HOMECOM COMMUNICATIONS INC, S-1/A, 2000-08-28

HOMECOM COMMUNICATIONS INC
S-1/A, 2000-08-28
COMPUTER PROGRAMMING SERVICES

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 2000
REGISTRATION NO. 333-38326
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1 TO FORM S-3
ON
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

HOMECOM COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7371 58-2153309
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) 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)
------------------------------

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 OF CORRESPONDENCE TO:
RAYMOND L. MOSS, ESQ.
SIMS MOSS KLINE & DAVIS LLP
400 NORTHPARK TOWN CENTER, SUITE 310
1000 ABERNATHY ROAD, N.E.
ATLANTA, GEORGIA 30328

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after the effective date of this Registration
Statement until April 14, 2002, or until such earlier time that all the shares
registered hereunder have been sold.

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, 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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,
check the following box. / /

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>
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE(3)
<S> <C> <C> <C> <C>
Common stock, par value $0.0001.............. 2,645,000 shares $0.8125 $2,149,063 $567.35
</TABLE>

(1) Shares of common stock which may be offered by the selling stockholder
pursuant to this Registration Statement consist of shares issueable upon
conversion of $2,127,000 principal amount of Series E Convertible Preferred
Stock and upon exercise of warrants to purchase 66,667 shares of common
stock. If all the Series E Convertible Preferred Stock had been converted as
of August 15, 2000, the conversion price would have been $.7073 per common
share, and approximately 3,088,428 shares of common stock would have been
issueable as a result of such conversion. An additional 66,667 shares of
common stock would be issueable if all the warrants were exercised. In
addition to the shares set forth in the table, the amount to be registered
includes an indeterminate number of shares issueable upon conversion of the
Series E Convertible Preferred Stock and exercise of the warrants, as this
number of shares may be adjusted 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 such number of shares
does not include additional shares that may be issueable due to the
operation of the conversion formula applicable to the Series E Convertible
Preferred Stock. Rule 416 does not apply to any additional shares that would
be issueable to holders of the Series E Convertible Preferred Stock as a
result of changes in the market price of the common stock, and we are not
relying on Rule 416 to register any additional shares issueable as a result
of the operation of the conversion formula applicable to the Series E
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 on August 25, 2000,
in accordance with Rule 457 under the Securities Act of 1933.

(3) $558.55 of such fee was previously paid with our filing with respect to this
offering on Form S-3 filed with the Commission on June 1, 2000; the
remaining $8.80 is being paid herewith.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 28, 2000

PROSPECTUS

HOMECOM COMMUNICATIONS, INC.

2,645,000 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 3 IN
DETERMINING WHETHER TO PURCHASE SHARES OF OUR STOCK.

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

-- on the NASDAQ SmallCap Market;

-- 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, which includes this
prospectus, we have 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
acquisitions, and registration statements covering a maximum of 3,117,371 shares
issueable in connection with the private placement of our series B, C and D
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 Is A Substantial Number Of Shares
Eligible For Future Sale" at page 7 of this prospectus.

Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
HCOM.

The selling shareholder will determine the price of the shares independent
of us. On August 25, 2000, the last sale price of the common stock on the Nasdaq
SmallCap Market was $0.875 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 August 28, 2000
<PAGE>
SUMMARY

We develop and market specialized software applications, products and
services that enable financial institutions and their customers to use the
internet and intranets/extranets to obtain and communicate important business
information, conduct commercial transactions and improve business productivity.
Our principal mission is to enable financial institutions to establish
electronic channels to consumers and conduct business by providing secure,
innovative, internet-based solutions to the banking, insurance and brokerage
industries. As a b2b, or business-to-business, technology provider to these
electronic channels, we intend to continually enrich the content of our
proprietary applications; host and maintain our own as well as third party
software applications; and to provide strategic design, consulting and
development services to financial institutions on e-commerce and web marketing.
Historically, we have derived our revenue from professional web development
services, software licensing, application development, insurance and securities
sales commissions, and hosting and transactions fees.

In 1999, we provided our product and service offerings through four distinct
but integrated business units:

-- our FAST, or Financial Application, Solutions and Technology unit,
creates internet and intranet business applications, solutions and technology
focused on the banking, insurance and brokerage client markets. FAST generates
revenue from the installation, integration and customization of our software
products within a client's website and e-commerce operations. We also provide
turnkey hosting services for these applications.

-- our Financial Solutions unit, also referred to as the Software Products
Group, provides cost effective, one-stop web-based financial service
applications to the banking, credit union and brokerage industries that allow
its clientele to rapidly deploy competitive e-commerce platforms at lower cost
than custom application development.

-- our InsureRate-TM- group provides turnkey online insurance programs to
financial institutions, particularly banks, credit unions, brokerage houses and
financial web portals. Broadly, InsureRate offers financial institutions the
opportunity to use the InsureRate term life, property and casualty or annuity
modules at the institution's website and/or for its own agency force within the
institution or to outsource these functions to InsureRate's fully licensed
agencies and call centers. InsureRate derives its revenues from participation in
the sales commissions paid by insurance carriers, website and extranet setup
fees, and insurance carrier enrollment fees. In 1999, we acquired First
Institutional Marketing, Inc., or FIMI, and its affiliated insurance agencies
and NASD broker dealer and integrated their operations with InsureRate. On
August 4, 2000, we announced that we have entered into an agreement to sell the
InsureRate division and the FIMI companies to a management group composed of
some of our employees and other investors. The transaction is subject to the
execution of a definitive purchase agreement and is subject to several
conditions, including the completion of financing.

-- HISS, or our Internet Security Services business unit. In October, 1999,
we sold the HISS business unit and entered into a joint marketing program with
the acquiror, Infrastructure Defense, Inc.

As a result of the sale of the HISS business unit, and the anticipated sale
of the InsureRate/FIMI unit, we will be focused on our core offerings of FAST
and the Software Products Group.

As used in this prospectus, the company described refers to HomeCom
Communications, Inc., a Delaware corporation, and its wholly owned subsidiaries.
We were 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.

1
<PAGE>
SUMMARY FINANCIAL INFORMATION

Basic and diluted earnings
(loss) per share
Continuing operations.... $ (0.00) $ (0.34) $ (1.86) $ (0.42) $ (1.96) $ (0.73) $ (0.63)
Discontinued
operations............. -- -- $ (0.02) $ (0.02) $ 0.10 $ (0.04) --
--------- --------- --------- --------- --------- --------- ---------
Total...................... $ (0.00) $ (0.34) $ (1.88) $ (0.44) $ (1.86) $ (0.77) $ (0.63)
========= ========= ========= ========= ========= ========= =========
Weighted average common
shares outstanding--basic
and diluted.............. 1,850,447 1,862,223 2,602,515 4,287,183 6,324,791 5,912,072 7,891,021
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------
1995 1996 1997 1998 1999 JUNE 30, 2000
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<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)....................... $134 $(1,305) $2,722 $2,265 $1,034 $1,086
Total assets.................................... 247 1,727 4,665 4,565 10,536 8,312
Long-term obligations........................... 161 148 1,652 155 442 382
Total liabilities............................... 243 2,347 2,708 1,117 2,931 2,327
Redeemable preferred stock...................... -- -- -- -- 1,625 283
Common stock and other stockholders' equity
(deficit)..................................... 5 (621) 1,957 3,448 5,980 5,703
</TABLE>

2
<PAGE>
FORWARD-LOOKING STATEMENTS. This prospectus contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
certain statements contained under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" concerning our expectations,
beliefs, or strategies regarding increased future revenues and operations, and
certain statements contained under "Business" concerning the development and
marketing of our products and 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 us on the date hereof, and we assume no obligation
to update any such forward-looking statements. These statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected or implied by the forward-looking statements.
These risks and uncertainties include the timing and acceptance of new product
introductions, the actions of our competitors and business partners, and the
factors discussed below.

RISK FACTORS

WE WILL REQUIRE ADDITIONAL CAPITAL TO FINANCE OUR OPERATING LOSSES AND
CAPITAL REQUIREMENTS. We have incurred, and expect to continue to incur,
substantial operating losses, and we will require substantial sums of cash in
our operations for an indefinite period. 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.

We have substantially limited unused sources of capital. As of June 30,
2000, we had working capital of approximately $1 million. We have undertaken
steps to address our ongoing cash requirements, including concentrating our
market focus, identifying additional operational and administrative
efficiencies, and actively managing working capital. We also may consider
raising additional capital through additional debt and equity offerings.

Because we expect to continue to incur substantial operating losses, we will
continue to use substantial sums of cash in our operations for an indefinite
period. We will therefore be required to obtain additional capital. We cannot
assure you that we will be successful in securing additional capital, or that
capital will be available on terms that are acceptable to us or on terms that
will not significantly dilute the interests of existing stockholders. If we
exhaust our current sources of capital and are not able to obtain additional
capital, we will be required to undertake steps to continue our operations.
These steps may include further reduction of our operating costs and other
expenditures, including potential reductions of personnel and suspension of
salary increases and capital expenditures. If these measures are not sufficient,
we may elect to implement other cost reduction actions as we may determine are
necessary and in our best interests, including the possible sale of some or all
of our business lines. Any actions undertaken may limit our opportunities to
realize continued increases in sales and we may not be able to reduce costs in
amounts sufficient to achieve break-even or profitable operations. If we exhaust
our sources of capital, and subsequent cost reduction measures are not
sufficient to allow us to achieve positive cash flows, we will be forced to seek
protection from our creditors. The aforementioned factors raise substantial
doubt about our ability to continue as a going concern. The financial statements
included in this prospectus have been prepared assuming we are a going concern
and do not include any adjustments that might result should we be unable to
continue as a going concern.

3
<PAGE>
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 June 30, 2000, we had an
accumulated deficit of approximately $19.7 million. We expect to continue to
experience significant losses for an indefinite period. 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 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. Our ability to offset
the effects of price reductions through an increase in the number of our
customers, higher revenue from enhanced services, or cost reductions is limited,
and we also expect our margins may fluctuate. If our margins decline, this will
negatively affect our results, and may negatively affect the market for our
shares. Our gross margins for each of 1998 and 1999 have been approximately 11%
and 31%, respectively.

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.

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.

4
<PAGE>
OUR STOCK PRICE MAY BE VOLATILE. The trading price of our shares has been,
and may continue to be, subject to wide fluctuations. During the twelve months
ending August 15, 2000, the closing sale prices of our shares on the Nasdaq
SmallCap Market has ranged from $0.6875 to $5.5625. Our 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.

Since February 1999, we have completed two acquisitions which have added
approximately 35 employees to our operations.

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 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

5
<PAGE>
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 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.

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 for Post
On the Fly and we have applied for federal registration of the names HomeCom 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

6
<PAGE>
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 IS 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 our ability to raise capital through offerings of shares, or to
effect acquisitions utilizing shares as part or all of the purchase price.

We had 9,048,100 shares outstanding as of August 15, 2000. There are also
the following shares that may become available for resale in the public markets:

-- As of August 15, 2000, there are outstanding warrants to acquire an
aggregate of 944,699 shares at a weighted average exercise price of $7.15
per share. The shares issueable 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 300,000 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 issueable 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.

-- As of August 15, 2000, there are outstanding options to purchase
1,027,451 shares under our employee stock option plan at a weighted average
exercise price of $4.492 per share, and 35,000 shares under our non-employee
directors option plan. As of August 15, 2000, 16,802 shares have been issued
under our employee stock purchase plan at a weighted average price of $2.24
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 150,000 shares reserved for
issuance under our stock purchase plan. At our last annual meeting of
stockholders, our stockholders approved an increase in the shares authorized
for issuance under the employee stock purchase plan from 150,000 to 300,000.
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 preferred stock and
related warrants to purchase 250,000 shares of common stock. As of
August 15, 2000, the holders of the series B preferred stock had converted
$2,000,000 principal amount of the series B preferred stock into common
stock. If all the remaining shares of series B preferred stock were
converted, and all the related warrants exercised, as of August 15, 2000, we
would be required to issue approximately 744,010 shares of common stock, or
approximately 7.6% of the number of shares of common stock that would then
be outstanding. The total number of shares of common stock issuable upon the
conversion and exercise will vary, based upon the closing bid prices of our
common stock. The terms of the series B preferred stock and the warrants are
more fully described in this prospectus under "Description of Capital
Stock," in particular the subsections entitled "Series B Convertible
Preferred Stock" on page 41 and "Warrants" on page 54. In connection with
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
the investors additional shares of common stock. Those penalties amounted to
an aggregate of 76,000 shares of common stock, which 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. As of
August 15, 2000, the holders of the series C preferred stock had converted
approximately $1,607,860 principal amount of the series C preferred stock
into common stock. If

7
<PAGE>
all the remaining shares of series C preferred stock were converted, and all
the related warrants exercised, as of August 15, 2000, we would be required
to issue approximately 2,843,719 shares of common stock, or approximately
23.9% of the number of shares of common stock that would then be
outstanding. The total number of shares of common stock issuable upon the
conversion and exercise will vary, based upon the closing bid prices of our
common stock. The terms of the series C preferred stock and the warrants are
more fully described in this prospectus under "Description of Capital
Stock," in particular the subsections entitled "Series C Convertible
Preferred Stock" on page 44 and "Warrants" on page 54.

-- 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. As of
August 15, 2000, the holders of the series D preferred stock had converted
approximately $1,474,180 principal amount of the series D preferred stock
into common stock. If all the remaining shares of series D preferred stock
were converted, and all the related warrants exercised, as of August 15,
2000, we would be required to issue approximately 38,433 shares of common
stock, or approximately .42% of the number of shares of common stock that
would then be outstanding. The total number of shares of common stock
issuable upon the conversion and exercise will vary, based upon the closing
bid prices of our common stock. The terms of the series D preferred stock
and the warrants are more fully described in the prospectus under
"Description of Capital Stock," in particular the subsections entitled
"Series D Convertible Preferred Stock" on page 47 and "Warrants" on page 54.

-- On April 14, 2000, we completed a private placement for cash of
$2,127,000 principal amount of our series E convertible preferred stock and
related warrants to purchase 66,667 shares of common stock. If all the
shares of series E preferred stock were converted, and all the related
warrants exercised, as of August 15, 2000, we would be required to issue
approximately 3,088,428 shares of common stock, or approximately 25.4% of
the number of shares of common stock that would then be outstanding. The
total number of shares of common stock issuable upon the conversion and
exercise will vary, based upon the closing bid prices of our common stock.
The terms of the series E preferred stock and the warrants are more fully
described in the prospectus under "Description of Capital Stock," in
particular the subsections entitled "Series E Convertible Preferred Stock"
on page 50 and "Warrants" on page 54.

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 25
shares of series B preferred stock, 94.607 shares of series C preferred stock,
1.291 shares of series D preferred stock and 106.35 shares of series E 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 will 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

8
<PAGE>
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. 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;

9
<PAGE>
-- 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.

MANAGEMENT AND SIGNIFICANT STOCKHOLDERS CAN EXERCISE INFLUENCE OVER
HOMECOM. Based upon stock ownership as of August 15, 2000, our executive
officers, directors, and 5% stockholders and their affiliates own an aggregate
of 19.1% of our outstanding shares. As a result, these persons acting together
may have the ability to substantially affect all matters submitted to our
shareholders for approval and to exercise significant influence over the
management and over our affairs. 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.

EXISTING SHAREHOLDERS WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION. The
conversion of preferred shares in conjunction with this offering will likely
result in immediate and substantial dilution to the existing shareholders. To
the extent that currently outstanding options and warrants are exercised or
converted, there may be further dilution in your shares. Please refer to the
information above under "There Is 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. 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 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, 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. On a number of trading days in
July and August, 2000, the closing sale price of our shares was $1.00 or less.

In addition, if our common stock is delisted from trading on the Nasdaq
SmallCap Market, trading in the common stock could become subject to the
requirements of certain rules promulgated under the Exchange Act that govern
trading in so-called penny stocks. These rules would require broker-dealers to
provide additional disclosure in connection with any sales of HomeCom common
stock. These rules would also require broker-dealers to sell these securities
only to established customers, accredited investors, as defined in the
Securities Act, or other investors who give prior written consent before
purchasing or selling their shares of HomeCom common stock. The additional
burdens imposed on broker-dealers by these requirements may discourage them from
effecting transactions in HomeCom common stock, which could severely limit the
liquidity of the HomeCom common stock.

10
<PAGE>
ISSUANCE OF SHARES TO SELLING SHAREHOLDER

On April 14, 2000, we completed a private placement of $2,127,000 principal
amount of our series E convertible preferred stock and warrants to purchase up
to 66,667 shares of our common stock. The series E 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 the registration
statement which includes this prospectus covering the shares of common stock
issuable upon conversion of the series E preferred stock and exercise of the
warrants. We are obligated to pay penalties if the registration statement is not
filed and declared effective within specified time periods.

