FINANTRA CAPITAL INC, 424B3, 2000-06-09

FINANTRA CAPITAL INC
424B3, 2000-06-09
SHORT-TERM BUSINESS CREDIT INSTITUTIONS

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<PAGE> 1
Filed pursuant to Rule 424(b)(3)
Registration No. 333-94095

PROSPECTUS

FINANTRA CAPITAL, INC.

10,434,976 SHARES OF COMMON STOCK

This Prospectus covers 10,434,976 shares of Common Stock, $.01 par value
per share, of Finantra Capital, Inc. being offered by certain selling
stockholders. Finantra Capital, Inc. is not selling any of the shares being
offered hereby. The shares of Common Stock being offered include up to 2,304,886
shares issuable upon the conversion into shares of Common Stock of all shares of
our Series C 6% Convertible Preferred Stock (and accrued and unpaid dividends
thereon), and up to 1,910,500 shares issuable upon the exercise into shares of
Common Stock of certain outstanding Common Stock purchase warrants.

Since we are not selling any of the shares being offered hereby, we will
not receive any proceeds from the sale of these shares. The selling stockholders
will receive all of the proceeds from the sale of the shares hereunder. We may,
however, receive from selling stockholders up to $3,516,125 upon their exercise
of Common Stock purchase warrants entitling them to receive up to 1,910,500 of
the shares of Common Stock being offered hereby.

Our Common Stock is quoted and traded on the NASDAQ SmallCap Market under
the symbol "FANT." On June 7, 2000, the closing sale price for shares of our
Common Stock was $3.81.

THIS INVESTMENT INVOLVES A HIGH DEGREE OR RISK. YOU SHOULD PURCHASE SHARES
ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 6.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS JUNE 9, 2000
<PAGE> 2

FORWARD-LOOKING STATEMENTS

This Prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We have based these forward-looking
statements largely on our current expectations and projections about future
events and financial trends affecting the financial condition of our business.
These forward-looking statements are subject to a number of risks, uncertainties
and assumptions about us, including, among other things:

- general economic and business conditions, both nationally and in our
markets;

- our expectations and estimates concerning future financial performance,
financing plans and the effect of competition;

- our estimates concerning credit losses;

- our continued dependence on the expertise and leadership of our
management and other key personnel;

- our expectation that we can continue our growth strategy; and

- other risk factors set forth in the "Risk Factors" section of this
Prospectus.

In addition, in this Prospectus, the words "believe," "may," "will,"
"estimate," "continue," "anticipate," "intend," "expect" and similar
expressions, as they relate to us, our business or our management, are intended
to identify forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this Prospectus may not occur and actual results
could differ materially from those anticipated or implied in the forward-looking
statements.

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

You should rely only on the information contained in this Prospectus and
the documents incorporated by reference. We have not authorized anyone to
provide you with different information. No offer of these securities is being
made in any jurisdiction where the offer or sale is not permitted. You should
not assume that the information in this Prospectus is accurate as of any other
date than the date on the front cover of this Prospectus.
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements.................................. IFC
Prospectus Summary.......................................... 3
Risk Factors................................................ 6
Use of Proceeds............................................. 11
Price Range of Common Stock and Dividend Policy............. 12
Capitalization.............................................. 13
Selected Consolidated Financial Data........................ 14
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 15
Business.................................................... 21
Management and Directors.................................... 26
Selling Stockholders........................................ 27
Plan of Distribution........................................ 32
Description of Capital Stock................................ 33
Legal Matters............................................... 35
Experts..................................................... 35
Where You Can Find More Information......................... 35
Information Incorporated by Reference....................... 35
Index to Financial Statements............................... F-1
</TABLE>

1
<PAGE> 4

[Intentionally Left Blank]

2
<PAGE> 5

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this Prospectus.
This summary is not complete and may not contain all of the information that you
should consider before investing in our Common Stock. You should read this
entire Prospectus carefully.

FINANTRA CAPITAL, INC.

Our business is conducted, generally, through two principal operating arms:

- our commercial asset business finance group and

- our consumer finance group.

Our commercial asset business finance group operates under the umbrella of
our Ameri-Cap Business Finance Group, Inc. holding company subsidiary, and
specializes in accounts receivable factoring and equipment leasing. Our consumer
finance group operates under the umbrella of our Ameri-Cap Consumer Finance
Group, Inc. holding company subsidiary, and specializes in mortgage banking and
other retail specialty financing lines.

Our emergence into the retail specialty finance industry was solidified by
our acquisition, as of September 30, 1999, of Travelers Investment Corporation.
Travelers is a California-based specialty consumer finance company which, for
the past 25 years, has been engaged, generally, in the acquisition, management,
servicing and collection of individual consumer contracts. Travelers has been
our largest acquisition to date.

In an effort to further solidify our emergence in the retail specialty
finance industry, during January 2000, we entered into a Consumer Finance
Contracts Program with Gateway Companies, Inc., a New York Stock Exchange
company. Pursuant to the Program, among other things, Gateway has agreed to
assign to us Gateway customer contracts for computers, software, accessories,
certain warranties and other related goods and services sold by Gateway or any
of its vendors in the ordinary course of Gateway's business to consumers for
individual, family, personal or household use, and we have agreed to accept such
assignments of contracts and finance loans to Gateway's customers to pay Gateway
for the goods being purchased under the contracts.

Since the consummation, during January 1998, of our initial public offering
of securities, our operations have focused primarily on growing an operation
base and establishing a market presence in each of the aforementioned business
segments. Our primary strategy for achieving our necessary growth and market
presence has been, among other things:

- to pursue acquisitions of existing enterprises which, in our opinion,
have management experience and earnings potential and long-term growth
possibilities and

- obtaining institutional lines of credit for each business line.

Having established operations in each of our commercial assets business
finance and consumer finance arms, our current principal strategy for making
operations more profitable is:

- to bundle (or combine and package) financial products and services.

- By bundling products and services, we believe we will be positioned to
more effectively compete since as the volume of the transactions we
handle increases, the more likely we will have access to less costly
leasing, factoring, mortgage banking and retail consumer financing lines.

During 1999, we also established Finantra Internet Services.com, Inc., an
Internet financial services company which will serve as a platform for our
distribution of financial products and services, in particular, residential
mortgages, through the Internet.

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OUR HISTORY AND PRINCIPAL OFFICES

We were incorporated under the laws of the State of Delaware on May 2,
1990. In August 1998, we changed our name to Finantra Capital, Inc. Our
principal executive offices are located at 150 South Pine Island Road, Suite
500, Plantation, Florida 33324, and our telephone number is (954) 577-9225.

THE OFFERING

Shares offered by selling
stockholders.................. 10,434,976 shares. Of these shares, 2,304,886
shares represent the maximum number of shares
to be issued to selling stockholders upon their
conversion, into Common Stock, of all of our
outstanding shares of Series C 6% Convertible
Preferred Stock, and 1,910,500 shares represent
the maximum number of shares to be issued to
selling stockholders upon their exercise of
various Common Stock purchase warrants.

Shares offered by Finantra.... 0 shares

Maximum number of shares to be
outstanding after this
offering...................... 19,111,625 shares

Use of proceeds............... Since we are not selling any of the shares
being offered hereby, we will not receive any
of the proceeds from this offering. However, if
selling stockholders exercise Common Stock
purchase warrants entitling them to purchase up
to 1,910,500 of the shares being offered
hereby, we will receive from such selling
stockholders approximately $3,516,125 upon
their exercise of their warrants. Such proceeds
will be used by us for general corporate
purposes, including to fund working capital and
acquisitions.

NASDAQ SmallCap Market
symbol........................ FANT

The maximum number of shares of Common Stock to be outstanding after this
offering is based upon there being 14,696,239 shares of Common Stock outstanding
at June 7, 2000, but excludes:

- approximately 582,907 shares of Common Stock issuable upon the conversion
of 2,728,004 shares of our Series A Preferred Stock;

- approximately 235,294 shares of Common Stock issuable upon the conversion
of 500,000 shares of our Series B Preferred Stock;

- approximately 1,475,000 shares of Common Stock issuable upon the exercise
of options outstanding and reserved for issuance under our 1997 Stock
Option Plan;

- 2,176,131 shares of Common Stock issuable upon the exercise, through
November 2001, at $3.25 per share, of certain warrants;

- 500,000 shares of Common Stock issuable upon the exercise, until December
2002, at $2.50 per share, of certain other warrants;

- 138,625 shares of Common Stock issuable upon the exercise, until December
2002, at $1.50 per share, of certain other warrants;

- 1,566,500 shares of Common Stock issuable upon the exercise, until July
2002, at $5.75 per share, of certain other warrants; and

- 1,944,080 shares of Common Stock issuable upon the exercise, at various
times through December 2004, at exercise prices ranging from
approximately $1.20 per share to $3.50 per share, of certain other
warrants.
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RISK FACTORS

You should consider the risk factors and the impact of various events that
could adversely affect our business before investing in our Common Stock.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table summarizes certain consolidated financial information
concerning the Company. This data is derived from, and is qualified by reference
to, the audited financial statements of the Company for the years ended December
31, 1999 and 1998, and the unaudited financial statements of the Company for the
three months ended March 31, 2000 and 1999, each of which, except for the
consolidated condensed balance sheet at March 31, 1999, is attached hereto and
should be read in conjunction herewith.

STATEMENT OF OPERATIONS DATA

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------- -----------------------------
1999 1998 2000 1999
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues................................... $11,604,014 $ 9,734,940 $5,231,458 $1,360,178
Costs and Expenses......................... 13,494,991 10,687,232 5,643,764 1,798,815
Loss Before Income Taxes and Minority
Interest................................. (1,890,977) (952,292) (412,306) (438,637)
Net Loss................................... (1,880,846) (898,081) (412,306) (426,837)
Net Loss Applicable to Common
Stockholders............................. (2,358,396) (1,192,685) (749,328) (495,037)
Net Loss Per Common Share.................. (.34) (.32) (.06) (.11)
</TABLE>

BALANCE SHEET DATA

<TABLE>
<CAPTION>
DECEMBER 31,
1999 MARCH 31, 2000
------------ -------------------------
ACTUAL ACTUAL AS ADJUSTED
------------ ----------- -----------
<S> <C> <C> <C>
Total Assets............................................ $66,535,520 $76,577,639 $80,093,764
Total Debt.............................................. 38,453,338 40,580,358 40,580,358
Total Liabilities....................................... 47,372,402 49,801,943 49,801,943
Stockholders' Equity.................................... 19,163,118 26,775,696 30,291,821
</TABLE>

The as adjusted Balance Sheet Data gives effect to the exercise by selling
stockholders of warrants to purchase up to 1,910,500 of the shares of Common
Stock being offered hereby. Upon the exercise of all of these warrants, we will
receive an aggregate of approximately $3,516,125. The as adjusted balance sheet
also gives effect to the conversion, into 2,304,886 shares of Common Stock, of
all of our outstanding shares of Series C Preferred Stock. Since we are not
selling any of the shares being offered hereby, we will not receive any of the
proceeds from the sale of such shares.

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<PAGE> 8

RISK FACTORS

You should carefully consider the risk factors below in addition to the
other information in this Prospectus. Each of these risk factors could adversely
affect our business, financial condition and operating results, as well as
adversely affect the value of an investment in our Common Stock.

WE HAVE A LIMITED OPERATING HISTORY WHICH MAKES IT DIFFICULT TO EVALUATE OUR
CURRENT BUSINESS AND PROSPECTS.

Since March 1998, our activities have consisted largely of accounts
receivable financing and traditional financing business lines. Our limited
operating history, therefore, makes it difficult to evaluate our current
business and prospects. Due to our limited operating history, it is difficult to
accurately predict our future revenues or results of operations. Moreover, our
operating results may vary depending on a number of factors, many of which are
outside of our control. Given our limited operating history, we cannot assure
you that our operations will be profitable or economically prudent.

DEFAULTS BY OUR CUSTOMERS MAY LIMIT OUR CASH FLOW.

As is the case for many companies in the finance business, overall
financial success will be governed heavily by the level of customer defaults
incurred. We believe that our credit evaluation procedures are adequate to limit
our default rate to a manageable amount. We attempt to mitigate credit risks
through the use of a variety of commercial credit reporting agencies when
processing lease and credit applications of customers and through various forms
of non-recourse financing. The failure of our customers to make scheduled
payments under their finance contracts, however, could:

- require us to make payments in connection with the recourse portion of
our borrowings and

- forfeit cash collateral pledged as security in connection with those
borrowings.

In addition, any increase in losses or in the rate of payment defaults
under any finance contracts originated by us could adversely affect our ability
to obtain additional funding. To protect against losses, we maintain an
allowance for credit losses in connection with payments due under finance
contracts held in our portfolio. While we maintain this allowance at a level
which we believe is sufficient to meet inherent estimated uncollectible contract
receivables based on our analysis of delinquencies, problem accounts and overall
risks of probable losses associated with such contracts, we cannot assure you
that the amount of this allowance will prove to be adequate and that we will not
suffer higher than anticipated losses.

THE CAPITAL REQUIREMENTS OF OUR OPERATIONAL ACTIVITIES HAVE BEEN, AND CONTINUE
TO BE, SIGNIFICANT.

We are dependent on the availability of capital to finance and expand our
ongoing operations and to finance our other working capital requirements. While
we currently have in place arrangements with several senior lenders for
long-term financing:

- to the extent our growth requires additional capital, we are not certain
that additional capital will be available to us on commercially
reasonable terms or at all;

- our inability to obtain additional capital, if needed, would adversely
affect our business and could cause us to curtail our expansion; and

- to the extent we are required to sell our equity securities to raise
operating capital, the stock interests of our stockholders could be
substantially diluted.

BECAUSE THE FINANCE BUSINESS INVOLVES THE PURCHASE AND CARRYING OF INSTALLMENT
SALES CONTRACTS, LEASES, ACCOUNTS, MORTGAGES AND OTHER FINANCIAL INSTRUMENTS, A
RELATIVELY HIGH RATIO OF DEBT TO NET WORTH IS CUSTOMARY.

The degree to which we are leveraged could have important consequences,
including:

- our ability to obtain additional financing in the future for debt
repayment, working capital, acquisition of financing instruments,
receivables, expansion, general corporate purposes and other purposes may
be materially impaired;
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- a substantial portion of our cash flow from operations must be dedicated
to the payment of the principal and interest on our indebtedness; and

- we are more vulnerable to economic downturns and rises in interest rates.

If interest rates increase, our cash flow will be adversely affected since
the interest rate on our debt is expected to fluctuate with market interest
rates. In such a situation, our ability to service our debt could be adversely
affected. If, at any time, we are unable to generate sufficient cash to meet our
obligations, we may have to renegotiate the payment terms of, or refinance, our
borrowings under our financing instruments or sell assets. If we cannot
successfully renegotiate the terms of our financing instruments or refinance our
debt, we could be declared in default and our business and operations could be
adversely affected.

OUR BUSINESS STRATEGY HAS BEEN, AND WILL CONTINUE TO BE, THE ACQUISITION OF
ENTITIES WITH HISTORIC OPERATIONS.

While we perform due diligence investigations of the businesses we acquire,
we are not certain that undisclosed liabilities relating back to a period prior
to our acquisition of such businesses will not surface. While we are
contractually indemnified, generally, by the sellers of these businesses to the
extent and for the periods set forth in the acquisition documents for
liabilities arising from events occurring prior to our acquisition of such
businesses, we are uncertain that such contractual indemnification obligations
will be honored or that we (or our acquired businesses) will not incur excessive
amounts in satisfying undisclosed liabilities. Any unanticipated expenditures by
us arising out of undisclosed liabilities that are not reimbursed to us could
adversely affect our financial condition.

EXTENSIVE FEDERAL AND STATE LAWS, SOME OF WHICH REQUIRE LICENSING AND
QUALIFICATION, APPLY TO VARIOUS ASPECTS OF OUR BUSINESS.

These laws regulate, among other things:

- the maximum interest rate that we may charge customers and

- our right to repossess and sell collateral.

An adverse change in these laws or the adoption of new laws could adversely
effect our business by limiting the interest and fee income we can generate on
existing and additional finance receivables, limiting the states in which may
operate or restricting our ability to realize the value of collateral securing
our finance receivables. Moreover, a reduction in existing statutory maximum
interest rates or the imposition of statutory maximum interest rates below those
we presently charge in unregulated jurisdictions would directly impair our
profitability. In addition, due to the consumer-oriented nature of the
industries in which we operate and uncertainties with respect to the application
of various laws and regulations in some circumstances, industry participants
frequently are named as defendants in litigation involving alleged violations of
federal and state consumer lending or other similar laws and regulations. An
adverse change in, modification to, or clarification of any of these laws or
regulations, or judicial interpretations as to whether and in what manner such
laws or regulations apply to our lines of business, could result in potential
liability that would adversely affect our financial condition and results of
operations. As a result, our cash flow and ability to service our debt may be
reduced.

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In addition, aspects of our business are subject to extensive federal and
state regulation under:

- the Truth-in-Lending Act;

- the Equal Credit Opportunity Act;

- the Home Mortgage Disclosure Act;

- the Community Reinvestment Act;

- the Electronic Funds Transfer Act;

- the Real Estate Settlement Practices Act; and

- the Fair Credit Reporting Act.

In addition, the subsidiaries through which we conduct our home equity
lending business are required to be licensed and are subject to regulation in
various states as mortgage bankers, mortgage brokers, originators, sellers and
servicers of mortgage loans. We are also subject to examination by federal and
state regulatory authorities with respect to originating, processing,
underwriting, selling and servicing home equity loans. Our failure to comply
with these statutory and regulatory requirements could adversely affect our
operations and financial performance. While we believe that we have implemented
procedures to comply with all statutory and regulatory requirements applicable
to us, we are not certain that more restrictive laws, rules and regulations will
not be adopted in the future that could make compliance more difficult or
expensive.

OUR OPERATIONS COULD BE ADVERSELY AFFECTED BY FLUCTUATIONS IN INTEREST RATES,
CHANGES IN ECONOMIC CONDITIONS, SHIFTS IN CONSUMER BEHAVIOR AND OTHER FACTORS.

Any decline in interest rates could reduce the amount that we earn on newly
originated loans and leases. In addition, a decline in interest rates could
result in an increase in prepayments which could decrease the size of our loan
portfolio if we are unsuccessful in originating new loans. Changes in economic
conditions and shifts in consumer behavior are difficult to predict, and our
financial performance cannot, generally, be insulated from these forces. We
intend to continually analyze the impact of interest rate risk and will attempt
to reduce its impact on our profitability. While we believe there are effective
ways available for us to reduce interest rate risk, we are not certain that we
will successfully reduce such risk or that our financial condition will not be
adversely affected by changes in interest rates or other economic conditions.

DOWNTURNS IN ECONOMIC CONDITIONS COULD CAUSE INCREASED DELINQUENCIES AND
DEFAULTS.

Any economic downturn could trigger:

- higher than anticipated delinquencies;

- defaults; and

- losses on our loans and other finance contracts.

If delinquencies, defaults or losses are higher than predicted or
anticipated, our financial condition and operating results could be adversely
affected.

HIGHER THAN ANTICIPATED CREDIT LOSSES COULD ADVERSELY AFFECT OUR PROFITABILITY.

The non-prime consumer credit market, in which we operate, is comprised of
borrowers, generally, who are deemed to be relatively high credit risks due to
various factors. These factors include, among other things, the manner in which
they have handled previous credit, the absence or limited extent of prior credit
history and limited financial resources. Consequently, non-prime consumer loans
and related finance contracts involve a higher degree of risk of default and
greater servicing and collection costs. Our profitability depends upon our
ability to:

- properly evaluate the creditworthiness of our credit-impaired borrowers;

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- maintain adequate security for non-prime finance contracts; and

- efficiently service and collect our portfolio of finance receivables.

We are unable to guarantee that the credit performance of our customers
will be satisfactory or that the rate of future defaults and/or losses will not
exceed recent prior experience.

VARIOUS RISKS ARE INHERENT IN OUR STRATEGY OF ACQUIRING OPERATING BUSINESSES.

This strategy entails reviewing and potentially reorganizing acquired
business operations, corporate infrastructures and systems and financial
controls. Unforeseen expenses, difficulties, complications and delays frequently
encountered in connection with the expansion of operations could, however,
inhibit our growth. In addition, we may be unable to maintain our growth or
anticipate all of the changing demands that expanding operations will impose on
our management personnel, operational and management information systems and
financial systems. We also may not be able to identify, acquire or manage
profitably additional businesses or to integrate successfully any acquired
businesses into ours without substantial costs, delays or other operational or
financial difficulties. Our failure to effectively integrate acquired businesses
could adversely affect our business, financial condition and results of
operations.

OUR INABILITY TO CONSUMMATE SECURITIZATIONS OF OUR FINANCIAL INSTRUMENTS COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION.

