decrease is primarily attributable to a reduction in Individual Investor subscription revenues, partially offset by an increase in newsstand sell-through. Subscription revenues for the three and six months ended June 30, 1999 decreased 15% and 9%, to $544,582 and $1,115,066, respectively, as compared to $640,145 and $1,224,166, respectively, in 1998. The decrease resulted from the Company's use of subscription-generation sources that provide for continuing numbers of subscribers with low marketing expenses but little or no subscription revenue. The Company believes that subscription revenues has stabilized at this level. Newsstand revenues for the three and six months ended June 30, 1999 increased 25% and 20%, to $218,853 and $419,484, respectively, as compared to $174,780 and $348,298, respectively, in 1998. Print Publications list rental and other revenues for the three and six months ended June 30, 1999 decreased 18% and 7%, to $281,269 and $605,655, respectively, as compared to $344,092 and $653,845, respectively, in 1998. List rental revenue for the three and six months ended June 30, 1999 decreased 4% and increased 17%, to $220,479 and $457,353, respectively, as compared to $228,758 and $389,526, respectively, in 1998. Other revenues for the three and six months ended June 30, 1999 decreased 47% and 44%, to $60,790 and $148,302, respectively, as compared to $115,334 and $264,319, respectively, in 1998. The decrease in other revenues is primarily attributable to reduced demand for reprints of Individual Investor magazine. Online Services advertising revenues for the three and six months ended June 30, 1999 decreased 24% and 20%, to $267,989 and $463,276, respectively, as compared to $351,386 and $580,807, respectively, in 1998. The decrease in advertising revenues is attributable to a decline in advertising sponsorship sales by the Company's independent sales agent, along with lower rates earned on advertising impressions for Individual Investor Online (www.individualinvestor.com), offset in part by advertising revenue earned by InsiderTrader.com. As a result of the decrease in advertising sponsorships for Individual Investor Online, in April 1999 the Company reorganized and strengthened its sales efforts and is now selling sponsorship advertisements directly as opposed to through a sales agent. Traffic to the Company's web sites for the three months ended June 30, 1999 increased 30% to an average of approximately 5.3 million page views per month, as compared to an average of approximately 4.0 million page views per month during the three months ended March 31, 1999. The Company expects that Online Services advertising revenues should trend higher in the future (with sequential fluctuations), and expects that gross margins associated with such revenues will increase in light of reduced dependence upon outside sales agents. Online Services subscription revenues for the three and six months ended June 30, 1999 were $32,320 and $72,472, respectively, as compared to $0 and $0, respectively, in 1998. The increase in subscription revenues is attributable to InsiderTrader.com (www.insidertrader.com), which the Company purchased in November 1998. The Company anticipates launching other subscription-based web sites this year, which should increase Online Services subscription revenues. Operating Expenses Total operating expenses from continuing operations for the three and six months ended June 30, 1999 decreased 6% and 2% to $6,020,190 and $11,896,705, respectively, as compared to $6,396,234 and $12,162,348, respectively, in 1998. Editorial, production and distribution expenses for the three and six months ended June 30, 1999 decreased 10% and 7% to $2,684,104 and $5,439,822, respectively, as compared to $2,968,414 and $5,868,888, respectively, in 1998. Print Publications editorial, production and distribution expenses for the three and six months ended June 30, 1999 decreased 13% and 10% to $2,098,588 and $4,312,712, respectively, as compared to $2,410,420 and $4,798,222, respectively, in 1998. The decrease relates primarily to Individual Investor magazine, which had fewer pages and less copies printed, along with lower paper costs and reduced manufacturing expenses resulting from a renegotiated agreement with the Company's printer. Online Services production and editorial expenses for the three and six months ended June 30, 1999 increased 5% and 5% to $585,516 and $1,127,110, respectively, as compared to $557,994 and $1,070,666, respectively, in 1998. The increase is primarily related to higher editorial and research costs, offset in part by lower production and development expenses for the Company's primary website, Individual Investor Online (www.individualinvestor.com), together with production and research costs for InsiderTrader.com, which the Company purchased in November 1998. Promotion and selling expenses for the three and six months ended June 30, 1999 increased 14% and 13% to $1,824,526 and $3,676,002, respectively, as compared to $1,606,059 and $3,248,728 respectively, in 1998. Print Publications promotion and selling expenses for the three and six months ended June 30, 1999 increased 9% and 11% to $1,379,138 and $3,037,129, respectively, as compared to $1,268,777 and $2,733,593, respectively, in 1998. The increase is primarily due to higher advertising salaries as a result of hiring additional in-house sales personnel, as well as increased marketing and promotion expenses, partially offset by reduced sales commissions. Online Services promotion and selling expenses for the three and six months ended June 30, 1999 increased 32% and 24% to $445,388 and $638,873, respectively, as compared to $337,282 and $515,135, respectively, in 1998. The increase is primarily attributable to increased marketing and promotion expenses, increased newspaper advertising and increased recruiting fees, partially offset by reduced advertising sales commissions and reduced barter advertising expenses. General and administrative expenses for the three and six months ended June 30, 1999 decreased 22% and 12% to $1,359,985 and $2,532,476, respectively, as compared to $1,743,493 and $2,893,153, respectively, in 1998. The decrease primarily results from unusually high 1998 expenses (severance, legal fees and executive search fees) relating to changes in senior management and key advertising sales personnel, offset in part by moving costs and increased rent expense in the 1999 periods related to the relocation of the Company's corporate office in March 1999. Depreciation and amortization expense for the three and six months ended June 30, 1999 increased 94% and 64% to $151,575 and $248,405, respectively, as compared to $78,268 and $151,579, respectively, in 1998. The increase is primarily attributable to additional depreciation for computer equipment purchased for the Company's Online Services operations as well as the amortization of leasehold improvements related to the new corporate office. Interest and Other Income Interest and other income for the three and six months ended June 30, 1999 increased to $39,827 and $596,394, respectively, as compared to $13,708 and $43,663, respectively, in 1998. The increase is primarily attributable to realized gains of $503,215 from the sale of investments in the first quarter of 1999. Discontinued Operations On April 30, 1998, the Company's Board of Directors decided to discontinue the Company's investment management services business. As a result of the Board's decision, WisdomTree Capital Management, Inc. ("WTCM") is dissolving the domestic and offshore investment funds, liquidating fund investments and distributing the net assets to all investors as promptly as possible. Accordingly, the operating results related to investment management services have been segregated from continuing operations and reported as a separate line item on the statement of operations. Net loss from discontinued operations for the three and six months ended June 30, 1999 was $0 and $0, respectively, as compared to a net loss of $258,619 and $636,079 for 1998. No additional loss amounts were recorded by the Company for the three and six months ended June 30, 1999 for discontinued operations because the Company believes that any remaining net operating losses and related material costs associated with these discontinued operations have been adequately provided for by provisions established in 1998. The Company's net investment in discontinued operations of $142,534 at June 30, 1999 represents its share of the net assets of the domestic investment fund, less any costs associated with discontinuing the investment management services business. Net Loss The Company's net loss for the three and six months ended June 30, 1999 decreased 24% and 30% to $2,276,726 and $3,594,858, respectively, as compared to $2,979,615 and $5,139,261, respectively, in 1998. No income taxes were provided in 1999 or 1998 due to the net loss. The basic and dilutive net loss per weighted average common share for the three and six months ended June 30, 1999 was $0.25 and $0.40, respectively, as compared to $0.41 and $0.71, respectively, in 1998. Liquidity and Capital Resources During the six months ended June 30, 1999, the Company received $2,228,100 from exercises of stock options, $990,729 from sales of investments, and $139,849 from the liquidation of the domestic fund. These inflows help to fund the Company's net cash used in operating activities of $3,568,680 during the period. The Company also incurred approximately $1.5 million of capital expenditures during the six months ended June 30, 1999 (primarily leasehold improvements and furniture connected with the relocation of its corporate office). Additionally, the Company used its working capital to fund a $750,000 acquisition of common stock of Kirlin Holding Corp. As of June 30, 1999, the Company had working capital of $9,107,152, which included cash and cash equivalents totaling $2,332,163 and investments of $7,506,376 which should be available during the second half of 1999, subject to market fluctuations and liquidity, to provide working capital to fund the Company's operations. As of August 9, 1999, the value of these investments declined to $5,304,451. The Company currently owns 175,000 shares of Wit Capital Group, Inc. Class C Common Stock. Wit Capital is an online investment banking and brokerage firm. The Company's stake in Wit Capital was acquired in 1997 as 250,000 shares of Series A Preferred Stock valued at $250,000, and was converted into 175,000 shares of Class C Common Stock due to a 7-for-10 reverse split of Class C Common Stock and the completion of Wit Capital's IPO on June 4, 1999. The investment is recorded on the Company's June 30, 1999 balance sheet at $5,950,000 based upon the June 30, 1999 closing price of Wit Capital Common Stock on the Nasdaq National Market. The Company may not transfer or dispose of the Class C Common Stock (or any interest in such shares) until 180 days from the completion of the IPO (i.e., until December 1, 1999), at which point it will automatically convert into Common Stock and will not be subject to any lock-up. The Company could realize a significant gain with respect to this investment, although there can be no assurance that the Company ultimately will realize any value with respect to its shares of Wit Capital. As of August 9, 1999, the value of the Company's investment in Wit Capital has declined to $3,171,875. On June 2, 1999, the Company and Kirlin Holding Corp ("Kirlin") entered into a Securities Purchase Agreement ("Securities Purchase Agreement") pursuant to which the Company acquired 300,000 shares ("Investor Shares") of common stock of Kirlin for $750,000, representing 4.9% of the then-outstanding shares of Kirlin's common stock (the share amount has been restated to reflect a 2-for-1 stock split effected July 30, 1999). The purchase price was paid from the Company's working capital. Kirlin contributed all the proceeds of this sale to the capital of its subsidiary, VentureHighway.com ("VentureHighway"), in which the Company has a 19.9% stake. Kirlin filed a registration statement registering the resale of the Investor Shares under the Securities Act of 1933 and is obligated to use its best efforts to cause the registration statement to become effective as soon as practicable thereafter. The investment in Kirlin is recorded on the Company's June 30, 1999 balance sheet at $1,471,950 based upon the June 30, 1999 closing price of Kirlin's common stock on the Nasdaq Small-Cap Market. The Company could realize a significant gain with respect to this investment, although there can be no assurance that the Company ultimately will realize any value with respect to its shares of Kirlin. As of August 9, 1999, the value of the Company's investment in Kirlin has increased to $2,062,500. Kirlin (Nasdaq: KILN) is a holding company engaged in securities brokerage, securities trading and merchant banking activities through its primary operating subsidiary, Kirlin Securities, Inc. Kirlin Securities is a full service, retail oriented brokerage firm and is a member of the NASD. On June 2, 1999, the Company, Kirlin and VentureHighway (at the time a wholly-owned subsidiary of Kirlin), entered into an agreement ("Agreement") pursuant to which the Company acquired 2,484 newly-issued shares of common stock of VentureHighway, representing 19.9% of the then-outstanding shares of common stock (the other 80.1% of which continue to be held by Kirlin). The purchase price is payable in the form of advertising for VentureHighway in the Company's magazines and websites during the next 30 months. The purchase price had a stated value of $3.2 million, and is recorded on the Company's June 30, 1999 balance sheet at a fair value of $2.6 million. VentureHighway owns and operates VentureHighway.com, a branded website designed to serve as an interactive portal for the matching of companies seeking funding with qualified investors seeking to fund such companies, and the facilitation of private placements and public offerings of securities of companies. There currently is no public market for VentureHighway securities, and there is no assurance that the Company will realize any value with respect to its investment in VentureHighway. The Company's current levels of revenues are not sufficient to cover its expenses. Under its current business plan, the Company intends to control its operating expenses while continuing to invest in its existing products. The Company anticipates losses to continue through 1999, although the Company anticipates that losses from continuing operations in 1999 will be significantly less than in 1998. Profitability may be achieved in future periods only if the Company can substantially increase its revenues while controlling increases in expenses. There can be no assurance that revenues will be substantially increased, or that the increases in expenses can be controlled adequately to enable the Company to attain profitability. Management continues to expect that revenues will grow in 1999 as the Company implements changes made by a new management team. Print Publications advertising sales are expected to increase due to the addition of new key sales personnel, anticipated publication of a 13th issue of Ticker, and the effect of the increased awareness in the marketplace due in part to selected public relations and advertising efforts. There can be no assurance, however, that advertising sales will increase because higher advertising rates may not be accepted by advertisers, advertising pages may continue to decline for Individual Investor, circulation may drop at either or both Individual Investor and Ticker, and the advertising mix may change. Although the Company has recently added key advertising sales personnel, no assurance can be given that these changes will result in advertising revenue increases. The Company also believes that a stock market correction or "bear" market would adversely affect its ability to sell advertising, particularly to the financial advertiser categories. The Company plans to continue investing in its Online Services because it believes that this line of business offers the greatest opportunity for generating substantial revenues and shareholder value over the longer term. The Company expects to realize higher revenues from operations of its flagship online service, Individual Investor Online, primarily due to the anticipated traffic growth to the site, which is expected to generate higher levels of sponsorship and banner revenues. Additionally, the Company expects to recognize at least $1.1 million of online revenues over the next four quarters as a result of its agreement with VentureHighway.com. There can be no assurance, however, that such traffic growth will be realized, or that, even if realized, such traffic growth will result in higher revenues or shareholder value. The Company also expects to launch additional subscription-based online products during 1999. There can be no assurance, however, that such products in fact will be launched, or that if launched, such products will be successful. Based on the Company's business plan, the Company believes that its working capital and its investments will be sufficient to fund its operations and capital requirements at least through 1999. In the event that the Company cannot obtain sufficient liquidity with respect to the Company's investments, the Company may need to obtain debt or equity financing during the fourth quarter of 1999 (during which quarter the Company's shares of Wit Capital should become freely tradable). Thereafter, the Company may need to raise additional capital in order to sustain operations unless the Company achieves profitability through the generation of revenues beyond those currently anticipated. The Company is currently exploring its ability to obtain additional financing. No assurance can be given as to the availability of additional financing or, if available, the terms upon which it may be obtained. Any such additional financing may result in dilution of an investor's equity investment in the Company. Failure to obtain additional financing on favorable terms, or at all, could have a substantial adverse effect on the Company's future ability to conduct operations. Year 2000 The Company has evaluated the potential impact of the situation commonly referred to as the "Year 2000 Issue". The Year 2000 Issue concerns the inability of information systems, whether due to computer hardware or software, to properly recognize and process date sensitive information relating to the year 2000 and beyond. Many of the world's computer systems currently record years in a two-digit format. Such computer systems may be unable to properly interpret dates beyond the year 1999, which could lead to business disruptions in the U.S and internationally. The potential costs and uncertainties associated with the Year 2000 Issue will depend on a number of factors, including software, hardware and the nature of the industry in which a company operates. The Year 2000 Issue could have a material adverse effect on the Company's results of operations and ability to conduct business. To attempt to ensure that the Company's computer systems (including computer hardware and computer software) are "Year 2000 Ready" (that is, are not disrupted by the Year 2000 Issue), the Company developed a plan to assess, and remediate where necessary, any Year 2000 Issue with respect to the Company's computer systems, and appointed certain employees to administer such plan. The plan contains four phases: first, identifying all computer hardware and software being used by the Company; second, determining whether such hardware and software is Year 2000 Ready; third, remediating any Year 2000 Issue with respect to any particular piece of hardware or software; and fourth, performing a final audit and test. The Company has completed the first two phases, and has completed the third phase with respect to hardware issues. The Company has made significant progress toward completing the third phase with respect to software issues, and currently expects to complete the third and fourth phases before October 1999. As of June 30, 1999, the Company has incurred direct costs of approximately $20,000 relating to the development and implementation of its Year 2000 Plan. The Company currently believes that total direct costs associated with making the Company's systems Year 2000 Ready should not exceed $30,000 and that such costs, together with any lost revenue associated with making the Company's systems Year 2000 Ready, should not have a material adverse effect on the Company's operating results or financial condition. The Company does not believe that the diversion of employee resources required to address the Year 2000 Issue will have a material effect on the Company's operating results or financial condition. The Company does not have in place a contingency plan of action in the event that it is not able to make its computer systems Year 2000 Ready, but will consider on an ongoing basis whether a contingency plan should be developed. The dates on which the Company believes it will complete its Year 2000 readiness phases, and the costs associated with such efforts, are based on the Company's current best estimates. However, there can be no guarantee that these estimates will be achieved, or that there will not be a delay in, or increased costs associated with, making the Company's systems Year 2000 Ready. Specific factors that might cause differences between the estimates and actual results include, but are not limited to, the availability and cost of personnel trained in these areas, the ability to locate and correct all relevant computer code and hardware devices (such as microcontrollers), timely responses to and corrections by third parties and suppliers, the ability to implement interfaces between the new systems and the systems not being replaced, and similar uncertainties. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third parties and the interconnection of global businesses, the Company cannot ensure its ability to timely and cost-effectively resolve problems associated with the Year 2000 Issue, and a failure to do so could materially adversely affect the Company's operations and business, and expose it to third party liability. The Company also faces risks and uncertainties to the extent that the third party suppliers of products, services and systems on which the Company relies or customers do not have business systems or products that are Year 2000 Ready. The Company has initiated communications with all of its significant suppliers to determine the extent to which the Company's systems and products are vulnerable to those third parties' failure to remediate their own systems' Year 2000 Issues. The Company has received assurances from certain of its suppliers stating that such suppliers' systems are or will timely be Year 2000 Ready, but there is no guarantee that the systems or products of these or other companies on which the Company relies will be timely, if at all, made Year 2000 Ready, and such a failure by such companies could have a material adverse effect on the Company's systems and products. No one customer has accounted for more than 10% of the Company's revenues in the past year, and the Company has not initiated contact with its customers concerning the status of their Year 2000 readiness. There is no guarantee that the systems of the Company's customers will be made Year 2000 Ready, and a failure by a number of the Company's customers to become Year 2000 Ready could have a material adverse effect on the Company's revenues and cash flows. The Company is in the process of identifying what actions may be needed to mitigate vulnerability to problems related to enterprises with which the Company interacts, but does not currently have in place a contingency plan of action in the event that the failure by one or more third parties to make their computer systems Year 2000 Ready causes adverse effects to be suffered by the Company. The Company will consider on an ongoing basis the extent to which a contingency plan should be developed.
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 2. Changes in Securities Sales of Unregistered Securities - ----------------- ----------------------- ---------- -------------------------------- ---------------- ----------------------------- Date of sale Title of security Number Consideration received and Exemption from If option, warrant or sold description of underwriting registration convertible security, terms or other discounts to market claimed of exercise or conversion price afforded to purchasers - ----------------- ----------------------- ---------- -------------------------------- ---------------- ---------------------------- - ----------------- ----------------------- ---------- -------------------------------- ---------------- ---------------------------- 4/99 - 6/99 Options to purchase 37,700 Exercise price would be Section 4(2) Vesting over a period of common stock granted received upon exercise four years from date of to employees grant, subject to certain conditions of continued service; exercisable for a period lasting ten years from date of grant at exercise prices ranging from $4.50 to $8.125 per share. - ----------------- ----------------------- ----------- ------------------------------- ----------------- ---------------------------- 4/99 - 6/99 Common stock granted 2,400 Public relations advisory Section 4(2) Shares held by the Company to consultant services in escrow and delivered in equal monthly amounts from June 1999 to May 2000, provided agreement is not terminated. Shares held in escrow and not yet delivered subject to repurchase at nominal amount in event of termination. - ---------------- ----------------------- ---------- -------------------------------- ---------------- -----------------------------
ITEM 4. Submission of Matters to a Vote of Security Holders On June 22, 1999, the Company held the annual meeting of stockholders for the purpose of electing one director of the Company, S. Christopher Meigher III, for a term of three years, and to consider and vote upon a proposal to amend the Company's Certificate of Incorporation to increase the number of authorized shares of Common Stock to 40,000,000. The shares of Common Stock voted on the matters were as follows: 8,106,531 shares were cast in favor and 173,837 shares were withheld for the election of the director, and 8,027,910 shares were cast in favor, 242,848 shares were against and 9,610 shares were abstained for the increase to the number of authorized shares of Common Stock. ITEM 5. Other Information In July 1997 certain former limited partners of WisdomTree Associates, L.P. ("WTA"), a domestic private investment fund of which WisdomTree Capital Management, Inc., a wholly-owned subsidiary of the Company, is the general partner, initiated an action in the Supreme Court of the State of New York, County of New York, captioned Richard Tarlow and Sandra Tarlow v. WisdomTree Associates, L.P., Bob Schmidt and Jonathan Steinberg, Index No. 113819/97. Defendants moved to dismiss the action based on plaintiffs' failure to file a complaint, and the action was dismissed without prejudice in October 1997. In October 1998, plaintiffs moved to vacate the default judgment. Defendants opposed the motion. On April 20, 1999, the court denied plaintiffs' motion with respect to Messrs. Schmidt and Steinberg, but granted the motion with respect to WTA and plaintiffs were permitted to and did file and serve a complaint solely against this defendant. Plaintiffs allege that WTA did not timely process plaintiffs' request for redemption of their interest in WTA, which delay allegedly caused plaintiffs to suffer approximately $470,000 in damages. WTA has moved to dismiss the complaint as to all causes of action other than the breach of contract claim. The parties are awaiting the Court's ruling on the motion, and WTA intends to continue conducting a vigorous defense. Due to the inherent uncertainty of litigation, the Company is not able to reasonably estimate the potential losses, if any, that may be incurred in relation to this litigation. In April 1999 a stockholder of the Company initiated an action in the Court of Chancery of the State of Delaware, New Castle County, captioned Michele S. Criden v. Jonathan L. Steinberg, Bruce L. Sokoloff, Peter M. Ziemba and S. Christopher Meigher III (C.A. No. 17082). The Company is named as a nominal defendant in the action. Plaintiff alleged that the four individual defendants, who comprise the entire Board of Directors of the Company, took improper action (i) on November 19, 1998, in determining to amend the terms of options previously granted to Jonathan Steinberg to reduce their exercise prices (which ranged from $4.9375 to $7.50) to $1.25 (11% higher than the last sale price on the trading date immediately preceding the date of such amendment), and (ii) on December 23, 1998, in determining to grant replacement options to each of Messrs. Sokoloff, Ziemba and Meigher, conditioned upon cancellation of their existing options, which replacement options had an exercise price of $2.00 per share (the last sale price of the Common Stock on the trading date immediately preceding the date of the new grant), which was less than the exercise price of options previously granted to them (which exercise prices ranged from $4.375 to $10.50). Plaintiff claimed that such actions constituted corporate waste and a diversion of corporate assets for improper and unnecessary purposes and that the directors breached their fiduciary duties, including their duty of loyalty, to the Company and its stockholders. Plaintiff demanded judgment (i) enjoining the four directors from exercising any options at the reduced exercise price, (ii) declaring a constructive trust of any proceeds resulting from the directors' exercise of such options, (iii) damages, on behalf of the Company, for losses and damages suffered and to be suffered in connection with the option repricings, including interest thereon, and (iv) awarding plaintiffs the costs of this action, including reasonable attorney's fees. In June 1999, defendants moved to dismiss the complaint. Plaintiff indicated that she would not oppose the motion, but rather would file an amended complaint. In August 1999, plaintiff filed an amended complaint. The Board of Directors believed at the time, and continues to believe, that the actions taken on November 19, 1998 and December 23, 1998, were proper. ITEM 6. Exhibits and Reports on Form 8-K Exhibits Exhibit Description Method of Filing NO. ---- ------------ ---------------- 3.1 Certificate of Amendment of Amended Filed herewith and Restated Certificate of Incorporation dated June 22, 1999 3.2 Amended and Restated Certificate of Filed herewith Incorporation of Registrant, as amended, through June 22, 1999 3.3 By-Laws of Registrant amended through Filed herewith April 27,1999 4.1 Specimen Certificate for Common Stock of Incorporated by Registrant reference to Exhibit 4.1 to the Form S-18 10.1 Form of Warrant dated December 16, 1998 Filed herewith 10.2 Letter dated as of April 28, 1999 between Filed herewith Registrant, Great American Life Insurance Company and Great American Insurance Company 27 Financial Data Schedule June 30, 1999 Filed only with the electronic submission of Form 10-Q in accordance with the EDGAR requirement 99 Certain Risk Factors Filed herewith (a) Reports on Form 8-K During the Quarter Ended June 30, 1999, the Company filed a Current Report on Form 8-K dated June 2, 1999, reporting under Item 2 the acquisition of 19.9% of the then-outstanding shares of common stock of VentureHighway.com Inc., as well as 150,000 shares (pre-split) of common stock of Kirlin Holding Corp. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: August 13, 1999 INDIVIDUAL INVESTOR GROUP, INC. (Registrant) By: /s/ Jonathan L. Steinberg Jonathan L. Steinberg, Chief Executive Officer and Director By: /s/ Henry G. Clark Henry G. Clark, Vice President Finance (Principal Financial and Accounting Officer)
                                                                 EXHIBIT 3.1


