HOMECOM COMMUNICATIONS INC, S-1/A, 1999-12-27

HOMECOM COMMUNICATIONS INC
S-1/A, 1999-12-27
COMPUTER PROGRAMMING SERVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 27, 1999

REGISTRATION NO. 333-88491

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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HOMECOM COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
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<TABLE>
<S> <C>
DELAWARE 7371
(State or other jurisdiction (Primary Standard Industrial
of incorporation Classification Code Number)

<S> <C>
DELAWARE 58-2153309
(State or other jurisdiction (I.R.S. Employer
of incorporation Identification No.)
</TABLE>

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BUILDING 14, SUITE 100, 3535 PIEDMONT ROAD
ATLANTA, GEORGIA 30305
(404) 237-4646
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
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HARVEY W. SAX
CHIEF EXECUTIVE OFFICER
HOMECOM COMMUNICATIONS, INC.
BUILDING 14, SUITE 100, 3535 PIEDMONT ROAD
ATLANTA, GEORGIA 30305
(404) 237-4646
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------------

COPIES TO:
RAYMOND L. MOSS, ESQUIRE
SIMS MOSS KLINE & DAVIS LLP
400 NORTHPARK TOWN CENTER
SUITE 310
1000 ABERNATHY ROAD
ATLANTA, GEORGIA 30328
(770) 481-7200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective until September 28,
2001, or until such earlier time that all of the shares registered hereunder
have been sold.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. / /

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

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE(2) REGISTRATION FEE(3)
<S> <C> <C> <C> <C>
Common Stock, par value $0.0001 per
share 1,777,812 shares $3.390 $6,026,783 $1,675.45
</TABLE>

(1) Shares of Common Stock which may be offered by the selling stockholders
pursuant to this Registration Statement consist of shares issuable upon
(i) conversion of $3,500,000 principal amount of Series C Convertible
Preferred Stock and exercise of related warrants ("Series C Warrants") to
purchase 59,574 shares of Common Stock and (ii) conversion of $1,500,000
principal amount of Series D Convertible Preferred Stock and exercise of
related warrants ("Series D Warrants") to purchase 25,000 shares of Common
Stock. In connection with the sale of the Series C Convertible Preferred
Stock and the Series C Warrants, HomeCom agreed to file a registration
statement covering at least 1,244,444 shares of Common Stock issuable upon
conversion of the Series C Convertible Preferred Stock and exercise of the
Series C Warrants. In connection with the sale of the Series D Convertible
Preferred Stock and the Series D Warrants, HomeCom agreed to file a
registration statement covering at least 533,368 shares of Common Stock
issuable upon conversion of the Series D Convertible Preferred Stock and
exercise of the Series D Warrants. If all the Series C Convertible Preferred
Stock had been converted as of November 15, 1999, the conversion price would
have been $2.84 per share of Common Stock, and 1,256,476 shares of Common
Stock would have been issuable as a result of such conversion. An additional
59,574 shares of Common Stock would be issuable if all the Series C Warrants
were exercised, for a total of 1,316,050 shares of Common Stock. If all the
Series D Convertible Preferred Stock had been converted as of November 15,
1999, the conversion price would have been $2.84 per share of Common Stock,
and 533,099 shares of Common Stock would have been issuable as a result of
such conversion. An additional 25,000 shares of Common Stock would be
issuable if all the Series D Warrants were exercised, for a total of 558,099
shares of Common Stock. In addition to the shares set forth in the table,
the amount to be registered includes an indeterminate number of shares of
Common Stock issuable upon (i) conversion of the Series C Convertible
Preferred Stock and exercise of the Series C Warrants and (ii) conversion of
the Series D Convertible Preferred Stock and exercise of the Series D
Warrants, in each case solely as a result of stock splits, stock dividends
and similar transactions in accordance with Rule 416 of Regulation C under
the Securities Act of 1933, but not including additional shares that may be
issuable due to the operation of the conversion formulas applicable to the
Series C Convertible Preferred Stock or the Series D Convertible Preferred
Stock. Rule 416 does not apply to any additional shares that would be
issuable to holders of the Series C Convertible Preferred Stock or the
Series D Convertible Preferred Stock as a result of changes in the market
price of the Common Stock, and HomeCom is not relying on Rule 416 to
register any additional shares issuable as a result of the operation of the
conversion formulas applicable to the Series C Convertible Preferred Stock
or the Series D Convertible Preferred Stock.

(2) Estimated solely for the purpose of computing the amount of the registration
fee, based on the average of the high and low prices for the Company's
common stock as reported on the Nasdaq SmallCap Market-TM- on October 1,
1999, in accordance with Rule 457 under the Securities Act of 1933.

(3) Previously paid.

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

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<PAGE>
PROSPECTUS
HOMECOM COMMUNICATIONS, INC.
1,777,812 SHARES OF COMMON STOCK

THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED BEGINNING ON PAGE 4 IN
DETERMINING WHETHER TO PURCHASE SHARES OF HOMECOM.

These shares of common stock are being offered by the selling shareholders
identified on page 42 of this prospectus in the section entitled "Principal and
Selling Shareholders." The selling shareholders may sell these shares from time
to time:

- on the NASDAQ SmallCap Market-TM-;

- on the over-the-counter market;

- in transactions directly with market makers; or

- in privately negotiated transactions.

We will not receive any portion of the proceeds from the sale of these
shares. In addition to the registration statement of which this prospectus forms
a part, HomeCom has filed other registration statements covering a substantial
number of additional shares of common stock. They include two registration
statements covering an aggregate of 811,429 shares issued in connection with
recently completed acquisitions; and a registration statement covering a maximum
of 1,339,559 shares issuable in connection with the private placement of our
series B convertible preferred stock and related warrants. All of these
registration statements have been declared effective. These registration
statements are more fully described under "Risk Factors--There Are A Substantial
Number Of Shares Eligible For Future Sale" at page 8 of this prospectus.

HomeCom's common stock is quoted on the Nasdaq SmallCap Market-TM- under the
symbol HCOM.

The selling shareholders will determine the price of the shares independent
of HomeCom. On December 22, 1999, the last sale price of the common stock on the
Nasdaq SmallCap Market-TM- was $3.3125 per share.

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

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

The date of this prospectus is December 27, 1999

<PAGE>
PROSPECTUS SUMMARY

HomeCom develops and markets specialized software applications, products and
services that enable consumers and financial institutions to use the internet
and intranets/extranets to obtain and communicate important business
information, conduct commercial transactions and improve business productivity.
HomeCom's principal mission is to enable financial institutions to establish an
electronic channel to consumers and business by providing secure, innovative,
internet-based solutions to the banking, insurance and brokerage industries. As
a technology provider to this electronic channel, HomeCom intends to continually
enrich the content, host and maintain its own as well as third party software
applications, and to provide strategic consulting to financial institutions on
e-commerce and marketing. HomeCom derives revenue from software licensing,
application development, and hosting and transactions fees. Through
September 30, 1999, HomeCom provided internet/intranet solutions in three areas:
(i) the design, development and integration of customized software application,
including world wide web site development and related network outsourcing;
(ii) the development, sale and integration of HomeCom's existing software
applications into the client's operations; and (iii) security consulting and
integration services. In October, 1999, we sold our security consulting and
integration service operations for a $200,000 note receivable, due January 1,
2000, and shares of a non-public entity valued at approximately $1.35 million,
and entered into a joint marketing program with the acquiror.

As used in this prospectus, HomeCom refers to HomeCom Communications, Inc.,
a Delaware corporation, and its wholly owned subsidiaries. HomeCom was
incorporated on December 2, 1994, under the laws of Delaware. Our principal
executive offices are located at Building 14, Suite 100, 3535 Piedmont Road,
Atlanta, Georgia 30305 and our telephone number is (404) 237-4646.

SUMMARY FINANCIAL INFORMATION

<TABLE>
<CAPTION>
DECEMBER 2, NINE MONTHS NINE MONTHS
(INCORPORATION) YEAR ENDED DECEMBER 31, ENDED ENDED
TO DECEMBER 31, -------------------------------------------------- SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1997 1998 1999 1998
--------------- --------- ---------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.................. -- $ 327,574 $2,229,975 $ 2,503,185 $ 2,510,689 $ 4,878,902 $ 1,884,927
Operating loss............. $ (17,452) (1,824) (580,865) (4,431,059) (5,260,930) (6,503,999) (3,944,418)
Net income (loss).......... (17,452) (5,440) (625,583) (4,881,181) (1,204,140) (6,882,250) 104,542
Basic and diluted loss per
share....................
Continuing operations...... $ (0.1) $ (0.00) $ (0.34) $ (1.86) $ (.42) $ (1.26) $ (.13)
Discontinued operations.... -- -- (.02) (.02) (0.07) (0.01)
--------- --------- ---------- ----------- ----------- ----------- -----------
Total.................... $ (0.1) $ (0.00) $ (0.34) $ (1.88) $ (.44) $ (1.33) $ (0.14)
========= ========= ========== =========== =========== =========== ===========
Weighted average common
shares outstanding--basic
and diluted.............. 1,850,447 1,850,447 1,862,223 2,602,515 4,287,183 6,166,695 4,039,832
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1997 1998 1999
-------- -------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).......................... $ 8,455 $133,792 $(1,304,682) $2,721,930 $2,265,725 $ 2,984,384
Total assets....................................... 10,254 247,382 1,726,522 4,664,779 4,565,490 12,043,771
Long-term obligations.............................. -- 160,792 147,833 1,652,009 88,242 126,353
Total liabilities.................................. -- 242,568 2,347,191 2,708,007 1,117,041 2,287,157
Redeemable preferred stock......................... -- -- -- -- -- 1,649,469
Common stock and other stockholders' equity
(deficit)........................................ 10,254 4,814 (620,669) 1,956,772 3,448,449 8,107,145
</TABLE>

3
<PAGE>

RISK FACTORS

FORWARD-LOOKING STATEMENTS

This prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
and Exchange Act, including certain statements contained under "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
concerning HomeCom's expectations, beliefs, or strategies regarding increased
future revenues and operations, and certain statements contained under
"Business" concerning the development and marketing of customized internet
applications and security consulting services and the effect of market
conditions and competition. When used in this prospectus, the words "believes,"
"intends," "anticipates" and similar expressions are intended to identify
forward-looking statements. All forward-looking statements included in this
prospectus are based on information available to HomeCom on the date hereof, and
HomeCom assumes no obligation to update any such forward-looking statements.
Such statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected or implied by such
forward-looking statements. Such risks and uncertainties include the timing and
acceptance of new product introductions, the actions of HomeCom's competitors
and business partners, and the factors discussed below.

WE WILL REQUIRE ADDITIONAL CAPITAL TO FINANCE OUR OPERATING LOSSES AND CAPITAL
REQUIREMENTS

We have incurred substantial operating losses, and we will require
substantial sums of cash in our operations for at least the next 12 months. We
may also need to spend significant amounts of cash to:

- fund continued growth, and offset operating losses;

- take advantage of unanticipated opportunities, such as major strategic
alliances or other special marketing opportunities, acquisitions of
complementary businesses or assets, or the development of new products; or

- react to unanticipated developments or competitive pressures.

On September 7, 1999, we announced a restructuring of our business
consistent with our core internet banking, insurance offerings, and professional
services operations. This restructuring is expected to result in a reduction of
expenses of approximately $3.5 million over the next twelve months, and a
reduction in our personnel by about 60 employees, to about 90 employees (after
taking into effect the anticipated divestiture of our security consulting and
integration division). There is no such assurance that such actions will be
sufficient to allow HomeCom to continue as a going concern. HomeCom currently
only has sufficient working capital to last until approximately March 31, 2000.
If HomeCom exhausts its current sources of capital and is not able to obtain
additional capital, HomeCom will be required to undertake additional steps to
continue its operations. Such steps may include further reduction of HomeCom's
operating costs and other expenditures, including additional reductions of
personnel and suspension of salary increases and capital expenditures. If such
measures are not sufficient, HomeCom may elect to implement other cost reduction
actions as HomeCom may determine are necessary and in HomeCom's best interests,
including the possible sale of some or all of HomeCom's business lines. Any such
actions undertaken may limit HomeCom's opportunities to realize continued
increases in sales and HomeCom may not be able to reduce its costs in amounts
sufficient to achieve break-even or profitable operations. If HomeCom exhausts
its sources of capital, and subsequent cost reduction measures are not
sufficient to allow HomeCom to achieve positive cash flows, HomeCom will be
forced to seek protection from its creditors. The aforementioned factors raise
substantial doubt about HomeCom's ability to continue as a going concern. The
financial statements included in this prospectus have been prepared assuming
HomeCom is a going concern and do not include any adjustments that might result
should HomeCom be unable to continue as a going concern.

We have engaged Raymond James & Associates, Inc. to assist us in evaluating
strategic alternatives.

4
<PAGE>
WE HAVE A LIMITED OPERATING HISTORY

We have a limited operating history. Our growth plans are subject to the
risks, expenses, and uncertainties frequently encountered by young companies
that operate exclusively in the new and evolving markets for internet products
and services. If we fail to achieve our growth plans, our prospects, and the
market for our shares, will be adversely affected. Successfully implementing our
growth plans depends on the following factors:

- Our ability to attract, retain, and motivate qualified people;

- Our ability to upgrade and commercialize products and services;

- Our ability to effectively integrate the technology and operations of
businesses or technologies we have acquired; and

- Our development or acquisition of services or products equal or superior
to those of our competitors.

WE EXPECT TO INCUR CONTINUED LOSSES

As of September 30, 1999, we had an accumulated deficit of approximately
$13.6 million. We expect to continue to experience significant losses for at
least the next 12 months. This will be primarily due to increased sales and
marketing, product development, customer service and support, and operating
costs incurred in support of our product and service offerings. If we cannot
generate sufficient revenues to offset our operating expenses, our business and
operating results will continue to be materially adversely affected.

OUR MARGINS MAY CONTINUE TO DECLINE DUE TO PRICE EROSION

The market for internet and intranet products and services is highly
competitive and is characterized by significant pressures to reduce prices,
incorporate new capabilities, and accelerate completion schedules. This increase
in competition has resulted in significant price competition, which in turn has
resulted in significant reductions in the average selling price of many of our
products and services, including our web site development and hosting services.
We have not been able to offset the effects of price reductions through an
increase in the number of our customers, higher revenue from enhanced services,
or cost reductions, and we expect that our margins may continue to decline. This
decline, if it continues, will negatively affect our results, and may negatively
affect the market for our shares. Our gross margins for each of the past two
years have been approximately 20%, which represents a significant decline from
the gross margins we achieved in 1996 of approximately 63%.

There are no substantial barriers to entry in our market, and we expect that
competition will continue to intensify. In addition, we compete with many other
companies that have longer operating histories, longer customer relationships,
and substantially greater financial, management, technical development, sales,
marketing, and other resources. Many nationally known companies and regional
local companies across the country are involved in Internet and intranet
applications, including the development and support of web sites and internet
applications, and the number of these companies is increasing.

WE DEPEND UPON CONTINUED GROWTH IN USE OF THE INTERNET

Our future success is dependent upon continued growth in the use of the
internet and the web. The internet may not prove to be a viable commercial
marketplace for many reasons, including:

- lack of acceptable security technologies,

- potentially inadequate development of the necessary infrastructure, or

- timely development and commercialization of performance improvements.

5
<PAGE>
If the internet continues to experience significant growth in the number of
users and level of services, the internet infrastructure may not be able to
support the demands placed upon it, and the performance and reliability of the
web may be adversely affected.

OUR STOCK PRICE MAY BE VOLATILE

The trading price of our shares has been, and may continue to be, subject to
wide fluctuations. During 1999, through the date of this prospectus, the closing
sale prices of our shares on the Nasdaq SmallCap Market-TM- has ranged from
$2.69 to $9.6875. The stock price may fluctuate in response to a number of
events and factors such as:

- quarterly variations in operating results,

- announcements of technological innovations or new products and media
products by us or our competitors,

- changes in financial estimates and recommendations by securities analysts,

- the operating and stock price performance of other companies that
investors view as comparable, and

- news reports related to trends in our markets.

In addition, the stock market in general and the market prices for
internet-related companies in particular have experienced extreme volatility and
often have been unrelated to the operating performance of those companies. These
broad market and industry fluctuations may adversely affect the price of the
stock regardless of our operating performance.

WE MAY NOT PROPERLY MANAGE OUR GROWTH

Our growth has placed a significant strain on our managerial, operational
and financial resources. To manage our growth, we must continue to implement and
improve our operational and financial systems and to expand, train, and manage
our employee base. Our systems, procedures or controls may not be adequate to
support our operations. Our management may not be able to achieve the rapid
execution necessary to support our market opportunity. Any failure to
effectively manage growth could have a material adverse effect on our business,
operating results, or financial condition.

WE MAY NOT PROPERLY HANDLE THE RISKS ASSOCIATED WITH ACQUISITIONS

As part of our business strategy, we have completed several acquisitions and
expect to enter into additional business combinations to further our goal to
become a leading provider of internet software solutions for the financial
services industry. Acquisition transactions are accompanied by many risks, and
we may not be successful in addressing one or more of these risks. These risks
include:

- the difficulty of assimilating the operations and personnel of the
acquired companies;

- the difficulties of managing geographically separate business units;

- the difficulty of incorporating acquired technology or content and rights
into our product and services;

- unanticipated expenses relating to technology integration;

- the maintenance of uniform standards, controls, procedures, and policies;
and

- the impairment of relationships with employees and customers as a result
of any integration or management changes.

6
<PAGE>
Since February 1999, we have completed two acquisitions which have added
approximately 35 employees to HomeCom.

WE DEPEND ON KEY PERSONNEL

We depend upon the continued services of our senior management for our
continued success. The loss of any member of senior management, such as Harvey
Sax, Dan Delity, David Frank, or James Wm. Ellsworth, could have a serious
negative impact upon our business and operating results. We can provide no
assurances that we will be able to retain our senior management or other key
personnel. Although we have entered into employment agreements with each of our
executive officers that contain non-competition and nondisclosure provisions,
our ability to benefit from them is uncertain because these provisions are
typically limited in geographic scope and time, and may not effectively prohibit
competition due to the global nature of the internet.

OUR AVERAGE SALES CYCLE MAY LENGTHEN

Our development and implementation of interactive web sites and intranet
software applications involves a lengthy sales cycle, which can be as long as
six to nine months. Extensive web sites, development or licensing of our
products may also involve substantial commitment of capital by potential
customers as well as the attendant delays frequently associated with approving
larger capital expenditures and reviewing new technologies that affect key
operations. If our average sales cycle continues to lengthen, we will face
increased costs, potentially lower profit margins and a potential inability to
achieve our target and sales goals.

WE MAY INCUR LOSSES FROM DEFECTS IN OUR PRODUCTS AND SERVICES

Web site services and other services based on software and computing systems
frequently encounter development and completion delays. Software may contain
undetected errors or failures when introduced, especially in the case of web
sites when the volume of traffic on the site increases. Errors found in the
software, underlying web site, or other project may result in delays in
completion, commercial release, or acceptance of the software, web site, or
other project. In addition, we may incur unanticipated additional costs in order
to cure any defect or be obligated to refund money paid to us or pay for damages
caused by any delay or defect. Applications or products developed by us may
contain undetected errors or failures when first introduced. If software errors
are discovered after introduction, we could experience delays and lost revenues
during the period required to correct these errors. Despite our best efforts to
the contrary, errors may be found in new applications, products, or releases
after the commencement of installation or shipment. These problems can result in
losses, or in delays in receiving revenues.

WE MAY INCUR LOSSES FROM SECURITY RISKS

Our software and equipment is vulnerable to computer viruses or similar
disruptive problems caused by customers or other internet users. Computer
viruses or problems caused by third parties, such as hackers, could lead to
interruptions, delays, or termination of service to our customers. Third parties
could also potentially jeopardize security of confidential information stored in
our computer systems or our customers' computer systems by their inappropriate
use of the internet, which could cause losses to us and to our customers.
Inappropriate use of the internet includes attempting to gain unauthorized
access to information or systems. Although we intend to continue to implement
security measures to prevent this, hackers have circumvented security measures
in the past, and may be able to circumvent our security measures or the security
measures of third parties in the future. Further, until more comprehensive
technologies are developed, the security and privacy concerns of existing and
potential customers may inhibit the growth of the internet service industry in
general and our customer base and revenue in particular. We do not have errors
and omissions, product liability, or other insurance to protect against risks
caused by computer viruses or other misuse of software or equipment by third
parties.

7
<PAGE>
WE MAY NOT BE SUCCESSFUL IN PROTECTING OUR PROPRIETARY RIGHTS OR AVOIDING CLAIMS
THAT WE INFRINGED THE PROPRIETARY RIGHTS OF OTHERS

Our success depends in part upon our software and related documentation. We
principally rely on copyright, trade secret, confidentiality procedures, and
contract laws to protect our proprietary technology. The steps we have taken may
not be adequate to prevent misappropriation of our technology, and our
competitors may independently develop technologies that are substantially
equivalent or superior to our technologies. We have a registered service mark
for our logo and have applied for federal registration of the names HomeCom,
Post On the Fly-TM-, and Personal Internet Banker-TM-. In addition, the laws of
some foreign countries do not protect our proprietary rights to as great an
extent as the laws of the United States. Although we do not believe that the
software or trademarks we use or any of the other elements of our business
infringe on the proprietary rights of any third parties, third parties may
assert claims of infringement against us in the future and may succeed in
securing injunctive relief or money damages. We could incur substantial costs
and diversion of management resources in the defense of any claims relating to
proprietary rights, which could materially adversely affect our business,
financial condition, and results of operations.

THERE ARE A SUBSTANTIAL NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE

The market for the shares may be adversely affected as a result of sales of
a large number of shares in the market, or a perception that large sales may
occur. This could also limit HomeCom's ability to raise capital through
offerings of shares, or to effect acquisitions utilizing shares as part or all
of the purchase price.

HomeCom had 6,673,203 shares outstanding as of November 11, 1999. Of that
amount, 3,803,084 shares, or approximately 57%, will be freely tradable without
restriction or further registration under the Securities Act, except for any
shares purchased by affiliates of HomeCom, as that term is defined in Rule 144
under the Securities Act. That number includes 626,087 shares issued in
connection with a recently completed acquisition, and HomeCom has filed a
registration statement covering those shares. The holders of those shares have
agreed not to sell one-half, or 313,043, of such shares until June 24, 1999 and
to limit sales on a cumulative basis to no more than one-sixth of these 313,043
shares during each month for the following six months. These restrictions do not
apply in the event that the shares have traded above $10.00 per share on each of
the five trading days prior to any single sale, so long as the sale is made at a
price per share of at least $10.00. We have also issued 185,342 shares in
connection with a recently completed acquisition, and we have filed a
registration statement covering 92,671, or one-half, of those shares.

The remaining 2,869,807 shares, or approximately 43% of the outstanding
shares, may be sold in the public market only if registered or sold under an
exemption from registration such as Rule 144.

In addition, there are also the following shares that may become available
for resale in the public markets:

- There are outstanding warrants to acquire an aggregate of 951,960 shares
at a weighted average exercise price of $7.15 per share. The shares
issuable upon exercise of the warrants have been registered under the
Securities Act, and will be available for resale upon issuance following
exercise of the warrants. Warrants to acquire an additional 315,000 shares
at an exercise price of $3.74 per share were issued in conjunction with
the acquisition of First Institutional Marketing, Inc. and certain of its
affiliates. The shares issuable upon exercise of these warrants have not
been registered under the Securities Act and are not currently available
for resale upon issuance following exercise of the warrants.

- There are outstanding options to purchase 1,255,424 shares under our
employee stock option plan at a weighted average exercise price of $4.19
per share, and 25,000 shares under our non-employee

8
<PAGE>

directors option plan. As of October 31, 1999, 9,815 shares have been
issued under our employee stock purchase plan at a weighted average price
of $2.66 per share. We have filed a registration statement on Form S-8
under the Securities Act to register the potential sale of 300,000 shares
reserved for issuance under our stock option plan and the 150,000 shares
reserved for issuance under our stock purchase plan. Except for shares
held by our affiliates, shares purchased under our stock option and
purchase plans generally will be available for resale in the public
market.

- On March 25, 1999, we completed a private placement for cash of $2,500,000
principal amount of our series B convertible stock and related warrants to
purchase 250,000 shares of common stock. Under the terms of the private
placement agreements, we filed a registration statement covering the
resale of up to 1,280,000 shares of Common Stock issuable upon conversion
of the series B preferred stock and exercise of the warrants. If all the
shares of series B preferred stock were converted, and all the related
warrants exercised, as of November 15, 1999, HomeCom would be required to
issue approximately 1,032,704 shares of common stock, or approximately
15.5% of the number of shares of common stock outstanding as of
November 11, 1999. The total number of shares of common stock issuable
upon such conversion and exercise will vary, based upon the closing bid
prices of HomeCom's common stock. On December 16, 1999, the holders of the
series B preferred stock converted $200,000 principal amount of series B
preferred stock into 63,317 shares of common stock. The terms of the
series B preferred stock and the warrants, including the conversion rights
of the series B preferred stock, are more fully described in this
prospectus under "Description of Capital Stock," in particular the
subsections entitled "Series B Convertible Preferred Stock" on page 46 and
"Warrants" on page 57. Pursuant to certain registration rights granted to
the investors in the private placement, we were obligated to pay penalties
if the registration statement was not filed and declared effective within
specified time periods. We incurred penalties under those provisions, and
we have elected to pay such penalties by issuing investors additional
shares of common stock. As of November 21, 1999, such penalties amounted
to an aggregate of 59,559 shares of common stock, which shares were
included in the registration statement.

- On July 28, 1999, we completed a private placement for cash of $3,500,000
principal amount of our series C convertible preferred stock and related
warrants to purchase 59,574 shares of common stock. If all the shares of
series C preferred stock were converted, and all the related warrants
exercised, as of November 15, 1999, HomeCom would be required to issue
approximately 1,316,650 shares of common stock, or approximately 19.1% of
the number of shares of common stock outstanding as of November 11, 1999.
The total number of shares of common stock issuable upon such conversion
and exercise will vary, based upon the closing bid prices of HomeCom's
common stock. On December 6, 1999, the holder of the series C preferred
stock converted $750,000 principal amount of series C preferred stock into
281,460 shares of common stock. The terms of the series C preferred stock
and the warrants, including registration rights of the holders of series C
preferred stock, are more fully described in the prospectus under
"Description of Capital Stock," in particular the subsections entitled
"Series C Convertible Preferred Stock" on page 50 and "Warrants" on
page 57.

- On September 28, 1999, we completed a private placement for cash of
$1,500,000 principal amount of our series D convertible preferred stock
and related warrants to purchase 25,000 shares of common stock. If all the
shares of series D preferred stock were converted, and all the related
warrants exercised, as of November 15, 1999, HomeCom would be required to
issue approximately 558,099 shares of common stock, or approximately 8.4%
of the number of shares of common stock outstanding as of November 11,
1999. The total number of shares of common stock issuable upon such
conversion and exercise will vary, based upon the closing bid prices of
HomeCom's common stock. The terms of the series D preferred stock and the
warrants, including registration rights of

9
<PAGE>

the holders of series D preferred stock, are more fully described in the
prospectus under "Description of Capital Stock," in particular the
subsections entitled "Series D Convertible Preferred Stock" on page 53 and
"Warrants" on page 57.

PREFERRED STOCK HAS RIGHTS SENIOR TO THE SHARES

We have the right to issue up to 1,000,000 shares of preferred stock and to
fix the rights, preferences, privileges and restrictions, which include voting
rights, of the preferred stock without shareholder approval. There is presently
issued and outstanding 115 shares of series B preferred stock, 137.5 shares of
series C preferred stock and 75 shares of Series D preferred stock. The rights
of holders of common stock may be adversely affected by the rights of holders of
the preferred stock, including any preferred stock that may be issued in the
future. In addition, the issuance of additional shares of preferred stock could
make it more difficult for a third party to acquire control of HomeCom, even if
the change of control would be beneficial to shareholders.

WE HAVE ANTI-TAKEOVER PROVISIONS IN PLACE

Our restated certificate of incorporation provides that our board is divided
into three classes of directors with each class serving a staggered three-year
term. The division of the board of directors into three classes may discourage a
third party from making a tender offer or commencing a proxy contest to obtain
control of HomeCom, and may serve to maintain the incumbency of the present
board of directors.

THERE ARE LIMITATIONS ON THE LIABILITY OF OUR DIRECTORS AND OFFICERS

Our restated certificate of incorporation provides that our directors shall
have no personal liability for some breaches of their fiduciary duties. In
addition, our restated bylaws provide for mandatory indemnification of directors
and officers to the fullest extent permitted by Delaware law. These limitations
on personal liability do not apply to liabilities under the federal securities
laws. However these provisions may reduce the likelihood of derivative
litigation against directors and officers and may discourage stockholders from
bringing a lawsuit against directors and officers for a breach of their
fiduciary duties.

THERE ARE UNCERTAINTIES ASSOCIATED WITH GOVERNMENT REGULATION AND OTHER LEGAL
ISSUES

There are currently few laws or regulations directly applicable to access to
or commerce on the internet. Due to the increased popularity and the use of the
internet, it is possible that laws and regulations may be adopted, covering
issues such as:

- user privacy,

- defamation,

- pricing,

- taxation,

- content regulation,

- quality of products and services, and

- intellectual property ownership and infringement.

Legislation of this type could expose us to substantial liability. It could
also dampen the growth in use of the web, decrease the acceptance of the web as
a communications and commercial medium, or require us to incur significant
expense in complying with any new regulations. Other nations, including Germany,
have taken actions to restrict the free flow of material considered to be
objectionable on the web. The European Union has recently adopted privacy and
copyright directives that may impose additional burdens and costs on our
international operations. In addition, several telecommunication carriers,
including America's Carriers Telecommunications Association, are seeking to have
telecommunications over the web regulated by the Federal Communication
Commission in the same manner as other telecommunication services. Because the
growing popularity and use of the web has burdened the existing
telecommunications infrastructure, many areas with high web use have begun to
experience interruptions in phone service.

10
<PAGE>
Local telephone carriers, including Pacific Bell, have petitioned the Federal
Communications Commission to regulate service providers and impose access fees.
Increased regulation, or the imposition of access fees, could substantially
increase the cost of communicating on the web and potentially decrease the
demand for our products. A number of proposals have been made at the federal,
state, and local level that would impose additional taxes on the sale of goods
and services through the internet. These proposals, if adopted, could
substantially impair the growth of electronic commerce and could adversely
affect our opportunity to derive financial benefit from the sale of goods and
services through the internet.

THERE ARE POTENTIAL COMMERCE-RELATED LIABILITIES

We are offering and intend to continue to offer insurance and securities
products through the internet. These activities will expose us to a number of
additional risks and uncertainties, including:

- potential liabilities for wrongful or illegal activities that may be
conducted in connection with the sale of securities and insurance
products;

- consumer fraud and false or deceptive advertising or sales practices;

- breach of contract claims related to the sales of insurance and securities
products;

- claims that materials included in our sites infringe on third-party
patents, copyrights, trademarks or other intellectual property rights or
are libelous, defamatory, or breach third-party confidentiality or privacy
rights;

- claims relating to any failure to appropriately collect or remit sales or
other taxes arising from commerce transactions;

- claims that may be brought by customers as a result of losses resulting
from any down time or other performance failures in our services; and

- state laws limiting the sale of insurance and securities products.

Although we maintain liability insurance, insurance may not cover these claims
or may not be adequate. Even if the claims do not result in material liability,
investigating and defending claims of this type is expensive.

FAILURE TO OBTAIN YEAR 2000 COMPLIANCE MAY HAVE ADVERSE EFFECTS ON US

We rely primarily on industry standard operating systems and applications
for our internal systems rather than proprietary software, and based on review
of significant internal programs and systems, we have determined that they are
substantially year 2000 compliant. In addition, we are seeking confirmation from
our primary telecommunications service providers that they are developing and
implementing plans to become year 2000 compliant. Information we have received
so far has indicated that they are in the process of implementing remediation
procedures to ensure that their computer systems, services, or products are year
2000 compliant by December 31, 1999. However, we have not undertaken an in-depth
evaluation of these providers in relation to the year 2000 issue. In addition,
we cannot predict whether or not all of these vendors' programs will be
successful. To the extent that these vendors fail to resolve any year 2000
issues on a timely basis or in a manner that is compatible with our systems,
that failure could have a material adverse effect on our financial position and
future operating results. We are using internal resources to identify and
correct our systems for year 2000 compliance, and we expect any incremental
costs associated with addressing this issue to be minimal. We do not believe
that the costs of addressing year 2000 issues will be material to our future
operating results or financial position.

11
<PAGE>
MANAGEMENT AND SIGNIFICANT STOCKHOLDERS CAN EXERCISE INFLUENCE OVER HOMECOM

Based upon stock ownership as of November 15, 1999, our executive officers,
directors, and 5% stockholders and their affiliates own an aggregate of 25.7% of
our outstanding shares. As a result, these persons acting together may have the
ability to control all matters submitted to our shareholders for approval and to
control the management and affairs of HomeCom. This concentration of ownership
may have the effect of delaying or preventing a change in control of HomeCom,
impede a merger, consolidation, or takeover or other business combination, or
discourage a potential acquiror from attempting to obtain control. This
concentration of control could also have a negative effect on the market price
of your shares.

SELLING SHAREHOLDERS WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION

The conversion of preferred shares in conjunction with this offering may
result in immediate and substantial dilution to the existing shareholders. To
the extent that currently outstanding options and warrants are exercised or
converted, there will be further dilution in your shares. Please refer to the
information above under "There Are a Substantial Number of Shares Eligible For
Future Sale."

WE MAY NOT MAINTAIN NASDAQ LISTING REQUIREMENTS

If we are unable to maintain the standards for continued listing, our shares
could be subject to delisting from the Nasdaq SmallCap Market-TM-. If our shares
were delisted, trading, if any, of our shares would be conducted in the
over-the-counter market on the OTC Bulletin Board established for securities
that do not meet the Nasdaq SmallCap Market-TM- listing requirements or in what
are commonly referred to as the pink sheets. As a result, investors may find it
more difficult to dispose of or to obtain accurate price quotations on the
shares. Under the currently effective criteria for continued listing of
securities on the Nasdaq SmallCap Market-TM-, a company must maintain $2,000,000
in net tangible assets, a minimum bid price of $1.00, and a public float of at
least $1,000,000.

THE SHARES MAY BECOME SUBJECT TO RISKS OF LOW PRICED STOCKS

In the absence of the shares being quoted in Nasdaq, or listed on an
exchange, trading in the shares would be covered by Rule 15g-9 promulgated under
the Securities Exchange Act of 1934, if our shares are a penny stock. The
applicability of this rule, if it occurs, could materially adversely affect the
ability of broker-dealers to sell our shares and the ability of purchasers in
this offering to sell their shares in the secondary market.

Under that rule, broker-dealers who recommend penny stocks to persons other
than established customers and accredited investors, who are generally investors
with net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with a spouse, must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement to
a transaction before the sale.

The SEC has adopted regulations that generally defined a penny stock to be
any equity security that has a market price of less than $5.00 per share.
However, exemptions to this rule include:

- an equity security listed on the Nasdaq Stock Market-TM-, and

- an equity security issued by an issuer that has:

- net tangible assets of at least $2,000,000, if the issuer has been in
continuous operation for three years,

- net tangible assets of at least $5,000,000, if the issuer has been in
continuous operation for less than three years, or

12
<PAGE>
- average revenue of at least $6,000,000 for the preceding three years.

Unless an exception is available, the regulations require the delivery,
before any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the associated risks.

ISSUANCE OF SHARES TO SELLING SHAREHOLDERS

SERIES C CONVERTIBLE PREFERRED STOCK AND WARRANTS

On July 28, 1999, we completed a private placement of $3,500,000 principal
amount of our series C convertible preferred stock and related warrants to
purchase our common stock. The series C preferred stock and warrants were sold
in a private placement in reliance on Rule 506 of the Securities Act of 1933,
which provides an exemption from registration for sales to accredited investors,
as defined by Rule 501 under Regulation D of the Securities Act. Under the terms
of the private placement, we agreed to file a registration statement under the
Securities Act covering a minimum of 1,244,444 shares of common stock issuable
upon conversion of the series C preferred stock and exercise of the warrants. We
are obligated to pay penalties if the registration statement is not filed and/or
declared effective within specified time periods.

The series C preferred stock has an initial stated value of $20,000 per
share, which increases at the rate of 6% per year. Each series C preferred share
is convertible, beginning 120 days following the date of issuance, at the option
of the holder, into a number of shares of common stock determined by dividing
the stated value by the lesser of (a) $5.875, and (b) 82.5% of the average of
the closing bid prices for the five trading days prior to the date of
conversion.

We may, at our option at any time after the 90(th) day following the
issuance of the series C preferred stock through July 22, 2001, prohibit holders
of the series C preferred stock from exercising any conversion rights for up to
90 days, provided that specified conditions are met. If we exercise that right,
we are required to compensate the holders of the series C preferred stock in
cash in an amount equal to 3% of the principal amount of the series C preferred
stock held by each holder for each thirty days that the prohibition is in
effect, pro-rated for partial months, or, at our option, deliver common stock in
payment of such amount, based on the average closing bid prices for the common
stock for the twenty trading days preceding the end of each calendar month
during the period conversion is prohibited.

The right of the holders of the series C preferred stock to convert their
shares is also subject to the following restrictions: (i) during the period
beginning on the issuance date through the following 120 days, each holder may
not convert more than 25% of the series C preferred stock purchased by such
holder; (ii) during the period beginning on the issuance date through the
following 150 days, each holder may not convert more than 50% of the series C
preferred stock purchased by such holder; and (iii) during the period beginning
on the issuance date through the following 180 days, each holder may not convert
more than 75% of the series C preferred stock purchased by such holder.

At any time after the issuance date, we have the right, in our sole
discretion, to redeem, from time to time, any or all of the series C preferred
stock; provided that specified conditions are met, including that we have cash,
credit or standby underwriting facilities available to fund the redemption. The
redemption price is calculated as 120% of the original purchase price.

The warrants expire on July 27, 2004 and have an exercise price of $7.34 per
share, subject to adjustment under specified circumstances.

SERIES D CONVERTIBLE PREFERRED STOCK AND WARRANTS

On September 28, 1999, we completed a private placement of $1,500,000
principal amount of our series D convertible preferred stock and related
warrants to purchase 25,000 shares of our common stock. The series D preferred
stock and warrants were sold in a private placement in reliance on Rule 506 of
the

13
<PAGE>
Securities Act of 1933, which provides an exemption from registration for sales
to accredited investors, as defined by Rule 501 under Regulation D of the
Securities Act. Under the terms of the private placement, we agreed to file a
registration statement under the Securities Act covering a minimum of 533,368
shares of common stock issuable upon conversion of the series D preferred stock
and exercise of the warrants. We are obligated to pay penalties if the
registration statement is not filed and/or declared effective within specified
time periods.

The series D preferred stock has an initial stated value of $20,000 per
share, which increases at the rate of 6% per year. Each series D preferred share
is convertible, beginning on the date of this prospectus, at the option of the
holder, into a number of shares of common stock determined by dividing the
stated value by the lesser of (a) $5.875, and (b) 82.5% of the average of the
closing bid prices for the five trading days prior to the date of conversion.