One of our long-range objectives is to sell a significant portion of the
financial instruments that we acquire and originate through the issuance of
securities backed by such financial instruments in securitization transactions
or through other structured finance products. In a securitization transaction,
generally, we will sell and transfer a pool of financial instruments to one or
more wholly-owned, special purpose subsidiaries. The special purpose subsidiary,
either directly or through a trust, will issue beneficial interests in the
financial instruments in the form of senior and subordinated securities and sell
such securities through public offerings and private placement transactions.
Several factors will affect our ability to complete securitizations, including:

- conditions in the securities markets, generally;

- conditions in the asset-backed securities markets;

- the credit quality and performance of our financial instruments;

- the compliance of our financial instruments with the eligibility
requirements established in connection with the securitizations;

- our ability to obtain third-party credit enhancement;

- our ability to service adequately our financial instruments; and

- the absence of any material downgrading or withdrawal of ratings given to
securities previously issued in our securitizations.

Any substantial reduction in the availability of the securitization market
for our financial instruments or any adverse change in the terms of such
securitizations could adversely affect our business, financial condition and
results of operations.

OUR SUCCESS IS LARGELY DEPENDENT ON THE SERVICES OF OUR MANAGEMENT AND KEY
EMPLOYEES.

The loss of the services of our management or key personnel, or our
inability to attract and retain, if necessary, additional skilled personnel for
our activities, could adversely affect our business and prospects. We are
uncertain that, if necessary, we will be able to hire or retain additional
qualified personnel. In addition, we do not currently maintain, nor in the
foreseeable future do we anticipate maintaining, other than with respect to
Robert D. Press, our Chairman of the Board, key-man life insurance covering the
lives of our significant employees.

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THE FINANCING BUSINESS, AND PARTICULARLY THE CONSUMER FINANCING BUSINESS, IS
HIGHLY FRAGMENTED AND COMPETITIVE.

We compete, and in the future will compete, for customers with a number of
national, regional and local finance and factoring companies, including those
which, like us, specialize in particular segments of the overall market. In
addition, our competitors include, and will include:

- those equipment manufacturers who finance the sale or lease of their
products themselves;

- other traditional types of financial services companies, such as
commercial banks and savings and loan associations; and

- conventional leasing and factoring companies.

Many of these competitors and potential competitors possess substantially
greater financial, marketing and human and operational resources than we do. In
addition, our future profitability will be directly related to our ability to
access capital funding and to obtain favorable funding rates as compared to the
capital and costs of capital available to our competitors. Accordingly, we are
not certain that we can compete successfully in our targeted markets.

WE DO NOT PAY DIVIDENDS.

We have not paid, and do not intend to pay, any dividends on our Common
Stock in the foreseeable future. In addition, to the extent excess earnings from
operations are generated, the holders of certain of our Preferred Stock are
entitled to receive cumulative dividends, quarterly, payable out of funds
legally available therefor. We currently intend to reinvest any remaining excess
earnings in the development and expansion of our business.

CERTAIN PROVISIONS OF DELAWARE LAW AND OUR CHARTER MAY MAKE A TAKEOVER OF US
DIFFICULT EVEN IF SUCH TAKEOVER COULD BE BENEFICIAL TO SOME OF OUR STOCKHOLDERS.

Delaware has enacted legislation that may deter or frustrate a takeover of
us. In certain circumstances, Delaware law requires the approval of two-thirds
of all of our shares eligible to vote for certain business combinations
involving a stockholder owning 15% or more of our voting securities (other than
stockholders currently meeting such description), excluding the voting power
held by such stockholder. In addition to the potential impact on future takeover
attempts and the possible perpetuation of management, the existence of such
provision could have an adverse effect on the market price of our Common Stock.
In addition, our Certificate of Incorporation authorizes the issuance of 15
million shares of "blank check" Preferred Stock with such designations, rights
and preferences as may be determined from time to time by our Board of
Directors. To date, our Board has authorized the issuance of an aggregate of
3,231,784 shares of Series A, B and C Preferred Stock. Accordingly, our Board is
empowered, without further stockholder action, to issue additional shares or
series of Preferred Stock with dividend, liquidation, conversion, voting or
other rights that could adversely affect the voting power or other rights of our
Common Stockholders. The issuance of such Preferred Stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing
a change in control of the Company. Although we have no present intention of
issuing any additional shares or series of Preferred Stock, we cannot guarantee
that we will not make such an issuance in the future.

OUR STOCK PRICE MAY BE SUBJECT TO SIGNIFICANT VOLATILITY.

Shares of our Common Stock are traded on the NASDAQ SmallCap Market under
the symbol "FANT." Stocks trading on the NASDAQ SmallCap Market generally
attract a less active public market and may be subject to extreme price
fluctuations. In addition, the price of our Common Stock will depend upon our
historical and anticipated operating results and general market and economic
conditions, some of which are beyond our control.

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OUR EXECUTIVE OFFICERS AND DIRECTORS HAVE SIGNIFICANT INFLUENCE OVER ALL MATTERS
REQUIRING STOCKHOLDER APPROVAL, INCLUDING DELAYING OR PREVENTING A CHANGE IN OUR
CORPORATE CONTROL.

After this offering, our executive officers and directors and their
affiliates will together control approximately 34% of our outstanding Common
Stock. As a result, these stockholders, if they act together, likely will be
able to control all matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. The
interests of our executive officers and directors may differ from the interests
of the other stockholders. This concentration of ownership may have the effect
of delaying, preventing or deterring a change in control of our Company, could
deprive our stockholders of an opportunity to receive a premium for their Common
Stock as part of a sale or merger of our Company and might adversely affect the
market price of our Common Stock.

AS A RESULT OF THIS OFFERING, A SIGNIFICANT NUMBER OF ADDITIONAL SHARES WILL
BECOME AVAILABLE FOR PUBLIC SALE, AND THEIR SALE COULD DEPRESS OUR COMMON STOCK
PRICE.

Prior to this offering, we had approximately 3.0 million shares of Common
Stock that were available for trading without restrictions in the public
marketplace. As a result of this offering, we may have up to approximately 13.0
million shares of Common Stock available for trading without restrictions in the
public marketplace. In addition, after this offering, we will have approximately
2.1 million shares of restricted Common Stock outstanding which will become
available for public sale within the next 12 months and a significant number of
shares of Common Stock reserved for issuance upon the exercise of outstanding
warrants and options. Sales of a substantial number of shares of our Common
Stock in the public marketplace, or the appearance that such shares are
available for sale, could adversely affect the market price of our Common Stock.

YEAR 2000 PROBLEMS MAY DISRUPT OUR BUSINESS AND THE COSTS TO CORRECT THESE
PROBLEMS MAY BE MATERIAL.

Many computer systems and applications use two-digit date fields to
identify a given year. The so-called "year 2000" or "Y2K" problem is the failure
of date-sensitive computing systems and applications to properly recognize and
process dates into and after the year 2000. These problems may cause incorrect
processing of financial and operational information, and could result in
business interruptions. We have completed the assessment, remediation, testing
and validation stages of our year 2000 compliance program and we believe that
all of our critical information technology systems are year 2000 compliant. We
have further assessed the year 2000 compliance status of our existing software
and hardware. Based on our assessment, we believe that we will not have to take
any corrective actions to address year 2000 problems in these areas, and we have
not developed a contingency plan to do so. While we believe that our assessment
was appropriate, we are not certain that we have identified all of the potential
year 2000 issues in our internal systems. Additionally, we do not currently know
whether our vendors, distributors or other significant business partners will
successfully achieve year 2000 compliance for their products and internal
systems. If we or our vendors, distributors or significant business partners
fail to identify and correct all year 2000 problems, there could be
unanticipated expenses and an adverse effect on our business.

USE OF PROCEEDS

Since we are not selling any of the shares being offered hereby, we will
not receive any proceeds from the sale of these shares. However, 1,910,500 of
the shares being offered by selling stockholders hereunder are first issuable
upon the exercise by such selling stockholders of certain outstanding Common
Stock purchase warrants These warrants have exercise prices ranging from $2.00
to $3.28 per share. Upon the exercise of these warrants, we will receive from
selling stockholders an aggregate of $3,516,125. These proceeds will be used by
us for general corporate purposes, including to fund working capital and
acquisitions.

11
<PAGE> 14

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Commencing April 14, 2000, shares of our Common Stock began being quoted
and traded on the NASDAQ SmallCap Market under the symbol "FANT." Prior thereto,
since January 1998, our Common Stock traded in the over-the-counter market and
was quoted on the OTC Electronic Bulletin Board maintained by NASDAQ under the
symbol "FANT".

The following table sets forth the reported high and low bid quotations on
the Electronic Bulletin Board for our Common Stock for the periods indicated.
These quotations represent prices between dealers and do not include retail
mark-up, mark-down or commissions or necessarily represent actual transactions.

<TABLE>
<CAPTION>
PERIOD HIGH LOW
------ ----- -----
<S> <C> <C>
1998
January 1, 1998 -- March 31, 1998........................... $7.25 $2.75
April 1, 1998 -- June 30, 1998.............................. 5.13 1.00
July 1, 1998 -- September 30, 1998.......................... 2.88 1.63
October 1, 1998 -- December 31, 1998........................ 3.00 2.00

1999
January 1, 1999 -- March 31, 1999........................... 3.75 2.75
April 1, 1999 -- June 30, 1999.............................. 5.13 2.88
July 1, 1999 -- September 30, 1999.......................... 5.00 3.25
October 1, 1999 -- December 31, 1999........................ 4.00 2.00

2000
January 1, 2000 -- March 31, 2000........................... 5.00 3.06
April 1, 2000 -- June 7, 2000............................... 4.94 2.63
</TABLE>

We have never declared any cash dividends with respect to shares of our
Common Stock and do not anticipate that dividends will be declared in the
foreseeable future. We intend that all available excess cash will be utilized to
satisfy dividend obligations accruing with respect to shares of our Preferred
Stock and to expand our business. Our future dividend policy will depend on our
earnings, capital requirements, expansion plans, financial condition and other
relevant criteria.

12
<PAGE> 15

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2000 on:

- an actual basis, and

- an as adjusted basis to give effect to the sale by selling
securityholders of all 10,434,976 of the shares being offered hereby,
including all 2,304,886 of the shares issuable upon the conversion into
Common Stock of all outstanding shares of our Series C 6% Convertible
Preferred Stock, and all 1,910,500 of the shares issuable upon the
exercise of certain outstanding Common Stock purchase warrants.

<TABLE>
<CAPTION>
MARCH 31, 2000
-------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Non-Current Debt............................................ $29,308,780 $29,308,780
Current Debt................................................ 11,271,578 11,271,578
Stockholders' Equity
Series A Preferred Stock, $.01 par value; 2,728,004 shares
issued and outstanding, respectively................... 27,279 27,279
Series B Preferred Stock, $.01 par value; 500,000 shares
issued and outstanding, respectively................... 5,000 5,000
Series C Preferred Stock, $.01 par value; 3,780 and 0
shares issued and outstanding, respectively............ 38 0
Common Stock, $.01 par value; 13,850,206 and 18,065,592
shares issued and outstanding, respectively............ 138,501 180,855
Additional Paid-in Capital................................ 33,704,732 37,178,741
Accumulated Deficit....................................... (7,099,854) (7,099,854)
----------- -----------
Total Stockholders' Equity........................ 26,775,696 30,292,021
----------- -----------
Total Capitalization.............................. $67,356,054 $70,872,379
=========== ===========
</TABLE>

The number of outstanding shares of Common Stock in this table excludes:

- approximately 582,907 shares of Common Stock issuable upon the conversion
of 2,728,004 shares of our Series A Preferred Stock;
- approximately 235,294 shares of Common Stock issuable upon the conversion
of 500,000 shares of our Series B Preferred Stock;
- approximately 1,475,000 shares of Common Stock issuable upon the exercise
of options outstanding and reserved for issuance under our 1997 Stock
Option Plan;
- 2,176,131 shares of Common Stock issuable upon the exercise, through
November 2001, at $3.25 per share, of certain warrants;
- 500,000 shares of Common Stock issuable upon the exercise, until December
2002, at $2.50 per share, of certain other warrants;
- 138,625 shares of Common Stock issuable upon the exercise, until December
2002, at $1.50 per share, of certain other warrants;
- 1,566,500 shares of Common Stock issuable upon the exercise, until July
2002, at $5.75 per share, of certain other warrants; and
- 1,944,080 shares of Common Stock issuable upon the exercise, at various
times through December 2004, at exercise prices ranging from
approximately $1.20 per share to $3.50 per share, of certain other
warrants.

13
<PAGE> 16

SELECTED CONSOLIDATED FINANCIAL DATA

Our selected historical consolidated financial information set forth below
should be read in conjunction with our audited financial statements and notes
thereto for the years ended December 31, 1999 and 1998, and our unaudited
financial statements and notes thereto for the three months ended March 31, 2000
and 1999, each of which, except for our consolidated balance sheet at March 31,
1999, is contained elsewhere in this Prospectus.

STATEMENT OF OPERATIONS DATA

BALANCE SHEET DATA

14
<PAGE> 17

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

The following discussion and analysis should be read in conjunction with
our audited and unaudited financial statements and the related notes included in
this Prospectus. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in the forward-looking statements as a result of various
factors, including the risks discussed in "Risk Factors" and elsewhere in this
Prospectus.

GENERAL

We are a diversified, multi-faceted specialty finance company principally
engaged in lending activities related to accounts receivable factoring,
equipment leasing, mortgage banking, consumer finance and other types of
specialty financing. We also provide accounting and collections services to
other entities. Our business is conducted, generally, through two principal
operating arms -- our commercial asset business finance group, and our consumer
finance group. Our commercial asset business finance group, operating under the
umbrella of our Ameri-Cap Business Finance Group, Inc. holding company
subsidiary, specializes, principally, in accounts receivable factoring and
equipment leasing. Our consumer finance group, operating under the umbrella of
the our Ameri-Cap Consumer Finance Group, Inc. holding company subsidiary,
specializes, principally, in mortgage banking and other retail specialty
financing lines.

Our emergence into the consumer specialty finance industry was solidified
by our acquisition, our largest to date, through our Travelers Acquisition Co.
subsidiary ("TAC"), of Travelers, as of September 30, 1999. Travelers is a
California-based specialty consumer finance company which, for the past 25
years, has been engaged, generally, in the acquisition, management, servicing
and collection of individual consumer contracts. Travelers operates under the
Company's Ameri-Cap Consumer Finance Group, Inc. umbrella.

In addition to our commercial asset finance and consumer finance arms, we
have also established an Internet financial services company subsidiary,
Finantra Internet Services.com, Inc., as a platform for the distribution of
financial products and services, in particular, residential mortgages, through
the Internet.

Since the consummation, during January 1998, of our initial public
offering, our operations have focused primarily on growing an operation base and
establishing a market presence in each of the aforementioned business segments.
Our primary strategy for achieving our necessary growth and market presence has
been, among other things, to pursue acquisitions of existing enterprises which,
in our opinion, have management experience and earnings potential and long-term
growth possibilities, and obtaining institutional lines of credit for each
business line. Having established operations in each of our commercial assets
business finance and consumer finance arms, our current principal strategy for
making operations more profitable is to bundle (or combine and package)
financial products and services. We believe that by bundling products and
services, we will be positioned to more effectively compete since, as the volume
of the transactions we handle increases, the more likely we will have access to
less costly leasing, factoring, mortgage banking and retail consumer financing
lines.

In an effort to further solidify our emergence into the retail specialty
finance industry, during January 2000, we entered into a Consumer Finance
Contracts Program with Gateway Companies, Inc. Pursuant to this Program, among
other things, Gateway has agreed to assign to us Gateway customer contracts for
computers, software, accessories, certain warranties and other related goods and
services sold by Gateway or any of its vendors in the ordinary course of their
business to consumers for individual, family, personal or household use, and we
have agreed to accept such assignments of contracts and finance loans to
Gateway's customers to pay Gateway for the goods being purchased under the
contracts. In general, we have agreed to pay Gateway for contracts for goods
assigned under the Program by Gateway to us a purchase price per contract equal
to the total principal amount to be financed by us under such contract less a
negotiated discount. Pursuant to the Program, Gateway has agreed to make
commercially reasonable efforts to assign to us, and we have agreed to make
commercially reasonable efforts to accept assignments of contracts, of not less
than a fixed amount per month.

15
<PAGE> 18

RESULTS OF OPERATIONS

Three Months Ended March 31, 2000 Compared to Three Months Ended March 31,
1999

For the three months ended March 31, 2000 ("First Quarter 2000"), we
generated revenues of $5,231,458, an increase of $3,871,280, or approximately
285%, from revenues of $1,360,178 for the three months ended March 31, 1999
("First Quarter 1999"). This significant increase in revenues was primarily the
result of our acquisition, subsequent to First Quarter 1999, of Travelers, and
the full scale implementation, in accordance with our business plan, subsequent
to First Quarter 1999, of our consumer retail loan (Travelers), mortgage banking
and accounts receivable factoring operations. During First Quarter 1999, our
revenue generating operations were essentially limited to accounts receivable
factoring operations.

During First Quarter 2000, we recorded approximately $1.1 million from the
gains on the sales of mortgage loans and related broker fees. In addition,
during First Quarter 2000, we recorded approximately $2.1 million of finance
interest attributable directly to Travelers' operations. Moreover, during First
Quarter 2000, we, through Travelers, recorded approximately $655,000 of
servicing income and an additional $309,000 from the gain on the sale of the
consumer installment contracts sold by us in our first securitization. We did
not securitize any of our finance contracts during First Quarter 1999.

During First Quarter 2000, we incurred an increase of $3,844,949, or
approximately 214%, in total operating expenses over First Quarter 1999 figures.
This increase was primarily the result of our acquisition, subsequent to First
Quarter 1999, of Travelers, and the full-scale implementation, in accordance
with our business plan, subsequent to First Quarter 1999, of our consumer retail
loan (Travelers), mortgage banking and accounts receivable factoring operations.
During First Quarter 1999, our operations were essentially limited to accounts
receivables factoring operations.

As a consequence of our expansion, and, primarily, our acquisition of
Travelers, during First Quarter 2000, we incurred approximately $1.0 million of
additional interest expense as compared to First Quarter 1999 interest expense.
This increase was directly related to borrowings required under our
interest-bearing credit facilities to finance consumer retail loans originated
by Travelers. In addition, as a result of our growth and expansion (again,
primarily relating to our acquisition of Travelers), we incurred approximately
$2.9 million of additional compensation and general overhead expenses during
First Quarter 2000 as compared to First Quarter 1999.

As a consequence of the foregoing, we recorded a net loss of $412,306 for
First Quarter 2000, as compared to a net loss $426,837 for First Quarter 1999.
When combined, however, with the provisions for dividends with respect to shares
of our Series A and Series C Preferred Stock, we incurred a net loss applicable
to common stockholders for First Quarter 2000 of $749,328, or approximately
$0.06 per share, as compared to a net loss applicable to common stockholders for
First Quarter 1999 of $495,037, or approximately $0.11 per share. No shares of
Series C Preferred Stock were outstanding during First Quarter 1999.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

For the year ended December 31, 1999 ("Fiscal 1999"), we generated revenues
of $11,604,014, an increase of $1,869,074, or approximately 19%, from revenues
of $9,734,940 for the year ended December 31, 1998 ("Fiscal 1998"). This
increase in revenues was primarily the result of our full-scale initiation,
during Fiscal 1999, and the resulting approximately $2.7 million increase in
broker fees and gains on sales of mortgage loans, of our mortgage banking
operations. In addition, for Fiscal 1999, we recorded an approximate $2.5
million increase in finance income attributable to three months of Travelers'
operations, and an approximate $600,000 increase in each of factoring, servicing
and consulting revenues. During Fiscal 1998, we had not yet fully commenced our
mortgage banking operations or owned Travelers. These increases in mortgage
banking, finance, factoring, servicing and consulting revenues effectively
offset an approximate $3 million decrease from Fiscal 1998 results in revenues
generated from our equipment leasing and other financial services operations.
These decreases are attributable, principally, to the shift in emphasis in our
business during Fiscal 1999, and the restructuring of our equipment leasing
operations into our factoring

16
<PAGE> 19

operations and our downsizing the amount of business, and consequently,
revenues, generated from providing back office accounting operations to
unaffiliated entities.

During Fiscal 1999, we incurred an increase of $2,807,759, or approximately
26%, in total operating costs and expenses over Fiscal 1998 figures. This
increase was principally the result of our expansion and full-scale initiation,
and the costs attendant thereto, during Fiscal 1999, of our overall business
plan and, in particular, our accounts receivable factoring, mortgage banking and
retail consumer finance (Travelers) operations. As a consequence thereof, we
incurred an approximate $1 million increase during Fiscal 1999 in interest and
other expenses incurred as a result of our significantly greater utilization of
our credit facilities to generate factoring, financing and mortgage banking
revenues. These increases in expenses more than offset the approximate $624,000
decrease in the provision for credit losses recorded for Fiscal 1999 as compared
to Fiscal 1998. The decrease in the provision for credit losses is due to the
change in the composition of the finance receivables during Fiscal 1999,
including our receipt of additional collateral for certain individually
significant receivables.