                            CERTIFICATE OF AMENDMENT
                                       OF
                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                         INDIVIDUAL INVESTOR GROUP, INC.


                  Pursuant  to the  General  Corporation  Law of  the  State  of
Delaware ("GCL"), it is hereby certified that:

                  1. The present name of the corporation (hereinafter called the
"corporation")  is  Individual  Investor  Group,  Inc.  The name under which the
corporation was incorporated was Financial Data Systems, Inc. The date of filing
the original  certificate of incorporation of the corporation with the Secretary
of State of the State of Delaware was September 19, 1985.

                  2. The  certificate  of  incorporation  of the  corporation is
hereby  amended by deleting  the first  paragraph  of Article  Fourth and in its
stead substituting the following:

                           The total  number of shares of all  classes  of stock
                  that  the  Corporation   shall  have  authority  to  issue  is
                  forty-two million  (42,000,000) shares, of which forty million
                  (40,000,000) shares will be shares of Common Stock, with a par
                  value  of  one  cent   ($.01)  per  share,   and  two  million
                  (2,000,000)  shares shall be shares of Preferred Stock, with a
                  par value of one cent ($.01) per share.

                  3. Except as otherwise  amended hereby,  the provisions of the
certificate of incorporation of the corporation are in full force and effect.

                  4. The amendment to the certificate of incorporation  has been
duly adopted in  accordance  with the  provisions  of Section 242 of the GCL, by
resolution of the Board of Directors of the corporation and by affirmative  vote
of the holders of a majority of the  outstanding  stock entitled to vote thereon
at a meeting of stockholders.

                  IN  WITNESS   WHEREOF,   the  undersigned   have  signed  this
Certificate of Amendment on this 22nd day of June 1999.



                                  /s/ Jonathan L. Steinberg
                                  Jonathan L. Steinberg, Chief Executive Officer


ATTEST:



/s/ Henry G. Clark
Henry G. Clark, Secretary


                                                                 EXHIBIT 3.2


                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                         INDIVIDUAL INVESTOR GROUP, INC.
                       (as amended through June 22, 1999)


                                    ARTICLE I
         The name of the Corporation is "INDIVIDUAL INVESTOR GROUP, INC."

                                   ARTICLE II
         The  address  of the  Corporation's  registered  office in the State of
Delaware is The Corporation  Trust Company,  1209 Orange Street,  in the City of
Wilmington,  County  of New  Castle.  The name of its  registered  agent at such
address is The Corporation Trust Company.

                                   ARTICLE III
         The  purpose  of the  Corporation  is to  engage in any  lawful  act or
activity for which  corporations may be organized under the General  Corporation
Law of Delaware.

                                   ARTICLE IV
         The total number of shares of all classes of stock that the Corporation
shall have authority to issue is forty-two million (42,000,000) shares, of which
forty million  (40,000,000)  shares shall be shares of Common Stock,  with a par
value of one cent ($.01) per share, and two million  (2,000,000) shares shall be
shares of Preferred Stock, with a par value of one cent ($.01) per share.

                  The Board of Directors of the Corporation  hereby expressly is
granted authority to authorize, in accordance with Section 151(a) of the General
Corporation Law of the State of Delaware,  from time to time the issuance of one
or more series of Preferred  Stock and with respect to any such series to fix by
resolution or resolutions the numbers, powers,  designations,  preferences,  and
relative,  participating,  optional, or other special rights of such series, and
the qualifications,  limitations, or restrictions thereof, including but without
limiting the generality of the foregoing, the following:

       (1)      entitling the holders  thereof to cumulative, non-cumulative, or
partially cumulative dividends, or to no dividends;
       (2)      entitling the holders thereof to receive  dividends payable on a
parity with, junior to, or in preference to, the dividends payable  on any other
class or series of capital stock of the Corporation;
       (3)      entitling  the  holders  thereof  to rights upon the liquidation
of, or upon any  distribution of  the  assets of,  the Corporation, on  a parity
with, junior to, or in preference to, the  rights of  any  other class or series
of capital stock of the Corporation;
       (4)      providing for the conversion,  at the option of the holder or of
the Corporation or both, of the shares of  Preferred  Stock into shares  of  any
other class or classes of capital stock of the Corporation  or any serie  of the
same or any other class or classes or into  property of the  Corporation or into
the securities or  properties of any  other corporation or  person, or providing
for no conversion;
       (5)      providing  for the  redemption,  as a whole or in  part, of  the
shares of  Preferred Stock at the option of the Corporation, in cash,  bonds, or
other  property,  at such  price or prices, within such  period or  periods, and
under such conditions  as the Board  of  Directors  shall so  provide, including
provision  for  the  creation  of a sinking  fund for the redemption thereof, or
providing for no redemption; and
       (6)      providing for the lack of voting rights or limited voting rights
or enjoying general, special, or multiple voting rights.


                                    ARTICLE V
         The  following  provisions  are  inserted  for  the  management  of the
business  and the  conduct of the  affairs of the  Corporation  and for  further
definition,  limitation,  and regulation of the powers of the Corporation and of
its directors and stockholders:
                  (1)      The business and affairs of  the Corporation shall be
         managed by or under the direction of the Board of Directors;
                  (2)  The  directors  shall  have  concurrent  power  with  the
         stockholders  to make,  alter,  amend,  change,  add to, or repeal  the
         Bylaws of the Corporation;
                  (3) The number of  directors  of the  Corporation  shall be as
         from time to time fixed by the Bylaws of the Corporation;
                  (4)  In  addition  to  the  powers  and  authority   expressly
         conferred  upon them herein or by  statute,  the  directors  hereby are
         empowered  to exercise  all such powers and do all such acts and things
         as may be exercised or done by the Corporation,  subject, nevertheless,
         to the  provisions  of the General  Corporation  Law of Delaware,  this
         Amended  and  Restated  Certificate  of  Incorporation,  and any Bylaws
         adopted  by  the  stockholders;   provided,  however,  that  no  Bylaws
         hereafter adopted by the stockholders shall invalidate any prior act of
         the  directors  which would have been valid if such Bylaws had not been
         adopted.