The series E preferred stock has an initial stated value of $20,000 per
share, which increases at the rate of 8% per year. Each series E preferred share
is convertible, 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) $3.53, 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 through April 14, 2002, prohibit holders
of the series E 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 E preferred stock in
cash in an amount equal to 3% of the principal amount of the series E 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.

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 E 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 April 14, 2005 and have an exercise price of $3.35
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 shareholder. We will not receive any
proceeds from the sale of the shares by the selling shareholder.

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<PAGE>
PRICE RANGE OF COMMON STOCK

Our common stock is traded on the Nasdaq SmallCap 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 Market.

<TABLE>
<CAPTION>
CALENDAR QUARTER HIGH LOW
---------------- -------- --------
<S> <C> <C>
2000
Third Quarter (through August 25, 2000)................... $1.25 0.56
Second Quarter............................................ 3.63 1.00
First Quarter............................................. 5.13 3.13
1999
Fourth Quarter............................................ 5.25 3.00
Third Quarter............................................. 6.69 2.75
Second Quarter............................................ 9.69 5.00
First Quarter............................................. 7.63 3.50
1998
Fourth Quarter............................................ 8.88 1.38
Third Quarter............................................. 4.94 1.63
Second Quarter............................................ 18.25 1.13
First Quarter............................................. 16.00 2.00
</TABLE>

On August 25, 2000, the last reported sale price of the shares as reported
by the Nasdaq SmallCap Market was $0.8125 per share. As of August 15, 2000,
there were 92 holders of record of the shares.

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<PAGE>
DIVIDEND POLICY

We have not paid any cash dividends on our capital stock to date. We
currently anticipate that we will retain all future earnings, if any, to fund
the development and growth of our business and we do not anticipate paying any
cash dividends in the foreseeable future.

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<PAGE>
SELECTED FINANCIAL DATA

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

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------- ---------------------
1995 1996 1997 1998 1999 1999 2000
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA AND SHARES OUTSTANDING)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues............................. $ 328 $ 2,230 $ 2,503 $ 2,511 $ 6,556 $ 2,819 $ 4,620
Cost Of Revenues..................... 60 775 2,140 2,232 4,555 1,903 2,183
--------- --------- --------- --------- --------- --------- ---------
Gross Profit......................... 268 1,455 363 279 2001 916 2,437
--------- --------- --------- --------- --------- --------- ---------
OPERATING EXPENSES
Sales And Marketing.................. 124 962 1,440 1,222 3,954 1,318 1,593
Product Development.................. 20 79 515 678 1,020 351 279
General And Administrative........... 121 909 2,538 3,098 5,083 2,170 2,604
Depreciation And Amortization........ 4 85 239 542 1,838 609 1,832
--------- --------- --------- --------- --------- --------- ---------
Total Operating Expenses............. 270 2,035 4,731 5,540 11,895 4,447 6,308
--------- --------- --------- --------- --------- --------- ---------
Operating Loss....................... (2) (581) (4,368) (5,261) (9,894) (3,531) (3,871)
--------- --------- --------- --------- --------- --------- ---------
OTHER EXPENSES (INCOME):
Gain On Sale Of Division............. -- -- -- (4,402) --
----
Interest Expense..................... 3 51 543 445 33 16 (30)
Other Income, Net.................... -- (7) (93) (167) (104) (40) (46)
--------- --------- --------- --------- --------- --------- ---------
Loss From Continuing Operations
Before Income Taxes................ (5) (626) (4,818) (1,137) (9,823) (3,507) (3,795)
Income Tax Provision (Benefit)....... -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Loss From Continuing Operations...... (5) (626) (4,818) (1,137) (9,823) (3,508) (3,795)
Loss From Discontinued Operations.... -- -- (63) (67) (498) (251) --
Gain On Disposal Of Business
Segment............................ -- -- -- -- 1,145 -- --
--------- --------- --------- --------- --------- --------- ---------
Net Loss............................. (5) (626) (4,881) (1,204) (9,176) (3,759) (3,795)
Deemed Preferred Stock Dividend...... -- -- -- (667) (2,557) (792) (1,183)
--------- --------- --------- --------- --------- --------- ---------
Loss Applicable To Common
Shareholders....................... $ (5) $ (626) $ (4,881) $ (1,871) $ (11,734) $ (4,551) $ (4,978)
========= ========= ========= ========= ========= ========= =========
LOSS PER COMMON SHARE--BASIC AND
DILUTED
Continuing Operations................ $ (0.00) $ (0.34) $ (1.86) $ (0.42) $ (1.96) $ (0.73) $ (0.63)
Discontinued Operations.............. -- -- (0.02) (0.02) 0.10 (0.04) --
--------- --------- --------- --------- --------- --------- ---------
TOTAL............................ $ (0.00) $ (0.34) $ (1.88) $ (0.44) $ (1.86) $ (0.77) $ (0.63)
========= ========= ========= ========= ========= ========= =========
Weighted Average Common Shares
Outstanding........................ 1,850,447 1,862,223 2,602,515 4,287,183 6,324,791 5,912,072 7,891,021
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------------------------- JUNE 30,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working Capital (Deficit)................................... 134 (1,305) 2,722 2,266 1,034 1,086
Total Assets................................................ 247 1,727 4,665 4,565 10,536 8,312
Long-Term Obligations....................................... 160 148 1,652 155 442 382
Total Liabilities........................................... 243 2,347 2,708 1,117 2,931 2,327
Redeemable Preferred Stock.................................. 1,625 283
Stockholders' Equity (Deficit).............................. 5 (621) 1,957 3,448 5,980 5,703
</TABLE>

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

Except for historical information, some matters discussed in this prospectus
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934. Many
factors could cause our actual results and experience to differ materially from
the anticipated results or other expectations expressed in our forward-looking
statements. Reference is made in particular to the discussions set forth in our
Annual Report on Form 10-K for the year ended December 31, 1999, our Quarterly
Reports on Form 10-Q for the quarterly periods ended March 31, 2000 and
June 30, 2000, and our Registration Statements on Forms S-1 (File Nos.
333-12219, 333-42599, 333-45383, 333-86837, 333-88491 and 333-56795) and S-3
(333-73123 and 333-81581).

GENERAL

We develop and market specialized software applications, products and
services that enable financial institutions and their customers to use the
Internet and intranets and extranets to obtain and communicate important
business information, conduct commercial transactions and improve business
productivity. Our principal mission is to enable financial institutions to
establish electronic channels to consumers and conduct business by providing
secure, innovative, internet-based applications to the banking, insurance and
brokerage industries. As a business to business provider to these electronic
channels, we intend to continually enrich the content of our proprietary
applications; host and maintain our own as well as third party software
applications; and to provide strategic design, consulting, and development
services to financial institutions on e-commerce and web marketing.
Historically, we have derived our revenue from professional web development
services, software licensing, application development, insurance and securities
sales commissions, and hosting and transactions fees. We have grown to
approximately 90 full-time employees and we occupy approximately 38,900 square
feet of office space with offices in Atlanta, Chicago, Houston, and New York
City.

Our proprietary web solutions, which are built around industry standards
such as Open Financial Exchange, or OFX, are designed to enable our clients to
increase revenues, achieve distinct competitive advantages, reduce costs, and
improve customer support. We employ full time multimedia artists, Ph.D. computer
programmers, licensed financial brokers and agents, and network engineers. We
provide internet and intranet solutions in three areas: (a) the design,
development and integration of customized software applications, including world
wide web site development and related network outsourcing; (b) the development,
sale and integration of our existing software applications into the client's
operations; and (c) security consulting and integration services. In October,
1999, we sold our security consulting and integration services operations and
entered into a joint marketing program with the acquiror, Infrastructure
Defense Inc.

Businesses such as banks, brokerage firms, and insurance companies can use
our Personal Internet Banker-TM- and InsureRate-TM- software to allow customers
and professionals within these organizations to access and manage accounts and
to transact insurance sales and quotes. Our Harvey-TM- software collects
demographic information from users for personally tailored marketing efforts.
Financial institutions that integrate their legacy systems, the Personal
Internet Banker or InsureRate applications with the Harvey application can
create multiple, focused marketing campaigns for client cross-selling
initiatives. We also design and create web sites as well as custom complex web
applications for interactive web sites, intranets and extranets, sell third
party internet security software, and provide server hosting and outsourcing
facilities.

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<PAGE>
In 1999, we provided our product and service offerings through four distinct
but integrated business units. In 2000, we have provided our products and
services through three distinct business units, due to the sale in October, 1999
of our Internet Security Services business unit:

1. HomeCom Financial Applications, Solutions and Technology, or 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 and extranets communicating with legacy
systems and client/server databases. Significant FAST revenue is generated from
the installation, integration and customization of Personal Internet Banker,
Harvey and InsureRate within a client's website and e-commerce operations. We
also provide turnkey hosting services for these applications.

2. Our Financial Solutions, or Software Product Group, provides cost
effective, one-stop web-based financial service applications to the banking,
credit union and brokerage industries that allow its clientele to rapidly deploy
competitive e-commerce platforms at far less cost than custom application
development. Our turnkey solutions are targeted to the 14,000 banks and credit
unions with assets between $500 million and $20 billion. Those applications
include:

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

-- 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 entered on application forms, adds information about what was
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; and

-- Post on the Fly-Registered Trademark- 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.

3. Our InsureRate-TM- application provides turnkey online insurance programs
to financial institutions, particularly banks, credit unions, brokerage houses
and financial web portals. InsureRate's bundled or unbundled modular approach to
insurance programs within a financial institution allows InsureRate's clients to
choose appropriate insurance programs for their clientele. Broadly, InsureRate
offers financial institutions the opportunity to use the InsureRate term life,
property and casualty or annuity modules at the institution's website and/or for
its own agency force within the institution or to outsource these functions to
InsureRate's fully licensed agencies and call centers. InsureRate derives its
revenues from participation in the sales commissions paid by insurance carriers,
website and extranet setup fees, and insurance carrier enrollment fees.
InsureRate operates within the regulated environment of securities and insurance
sales. In order to participate in this regulated industry, on March 24, 1999, we
acquired First Institutional Marketing, Inc., or FIMI, and its affiliated
insurance agencies and NASD broker dealer and integrated their operations with
InsureRate. As a result of this combination of technology and industry
expertise, InsureRate brings a state-of-the-art internet platform to financial
institutions which provides innovative web-based insurance products and
marketing programs for the banking and brokerage industries, introduces
financial institutions to the sale of insurance and investment products, and
trains bank personnel to market and sell leading insurance and investment
products to their customers.

On August 4, 2000, we announced that we had entered into an agreement to
sell the InsureRate division and the FIMI companies. The transaction is subject
to the execution of a definitive purchase

16
<PAGE>
agreement and is subject to a number of conditions, including but not limited to
the completion of financing satisfactory to complete the transaction. With the
sale of InsureRate, we will focus on our core offerings of FAST and the
solutions sets offered by the Software Products Group. Additionally, we are
developing relationships with successful third party product companies whose
products lend themselves to a high degree of customization and integration
within the financial community.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

REVENUES: Revenues increased 17% from $1,912,052 in the second quarter of
1999 to $2,236,486 in the second quarter of 2000. This increase of $324,434 is
primarily attributable to increases in custom application development revenues
of approximately $590,000 and increases in hosting revenues of approximately
$51,000. Increases were offset by lower revenues from web site maintenance of
$75,889, insurance sales of $82,198 and software applications consulting and
integration services of approximately $147,000.

COST OF REVENUES: Cost of revenues 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 revenues decreased
from $1,193,440, or 62% of revenues in the second quarter of 1999 to $1,154,648,
or 52% of revenues in the second quarter of 2000. The decline in cost of
revenues as a percentage of revenues is due to more efficient utilization of
technical staff resources. The improvement in margin for web development
services was partially offset by increased costs for staff in the insurance
businesses in anticipation of increased revenues.

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 26% from $948,213 in 1999 to $701,601 in 2000. This decrease
was primarily attributable to lower advertising, public relations, and marketing
costs. As a percentage of net sales, these expenses declined from 50% in 1999 to
31% in 2000.

PRODUCT DEVELOPMENT: Product development costs consist of personnel costs
required to conduct our product development efforts, and a pro-rata allocation
of telecommunications, facilities and data center costs. Total expenditures
decreased from $165,280, or 9% of revenues in the second quarter of 1999 to
$69,292, or 3% of net sales in the second quarter of 2000. This decrease was
primarily attributable to fewer personnel resources required to support the
product development group.

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 decreased from
$1,407,992 in the second quarter of 1999 to $1,327,276 in the second quarter of
2000. As a percentage of net sales, these expenses decreased from 74% in the
second quarter of 1999 to 59% in the second quarter of 2000, due primarily to
increases in revenues without corresponding increases in general and
administrative expense.

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 $457,104, or 24% of revenues in the second quarter
of 1999 to $1,336,734, or 60% of revenues in the second quarter of 2000,
primarily due to the write off of approximately $830,000 of goodwill associated
with the Ganymede acquisition.

LOSS FROM DISCONTINUED OPERATIONS: Our HISS Business Unit was sold on
October 1, 1999. The loss attributable to HISS operations for the second quarter
of 1999 was approximately $143,000.

17
<PAGE>
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

REVENUES: Revenues increased 64% from $2,819,282 in the first six months of
1999 to $4,619,957 in the first six months of 2000. This increase of $1,800,675
is primarily attributable to increases in custom application development
revenues of approximately $897,000 and increases in product revenues of
approximately $280,000 and increases in insurance revenues of approximately
$603,000. The insurance revenues reflect a full six months of reporting in 2000
and only three months in 1999.

COST OF REVENUES: Cost of revenues 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 revenues decreased
from $1,903,380,or 68% of revenues in the first six months of 1999 to
$2,183,324, or 47% of revenues in the first six months of 2000. The decline in
cost of revenues as a percentage of revenue is due to more efficient utilization
of technical staff resources related to web development projects. The
improvement in margin for web development was partially offset by increased
costs for staff in the insurance businesses in anticipation of increased
revenues.

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 21% from $1,318,010 in 1999 to $1,593,417 in 2000. This
increase was primarily attributable to higher cost of sales and marketing costs
in the insurance businesses compared to our other business segments. As a
percentage of revenues, these expenses declined from 47% in 1999 to 34% in 2000.

PRODUCT DEVELOPMENT: Product development costs consist of personnel costs
required to conduct our product development efforts, and a pro-rata allocation
of telecommunications, facilities and data center costs. Total expenditures
decreased from $350,579, or 12% of revenues in the first six months of 1999, to
278,523, 0r 6.0% of revenues for the first six months of 2000. This decrease was
primarily attributable to fewer personnel resources being required to support
the product development group.

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
$2,169,873 for the first six months of 1999 to $2,603,792 for the first six
months of 2000. As a percentage of revenues, these expenses increased from 56%
for the first six months of 1999 to 77% for the first six months of 2000, due
primarily to increases in expenses associated with the Ganymede and FIMI
acquisitions and an increased use of outside services during the six months
ended June 30, 2000.

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 $608,823, or 22% of revenues for the first six
months of 1999 to $1,832,491, or 39.7% of revenues for the first six months of
2000. The increase is primarily due to the writeoff of goodwill associated with
the Ganymede acquisition.

LOSS FROM DISCONTINUED OPERATIONS: The HISS Business Unit was sold on
October 1, 1999. The loss attributable to HISS operations for the six months of
operations in 1999 through June 30, 1999, was approximately $251,000.

YEAR ENDED DECEMBER 31, 1998 AS COMPARED TO YEAR ENDED DECEMBER 31, 1999

REVENUES. Revenues increased 161.1% from $2,510,689 in 1998 to $6,556,173
in 1999. This increase of $4,045,484 is primarily attributable to the
contribution of FIMI of $2,438,168 in 1999 and an increase in high-end website
development revenue of $1,562,408.

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COST OF REVENUES. Cost of revenues includes commissions for financial
institutions and agents, salaries for programmers, technical staff, sales staff
and customer support, as well as a pro-rata allocation of telecommunications,
facilities and data center costs. Cost of revenues increased from $2,231,757, or
88.9% of revenues in 1998 to $4,555,337, or 69.5% of revenues in 1999. This
increase reflects increased costs associated with our insurance operations. The
decrease in cost of revenues as a percentage of revenues is due to increased
margins in our FAST group and the margin economies brought by the acquisition of
the FIMI companies.

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 $2,731,884 from $1,221,908 in 1998 to $3,953,792 in 1999.
This increase was primarily attributable to the addition of the FIMI companies
and higher advertising and promotional marketing costs. As a percentage of net
sales, these expenses increased from 48.7% in 1998 to 60.3% in 1999 as a result
of the ramp up of PIB and InsureRate sales efforts and the significant
implementation time required to generate revenues from these initiatives.