We may, at our option at any time after the 90(th) day following the
issuance of the series D preferred stock through September 28, 2001, prohibit
holders of the series D preferred stock from exercising any conversion rights
for up to 90 days, provided that specified conditions are met. If we exercise
that right, we are required to compensate the holders of the series D preferred
stock in cash in an amount equal to 3% of the principal amount of the series D
preferred stock held by each holder for each thirty days that the prohibition is
in effect, pro-rated for partial months, or, at our option, deliver common stock
in payment of such amount, based on the average closing bid prices for the
common stock for the twenty trading days preceding the end of each calendar
month during the period conversion is prohibited.

The right of the holders of the series D preferred stock to convert their
shares is also subject to the following restrictions: (i) during the period
beginning on the issuance date through the following 120 days, each holder may
not convert more than 25% of the series D preferred stock purchased by such
holder; (ii) during the period beginning on the issuance date through the
following 150 days, each holder may not convert more than 50% of the series D
preferred stock purchased by such holder; and (iii) during the period beginning
on the issuance date through the following 180 days, each holder may not convert
more than 75% of the series D preferred stock purchased by such holder.

At any time after the issuance date, we have the right, in our sole
discretion, to redeem, from time to time, any or all of the series D preferred
stock; provided that specified conditions are met, including that we have cash,
credit or standby underwriting facilities available to fund the redemption. The
redemption price is calculated as (i) 105% of the original purchase price for
the first 30 days following the issuance date; (ii) 110% of the original
purchase price for the next 90 days and (iii) 120% of the original purchase
price after 120 days from the issuance date.

The warrants expire on September 27, 2004 and have an exercise price of
$7.34 per share, subject to adjustment under specified circumstances.

USE OF PROCEEDS

The proceeds from the sale of the shares covered by this prospectus are
entirely for the benefit of the selling shareholders. We will not receive any
proceeds from the sale of the shares by the selling shareholders.

14
<PAGE>
PRICE RANGE OF COMMON STOCK

HomeCom's Common Stock is traded on the Nasdaq SmallCap-TM- Market under the
symbol "HCOM." The following table shows for the periods indicated the high and
low sale prices for the Common Stock as reported by the Nasdaq SmallCap-TM-
Market.

<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
1997:
Second quarter (since May 8, 1997).......................... $ 7.25 $6.00
Third quarter............................................... 6.50 2.13
Fourth quarter.............................................. 15.56 2.63

1998:
First quarter............................................... 16.00 2.00
Second quarter.............................................. 18.25 1.13
Third quarter............................................... 4.94 1.63
Fourth quarter.............................................. 8.88 1.38

1999:
First quarter............................................... 7.63 3.50
Second quarter.............................................. 9.69 5.00
Third quarter............................................... 6.69 2.69
Fourth quarter (through December 22, 1999).................. 5.25 3.13
</TABLE>

On December 22, 1999, the last reported sale price of the shares as reported
by the Nasdaq SmallCap(TM) Market was $3.3125 per share. As of November 15,
1999, there were 67 holders of record of the shares.

15
<PAGE>
DIVIDEND POLICY

HomeCom has not paid any cash dividends on its capital stock to date.
HomeCom currently anticipates that it will retain all future earnings, if any,
to fund the development and growth of its business and does not anticipate
paying any cash dividends in the foreseeable future.

SELECTED FINANCIAL DATA

The following selected historical financial data have been derived from the
audited and unaudited financial statements of HomeCom. The data should be read
in conjunction with the financial statements, related notes and other financial
information included herein.

<TABLE>
<CAPTION>
DECEMBER 2 NINE MONTHS ENDED
(INCORPORATION) YEAR ENDED DECEMBER 31, SEPTEMBER 30,
TO DECEMBER 31, -------------------------------------------------- -------------------------
1994 1995 1996 1997 1998 1999 1998
--------------- --------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales:
Service sales................ $ -- $ 327,574 $2,112,878 $ 2,484,459 $ 2,463,490 $ 4,760,878 $ 1,854,708
Equipment sales.............. -- -- 117,097 18,726 47,199 118,084 30,219
--------- --------- ---------- ----------- ----------- ----------- -----------
Total net sales............ -- 327,574 2,229,975 2,503,185 2,510,689 4,878,962 1,884,927
--------- --------- ---------- ----------- ----------- ----------- -----------
Cost of sales:
Cost of services............. -- 59,871 715,377 2,129,968 2,208,820 3,289,155 1,176,045
Cost of equipment sold....... -- -- 60,058 10,014 22,937 115,573 197,957
--------- --------- ---------- ----------- ----------- ----------- -----------
Total cost of sales........ -- 59,871 775,435 2,139,982 2,231,757 3,404,728 1,374,002
--------- --------- ---------- ----------- ----------- ----------- -----------
Gross profit................... -- 267,703 1,454,540 363,203 278,932 1,474,234 510,925
--------- --------- ---------- ----------- ----------- ----------- -----------
Operating expenses:
Sales and marketing.......... 1,045 124,253 962,220 1,440,002 1,221,908 2,787,569 439,045
Product development.......... -- 20,239 78,887 514,655 677,590 691,004 291,420
General and administrative... 16,407 121,313 909,230 2,538,229 3,098,095 3,489,424 3,421,972
Depreciation and
amortization............... -- 3,722 85,068 238,537 542,269 1,010,236 302,906
--------- --------- ---------- ----------- ----------- ----------- -----------
Total operating expenses....... 17,452 269,527 2,035,405 4,731,423 5,539,862 7,978,233 4,455,343
--------- --------- ---------- ----------- ----------- ----------- -----------
Operating loss................. (17,452) (1,824) (580,865) (4,368,220) (5,260,930) (6,503,999) (3,944,418)
OTHER EXPENSES (INCOME)
Gain on sale of division..... -- -- -- -- (4,402,076) (4,402,076)
Interest expense............. -- 3,469 51,272 543,420 445,216 25,416 444,023
Other expense (income),
net........................ -- 147 (6,554) (93,298) (166,942) (48,749) (125,577)
--------- --------- ---------- ----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES........................ (17,452) (5,440) (625,583) (4,818,342) (1,137,128) (6,480,666) 139,212
INCOME TAX PROVISION
(BENEFIT).................... -- -- -- -- -- -- --
--------- --------- ---------- ----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS................... (17,452) (5,440) (625,583) (4,818,342) (1,137,128) (6,480,666) 139,212
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS................... -- -- -- (62,839) (67,012) (401,584) (34,670)
--------- --------- ---------- ----------- ----------- ----------- -----------
NET INCOME (LOSS).............. (17,452) (5,440) (625,583) (4,881,181) (1,204,140) (6,882,250) 104,542
PREFERRED STOCK DIVIDEND....... -- -- -- -- (666,667) (1,315,231) (666,667)
--------- --------- ---------- ----------- ----------- ----------- -----------
LOSS APPLICABLE TO COMMON
SHAREHOLDERS................. (17,452) $ (5,440) $ (625,583) $(4,881,181) $(1,870,807) $(8,197,481) $ (562,125)
========= ========= ========== =========== =========== =========== ===========
LOSS PER COMMON SHARE--BASIC
AND DILUTED..................
CONTINUING OPERATIONS.......... $ (0.01) $ (0.00) $ (0.34) $ (1.86) $ (0.42) $ (1.26) $ (0.13)
DISCONTINUED OPERATIONS........ -- -- -- (0.02) (0.02) (0.07) (0.01)
--------- --------- ---------- ----------- ----------- ----------- -----------
TOTAL.......................... $ (0.01) $ (0.00) $ (0.34) $ (1.88) $ (0.44) $ (1.33) $ (0.14)
========= ========= ========== =========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING--BASIC AND
DILUTED...................... 1,850,447 1,850,447 1,862,223 2,602,515 4,287,183 6,166,695 4,039,832
========= ========= ========== =========== =========== =========== ===========
</TABLE>

16
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1997 1998 1999
-------- -------- ----------- ---------- ---------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).......................... $ 8,455 $133,792 $(1,304,682) $2,721,930 $2,265,725 $ 2,984,384
Total assets....................................... 10,254 247,382 1,726,522 4,664,779 4,565,490 12,043,771
Long-term obligations.............................. -- 160,792 147,833 1,652,009 88,242 126,353
Total liabilities.................................. -- 242,568 2,347,191 2,708,007 1,117,041 2,287,157
Redeemable preferred stock......................... -- -- -- -- -- 1,649,469
Common stock and other stockholders' equity
(deficit)........................................ 10,254 4,814 (620,669) 1,956,772 3,448,449 8,107,145
</TABLE>

PRO FORMA FINANCIAL INFORMATION

The following unaudited Pro Forma Combined Statements of Operations for the
nine month periods ended September 30, 1999 and 1998, and the year ended
December 31, 1998, have been prepared to reflect adjustments to the Company's
historical results of operations to give effect to the acquisition of FIMI and
Ganymede Corporation ("Ganymede") and the divestiture of HostAmerica as if each
transaction had occurred on January 1, 1998. The security services division
("HISS") has been treated as a discontinued operation in the historical
statements of operations. The Pro Forma balance sheet gives effect to the sale
of HISS as if it had occurred on September 30, 1999.

These pro forma statements of operations have been prepared by the Company
based on the audited financial statements of FIMI and Ganymede for the year
ended December 31, 1998, and the unaudited interim financial statements of FIMI
for the period from January 1 through March 24, 1999 (date of acquisition) and
for the nine-month period ended September 30, 1998, and of Ganymede for the
period from January 1 through April 23, 1999 (date of acquisition) and for the
nine-month period ended September 30, 1998, included elsewhere in this
Registration Statement.

These pro forma statements are not necessarily indicative of the results of
operations which would have been attained had each of the acquisitions and the
divestiture been consummated on the dates indicated or which may be attained in
the future. These pro forma statements should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical financial statements and notes thereto of
HomeCom, FIMI and Ganymede, included herein.

17
<PAGE>
HOMECOM COMMUNICATIONS, INC.

PRO-FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
---------------------- ------------ PRO-FORMA PRO-FORMA
HOMECOM FIMI GANYMEDE HOSTAMERICA ADJUSTMENTS AS ADJUSTED
----------- ---------- --------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales......................... 2,510,689 3,972,049 665,359 (533,159) -- 6,614,938
Cost of Sales..................... 2,231,757 3,168,026 511,278 (210,796) -- 5,700,265
----------- ---------- -------- --------- ----------- -----------
Gross Profit...................... 278,932 804,023 154,081 (322,363) -- 914,673
1,044,168 (1)
Operating Expenses................ 5,539,862 883,180 205,180 (53,593) 432,012 (2) 8,050,809
----------- ---------- -------- --------- ----------- -----------
Operating Income (Loss)........... (5,260,930) (79,157) (51,099) (268,770) (1,476,180) (7,136,136)
Other Expenses (Income), Net...... (4,123,802) (1,066) 18,150 -- -- (4,106,718)
----------- ---------- -------- --------- ----------- -----------
Income (Loss) from Continuing
Operations Before Income
Taxes........................... (1,137,128) (78,091) (69,249) (268,770) (1,476,180) (3,029,418)
Income Taxes...................... -- -- -- -- -- --
----------- ---------- -------- --------- ----------- -----------
Net Income (Loss) from Continuing
Operations...................... (1,137,128) (78,091) (69,249) (268,770) (1,476,180) (3,029,418)
Preferred Stock Dividend.......... (666,667) -- -- -- -- (666,667)
----------- ---------- -------- --------- ----------- -----------
Income (Loss) from Continuing
Operations Applicable to Common
Shareholders.................... (1,803,795) (78,091) (69,249) (268,770) (1,476,180) (3,696,085)
=========== ========== ======== ========= =========== ===========
Basic and Diluted Loss from
Continuing Operations Per
Share........................... $ (0.42) $ (0.06) $ (0.37) $ -- $ -- $ (0.65)
=========== ========== ======== ========= =========== ===========
Weighted Average Common Shares
Outstanding..................... 4,287,183 1,252,174 185,342 -- -- 5,724,699
=========== ========== ======== ========= =========== ===========
</TABLE>

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

(1) To record amortization of the intangibles of FIMI assuming the acquisition
had been completed on January 1, 1998. Tangible assets are being amortized
over approximately 3 years resulting in annual amortization expense of
$1,044,168.

(2) To record amortization of the intangibles of Ganymede assuming the
acquisition had been completed on January 1, 1998. Intangible assets are
being amortized over 3 years, resulting in annual amortization expense of
$432,012.

18
<PAGE>
HOMECOM COMMUNICATIONS, INC.

PRO-FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------
1999
-----------------------------------------------------------------------------------
ACQUISITIONS DISPOSITIONS
----------------------- ------------- PRO-FORMA PRO-FORMA
HOMECOM FIMI GANYMEDE HOST AMERICA ADJUSTMENTS AS ADJUSTED
----------- ---------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales................................... $ 4,878,962 $ 682,933 $ 275,619 $ -- $ -- $ 5,837,514
Cost of Sales............................... 3,404,728 498,350 341,508 -- -- 4,244,586
----------- ---------- --------- --------- ----------- -----------
Gross Profit................................ 1,474,234 184,583 (65,889) -- -- 1,592,928
Operating Expenses.......................... 7,978,233 332,329 7,729 -- 405,046 (1) 8,723,337
----------- ---------- --------- --------- ----------- -----------
Operating Income (Loss)..................... (6,503,999) (147,746) (73,618) -- (405,046) (7,130,409)
Other Expenses (Income), Net................ (23,333) -- 7,729 -- -- (15,604)
----------- ---------- --------- --------- ----------- -----------
Income (Loss) from Continuing Operations.... (6,480,666) (147,746) (81,347) -- (405,046) (7,114,805)
Preferred Stock Dividend.................... (1,315,231) -- -- -- -- (1,315,231)
----------- ---------- --------- --------- ----------- -----------
Income (Loss) from Continuing Operations
Applicable to Common Shareholders......... $(7,795,897) $ (147,746) $ (81,347) -- $ (405,046) (8,430,036)
=========== ========== ========= ========= =========== ===========
Basic and Diluted Earnings (Loss) Per Share
from Continuing Operations................ $ (1.26) $ (0.26) $ (0.67) $ -- $ -- $ (1.23)
=========== ========== ========= ========= =========== ===========
Weighted Average Common Shares Outstanding
Basic and Diluted......................... 6,166,695 574,201 120,831 -- -- 6,861,727
=========== ========== ========= ========= =========== ===========
</TABLE>

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------
1998
-----------------------------------------------------------------------------------
ACQUISITIONS DISPOSITIONS
----------------------- ------------- PRO-FORMA PRO-FORMA
HOMECOM FIMI GANYMEDE HOST AMERICA ADJUSTMENTS AS ADJUSTED
----------- ---------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales................................... $ 1,884,927 $3,038,606 $ 524,785 $(533,159) $ -- $ 4,915,159
Cost of Sales............................... 1,374,002 1,388,693 375,990 (210,796) -- 2,927,889
----------- ---------- --------- --------- ----------- -----------
Gross Profit................................ 510,925 1,649,913 148,795 (322,363) -- 1,987,270
Operating Expenses.......................... 4,455,343 1,705,065 166,265 (48,892) 1,107,135 (1) 7,384,916
----------- ---------- --------- --------- ----------- -----------
Operating Income (Loss)..................... (3,944,418) (55,152) (17,470) (273,471) (1,107,135) (5,397,646)
Other Expenses (Income), Net................ (4,083,630) 348 (1,423) -- -- (4,084,705)
----------- ---------- --------- --------- ----------- -----------
Income (Loss) from Continuing Operations.... 139,212 (55,500) (16,047) (273,471) (1,107,135) (1,312,941)
Preferred Stock Dividend.................... (666,667) -- -- -- -- (666,667)
----------- ---------- --------- --------- ----------- -----------
Income (Loss) from Continuing Operations
Applicable to Common Shareholders......... $ (527,455) $ (55,500) $ (16,047) $(273,471) $(1,107,135) $(1,979,608)
=========== ========== ========= ========= =========== ===========
Basic and Diluted Earnings (Loss) Per Share
from Continuing Operations................ $ (0.13) $ (0.04) $ (0.09) $ -- $ -- $ (0.36)
=========== ========== ========= ========= =========== ===========
Weighted Average Common Shares Outstanding
Basic and Diluted......................... 4,039,832 1,252,174 185,342 -- -- 5,477,348
=========== ========== ========= ========= =========== ===========
</TABLE>

(1) To record amortization of the intangibles of FIMI and Ganymede, assuming the
acquisitions had occurred on January 1, 1998. Intangible assets are being
amortized over three years resulting in annual amortization expense of
$1,044,168 and $432,012, respectively.

19
<PAGE>

HOMECOM COMMUNICATIONS, INC.

PRO FORMA UNAUDITED COMBINED CONDENSED BALANCE SHEET

SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HOMECOM ADJUSTMENTS AS ADJUSTED
------------ ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,582,670 $ 2,582,670
Accounts and notes receivable, net........................ 1,707,035 200,000(a) 1,907,035
Loans to shareholders..................................... 370,000 -- 370,000
Other current assets...................................... 413,464 -- 413,464
------------ ---------- -----------
Total current assets.................................... 5,073,169 200,000 5,273,169
FURNITURE, FIXTURES AND EQUIPMENT, NET...................... 1,036,582 1,036,582
DEPOSITS.................................................... 242,182 242,182
INVESTMENTS................................................. -- 1,350,000(a) 1,350,000
INTANGIBLE ASSETS, NET...................................... 5,445,864 -- 5,445,864
OTHER NON-CURRENT ASSETS.................................... 245,974 -- 245,974
------------ ---------- -----------
Total assets............................................ $ 12,043,771 $1,550,000 $13,593,771
============ ========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $ 1,397,909 $ -- $ 1,397,909
Accrued payroll liabilities............................... 426,213 -- 426,213
Unearned revenue.......................................... 155,221 -- 155,221
Other current liabilities................................. 109,442 -- 109,442
------------ ---------- -----------
Total current liabilities............................... 2,088,785 -- 2,088,785

OBLIGATIONS UNDER CAPITAL LEASES............................ 126,353 -- 126,353
OTHER LIABILITIES........................................... 72,019 -- 72,019
------------ ---------- -----------
Total liabilities....................................... 2,287,157 -- 2,287,157

REDEEMABLE PREFERRED STOCK.................................. 1,649,469 -- 1,649,469

COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY:
Preferred stock........................................... 3 3
Common stock.............................................. 667 -- 667
Additional paid-in capital................................ 21,798,069 -- 21,798,069
Subscriptions receivable.................................. (98,440) -- (98,440)
Accumulated deficit....................................... (13,593,154) 1,550,000(a) (12,043,154)
------------ ---------- -----------
Total stockholders' equity.............................. 8,107,145 1,550,000 9,657,145
------------ ---------- -----------
Total liabilities and stockholders' equity.............. $ 12,043,771 $1,550,000 $13,593,771
============ ========== ===========
</TABLE>

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

(a) to record sale of security division for a $200,000 note receivable due
January 1, 2000, and shares of common stock in a non-public entity valued at
approximately $1.35 million. The sale of the security division occurred on
October 1, 1999.

20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for historical information contained herein, some matters discussed
in this prospectus constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company notes that a variety of
risk factors could cause HomeCom's actual results and experience to differ
materially from the anticipated results or other expectations expressed in
HomeCom's forward-looking statements. Reference is made in particular to the
discussions set forth in HomeCom's Annual Report on Form 10-K/A for the year
ended December 31, 1998, HomeCom's Quarterly Report on Form 10-Q for the
quarterly periods ended March 31, 1999, June 30, 1999 and September 30, 1999,
and the Company's Registration Statements on Forms S-1 (File Nos. 333-12219,
333-42599, 333-45383 and 333-56795) and S-3 (333-73123).

GENERAL

HomeCom develops and markets specialized software applications, products and
services that enable consumers and financial institutions to use the internet
and intranets/extranets to obtain and communicate important business
information, conduct commercial transactions and improve business productivity.
HomeCom's principal mission is to enable financial institutions to establish an
electronic channel to consumers and business by providing secure, innovative,
internet-based solutions to the banking, insurance and brokerage industries. As
a technology provider to this electronic channel, HomeCom intends to continually
enrich the content, host and maintain its own as well as third party software
applications, and to provide strategic consulting to financial institutions on
e-commerce and marketing. HomeCom derives revenue from software licensing,
application development, and hosting and transactions fees. Through September
1999, HomeCom provided internet/intranet solutions in three areas: (i) the
design, development and integration of customized software application,
including world wide web site development and related network outsourcing;
(ii) the development, sale and integration of HomeCom's existing software
applications into the client's operations; and, (iii) security consulting and
integration services. In October, 1999, we sold our security consulting and
integration services operations for proceeds of approximately $1.35 million in
common stock in the non-public acquiror and $200,000 cash payable January 1,
2000, and entered into a joint marketing program with the acquiror.

HomeCom's revenues and operating results have varied substantially from
period to period, and should not be relied upon as an indication of future
results. HomeCom historically has operated with no significant backlog because
its services are provided as requested by customers. As a result, revenues in
any period are substantially affected by the amount of services requested by its
customers. An unanticipated termination of a major project, a client's decision
not to pursue a new project or proceed to succeeding stages of a current
project, or the completion during a quarter of several major client projects,
could require HomeCom to pay underutilized employees and could therefore have a
material adverse effect on HomeCom's results of operations, financial condition,
and cash flows.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998

NET SALES. Net sales increased 330% from $478,372 in the third quarter of
1998 to $2,059,681 in the third quarter of 1999. Revenues from service sales
increased 321% from $464,493 in the third quarter of 1998 to $1,958,276 in the
third quarter of 1999. This increase of $1,493,783 is primarily attributable to
increases in custom application development revenues of approximately $600,000
and to insurance sales of approximately $886,000 from the FIMI acquisition.
Revenue from equipment sales increased from $13,879 in the third quarter of 1998
to $101,405 in the third quarter of 1999 due to increased sales of hardware and
software.

21
<PAGE>

COST OF SALES. Cost of sales includes salaries for programmers, technical
staff and customer support, as well as a pro-rata allocation of
telecommunications, facilities and data center costs. Cost of sales for services
increased from $398,108, or 83.2% of revenues in the third quarter of 1998 to
$1,450,941, or 70.4% of revenues in the third quarter of 1999. This increase
reflects the FIMI acquisition, as well as increased costs for technical and
support personnel hired in advance of anticipated revenue growth, offset by
costs eliminated due to the sale of HostAmerica in June 1998. The decrease in
cost of sales as a percentage of revenues is due to higher gross margins on
insurance sales, which began with the FIMI acquisition in late March 1999.

GROSS PROFIT. Gross profit increased by $576,634 from $(18,301) in the
third quarter of 1998 to $558,333 in the third quarter of 1999. Gross profit
margins increased from (3.8)% during the third quarter of 1998 to 27.1% during
the third quarter of 1999. These increases primarily reflect the acquisition of
FIMI in late March 1999.

SALES AND MARKETING. Sales and marketing expenses include salaries,
variable commissions, and bonuses for the sales force, advertising and
promotional marketing materials, and a pro-rata allocation of
telecommunications, facilities and data center costs. Sales and marketing
expenses increased 886.3% from $136,678 in 1998 to $1,348,107 in 1999. This
increase was primarily attributable to commissions on insurance sales due to the
FIMI acquisition, as well as increased advertising, public relations, and
marketing costs. As a percentage of net sales, these expenses increased from
28.6% in 1998 to 65.5% in 1999.

PRODUCT DEVELOPMENT. Product development costs consist of personnel costs
required to conduct the Company's product development efforts, and a pro-rata
allocation of telecommunications, facilities and data center costs. Management
believes that continuing investment in product development is required to
compete effectively in the Company's industry. Total expenditures for product
development were $426,871 or 20.7% of net sales in the third quarter of 1999.
This compares to total product development expenditures of $167,556 or 35.0% of
sales in the third quarter of 1998.

GENERAL AND ADMINISTRATIVE. General and administrative expenses include
salaries for administrative personnel, insurance and other administrative
expenses, as well as a pro-rata allocation of telecommunications, and facilities
and data center costs. General and administrative expenses increased from
$1,171,988 in the third quarter of 1998 to $1,306,141 in the third quarter of
1999 due primarily to the FIMI acquisition. As a percentage of net sales, these
expenses decreased from 245.0% in the third quarter of 1998 to 63.4% in the
third quarter of 1999, due primarily to increases in revenues due to the FIMI
acquisition without proportional increases in general and administrative
expenses.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization includes
depreciation and amortization of computers, network equipment, office equipment,
equipment under capital leases, and intangible assets. Depreciation and
amortization increased from $124,110 in the third quarter of 1998 to $485,139 in
the third quarter of 1999, reflecting increased expenditures on capital
equipment and amortization of intangible assets associated with the acquisitions
of FIMI and Ganymede.

LOSS FROM DISCONTINUED OPERATIONS. On September 1, 1999 the Board of
Directors of the Company determined to dispose of its HISS Business Unit. The
loss attributable to HISS operations for the third quarter of 1999 thru
September 30, 1999 was $115,275. HISS was sold on October 1, 1999.

INTEREST EXPENSE. Interest expense increased from $5,494 in the third
quarter of 1998 to $9,262 during the third quarter of 1999, principally
reflecting increases in capital leases over the third quarter of 1998.

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998

NET SALES. Net sales increased 158.8% from $1,884,927 in the first nine
months of 1998 to $4,878,962 in the first nine months of 1999. Revenues from
service sales increased 156.7% from $1,854,708 in the first nine months of 1998
to $4,760,878 in the first nine months of 1999. This increase of $2,906,170 is
primarily

22
<PAGE>

attributable to increases in custom application development revenues of
approximately $1,573,000, software product sales of approximately $172,000, and
insurance sales of approximately $1,779,000 from the FIMI acquisition, offset by
lower hosting revenues of approximately $537,000 due to the sale of HostAmerica
in June 1998. Revenue from equipment sales increased from $30,219 in the first
nine months of 1998 to $118,084 in the first nine months of 1999. This increase
of $87,865 was attributable to decreased sales of hardware and software.

COST OF SALES. Cost of sales includes salaries for programmers, technical
staff and customer support, as well as a pro-rata allocation of
telecommunications, facilities and data center costs. Cost of sales for services
increased from $1,176,045, or 62.4% of revenues in the first nine months of 1998
to $3,289,155, or 67.4% of revenues in the first nine months of 1999. This
increase reflects the FIMI acquisition, as well as increased costs for technical
personnel hired in advance of anticipated revenue growth, offset by costs
eliminated due to the sale of HostAmerica in June 1998.

GROSS PROFIT. Gross profit increased by $963,309 from $510,925 in the first
nine months of 1998 to $1,474,234 in the first nine months of 1999. Gross profit
margins were 30.2% during the first nine months of 1999, compared to 27.1%
during the first nine months of 1998.

SALES AND MARKETING. Sales and marketing expenses include salaries,
variable commissions, and bonuses for the sales force, advertising and
promotional marketing materials, and a pro-rata allocation of
telecommunications, facilities and data center costs. Sales and marketing
expenses increased 534.9% from $439,045 in 1998 to $2,787,569 in 1999. This
increase was primarily attributable to commissions on insurance sales due to the
FIMI acquisition, as well as increased advertising, public relations, and
marketing costs. As a percentage of net sales, these expenses increased from
23.3% in 1998 to 57.1% in 1999.

PRODUCT DEVELOPMENT. Product development costs consist of personnel costs
required to conduct the Company's product development efforts, and a pro-rata
allocation of telecommunications, facilities and data center costs. Management
believes that continuing investment in product development is required to
compete effectively in the Company's industry. Total expenditures for product
development were $691,004 or 14.2% of net sales in the first nine months of
1999. This compares to total product development expenditures of $291,420 or
15.5% of sales in the first nine months of 1998.

GENERAL AND ADMINISTRATIVE. General and administrative expenses include
salaries for administrative personnel, insurance and other administrative
expenses, as well as a pro-rata allocation of telecommunications, and facilities
and data center costs. General and administrative expenses increased from
$3,421,972 in the first nine months of 1998 to $3,489,424 in the first nine
months of 1999. As a percentage of net sales, these expenses decreased from
181.5% in the first nine months of 1998 to 71.5% in the first nine months of
1999, due primarily to increases in revenues without proportional increases in
general and administrative expenses.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization includes
depreciation and amortization of computers, network equipment, office equipment,
equipment under capital leases, and intangible assets. Depreciation and
amortization increased from $302,906 in the first nine months of 1998 to
$1,010,236 in the first nine months of 1999, reflecting increased expenditures
on capital equipment and amortization of intangible assets associated with the
acquisitions of FIMI and Ganymede.

LOSS FROM DISCONTINUED OPERATIONS. On September 1, 1999 the Board of
Directors of the Company determined to dispose of its HISS Business Unit. The
loss attributable to HISS operations for the nine months ended September 30,
1999 thru September 30, 1999 was $401,584, compares to a loss in the first nine
months of 1998 of $34,670. HISS was sold on October 1, 1999.

OTHER INCOME. During the nine months ended June 30, 1998, the Company
recorded a gain on the sale of its HostAmerica division of $4,402,076.

23
<PAGE>

INTEREST EXPENSE. Interest expense decreased from $444,023 in the first
nine months of 1998 to $25,416 during the first nine months of 1999, principally
reflecting amortization of the discount ($122,778) and debt issue costs
($283,754) incurred in 1998 for the Company's 5% convertible debentures issued
in September 1997.

YEAR ENDED DECEMBER 31, 1997 AS COMPARED TO YEAR ENDED DECEMBER 31, 1998

NET SALES. Net sales increased 0.3% from $2,503,185 in 1997 to $2,510,689
in 1998. Revenues from service sales decreased 0.8% from $2,484,459 in 1997 to
$2,463,490 in 1998. Revenues from equipment sales increased from $18,726 in 1997
to $47,199 during 1998.

COST OF SALES. Cost of sales includes salaries for programmers, technical
staff and customer support, as well as a pro-rata allocation of
telecommunications, facilities and data center costs. Cost of sales for services
increased from $2,129,968, or 85.1% of revenues in 1997 to $2,208,820, or 88.0%
of revenues in 1998. This increase reflects increased costs for technical
personnel hired in advance of anticipated revenue growth, offset by costs
eliminated due to the sale of HostAmerica in June 1998. The increase in cost of
sales as a percentage of revenues is due to the mix of products and services
sold.

GROSS PROFIT. Gross profit decreased by $84,271 from $363,203 in 1997 to
$278,932 in 1998. Gross profit margins also decreased from 14.5% during 1997 to
11.1% during 1998. This decrease as a percentage of net sales is due to the mix
of products and services sold.

SALES AND MARKETING. Sales and marketing expenses include salaries,
variable commissions, and bonuses for the sales force, advertising and
promotional marketing materials, and a pro-rata allocation of
telecommunications, facilities and data center costs. Sales and marketing
expenses decreased 15.1% from $1,440,002 in 1997 to $1,221,908 in 1998. This
decrease was primarily attributable to a decrease in advertising and promotional
marketing materials. As a percentage of net sales, these expenses decreased from
57.5% in 1997 to 48.7% in 1998.

PRODUCT DEVELOPMENT. Product development costs consist of personnel costs
required to conduct HomeCom's product development efforts, and a pro-rata
allocation of telecommunications, facilities and data center costs. Management
believes that continuing investment in product development is required to
compete effectively in HomeCom's industry. Total expenditures for product
development were $677,590, or 27.0% of net sales in 1998, of which none were
capitalized. This compares to total product development expenditures of
$683,488, or 27.3% of net sales in 1997, of which $168,833 were capitalized.

GENERAL AND ADMINISTRATIVE. General and administrative expenses include
salaries for administrative personnel, insurance and other administrative
expenses, as well as a pro-rata allocation of telecommunications, and facilities
and data center costs. General and administrative expenses increased from
$2,538,229 in 1997 to $3,098,095 in 1998. As a percentage of net sales, these
expenses increased from 101.4% in 1997 to 123.4% in 1998. These increases
reflect additional expenditures for operational and administrative support
personnel incurred to support anticipated growth, professional services for
public and investor relations, and accounting and legal support for HomeCom's
securities filings and divestiture activities.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization includes
depreciation and amortization of computers, network equipment, office equipment,
equipment under capital leases, and goodwill increased from $238,537, or 9.5% of
net sales in 1997 to $542,269, or 21.6% in 1998, reflecting increased
expenditures on capital equipment and the amortization of goodwill associated
with the The Insurance Resource Center acquisition.

OTHER INCOME. During 1998, HomeCom recorded a gain on the sale of its
HostAmerica division of $4,402,076 (see Note 9 to the Financial Statements
included in this prospectus).

INTEREST EXPENSE. Interest expense decreased from $543,420 in 1997 to
$445,216 during 1998, due to lower amortization of the discount associated with
the convertible debentures issued in September 1997.

24
<PAGE>

YEAR ENDED DECEMBER 31, 1996 AS COMPARED TO YEAR ENDED DECEMBER 31, 1997

NET SALES. Net sales increased 12.3% from $2,229,975 in 1996 to $2,503,185
in 1997. Revenues from service sales increased 17.6% from $2,112,878 in 1996 to
$2,484,459 in 1997. This increase of $371,581 is primarily attributable to
increases in hosting revenues of approximately $472,000. Revenues from equipment
sales decreased from $117,097 during 1996 to $18,726 during 1997.

COST OF SALES. Cost of sales for services increased from $715,377, or 32.1%
of revenues in 1996 to $2,129,968, or 85.1% of revenues in 1997. This increase
reflects higher overall payroll costs associated with increasing HomeCom's
technical staff to a high of approximately 60 persons in July 1997 to create
available capacity for anticipated revenue growth which did not occur. As part
of an effort to control cash expenditures, Homecom subsequently reduced this
staff to approximately 30 persons by December 31, 1997.

GROSS PROFIT. Gross profit decreased by $1,091,337 from $1,454,540 in 1996
to $363,203 in 1997. Gross profit margins decreased from 65.2% in 1996 to 14.5%
in 1997. This decrease as a percentage of net sales primarily reflects increased
costs incurred by Homecom for technical personnel hired in advance of
anticipated revenue growth which did not occur.

SALES AND MARKETING. Sales and marketing expenses increased 49.7% from
$962,220 in 1996 to $1,440,002 in 1997. This increase was primarily attributable
to an increase in advertising and marketing expenses. As a percentage of net
sales, these expenses increased from 43.1% in 1996 to 57.5% in 1997. During the
third quarter of 1997, Homecom implemented procedures intended to substantially
reduce advertising and marketing expenses.

PRODUCT DEVELOPMENT. Total expenditures for product development were
$683,488, or 27.3% of net sales in 1997, of which $168,833 were capitalized.
This compares to total product development expenditures of $163,069, or 7.3% of
sales, in 1996, of which $84,182 were capitalized. This increase was due to
increases in product development staff and expenditures for Homecom's Personal
Internet Banker-TM- product.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
from $909,230 in 1996 to $2,538,229 in 1997. As a percentage of net sales, these
expenses increased from 40.8% in 1996 to 101.4% in 1997. This increase as a
percentage of net sales reflects primarily increases for operational and
administrative support personnel incurred to support anticipated growth in
revenues, which did not occur. During the third quarter of 1997, Homecom
implemented steps to significantly reduce its general and administrative costs.
These steps included: (i) reductions in general and administrative staff; and
(ii) reductions in public relations and other professional services.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$85,068, or 3.8% of net sales in 1996 to $238,537, or 9.5% in 1997, reflecting
increased expenditures on capital equipment.

INTEREST EXPENSE. Interest expense increased from $51,272 in 1996 to
$543,420 during 1997, principally reflecting $443,889 of amortization of the
discount associated with the convertible debentures issued in September 1997.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES ("FAS 133"). FAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). FAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. Management of HomeCom
anticipates that, due to

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its limited use of derivative instruments, the adoption of FAS 133 will not have
a significant effect on HomeCom's results of operations or its financial
position.

In June 1999, the FASB issued Statement of Financial Accounting Standards
No. 137, Accounting for Derivative Instruments and Hedging Activities--Deferral
of the Effective Date of FASB Statement No. 133 ("FAS 137"). FAS 137 defers the
effective date of FAS 133 until fiscal quarters beginning after June 15, 2000
(January 1, 2001 for HomeCom).

LIQUIDITY AND CAPITAL RESOURCES

HomeCom has substantially limited sources of capital. As of September 30,
1999, HomeCom had net working capital of approximately $2,984,384. Management
has undertaken steps to address HomeCom's ongoing cash requirements including
concentrating HomeCom's market focus, identifying additional operational and
administrative efficiencies, and actively managing working capital. HomeCom also
may consider raising additional capital through additional debt and equity
offerings.

Because HomeCom expects to continue to incur substantial operating losses,
HomeCom will continue to use substantial sums of cash in its operations for an
indefinite period. Accordingly, HomeCom will be required to obtain additional
capital. No assurance can be given that HomeCom will be successful in its
efforts to obtain additional capital, or that capital will be available on terms
acceptable to HomeCom or on terms that will not significantly dilute the
interests of existing stockholders. HomeCom has engaged Raymond James &
Associates, Inc. to assist HomeCom in evaluating strategic alternatives.

On September 7, 1999, we announced a restructuring of our business
consistent with our core internet banking, insurance offerings, and professional
services operations. This restructuring is expected to result in a reduction of
expenses of approximately $3.5 million over the next twelve months, and a
reduction in our personnel by about 60 employees, to about 90 employees (after
taking into effect the divestiture of our security consulting and integration
division). There is no such assurance that such actions will be sufficient.
HomeCom currently only has sufficient working capital to last until
approximately March 31, 2000. If HomeCom exhausts its current sources of capital
and is not able to obtain additional capital, HomeCom will be required to
undertake additional steps to continue its operations. Such steps may include
further reduction of HomeCom's operating costs and other expenditures, including
additional reductions of personnel and suspension of salary increases and
capital expenditures. If such measures are not sufficient, HomeCom may elect to
implement other cost reduction actions as HomeCom may determine are necessary
and in HomeCom's best interests, including the possible sale of some or all of
HomeCom's business lines. Any such actions undertaken may limit HomeCom's
opportunities to realize continued increases in sales and HomeCom may not be
able to reduce its costs in amounts sufficient to achieve break-even or
profitable operations. If HomeCom exhausts its sources of capital, and
subsequent cost reduction measures are not sufficient to allow HomeCom to
achieve positive cash flows, HomeCom will be forced to seek protection from its
creditors. The aforementioned factors raise substantial doubt about HomeCom's
ability to continue as a going concern. The financial statements included in
this prospectus have been prepared assuming HomeCom is a going concern and do
not include any adjustments that might result should HomeCom be unable to
continue as a going concern.

Net cash used in operating activities was $6,829,069 for the nine months
ended September 30, 1999. HomeCom has primarily financed its operations to date
through public and private sales of debt and equity securities and loans from
its principal stockholders and affiliates. During May 1997, HomeCom completed an
initial public offering of its common stock, issuing 1,000,000 shares at a price
of $6.00 per share. The net proceeds to HomeCom from the initial public offering
were approximately $4.7 million. HomeCom has repaid all outstanding principal
amounts loaned to HomeCom by stockholders and affiliates. During
September 1997, HomeCom completed the issuance of an aggregate $1.7 million
principal amount of HomeCom's 5% convertible debentures due September 22, 2000.
Net proceeds from the sale of the debentures was approximately $1.5 million. In
December 1997, HomeCom issued 20,000 shares of series A preferred stock for
aggregate net proceeds of approximately $1.8 million. During 1998, HomeCom's 5%

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convertible debentures and its series A preferred stock were converted into
961,460 and 711,456 shares of common stock, respectively. In June 1998, HomeCom
sold its HostAmerica division to Sage Acquisition Corp., for net proceeds of
approximately $4,500,000. In March 1999, HomeCom issued 125 shares of its
series B preferred stock for aggregate net proceeds of approximately
$2.3 million. On July 28, 1999, HomeCom sold 175 shares of its series C
preferred stock for net proceeds of approximately $3.3 million. On September 28,
1999, HomeCom sold 75 shares of its series D preferred stock for net proceeds of
approximately $1.4 million.