As a consequence of the foregoing, we recorded a net loss of $1,880,846 for
Fiscal 1999, as compared to a net loss of $898,081 for Fiscal 1998. When
combined with the provision for dividends with respect to shares of our Series A
and Series C Preferred Stock, we incurred a net loss applicable to common
stockholders for Fiscal 1999 of $2,358,396, or approximately $0.34 per share, as
compared to a net loss applicable to common stockholders for Fiscal 1998 of
$1,192,685, or approximately $0.32 per share.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2000, we had total assets of $76,577,639, as compared to total
assets of $66,535,520 at December 31, 1999. This increase in total assets is
primarily the result of (i) the increased number of consumer retail loans,
equipment leases, factored accounts receivable, loans held for resale and
related financial instruments originated or underwritten by us during First
Quarter 2000, (ii) the receipt by us of approximately $7.1 million in proceeds
from our issuance, in privately negotiated transactions (at differing per share
purchase prices) with 16 accredited investors, of 2,828,545 shares of Common
Stock and (iii) our receipt of $6 million in the form of two short-term notes
from the purchasers of $6.6 million of consumer finance contracts securitized
and sold by us during First Quarter 2000. The $11,496,617 of goodwill, net,
recorded on our balance sheet at March 31, 2000 represents the premium over the
fair value of net assets acquired by us in connection with our acquisitions of
our operating divisions. We anticipate that the future earnings of the acquired
companies will offset the amortization associated with the recording of this
goodwill.

At March 31, 2000, we had total liabilities of $49,801,943, as compared to
total liabilities of $47,372,402 at December 31, 1999. This slight increase in
total liabilities was primarily the result of increased borrowings under our
lines of credit necessitated as a result of our increased business activities,
primarily in the consumer loan (Travelers) area. Due to the increased amount of
consumer loan business originated by us during First Quarter 2000, we were also
required to record an additional approximate $1.2 million in client reserves at
March 31, 2000, as compared to the amount of client reserves at December 31,
1999.

At March 31, 2000, we had total stockholders' equity of $26,775,696, as
compared to total stockholders' equity of $19,163,118 at December 31, 1999. This
increase in stockholders' equity is attributable directly to our issuance,
during First Quarter 2000, of 2,828,545 shares of Common Stock to individual
investors in consideration for approximately $7.1 million in proceeds, net of
the net loss incurred.

In addition, subsequent to the end of First Quarter 2000, we issued and
sold, in separate, privately negotiated transactions (at differing per share
purchase prices), to nine accredited investors, an aggregate of 527,000 shares
of Common Stock in consideration for an aggregate of approximately $1.9 million.

We anticipate, based on current proposed plans and assumptions relating to
our operations and expansion, that we will be able to satisfy our currently
contemplated cash requirements for approximately the next 12 months from working
capital, cash flow and our interest-bearing credit facilities. In the event that
our plans change or our assumptions prove to be inaccurate, or working capital,
cash flow and availability under existing credit facilities prove to be
insufficient to fund our operations and expansion (due to unanticipated
expenses, delays, problems or otherwise), we would be required to seek
additional funding. Depending upon our financial

17
<PAGE> 20

strength and the state of the capital markets, we may also determine that it is
advisable to raise additional equity capital. We have no current arrangements
with respect to, or sources of, any additional capital, and we are not certain
that such additional capital will be available to us, if needed, on commercial
reasonable terms, or at all. Our inability to obtain additional capital would
adversely affect us and could cause us to be unable to implement our business
strategy or proposed expansion or to otherwise significantly curtail or cease
operations.

In consideration for our purchase of Travelers, we paid Travelers'
stockholders an aggregate of $20 million, $15 million of which was paid in cash
at closing with the remaining $5 million purchase price taking the form of
three-year 10% promissory notes (the "Notes") of TAC. The Notes require a
$500,000 principal payment during the first year following the closing amortized
in twelve equal monthly installments, a $500,000 lump sum payment during the
13th month following the closing, with the remaining $4 million being amortized
over the next 24 months in equal monthly installments. To secure TAC's
obligations to Travelers' former stockholders under the Notes, TAC granted such
former stockholders a subordinated security interest in all of Travelers' assets
and pledged, on a subordinated basis, all of the capital stock of Travelers. We
have has also guaranteed all of TAC's obligations under the Notes.

The $15 million cash payment made to the stockholders of Travelers at the
closing was funded by us as follows: approximately $5.4 million from advances
made under the Travelers/FINOVA Facility, $3.5 million from the sale by us, to
certain accredited investors in an arm's-length, privately negotiated
transaction, of an aggregate of 3,500 shares of Series C 6% Convertible
Preferred Stock and related Common Stock purchase warrants (the "Preferred
Warrants"), $3.65 million from a 12-month secured loan made to TAC by BH Interim
Funding, L. P., approximately $2.0 million from our sale, during October 1999,
of 860,000 shares of our Common Stock at $2.33 per share to two accredited
investors in an arm's-length, privately negotiated transaction, $500,000 from a
90-day unsecured loan, bearing interest at the rate of 10% per annum, advanced
to us in an arm's-length, privately negotiated transaction from an unaffiliated
person, and $150,000 from our working capital. We have repaid the $500,000
90-day unsecured loan.

The Travelers/FINOVA Facility is in the principal amount of $32.5 million,
has a five-year term and bears interest, payable monthly, at the rate which,
from time to time, is 2% above FINOVA's stated "prime rate." Advances under the
Travelers/FINOVA Facility are limited, generally, to an amount not to exceed 80%
of Travelers' eligible receivables and eligible inventory. TAC's obligations
under the Travelers/FINOVA Facility have been secured by TAC's grant of a first
lien on, and security interest in, all of Travelers' assets, and a pledge, on a
subordinated basis, of all of the capital stock of Travelers. We have guaranteed
all of TAC's obligations and liabilities under the Travelers/FINOVA Facility. At
the closing of the Travelers acquisition, TAC and us applied approximately $15
million of advances under the Travelers/FINOVA Facility to satisfy and discharge
all indebtedness then owing by Travelers to Travelers' senior lenders.

Concurrently, we issued and sold, in an arm's-length, privately negotiated
transaction with certain accredited investors, in consideration for $3.5
million, an aggregate of 3,500 shares of our Series C 6% Convertible Preferred
Stock. In connection therewith, we also issued to the purchasers of the Series C
Preferred Stock (or their designees) Preferred Warrants entitling them the right
to acquire, in the aggregate, up to 700,000 shares of our Common Stock. The
Preferred Warrants are exercisable at any time within the five-year period
immediately following the closing at an exercise price of $3.28 (such price
being the closing sale price for shares of our Common Stock on the Electronic
Bulletin Board maintained by NASDAQ on the date of the closing). The Preferred
Warrants, generally, contain customary terms and provide for adjustment in the
number of shares of Common Stock issuable upon the exercise of such Warrants in
the event we take any action prior to the exercise of such Preferred Warrants
that may be dilutive to the holders of such Preferred Warrants.

Shares of our Series C Preferred Stock accrue dividends, payable quarterly
(to the extent legally sufficient funds are then available), at an annual rate
of $60.00 per share. All regularly declared but unpaid dividends cumulate.
Holders of shares of Series C Preferred Stock are not entitled to vote on any
matter affecting our stockholders, except as may be required by law. Holders of
the Series C Preferred Stock are entitled to a $1,000.00 per share liquidation
preference (together with all accrued and unpaid dividends) over the holders of
our Common Stock in the event of liquidation, dissolution or winding up. The
shares of Series C

18
<PAGE> 21

Preferred Rank rank pari passu with the outstanding shares of our Series A and
Series B preferred stock in the event of liquidation, dissolution or winding up.
After the satisfaction of all of our indebtedness, holders of Series C Preferred
Stock would then receive any remaining assets in priority to holders of our
Common Stock and on a pari passu basis with the holders of our Series A and
Series B Preferred Stock.

Shares of Series C Preferred Stock are convertible into shares of our
Common Stock at any time at the option of the holder as follows: the holder
shall be entitled to that number of shares of Common Stock as equals the
quotient of (i) the aggregate liquidation preference (plus all accrued and
unpaid dividends) attributable to such holder's shares of Series C Preferred
Stock divided by (ii) the lesser of (a) $3.28 and (b) the product of (1) 80%
multiplied by (2) the closing price on the NASDAQ SmallCap Market (or the
exchange upon which our shares may then be trading) on the trading day
immediately preceding the date that conversion is requested).

In addition, we will issue to each holder of the Series C Preferred Stock,
such number of shares of Common Stock as is equal to the difference between (i)
the quotient of (a) the aggregate liquidation preference (plus all accrued and
unpaid dividends) attributable to such holder's shares of Series C Preferred
Stock divided by (b) $3.28 and (ii) the quotient of (A) the aggregate
liquidation preference (plus accrued and unpaid dividends) attributable to such
holder's shares of Series C Preferred Stock divided by (B) $2.624.

Notwithstanding the foregoing, in the event a holder of Series C Preferred
Stock requests conversion at a time when the per share market value of our
Common Stock is less than $3.00, we shall have the right, but not the
obligation, to redeem all such holder's shares of Series C Preferred Stock by
paying to such holder, in cash, a redemption price equal to 120% of the
aggregate liquidation preference attributable to the shares of Series C
Preferred Stock for which conversion has been requested, together with accrued
and unpaid dividends.

Concurrently with the closing of the Travelers acquisition, we also caused
TAC to enter into a loan and security agreement with BHC Interim Funding, L. P.,
an unaffiliated entity ("BHC"), pursuant to which, among other things, BHC
advanced TAC $3.5 million (the "BHC Loan"). The BHC Loan has a term of 12 months
and bears interest at the rate of 13.5% per annum. The BHC Loan requires monthly
interest payments and one balloon payment of principal at maturity. TAC's
obligations to BHC under the BHC Loan have been secured by TAC's grant to BHC of
a first lien on, and security interest in, all of the capital stock of Travelers
and a subordinated security interest covering all of the assets of Travelers. In
connection with the BHC Loan, TAC issued to BHC a warrant entitling BHC to
purchase up to 4.28% of our Common Stock during the five year period immediately
following such warrant's issuance, at an exercise price of $3.50 per share (the
"Finantra Warrant").

In addition, TAC issued to BHC warrants (the "TAC Warrants") which entitle
BHC to purchase up to an additional 3% of the common stock of TAC at an exercise
price of $.01 per share. The Finantra Warrant also provides that BHC shall be
entitled to purchase up to an additional 1% of our Common Stock at an exercise
price equal to the lesser of (i) $3.50 and (ii) the average closing price for
shares of our Common Stock on the Bulletin Board for the five trading day period
immediately preceding the six-month anniversary of the closing of the Traveler's
acquisition. If the BHC Loan is not paid in full within the nine month period
immediately following the closing of the Travelers acquisition, then BHC will
further be issued (a) TAC Warrants entitling BHC to purchase up to an additional
3% of the common stock of TAC at an exercise price of $.01 per share and (b)
Finantra Warrants entitling BHC to purchase up to an additional 1.5% of our
Common Stock at an exercise price equal to the lesser of (i) $3.50 and (ii) the
average closing price on the NASDAQ SmallCap Market (or such exchange as shares
of our Common Stock may then be listed) for shares of our Common Stock for the
five trading day period immediately preceding the nine-month anniversary of the
closing. In such event, we and TAC also will be jointly and severally liable to
BHC for an additional transaction fee in the amount of $182,500.

The TAC Warrants further grant BHC the right to put back to TAC 25% of
BHC's then unexercised TAC Warrants upon the earlier of repayment in full of the
BHC Loan or the maturity of its term, for $100,000 if such put right is
exercised after the 180th day immediately following the closing of the Travelers
acquisition, but on or before the 270th day immediately following the closing,
and $230,000 if such put right is exercised

19
<PAGE> 22

after the 270th day following the closing. In addition, beginning on the second
anniversary of the closing, BHC has the right to put to us the balance of its
unexercised TAC Warrants in exchange for (i) the higher of (a) a cash payment
equal to $92,000 per 1% of Travelers' common stock or (b) a cash payment
representing the fair market value of such TAC Warrants or (ii) registered
shares of our Common Stock valued at the lesser of $3.50 and the average closing
price on the NASDAQ SmallCap Market (or such exchange as shares of our Common
Stock may then be listed) for shares of our Common Stock for the five trading
day period immediately preceding the exercise of the relevant put right
described herein.

We have granted BHC customary registration and other rights with respect to
the shares of our Common Stock issuable upon the exercise of the Finantra
Warrant.

In addition, the BHC Loan contains significant monetary penalties in the
event it is not paid in full within the 12-month period immediately following
the closing of the Travelers acquisition. We have not yet repaid the BHC Loan.

YEAR 2000 COMPLIANCE

The inability of business processes to continue to function correctly after
the beginning of the Year 2000 could have serious adverse effects on companies
and entities throughout the world. In order to insulate ourselves from suffering
any such adverse effects after January 1, 2000, during Fiscal 1999, we purchased
new software and hardware systems for ourselves and our subsidiaries. These new
systems all carry manufacturers' representations and warranties concerning Year
2000 compliance. To date, all of these systems have functioned properly and we
have not been adversely impacted by any Year 2000 computer problems. We are not
certain, however, that our software and hardware systems will not fail in the
future. In such event, we will be forced to expend such amounts of our working
capital as may be necessary to correct our software and hardware systems and
implement contingency plans.

20
<PAGE> 23

BUSINESS

GENERAL

Our business is operated principally through two wholly-owned holding
company subsidiaries, Ameri-Cap Business Finance Group, Inc. and Ameri-Cap
Consumer Finance Group, Inc. Ameri-Cap Business Finance Group, Inc., which
spearheads our business finance operations, specializes, principally, in
accounts receivable factoring and equipment leasing. Ameri-Cap Consumer Finance
Group, Inc., which spearheads our consumer finance operations, specializes,
principally, in mortgage banking, consumer finance and other types of specialty
financing. In addition, we have formed Finantra Internet Services.com, Inc. as a
platform for the distribution of financial products and services, in particular,
residential mortgages, through the Internet.

Since the consummation of our IPO during January 1998, our operations have
focused primarily on growing an operation base and establishing a market
presence in each of the aforementioned businesses. Our primary strategy for
achieving our necessary growth and market presence has been, among other things,
to pursue acquisitions of existing enterprises which, in our opinion, have
management experience, earnings potential and long-term growth possibilities,
and obtaining institutional lines of credit for each financing business line.

Effective September 30, 1999, we, through our TAC subsidiary, consummated
our largest acquisition to date, Travelers, a California-based provider of
specialty consumer financing. Travelers has been engaged for over 25 years in
the acquisition, management, servicing and collection of individual consumer
contracts. At the time of its acquisition, Travelers had an established loan
portfolio of approximately $36 million in gross consumer receivables. Travelers
operates under the Company's Ameri-Cap Finance Group, Inc. subsidiary.

While we have only a limited operating history in the accounts receivable
factoring and traditional financing business lines, we have more seasoned
experience in the equipment leasing business.

AMERI-CAP BUSINESS FINANCE GROUP OPERATIONS

Factoring Operations

Our factoring operations are conducted through our Ameri-Cap Factors Group,
Inc. subsidiary. Ameri-Cap Factors' business consolidates the operations of our
Ameri-Cap Commercial Asset Finance Group, Inc., American Factors Group, Inc. and
Ameri-Cap Retail Factors, Inc. subsidiaries, and focuses on the discounted
purchase of approved accounts receivable. These receivables are limited,
principally, to credit insured and other relatively low-risk accounts
receivables. Ameri-Cap Factors recently has expanded operations to include
traditional factoring, i.e., providing small-to-medium sized companies with
capital through the discounted purchase of their accounts receivable.

Ameri-Cap Factors' business consists, generally, of Ameri-Cap Factors
entering into an accounts receivable factoring and security agreement with a
client which obligates the client to sell to Ameri-Cap Factors a minimum amount
of accounts receivable each month (or a minimum amount of receivables during the
term of the agreement), usually has a term of not less than one year, and is
automatically renewable. When making an advance collateralized by inventory,
equipment, real estate or other assets, Ameri-Cap Factors enters into such
additional agreements with the client, and, if appropriate, third parties, as
Ameri-Cap Factors deems necessary or desirable based on the type of collateral
securing the advance. Ameri-Cap Factors purchases accounts receivable from its
clients at a discount from face value and usually requires the client's
customers to make payment on the receivables directly to Ameri-Cap Factors.
Ameri-Cap Factors also takes a

21
<PAGE> 24

lien on all accounts receivable of the client and, whenever available, blanket
liens on all of the client's other assets (some or all of which liens may be
subordinate to other liens) to secure the client's obligations. When making an
advance, Ameri-Cap Factors generally takes a first lien on the specific
collateral securing the advance. Ameri-Cap Factors almost always requires
personal guaranties (either unlimited or limited to the validity and
collectibility of purchased accounts receivable) from each client's principals.
Although Ameri-Cap Factors obtains, when available, credit insurance
underwritten by credible insurance companies, and as much collateral as
possible, there can be no assurance that the collateral obtained will be
sufficient to protect Ameri-Cap Factors against loss.

For purposes of providing Ameri-Cap Factors with the capital necessary to
finance its factoring operations, we, through our American Factors Group, Inc.
subsidiary, entered into a $4 million factoring facility with FINOVA Capital
Corporation. Advances under the factoring facility are secured by the pledge to
FINOVA of all of American Factors Group, Inc.'s receivables, all other Ameri-Cap
Factors' receivables acquired with advances under the Factoring Facility and our
guaranty.

Leasing Operations

Our equipment leasing operations, i.e., the business of acquiring,
originating, selling and servicing equipment leases, are conducted through our
Ameri-Cap Leasing Corp. subsidiary ("Ameri-Cap Leasing"). The equipment leased
by Ameri-Cap Leasing generally has a purchase price of less than $250,000. As
such, Ameri-Cap Leasing's leases are commonly referred to as "small ticket
leases." Ameri-Cap Leasing currently funds the acquisition or origination of its
leases from its working capital. Ameri-Cap Leasing has established strategic
alliances with a network of independent leasing companies, lease brokers and
equipment vendors, each of which acts as a source from which Ameri-Cap Leasing
obtains access to equipment leases. Ameri-Cap Leasing customizes lease financing
products to meet the specific equipment financing needs of its sources.

We believe that the small ticket segment of the equipment leasing business
is a rapidly growing industry due, in part, to (i) the consolidation of the
banking industry, which has eliminated many of the smaller community banks that
traditionally provided equipment financing for small to mid-size businesses,
forcing these businesses to seek alternative financing rather than deal with the
approval process of large commercial banks; (ii) stricter lending requirements
of commercial banks; (iii) a trend toward instant approvals at the point of sale
made possible by improved technology; (iv) the decline in the price of computer
hardware and software and increasing demand therefor; and (v) the adoption of
accounting pronouncements concerning the accounting treatment of transactions
with captive finance company subsidiaries, which has caused a number of
manufacturers to eliminate their finance companies, resulting in an increased
demand for independent financing.

Substantially all equipment leases acquired or originated by Ameri-Cap
Leasing are non-cancelable. During the term of the lease, Ameri-Cap Leasing
generally receives scheduled payments sufficient, in the aggregate, to cover
Ameri-Cap Leasing's borrowing costs and the costs of the underlying equipment,
and to provide Ameri-Cap Leasing with an appropriate profit margin. The initial
non-cancelable term of the lease is equal to or less than the equipment's
estimated economic life and a small portion of Ameri-Cap Leasing's leases
provide Ameri-Cap Leasing with additional revenues based on the residual value
of the equipment financed at the end of the initial term of the lease. Initial
terms of the leases in the Ameri-Cap Leasing's portfolio generally range from 12
to 60 months.

AMERI-CAP CONSUMER FINANCE GROUP OPERATIONS

Retail Specialty Finance Operations

Our emergence into the retail specialty finance industry was solidified by
our acquisition, through TAC, of Travelers during late 1999. Travelers conducts
business, principally, through four operating subsidiaries, Travelers Acceptance
Corporation, Travelers Leasing Corporation, Trace Credit Service and Traveler's
Data Services. Travelers Acceptance, generally, purchases, services and collects
installment consumer contracts from originators. Travelers Acceptance currently
services approximately 200 organizations, with a total portfolio value of
approximately $40 million in consumer promissory notes, comprising over 21,000
individual

22
<PAGE> 25

accounts. Travelers Leasing, generally, provides niche based leasing solutions
to a variety of businesses. Trace Credit, generally, provides debt collection
services to third-party clients. Trace Credit currently serves approximately 100
clients and has in its portfolio approximately $50 million in recoverable and
collectible non-performing receivables. Travelers Data, generally, provides for
the billing and servicing of individual consumer accounts for third-party
clients. Travelers Data currently services approximately $80 million of consumer
promissory notes.