PRODUCT DEVELOPMENT. Product development costs consist of personnel costs
required to conduct our 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 our industry. Total expenditures for product development were
$1,020,264, or 15.6% of net sales in 1999. This compares to total product
development expenditures of $677,590, or 27.0% of net sales in 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
$3,098,095 in 1998 to $5,082,979 in 1999. This increase is due to the
acquisition of the FIMI companies and the increased administrative burden
associated with financings, mergers, acquisitions and divestitures. As a
percentage of net sales, these expenses decreased from 123.4% in 1998 to 77.5%
in 1999. The percentage decline is a result of operating efficiencies.

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 $542,269, or 21.6% of net sales in 1998 to
$1,837,647, or 28.0% in 1999, reflecting the amortization of intangible assets
associated with the IRC, FIMI and Ganymede acquisitions.

OTHER INCOME. In 1999 and 1998 we recorded other income of $103,551 and
$166,942, respectively; due primarily to lower balances in interest bearing cash
accounts.

INTEREST EXPENSE. Interest expense decreased from $445,216 in 1998 to
$32,669 during 1999, due to the absence of the amortization of the discount on a
convertible debenture converted to common stock during 1998.

DISCONTINUED OPERATIONS. We recorded a gain of $1,144,591 on the sale of
our Internet Security Services or HISS, division in 1999. In addition, HISS
recorded losses of approximately $498,000 and $67,000 in 1999 and 1998,
respectively. During 1998, we recorded a gain on the sale of our HostAmerica
division of $4,402,076 (see Note 12).

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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.

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 our 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 our 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 our
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, we recorded a gain on the sale of our
HostAmerica division of $4,402,076.

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.

LIQUIDITY AND CAPITAL RESOURCES

We have substantially limited unused sources of capital. As of June 30,
2000, we had net working capital of approximately $1.1 million. On April 14,
2000, we completed an equity offering of

20
<PAGE>
approximately $2 million to address our immediate liquidity needs. Management
has undertaken steps to address our ongoing cash requirements including
concentrating our market focus, identifying additional operational and
administrative efficiencies, and actively managing working capital. We also may
consider raising additional capital through additional debt and equity
offerings.

Because we expect to continue to incur substantial operating losses, we will
continue to use substantial sums of cash in our operations for an indefinite
period. Accordingly, we will be required to obtain additional capital. No
assurance can be given that we will be successful in our efforts to obtain
additional capital, or that capital will be available on terms acceptable to us
or on terms that will not significantly dilute the interests of existing
stockholders. If we exhaust our current sources of capital and are not able to
obtain additional capital, we will be required to undertake steps to continue
our operations. These steps may include immediate reduction of our operating
costs and other expenditures, including potential reductions of personnel and
suspension of salary increases and capital expenditures. If these measures are
not sufficient, we may elect to implement other cost reduction actions as we
determine are necessary and in our best interests, including the possible sale
of some or all certain of our business lines. Any actions undertaken may limit
our opportunities to realize continued increases in sales and we may not be able
to reduce our costs in amounts sufficient to achieve break-even or profitable
operations. If we exhaust our sources of capital, and subsequent cost reduction
measures are not sufficient to allow us to achieve break-even or profitable
operations, we will be forced to seek protection from our creditors. The
aforementioned factors raise substantial doubt about our ability to continue as
a going concern. The financial statements included herein have been prepared
assuming we are a going concern and do not include any adjustments that might
result should we be unable to continue as a going concern.

Net cash used in operating activities was $2,424,339 for six months ended
June 30, 2000. We have primarily financed our operations to date through public
and private sales of debt and equity securities and loans from our principal
stockholders and affiliates. In March 1999, we issued 125 shares of our
series B preferred stock for aggregate net proceeds of approximately
$2.3 million. On July 28, 1999, we sold 175 shares of our series C preferred
stock for net proceeds of approximately $3.3 million. On September 28, 1999, we
sold 75 shares of our series D preferred stock for net proceeds of approximately
$1.4 million. On April 14, 2000, we sold 106.35 shares of our series E preferred
stock for net proceeds of approximately $1.9 million.

We spent $93,265 and $252,793 during the six months ended June 30, 2000 and
1999, respectively, for the purchase of capital equipment. These amounts were
expended primarily for computer equipment, communications equipment and software
necessary for us to increase our presence in the internet and intranet
applications marketplace. Our commitments as of June 30, 2000 consist primarily
of leases on our Atlanta, Chicago, Houston, and New York City facilities.

Accounts receivable, net of allowance for doubtful accounts, totaled
$1,351,567 as of June 30, 2000. We monitor trade receivables through ongoing
credit evaluations of our customers' financial conditions. The allowance for
doubtful accounts is considered by management to be an adequate reserve for
known and estimated bad debts. A revision in this reserve due to actual results
differing from this estimate could have a material impact on our results of
operations, financial position and liquidity.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, referred to as FAS 133. FAS 133, as deferred
by FAS 137, is effective for all fiscal quarters of all fiscal years beginning
after June 15, 2000, which would be January 1, 2001 for us. 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. Our management anticipates that, due to our limited use of
derivative instruments, the adoption of FAS 133 will not have a significant
effect on our results of operations or our financial position.

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BUSINESS

GENERAL

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

Our proprietary web solutions, which are built around industry standards
such as Open Financial Exchange, or OFX, are designed to enable our clients to
increase revenues, achieve distinct competitive advantages, reduce costs, and
improve customer support. We employ full time multimedia artists, Ph.D. computer
programmers, licensed financial brokers and agents, and network engineers. We
provide internet and intranet solutions in three areas: (a) the design,
development and integration of customized software applications, including World
Wide Web site development and related network outsourcing; (b) the development,
sale and integration of our existing software applications into the client's
operations; and (c) security consulting and integration services. In October,
1999, we sold our security consulting and integration services operations and
entered into a joint marketing program with the acquiror, Infrastructure
Defense Inc.

PRODUCTS AND SERVICES

In 1999, we provided our product and service offerings through four distinct
but integrated business units. In 2000, we have provided our products and
services through three distinct business units, due to the sale in October, 1999
of our Internet Security Services business unit:

1. HomeCom Financial Applications, Solutions and Technology, or FAST,
creates internet and intranet business applications, solutions and technology
focused on the banking, insurance and

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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. Significant FAST
revenue is generated from the installation, integration and customization of
Personal Internet Banker, Harvey and InsureRate within a client's website and
e-commerce operations. We also provide turnkey hosting services for these
applications.

On August 4, 2000, we announced that we had entered into an agreement to
sell the InsureRate division and the FIMI companies. The transaction is subject
to the execution of a definitive purchase agreement and is subject to a number
of conditions, including the completion of financing. With the sale of
InsureRate, we will focus on our core offerings of FAST and the Software
Products Group.

We employ a team of highly trained internet/intranet software developers and
multimedia and graphics professionals who design and develop specialized
internet/intranet software applications. These

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<PAGE>
applications enable companies to obtain and communicate vital business
information, such as sales reports, order status systems, employee directories
and client account information. We work closely with our customers to analyze
and design internet-based software solutions that facilitate the interactive
exchange of business information. Through our experience in designing custom
internet solutions for businesses, we believe that we have developed and
continue to develop in-depth knowledge concerning industry-specific internet
applications and requirements. We plan to leverage this knowledge to develop
additional internet-enabled applications targeted for the financial services
industry.

Our staff of 16 full-time software engineers design and develop custom
applications and software products. Our software engineers have experience with
various computer operating 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. Our 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, we acquired all of the outstanding capital stock of The
Insurance Resource Center, Inc. for 351,391 shares of our common stock. The
Insurance Resource Center provides internet development and hosting services to
the insurance industry and was incorporated into our FAST group.

On June 9, 1998, we sold substantially all of the assets of our 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. We recorded a gain on the sale of approximately $4,402,000. This
transaction allowed us to further consolidate our business focus on the
financial services market.

On November 6, 1998, we 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, we 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,
we completed this acquisition.

On April 23, 1999, we 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, we entered into employment agreements for an initial
term of 1 year, 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 $823,000, and entered into a joint
marketing program with the acquiror.

We 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, we have not entered into any additional binding agreements or
commitments. Moreover, we have extremely limited sources of cash. Consequently,
we have limited

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<PAGE>
resources available to complete an acquisition and no assurance can be given
that we will be able to successfully complete any additional acquisitions.

SALES AND MARKETING

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

COMPETITION

The market for specialized internet applications is highly competitive, and
we expect that this competition will intensify in the future. In providing
specialized software application design and development, we compete 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 LLP,
Electronic Data Systems Corporation, International Business Machines Corporation
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 that we offer. We also compete 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 our custom software application services.

We believe 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 that we offer. We
compete on the basis of creative talent, price, reliability of services, and
responsiveness. Many of our current and prospective competitors have
substantially greater financial, technical, marketing and other resources than
us. We believe that we presently compete favorably with respect to each of our
various service offerings. There can be no assurance that our present and
proposed products will be able to compete successfully with current or future
competitors or that the competitive pressures that we face will not have a
material adverse effect on our business, financial condition and operating
results.

INTELLECTUAL PROPERTY RIGHTS

In accordance with industry practice, we rely primarily on a combination of
copyright, patent and trademark laws, trade secrets, confidentiality procedures
and contractual provisions to protect our proprietary rights. We seek to protect
our software, documentation and other written materials principally under trade
secret and copyright laws, which afford only limited protection. We have a
registered service mark for our logo and for Post On The Fly, and we have
applied for federal

25
<PAGE>
registration of the names HomeCom and Personal Internet Banker. Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy aspects of our products or to obtain and use information that we regard as
proprietary. There can be no assurance that our means of protecting our
proprietary rights will be adequate or that our competitors will not
independently develop competing products and services. 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. We do not believe that any of our
proposed products infringe the proprietary rights of third parties. We can give
no assurance, however, that third parties will not claim that we have infringed
their proprietary rights. We expect 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 us to enter into royalty or licensing agreements. Such royalty
or licensing agreements, if required, may not be available on terms acceptable
to us. In addition, web site developers, like us 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. We routinely enter into non-disclosure
and confidentiality agreements with employees, vendors, contractors, consultants
and customers.

We can give no assurance that our means of protecting our proprietary rights
will be adequate or that our competitors will not independently develop similar
technology. We believe 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 1997 and 1998, no customer accounted for more than 10% of our total
net sales. During 1999 two customers each accounted for more than 10% of our
total revenue. During 1999, we initiated a plan to win larger, more complex web
development projects. As a result, we have won several contracts whose revenue
will be recognized over several quarters. This focus on fewer, but larger,
clients has also resulted in a concentration of credit risk. Our sales to our
five largest customers represented approximately 15%, 27% and 51% of our total
revenues for 1997, 1998 and 1999, respectively.

EMPLOYEES

At August 15, 2000, HomeCom employed 90 full-time employees, of whom 29 were
technical personnel engaged in maintaining or developing our products or
performing related services, 6 were marketing or sales personnel, 43 were
involved in the sale and production of insurance products, and 12 were involved
in administration and finance.

INSURANCE

We maintain liability and other insurance that we believe to be customary
and generally consistent with industry practice. We believe that such insurance
is adequate to cover potential claims relating to our existing business
activities.

GOVERNMENT REGULATION

Except with regard to insurance and securities sales, as discussed below, we
do not believe that we are currently subject to direct regulation by any
government agency, other than regulations applicable

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<PAGE>
to businesses generally, and we believe 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 we conduct our 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, 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 our products and services and increase our cost of doing
business or cause us to modify its operations, or otherwise have an adverse
effect on our business, financial condition and operating results. In addition,
the applicability to the internet of existing laws governing issues such as
property ownership, libel, and personal privacy is uncertain. We cannot predict
the impact, if any, that future regulation or regulatory changes may have on our
business. In addition, web site developers like us 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 us.

In addition, our network services are transmitted to our 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 our 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.

We own and operate a NASD regulated broker/dealer and are affiliated with
various insurance agencies. These subsidiaries and affiliates are subject to
federal and state regulation of their operations, including but not limited to,
the Securities Act of 1933, the Securities Exchange Act of 1934 and various
comparable state securities and insurance laws and regulations. Securities and
insurance sales over the internet are new environments for these industries and
the regulatory bodies governing such activities are currently promulgating new
rules and regulations that may significantly affect our securities and insurance
businesses.

PROPERTIES

We occupy 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 our headquarters and computer center. We also have an office
in New York City occupying approximately 3,400 square feet under a lease
expiring in January 2003 and an office in Chicago occupying approximately 1,000
square feet under a lease expiring in 2004. We house our InsureRate operations
in Houston, Texas occupying approximately 17,500 square feet under a lease
expiring in 2004.

Our internet services are maintained in its key-card access-secured, dual
Leibert air-conditioned Network Operations Center, or NOC, in Class A office
space near our principal offices. Our 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, or 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 our 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

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<PAGE>
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 and Fiber Distributed Data Interface
technology. Telecommunications lines are provided through two physically diverse
entrance facilities. We have acquired and installed multiple Cisco routers for
connection to the internet, which automatically redistribute traffic load in the
event of telecommunications failure.

We believe that the properties which we currently have under lease are
adequate to serve our business operations for the foreseeable future. We believe
that if we were unable to renew the lease on any of these facilities, we could
find other suitable facilities with no material adverse effect on our business.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings. From time to time, we
are involved in various routine legal proceedings incidental to the conduct of
our business.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The names of our directors and executive officers, their ages as of
August 15, 2000 and certain information about them are set forth below.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- -------- ----------------------------------
<S> <C> <C>
Harvey W. Sax(2).................. 48 President, chief executive officer
and director
Gia Bokuchava, Ph.D. ............. 36 Chief technical officer and
director
Roger J. Nebel.................... 47 Director
William Walker(1)................. 58 Director
Claude A. Thomas(1)(2)(3)......... 57 Director
Daniel A. Delity(3)............... 39 Vice President and Director
James Wm. Ellsworth(2)............ 44 Director
Timothy R. Robinson............... 37 Executive Vice President and Chief
financial officer
</TABLE>

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

(1) Member of audit and compensation committees

(2) Member of executive committee

(3) Member of strategic planning committee

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
October 1, 1999. From May 1991 until February 1993, Mr. Nebel was a department
manager, and from March 1993 to July 1996, senior manager--enterprise assurance,
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.

29
<PAGE>
William Walker is president and chief executive officer of the Reassurance
Company of Hanover, or 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 member of the board of
directors since March 1999.

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 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, a public company.
Previously, he held positions as chief executive officer of International
Banking Technologies and other subsidiaries of First Financial Management, which
is now FirstData Corporation, a NYSE company. He started his 30-year career with
Electronic Data Systems in the Wall Street division, and subsequently held
executive positions with Coopers & Lybrand and Digital Equipment Corporation.
Mr. Thomas holds a BE cum laude in Chemical Engineering from Vanderbilt
University and a master of business administration in marketing and finance with
honors from Washington University. Mr. Thomas has been a member of the Board of
Directors since February 1998.

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 member of the board of directors since
March 1999.

James Wm. Ellsworth served as chief financial officer from October, 1999
through July, 2000. 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 member of the board of directors since March 1999.

Timothy R. Robinson has served as Executive Vice President and Chief
Financial Officer of HomeCom since August, 2000. Prior to joining HomeCom,
Mr. Robinson served as Vice President and Chief Financial Officer of Tanner's
Restaurant Group, Inc. from December of 1996 until January of 2000.
Mr. Robinson, a CPA, served as a senior manager with what is now
PricewaterhouseCoopers LLP from June 1986 to December 1996. Mr. Robinson
graduated from Georgia State University with a Bachelor of Business
Administration, Accounting.

Our board of directors is divided into three classes. The class III
directors, which are Mr. Sax and Mr. Ellsworth, will serve until the 2000 annual
meeting of stockholders; the class I directors, which are Mr. Thomas,
Mr. Walker and Mr. Delity, will serve until the 2001 annual meeting of
stockholders, and the class II directors, which are Dr. Bokuchava and
Mr. Nebel, will serve until the 2002 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

30
<PAGE>
HomeCom. 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 HomeCom 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 HomeCom.

BOARD COMMITTEES

The Board of Directors has four standing committees: a compensation
committee, an audit committee, a strategic planning committee and an executive
committee. The compensation committee provides recommendations to the board of
directors concerning salaries and incentive compensation for our officers and
employees. The audit committee recommends our independent auditors and reviews
the results and scope of audit and other accounting-related services provided by
the auditors. The strategic planning committee has been authorized to work with
our investment bankers to identify and evaluate our strategic alternatives.The
executive committee has day-to-day executive decision-making authority on behalf
of HomeCom, 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
matter. 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

Prior to June 1999, 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 our non-employee directors stock option plan, and
may receive additional grants of options under that plan at the discretion of
the compensation committee of the board of directors. See "Stock option plans--
Non-employee directors stock option plan."