HomeCom spent $306,900 and $345,278 during the nine months ended
September 30, 1999 and 1998, respectively, for the purchase of capital
equipment. These amounts were expended primarily for computer equipment,
communications equipment and software necessary for HomeCom to increase its
presence in the internet and intranet applications marketplace. HomeCom's
commitments as of December 31, 1998 consist primarily of leases on its Atlanta,
Vienna, Virginia, Houston, Texas, Chicago, and New York City facilities.

Accounts receivable, net of allowance for doubtful accounts, totaled
$1,707,035 as of September 30, 1999. Trade receivables are monitored by HomeCom
through ongoing credit evaluations of its customers' financial conditions. The
allowance for doubtful accounts is considered by management to be an adequate
reserve for known and estimated bad debts of HomeCom. A revision in this reserve
due to actual results differing from this estimate could have a material impact
on the results of operations, financial position and liquidity of HomeCom.

YEAR 2000

Many existing computer programs were originally designed to use only two
digits to identify a year in date fields. As a result, date-sensitive software
applications may recognize a date using "00" as the year 1900 rather than the
year 2000. If not corrected, these applications could fail or produce erroneous
results when working with dates in the year 2000 and beyond. If not properly
addressed, the year 2000 issue could have a material effect on HomeCom's
financial position and future operating results. HomeCom primarily relies on
industry standard operating systems and applications for its internal systems
rather than proprietary software, and based on its review of its significant
internal programs and systems, has determined that they are substantially year
2000 compliant. In addition, HomeCom is seeking confirmation from its primary
telecommunications service providers that they are developing and implementing
plans to become year 2000 compliant. Information received to date has indicated
that such respondents are in the process of implementing remediation procedures
to ensure that their computer systems, services, or products are year 2000
compliant by December 31, 1999. However, HomeCom has not undertaken an in-depth
evaluation of such providers in relation to the year 2000 issue. In addition,
HomeCom cannot predict whether or not all of these vendors' programs will be
successful. To the extent that these vendors fail to resolve any year 2000
issues on a timely basis or in a manner that is compatible with HomeCom's
systems, that failure could have a material adverse effect on HomeCom's
financial position and future operating results. HomeCom is using internal
resources to identify and correct its systems for year 2000 compliance, and
expects any incremental costs associated with addressing this issue to be
minimal. HomeCom does not believe that the costs of addressing year 2000 issues
will be material to its financial position or future operating results.

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BUSINESS

GENERAL

HomeCom is a Delaware corporation, organized in 1994 to provide advanced
software applications and integration services to businesses seeking to take
advantage of the internet. In the fourth quarter of 1997, HomeCom made a
strategic decision to move away from horizontally focused internet web design
and hosting services to become a vertically focused financial applications and
solutions provider to the financial services market, including banking,
insurance, and securities brokerage firms.

HomeCom's solutions, which are built around industry standards such as Open
Financial Exchange (OFX), are designed to enable its clients to increase
revenues, achieve distinct competitive advantages, reduce costs, and improve
customer support. The Company employs full time multimedia artists, Ph.D.
computer programmers, internet security experts, licensed financial brokers and
agents, and network engineers. Through September, 1999 HomeCom provided
internet/intranet solutions in three areas: (i) the design, development and
integration of customized software application, including world wide web site
development and related network outsourcing; (ii) the development, sale and
integration of HomeCom's existing software applications into the client's
operations; and, (iii) security consulting and integration services. In October,
1999, we sold our security consulting and integration services operations for
proceeds of approximately $1.35 million in common stock in the non-public
acquiror and $200,000 cash payable January 1, 2000, and entered into a joint
marketing program with the acquiror.

PRODUCTS AND SERVICES

Businesses such as banks, brokerage firms, and insurance companies can use
HomeCom's Personal Internet Banker-TM- and InsureRate-TM- software to allow
customers to access account information and insurance quotes. Its Harvey-TM-
software collects demographic information from users for personally tailored
marketing efforts. HomeCom also creates web sites, designs custom software for
interactive web sites, intranets/extranets, sells third party internet security
software, and provides server hosting and outsourcing facilities.

HomeCom provides its product and service offerings through four distinct but
integrated business units:

- HomeCom's Software Products provides cost effective, one-stop financial
services to the banking, credit union and brokerage industries that allow
customers on-line access to transact personal banking business. HomeCom's
turnkey solutions are targeted to the 14,000 banks and credit unions with
assets between $500 million and $20 billion:

- Personal Internet Banker-TM- (PIB) provides interactive internet banking
including bill payment, balance inquiry, funds transfer, and statement
download for checking, savings and credit card accounts.

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- Harvey-TM- enables banks to both advertise and market targeted consumers
based on demographics and web site browsing preferences. As consumers
interact with the financial institution's web site, Harvey-TM- mines the
data they enter on application forms, adds information about what they
looked at or clicked on and then combines that information with data from
a variety of legacy systems to dramatically increase the financial
institution's cross selling and profit capability.

- Post on the Fly-TM- Conference is an online bulletin board, collaboration
and conferencing system, allowing customers to capture their most
valuable property--the living, moving body of knowledge within an
organization, its business partners and its customers. Specifically
designed for the needs of financial services companies, Conference can
run unlimited numbers of investor forums, private analyst meetings,
financial planning workshops, or customer support groups.

- HomeCom's InsureRate-TM- provides consumer information and education on
insurance via its website--www.insurerate.com. Consumers are also offered
a choice of competitively priced and innovative insurance products for
direct purchase via the internet. InsureRate's technology makes it a low
cost insurance product vendor. Management also intends to add
broker/dealer operations and expects to derive additional profits by
sharing in the reinsurance product selling agreements and sharing
management fees on client assets that it accumulates. Management expects
to offer a selection of fixed annuity, term life, modified endowment
contracts, long-term care, personal auto, homeowners and other policies.

- On March 24, 1999, HomeCom acquired First Institutional Marketing, Inc.
and affiliated companies, which (i) provide innovative insurance products
and marketing programs for the commercial banking industry,
(ii) introduce banks to the sale of insurance and investment products,
and (iii) train bank personnel to market and sell leading insurance and
investment products to their customers. The Company has combined First
Institutional Marketing and InsureRate-TM- to provide integrated
insurance offerings. InsureRate-TM- is the electronic distribution arm of
First Institutional Marketing.

- HomeCom Financial Applications, Solutions and Technology (FAST) creates
Internet and intranet business applications, solutions and technology
focused on the banking, insurance and brokerage client markets.
Applications include software programs ranging from simple mathematical
calculators to extremely sophisticated intranets/extranets communicating
with legacy systems and client/ server databases. HomeCom also provides
turnkey hosting and security integration services for these applications.

- HomeCom Internet Security Services (HISS) provides professional services
to businesses that are concerned about network applications and
information security. In October, 1999 we sold our security consulting and
integration service operations for a $200,000 note receivable due
January 1, 2000 and shares of a non-public entity valued at approximately
$1.35 million, and entered into a joint marketing program with the
acquiror.

HomeCom employs a team of highly trained internet/intranet software
developers and multimedia and graphics professionals who design and develop
specialized internet/intranet software applications. These applications enable
companies to obtain and communicate vital business information, such as sales
reports, order status systems, employee directories and client account
information. HomeCom works closely with its customers to analyze and design
internet-based software solutions that facilitate the interactive exchange of
business information. Through its experience in designing custom internet
solutions for businesses, HomeCom believes that it has developed and continues
to develop in-depth knowledge concerning industry-specific internet applications
and requirements. HomeCom plans to leverage this knowledge to develop additional
internet-enabled applications targeted for the financial services industry.

HomeCom's staff of 19 full-time software engineers design and develop custom
applications and software products. HomeCom's software engineers have experience
with various computer operating

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systems, including Sun Solaris, SGI's IRIX, Windows NT, Digital Unix on the
Alpha platform, Intel's Pentium Pro on BSDI Unix, Hewlett Packard's HP 9000 and
Apple's Macintosh operating system. The software engineers write software
programs using various tools and languages, including Perl, JAVA, CGI
Programming, C and C ++. The software engineers also have database expertise in
Oracle, Informix, Sybase and SQL, and many software development tools. HomeCom's
multimedia artists and engineers utilize many of the generally available
software programs and tools such as Adobe Photoshop, MacroMedia Shockwave,
RealAudio and VDOLive.

ACQUISITIONS AND DIVESTITURES

On April 16, 1998, HomeCom acquired all of the outstanding capital stock of
The Insurance Resource Center, Inc. for 351,391 shares of HomeCom's common
stock. The Insurance Resource Center provides internet development and hosting
services to the insurance industry and was incorporated into HomeCom's FAST
group.

On June 9, 1998, HomeCom sold substantially all of the assets of its
HostAmerica internet network outsourcing services division to Sage Acquisition
Corp. for cash of $4,250,000 and Sage's assumption of approximately $250,000 of
unearned revenue. HomeCom recorded a gain on the sale of approximately
$4,402,000. This transaction allowed HomeCom to further consolidate its business
focus on the financial services market.

On November 6, 1998, HomeCom signed a definitive agreement and plan of
merger to acquire, among other things, all of the outstanding shares of the
First Institutional Marketing companies for 1,252,174 shares of common stock. In
addition, HomeCom entered into employment agreements for an initial term of
3 years with the three principals of First Institutional Marketing, calling for
them to continue in their current roles for the acquired companies. On
March 24, 1999, HomeCom completed this acquisition.

On April 23, 1999, HomeCom acquired all the outstanding shares of Ganymede
Corporation for total consideration of 185,342 shares of common stock and
$100,000 cash. Ganymede is a Chicago-based web site developer for financial
institutions. In addition, the Company entered into employment agreements with
the three principals of Ganymede, calling for them to continue in their current
roles for the acquired company.

In October, 1999 we sold our security consulting and integration service
operations for a $200,000 note receivable due January 1, 2000 and shares of a
non-public entity valued at approximately $1.35 million, and entered into a
joint marketing program with the acquiror.

HomeCom may seek to make additional strategic and tactical acquisitions of
companies that have developed specific industry expertise or have existing
relationships with large businesses needing internet/ intranet solutions.
However, HomeCom has not entered into any additional binding agreements or
commitments. Moreover, HomeCom has extremely limited sources of cash.
Consequently, HomeCom has limited resources available to complete an acquisition
and no assurance can be given that HomeCom will be able to successfully complete
any additional acquisitions.

SALES AND MARKETING

HomeCom's products and services have been developed to serve the needs of
the financial services market, including banking, insurance, and securities
brokerage. HomeCom markets its products and services through its direct sales
force, print advertising and its own Web site. HomeCom also generates customer
leads through its business partner relationships with leading technology
companies. HomeCom also utilizes traditional print and media marketing
strategies to enhance Company and product name recognition.

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In February 1999, HomeCom and USA TODAY created a marketing alliance to
provide direct online access and online promotion for InsureRate-TM-. The
agreement should build further momentum for sales to banks, credit unions,
brokerage companies and other financial institutions.

COMPETITION

The market for specialized internet applications is highly competitive, and
HomeCom expects that this competition will intensify in the future. In providing
specialized software application design and development, HomeCom competes with
numerous businesses that also provide software design and development services,
companies that have developed and market application specific internet software
products, companies that provide software tools that enable customers to develop
specific internet-enabled software applications and companies that choose to
develop internet application products internally. Andersen Consulting L.L.P.,
Electronic Data Systems Corporation (EDS), International Business Machines
Corporation (IBM) and Cap Gemini America are significant custom software
developers, integrators and resellers whose services include a broad range of
internet and intranet software applications design and development services.
Companies such as Broadvision, Inc., Edify Corporation and Security First
Network Bank have developed application specific internet software products that
are broadly marketed and licensed and perform such functions as interactive
one-to-one marketing, human resources benefits inquiry, enrollment and training
and internet banking. In addition, companies that offer and sell client/server
based internet-enabled software products, such as Netscape and Microsoft, may in
the future bundle software capabilities and applications with existing products
in a manner which may limit the need for software capabilities and application
services such as those offered by HomeCom. HomeCom also competes with the
information technology departments of significant business enterprises who may
choose to design and develop their internet applications internally. The
emergence of sophisticated software products and tools that enable companies to
build customized internet-enabled software applications internally also may have
the effect of encouraging internal development and, thus, may materially reduce
the demand for HomeCom's custom software application services.

HomeCom believes that the rapid expansion of the market for internet
software applications will foster the growth of many significant competitors
performing comparable services and offering comparable products to those offered
by HomeCom. HomeCom competes on the basis of creative talent, price, reliability
of services, and responsiveness. Many of HomeCom's current and prospective
competitors have substantially greater financial, technical, marketing and other
resources than HomeCom. HomeCom believes that it presently competes favorably
with respect to each of its various service offerings. There can be no assurance
that HomeCom's present and proposed products will be able to compete
successfully with current or future competitors or that competitive pressures
faced by HomeCom will not have a material adverse effect on HomeCom's business,
financial condition and operating results.

INTELLECTUAL PROPERTY RIGHTS

In accordance with industry practice, HomeCom relies primarily on a
combination of copyright, patent and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect its proprietary
rights. HomeCom seeks to protect its software, documentation and other written
materials principally under trade secret and copyright laws, which afford only
limited protection. HomeCom has a registered service mark for its logo, and has
applied for federal registration of the names HomeCom-TM-, Post On The Fly-TM-
and Personal Internet Banker-TM-. Despite HomeCom's efforts to protect its
proprietary rights, unauthorized parties may attempt to copy aspects of
HomeCom's products or to obtain and use information that HomeCom regards as
proprietary. There can be no assurance that HomeCom's means of protecting its
proprietary rights will be adequate or that HomeCom's competitors will not
independently develop competing products and services. In addition, the laws of
some foreign countries do not protect HomeCom's proprietary rights to as great
an extent as the laws of the United States. HomeCom does not believe that any of
its proposed products infringe the proprietary rights of third parties. There
can be no

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assurance, however, that third parties will not claim infringement by HomeCom
with respect to its products. HomeCom expects that software product developers
will increasingly be subject to infringement claims as the number of products
and competitors in electronic commerce grows and the functionality of products
in different industry segments overlaps. Any such claims, with or without merit,
could be time-consuming, result in costly litigation, cause product shipment
delays or require HomeCom to enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may not be available on terms
acceptable to HomeCom. In addition, Web site developers such as HomeCom face
potential liability for the actions of customers and others using their
services, including liability for infringement of intellectual property rights,
rights of publicity, defamation, libel fraud, misrepresentation, unauthorized
computer access, theft, tort liability and criminal activity under the laws of
the United States, various states and foreign jurisdictions. HomeCom routinely
enters into non-disclosure and confidentiality agreements with employees,
vendors, contractors, consultants and customers.

There can be no assurance that HomeCom's means of protecting its proprietary
rights will be adequate or that HomeCom's competitors will not independently
develop similar technology. HomeCom believes that, due to the rapid pace of
internet innovation and related software industries, factors such as the
technological and creative skills of its personnel are more important in
establishing and maintaining a leadership position within the industry than are
the various legal protections of its technology.

CUSTOMERS

During 1996, 1997 and 1998, no customer accounted for more than 10% of
HomeCom's total net sales. Because substantially all of HomeCom's customers have
retained HomeCom for a single project, customers from whom HomeCom generated
substantial revenue in one quarter generally have not been a substantial source
of revenue in a subsequent quarter.

EMPLOYEES

At November 30, 1999, HomeCom employed 90 full-time employees, of whom 56
were technical personnel engaged in maintaining or developing HomeCom's products
or performing related services, 24 were marketing, sales, or sales support
personnel and 10 were involved in administration and finance.

INSURANCE

HomeCom maintains liability and other insurance that it believes to be
customary and generally consistent with industry practice. HomeCom believes that
such insurance is adequate to cover potential claims relating to its existing
business activities.

GOVERNMENT REGULATION

The Telecommunications Act of 1996 (the "1996 Telecommunications Act"),
which became effective on February 8, 1996, imposes criminal liability on
persons sending or displaying in a manner available to minors indecent material
on an interactive computer service such as the internet. The 1996
Telecommunications Act also imposes criminal liability on an entity knowingly
permitting facilities under its control to be used for those activities. The
constitutionality of these provisions was successfully challenged in federal
district court and ultimately found unconstitutional by the United States
Supreme Court in Reno v. American Civil Liberties Union.

Except for the 1996 Telecommunications Act, HomeCom does not believe that it
is currently subject to direct regulation by any government agency, other than
regulations applicable to businesses generally, and believes that there are
currently few laws or regulations directly applicable to Web site service
companies. The Federal Communications Commission is studying the possible
regulation of the internet. Any such regulations adopted by the Federal
Communications Commission may adversely impact the manner in which HomeCom
conducts its business. It is possible that a number of additional laws and
regulations may be adopted with respect to the internet, covering issues such as
user privacy, pricing,

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characteristics, and quality of products and services. The adoption of any such
laws or regulations may decrease the growth of the internet, which could in turn
decrease the demand for HomeCom's products and services and increase HomeCom's
cost of doing business or cause HomeCom to modify its operations, or otherwise
have an adverse effect on HomeCom's business, financial condition and operating
results. Moreover, the applicability to the internet of existing laws governing
issues such as property ownership, libel, and personal privacy is uncertain.
HomeCom cannot predict the impact, if any, that future regulation or regulatory
changes may have on its business. In addition, Web site developers such as
HomeCom face potential liability for the actions of customers and others using
their services, including liability for infringement of intellectual property
rights, rights of publicity, defamation, libel, fraud, misrepresentation,
unauthorized computer access, theft, tort liability and criminal activity under
the laws of the U.S., various states and foreign jurisdictions. Any imposition
of liability could have a material adverse effect on HomeCom.

In addition, HomeCom's network services are transmitted to its customers
over dedicated and public telephone lines. These transmissions are governed by
regulatory policies establishing charges and terms for communications. Changes
in the regulatory environment relating to the telecommunications and media
industry could have an effect on HomeCom's business, including regulatory
changes which directly or indirectly affect use or access of the internet or
increase the likelihood or scope of competition from regional telephone
companies, could have a material adverse effect on HomeCom.

HomeCom occupies approximately 17,000 square feet in two office buildings in
Atlanta, Georgia under leases expiring in March 2001 and October 2002. These
facilities serve as HomeCom's headquarters and computer center. HomeCom also has
an office in New York City occupying approximately 3,400 square feet under a
lease expiring in January 2003, an office in Houston, Texas occupying
approximately 12,000 square feet under a lease expiring in June 2004, and an
office in Chicago occupying approximately 1,100 square feet under a lease
expiring in October 2002.

HomeCom's internet services are maintained in its key-card access-secured,
dual Leibert air-conditioned Network Operations Center (NOC) in Class A office
space near HomeCom's principal offices. Company personnel monitor server and
network functions on a 24 hour per day, 7 days per week basis. Back-up servers
replace production servers in the event of failure or down time. Tape back-ups
are performed on a daily basis and transported to secure off-site storage. Each
server is Simple Network Management Protocol (SNMP) managed and utilizes devices
located on a separate network to notify network personnel by pager in the event
of problems that are not otherwise detected by HomeCom's own SNMP.

All power supplied to the NOC computer room is supplied by two separate
power substations through American Power Conversion Matrix UPS lines, with
back-up battery power. Telecommunications are provided to the computer room
through multiple leased T1 and T3 lines directly connected to the T3 internet
provided by interexchange carriers. Each T1 and T3 line is provisioned on
separate local carrier fiber optics using the latest Synchronous Optical Network
(SONET) and Fiber Distributed Data Interface ("FDDI") technology.
Telecommunications lines are provided through two physically diverse entrance
facilities. HomeCom has acquired and installed multiple Cisco routers for
connection to the internet, which automatically redistribute traffic load in the
event of telecommunications failure.

HomeCom believes that the properties which it currently has under lease are
adequate to serve HomeCom's business operations for the foreseeable future.
HomeCom believes that if it were unable to renew the lease on any of these
facilities, it could find other suitable facilities with no material adverse
effect on HomeCom's business.

LEGAL PROCEEDINGS

HomeCom is not a party to any material legal proceedings. From time to time,
HomeCom is involved in various routine legal proceedings incidental to the
conduct of its business.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
AGE AT
NAME JUNE 30, 1999 POSITION
- ---- ------------- --------
<S> <C> <C>
Harvey W. Sax (2)...................... 47 President, Chief Executive Officer and
Director
Gia Bokuchava, Ph.D.................... 35 Chief Technical Officer and Director
Roger J. Nebel......................... 46 Director
William Walker (1)..................... 57 Director
Claude A. Thomas (1) (2)............... 56 Director
Daniel A. Delity....................... 39 Director
James Wm. Ellsworth (2)................ 43 Chief Financial Officer and Director
</TABLE>

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

(1) Member of the Audit and Compensation Committees.

(2) Member of the Executive Committee.

The principal occupations for the past five years or more of the nominees
for director and the six directors whose term of office will continue after the
Annual Meeting are set forth below.

Harvey W. Sax is a founder of HomeCom and has served as President and Chief
Executive Officer of HomeCom since January 1995 and as Chairman of the Board of
Directors since September 1997. He was Secretary of HomeCom from December 1994
until January 1995. From October 1994 until December 1995, when he began working
as a full-time employee of HomeCom, Mr. Sax served as a Vice President of
Oppenheimer & Co., Inc. From February 1993 until September 1994, Mr. Sax served
as a Senior Vice President of D. Blech & Co. From July 1992 until
February 1993, Mr. Sax was a Vice President of PaineWebber, Inc. From
January 1989 until July 1992, Mr. Sax was a Vice President of Bear, Stearns &
Co. Inc. Mr. Sax received a Bachelor of Arts degree from Emory University in
1972. Mr. Sax has been a member of the Board of Directors since December 1994.

Gia Bokuchava, Ph.D., has served as HomeCom's Chief Technical Officer since
August 1995. Dr. Bokuchava served as a visiting professor at Emory University
from September 1994 until August 1995 and was employed by the National Library
of Medicine, assisting in the development of Internet based applications, from
January 1995 until August 1995. From July 1990 until September 1994,
Dr. Bokuchava was the Director of The Computer Center at the Institute of
Mechanical Engineering at Georgia Technical University, Tblisi, Georgia
(formerly a part of the Soviet Union). Dr. Bokuchava has taught computer science
as a visiting associate professor at the Universities of Moscow and China.
Dr. Bokuchava received a doctorate in theoretical physics from Georgia Technical
University, Tblisi, in 1990. Dr. Bokuchava has been a member of the Board of
Directors since September 1996.

Roger J. Nebel served as Vice President of HomeCom from August 1996 until
the sale of HISS on October 1, 1999. From May 1991 until July 1996, Mr. Nebel
was a Department Manager (May 1991 to February 1993) and Senior
Manager--Enterprise Assurance (March 1993 to July 1996) for PRC, Inc., a
subsidiary of Litton Industries, Inc., which provides information technology
consulting and systems integration services for governments and businesses.
Mr. Nebel received a Bachelor of Science degree in Engineering from California
Coast University in 1990 and a Master of Science degree in Management from
National-Louis University in 1993. Mr. Nebel has been a member of the Board of
Directors since September 1996.

Claude A. Thomas is a principal of Ambassador Capital Corporation, an
investment banking firm specializing in emerging technology companies. In his
present position, Mr. Thomas assists electronic

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commerce and emerging technology companies with financing, business strategies,
strategic alliances and financial restructuring. From 1994-1997, he was
Executive Vice President, Corporate Development and Software Solutions for
CheckFree Corporation (NASDAQ: CKFR). Previously, he held positions as CEO of
International Banking Technologies and other subsidiaries of First Financial
Management (now FirstData Corporation, NYSE: FDC). He started his 30-year career
with Electronic Data Systems (NYSE: EDS) in the Wall Street division, and
subsequently held positions with Coopers & Lybrand and Digital Equipment
Corporation. Mr. Thomas holds a BE cum laude in Chemical Engineering from
Vanderbilt University and an MBA in Marketing and Finance with honors from
Washington University. Mr. Thomas has been a member of the Board of Directors
since February 1998.

William Walker is President and CEO of the Reassurance Company of Hanover
("RCH"). He has a 40-year career in the insurance industry, beginning with
United Family Life Insurance Company. He also served as Assistant Vice President
with American Pioneer Life, Assistant Secretary with General Reassurance
Company, and Vice President with North American Reassurance. Walker joined RCH
in 1993. Walker is a graduate of Marshall University where he also received his
L.L.B. degree. Mr. Walker has been a director of HomeCom since March, 1999.

Daniel A. Delity founded First Institutional Marketing, Inc. in 1988.
Mr. Delity is President and Director of First Institutional Marketing, Inc.,
Premier Financial Services, Inc. and All Things Financial, Inc. Mr. Delity also
serves as Vice President and General Securities Representative for FIMI
Securities, Inc. Mr. Delity received his Bachelors degree in education and
political science from the State University of New York at Geneseo. Mr. Delity
earned his Group I and IV Insurance licenses and Series 7 & 63 securities
licenses in 1984, and has subsequently concentrated his career in the financial
services industry. Mr. Delity has been a director of HomeCom since March, 1999.

James Wm. Ellsworth has served as Chief Financial Officer since October,
1999. He also serves as Executive Vice President of First Institutional
Marketing, Inc., Premier Financial Services, Inc., All Things Financial and FIMI
Securities, Inc., and as the Financial and Operations Principal of FIMI
Securities, Inc. Prior to joining First Institutional Marketing, Inc. in August
of 1997, Mr. Ellsworth served as Vice President--Finance of QuickQuote Insurance
Agency, Inc., an internet direct insurance agency from October of 1996 until
July of 1997. Mr. Ellsworth also served as a partner in the investment firm of
LEF&C Partners from September 1986 to December 1993. Mr. Ellsworth served as a
Certified Public Accountant with what is now KPMG Peat Marwick from September
1983 to July 1986. Mr. Ellsworth graduated in May 1983 from San Francisco State
University with a Bachelor of Science degree in Business Administration,
Accounting. Mr. Ellsworth has been a director of HomeCom since March, 1999.

On October 15, 1999, Norman H. Smith resigned his position as Chief
Financial Officer of HomeCom in order to take other employment.

HomeCom's Board of Directors is divided into three classes. The Class III
directors (Messrs. Sax and Ellsworth) serve until the 2000 Annual Meeting of
Stockholders, the Class I directors (Mr. Thomas, Mr. Walker and Mr. Delity)
serve until the 2001 Annual Meeting of Stockholders, and the Class II directors
(Dr. Bokuchava and Mr. Nebel) will serve until the 1999 Annual Meeting of
Stockholders. Upon election, each class serves a three-year term. The
classification of the Board of Directors could have the effect of making it more
difficult for a third party to acquire control of the Company. Officers are
elected at the first Board of Directors meeting following the stockholders
meeting at which directors are elected, and officers serve at the discretion of
the Board of Directors. Each executive officer of the Company was chosen by the
Board of Directors and serves at the pleasure of the Board of Directors until
his or her successor is appointed or until his or her earlier resignation or
removal. There are no family relationships between any of the directors or
executive officers of the Company.

35
<PAGE>
BOARD COMMITTEES

The Board of Directors has three standing committees: a Compensation
Committee, an Audit Committee and an Executive Committee. The Compensation
Committee provides recommendations to the Board of Directors concerning salaries
and incentive compensation for officers and employees of the Company. The Audit
Committee recommends the Company's independent auditors and reviews the results
and scope of audit and other accounting-related services provided by such
auditors. The Executive Committee has day-to-day executive decision-making
authority on behalf of the Company, subject to the overall review and approval
of the Board of Directors. A majority vote of the Executive Committee is
required to act on any such matters. The Executive Committee may be disbanded or
reconstituted at any time by a majority vote of the Board of Directors. All
major corporate decisions continue to be subject to the review and approval of
the Board of Directors.

DIRECTOR COMPENSATION

Previously, directors did not receive any cash compensation for their
services as members of the Board of Directors, but were reimbursed for their
reasonable travel expenses in attending Board of Directors and committee
meetings. Effective July 1999, the Board of Directors unanimously approved
compensation to the two outside directors of $1,000 per Board meeting attended.
Directors who are not employees of HomeCom are eligible to receive automatic
grants of stock options under HomeCom's Non-Employee Directors Stock Option
Plan, and may receive additional grants of options under such plan at the
discretion of the Compensation Committee of the Board of Directors. See "Stock
Option Plans--NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN" at page 38 of this
prospectus.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1995, compensation of executive officers of HomeCom was determined by
Harvey W. Sax, HomeCom's President and Chief Executive Officer. In
September 1996, HomeCom established a Compensation Committee to review the
performance of executive officers, establish overall employee compensation
policies and recommend salaries and incentive compensation for officers and
employees of HomeCom. No member of the Compensation Committee is or will be an
executive officer of HomeCom.

EXECUTIVE COMPENSATION

The following table sets forth the total compensation paid or accrued by
HomeCom in 1998 for its Chief Executive Officer and each executive officer of
HomeCom whose total annual salary and bonuses determined at December 31, 1998
exceeded $100,000 (each, a "Named Executive Officer"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------------------
------------------- NUMBER OF SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS UNDERLYING OPTIONS COMPENSATION
- --------------------------- -------- -------- -------------------- ------------
<S> <C> <C> <C> <C>
Harvey W. Sax............................. $147,192 $ 0 0 $ 0
President, Chief Executive Officer
Krishan Puri.............................. $157,508 $ 0 0 $ 0
Executive Vice-President
Roger Nebel............................... $ 99,113 $ 0 0 $ 0
Vice-President
Gia Bokuchava, Ph.D....................... $174,651 $ 0 0 $ 0
Chief Technical Officer And Director
Norman H. Smith........................... $ 99,115 $ 0 0 $ 0
Chief Financial Officer
</TABLE>

36
<PAGE>

As of December 31, 1998, the annual salaries for HomeCom's executive
officers were as follows: Harvey W. Sax, President and Chief Executive Officer
($150,000); Norm Smith, Chief Financial Officer ($100,000); Krishan Puri,
Executive Vice President ($110,100); Gia Bokuchava, Ph.D., Chief Technical
Officer ($100,000); and Roger Nebel, Vice President ($100,000). Pursuant to the
employment agreements with Dr. Bokuchava and Mr. Puri, each is eligible to
receive cash bonuses to repay certain promissory notes issued by them to HomeCom
in connection with their purchase of shares of Common Stock from HomeCom in
August 1996. See "Certain Transactions." Each of HomeCom's executive officers
also is eligible to receive cash bonuses to be awarded at the discretion of the
Compensation Committee of the Board of Directors. On October 15, 1999 Norman
H. Smith resigned his position with HomeCom. On October 13, 1999, Krishan Puri
resigned as Executive Vice President, and Mr. Puri resigned as a director on
November 1, 1999.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning options granted to the
Named Executive Officers during the year ended December 31, 1998:

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
NUMBER OF EXERCISE OF STOCK PRICE
SECURITIES PERCENT OF OR BASE APPRECIATION
UNDERLYING TOTAL GRANTED PRICE FOR OPTION
OPTIONS TO EMPLOYEES FOR ----------------------
EXECUTIVE OFFICER GRANTED FISCAL YEAR SHARE EXPIRATION DATE 5% 10%
----------------- ---------- ------------- -------- ---------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Krishan Puri................. 10,000 3.24% $4.38 December 9, 2008 27,546 69,806
</TABLE>

OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

The following table sets forth the aggregate dollar value of all options
exercised, and the total number of unexercised options held, on December 31,
1998 by the Named Executive Officer:

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED DECEMBER 31, 1998 DECEMBER 31, 1998
ON VALUE --------------------------- ---------------------------
EXECUTIVE OFFICER EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harvey Sax........................ 0 0 2,500 7,500 $ 0 $ 0
Krishan Puri...................... 0 0 6,250 18,750 $ 0 $ 0
Roger Nebel....................... 0 0 5,000 15,000 $ 0 $ 0
Gia Bokuchava, Ph.D............... 0 0 6,250 18,750 $ 0 $ 0
Norman H. Smith................... 0 0 6,250 18,750 $ 0 $ 0
</TABLE>

EMPLOYMENT AGREEMENTS

HomeCom has entered into an employment agreement with Harvey W. Sax, its
President and Chief Executive Officer, which provides a five year term
commencing on January 1, 1996, subject to automatic extension for an additional
one year on each one-year anniversary of the agreement. This employment
agreement is subject to early termination as provided therein, including
termination by HomeCom "for cause," as defined in the employment agreement. The
employment agreement provides for an annual base salary of $150,000, and for
bonus compensation to be awarded at the discretion of the compensation committee
of the Board of Directors.

37
<PAGE>
STOCK OPTION PLANS

EMPLOYEE STOCK OPTION PLAN. HomeCom's stock option plan was adopted by
HomeCom's stockholders in September 1996. A total of 2,000,000 shares of common
stock have been reserved for issuance under the stock option plan, and the plan
provides that the number of shares authorized for issuance under the plan will
not exceed 20% of the total issued and outstanding shares of HomeCom's common
stock. The purpose of the stock option plan is to provide incentives for
officers and key employees to promote the success of HomeCom, and to enhance
HomeCom's ability to attract and retain the services of such persons. Options
granted under the stock option plan may be either (i) options intended to
qualify as "incentive stock options" under Section 422 of the Code or
(ii) non-qualified stock options. Stock options may be granted under the stock
option plan for all employees of HomeCom, or of any present or future subsidiary
or parent of HomeCom. The stock option plan is administered by the compensation
committee of the Board of Directors. The compensation committee has the
authority to determine exercise prices applicable to the options, the eligible
employees or consultants to whom options may be granted, the number of shares of
common stock subject to each option and the terms upon which options are
exercisable. The compensation committee has the authority to interpret the stock
option plan and to prescribe, amend and rescind the rules and regulations
pertaining to the stock option plan. No option is transferable by the optionee
other than by will or the laws of descent and distribution, and each option is
exercisable during the lifetime of the optionee only by such optionee.

Any incentive stock option that is granted under the stock option plan may
not be granted at a price less than the fair market value of the common stock on
the date of grant (or less than 110% of fair market value in the case of holders
of 10% or more of the total combined voting power of all classes of stock of
HomeCom or a subsidiary or parent of HomeCom). Non-qualified stock options may
be granted at the exercise price established by the compensation committee,
which will not be less than 85% of the fair market value of the common stock on
the date of grant.

Each option granted under the stock option plan is exercisable for a period
not to exceed ten years from the date of grant (or five years in the case of a
holder of 10% or more of the total combined voting power of all classes of stock
of HomeCom or a subsidiary or parent of HomeCom) and shall lapse upon expiration
of such period, or earlier upon termination of the recipient's employment with
HomeCom, or as determined by the compensation committee.

As of November 30, 1999, options to purchase 1,255,424 shares of common
stock were outstanding under the stock option plan at exercise prices ranging
from $1.91 to $8.06 per share and at a weighted average exercise price of $4.19
per share. All outstanding options vest 25% per year from their date of grant.

NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN. HomeCom's non-employee directors
stock option plan was adopted by HomeCom's stockholders in September 1996 and
amended in October 1996. HomeCom has reserved 300,000 shares of common stock for
issuance under the non-employee directors plan.

The non-employee directors plan provides for the automatic granting of
non-qualified stock options to directors who are not officers or employees of
HomeCom. Each non-employee director who is first appointed or elected to the
Board of Directors is granted an option to purchase 10,000 shares of common
stock. Also, each non-employee director automatically receives an option to
purchase 5,000 shares of common stock on the date of each annual meeting of
HomeCom's stockholders. The non-employee directors plan also allows the
compensation committee of the Board to make extraordinary grants of options to
non-employee directors. All options granted under the non-employee directors
plan vest 50% per year of service by the non-employee director on the Board of
Directors. No option is transferable by the optionee other than by will or laws
of descent and distribution, and each option is exercisable, during the lifetime
of the optionee, only by such optionee. The exercise price of all options will
be the fair market value of the shares of common stock on the date of grant, and
the term of each option may not exceed

38
<PAGE>
seven years. The non-employee directors plan will continue in effect for a
period of ten years unless sooner terminated by the Board of Directors.

During February 1998, Mr. Thomas was granted an option under the
non-employee directors plan to purchase 10,000 shares of common stock at an
exercise price of $2.18 per share. In March, 1999 Mr. Thomas was granted an
option to purchase 5,000 shares of common stock at an exercise price of $4.8125.
During March 1999, Mr. Walker was granted an option to purchase 10,000 shares of
common stock at an exercise price of $6.00.

EMPLOYEE STOCK PURCHASE PLAN. HomeCom's employee stock purchase plan became
effective on March 1, 1997. A total of 150,000 shares of common stock have been
reserved for issuance under the stock purchase plan. The stock purchase plan is
intended to qualify under Section 423 of the Internal Revenue Code. The purpose
of the stock purchase plan is to encourage and enable employees of HomeCom to
acquire a proprietary interest in HomeCom through ownership of shares of common
stock. Eligible employees of HomeCom will purchase shares of common stock at 85%
of fair market value and HomeCom will partially subsidize purchases under the
stock purchase plan and will pay the expenses of its administration.

An employee electing to participate in the stock purchase plan must
authorize a stated dollar amount or percentage of the employee's regular pay to
be deducted by HomeCom from the employee's pay during each of four quarterly
payroll deduction periods. Those payroll deduction periods begin on January 1,
April 1, July 1 and October 1 of each calendar year during which the stock
purchase plan is in effect. HomeCom is deemed on the last day of each payroll
deduction period to have granted a purchase right to each participant as of the
first day of the payroll deduction period to purchase as many full and
fractional shares of common stock as can be purchased with the participant's
payroll deductions. On the last day of the payroll deduction period, the
participant will be deemed to have exercised this option, at the option price,
to the extent of the participant's accumulated payroll deductions. In no event,
however, may the participant purchase common stock having a fair market value,
measured on the first business day of the payroll deduction period, of greater
than $25,000 during a calendar year. The option price under the stock purchase
plan is equal to 85% of the fair market value of the common stock on either the
first business day or the last business day of the applicable payroll deduction
period, whichever is lower.

Employees of HomeCom who have completed six full months of service with
HomeCom and whose customary employment is more than 20 hours per week and five
or more months per calendar year are eligible to participate in the stock
purchase plan. An employee may not be granted an option under the stock purchase
plan if after the granting of the option such employee would be deemed to own 5%
or more of the combined voting power of value of all classes of stock of
HomeCom. As of July 31, 1999, approximately 72 employees are eligible to
participate in the stock purchase plan, and as of such date, 10 employees are
participating in the Plan. An employee's rights under the stock purchase plan
may not be assigned, transferred, pledged or otherwise disposed of, except by
will or the laws of descent and distribution. An employee's rights under the
stock purchase plan terminate upon termination of his or her employment for any
reason, including retirement. Upon such termination, HomeCom will refund the
employee's payroll deductions or contributions made during the payroll deduction
period.

An employee may not sell shares of common stock purchased under the stock
purchase plan until the first day of the second payroll deduction period
following the payroll deduction period in which the option for such shares was
granted.