                                   ARTICLE VI
         The number of  directors  to  constitute  the whole Board of  Directors
shall be such  number as shall be set forth in the  Bylaws and as shall be fixed
from time to time by resolution of the Board of Directors or by the stockholders
of the  Corporation.  The Board of Directors shall be divided into three classes
as  nearly  equal in  number  as may be,  with the term of  office  of one class
expiring each year. At each annual  meeting of the  stockholders,  successors to
the directors  whose terms shall then expire shall be elected to hold office for
terms expiring at the third succeeding  annual meeting of stockholders.  In case
of any  vacancies,  by reason of an  increase  in the  number  of  directors  or
otherwise,  each  additional  director  may be elected by the Board of Directors
until the end of the term he is elected to fill and until his successor shall be
elected and  qualified  in the class to which such  director is assigned and for
the term or remainder  of the term of such class.  Directors  shall  continue in
office until others are chosen and qualified in their stead.  When the number of
directors  is  changed,  any newly  created  directorships  or any  decrease  in
directorships  shall be so  assigned  among the  classes  by a  majority  of the
directors then in office,  though less than a quorum,  as to make all classes as
nearly  equal in  number  as may be  feasible.  No  decrease  in the  number  of
directors shall shorten the term of any incumbent director.

         Notwithstanding the foregoing,  whenever the holders of any one or more
series of Preferred Stock issued by the Corporation shall have the right, voting
separately  by class or  series,  to elect  directors  at an annual  or  special
meeting of stockholders, the election, term of office, filling of vacancies, and
other  features  of such  directorships  shall be  governed by the terms of this
Certificate of Incorporation  applicable  thereto,  and such directors  selected
shall not be divided into classes  pursuant to this Article VI unless  expressly
provided by such terms.

                                   ARTICLE VII
         No  director  shall be  personally  liable  to the  Corporation  or its
stockholders  for  monetary  damages  for any breach of  fiduciary  duty by such
director  as a  director,  pursuant  to  Section  102  (b)  (7) of  the  General
Corporation Law of Delaware.  Notwithstanding the foregoing sentence, a director
shall be liable to the extent  provided by applicable  law (1) for any breach of
the director's duty of loyalty to the Corporation or its  stockholders,  (2) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) pursuant to Section 174 of the General Corporation
Law of Delaware,  or (4) for any transaction  from which the director derived an
improper personal  benefit.  No amendment to or repeal of this Article VII shall
apply to or have  any  effect  on the  liability  or  alleged  liability  of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.

                                  ARTICLE VIII
         The Corporation,  to the fullest extent permitted by Section 145 of the
general Corporation Law of Delaware, as the same may be amended and supplemented
from time to time,  or by any  successor  thereto,  shall  indemnify any and all
persons  whom it shall  have power to  indemnify  under  such  Section  from and
against any and all of the expenses,  liabilities, and other matters referred to
in or covered by such  Section,  and, to the fullest  extent  permitted  by such
Section,  shall advance expenses  incurred by such persons in defending civil or
criminal actions, suits, and proceedings. The indemnification and advancement of
expenses  provided for herein shall not be deemed  exclusive of any other rights
to which  those  seeking  indemnification  or  advancement  of  expenses  may be
entitled  under any bylaw,  agreement,  vote of  stockholders  or  disinterested
directors, or otherwise.  Such indemnification and advancement of expenses shall
continue as to a person who has ceased to be a director,  officer,  employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person.

                                   ARTICLE IX
         Meetings  of  stockholders  may be held  within or without the State of
Delaware,  as the Bylaws may provide.  The books of the  Corporation may be kept
(subject to any provision  contained in the General Corporation Law of Delaware)
outside the State of Delaware at such place or places as may be designated  from
time to time by the Board of Directors or in the Bylaws of the Corporation.


                                    ARTICLE X
         Whenever  a  compromise  or  arrangement   is  proposed   between  this
Corporation  and  its  creditors  or any  class  of  them  and/or  between  this
Corporation  and its  stockholders  or any class of them, any court of equitable
jurisdiction  within the State of Delaware may, on the  application in a summary
way of this  Corporation  or of any  creditor or  stockholder  thereof or on the
application of any receiver or receivers  appointed for this  Corporation  under
the provisions of Section 291 of the General  Corporation  Law of Delaware or on
the  application  of trustees in  dissolution  or of any  receiver or  receivers
appointed for this Corporation  under the provisions of the General  Corporation
Law of Delaware, order a meeting of the creditors or class of creditors,  and/or
of the  stockholders or class of stockholders of this  Corporation,  as the case
may be, to be summoned in such manner as the said court  directs.  If a majority
in  number  representing  three-fourths  in value of the  creditors  or class of
creditors,  and/or  of  the  stockholders  or  class  of  stockholders  of  this
Corporation,  as the case may be, agree to any compromise or arrangement  and to
any  reorganization  of this  Corporation as a consequence of such compromise or
arrangement,  the said  compromise or  arrangement  and the said  reorganization
shall,  if sanctioned by the court to which the said  application has been made,
be  binding  on all the  creditors  or class  of  creditors,  and/or  on all the
stockholders or class of stockholders of this  Corporation,  as the case may be,
and also on this Corporation.

                                   ARTICLE XI
         The Corporation  reserves the right to amend, alter,  change, or repeal
any provision contained in this Certificate of Incorporation,  in the manner now
or hereafter  prescribed by statute,  and all rights conferred upon stockholders
herein are granted subject to this reservation.


                                   ARTICLE XII
         The amount of the authorized  stock of the  Corporation of any class or
classes may be increased or decreased by the affirmative  vote of the holders of
a majority of the stock of the Corporation entitled to vote.

                                  ARTICLE XIII
         Elections of directors  need not be by ballot  unless the Bylaws of the
Corporation shall so provide.

                                                                 EXHIBIT 3.3


                                             [As amended through April 27, 1999]


                                     BY-LAWS

                                       OF

                         INDIVIDUAL INVESTOR GROUP, INC.




                                    ARTICLE I

                                     Offices


                  1. Registered Office. The registered office of the Corporation
in Delaware shall be at 1209 Orange Street, in the City of Wilmington, County of
New Castle,  State of  Delaware,  and the name of the  resident  agent in charge
thereof is The Corporation Trust Company.

                  2. Other Offices.  The  Corporation may also have an office or
offices at such other place or places,  within or without the State of Delaware,
as the Board of Directors may from time to time designate or the business of the
Corporation may require.


                                   ARTICLE II

                             Stockholders' Meetings


                  1. Annual Meetings.  The annual meeting of the stockholders of
the Corporation for the purpose of electing directors and for the transaction of
such other  business as may properly be brought before the meeting shall be held
at such time and on such date as shall be fixed from time to time by  resolution
of the Board of Directors  and as set forth in the notice of the  meeting.  Such
annual meeting of  stockholders  shall be held at such place,  within or without
the State of Delaware, as may be fixed by the Board of Directors.

                  2.  Special  Meetings.  Special  meetings of the  stockholders
shall be held at such place  within or without  the State of  Delaware as may be
designated in the notice of said  meeting,  upon call of the Board of Directors,
the Chairman of the Board, the President or the Secretary.


                  3.  Notice  of  Meetings.   The  Secretary  or  any  Assistant
Secretary shall cause notice of the place,  date and hour of each meeting of the
stockholders, and, in the case of a special meeting, the purpose or purposes for
which such meeting is called to be given personally or by mail, at least ten but
not more than sixty days prior to the  meeting,  to each  stockholder  of record
entitled to vote at his post office  address as the same appears on the books of
the  Corporation  at  the  time  of  such  mailing.  Notice  of any  meeting  of
stockholders  need not be given to any  stockholder  who shall  sign a waiver of
such notice in writing,  whether before or after the time of such meeting, or to
any stockholder  who shall attend such meeting in person or by proxy.  Notice of
any adjourned  meeting of the stockholders of the Corporation need not be given,
except as otherwise required by statute.

                  4.  Quorum.  A quorum at all  meetings of  stockholders  shall
consist of the  holders  of record of a  majority  of the shares of stock of the
Corporation, issued and outstanding, entitled to vote at the meeting, present in
person or by proxy,  except as otherwise  provided by statute or the Certificate
of Incorporation. When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any stockholder.

                  5.  Absence  of  Quorum.  In the  absence  of a quorum  at any
meeting or any adjournment  thereof, a majority of those present in person or by
proxy and entitled to vote may adjourn  such  meeting from time to time.  At any
such  adjourned  meeting  at which a  quorum  is  present  any  business  may be
transacted which might have been transacted at the meeting as originally called.

                  6.  Voting in  General.  Except as  otherwise  provided in the
By-Laws,  the  Certificate  of  Incorporation  or in the  laws of the  State  of
Delaware,  at every meeting of the  stockholders,  each stockholder of record of
the  Corporation  shall  have one vote in person  or by proxy for each  share of
stock having voting  rights held by him and  registered in his name on the books
of the Corporation.  Any vote on shares of stock of the Corporation may be given
by the  stockholder  entitled  thereto in person or by his proxy appointed by an
instrument  in  writing,  subscribed  by such  stockholder,  or by his  attorney
thereunto authorized,  and delivered to the secretary of the meeting.  Except as
otherwise  required by statute,  by the  Certificate of  Incorporation  or these
By-Laws,  all matters  coming  before any meeting of the  stockholders  shall be
decided by a plurality vote of the  stockholders of the  Corporation  present in
person or by proxy at such meeting and entitled to vote thereat,  a quorum being
present.

                  7. Consent of Stockholders in Lieu of Meeting.  To the fullest
extent  permitted  by law,  whenever  any action is required or  permitted to be
taken at a meeting of stockholders,  by law, by the Certificate of Incorporation
or by these By-Laws,  such action may be taken without a meeting,  without prior
notice and  without a vote of  stockholders,  if a consent in  writing,  setting
forth the action so taken,  shall be signed by the holders of outstanding  stock
having not less than the  minimum  number of votes that  would be  necessary  to
authorize or take such action at a meeting at which all shares  entitled to vote
thereon were present and voted.

                  8.  Stockholder  Proposals To Be Transacted at Annual Meeting.
For business to be properly  brought before an annual meeting of stockholders by
a stockholder, the stockholder must give written notice thereof to the Secretary
of the  Corporation,  which  must be  received  at the  Corporation's  principal
executive  offices not later than 120 calendar days before the first anniversary
of the date of the  Corporation's  notice of annual  meeting used in  connection
with the previous year's annual meeting of stockholders or, if no annual meeting
was held in the previous  year,  then by the end of the fiscal year  immediately
preceding  the fiscal year in which the annual  meeting  will be held.  Any such
notice  shall set forth as to each  matter  the  stockholder  proposes  to bring
before the annual meeting (i) a brief  description of the business desired to be
brought before the meeting and the reasons for  conducting  such business at the
meeting and, in the event that such business includes a proposal to amend either
the Certificate of Incorporation or By-laws of the Corporation,  the language of
the proposed amendment,  (ii) the name and address of the stockholder  proposing
such  business,  (iii) a  representation  disclosing  (a) the  number  of shares
beneficially owned by such stockholder,  (b) the length of time such shares have
been held by the stockholder, (c) that the stockholder will continue to own such
securities through the annual meeting,  and (d) that the stockholder  intends to
appear in  person  or by proxy at the  meeting  at which  the  proposal  will be
considered,  and (iv) any material interest of the stockholder in such business.
The  chairman  of any annual  meeting of  stockholders  may refuse to permit any
business to be brought  before an annual  meeting  without  compliance  with the
foregoing procedures.


                                   ARTICLE III

                                    Directors


                  1. General  Power.  The property,  affairs and business of the
Corporation  shall  be  managed  by or  under  the  direction  of its  Board  of
Directors,  which  shall  consist of not less than one (1) nor more than  twenty
(20)  persons.  The exact  number of  directors  within the  maximum and minimum
limitations  specified  shall be fixed  from time to time by  resolution  of the
Board of Directors or by the stockholders.

                  2. Term of Office. Each director (whether elected at an annual
meeting, or to fill a vacancy or newly created  directorship or otherwise) shall
hold office until his successor  shall be elected and shall qualify or until his
earlier resignation or removal.

                  3. Meetings.  Meetings of the Board of Directors shall be held
at such place  within or outside  of the State of  Delaware  as may from time to
time be fixed by resolution of the Board of Directors, or as may be specified in
the notice of the meeting.  Regular  meetings of the Board of Directors shall be
held at such times as may from time to time be fixed by  resolution of the Board
of Directors,  and special meetings may be held at any time upon the call of the
Chairman  of the Board or  President  or a majority  of the  directors  by oral,
telegraphic  or written notice duly served on or sent or mailed to each director
not less than one day before such  meeting.  A meeting of the Board of Directors
may be held without notice immediately after the annual meeting of stockholders.
Notice need not be given of regular meetings of the Board of Directors. Meetings
may be held at any time without  notice if all the directors are present,  or if
at any time  before or after  the  meeting  those  present  waive  notice of the
meeting in writing.

                  4. Quorum. A majority of the members of the Board of Directors
then acting shall constitute a quorum for the transaction of business, but if at
any meeting of the Board of Directors there shall be less than a quorum present,
a majority of those  present may adjourn the meeting,  without  further  notice,
from time to time until a quorum shall have been obtained.

                  5. Vacancies. In case one or more vacancies shall occur in the
Board of  Directors by reason of death,  resignation,  increase in the number of
directors or otherwise except in so far as otherwise  provided in these By-Laws,
the remaining  directors,  although less than a quorum, may, by a majority vote,
elect a successor or successors for the unexpired term or terms.

                  6. Removal from Office. Any or all of the directors may by the
affirmative  vote of the  holders  of a  majority  of all the  shares  of  stock
outstanding  and  entitled to vote for the election of directors be removed from
office, either with or without cause.

                  7. Action without a Meeting.  Any action required or permitted
to be taken at any meeting of the Board of  Directors or any  committee  thereof
may be taken  without a meeting if all members of the Board of  Directors  or of
the committee,  as the case may be, consent thereto in writing, and such writing
or writings are filed with the minutes of proceedings of the Board of Directors.

                  8.  Regulations;  Manner of Acting.  To the extent  consistent
with law, the  Certificate  of  Incorporation  and these  By-Laws,  the Board of
Directors and any committee thereof may adopt such rules and regulations for the
conduct of meetings of the Board or such committee and for the management of the
property,  affairs  and  business  of the  Corporation  as the  Board  may  deem
appropriate.  Members of the Board of Directors  and any  committee  thereof may
participate  in a meeting of the Board or such  committee by means of conference
telephone  or similar  communications  equipment  by means of which all  persons
participating in the meeting can hear each other, and such  participation  shall
constitute presence in person at such meeting for all purposes of these By-Laws.

                  9. Compensation.  Directors may, by resolution of the Board of
Directors,  be allowed a fixed sum and expenses of attendance  for attendance at
regular or special  meetings of the Board of  Directors;  provided  that nothing
herein  contained  shall be construed to preclude any director  from serving the
Corporation in any other capacity and receiving compensation  therefor.  Members
of special or standing committees,  and others who attend pursuant to direction,
may, by vote of the Board of Directors, be allowed a like fixed sum and expenses
of attendance for attending committee meetings.

                  10.  Executive  Committee.  The  Board  of  Directors,  in its
discretion, may appoint an Executive Committee consisting of one or more members
of the Board of  Directors,  who  shall  serve at the  pleasure  of the Board of
Directors.  The Executive  Committee  shall have and may exercise all the powers
and  authority of the Board of Directors in the  management  of the business and
affairs of the Corporation,  and may authorize the seal of the Corporation to be
affixed to all papers which may require it. The Executive  Committee  shall also
have the power and authority to declare a dividend and to authorize the issuance
of stock. The Executive Committee powers shall be subject to the limitations set
forth in Section 141(c) of the Delaware General Corporation Law, as amended. The
Executive  Committee  shall  also  have  authority  to  adopt a  certificate  of
ownership and merger pursuant to Section 253 of the Delaware General Corporation
Law, as amended.