EXECUTIVE COMPENSATION

The table below lists the total compensation paid or accrued by HomeCom in
1999 for our chief executive officer and each executive officer of HomeCom whose
total annual salary and bonuses determined at December 31, 1999 exceeded
$100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL LONG-TERM COMPENSATION AWARDS
COMPENSATION -----------------------------------
------------------- NUMBER OF SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS UNDERLYING OPTIONS COMPENSATION
--------------------------- -------- -------- -------------------- ------------
<S> <C> <C> <C> <C>
Harvey W. Sax................................ $137,420 $0 60,000 $0
President, Chief Executive Officer
Krishan Puri................................. $145,540 $0 200 $0
Executive Vice-President
Gia Bokuchava, Ph.D. ........................ $175,585 $0 25,000 $0
Chief Technical Officer And Director
</TABLE>

As of December 31, 1999, the annual salaries for our executive officers were
as follows: Harvey W. Sax, president and chief executive officer--$150,000;
James Wm. Ellsworth, chief financial officer--$120,000; Gia Bokuchava, Ph.D.,
chief technical officer--$105,000; James B. Alvilhiera, vice president--

31
<PAGE>
$100,000. Under our employment agreement with Dr. Bokuchava, he is eligible to
receive cash bonuses to repay promissory notes issued by him to HomeCom in
connection with his purchase of shares of common stock from HomeCom in
August 1996. 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.

OPTION GRANTS IN LAST FISCAL YEAR

The table below lists information concerning options granted in 1999 to our
chief executive officer and each executive officer whose total annual salary and
bonuses at December 31, 1999 exceeded $100,000.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
----------------------------------------------------------------- ASSUMED ANNUAL
PERCENT OF TOTAL RATES OF STOCK
UNDERLYING PRICE APPRECIATION
NUMBER OF SECURITIES EXERCISE OR FOR OPTION TERM
OPTIONS GRANTED TO BASE PRICE FOR EXPIRATION ---------------------
EXECUTIVE OFFICER GRANTED EMPLOYEES SHARE DATE 5% 10%
----------------- --------- ---------------- -------------- ----------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Harvey Sax................. 50,000 067% $5.78 February 26, 2009 181,751 460,592
Krishan Puri............... 200 .001% $3.94 January 7, 2000 496 1,256
</TABLE>

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

The table below lists the aggregate dollar value of all options exercised,
and the total number of unexercised options held, on December 31, 1999 by our
chief executive officer and each executive officer whose total annual salary and
bonuses at December 31, 1999 exceeded $100,000.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999
ACQUIRED ON VALUE --------------------------- ---------------------------
EXECUTIVE OFFICER EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
----------------- ----------- -------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harvey Sax......................... 0 0 55,000 5,000 0 0
Krishan Puri....................... 0 0 0 0 0 0
Gia Bokuchava, Ph.D................ 0 0 12,500 12,500 0 0
</TABLE>

EMPLOYMENT AGREEMENTS

We have entered into an employment agreement with Harvey W. Sax, our
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 in the employment
agreement, including termination by us "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.

We have entered into an employment agreement with James Wm. Ellsworth which
provides a three year term commencing on March 24, 1999, 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
in the agreement, including termination by us "for cause," as defined in the
employment agreement. The employment agreement provides for an annual base
salary of not less than $120,000 and for annual bonus compensation and annual
salary raises to be awarded at the discretion of the compensation committee of
the board of directors. The employment agreement further provides for payout of
the remaining amounts due under the employment agreement if termination occurs
for

32
<PAGE>
any reason other than for cause and if it occurs prior to the conclusion of the
term of the employment agreement, with a minimum payout due being one year's
salary. Further, the employment agreement provides that any diminution of title,
role or compensation, as defined in the employment agreement, will also result
in the payout of the remaining amounts due under the employment agreement, with
the minimum payment due being one year's salary.

STOCK OPTION PLANS

EMPLOYEE STOCK OPTION PLAN. Our employee stock option plan was adopted by
our stockholders in September 1996. A total of 2,000,000 shares 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 our common stock. The purpose of
the stock option plan is to provide incentives for officers and key employees to
promote our success, and to enhance our ability to attract and retain the
services of these persons. Options granted under the stock option plan may be
either options intended to qualify as "incentive stock options" under
Section 422 of the Code or non-qualified stock options. Stock options may be
granted under the stock option plan for all of our employees, or employees of
any of our present or future subsidiaries or parents. 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 the 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 our stock or
our subsidiary or parent. 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 our
stock or our subsidiary or parent, and will lapse upon expiration of the period,
or earlier upon termination of the recipient's employment, or as determined by
the compensation committee.

As of August 15, 2000, options to purchase 1,027,451 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 $4.492 per
share. All outstanding options vest 25% per year from their date of grant.

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

The 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 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 our stockholders. The
directors plan also allows the compensation committee to make extraordinary
grants of options to non-employee directors. All

33
<PAGE>
options granted under the 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 the
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 seven years. The 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 directors
plan to purchase 10,000 shares of common stock at an exercise price of $3.21 per
share. In March 1999, Mr. Thomas was granted an option to purchase 5,000 shares
of common stock at an exercise price of $5.25. During March 1999, Mr. Walker was
granted an option to purchase 10,000 shares of common stock at an exercise price
of $5.06.

EMPLOYEE STOCK PURCHASE PLAN. Our employee stock purchase plan became
effective on March 1, 1997. A total of 300,000 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 Code. The purpose of the stock
purchase plan is to encourage and enable our employees to acquire a proprietary
interest in HomeCom through ownership of shares of common stock. Our eligible
employees will purchase shares of common stock at 85% of fair market value and
we will partially subsidize purchases under the stock purchase plan by paying
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 from the employee's pay during each of four quarterly payroll
deduction purchase periods. Purchase 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. We are deemed on the last day of each purchase period to have
granted a purchase right to each participant as of the first day of the purchase
period to purchase as many full shares of common stock as can be purchased with
the participant's payroll deductions. On the last day of the purchase 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 purchase 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 purchase period,
whichever is lower.

Employees who have completed six full months of service with us 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 the employee would be deemed to own 5% or more of the
combined voting power or value of all classes of our stock. As of August 15,
2000, approximately 49 employees are eligible to participate in the stock
purchase plan, and as of the date, 2 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 termination, we will refund the employee's payroll deductions
or contributions made during the purchase period.

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

34
<PAGE>
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
plan, except for adjustments due to changes in our 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. Our 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 Code. This plan was
implemented in March 1998. In general, all of our employees are eligible to
participate. The 401(k) plan includes a salary deferral arrangement under which
participants may contribute amounts not to exceed limitations imposed by the
Code. Subject to certain Code limitations, we 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.
We 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 is 100% vested. The portion of the
account attributable to our contributions, including matching contributions,
will vest after 5 years of service with us. 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

Our principal employees, including executive officers, are required to sign
an agreement with us (a) restricting the ability of the employee to compete with
us during his or her employment and for a period of eighteen months following
the termination of employment, (b) restricting solicitation of customers and
employees following employment with us, and (c) providing for ownership and
assignment of intellectual property rights to us.

CERTAIN TRANSACTIONS

In August 1996, we issued and sold to six 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, we entered into employment agreements with the employees which
provide that for each of the first four years of employment, we will issue a
bonus to the employee in the amount necessary to repay the annual amount due
under the promissory note, plus the taxes due by the employee as a consequence
of receiving the bonus. Under the terms of the employment agreements, we will
continue to make these annual payments if the employee is terminated other than
"for cause," as defined in the employment agreements. Under the terms of the
subscription agreements for the shares, if the employee's employment is
terminated within the four-year period, we have the right to repurchase that
percentage of the shares purchased by the employee which will equal the
percentage of the promissory note which is not yet due, payment for the
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, a former Executive Vice President and a former director,
purchased 39,559 and 29,669 shares of common stock, respectively, in this
transaction. Mr. Vinod Keni, a former director, also purchased 3,955 shares in
this transaction. We have 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 per share, will continue to vest as if Mr. Keni were still employed by us.
We also agreed to cancel and forgive indebtedness of approximately $18,000

35
<PAGE>
represented by the promissory note given by Mr. Keni to purchase the 3,955
shares and to give Mr. Keni a cash payment to cover Mr. Keni's estimated tax
liability from the cancellation of indebtedness.

In August 1996, we acquired all of the outstanding capital stock of our
Internet Security Services, Inc., or 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 their pro rata share of four 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, we sold substantially all of the assets
of our Internet Security Services division to Infrastructure Defense, Inc. for
$200,000 cash, certain security audit rights and shares of a non-public entity.
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 us having a value of at least $5 million and being freely tradeable
on or before December 31, 2001.

36
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS

The following table provides information as of August 15, 2000, concerning
beneficial ownership of common stock by:

-- each person or entity known to beneficially own more than 5% of the
outstanding common stock,

-- each of our directors,

-- our chief executive officer and each executive officer whose total
annual salary and bonuses at December 31, 1999 exceeded $100,000,

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

-- the selling shareholder.

The information as to beneficial ownership has been furnished by each of our
respective stockholders, directors and executive officers 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 shareholder is MacNab LLC, which is also the holder of our
series C preferred stock. The number of shares in the table represents an
estimate of the number of shares of common stock to be offered by MacNab LLC, if
it were to fully convert our series C and E preferred stock as of August 15,
2000, fully exercise all the related warrants, and offer all the resulting
shares of common stock for sale. In accordance with the terms of the preferred
stock, if converted on August 15, 2000, the outstanding shares of series C
preferred stock would convert at a conversion price of $.7073 per share into
2,843,719 shares of common stock, and the outstanding shares of series E
preferred stock would convert at a conversion price of $.7073 per share into
3,088,428 shares of common stock. The warrants issued with the series C
preferred stock are exercisable at an exercise price of $7.34 per share into
59,574 shares of common stock, and the warrants issued with the series E
preferred stock are exercisable at an exercise price of $3.35 per share into
66,667 shares of common stock. The actual number of shares of common stock
issuable upon conversion of the 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 41, in
particular the subsections entitled "Series E Convertible Preferred Stock" on
page 50 and "Warrants" on page 54. This table, however, assumes no adjustment to
the conversion price of the preferred stock or exercise price of the warrants.
We have agreed to register, under a registration statement which includes this
prospectus at least 1,808,293 shares. We cannot assure you that MacNab LLC will
sell any or all of the shares that it may acquire upon their conversion of
preferred stock or exercise of warrants, as its determination whether to hold or
convert the series preferred stock or to exercise the warrants, and sell the
resulting shares, will depend upon

37
<PAGE>
many factors, including our prospects, general market conditions and the
prevailing price of the common stock.

<TABLE>
<CAPTION>
COMMON STOCK PERCENTAGE OF
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) OUTSTANDING SHARES
--------------------------- --------------------- ------------------
<S> <C> <C>
Harvey W. Sax(3)......................... 802,244 9.0
Gia Bokuchava, Ph.D.(4).................. 47,559 *
Roger J. Nebel(5)........................ 40,698 *
Claude A. Thomas(6)...................... 12,500 *
Mark Germain(7).......................... 350,885 3.9
Margery Germain(8)....................... 350,885 3.9
Daniel A. Delity(9)...................... 690,590 7.7
James Wm. Ellsworth(9)................... 141,467 1.6
David B. Frank(9)........................ 305,000 3.4
William Walker(10)....................... 5,000 *
CPR (USA), Inc.(11)...................... 484,505 4.9
LibertyView Funds, LP(12)................ 387,604 3.9
LibertyView Fund, LLC(13)................ 96,901 *
MacNab LLC(14)........................... 6,058,388 40.1
All executive officers and directors as a
group (7 persons)...................... 1,740,058 19.1
</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 or convertible
securities that are currently exercisable or exercisable within sixty days
of the date of this prospectus 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 issueable upon the exercise of an
outstanding option at an exercise price of $4.47 per share. Excludes 57,500
shares of common stock issueable upon the exercise of outstanding options
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 issueable upon the exercise of
outstanding options at a weighted average exercise price of $4.71 per
share. Excludes 17,500 shares of common stock issueable upon the exercise
of outstanding options 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 issueable upon the exercise of
outstanding options at a weighted average exercise price of $5.35 per share
and 18,958 shares issued in connection with our acquisition of HISS. See
"Certain Transactions." Excludes an additional 18,960 shares of common
stock that may be issued in connection with our acquisition of HISS. See
"Certain Transactions."

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<PAGE>
(6) Includes 12,500 shares of common stock issueable upon the exercise of an
outstanding option at a weighted average exercise price of $3.62 per share.
Excludes 2,500 shares of common stock issueable upon the exercise of
outstanding options at an exercise price of $5.25 per share which are not
currently exercisable and which become 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 issueable upon the exercise of an
outstanding warrant exercisable at an exercise price of $3.74 which is not
currently exercisable and which becomes exercisable more than 60 days
following the date of this prospectus.

Includes 5,000 shares of common stock issuable upon the exercise of an
outstanding option at an exercise price of $5.06.

(10) Excludes 5,000 shares of common stock issueable upon the exercise of an
outstanding option 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.

(11) Consists of shares of common stock issueable upon conversion of 12.5
outstanding shares of our series B preferred stock and exercise of related
warrants, based upon conversion prices as in effect on August 15, 2000. 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 issueable upon conversion of 10
outstanding shares of our series B preferred stock and exercise of related
warrants, based upon conversion prices as in effect on August 15, 2000.
100% of the voting shares of LibertyView Funds, L.P. are owned by Banque
CPR.

(13) Consists of shares of common stock issueable upon conversion of 2.5
outstanding shares of our series B preferred stock and exercise of related
warrants, based upon conversion prices as in effect on August 15, 2000.
100% of the voting shares of LibertyView Fund, LLC are owned by LibertyView
Capital Management Inc., a wholly-owned subsidiary of CPR (USA) Inc.

(14) Consists of shares of common stock issueable upon conversion of 94.607
outstanding shares of our series C and 106.35 outstanding shares of
series E preferred stock and exercise of related warrants, based upon
conversion prices as in effect on August 15, 2000. 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.

39
<PAGE>
DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 50,000,000 shares of common stock,
$.0001 par value, and 1,000,000 shares of preferred stock, $.01 par value. As of
August 1, 2000, there were outstanding 8,925,726 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, 25 shares of which are presently outstanding and held by three
record holders, 175 shares have been designated series C convertible preferred
stock, 94.607 shares of which are presently outstanding and are held by one
record holder, and 75 shares have been designated series D convertible preferred
stock, 1.291 of which are presently outstanding and are held by one record
holder, and 107 shares have been designated series E convertible preferred
stock, 106.35 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 our dissolution, liquidation or
winding up, 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 us 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, 25 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 our liquidation, dissolution and winding up. 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

40
<PAGE>
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 shares will 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 unless
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 will 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 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, or $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.

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<PAGE>
If all the remaining shares of series B preferred stock were converted as of
August 15, 2000, based upon the closing bid prices of the shares prior to that
date, under the conversion formula of the series B preferred stock based on the
average closing price of the four (4) consecutive trading days of the twenty
five (25) trading days immediately preceeding trading days immediately
preceeding August 15, 2000 that would produce the lowest average conversion
price, the conversion price for the shares would be set at a price of $.7188 per
share. After 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 25
outstanding shares of series B preferred stock would be convertible into 744,010
shares of common stock, or approximately 7.6% of the shares that would then be
outstanding. 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 then represent, under the following assumptions, and in each case
after taking into effect the 5% annual premium through August 15, 2000:

(a) assuming the current conversion price of $.7188 per share;

(b) assuming a conversion price 25% below the closing bid price as of
August 15, 2000 of $.7188 per share, or $.5391 per share;

(c) assuming a conversion price 50% below the closing bid price as of
August 15, 2000 of $.7188 per share, or $.3594 per share; and

(d) assuming a conversion price 75% below the closing bid price as of
August 15, 2000 of $.7188 per share, or $.1797 per share.

<TABLE>
<CAPTION>
THE SERIES B PREFERRED
SHARES WOULD CONVERT INTO:
---------------------------
NUMBER OF PERCENT OF
SHARES OUTSTANDING
------------ ------------
<S> <C> <C>
At the Current Conversion Price.................... 744,010 7.6%
At 25% below the Current Market Price.............. 993,857 9.9%
At 50% below the Current Market Price.............. 1,488,020 14.1%
At 75% below the Current Market Price.............. 2,976,041 24.8%
</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.

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<PAGE>
Prior to this financing, the board of directors of HomeCom considered a
variety of financing proposals. The Board determined that the series B preferred
stock financing represented the most favorable proposal offered to us 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 our previous two private placement financings consummated in December 1997
and January 1998.

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.

No shares of the series B preferred stock may be converted if, following
such conversion, the holder of the shares would beneficially own in excess of
4.9% of the outstanding shares. 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.

We 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. We 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 us 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.