The stock purchase plan is administered by the compensation committee. No
member of the Board of Directors will be eligible to participate in the stock
purchase plan during the period he or she serves as a member of the compensation
committee. The compensation committee may terminate or amend the stock purchase
plan at any time. However, any termination or amendment may not affect or change
purchase rights previously granted under the stock purchase plan without the
consent of the affected participants. Also, any amendment that materially
increases the benefits or number of shares under the stock purchase

39
<PAGE>
plan, except for adjustments due to changes in HomeCom's capital structure, or
that materially modifies the eligibility requirements of the stock purchase plan
will be subject to stockholder approval. If not sooner terminated by the
Compensation Committee, the stock purchase plan will terminate at the time that
all authorized shares of common stock reserved for grant under the stock
purchase plan have been purchased.

401(K) PROFIT SHARING PLAN. HomeCom's Board of Directors has approved the
adoption of a 401(k) profit sharing plan, which is intended to be a
tax-qualified defined contribution plan under Section 401(k) of the Internal
Revenue Code. This plan was implemented in March 1998. In general, all employees
of HomeCom are eligible to participate. The 401(k) plan includes a salary
deferral arrangement pursuant to which participants may contribute amounts not
to exceed limitations imposed by the Code. Subject to certain Code limitations,
HomeCom may make a matching contribution of up to $1,000 of the salary deferral
contributions of participants at a rate of 50% of the participant's
contributions, up to 4% of the participant's salary. HomeCom may also make an
additional contribution to the 401(k) plan each year at the discretion of the
Board of Directors. Separate accounts are maintained for each participant in the
401(k) plan. The portion of a participant's account attributable to his or her
own contributions will be 100% vested. The portion of the account attributable
to HomeCom contributions, including matching contributions, will vest after
5 years of service with HomeCom. Distributions from the 401(k) plan may be made
in the form of a lump-sum cash payment or in installment payments.

AGREEMENTS WITH EMPLOYEES

Principal employees of HomeCom, including executive officers, are required
to sign an agreement with HomeCom restricting the ability of the employee to
compete with HomeCom during his or her employment and for a period of eighteen
months thereafter, restricting solicitation of customers and employees following
employment with HomeCom, and providing for ownership and assignment of
intellectual property rights to HomeCom.

40
<PAGE>
CERTAIN TRANSACTIONS

During the period December 1994 through December 1995, Harvey W. Sax,
HomeCom's President and Chief Executive Officer, loaned a total of approximately
$63,497 to HomeCom pursuant to a promissory note payable by HomeCom on
September 12, 2000, which accrues interest at the prime rate plus 1% per annum.
HomeCom used approximately $56,000 of the net proceeds of its initial public
offering to repay the remaining outstanding amounts owed under this promissory
note.

In February 1996, in connection with a recapitalization of the common stock,
HomeCom issued 787,844 shares of common stock to Harvey W. Sax, its President
and Chief Executive Officer and then its sole stockholder, for $.001 per share.
In December 1994, HomeCom granted Nat Stricklen, a co-founder and former
director of HomeCom, an option to acquire, for an aggregate exercise price of
$10.00, shares of common stock which, when issued, would represent approximately
10% of the issued and outstanding common stock. Mr. Stricklen exercised this
option in February 1996 and received 93,070 shares of common stock.

In February 1996, HomeCom (i) sold for $.0001 per share 335,052 shares to
Margery Germain; and (ii) issued to Mark Germain for $200,000 an unsecured
promissory note due September 1997 in the principal amount of $200,000 and
bearing interest at the rate of 8% per annum. Pursuant to the terms of the
promissory note with Mr. Germain, in May, 1997 HomeCom issued Mr. Germain 33,333
shares of common stock in repayment of the $200,000 outstanding principal
balance of this note.

Mr. David A. Blech, Mrs. Esther Blech and the Edward A. Blech Trust
(collectively the "Blech Interests") have agreed in writing with the Nasdaq
Stock Market, Inc. that, for a period of three years from the date of their
original purchases of securities from HomeCom, none of them will sell, transfer,
assign, pledge or hypothecate any shares of common stock. Gifts of shares of the
common stock are permitted provided that the recipient of such gift agrees in
writing to be bound by the terms of the agreement. The Blech Interests further
agreed that while the common stock is listed on any Nasdaq market, there will be
no financial relationship between David Blech or any of the foregoing Blech
Interests, on the one hand, and HomeCom, on the other hand; that the direct or
indirect ownership of shares of common stock held by Mr. David A. Blech and/or
the Blech Interests may not exceed 5% of the common stock; and that there may be
no advisory relationship between Mr. David A. Blech and HomeCom. To the best of
HomeCom's knowledge and belief, the Blech Interests beneficially own less than
5% of the common stock.

In August 1996, Harvey W. Sax, HomeCom's President and Chief Executive
Officer, contributed 3,956 shares of common stock to HomeCom.

In August 1996, HomeCom issued and sold to six of its employees an aggregate
of 102,855 shares of common stock for a total of $468,004, payable through the
issuance of promissory notes payable in four equal annual installments, bearing
interest at 8% per annum and secured by the shares of common stock purchased
therewith. Also in August 1996, HomeCom entered into employment agreements with
such persons which provide that for each of the first four years of employment,
HomeCom will issue a bonus to the employee in the amount necessary to repay the
annual amount due under such promissory note (plus the taxes due by the employee
as a consequence of receiving such bonus). Pursuant to the terms of the
employment agreements, HomeCom will continue to make these annual payments if
the employee is terminated other than "for cause," as defined in the employment
agreements. Pursuant to the terms of the subscription agreements for such
shares, if the employee's employment is terminated within such four-year period,
HomeCom has the right to repurchase that percentage of the shares purchased by
the employee which shall equal the percentage of the promissory note which is
not yet due, payment for such repurchase to be made by canceling the applicable
outstanding amount of the promissory note. Gia Bokuchava, Ph.D., Chief Technical
Officer and a director, and Krishan Puri, Executive Vice President and a
director, purchased 39,559 and 29,669 shares of common stock, respectively, in
this transaction. Mr. Vinod Keni, a former director, purchased 3,955 shares in
this transaction. HomeCom has agreed with Mr. Keni that all 11,865 options to
acquire common stock held by Mr. Keni (at a weighted average exercise price of
$5.16

41
<PAGE>
per share) shall continue to vest as if Mr. Keni were still employed by HomeCom.
HomeCom also agreed to cancel and forgive indebtedness of approximately $18,000
represented by the promissory note given by Mr. Keni to purchase such 3,955
shares and to give Mr. Keni a cash payment to cover Mr. Keni's estimated tax
liability from such cancellation of indebtedness.

In August 1996, Krishan Puri, Executive Vice President and a director,
exercised a warrant to purchase 9,307 shares of common stock for a total
exercise price of $1.00. Mr. Puri was granted the warrant in June 1995 in
connection with his agreeing to serve on HomeCom's former Board of Advisors.

In August 1996, HomeCom acquired all of the outstanding capital stock of
HomeCom Internet Security Services, Inc. (HISS), a Delaware corporation formed
in July 1996 to provide internet and Intranet security system consulting
services. In the transaction, the former holders of HISS's capital stock
received the right to receive annual earnout payments to be paid not later than
March 31 of 1998, 1999, 2000 and 2001. Roger Nebel, a director of HomeCom, owned
48% of HISS's outstanding capital stock and was entitled to receive 48% of the
annual earnouts. HISS was merged with and into HomeCom on September 11, 1996. On
October 1, 1999, HomeCom sold substantially all of the assets of its HomeCom
Internet Security Services division to Infrastructure Defense, Inc. for
$1.35 million in common stock of the non-public acquiror and a $200,000 note
receivable due January 1, 2000. In connection with the sale, the total number of
additional shares issuable to Mr. Nebel under the earnout provisions was fixed
at 37,918 shares, of which Mr. Nebel has received 18,958 shares. Mr. Nebel's
entitlement to the remaining 18,960 shares is contingent upon the shares of
Infrastructure Defense, Inc., received by HomeCom having a value of at least
$5 million and being freely tradeable by HomeCom on or before December 31, 2001.

RECENT TRANSACTIONS

THE INSURANCE RESOURCE CENTER

On April 16, 1998, HomeCom acquired all of the outstanding capital stock of
The Insurance Resource Center, Inc. for 351,391 shares of HomeCom's common
stock. Pursuant to an agreement and plan of reorganization, filed a registration
statement for 175,696 of such shares on June 12, 1998. The Insurance Resource
Center will remain a wholly-owned subsidiary of HomeCom. In addition, The
Insurance Resource Center has pursuant to an employment agreement retained the
services of Tim James Higham, one of the former shareholders of The Insurance
Resource Center as Vice President of Insurance Sales. Effective September 7,
1999, Mr. Higham ceased to be employed by HomeCom.

DIVESTITURE OF HOSTAMERICA DIVISION

On June 9, 1998 HomeCom sold substantially all of the assets of its
HostAmerica internet network outsourcing services division, consisting of web
site and internet application hosting facilities to Sage Acquisition Corp. for
$4,500,000. HomeCom retains, however, certain hosting accounts and retains the
right to perform hosting services for companies engaged in the financial service
industry. During 1996 and 1997, internet outsourcing services generated
approximately 16% and 29%, respectively, of HomeCom's total revenues. Internet
outsourcing revenues generated approximately 42% of HomeCom's total revenues for
the six months ended June 30, 1998.

FIRST INSTITUTIONAL MARKETING, INC.

42
<PAGE>
GANYMEDE CORPORATION

INTERNET SECURITY SERVICES

PRINCIPAL AND SELLING SHAREHOLDERS

The following table provides information as of November 15, 1999, concerning
beneficial ownership of common stock by (1) each person or entity known by
HomeCom to beneficially own more than 5% of the outstanding Common Stock,
(2) each director and nominee for director of HomeCom, (3) each Named Executive
Officer, (4) all directors and executive officers of HomeCom as a group and
(5) the selling shareholders. The information as to beneficial ownership has
been furnished by the respective stockholders, directors and executive officers
of HomeCom and, unless otherwise indicated, each of the stockholders has
indicated that they have sole voting and investment power with respect to the
shares beneficially owned. The selling shareholders are MacNab LLC and Jackson
LLC.

For the selling shareholders, the number of shares in the table represents
an estimate of the number of shares of common stock to be offered by the selling
stockholders, if the holders were to fully convert the series C preferred stock
and series D preferred stock as of November 15, 1999, fully exercise the related
warrants, and offer all the resulting shares of common stock for sale. If
converted as of November 15, 1999, the series C preferred stock would convert at
a conversion price of $2.84 per share into 1,256,476 shares of common stock. The
warrants issued in connection with the series C preferred stock are exercisable
at an exercise price of $7.34 per share into 59,574 shares of common stock. If
converted as of November 15, 1999, the series D preferred stock would convert at
a conversion price of $2.84 per share into 533,099 shares of common stock. The
warrants issued in connection with the series D preferred stock are exercisable
at an exercise price of $7.34 per share into 25,000 shares of common stock. The
actual number of shares of common stock issuable upon conversion of the
series C preferred stock and series D preferred stock and exercise of the
warrants is indeterminate, and could be materially less or more than the amount
estimated due to the conversion and exercise price adjustments explained in the
section of this prospectus entitled "Description of Capital Stock" on page 45,
in particular the subsections entitled "Series C Convertible Preferred Stock" on
page 49 and "Series D Preferred Stock" on page 52. We agreed to register at
least 1,244,444 shares in connection with the issuance of the series C preferred
shares and at least 533,368 shares in connection with the issuance of the
series D preferred shares; the additional shares covered by this prospectus for
sale by the selling stockholders are to accommodate the possibility that the
actual number of shares issuable upon conversion of the preferred stock or
exercise of warrants increases as a result of adjustments in the conversion or
exercise prices. This table, however, assumes no adjustment to the conversion or
exercise prices. We cannot assure you that the selling stockholders will sell
any or all of the shares that they may acquire upon their conversion of
series C preferred stock or series D preferred stock or exercise of warrants.
The selling shareholders' determination whether to hold or convert the series C
preferred stock on the Series D preferred stock, or to exercise the warrants,
and sell the resulting

43
<PAGE>

shares, will depend upon many factors, including HomeCom's prospects, general
market conditions and the prevailing price of the common stock.

<TABLE>
<CAPTION>
COMMON
STOCK
BENEFICIALLY PERCENTAGE
NAME OF BENEFICIAL OWNER(1) OWNED(2) OF CLASS
- --------------------------- ------------ ----------
<S> <C> <C>
Harvey W. Sax(3)............................................ 806,629 12.1%
Gia Bokuchava, Ph.D.(4)..................................... 47,559 *
Roger J. Nebel(5)........................................... 26,458 *
Claude A. Thomas(6)......................................... 5,000 *
Mark Germain(7)............................................. 350,885 5.3
Margery Germain(8).......................................... 350,885 5.3
Daniel A. Delity(9)......................................... 690,590 10.3
James Wm. Ellsworth(9)...................................... 141,467 2.1
David B. Frank(9)........................................... 351,417 5.3
William Walker(10).......................................... -- *
CPR (USA), Inc.(11)......................................... 372,876 5.6
LibertyView Funds, LP(12)................................... 297,900 4.5
LibertyView Fund, LLC(12)................................... 74,475 1.1
MacNab LLC(13).............................................. 1,316,050 19.7
Jackson LLC(14)............................................. 558,099 8.4
All executive officers and directors as a group (7
persons).................................................. 1,717,703 25.7%
</TABLE>

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

* Less than 1%.

(1) Except as otherwise noted, the street address of the named beneficial owner
is Building 14, Suite 100, 3535 Piedmont Road, Atlanta, Georgia 30305.

(2) Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all shares
of Common Stock beneficially owned, subject to community property laws where
applicable. Shares of Common Stock subject to options that are currently
exercisable or exercisable within sixty days of November 15, 1999 are deemed
to be outstanding and to be beneficially owned by the person holding such
options for the purpose of computing the percentage ownership of such person
but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person.

(3) Includes 2,500 shares of Common Stock issuable upon the exercise of an
option outstanding as of November 15, 1999 at an exercise price of $4.47 per
share. Excludes 57,500 shares of Common Stock issuable upon the exercise of
options outstanding as of November 15, 1999 at a weighted average exercise
price of $5.61 which are not currently exercisable and which become
exercisable more than 60 days following the date of this Prospectus.

(4) Includes 7,500 shares of Common Stock issuable upon the exercise of options
outstanding as of November 15, 1999 at a weighted average exercise price of
$4.71 per share. Excludes 17,500 shares of Common Stock issuable upon the
exercise of options outstanding as of November 15, 1999 at a weighted
average exercise price of $4.33 which are not currently exercisable and
which become exercisable more than 60 days following the date of this
Prospectus.

(5) Includes 7,500 shares of Common Stock issuable upon the exercise of options
outstanding as of November 15, 1999 at a weighted average exercise price of
$5.35 per share and 18,958 shares issued in connection with HomeCom's
acquisition of HISS. See "Certain Transactions". Excludes 12,500 shares of
Common Stock issuable upon the exercise of options outstanding as of
November 15, 1999 at a weighted average exercise price of $4.84 which are
not currently exercisable and which become exercisable more than 60 days
following the date of this Prospectus. Excludes an additional 18,960 shares
of Common Stock that may be issued in connection with HomeCom's acquisition
of HISS. See "Certain Transactions."

(6) Includes 5,000 shares of Common Stock issuable upon the exercise of an
option outstanding as of November 15, 1999 at an exercise price of $3.22 per
share which is currently exercisable. Excludes 10,000 shares of Common Stock
issuable upon the exercise of options outstanding as of November 15, 1999 at
a weighted average exercise price of $4.24 per share which is not currently
exercisable and which becomes exercisable more than 60 days following the
date of the date of this Prospectus.

(7) The address of this stockholder is 81 Main Street White Plains, NY 10601.
Includes 335,052 shares of Common Stock owned by Margery Germain, the wife
of Mr. Germain, as to which shares Mr. Germain disclaims beneficial
ownership.

(8) The address of this stockholder is 6 Olmstead Road Scarsdale, NY 10583.
Includes 15,833 shares of Common Stock owned by Mark Germain.

(9) Excludes 100,000 shares of Common Stock issuable upon the exercise of a
warrant outstanding as of November 15, 1999 at an exercise price of $3.74
which are not currently exercisable and which become exercisable more than
60 days following the date of this Prospectus.

(10) Excludes 10,000 shares of Common Stock issuable upon the exercise of an
option outstanding as of November 15, 1999 at an exercise price of $5.06
which is not currently exercisable and which become exercisable more than
60 days following the date of this Prospectus.

44
<PAGE>

(11) Consists of shares of Common Stock issuable upon conversion of HomeCom's
series B preferred stock and exercise of related warrants on December 16,
1999, CPR (USA), Inc. converted 5 shares of series B preferred stock into
31,658 shares of common stock. CPR (USA), Inc. is a wholly-owned subsidiary
of Banque CPR, a French company ("Banque CPR"). The Board of Directors of
CPR (USA), Inc. are Richard Meckler, Steven Rogers, Henri Cukierman,
Philippe Delienne, Olivier Mirat and Bernard Crutz. The principal officers
of CPR (USA), Inc. are Messrs. Meckler and Rogers, and George Hartigan, Alan
Mark, Cort Gwon & Neil Weiner.

(12) Consists of shares of Common Stock issuable upon conversion of HomeCom's
series B preferred stock and exercise of related warrants on December 16,
1999, LibertyView Funds, LP converted 4 shares of Series B preferred stock
into 25,327 shares of common stock, and LibertyView Fund, LLC converted 1
share of series B preferred stock into 6,332 shares of common stock. 100% of
the voting shares of LibertyView Funds, L.P. are owned by Banque CPR. 100%
of the voting shares of LibertyView Fund, LLC are owned by LibertyView
Capital Management Inc., a wholly-owned subsidiary of CPR (USA) Inc.

(13) The address of this stockholder is c/o Citco Trustees (Cayman) Ltd.,
Corporate Centre, Windwood One, West Bay Road, Grand Cayman, Cayman Islands.
The director of MacNab LLC is Navigator Management, Ltd., Harbour House, 2nd
floor, Waterfront Drive, P.O. Box 972, Road Town, Tortola, British Virgin
Islands, and the President of Navigator Management Ltd. is David Sims.
Consists of shares of common stock issuable upon conversion of HomeCom's
series C preferred stock and exercise of related warrants, based upon
conversion prices as in effect on November 15, 1999. On December 6, 1999,
MacNab LLC converted 37.5 shares of Series C preferred stock into 281,460
shares of common stock. MacNab LLC may not convert series C preferred shares
that would result in it owning in excess of 4.99% of the outstanding common
stock following conversion. The series C preferred stock is more fully
described under "Description of Capital Stock."

(14) The address of this stockholder is c/o Citco Trustees (Cayman) Ltd.,
Corporate Centre, Windwood One, West Bay Road, Grand Cayman, Cayman Islands.
The director of Jackson LLC is Navigator Management Ltd., Harbour House, 2nd
Floor, Waterfront Drive, P.O. Box 972, Road Town, Tortola, British Virgin
Islands, and the President of Navigator Management Ltd. is David Sims.
Consists of shares of Common Stock issuable upon conversion of Homecom's
series D preferred stock and exercise of related warrants, based on
conversion prices as in effect on November 15, 1999. Jackson LLC may not
convert series D preferred shares that would result in it owning in excess
of 4.99% of the outstanding common stock following conversion. The series D
preferred stock is more fully described herein under "Description of Capital
Stock."

45
<PAGE>
DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 15,000,000 shares of common stock,
$.0001 par value, and 1,000,000 shares of preferred stock, $.01 par value. As of
November 15, 1999, we had issued and there were outstanding 6,673,203 shares of
common stock held of record by 67 record holders. Of the authorized preferred
stock, 20,000 shares have been designated series A convertible preferred stock,
none of which are presently outstanding, 125 shares have been designated
series B convertible preferred stock, 115 shares of which are presently
outstanding and held by three record holders, 175 shares have been designated
series C convertible preferred stock, 137.5 shares of which are presently
outstanding and are held by one record holder, and 75 shares have been
designated series D convertible preferred stock, all of which are presently
outstanding and are held by one record holder.

COMMON STOCK

Holders of shares of common stock are entitled to one vote per share for the
election of directors and all matters to be submitted to a vote of the
stockholders. Subject to the rights of any holders of preferred stock which may
be issued in the future, the holders of shares of common stock are entitled to
share ratably in any dividends as may be declared by the board of directors out
of legally available funds. In the event of dissolution, liquidation or winding
up of HomeCom, holders of shares of common stock are entitled to share ratably
in all assets remaining after payment of all liabilities and the aggregate
liquidation preference of outstanding shares of preferred stock. Holders of
shares of common stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of common stock are, and the shares of
common stock to be issued by Homecom in this offering will be, duly authorized,
validly issued, fully paid and nonassessable.

PREFERRED STOCK

Our restated certificate of incorporation authorizes the issuance of
preferred stock with designations, rights and preferences determined from time
to time by the board of directors. Accordingly, the board of directors is
empowered, without stockholder approval, to issue preferred stock with
dividends, liquidation, conversion, voting and other rights that could adversely
affect the voting power or other rights of the holders of common stock.

SERIES B CONVERTIBLE PREFERRED STOCK

Pursuant to our certificate of incorporation, the board has classified 125
shares of preferred stock as series B convertible preferred stock with the
rights, preferences, privileges and terms set forth in the certificate of
designations filed with the State of Delaware. Of the 125 shares authorized by
the board, 115 are currently outstanding. The stated value per share of the
series B preferred stock is $20,000. All shares of common stock are of junior
rank to all series B preferred shares in respect to the preferences as to
distributions and payments upon the liquidation, dissolution, and winding up.
The rights of the shares of common stock are subject to the preferences and
relative rights of the series B preferred shares. The series B preferred shares
will be of greater rank than any series of common or preferred stock issued by
us in the future. Without the prior express written consent of the holders of at
least a majority of the then outstanding series B preferred shares, we will not
authorize or issue capital stock that is of senior or equal rank to the
series B preferred shares regarding the preferences as to distributions and
payments upon the liquidation, dissolution and winding up of HomeCom. Without
the prior express written consent of the holders of not less than a majority of
the then outstanding series B preferred shares, we will not hereafter authorize
or make any amendment to our certificate of incorporation or bylaws, or make any
resolution of the board of directors with the Delaware Secretary of State
containing any provisions which would materially and adversely affect or impair
the rights or relative priority of the holders of the series B preferred shares
relative to the holders of the common stock or the holders of any other class of
capital stock. In the event of our merger or consolidation with or into another
corporation, the series B preferred

46
<PAGE>

shares shall maintain their relative powers, designations, and preferences, and
no merger may result that is inconsistent with this provision.

Holders of the series B preferred stock are not entitled to receive
dividends. If any series B preferred shares are outstanding, we may not, without
the prior express written consent of the holders of a majority of the then
outstanding series B preferred shares, directly or indirectly declare, pay or
make any dividends or other distributions upon any of the common stock so long
as written notice thereof has been given to holders of the series B preferred
shares at least thirty days prior to the earlier of (a) the record date taken
for or (b) the payment of the dividend or other distribution. We may declare and
pay a dividend in cash with respect to the common stock so long as we pay
simultaneously to each holder of series B preferred shares an amount in cash
equal to the amount the holder would have received had all of the holder's
series B preferred shares been converted to common stock one business day before
the record date for the dividend, and after giving effect to the payment of any
dividend and any other required payments, including required payments to the
holders of the series B preferred shares, we have in cash or cash equivalents an
amount equal to the aggregate of:

- all of our liabilities reflected on our most recently available balance
sheet;

- the amount of any indebtedness incurred by us or any of our subsidiaries
since our most recent balance sheet; and

- 120% of the amount payable to all holders of any shares of any class of
preferred stock assuming a liquidation as the date of our most recently
available balance sheet.

In the event of any voluntary or involuntary liquidation, dissolution, or
winding up, the holders of the series B preferred shares will be entitled to
receive in cash out of our assets, whether from capital or from earnings
available for distribution to our stockholders, before any amount shall be paid
to the holders of any of our capital stock of any class junior in rank to the
series B preferred shares in respect of the preferences as to the distributions
and payments on the liquidation, dissolution and winding up, an amount per
series B preferred share equal to the sum of (i) $20,000 and (ii) a premium of
5% per year of the stated value from the date of issuance of the series B
preferred stock; provided that, if the funds are insufficient to pay the full
amount due to the holders of series B preferred shares and holders of shares of
other classes or series of preferred stock that are of equal rank with the
series B preferred shares as to payments of this type, then each holder of
series B preferred shares and other preferred shares will share equally in the
available funds in accordance with their respective liquidation preferences. The
purchase or redemption by us of stock of any class in any manner permitted by
law will not be regarded as a liquidation, dissolution or winding up. Neither
our consolidation or merger with or into any other person, nor the sale or
transfer by us of less than substantially all of its assets will be deemed to be
a liquidation, dissolution or winding up.

The holders of series B preferred shares shall have no voting rights, except
as required by law, including the General Corporation Law of the State of
Delaware.

Each share of series B preferred stock is convertible on or after the date
of this prospectus into the number of shares of our common stock, equal to the
stated value ($20,000) plus a premium of 5% per year of the stated value from
the date of issuance of the series B preferred stock, divided by the conversion
price. The conversion price is equal to the lesser of:

(1) the average closing bid prices of the common stock for any four
consecutive trading days during the twenty-five consecutive trading
day period ending on the day prior to the conversion; or

(2) $5.23.

If all the outstanding shares of series B preferred stock were converted as
of November 15, 1999, based upon the closing bid prices of the shares prior to
that date, under the conversion formula of the series B preferred stock the
conversion price for the shares would be set at a price of $3.30 per share.
After

47
<PAGE>

taking into effect a premium of 5% per year from the date of issuance provided
for under the terms of the series B preferred stock, the 125 outstanding shares
of series B preferred stock would be convertible into 782,704 shares of common
stock, or approximately 11.7% of the outstanding shares. The following table
includes the total number of shares that would be issued upon conversion of all
the series B preferred stock, and the percentage of the currently issued and
outstanding shares that such number of shares would represent, under the
following assumptions, and in each case after taking into effect the 5% annual
premium through November 15, 1999:

(a) assuming the current conversion price of $3.30 per share;

(b) assuming a conversion price 25% below the closing bid price as of
November 11, 1999 of $3.6875 per share, or $2.77 per share;

(c) assuming a conversion price 50% below the closing bid price as of
November 11, 1999 of $3.6875 per share, or $1.84 per share; and

(d) assuming a conversion price 75% below the closing bid price as of
November 11, 1999 of $3.6875 per share, or $0.92 per share.

<TABLE>
<CAPTION>
THE SERIES B PREFERRED
SHARES WOULD CONVERT INTO:
---------------------------------
<S> <C> <C>
NUMBER OF PERCENT OF
SHARES OUTSTANDING
--------- ----
At the Current Conversion Price........... 782,704 11.7%
At 25% below the Current Market Price..... 931,543 14.0%
At 50% below the Current Market Price..... 1,402,378 21.0%
At 75% below the Current Market Price..... 2,804,755 42.0%
</TABLE>

Under the conversion price formula, there is no ceiling on the number of
shares of common stock into which the outstanding shares of series B preferred
stock can be converted. As a result, as the price of the common stock decreases,
the number of shares of common stock underlying the outstanding shares of
series B preferred stock continues to increase.

Under the conversion price formula, the series B preferred stock may, from
time to time, be convertible at a rate at or below the common stock's market
price. The lower the common stock's market price at the time a holder converts
his outstanding shares of series B preferred stock, the more shares of common
stock the holder will get in the conversion. To the extent a holder of shares of
series B preferred stock converts and then sells the shares of common stock, the
common stock's market price may decrease due to the additional shares in the
market, allowing the selling holder to convert other shares of series B
preferred stock into greater amounts of common stock, the sale of which could
further depress the market price for the common stock. The downward pressure on
the market price of the common stock as a holder of the series B preferred stock
converts and sells material amounts of common stock could encourage short sales
by other holders or others, placing further downward pressure on the market
price of the common stock. The conversion of the outstanding shares of series B
preferred stock may result in substantial dilution to the interest of other
common stockholders, since each holder of the outstanding shares of series B
preferred stock may ultimately convert and sell the full amount of common stock
issuable upon conversion.

Prior to this financing, the Board of Directors of HomeCom considered a
variety of financing proposals. The Board determined that the financing proposal
by the selling shareholders represented the most favorable proposal offered to
the Company based upon, among other things, the timing of the transaction, the
quality of the investors, and the terms and limitations of the financing. The
Board also determined that this financing appeared to be on better terms and
conditions than the previous two private placement financings of HomeCom
consummated in December 1997 and January 1998.

48
<PAGE>
The holders of the series B preferred shares are limited with respect to the
number of shares that they can convert at any one time. In particular, as long
as they are subject to laws, rules or regulations which would prohibit their
owning in excess of 4.99% of the outstanding common stock following conversion,
they may not own in excess of that amount.

The series B preferred stock is subject to redemption at our option after
the date of this prospectus at 120% of the principal amount of the stock being
redeemed. If any series B preferred stock remain outstanding on March 24, 2002,
all the shares will automatically be converted into common stock.

The issuance of the series B preferred stock is also subject to the NASDAQ
National Market's Market Place Rule 4460(i). Pursuant to the terms of this rule,
we have agreed with the holders of the series B preferred stock that so long as
we are subject to this rule or any rule substantially similar to this rule, we
will not issue more than 19.99% of the common stock outstanding on the date the
series B preferred stock was issued upon conversion of the series B preferred
stock in the absence of:

- the approval of the issuance by our stockholders; or

- a waiver by NASDAQ of the provisions of that rule.

HomeCom issued series B preferred stock totaling $2,500,000 on March 25,
1999. The series B preferred stock investors were issued 125 shares of preferred
stock, having a stated value of $20,000 per share, and 225,000 warrants to
purchase common stock at $5.70 per share. HomeCom paid offering costs of
$216,250 cash plus 25,000 warrants to purchase common stock at $5.70 per share,
resulting in net proceeds to HomeCom of $2,283,750 for the preferred shares and
warrants.

The series B preferred stock is convertible into common stock at a
conversion price equal to the lower of (a) the average of the closing price for
four consecutive trading days in the twenty-five consecutive trading days ending
one day prior to the conversion date ($4.86 at the issuance date) and
(b) $5.23. The number of common shares into which the series B preferred stock
is convertible is determined by dividing the stated value of the series B
preferred stock, increased by 5% annually, by the conversion price. As the
series B preferred stock is automatically convertible on March 24, 2002, the
most beneficial conversion ratio was determined to include the additional common
shares attributable to the 5% annual increase for the three year period ending
in 2002. After adjustment for this additional benefit the $4.86 conversion price
is reduced to $4.23, the most beneficial conversion price at the issuance date.

In determining the accounting for the beneficial conversion feature, HomeCom
first allocated the net proceeds of $2,283,750 to the preferred stock and the
warrants based on their relative fair values at the issuance date, resulting in
$1,766,217 assigned to the preferred stock and $517,533 assigned to the warrants
as of March 24, 1999. HomeCom then allocated $899,284 of the series B net
proceeds to additional paid in capital for the beneficial conversion feature.
The beneficial conversion feature will be recognized as a deemed dividend to the
preferred shareholders over the minimum period in which the preferred
shareholders can realize that return. Approximately $792,000 of the beneficial
conversion was amortized in the second quarter of 1999 and $9,854 in the third
quarter of 1999. The balance of the beneficial conversion feature is being
recognized from the issuance date through March, 2002.

HomeCom has the option to redeem the series B preferred stock after
110 days for 120% of face value. Additionally, if HomeCom has issued common
stock upon conversion of the series B preferred stock such that 19.99% of the
common stock outstanding is held by the preferred shareholders, HomeCom must
obtain approval of the shareholders before any more preferred shares can be
converted. If such approval is not obtained within 60 days, the preferred
shareholders may require HomeCom to repurchase the remaining series B preferred
stock at 120% of face value. At the issuance date, HomeCom had obtained
irrevocable proxies from shareholders representing approximately 40% of the
common shareholders to vote in favor of increasing the number of shares should
such vote be required. The series B preferred stock is presented outside of
permanent equity as the outcome of the shareholder vote, and possible
redemption, is outside of the control of HomeCom.

49
<PAGE>
SERIES C PREFERRED STOCK

Pursuant to our certificate of incorporation, the Board has classified
175 shares of preferred stock as Series C Convertible Preferred Stock with the
rights, preferences, privileges and terms set forth in the certificate of
designations filed with the State of Delaware. Of the 175 shares authorized by
the Board, 137.5 shares are currently outstanding. The stated value per share of
the series C preferred stock is $20,000. All shares of common stock are to be of
junior rank to all series C preferred shares in respect to the preferences as to
distributions and payments upon the liquidation, dissolution, and winding up of
HomeCom. The rights of the shares of common stock are subject to the preferences
and relative rights of the series C preferred shares. Except for the series B
preferred stock, the series C preferred shares shall be of greater rank than any
series of common or preferred stock issued by us in the future. Without the
prior express written consent of the holders of not less than a majority of the
then outstanding series C preferred shares, we shall not hereafter authorize or
issue additional or other capital stock that is of senior or equal rank to the
series C preferred shares in respect of the preferences as to distributions and
payments upon the liquidation, dissolution and winding up of HomeCom. Without
the prior express written consent of the holders of not less than a majority of
the then outstanding series C preferred shares, we shall not hereafter authorize
or make any amendment to the our certificate of incorporation or bylaws, or make
any resolution of the board of directors with the Delaware Secretary of State
containing any provisions which would materially and adversely affect or
otherwise impair the rights or relative priority of the holders of the series C
preferred shares relative to the holders of the common stock or the holders of
any other class of capital stock. In the event of our merger or consolidation
with or into another corporation, the series C preferred shares shall maintain
their relative powers, designations, and preferences provided for herein, and no
merger may result that is inconsistent with this provision.

Holders of the series C preferred stock are not entitled to receive
dividends. If any series C preferred shares are outstanding, we may not, without
the prior express written consent of the holders of a majority of the then
outstanding series C preferred shares, directly or indirectly declare, pay or
make any dividends or other distributions upon any of the common stock unless
written notice thereof has been given to holders of the series C preferred
shares at least thirty (30) days prior to the earlier of (a) the record date
taken for or (b) the payment of the dividend or other distribution. We may
declare and pay a dividend in cash with respect to the common stock so long as
we: (i) pay simultaneously to each holder of series C preferred shares an amount
in cash equal to the amount the holder would have received had all of the
holder's series C preferred shares been converted to common stock one business
day prior to the record date for the dividend, and after giving effect to the
payment of any dividend and any other payments required in connection therewith,
including to the holders of the series C preferred shares, we have in cash or
cash equivalents an amount equal to the aggregate of:

- all of its liabilities reflected on its most recently available balance
sheet;

- the amount of any indebtedness incurred by us or any of its subsidiaries
since its most recent balance sheet;

- 120% of the amount payable to all holders of any shares of any class of
preferred stock assuming a liquidation as the date of our most recently
available balance sheet.

In the event of any voluntary or involuntary liquidation, dissolution, or
winding up, the holders of the series C preferred shares shall be entitled to
receive in cash out of our assets, whether from capital or from earnings
available for distribution to its stockholders, before any amount shall be paid
to the holders of any of our capital stock of any class junior in rank to the
series C preferred shares in respect of the preferences as to the distributions
and payments on the liquidation, dissolution and winding up, an amount per
series C preferred share equal to the sum of (i) $20,000 and (ii) a premium of
6% per year of the stated value from the date of issuance of the series C
preferred stock; provided that, if the funds are insufficient to pay the full
amount due to the holders of series C preferred shares and holders of shares of
other classes or series of preferred stock that are of equal rank with the
series C preferred shares as to payments of this type, then

50
<PAGE>
each holder of series C preferred shares and other preferred shares shall share
equally in the available funds in accordance with their respective liquidation
preferences. The purchase or redemption by us of stock of any class in any
manner permitted by law shall not be regarded as a liquidation, dissolution or
winding up. Neither our consolidation or merger with or into any other person,
nor the sale or transfer by us of less than substantially all of its assets
shall be deemed to be a liquidation, dissolution or winding up.

The holders of series C preferred shares shall have no voting rights, except
as required by law, including, but not limited to, the General Corporation Law
of the State of Delaware.

The series C preferred stock has an initial stated value of $20,000 per
share, which increases at the rate of 6% per year. Each series C preferred share
is convertible, beginning 120 days following the date of issuance, at the option
of the holder, into the number of shares of common stock determined by dividing
the stated value by the lower of (a) $5.875, and (b) 82.5% of the average of the
closing bid prices for the five trading days prior to the date of conversion.
Any series C preferred stock outstanding on July 22, 2002 will automatically be
converted into common stock at the conversion price then in effect.

If all the outstanding shares of series C preferred stock were converted as
of November 15, 1999, based upon the closing bid prices of the shares prior to
that date, under the conversion formula of the series C preferred stock the
conversion price for the shares would be set at a price of $2.84 per share.
After taking into effect a premium of 6% per year from the date of issuance
provided for under the terms of the series C preferred stock, the 175
outstanding shares of series C preferred stock would be convertible into
1,256,476 shares of common stock, or approximately 18.8% of the outstanding
shares. The following table includes the total number of shares that would be
issued upon conversion of all the series C preferred stock, and the percentage
of the currently issued and outstanding shares that such number of shares would
represent, under the following assumptions, and in each case after taking into
effect the 6% annual premium through November 15, 1999:

(a) assuming the current conversion price of $2.84 per share;

(b) assuming a conversion price based on an average closing bid price 25%
below the closing bid price as of November 11, 1999 of $3.6875 per share,
or $2.35 per share;

(c) assuming a conversion price based on an average closing bid price 50%
below the closing bid price as of November 11, 1999 of $3.6785 per share,
or $1.56 per share; and

(d) assuming a conversion price based on an average closing bid price 75%
below the closing bid price as of November 11, 1999 of $3.6875 per share,
or $0.78 per share.

<TABLE>
<CAPTION>
THE SERIES C PREFERRED
SHARES WOULD CONVERT INTO:
-----------------------------------------
NUMBER OF SHARES PERCENT OF OUTSTANDING
---------------- ----------------------
<S> <C> <C>
At the Current Conversion Price........................... 1,256,476 18.8%
At 25% below the Current Market Price..................... 1,515,395 22.7%
At 50% below the Current Market Price..................... 2,278,317 34.1%
At 75% below the Current Market Price..................... 4,556,634 68.3%
</TABLE>

Under the conversion price formula, there is no ceiling on the number of
shares of common stock into which the outstanding shares of series C preferred
stock can be converted. As a result, as the price of the common stock decreases,
the number of shares of common stock underlying the outstanding shares of
series C preferred stock continues to increase.

Under the conversion price formula, the series C preferred stock will be
convertible at a rate at or below the common stock's market price. The lower the
common stock's market price at the time a holder converts his outstanding shares
of series C preferred stock, the more shares of common stock the holder will get
in the conversion. To the extent a holder of shares of series C preferred stock
converts and then sells the shares of common stock, the common stock's market
price may decrease due to the additional

51
<PAGE>
shares in the market, allowing the selling holder to convert other shares of
series C preferred stock into greater amounts of common stock, the sale of which
could further depress the market price for the common stock. The downward
pressure on the market price of the common stock as a holder of the series C
preferred stock converts and sells material amounts of common stock could
encourage short sales by other holders or others, placing further downward
pressure on the market price of the common stock. The conversion of the
outstanding shares of series C preferred stock may result in substantial
dilution to the interest of other common stockholders, since each holder of the
outstanding shares of series C preferred stock may ultimately convert and sell
the full amount of common stock issuable upon conversion.