We believe that Travelers' resources have been historically underutilized
and that, with the implementation of certain marketing and operating strategies,
Travelers' financial performance could be increased materially. We further
believe that acquisition of Travelers will result in numerous marketing and
operating synergies that will result, on a consolidated basis, in revenue and
earnings increases for us. Our management believes that the acquisition of
Travelers should be accretive as a result of both cost savings and revenue
expansion. We intend to effect initial Travelers' cost reductions by combining
Travelers' three existing offices into one location and by updating Travelers'
information systems and transitioning it to an Internet access portal. In
addition, we anticipate that we can eliminate approximately $1 million annually
from Travelers' operating expenses as a direct result of the elimination of
certain salary and consulting fees historically paid to certain of Travelers'
former stockholders. Our management further anticipates that Travelers' revenues
should be enhanced as a result of cross-selling and marketing efforts between
Travelers and our other operating divisions.

In order to provide Travelers with the capital necessary to fund its
operations, we have entered into a separate $32.5 million credit facility with
FINOVA (the "Travelers/FINOVA Facility"). The Travelers/ FINOVA Facility has a
five year term and bears interest at the rate which, from time to time, is 2%
above FINOVA's stated prime rate. Advances under the Travelers/FINOVA Facility
are limited, generally, to an amount not to exceed 80% of Travelers' eligible
receivables and inventory. Obligations thereunder have been secured by
Travelers' grant of a first lien on, and security interest in, all of Travelers'
assets and a pledge, on a subordinated basis, of all of the capital stock of
Travelers. At the closing of our acquisition of Travelers, approximately $15
million of advances under the Travelers/FINOVA Facility were applied to satisfy
indebtedness then owing to Travelers' senior lenders. Each of TAC and us has
guaranteed all obligations and liabilities under the Travelers/FINOVA Facility.

In an effort to further solidify our emergence into the retail specialty
finance industry, we, through our Travelers Acceptance and T.A.C. Technology
Finance Corp. subsidiaries, during January 2000, entered into the Consumer
Finance Contracts Program with Gateway. Pursuant to the Program, among other
things, Gateway has agreed to assign to us Gateway customer contracts for goods,
and we have agreed to accept such assignments of contracts and finance loans to
Gateway's customers to pay Gateway for the goods being purchased under the
contracts. In general, we have agreed to pay Gateway for contracts for goods
assigned under the Program by Gateway to us at a purchase price per contract
equal to the total principal amount to be financed by us under such contract
less a negotiated discount. Pursuant to the Program, Gateway has agreed to make
commercially reasonable efforts to assign to us, and we have agreed to make
commercially reasonable efforts to accept assignments of contracts, of not less
than a fixed amount per month.

Pursuant to the Program, Gateway shall offer to us all contracts for goods
involving Gateway customers who satisfy a certain credit profile, subject,
however, to existing financing programs of Gateway and other limitations and
guidelines that Gateway has instituted. We, in our sole discretion, shall make
all credit decisions as to those contracts we agree to accept and fund. We shall
accept an assignment of a contract approved for funding in accordance with the
our credit procedures and the obligation to accept the assignment from Gateway
of such contract shall be in our sole discretion. The Program has a limited term
during which time we have agreed, in general, not to acquire consumer finance
contracts from any other manufacturer of personal computers other than Gateway.
Certain exceptions to this prohibition do apply, however. Similarly, Gateway has
agreed that during the term of the Program, Gateway will not offer consumer
finance programs involving consumer finance contracts on substantially the same
terms and conditions and involving substantially the same credit profile to
other finance companies, provided that Gateway credit financing programs
existing at the effective date of the Program will not be limited or otherwise
affected by the Program.

23
<PAGE> 26

We have has further agreed that we shall service, process, administer and
collect all amounts due under assigned contracts with reasonable care,
consistent with accepted servicing practices of prudent lending institutions, at
our own expense and without reimbursement from Gateway. We shall be responsible
for mailing monthly periodic statements to customers whose contracts have been
assigned to, and financed by, us, and collecting all amounts due on such
contracts. Pursuant to the Program, Gateway shall be responsible for any
marketing or advertising of the goods and of the Program. We have guaranteed all
obligations under the Program.

Mortgage Banking Operations

Our mortgage banking operations are conducted through our Ameri-Cap
Mortgage Group, Inc. subsidiary. Ameri-Cap Mortgage's business consolidates its
operations with the operations of our Ameri-Cap Mortgage Lending Corp. and
Ameri-Cap Mortgage Services, Inc. subsidiaries.

Ameri-Cap Mortgage is a licensed mortgage lender engaged in both
residential and commercial lending. Ameri-Cap Mortgage's operations focus
primarily on conforming and non-conforming loans, sub-prime credits, home
improvement loans, sales finance contracts and debt consolidations.

In order to provide Ameri-Cap Mortgage with the financial capacity to
originate its mortgage loans, we have obtained a $10 million warehouse line of
credit from Suntrust Bank and a $5 million warehouse line of credit from
Republic Bank. We anticipate that these warehouse lines will be utilized to fund
residential and commercial mortgages.

Internet and E-Commerce Operations

During the fourth quarter of Fiscal 1999 and continuing through the first
quarter of Fiscal 2000, we expended considerable efforts and capital in
developing and marketing our e-commerce enablement operations and creating
Internet portals. In this regard, we, for nominal consideration, acquired an
approximate 49.5% interest in FunU.com, an unaffiliated entity engaged in the
development of Internet portals primarily targeted to major university students.
In addition, we, in conjunction with our acquisition of Travelers and our
entering into the Consumer Finance Contracts Program with Gateway, have
continued our development of our on-line, instantaneous credit approval and loan
processing capabilities.

EMPLOYEES

We currently employ, on a consolidated basis, approximately 165 full-time
employees. Approximately ten of these employees are executive officers,
approximately 25 are administrative staff, approximately 50 are sales and
marketing personnel and approximately 80 are support staff. None of our
employees are represented by a union or subject to any collective bargaining
agreements. We believe that our workforce is adequate to meet our reasonably
foreseeable requirements and that our relationship with employees is good.

DESCRIPTION OF PROPERTIES

We currently own no real property and conduct our business from facilities
leased to us by unaffiliated third parties in Plantation, Boca Raton and Lake
Worth, Florida, Carlsbad, California and Bainbridge Township, Ohio. Our
principal place of business is located in Plantation, Florida. Pursuant to our
lease for the Plantation property, which has an initial term expiring in 2004,
we rent approximately 9,800 square feet of office space in consideration for
annual rents currently set at approximately $16,750 per year, gradually
escalating over the lease term to approximately $18,850 during the last year of
the initial lease term. We are also obligated to pay the landlord for these
premises our proportionate share of all operating costs, expenses and taxes. We
believe these premises are well maintained and adequate to meet our needs for
the foreseeable future.

Our subsidiaries do not own any real property and conduct their respective
businesses from facilities leased to them, at market rates, by unaffiliated
persons. We believe that such leased facilities are adequate for our
subsidiaries' reasonably foreseeable operations.

24
<PAGE> 27

The following table highlights the monthly rent payable by us for our other
leased facilities and the amount of space rented:

<TABLE>
<CAPTION>
LOCATION MONTHLY RENT SQUARE FOOTAGE RENTED
-------- ------------ ---------------------
<S> <C> <C>
Boca Raton, Florida......................................... $ 5,225 2,200
Lake Worth, Florida......................................... 5,256 3,500
Carlsbad, California........................................ 30,518 19,438
Bainbridge Township, Ohio................................... 2,700 2,400
</TABLE>

25
<PAGE> 28

MANAGEMENT AND DIRECTORS

Our directors and executive officers are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH US
---- --- -------------------
<S> <C> <C>
Robert D. Press................................. 35 Chairman of the Board and Chief
Executive Officer
Charles Litt.................................... 51 President and Director
Maynard J. Hellman.............................. 54 General Counsel and Director
Arthur J. Press................................. 70 Director
Evaldo F. Dupuy................................. 55 Director
Thomas W. Dwyer................................. 38 Director
Alyce B. Schreiber.............................. 35 Executive Vice President,
Secretary and Director
Vern E. Landeck................................. 41 Chief Financial Officer
</TABLE>

Robert D. Press has served as our Chairman of the Board since August 1997
and as our Chief Executive Officer and a Director since our inception in
September 1993. From September 1993 through May 1999, Mr. Press also served as
our President. Mr. Press devotes all of his business time and efforts to our
affairs. From June 1990 to August 1993, Mr. Press served as President of Premier
Lease Concepts, Inc., our predecessor. In addition, from 1989 to 1997, Mr. Press
served as President of Performance Capital Management, Inc., a holding company
controlled in part by Mr. Press, which had interests in brokerage and investment
management, and since October 1992, as President of Medley Group, Inc., a
principal stockholder of ours. Mr. Press also served, from 1991 to July 1997, as
a licensed registered representative of PCM Securities Limited, L.P., an NASD
registered broker-dealer. Mr. Press holds a B.A. degree in Economics from
Brandeis University. From 1984 to 1986, Mr. Press worked as a full-time trading
systems consultant to several major Wall Street firms, including The Longview
Group. In 1986, Mr. Press joined Chemical Bank, N.A. ("Chemical Bank") as an
internal consultant in trading and capital markets, and later in 1986, Mr. Press
joined in the formation of Chemical Bank's Interest Rate Arbitrage trading
group, of which Mr. Press became the principal trader responsible for the global
trading and investment decisions of a multi-billion dollar portfolio. Mr. Press
holds Series 7 and 63 professional securities licenses. Mr. Press is the son of
Arthur J. Press, a Director of the Company.

Charles Litt has served as our President and a Director since May 1999.
From 1996 to May 1999, Mr. Litt served as Vice President and General Counsel for
First Sierra Financial, Inc. ("First Sierra"), a publicly held specialty finance
company. Mr. Litt's responsibilities at First Sierra included the negotiation of
vendor program agreements and the structuring of major leasing and finance
transactions. From 1993 to 1996, Mr. Litt served as President of Kinnard Capital
Corporation, a subsidiary of Kinnard Investments, a Minneapolis based investment
company with broker dealer and financial focused subsidiaries. Prior to 1993,
Mr. Litt served in various positions for Banc One Leasing Corporation.

Maynard J. Hellman has served a Director since January 1997 and as our
General Counsel since January 1999. From January 1988 to December 1998, Mr.
Hellman served as managing partner of the Coral Gables, Florida based law firm
of Hellman & Mass. From 1983 until 1988, Mr. Hellman was engaged in the private
practice of law and prior thereto, Mr. Hellman served as a partner in the Miami,
Florida law firm of Gilbert, Silverstein and Hellman. Mr. Hellman holds a J.D.
degree from the University of Miami School of Law and a B.B.A degree in
Accounting from the University of Miami School of Business Administration.

Arthur J. Press has served as a Director since January 1998. Prior to his
retirement in 1987, Mr. Press served as the Vice President of Commercial Lending
for Chemical Bank. Mr. Press is the father of Robert D. Press, our Chairman of
the Board and Chief Executive Officer.

Evaldo F. Dupuy has served as a Director since July 1998. Since 1989, Mr.
Dupuy has served as a principal of Coast Partners Securities, Inc., a boutique
investment banking firm specializing in asset backed and debt related facilities
for its clients. Mr. Dupuy is a member of the Florida Premium Finance
Association,

26
<PAGE> 29

Florida Automobile Dealers Association, Florida Mortgage Brokers Association and
the Asset Based Lender Association.

Thomas W. Dwyer has served as a Director since March 1999. Since 1994, Mr.
Dwyer has served as Vice President of Fuji Capital Markets Corp., a derivatives
trading house owned by Fuji Bank Tokyo. In addition, since 1998, Mr. Dwyer has
served as a director of Securities Arbitrage Consulting Group, a Chicago based
risk software company.

Alyce B. Schreiber has served as a Director and our Executive Vice
President since March 1999 and as our Vice President and Secretary since
November 1995. From 1995 to October 1995, Ms. Schreiber served as director of
Club Operations for The Jockey Club, a Miami, Florida resort. From December 1994
to May 1995, Ms. Schreiber worked in the business development department of Sky
Scientific, Inc., a publicly held entity with subsidiaries in natural resources.
From September 1991 to September 1994, Ms. Schreiber served as our Vice
President and Secretary. Prior thereto, Ms. Schreiber served as a tax specialist
for Laventhol and Horwath, a certified public accounting firm. Ms. Schreiber
holds a J.D. degree from Cardozo School of Law and a B.B.A. degree in Accounting
from the Boston University School of Management.

Vern E. Landeck has served as our Chief Financial Officer since April 2000.
From July 1997 to March 2000, Mr. Landeck served as Chief Financial Officer of
Prime Capital Corporation, a NASDAQ company engaged in the commercial specialty
finance business ("Prime"). From May 1996 to June 1997, Mr. Landeck served as
Vice President and Treasurer of Prime. From 1988 to 1996, Mr. Landeck served as
President of Atlantic Capital Exchange, Inc., a Chicago, Illinois and Fairfax,
Virginia based equipment financing company founded by Mr. Landeck.

Our Board of Directors has established Audit and Compensation Committees.
The Audit Committee meets with our management to consider the adequacy of our
internal controls and the objectivity of our financial reporting. The Audit
Committee also meets with our independent accountants and with appropriate
Company financial personnel about these matters. The Compensation Committee
administers our 1997 Stock Option Plan and makes recommendations to the Board of
Directors with respect to the compensation of management. The Audit and
Compensation Committees are comprised of Messrs. Hellman, Dupuy, Press and Dwyer
and Ms. Schreiber.

Our Directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified.

SELLING STOCKHOLDERS

We have listed below:

- the name of each selling stockholder;

- the number of shares of Common Stock beneficially owned by each selling
stockholder as of the date of this Prospectus;

- the number of shares of Common Stock being offered by each selling
stockholder hereunder; and

- the number of shares of Common Stock to be beneficially owned by each
selling stockholder after this offering is complete.

Except as set forth below, none of the selling stockholders is affiliated
with us or our affiliates or, during the past three years, held any position or
office with us or our affiliates or had a material relationship with us or our
affiliates.

The shares of Common Stock being offered hereby are being registered to
permit the public sale of such shares and the selling stockholders may offer all
or part of the shares for resale from time to time. We will receive no proceeds
from the sale of the shares being offered hereby, but could receive up to
$3,516,125 if selling stockholders exercise Common Stock purchase warrants
entitling them to receive up to 1,910,500 of the shares being offered hereby.

27
<PAGE> 30

The following table is derived from our books and records, as well as from
those of our transfer agent.

<TABLE>
<CAPTION>
SHARES OF
SHARES OF COMMON COMMON STOCK
STOCK BENEFICIALLY SHARES TO BE SOLD BENEFICIALLY
OWNED BEFORE THIS PURSUANT TO THIS OWNED AFTER THIS PERCENT OF
SELLING STOCKHOLDER OFFERING OFFERING OFFERING CLASS
------------------- ------------------ ----------------- ---------------- ----------
<S> <C> <C> <C> <C>
Access 1 Financial Consulting.... 20,000 20,000 -- --
Charterbridge Financial Group.... 15,000 15,000 -- --
Garry Spear & Sally Spear
JTBTE.......................... 25,000 25,000 -- --
Joanne Telmosse.................. 15,000 15,000 -- --
Medical Enterprise............... 34,000 34,000 -- --
Rob Denton....................... 23,000 23,000 -- --
Trans Asia Holdings.............. 89,000 89,000 -- --
William Prouty & Marie Prouty
JTBTE.......................... 76,000 76,000 -- --
Stedman Walker................... 25,000(1) 25,000(1) -- --
Theodore P. Kovaleff............. 32,500(1) 32,500(1) -- --
Carrington Capital Corp.......... 110,000(1) 110,000(1) -- --
Oceancrest....................... 100,000(1) 100,000(1) -- --
Peter Nasca...................... 10,000(1) 10,000(1) -- --
Barry Goldstein.................. 85,000 85,000 -- --
Jonathan Dreyer.................. 15,000 15,000 -- --
Lyndsey Dreyer................... 15,000 15,000 -- --
Al & Laura L. Bost............... 10,000 10,000 -- --
Alan Abelson..................... 1,000 1,000 -- --
Alfredo Forgione................. 10,000 10,000 -- --
Angelo Calvello.................. 5,000 5,000 -- --
Anthony J. Esper................. 6,000 6,000 -- --
Anthony Lopez.................... 10,000 10,000 -- --
Areta Diversified Hedge Fund..... 10,000 10,000 -- --
Azzarelli Enterprise, Ltd. ...... 10,000 10,000 -- --
Barth Azzarelli.................. 10,000 10,000 -- --
Bill Wimble...................... 10,000 10,000 -- --
Bobby N. Butts................... 20,000 20,000 -- --
Carlos and Glenda Johns.......... 10,000 10,000 -- --
Central American Enterprises,
Ltd. .......................... 20,000 20,000 -- --
Central American Enterprises,
Ltd. .......................... 10,000 10,000 -- --
Charles Fest..................... 10,000 10,000 -- --
D.M. Stone Revocable Trust....... 10,000 10,000 -- --
David Banning.................... 30,000 30,000 -- --
David Banning, Jr. .............. 20,000 20,000 -- --
David J. Bell.................... 10,000 10,000 -- --
Debbie & Gary Phillips........... 10,000 10,000 -- --
Donald McDermott................. 10,000 10,000 -- --
Donald Tocco..................... 5,000 5,000 -- --
E. William Reiber................ 10,000 10,000 -- --
E.T. Henry....................... 10,000 10,000 -- --
Everett Sorenson................. 77,647 77,647 -- --
Francis DeBenedictis............. 10,000 10,000 -- --
Frank Leskinenn.................. 1,500 1,500 -- --
Frank Musolino................... 100,000 100,000 -- --
Gary R. & Jacqueline L.
Trombley....................... 20,000 20,000 -- --
George G. & June Oliver.......... 10,000 10,000 -- --
Gilbert Wolfer................... 20,000 20,000 -- --
Gulfshore Brokerage, Inc. ....... 1,300 1,300 -- --
James & Robin Eilers............. 10,000 10,000 -- --
Jay Massaro...................... 10,000 10,000 -- --
John Ash......................... 5,000 5,000 -- --
</TABLE>

28
<PAGE> 31

<TABLE>
<CAPTION>
SHARES OF
SHARES OF COMMON COMMON STOCK
STOCK BENEFICIALLY SHARES TO BE SOLD BENEFICIALLY
OWNED BEFORE THIS PURSUANT TO THIS OWNED AFTER THIS PERCENT OF
SELLING STOCKHOLDER OFFERING OFFERING OFFERING CLASS
------------------- ------------------ ----------------- ---------------- ----------
<S> <C> <C> <C> <C>
John Mathis...................... 10,000 10,000 -- --
Joseph Nuccio.................... 10,000 10,000 -- --
Kim Schwenche.................... 20,000 20,000 -- --
Kurt H. Hull..................... 20,000 20,000 -- --
Leo & Sharon Harvey.............. 3,400 3,400 -- --
Leonard Martz.................... 3,000 3,000 -- --
Leslie Bauer..................... 10,000 10,000 -- --
Linda Hecht...................... 10,000 10,000 -- --
Marc Sacks....................... 50,000 50,000 -- --
Marcia and David Thuermer
JTWROS......................... 10,000 10,000 -- --
Margaret Davis................... 10,000 10,000 -- --
Mark Himan....................... 15,000 15,000 -- --
Mark Hirst....................... 10,000 10,000 -- --
Mark J. & Elisa A. Stevens....... 10,000 10,000 -- --
Massaro Plumbing Co. ............ 10,000 10,000 -- --
Melvin Hughes.................... 3,500 3,500 -- --
Mergers, Acquisitions &
Placements, Inc. .............. 120,000 120,000 -- --
Michael & Carol Lechance......... 10,000 10,000 -- --
Michael Azzarelli................ 20,000 20,000 -- --
Michael Orr...................... 20,000 20,000 -- --
Michael Wayne Trust.............. 10,000 10,000 -- --
Mitch Welin...................... 30,000 30,000 -- --
Northwoods Capital Money Purchase
Pension........................ 5,000 5,000 -- --
Paul Whiting..................... 20,000 20,000 -- --
Pauline Mordini.................. 10,000 10,000 -- --
Phillip Taylor................... 5,000 5,000 -- --
Pinnacle Enterprises............. 10,000 10,000 -- --
Ralph C. Mahin................... 10,000 10,000 -- --
Ray Diana........................ 10,000 10,000 -- --
Richard Carolan.................. 50,000 50,000 -- --
Richard T. & Kathy Carbaugh...... 20,000 20,000 -- --
Richard W. Henry................. 10,000 10,000 -- --
Robert Curci..................... 10,000 10,000 -- --
Robert Lowe II................... 10,000 10,000 -- --
Robert P. Louwe.................. 50,000 50,000 -- --
Rocky P. Pagliarulo.............. 10,000 10,000 -- --
Roger Andre Pinder............... 10,000 10,000 -- --
Roger D. Ladd.................... 10,000 10,000 -- --
Ron Bradley...................... 10,000 10,000 -- --
Ronald Don....................... 15,967 15,967 -- --
Rosalyn T. & Keith F. Tart....... 10,000 10,000 -- --
Rudolfo Suarez................... 2,000 2,000 -- --
Russell Wolter................... 3,700 3,700 -- --
Ruth Adney....................... 10,000 10,000 -- --
Ruth C. Kelly.................... 10,000 10,000 -- --
Samuel Jean Enterprise........... 10,000 10,000 -- --
Scott A. Nedrow.................. 10,000 10,000 -- --
Stephen Story.................... 20,000 20,000 -- --
Steven Aufderhar................. 20,000 20,000 -- --
Tari Shannon..................... 5,000 5,000 -- --
</TABLE>