SERIES C CONVERTIBLE 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, 94.607 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 our liquidation, dissolution, and winding up.
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 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 not less than a majority of the
then outstanding series C preferred shares, we will not hereafter authorize or
issue additional or other capital stock that is of

43
<PAGE>
senior or equal rank to the series C preferred shares in respect of the
preferences as to distributions and payments upon our liquidation, dissolution
and winding up. Without the prior express written consent of the holders of not
less than a majority of the then outstanding series C preferred shares, we will
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 will maintain heir 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 has been given to holders of the series C 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: (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 will 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 will 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 each holder of
series C 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 C preferred shares 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

44
<PAGE>
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 August 15, 2000, 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 $.7073 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 94.607
outstanding shares of series C preferred stock would be convertible into
2,843,719 shares of common stock, or approximately 23.9% of the shares that
would then be outstanding. 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 outstanding shares that such number of shares would
then represent, under the following assumptions, and in each case after taking
into effect the 6% annual premium through August 15, 2000:

(a) assuming the current conversion price of $.7073 per share;

(b) assuming a conversion price based on an average closing bid price
25% below the closing bid price as of August 15, 2000 of $.7073 per share,
or $.53 per share;

(c) assuming a conversion price based on an average closing bid price
50% below the closing bid price as of August 15, 2000 of $.7073 per share,
or $.354 per share; and

(d) assuming a conversion price based on an average closing bid price
75% below the closing bid price as of August 15, 2000 of $.7073 per share,
or $.177 per share.

<TABLE>
<CAPTION>
THE SERIES C PREFERRED
SHARES WOULD CONVERT INTO:
----------------------------
NUMBER OF PERCENT
SHARES OF OUTSTANDING
----------- --------------
<S> <C> <C>
At the Current Conversion Price.................... 2,843,719 23.9%
At 25% below the Current Market Price.............. 3,794,843 29.5%
At 50% below the Current Market Price.............. 5,681,545 38.6%
At 75% below the Current Market Price.............. 11,363,090 55.7%
</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 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.

45
<PAGE>
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. On August 2, 2000, we exercised that right by notice to the holder
of the series C preferred stock.

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 120% of the original purchase price.

No shares of the series C preferred stock may be converted if, following
such conversion, the holder of the shares would beneficially own in excess of
4.9% of the outstanding shares. 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 have filed a registration statement under the Securities
Act with respect to up to 1,244,444 shares of common stock issuable upon
conversion of the series C preferred stock and exercise of the related warrants.

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 our level of cash and cash equivalents were inadequate to permit
us to continue in existence for a sustained period. While the board of directors
considered the disadvantages of the potential preferred stock, including
(a) the potential dilution of the voting power per share of common stock,
(b) the potential dilution of the common stock book value, and (c) 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 our best interests and our shareholders' best interests to
proceed with the private placement based on the board's belief that such
transactions offered the most favorable terms then available to us given the
existing market conditions and our need for additional cash resources.

SERIES D CONVERTIBLE 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, 1.291 shares 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 our liquidation, dissolution, and winding up.
The rights of the shares of common stock are subject to the preferences and
relative rights of the

46
<PAGE>
series D preferred shares. Except for the series B preferred stock and the
series C preferred stock, the series D 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 not less than a majority of
the then outstanding series D preferred shares, we will 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 our liquidation, dissolution and winding up. Without the prior
express written consent of the holders of not less than a majority of the then
outstanding series D preferred shares, we will 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 prefrred shares will 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 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;

-- 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 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 will 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 (a) $20,000 and (b) 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 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.

47
<PAGE>
The holders of series D preferred shares 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 August 15, 2000, 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 $.7073per 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 1.291
outstanding shares of series D preferred stock would be convertible into 38,433
shares of common stock, or approximately .42% of the shares that would then be
outstanding. 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 August 15, 2000:

(a) assuming the current conversion price of $.7073 per share;

(b) assuming a conversion price based on an average closing bid price
25% below the closing bid price as of August 15, 2000 of $.7073 per share,
or $.53 per share;

(c) assuming a conversion price based on an average closing bid price
50% below the closing bid price as of August 15, 2000 of $.7073 per share,
or $.354 per share; and

(d) assuming a conversion price based on an average closing bid price
75% below the closing bid price as of August 15, 2000 of $.7073 per share,
or $.177 per share.

<TABLE>
<CAPTION>
THE SERIES D PREFERRED
SHARES WOULD CONVERT INTO:
---------------------------
NUMBER PERCENT OF
OF SHARES OUTSTANDING
------------ ------------
<S> <C> <C>
At the Current Conversion Price.................... 38,433 .42%
At 25% below the Current Market Price.............. 51,288 .56%
At 50% below the Current Market Price.............. 76,787 .84%
At 75% below the Current Market Price.............. 153,573 1.7%
</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

48
<PAGE>
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.

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.

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 120% of the original purchase price after 120 days from the
issuance date.

No shares of the series D preferred stock may be converted if, following
such conversion, the holder of the shares would beneficially own in excess of
4.9% of the outstanding shares. 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 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 have filed a registration statement under the Securities
Act with respect to up to 533,368 shares of common stock issuable upon
conversion of the series D preferred stock and exercise of the related warrants.

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 our level of cash and cash equivalents were inadequate to permit
us 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 our best interests and our shareholders'
best interests for us to proceed with the private placement based on the board's
belief that such transactions offered the most favorable terms then available to
us given the existing market conditions and our need for additional cash
resources.

SERIES E CONVERTIBLE PREFERRED STOCK

Pursuant to our certificate of incorporation, the board has classified 107
shares of preferred stock as Series E 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 107 shares authorized by
the

49
<PAGE>
board, 106.35 shares are currently outstanding. The stated value per share of
the series E preferred stock is $20,000. All shares of common stock are to be of
junior rank to all series E preferred shares in respect to the preferences as to
distributions and payments upon our liquidation, dissolution, and winding up.
The rights of the shares of common stock are subject to the preferences and
relative rights of the series E preferred shares. Except for the series B
preferred stock, the series C preferred stock, and the series D preferred stock,
the series E 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 not less than a majority of the then outstanding
series E preferred shares, we will not hereafter authorize or issue additional
or other capital stock that is of senior or equal rank to the series E preferred
shares in respect of the preferences as to distributions and payments upon our
liquidation, dissolution and winding up. Without the prior express written
consent of the holders of not less than a majority of the then outstanding
series E preferred shares, we will 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 E 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 anther
corporation, the series E preferred shares will 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 E preferred stock are not entitled to receive
dividends. If any series E preferred shares are outstanding, we may not, without
the prior express written consent of the holders of a majority of the then
outstanding series E 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 E 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: (i) pay
simultaneously to each holder of series E preferred shares an amount in cash
equal to the amount the holder would have received had all of the holder's
series E 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 E 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 E 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 will be paid
to the holders of any of our capital stock of any class junior in rank to the
series E preferred shares in respect of the preferences as to the distributions
and payments on the liquidation, dissolution and winding up, an amount per
series E preferred share equal to the sum of (i) $20,000 and (ii) a premium of
8% per year of the stated value from the date of issuance of the series E
preferred stock; provided that, if the funds are insufficient to pay the full
amount due to the holders of series E preferred shares and holders of shares of
other classes or series of preferred stock that are of equal rank with the
series E preferred shares as to payments of this type, then each holder of
series E 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

50
<PAGE>
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 E preferred shares 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 E preferred stock has an initial stated value of $20,000 per
share, which increases at the rate of 8% per year. Each series E 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) $3.53, 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 E preferred stock outstanding on
April 14, 2003 will automatically be converted into common stock at the
conversion price then in effect.

If all the outstanding shares of series E preferred stock were converted as
of August 15, 2000, based upon the closing bid prices of the shares prior to
that date, under the conversion formula of the series E preferred stock the
conversion price for the shares would be set at a price of $.7073 per share.
After taking into effect a premium of 8% per year from the date of issuance
provided for under the terms of the series E preferred stock, the 106.35
outstanding shares of series E preferred stock would be convertible into
3,088,428 shares of common stock, or approximately 25.4% of the shares that
would then be outstanding. The following table includes the total number of
shares that would be issued upon conversion of all the series E preferred stock,
and the percentage of the issued and outstanding shares that such number of
shares would represent, under the following assumptions, and in each case after
taking into effect the 8% annual premium through August 15, 2000:

(a) assuming the current conversion price of $.7073 per share;

(b) assuming a conversion price based on an average closing bid price
25% below the closing bid price as of August 15, 2000 of $.7073per share, or
$ .53 per share;

(c) assuming a conversion price based on an average closing bid price
50% below the closing bid price as of August 15, 2000 of $.7073 per share,
or $.354 per share; and

(d) assuming a conversion price based on an average closing bid price
75% below the closing bid price as of August 15, 2000 of $.7073 per share,
or $.177 per share.

<TABLE>
<CAPTION>
THE SERIES E PREFERRED
SHARES WOULD CONVERT
------------------------
INTO:
NUMBER PERCENT OF
OF SHARES OUTSTANDING
---------- -----------
<S> <C> <C>
At the Current Conversion Price...................... 3,088,428 25.4%
At 25% below the Current Market Price................ 4,121,399 31.3%
At 50% below the Current Market Price................ 6,170,456 40.5%
At 75% below the Current Market Price................ 12,340,912 57.7%
</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 E 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 E preferred stock continues to increase.

Under the conversion price formula, the series E 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 E preferred stock, the more shares of common stock the holder will get
in the conversion. To the extent a holder of shares of series E preferred stock
converts and then sells the shares of common stock, the common stock's market
price may decrease

51
<PAGE>
due to the additional shares in the market, allowing the selling holder to
convert other shares of series E 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 E 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 E preferred stock may result in substantial
dilution to the interest of other common stockholders, since each holder of the
outstanding shares of series E preferred stock may ultimately convert and sell
the full amount of common stock issuable upon conversion.

Through April 14, 2002, we have the right, under specified circumstances, to
prohibit holders of the series E 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 E preferred stock in cash or in shares of
common stock.

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 E 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 120% of the original purchase price.

No shares of the series E preferred stock may be converted if, following
such conversion, the holder of the shares would beneficially own in excess of
4.9% of the outstanding shares. The issuance of the series E 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 E 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 E preferred stock was issued
upon conversion of the series E 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 April 14, 2000, we completed a private placement of $2,127,000 principal
amount of our series E convertible preferred stock and related warrants to
purchase up to 66,667 shares of common stock. The series E 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 under the Securities Act the
registration statement of which this prospectus forms a part.

We entered into, and consummated, the private placement of the series E
preferred stock and the warrants based on a determination by our board of
directors that our level of cash and cash equivalents were inadequate to permit
us to continue in existence for a sustained period. While the board of directors
considered the disadvantages of the potential preferred stock, including
(a) the potential dilution of the voting power per share of common stock,
(b) the potential dilution of the common stock book value, and (c) 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 our best interests and our shareholders' best interests for us to
proceed with the private placement based on the board's belief that such
transactions offered the most favorable terms then available to us given the
existing market conditions and our need for additional cash resources.

52
<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 August 15, 2000, 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.

In connection with the sale of the series E convertible preferred stock, we
issued series E preferred stock warrants. These warrants represent the right to
acquire an aggregate of up to 66,667 shares of common stock. The warrants expire
on April 14, 2005 and have an exercise price of $3.35 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 some 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.

53
<PAGE>
LIMITATIONS ON LIABILITY OF DIRECTORS

Our 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 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. Our restated bylaws contain provisions requiring the
indemnification of our 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. We believe
that these restated certificate of incorporation and bylaws provisions are
necessary to attract and retain qualified persons as our directors and officers.

STATUTORY BUSINESS COMBINATION PROVISION

We are 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: (a) 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, (b) 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 (c) 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 (a) the owner of 15% or more of the outstanding voting stock of
the corporation or (b) 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 our restated certificate of incorporation nor our restated
bylaws contains any such exclusion, although the Board of Directors has excluded
certain of our stockholders from the coverage of Section 203.

54
<PAGE>
PLAN OF DISTRIBUTION

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

-- on the Nasdaq SmallCap Market;

-- 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 shareholder 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 shareholder against
some liabilities arising under the Securities Act.

Any broker-dealer participating in transactions as agent may receive
commissions from the selling shareholder, 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 shareholder. Broker-dealers may agree with the
selling shareholder 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 shareholder, to purchase as principal any unsold shares at
the price required to fulfill the broker-dealer commitment to the selling
shareholder. 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 shareholder 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 shareholder and their affiliates. The selling
shareholder has advised us that during the time as the selling shareholder 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;

-- 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 Exchange Act;

-- 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

-- 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 shareholder 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 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.

55
<PAGE>
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.

We have agreed to use our 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 shareholder will sell
all or any of the shares offered under this prospectus.

LEGAL MATTERS

The validity of the common stock being offered under this prospectus will be
passed upon for HomeCom by Sims Moss Kline & Davis, a limited liability
partnership, Atlanta, Georgia.

EXPERTS

The financial statements of HomeCom as of December 31, 1998 and 1999 and for
each of the three years in the period ended December 31, 1999 included in this
prospectus have been included in reliance on the report, which contains an
explanatory paragraph relating to our ability to continue as a going concern as
described in the notes to the financial statements, of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that 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
that 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 that firm as experts in accounting and auditing.

AVAILABLE INFORMATION

We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and accordingly file reports, proxy and information
statements, and other information with the Securities and Exchange Commission.
Such reports, proxy and information statements, and other information we file
with the Commission 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.

56
<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, 1998 and 1999........... F-3
Statements of Operations for Each of the Three Years in
the Period Ended
December 31, 1999....................................... F-4
Statements of Stockholders' Equity (Deficit) for Each of
the Three Years in the
Period Ended December 31, 1999.......................... F-5
Statements of Cash Flows for Each of the Three Years in
the Period Ended
December 31, 1999....................................... F-6
Notes to Financial Statements............................. F-8

UNAUDITED INTERIM FINANCIAL STATEMENTS:
Balance Sheets as of June 30, 2000 and December 31,
1999.................................................... F-24
Statements of Operations for the Three and Six Month
Periods Ended June 30, 2000
and 1999................................................ F-25
Statements of Cash Flows for the Six Month Periods Ended
June 30, 2000 and 1999.................................. F-26
Notes to Financial Statements............................. F-27

PREMIER FINANCIAL SERVICES, INC., FIRST INSTITUTIONAL
MARKETING, INC., AND ALL THINGS FINANCIAL, INC.
Independent Auditors' Report.............................. F-32
Combined Balance Sheets................................... F-33
Combined Statement of Income and Retained Earnings........ F-34
Combined Statement of Cash Flows.......................... F-35
Notes to the Combined Financial Statements................ F-36

FIMI SECURITIES, INC.:
Independent Auditors' Report.............................. F-39
Statements of Financial Condition......................... F-40
Statements of Income...................................... F-41
Statements of Changes in Stockholder's Equity............. F-42
Statements of Cash Flows.................................. F-43
Notes to the Financial Statements......................... F-44
Schedule I................................................ F-46
Schedule II............................................... F-47
Schedule III.............................................. F-48

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-49

GANYMEDE CORPORATION:
Independent Auditors' Report.............................. F-50
Balance Sheet............................................. F-51
Statement of Loss and Deficit............................. F-52
Statement of Cash Flows................................... F-53
Notes to Financial Statements............................. F-54
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

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

In our opinion, the accompanying consolidated balance sheets and the related
consolidated 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. and its subsidiaries at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
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
auditing standards generally accepted in the United States, 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 1 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 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

PricewaterhouseCoopers LLP

Atlanta, Georgia
March 29, 2000

F-2
<PAGE>
HOMECOM COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,291,932 $ 1,497,678
Restricted cash........................................... 250,000 --
Accounts receivable, net.................................. 680,790 1,160,114
Employee loans............................................ -- 474,583
Receivable from related party............................. -- 200,000
Other current assets...................................... 4,796 189,648
----------- ------------
Total current assets.................................. 3,227,518 3,522,023
Furniture, fixtures and equipment, net...................... 797,263 1,131,204
Deposits.................................................... 80,231 92,494
Intangible assets, net...................................... 351,320 4,966,822
Investment.................................................. -- 823,175
Other assets................................................ 109,158 --
----------- ------------
Total assets................................................ $ 4,565,490 $ 10,535,718
=========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $ 424,094 $ 1,697,210
Accrued payroll liabilities............................... 300,927 290,414
Unearned revenue.......................................... 128,345 296,319
Current portion of obligations under capital leases....... 108,427 204,278
----------- ------------
Total current liabilities............................. 961,793 2,488,221
Obligations under capital leases............................ 88,242 315,275
Other liabilities........................................... 67,006 127,104
----------- ------------
Total liabilities..................................... 1,117,041 2,930,600
----------- ------------
Redeemable Preferred stock, Series B $.01 par value, 125
shares authorized, 0 and 125 shares issued at
December 31, 1998 and 1999, respectively and 0 and 115
shares outstanding at December 31, 1998 and 1999,
respectively, convertible, participating, $2,388,219
liquidation value as of December 31, 1999............... -- 1,624,920
Commitments and contingencies (Note 5)
----------- ------------
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value, 15,000,000 shares
authorized, 5,072,397 and 7,040,525 shares issued and
outstanding at December 31, 1998 and 1999,
respectively............................................ 507 704
Preferred stock, Series C, $.01 par value, 175 shares
authorized, 0 and 175 shares issued at December 31, 1998
and 1999, respectively and 0 and 137.5 shares
outstanding at December 31, 1998 and 1999, respectively,
convertible, participating; $2,810,264 liquidation value
at December 31, 1999.................................... -- 2
Preferred stock, Series D, $.01 par value, 75 shares
authorized, 0 and 75 shares issued at December 31, 1998
and 1999, respectively and 0 and 75 shares outstanding
at December 31, 1998 and 1999, respectively;
convertible, participating; $1,522,685 liquidation value
at December 31, 1999.................................... -- 1
Additional paid-in capital................................ 10,355,724 21,931,281
Subscriptions receivable.................................. (196,878) (64,687)
Accumulated deficit....................................... (6,710,904) (15,887,103)
----------- ------------
Total stockholders' equity............................ 3,448,449 5,980,198
----------- ------------
Total liabilities and stockholders' equity............ $ 4,565,490 $ 10,535,718
=========== ============
</TABLE>