The holders of the series C preferred shares are limited with respect to the
number of shares that they can convert at any one time. In particular, as long
as they are subject to laws, rules or regulations which would prohibit their
owning in excess of 4.99% of the outstanding common stock following conversion,
they may not own in excess of that amount.

After the 90th day following the issuance of the series C preferred stock,
and through July 22, 2001, we have the right, under specified circumstances, to
prohibit holders of the series C preferred stock from exercising any conversion
rights for up to 90 days. If we exercise that right, we are required to
compensate the holders of the series C preferred stock in cash or in shares of
common stock. The right of the holders of the series C preferred stock to
convert their shares is also subject to the following restrictions: (i) during
the period beginning on the issuance date through the following 120 days, each
holder may not convert more than 25% of the series C preferred stock purchased
by such holder, (ii) during the period beginning on the issuance date through
the following 150 days, each holder may not convert more than 50% of the
series C preferred stock purchased by such holder; and (iii) during the period
beginning on the issuance date through the following 180 days, each holder may
not convert more that 75% of the series C preferred stock purchased by such
holder.

At any time after the issuance date, HomeCom has the right, in its sole
discretion, to redeem, from time to time, any or all of the series C preferred
stock provided that specified conditions are met, including that we have cash,
credit or standby underwriting facilities available to fund the redemption. The
redemption price is (i) 105% of the original purchase for the first 30 days
following the issuance date; (ii) 110% of the original purchase price for the
next 90 days thereafter and (iii) 120% of the original purchase price after
120 days from the issuance date.

The issuance of the series C preferred stock is also subject to the NASDAQ
National Market's Market Place Rule 4460 (i). Pursuant to the terms of this
rule, we have agreed with the holders of the series C preferred stock that so
long as we are subject to this rule or any rule substantially similar to this
rule, we will not issue more than 19.99% of the common stock outstanding on the
date the series C preferred stock was issued upon conversion of the series C
preferred stock in the absence of:

- the approval of the issuance by our stockholders; or

- a waiver by NASDAQ of the provisions of that rule.

On July 28, 1999, we completed a private placement of $3,500,000 principal
amount of our series C convertible preferred stock and related warrants to
purchase up to 59,574 shares of common stock. The series C preferred stock and
warrants were sold in reliance on Rule 506 of the Securities Act, which provides
an exemption from registration for sales to accredited investors, as defined by
Rule 501 under Regulation D of the Securities Act.

Pursuant to certain registration rights granted to the investors in the
private placement, we are obligated to file a registration statement under the
Securities Act with respect to a minimum of 1,244,444 shares of common stock
issuable upon conversion of the series C preferred stock and exercise of the
related warrants. We are obligated to pay penalties if the registration
statement is not filed and declared effective within specified time periods.

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<PAGE>
We entered into, and consummated, the private placement of the series C
preferred stock and the warrants based on a determination by our board of
directors that HomeCom's level of cash and cash equivalents were inadequate to
permit HomeCom to continue in existence for a sustained period. While the board
of directors considered the disadvantages of the potential preferred stock,
including (i) the potential dilution of the voting power per share of common
stock, (ii) the potential dilution of the common stock book value, and (iii) the
potential negative impact on earnings per share of common stock, after
negotiations with investment banking firms and potential investors, and based
upon the pressures of the need for additional cash resources, the board of
directors determined that it was in the best interests of HomeCom and its
shareholders for HomeCom to proceed with the private placement based on the
board's belief that such transactions offered the most favorable terms then
available to HomeCom given the existing market conditions and HomeCom's need for
additional cash resources.

SERIES D PREFERRED STOCK

Pursuant to our certificate of incorporation, the Board has classified 75
shares of preferred stock as Series D Convertible Preferred Stock with the
rights, preferences, privileges and terms set forth in the certificate of
designations filed with the State of Delaware. Of the 75 shares authorized by
the Board, all are currently outstanding. The stated value per share of the
series D preferred stock is $20,000. All shares of common stock are to be of
junior rank to all series D preferred shares in respect to the preferences as to
distributions and payments upon the liquidation, dissolution, and winding up of
HomeCom. The rights of the shares of common stock are subject to the preferences
and relative rights of the series D preferred shares. Except for the series B
preferred stock and the series C preferred stock, the series D preferred shares
shall be of greater rank than any series of common or preferred stock issued by
us in the future. Without the prior express written consent of the holders of
not less than a majority of the then outstanding series D preferred shares, we
shall not hereafter authorize or issue additional or other capital stock that is
of senior or equal rank to the series D preferred shares in respect of the
preferences as to distributions and payments upon the liquidation, dissolution
and winding up of HomeCom. Without the prior express written consent of the
holders of not less than a majority of the then outstanding series D preferred
shares, we shall not hereafter authorize or make any amendment to the our
certificate of incorporation or bylaws, or make any resolution of the board of
directors with the Delaware Secretary of State containing any provisions which
would materially and adversely affect or otherwise impair the rights or relative
priority of the holders of the series D preferred shares relative to the holders
of the common stock or the holders of any other class of capital stock. In the
event of our merger or consolidation with or into another corporation, the
series D preferred shares shall maintain their relative powers, designations,
and preferences provided for herein, and no merger may result that is
inconsistent with this provision.

Holders of the series D preferred stock are not entitled to receive
dividends. If any series D preferred shares are outstanding, we may not, without
the prior express written consent of the holders of a majority of the then
outstanding series D preferred shares, directly or indirectly declare, pay or
make any dividends or other distributions upon any of the common stock unless
written notice thereof has been given to holders of the series D preferred
shares at least thirty (30) days prior to the earlier of (a) the record date
taken for or (b) the payment of the dividend or other distribution. We may
declare and pay a dividend in cash with respect to the common stock so long as
we: (i) pay simultaneously to each holder of series D preferred shares an amount
in cash equal to the amount the holder would have received had all of the
holder's series D preferred shares been converted to common stock one business
day prior to the record date for the dividend, and after giving effect to the
payment of any dividend and any other payments required in connection therewith,
including to the holders of the series D preferred shares, we have in cash or
cash equivalents an amount equal to the aggregate of:

- all of its liabilities reflected on its most recently available balance
sheet;

- the amount of any indebtedness incurred by us or any of its subsidiaries
since its most recent balance sheet;

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- 120% of the amount payable to all holders of any shares of any class of
preferred stock assuming a liquidation as the date of our most recently
available balance sheet.

In the event of any voluntary or involuntary liquidation, dissolution, or
winding up, the holders of the series D preferred shares shall be entitled to
receive in cash out of our assets, whether from capital or from earnings
available for distribution to our stockholders, before any amount shall be paid
to the holders of any of our capital stock of any class junior in rank to the
series D preferred shares in respect of the preferences as to the distributions
and payments on the liquidation, dissolution and winding up, an amount per
series D preferred share equal to the sum of (i) $20,000 and (ii) a premium of
6% per year of the stated value from the date of issuance of the series D
preferred stock; provided that, if the funds are insufficient to pay the full
amount due to the holders of series D preferred shares and holders of shares of
other classes or series of preferred stock that are of equal rank with the
series D preferred shares as to payments of this type, then each holder of
series D preferred shares and other preferred shares shall share equally in the
available funds in accordance with their respective liquidation preferences. The
purchase or redemption by us of stock of any class in any manner permitted by
law shall not be regarded as a liquidation, dissolution or winding up. Neither
our consolidation or merger with or into any other person, nor the sale or
transfer by us of less than substantially all of its assets shall be deemed to
be a liquidation, dissolution or winding up.

The holders of series D preferred shares shall have no voting rights, except
as required by law, including, but not limited to, the General Corporation Law
of the State of Delaware.

The series D preferred stock has an initial stated value of $20,000 per
share, which increases at the rate of 6% per year. Each series D preferred share
is convertible, at the option of the holder, into the number of shares of common
stock determined by dividing the stated value by the lower of (a) $5.875, and
(b) 82.5% of the average of the closing bid prices for the five trading days
prior to the date of conversion. Any series D preferred stock outstanding on
September 27, 2002 will automatically be converted into common stock at the
conversion price then in effect.

If all the outstanding shares of series D preferred stock were converted as
of November 15, 1999, based upon the closing bid prices of the shares prior to
that date, under the conversion formula of the series D preferred stock the
conversion price for the shares would be set at a price of $2.84 per share.
After taking into effect a premium of 6% per year from the date of issuance
provided for under the terms of the series D preferred stock, the 75 outstanding
shares of series D preferred stock would be convertible into 533,099 shares of
common stock, or approximately 8.0% of the outstanding shares. The following
table includes the total number of shares that would be issued upon conversion
of all the series D preferred stock, and the percentage of the currently issued
and outstanding shares that such number of shares would represent, under the
following assumptions, and in each case after taking into effect the 6% annual
premium through November 15, 1999:

(a) assuming the current conversion price of $2.84 per share;

(b) assuming a conversion price based on an average closing bid price 25%
below the closing bid price as of November 11, 1999 of $3.6875 per share,
or $2.35 per share;

(c) assuming a conversion price based on an average closing bid price 50%
below the closing bid price as of November 11, 1999 of $3.6875 per share,
or $1.56 per share; and

(d) assuming a conversion price based on an average closing bid price 75%
below the closing bid price as of November 11, 1999 of $3.6875 per share,
or $0.78 per share.

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<PAGE>

<TABLE>
<CAPTION>
THE SERIES D PREFERRED
SHARES WOULD CONVERT INTO:
-----------------------------------------
NUMBER OF SHARES PERCENT OF OUTSTANDING
---------------- ----------------------
<S> <C> <C>
At the Current Conversion Price........................... 553,099 8.0%
At 25% below the Current Market Price..................... 642,105 9.6%
At 50% below the Current Market Price..................... 966,647 14.5%
At 75% below the Current Market Price..................... 1,933,294 29.0%
</TABLE>

Under the conversion price formula, there is no ceiling on the number of
shares of common stock into which the outstanding shares of series D preferred
stock can be converted. As a result, as the price of the common stock decreases,
the number of shares of common stock underlying the outstanding shares of
series D preferred stock continues to increase.

Under the conversion price formula, the series D preferred stock will be
convertible at a rate at or below the common stock's market price. The lower the
common stock's market price at the time a holder converts his outstanding shares
of series D preferred stock, the more shares of common stock the holder will get
in the conversion. To the extent a holder of shares of series D preferred stock
converts and then sells the shares of common stock, the common stock's market
price may decrease due to the additional shares in the market, allowing the
selling holder to convert other shares of series D preferred stock into greater
amounts of common stock, the sale of which could further depress the market
price for the common stock. The downward pressure on the market price of the
common stock as a holder of the series D preferred stock converts and sells
material amounts of common stock could encourage short sales by other holders or
others, placing further downward pressure on the market price of the common
stock. The conversion of the outstanding shares of series D preferred stock may
result in substantial dilution to the interest of other common stockholders,
since each holder of the outstanding shares of series D preferred stock may
ultimately convert and sell the full amount of common stock issuable upon
conversion.

The holders of the series D preferred shares are limited with respect to the
number of shares that they can convert at any one time. In particular, as long
as they are subject to laws, rules or regulations which would prohibit their
owning in excess of 4.99% of the outstanding common stock following conversion,
they may not own in excess of that amount.

After the 90th day following the issuance of the series D preferred stock,
and through September 27, 2001, we have the right, under specified
circumstances, to prohibit holders of the series D preferred stock from
exercising any conversion rights for up to 90 days. If we exercise that right,
we are required to compensate the holders of the series D preferred stock in
cash or in shares of common stock. The right of the holders of the series D
preferred stock to convert their shares is also subject to the following
restrictions: (i) during the period beginning on the issuance date through the
following 90 days, each holder may not convert more than 25% of the series D
preferred stock purchased by such holder, (ii) during the period beginning on
the issuance date through the following 120 days, each holder may not convert
more than 50% of the series D preferred stock purchased by such holder; and
(iii) during the period beginning on the issuance date through the following
150 days, each holder may not convert more that 75% of the series D preferred
stock purchased by such holder.

At any time after the issuance date, HomeCom has the right, in its sole
discretion, to redeem, from time to time, any or all of the series D preferred
stock provided that specified conditions are met, including that we have cash,
credit or standby underwriting facilities available to fund the redemption. The
redemption price is (i) 105% of the original purchase for the first 30 days
following the issuance date; (ii) 110% of the original purchase price for the
next 90 days thereafter and (iii) 120% of the original purchase price after
120 days from the issuance date.

The issuance of the series D preferred stock is also subject to the NASDAQ
National Market's Market Place Rule 4460 (i). Pursuant to the terms of this
rule, we have agreed with the holders of the series D preferred stock that so
long as we are subject to this rule or any rule substantially similar to this

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<PAGE>
rule, we will not issue more than 19.99% of the common stock outstanding on the
date the series D preferred stock was issued upon conversion of the series D
preferred stock in the absence of:

- the approval of the issuance by our stockholders; or

- a waiver by NASDAQ of the provisions of that rule.

On September 28, 1999, we completed a private placement of $1,500,000 principal
amount of our series D convertible preferred stock and related warrants to
purchase up to 25,000 shares of common stock. The series D preferred stock and
warrants were sold in reliance on Rule 506 of the Securities Act, which provides
an exemption from registration for sales to accredited investors, as defined by
Rule 501 under Regulation D of the Securities Act.

Pursuant to certain registration rights granted to the investors in the
private placement, we are obligated to file a registration statement under the
Securities Act with respect to a minimum of 533,368 shares of common stock
issuable upon conversion of the series D preferred stock and exercise of the
related warrants. We are obligated to pay penalties if the registration
statement is not filed and declared effective within specified time periods.

We entered into, and consummated, the private placement of the series D
preferred stock and the warrants based on a determination by our board of
directors that HomeCom's level of cash and cash equivalents were inadequate to
permit HomeCom to continue in existence for a sustained period. While the board
of directors considered the disadvantages of the potential preferred stock,
including (i) the potential dilution of the voting power per share of common
stock, (ii) the potential dilution of the common stock book value, and
(iii) the potential negative impact on earnings per share of common stock, after
negotiations with investment banking firms and potential investors, and based
upon the pressures of the need for additional cash resources, the board of
directors determined that it was in the best interests of HomeCom and its
shareholders for HomeCom to proceed with the private placement based on the
board's belief that such transactions offered the most favorable terms then
available to HomeCom given the existing market conditions and HomeCom's need for
additional cash resources.

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<PAGE>
WARRANTS

In connection with the completion with the our initial public offering, we
granted to our underwriter, Ladenburg Thalmann & Co. Inc., the underwriter,
warrants to acquire 100,000 shares of the common stock at an exercise price of
$7.20 per share. The exercise price is subject to adjustment under specified
circumstances. The underwriter warrants expire on May 12, 2002, if not earlier
exercised.

In connection with the completion of a sale of debentures in December of
1998, we issued to First Granite Securities, Inc., an entity designated by the
holder of the debentures, warrants to acquire an aggregate 400,000 shares of
common stock. Of these warrants, warrants to acquire an aggregate of 200,000
shares are exercisable at a price of $4.00 per share (of which 156,875 had been
exercised as of November 15, 1999) and warrants to acquire an aggregate 200,000
shares are exercisable at a price of $6.00 per share. The exercise price of
these debenture warrants is subject to adjustment under specified circumstances.
If not earlier exercised, the debenture warrants expire on October 27, 2000.
Pursuant to an agreement dated April 8, 1998, in the event that we agree to
adjust the exercise price of the series B preferred stock warrants to an
exercise price below $5.00, we have also agreed to amend the exercise price of
any unexercised debenture warrants to the reduced exercise price.

In connection with the completion of the sale of our series A preferred
stock, we issued the series A preferred stock warrants. These warrants represent
the right to acquire an aggregate of 125,000 shares of common stock, with
warrants to purchase 62,500 shares of common stock having an exercise price per
share equal to $14.50 per share and warrants to purchase the remaining 62,500
shares having an exercise price equal to $15.825. The exercise price of these
warrants is subject to adjustment under specified circumstances. The series A
preferred stock warrants will expire on December 31, 2000, and are eligible to
be exercised at any time on or after June 23, 1998.

In connection with the completion of the sale of series B convertible
preferred stock, we issued series B convertible preferred stock warrants. These
warrants represent the right to acquire an aggregate of 250,000 shares of common
stock, each with an exercise price per share equal to $5.70 per share. The
exercise price of these warrants is subject to adjustment under specified
circumstances. The series B convertible preferred stock warrants will expire on
March 24, 2004, if not earlier exercised.

In connection with the sale of the series C convertible preferred stock, we
issued series C preferred stock warrants. These warrants represent the right to
acquire an aggregate of up to 59,574 shares of common stock. The warrants expire
on July 27, 2004 and have an exercise price of $7.34 per share, subject to
adjustment. We also issued warrants to acquire an aggregate of 77,000 shares of
common stock having an exercise price per share equal to $5.813, subject to
adjustment. These warrants will expire on July 30, 2004.

In connection with the sale of the series D convertible preferred stock, we
issued series D preferred stock warrants. These warrants represent the right to
acquire an aggregate of up to 25,000 shares of common stock. The warrants expire
on September 27, 2004 and have an exercise price of $7.34 per share, subject to
adjustment.

Warrants to acquire an additional 315,000 shares at an exercise price of
$3.74 per share were issued in conjunction with the acquisition of First
Institutional Marketing, Inc. and certain of its affiliates. The shares issuable
upon exercise of these warrants have not been registered under the Securities
Act and are not currently available for resale upon issuance following exercise
of the warrants.

LIMITATIONS ON LIABILITY OF DIRECTORS

HomeCom's restated certificate of incorporation contains provisions which
eliminate the personal liability of its directors for monetary damages resulting
from breaches of their fiduciary duty, other than liability for a breach of the
duty of loyalty, acts or omissions not in good faith that constitute a breach of
the director's duty to HomeCom, acts that involve intentional misconduct or a
knowing violation of the law, transactions in which the director receives an
improper benefit and acts or omissions for which liability is expressly provided
by an applicable statute. While the restated certificate of incorporation
provides

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directors with protection from awards for monetary damages for breach of duties
to HomeCom, it does not eliminate those duties. Accordingly, the restated
certificate of incorporation should not affect the availability of equitable
remedies, such as injunction or rescission, based on a director's breach of the
duty of care. However, equitable remedies may not provide stockholders adequate
monetary compensation for damages caused by breach of duties to HomeCom.
HomeCom's restated bylaws contain provisions requiring the indemnification of
HomeCom's directors and officers, and persons serving at the request of HomeCom
as a director or officer of another corporation, to the fullest extent permitted
under the Delaware General Corporation Law. These provisions do not apply to
liabilities under federal securities laws. HomeCom believes that these restated
certificate of incorporation and bylaws provisions are necessary to attract and
retain qualified persons as directors and officers of HomeCom.

STATUTORY BUSINESS COMBINATION PROVISION

HomeCom is subject to the provisions of Section 203 of the Delaware General
Corporation Law. Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations with
a person, or affiliate or associate of such person, who is an interested
stockholder for a period of three years from the date that such person became an
interested stockholder unless: (i) the transaction resulting in a person
becoming an interested stockholder, or the business combination, is approved by
the board of directors of the corporation before the person becomes an
interested stockholder, (ii) the interested stockholder acquired 85% or more of
the outstanding voting stock of the corporation in the same transaction that
makes it an interested stockholder (excluding shares owned by persons who are
both officers and directors of the corporation and shares held by certain
employee stock ownership plans) or (iii) on or after the date the person becomes
an interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. Under Section 203, an
interested stockholder is defined (with certain limited exceptions) as any
person that is (i) the owner of 15% or more of the outstanding voting stock of
the corporation or (ii) an affiliate or associate of the corporation that was
the owner of 15% or more of the outstanding voting stock of the corporation at
any time within the three-year period immediately prior to the date on which it
is sought to be determined whether such person is an interested stockholder.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage, provided that such charter or
bylaw amendment shall not become effective until twelve months after the date it
is adopted. Neither the restated certificate of incorporation nor the restated
bylaws of HomeCom contains any such exclusion, although the Board of Directors
has excluded certain stockholders of HomeCom from the coverage of Section 203.

ADDITIONAL INFORMATION REGARDING BENEFICIAL
OWNERSHIP OF SHARES BY THE SELLING STOCKHOLDERS

The terms of the series C preferred stock and the warrants provide that the
preferred stock is convertible and the warrants are exercisable by any holder
only to the extent that the number of shares of common stock issuable at that
time, together with the number of shares of common stock beneficially owned by
that holder and its affiliates as determined in accordance with Section 13(d) of
the Securities Exchange Act, would not exceed 4.99% of our then outstanding
common stock so long as that holder is subject to laws, rules or regulations
which would prohibit owning in excess of 4.99%.

The terms of the series D preferred stock and the warrants provide that the
preferred stock is convertible and the warrants are exercisable by any holder
only to the extent that the number of shares of common stock issuable at that
time, together with the number of shares of common stock beneficially owned by
that holder and its affiliates as determined in accordance with Section 13(d) of
the Securities Exchange Act, would not exceed 4.99% of our then outstanding
common stock so long as that holder is subject to laws, rules or regulations
which would prohibit owning in excess of 4.99%.

58
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ADDITIONAL INFORMATION REGARDING SOME OF
THE SHARES HELD BY THE SELLING SHAREHOLDERS

As a result of limitations imposed by Nasdaq and the terms of the series C
preferred stock, we may not issue shares representing more than 19.99% of our
common stock outstanding of the time of issuance of the Series C preferred stock
unless we obtain stockholder approval or a waiver of the limitations by Nasdaq.
Similarly, as a result of limitations imposed by Nasdaq and the terms of the
series D preferred stock, we may not issue shares representing more than 19.99%
of our common stock outstanding at the time of issuance of the Series D
preferred stock unless we obtain stockholder approval or a waiver of the
limitations by Nasdaq.

PLAN OF DISTRIBUTION

Shares covered by this prospectus may be offered and sold from time to time
by the selling shareholders. The selling shareholders will act independently of
HomeCom in making decisions with respect to the timing, manner and size of each
sale. The selling shareholders may sell the shares:

- on the Nasdaq SmallCap Market-TM-;

- at prices and at terms then prevailing or at prices related to the then
current market price; or

- in private sales at negotiated prices directly or through brokers.

The selling shareholders and any underwriter, dealer or agent who
participates in the distribution of the shares may be deemed to be underwriters
under the Securities Act, and any discount, commission or concession received by
these persons might be deemed to be an underwriting discount or commission under
the Securities Act. We have agreed to indemnify the selling shareholders against
some liabilities arising under the Securities Act.

Any broker-dealer participating in transactions as agent may receive
commissions from the selling shareholders, and, if acting as agent for the
purchaser of the shares, from the purchaser). Usual and customary brokerage fees
will be paid by the selling shareholders. Broker-dealers may agree with the
selling shareholders to sell a specified number of shares at a stipulated price
per share, and, to the extent the broker-dealer is unable to do so acting as
agent for the selling shareholders, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the selling
shareholders. Broker-dealers who acquire shares as principal may then resell the
shares from time to time in transactions in the over-the-counter market, in
negotiated transactions or by a combination of these methods of sale, at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with resales may pay to or receive from the purchasers of the shares commissions
as described above.

We have advised the selling shareholders that the anti-manipulation rules
under the Exchange Act may apply to sales of shares in the market and to the
activities of the selling shareholders and their affiliates. The selling
shareholders have advised HomeCom that during the time as the selling
shareholders may be engaged in the attempt to sell shares registered under this
prospectus, they will:

- not engage in any stabilization activity in connection with any of the
shares;

- not bid for or purchase any of the shares or any rights to acquire the
shares, or attempt to induce any person to purchase any of the shares or
rights to acquire the shares other than as permitted under the Securities
Exchange Act;

- not effect any sale or distribution of the shares until after the
prospectus shall have been appropriately amended or supplemented, if
required, to describe the terms of the sale or distribution; and

- effect all sales of shares in broker's transactions through broker-dealers
acting as agents, in transactions directly with market makers, or in
privately negotiated transactions where no broker or other third party,
other than the purchaser, is involved.

The selling shareholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against some liabilities,
including liabilities arising under the Securities Act. Any

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commissions paid or any discounts or concessions allowed to any broker-dealers,
and any profits received on the resale of shares, may be deemed to be
underwriting discounts and commissions under the Securities Act if the
broker-dealers purchase shares as principal.

In order to comply with the securities laws of some states, if applicable,
the shares will be sold in some jurisdictions only through registered or
licensed brokers or dealers. In some states, the shares may not be sold unless
the shares have been registered or qualified for sale in the applicable state or
an exemption from the registration or qualification requirement is available and
is complied with.

HomeCom has agreed to use its best efforts to maintain the effectiveness of
this registration statement with respect to the shares until the earlier of the
sale of the shares or two years from the date of this prospectus. No sales may
be made under this prospectus after that date unless we amend or supplement this
prospectus to indicate that we have agreed to extend the period of
effectiveness. There can be no assurance that the selling shareholders will sell
all or any of the shares offered under this prospectus.

LEGAL MATTERS

The validity of the common stock being offered hereby will be passed upon
for HomeCom by Sims Moss Kline & Davis, a Limited Liability Partnership,
Atlanta, Georgia. That law firm has received warrants to purchase shares of
common stock of the Company as part of its compensation for legal services. The
amount of compensation that the firm has received in 1999 (or expects to receive
for services rendered but presently unbilled) in the form of warrants is
approximately $74,000.

EXPERTS

The financial statements of HomeCom Communications, Inc. as of December 31,
1997 and 1998 and for each of the three years in the period ended December 31,
1998, included in this Registration Statement, have been so included in reliance
on the report (which contains an explanatory paragraph relating to the Company's
ability to continue as a going concern as described in Note 12 to the financial
statements) of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing. The financial
statements of Premier Financial Services, Inc., First Institutional Marketing,
Inc., All Things Financial, Inc., and FIMI Securities, Inc. as of December 31,
1998 and 1997, and for each of the two years in the period ended December 31,
1998, included in this Registration Statement, have been so included in reliance
on the report of Andrew Shebay & Company, PLLC, independent auditors, given on
the authority of said firm as experts in accounting and auditing. The financial
statements of Ganymede Corporation as of December 31, 1998, and for the year
then ended, included in this Registration Statement, have been so included in
reliance on the report of Ostrow, Reisin Berk & Abrams, Ltd., independent
auditors, given on the authority of said firm as experts in accounting and
auditing.

AVAILABLE INFORMATION

HomeCom is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy and information statements, and other information with the Securities and
Exchange Commission. Such reports, proxy and information statements, and other
information filed by HomeCom can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as the regional offices of the Commission
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such reports, proxy statements and other information can also
be inspected at the offices of the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006. The Commission
maintains a world wide web site that contains reports, proxy and information
statements, and other information that are filed through the Commission's
Electronic Data Gathering, Analysis and Retrieval System. This web site can be
accessed at http://www.sec.gov.

60
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
HOMECOM COMMUNICATIONS, INC.:
- ------------------------------------------------------------
FINANCIAL STATEMENTS:
Report of Independent Accountants......................... F-2
Balance Sheets as of December 31, 1997 and 1998........... F-3
Statements of Operations for Each of the Three Years in
the
Period Ended December 31, 1998.......................... F-4
Statements of Stockholders' Equity (Deficit) for Each of
the
Three Years in the Period Ended December 31, 1998....... F-5
Statements of Cash Flows for Each of the Three Years in
the
Period Ended December 31, 1998.......................... F-6
Notes to Financial Statements............................. F-7

UNAUDITED INTERIM FINANCIAL STATEMENTS:
Balance Sheets as of September 30, 1999 and December 31,
1998.................................................... F-19
Statements of Operations for the Three and Nine Month
Periods
Ended September 30, 1999 and 1998....................... F-20
Statements of Cash Flows for the Nine Month Periods
Ended September 30, 1999 and 1998....................... F-21
Notes to Financial Statements............................. F-22

PREMIER FINANCIAL SERVICES, INC., FIRST INSTITUTIONAL
MARKETING, INC., AND
ALL THINGS FINANCIAL, INC.
Independent Auditors' Report.............................. F-28
Combined Balance Sheets................................... F-29
Combined Statement of Income and Retained Earnings........ F-31
Combined Statement of Cash Flows.......................... F-32
Notes to the Combined Financial Statements................ F-33

FIMI SECURITIES, INC.:
- ------------------------------------------------------------
Independent Auditors' Report.............................. F-36
Statements of Financial Condition......................... F-37
Statements of Income...................................... F-38
Statements of Changes in Stockholder's Equity............. F-39
Statements of Cash Flows.................................. F-40
Notes to the Financial Statements......................... F-41
Schedule I................................................ F-42
Schedule II............................................... F-43
Schedule III.............................................. F-44

PREMIER FINANCIAL SERVICES, INC., FIRST INSTITUTIONAL
MARKETING, INC., ALL THINGS FINANCIAL, INC. AND FIMI
SECURITIES, INC.:
UNAUDITED INTERIM FINANCIAL STATEMENTS:
Combined Statement of Income (Loss) and Retained
Earnings................................................ F-45

GANYMEDE CORPORATION:
- ------------------------------------------------------------
Independent Auditors' Report.............................. F-46
Balance Sheet............................................. F-47
Statement of Loss and Deficit............................. F-48
Statement of Cash Flows................................... F-49
Notes to Financial Statements............................. F-50
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
HomeCom Communications, Inc.

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

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company has experienced recurring losses and negative
cash flows since its inception and has an accumulated deficit. The Company is
dependent on continued financing from investors to sustain its activities and
there is no assurance that such financing will be available. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 12. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

PricewaterhouseCoopers LLP

Atlanta, Georgia
March 29, 1999, except as to Note 12,
which is as of September 7, 1999
and Note 13, which is as of October 1, 1999

F-2
<PAGE>
HOMECOM COMMUNICATIONS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 3,187,948 $ 2,291,932
Restricted cash........................................... -- 250,000
Accounts receivable, net.................................. 470,839 680,790
Other current assets...................................... -- 4,796
----------- -----------
Total current assets.................................. 3,658,787 3,227,518
FURNITURE, FIXTURES AND EQUIPMENT, NET...................... 627,624 797,263
SOFTWARE DEVELOPMENT COSTS, NET............................. 31,778 --
DEPOSITS.................................................... 85,731 80,231
DEFERRED ACQUISITION COSTS.................................. -- 109,158
DEFERRED DEBT ISSUE COSTS................................... 248,359 --
INTANGIBLE ASSETS, NET...................................... -- 351,320
OTHER NON-CURRENT ASSETS.................................... 12,500 --
----------- -----------
Total assets.......................................... $ 4,664,779 $ 4,565,490
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $ 427,886 $ 424,094
Accrued payroll liabilities............................... 264,180 300,927
Unearned revenue.......................................... 190,978 128,345
Current portion of obligations under capital leases....... 53,813 108,427
----------- -----------
Total current liabilities............................. 936,857 961,793
----------- -----------
CONVERTIBLE DEBENTURES, NET OF DISCOUNT OF $122,778 AS OF
DECEMBER 31, 1997......................................... 1,577,222 --
OBLIGATIONS UNDER CAPITAL LEASES............................ 74,787 88,242
OTHER LIABILITIES........................................... 119,141 67,006
----------- -----------
Total liabilities..................................... 2,708,007 1,117,041
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value, 15,000,000 shares
authorized, 2,956,396 and 5,072,397 shares issued and
outstanding at December 31, 1997 and 1998,
respectively............................................ 295 507
Preferred stock, Series A, convertible, $100 par value,
1,000,000 shares authorized, 20,000 and 0 shares issued
and outstanding at December 31, 1997 and 1998,
respectively; participating; $2,000,000 liquidation
value at December 31, 1997.............................. 200 --
Additional paid-in capital................................ 7,800,542 10,355,724
Subscriptions receivable.................................. (337,501) (196,878)
Accumulated deficit....................................... (5,506,764) (6,710,904)
----------- -----------
Total stockholders' equity............................ 1,956,772 3,448,449
----------- -----------
Total liabilities and stockholders' equity............ $ 4,664,779 $ 4,565,490
=========== ===========
</TABLE>

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

F-3
<PAGE>

HOMECOM COMMUNICATIONS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1997 1998
---------- ----------- -----------
<S> <C> <C> <C>
NET SALES:
Service sales......................................... $2,112,878 $ 2,484,459 $ 2,463,490
Equipment sales....................................... 117,097 18,726 47,199
---------- ----------- -----------
Total net sales................................... 2,229,975 2,503,185 2,510,689
---------- ----------- -----------
COST OF SALES:
Cost of services...................................... 715,377 2,129,968 2,208,820
Cost of equipment sold................................ 60,058 10,014 22,937
---------- ----------- -----------
Total cost of sales............................... 775,435 2,139,982 2,231,757
---------- ----------- -----------
GROSS PROFIT............................................ 1,454,540 363,203 278,932
---------- ----------- -----------
OPERATING EXPENSES:
Sales and marketing................................... 962,220 1,440,002 1,221,908
Product development................................... 78,887 514,655 677,590
General and administrative............................ 909,230 2,538,229 3,098,095
Depreciation and amortization......................... 85,068 238,537 542,269
---------- ----------- -----------
Total operating expenses.......................... 2,035,405 4,731,423 5,539,862
---------- ----------- -----------
OPERATING LOSS.......................................... (580,865) (4,368,220) (5,260,930)
OTHER EXPENSES (INCOME)
Gain on sale of division.............................. -- -- (4,402,076)
Interest expense...................................... 51,272 543,420 445,216
Other expense (income), net........................... (6,554) (93,298) (166,942)
---------- ----------- -----------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES..... (625,583) (4,818,342) (1,137,128)
INCOME TAXES............................................ -- -- --
---------- ----------- -----------
NET LOSS FROM CONTINUING OPERATIONS..................... (625,583) (4,818,342) (1,137,128)
LOSS FROM DISCONTINUED OPERATIONS....................... -- (62,839) (67,012)
---------- ----------- -----------
NET LOSS................................................ (625,583) (4,881,181) (1,204,140)
PREFERRED STOCK DIVIDEND................................ -- -- (666,667)
---------- ----------- -----------
LOSS APPLICABLE TO COMMON SHAREHOLDERS.................. $ (625,583) $(4,881,181) $(1,870,807)
========== =========== ===========
BASIC AND DILUTED LOSS PER SHARE
Continuing Operations................................. $ (0.34) $ (1.86) $ (0.42)
Discontinued Operations............................... -- (0.02) (0.02)
---------- ----------- -----------
Total............................................... $ (0.34) $ (1.88) $ (0.44)
========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING........... 1,862,223 2,602,515 4,287,183
========== =========== ===========
</TABLE>

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

F-4
<PAGE>
HOMECOM COMMUNICATIONS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------- -------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
-------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995.......................... -- -- 1,000 27,706 --
Conversion from S to C corporation.................. (22,892)
Issuance of stock................................... 19,663 468,104
Net loss............................................
Stock split and recapitalization to $0.0001 par
value............................................. -- -- 1,902,400 (495,618) 495,618
------- ---- --------- -------- -----------
BALANCE, December 31, 1996.......................... -- -- 1,923,063 192 472,726
Conversion of note payable to common shares......... 33,333 3 199,997
Issuance of common shares, net of offering costs.... 1,000,000 100 4,672,489
Issuance of preferred shares, net of offering
costs............................................. 20,000 200 1,799,052
Issuance of warrants and compensatory stock
options........................................... 89,611
Cancellation of subscriptions receivable under
employment agreements.............................
Favorable conversion feature of convertible
debentures........................................ 566,667
Net loss............................................ -- -- -- -- --
------- ---- --------- -------- -----------
BALANCE, December 31, 1997.......................... 20,000 200 2,956,396 295 7,800,542
Issuance of stock................................... 443,085 45 884,086
Conversion of convertible debentures to common
shares............................................ 961,460 96 1,699,904
Conversion of preferred stock to common shares...... (20,000) (200) 711,456 71 129
Cancellation of subscriptions receivable under
employment agreements.............................
Other............................................... (28,937)
Net loss............................................ -- -- -- -- --
------- ---- --------- -------- -----------
BALANCE, December 31, 1998.......................... -- $ -- 5,072,397 $ 507 $10,355,724
======= ==== ========= ======== ===========
</TABLE>

<TABLE>
<CAPTION>
TOTAL
SUBSCRIPTIONS ACCUMULATED STOCKHOLDERS'
RECEIVABLE DEFICIT EQUITY (DEFICIT)
------------- ----------- ----------------
<S> <C> <C> <C>
BALANCE, December 31, 1995.................................. (22,892) 4,814
Conversion from S to C corporation.......................... 22,892 --
Issuance of stock........................................... (468,004) 100
Net loss.................................................... (625,583) (625,583)
Stock split and recapitalization to $0.0001 par value....... -- -- --
--------- ----------- ----------
BALANCE, December 31, 1996.................................. (468,004) (625,583) (620,669)
Conversion of note payable to common shares................. 200,000
Issuance of common shares, net of offering costs............ 4,672,589
Issuance of preferred shares, net of offering costs......... 1,799,252
Issuance of warrants and compensatory stock options......... 89,611
Cancellation of subscriptions receivable under employment
agreements................................................ 130,503 130,503
Favorable conversion feature of convertible debentures...... 566,667
Net loss.................................................... -- (4,881,181) (4,881,181)
--------- ----------- ----------
BALANCE, December 31, 1997.................................. (337,501) (5,506,764) 1,956,772
Issuance of stock........................................... 884,131
Conversion of convertible debentures to common shares....... 1,700,000
Conversion of preferred stock to common shares.............. --
Cancellation of subscriptions receivable under employment
agreements................................................ 140,623 140,623
Other....................................................... (28,937)
Net loss.................................................... -- (1,204,140) (1,204,140)
--------- ----------- ----------
BALANCE, December 31, 1998.................................. $(196,878) $(6,710,904) $3,448,449
========= =========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-5
<PAGE>
HOMECOM COMMUNICATIONS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1997 1998
--------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(625,583) $(4,881,181) $(1,204,140)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization........................... 87,730 457,113 542,269
Amortization of debt discount........................... -- 443,889 122,778
Amortization of debt issue costs........................ -- 22,578 283,754
Forgiveness of subscriptions receivable................. -- 130,501 140,623
Expense recorded for issuance of warrants............... -- -- 36,093
Non-cash compensation expense........................... -- -- 44,933
Gain on sale of division................................ -- -- (4,402,076)
Provision for bad debts................................. 104,360 244,893 167,675
Deferred rent expense................................... 73,424 45,717 (52,135)
Change in operating assets and liabilities:
Accounts receivable................................... (506,289) (227,478) (309,248)
Accounts payable and accrued expenses................. 316,641 (221,908) (3,793)
Accrued payroll liabilities........................... 284,367 (74,274) 36,747
Unearned revenue...................................... 90,691 57,808 187,367
Other................................................. (41,266) (21,674) 4,963
--------- ----------- -----------
Net cash used in operating activities................... (215,925) (4,024,016) (4,404,190)
--------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, fixtures and equipment............. (349,646) (387,209) (362,689)
Proceeds from sale of division, net of restricted cash of
$250,000................................................ -- -- 4,000,000
Payment of acquisition costs.............................. -- -- (152,407)
Software development costs................................ (84,182) (168,834) --
--------- ----------- -----------
Net cash provided by (used in) investing activities..... (433,828) (556,043) 3,484,904
--------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of deferred offering costs........................ (88,096) (415,448) (28,937)
Payment of deferred debt issue costs...................... -- (220,937) (35,395)
Repayment of capital lease obligations.................... (4,404) (51,010) (144,492)
Proceeds from issuance of common shares and exercise of
warrants................................................ -- -- 232,094
Payment of preferred stock issue costs.................... -- (190,748) --
Proceeds from issuance of convertible debentures and
warrants................................................ -- 1,700,000 --
Proceeds from issuance of preferred shares and warrants... -- 2,000,000 --
Proceeds from notes payable to stockholders............... 889,904 490,000 --
Repayment of notes payable to stockholders................ (5,115) (1,335,581) --
Proceeds from note payable................................ 70,000 -- --
Repayment of note payable................................. (9,354) (60,646) --
Proceeds from sale of stock, net of underwriting discounts
and commissions......................................... 100 5,520,000 --
--------- ----------- -----------
Net cash provided by financing activities............... 853,035 7,435,630 23,270
--------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 203,282 2,855,571 (896,016)
CASH AND CASH EQUIVALENTS at beginning of period............ 129,095 332,377 3,187,948
--------- ----------- -----------
CASH AND CASH EQUIVALENTS at end of period.................. $ 332,377 $ 3,187,948 $ 2,291,932
========= =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON
CASH INVESTING AND FINANCING ACTIVITIES:
Interest paid............................................. $ 6,277 $ 56,365 $ 16,277
========= =========== ===========
Capital lease obligations incurred during year on lease of
computer equipment...................................... $ 64,667 $ 119,346 $ 208,065
========= =========== ===========
Conversion of notes payable to affiliate to common
stock................................................... $ -- $ 200,000 $ --
========= =========== ===========
Issuance of warrants and compensatory stock options....... $ -- $ 89,611 $ --
========= =========== ===========
</TABLE>

During 1998, the Company issued 351,391 shares of common stock for the net
assets of The Insurance Resource Center, Inc.