29
<PAGE> 32

<TABLE>
<CAPTION>
SHARES OF
SHARES OF COMMON COMMON STOCK
STOCK BENEFICIALLY SHARES TO BE SOLD BENEFICIALLY
OWNED BEFORE THIS PURSUANT TO THIS OWNED AFTER THIS PERCENT OF
SELLING STOCKHOLDER OFFERING OFFERING OFFERING CLASS
------------------- ------------------ ----------------- ---------------- ----------
<S> <C> <C> <C> <C>
Terry W. Kramer.................. 10,000 10,000 -- --
Theodore P. Kovaleff............. 10,000 10,000 -- --
Todd R. Taylor................... 10,000 10,000 -- --
Trust Co. of America f/b/o Larry
Neely.......................... 10,000 10,000 -- --
Vincent Testaverde............... 20,000 20,000 -- --
Wallace Fristz................... 2,500 2,500 -- --
Walter J. Croll.................. 20,000 20,000 -- --
Warren Freistat.................. 18,118 18,118 -- --
William R. & Debra B. Shelton.... 10,000 10,000 -- --
William & Debra Shelton.......... 10,000 10,000 -- --
William A. Strickland Rev.
Trust.......................... 10,000 10,000 -- --
William Ashby.................... 50,000 50,000 -- --
William Betke.................... 1,500 1,500 -- --
Banque Edouard Constant SA....... 20,000 20,000 -- --
Banque Edouard Constant SA....... 50,000 50,000 -- --
Canclord Capital Corporation..... 10,000 10,000 -- --
Credit Lyonnais (Schweiz)AG...... 50,000 50,000 -- --
El Oro Mining & Exploration
CO. ........................... 100,000 100,000 -- --
Karnaff Limited.................. 200,000 200,000 -- --
Lloyds Bank PLC.................. 50,000 50,000 -- --
MaCalay Asst Management, Ltd. ... 10,000 10,000 -- --
Pierre Arbour.................... 50,000 50,000 -- --
Research Capital Corp............ 80,000 80,000 -- --
Royter & Co. .................... 50,000 50,000 -- --
SG Hamaros Bank & Trust.......... 30,000 30,000 -- --
W. Van Gelown.................... 30,000 30,000 -- --
First American Investment Banking
Corp........................... 187,000(1) 187,000(1) -- --
Palm State Equities.............. 3,000(1) 3,000(1) -- --
Robert Moreya.................... 1,000(1) 1,000(1) -- --
Sorento Asset Management......... 17,000(1) 17,000(1) -- --
Stephanie Martin................. 7,500(1) 7,500(1) -- --
Tome Lane........................ 500(1) 500(1) -- --
Trine Ltd. ...................... 17,000(1) 17,000(1) -- --
AFIBA AG......................... 100,000 100,000 -- --
Alec Arho........................ 10,000 10,000 -- --
Ann Katherine Stromberg.......... 10,000 10,000 -- --
Ann-Marie Kolster................ 25,000 25,000 -- --
Christian Kolster................ 10,000 10,000 -- --
Christian Kolster................ 15,000 15,000 -- --
Claude Disserens................. 10,000 10,000 -- --
Dominique Pilet.................. 20,000 20,000 -- --
Golden Lion...................... 20,000 20,000 -- --
Henrick Gayer.................... 25,000 25,000 -- --
Jorma Alhopuro................... 10,000 10,000 -- --
Jukka Lehtonen Estate............ 15,000 15,000 -- --
Kari Ahola....................... 10,000 10,000 -- --
Kari Ahola....................... 10,000 10,000 -- --
Lago Invest...................... 30,000 30,000 -- --
Leif Kolster..................... 33,000 33,000 -- --
Markus Lindberg.................. 10,000 10,000 -- --
Rickard Rosen.................... 2,000 2,000 -- --
</TABLE>

30
<PAGE> 33

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

(1) Represents shares issuable upon the exercise of certain Common Stock
purchase warrants held by the selling stockholder.
(2) Represents shares issuable upon the conversion into Common Stock of shares
of our Series C 6% Convertible Preferred Stock owned by the selling
stockholder.
(3) Since the number of shares issuable upon the conversion of our Series C
Preferred Stock and the exercise of the Common Stock purchase warrants
issued in connection therewith is not definitive at the date of this
Prospectus (due to adjustments required prior to conversion and/or exercise,
as the case may be, based upon the then market price of our Common Stock and
our possible taking of potentially dilutive corporate actions), we have
contractually agreed with the holders of our Series C Preferred Stock and
the Common Stock purchase warrants issued in connection therewith to
register hereunder 200% of the shares of Common Stock that are currently
issuable if all such shares of Series C Preferred Stock and related Common
Stock purchase warrants were immediately converted and exercised, as the
case may be.

Each of Garry Spear and William Prouty was employed by us or one of our
affiliates at some point during the past three years. Neither of these persons
is currently employed by us or our affiliates.

Access 1 Financial Consulting has been engaged by us to perform various
financial consulting services. In consideration for their services, we issued
Access 1 20,000 shares of our Common Stock and agreed to issue them additional
shares of our Common Stock at such times as our shares trade at certain minimum
levels. We have also retained Charterbridge Financial Corp. to perform various
investor relations services on our behalf. In consideration for these services,
we agreed to pay Charterbridge $60,000 and issue to it 60,000 shares of our

31
<PAGE> 34

Common Stock. We have further retained Oceancrest to perform various financial
services. In consideration for their services, we issued Oceancrest warrants
entitling them to purchase up to 100,000 shares of our Common Stock at $2.75 per
share at any time prior to March 29, 2004. In addition, we pay Mergers,
Acquisitions & Placements, Inc. $90,000 per year in consideration for
receivables financing services performed by them on our behalf.

Carol Edelson is the wife of our former Chairman of the Board. Ms.
Edelson's husband resigned as our Chairman in August 1997.

PLAN OF DISTRIBUTION

The shares covered by this Prospectus may be distributed from time to time
by the selling stockholders in one or more transactions that may take place in
the NASDAQ SmallCap Market (or in any other market in which our shares may then
trade). These transactions include ordinary broker's transactions, privately-
negotiated transactions or sales to one or more broker-dealers for resale of
these shares as principals, at market prices existing at the time of sale, at
prices related to existing market prices, through Rule 144 transactions or at
negotiated prices. Usual and customary or specifically negotiated brokerage fees
or commissions may be paid by the selling stockholders in connection with their
sales of shares.

The selling stockholders may sell the shares being offered hereby in one or
more of the following methods:

- a block trade in which a broker or dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal
to facilitate the transaction;

- purchases by a broker or dealer as a principal and resale by the broker
or dealer for its account under this Prospectus;

- ordinary brokerage transactions and transactions in which the broker
solicits purchases; and

- face-to-face transactions between sellers and purchasers without a
broker-dealer.

In making sales, brokers or dealers used by the selling stockholders may
arrange for other brokers or dealers to participate. The selling stockholders
and other through whom such shares are sold may be "underwriters" within the
meaning of the Securities Act for the securities offered, and any profits
realized, or commissions received, may be considered underwriting compensation.

At the time a particular offer of the shares is made by or on behalf of a
selling stockholder, to the extent required, a Prospectus is to delivered. The
Prospectus will include the number of shares of Common Stock being offered and
the terms of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriter for the shares of
Common Stock purchased from the selling stockholder, and any discounts,
commissions or concessions allowed or reallowed or paid to dealers, and the
proposed selling price to the public.

We have told the selling stockholders that the anti-manipulative rules
under the Securities Exchange Act of 1934, including Regulation M, may apply to
their sales in the market. We have provided each of the selling stockholders
with a copy of these rules. We have also told the selling stockholders of the
need for delivery of copies of this Prospectus in connection with any sale of
the shares that are registered by this Prospectus.

Sales of shares and the selling stockholders, or even the potential of
these sales, may have a negative effect on the market price for shares of our
Common Stock.

We will bear all of the costs and expenses incurred in connection with this
offering, other than brokerage fees, discounts and commissions incurred by
selling stockholders upon their sale of the shares being offered hereby. Selling
stockholders will be responsible for such fees, discounts and commissions.

32
<PAGE> 35

We anticipate that offering costs and expenses will be comprised of:

<TABLE>
<CAPTION>
COSTS OR EXPENSE ANTICIPATED AMOUNT
---------------- ------------------
<S> <C>
Registration Fees........................................... $ 8,863
Transfer Agents's Fees...................................... 7,500
Printing Costs.............................................. 15,000
Legal Fees.................................................. 50,000
Accounting Fees............................................. 15,000
NASDAQ Listing Fees......................................... 15,000
Other Miscellaneous Offering Costs.......................... 8,637
--------
Total:............................................ $120,000
========
</TABLE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

We are authorized to issue 50,000,000 shares of Common Stock and 15,000,000
shares of Preferred Stock. At June 7, 2000, 14,696,239 shares of our Common
Stock were issued and outstanding, and 2,728,004, 500,000 and 3,780 shares of
our Series A, Series B and Series C Preferred Stock, respectively, were issued
and outstanding.

COMMON STOCK

The holders of our Common Stock are entitled to one vote for each share
held of record by them on all matters to be voted on by stockholders. There is
no cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voting for the election of
directors can elect all of the directors then up for election. Subject to the
terms of our Preferred Stock, the holders of Common Stock are entitled to
receive ratably dividends when, as and if declared by our Board out of funds
legally available therefor. In the event of our liquidation, dissolution or
winding up, the holders of Common Stock are entitled to share ratably in all
assets remaining which are available for distribution to them after payment of
liabilities and after provision has been made for each class of stock, if any,
having preference over the Common Stock. Holders of shares of Common Stock, as
such, have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to the Common Stock. All of the outstanding
shares of Common Stock are (and the shares issuable (i) upon the conversion into
Common Stock of shares of our Series C Preferred Stock, (ii) upon the valid and
proper exercise of our outstanding Common Stock purchase warrants and (iii)
issuable in satisfaction of certain of our indebtedness will be) fully paid and
nonassessable.

PREFERRED STOCK

We are authorized to issue Preferred Stock in one or more series with such
designations, rights, preferences and restrictions as may be determined from
time to time by our Board. Accordingly, our Board is empowered, without
stockholder approval, to issue Preferred Stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting power
or other rights of the holders of our Common Stock and, in certain instances,
could adversely affect the market price of such stock. In the event of issuance,
the Preferred Stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in control of our Company.

Series A Preferred Stock

Our Series A Preferred Stock ranks pari passu to the Series C Preferred
Stock (except to the extent certain holders thereof have not consented to and
waived the issuance of the Series C Preferred Stock) and ranks senior to any
other series or classes of Preferred Stock hereafter created and all other
equity securities, including our Common Stock. The Series A Preferred Stock
accrues dividends, payable quarterly (to the

33
<PAGE> 36

extent legally sufficient funds are then available to us), at an annual rate of
$.10 per share. All regularly declared but unpaid dividends cumulate. If we, for
whatever reason, fail to pay the regular quarterly dividend with respect to the
Series A Preferred Stock for four consecutive quarters, the holders of the
Series A Preferred Stock, voting separately as a class, shall be entitled to
elect one designee to Board. Holders of shares of Series A Preferred Stock are
not otherwise entitled to vote on any matters affecting us or our stockholders,
except as may be required by law.

Our Series A Preferred Stock is entitled to a $1.00 per share liquidation
preference (together with all accrued and unpaid dividends) over our Common
Stock in the event of our dissolution. After the satisfaction of all of our
indebtedness, holders of our Series A Preferred Stock would then receive any
remaining assets in priority to holders of our Common Stock.

Holders of our Series A Preferred Stock have the right to convert any or
all of their shares of Series A Preferred Stock into shares of our Common Stock
at the rate of approximately $4.68 per share, subject to adjustment (the
"conversion price"). The number of shares of Common Stock issuable upon
conversion shall be determined by dividing the aggregate liquidation value
($1.00 per share) of all shares of Series A Preferred Stock being converted
(together with the amount of all accrued and unpaid dividends with respect to
such shares) by the conversion price for such shares.

We have has the unilateral right, commencing June 1, 2001 (the "anniversary
date"), to redeem all or any shares of Series A Preferred Stock at the
redemption price of $1.00 per share (together with the amount of all accrued and
unpaid dividends with respect to such shares) if the average closing price for
shares of our Common Stock for the 20 consecutive trading days immediately
preceding the anniversary date exceeds the conversion price by 20%
(approximately $5.62 per share).

Series B Preferred Stock

Our Series B Preferred Stock ranks junior to our Series A Preferred Stock
and ranks senior to any other series or classes of Preferred Stock hereto or
hereafter created and all other equity securities, including our Common Stock.
In the event of our liquidation, dissolution or winding up, whether voluntary or
involuntary, the holders of our Series B Preferred Stock shall be entitled to
receive out of assets available for distribution an amount equal to $1.00 per
share. The Series B Preferred Stock is convertible, at any time, in whole or
part, into shares of our Common Stock at the rate of 2 1/8 shares of Series B
Preferred Stock for each share of Common Stock.

Series C Preferred Stock

Our Series C Preferred Stock accrue dividends, payable quarterly (to the
extent legally sufficient funds are then available), at an annual rate of $60.00
per share. All regularly declared but unpaid dividends cumulate. Holders of
shares of Series C Preferred Stock are not entitled to vote on any matter
affecting stockholders, except as may be required by law. Holders of the Series
C Preferred Stock are entitled to a $1,000.00 per share liquidation preference
(together with all accrued and unpaid dividends) over the holders of our Common
Stock in the event of our liquidation, dissolution or winding up. The shares of
Series C Preferred Rank rank pari passu with the outstanding shares of our
Series A (except to the extent certain holders thereof have not consented to the
issuance of the Series C Preferred Stock) and Series B Preferred Stock in the
event of liquidation, dissolution or winding up. After the satisfaction of all
of our indebtedness, holders of Series C Preferred Stock would then receive any
remaining assets in priority to holders of the Company's Common Stock and on a
pari passu basis with the holders of our Series A and Series B Preferred Stock.

Shares of Series C Preferred Stock are convertible into shares of the
Company's Common Stock at any time at the option of the holder as follows: the
holder shall be entitled to that number of shares of Common Stock as equals the
quotient of (i) the aggregate liquidation preference (plus all accrued and
unpaid dividends) attributable to such holder's shares of Series C Preferred
Stock divided by (ii) the lesser of (a) $3.28 and (b) the product of (1) 80%
multiplied by (2) the closing price on the NASDAQ SmallCap

34
<PAGE> 37

Market (or the exchange upon which our shares may then be trading) on the
trading day immediately preceding the date that conversion is requested.

LEGAL MATTERS

The validity of the securities offered by this Prospectus will be passed
upon for us by Winick & Rich, P.C., 919 Third Avenue, New York, New York 10022.

EXPERTS

Our consolidated financial statements for the years ended December 31, 1999
and 1998 appearing in this Prospectus and registration statement have been
audited, with respect to the 1999 financial statements, by
PricewaterhouseCoopers LLP, and with respect to the 1998 financial statements,
by Daszkal Bolton Manela Devlin & Co., as set forth in their respective reports
thereon appearing elsewhere in this Prospectus, and are included in reliance
upon those reports given on the authority of PricewaterhouseCoopers LLP and
Daszkal Bolton Manela Devlin & Co., respectively, as experts in auditing and
accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports and other information with
the Securities and Exchange Commission. You may read our Commission filings over
the Internet at the Commission's website at http://www.sec.gov. You may also
read and copy documents at the Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Full addresses of
the Commission's reference rooms are: Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; 7 World Trade Center, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms.

We have filed with the Commission a registration statement on Form S-3
under the Securities Act of 1933, as amended, with respect to the shares of
Common Stock offered by this Prospectus. This Prospectus, which is a part of the
registration statement, does not contain all of the information set forth in the
registration statement. For further information about us and our Common Stock,
you should refer to the registration statement. This Prospectus summarizes
material provisions of contracts and other documents to which we refer you.
Since the Prospectus may not contain all of the information that you may find
important, you should review the full text of these documents. We have included
copies of these documents as exhibits to our registration statement.

INFORMATION INCORPORATED BY REFERENCE

The Commission allows us to provide information about our business and
other important information to you by "incorporating by reference" the
information we file with the Commission. This means that we can

35
<PAGE> 38

disclose the information to you by referring in this Prospectus to the documents
we file with the Commission. Under the Commission's regulations, any statement
contained in a document incorporated by reference in this Prospectus is
automatically updated and superseded by any information contained in this
Prospectus, or in any subsequently filed document of the types described below.

We incorporate into this Prospectus by reference the following documents
filed by us with the Commission, each of which should be considered an important
part of this Prospectus:

<TABLE>
<CAPTION>
COMMISSION FILING PERIOD COVERED OR DATE OF FILING
----------------- ---------------------------------
<S> <C>
Annual Report on Form 10-KSB.......................... Year ended December 31, 1999
Amendment No. 1 to Annual Report on Form 10-KSB....... Year ended December 31, 1999
Quarterly Report on Form 10-QSB....................... Quarter ended March 31, 2000
Current Report on Form 8-K/A.......................... January 18, 2000
Current Report on Form 8-K............................ January 25, 2000
Current Report on Form 8-K............................ February 8, 2000
Description of our Common Stock contained in
Registration Statement on Form 8-A and any amendment
or report filed for the purpose of updating such
description......................................... December 1997
All subsequent documents filed by us under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act....... After the date of this Prospectus
</TABLE>

You may request a copy of each of our filings at no cost, by writing or
telephoning us at the following address, telephone or facsimile number:

Finantra Capital, Inc.
Attn: Alyce B. Schreiber
150 South Pine Island Road
Suite 500
Plantation, Florida 33324
Phone No.: (954) 577-9225
Fax No.: (954) 577-9832

Exhibits to a document will not be provided unless they are specifically
incorporated by reference in that document.

36
<PAGE> 39

FINANTRA CAPITAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Annual Consolidated Financial Statements
Reports of Independent Certified Public Accountants....... F-2
Consolidated Balance Sheet at December 31, 1999........... F-4
Consolidated Statements of Operations for each of the two
years in the period ended December 31, 1999............ F-5
Consolidated Statements of Changes in Stockholders' Equity
for each of the two years in the period ended December
31, 1999............................................... F-6
Consolidated Statements of Cash Flows for each of the two
years in the period ended December 31, 1999............ F-7
Notes to Consolidated Financial Statements................ F-9
Interim Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidated Balance Sheet at March 31, 2000.... F-26
Condensed Consolidated Statements of Operations for the
three months ended March 31, 2000 and 1999............. F-27
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2000 and 1999............. F-28
Condensed Notes to Consolidated Financial Statements...... F-29
</TABLE>

F-1
<PAGE> 40

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
Finantra Capital, Inc.

In our opinion, based on our audit and the report of other auditors, the
accompanying consolidated balance sheet and the related consolidated statements
of operations, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Finantra Capital, Inc. and its
subsidiaries at December 31, 1999, and the results of their operations and their
cash flows for the year then ended 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 audit. We did not audit the
financial statements of Ameri-Cap Mortgage Group, Inc., an 80%-owned subsidiary,
which statements reflect total assets of $7.7 million at December 31, 1999 and
total revenues of $3.2 million for the year then ended. Those statements were
audited by other auditors whose report thereon has been furnished to us, and our
opinion expressed herein, insofar as it relates to the amounts included for
Ameri-Cap Mortgage Group, Inc., is based solely on the report of the other
auditors. We conducted our audit 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 audit and the report of other auditors provide a reasonable
basis for the opinion expressed above.

PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
March 30, 2000

F-2
<PAGE> 41

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Finantra Capital, Inc. and subsidiaries

We have audited the consolidated balance sheet of Finantra Capital, Inc.
and subsidiaries, as of December 31, 1998, and the related accompanying
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the management of Finantra Capital, Inc. and subsidiaries. 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 audits 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 Finantra Capital, Inc. and
subsidiaries, as of December 31, 1998, and the results of their operations and
their cash flows for the years then ended in conformity with generally accepted
accounting principles.

Daszkal Bolton Manela Devlin & Co.
Boca Raton, Florida
March 12, 1999

F-3
<PAGE> 42

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------
<S> <C>
ASSETS
Cash and cash equivalents................................... $ 1,214,315
Certificate of deposit-restricted........................... 1,450,000
Loans available for sale.................................... 6,065,166
Finance receivables, net.................................... 38,172,653
Lease receivables, net...................................... 1,232,854
Other receivables, net...................................... 668,661
Due from related parties.................................... 1,756,474
Property and equipment, net................................. 573,810
Goodwill, net............................................... 10,998,940
Other assets................................................ 4,402,647
-----------
Total assets...................................... $66,535,520
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses....................... $ 2,657,068
Client reserves............................................. 4,030,180
Client payouts.............................................. 1,251,541
Credit balances of factoring clients........................ 840,632
Lines of credit............................................. 29,843,029
Notes payable and other interest bearing obligations........ 8,610,309
Notes payable -- related parties............................ 30,000
Capital leases.............................................. 109,643
-----------
Total liabilities................................. 47,372,402
-----------
Commitments and contingencies (Note 20)
Stockholders' equity:
Preferred stock, $.01 par value; 15,000,000 shares
authorized, 3,231,784 issued:
Series A redeemable convertible preferred stock, 2,728,004
shares issued and outstanding.......................... 27,279
Series B convertible preferred stock, $.01 par value,
500,000 shares authorized; 500,000 shares issued and
outstanding............................................ 5,000
Series C 6% convertible preferred stock, $.01 par value,
3,800 shares authorized; 3,780 shares issued and
outstanding............................................ 38
Common Stock, $.01 par value, 50,000,000 shares authorized;
9,329,161 shares issued and outstanding................... 93,291
Additional paid-in capital.................................. 25,388,036
Accumulated deficit......................................... (6,350,526)
-----------
Total stockholders' equity........................ 19,163,118
-----------
Total liabilities and stockholders' equity........ $66,535,520
===========
</TABLE>

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

F-4
<PAGE> 43

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
REVENUES:
Broker fees and gains on sales of mortgage loans............ $ 3,222,823 $ 529,137
Finance income.............................................. 2,716,763 276,199
Factoring fee income........................................ 1,476,019 889,791
Leasing income.............................................. 367,458 3,440,434
Servicing income............................................ 682,611 --
Consulting and advisory fees................................ 972,000 308,470
Medical billing fees........................................ 531,025 709,521
Other income................................................ 1,635,315 3,581,388
----------- -----------
Total revenues.................................... 11,604,014 9,734,940
----------- -----------
EXPENSES:
Compensation and employee benefits.......................... 6,306,211 4,186,001
Consulting and marketing fees............................... 1,443,738 230,031
Leasing and equipment cost.................................. -- 3,189,162
Occupancy and equipment..................................... 1,767,899 370,326
Legal and accounting........................................ 455,350 454,113
Interest expense............................................ 1,389,295 201,276
Provision for credit losses................................. 482,727 1,107,269
Indirect loan expenses...................................... 420,006 --
Other expenses.............................................. 1,229,765 949,054
----------- -----------
Total expenses.................................... 13,494,991 10,687,232
----------- -----------
Loss before income taxes and minority interest.............. (1,890,977) (952,292)
Income tax benefit.......................................... 355 65,960
Minority interest in net (income) loss of consolidated
subsidiaries.............................................. 9,776 (11,749)
----------- -----------
Net loss.......................................... (1,880,846) (898,081)
Preferred stock dividends................................... (477,550) (294,604)
----------- -----------
Net loss applicable to common stockholders........ $(2,358,396) $(1,192,685)
=========== ===========
Net loss per basic and diluted common share................. $ (.34) $ (.32)
=========== ===========
Weighted average common shares outstanding.................. 6,944,692 3,691,956
=========== ===========
</TABLE>

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

F-5
<PAGE> 44

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
------------------- ------------------- TREASURY PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT STOCK CAPITAL DEFICIT EQUITY
--------- ------- --------- ------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998.... 2,958,817 $29,586 2,667,382 $26,674 $ -- $ 6,947,803 $(2,799,445) $ 4,204,618
Net loss...................... -- -- -- -- -- -- (898,081) (898,081)
Preferred stock dividends..... -- -- -- -- -- -- (294,604) (294,604)
Common stock issued........... -- -- 30,000 300 -- -- -- 300
Common stock issued for
acquisitions................ -- -- 975,855 9,758 -- 3,167,588 -- 3,177,346
Common stock issued for
services.................... -- -- 412,600 4,126 -- 574,854 -- 578,980
Preferred stock Series B
issued...................... 500,000 5,000 -- -- -- 495,000 -- 500,000
Private placement, net of
issuance costs.............. -- -- -- -- -- 400,578 -- 400,578
Repurchase of common stock.... -- -- -- -- (34,644) -- -- (34,644)
Repurchase and retirement of
common stock................ -- -- (10,000) (100) -- (54,900) -- (55,000)
Common stock rescission....... -- -- -- -- -- (100,000) -- (100,000)
Sale of common stock, net of
issuance costs.............. -- -- 36,290 363 -- 19,226 -- 19,589
--------- ------- --------- ------- -------- ----------- ----------- ------------
Balance at December 31,
1998........................ 3,458,817 34,586 4,112,127 41,121 (34,644) 11,450,149 (3,992,130) 7,499,082
Net loss...................... (1,880,846) (1,880,846)
Preferred stock dividends..... -- -- -- -- -- -- (477,550) (477,550)
Exercise of warrants for
common stock................ -- -- 140,000 1,400 -- 198,170 -- 199,570
Common stock issued for
acquisitions................ -- -- 2,417,500 24,175 -- 5,858,105 -- 5,882,280
Common stock issued for
services.................... -- -- 279,600 2,796 -- 520,098 -- 522,894
Common stock issued for debt
conversion.................. 155,000 1,550 308,450 310,000
Preferred stock Series C
issued...................... 3,780 38 -- -- -- 3,779,962 -- 3,780,000
Preferred stock Series A
converted to common stock... (230,813) (2,307) 49,637 496 24,892 23,081
Private placement, net of
issuance costs.............. 2,039,872 20,399 2,773,780 2,794,179
Sale of common stock, net of
issuance costs.............. -- -- 135,425 1,354 -- 369,430 -- 370,784
Purchase of treasury stock.... (31,150) (31,150)
Issuance of treasury stock.... 65,794 65,794
Issuance of warrants.......... 105,000 105,000
--------- ------- --------- ------- -------- ----------- ----------- ------------
Balance at December 31,
1999........................ 3,231,784 $32,317 9,329,161 $93,291 $ -- $25,388,036 $(6,350,526) $ 19,163,118
========= ======= ========= ======= ======== =========== =========== ============
</TABLE>

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

F-6
<PAGE> 45

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (1,880,846) $ (898,081)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization.......................... 830,015 228,253
Provision for credit losses............................ 482,727 1,107,269
Common stock issued for services....................... 522,894 578,880
Changes in assets and liabilities:
Purchases of loans available for sale and net
originations of receivables........................... (97,706,142) (5,073,003)
Proceeds from sales of loans available for sale........ 91,621,213 --
Increase (decrease) in accounts payable and accrued
expenses.............................................. (19,477) 925,431
Increase in client reserves and client payouts......... 28,708
Increase in other assets............................... (3,140,182) (78,898)
------------ -----------
Net cash used by operating activities............. (9,261,090) (3,210,149)
------------ -----------
Cash flows from investing activities:
Purchase of subsidiary.................................... (14,080,359) 46,044
Change in capital lease obligation........................ -- (76,511)
Notes acquired for cash................................... -- (1,012,000)
Increase in related party receivables..................... (888,097) (792,964)
Decrease in certificate of deposit -- restricted.......... 25,000 225,000
Purchase of fixed assets.................................. (924,422) --
------------ -----------
Net cash used by investing activities............. (15,867,878) (1,610,431)
------------ -----------
Cash flows from financing activities:
Net increase in lines of credit........................... 12,249,458 2,643,571
Proceeds from issuance of notes payable and other
ineterest bearing obligations.......................... 3,624,085 100,000
Repayment of preferred stock.............................. -- (322,361)
Proceeds from issuance of Series C preferred stock........ 3,780,000
Repayments of notes payable and other interest bearing
obligations............................................ (83,334) (166,297)
Preferred stock dividends................................. (204,375) 420,268
Issuance of common stock.................................. 6,107,269 (89,644)
Exercise of warrants for common stock..................... 199,570 300,000
Prepayments of notes payable-related party................ (270,000) 500,000
Purchase of treasury stock................................ (31,150) --
------------ -----------
Net cash provided by financing activities................... 25,371,523 3,385,537
------------ -----------
Net increase (decrease) in cash and cash equivalents........ 242,555 (1,435,043)
Cash and cash equivalents -- beginning of period............ 971,760 2,406,803
------------ -----------
Cash and cash equivalents -- end of period.................. $ 1,214,315 $ 971,760
============ ===========
</TABLE>

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

F-7
<PAGE> 46

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
------------ ----------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Interest paid............................................. $ 1,003,933 $ 74,961
============ ==========
Stock issued for acquisitions............................... $3,177,346
==========
Acquisition of businesses:
Fair value of assets acquired............................. $(44,728,039)
Liabilities assumed....................................... 21,128,039
Note payable issued....................................... 5,000,000
------------
Stock issued.............................................. 2,728,530
------------
Cash paid................................................. (15,871,470)
Less cash acquired........................................ 1,791,111
------------
Net cash paid..................................... $(14,080,359)
============
Supplemental disclosure of non-cash investing and financing
activities:
Exchange of notes payable for common stock................ $ 310,000
Assets acquired for stock................................. 150,000
Exchange of preferred stock for common stock.............. 23,081
Issuance of treasury stock for notes receivable........... 34,644
</TABLE>

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

F-8
<PAGE> 47

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Finantra Capital, Inc., and subsidiaries (the "Company") is a Delaware
corporation headquartered in Plantation, Florida. The Company is a specialty
finance company, principally engaged in lending activities related to accounts
receivable factoring, equipment leasing, mortgage banking, consumer finance and
other types of specialty financing. The Company also provides accounting and
collections services to other companies.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

RECLASSIFICATION

Certain amounts included in the 1998 consolidated financial statements have
been reclassified to conform with the 1999 presentation.

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
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

In the normal course of business, the Company encounters significant
economic risk: credit risk, market risk and concentration of credit risk. Credit
risk is the risk of default on the Company's receivables portfolios that results
from a borrowers' inability or unwillingness to make contractually required
payments. Market risk includes interest rate risk. The Company is exposed to
interest rate risk to the degree that its interest-bearing liabilities mature or
reprice at different speeds, or different bases, than its interest-earning
assets. Market risk also reflects the risk of declines in the valuation of loans
held for sale, and in the value of the collateral underlying loans.
Concentration of credit risk refers to the risk that, if the Company extends a
significant portion of its total outstanding credit to borrowers in a specific
geographical area or industry or on the security of a specific form of
collateral, the Company may experience disproportionately high levels of default
and losses if those borrowers, or the value of such type of collateral, is
adversely affected by economic or other factors that are particularly applicable
to such borrowers or collateral.

CASH AND CASH EQUIVALENTS

The Company considers unrestricted highly liquid investments purchased with
an original maturity of three months or less to be cash equivalents.

LOANS AVAILABLE FOR SALE

Residential mortgage loans originated by the Company which the Company does
not presently intend to hold to maturity are designated as loans available for
sale and are stated at the lower of cost, after consideration of deferred loan
fees and costs, or aggregate market value. Loan origination fees and certain
direct loan origination costs are deferred and included in the carrying value.
Upon the sale of a loan, the deferred loan fees and costs are included in the
gain or loss on sale. Gains and losses on disposal of such loans are computed on
a specific identification basis.

F-9
<PAGE> 48

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FINANCE RECEIVABLES

The Company both originates and acquires finance receivables. Finance
receivables include interest-bearing and precompute discount receivables. The
face amount of an interest bearing receivable equals the amount of cash loaned
or paid to acquire the receivable; unearned interest is not recorded. In a
precompute discount receivable, the amount of the cash loaned or paid to acquire
the receivable is less than the face amount of the receivable; the difference
represents unearned income to be earned over the life of the receivable.

Receivables that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at their outstanding
unpaid principal balances, reduced by an allowance for credit losses, unearned
income and net of any deferred fees or costs on originated receivables, or
unamortized premiums or discounts on purchased receivables.

Finance income includes origination, commitment, delinquency and rollover
fees and prepayment penalties. Origination and commitment fees and certain
direct origination costs are capitalized and recognized as an adjustment of the
yield of the related receivable. Delinquency fees are recognized when charged,
and prepayment penalties are recognized when the receivable is prepaid.

Finance income also includes interest income and the accretion of the
discount recorded on discount loans. The discount is accreted into interest
income as a yield adjustment using the interest method over the contractual
maturity of the finance receivable. In general, when finance receivables become
90 days past due, accretion of the discount and interest income recognition is
discontinued.

Factoring fee income represents fees on purchased factoring receivables
that are earned over the period services are rendered based on rates stipulated
in the factoring agreement.

CONSULTING AND ADVISORY FEES

Consulting and advisory fees are generated by the Company for services
rendered in the area of structuring and obtaining financing for other companies.

LEASE RECEIVABLES

Lease receivables are reported as the sum of the minimum lease payments
receivable plus the estimated residual value of the leased property, less
unearned income and the allowance for credit losses.

Leasing income represents the unearned income which is amortized to income
over the life of the underlying lease term using the effective interest method
to produce a constant periodic rate of return on the net investment in the
lease.

OTHER RECEIVABLES

Other receivables are reported at the contractual amount of the receivable.
Interest income is recognized on the accrual method.

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is maintained at a level that management,
based upon an evaluation of known and inherent risks in the finance, lease and
other receivables portfolios, considers adequate to provide for credit losses.
Management's periodic evaluation of the allowance for credit losses is based on
an analysis of the portfolios, taking into consideration historical loss
experience, economic conditions and trends, collateral values and other relevant
factors. Future adjustments to the allowance for credit losses may be necessary
if actual experience differs from the assumptions used by management. Credit
exposures deemed to be

F-10
<PAGE> 49

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

uncollectible are charged against the allowance for credit losses and recoveries
of previously charged off amounts are credited to the allowance for credit
losses.

Specific valuation allowances are established for non-homogenous impaired
loans in the amount by which the carrying value, before any allowance for credit
losses, exceeds the fair value of collateral less costs to dispose on an
individual receivable basis. Impairment is evaluated on a pool basis for certain
pools of homogenous receivables. The Company considers a receivable to be
impaired when, based on current information and events, it believes that it is
probable that the Company will be unable to collect all amounts due according to
the contractual terms of the receivable agreement. Impairment losses are
recognized through an increase in the allowance for credit losses and a
corresponding charge to the provision for credit losses.

REPOSSESSED ASSETS

Assets are classified as repossessed assets and included in other assets
when physical possession of the collateral is taken. Subsequent to repossession,
repossessed assets are carried at fair value less costs to sell.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Depreciation is provided by the
straight-line method over the estimated useful lives of the assets, ranging from
3 to 7 years.

GOODWILL AND OTHER INTANGIBLES

Net assets of companies acquired in purchase business combinations are
recorded at fair value at the date of acquisition. Identified intangibles are
amortized over the period benefited. Goodwill is amortized on a straight-line
basis over a period not to exceed 15 years. The recoverability of goodwill and
other intangibles is evaluated if events or circumstances indicated a possible
impairment. Such evaluation is based on various analyses, including undiscounted
future cash flow projections. Additionally, the Company periodically evaluates
the amortization periods to determine whether events or circumstances warrant
revised amortization periods.

The results of operations of purchased companies are included in the
Company's results of operations from the date of acquisition.

INVESTMENTS IN UNCONSOLIDATED ENTITIES

The Company's investments in unconsolidated entities are accounted for
under the cost or equity method, generally based on the percentage of legal
ownership in the entity. Under the cost method, the Company owns less than 20%
of the outstanding shares of the entity and the Company does not have the
ability to exercise significant influence over the entity. Investments accounted
for under the cost method are carried at the amount of the Company's initial
investment, and are periodically reviewed for impairment.

Under the equity method, the Company owns 20% or greater but less than 50%
of the outstanding shares of the entity and the Company has the ability to
exercise significant influence over the entity. Under the equity method, the
investment in the shares of the entity is initially recorded at the cost of the
shares acquired and thereafter is periodically increased or decreased by the
Company's proportionate share of the earnings or losses of the entity, and
decreased by the dividends or distributions received from the entity. Equity
method investments are also periodically reviewed for impairment.

CLIENT RESERVES

Client reserves represent amounts withheld on consumer installment
contracts purchased by the Company. Chargeoffs resulting from borrower defaults
may be charged against the client reserves based on the

F-11
<PAGE> 50

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

underlying contract with the client. If these charges result in a reduction of
the client reserves to zero, incremental charges are recorded through the
allowance for credit losses. If the charges do not exceed the client reserves,
the client reserves are refunded to the client based on an analysis of client
delinquency and minimum reserve requirements.

CLIENT PAYOUTS

Client payouts represent amounts collected on receivables serviced for
third parties and amounts payable by the Company for finance receivables
purchased which have not yet been funded.

The Company receives servicing fees from third parties for servicing
finance receivables. The servicing fees are generally collected from the
underlying borrowers' payments on a monthly basis.

TREASURY STOCK

Treasury stock acquired is recorded at cost.

INCOME TAXES

There are two components of income tax provision: current and deferred.
Current income tax expense approximates taxes to be paid or refunded for the
applicable period. Balance sheet amounts of deferred taxes are recognized on the
temporary differences between the bases of assets and liabilities as measured by
tax laws and their bases as reported in the financial statements. Deferred tax
expense or benefit is then recognized for the change in deferred tax liabilities
or assets between periods.

Recognition of deferred tax assets is based on management's belief that it
is more likely than not that the tax benefit associated with certain temporary
differences, tax operating loss carryforwards and tax credits will be realized.
A valuation allowance is recorded for those deferred tax items for which it is
more likely than not that realization will not occur.

LOSS PER COMMON SHARE

Loss per common share is computed by dividing net loss, plus dividends on
preferred stock, by the weighted average number of common shares issued and
outstanding. Diluted earnings per common share is computed by dividing net loss
available to common stockholders, adjusted for the effect of assumed
conversions, by the weighted average number of common shares issued and
outstanding and dilutive potential common shares, which include convertible
preferred stock and stock options. Dilutive potential common shares are
calculated using the treasury stock method. Potential dilutive common shares are
excluded from the diluted calculation when a net loss was incurred for the
period as they would be antidilutive.

STOCK COMPENSATION

As allowed under SFAS No. 123, the Company accounts for stock based
compensation under APB No. 25, rather than under SFAS No. 123. Accordingly, the
Company has elected to provide the SFAS No. 123 disclosures as if the Company
had adopted the fair-value based method of measuring outstanding employee stock
options.

LIQUIDITY

The Company's business requires substantial cash to support the growth of
loan production and operations. In general, the Company finances the purchase of
loans through various credit and warehouse facilities. The Company funds through
these facilities approximately 72% of factored receivables, approximately 98% of
mortgage loans and between approximately 70% and 90% of other finance
receivables, and

F-12
<PAGE> 51

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

funds the remainder of the purchase price through its capital. The Company
generates negative cash flow from operations and expects to continue to do so as
long as it continues to experience significant growth in its receivables
portfolio. As the Company continues to increase the volume of receivables
purchased, it must secure additional capital to support its growth. Failure to
secure additional capital or to consummate securitizations and other sales
transactions may result in a significant adverse effect on the Company's
financial position and results of operations.

NOTE 2. ACQUISITION AND DISPOSITION TRANSACTIONS

1999 ACQUISITIONS

Effective September 30, 1999, the Company acquired 100% of the outstanding
capital stock of Travelers Investment Corporation ("Travelers"). The total
purchase price was $23,600,000, including direct costs of the acquisition. The
acquisition was accounted for as a purchase and the purchase price was allocated
to Travelers assets and liabilities based on their fair values as follows:

<TABLE>
<S> <C>
Purchase price.............................................. $23,600,000
Fair value of net assets acquired........................... 14,614,000
-----------
Goodwill.................................................... $ 8,986,000
===========
</TABLE>

The following unaudited pro forma results of operations of the Company are
presented as if the acquisition of Travelers had occurred on January 1, 1998:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues.................................................... $19,650,881 $19,217,832
Expenses.................................................... 20,987,386 19,192,953
Net (loss) income........................................... (1,365,574) 24,879
Loss per share.............................................. (.20) --
</TABLE>

The pro forma consolidated results of operations include adjustments to
give effect to the purchase accounting adjustments as if the acquisition
occurred on January 1, 1998. The unaudited pro forma information is not
necessarily indicative of the results of operations that would have occurred had
the acquisition occurred on January 1, 1998, or the future results of the
combined operations.