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

F-3
<PAGE>
HOMECOM COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Revenues.................................................... 2,503,185 2,510,689 6,556,173
Cost of revenues............................................ 2,139,982 2,231,757 4,555,337
----------- ----------- ------------
GROSS PROFIT................................................ 363,203 278,932 2,000,836
----------- ----------- ------------

OPERATING EXPENSES:
Sales and marketing....................................... 1,440,002 1,221,908 3,953,792
Product development....................................... 514,655 677,590 1,020,264
General and administrative................................ 2,538,229 3,098,095 5,082,979
Depreciation and amortization............................. 238,537 542,269 1,837,647
----------- ----------- ------------
Total operating expenses.............................. 4,731,423 5,539,862 11,894,682
----------- ----------- ------------
OPERATING LOSS.............................................. (4,368,220) (5,260,930) (9,893,846)

OTHER EXPENSES (INCOME)
Gain on sale of division.................................. -- (4,402,076) --
Interest expense.......................................... 543,420 445,216 32,669
Other expense (income), net............................... (93,298) (166,942) (103,551)
----------- ----------- ------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES......... (4,818,342) (1,137,128) (9,822,964)

INCOME TAX PROVISION (BENEFIT).............................. -- -- --
----------- ----------- ------------
LOSS FROM CONTINUING OPERATIONS............................. (4,818,342) (1,137,128) (9,822,964)
LOSS FROM DISCONTINUED OPERATIONS........................... (62,839) (67,012) (497,826)
GAIN ON DISPOSAL OF DISCONTINUED BUSINESS SEGMENT........... -- -- 1,144,591
----------- ----------- ------------

NET LOSS.................................................... (4,881,181) (1,204,140) (9,176,199)

DEEMED PREFERRED STOCK DIVIDEND............................. -- (666,667) (2,557,466)
----------- ----------- ------------

LOSS APPLICABLE TO COMMON SHAREHOLDERS...................... $(4,881,181) $(1,870,807) $(11,733,665)
=========== =========== ============

LOSS PER SHARE--BASIC AND DILUTED...........................
CONTINUING OPERATIONS..................................... $ (1.86) $ (0.42) $ (1.96)
DISCONTINUED OPERATIONS................................... (0.02) (0.02) .10
----------- ----------- ------------
TOTAL................................................. $ (1.88) $ (0.44) $ (1.86)
=========== =========== ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED......................................... 2,602,515 4,287,183 6,324,791
=========== =========== ============
</TABLE>

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

F-4
<PAGE>
HOMECOM COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>

PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------- --------------------- PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT
-------- -------- --------- --------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996.............. -- -- 1,923,063 $ 192 $ 472,726 $(468,004) $ (625,583)
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........... 130,503
Beneficial conversion feature of
convertible debentures................ 566,667
Net loss................................ -- -- -- -- -- -- (4,881,181)
------- ----- --------- --------- ----------- --------- ------------
BALANCE, December 31, 1997.............. 20,000 200 2,956,396 295 7,800,542 (337,501) (5,506,764)

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........... 140,623
Other................................... (28,937)
Net loss................................ -- -- -- -- -- -- (1,204,140)
------- ----- --------- --------- ----------- --------- ------------
BALANCE, December 31, 1998.............. -- -- 5,072,397 507 10,355,724 (196,878) (6,710,904)

Issuance of preferred stock and
warrants, net of offering costs....... 250 3 5,265,031
Common stock issued in conjunction with
the acquisition of FIMI............... 1,252,174 125 4,235,979
Common stock issued in conjunction with
the acquisition of Ganymede........... 185,342 19 1,248,167
Warrant exercises....................... 106,875 11 427,489
Conversion of preferred stock to common
shares................................ (37) 344,777 34 141,263
Stock option exercises.................. 53,278 5 209,450
Cancellation of subscription receivable
under employment agreements........... 132,191
Other................................... 25,682 3 48,178
Net loss................................ (9,176,199)
------- ----- --------- --------- ----------- --------- ------------
BALANCE, December 31, 1999.............. 213 $ 3 7,040,525 $ 704 $21,931,281 $ (64,687) $(15,887,103)
======= ===== ========= ========= =========== ========= ============

<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
(DEFICIT)
-------------
<S> <C>
BALANCE, December 31, 1996.............. $ (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
Beneficial conversion feature of
convertible debentures................ 566,667
Net loss................................ (4,881,181)
-----------
BALANCE, December 31, 1997.............. 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
Other................................... (28,937)
Net loss................................ (1,204,140)
-----------
BALANCE, December 31, 1998.............. 3,448,449
Issuance of preferred stock and
warrants, net of offering costs....... 5,265,034
Common stock issued in conjunction with
the acquisition of FIMI............... 4,236,104
Common stock issued in conjunction with
the acquisition of Ganymede........... 1,248,186
Warrant exercises....................... 427,500
Conversion of preferred stock to common
shares................................ 141,297
Stock option exercises.................. 209,455
Cancellation of subscription receivable
under employment agreements........... 132,191
Other................................... 48,181
Net loss................................ (9,176,199)
-----------
BALANCE, December 31, 1999.............. $ 5,980,198
===========
</TABLE>

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

F-5
<PAGE>
HOMECOM COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(4,881,181) $(1,204,140) $(9,176,199)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization........................... 457,113 542,269 1,916,170
Amortization of debt discount........................... 443,889 122,778 --
Amortization of debt issue costs........................ 22,578 283,754 --
Forgiveness of subscriptions receivable................. 130,501 140,623 132,189
Expense recorded for issuance of warrants............... -- 36,093 11,797
Non-cash compensation expense........................... -- 44,933 68,071
Gain on sale of division................................ -- (4,402,076) (1,144,591)
Provision for bad debts................................. 244,893 167,675 228,000
Deferred rent expense................................... 45,717 (52,135) (31,532)
Change in operating assets and liabilities:
Accounts receivable................................... (227,478) (309,248) (499,466)
Accounts payable and accrued expenses................. (221,908) (3,793) 542,947
Accrued payroll liabilities........................... (74,274) 36,747 (45,700)
Unearned revenue...................................... 57,808 187,367 167,974
Other................................................. (21,674) 4,963 128,054
----------- ----------- -----------
Net cash used in operating activities................... (4,024,016) (4,404,190) (7,702,286)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, fixtures and equipment............. (387,209) (362,689) (507,117)
Cash from acquisition..................................... -- -- 136,938
Loans to related parties.................................. -- -- (474,583)
Proceeds from sale of division, net of restricted cash of
$250,000................................................ -- 4,000,000 --
Payment of acquisition costs.............................. -- (152,407) --
Software development costs................................ (168,834) -- --
Release of Restricted cash................................ 250,000
----------- ----------- -----------
Net cash provided by (used in) investing activities..... (556,043) 3,484,904 (594,762)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of deferred offering costs........................ (415,448) (28,937) --
Payment of deferred debt issue costs...................... (220,937) (35,395) --
Repayment of capital lease obligations.................... (51,010) (144,492) (133,691)
Proceeds from issuance of common shares and exercise of
warrants................................................ -- 232,094 648,682
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 -- 6,987,801
Proceeds from notes payable to stockholders............... 490,000 -- --
Repayment of notes payable to stockholders................ (1,335,581) -- --
Proceeds from note payable................................ -- -- --
Repayment of note payable................................. (60,646) -- --
Proceeds from sale of stock, net of underwriting discounts
and commissions......................................... 5,520,000 -- --
----------- ----------- -----------
Net cash provided by financing activities................. 7,435,630 23,270 7,502,792
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 2,855,571 (896,016) 794,256
CASH AND CASH EQUIVALENTS at beginning of period............ 332,377 3,187,948 2,291,932
----------- ----------- -----------
CASH AND CASH EQUIVALENTS at end of period.................. $ 3,187,948 $ 2,291,932 $ 1,497,676
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON
CASH INVESTING AND FINANCING ACTIVITIES:
Interest paid............................................. $ 56,365 $ 16,277 $ 32,400
=========== =========== ===========
Capital lease obligations incurred during year on lease of
computer equipment...................................... $ 119,346 $ 208,065 $ 308,093
=========== =========== ===========
Conversion of notes payable to affiliate to common
stock................................................... $ 200,000 $ -- $ --
=========== =========== ===========
Issuance of warrants and compensatory stock options....... $ 89,611 $ -- $ --
=========== =========== ===========
</TABLE>

F-6
<PAGE>
HOMECOM COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

During 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 1999, the Company issued 185,342 shares of common stock for the net
assets of Ganymede Corporation.

During 1999, 47 shares of preferred stock were converted into 344,777 shares
of common stock.

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.

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

F-7
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

HomeCom Communications, Inc. (the "Company") develops and markets
specialized software applications, products and services that enable financial
institutions and their customers to use the Internet and intranets/extranets to
obtain and communicate important business information, conduct commercial
transactions and improve business productivity. HomeCom derives revenue from
professional web development services, software licensing, application
development, insurance and securities sales commissions, hosting fees and
transactions fees. 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.
HomeCom's Software Products Group provides cost effective, one-stop web-based
financial service applications to the banking, credit union and brokerage
industries that allow its clientele to deploy competitive e-commerce platforms
at far less cost than custom application development. HomeCom's InsureRate-TM-
provides turnkey online insurance programs to financial institutions,
particularly banks, credit unions, brokerage houses and financial web portals.

BASIS OF PRESENTATION--GOING CONCERN

The Company's financial statements are prepared using 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 has incurred significant losses since its incorporation,
resulting in an accumulated deficit at December 31, 1999 of approximately
$15.9 million. The Company continues to experience negative cash flows from
operations and is dependent on continued financing from investors to sustain its
activities. 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. During 1999, the Company completed a workforce reduction and the
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.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, subsequent to acquisition, after the
elimination of all significant intercompany accounts and transactions.

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.

F-8
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 were 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. During
the year ended December 31, 1999 these restricted funds were released from
escrow to the Company.

ACCOUNTS RECEIVABLE, NET

Accounts receivable are shown net of the allowance for doubtful accounts.
The allowance was approximately $95,000 and $215,000 at December 31, 1998 and
1999, respectively. Write-offs were approximately $233,000 and $108,000 for the
year ended December 31, 1998 and 1999, respectively.

Concentration of credit risk with respect to trade accounts receivable is
generally diversified due to the large number of entities comprising and the
quality of its customer base. The Company provides an allowance for accounts
which are estimated to be uncollectible. The Company's sales to its five largest
customers represented approximately 15%, 27% and 51% of total revenues for the
years ended December 31, 1997, 1998 and 1999, respectively. During 1999, two
customers each accounted for more than 10% of the revenues of the Company. No
customer accounted for more than 10% of the revenues of the Company in 1998 or
1997.

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. Furniture and fixtures are
depreciated over a 5 year life; computer equipment is depreciated over a 3 year
life. 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, 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 growth 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
$219,000 and $32,000 in 1997 and 1998, respectively. These expenses are included
in cost of sales. At December 31, 1998, capitalized software development costs
had been fully amortized.

F-9
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS

Intangible assets represent identifiable and unidentifiable intangible
assets relating to acquired businesses. Amounts assigned to certain
relationships and licenses are amortized on a straight-line basis over three
years; amounts assigned to retail insurance operations are amortized on a
straight-line basis over seven years costs in excess of net tangible and
identifiable intangible assets acquired are recorded as goodwill and are
amortized on a straight-line basis over periods ranging from three to five
years. The lives established for these assets are a composite of many factors
which are subject to change because of the nature of the Company's operations.
This is particularly true for costs in excess of net assets acquired which
reflect value attributable to the going concern nature of the acquired
businesses, the stability of their operations, market presence and reputation.
Accordingly, at each balance sheet date, a determination is made by management
to ascertain whether the intangible assets have been impaired based on several
criteria, including, but not limited to, sales trends and undiscounted cash
flows.

Impairment of value, if any, is recognized in the period in which it is
determined. The Company does not believe there are any facts or circumstances
indicating impairment of intangible assets at December 31, 1999.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments approximates
fair value.

REVENUE RECOGNITION

The Company recognizes revenues on web site 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 related to insurance product commissions are recognized
upon receipt. 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.

ADVERTISING EXPENSES

Advertising costs are expensed when incurred. Advertising expenses were
approximately $724,000, $263,000, and $1,147,000 for the years ended
December 31, 1997, 1998 and 1999, respectively.

INCOME TAXES

The Company accounts for income taxes using the asset and liability method
as described by Statement of Financial Accounting Standards No. 109, ACCOUNTING
FOR INCOME TAXES ("SFAS No. 109").

Under SFAS 109 the liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and

F-10
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
tax bases of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse.

The Company provides a valuation allowance for deferred tax assets which are
determined by management to be below the threshold for realization established
by SFAS 109.

BASIC AND DILUTED LOSS PER SHARE

Basic and diluted loss per share 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, 1999, the numerator and denominator are
the same for both basic and diluted loss per share.

The table below illustrates the calculation of the loss per share amounts
attributable to continuing and discontinued operations applicable to common
shareholders.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Loss from continuing operations....................... $(4,818,342) $(1,137,128) $ (9,822,964)
Less: Deemed Preferred stock dividend................. -- (666,667) (2,557,466)
----------- ----------- ------------
Loss from continuing operations applicable to common
shareholders........................................ (4,818,342) (1,803,795) (12,380,430)
Discontinued operations............................... (62,839) (67,012) 646,765
----------- ----------- ------------
Net loss applicable to common shareholders............ $(4,881,181) $(1,870,807) $(11,733,665)
=========== =========== ============
Weighted average common shares outstanding--
Basic and diluted................................... 2,602,515 4,287,183 6,324,791
----------- ----------- ------------
Loss per share--continuing operations................. $ (1.86) $ (0.42) $ (1.96)
Loss per share--discontinued operations............... (0.02) (0.02) .10
----------- ----------- ------------
$ (1.88) $ (0.44) $ (1.86)
=========== =========== ============
</TABLE>

The Company has not declared or paid any dividends to the shareholders of
the Preferred Stock. However, the Preferred Stock possess conversion rights (the
"Beneficial Conversion Feature") that are analogous to dividends. Accordingly,
the Beneficial Conversion Feature is accounted for as a Deemed Preferred Stock
Dividend. (See footnotes 7, 8, and 9.)

OTHER MATTERS

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

F-11
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. FURNITURE, FIXTURES AND EQUIPMENT, NET

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

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1999
--------- ----------
<S> <C> <C>
Furniture and fixtures................................ $ 257,424 $ 399,845
Computer equipment.................................... 861,400 1,195,234
Computer equipment under capital leases............... 382,055 810,917
--------- ----------
1,500,879 2,405,996
Less: accumulated depreciation and amortization....... (703,616) (1,274,792)
--------- ----------
$ 797,263 1,131,204
========= ==========
</TABLE>

3. INTANGIBLE ASSETS

Intangible assets consist of the following at December 31, 1998 and 1999:

<TABLE>
<CAPTION>
1998 1999
--------- ----------
<S> <C> <C>
Licenses and training programs........................ -- $ 172,269
Bank and carrier relationships........................ -- 450,000
Retail insurance operations........................... -- 1,500,000
Goodwill.............................................. 459,510 3,830,888
--------- ----------
459,510 5,953,157
Less: Accumulated amortization........................ (108,190) (986,335)
--------- ----------
$ 351,320 $4,966,822
========= ==========
</TABLE>

Amortization expense relating to intangible assets was $0, $108,190 and
$1,337,655 for the years ended December 31, 1997, 1998 and 1999, respectively.