During 1998, $1,700,000 of convertible debentures were converted into
961,460 shares of common stock.

During 1998, 20,000 shares of preferred stock were converted into 711,456
shares of common stock.

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

F-6
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

HomeCom Communications, Inc. (the "Company") specializes in Internet
application solutions for the financial services industry. HomeCom's integrated
Web-enabled solutions for one-stop financial services include a complete range
of products and services such as secure banking services, fee-income producing
insurance and brokerage products, and intelligent one-to-one marketing. In
addition, HomeCom offers custom Web development and hosting services, as well as
Internet security products and services.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, management considers all highly
liquid investments with a maturity of three months or less when purchased to be
cash equivalents.

RESTRICTED CASH

Under the terms of the sale of the Company's HostAmerica division in June,
1998, $250,000 of the proceeds of the sale are to be held in escrow until
May 1, 1999 for the purpose of indemnifying the Purchaser for representations
and warranties made by the Company under the Asset Purchase Agreement.

ACCOUNTS RECEIVABLE, NET

Accounts receivables are shown net of the allowance for doubtful accounts.
The allowance was approximately $161,000 and $95,000 at December 31, 1997 and
1998, respectively. Write-offs were approximately $191,000 and $233,000 for the
years ended December 31, 1997 and 1998, respectively.

FURNITURE, FIXTURES AND EQUIPMENT, NET

Furniture, fixtures and equipment are recorded at cost less accumulated
depreciation, which is computed using the straight-line method over the
estimated useful lives of the related assets (three to five years). Assets
recorded under capital leases are amortized over the shorter of their useful
lives or the term of the related leases using the straight-line method.
Maintenance and repairs are charged to expense as incurred. Upon sale,
retirement or other disposition of these assets, the cost and the related
accumulated depreciation are removed from the respective accounts and any gain
or loss on the disposition is included in income.

SOFTWARE DEVELOPMENT COSTS, NET

The Company capitalizes internal software development costs in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting For Costs
of Computer Software To Be Sold, Leased,

F-7
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

or Otherwise Marketed". The capitalization of these costs begins when a
product's technological feasibility has been established and ends when the
product is available for general release to customers. Amortization is computed
on an individual product basis and is the greater of (a) the ratio of current
gross revenues for a product to the total current and anticipated future gross
revenues for the product or (b) the straight-line method over the estimated
economic life of the product. Amortization of capitalized software development
costs totaled approximately $3,000, $219,000, and $32,000 in 1996, 1997, and
1998, respectively. These expenses are included in cost of sales. At
December 31, 1998, capitalized software development costs have been fully
amortized.

DEFERRED ACQUISITION COSTS

Costs incurred in connection with the Company's acquisition of First
Institutional Marketing, Inc. have been deferred. These costs consist of legal,
accounting, and printing costs and will be capitalized upon the closing of this
transaction.

DEFERRED DEBT ISSUE COSTS

Costs in connection with the Company's offering of convertible debentures
were deferred and amortized over the term of the debt. As of December 31, 1998,
all of the convertible debentures had been converted into shares of common stock
and, accordingly, all of the deferred debt issue costs had been amortized.

INTANGIBLE ASSETS

Intangible assets consist of cost in excess of net assets acquired arising
from the purchase of The Insurance Resource Center, Inc. ("IRC") which is being
amortized using the straight-line method over three years. Impairment of value,
if any, is recognized in the period in which it is determined. Management
assesses the recoverability of intangible assets at each balance sheet date
based on undiscounted projected cash flows and operating income.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the balance sheet for the Company's notes
payable and capital lease obligations approximate fair value.

REVENUE RECOGNITION

The Company recognizes revenues on web page development and specialized
software application contracts using the percentage-of-completion method. Earned
revenue is based on the percentage that incurred hours to date bear to total
estimated hours after giving effect to the most recent estimates of total hours.
Earned revenue reflects the original contract price adjusted for agreed upon
claim and change order revenue, if any. If estimated total costs on any of these
contracts indicate a loss, the entire amount of the estimated loss is recognized
immediately. Revenues related to other services are recognized as the services
are performed. Revenues from equipment sales and related costs are recognized
when products are shipped to the customer. Unearned revenue, as reflected on the
accompanying balance sheet, represents the amount of billings recorded on
contracts in advance of services being performed.

F-8
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ADVERTISING EXPENSES

Advertising costs are expensed when incurred. Advertising expenses were
approximately $724,000 and $263,000 for the years ended December 31, 1997 and
1998, respectively.

INCOME TAXES

Prior to February 9, 1996, the Company qualified as an S Corporation for
federal and state income tax purposes. Accordingly, no provision was made for
income taxes for its operations prior to February 9, 1996. Effective
February 9, 1996, the Company converted from an S corporation to a C corporation
for income tax purposes and is, therefore, subject to corporate income taxes.
Deferred income tax assets and liabilities reflect differences between the bases
of the Company's assets and liabilities for financial reporting and income tax
purposes. The net deferred income tax asset of approximately $2,500,000 at
December 31, 1998 is primarily due to operating loss carryforwards generated
since February 9, 1996, and is fully offset by a valuation allowance. The effect
of a change in the valuation allowance that results from a change in
circumstances that causes a change in judgment about the realizability of the
related deferred tax asset in future years would be included in income in that
period.

As a result of termination of the S Corporation in February 1996, the
accumulated deficit as of that date was transferred to additional paid-in
capital.

BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share ("EPS") are calculated according to the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings per
Share" ("FAS 128"). Due to the net loss position of the Company for each of the
three years in the period ending December 31, 1998, the numerator and
denominator are the same for both basic and diluted EPS.

OTHER MATTERS

Certain prior year amounts have been reclassified to conform to current year
presentation.

2. FURNITURE, FIXTURES AND EQUIPMENT, NET

Furniture, fixtures and equipment, net, are comprised of the following as
of:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- ---------
<S> <C> <C>
Furniture and fixtures................................. $191,107 $ 257,424
Computer equipment..................................... 579,486 861,400
Computer equipment under capital leases................ 184,012 382,055
-------- ---------
954,605 1,500,879
Less: accumulated depreciation and amortization........ (326,981) (703,616)
-------- ---------
$627,624 $ 797,263
======== =========
</TABLE>

F-9
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. NOTES PAYABLE

Notes payable are comprised of the following as of:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1998
---------- ----------
<S> <C> <C>
Convertible debentures (interest accrues at 5%),
payable September 22, 2000, non-collateralized,
convertible at the option of the holders into
shares of the Company's common stock, net of
unamortized discount of $122,778................... $1,577,222 --
Less current maturities of notes payable............. -- --
---------- ----------
$1,577,222 $ --
========== ==========
</TABLE>

These notes were converted into 961,460 shares of common stock during 1998.

4. SEGMENT INFORMATION

During 1998, HomeCom reorganized into five separate business units,
organized on the basis of products and services. Prior to that time, the Company
operated in a single business segment. The Company has determined that its
reportable segments are those that are based on the Company's method of internal
reporting, which disaggregates its business by product and service category into
business units. HomeCom's reportable segments are: custom Web development
(FAST), Internet outsourcing services (HostAmerica), Internet security services
(HISS), software products, and InsureRate. On June 9, 1998, the Company sold
substantially all of the assets of its HostAmerica Internet outsourcing services
business unit to Sage Acquisition Corp.

The table below presents information about the reported business unit income
for HomeCom Communications, Inc. for the year ended December 31, 1998:

<TABLE>
<CAPTION>
SOFTWARE RECONCILING CONSOLIDATED HISS
FAST HOSTAMERICA PRODUCTS INSURERATE ITEMS TOTALS (DISCONTINUED)
---- ----------- -------- ---------- ----------- ------------ --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $1,950 $531 $ 29 $ 0 $ 0 $ 2,510 $782
Net Income (Loss).......... $ (363) $256 $(443) $(357) $(230) $(1,137) $(67)
</TABLE>

Reconciling items represent adjustments that are made to the total of the
segments' operating income in order to arrive at consolidated net loss and
include the following:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Depreciation and amortization.................. $ (587)
Interest expense, net.......................... (278)
Gain on sale of division....................... 4,402
Corporate sales and marketing and product
development expenses......................... (360)
General and administrative expenses............ (3,407)
-------
$ (230)
=======
</TABLE>

F-10
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. SEGMENT INFORMATION (CONTINUED)

The Company evaluates the performance of its segments based on segment
revenue and identifiable segment direct expenses, consisting primarily of
salaries and wages, travel and other costs of segment operating and sales
personnel. Common expenses for general and administrative costs, facilities,
equipment, telecommunications, and depreciation and amortization expenses are
not allocated to the business segments but are included in Corporate expenses.
Corporate expenses are included as part of the Reconciling Items column in the
table above.

Revenues for the years ended December 31, 1997 and 1996, were as follows:

<TABLE>
<CAPTION>
SOFTWARE CONSOLIDATED HISS
FAST HOSTAMERICA PRODUCTS INSURERATE TOTALS (DISCONTINUED)
---- ----------- -------- ---------- ------------ --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues--1997....................... $1,792 $691 $ 20 $ -- $ 2,503 $375
Revenues--1996....................... $1,845 $305 $ 80 $ -- $ 2,230 $ 69
</TABLE>

Prior year operating income (loss) by segment is not presented as the
information is not available. HISS had a segment loss of approximately $63,000
and $0 in 1997 and 1996, respectively.

Asset information by reportable segment is not reported since the Company
does not produce such information internally. All of the Company's revenues and
expenses originate in the United States. No single customer accounted for more
than 10% of the Company's revenues. Therefore, no additional disclosures about
major customers are presented.

5. COMMITMENTS AND CONTINGENCIES

The Company leases office space and equipment under noncancelable operating
lease agreements expiring through 2002. The Company has entered into several
capital leases of computer equipment.

Future minimum lease payments under capital and operating leases are as
follows as of December 31, 1998:

<TABLE>
<CAPTION>
CAPITAL LEASES OPERATING LEASES
-------------- ----------------
<S> <C> <C>
1999............................ $123,571 $ 524,171
2000............................ 69,654 534,529
2001............................ 25,785 338,789
2002............................ -- 234,424
2003............................ -- --
-------- ----------
Total minimum lease payments.... 219,010 $1,631,913
==========
Less: amount representing
interest...................... (22,341)
--------
Present value of minimum lease
payments...................... 196,669
Less: current portion........... (108,427)
--------
$ 88,242
========
</TABLE>

The Company leases office space in New York City, Vienna, Virginia and
Atlanta, Georgia. The total amount of the base rent payments is being charged to
expense on a straight-line method over the term of these leases. The Company has
recorded a deferred credit to reflect the excess of rent expense over cash
payments since inception of the leases.

F-11
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Rental expense under operating leases was approximately $227,000, $507,000
and $440,000 for the years ended December 31, 1996, 1997, and 1998,
respectively.

Various legal proceedings may arise in the normal course of business.
Additionally, the Company's software and equipment are vulnerable to computer
viruses or similar disruptive problems caused by customers or other Internet
users. Computer viruses or problems caused by third parties could lead to
interruptions, delays or cessation in service to the Company's customers.
Moreover, customers of the Company could use computer files and information
stored on or transmitted to Web server computers maintained by the Company to
engage in illegal activities that may be unknown or undetectable by the Company,
including fraud and misrepresentation, and unauthorized access to computer
systems of others. Furthermore, inappropriate use of the Internet by third
parties could also jeopardize the security of customers' confidential
information that is stored in the Company's computer systems. Any such actions
could subject the Company to liability to third parties. The Company does not
have errors and omissions, product liability or other insurance to protect
against risks caused by computer viruses or other misuse of software or
equipment by third parties. Although the Company attempts to limit its liability
to customers for these types of risks through contractual provisions, there can
be no assurance that these provisions will be enforceable. Management does not
believe that there are currently any asserted or unasserted claims that will
have a material adverse effect on the financial position, results of operations
or cash flows of the Company.

6. CONCENTRATION OF CREDIT RISKS

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents
and accounts receivable. The Company places its cash and cash equivalents with
quality financial institutions. Concentration of credit risk with respect to
trade receivables is monitored by the Company through ongoing credit evaluations
of its customers' financial condition. The Company's sales to its five largest
customers represented approximately 26%, 15%, and 27% of total revenues for the
years ended December 31, 1996, 1997, and 1998, respectively. No customer
accounted for more than 10% of the revenues of the Company during 1996, 1997 or
1998. The five most significant customer balances represented approximately 26%
and 50% of the gross accounts receivable balance at December 31, 1997 and 1998,
respectively.

7. EQUITY AND CONVERTIBLE DEBT TRANSACTIONS

All share and per share amounts presented below have been adjusted to
reflect the 93.07-for-one stock split effective September 11, 1996.

During 1995, the Company issued warrants to its former Board of Advisors to
purchase 37,228 shares of common stock for total consideration of $4.00. The
warrants were granted at the fair market value of the common stock at the time
of issuance. These warrants were exercised in August 1996.

During February 1996, the Company issued 707,332 additional shares to the
previous sole stockholder, 93,070 shares to an executive officer of the Company
pursuant to the exercise of options granted in connection with the founding of
the Company, and 893,472 shares to four private investors.

In August 1996, the Company sold to certain key employees an aggregate of
102,855 shares of common stock for an aggregate consideration of $468,004,
payable through the issuance of promissory notes payable in four equal
installments, bearing interest at 8% per annum and secured by the shares of
common stock purchased therewith. Also in August 1996, the Company entered into
employment

F-12
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. EQUITY AND CONVERTIBLE DEBT TRANSACTIONS (CONTINUED)

agreements with such persons which provide that, assuming continued employment
with the Company, for each of the first four years of employment, the Company
will issue a bonus to the employee in the amount necessary to repay the annual
amount due under such promissory note (plus the taxes due by the employee as a
consequence of receiving such bonus). Pursuant to the terms of the employment
agreements, the Company will continue to make these annual payments if the
employee is terminated other than "for cause," as defined in the employment
agreements. Pursuant to the terms of the subscription agreements for such
shares, if the employee's employment is terminated within such four-year period,
the Company has the right to repurchase that percentage of the shares purchased
by the employee which shall equal the percentage of the promissory note which is
not yet due, payment for such repurchase to be made by canceling the applicable
outstanding amount of the promissory note. For financial reporting purposes,
these notes receivable have been presented as a separate component of
stockholders' equity.

In September 1996, the Company amended and restated its Certificate of
Incorporation (i) to reclassify its common stock from no par value stock to
stock with a par value of $0.0001 per share, (ii) to increase the authorized
shares of common stock to 15,000,000, and (iii) to authorize the issuance of
1,000,000 shares of $0.01 par value preferred stock. In addition, the Board of
Directors approved a 93.07-for-one stock split effected in the form of a stock
dividend, whereby each common stockholder of record as of September 11, 1996
received 92.07 additional shares of common stock for each share owned as of the
record date. As a result of the stock split and recapitalization, 1,902,400
shares were issued and $495,618 was transferred from Common Stock to Paid-in
Capital. Weighted average common shares outstanding and per share amounts for
all periods presented have been restated to reflect the stock split.

In May 1997, the Company completed an initial public offering of its common
stock. The Company issued 1,000,000 shares at an initial public offering price
of $6.00 per share. The total proceeds of the offering, net of underwriting
discounts, commissions and offering expenses, were approximately $4,700,000. The
Company used a portion of the proceeds from the initial public offering to repay
outstanding principal amounts of approximately $1,300,000 loaned to the Company
by stockholders and affiliates plus accrued interest of approximately $65,000.
The Company issued 33,333 shares of common stock as payment in full of the
outstanding principal balance of a $200,000 loan from an investor.

In connection with the completion with the Company's initial public
offering, the Company granted its underwriter warrants to acquire 100,000 shares
of the Company's common stock at an exercise price of $7.20 per share. The
exercise price is subject to adjustment under certain circumstances. These
warrants expire on May 12, 2002 if not earlier exercised.

In September 1997, the Company issued $1,700,000 of 5% convertible
debentures due September 22, 2000. Net proceeds to the Company from the issuance
of the debentures totaled approximately $1,500,000. Outstanding principal and
interest on the debentures is payable on September 22, 2000. During 1998, the
full principal amount of the debentures was fully converted into 961,460 shares
of common stock. As of December 31, 1998, $44,596 of interest has been accrued
for the debentures, and is payable on September 22, 2000. Due to the beneficial
conversion feature of the debentures, a portion of the proceeds ($566,667) has
been allocated to additional paid-in capital. The corresponding discount on the
debentures was amortized in 1998 as a non-cash charge to interest expense.

In connection with the issuance of the debentures, the Company issued to a
broker designated by the purchaser of the debentures three-year warrants to
acquire an aggregate 400,000 shares of common stock. These warrants were issued
in October 1997. Of these warrants, 50,000 were exercised in December 1998 at an
exercise price of $4.00 per share. At December 31, 1998, warrants to purchase
150,000 shares of

F-13
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. EQUITY AND CONVERTIBLE DEBT TRANSACTIONS (CONTINUED)

common stock are outstanding and exercisable at a price of $4.00 per share, and
warrants to purchase the remaining 200,000 shares of common stock are
outstanding and exercisable at a price of $6.00 per share. If not earlier
exercised, the warrants expire on October 27, 2000.

In December 1997, the Company issued 20,000 shares of its Series A preferred
stock for an aggregate purchase price of $2,000,000. Net proceeds to the Company
from the Series A preferred stock issuance were approximately $1,800,000. As of
December 31, 1998, the preferred stock had been fully converted into 711,456
shares of common stock. A discount of $666,667 results from an allocation of the
proceeds to the beneficial conversion feature. This discount is analogous to a
dividend and was recognized as a return to the Series A preferred holders over
the period the preferred stock was outstanding.

In connection with the issuance and sale of the Series A preferred stock,
the Company granted the Series A preferred warrants to acquire an aggregate of
75,000 shares of Common Stock, with warrants to purchase 62,500 shares of common
stock having an exercise price per share equal to $14.50625 and warrants to
purchase 12,500 shares of common stock having an exercise price per share equal
to $15.825. The Company also granted 50,000 warrants to a placement agent at an
exercise price of $15.825 per share. The Series A preferred stock warrants will
expire on December 31, 2000.

At December 31, 1998, 600,000 warrants are outstanding at a weighted average
exercise price of $7.51.

On April 16, 1998, the Company issued 351,391 shares of common stock to
acquire all of the outstanding capital stock of The Insurance Resource
Center, Inc.

On October 7, 1998, the Company issued 18,959 shares of common stock to the
former holders of HISS's capital stock as an earnout payment, which was recorded
as compensation expense.

8. STOCK OPTION PLANS

The Company's Employee Stock Option Plan (the "Stock Option Plan") was
adopted by the Company's stockholders in September 1996. Shares of common stock
may be sold or awarded to officers, key employees and consultants. On March 3,
1999 at a Special Meeting of Stockholders, the Company's stockholders approved
an amendment to the Stock Option Plan which increased the number of shares
reserved for issuance under the Stock Option Plan to 2,000,000. Options granted
under the Stock Option Plan may be either (i) options intended to qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code or
(ii) non-qualified stock options.

During 1997 and 1998, the Company granted options to purchase shares under
the Stock Option Plan. The options vest 25% per year and expire ten years after
the grant date. The exercise price of the options was at or above the fair
market value of the stock on the grant date.

The Company's Non-Employee Directors' Stock Option Plan (the "Directors'
Plan") was adopted by the Company's stockholders in September 1996. Shares of
common stock may be sold or awarded to directors who are not officers or
employees of the Company ("Non-Employee Directors"). The Company has reserved
300,000 shares of common stock for issuance under the Directors' Plan.

The Directors' Plan provides for the automatic granting of an option to
purchase 10,000 shares of common stock to each Non-Employee Director who is
first appointed or elected to the Board of Directors. Also, each Non-Employee
Director is automatically granted an option to purchase 5,000 shares of common
stock on the date of each annual meeting of the Company's stockholders.
Furthermore, the Directors' Plan allows the Board of Directors to make
extraordinary grants of options to Non-Employee Directors.

F-14
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. STOCK OPTION PLANS (CONTINUED)

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"). This statement requires that companies with
stock-based compensation plans either recognize compensation expense based on
new fair value accounting method or continue to apply the provisions of
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees" ("APB 25") and disclose pro forma net income and earnings per share
assuming the fair value method had been applied.

The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options. The Company has recognized no
compensation expense for options issued to employees and non-employee directors.
For the years ended December 31, 1997 and 1998, the Company recognized
approximately $5,000 and $36,000, respectively, in expense for stock issued to
non-employees.

Pro forma information regarding loss per share is required by FAS 123 and
has been determined as if the Company had accounted for its employee stock
options under the fair value method of that Statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted average assumptions:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1996 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Risk-free interest rate........................... 6.46% 5.93% 5.11%
Volatility factors of the expected market price of
the Company's common stock...................... 80% 90% 110%
Weighted average expected life of the options..... 4 years 5 years 5 years
</TABLE>

Had compensation cost for the Company's stock-based compensation plans been
determined under the provisions consistent with FAS 123, the Company's net loss
and loss per share for the years ended December 31, 1997 and 1998, would have
been the pro forma amounts listed below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1998 1997
--------- ----------- -----------
<S> <C> <C> <C>
Loss applicable to common shareholders:
As reported............................ $(625,583) $(4,881,181) $(1,870,807)
Pro forma.............................. (676,776) (5,012,634) (2,351,259)
Basic and diluted loss per share:
As reported............................ (0.34) (1.88) (0.44)
Pro forma.............................. (0.36) (1.93) (0.55)
</TABLE>

F-15
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. STOCK OPTION PLANS (CONTINUED)

Option activity under all of the stock option plans is summarized as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1997 1998
---------------------------- ----------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year......... 220,543 $6.30 421,160 $4.95
Granted.................................. 599,555 5.26 312,700 3.35
Exercised................................ 0 -- (4,375) 4.06
Forfeited................................ (398,938) 5.80 (170,875) 3.34
--------- ---------
Outstanding at end of year............... 421,160 4.95 558,610 4.59
========= =========
Options exercisable at year end.......... 3,090 127,791
========= =========
Shares available for future grant........ 178,840 41,390
========= =========
Weighted-average fair value of options
granted during the year at the shares'
fair value............................. $ 3.71 $ 2.79
========= =========
</TABLE>

The following table summarizes information about fixed options outstanding
at December 31, 1998.

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
REMAINING
EXERCISE PRICES SHARES CONTRACTUAL LIFE
- --------------- -------- ----------------
<S> <C> <C>
$1.91--2.18.......................................... 50,700 9.6
$3.69--4.72.......................................... 329,111 8.9
$6.00--8.06.......................................... 178,799 8.5
-------
558,610 8.8
=======
</TABLE>

9. ACQUISITIONS AND DIVESTITURES

In August 1996, HomeCom acquired all of the outstanding capital stock of
HomeCom Internet Security Services, Inc. ("HISS"), a start-up company formed in
July 1996 to provide Internet and Intranet security system consulting services.
Consideration to the former holders of HISS' capital stock consisted of the
right to receive their pro rata share of four annual earnout payments to be paid
not later than March 31 of 1998, 1999, 2000 and 2001. In 1998, the Company
incurred approximately $45,000 in compensation expense in the form of issuing
18,959 shares of common stock to certain former holders of HISS' capital stock.
The maximum additional potential liability under the earnout agreement is
$134,800, payable in common stock or cash at the Company's option. The Company
does not expect this additional potential liability to be paid, due to HISS net
income limitations.

On April 16, 1998, the Company acquired all of the outstanding capital stock
of The Insurance Resource Center, Inc. ("IRC") for total consideration of
approximately $571,000, consisting of 351,391 shares of the Company's common
stock. IRC provides Internet development and hosting services to the insurance
industry. The Company has accounted for this acquisition as a purchase
transaction. Approximately $460,000 was recorded as an intangible asset and is
being amortized over three years. At

F-16
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. ACQUISITIONS AND DIVESTITURES (CONTINUED)

December 31, 1998, the net unamortized balance of this intangible asset was
$351,000, net of $109,000 of accumulated amortization.

On June 9, 1998, the Company sold substantially all of the assets of its
HostAmerica Internet network outsourcing services division to Sage Acquisition
Corp. ("Sage") for cash of $4,250,000 and Sage's assumption of approximately
$250,000 of unearned revenue. The Company recorded a gain on the sale of
approximately $4,402,000. The assets sold consisted of computer network
equipment and service contracts.

10. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows, as of:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1998
----------- -----------
<S> <C> <C>
Temporary differences:
Allowance for uncollectibles....................... $ 61,009 $ 36,246
Vacation accrual................................... 11,049 33,586
Depreciation....................................... 2,317 4,826
Deferred rent expense.............................. 45,274 25,462
Software development expenses...................... 55,599 35,138
----------- -----------
175,248 135,258
Net operating loss carryforward.................... 1,903,040 2,357,670
----------- -----------
Deferred tax asset................................. 2,078,288 2,492,928
Valuation allowance................................ (2,078,288) (2,492,928)
----------- -----------
Net deferred tax asset............................. $ 0 $ 0
=========== ===========
</TABLE>

At December 31, 1998, the Company had net operating loss carryforwards for
income tax purposes of approximately $6,200,000 which begin to expire in 2011.
Realization of these assets is contingent on having future taxable earnings. In
addition, certain stock transactions during 1997 resulted in the Company
incurring an ownership change as defined in Internal Revenue Code Section 382.
The result of this ownership change is to substantially limit the utilization of
the Company's net operating loss carry-forwards in the future. Based on the
cumulative losses in recent years and the limitation and the use of the
company's net operating losses management believes that a full valuation
allowance should be recorded against the deferred tax asset. The income tax
benefit differs from the amounts computed by applying the Federal statutory rate
of 34% to loss before taxes principally as a result of the recording of the
valuation allowance.

11. SUBSEQUENT EVENTS

On March 24, 1999, the Company acquired First Institutional Marketing, Inc.
and certain of its affiliates ("FIMI") of Houston, Texas for 1,252,174 shares of
common stock. FIMI offers insurance and investment products to banks,
broker/dealers, insurance agencies and retail consumers. FIMI markets its
products primarily to insurance agencies affiliated with commercial banks and
broker/dealers. The Company will account for this acquisition as a purchase
transaction.

F-17
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. SUBSEQUENT EVENTS (CONTINUED)

On March 25, 1999, the Company issued 125 shares of its Series B Preferred
Stock for an aggregate purchase price of $2,500,000. Net proceeds to the Company
from the Series B preferred sale were approximately $2,280,000. The Series B
preferred stock is convertible at the option of the holder into a number of
shares of common stock equal to a share-based factor. The Series B conversion
price is the lesser of (i) the average closing bid price during any four
(4) consecutive trading days during the twenty-five (25) consecutive trading day
period ending one (1) trading day prior to the day the notice of conversion is
sent to the Company, or (ii) $5.23. The shares may be redeemed by the Company at
a price equal to 120% of the face amount of the shares.

In connection with the issuance and sale of the Series B preferred stock,
the Company granted the Series B preferred warrants to acquire an aggregate
225,000 shares of common stock at an exercise price of $5.70. The Company also
granted 25,000 warrants to a placement agent at an exercise price of $5.70. The
Series B preferred warrants will expire on March 24, 2004.

12. BASIS OF PRESENTATION--GOING CONCERN (UNAUDITED INFORMATION AS OF JUNE 30,
1999)

The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern which
contemplate the realization of assets and liquidation of liabilities in the
normal course of business. The Company continues to incur significant losses
resulting in an accumulated deficit of approximately $6.7 million and
$11.3 million at December 31, 1998 and June 30, 1999, respectively. The Company
has experienced negative cash flows from operations totaling approximately
$4.4 million during the year ended December 31, 1998 and approximately
$3.5 million during the six month period ended June 30, 1999. The Company is
dependent on continued financing from investors to sustain its activities and
there is no assurance that such financing will be available. These factors raise
substantial doubt about the Company's ability to continue as a going concern. On
September 7, 1999, the Company announced a reduction of its workforce and the
planned sale of its security division in order to reduce its expenses. The
Company's continued existence as a going concern is dependant upon adequate
future debt or equity funding and successful commercialization of its products
and services.

13. DISPOSITION OF INTERNET SECURITY SERVICES DIVISION (UNAUDITED)

The Board of Directors of the Company determined to dispose of the HISS unit
on September 1, 1999. Accordingly, the results of operations from the
discontinued HISS segment have been shown as a discontinued operation in the
Statements of Operations.

F-18
<PAGE>

HOMECOM COMMUNICATIONS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,582,670 $ 2,291,932
Restricted cash........................................... -- 250,000
Accounts receivable, net of allowance for uncollectible
accounts of $214,930 and $95,384 as of September 30,
1999 and December 31, 1998, respectively................ 1,707,035 680,790
Loans to shareholders..................................... 370,000
Other current assets...................................... 413,464 4,796
------------ -----------
Total current assets.................................... 5,073,169 3,227,518
FURNITURE, FIXTURES AND EQUIPMENT, NET...................... 1,036,582 797,263
DEPOSITS.................................................... 242,182 80,231
DEFERRED ACQUISITION COSTS.................................. -- 109,158
INTANGIBLE ASSETS, NET...................................... 5,445,864 351,320
OTHER ASSETS................................................ 245,974 --
------------ -----------
Total assets............................................ $ 12,043,771 $ 4,565,490
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $ 1,397,909 $ 424,094
Accrued payroll liabilities............................... 426,213 300,927
Unearned revenue.......................................... 155,221 128,345
Current portion of obligations under capital leases....... 109,442 108,427
------------ -----------
Total current liabilities............................... 2,088,785 961,793
OTHER LIABILITIES........................................... 72,019 67,006
OBLIGATIONS UNDER CAPITAL LEASES............................ 126,353 88,242
------------ -----------
2,287,157 1,117,041
------------ -----------
REDEEMABLE PREFERRED STOCK $.0001 par value, 125 shares
authorized, Series B, 125 issued and outstanding at
September 30, 1999, respectively and 0 shares outstanding
on December 31, 1998, convertible, participating; $20,523
per share liquidation value at September 30, 1999......... 1,649,469 --
------------ -----------
STOCKHOLDERS' EQUITY:
Preferred stock $0.001 par value, 1,000,000 authorized,
Series C and Series D 175 and 75 authorized, issued, and
outstanding at September 30, 1999, respectively, and 0
shares outstanding on December 31, 1998, convertible,
participating, $20,214 and $20,010 per share liquidation
value at September 30, 1999 respectively................ 3 --
Common stock, $.0001 par value, 15,000,000 shares
authorized, 6,669,765 and 5,072,397 shares issued and
outstanding at September 30, 1999 and December 31, 1998,
respectively............................................ 667 507
Additional paid-in capital.................................. 21,798,069 10,355,724
Subscriptions receivable.................................... (98,440) (196,878)
Accumulated deficit......................................... (13,593,154) (6,710,904)
------------ -----------
Total stockholders' equity................................ 8,107,145 3,448,449
------------ -----------
Total liabilities and stockholders' equity................ $ 12,043,771 $ 4,565,490
============ ===========
</TABLE>

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

F-19
<PAGE>

HOMECOM COMMUNICATIONS, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES:
Service sales............................ $ 1,958,276 $ 464,493 $ 4,760,878 $ 1,854,708
Equipment sales.......................... 101,405 13,879 118,084 30,219
----------- ----------- ----------- -----------
Total net sales........................ 2,059,681 478,372 4,878,962 1,884,927
----------- ----------- ----------- -----------
COST OF SALES:
Cost of services......................... 1,450,941 398,108 3,289,155 1,176,045
Cost of equipment sold................... 50,407 98,565 115,573 197,957
----------- ----------- ----------- -----------
Total cost of sales.................... 1,501,348 496,673 3,404,728 1,374,002
----------- ----------- ----------- -----------
GROSS PROFIT (LOSS)........................ 558,333 (18,301) 1,474,234 510,925
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Sales and marketing...................... 1,348,107 136,678 2,787,569 439,045
Product development...................... 426,871 167,556 691,004 291,420
General and administrative............... 1,306,141 1,171,988 3,489,424 3,421,972
Depreciation and amortization............ 485,139 124,110 1,010,236 302,906
----------- ----------- ----------- -----------
Total operating expenses............... 3,566,258 1,600,332 7,978,233 4,455,343
----------- ----------- ----------- -----------
OPERATING (LOSS)........................... (3,007,925) (1,618,633) (6,503,999) (3,944,418)
OTHER EXPENSES (INCOME)
Gain on sale of division................. (4,402,076)
Interest expense......................... 9,263 5,494 25,416 444,023
Other expense (income), net.............. (8,839) (58,421) (48,749) (125,577)
----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES...................... (3,008,349) (1,565,706) (6,480,666) 139,212
INCOME TAX PROVISION (BENEFIT)............. -- -- -- --
----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS... (3,008,349) (1,565,706) (6,480,666) 139,212
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS............................... (115,275) (50,610) (401,584) (34,670)
----------- ----------- ----------- -----------
NET INCOME (LOSS).......................... (3,123,624) (1,616,316) (6,882,250) 104,542
PREFERRED STOCK DIVIDEND................... (522,841) (1,315,231) (666,667)
----------- ----------- ----------- -----------
LOSS APPLICABLE TO COMMON SHAREHOLDERS..... $(3,646,465) $(1,616,316) $(8,197,481) $ (562,125)
=========== =========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE--BASIC AND
DILUTED..................................
CONTINUING OPERATIONS...................... $ (0.53) $ (0.32) $ (1.26) $ (0.13)
DISCONTINUED OPERATIONS.................... (0.02) (0.01) (0.07) (0.01)
----------- ----------- ----------- -----------
TOTAL.................................... $ (0.55) $ (0.33) $ (1.33) $ (0.14)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING--BASIC AND DILUTED........... 6,667,639 4,830,779 6,166,695 4,039,832
=========== =========== =========== ===========
</TABLE>

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

F-20
<PAGE>

HOMECOM COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $(6,882,250) $ 104,542
Adjustments to reconcile net income (loss) to cash used in
operating activities:
Depreciation and amortization........................... 1,119,802 381,592
Amortization of debt discount........................... 122,778
Amortization of debt issue costs........................ 283,754
Gain on sale of division................................ (4,402,076)
Provision for bad debts................................. 168,500 140,000
Deferred rent expense................................... (26,619) (52,784)
Change in operating assets and liabilities:
Accounts receivable................................... (897,549) (380,093)
Prepaid expenses...................................... (408,668)
Accounts payable and accrued expenses................. 385,465 176,343
Accrued payroll liabilities........................... 90,099 (1,153)
Unearned revenue...................................... 26,876 (181,542)
Other................................................. (404,725) (28,167)
----------- -----------
Net cash used in operating activities................... (6,829,069) (3,836,806)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, fixtures and equipment............. (306,900) (345,278)
Proceeds from sale of division............................ 4,500,000
Cash from acquisition..................................... 136,938
Loans to shareholders..................................... (370,000)
Payment of acquisition costs.............................. (213,461)
Other..................................................... -- (46,540)
----------- -----------
Net cash (used in) provided by investing activities..... (753,423) 4,108,182
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of deferred offering costs........................ (28,937)
Payment of deferred debt issue costs...................... 109,158 (35,395)
Proceeds from issuance of preferred shares and warrants,
net of offering costs................................... 7,031,251
Repayment of capital lease obligations.................... (192,197) (76,364)
Proceeds from issuance of common shares and exercise of
warrants................................................ 675,018 140,623
----------- -----------
Net cash provided by (used in) financing activities..... 7,623,230 (73)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 40,738 271,303
CASH AND CASH EQUIVALENTS at beginning of period............ 2,541,932 3,187,948
----------- -----------
CASH AND CASH EQUIVALENTS at end of period.................. $ 2,582,670 $ 3,459,251
=========== ===========
</TABLE>

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON CASH INVESTING AND
FINANCING ACTIVITIES:

During the nine-month periods ended September 30, 1999 and 1998, capital
lease obligations of $93,242 and $159,391, respectively, were incurred when the
Company entered into leases on computer equipment.

During the nine months ended September 30, 1999, the Company issued
1,252,174 shares of common stock for the net assets of First Institutional
Marketing, Inc. and certain of its affiliates.

During the nine months ended September 30, 1999, the Company issued 185,342
shares of common stock for the net assets of Ganymede Corporation.

During the nine months ended September 30, 1998, $1,700,000 of convertible
debentures were converted into 961,460 shares of common stock.

During the nine months ended September 30, 1998, 12,500 shares of preferred
stock were converted into 366,630 shares of common stock.

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

F-21
<PAGE>

HOMECOM COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to Article 10 of Regulation S-X of the
Securities and Exchange Commission. The accompanying unaudited financial
statements reflect, in the opinion of management, all adjustments necessary to
achieve a fair statement of the financial position and results of operations of
HomeCom Communications, Inc. (the "Company") for the interim periods presented.
All such adjustments are of a normal and recurring nature. These financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K.

2. ACQUISITION OF FIRST INSTITUTIONAL MARKETING, INC. ("FIMI")

On March 24, 1999, the Company acquired First Institutional
Marketing, Inc., and certain of its affiliates ("FIMI") of Houston, Texas for
total consideration of $4,236,104, consisting of 1,252,174 shares of common
stock. The acquisition has been accounted for as purchase transaction. The value
of the shares was determined by using the average closing stock price of the two
days before and after the definitive agreement was publicly announced. The
Company has engaged an independent firm to assess the fair value of the assets
purchased and liabilities assumed. The resulting goodwill will be amortized over
a period of approximately 3 years. Results of operations for FIMI are included
with those of the Company subsequent to the date of acquisition.