                  11.  Other  Committees.   The  Board  of  Directors,   in  its
discretion,  may appoint one or more  committees  (in addition to the  Executive
Committee),  each consisting of one or more directors. Each such committee shall
have such powers and duties as may be provided by resolution or  resolutions  of
the Board of Directors.

                  12. Quorum,  Manner of Acting,  etc. Each Committee shall have
quorum  requirements  which are no more  restrictive  than those of the Board of
Directors  and shall in all other  respects act in the manner and  following the
procedures established for the Board of Directors.

                                   ARTICLE IV

                                    Officers


                  1. General. The officers of the Corporation shall be appointed
by the Board of Directors and shall be a Chairman of the Board, a President, one
or more Vice  Presidents  (one or more of which may be  designated  Senior  Vice
Presidents by the Board of Directors), a Secretary and a Treasurer. From time to
time the Board of Directors may appoint such  Assistant  Secretaries,  Assistant
Treasurers and such other officers,  agents and employees as it may deem proper.
Any number of offices may be held by the same person.  The Chairman of the Board
and the President shall be chosen from among the Directors.

                  2. Term.  All officers  shall hold their  offices  until their
respective   successors  are  elected  and  qualify,   or  until  their  earlier
resignation or removal.  Any officer may be removed from office,  either with or
without cause, at any time by the affirmative  vote of a majority of the members
of the Board of  Directors  then in office.  Any  officer may resign at any time
upon written notice to the Corporation.

                  3. Power to Vote Securities Owned by the  Corporation.  Unless
otherwise  ordered by the Board of Directors,  the Chairman of the Board and the
President,  acting  singly or together,  shall have full power and  authority on
behalf of the  Corporation  to  attend,  to act and to vote at any  meetings  of
security  holders  of  the  corporations  in  which  the  Corporation  may  hold
securities,  and at any such meetings shall possess and may exercise any and all
the rights and powers incident to the ownership of such  securities,  and which,
as the owner thereof,  the  Corporation  might have possessed and exercised,  if
present.  The Board of Directors by resolution from time to time may confer like
powers upon any other person or persons.


                                    ARTICLE V

                               Duties of Officers


                  1.  Chairman of the Board.  The Chairman of the Board shall be
the Chief Executive Officer of the Corporation and shall have general charge and
control  of all the  property,  business  and  affairs of the  Corporation  and,
subject to the  supervision  of the Board of  Directors,  he shall have  general
supervision over the corporation's officers, employees and agents. He shall sign
(unless  the  President  or a Vice  President  shall have  signed)  certificates
representing  the stock of the Corporation  authorized for issuance by the Board
of  Directors  or the  Executive  Committee.  He may enter into any  contract or
execute and deliver any instrument in the name and on behalf of the  Corporation
in the ordinary course of the Corporation's  business.  He shall have all powers
and perform all duties incident to the office of a chief executive  officer of a
corporation  and such  other  duties as are given to him by these  By-Laws or as
from time to time may be assigned to him by the Board of Directors.

                  2.  President.  The  President  shall,  in the  absence of the
Chairman of the Board,  preside at meetings of the stockholders and of the Board
of  Directors  and shall,  in case of a vacancy in the office of the Chairman of
the Board,  have the power to perform  the duties  incident to such  office.  He
shall be the Chief Operating Officer of the Corporation.

                  3. Vice Presidents. Each Vice President shall have such powers
and perform such duties as may be assigned to him by the Board of Directors, the
Chairman  of the Board or the  President.  At the  request or in the  absence or
disability of the Chairman of the Board,  the  President and the Executive  Vice
President, the Vice President (or if none shall have been designated, the senior
of the Vice  Presidents  present and able to act or such other Vice President as
may be designated by the Board of Directors)  may perform all the duties of such
officers and, when so acting, shall have all the powers of and be subject to all
the  restrictions  upon such  officers.  Any Vice President may sign (unless the
Chairman  of the Board,  the  President  or another  Vice  President  shall have
signed)  certificates  representing  stock  of the  Corporation  authorized  for
issuance by the Board of Directors or the Executive Committee.

                  4. Treasurer.  The Treasurer shall have the custody of all the
funds and  securities  of the  Corporation.  When  necessary  or proper he shall
endorse on behalf of the Corporation,  for collection,  checks,  notes and other
obligations  and shall deposit the same to the credit of the Corporation in such
bank, or banks,  or depositories as may be designated by the Board of Directors,
or by any officer acting under authority conferred by the Board of Directors. He
shall enter  regularly in books to be kept for the purpose,  a full and accurate
account of all moneys  received  and paid by him on account of the  Corporation.
Whenever  required by the Board of Directors,  he shall render an account of all
his transactions as Treasurer and of the financial condition of the Corporation.
He shall at all reasonable  times exhibit his books and accounts to any director
of the  Corporation  upon  application at the office of the  Corporation  during
business  hours and he shall  perform  all things  incident  to the  position of
Treasurer,  subject to the control of the Board of Directors. He shall give bond
for the faithful  discharge of his duties if the Board of Directors so requires.
He may sign  (unless an  Assistant  Treasurer  or the  Secretary or an Assistant
Secretary shall have signed) certificates  representing stock of the Corporation
authorized for issuance by the Board of Directors or the Executive Committee. He
shall perform, in general, all duties incident to the office of a treasurer of a
corporation  and such  other  duties as are given to him by these  By-Laws or as
from time may be assigned to him by the Board of Directors,  the Chairman of the
Board or the President.

                  5. Assistant Treasurers. The Board of Directors may, from time
to time,  designate and elect one or more  Assistant  Treasurers  who shall have
such powers and  perform  such duties as may be assigned to them by the Board of
Directors or the  Treasurer.  At the request or in the absence or  disability of
the Treasurer,  the Assistant  Treasurer (or, if there are two or more Assistant
Treasurers,  then the senior of the Assistant Treasurers present and able to act
or  such  other  Assistant  Treasurer  as may be  designated  by  the  Board  of
Directors)  may perform  all the duties of the  Treasurer  and,  when so acting,
shall have all the powers of and be  subject  to all the  restrictions  upon the
Treasurer.

                  6.  Secretary.  The  Secretary  shall attend to the giving and
serving of all notices of the  Corporation.  He shall keep or cause to be kept a
record of the proceedings of the meetings of the  stockholders  and of the Board
of Directors in books kept for that  purpose.  He shall be the  custodian of the
seal of the  Corporation,  and cause such seal (or a  facsimile  thereof)  to be
affixed to all certificates  representing the stock of the Corporation  prior to
the issuance  thereof and to all instruments the execution of which on behalf of
the  Corporation  under its seal shall have been duly  authorized  in accordance
with these  By-Laws,  and when so affixed he may attest the same.  He shall have
charge of the  records of the  Corporation,  including  the stock books and such
other books,  reports,  statements and other documents as the Board of Directors
may direct to be kept or as are required by law to be kept all of which shall at
all  reasonable  times be open to  inspection  by any  director.  He shall  sign
(unless the Treasurer,  an Assistant  Treasurer or an Assistant  Secretary shall
sign) certificates representing stock of the Corporation authorized for issuance
by the Board of  Directors  or the  Executive  Committee.  He shall  perform all
duties  incident to the office of a secretary  of a  corporation  and such other
duties  as are  given to him by  these  By-Laws  or as from  time to time may be
assigned  to him by the Board of  Directors,  the  Chairman  of the Board or the
President.

                  7.  Assistant  Secretaries.  The Board of Directors  may, from
time to time,  designate and elect one or more Assistant  Secretaries  who shall
have such powers and perform such duties as may be assigned to them by the Board
of  Directors  or  the  Secretary.  At the  request  or in  the  absence  of the
Secretary,  the  Assistant  Secretary  (or,  if there are two or more  Assistant
Secretaries,  then the senior of the Assistant  Secretaries  present and able to
act or such  other  Assistant  Secretary  as may be  designated  by the Board of
Directors)  may perform  all the duties of the  Secretary  and,  when so acting,
shall have all the powers of and be  subject  to all the  restrictions  upon the
Secretary.

                  8. Delegation by Board of Directors. In the case of absence or
inability  to act of any  officer of the  Corporation  and of any person  herein
authorized  to act in his place,  the Board of  Directors  may from time to time
delegate the powers of such officer to any other  officer or any director or any
other person whom it may select.


                                   ARTICLE VI

                                  Capital Stock


                  1.       Certificates of Stock.

     (a) Every holder of stock in  the Corporation  shall be entitled  to have a
certificate,  signed by, or in the name of the  Corporation  by, the Chairman of
the  Board,  the  President  or any  Vice  President  and the  Treasurer  or any
Assistant Treasurer or the Secretary or any Assistant Secretary,  certifying the
number of shares owned by him in the Corporation.

     (b) Certificates  representing  shares of stock of the Corporation shall be
in such form as shall be approved by the Board of Directors.

     (c) There shall be entered upon the stock books of the  Corporation  at the
time of issuance of each share the number of the certificate issued, the name of
the person owning the shares represented  thereby,  the number and class of such
shares,  and the  date of  issuance  thereof.  Every  certificate  exchanged  or
returned  to the  Corporation  shall  be  marked  "Cancelled",  with the date of
cancellation.


                  2. Transfers of Stock.  Upon  surrender to the  Corporation or
the transfer agent of the Corporation of a certificate representing shares, duly
endorsed or  accompanied by  appropriate  evidence of succession,  assignment or
authority to transfer,  the  Corporation  shall issue a new  certificate  to the
person entitled thereto, cancel the old certificate,  and record the transaction
upon its books.  Subject to the provisions of the  Certificate of  Incorporation
and these By-Laws,  the Board of Directors may prescribe such  additional  rules
and regulations as it may deem appropriate  relating to the issue,  transfer and
registration of shares of the Corporation.


                                   ARTICLE VII

                                 Corporate Seal


                  The  Corporate  Seal of the  Corporation  shall be circular in
form and shall bear the name of the Corporation,  the year of incorporation  and
the  words,  "Corporate  Seal"  and  "Delaware".  The form of the seal  shall be
subject  to  alteration  by the Board of  Directors  and the seal may be used by
causing it or a facsimile  to be  impressed  or affixed or printed or  otherwise
reproduced.  Any officer or director of the Corporation  shall have authority to
affix the corporate seal of the Corporation to any document  requiring the same,
and to attest the same.


                                  ARTICLE VIII

                          Indemnification and Insurance


                  1. Indemnification.  Each person who has been or is threatened
to be made a party to any  threatened,  pending  or  completed  action,  suit or
proceedings, whether civil, criminal, administrative or investigative, by reason
of the fact  that he is or was a  director,  officer,  employee  or agent of the
Corporation,  or is serving or has served at the request of the Corporation as a
director, officer, employee or agent of another corporation,  partnership, joint
venture,  trust or other  enterprise,  shall be indemnified  by the  Corporation
against expenses (including attorneys' fees), judgments,  fines and amounts paid
in settlement  actually and reasonably  incurred by him in connection  with such
action, suit or proceeding, and expenses incurred in connection therewith may be
advanced by the Corporation,  all to the full extent and in the manner permitted
by Section 145 of the General  Corporation  Law of the State of Delaware (or any
other similar provision or provisions of applicable law at the time in effect).

                    The  indemnification  provided  hereby  shall not  be deemed
 exclusive of any other rights to which those  indemnified may be entitled under
 any by-law,  agreement,  vote of  stockholders or  disinterested  directors  or
 otherwise,  both as  to action in  his official  capacity and  as to  action in
 another capacity  while holding such office,  and shall continue as to a person
 who has  ceased to be a  director, officer,  employee  or agent and shall inure
 to the  benefit  of the  heirs,  executors and administrators of such a person.


                  2.   Insurance.   By  action   of  the  Board  of   Directors,
notwithstanding  any interest of the Directors in such action,  the  Corporation
may  purchase  and  maintain  insurance,  in such  amounts as the Board may deem
appropriate, on behalf of any person who is or was a Director, officer, employee
or  agent  of  the  Corporation  or is or was  serving  at  the  request  of the
Corporation as a Director,  officer,  employee or agent of another  corporation,
partnership,  joint  venture,  trust or other  enterprise  against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his  status as such,  whether  or not the  Corporation  would  have the power to
indemnify him against such liability under applicable provisions of law.


                                   ARTICLE IX

                                   Amendments


                  The By-Laws of the Corporation shall be subject to alteration,
amendment or repeal,  and new By-Laws not inconsistent with any provision of the
Certificate of Incorporation or statute,  may be made, either by the affirmative
vote of the  holders  of a  majority  in  interest  of the  stockholders  of the
Corporation  present in person or by proxy at any  annual or special  meeting of
the stockholders  and entitled to vote thereat a quorum being present,  provided
that notice of such  proposed  action  shall have been given in the call for the
meeting,  or by the affirmative vote of a majority of the whole Board,  given at
any regular or special meeting of the Board of Directors.

                                                                 EXHIBIT 10.1

                  THE REGISTERED HOLDER OF THIS WARRANT, BY ITS
                   ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT
                      SELL, TRANSFER OR ASSIGN THIS WARRANT
                           EXCEPT AS HEREIN PROVIDED.

              VOID AFTER 5:00 P.M. EASTERN TIME, DECEMBER 15, 2003

                                     WARRANT

                               For the Purchase of

                          _____ Shares of Common Stock

                                       of

                         INDIVIDUAL INVESTOR GROUP, INC.


1.       Warrant.

         THIS  CERTIFIES  THAT,  in  consideration  of $10.00 and other good and
valuable     consideration,     duly     paid    by    or    on     behalf    of
_____________________("Holder"),   as  registered  owner  of  this  Warrant,  to
Individual Investor Group, Inc.  ("Company"),  Holder is entitled,  at or before
5:00  p.m.,  Eastern  Time  December  15,  2003  ("Expiration  Date"),  but  not
thereafter,  to subscribe for, purchase and receive,  in whole or in part, up to
__________________  (_______)  shares of Common  Stock of the  Company  ("Common
Stock") in accordance  with Section 2.4 hereof.  If the Expiration Date is a day
on which banking  institutions are authorized by law to close, then this Warrant
may be exercised at or before 5:00 p.m.  Eastern Time on the next succeeding day
which is not such a day in accordance  with the terms herein.  During the period
ending on the  Expiration  Date,  the Company agrees not to take any action that
would  terminate  the  Warrant,  except as provided in Section 2.4 hereof.  This
Warrant  is  initially  exercisable  at  $2.15625  per  share  of  Common  Stock
purchased;  provided,  however,  that upon the  occurrence  of any of the events
specified in Section 6 hereof, the rights granted by this Warrant, including the
exercise price and the number of shares of Common Stock to be received upon such
exercise,  shall be adjusted as therein  specified.  The term  "Exercise  Price"
shall mean the initial exercise price or the adjusted exercise price,  depending
on the context, of a share of Common Stock. The term "Securities" shall mean the
shares of Common Stock issuable upon exercise of this Warrant.

2.       Exercise.

         2.1 Exercise Form. In order to exercise this Warrant, the exercise form
attached  hereto  must be duly  executed  and  completed  and  delivered  to the
Company,  together  with this Warrant and payment of the Exercise  Price for the
Securities being purchased.  If the subscription rights represented hereby shall
not be exercised at or before 5:00 p.m.,  Eastern Time, on the Expiration  Date,
this Warrant shall become and be void without  further force or effect,  and all
rights represented hereby shall cease and expire.