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/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-12
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. SEGMENT INFORMATION (CONTINUED)
The table below presents information about the reported business unit income
for HomeCom Communications, Inc. for the years ended December 31, 1998 and 1999
(in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues:
FAST.................................................... $ 1,950 $ 3,903
HostAmerica............................................. 531 --
InsureRate/FIMI......................................... -- 2,467
Software Products....................................... 29 186
------- -------
Totals................................................ $ 2,510 $ 6,556
======= =======
HISS (Discontinued Operation)........................... $ 782 $ 257
======= =======
Business Unit Net Income (Loss):
FAST.................................................... (363) (458)
HostAmerica............................................. 256 --
InsureRate/FIMI......................................... (357) (2,737)
Software Products....................................... (443) (1,396)
------- -------
Business Unit Net Income (Loss):.......................... $ (907) $(4,591)
======= =======
HISS (Discontinued Operation)........................... $ (67) $ (498)
======= =======
Adjustments to reconcile Business unit net income (loss)
with consolidated net income (loss):
Corporate Expenses...................................... (4,354) (5,303)
Gain on Sale of Division................................ 4,402
Interest expense........................................ (445) (33)
Other Income, Net....................................... 167 104
------- -------
Loss From Continuing Operations........................... $(1,137) $(9,823)
======= =======
</TABLE>

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.

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

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

F-13
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. SEGMENT INFORMATION (CONTINUED)
For the year 1997, operating income (loss) by segment is not presented as
the information is not available.

Asset information by reportable segment is not reported since the Company
does not produce such information internally.

5. COMMITMENTS AND CONTINGENCIES

The Company leases office space and equipment under noncancelable operating
lease agreements expiring through 2004. The Company has entered into capital
leases of computer equipment.

Future minimum lease payments under capital and operating leases are as
follows as of December 31, 1999:

<TABLE>
<CAPTION>
CAPITAL
LEASES OPERATING LEASES
--------- ----------------
<S> <C> <C>
2000.............................................. $ 264,685 $ 625,050
2001.............................................. 170,271 426,895
2002.............................................. 98,255 363,357
2003.............................................. 44,358 235,550
2004.............................................. 16,358 161,715
--------- ----------
Total minimum lease payments...................... 593,927 $1,812,567
==========
Less: amount representing interest................ (74,374)
---------
Present value of minimum lease payments........... 519,553
Less: current portion............................. (204,278)
---------
$ 315,275
=========
</TABLE>

The Company leases office space in New York City, Chicago, Houston, and
Atlanta. 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.

Rental expense under operating leases was approximately $507,000, $440,000
and $588,000 for the years ended December 31, 1997, 1998, 1999 respectively.

F-14
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)

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. The Company does maintain errors and omissions to
protect it from malfunctions or nonmerchantability of its software products and
from potential market conduct liabilities relating to its insurance and
securities operations. 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. EQUITY AND CONVERTIBLE DEBT TRANSACTIONS

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. During 1998, the full
principal amount of the debentures was fully converted into 961,460 shares of
common stock. As of December 31, 1999, $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) was
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

F-15
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. EQUITY AND CONVERTIBLE DEBT TRANSACTIONS (CONTINUED)
stock. These warrants were issued in October 1997. Of these warrants, 43,125 and
200,000 at exercise prices of $4.00 and $6.00 per share, respectively, are
outstanding at December 31, 1999. 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 were outstanding at a weighted
average exercise price of $7.51. At December 31, 1999, 1,261,960 warrants are
outstanding at a weighted average exercise price of $6.30.

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. In October, 1999, in connection with the sale of the
HISS business unit, the Company issued 18,959 shares of common stock to the
former shareholders of HISS as an earnout payment. In addition, the Company
committed to issue another 18,959 shares of common stock to the former
shareholders of HISS in the event that the Company's equity stake in the
acquiring entity becomes worth over $5 million and is freely tradable.

During 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 1999, the Company issued 185,342 shares of common stock for the net
assets of Ganymede Corporation.

7. 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.

F-16
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. ISSUANCE OF SERIES B PREFERRED STOCK (CONTINUED)
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 1999. The balance of the beneficial
conversion feature will be recognized through March, 2002. During 1999, 10
shares of Series B Preferred Stock were converted into 63,317 shares of common
stock.

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 of notice, the
preferred shareholders may require the Company to repurchase the remaining
Series B Preferred Stock at 120% of face value. 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.

8. 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

F-17
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. ISSUANCE OF SERIES C PREFERRED STOCK (CONTINUED)
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.

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 $1,485,000 of
the beneficial conversion was amortized in 1999. The balance of the beneficial
conversion feature will be recognized through July, 2002. During 1999, 37 shares
of Series C Preferred Stock were converted into 281,460 shares of common stock.

The Company has 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 at 120% of the original
purchase price.

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.

9. 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.

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 $280,000 of
the beneficial conversion was amortized in 1999. The balance of the beneficial
conversion feature will be recognized through September, 2002.

F-18
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. ISSUANCE OF SERIES D PREFERRED STOCK (CONTINUED)
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 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.

10. 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.

The options granted 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.

Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("FAS 123") 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"

F-19
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK OPTION PLANS (CONTINUED)
("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, 1998 and 1999, the Company recognized
approximately $5,000, $36,000, and $0, 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,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Risk-free interest rate........................... 5.93% 5.11% 5.58%
Volatility factors of the expected market price of
the Company's common stock...................... 90% 110% 85%
Weighted average expected life of the options..... 5 years 5 years 5 years
Expected dividend yield........................... 0% 0% 0%
</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, 1998 and 1999 would
have been the pro forma amounts listed below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Loss applicable to common
shareholders:
As reported......................... $(4,881,181) $(1,870,807) $(11,733,665)
Pro forma........................... (5,012,634) (2,351,259) (12,591,580)
Basic and diluted loss per share:
As reported......................... (1.88) (0.44) (1.86)
Pro forma........................... (1.93) (0.55) (1.99)
</TABLE>

F-20
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. 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 1999
--------------------------- --------------------------- ----------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE WEIGHTED-AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
-------- ---------------- -------- ---------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
year.......................... 220,543 $6.30 421,160 $4.95 558,610 $4.59
Granted......................... 599,555 5.26 312,700 3.35 1,067,958 4.31
Exercised....................... 0 -- (4,375) 4.06 (53,278) 3.93
Forfeited....................... (398,938) 5.80 (170,875) 3.34 (418,031) 4.25
-------- -------- ---------
Outstanding at end of year...... 421,160 4.95 558,610 4.59 1,155,259 4.49
======== ======== ===== =========
Options exercisable at year
end........................... 3,090 4.95 127,791 4.98 251,112 4.85
======== ======== =========
Shares available for future
grant......................... 178,840 41,390 912,912
======== ======== =========
Weighted-average fair value of
options granted during the
year at the shares' fair
value......................... $ 3.71 $ 2.79 $ 3.10
======== ======== =========
</TABLE>

The following table summarizes information about fixed options outstanding
at December 31, 1999.

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
REMAINING
EXERCISE PRICES SHARES CONTRACTUAL LIFE
--------------- --------- ----------------
<S> <C> <C>
$1.91-2.81............................................. 392,900 9.6
$3.22-4.55............................................. 246,550 7.8
$5.06-6.50............................................. 505,809 8.8
$8.06.................................................. 10,000 8.0
---------
1,155,259
=========
</TABLE>

11. ACQUISITIONS AND DIVESTITURES

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 accounted for this acquisition as a purchase transaction.
Approximately $460,000 was recorded as an intangible asset. At December 31,
1998, the net unamortized balance of this intangible asset was $351,000, net of
$109,000 of accumulated amortization. As of December 31, 1999, the intangible
assets related to IRC had been fully amortized.

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.

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

F-21
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. ACQUISITIONS AND DIVESTITURES (CONTINUED)
shares of common stock. The acquisition has been accounted for as a 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 resulting intangible assets will be amortized over a
period of approximately 3 to 7 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 in 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.

On April 23, 1999, the Company acquired all of the outstanding shares of
Ganymede Corporation ("Ganymede") for total consideration of $1,348,186,
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 transaction. The purchase price has been allocated
to assets acquired and liabilities assumed based on their estimated fair values.
The resulting intangible assets will be amortized over a period of approximately
3 to 5 years. Results of operations for Ganymede have been included with those
of the Company for periods subsequent to the date of acquisition.

The following unaudited pro forma information for the years ended
December 31, 1998 and 1999 have been prepared to reflect adjustments to the
Company's historical results of operations to give effect to the acquisition of
FIMI and Ganymede and the divestiture of HostAmerica and HISS as if each
transaction had occurred on January 1, 1998.

This pro forma information is not necessarily indicative of the results of
operations which would have been attained had each of the aforementioned
transactions been consummated on the dates indicated or which may be attained in
the future.

<TABLE>
<CAPTION>
1998 1999
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net revenue....................................... $ 7,113,162 $ 7,277,164
Gross profit...................................... 1,292,832 2,232,059
Loss from continuing operations................... (1,366,197) (9,439,054)
</TABLE>

12. 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 $823,175 in common stock of the non-public acquiror,
certain security audit rights and $200,000 cash, paid in January, 2000. The
purchase price was established through arms' length negotiations between the
Company and iDefense.

F-22
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. DISPOSITION OF INTERNET SECURITY SERVICES DIVISION (CONTINUED)
The Company has removed the results of this discontinued operation from the
continuing operations of the Company for all periods presented. The Company
recorded a gain of approximately $1.14 million on the sale of the HISS unit in
1999.

13. 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,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Temporary differences:
Allowance for uncollectibles....................... $ 36,246 $ 82,052
Vacation accrual................................... 33,586 29,812
Depreciation....................................... 4,826 113,930
Deferred rent expense.............................. 25,462 19,490
Cash to accrual adjustment......................... -- 100,278
Other accruals..................................... -- 160,000
Software development expenses...................... 35,138 32,620
Net operating loss carryforward.................... 2,357,670 5,043,323
----------- -----------
Deferred tax asset................................. 2,492,928 5,581,505
Valuation allowance................................ (2,492,928) (4,896,133)
----------- -----------
Net deferred tax asset............................. -- 685,372

Acquired intangibles............................... -- (685,372)
----------- -----------
Deferred tax liability............................. -- (685,372)
----------- -----------
Net deferred tax asset (liability)................. -- --
=========== ===========
</TABLE>

At December 31, 1999, the Company had net operating loss carryforwards for
income tax purposes of approximately $13,300,000 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 future
utilization of the Company's net operating loss carryforwards as of the change
date. Certain stock transactions occurring in 1998 and 1999 may have resulted in
the Company incurring an ownership change, which may result in a limitation on
the Company's future utilization of net operating loss carryforwards generated
in 1998 and 1999. 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.

F-23
<PAGE>
HOMECOM COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 1,030,253 $ 1,497,678
Accounts receivable, net.................................. 1,351,567 1,160,114
Employee loans............................................ 470,958 474,583
Receivable from related parties........................... 200,000
Other current assets...................................... 177,214 189,648
------------ ------------
Total current assets...................................... 3,029,992 3,522,023
Furniture, Fixtures and Equipment, Net...................... 899,434 1,131,204
Deposits.................................................... 82,485 92,494
Intangible Assets, Net...................................... 3,477,408 4,966,822
Investment.................................................. 823,175 823,175
------------ ------------
Total Assets............................................ $ 8,312,494 $ 10,535,718
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses..................... $ 1,328,298 $ 1,697,210
Accrued payroll liabilities............................... 433,194 290,414
Unearned revenue.......................................... 296,319
Current portion of obligations under capital leases....... 182,910 204,278
------------ ------------
Total Current Liabilities................................. 1,944,402 2,488,221
Other Liabilities........................................... 109,060 127,104
Obligations Under Capital Lease............................. 273,341 315,275
------------ ------------
Total Liabilities....................................... 2,326,803 2,930,600
------------ ------------
Redeemable Preferred Stock--Series B, $.01 par value, 125
shares authorized, 25 and 115 shares outstanding at June
30, 2000 and December 31, 1999, respectively;
participating; $531,575 liquidation value at June 30,
2000...................................................... 282,695 1,624,920
------------ ------------
Stockholders' Equity:
Common stock, $.0001 par value, 50,000,000 shares
authorized, 8,786,247 shares and 7,040,525 shares issued
and outstanding at June 30, 2000 and December 31, 1999,
respectively............................................ 879 704
Preferred stock, Series C, $.01 par value, 175 shares
authorized, 104.6 and 137.5 shares outstanding at June
30, 2000 and December 31, 1999, respectively,
convertible, participating; $2,208,383 liquidation value
at June 30, 2000........................................ 1 2
Preferred stock, Series D, $.01 par value, 75 shares
authorized, 1.3 and 75 shares outstanding at June 30,
2000 and December 31, 1999 respectively; convertible,
participating; $26,991 liquidation value at June 30,
2000.................................................... 1 1
Preferred stock, Series E, $.01 par value, 106.4 shares
authorized, 106.4 shares issued and outstanding as June
30, 2000, convertible, participating, $2,162,897
liquidation value at June 30,2000....................... 1
Additional paid-in capital................................ 25,449,071 21,931,281
Subscriptions Receivable.................................. (64,687) (64,687)
Accumulated Deficit....................................... (19,682,270) (15,887,103)
------------ ------------
Total Stockholders' Equity.................................. 5,702,996 5,980,198
------------ ------------
Total Liabilities and Stockholders' Equity.............. $ 8,312,494 $ 10,535,718
============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements

F-24
<PAGE>
HOMECOM COMMUNICATIONS, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------- ---------------------------
2000 1999 2000 1999
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues................................... $ 2,236,486 $ 1,912,052 $ 4,619,957 $ 2,819,282
Cost of Revenues........................... 1,154,648 1,193,440 2,183,324 1,903,380
----------- ----------- ----------- -----------
Gross Profit............................... 1,081,838 718,612 2,436,633 915,902
----------- ----------- ----------- -----------
Operating Expenses:
Sales and marketing...................... 701,601 948,213 1,593,417 1,318,010
Product development...................... 69,292 165,280 278,523 350,579
General and administrative............... 1,327,276 1,407,992 2,603,792 2,169,873
Depreciation and amortization............ 1,336,734 457,104 1,832,491 608,823
----------- ----------- ----------- -----------
Total operating expenses............... 3,434,903 2,978,589 6,308,223 4,447,285
----------- ----------- ----------- -----------
Operating loss............................. (2,353,065) (2,259,977) (3,871,590) (3,531,383)
Other Expenses
Interest expense (income)................ (34,529) 11,444 (30,464) 16,153
Other income, net........................ (14,537) (27,383) (45,959) (39,910)
----------- ----------- ----------- -----------
Loss From Continuing Operations Before
Income Taxes............................. (2,303,999) (2,244,038) (3,795,167) (3,507,626)
Income Tax Provision (Benefit)............. -- -- -- --
----------- ----------- ----------- -----------
Loss From Continuing Operations............ (2,303,999) (2,244,038) (3,795,167) (3,507,626)
Loss from Discontinued Operations.......... (143,000) (251,000)
----------- ----------- ----------- -----------
Net Loss................................... (2,303,999) (2,387,038) (3,795,167) (3,758,626)
Deemed Preferred Stock Dividend............ (871,318) (792,390) (1,182,740) (792,390)
----------- ----------- ----------- -----------
Net Loss Applicable to Common
Shareholders............................. $(3,175,317) $(3,179,428) $(4,977,907) $(4,551,016)
=========== =========== =========== ===========
Loss Per Share--Basic and Diluted
Continuing Operations.................... $ (0.38) $ (0.46) $ (0.63) $ (0.73)
Discontinued Operations.................. (0.02) (0.04)
----------- ----------- ----------- -----------
Loss Per Share--Basic and Diluted.......... $ (0.38) $ (0.48) $ (0.63) $ (0.77)
=========== =========== =========== ===========
Weighted Average Common Shares
Outstanding.............................. 8,353,619 6,585,603 7,891,021 5,912,072
=========== =========== =========== ===========
</TABLE>

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

F-25
<PAGE>
HOMECOM COMMUNICATIONS, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss.................................................. $(3,795,167) $(3,758,626)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization........................... 1,814,449 608,823
Provision for bad debts................................. (386) 133,500
Deferred rent expense................................... (18,043) (21,571)
Change in operating assets and liabilities:
Accounts receivable................................... (226,480) (406,158)
Prepaid expenses...................................... (562,382)
Accounts payable and accrued expenses................. (106,653) 779,516
Accrued payroll liabilities........................... 142,780 102,157
Unearned revenue...................................... (296,319) (76,319)
Other................................................. 61,480 (270,718)
----------- -----------
Net cash used in operating activities................... (2,424,339) (3,471,778)
----------- -----------
Cash Flows From Investing Activities:
Purchase of furniture, fixtures and equipment............. (93,265) (252,793)
Cash from acquisition..................................... 136,938
Employee loans............................................ (370,000)
Payment of acquisition costs.............................. (356,285)
----------- -----------
Net cash used in investing activities................... (93,265) (842,140)
----------- -----------
Cash Flows From Financing Activities:
Repayment of receivable from a related party.............. 200,000
Proceeds from issuance of preferred shares and warrants... 1,898,750 2,283,750
Repayment of capital lease obligations.................... (63,302) (146,516)
Proceeds from issuance of common shares and exercise of
warrants................................................ 14,731 448,487
----------- -----------
Net cash provided by financing activities............... 2,050,179 2,585,721
----------- -----------
Net Decrease in cash and cash Equivalents................... (467,425) (1,728,197)
Cash and Cash Equivalents at Beginning of Period............ 1,497,678 2,541,932
----------- -----------
Cash and Cash Equivalents at End of Period.................. $ 1,030,253 $ 813,735
=========== ===========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON CASH INVESTING AND
FINANCING ACTIVITIES

During the six months ended June 30, 2000 the Company issued 59,559 shares
of common stock relating to penalties on preferred stock accrued during 1999.