Prior to the closing of the acquisition, the Company loaned the shareholders
of FIMI $370,000. The note is due January 29, 2000 and bears interest of 9%. The
loan may be repaid in cash or common stock.

In connection with the acquisition, the principal shareholders of FIMI were
granted 300,000 warrants to acquire HomeCom common stock at an exercise price of
$3.74 per share. Vesting of the warrants is contingent upon FIMI meeting certain
operating goals as defined in the agreement. If the operating results are
obtained, the warrants vest ratably over a three-year period on the anniversary
date of the acquisition.

3. ACQUISITION OF GANYMEDE CORPORATION

On April 23, 1999, the Company acquired all of the outstanding shares of
Ganymede Corporation ("Ganymede") for total consideration of $1,132,339,
consisting of 185,342 shares of common stock and $100,000 cash. The number of
shares was determined by dividing the total non-cash consideration by the
average closing price of the Company's stock for the 20 trading days prior to
April 9, 1999. The value of the shares was determined by using the average
closing stock price of the two days before and after the definitive agreement
was publicly announced. In addition, the Company entered into employment
agreements with the three principals of Ganymede, calling for them to continue
in their current roles for the acquired company.

The acquisition has been accounted for as a purchase. The purchase price has
been allocated to assets acquired and liabilities assumed based on their
estimated fair values. The resulting goodwill will be amortized over a period of
approximately 3 years. Results of operations for Ganymede have been included
with those of the Company for periods subsequent to the date of acquisition.

F-22
<PAGE>

4. DISPOSITION OF INTERNET SECURITY SERVICES DIVISION

On October 1, 1999, the Company sold substantially all of the assets of its
HomeCom Internet Security Services ("HISS") division to Infrastructure
Defense, Inc. ("iDefense") for $1.35 million in common stock of the non-public
acquiror and a $200,000 note receivable, due January 1, 2000. The Company
intends to record a gain of approximately $1.5 million on the sale of the HISS
unit in the fourth quarter of 1999. The foregoing description of the Sale is
qualified in its entirety by reference to the full text of the Asset Purchase
Agreement, dated as of October 1, 1999 (the "Asset Purchase Agreement"), by and
between the Company and to Infrastructure Defense, Inc., a Delaware corporation.
The Board of Directors of the Company determined to dispose of the HISS unit on
September 1, 1999. Accordingly, results of operations from the discontinued HISS
unit have been shown as a discontinued operation in the Statement of Operations
for the three and nine months ended September 30, 1999 and 1998. This
discontinued operations presentation results in certain revenue and expense
reclassifications for the periods presented.

5. ISSUANCE OF SERIES B PREFERRED STOCK

The Company issued Series B Preferred Stock totaling $2,500,000 on
March 25, 1999 (the "Issuance Date"). The Series B Preferred Stock investors
were issued 125 shares of preferred stock, having a stated value of $20,000 per
share, and 225,000 warrants to purchase common stock at $5.70 per share. The
Company paid offering costs of $216,250 cash plus 25,000 warrants to purchase
common stock at $5.70 per share, resulting in net proceeds to the Company of
$2,283,750 for the preferred shares and warrants.

The Series B Preferred Stock bears no dividends and is convertible at the
option of the holder at the earlier of 90 days after issuance or the effective
date of a registration statement covering the shares. The warrants are
exercisable at any time and expire five years from the date of issuance.

The Series B Preferred Stock is convertible into common stock at a
conversion price equal to the lower of (a) the average of the closing price for
four consecutive trading days in the twenty-five consecutive trading days ending
one day prior to the conversion date ($4.86 at the Issuance date) and
(b) $5.23. The number of common shares into which the Series B Preferred Stock
is convertible is determined by dividing the stated value of the Series B
Preferred Stock, increased by 5% annually, by the conversion price. As the
Series B Preferred Stock is automatically convertible on March 24, 2002, the
most beneficial conversion ratio was determined to include the additional common
shares attributable to the 5% annual increase for the three year period ending
in 2002. After adjustment for this additional benefit the $4.86 conversion price
is reduced to $4.23, the most beneficial conversion price at the Issuance Date.

In determining the accounting for the beneficial conversion feature, the
Company first allocated the net proceeds of $2,283,750 to the preferred stock
and the warrants based on their relative fair values at the Issuance Date,
resulting in $1,766,217 assigned to the preferred stock and $517,533 assigned to
the warrants as of March 24, 1999. The Company then allocated $899,284 of the
Series B net proceeds to additional paid in capital for the beneficial
conversion feature. The beneficial conversion feature will be recognized as a
deemed dividend to the preferred shareholders over the minimum period in which
the preferred shareholders can realize that return. Approximately $792,000 of
the beneficial conversion was amortized in the second quarter of 1999 and $9,854
in the third quarter of 1999. The balance of the beneficial conversion feature
is being recognized from the Issuance Date through March, 2002.

The Company has the option to redeem the Series B Preferred Stock after
110 days for 120% of face value. Additionally, if the Company has issued common
stock upon conversion of the Series B Preferred Stock such that 19.99% of the
common stock outstanding is held by the preferred shareholders, the Company must
obtain approval of the shareholders before any more preferred shares can be
converted. If such approval is not obtained within 60 days shares of notice, the
preferred shareholders may require the Company to repurchase the remaining
Series B Preferred Stock at 120% of face value. At the Issuance Date, the
Company had obtained irrevocable proxies from shareholders representing
approximately 40%

F-23
<PAGE>

of the common shareholders to vote in favor of increasing the number of shares
should such vote be required. The Series B Preferred Stock is presented outside
of permanent equity as the outcome of the shareholder vote, and possible
redemption, is outside of the control of the Company.

6. ISSUANCE OF SERIES C PREFERRED STOCK

On July 28, 1999, the Company completed a private placement of $3,500,000
principal amount of the Company's Series C Convertible Preferred Stock, par
value $.01 per share (the "Series C Preferred Stock") and warrants to acquire up
to 59,574 shares of Common Stock (the "Series C Preferred Warrants"). The
Series C Preferred Stock has an initial stated value of $20,000 per share, which
stated value increases at the rate of 6% per year (such stated value, as
increased from time to time, is referred to as the "Series C Stated Value").
Each Series C Preferred Share is convertible, from and after 120 days following
the date of issuance, at the option of the holder, into such number of shares of
Common Stock as is determined by dividing the Series C Stated Value by the
lesser of (a) $5.875, and (b) 82.5% of the average of the closing bid prices for
the five trading days preceding the date of conversion. Any Series C Preferred
Stock issued and outstanding on July 22, 2002 will automatically be converted
into Common Stock at the conversion price then in effect.

Pursuant to certain registration rights granted to the investors in the
private placement, we are obligated to file a registration statement (the
"Registration Statement") under the Securities Act of 1933 (the "1933 Act") with
respect to a minimum of 1,244,444 shares of Common Stock issuable upon
conversion of the Series C Preferred Stock and exercise of the Series C
Preferred Warrants. We are obligated to pay penalties if the Registration
Statement is not filed and/or declared effective within the specified time
periods. We may, at our option at any time after the 90th day following the
issuance of the Series C Preferred Stock through July 22, 2001, prohibit holders
of the Series C Preferred Stock from exercising any conversion rights for up to
90 days, provided that certain conditions are met. If we exercise that right, we
are required to compensate the holders of the Series C Preferred Stock in cash
in an amount equal to 3% of the principal amount of the Series C Preferred Stock
held by each holder for each thirty days that prohibition is in effect (pro
rated for partial months) or, at our option, deliver Common Stock in payment of
such amount (based on the average closing bid prices for the Common Stock for
the twenty trading days preceding the end of each calendar month during the
period conversion is so prohibited).

In determining the accounting for the beneficial conversion feature, the
Company first allocated the net proceeds of $3,323,748 to the preferred stock
and the warrants based on their relative fair values at the Issuance Date,
resulting in $3,170,904 assigned to the preferred stock and $152,844 assigned to
the warrants as of July 27, 1999. The Company then allocated $1,678,505 of the
Series C net proceeds to additional paid in capital for the beneficial
conversion feature. The beneficial conversion feature will be recognized as a
deemed dividend to the preferred shareholders over the minimum period in which
the preferred shareholders can realize that return. Approximately $376,952 of
the beneficial conversion was amortized in the third quarter of 1999. The
balance of the beneficial conversion feature is being recognized from the
Issuance Date through July, 2002.

The right of the holders of the Series C Preferred Stock to convert their
shares is also subject to the following restrictions: (i) during the period
beginning on the issuance date through the following 90 days, each holder may
not convert more than 25% of the Series C Preferred Stock purchased by such
holder; (ii) during the period beginning on the issuance date through the
following 120 days, each holder may not convert more than 50% of the Series C
Preferred Stock purchased by such holder; and (iii) during the period beginning
on the issuance date through the following 150 days, each holder may not convert
more than 75% of the Series C Preferred Stock purchased by such holder. At any
time after the issuance date, the Company shall have the right, in its sole
discretion, to redeem, from time to time, any or all of the Series C Preferred
Stock; provided that certain conditions are met, including the availability of
cash, credit or standby underwriting facilities available to fund the
redemption. The redemption price will be calculated as (i) 105% of the original
purchase price for the first 30 days following the issuance date; (ii) 110%

F-24
<PAGE>

of the original purchase price for the next 90 days thereafter and (iii) 120% of
the original purchase price after 120 days from the issuance date.

The Series C Preferred Warrants expire on July 27, 2004 and have an exercise
price of $7.34 per share, subject to adjustment under certain circumstances.

7. ISSUANCE OF SERIES D PREFERRED STOCK

On September 28, 1999, the Company completed a private placement of
$1,500,000 principal amount of the Company's Series D Convertible Preferred
Stock, par value $.01 per share (the "Series D Preferred Stock") and warrants to
acquire up to 25,000 shares of Common Stock (the "Series D Preferred Warrants").
The Series D Preferred Stock has an initial stated value of $20,000 per share,
which stated value increases at the rate of 6% per year (such stated value, as
increased from time to time, is referred to as the "Series D Stated Value").
Each Series D Preferred Share is convertible, from and after 120 days following
the date of issuance, at the option of the holder, into such number of shares of
Common Stock as is determined by dividing the Series D Stated Value by the
lesser of (a) $5.875, and (b) 82.5% of the average of the closing bid prices for
the five trading days preceding the date of conversion. Any Series D Preferred
Stock issued and outstanding on September 22, 2002 will automatically be
converted into Common Stock at the conversion price then in effect.

Pursuant to certain registration rights granted to the investors in the
private placement, we are obligated to file a registration statement (the
"Registration Statement") under the Securities Act of 1933 (the "1933 Act") with
respect to a minimum of 533,368 shares of Common Stock issuable upon conversion
of the Series D Preferred Stock and exercise of the Series D Preferred Warrants.
We are obligated to pay penalties if the Registration Statement is not filed
and/or declared effective within the specified time periods. We may, at our
option at any time after the 90th day following the issuance of the Series D
Preferred Stock through September 22, 2001, prohibit holders of the Series D
Preferred Stock from exercising any conversion rights for up to 90 days,
provided that certain conditions are met. If we exercise that right, we are
required to compensate the holders of the Series D Preferred Stock in cash in an
amount equal to 3% of the principal amount of the Series D Preferred Stock held
by each holder for each thirty days that prohibition is in effect (pro rated for
partial months) or, at our option, deliver Common Stock in payment of such
amount (based on the average closing bid prices for the Common Stock for the
twenty trading days preceding the end of each calendar month during the period
conversion is so prohibited).

In determining the accounting for the beneficial conversion feature, the
Company first allocated the net proceeds of $1,423,750 to the preferred stock
and the warrants based on their relative fair values at the Issuance Date,
resulting in $1,387,477 assigned to the preferred stock and $36,273 assigned to
the warrants as of September 28, 1999. The Company then allocated $642,084 of
the Series D net proceeds to additional paid in capital for the beneficial
conversion feature. The beneficial conversion feature will be recognized as a
deemed dividend to the preferred shareholders over the minimum period in which
the preferred shareholders can realize that return. Approximately $136,035 of
the beneficial conversion was amortized in the third quarter of 1999. The
balance of the beneficial conversion feature is being recognized from the
Issuance Date through September, 2002.

The right of the holders of the Series D Preferred Stock to convert their
shares is also subject to the following restrictions: (i) during the period
beginning on the issuance date through the following 90 days, each holder may
not convert more than 25% of the Series D Preferred Stock purchased by such
holder; (ii) during the period beginning on the issuance date through the
following 120 days, each holder may not convert more than 50% of the Series D
Preferred Stock purchased by such holder; and (iii) during the period beginning
on the issuance date through the following 150 days, each holder may not convert
more than 75% of the Series D Preferred Stock purchased by such holder. At any
time after the issuance date, the Company shall have the right, in its sole
discretion, to redeem, from time to time, any or all of the Series D Preferred
Stock; provided that certain conditions are met, including the availability of
cash, credit

F-25
<PAGE>

or standby underwriting facilities available to fund the redemption. The
redemption price will be calculated as (i) 105% of the original purchase price
for the first 30 days following the issuance date; (ii) 110% of the original
purchase price for the next 90 days thereafter and (iii) 120% of the original
purchase price after 120 days from the issuance date.

The Series D Preferred Warrants expire on September 27, 2004 and have an
exercise price of $7.34 per share, subject to adjustment under certain
circumstances.

8. BASIC AND DILUTED INCOME (LOSS) PER SHARE

The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 128, "Earnings Per Share", effective December 31, 1997. Earnings (loss) per
common share was computed by dividing net income (loss) available to common
shareholders by the weighted average number of shares of common stock
outstanding for the period then ended. The effect of the Company's stock options
and convertible securities was excluded from the computations for the three and
nine months ended September 30, 1999, as they are antidilutive.

The following table sets forth the calculation of the earnings (loss) per
share of the Company:

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Earnings (loss) per share computation--
basic and diluted
Income (loss) from continuing
operations............................ $ (3,008,349) $ (1,565,706) $ (6,480,666) $ 139,212
Less: Preferred stock dividend.......... (522,841) 0 (1,315,231) (666,667)
------------ ------------ ------------ ------------
Income (loss) applicable to common
shareholders.......................... (3,531,190) (1,565,706) (7,795,897) (527,455)
Discontinued operations................. (115,275) (50,610) (401,584) (34,670)
------------ ------------ ------------ ------------
Net income (loss) applicable to common
shareholders.......................... $ (3,646,465) $ (1,616,316) $ (8,197,481) $ (562,125)
============ ============ ============ ============
Weighted average common shares
outstanding--
Basic and diluted..................... 6,667,639 4,830,779 6,166,695 4,039,832
============ ============ ============ ============
Earnings (loss) per share--basic and
diluted
Income (loss) from continuing
operations............................ $ (0.53) $ (0.32) $ (1.26) $ (0.13)
Discontinued operations................. (0.02) (0.01) (0.07) (0.01)
------------ ------------ ------------ ------------
Net income (loss) available to common
shareholders.......................... $ (0.55) $ (0.33) $ (1.33) $ (0.14)
============ ============ ============ ============
</TABLE>

9. SEGMENT INFORMATION

During 1998, HomeCom reorganized into five separate business units,
organized on the basis of products and services. Prior to that time, the Company
operated in a single business segment. The Company has determined that its
reportable segments are those that are based on the Company's method of internal
reporting, which disaggregates its business by product and service category into
business units. HomeCom's reportable segments are: custom Web development
(FAST), Internet outsourcing services (HostAmerica), Internet security services
(HISS), software products, and InsureRate/FIMI. On June 9, 1998, the Company
sold substantially all of the assets of its HostAmerica Internet outsourcing
services business unit to Sage Acquisition Corp. On October 1, 1999 the Company
sold all of the assets of its HISS unit to Infrastructure Defense Inc.

F-26
<PAGE>

The table below presents information about the reported business unit income
for HomeCom Communications, Inc. for the three and nine months ended
September 30, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
FAST..................................................... $ 1,070 $ 468 $ 2,915 $ 1,342
HostAmerica.............................................. (1) 537
InsureRate/FIMI.......................................... 886 1,779
Software Products........................................ 104 13 185 13
------- ------- ------- -------
Totals................................................... $ 2,060 $ 480 $ 4,879 $ 1,892
======= ======= ======= =======
HISS (DISCONTINUED OPERATION)............................ 133 233 361 606
======= ======= ======= =======

Business Unit Net Income (Loss):
FAST..................................................... $ 203 $ (224) $ 470 $ (275)
HostAmerica.............................................. (5) 205
InsureRate/FIMI.......................................... (811) (120) (1,780) (225)
Software Products........................................ (418) (166) (736) (338)
HISS..................................................... (115) (51) (356) (35)
------- ------- ------- -------

Business Unit Net Income (Loss).......................... $(1,141) $ (566) $(2,402) $ (668)
Adjustments to reconcile business unit net income (loss)
with consolidated net income (loss):
General and Administrative Expenses...................... (1,435) (1,121) (1,780) (655)
Gain on Sale of Division................................. 4,402
Interest Expense......................................... (9) (5) (25) (444)
Net Other................................................ (539) 76 (2,675) (2,530)
------- ------- ------- -------
Consolidated Net Income (Loss)........................... $(3,124) $(1,616) $(6,882) $ 105
======= ======= ======= =======
</TABLE>

10. INCOME TAXES

There was no provision for or cash payment of income taxes for the three and
nine months ended September 30, 1999 and 1998, respectively, as the Company
anticipates a net taxable loss for the year ended December 31, 1999.

11. OTHER MATTERS

Certain prior period amounts have been reclassified to conform to current
period presentation.

F-27
<PAGE>
INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS
Premier Financial Services, Inc.
First Institutional Marketing, Inc.
All Things Financial, Inc.
Houston, Texas

We have audited the accompanying statements of financial condition of
Premier Financial Services, Inc., First Institutional Marketing, Inc., All
Things Financial, Inc., as of December 31, 1998 and 1997, and the related
statements of income, and changes in financial condition for the period then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Premier Financial Services,
Inc., First Institutional Marketing, Inc., All Things Financial, Inc., as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the period then ended in conformity with generally accepted accounting
principles.

Andrew Shebay & Company, PLLC
Houston, Texas

June 4, 1999

F-28
<PAGE>
PREMIER FINANCIAL SERVICES, INC.
FIRST INSTITUTIONAL MARKETING, INC.
ALL THINGS FINANCIAL, INC.
COMBINED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents................................. $ 17,447 $ 55,912
Certificates of Deposit................................... 52,901 50,325
Accounts Receivable....................................... 164,173 265,465
-------- --------
Total current assets.................................. 234,521 371,702
-------- --------
PROPERTY AND EQUIPMENT:
Computer Equipment........................................ 281,621 207,448
Office Equipment and Fixtures............................. 120,734 120,660
Automobiles............................................... 30,853 30,853
-------- --------
433,208 358,961
Less: Accumulated Depreciation............................ 313,558 290,326
-------- --------

Net Property and Equipment............................ 119,650 68,635

OTHER ASSETS:............................................... 1,879 1,879
-------- --------

TOTAL ASSETS................................................ $356,050 $442,216
======== ========
</TABLE>

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

F-29
<PAGE>
PREMIER FINANCIAL SERVICES, INC.
FIRST INSTITUTIONAL MARKETING, INC.
ALL THINGS FINANCIAL, INC.
COMBINED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
--------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable........................................ $ 279,520 $217,646
Bank Overdraft.......................................... 25,007 --
Commissions Payable..................................... 71,037 73,547
Payroll Taxes Payable................................... 6,135 7,561
Other Accrued Liabilities............................... 13,166 2,738
Current Portion of Capital Leases....................... 13,242 1,925
Note Payable............................................ 15,815 15,815
--------- --------
Total Current Liabilities........................... 423,922 319,232
LONG-TERM LEASE OBLIGATION-NET.............................. 68,933 --
STOCKHOLDERS' EQUITY:
Premier Financial Services, Inc. -Common stock
authorized 100,000 shares of $1 par value, 930 shares
issued................................................ 930 930
First Institutional Marketing, Inc.--Common stock
authorized 10,000 shares of $1 par value, 930 shares
issued 930 930
All Things Financial, Inc.,--Common stock authorized
10,000 shares of $1 par value, 930 shares issued...... 895 895
Paid in Capital--Premier Financial Services, Inc............ 100 100
Retained earnings........................................... (139,660) 120,129
--------- --------
Total stockholders' equity.......................... (136,805) 122,984
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................ $ 356,050 $442,216
========= ========
</TABLE>

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

F-30
<PAGE>
PREMIER FINANCIAL SERVICES, INC.
FIRST INSTITUTIONAL MARKETING, INC.
ALL THINGS FINANCIAL, INC.
COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDING DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
REVENUE..................................................... $3,944,618 $4,277,324
COST OF REVENUES............................................ 3,155,312 3,211,206
---------- ----------
GROSS PROFIT................................................ 789,306 1,066,118
OPERATING EXPENSES.......................................... 883,180 986,771
---------- ----------
NET OPERATING INCOME........................................ (93,874) 79,347
OTHER INCOME (EXPENSE)
Interest Income......................................... 3,854 2,495
Interest Expense........................................ (2,788) (815)
---------- ----------
Total Other Income.................................. 1,066 1,680
---------- ----------
COMBINED NET INCOME......................................... (92,808) 81,027
Retained Earnings--beginning of year.................... 120,129 151,298
Stockholder Distributions............................... (166,981) (112,196)
---------- ----------
RETAINED EARNINGS--END OF YEAR.............................. $ (139,660) $ 120,129
========== ==========
</TABLE>

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

F-31
<PAGE>
PREMIER FINANCIAL SERVICES, INC.
FIRST INSTITUTIONAL MARKETING, INC.
ALL THINGS FINANCIAL, INC.
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDING DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)........................................... $(92,808) $ 81,027
Adjustments to Reconcile Combined Net Income to Net Cash
Provided by Operating Activities: Depreciation........ 39,761 23,895
Decrease (Increase) In:
Accounts Receivable................................... 101,292 231,537
Employee Advances..................................... -- 16,433
Due from Affiliate.................................... -- 2,437
(Decrease) Increase In:
Accounts Payable...................................... 59,365 (111,578)
Bank Overdraft........................................ 25,007 --
Commission Payable.................................... -- (52,709)
Payroll Taxes Payable................................. 9,002 2,824
Other Accrued Liabilities............................. -- (15,340)
-------- --------
Net cash provided by operating activities............... 141,619 178,526
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in CD.......................................... (2,579)
Purchase of Equipment................................... (94,022) (10,176)
-------- --------
Net Cash (used) in Investing Activities............... (96,601) (10,176)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to Shareholders........................... (163,733) --
Proceeds from New Notes and Leases...................... 80,250 15,000
Repayments of Capital Lease Obligations................. (23,521)
-------- --------
Net Cash (used) in Financing Activities............... (83,483) (8,521)
-------- --------
NET INCREASE IN CASH........................................ (38,465) 159,829
Cash Balance--beginning of year......................... 55,912 (103,917)
-------- --------
CASH BALANCE--END OF YEAR................................... $ 17,447 $ 55,912
======== ========
</TABLE>

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

F-32
<PAGE>
PREMIER FINANCIAL SERVICES, INC.
FIRST INSTITUTIONAL MARKETING, INC.
ALL THINGS FINANCIAL, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 1998 AND 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business--Premier Financial Services, Inc., First
Institutional Marketing, Inc., All Things Financial, Inc., (the Companies) began
operations in 1989. The Companies are marketing organizations dedicated to
providing fixed and variable annuities, insurance products and full service
brokerage to banks, savings and loan and credit unions. Associated brokerage
services are provided by FIMI Securities, Inc., an uncombined company related
through common ownership. First Institutional Marketing, Inc., (FIMI), Premier
Financial Services, Inc., (PFS), and All Things Financial, Inc., (ATF) operated
exclusively in the United States.

Principles of Combination--The combined financial statements include the
combined accounts of the Companies, which are related through common ownership.
All material intercompany transactions have been eliminated.

Cash and Cash Equivalents--The Companies define cash equivalents as
short-term, highly liquid investments that are readily convertible to cash with
a maturity of less than three months.

Property and Equipment--Property and equipment are stated at cost less
accumulated depreciation. Depreciation expense is provided using accelerated and
straight-line methods for financial reporting purposes. Major classifications
and estimated useful lives are as follows:

<TABLE>
<S> <C>
Computer equipment.......................................... 5-7 years
Office equipment and fixtures............................... 7 years
Automobiles................................................. 5 years
</TABLE>

Cost of assets includes capital expenditures, which improve the efficiency
of the assets or lengthen their useful lives. Normal or recurring expenditures
for repair and maintenance and capital expenditures of insignificant amounts are
expensed, when incurred. Cost and related accumulated depreciation of assets
sold or retired are eliminated from the accounts, and gains or losses on
disposal are reflected in income. Depreciation expense totaled $39,761 and
$23,895 in 1998 and 1997, respectively, and includes amortization of capital
leases.

Advertising costs--Advertising costs are charged to operations when the
advertising first takes place. No direct-response advertising is used by the
Companies. Total advertising expense for the years ending December 31, 1998 and
1997 was $43,038 and $59,468, respectively.

Use of estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

2. LEASES

Operating lease--The Companies currently lease office space in a Houston,
Texas facility under a five year operating lease. The lease continues through
July 14, 2002, and provides for minimum monthly rental

F-33
<PAGE>
PREMIER FINANCIAL SERVICES, INC.
FIRST INSTITUTIONAL MARKETING, INC.
ALL THINGS FINANCIAL, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 1998 AND 1997

2. LEASES (CONTINUED)

payments of $2,998, plus an annual increase based on the increase in building
operating costs. Rental expense for the year ending December 31, 1998 and 1997
was $85,825 and $83,792.

Capital leases--The Companies lease computer equipment under capital leases
expiring 1998 through 2004. At December 31, 1998 and 1997 the lease obligations
were as follows:

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Capital lease for equipment payable to Bevenco, dated June
1995, interest at 10%, payable in 36 monthly installments
of $330................................................... $ -- $1,925
Capital lease for equipment payable to Bevenco, dated May
1998, interest at 15%, payable in 60 monthly installments
of $657................................................... 25,357 --
Capital lease for equipment payable to Bevenco, dated May
1998, interest at 15%, payable in 60 monthly installments
of $1,417................................................. 56,818 --
------- ------
Total Lease Obligation................................ 82,175
Less amount shown as current................................ 13,242 1,925
------- ------
Long-term obligation........................................ $68,933 $ --
======= ======
</TABLE>

Future minimum commitments, by year and in the aggregate related to capital
and non-cancelable operating leases at December 31, 1998, is as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASE LEASE
-------- ---------
<S> <C> <C>
Year ending December 31,
1999..................................................... $13,921 $ 35,976
2000..................................................... 15,433 35,976
2001..................................................... 17,987 35,976
2002..................................................... 20,963 17,988
2003..................................................... 13,871
------- --------
Total minimum lease payments............................. $82,175 $161,892
======= ========
</TABLE>

3. LONG-TERM DEBT

The note payable represents an agreement between First Institutional
Marketing, Inc. and one of its insurance carriers. The unsecured note is dated
April 14, 1997, and is payable in monthly installments of $1,356, beginning May,
1998. As of the date of this report no payments have been made on the note
because of a dispute with the insurance carrier. The note is reflected as a
current liability on the combined balance sheet.

4. INCOME TAXES

The Companies have elected to be taxed under the provisions of Subchapter S
of the Internal Revenue Code. Under those provisions, the Companies do not pay
Federal Corporate income taxes on its

F-34
<PAGE>
PREMIER FINANCIAL SERVICES, INC.
FIRST INSTITUTIONAL MARKETING, INC.
ALL THINGS FINANCIAL, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 1998 AND 1997

4. INCOME TAXES (CONTINUED)

taxable income. Instead, the stockholders are liable for individual federal
income taxes on their respective shares of income.

5. TREASURY STOCK

During the year the Companies canceled all common stock held in treasury,
resulting in a reduction to the capital stock accounts and additional paid in
capital. Shares in treasury consisted of 405 shares of Premium Financial
Services, Inc.; 320 shares of First Institutional Marketing, Inc.; and 255
shares of All Things Financial, Inc.

6. RELATED PARTY TRANSACTIONS

Pursuant to informal agreements, Premier Financial Services, Inc. processes
payroll, contract labor charges, and various other general and administrative
expenses for affiliated companies. Premier Financial Services, Inc, is
reimbursed for this expense on a regular basis. Amounts paid by First
Institutional Marketing and All Things Financial, Inc. have been eliminated in
the combination. Additional reimbursements of $607,000 and $922,879 for the
years ending December 31, 1998 and 1997, are recorded in revenues.

7 EMPLOYEE BENEFITS

The Companies maintain a 401(k)-retirement plan that covers all eligible
employees. This defined contribution plan provides matching Company
contributions equal to 50% of the employee contribution to a maximum Company
contribution of 3%. Additionally, the Companies may make discretionary
contributions. Contributions by the Companies totaled $3,005 and $25,143, for
1998 and 1997 and are included in employee benefits.

8. NON-CASH TRANSACTIONS

During 1997, the Companies reclassified various shareholder loans and
advances to stockholder distributions. These reclassifications totaled $112,196
in 1997.

9. PROPOSED SALE OF THE COMPANY

On June 15, 1998 the shareholders of the Company signed a letter of intent,
along with the shareholders of other affiliated Companies, to exchange all of
the their common stock for common stock in HomeCom Communications, Inc. HomeCom
is a Company whose stock is listed on the NASDAQ. In November 1998 a merger
agreement was executed. On March 1, 1999, HomeCom filed a registration statement
with the Securities and Exchange Commission to cover one-half of the stock to be
issued in the merger. The merger was closed and became effective on March 24,
1999.

F-35
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors
FIMI Securities, Inc.
Houston, Texas

We have audited the accompanying statements of financial condition of FIMI
Securities, Inc. (an S corporation), as of December 31, 1998 and 1997, and the
related statements of income, changes in stockholders' equity, and changes in
financial condition for the period then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of FIMI Securities, Inc., as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the period then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information contained in
Schedules I, II, and III is presented for purposes of additional analysis and is
not a required part of the basic financial statements, but is supplementary
information required by rule 17a-5 of the Securities and Exchange Commission.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

<TABLE>
<S> <C> <C>
/s/ Andrew Shebay & Company, PLLC
</TABLE>

March 2, 1999

F-36
<PAGE>
FIMI SECURITIES, INC.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31, 1998 AND 1997

ASSETS

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Current Assets:
Cash.................................................... $44,339 $29,621
Prepaid expense......................................... --
------- -------
Total current assets.................................. 44,339 29,621
Other Assets:
Organizational Cost..................................... 15,268 15,269
------- -------
$59,607 $44,890
======= =======
Common stock--authorized 10,000 shares
of $1 par value, 1,000 shares issued and outstanding...... $ 1,000 $ 1,000
Contributed capital......................................... 19,000 19,000
Retained earnings........................................... 39,607 24,890
------- -------
Total stockholders' equity............................ $59,607 $44,890
======= =======
</TABLE>

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

F-37
<PAGE>
FIMI SECURITIES, INC.

STATEMENTS OF INCOME

FOR THE YEARS ENDING DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
REVENUE
Commissions............................................. $634,336 $868,823
Interest and other income............................... 95 4,001
-------- --------
TOTAL REVENUE......................................... 634,431 872,824
-------- --------

EXPENSES
Management fee.......................................... 607,000 947,000
Broker fees............................................. 0 1,448
Accounting.............................................. 3,800 3,000
Licenses & permits...................................... 8,115 1,220
Office supplies & expense............................... 248 214
Taxes................................................... 101 331
Professional fees....................................... 450 500
-------- --------

TOTAL EXPENSES........................................ 619,714 953,713
-------- --------
NET INCOME.................................................. $ 14,717 $(80,889)
======== ========
</TABLE>

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

F-38
<PAGE>
FIMI SECURITIES, INC

STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

FOR THE YEARS ENDING DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
-------- ---------- -------- --------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1996........................... $ 1,000 $ 19,000 $105,779 $125,779
Net income (loss)................................ (80,889) (80,889)
-------- -------- -------- --------
BALANCE, December 31, 1997........................... 1,000 19,000 24,890 44,890
Net income (loss)................................ 14,717 14,717
-------- -------- -------- --------
BALANCE, December 31, 1998........................... $ 1,000 $ 19,000 $ 39,607 $ 59,607
======== ======== ======== ========
</TABLE>

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

F-39
<PAGE>
FIMI SECURITIES, INC

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDING DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)....................................... $14,717 $(80,889)
Change in prepaid expenses.............................. -- 3,000
------- --------
Net cash provided (used) by operating activities........ 14,717 (77,889)
------- --------
CASH
Net increase (decrease) in cash......................... 14,717 (77,889)
Balance--beginning of year.............................. 29,622 107,511
------- --------
Balance--end of year.................................... $44,339 $ 29,622
======= ========
</TABLE>

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

F-40
<PAGE>
FIMI SECURITIES, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the business--The Company was formed in 1994 primarily for the
purpose of qualifying and operating as a broker-dealer. The Company is a member
of the National Association of Security Dealers and is registered with the
Securities and Exchange Commission and with various states' securities
commissions. The Company's primary business is in the wholesale brokerage of
variable annuities.

Income taxes--The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Under those provisions, the Company
does not pay federal corporate income taxes on its taxable income. Instead, the
stockholders are liable for individual federal income taxes on their respective
shares of income.

2. NET CAPITAL REQUIREMENTS

Pursuant to the net capital provisions of Rule 15c3-1 of the Securities
Exchange Act of 1934, the Company is required to maintain a minimum net capital,
as defined under such provisions. Net capital and the related net capital ratio
may fluctuate on a daily basis. At December 31, 1997, the Company had net
capital and net capital requirements of approximately $29,621 and $5,000
respectively. At December 31, 1998, the Company had net capital and net capital
requirements of approximately $44,338 and $5,000 respectively. The net capital
rules may effectively restrict the payment of cash dividends.

3. TRANSACTIONS WITH AFFILIATES

The management fee reported on the Statements of Income represents billings
from various affiliated companies for the fair market value of management and
administrative services rendered.

4. SIGNIFICANT CUSTOMER

A significant portion of the commission income is derived from transactions
with one company. Approximately 79% in 1998 and 20% in 1997 of commission income
is attributable to one unrelated Brokerage Company.

5. LITIGATION

During 1998 the Company was named in a lawsuit with certain affiliated
companies arising from a breach of contract dispute. At this time no estimate of
the potential outcome can be made by the Company's legal counsel. The Company
intends to vigorously defend its position.

6. PROPOSED SALE OF THE COMPANY

On June 15, 1998 the shareholders of the Company signed a letter of intent,
along with the shareholders of other affiliated Companies, to exchange all of
the their common stock for common stock in HomeCom Communications, Inc. HomeCom
is a Company whose stock is listed on the NASDAQ. In November 1998 a merger
agreement was executed. In March 1999, HomeCom filed a registration statement
with the Securities and Exchange Commission to cover the stock to be issued in
the merger. The merger is expected to be closed in early 1999.

F-41
<PAGE>
FIMI SECURITIES, INC.

COMPUTATION OF NET CAPITAL UNDER RULE 15C3-1
OF THE SECURITIES AND EXCHANGE COMMISSION

FOR THE YEARS ENDING DECEMBER 31, 1998 AND 1997

SCHEDULE I

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Net capital:
Stockholders' Equity...................................... $59,607 $44,890
Less non-allowable assets:................................ 15,268 15,269
------- -------
Net capital before haircuts on securities position...... 44,339 29,621
------- -------
Haircuts on securities:..................................... -0- -0-
------- -------
Net capital............................................. $44,339 $29,621
======= =======
Net capital requirement..................................... $ 5,000 $ 5,000
Net capital in excess of required amount.................... 39,339 24,621
------- -------
Net capital............................................. $44,339 $29,621
======= =======
Aggregate indebtedness...................................... -0- -0-
======= =======
Ratio of aggregate indebtedness to net capital.............. 0 to 1 0 to 1
======= =======
</TABLE>

Note--This computation does not differ from the computation of net capital
under Rule 15c3-1 as of December 31, 1998 filed by FIMI Securities, Inc. with
the National Association of Securities Dealers on part II of Form X-17A-5.

F-42
<PAGE>
FIMI SECURITIES, INC.

COMPUTATION FOR DETERMINATION OF
RESERVE REQUIREMENT UNDER RULE 15C3-3
OF THE SECURITIES AND EXCHANGE COMMISSION

AS OF DECEMBER 31, 1998 AND 1997

SCHEDULE II

The Company is in compliance with the exemptive provisions of SEC Rule
15c3-3(k)(2)(i) in that it carried no margin accounts, handled no customers'
funds or securities, and held no funds or securities for or owed no money or
securities to its customers.

F-43
<PAGE>
FIMI SECURITIES, INC.

COMPUTATION FOR DETERMINATION OF
RESERVE REQUIREMENT UNDER RULE 15C3-3
OF THE SECURITIES AND EXCHANGE COMMISSION

AS OF DECEMBER 31, 1998 AND 1997

SCHEDULE III

NONE

F-44
<PAGE>

FIMI SECURITIES, INC.
PREMIER FINANCIAL SERVICES, INC.
FIRST INSTITUTIONAL MARKETING, INC.
ALL THINGS FINANCIAL, INC.
COMBINED STATEMENT OF INCOME (LOSS) AND RETAINED EARNINGS
FOR THE PERIOD FROM JANUARY 1, 1999 THROUGH MARCH 23, 1999 (DATE OF ACQUISITION)
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
JANUARY 1,
1999 NINE MONTHS
THROUGH ENDED
MARCH 23, 1999 SEPTEMBER 30, 1998
-------------- ------------------
<S> <C> <C>
REVENUE..................................................... $ 682,933 $3,038,606
COST OF REVENUES............................................ 498,350 1,388,693
--------- ----------
GROSS PROFIT................................................ 184,583 1,649,913
OPERATING EXPENSES.......................................... 332,329 1,705,065
--------- ----------
NET OPERATING INCOME (LOSS)................................. (147,746) (55,152)
OTHER INCOME (EXPENSE)
Interest Income......................................... -- --
Interest Expense........................................ -- 348
--------- ----------
Total Other Income.................................. -- --
COMBINED NET INCOME (LOSS).................................. (147,746) (55,500)
(Accumulated Deficit) Retained Earnings--beginning of
year.................................................. (100,053) 165,019
Stockholder Distributions............................... -- --
--------- ----------
(ACCUMULATED DEFICIT) RETAINED EARNINGS--END OF PERIOD...... $(247,799) $ 109,519
========= ==========
</TABLE>

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

F-45
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors
Ganymede Corporation
Chicago, Illinois

We have audited the accompanying balance sheet of Ganymede Corporation as of
December 31, 1998, and the related statements of income and deficit and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ganymede Corporation as of
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

Ostrow Reisin Berk & Abrams, Ltd

February 8, 1999

F-46
<PAGE>
GANYMEDE CORPORATION

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
1998
------------
<S> <C>
ASSETS (NOTE 4)
Current assets:
Cash and equivalents (Notes 1 and 2)...................... $ 46,108
Accounts receivable, trade, less allowance for doubtful
accounts of $2,500...................................... 111,123
---------
Total current assets.................................... 157,231
---------
Property and equipment:
Computer equipment and furniture.......................... 72,885
Less accumulated depreciation............................. 34,595
---------
Property and equipment, net............................. 38,290
---------
Other asset:
Security deposits......................................... 1,820
---------
Total assets................................................ $ 197,341
=========
LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIENCY
Current liabilities:
Accounts payable, trade................................... $ 55,509
Accrued compensation...................................... 142,845
Note payable, bank (Note 2)............................... 43,554
Notes payable, stockholders (Note 3)...................... 134,300
---------
Total current liabilities............................... 376,208
---------
Shareholders' equity deficiency:
Common stock, no par value; authorized 10,000,000 shares,
issued and outstanding 980,000 shares (Notes 4 and 8)... 200,000
Additional paid-in capital................................ 4,175
Deficit................................................... (383,042)
---------
Total shareholders' equity deficiency................... (178,867)
---------
Total liabilities and shareholders' equity deficiency....... $ 197,341
=========
</TABLE>

See notes to financial statements.