         2.2  Legend.  Each  certificate  for  Securities  purchased  under this
Warrant  shall  bear a legend  as  follows,  unless  such  Securities  have been
registered under the Securities Act of 1933, as amended ("Act"):


         "The  securities   represented  by  this   certificate  have  not  been
         registered  under the  Securities  Act of 1933,  as amended  ("Act") or
         applicable  state law. The securities may not be offered for sale, sold
         or otherwise  transferred except pursuant to an effective  registration
         statement under the Act, or pursuant to an exemption from  registration
         under the Act and applicable state law."

         2.3      Conversion Right.

                  2.3.1  Determination of Amount.  In lieu of the payment of the
Exercise Price in cash, the Holder shall have the right (but not the obligation)
to convert this  Warrant,  in whole or in part,  into Common Stock  ("Conversion
Right"),  as follows:  upon exercise of the Conversion  Right, the Company shall
deliver to the  Holder  (without  payment  by the Holder of any of the  Exercise
Price) that number of shares of Common Stock equal to the  quotient  obtained by
dividing (x) the "Value" (as defined  below) of the portion of the Warrant being
converted at the time the Conversion Right is exercised by (y) the Market Price.
The  "Value" of the  portion of the  Warrant  being  converted  shall  equal the
remainder  derived from  subtracting  (a) the Exercise  Price  multiplied by the
number of shares of Common  Stock being  converted  from (b) the Market Price of
the  Common  Stock  multiplied  by the  number of shares of Common  Stock  being
converted.  As used herein,  the term "Market Price" at any date shall be deemed
to be the last reported sale price of the Common Stock on such date, or, in case
no such  reported sale takes place on such day, the average of the last reported
sale prices for the immediately  preceding three trading days, in either case as
officially  reported by the  principal  securities  exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed or
admitted to trading on any national  securities exchange or if any such exchange
on which the Common Stock is listed is not its  principal  trading  market,  the
last reported sale price as furnished by the National  Association of Securities
Dealers,  Inc.  ("NASD")  through the Nasdaq National Market or SmallCap Market,
or, if applicable,  the OTC Bulletin Board, or if the Common Stock is not listed
or admitted to trading on any of the foregoing markets, or similar organization,
as  determined  in good faith by  resolution  of the Board of  Directors  of the
Company, based on the best information available to it.

                  2.3.2 Exercise of Conversion  Right.  The Conversion Right may
be  exercised  by the  Holder on any  business  day on or after the  Warrant  is
exercisable  and not later than the  Expiration  Date by delivering  the Warrant
with a duly executed  exercise form attached hereto with the conversion  section
completed to the Company,  exercising  the  Conversion  Right and specifying the
total number of shares of Common Stock the Holder will purchase pursuant to such
conversion.

         2.4 Exercise  Schedule.  This Warrant may be exercised to the extent of
_______   shares  of  Common  Stock  on  or  after  December  16,  1999  ("First
Installment")  and to the extent of an additional  ______ shares of Common Stock
("Additional  Installment")  on or after January 16, 2000.  Notwithstanding  the
foregoing,  in the event the  Company  terminates  the  Financial  Advisory  and
Investment Banking Agreement  ("Agreement") dated December 16, 1998, between the
Company  and SERP on or before  January 15,  2000,  pursuant to Section 2 of the
Agreement,  the  Company  may,  in its sole  discretion,  cancel the  Additional
Installment on or before such date.

3.       Transfer.

         3.1 General Restrictions. The registered Holder of this Warrant, by its
acceptance  hereof,  agrees  that  it will  not  sell,  transfer  or  assign  or
hypothecate  this Warrant to anyone except upon compliance  with, or pursuant to
exemptions  from,  applicable  securities  laws.  In order to make any permitted
assignment,  the Holder must deliver to the Company the assignment form attached
hereto duly  executed and  completed,  together with this Warrant and payment of
all transfer taxes, if any, payable in connection therewith. Upon receipt of the
foregoing and  satisfaction  of the  requirements  set forth in Section 3.2, the
Company shall immediately  transfer this Warrant on the books of the Company and
shall  execute  and  deliver a new  Warrant  or  Warrants  of like  tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the aggregate
number of shares of Common Stock  purchasable  hereunder or such portion of such
number as shall be contemplated by any such assignment.

         3.2  Restrictions  Imposed by the Securities  Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (i)
the  Company  has  received  the  opinion  of counsel  for the Holder  that such
securities may be sold pursuant to an exemption from registration under the Act,
and  applicable  state law,  the  availability  of which is  established  to the
reasonable  satisfaction  of  the  Company,  or  (ii) a  registration  statement
relating to such Securities has been filed by the Company and declared effective
by the Securities and Exchange  Commission and compliance with applicable  state
law.

4.       New Warrants to be Issued.

         4.1  Partial  Exercise  or  Transfer.  Subject to the  restrictions  in
Section 3 hereof, this Warrant may be exercised or assigned in whole or in part.
In the event of the exercise or assignment  hereof in part only,  upon surrender
of this Warrant for  cancellation,  together with the duly executed  exercise or
assignment  form and  funds (or  conversion  equivalent)  sufficient  to pay any
Exercise  Price  and/or  transfer  tax,  the  Company  shall,   subject  to  the
restrictions  in Section 3 hereof,  cause to be delivered to the Holder  without
charge a new  Warrant  of like  tenor to this  Warrant in the name of the Holder
evidencing the right of the Holder to purchase the aggregate number of shares of
Common Stock and Warrants purchasable hereunder as to which this Warrant has not
been exercised or assigned.

         4.2  Lost  Certificate.   Upon  receipt  by  the  Company  of  evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of reasonably  satisfactory  indemnification,  the Company shall execute and
deliver a new Warrant of like tenor and date. Any such new Warrant  executed and
delivered  as a result of such loss,  theft,  mutilation  or  destruction  shall
constitute a substitute contractual obligation on the part of the Company.

5.       Registration Rights.

         5.1      "Piggy-Back" Registration.

5.1.1  Grant of Right.  The Holders of this  Warrant  shall have the right on or
before  December  15,  2005 to  include  all or any part of the shares of Common
Stock  underlying  this Warrant (the  "Registrable  Securities")  as part of any
registration of securities filed by the Company (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to
Form S-8 or any equivalent  form);  provided,  however,  that if, in the written
opinion of the Company's managing underwriter or underwriters,  if any, for such
offering (the "Underwriter"),  the inclusion of the Registrable Securities, when
added  to the  securities  being  registered  by  the  Company  or  the  selling
stockholder(s), will exceed the maximum amount of the Company's securities which
can be marketed (i) at a price  reasonably  related to their then current market
value, or (ii) without  materially and adversely  affecting the entire offering,
the Company shall  nevertheless  register all or any portion of the  Registrable
Securities  required to be so registered but such  Registrable  Securities shall
not be sold by the Holders  until 90 days after the  registration  statement for
such offering has become effective; and provided further that, if any securities
are  registered  for sale on behalf of other  stockholders  in such offering and
such  stockholders  have not agreed to defer such sale until the  expiration  of
such 90 day period,  the number of securities to be sold by all  stockholders in
such public  offering  during such 90 day period shall be  apportioned  pro rata
among all such selling  stockholders,  including all holders of the  Registrable
Securities,  according to the total amount of securities of the Company proposed
to  be  sold  by  said  selling  stockholders,  including  all  holders  of  the
Registrable  Securities.  Notwithstanding the foregoing, if the shares of Common
Stock underlying this Warrant are freely saleable, without restriction, under an
exemption from the registration requirements of the Act at the time of filing of
the  registration  statement,  the Company shall have no  obligation  under this
Section 5 to register such shares under such registration statement.

                  5.1.2  Terms.  The  Company  shall bear all fees and  expenses
attendant to registering the Registrable  Securities,  including any filing fees
payable to the National Association of Securities Dealers, Inc., but the Holders
shall pay any and all  underwriting  commissions  and the  expenses of any legal
counsel selected by the Holders to represent them in connection with the sale of
the Registrable  Securities.  In the event of such a proposed registration,  the
Company shall  furnish the then Holders of  outstanding  Registrable  Securities
with not less than thirty days  written  notice  prior to the  proposed  date of
filing of such registration statement. Such notice to the Holders shall continue
to be given for each registration statement filed by the Company until such time
as all of the Registrable  Securities have been sold by the Holder.  The holders
of the Registrable  Securities shall exercise the  "piggy-back"  rights provided
for herein by giving  written  notice,  within twenty days of the receipt of the
Company's notice of its intention to file a registration statement.  The Company
shall cause any registration  statement filed pursuant to the above  "piggyback"
rights to remain effective until all Registrable Securities thereunder have been
sold, or are freely saleable,  without restriction,  under an exemption from the
registration requirements.

         5.2      General Terms

                  5.2.1    Indemnification.

                          (a) Subject to clauses (b)-(d) of this Section  5.2.1,
the  Company  shall  indemnify  the  Holder(s)  of  the  Registrable  Securities
to be sold pursuant to any  registration statement hereunder and any underwriter
or person deemed to be an underwriter under the Act and each person, if any, who
controls  such  Holders or underwriters  or  persons  deemed to  be underwriters
within the meaning of Section 15 of the Act or  Section 20(a) of the  Securities
Exchange  Act of  1934,  as amended ("Exchange Act"),  against all loss,  claim,
damage, expense or liability (including all reasonable attorneys' fees and other
expenses reasonably  incurred in  investigating,  preparing or defending against
any claim whatsoever)  to which any of  them may become  subject  under the Act,
the Exchange Act or otherwise,  arising from such registration  statement, other
than arising from the willful misconduct,  bad faith or gross negligence  of the
party seeking indemnification.  Subject  to  clauses  (b)-(d)  of  this  Section
5.2.1,  the  Holder(s) of the Registrable Securities to be sold pursuant to such
registration statement, and  their successors and assigns,  shal severally,  and
not jointly,  indemnify the Company,  against all loss, claim,  damage,  expense
or liability (including all reasonable   attorneys'   fees  and  other  expenses
reasonably incurred  in investigating,  preparing or defending against any claim
whatsoever) to which the Company may  become subject under the Act, the Exchange
Act or otherwise,  arising  from  information  furnished by or on behalf of such
Holders,  in writing,  for specifi  inclusion in  such  registration  statement.

                         (b)  If any action is  brought against a party  hereto,
("Indemnified  Party") in  respect of which indemnity may be  sought against the
other  party  ("Indemnifying Party"),  such  Indemnified  Party  shall  promptly
notify  Indemnifying  Party in  writing of  the  institution of  such action and
Indemnifying  Party shall  assume the  defense  of such  action,  including  the
employment  and  fees of  counsel  reasonably  satisfactory to  the  Indemnified
Party.  Such Indemnified Party  shall have  the right to employ its or their own
counsel in any such case,  but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i)  the employment of such counsel
shall have  been  authorized  in  writing by  Indemnifying  Party  in connection
with the defense of  such action,  or (ii)  Indemnifying  Party  shall  not have
employed  counsel to defend such action,  or (iii) such Indemnified  Party shall
have been  advised by  counsel that  there may be  one or  more  legal  defenses
available  to it which  may result in a conflict between  the  Indemnified Party
and Indemnifying  Party  (in which case Indemnifying  Party shall  not have  the
right to direct the defense  of such action on behalf of the Indemnified Party),
in any of which events,  the reasonable fees and  expenses of not  more than one
additional  firm  of attorneys  designated  in writing  by the Indemnified Party
shall be borne by Indemnifying Party.  Notwithstanding  anything to the contrary
contained herein,  if Indemnified  Party shall assume the defense of such action
as provided above,  Indemnifying Party shall not be liable for any settlement of
any such action effected without its written consent.

                          (c)  If the  indemnification or reimbursement provided
for  hereunder  is  finally  judicially  determined  by  a  court  of  competent
jurisdiction  to be  unavailable to  an  Indemnified  Party  (other  than  as  a
consequence  of  a  final  judicial determination  of  willful  misconduct,  bad
faith or gross  negligence  of such Indemnified Party),  then Indemnifying Party
agrees,  in lieu of indemnifying such Indemnified  Party,  to contribute  to the
amount  paid  or  payable  by  such  Indemnified  Party (i)  in such  proportion
as is  appropriate  to  reflect the relative benefits received,  or sought to be
received,  by Indemnifying  Party on the one hand and by such  Indemnified Party
on the other or (ii) if (but only if) the allocation  provided  in clause (i) of
this  sentence is not  permitted  by applicable  law, in such  proportion  as is
appropriate to reflect not only the relative benefits referred to in such clause
(i) but also the relative fault of  Indemnifying  Party and of such  Indemnified
Party;  provided,   however,  that  in  no  event  shall  the  aggregate  amount
contributed by a Holder  exceed the cumulative profit,  if any,  earned  by such
Holder  as a  result  of each  sale  by  him  the  Warrants or as a  result each
exercise by him of the Warrants and the sale by him of the  underlying shares of
Common Stock.

                          (d)  The  rights   accorded  to  Indemnified   Parties
hereunder shall  be in addition to any  rights  that any  Indemnified  Party may
have at common  law,  by  separate agreement or otherwise.

                  5.2.2 Exercise of Warrants.  Nothing contained in this Warrant
shall be construed as requiring the Holder(s) to exercise  their  Warrants prior
to  or  after  the  initial  filing  of  any   registration   statement  or  the
effectiveness thereof.

                  5.2.3  Documents  Delivered  to Holders.  If, and only if, the
offering,  with  respect  to which the  registration  statement  referred  to in
Section 5.1.1 is being filed, is underwritten, the Company shall furnish to each
Holder  participating in any of the foregoing  offerings and to each underwriter
of any  such  offering,  a  signed  counterpart,  addressed  to such  Holder  or
Underwriter,  of (i) an opinion of counsel to the Company,  dated the  effective
date of such registration statement and an opinion dated the date of the closing
under the  underwriting  agreement  related  thereto,  and (ii) a "cold comfort"
letter dated the  effective  date of such  registration  statement  and a letter
dated the date of the closing  under the  underwriting  agreement  signed by the
independent  public  accountants  who  have  issued a  report  on the  Company's
financial  statements  included  in such  registration  statement,  in each case
covering  substantially  the same  matters  with  respect  to such  registration
statement  (and  the  prospectus  included  therein)  and,  in the  case of such
accountants'  letter,  with  respect  to events  subsequent  to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants'  letters  delivered to  underwriters in underwritten  public
offerings of securities.  The Company shall also deliver promptly to each Holder
participating  in the  offering  requesting  the  correspondence  and  memoranda
described  below and to the managing  underwriter  copies of all  correspondence
between  the  Commission  and the  Company,  its  counsel  or  auditors  and all
memoranda  relating to discussions with the Commission or its staff with respect
to the registration  statement and permit each Holder and underwriter to do such
investigation,  upon  reasonable  advance  notice,  with respect to  information
contained in or omitted from the  registration  statement as it deems reasonably
necessary to comply with  applicable  securities laws or rules of the NASD. Such
investigation  shall  include  access  to  books,  records  and  properties  and
opportunities  to discuss  the  business of the Company  with its  officers  and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder shall reasonably  request.  Notwithstanding  the
anything in the foregoing to the contrary,  the Company shall not be required to
deliver,  make  available for  inspection,  or answer any questions  concerning,
matters that are  protected  from  disclosure  by the  attorney-client  or other
judicially-recognized privilege.

                  5.2.4 Documents  Delivered by Holder.  The Company may furnish
each of the  Holders  participating  in any of the  foregoing  offerings  with a
questionnaire    requesting   information    customarily   sought   of   selling
securityholders,  and each Holder shall  promptly  furnish  such  questionnaire,
accurately completed and executed, to the Company.