During the six months ended June 30, 2000, the Company issued 15,077 shares
of common stock for legal costs incurred in 1999.

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

F-26
<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. GOING CONCERN MATTERS

The company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplate the
realization of assets and liquidations of liabilities in the normal course of
business. The Company has incurred significant losses since its incorporation,
resulting in an accumulated deficit at June 30, 2000 of approximately $19.7
million. The Company continues to experience negative cash flows from operations
and has been dependent on continued financing from investors to sustain its
activities. There is no assurance that such financing will be available in the
future. These factors raise substantial doubt about the Company's ability to
continue as a going concern. During 1999 the Company completed a workforce
reduction and the sale of its security division in order to reduce expenses.
Additionally, the Company has taken measures to reduce its corporate overhead.
The Company's continued existence as a going concern is dependent upon its
ability to generate cash flows sufficient to cover its corporate overhead or to
secure adequate debt or equity funding.

3. SEGMENT INFORMATION

During 1999, HomeCom was organized into four separate business units,
organized on the basis of products and services. 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 security services (HISS), software products, and
InsureRate/FIMI. On October 1, 1999 the Company sold all of the assets of its
HISS unit to Infrastructure Defense, Inc and discontinued operations for this
business. On August 4, 2000, the Company announced that it had entered into an
agreement to sell the InsureRate division and the FIMI companies. The
transaction is subject to the execution of a definitive purchase agreement and
is subject to a number of conditions, not limited to the completion of financing
satisfactory to complete the transaction.

F-27
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

3. SEGMENT INFORMATION (CONTINUED)
The table below presents information about the reported business unit
revenues, income (loss) for HomeCom Communications, Inc. for the three months
and six months ended June 30, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS ENDED
ENDED JUNE 30, JUNE 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues
FAST........................................... $ 1,488 $ 1,071 $ 2,655 $ 1,846
InsureRate/FIMI................................ 744 826 1,500 893
Software Products.............................. 4 15 465 80
------- ------- ------- -------
Totals....................................... 2,236 1,912 4,620 2,819
HISS (Discontinued Operation).................. 93 228
------- ------- ------- -------
Total Revenue.................................... 2,236 2,005 4,620 3,047
======= ======= ======= =======
Business Unit Net Income (Loss)
FAST........................................... 942 153 1,464 267
InsureRate/FIMI................................ (561) (820) (1,168) (959)
Software Products.............................. (80) (109) 286 (249)
------- ------- ------- -------
Business Unit Net Income (Loss).................. 301 (776) 582 (941)
Adjustments to reconcile Business unit net income
(loss) with consolidated net income (loss):
Corporate Expenses............................. (2,588) (1,461) (4,359) (2,265)
Interest expense............................... (11) (4) (16)
Net Other...................................... (17) 4 (14) (286)
------- ------- ------- -------
Loss from Continuing Operations.................. (2,304) (2,244) (3,795) (3,508)
HISS (Discontinued Operation).................. (143) (251)
------- ------- ------- -------
Net Loss......................................... $(2,304) $(2,387) $(3,795) $(3,759)
======= ======= ======= =======
</TABLE>

4. BASIC AND DILUTED LOSS PER SHARE

Earnings (loss) per common share ("EPS") is computed by dividing net income
(loss) available to common shareholders by the weighted average number of shares
of common stock outstanding for the

F-28
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

4. BASIC AND DILUTED LOSS PER SHARE (CONTINUED)
period then ended. The effect of the Company's stock options and convertible
securities is excluded from the computations for the three and six months ended
June 30, 2000 and 1999, as it is antidilutive.

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------- ---------------------------
2000 1999 2000 1999
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Loss from continuing operations.... $(2,303,999) $(2,244,038) $(3,795,167) $(3,507,626
Less: Deemed preferred stock
dividend....................... (871,318) (792,390) (1,182,740) (792,390)
----------- ----------- ----------- -----------
Loss from continuing operations
applicable to common
shareholders..................... $(3,175,317) $(3,036,428) $(4,977,907) $(4,300,016)
----------- ----------- ----------- -----------
Loss from discontinued
operations....................... (143,000) (251,000)
Net loss applicable to common
shareholders..................... $(3,175,317) $(3,179,428) $(4,977,907) $(4,551,016)
----------- ----------- ----------- -----------
Loss per share-continuing
operations....................... $ (0.38) $ (0.46) $ (0.63) $ (0.73)
Loss per share-discontinued
operations....................... (0.02) (0.04)
----------- ----------- ----------- -----------
$ (0.38) $ (0.48) $ (0.63) $ (0.77)
=========== =========== =========== ===========
Weighted average common shares
outstanding-basic and diluted.... 8,353,619 6,585,603 7,891,021 5,912,072
=========== =========== =========== ===========
</TABLE>

5. ISSUANCE OF SERIES E PREFERRED STOCK

On April 14, 2000, the Company completed a private placement of $2,127,000
principal amount of the Company's Series E Convertible Preferred Stock, par
value $.01 per share (the "Series E Preferred Stock") and warrants to acquire
66,667 shares of common stock (the "Series E Preferred Warrants"). The Series E
Preferred Stock has an initial stated value of $20,000 per share, which stated
value increases at the rate of 8% per year. Each Series E Preferred Share is
convertible 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 E Stated Value by the lesser of (a) $3.53, or (b) 82.5% of the
average of the closing bid prices for the five trading days preceding the date
of conversion. Any Series E Preferred Stock issued and outstanding on April 14,
2003 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 under the
Securities Act of 1933 with respect to a minimum of 1,808,293 shares of common
stock issuable upon conversion of the Series E Preferred Stock and exercise of
the Series E Preferred Warrants. The Company is obligated to pay penalties if
the Registration Statement is not filed and/or declared effective within the
specified time periods. The Company may at its option at any time after the 90th
day following the issuance of the Series E Preferred Stock through April 14,
2002, prohibit holders of the Series E Preferred Stock from exercising any
conversion rights for up to 90 days, provided that certain conditions are met.
If the Company exercises that right, the Company is required to compensate the
holders of the Series E Preferred Stock in cash in an amount equal to 3% of the
principal amount of the Series E Preferred

F-29
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. ISSUANCE OF SERIES E PREFERRED STOCK (CONTINUED)
Stock held by each holder for each thirty days that prohibition is in effect
(pro rated for partial months) or, at the Company's 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).

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 E
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% 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.

In determining the accounting for the beneficial conversion feature, the
Company first allocated the net proceeds of $1,855,426 to the Series E Preferred
Stock and the Series E Preferred Warrants based on their relative fair values at
the issuance date, resulting in $1,791,211 assigned to the Series E Preferred
Stock and $64,215 assigned to the Series E Preferred Warrants as of April 14,
2000. The Company then allocated $1,059,347 of the Series E Preferred Stock 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 $854,000 of the beneficial
conversion was amortized in the second quarter of 2000. The balance of the
beneficial conversion feature is being recognized from the issuance date through
April 14, 2003.

The Series E Preferred Warrants expire on April 14, 2005 and have an
exercise price of $3.35 per share, subject to adjustment under certain
circumstances.

6. INTANGIBLE IMPAIRMENT

Management of the Company evaluates the recoverability of its long-lived
assets at each balance sheet date. Among other factors considered in such
evaluation is the historical and projected operating performance of business
operations. In June 2000, the company recognized a goodwill impairment charge of
approximately $831,000 with no associated tax benefit, related to the 1999
acquisition of Ganymede Corporation ("Ganymede"). The review for impairment at
these operations was triggered by recent cash flow losses and forecasted
operating cash flows below those expected at the time that Ganymede was
acquired. Accordingly, management has concluded that intangible assets in the
amount of approximately $831,000 are no longer recoverable through future
operations and such amount has been written off in the Company's financial
statements for the quarter ended June 30, 2000.

7. TAXES

There was no provision for or cash payment of income taxes for the three and
six months ended June 30, 2000 and 1999, respectively, as the Company
anticipates a net taxable loss for the year ended December 31, 2000.

F-30
<PAGE>
HOMECOM COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

8. CAPITAL STRUCTURE

On June 29, 2000, our shareholders voted to amend our articles of
incorporation to increase the number of authorized shares of common stock from
15,000,000 to 50,000,000.

For the quarter ended June 30, 2000, 32.89 shares of Series C Preferred
Stock were converted into 386,698 shares of common stock and 73.71 shares of
Series D Preferred Stock were converted into 262,596 shares of common stock.

9. OTHER MATTERS

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

F-31
<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-32
<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
======== ========

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-33
<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-34
<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-35
<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

F-36
<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)
monthly rental 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

F-37
<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)
its 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-38
<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-39
<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-40
<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-41
<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-42
<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-43
<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.

F-44
<PAGE>
FIMI SECURITIES, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

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-45
<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-46
<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-47
<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-48
<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-49
<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-50
<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-51
<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-52
<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-53
<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

F-54
<PAGE>
GANYMEDE CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
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.

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

F-55
<PAGE>
GANYMEDE CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. STOCK OPTIONS (CONTINUED)
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.

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

F-56
<PAGE>
GANYMEDE CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

10. RELATED PARTY TRANSACTION, ACCRUED SHAREHOLDERS' COMPENSATION (CONTINUED)
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-57
<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 THAT DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.................... 1
Summary Financial Information......... 2
Risk Factors.......................... 3
Issuance of Shares to Selling
Shareholders........................ 11
Use of Proceeds....................... 11
Price Range of common stock........... 12
Dividend Policy....................... 13
Selected Financial Data............... 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 15
Business.............................. 22
Management............................ 29
Principal and Selling Stockholders.... 37
Description of Capital Stock.......... 40
Plan of Distribution.................. 55
Legal Matters......................... 56
Experts............................... 56
Available Information................. 56
Index to Financial Statements......... F-1
</TABLE>

HOMECOM
COMMUNICATIONS, INC.
2,645,000 SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF SHARES
OF HOMECOM'S SERIES E CONVERTIBLE
PREFERRED STOCK AND
UPON THE EXERCISE OF WARRANTS
---------------------

PROSPECTUS

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

August 28, 2000

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

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 567.35
Nasdaq SmallCap Market additional listing fee............... 26,450.00
Accountants' fees and expenses.............................. 10,000.00
Legal fees and expenses..................................... 15,000.00
Blue Sky fees and expenses.................................. 5,000.00
Transfer Agent's fees and expenses.......................... 500.00
Printing and engraving expenses............................. 500.00
Miscellaneous............................................... 1,000.00
----------
Total expenses........................................ $59,017.35
==========
</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). Our Restated Certificate of Incorporation (the
"Restated Certificate") exonerates our directors from monetary liability to the
extent permitted by this statutory provision.

Our Restated Certificate of Incorporation and Restated Bylaws (the "Restated
Bylaws") also provide that we 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 our Restated Certificate of Incorporation
and Restated Bylaws to the contrary, the DGCL provides that we 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.

1. 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"). All of the 5% Convertible
Debentures have been converted into an aggregate of 961,460 shares of our 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 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.

2. 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. All
of the Series A preferred stock has been converted into an aggregate of 711,456
shares of our 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.

3. On April 16, 1998, we acquired all of the outstanding capital stock of
The Insurance Resource Center, Inc. ("IRC") for 351,391 shares of our common
stock. Pursuant to the Agreement and Plan of Reorganization, we filed a
registration statement for 175,696 of such shares on June 12, 1998.

4. 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.

5. In March 1999, we 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, we filed a registration statement covering the
resale of one-half of those shares.

6. In April 1999, we 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, we filed a registration
statement covering the resale of one-half of those shares.

7. 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 $3.3 million. In connection with the issuance and
sale of

II-2
<PAGE>
the Series C Preferred Stock, the Registrant issued to the investor 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 to the Delphi
Group in satisfaction of their claim that they were entitled to compensation in
connection with the issuance of the Series C Preferred Stock. These warrants
will expire on July 30, 2004.

8. 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 to the investor
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.

9. In April 2000, the Registrant issued 106.35 shares of its series E
convertible preferred stock (the "Series E Preferred Stock") to a private
investor for an aggregate purchase price of $2,000,000. Net proceeds to the
Registrant were approximately $1.9 million. In connection with the issuance and
sale of the Series E Preferred Stock, the Registrant issued to the investor
warrants to acquire an aggregate of 66,667 shares of common stock having an
exercise price per share equal to $3.35. These warrants will expire on
April 14, 2005.

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 501 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
--------------------- ------------------------------------------------------------
<C> <S>
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 ####

3.6 -- Certificate of Designation of Series D Convertible
Preferred Stock ####

3.7 -- Amended Certificate of Designations, Preferences and
Rights of Series E Convertible Preferred Stock of HomeCom
Communications, Inc. dated as of April 14, 2000 #####

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.*
</TABLE>

II-3
<PAGE>

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

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.***
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
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 Company.***

10.31 -- Escrow Agreement dated as of January 23, 1998 by and
among InsureRate, Inc., Hamilton Dorsey Alston Company, the
Registrant, Jerome R. Corsi and SunTrust Bank, Atlanta.***

10.32 -- Shareholders Agreement dated January 23, 1998 by and
among Hamilton Dorsey Alston Company, 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 Company.***

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 Company.***

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.****
</TABLE>

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<PAGE>

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

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.+++
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
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
MacNab LLC ####

10.66 -- Registration Rights Agreement dated as of July 23, 1999
by and among HomeCom Communications, Inc. and
MacNab LLC ####

10.67 -- Transfer Agent Instructions dated as of September 28,
1999 ####

10.68 -- Transfer Agent Legal Opinion dated as of July 23,
1999 ####

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

10.70 -- Warrant Agreement, dated as of July 23, 1999, by and
between HomeCom Communications, Inc. and MacNab LLC

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

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

10.73 -- Transfer Agent Instructions dated as of September 28,
1999 ####

10.74 -- Transfer Agent Legal Opinion dated as of September 28,
1999 ####

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

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

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.+++++
</TABLE>

II-7
<PAGE>

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

10.86 -- Securities Purchase Agreement dated as of April 14, 2000,
by and among HomeCom Communications, Inc. and McNab
LLC #####

10.87 -- Registration Rights Agreement dated as of April 14, 2000,
by and among HomeCom Communications, Inc. and McNab
LLC #####

10.88 -- Transfer Agent Instructions dated as of April 14,
2000 #####

10.89 -- Transfer Agent Legal Opinion dated as of April 14,
2000 #####

10.90 -- Warrant Agreement, dated as of April 14, 2000, by and
among MacNab LLC and HomeCom Communications, Inc.

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.

### Incorporated herein by reference to exhibit of the same
number in Form 10-Q of the Registrant filed with the
Commission on August 14, 2000.
</TABLE>

II-8
<PAGE>
<TABLE>
<C> <S>
#### Incorporated herein by reference to exhibit of the same
number in Form S-1 Registration Statement of the Registrant
(Registration No. 333-88491).

##### Incorporated herein by reference to exhibit of the same
number in Form S-3 Registration Statement of the Registrant
(Registration No. 333-38326).

+ 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>

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

II-9
<PAGE>
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 28th day of August, 2000.

<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>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ HARVEY W. SAX President and Chief
------------------------------------------- Executive Officer (Principal August 28, 2000
Harvey W. Sax Executive Officer)

/s/ HARVEY W. SAX Chief Technical Officer and
------------------------------------------- Director August 28, 2000
Harvey W. Sax

/s/ HARVEY W. SAX Director
As Attorney-In-Fact
------------------------------------------- August 28, 2000
Roger Nebel

/s/ HARVEY W. SAX Director
As Attorney-In-Fact
------------------------------------------- August 28, 2000
James Wm. Ellsworth

/s/ HARVEY W. SAX Director
As Attorney-In-Fact
------------------------------------------- August 28, 2000
Daniel A. Delity

/s/ HARVEY W. SAX Director
As Attorney-In-Fact
------------------------------------------- August 28, 2000
Claude A. Thomas

/s/ TIMOTHY ROBINSON Executive Vice President and
------------------------------------------- Chief Financial Officer August 28, 2000
Timothy R. Robinson
</TABLE>

II-11