On May 11, 1999, through an 80% owned subsidiary of the Company, the
Company acquired the assets of Suntrust Financial Corporation ("Suntrust") for
$50,000 in cash. Suntrust had no significant assets or results of operations at
the date of acquisition.

On January 1, 1999, through an 80% owned subsidiary of the Company, the
Company acquired 80% of the outstanding common shares of Suncoast Title Company
("Suncoast") from an affiliate of the Company for 50,000 shares of the Company's
common stock. The Company is obligated to issue a total of 50,000 additional
shares of common stock to acquire the remaining 20% of Suncoast common stock
over a 5 year period ending December 31, 2003. The acquisition was accounted for
as a purchase. Suncoast had no significant assets or results of operations at
the date of acquisition.

1999 DISPOSITIONS

On December 31, 1999, the Company sold Medical Billings Services Systems,
Inc. ("Medical Billings"), a 100% owned subsidiary of the Company and a company
engaged primarily in providing accounting and other financial administrative
services principally to the medical industry, to the original owner of the
company. Medical Billings was acquired by the Company on March 30, 1998.

F-13
<PAGE> 52

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On July 14, 1999, the Company sold American Investment Management ("AIM"),
an 80% owned subsidiary, and a marketer and manager of a variety of financial
and insurance-related services, to the minority stockholder. The ownership
interest in AIM had been acquired by the Company on March 13, 1998. According to
the terms of the original acquisition agreement, the seller had the right to
reacquire the shares of AIM in 1999.

On May 17, 1999, the Company sold MFC Financial Corp ("MFC"), an 80% owned
subsidiary of the Company engaged in leasing activity, to an unrelated third
party. The ownership interest in MFC was acquired by the Company on June 30,
1998.

None of these companies had material assets or results of operations at the
date of disposition.

1998 ACQUISITIONS

On August 31, 1998, the Company, through a wholly owned subsidiary,
acquired approximately 91% of the outstanding capital stock of Ameritrust
Holdings, Inc.. In consideration, the Company issued an aggregate of 381,000
shares of its common stock to Ameritrust's stockholders. The remaining capital
stock of Ameritrust will be exchanged for shares of the Company's common stock
at annual intervals ending on June 30, 2002, if certain earning hurdles are met.
The maximum number of shares that could be issued under this agreement over the
next five years is 624,750 shares. No exchanges occurred during 1999 or 1998.

On March 30, 1998, the Company acquired 100% of Premier Provider Services
and PPS Staffing Systems, engaged primarily in providing accounting and other
financial administrative services. These companies did not have significant
assets or results of operations at the date of acquisition. The acquisitions
resulted in goodwill of $2,272,455.

NOTE 3. LOANS AVAILABLE FOR SALE

At December 31, 1999, loans available for sale were comprised of
residential mortgage loans originated under flow agreements principally for sale
to government sponsored entities. The loans were sold in January 2000.

F-14
<PAGE> 53

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4. FINANCE RECEIVABLES

Finance receivables are comprised of the following at December 31, 1999:

<TABLE>
<S> <C>
Consumer installment contracts:
Education tuition and seminary fees....................... $12,238,094
Used automobiles.......................................... 6,432,343
Leisure activity memberships.............................. 4,254,831
Fitness................................................... 1,579,000
Dating club memberships................................... 3,987,608
Medical................................................... 2,103,911
Other..................................................... 9,591,863
-----------
40,187,650
Unearned income........................................... (4,431,036)
-----------
35,756,614
-----------
Commercial finance receivables:
Loan receivable which is secured by common stock of the
borrower and the pledge of certain assigned receivables
of the borrower. The note plus interest at 10% is due
June 30, 2000.......................................... 1,120,461
Loan receivable which is secured by a pledge of 125,000
shares of Finantra common stock. The note plus interest
at 10% is due April 1, 2006............................ 208,969
Other..................................................... 20,070
-----------
1,349,500
Factored receivables, partially insured..................... 3,708,798
-----------
40,814,912
Allowance for credit losses................................. (2,642,259)
-----------
$38,172,653
===========
</TABLE>

At December 31, 1999, the Company had impaired loans of approximately
$209,000, with the related valuation allowance included in the allowance for
credit losses.

NOTE 5. LEASE RECEIVABLES

Lease receivables are comprised of the following at December 31, 1999:

<TABLE>
<S> <C>
Minimum lease payments receivable........................... $1,345,688
Estimated unguaranteed residual value of leased equipment... 101,686
----------
1,447,374
Unearned income............................................. (214,520)
----------
$1,232,854
==========
</TABLE>

Future minimum lease payments receivable at December 31, 1999 are as
follows:

F-15
<PAGE> 54

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6. OTHER RECEIVABLES

Other receivables are comprised of the following at December 31, 1999:

<TABLE>
<S> <C>
Notes receivable bearing interest at 8% per annum and
maturing on May 17, 2001.................................. $ 47,295
Various other demand receivables, unsecured and non-interest
bearing................................................... 621,366
--------
$668,661
========
</TABLE>

NOTE 7. PROPERTY AND EQUIPMENT

Property and equipment was comprised of the following at December 31, 1999:

<TABLE>
<S> <C>
Office equipment............................................ $1,013,351
Furniture and fixtures...................................... 326,964
Equipment under capital lease............................... 88,611
----------
1,428,926
Accumulated depreciation.................................... (855,116)
----------
$ 573,810
==========
</TABLE>

Depreciation expense on property and equipment for the years ended December
31, 1999 and 1998 was $95,280 and $60,824, respectively.

NOTE 8. INVESTMENTS IN UNCONSOLIDATED ENTITIES

At December 31, 1999, the Company has a 19% ownership interest in Titan
Mortgage, Inc., a residential mortgage originator and telemarketer, in the
amount of $660,000, accounted for under the cost method.

At December 31, 1999, the Company has a 49.5% interest in FunU.com Corp.,
an internet web-application catering to college students, in the amount of
$316,000 accounted for under the equity method.

NOTE 9. RECEIVABLES SERVICING

The Company services finance receivables for third parties. The face amount
of finance receivables serviced for others at December 31, 1999 was
approximately $102 million. Since the Company does not own these receivables,
they are excluded from the consolidated balance sheet.

Included in cash and cash equivalents at December 31, 1999 is approximately
$568,000 of cash collected on behalf of third parties.

NOTE 10. LINES OF CREDIT

Lines of credit were comprised of the following at December 31, 1999:

F-16
<PAGE> 55

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
COMMITTED OUTSTANDING EXPIRATION INTEREST
DESCRIPTION AMOUNT AMOUNT DATE RATE
----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
On March 26, 1999, the Company through an
80% owned subsidiary entered into a
Mortgage Loan Warehousing and Security
Agreement. The loan agreement contains
various debt covenants including, but not
limited to, an adjusted tangible net worth
covenant, the violation of which at
December 31, 1999 was waived by the
lender.................................... $10,000,000 $ 2,548,934 4/30/2000 LIBOR + 2.25%
On September 23, 1999, the Company through
a 100% owned subsidiary entered into a
Loan and Security Agreement. The proceeds
of the loan are utilized to purchase
consumer finance contracts. The loan
contains various debt covenants........... 32,500,000 21,841,416 8/31/2004 Prime + 2%
On June 30, 1999, the Company through an
80% owned subsidiary entered into a Credit
and Security Agreement. The proceeds of
the loan are utilized by the subsidiary to
purchase mortgage loan collateralized by
residential real estate, which loans are
then sold to various investors. The loan
contains various debt covenants........... 5,000,000 3,459,283 6/30/2000 Prime - 2.25%
----------- -----------
$51,500,000 $29,843,029
=========== ===========
</TABLE>

At December 31, 1999, the prime rate was 8.5% and LIBOR was 6.0%.

NOTE 11. NOTES PAYABLE AND OTHER INTEREST BEARING OBLIGATIONS

Notes payable and other interest bearing obligations were comprised of the
following at December 31, 1999:

<TABLE>
<S> <C>
Notes payable to financial institutions:
Note payable at 13.5% interest rate maturing November
2000................................................... $3,580,000
Various notes at interest rates varying from 9% to 10.5%,
due in monthly installments through 2001 collateralized
by certain lease receivables........................... 34,246
Notes payable to individuals:
Notes payable at 10% interest. Notes were for various
amounts maturing November 2002......................... 4,916,666
8% note payable in sixty monthly installments of $4,460
plus interest at 8%, secured by certain furniture,
fixtures and equipment, maturity date
July 15, 2001.......................................... 79,397
----------
$8,610,309
==========
</TABLE>

NOTE 12. INCOME TAXES

For the years ended December 31, 1999 and 1998, the Company had a tax
benefit of $355 and $65,960, respectively.

F-17
<PAGE> 56

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the Federal statutory income tax rate of 35% to the
Company's effective income tax rate is as follows:

<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Computed at the Statutory rates............................. $(658,296) $(345,207)
(Increase) decrease resulting from:
Non-deductible expenses................................... 161,000 258,220
State income taxes, net loss.............................. -- 9,620
Change in deferred tax asset valuation allowance............ 496,941 11,407
--------- ---------
Actual benefit.............................................. $ (355) $ (65,960)
========= =========
</TABLE>

The components of the deferred tax asset were as follows at December 31,
1999:

<TABLE>
<S> <C>
Net operating loss carryforward............................. $ 850,000
Allowance for credit losses................................. 1,057,000
Basis difference in leases.................................. 150,000
Other....................................................... 60,801
-----------
2,117,801
-----------
Deferred tax liabilities:
Depreciation expense...................................... (47,000)
-----------
(47,000)
-----------
2,070,801
Valuation allowance......................................... (2,033,000)
-----------
Net deferred tax asset.................................... $ 37,801
===========
</TABLE>

Management conducts periodic evaluations to determine whether it is more
likely than not that the deferred tax asset can be realized in future periods.
Among the factors considered in this evaluation are estimates of future
earnings, the future reversal of temporary differences and the impact of tax
planning strategies that can be implemented if warranted. As a result of this
evaluation, the Company included in its tax provision a valuation allowance for
substantially all of the deferred tax assets at December 31, 1999.

At December 31, 1999, the Company has unused net operating loss
carryforwards of approximately $2,125,000, expiring between in 2012 and 2019,
which is available for use on its future corporate Federal and State tax
returns.

NOTE 13. CONSULTING AND EMPLOYMENT AGREEMENTS

At December 31, 1999, the Company had outstanding various non-exclusive
consulting agreements with investment bankers and investment advisors which are
conditioned for payment upon the consultant introducing acceptable acquisition
transactions to the Company. The consultants will be compensated upon the
closing of an introduced transaction based upon the equity raised or the value
of the transaction, either in cash or stock depending upon the specific
agreement with the consultant.

At December 31, 1999, the Company had existing employment agreements with
certain key executives that expire between three and seven years. The employment
agreements generally include fixed base compensation, performance bonuses,
perquisites, stock options and stock grants.

F-18
<PAGE> 57

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 14. STOCKHOLDERS' EQUITY

INITIAL PUBLIC OFFERING

The Company commenced its initial public offering ("IPO") at December 24,
1997, selling 1,285,135 shares of common stock and 1,566,500 warrants. The
common stock sold for $5.50 per share. The warrants sold for $0.15 each and
consist of one redeemable warrant to purchase one share of common stock for
$5.75. The common shares and warrants were purchased separately and are
transferable separately.

The Company received cash and subscriptions of approximately $6,893,000 for
securities and warrants sold from the IPO. Of this amount, there was a non-cash
portion approximating $1,234,000 in subscriptions, representing 223,933 shares,
that were issued to satisfy existing obligations by the Company to the
subscribers of the IPO. Included in this amount was approximately $290,000 due
to the President and Chairman of the Board of the Company and $361,000 due to a
former principal stockholder. Offering costs of approximately $958,000 were
charged to additional paid-in capital upon completion of the offering.

RESCISSION

Following the consummation of the IPO, management of the Company concluded
that various procedural and administrative matters relating to the IPO should
have been disclosed during the period that the IPO was being marketed, rather
than following the consummation of the IPO, as the Company did. As a
consequence, the Company provided purchasers of the Company's securities in the
IPO with the opportunity to rescind their IPO purchase in consideration for
their IPO investment price. The rescission offer expired January 22, 1998.

PREFERRED STOCK

Series A: In June 1996, the Company authorized and issued an aggregate of
2,958,817 shares designated as Series A 10% convertible preferred stock. At the
time the preferred stock was issued, the Company offered to certain note holders
the option to exchange their notes, approximating $972,000, to convertible
preferred stock of the Company at a ratio of approximately 1.03 shares to $1.00.
Note holders elected to convert $788,844 of notes and accrued interest to
convertible preferred stock. Dividends on the preferred stock are payable
quarterly and are cumulative. The preferred stock is convertible to common stock
of the Company at $4.68. Under the terms of the convertible preferred stock
issue the Company, at its sole discretion, may redeem the stock commencing on or
after the fifth anniversary of its issuance if the average trading price of the
common stock in the 20 trading days immediately preceding such anniversary,
exceeds the conversion price by 20%. At anytime after the fifth anniversary, the
Company has the right to redeem the convertible preferred stock, in whole or in
part, upon 30 days notice to the holders.

Series B: In November 1998, the Company authorized 500,000 shares of
Series B preferred stock. The preferred stock is convertible to common stock of
the Company at a rate of 2 1/8 shares of Series B preferred stock for each share
of common stock exchanged. The Series B preferred stock is neither redeemable
nor subject to dividends. Holders of the Series B Preferred Stock are
subordinate to Series A Preferred Stock and to senior all other equity
securities of the Company. In the event of a liquidation or dissolution, the
holders of the Series A and Series B Preferred Stock will be entitled on a pari
passu basis to receive all of the assets of the Company available for
distribution to its stockholders prior to the Company's common shareholders. The
Series B Preferred Stock has a liquidation value of $1 per share.

Series C: In November 1999, the Company authorized 3,800 shares and issued
3,780 shares of Series C Preferred stock. The Series C Preferred stock is
convertible into shares of the Company's common stock at any time at the option
of the holder within 180 days from the original issue date at a price of $3.28
per share and thereafter the conversion price will be the lesser of (a) the
initial conversion price or (b) the product of (1) 80% multiplied by (2) the
closing price of the Company's common stock on the bulletin board (or the

F-19
<PAGE> 58

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

exchange upon which the shares of the Company's common stock are traded) on the
day immediately preceding the date that conversion is requested. Notwithstanding
the foregoing, in the event a holder of Series C Preferred stock requests
conversion at a date when the per market share value (as defined) is less than
$3.00 per share, the Company will have the right, but not the obligation, to
redeem all of the shareholder's shares of Series C Preferred stock by paying to
such holder, in cash, a redemption price equal to 120% of the aggregate
liquidation preference attributable to the shares of the Series C Preferred
stock ($1,000 per share) for which conversion had been requested. The Series C
Preferred stock pays a dividend at an annual rate of $60 per share. Holders of
the Series C Preferred stock rank pari passu with the outstanding shares of
Series A and Series B Preferred stock of the Company in the event of
liquidation, dissolution or winding up.

WARRANTS ISSUED

At December 31, 1999, warrants to purchase 2,176,131 common shares are
exercisable at a strike price of $3.25 through November 2001; 500,000 warrants
are exercisable until December 2002 at a strike price of $2.50 per share;
138,625 warrants are exercisable until December 2002 at a strike price of $1.50
per share; and 1,566,500 warrants are exercisable until July 2002 at a strike
price of $5.75. In addition at December 31, 1999, the Company had other warrants
outstanding arising from various acquisitions and other financing activities to
acquire an aggregate of 2,644,080 shares of common stock at exercise prices
ranging from approximately $1.20 to approximately $3.50. These other warrants
are exercisable at various times through December 2004.

NOTE 15. STOCK OPTION PLAN

On January 9, 1997, the Company established an incentive compensation stock
option plan (the "Plan"). The Plan has 1,500,000 shares of Common Stock reserved
for issuance upon the exercise of options designated as either (i) incentive
stock options ("ISOs") under the Internal Revenue Code of 1986, or (ii)
non-qualified options. ISOs may be granted under the Plan to employees and
officers of the Company. Non-qualified options may be granted to consultants,
directors (whether or not they are employees), employees or officers of the
Company.

Options issued for the years ended December 31, 1999 and 1998 carry
exercise prices equal to the fair market value on the date of the grant. The
options vest over a period of up to five years following the date of grant and
the unexercised portion of the options expires and ceases to be exercisable on
the earlier of the stated exercise period of the grant or specified date
following termination of employment. In certain circumstances, the exercise of
stock options may have an adverse effect on the market price of the Company's
common stock and/or warrants. There was no compensation expense for the years
ended December 31, 1999 and 1998 related to options granted.

Had compensation expense for the stock option plan been determined based on
the fair value of the options at the grant date consistent with the methodology
prescribed under Statement of Financial Standards No. 123, "Accounting for Stock
Based Compensation," the Company's loss would have been increased by $729,960
and $251,287 in 1999 and 1998, respectively. The fair value of each option is
estimated on the date of grant using the fair market option pricing model with
the assumptions at December 31:

<TABLE>
<CAPTION>
1999 1998
----- ----
<S> <C> <C>
Risk-free interest rate..................................... 6.50% 5.50%
Expected option life (years)................................ 2-5 2-5
Expected stock price volatility............................. 0.591 N/A
Expected dividend yield..................................... None None
</TABLE>

F-20
<PAGE> 59

FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Information related to options is summarized below:

<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE RANGE OF OPTIONS
OPTIONS EXERCISE EXERCISE OPTIONS FORFEITED/ OPTIONS OPTIONS
GRANTED PRICE PRICES EXERCISED TERMINATED OUTSTANDING VESTED
------- --------- -------------- --------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1998................... 418,000 $1.96 $1.20 to $3.30 25,000 12,000 381,000 381,000
1999................... 543,500 3.32 2.63 to 5.12 -- 15,000 528,500 264,500
------- ------ ------ ------- -------
961,500 25,000 27,000 909,500 645,500
======= ====== ====== ======= =======
</TABLE>

NOTE 16. FAIR VALUE OF FINANCIAL INSTRUMENTS

A majority of the Company's assets and liabilities are financial
instruments. For the majority of the Company's financial instruments, fair
values are not readily available since there are not available trading markets
as characterized by current exchanges between willing parties. Accordingly, fair
values can only be derived or estimated using various valuation techniques, such
as computing the present value of estimated future cash flows using discount
rates commensurate with the risks involved. However, the determination of
estimated future cash flows is inherently subjective and imprecise. The
estimates are not necessarily indicative of the amounts the Company could
realize in a current market exchange, and the use of different market
assumptions or methodologies could have a material effect of the estimated fair
value amounts.

The fair values indicated below are indicative of the interest rate
environment at December 31, 1999, and do not take into consideration the effects
of interest rate fluctuations. The methodologies and key assumptions used by the
Company in estimating fair values of financial instruments are as follows:

Cash and Cash Equivalents: The carrying amounts of cash and cash
equivalents, and the certificate of deposit approximate the fair values.

Finance Receivables: Fair values were estimated for groups of similar
loans based on the type of loan, credit quality and maturity. The fair values
for factoring receivables approximate the carrying values given the contractual
interest rates and the relatively short-term duration of the receivables. Fair
values for consumer installment contracts and commercial finance receivables
were estimated using discounted cash flow analyses, using interest rates
currently being offered for loans with similar terms to borrowers of similar
credit quality.

Lease Receivables, Other Receivables, Due From Related Parties: The fair
values for interest bearing receivables were estimated using discounted cash
flow analysis, using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality. The fair values of demand
notes approximate the carrying value.

Lines of Credit: The fair values of the lines of credit approximate the
carrying values given the short term maturities and the variable interest rates.

Notes Payable and Other Interest Bearing Obligations and Notes
Payable -- Related Parties: The fair values for interest bearing obligations
were estimated using discounted cash flow analysis, using interest rates
currently being offered for loans with similar terms to borrowers of similar
credit quality. The fair values of demand notes approximate the carrying value.