6.       Adjustments

         6.1  Adjustments  to  Exercise  Price  and  Number of  Securities.  The
Exercise Price and the number of shares of Common Stock  underlying this Warrant
shall be subject to adjustment from time to time as hereinafter set forth:

                  6.1.1 Stock  Dividends -  Recapitalization,  Reclassification,
Split-Ups.  If, after the date hereof,  and subject to the provisions of Section
6.2 below,  the number of  outstanding  shares of Common Stock is increased by a
stock  dividend on the Common  Stock  payable in shares of Common  Stock or by a
split-up,  recapitalization  or  reclassification  of shares of Common  Stock or
other similar event,  then, on the effective date thereof,  the number of shares
of Common  Stock  issuable on exercise of this  Warrant  shall be  increased  in
proportion to such increase in outstanding shares.

                  6.1.2  Aggregation  of Shares.  If after the date hereof,  and
subject to the  provisions of Section 6.2, the number of  outstanding  shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar  event,  then,  upon the effective  date
thereof,  the number of shares of Common  Stock  issuable  on  exercise  of this
Warrant shall be decreased in proportion to such decrease in outstanding shares.

                  6.1.3  Adjustments in Exercise  Price.  Whenever the number of
shares  of  Common  Stock  purchasable  upon the  exercise  of this  Warrant  is
adjusted,  as provided in this Section 6.1, the Exercise Price shall be adjusted
(to the nearest cent) by multiplying  such Exercise Price  immediately  prior to
such  adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such  adjustment,  and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.


                  6.1.4 Replacement of Securities upon  Reorganization,  etc. In
case of any  reclassification  or  reorganization  of the outstanding  shares of
Common Stock other than a change covered by Section 6.1.1 hereof or which solely
affects  the par value of such  shares of  Common  Stock,  or in the case of any
merger or consolidation of the Company with or into another  corporation  (other
than  a  consolidation  or  merger  in  which  the  Company  is  the  continuing
corporation and which does not result in any  reclassification or reorganization
of the  outstanding  shares  of  Common  Stock),  or in the  case of any sale or
conveyance to another corporation or entity of the property of the Company as an
entirety or substantially as an entirety in connection with which the Company is
dissolved, the Holder of this Warrant shall have the right thereafter (until the
expiration  of the  right of  exercise  of this  Warrant)  to  receive  upon the
exercise  hereof,  for the  same  aggregate  Exercise  Price  payable  hereunder
immediately prior to such event, the kind and amount of shares of stock or other
securities or property  (including cash) receivable upon such  reclassification,
reorganization,  merger or  consolidation,  or upon a dissolution  following any
such sale or other transfer, by a Holder of the number of shares of Common Stock
of the Company  obtainable  upon exercise of this Warrant  immediately  prior to
such event;  and if any  reclassification  also results in a change in shares of
Common Stock covered by Sections 6.1.1 or 6.1.2,  then such adjustment  shall be
made  pursuant to Sections  6.1.1,  6.1.2,  6.1.3 and this  Section  6.1.4.  The
provisions   of  this  Section  6.1.4  shall   similarly   apply  to  successive
reclassifications,  reorganizations,  mergers or consolidations,  sales or other
transfers.

                  6.1.5  Changes in Form of Warrant.  This form of Warrant  need
not be changed  because of any change  pursuant to this  Section,  and  Warrants
issued after such change may state the same  Exercise  Price and the same number
of shares of Common Stock and  Warrants as are stated in the Warrants  initially
issued pursuant to this Agreement.  The acceptance by any Holder of the issuance
of new Warrants  reflecting a required or permissive  change shall not be deemed
to waive any rights to a prior adjustment or the computation thereof.

         6.2  Elimination  of  Fractional  Interests.  The Company  shall not be
required to issue certificates  representing fractions of shares of Common Stock
upon the  exercise of this  Warrant,  nor shall it be required to issue scrip or
pay cash in lieu of any fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the  nearest  whole  number  of  shares  of  Common  Stock or other  securities,
properties or rights.

7.  Reservation  and Listing.  The Company  shall at all times  reserve and keep
available out of its authorized  shares of Common Stock,  solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof.  The Company  covenants and agrees that,  upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock and other
securities  issuable upon such exercise shall be duly and validly issued,  fully
paid and non-assessable and not subject to preemptive rights of any stockholder.
As long as the Warrants  shall be  outstanding,  the Company  shall use its best
efforts  to cause all  shares of Common  Stock  issuable  upon  exercise  of the
Warrants to be listed (subject to official notice of issuance) on all securities
exchanges (or, if applicable on Nasdaq) on which the Common Stock is then listed
and/or quoted.

8.       Certain Notice Requirements.

         8.1 Holder's Right to Receive Notice. Nothing herein shall be construed
as conferring upon the Holders the right to vote or consent or to receive notice
as a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company.  If, however, at any time
prior to the  expiration of the Warrants and their  exercise,  any of the events
described in Section 8.2 shall occur,  then, in one or more of said events,  the
Company  shall give written  notice of such event at least fifteen days prior to
the date fixed as a record  date or the date of closing the  transfer  books for
the determination of the stockholders  entitled to such dividend,  distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify  such record date or the date of the closing of the transfer  books,  as
the case may be.


         8.2 Events Requiring Notice.  The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company  shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution, or (ii)
the Company  shall offer to all the holders of its Common  Stock any  additional
shares  of  capital  stock of the  Company  or  securities  convertible  into or
exchangeable for shares of capital stock of the Company, or any option, right or
warrant to subscribe therefor,  or (iii) a merger or reorganization in which the
Company  is not the  surviving  party,  or (iv) a  dissolution,  liquidation  or
winding up of the Company  (other than in  connection  with a  consolidation  or
merger)  or a sale  of all or  substantially  all of its  property,  assets  and
business shall be proposed.

         8.3 Notice of Change in Exercise  Price.  The Company  shall,  promptly
after an event  requiring a change in the Exercise  Price  pursuant to Section 6
hereof,  send notice to the Holders of such event and change  ("Price  Notice").
The Price Notice shall  describe the event  causing the change and the method of
calculating  same and  shall be  certified  as being  true and  accurate  by the
Company's President and Chief Financial Officer.

         8.4 Transmittal of Notices. All notices,  requests,  consents and other
communications  under this  Warrant  shall be in writing  and shall be deemed to
have been duly made on the date of delivery if delivered  personally  or sent by
overnight courier,  with  acknowledgment of receipt by the party to which notice
is  given,  or on the fifth  day  after  mailing  if mailed to the party to whom
notice  is  to be  given,  by  registered  or  certified  mail,  return  receipt
requested,  postage  prepaid and properly  addressed  as follows:  (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on the
books of the Company,  or (ii) if to the  Company,  to its  principal  executive
office.

9.       Miscellaneous.

         9.1 Headings. The headings contained herein are for the sole purpose of
convenience  of reference,  and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.

         9.2 Entire Agreement.  This Warrant (together with the other agreements
and documents  being  delivered  pursuant to or in connection with this Warrant)
constitutes  the entire  agreement  of the parties  hereto  with  respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.

         9.3 Binding  Effect.  This Warrant shall inure solely to the benefit of
and shall be  binding  upon,  the Holder and the  Company  and their  respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable  right,  remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.


         9.4 Governing Law;  Submission to  Jurisdiction.  This Warrant shall be
governed by and construed  and enforced in accordance  with the law of the State
of New York,  without  giving  effect to conflict of laws.  The Company and each
Holder  hereby  agree that any action,  proceeding  or claim  against such party
arising out of, or relating in any way to this Warrant (a "Proceeding") shall be
brought and enforced in the courts of the State of New York,  County of New York
or the United States  District Court for the Southern  District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
Each party hereby  waives any objection to the  exclusive  jurisdiction  of such
courts over a  Proceeding,  whether based on grounds of venue,  or  inconvenient
forum or  otherwise.  Each party agrees that any process or summons to be served
upon a party in connection  with a Proceeding  may be served by  transmitting  a
copy thereof by registered or certified mail, return receipt requested,  postage
prepaid, addressed to the party at the address set forth in Section 8 hereof, as
well as in any other  manner  permitted  by law.  Such  mailing  shall be deemed
personal  service  and  shall  be  legal  and  binding  upon  the  party  in the
Proceeding.  Each party agrees that the  prevailing  party(ies)  in a Proceeding
shall be entitled to recover  from the other  party(ies)  all of its  reasonable
attorneys'  fees and expenses  relating to such  Proceeding  and/or  incurred in
connection with the preparation therefor.

         9.5  Waiver,  Etc.  The  failure of the Company or the Holder to at any
time  enforce  any of the  provisions  of this  Warrant  shall  not be deemed or
construed  to be a waiver of any such  provision,  nor to in any way  affect the
validity of this Warrant or any provision  hereof or the right of the Company or
any Holder to thereafter  enforce each and every  provision of this Warrant.  No
waiver of any breach, non-compliance or non-fulfillment of any of the provisions
of this  Warrant  shall be  effective  unless set forth in a written  instrument
executed  by the party or  parties  against  whom or which  enforcement  of such
waiver  is  sought;  and  no  waiver  of  any  such  breach,  non-compliance  or
non-fulfillment  shall be  construed  or  deemed  to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.

         9.6 Amendments in Writing.  This Warrant may not be amended or modified
except by means of a written  instrument  signed by the  Company and each Holder
affected thereby.


         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the 16th day of December, 1998.


                         INDIVIDUAL INVESTOR GROUP, INC.

                         By:__________________________________
                               Name:
                               Title:






Form to be used to exercise Warrant:

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


Date:  _____________________, _____

                  The  undersigned  hereby  elects  irrevocably  to exercise the
within   Warrant  and  to   purchase   ________   shares  of  Common   Stock  of
_________________________ and hereby makes payment of $____________ (at the rate
of  $_________  per share of Common  Stock) in  payment  of the  Exercise  Price
pursuant  thereto.  Please  issue the Common  Stock as to which this  Warrant is
exercised in accordance with the instructions given below.

                                                         or

                  The undersigned hereby elects irrevocably to convert its right
to purchase  ____________  shares of Common Stock  purchasable  under the within
Warrant      into      __________      shares     of     Common     Stock     of
__________________________________________   (based  on  a  "Market   Price"  of
$________ per share of Common Stock).
Please issue the Common Stock in accordance with the instructions given below.


                                          --------------------------------------
                                          Signature


- ---------------------------
Signature Guaranteed

                  NOTICE:  The signature to this form must  correspond  with the
name as written upon the face of the within Warrant in every particular  without
alteration or enlargement or any change whatsoever,  and must be guaranteed by a
bank,  other than a savings  bank,  or by a trust  company  or by a firm  having
membership on a registered national securities exchange.

                   INSTRUCTIONS FOR REGISTRATION OF SECURITIES


Name              ________________________________________________________
                                            (Print in Block Letters)


Address           ________________________________________________________






Form to be used to assign Warrant:

                                   ASSIGNMENT


                  (To be executed by the registered  Holder to effect a transfer
of the within Warrant):

                  FOR  VALUE  RECEIVED,   ________________________________  does
hereby sell,  assign and  transfer  unto  _________________________________  the
right   to   purchase   _____________________   shares   of   Common   Stock  of
_________________________________  ("Company")  evidenced by the within  Warrant
and does hereby authorize the Company to transfer such right on the books of the
Company.


Dated:____________________, _____



                                          --------------------------------------
                                          Signature






                  NOTICE:  The signature to this form must  correspond  with the
name as written upon the face of the within Warrant in every particular  without
alteration or enlargement or any change whatsoever,  and must be guaranteed by a
bank,  other than a savings  bank,  or by a trust  company  or by a firm  having
membership on a registered national securities exchange.

                                                                 EXHIBIT 10.2

April 28, 1999

Gregory E. Barton, Esq.
Individual Investor Group, Inc.                         VIA UPS OVERNIGHT
125 Broad Street, 14th Floor
New York, NY  10004

Dear Mr. Barton:

We refer to the separate Stock Purchase  Agreement dated as of November 30, 1998
between  Individual  Investor Group,  Inc. and each of Great American  Insurance
Company and Great American Life Insurance Company (the " Agreements").

As we have  discussed,  the final  documents  inadvertently  omitted a provision
relating to a one-year  holdback on conversion of the preferred  stock purchased
thereunder,  which the  parties  believed  would be  included.  To correct  that
drafting error, which was only recently  discovered,  we would like to amend the
Agreements  as of November 30, 1998,  to provide  that the  Preferred  Stock (as
defined in the Agreements)  held by Great American  Insurance  Company and Great
American Life Insurance  Company may not be converted into  Individual  Investor
Group Inc.  common stock until  December 2, 1999 (one year following the date of
issuance), notwithstanding anything to the contrary in the Agreements.

Please  signify your  acceptance  to the terms hereof by executing  the enclosed
copy of this letter.  Please feel free to call Karl J. Grafe with any  questions
concerning this matter.

Very truly yours,

GREAT AMERICAN INSURANCE COMAPANY


By: /s/ Ronald C. Hayes
        Ronald C. Hayes, Assistant Vice President

GREAT AMERICAN LIFE INSURANCE COMAPANY


By: /s/ Mark F. Muething
        Mark F. Muething, Senior Vice President

                                       Agreed to and Accepted:

                                       INDIVIDUAL INVESTOR GROUP, INC.




                                       By: /s/ Gregory E. Barton
                                               Gregory E. Barton, Vice President


                             CERTAIN RISK FACTORS                EXHIBIT 99
                             Dated: August 13, 1999

         You should  carefully  consider the following  risks,  as well as those
described in our most recent Form 10-K,  Form 10-Q and Form 8-K filings,  before
making an investment decision.  The risks described below are not the only risks
we face. Additional risks may also impair our business operations. If any of the
following  risks  occur,  our  business,  results  of  operations  or  financial
condition could be materially  adversely affected.  If that happens, the trading
price of our common  stock could  decline,  and you may lose all or part of your
investment.  In the  risk  factors  below,  when we use the word  "web,"  we are
referring to the portion of the Internet commonly referred to as the "world wide
web."

We have a history of losses and we  anticipate  that our losses will continue in
the future. As of June 30, 1999, we had an accumulated deficit of $25.5 million.
In the past ten years,  the only calendar year we were  profitable  was 1995. We
expect to continue to incur net losses in 1999 and in subsequent fiscal periods.
We expect to continue to incur significant  operating expenses and, as a result,
will need to generate significant revenues to achieve  profitability,  which may
not occur. Even if we do achieve  profitability,  we may be unable to sustain or
increase profitability on a quarterly or annual basis in the future.

We will need to raise  additional  capital in the  future.  Based on our current
business  plan,  we believe  that our working  capital and  investments  will be
sufficient  to fund our  operations  and capital  requirements  at least through
1999. Due to unforeseen events and circumstances  that may arise as discussed in
the other risks  identified in this Exhibit 99 and in the  accompanying  report,
our working  capital and investments in fact might not be sufficient to fund our
operations and capital  requirements  through 1999.  Also, if we cannot generate
cash  from our  investments,  we may need to raise  money  from  debt or  equity
financing (or a combination of the two types) during the fourth quarter of 1999.
In any event,  we believe we will need to raise  additional  capital in order to
sustain our operations after 1999 unless we generate revenues beyond the amounts
we currently  anticipate.  Such additional financing may not be available to us,
or, if available,  the terms upon which it may be obtained may be unfavorable to
us and may result in  dilution of an  investor's  equity  investment  in us. Our
failure to obtain additional financing on favorable terms, or at all, would have
a substantial adverse effect on our future ability to conduct operations.