F-47
<PAGE>

GANYMEDE CORPORATION

STATEMENT OF LOSS AND DEFICIT

<TABLE>
<CAPTION>
JANUARY 1, 1999 NINE MONTHS
YEAR ENDED THROUGH ENDED
DECEMBER 31, 1998 APRIL 23, 1999 SEPTEMBER 30, 1998
----------------- --------------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Service revenue............................... $ 665,359 $ 275,619 $ 524,785
Operating expenses............................ 716,458 341,508 542,255
--------- --------- ---------
Loss from operations.......................... (51,099) (65,889) (17,470)
--------- --------- ---------
Other income (expense):
Interest expense............................ (20,915) (7,729) --
Interest income............................. 2,765 -- (1,423)
--------- --------- ---------
Total other expense, net.................. (18,150) (7,729) --
--------- --------- ---------
Net loss...................................... (69,249) (73,618) (16,047)
Deficit, beginning of year.................... (313,793) (383,042) (313,793)
--------- --------- ---------
Deficit, end of year.......................... $(383,042) $(456,660) $(329,840)
========= ========= =========
</TABLE>

See notes to financial statements.

F-48
<PAGE>
GANYMEDE CORPORATION

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Operating activities:
Net loss.................................................. $(69,249)
Adjustments to reconcile above to cash used in operating
activities:
Depreciation............................................ 15,963
(Increase) decrease in operating assets:
Accounts receivable, trade............................ (43,380)
Security deposits..................................... 1,539
Increase (decrease) in operating liabilities:
Accounts payable, trade............................... 23,869
Accrued expenses...................................... 9,342
--------
Cash used in operating activities................... (61,916)
--------
Investing activities:
Purchase of property and equipment........................ (10,309)
--------
Cash used in investing activities................... (10,309)
--------
Financing activities:
Proceeds from notes payable, stockholders................. 66,280
Proceeds from notes payable, bank, net.................... 2,239
--------
Cash provided by financing activities............... 68,519
--------
Decrease in cash and equivalents............................ (3,706)
Cash and equivalents:
Beginning of year........................................... 49,814
--------
End of year................................................. $ 46,108
========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest.................... $ 20,915
========
</TABLE>

See notes to financial statements.

F-49
<PAGE>
GANYMEDE CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS DESCRIPTION:

The Company is engaged in the development and maintenance of Internet web
sites and related consulting services. The Company also provides for host site
development and Internet connection. The Company's customers are in the greater
Chicagoland area.

CASH AND EQUIVALENTS:

Cash and equivalents consist of checking accounts and certificates of
deposit with maturities of three months or less.

PROPERTY, PLANT, EQUIPMENT AND RELATED DEPRECIATION AND AMORTIZATION:

Property and equipment are stated at cost. The Company provides for
depreciation and amortization of the various classes of assets over their
estimated useful lives, using primarily accelerated methods.

REVENUE RECOGNITION:

The Company recognizes revenue at the time services are performed.

ADVERTISING AND PROMOTION COSTS:

Advertising and promotion costs are charged to operations during the period
in which they are incurred. For the year ended December 31, 1998, such costs
were nominal.

USE OF ESTIMATES:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.

2. NOTE PAYABLE, BANK

A bank line of credit agreement provides for a $54,107 revolving line of
credit, with interest due monthly at 8.44% per annum. The note is secured by a
certificate of deposit at the bank in the amount of $54,107. The line of credit
matures March 1, 1999.

3. NOTES PAYABLE, STOCKHOLDERS

At December 31, 1998, the Company has unsecured notes payable to two
stockholders. The notes are due on demand and bear interest at the rate of 15%.

4. COMMITMENTS AND CONTINGENCIES

In October 1998, the Company entered into an Accounts Receivable Purchase
Agreement with Silicon Valley Financial Services. The agreement allows for the
Company to sell its receivables. No receivables have been sold as of December
31, 1998. In conjunction with the agreement, the Company has pledged its assets
and issued stock warrants for 3,750 shares of common stock to Silicon Valley
Financial Services. The warrants have an initial exercise price of $2.00 per
share, were all outstanding and exercisable at December 31, 1998 and expire in
November 2003.

F-50
<PAGE>
GANYMEDE CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES

The Company elected S Corporation status for income tax purposes. Under this
election, the shareholders report corporate income, if any, on their personal
income tax return. Accordingly, at December 31, 1998, no provision was made for
federal or state income taxes.

6. EMPLOYEES' SALARY DEFERRAL PLAN

The Company maintains an employee salary deferral plan. Participation is
voluntary, and all employees who meet prescribed service requirements are
eligible to participate up to 15% of their salaries. The Company did not
contribute to the plan during the year ended December 31, 1998.

7. OPERATING LEASE OBLIGATIONS

The Company leases its premises in Chicago for monthly rent of $2,970 plus
maintenance costs. The lease expires on July 31, 2000. Total rental expense for
all operating leases covering real estate was $34,660.

The Company leases computer equipment from a company controlled by a
stockholder on a month-to-month basis. Total rent paid to the related party was
$9,897 for the year ending December 31, 1998. The Company also leases computer
equipment under various terms from unrelated parties. Total rent paid to
unrelated parties was $9,223 for the year ended December 31, 1998. The leases
are secured by the leased equipment.

Future minimum rental payments under noncancelable operating leases are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
- ------------------------ --------
<S> <C>
1999........................................................ $46,078
2000........................................................ 27,147
-------
Total....................................................... $73,225
=======
</TABLE>

8. STOCK OPTIONS

The Company has a stock option plan which was adopted in 1997. Under the
plan, the Company may grant options to its employees for up to 50,000 shares of
common stock. The original exercise price for options granted under the plan was
$2.00, and the options are exercisable immediately without restrictions. The
options expire 10 years after the date of grant for shareholders owning less
then 10% and expire 5 years after the date of grant for shareholder owning 10%
or more. The fair value of the options is determined by the board of directors.
In October 1998, the board of directors granted 1,000 options to two employees.

The Company applies Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation," which establishes financial
accounting and reporting standards for stock-based employee compensation plans.
The Company elected to continue to account for employee stock-based compensation
as prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees."
and to provide pro forma disclosures in the Notes to Financial Statements of the
effects of SFAS No. 123 on net income. There was no material effect on the
results of operations as a result of adopting SFAS No. 123. Compensation costs
are recognized as the difference between the exercise price of each option and
the market price of the Company's stock, and no compensation costs were charged
to expense in 1998.

F-51
<PAGE>
GANYMEDE CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. STOCK OPTIONS (CONTINUED)

The following table summarizes information about stock options outstanding
and exercisable under the plan at December 31, 1998:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
SHARES ------------------------------ SHARES
OUTSTANDING OPTION EXERCISED, OUTSTANDING REMAINING
DECEMBER 31, OPTIONS FORFEITED DECEMBER 31, CONTRACTUAL EXERCISE
1997 GRANTED OR EXPIRED 1998 LIFE PRICE
- --------------------- ---------- ----------------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
21,500 21,500 4 $2.00
10,500 10,500 9 $2.00
1,000 1,000 10 $2.00
------ ------ ------
32,000 1,000 33,000
====== ====== ======
</TABLE>

The Company granted options for an additional 10,000 shares in January 1999.
The options have an exercise price of $2.00 per share and expire in 2009.

9. SUBSEQUENT EVENT

As shown in the accompanying financial statements, the Company incurred a
net loss of $69,249 during the year ended December 31, 1998 and, as of that
date, the Company's current liabilities exceeded its current assets by $218,977
and its total liabilities exceeded its total assets by $178,867. Those factors
create an uncertainty about the Company's ability to continue as a going
concern. Management of the Company has received a letter of intent to purchase
all of the outstanding stock of the Company which, if the transaction is carried
out, will provide the Company additional financing. The purchase price is based
on a multiple of one and a half times total revenues, and the transaction is
expected to close in April, 1999. The financial statements do not include any
adjustments that might be necessary if the Company does not consummate the
transaction and become unable to continue as a going concern.

10. RELATED PARTY TRANSACTION, ACCRUED SHAREHOLDERS' COMPENSATION

As of December 31, 1998, the Company has accrued $125,000 to certain
shareholders as compensation for past services rendered. Total compensation
expense to shareholder-officers was $218,000 for the year ended December 31,
1998.

The following unaudited pro forma financial statements give effect to the
acquisition by the Company of Ganymede in a transaction accounted for as a
purchase. The unaudited pro forma balance sheet is based on the individual
balance sheets of the Company appearing in the Company's Annual Report on Form
10-K, and of Ganymede, appearing elsewhere in this Current Report on Form 8-K,
and has been prepared to reflect the acquisition by the Company of Ganymede as
of December 31, 1998. The unaudited pro forma statements of income are based on
the individual statements of income of the Company appearing in the Company's
Annual Report on Form 10-K and of Ganymede, appearing elsewhere in this Current
Report on Form 8-K, and combines the results of operations of the Company and of
Ganymede (acquired by the Company as of April 23, 1999) for the year ended
December 31, 1998 and for the three months ended March 31, 1999, as if the
acquisition occurred on January 1, 1998. These unaudited pro forma financial
statements should be read in conjunction with the historical financial
statements and notes thereto of the Company appearing in the Company's Annual
Report on Form 10-K, and of Ganymede, appearing elsewhere in this Current Report
on Form 8-K.

F-52
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED BY
HOMECOM. THIS PROSPECTUS DOES NOT CONSTITUTE ANY OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF HOMECOM SINCE SUCH DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 4
Issuance of Shares to Selling
Shareholders......................... 13
Use of Proceeds........................ 14
Price Range of Common Stock............ 15
Dividend Policy........................ 16
Selected Financial Data................ 16
Pro Forma Financial Information........ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 21
Business............................... 28
Management............................. 34
Certain Transactions................... 41
Recent Transactions.................... 42
Principal and Selling Stockholders..... 43
Description of Capital Stock........... 46
Warrants............................... 57
Plan of Distribution................... 59
Legal Matters.......................... 60
Experts................................ 60
Available Information.................. 60
Index to Financial Statements.......... F-1
</TABLE>

HOMECOM
COMMUNICATIONS, INC.

1,777,812 SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF SHARES
OF HOMECOM'S SERIES C CONVERTIBLE
PREFERRED STOCK, SERIES D CONVERTIBLE
PREFERRED STOCK AND
UPON THE EXERCISE OF WARRANTS

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

PROSPECTUS

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

December 23, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 1,919.15
Nasdaq SmallCap Market additional listing fee............... 7,500.00
Accountants' fees and expenses.............................. 15,000.00
Legal fees and expenses..................................... 45,000.00
Blue Sky fees and expenses.................................. 5,000.00
Transfer Agent's fees and expenses.......................... 500.00
Printing and engraving expenses............................. 2,500.00
Miscellaneous............................................... 2,580.85
----------
Total expenses.............................................. $80,000.00
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Delaware General Corporation Law (the "DGCL") permits a corporation to
eliminate or limit the personal liability of a director to the corporation or
its stockholders for monetary damages for breach of duty of care or other duty
as a director, provided that no provision shall eliminate or limit the liability
of a director: (A) for an appropriation, in violation of his duties, of any
business opportunity of the corporation; (B) for acts or omissions which involve
intentional misconduct or a knowing violation of law; (C) for unlawful corporate
distributions; or (D) for any transaction from which the director received an
improper personal benefit. This provision pertains only to breaches of duty by
directors in their capacity as directors (and not in any other corporate
capacity, such as officers) and limits liability only for breaches of fiduciary
duties under Delaware corporate law (and not for violation of other laws, such
as the federal securities laws). HomeCom's Restated Certificate of Incorporation
(the "Restated Certificate") exonerates HomeCom's directors from monetary
liability to the extent permitted by this statutory provision.

HomeCom's Restated Certificate of Incorporation and Restated Bylaws (the
"Restated Bylaws") also provide that HomeCom shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including any action by or in the right of HomeCom), by reason of
the fact that such person is or was a director or officer of HomeCom, or is or
was serving at the request of HomeCom as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including reasonable attorneys' fees), judgments, fines, and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, if such person acted in good faith and in
a manner such person reasonably believed to be in or not opposed to the best
interests of HomeCom (and with respect to any criminal action or proceeding, if
such person had no reasonable cause to believe such person's conduct was
unlawful), to the maximum extent permitted by, and in the manner provided by,
the DGCL.

Notwithstanding any provisions of HomeCom's Restated Certificate of
Incorporation and Restated Bylaws to the contrary, the DGCL provides that
HomeCom shall not indemnify a director or officer for any liability incurred in
a proceeding in which the director is adjudged liable to HomeCom or is subjected
to injunctive relief in favor of HomeCom: (1) for any appropriation, in
violation of his duties, of any business opportunity of HomeCom; (2) for acts or
omissions which involve intentional misconduct or a knowing violation of law;
(3) for unlawful corporate distributions; or (4) for any transaction from which
the director or officer received an improper personal benefit.

II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following list describes sales by the Registrant of securities in the
past three years which were not registered under the Securities Act.

During the period from its formation in December 1994 through August 1996,
the Registrant has issued the securities set forth below which were not
registered under the Securities Act of 1933, as amended (the "Securities Act").
All share amounts have been adjusted to reflect the Registrant's September 1996
recapitalization and 93.07 for 1 stock split.

1. In December 1994, in connection with the incorporation of the
Registrant, the Registrant issued and sold to its sole stockholder 93,070
shares of Common Stock for $27,706.

2. In February 1996, in connection with the recapitalization of the
Registrant, the Registrant issued and sold 707,332 shares of Common Stock to
its President, Chief Executive Officer and sole stockholder for a total
purchase price of $760.

3. In February 1996, the Registrant issued and sold 93,070 shares of
Common Stock to its Senior Vice President for a total purchase price of $10
upon the exercise of stock options granted in connection with the founding
of the Registrant.

4. Pursuant to a privately negotiated transaction with five investors,
the Registrant issued and sold to four of the investors in February 1996 an
aggregate of 893,472 shares of Common Stock for a total purchase price of
$96, and issued and sold to three of the investors in February, March and
May 1996 promissory notes in the aggregate principal amount of $499,904. In
May 1997, pursuant to the terms of such promissory notes, the Registrant
issued a total of 33,333 shares of Common Stock to the holders of such notes
in partial repayment of the principal amounts owed thereunder.

5. In August 1996, the Registrant issued an aggregate of 37,228 shares
of Common Stock to four members of its former Board of Advisors upon
exercise of warrants, for a total purchase price of $4.00.

6. In August 1996, the Registrant issued and sold an aggregate of
102,855 shares of Common Stock to six of its employees for a total purchase
price of $468,004.22, paid through delivery of 8% promissory notes, payable
25% per year, secured by the shares purchased thereby.

7. In August 1996, in connection with the Registrant's acquisition of
all of the stock of HomeCom internet Security Services, Inc., a Delaware
corporation ("HISS"), the Registrant and the stockholders of HISS entered
into a Stock Purchase Agreement which provides that the Registrant may, at
its option, issue shares of its Common Stock as all or part of the earnout
payments to be paid to such former stockholders pursuant to the Stock
Purchase Agreement.

8. In September 1996, the Registrant granted stock options (i) to three
directors under its Non-Employee Directors Stock Option Plan to purchase an
aggregate of up to 30,000 shares of Common Stock and (ii) to 24 employees
under its Stock Option Plan to purchase an aggregate of up to 79,167 shares
of Common Stock.

9. In September 1997, the Registrant issued and sold 5% convertible
debentures (the "Debentures") to four private investors for an aggregate
purchase price of $1,700,000. The Debentures were issued pursuant to the
terms of a 5% Convertible Debenture Purchase Agreement dated effective as of
September 19, 1997 (the "Debenture Agreement"). Outstanding principal and
interest on the Debentures is payable on September 22, 2000. The Debentures
are convertible at the option of the holders. As of May 15, 1998, all of the
5% Convertible Debentures had been converted into an aggregate 961,460
shares of HomeCom's Common Stock. In connection with the issuance of the
Debentures, the Registrant granted to an entity designated by the investors
aggregate warrants to acquire 400,000 shares of Common Stock, with warrants
to acquire 200,000 of such shares exercisable

II-2
<PAGE>
at a price of $4.00 per share and warrants to acquire the remaining 200,000
of such shares exercisable at a price of $6.00 per share. If not earlier
exercised, these warrants expire on October 27, 2000.

10. In December 1997, the Registrant issued 20,000 shares of its
Series A Convertible preferred stock (the "Series A preferred stock") to
private investors (the "Series A Preferred Holders") for an aggregate
purchase price of $2,000,000. Net proceeds to the Registrant were
approximately $1.8 million. As of August 15, 1998, all of the Series A
preferred stock had been converted into an aggregate 711,456 shares of
HomeCom's Common Stock.

In connection with the issuance and sale of the Series A preferred
stock, the Registrant granted warrants to the Series A Preferred Holders to
acquire an aggregate of 75,000 shares of Common Stock, with warrants to
purchase 62,500 shares of Common Stock having an exercise price per share
equal to $14.50625 and warrants to purchase 12,500 shares of Common Stock
having an exercise price per share equal to $15.825. The Registrant also
granted 50,000 warrants to a placement agent, the Malachi Group, at an
exercise price of $15.825 per share. These warrants to purchase an aggregate
125,000 shares of Common Stock (the "Series A preferred stock Warrants")
will expire on December 31, 2000 and are eligible to be exercised at any
time on or after June 23, 1998.

11. On April 16, 1998, HomeCom acquired all of the outstanding capital
stock of The Insurance Resource Center, Inc. ("IRC") for 351,391 shares of
HomeCom's Common Stock. Pursuant to the Agreement and Plan of
Reorganization, HomeCom filed a registration statement for 175,696 of such
shares on June 12, 1998. IRC shall remain a wholly-owned subsidiary of
HomeCom.

12. In March 1999, the Registrant issued 125 shares of its Series B
convertible preferred stock (the "Series B Preferred Stock") to private
investors (the "Series B Preferred Holders") for an aggregate purchase price
of $2,500,000. Net proceeds to the Registrant were approximately
$2.3 million. In connection with the issuance and sale of the Series B
Preferred Stock, the Registrant granted warrants to the Series B Preferred
Holders to acquire an aggregate of 225,000 shares of Common Stock having an
exercise price per share equal to $5.70. The Registrant also granted 25,000
warrants to a placement agent, J.P. Turner & Company, L.L.C., at an exercise
price of $5.70 per share. These warrants to purchase an aggregate of 250,000
shares of Common Stock will expire on March 24, 2004.

13. In March 1999, HomeCom acquired all of the outstanding shares of the
First Institutional Marketing companies for 1,252,174 shares of common
stock. In connection with that acquisition, HomeCom filed a registration
statement covering the resale of one-half of those shares.

14. In April 1999, HomeCom acquired all the outstanding shares of
Ganymede Corporation for total consideration of 185,342 shares of common
stock and $100,000 cash. In connection with that acquisition, HomeCom filed
a registration statement covering the resale of one-half of those shares.

15. In July 1999, the Registrant issued 175 shares of its series C
convertible preferred stock (the "Series C Preferred Stock") to a private
investor for an aggregate purchase price of $3,500,000. Net proceeds to the
Registrant were approximately $2.3 million. In connection with the issuance
and sale of the Series C Preferred Stock, the Registrant issued warrants to
acquire an aggregate of 59,574 shares of Common Stock having an exercise
price per share equal to $7.34. These warrants will expire on July 27, 2004.
The Registrant also issued warrants to acquire an aggregate of 77,000 shares
of Common Stock having an exercise price per share equal to $5.813. These
warrants will expire on July 30, 2004.

16. In September 1999, the Registrant issued 75 shares of its series D
convertible preferred stock (the "Series D Preferred Stock") to a private
investor for an aggregate purchase price of $1,500,000. Net proceeds to the
Registrant were approximately $1.4 million. In connection with the issuance
and sale of the Series D Preferred Stock, the Registrant issued warrants to
acquire an aggregate of 25,000 shares of Common Stock having an exercise
price per share equal to $7.34. These warrants will expire on September 27,
2004.

II-3
<PAGE>
The sales and issuance of shares listed above were exempt from registration
under the Securities Act by virtue of Sections 4(2) and 3(b) thereof and in
reliance on Rule 701 and Regulation D promulgated thereunder. The recipients of
the above-described securities represented their intention to acquire the
securities for investment only and not with a view to distribution thereof.
Appropriate restrictive legends were affixed to stock certificates and warrants
issued in such transactions.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C> <C>

1.1 -- Form of Underwriting Agreement.*

3.1 -- Restated Certificate of Incorporation of the Registrant.*

3.2 -- Restated Bylaws of the Registrant.*

3.3 -- Certificate of Designation of Series A Convertible preferred
stock.***

3.4 -- Certificate of Designation of Series B Convertible Preferred
Stock.**

3.5 -- Certificate of Designation of Series C Convertible Preferred
Stock (previously filed).

3.6 -- Certificate of Designation of Series D Convertible Preferred
Stock (previously filed).

4.1 -- See Exhibits 3.1 and 3.2 for provisions of the Restated
Certificate of Incorporation and Bylaws of the Registrant
defining rights of the holders of Common Stock of the
Registrant.*

4.2 -- Specimen Stock Certificate.*

4.3 -- Form of Warrant.*

5.1 -- Opinion of Sims Moss Kline & Davis LLP, Counsel to the
Registrant, as to the legality of the shares being
registered (previously filed).

10.1 -- HomeCom Communications, Inc. Stock Option Plan and form of
Stock Option Certificate.*

10.2 -- HomeCom Communications, Inc. Non-Employee Directors Stock
Option Plan and form of Stock Option Certificate.*

10.3 -- Employment Agreement between the Registrant and Harvey W.
Sax, dated January 1, 1996.*

10.4 -- Form of Employment Agreement entered into between the
Registrant and each of its executive officers except Harvey
W. Sax.*

10.5 -- Lease Agreement between Property Georgia OBJLW One
Corporation and the Registrant dated January 22, 1996.*

10.6 -- Lease and Services Agreement between Alliance Greensboro,
L.P. and the Registrant, dated June 25, 1996.*

10.7 -- Business Alliance Program Agreement between Oracle
Corporation and the Registrant, dated May 30, 1996, together
with the Sublicense Addendum, Application Specific
Sublicense Addendum, Full Use and Deployment Sublicense
Addendum and License Transfer Policy, each dated May 30,
1996.*

10.8 -- Network Enrollment Agreement between Apple Computer, Inc.
and the Registrant, effective May 1996.*

10.9 -- Member Level Agreement between Microsoft Corporation and the
Registrant, effective May 1996.*
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C> <C>
10.10 Master Agreement for internet Services and Products between
BBN Planet Corporation and the Registrant, dated February 1,
1996.*

10.11 -- Authorized Business Partners Agreement between BBN Planet
Corporation and the Registrant, dated May 14, 1996.*

10.12 -- Stock Purchase Agreement between the Registrant and the
stockholders of HomeCom internet Security Services, Inc.,
dated August 31, 1996.*

10.13 -- Form of Promissory Notes issued by the Registrant and held
by Mark Germain.*

10.14 -- Form of Promissory Notes issued by the Registrant and held
by Esther Blech and the Edward A. Blech Trust.*

10.15 -- Marketing Associate Solution Alliance Agreement dated
February 6, 1997 between the Registrant and Unisys
Corporation.*

10.16 -- Marketing Associate Agreement dated February 6, 1997 between
the Registrant and Unisys Corporation.**

10.17 -- Letter agreement dated January 16, 1997 between the
Registrant, David A. Blech, Esther Blech and the Edward A.
Blech Trust.*

10.18 -- HomeCom Communications, Inc. Employee Stock Purchase Plan.*

10.19 -- 5% Convertible Debenture Purchase Agreement dated effective
September 19, 1997 between the Registrant, Euro Factors
International, Inc., Beauchamp Finance, FTS Worldwide
Corporation and COLBO.***

10.20 -- Form of 5% Convertible Debenture issued by the Registrant
and held by Euro Factors International, Inc., Beauchamp
Finance, FTS Worldwide Corporation and COLBO.***

10.21 -- Registration Rights Agreement dated effective September 19,
1997 between the Registrant, Euro Factors International,
Inc., Beauchamp Finance, FTS Worldwide Corporation and
COLBO.***

10.22 -- Letter agreement dated September 23, 1997 between the
Registrant, Euro Factors International, Inc., Beauchamp
Finance, FTS Worldwide Corporation and COLBO.***

10.23 -- Letter agreement dated September 27, 1997 between the
Registrant, Euro Factors International, Inc., Beauchamp
Finance, FTS Worldwide Corporation and COLBO.***

10.24 -- Form of Warrant to purchase 200,000 shares of Common Stock
at an exercise price of $4.00 per share issued by the
Registrant to First Granite Securities, Inc.***

10.25 -- Form of Warrant to purchase 200,000 shares of Common Stock
at an exercise price of $6.00 per share issued by the
Registrant to First Granite Securities, Inc.***

10.26 -- Form of Securities Purchase Agreement between the
Registrant, Sovereign Partners, L.P. and Dominion Capital
Fund, LTD. dated as of December 23, 1997.***

10.27 -- Form of Registration Rights Agreement between the
Registrant, Sovereign Partners, L.P. and Dominion Capital
Fund, LTD. dated as of December 23, 1997.***

10.28 -- Form of Warrant to purchase 18,750 shares of Common Stock
issued by the Registrant to Sovereign Partners, L.P.***

10.29 -- Form of Warrant to purchase 56,250 shares of Common Stock
issued by the Registrant to Dominion Capital Fund, LTD.***

10.30 -- Common Stock Purchase Agreement dated January 23, 1998 by
and among InsureRate, Inc., the Registrant, Jerome R. Corsi
and Hamilton Dorsey Alston HomeCom.***
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C> <C>
10.31 -- Escrow Agreement dated as of January 23, 1998 by and among
InsureRate, Inc., Hamilton Dorsey Alston HomeCom, the
Registrant, Jerome R. Corsi and SunTrust Bank, Atlanta.***

10.32 -- Shareholders Agreement dated January 23, 1998 by and among
Hamilton Dorsey Alston HomeCom, the Registrant and
InsureRate, Inc.***

10.33 -- Web Development and Hosting Services Agreement dated January
23, 1998, by and among InsureRate, Inc. and Hamilton Dorsey
Alston HomeCom.***

10.34 -- Form of Warrant to purchase 25,000 shares of Common Stock
for an aggregate purchase price of $92,500 by the Registrant
to Hamilton Dorsey Alston HomeCom.***

10.35 -- Loan Agreement dated January 23, 1998 by and between
InsureRate, Inc. and the Registrant.***

10.36 -- Form of Master Note issued by the Registrant to InsureRate,
Inc.***

10.37 -- Form of Warrant to purchase 50,000 shares of Common Stock
issued by the Registrant to The Malachi Group, Inc.+

10.38 -- Letter Agreement, dated April 8, 1998 by and among HomeCom,
Eurofactors International Inc., Blauchamp France, FTS
Worldwide Corporation and COLBO.****

10.39 -- Letter Agreement, dated April 8, 1998 by and between First
Granite Securities, Inc. and HomeCom.****

10.40 -- Letter Agreement, dated April 17, 1998 by and among
Sovereign Partners, L.P., Dominion Capital Fund and
HomeCom.****

10.41 -- Agreement and Plan of Reorganization by and among The
Insurance Resource Center, Inc., Tim Strong, James Higham,
Cameron M. Harris & HomeCom and HomeCom, dated as of April
15, 1998.***

10.42 -- Employment Agreement by and between HomeCom and Tim Higham,
dated as of April 16, 1998.***

10.44 -- Asset Purchase Agreement by and between HomeCom and Sage
Networks Acquisition Corp. dated as of June 10, 1998.+

10.45 -- Escrow Agreement by and between HomeCom and Sage Networks
Acquisition Corp. dated as of June 10, 1998.+

10.46 -- Transitional Services Agreement by and between HomeCom and
Sage Networks Acquisition Corp. dated as of June 10, 1998.+

10.47 -- Co-Location Agreement by and between HomeCom and Sage
Networks, Inc. dated as of June 10, 1998.+

10.48 -- Agreement and Plan of Merger by and among HomeCom
Communications, Inc, FIMI Securities Acquisitions Corp.,
Inc., ATF Acquisition Corp., Inc. and Daniel A. Delity,
James Wm. Ellsworth, and David B. Frank dated as of November
6, 1998, together with exhibits.++

10.50 -- Securities Purchase Agreement dated as of March 25, 1999 by
and among HomeCom Communications, Inc. and CPR (USA), Inc.,
Liberty View Funds, L.P., and Liberty View Fund, L.L.C.++

10.51 -- Registration Rights Agreement dated as of March 25, 1999 by
and among HomeCom Communications, Inc. and CPR (USA), Inc.,
Liberty View Funds, L.P., and Liberty View Fund, L.L.C.++
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C> <C>
10.52 -- Transfer Agent Instructions dated as of March 25, 1999.++

10.53 -- Transfer Agent Legal Opinion dated as of March 25, 1999.++

10.54 -- Placement Agency Agreement dated as of March 25, 1999 by and
between HomeCom Communications, Inc. and J.P. Turner &
Company, L.L.C.++

10.55 -- Stock Purchase Agreement by and among HomeCom
Communications, Inc. and Richard L. Chu, Joseph G. Rickard,
John R. Winans, Mario D'Agostino, Karen Moore, and John
Kokinis, dated as of April 23, 1999.+++

10.56 -- Employment Agreement Between Ganymede Corporation and
Richard L. Chu, dated as of April 23, 1999.+++

10.57 -- Employment Agreement between Ganymede Corporation and John
Winans, dated as of April 23, 1999.+++

10.58 -- Employment Agreement between Ganymede Corporation and Joseph
G. Rickard, dated as of April 23, 1999.+++

10.59 -- Escrow Agreement by and among HomeCom Communications, Inc.
and Richard L. Chu, Joseph G. Rickard, John R. Winans, Mario
D'Agostino, Karen Moore, and John Kokinis, dated as of
April 23, 1999.+++

10.60 -- Pledge and Security Agreement by and between HomeCom
Communications, Inc. and Richard L. Chu, Joseph G. Rickard,
John R. Winans, Mario D'Agostino, Karen Moore, and John
Kokinis, dated as of April 23, 1999.+++

10.61 -- Warrant Agreement, dated as of March 25, 1999, by and among
CPR (USA), Inc. and HomeCom Communications, Inc.++++

10.62 -- Warrant Agreement, dated as of March 25, 1999, by and among
Liberty View Fund, L.L.C. and HomeCom Communications,
Inc.++++

10.63 -- Warrant Agreement, dated as of March 25, 1999, by and among
Liberty View, Funds, L.P. and HomeCom Communications,
Inc.++++

10.64 -- Warrant Agreement, dated as of March 25, 1999, by and among
J.P. Turner & Company, L.L.C and HomeCom Communications,
Inc.++++

10.65 -- Securities Purchase Agreement dated as of July 23, 1999 by
and among HomeCom Communications, Inc. and Jackson LLC
(previously filed).

10.66 -- Registration Rights Agreement dated as of July 23, 1999 by
and among HomeCom Communications, Inc. and Jackson LLC
(previously filed).

10.67 -- Transfer Agent Instructions dated as of September 28, 1999
(previously filed).

10.68 -- Transfer Agent Legal Opinion dated as of July 23, 1999
(previously filed).

10.69 -- Placement Agency Agreement dated as of July 23, 1999 by and
between HomeCom Communications, Inc. and Greenfield Capital
Partners (previously filed).

10.70 -- Warrant Agreement, dated as of July 23, 1999, by and between
HomeCom Communications, Inc. and Jackson LLC (previously
filed).

10.71 -- Securities Purchase Agreement dated as of September 27, 1999
by and among HomeCom Communications, Inc. and Jackson LLC
(previously filed).

10.72 -- Registration Rights Agreement dated as of September 27, 1999
by and among HomeCom Communications, Inc. and Jackson LLC
(previously filed).

10.73 -- Transfer Agent Instructions dated as of September 28, 1999
(previously filed).
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C> <C>
10.74 -- Transfer Agent Legal Opinion dated as of September 28, 1999
(previously filed).

10.75 -- Placement Agency Agreement dated as of September 27, 1999 by
and between HomeCom Communications, Inc. and Greenfield
Capital Partners (previously filed).

10.76 -- Warrant Agreement, dated as of September 27, 1999, by and
between HomeCom Communications, Inc. and Jackson LLC
(previously filed).

10.77 -- Asset Purchase Agreement, dated October 1, 1999, by and
between HomeCom Communications, Inc. and Infrastructure
Defense, Inc.+++++

10.78 -- Bill of Sale and Assignment, dated October 1, 1999, by and
between HomeCom Communications, Inc. and Infrastructure
Defense, Inc.+++++

10.79 -- Non-solicitation and Non-compete Agreement, Dated October 1,
1999, by and between HomeCom Communications, Inc. and
Infrastructure Defense, Inc.+++++

10.80 -- Registration Rights Agreement, October 1, 1999, by and
between HomeCom Communications, Inc. and Infrastructure
Defense, Inc.+++++

10.81 -- Form of Opinion of Purchaser's Counsel.+++++

10.82 -- Form of Opinion of Seller's Counsel.+++++

10.83 -- Referral and Service Agreement, dated October 1, 1999, by
and between HomeCom Communications, Inc. and Infrastructure
Defense, Inc.+++++

10.84 -- Value Added Distributor Agreement, dated October 1, 1999 by
and between HomeCom Communications, Inc. and Infrastructure
Defense, Inc.+++++

10.85 -- Resignation Letter of Krishan Puri, dated November 1,
1999.++++++

21.1 -- List of Subsidiaries.***

23.1 -- Consent of PricewaterhouseCoopers LLP

23.2 -- Consent of Andrew Shebay & Company, PLLC

23.3 -- Consent of Andrew Shebay & Company, PLLC

23.4 -- Consent of Ostrow Reisin Berk & Abrams, Ltd.

23.5 -- Consent of Sims Moss Kline & Davis LLP (included in
Exhibit 5.1) (previously filed).

24.1 -- Powers of Attorney (previously filed).

27.1 -- Financial Data Schedule (for SEC use only).+++
</TABLE>

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

<TABLE>
<C> <S>
* Incorporated herein by reference to exhibit of the same
number in the Form S-1 Registration Statement of the
Registrant (Registration No. 333-12219).

** Incorporated herein by reference to exhibit of the same
number in the Form 10-K of the Registrant filed with the
Commission on March 31, 1998.

*** Incorporated herein by reference to exhibit of the same
number in the Form S-1 Registration Statement of the
Registrant (Registration No. 333-42599).

**** Incorporated herein by reference to exhibit of the same
number in Form 8-K of the Registrant filed with the
Commission on April 28, 1998.

+ Incorporated herein by reference to exhibit of the same
number in Form 8-K of the Registrant filed with the
Commission on June 25, 1998.

++ Incorporated herein by reference to exhibit of the same
number in Form 8-K of the Registrant filed with the
Commission on November 18, 1998.
</TABLE>

II-8
<PAGE>

<TABLE>
<C> <S>
+++ Incorporated herein by reference to exhibit of the same
number in Form 10-Q/A of the Registrant filed with the
Commission on November 17, 1999.

+ Incorporated herein by reference to exhibit of the same
number in Form S-1 Registration Statement of the Registrant
(Registration No. 333-45383).

++ Incorporated herein by reference to exhibit of the same
number in Form 10-K of the Registrant filed with the
Commission on March 31, 1999.

+++ Incorporated herein by reference to exhibit of the same
number in Form 8-K of the Registrant filed with the
Commission on May 10, 1999.

++++ Incorporated herein by reference to Registration Statement
on Form S-3 of the Registrant (Registration No. 333-79761)

+++++ Incorporated herein by reference to exhibit of the same
number on Form 8-K of the Registrant filed with the
Commission on October 18, 1999.

++++++ Incorporated herein by reference to exhibit of the same
number on Form 8-K of the Registrant filed with the
Commission on November 5, 1999.
</TABLE>

II-9
<PAGE>
ITEM 17. UNDERTAKINGS

(a) The Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1993 Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the 1933 Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of the Registration
Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the 1933 Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

II-10
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia
on the 23rd day of December, 1999.

<TABLE>
<S> <C> <C>
HOMECOM COMMUNICATIONS,INC.

By: /s/ HARVEY W. SAX
-----------------------------------------
Harvey W. Sax
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
President and Chief
/s/ HARVEY W. SAX Executive Officer
------------------------------------------- (Principal Executive December 23, 1999
Harvey W. Sax Officer)

/s/ HARVEY W. SAX
As Attorney-In-Fact Chief Technical Officer and
------------------------------------------- Director December 23, 1999
Gia Bokuchava, Ph.D.

/s/ HARVEY W. SAX
As Attorney-In-Fact
------------------------------------------- Vice President and Director December 23, 1999
Roger Nebel

/s/ HARVEY W. SAX
As Attorney-In-Fact Chief Financial Officer,
------------------------------------------- Director December 23, 1999
James Wm. Ellsworth

/s/ HARVEY W. SAX
As Attorney-In-Fact
------------------------------------------- Director December 23, 1999
Daniel A. Delity

/s/ HARVEY W. SAX
As Attorney-In-Fact
------------------------------------------- Director December 23, 1999
Claude A. Thomas
</TABLE>

II-11

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1
(File No. 333-88491) of HomeCom Communications, Inc. of our report, which
includes an explanatory paragraph relating to the Company's ability to continue
as a going concern, dated March 29, 1999, except as to Note 12, which is as of
September 7, 1999, and Note 13, which is as of October 1, 1999, relating to the
financial statements of HomeCom Communications, Inc., which appears in such
Registration Statement. We also consent to the reference to us under the caption
"Experts" in such Registration Statement.

PRICEWATERHOUSECOOPERS LLP
Atlanta, Georgia
December 23, 1999

<PAGE>
EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 of
HomeCom Communications, Inc. of our report, dated March 2, 1999, on our audits
of the financial statements of FIMI Securities, Inc. We also consent to the
reference to our firm under the caption "Experts."

Andrew Shebay & Company, PLLC
Houston, Texas
December 23, 1999

<PAGE>
EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 of
HomeCom Communications, Inc. of our report, dated June 4, 1999, on our audits of
the financial statements of Premier Financial Services, Inc., First
Institutional Marketing, Inc., and All Things Financial, Inc. We also consent to
the reference to our firm under the caption "Experts."

Andrew Shebay & Company, PLLC
Houston, Texas
December 23, 1999

<PAGE>
EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 of
HomeCom Communications, Inc. of our report, dated February 8, 1999, on our
audits of the financial statements of Ganymede Corporation. We also consent to
the reference to our firm under the caption "Experts."

Ostrow, Reisin Berk & Abrams, Ltd.
Chicago, Illinois
December 23, 1999