Our online services business has a limited operating  history.  We commenced our
online  services  operations  in May 1997.  Accordingly,  we have only a limited
operating  history upon which you can  evaluate  this  business  segment and its
prospects. An investor in our common stock must consider the risks, expenses and
difficulties frequently encountered by early stage businesses in new and rapidly
evolving markets, including web-based financial news and information companies.

Our quarterly  financial  results are subject to significant  fluctuations.  Our
quarterly  operating  results  may  fluctuate  significantly  in the future as a
result of a variety of  factors,  many of which are  outside  our  control.  For
example,  in our print  publications  business,  our  revenues  tend to  reflect
seasonal  patterns,  with certain calendar  quarters tending to be stronger than
others. Similar seasonal patterns may develop in the online services business as
well.

         We believe that quarter-to-quarter comparisons of our operating results
may not be a good indication of our future performance,  nor would our operating
results for any particular quarter be indicative of future operating results. In
some future  quarters our  operating  results may be below the  expectations  of
public market analysts and investors.  If that happens,  the price of our common
stock may fall, perhaps dramatically.

We face  intense  competition  in both our print  publications  business and our
online services business. An increasing number of financial news and information
sources  compete for  consumers'  and  advertisers'  attention and spending.  We
expect this competition to continue and to increase. We compete for advertisers,
readers,  staff and outside  contributors  with many types of  companies.  These
competitors include:

 --  online  services or  web sites focused on business,  finance and investing,
     such  as  CBS MarketWatch.com;  The WallStreet Journal Interactive Edition;
     TheStreet.com; The Motley Fool; Yahoo! Finance; Silicon Investor; Microsoft
     Investor; SmartMoney.com; Money.com and Multex.com;

 --  publishers and distributors of traditional  print media, such as  The  Wall
     Street  Journal;   Barron's;   Investors Business  Daily;    Business Week;
     Fortune;  Forbes;  Money;  Kiplinger's;   Smart Money;   Worth;  Registered
     Representative;  Institutional Investor;   Research  and  On  Wall  Street;

 --  publishers and  distributors of  radio and  television  programs focused on
     business, finance and investing, such as Bloomberg Business Radio and CNBC;


 --  web "portal" companies, such as Yahoo!;  Excite;  Lycos; Snap!; Go Network;
     and America Online; and

 --  online brokerage firms, many of which provide financial and investment news
     and information, such as Charles Schwab and E*TRADE.

         Our  ability  to  compete  depends  on  many  factors,   including  the
originality,  timeliness,  comprehensiveness  and trustworthiness of our content
and that of our competitors,  the ease of use of services developed either by us
or our competitors and the effectiveness of our sales and marketing efforts.

         Many of our existing competitors,  as well as a number of potential new
competitors,  have longer operating histories, greater name recognition,  larger
customer  bases and  significantly  greater  financial,  technical and marketing
resources  than we do. This may allow them to devote  greater  resources than we
can to the  development  and  promotion of their  services and  products.  These
competitors  may  also  engage  in  more  extensive  research  and  development,
undertake more far-reaching  marketing campaigns,  adopt more aggressive pricing
policies to attract  advertisers and make more attractive offers to existing and
potential employees,  outside contributors,  strategic partners and advertisers.
Our  competitors  may develop  content that is equal or superior to ours or that
achieves  greater  market  acceptance  than ours.  It is also  possible that new
competitors may emerge and rapidly acquire  significant market share. We may not
be able to  compete  successfully  for  advertisers,  readers,  staff or outside
contributors.  Increased  competition could result in price reductions,  reduced
margins or loss of our market  share.  Any of these could  materially  adversely
affect our business, results of operations and financial condition.

Because our editorial is focused on the  financial  markets,  a prolonged  "bear
market" may cause our  businesses to suffer.  Our editorial is highly focused on
the  financial  markets.  If the markets  suffer a  prolonged  downturn or "bear
market," it is possible  that our  businesses  might suffer  materially  for two
reasons.  First,  during a bear  market,  people may become less  interested  in
buying and selling  securities,  and thus less  interested  in our  research and
analysis of  securities.  Less people might be interested in  subscribing to our
print  publications,  and less people  might be  interested  in using our online
services.  Second,  advertisers  particularly the financial services advertisers
that are our most  important  source of  advertising  revenue - might  decide to
reduce their advertising  budgets.  Either of these developments could cause our
operations to suffer materially.

Because our  editorial is focused on research  and analysis of specific  stocks,
our businesses  could suffer if our  recommendations  are poor. Our editorial is
focused on research and analysis of specific stocks.  We frequently state that a
particular  company's  stock is undervalued or overvalued at the current prices.
We believe that our research and analysis is of a high quality, and we are proud
to take a stand and be held accountable for our opinions. We believe our readers
appreciate  this  editorial  courage,  and find it to be of  greater  value than
stories on such topics as "the best  cities in which to live" and the like.  But
because we give these specific  opinions,  the wisdom of our  conclusions can be
measured:  did the stocks we said were  undervalued go up, and did the stocks we
said were  overvalued  go down.  If our opinions  turn out to be incorrect - and
some of our opinions  certainly  will be - people may become less  interested in
learning these opinions. They may be less interested in subscribing to our print
publications  and less interested in using our online  services.  If interest in
our opinions declines, our operations could suffer materially.

Our company may not be able to attract and retain  qualified  employees  for our
print publications  business.  Many of our competitors in the print publications
business are larger than we are, and have a number of print titles (we only have
two  magazines  and  one  newsletter).  There  is a  general  perception  in the
employment  market that larger  publishers  are more  prestigious  or offer more
varied career opportunities (for instance, the ability to move from one title to
another).  Although we believe our company offers an attractive work environment
and employment  opportunity  in our print  publications  business  (offering our
employees  greater  responsibility  and the  ability  to have a more  meaningful
impact on the product than would be the case at a magazine with a larger staff),
we may be perceived by many people as a less  attractive  employer than a larger
publisher.  If we are unable to attract and retain  qualified  employees for our
print publications business, that business could suffer materially.

Our company may not be able to attract and retain  qualified  employees  for our
online service business.  There is a general perception in the employment market
that pure Internet  companies  offer a more  attractive  work  environment for a
youthful  workforce.  This is based on the belief that the Internet is a new and
growing industry that offers a great future. In addition,  many employees in the
Internet  industry  seek  and  often  receive  significant   portions  of  their
compensation  through  stock  options.  The stock  prices of many pure  Internet
companies have increased  dramatically  during the past year or so.  Although we
believe  our  company  offers an  attractive  work  environment  and  employment
opportunity in our online services business,  we may be perceived by many people
as a less attractive  employer than a pure Internet company. If we are unable to
attract and retain qualified  employees for our online services  business,  that
business could suffer materially.

We depend on our editorial staff and outside  contributors.  Our success depends
substantially  upon the efforts of our editorial staff and outside  contributors
to produce original, timely,  comprehensive and trustworthy content. Our writers
are not bound by employment agreements. Competition for financial journalists is
intense,  and we may  not be able  to  retain  existing  or  attract  additional
qualified writers in the future. If we lose the services of a significant number
of our  editorial  staff and  outside  contributors  or are  unable  to  attract
additional  writers with appropriate  qualifications,  our business,  results of
operations and financial condition could be materially adversely affected.

We depend on key  management  personnel.  Our future  success  depends  upon the
continued  service of key management  personnel.  The loss of one or more of our
key management personnel could materially adversely affect our business, results
of operations  and financial  condition.  Moreover,  the costs that may arise in
connection with executive  departures and  replacements  can be significant,  as
they were during 1998.

We depend on certain  advertisers  and on  independent  advertising  agents,  to
generate  revenue.  In 1998, and continuing  through the second quarter of 1999,
the majority of our print publications  advertising  revenue came from financial
services  companies,  followed by consumer  advertisers and others.  We were not
dependent upon any particular  advertiser for our print  publications  revenues.
During the second  quarter of 1999,  approximately  sixty  percent of the online
services  advertising  revenue came from four brokerage  firms  offering  online
trading.  We expect that the majority of advertising  revenues  derived from our
online services  operations will come from online  brokerage firms. In the event
that online  brokerage  firms choose to scale back on their  advertising (on the
Internet  in general  or on our web sites in  particular),  our online  services
business,  results of  operations  and financial  condition  could be materially
adversely affected.

         If we do not continue to increase our revenue from  financial  services
advertisers or attract advertisers from non-financial industries,  our business,
results of operations  and  financial  condition  could be materially  adversely
affected.  With respect to our online services in particular,  advertising rates
are frequently  measured on a "cost per thousand"  clicks,  or "CPM," basis. CPM
rates  have  fluctuated  in the past and we  expect  CPM  rates to  continue  to
fluctuate. CPM rates may experience industry-wide declines in the future, as the
supply of desirable online advertising space may be increasing at a rate greater
than the  demand  for that  space by  advertisers.  We  believe  that we  charge
advertising rates that are among the highest of financial web sites. However, we
cannot  guarantee  that we will be able to command  premium rates in the future.
Moreover,  a number of advertisers that have been a source of a material portion
of our online  services  advertising  revenues are  purchasing  advertising on a
"cost-per-action"  basis,  in which we are paid only  when a user of our  online
services  takes the relevant  action.  The number of such  completed  actions is
usually a very small percent of the number of advertising  impressions  shown on
our web site. It is more  difficult to accurately  predict  revenue that will be
received from  cost-per-action  ads than from CPM ads. An increased shift of our
important  advertisers  to  cost-per-action  ads could have a  material  adverse
effect on our online services advertising revenues.

         In  selling  print   advertising,   we  depend  both  on  our  internal
advertising  sales department and on outside sales  representatives  to maintain
and increase our  advertising  sales. In selling online  advertising,  we depend
primarily upon our internal  advertising  sales  department and an outside sales
agent.  The success of our  advertising  sales efforts is subject to a number of
risks,  including  the  competition  we face from other  companies in hiring and
retaining sales personnel and effective outside sales  representatives,  and the
length of time it takes new sales personnel to become productive.  Our business,
results of operations  and  financial  condition  could be materially  adversely
affected if we do not maintain an effective advertising sales department.

Additional  risks  associated  with online  advertising.  No standards have been
widely accepted to measure the effectiveness of web advertising. If standards do
not develop,  existing  advertisers may not continue or increase their levels of
web advertising. If standards develop and we are unable to meet those standards,
advertisers may not continue advertising on our site.  Furthermore,  advertisers
that have traditionally  relied upon other advertising media may be reluctant to
advertise on the web. If advertisers perceive the Internet or our web site to be
a limited or an ineffective  advertising medium, they may be reluctant to devote
a portion of their advertising budget to Internet  advertising or to advertising
on our web site.  Our business,  results of operations  and financial  condition
could  be  materially  adversely  affected  if the  market  for web  advertising
declines or develops more slowly than expected.

         Different pricing models are used to sell advertising on the web. It is
difficult to predict which, if any, will emerge as the industry  standard.  This
uncertainty  makes it  difficult  to project  our future  advertising  rates and
revenues.  We cannot  assure you that we will be  successful  under  alternative
pricing models that may emerge. Moreover,  "filter" software programs that limit
or  prevent  advertising  from being  delivered  to a web  user's  computer  are
available.  Widespread  adoption of this  software  could  materially  adversely
affect the  commercial  viability  of web  advertising,  which could  materially
adversely affect our advertising revenues.

Risks associated with our list rental revenue.  The ability to earn revenue from
list rental  depends in large degree upon three  factors:  first,  the number of
subscribers  on  the  list;  second,  the  demographic  characteristics  of  the
subscribers on the list (such as age, income and wealth);  and third, the degree
to which previous  rentals of the list have produced  favorable  results for the
renter. This last factor is affected by the manner in which the subscribers have
been added. For example, new subscribers from direct-to-publisher  sources (such
as direct mail and insert cards in the  magazine)  typically  are more  valuable
than  subscribers  obtained  from  subscription  agencies  by means  of  reduced
introductory rates or use airline frequent flyer miles.

         We use an independent  party,  Rickard List  Marketing,  to promote the
rental of our subscriber  lists. The revenue we earn from list rentals thus also
depends in part upon the efforts our agent makes.

We depend on independent  parties to publish our print  publications.  We depend
upon an independent  party,  Quebecor,  to print our print  publications  and to
deliver the printed  copies to the United  States Post Office for mailing to our
subscribers. If our printer's business is disrupted for any reason, such as fire
or  other  natural  disaster,  labor  strife,  supply  shortages,  or  machinery
problems,  we  might  not be able to  distribute  our  publications  in a timely
manner.  Since magazines typically are printed only shortly before the time they
are to be mailed to subscribers, any disruption at our printer could prevent our
magazines from being  distributed in a timely manner. If we don't distribute our
magazines on time,  our  subscribers  may become  dissatisfied  and cancel their
subscriptions.  If a disruption at our printer  delays our ability to distribute
Individual Investor magazine to newsstands,  we may lose newsstand sales. In the
event of a disruption,  our  insurance  may not cover all of our losses.  Any of
these developments may cause our operating results to suffer materially.

We depend on independent  parties to distribute  Individual Investor magazine to
newsstands.  We  depend  upon  independent  parties  (the  largest  of  which is
International Circulation Distributors,  a subsidiary of The Hearst Corporation)
to distribute Individual Investor magazine to newsstands. If the business of our
distributors  is  disrupted  for any  reason,  such as labor  strife or  natural
disaster,  we might not be able to distribute  Individual  Investor  magazine to
newsstands  in a  timely  manner.  Since  our  distributors  typically  pick  up
Individual Investor magazine for newsstand  distribution only shortly before the
time the magazine is to be delivered,  any disruption at our distributors  could
prevent the magazine from being distributed to newsstands in a timely manner. If
a  disruption  at our  distributors  delays our  ability  to deliver  Individual
Investor  magazine to  newsstands,  we may lose  newsstand  sales.  Any of these
developments may cause our operating results to suffer materially.

We depend on  independent  parties to obtain the majority of the  subscribers to
Individual  Investor magazine.  We depend upon independent parties to obtain the
majority of the  subscribers  to Individual  Investor  magazine.  These agencies
include  American  Family  Publishers,  Publishers  Clearing  House  and  NewSub
services. These agencies obtain subscribers primarily through use of direct mail
campaigns.  If the positive  response to the  promotion of  Individual  Investor
magazine by these agencies is not great enough,  or if the agencies believe that
we may fail to fulfill a  subscription,  they may stop  promoting  our magazine.
This  could  cause  our  subscriber  base  to  shrink,  which  would  lower  our
subscription  revenue and reduce our advertising  rate base, which would lead to
lower  advertising  revenue.  Also,  many  publications  compete for services of
subscription agencies, and one or more of these subscription agencies may choose
not to continue to market Individual  Investor in order to better serve a one of
our competitors.  Any of those developments could cause our operating results to
suffer materially.

We may incorrectly forecast our success in obtaining and renewing subscriptions.
We  attempt  to  accurately  forecast  the  number of  subscribers  to our print
publications.  We run the risk that our forecasts will be incorrect,  either too
high or too low. Our forecast could be too high if the number of new subscribers
that we obtain is less than the amount we projected.  Our forecast also could be
too  high if we get  less  renewal  orders  from  existing  subscribers.  If our
subscriber  base is less than our  projections,  we will earn less  subscription
revenue and our advertising  rate base will be lower,  which would lead to lower
advertising   revenue.   This  could  cause  our  operating  results  to  suffer
materially.

         Our forecast  could be too low if we obtain more new  subscribers  than
projected,  or if we receive more renewal  orders than  projected  from existing
subscribers.  If our subscriber base is higher than we projected,  we would earn
more  subscription  revenue  than  projected,  but  have  higher  than  expected
production  and  distribution  costs.  We  might  not be  able to  increase  our
advertising  rate base  immediately.  This could lead to our  operating  results
being worse than projected.

We depend on independent  parties to manage our subscriber files. We depend upon
an  independent  party to manage  our  subscriber  files.  This  party  receives
subscription orders and payments for our print  publications,  sends renewal and
invoice notices to subscribers and generates subscribers' labels and circulation
reports for us. If the business of this party is disrupted, we may become unable
to process subscription  requests,  or send out renewal notices or invoices,  or
deliver our print publications.  If this were to happen, our insurance might not
cover all of our losses.  Any of those  developments  could cause our  operating
results to suffer materially.

We need to manage our growth.  Although our print publications  business has not
experienced  rapid  growth  in the  recent  past,  our  online  services,  which
commenced in May 1997, have experienced  rapid growth.  This growth has placed a
strain on our managerial,  operational and financial  resources.  We expect this
strain to increase with anticipated future growth in both print publications and
online services. To manage our growth, we must continue to implement and improve
our  managerial  controls  and  procedures  and our  operational  and  financial
systems.  In addition,  our future success will depend on our ability to expand,
train and manage our workforce,  in particular our editorial,  advertising sales
and business  development staff. We cannot assure you that we have made adequate
allowances  for the costs and risks  associated  with this  expansion,  that our
systems,  procedures or controls will be adequate to support our operations,  or
that our management will be able to successfully  offer and expand our services.
If we are unable to manage  our growth  effectively,  our  business,  results of
operations and financial condition could be materially adversely affected.

We need to establish and maintain  relationships with other web sites to promote
the growth of our online services business.  For us to maintain and increase the
traffic to our web sites,  it is  important  for us to  establish  and  maintain
content distribution  relationships with highly-trafficked web sites operated by
other  companies.  There is intense  competition  for  relationships  with these
sites.  Although  we  have  not  paid  any  material  sum  with  respect  to our
relationships to date, it is possible that, in the future,  we might be required
to pay fees in order to  establish or maintain  relationships  with these sites.
(It is possible,  however, that we may be able to charge fees in connection with
these  relationships in the future.)  Additionally,  many of these sites compete
with our web sites as providers of  financial  information,  and these sites may
become less willing to establish or maintain strategic  relationships with us in
the  future.  We may be unable to enter into  relationships  with these sites on
commercially   reasonable   terms  or  at  all.  Even  if  we  enter  into  such
relationships,  they may not attract  significant  numbers of viewers to our web
sites.

Increased  traffic to our web sites may strain our systems and impair our online
services  business.  On  occasion,  we have  experienced  significant  spikes in
traffic on our web site. In addition, the number of users of our online services
has  increased  over time and we are seeking to increase our user base  further.
Accordingly,  our web site must  accommodate a high volume of traffic,  often at
unexpected  times.  Our  web  site  has  in the  past,  and  may in the  future,
experience  slower  response times than usual or other problems for a variety of
reasons.  These  occurrences could cause our readers to perceive our web site as
not  functioning  properly  and,  therefore,  cause them to use other methods to
obtain their  financial  news and  information.  In such a case,  our  business,
results of operations  and  financial  condition  could be materially  adversely
affected.

We face a risk of system failure for our online services  business.  Our ability
to  provide  timely  information  and  continuous  news  updates  depends on the
efficient  and  uninterrupted  operation  of  our  computer  and  communications
hardware  and software  systems.  Similarly,  our ability to track,  measure and
report  the  delivery  of  advertisements  on our site  depends  largely  on the
efficient  and  uninterrupted  operation of a third-party  system  maintained by
DoubleClick.   These  systems  and   operations  are  vulnerable  to  damage  or
interruption from human error,  natural disasters,  telecommunication  failures,
break-ins, sabotage, computer viruses, intentional acts of vandalism and similar
events.  We do not have a formal  disaster  recovery  plan for the event of such
damage or  interruption.  Any system failure that causes an  interruption in our
service or a decrease in  responsiveness of our web site could result in reduced
traffic,  reduced  revenue and harm to our  reputation,  brand and our relations
with our advertisers.  Our insurance  policies may not adequately  compensate us
for any  losses  that we may incur  because  of any  failures  in our  system or
interruptions  in our delivery of content.  Our business,  results of operations
and financial  condition  could be materially  adversely  affected by any event,
damage or failure that interrupts or delays our operations.

We may not successfully  develop new and enhanced  services and features for our
online  services to the  satisfaction  of our customers.  We intend to introduce
additional  and  enhanced  services in order to retain the current  users of our
online  services and to attract new users. If we introduce a service that is not
favorably  received or fail to introduce certain new or enhanced  services,  our
current users may choose a competitive service over ours. We may also experience
difficulties  that  could  delay or prevent us from  introducing  new  services.
Furthermore,  the new services we may introduce  could  contain  errors that are
discovered  after the services are introduced.  If that happens,  we may need to
significantly  modify the design or  implementation  of the  services on our web
sites to correct these errors. Our business, results of operations and financial
condition could be materially  adversely affected if we experience  difficulties
in  introducing  new  services or if these new  services are not accepted by our
users.

We depend on the continued growth in use and efficient operation of the web. The
web-based information market is new and rapidly evolving.  Our business would be
materially  adversely  affected if web usage does not  continue to grow or grows
slowly. Web usage may be inhibited for a number of reasons, such as:

      --    inadequate network infrastructure;

      --    security concerns;

      --    inconsistent quality of service; and

      --    unavailability of cost-effective, high-speed access to the Internet.

         The users of our online services depend on Internet service  providers,
online  service  providers  and other web site  operators  for access to our web
site. Many of these services have experienced significant service outages in the
past and could experience service outages,  delays and other difficulties due to
system  failures  unrelated to our systems.  These  occurrences  could cause our
readers  to  perceive  the web in general  or our web site in  particular  as an
unreliable medium and, therefore,  cause them to use other media to obtain their
financial news and information.  We also depend on certain information providers
to  deliver  information  and data feeds to us on a timely  basis.  Our web site
could  experience  disruptions or interruptions in service due to the failure or
delay in the  transmission  or receipt of this  information,  which could have a
material  adverse  effect on our business,  results of operations  and financial
condition.

Government  regulation  and legal  uncertainties  relating  to the web.  Certain
existing laws or regulations specifically regulate communications or commerce on
the web. Further, laws and regulations that address issues such as user privacy,
pricing, online content regulation, taxation and the characteristics and quality
of online products and services are under consideration by federal, state, local
and foreign governments and agencies. Several telecommunications  companies have
petitioned the Federal  Communications  Commission to regulate  Internet service
providers and online services providers in a manner similar to the regulation of
long distance  telephone  carriers and to impose access fees on such  companies.
That regulation,  if imposed,  could increase the cost of transmitting data over
the web.  Moreover,  it may take years to determine the extent to which existing
laws   relating  to  issues  such  as   intellectual   property   ownership  and
infringement,  libel,  obscenity and personal privacy are applicable to the web.
The Federal Trade Commission and government agencies in certain states have been
investigating  certain  Internet  companies  regarding  their  use  of  personal
information. We could incur additional expenses if any new regulations regarding
the use of personal  information  are  introduced or if these  agencies chose to
investigate our privacy practices.  Any new laws or regulations  relating to the
web, or certain  application or  interpretation of existing laws, could decrease
the  growth  in the use of the  web,  decrease  the  demand  for our web site or
otherwise materially adversely affect our business.

Web  security  concerns  could  hinder  internet  commerce.  Concern  about  the
transmission  of  confidential   information   over  the  Internet  has  been  a
significant  barrier to electronic commerce and communications over the web. Any
well-publicized  compromise of security could deter people from using the web or
from  using  it  to  conduct  transactions  that  involve  the  transmission  of
confidential information, such as signing up for a paid subscription,  executing
stock trades or purchasing  goods or services.  Because many of our  advertisers
seek to advertise on our web site to encourage people to use the web to purchase
goods or services,  our business,  results of operations and financial condition
could be materially  adversely affected if Internet users  significantly  reduce
their use of the web because of security concerns. We may also incur significant
costs to  protect  ourselves  against  the  threat of  security  breaches  or to
alleviate problems caused by such breaches.

Our  efforts to build  positive  brand  recognition  may not be  successful.  We
believe  that  maintaining  and growing  awareness  about our brands  (including
Individual Investor,  Individual Investor Online,  Ticker, Magic 25 and the INDI
SmallCap  500) is an  important  aspect of our  efforts to  continue  to attract
subscribers  and readers.  The  importance of positive  brand  recognition  will
increase in the future  because of the growing  number of providers of financial
information.  We cannot  assure  you that our  efforts to build  positive  brand
recognition will be successful.

         In order to build positive brand recognition, it is very important that
we  maintain  our  reputation  as a  trustworthy  source  of  investment  ideas,
research,  analysis and news.  The occurrence of certain  events,  including our
misreporting a news story or the  non-disclosure of a financial  interest by one
or more of our  employees  in a  security  that we write  about,  could harm our
reputation  for  trustworthiness.  These events  could  result in a  significant
reduction in the number of our readers,  which could materially adversely affect
our business, results of operations and financial condition.

Control of the Company by Principal Stockholders.  At the present time, Jonathan
Steinberg, Wise Partners, L.P. (a partnership controlled by Jonathan Steinberg),
Saul  Steinberg  (who is  Jonathan's  father) and  Reliance  Financial  Services
Corporation  (a  substantial  portion of the common stock of Reliance  Financial
Services  Corporation's parent,  Reliance Group Holdings,  Inc., is beneficially
owned by Saul  Steinberg,  members  of his  family and  affiliated  trust),  own
approximately  43.4% of the  outstanding  shares of common  stock of our Company
(and have exercisable options to purchase common stock that, if exercised, could
bring their ownership  percentage to approximately  47.2%). As a result of their
ownership of common  stock,  they will be able to  significantly  influence  all
matters requiring  approval by our  stockholders,  including the election of our
directors. Because it would be very difficult for another company to acquire our
company without the approval of the  Steinbergs,  other companies might not view
our company as an attractive takeover candidate.  Our stockholders therefore may
have less of a chance to benefit from any possible takeover of our company, than
they would if the Steinbergs did not have as much influence.

We rely on our intellectual  property. To protect our rights to our intellectual
property,  we rely on a combination of trademark and copyright law, trade secret
protection,  confidentiality  agreements and other contractual arrangements with
our  employees,   affiliates,   clients,  strategic  partners  and  others.  The
protective  steps we have taken may be inadequate to deter  misappropriation  of
our proprietary information. We may be unable to detect the unauthorized use of,
or take appropriate steps to enforce, our intellectual  property rights. We have
registered  certain of our  trademarks  in the United States and we have pending
U.S. applications for other trademarks. Effective trademark, copyright and trade
secret  protection  may not be available  in every  country in which we offer or
intend to offer our services.

         We are somewhat  dependent  upon the use of certain  trademarks  in our
operation,  including the marks Individual Investor, Individual Investor Online,
Ticker,  Magic 25 and the INDI SmallCap 500. We have a perpetual license for use
of the  trademark  Individual  Investor.  To perfect our  interests in the mark,
however,  we filed suit in 1997  against the  licensor and a third party whom we
believed was infringing  the mark. The litigation was resolved  favorably to us,
with an  agreement  by the third  party not to  further  infringe  the mark.  We
commenced  negotiations  with the licensor to obtain assignment of the mark, but
did not reach an agreement.  Although we will continuously  monitor and may seek
enforcement against any perceived infringement of the mark, we cannot assure you
that our efforts will be successful.

         Additionally, we are somewhat dependent upon the ability to protect our
proprietary content through the laws of copyright,  unfair competition and other
law.  We cannot  assure  you,  however,  that the laws  will give us  meaningful
protection.

We may be liable for information  published in our print  publications or on our
online services. We may be subject to claims for defamation, libel, copyright or
trademark infringement or based on other theories relating to the information we
publish in our print publications or through our online services.  We could also
be subject to claims based upon the content that is accessible from our web site
through links to other web sites.  Our insurance may not  adequately  protect us
against these claims.

Year 2000  risks.  We have  evaluated  the  potential  impact  of the  situation
commonly referred to as the "Year 2000 Issue".  The Year 2000 Issue concerns the
inability of information systems,  whether due to computer hardware or software,
to properly  recognize and process date  sensitive  information  relating to the
year 2000 and beyond. To attempt to ensure that our computer systems will not be
disrupted  by the Year 2000 Issue,  we  developed  a plan to assess,  and to fix
where necessary,  any Year 2000 Issue with respect to our computer  systems.  We
have  identified the fixes that should be made to our computer  systems in light
of the Year 2000 Issue and  currently  expect to  complete  our  repair  efforts
before September 1999. We intend to test our systems before October 1999.

         We currently believe that total direct costs associated with making our
systems "Year 2000 Ready" (that is, not disrupted by the Year 2000 Issue) should
not exceed $30,000.  We do not believe that the diversion of employee  resources
required  to address  the Year 2000  Issue  will have a  material  effect on our
operating  results or financial  condition.  We do not currently have in place a
contingency  plan of  action  in the  event  that we are  not  able to make  our
computer  systems Year 2000 Ready, but will consider on an ongoing basis whether
such a contingency plan should be developed.

         The dates on which we believe we will complete our Year 2000 plan,  and
the costs associated with the efforts,  are based on our current best estimates.
However,  we cannot  guarantee that these  estimates  will be achieved,  or that
there will not be a delay in, or increased  costs  associated  with,  making our
systems Year 2000 Ready.  Specific factors that might cause differences  between
the estimates and actual results  include the following:  the  availability  and
cost of personnel  trained in these areas; the ability to locate and correct all
relevant computer code and hardware devices (such as  microcontrollers);  timely
responses to and  corrections by  third-parties  and  suppliers;  the ability to
implement interfaces between the new systems and the systems not being replaced;
and similar  uncertainties.  Due to the general uncertainty inherent in the Year
2000 problem,  resulting in part from the uncertainty of the Year 2000 readiness
of third  parties  and the  interconnection  of  global  businesses,  we  cannot
guarantee that will be able to resolve,  in a timely or cost-effective  fashion,
any problems  associated with the Year 2000 Issue.  If we fail to resolve,  in a
timely and cost-effective  fashion,  any problems  associated with the Year 2000
Issue, our operations and business could be materially  adversely  affected.  If
that happens, we also could incur liabilities to third parties.

         We also face risks and uncertainties to the extent that the independent
suppliers  of  products,  services  and  systems  on  which  we rely do not have
business systems or products that are Year 2000 Ready. We have communicated with
significant suppliers and customers to determine the extent to which our systems
and products are  vulnerable  to those third  parties'  failure to fix their own
systems' Year 2000 Issues.  The systems or products of other  companies on which
we rely might not be made Year 2000 Ready in time to prevent disruption.  If the
systems of any of those third parties are disrupted, our operations and business
could be materially  adversely  affected.  We are in the process of  identifying
what actions may be needed to reduce our  vulnerability  to problems  related to
the companies  with which we interact,  but we do not currently  have in place a
contingency  plan of action in the event  that the  failure by one or more third
parties  to make their  computer  systems  Year 2000  Ready  causes us to suffer
material  adverse  effects.  We will consider on an ongoing basis whether such a
contingency plan should be developed.


 


5 6-mos Dec-31-1999 Jan-1-1999 Jun-30-1999 2,332,163 7,506,376 3,299,286 378,479 0 13,762,379 2,832,310 1,025,880 19,189,159 4,655,227 0 100 0 91,197 10,613,550 19,189,159 7,705,453 7,705,453 5,439,822 11,896,705 0 0 0 (3,594,858) 0 (3,594,858) 0 0 0 (3,594,858) (0.40) (0.40)