F-21
<PAGE> 60
FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The carrying amounts and fair values of the Company's financial instruments
at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
CARRYING ESTIMATED
VALUE FAIR VALUE
----------- -----------
<S> <C> <C>
Assets:
Cash and cash equivalents................................. $ 1,214,315 $ 1,214,315
Certificate of deposit.................................... 1,450,000 1,450,000
Loans available for sale.................................. 6,065,166 6,065,166
Finance receivables....................................... 38,172,653 39,523,139
Lease receivables......................................... 1,232,854 1,232,854
Other receivables......................................... 668,661 634,495
Due from related parties.................................. 1,756,474 1,644,220
Liabilities:
Lines of credit........................................... 29,843,029 29,843,029
Notes payable and other interest bearing obligations...... 8,610,309 8,680,309
Notes payable -- related parties.......................... 30,000 30,000
</TABLE>

NOTE 17. RELATED PARTY TRANSACTIONS

Due from related parties is comprised of the following at December 31,
1999:

<TABLE>
<S> <C>
Note receivable from Medley Group, Inc. The note has a
stated interest rate of 8% with principal and interest
payable in full on December 30, 2000...................... $ 392,893
Note receivable from Medley Group, Inc. The note is payable
in sixty monthly installments of $3,754 plus accrued
interest at 5% beginning July 1, 1999. The remaining
balance of $100,000 plus any accrued interest is due July
1, 2004................................................... 333,089
Note receivable from an affiliated company, 8% interest
rate, payable on or before May 1, 2000.................... 250,000
Note receivable from Tract IV, Inc. The note is payable in
monthly installments of $3,500 plus accrued interest of
12% with the balance due on May 31, 2001.................. 206,784
Note receivable due jointly from two employees, unsecured
and non-interest bearing, repayable out of future
commissions earned from a subsidiary of the Company....... 160,000
Note receivable, bears interest at 3% and matures December
2003...................................................... 100,449
Note receivable from employee, unsecured and bears interest
at 6% and matures on July 16, 2000........................ 99,791
Demand note................................................. 80,000
Short term notes receivable from employees and affiliates... 28,192
6% interest-bearing note receivable from an employee,
unsecured and matures on October 27, 2002................. 26,000
Note receivable, due May 2000 at 6%......................... 24,876
Note receivable from the Chief Executive Officer of the
Company with an original amount of $68,000. Interest
accrues on the note at a rate of 10% with maturity on May
5, 2001. The note was modified along with the employment
agreement whereby $68,000 in principal will be forgiven at
a rate of 20% per year beginning in 1999.................. 54,400
----------
$1,756,474
==========
</TABLE>

At December 31, 1999, the Company has receivables totaling $725,982 from
Medley Group, Inc. whose management is substantially the same as that of the
Company. Medley Group has pledged 175,000 shares of common stock of the Company
as collateral.
F-22
<PAGE> 61
FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1999, the Company has a $1,450,000 certificate of deposit
with a six month maturity, that is pledged as security for a letter of credit
for Medley Group, Inc. The Company's letter of credit was provided as a
financial accommodation to Medley Group, Inc. for a fee equal to $150,000 per
annum. This fee is payable each year the Company continues to extend such
financial accommodation. This letter of credit was posted for the purpose of
securing the performance of certain equipment leases sold by Medley Group to the
Company in 1997 for 750,000 shares of the Company's Common Stock owned by Medley
Group, Inc., which common stock, for purposes of the pledge, has an agreed upon
value of $2.50 per share.

At December 31, 1999, the Company has a loan payable to a shareholder and
director of the Company for $30,000 which bears an interest rate of 12% per
annum and matured January 1, 1999.

Subsequent to December 31, 1999, the Chief Executive Officer of the Company
acquired, in a private transaction 1,532,127 shares of Series A Preferred stock.

During January 1999, the Company, through its Ameri-Cap Mortgage
subsidiary, acquired from a director of the Company, 80% of the outstanding
capital stock of Suncoast for 50,000 shares of the Company's Common Stock. The
Company has agreed, through 2003, to acquire the remaining 20% of the
outstanding capital stock of Suncoast for an aggregate of 50,000 additional
shares of the Company's common stock.

During February 1999, the Company, through its Ameri-Cap Factors
subsidiary, acquired from the same director, .6% of the outstanding capital
stock of Ameri-Med Financial Services, Inc., a Florida medical receivables
financing business ("Ameri-Med Financial"), for 140,000 shares of the Company's
common stock. Ameri-Cap Factors previously owned 80% of the outstanding capital
stock of Ameri-Med Financial. The Company has agreed beginning in February 2000
and in February of each year thereafter, through 2004, to acquire .06% of the
capital stock of Ameri-Med Financial owned by the director in exchange for
35,000 shares of the Company's common stock. The expense associated with the
exchanges will be accounted for at the dates the exchanges occur.

Also during February 1999, the Company acquired from the same director the
right to exchange the director's 7% of the outstanding common stock of Ameri-Cap
Mortgage for 400,000 shares of the Company's common stock. The Company has
agreed to exchange 1.4% of the director's common stock of Ameri-Cap Mortgage
annually beginning in February 2000 for 80,000 shares of the Company's Common
Stock. The Company currently owns 80% of the outstanding common stock of
Ameri-Cap Mortgage. The expense associated with the exchanges will be accounted
for at the dates the exchanges occur.

NOTE 18. BUSINESS SEGMENTS

Management of the Company reports the results of operations of the Company
through two primary business segments: BUSINESS FINANCE, which specializes
principally in accounts receivable factoring and equipment leasing; and CONSUMER
FINANCE, which specializes principally in mortgage banking, consumer finance,
and other types of specialty finance.

F-23
<PAGE> 62
FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes certain financial data for the Company's
business segments:

<TABLE>
<CAPTION>
REVENUES EXPENSES NET LOSS TOTAL ASSETS
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
December 31, 1999:
Business Finance.................... $ 4,109,291 $ 5,806,236 $ (679,490) $56,224,979
Consumer Finance.................... 7,531,186 8,344,573 (807,082) 10,310,541
Corporate items and eliminations.... (36,463) 655,818 (394,274) --
----------- ----------- ----------- -----------
$11,604,014 $13,494,991 $(1,880,846) $66,535,520
=========== =========== =========== ===========
December 31, 1998
Business Finance.................... $ 9,391,071 $10,206,594 $ (815,323) $16,998,001
Consumer Finance.................... 565,032 646,700 (81,668) 1,239,685
Corporate items and other........... (221,163) (166,062) (1,090) (4,619,499)
----------- ----------- ----------- -----------
$ 9,734,940 $10,687,232 $ (898,081) $13,618,187
=========== =========== =========== ===========
</TABLE>

NOTE 19. CONCENTRATION OF CREDIT RISK

At December 31, 1999, the Company had outstanding several individually
significant finance and related party receivables, which represent significant
credit risk. The Company has obtained various forms of collateral to secure
certain of these receivables.

NOTE 20. COMMITMENTS AND CONTINGENCIES

LEASES

The Company acquired computers and equipment under the provisions of two
leases which, for financial reporting purposes, have been capitalized.

Future minimum lease payments for the Company's operating leases are as
follows:

<TABLE>
<CAPTION>
OPERATING
YEAR ENDING DECEMBER 31, LEASES
------------------------ ----------
<S> <C>
2000........................................................ $ 419,158
2001........................................................ 250,337
2002........................................................ 256,702
2003........................................................ 234,663
2004........................................................ 37,004
----------
Total minimum lease payments...................... $1,197,864
==========
</TABLE>

Total rent expense for all operating leases for the years ended December
31, 1999 and 1998, was $428,135 and $141,530, respectively.

LITIGATION

The Company is involved in litigation in the normal course of business.
This litigation is not expected to have a material effect on the Company's
results of operations or financial condition.

NOTE 21. SUBSEQUENT EVENTS (UNAUDITED)

On February 29, 2000, the Company entered into a letter of intent to
acquire all of the issued and outstanding common stock of Prime Capital
Corporation ("Prime"), a publicly held commercial leasing company. The
acquisition is subject to a variety of conditions, including approval by Prime
shareholders. There are no assurances that the acquisition will be consummated,
nor consummated on the previously agreed

F-24
<PAGE> 63
FINANTRA CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

to terms. Prime is principally engaged in the structuring and funding of custom
finance programs on behalf of developers, manufacturers and distributors of
commercial software, communication equipment and medical devices. In 1999, Prime
originated approximately $160 million of such leases.

F-25
<PAGE> 64

FINANTRA CAPITAL, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
MARCH 31, 2000
--------------
(UNAUDITED)
<S> <C>
ASSETS
Assets:
Cash and cash equivalents................................. $ 6,187,938
Certificate of deposit-restricted......................... 1,450,000
Loans available for sale.................................. 6,056,554
Finance receivables, net.................................. 35,935,761
Lease receivables, net.................................... 1,240,361
Other receivables, net.................................... 7,524,517
Due from related parties.................................. 1,755,574
Property and equipment, net............................... 694,733
Goodwill, net............................................. 11,496,617
Other assets.............................................. 4,235,584
-----------
Total assets...................................... $76,577,639
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses..................... $ 1,719,776
Client reserves........................................... 5,289,921
Client payouts............................................ 1,279,825
Credit balances of factoring clients...................... 836,846
Lines of credit........................................... 32,048,250
Notes payable and other interest bearing obligations...... 8,532,108
Notes payable-related parties............................. 38,000
Capital leases............................................ 57,217
-----------
Total liabilities................................. 49,801,943
-----------
Commitments and Contingencies (Note 7)
Stockholders' equity:
Preferred stock, 15,000,000 shares authorized, 3,231,784
issued:
Series A redeemable convertible preferred stock, $.01 par
value, 2,948,817 shares authorized; 2,728,004 shares
issued and outstanding................................. 27,279
Series B convertible preferred stock, $.01 par value,
500,000 shares authorized; 500,000 shares issued and
outstanding............................................ 5,000
Series C 6% convertible preferred stock, $.01 par value,
3,800 shares authorized; 3,780 shares issued and
outstanding............................................ 38
Common stock, $.01 par value, 50,000,000 shares
authorized; 13,850,206 shares issued and outstanding... 138,501
Additional paid-in capital................................ 33,704,732
Accumulated deficit....................................... (7,099,854)
-----------
Total stockholders' equity........................ 26,775,696
-----------
Total liabilities and stockholders' equity........ $76,577,639
===========
</TABLE>

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

F-26
<PAGE> 65

FINANTRA CAPITAL, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
2000 1999
------------ -----------
<S> <C> <C>
Revenues:
Broker fees and gains on sales of mortgage loans.......... $ 1,113,208 $ 0
Finance income............................................ 2,145,750 199,506
Factoring fee income...................................... 528,890 568,625
Leasing income............................................ 74,270 50,702
Servicing income.......................................... 655,230 0
Medical billing fees...................................... 411 149,965
Consulting and advisory fees.............................. 50,000 177,000
Other income.............................................. 663,699 214,380
----------- ----------
Total revenues.................................... 5,231,458 1,360,178
----------- ----------
Expenses:
Compensation and employee benefits........................ 2,461,988 941,331
Consulting and marketing fees............................. 420,906 103,775
Occupancy and equipment................................... 585,903 205,630
Legal and accounting...................................... 305,859 138,443
Interest expense.......................................... 1,062,835 82,926
Provision for credit loss................................. 175,371 0
Indirect loan expense..................................... 236,278 22,115
Other expenses............................................ 394,624 304,595
----------- ----------
Total expenses.................................... 5,643,764 1,798,815
----------- ----------
Loss before minority interest............................... (412,306) (438,637)
Minority interest in loss of consolidated subsidiaries...... 0 11,800
----------- ----------
Net loss.................................................... (412,306) (426,837)
Preferred stock dividends................................... (337,022) (68,200)
----------- ----------
Net loss applicable to common stockholders.................. $ (749,328) $ (495,037)
=========== ==========
Weighted average common shares outstanding.................. 12,248,013 4,627,727
=========== ==========
Net loss per basic and diluted common share................. $ (0.06) $ (0.11)
=========== ==========
</TABLE>

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

F-27
<PAGE> 66

FINANTRA CAPITAL, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net cash (used) provided by operating activities.......... $(4,070,472) $(1,670,155)
Cash flows from investing activities:
Increase in related parties receivables................... 900 342,577
Purchases of property and equipment....................... (176,046) (267,450)
----------- -----------
Net cash used by investing activities............. (175,146) 75,127
Cash flows from financing activities:
Net increase (decrease) in lines of credit................ 2,205,221 (155,911)
Proceeds from debt........................................ 1,288,025 7,335,700
Repayment of debt......................................... (1,313,726) (8,680,217)
Proceeds from related party debt.......................... 8,000 0
Repayment of capital leases............................... (52,426) 0
Payment of preferred stock dividends...................... (29,897) (68,200)
Issuance of common stock.................................. 7,114,044 3,464,450
Purchase of treasury stock................................ 0 (31,150)
----------- -----------
Net cash provided by financing activities......... $ 9,219,241 $ 1,864,672
=========== ===========
Net increase in cash........................................ $ 4,973,623 $ 269,644
Cash -- beginning........................................... 1,214,315 971,760
----------- -----------
Cash -- end................................................. $ 6,187,938 $ 1,241,404
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period:
Interest.................................................. $ 1,012,835 $ --
=========== ===========
Supplemental noncash investing and financial activities:
Issuance of common stock for acquisition of
subsidiaries........................................... $ -- $ 712,500
=========== ===========
Issuance of common stock for services..................... $ -- $ 41,500
=========== ===========
Exchange of finance receivable for other receivables...... $ 6,000,000 $ --
=========== ===========
Common stock issued as contingent purchase price for
acquisitions........................................... $ 682,031 $ --
=========== ===========
Imputed dividend on Series C preferred stock.............. $ 307,125 $ --
=========== ===========
</TABLE>

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

F-28
<PAGE> 67

FINANTRA CAPITAL, INC.
AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000

NOTE 1. PRINCIPLES OF CONSOLIDATION

The accompanying financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.

NOTE 2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required for complete financial statements. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
periods presented have been included.

These results have been determined on the basis of generally accepted
accounting principles and practices applied consistently with those used in the
preparation of the Company's Annual Financial Statement for the year ended
December 31, 1999. Operating results for the three months ended March 31, 2000
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2000.

Certain items in the condensed consolidated financial statements for the
interim period ended March 31, 1999 have been reclassified to conform with the
current presentation. These reclassifications had no effect on the previously
reported net loss.

NOTE 3. STOCKHOLDERS' EQUITY

During the quarter ended March 31, 2000, the Company issued additional
shares of common stock as described below.

The Company issued 2,828,545 shares to private investors for total proceeds
of $7,114,045.

The Company issued 242,500 shares as consideration under exchange
agreements related to certain prior year acquisitions for which the Company was
obligated to issue additional shares to the minority shareholders. Of these
shares, 127,500 were issued to a Director of the Company who is a minority
shareholder in certain subsidiaries of the Company.

Pursuant to an employment agreement, the Company granted 1,450,000 shares
to an executive officer of the Company. Of these shares, 1,400,000 are subject
to forfeiture by the executive ratably over a seven year term if the executive
leaves the employment of the Company. Accordingly, the issuance of these shares
was recorded as deferred compensation in shareholders' equity and will be
amortized as compensation expense over the seven year term.

NOTE 4. EARNINGS PER SHARE

Potential dilutive common shares have been excluded from the diluted
earnings per share calculation as a net loss was incurred for the period, an
inclusion of such shares would be antidilutive.

NOTE 5. FINANCE RECEIVABLES

During the quarter ended March 31, 2000, the Company securitized and sold
$6.6 million of finance receivables, which were comprised of consumer finance
contracts. The Company received proceeds of $6 million in the form of two
short-term notes receivables from the buyers, which are included in other
receivables in the consolidated balance sheet at March 31, 2000, and retained a
beneficial interest in the

F-29
<PAGE> 68
FINANTRA CAPITAL, INC.
AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

amount of $898,000. The sale resulted in a gain of $309,000, which is included
in other income in the condensed consolidated statements of operations.

NOTE 6. BUSINESS SEGMENTS

The following table summarizes certain financial data for the Company's
business segments:

<TABLE>
<CAPTION>
REVENUES EXPENSES NET LOSS TOTAL ASSETS
---------- ---------- --------- ------------
<S> <C> <C> <C> <C>
March 31, 2000:
Business Finance....................... $ 554,893 $ 644,080 $ (89,187) $ 3,932,815
Consumer Finance....................... 4,412,905 4,209,542 203,363 61,527,607
Corporate items and other.............. 263,660 790,142 (526,482) 11,117,217
---------- ---------- --------- -----------
$5,231,458 $5,643,764 $(412,306) $76,577,639
========== ========== ========= ===========
March 31, 1999:
Business Finance....................... $ 880,325 $ 810,692 $ 69,633 $ 5,674,989
Consumer Finance....................... 151,980 481,875 (329,895) 1,926,733
Corporate items and eliminations....... 327,873 506,248 (178,375) 7,571,256
---------- ---------- --------- -----------
$1,360,178 $1,798,815 $(438,637) $15,172,978
========== ========== ========= ===========
</TABLE>

NOTE 7. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases various kinds of equipment under operating leases. No
significant changes to the terms or amounts of these operating leases occurred
since December 31, 1999.

LITIGATION

The Company is involved in litigation in the normal course of business.
This litigation is not expected to have a material effect on the Company's
results of operations or financial condition.

NOTE 8. SUBSEQUENT EVENT

Subsequent to March 31, 2000, the Company issued to private investors for
cash approximately 527,000 shares of Common Stock.

F-30
<PAGE> 69

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

GENERAL

Finantra Capital, Inc., a Delaware corporation (the "Company"), is a
diversified, multi-faceted specialty finance company principally engaged in
lending activities related to accounts receivable factoring, equipment leasing,
mortgage banking, consumer finance and other types of specialty financing. The
Company also provides accounting and collections services to other entities. The
Company's business is conducted, generally, through two principal operating
arms -- the Company's commercial asset business finance group, and the Company's
consumer finance group. The commercial asset business finance group, operating
under the umbrella of the Company's Ameri-Cap Business Finance Group, Inc.
holding company subsidiary, specializes, principally, in accounts receivable
factoring and equipment leasing. The consumer finance group, operating under the
umbrella of the Company's Ameri-Cap Consumer Finance Group, Inc. holding company
subsidiary ("ACFG"), specializes, principally, in mortgage banking and other
retail specialty financing lines.

The Company's emergence into the consumer specialty finance industry was
solidified by the Company's acquisition, its largest to date, through the
Company's Travelers Acquisition Co. subsidiary ("TAC"), of Travelers Investment
Corporation ("Travelers"), as of September 30, 1999. Travelers is a
California-based specialty consumer finance company which, for the past 25
years, has been engaged, generally, in the acquisition, management, servicing
and collection of individual consumer contracts. Travelers operates under the
Company's ACFG consumer finance group umbrella.

In addition to its commercial asset finance and consumer finance arms, the
Company has also established an Internet financial services company subsidiary,
Finantra Internet Services.com, Inc., as a platform for the distribution of
financial products and services, in particular, residential mortgages, through
the Internet.

Since the consummation, during January 1998, of the Company's initial
public offering of securities, the Company's operations have focused primarily
on growing an operation base and establishing a market presence in each of the
aforementioned business segments. The Company's primary strategy for achieving
its necessary growth and market presence has been, among other things, to pursue
acquisitions of existing enterprises which, in the Company's opinion, have
management experience and earnings potential and long-term growth possibilities,
and obtaining institutional lines of credit for each business line. Having
established operations in each of its commercial assets business finance and
consumer finance arms, the Company's current principal strategy for making its
operations more profitable is to bundle (or combine and package) financial
products and services. The Company believes that by bundling products and
services, it will be positioned to more effectively compete since, as the volume
of the transactions it handles increases, the more likely the Company will have
access to less costly leasing, factoring, mortgage banking and retail consumer
financing lines.

In an effort to further solidify the Company's emergence into the retail
specialty finance industry, the Company, during January 2000, through its
Travelers Acceptance Corporation and T.A.C. Technology Finance Corp.
subsidiaries, entered into a Consumer Finance Contracts Program (the "Program")
with Gateway Companies, Inc., a New York Stock Exchange Company ("Gateway").
Pursuant to the Program, among other things, Gateway has agreed to assign to the
Company Gateway customer contracts (the "Contracts") for computers, software,
accessories, certain warranties and other related goods and services sold by
Gateway or any of its vendors in the ordinary course of Gateway's business
(collectively, the "Goods") to consumers for individual, family, personal or
household use, and the Company has agreed to accept such assignments of
Contracts and finance loans to Gateway's customers to pay Gateway for the Goods
being purchased under the Contracts. In general, the Company has agreed to pay
Gateway for Contracts for Goods assigned under the Program by Gateway to the
Company at a purchase price per Contract equal to the total principal amount to
be financed by the Company under such Contract less a negotiated discount.
Pursuant to the Program, Gateway has agreed to make commercially reasonable
efforts to assign to the Company, and the Company has agreed to make
commercially reasonable efforts to accept assignments of Contracts, of not less
than a fixed amount per month.

F-31
<PAGE> 70

RESULTS OF OPERATIONS

Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999

For the three months ended March 31, 2000 ("First Quarter 2000"), the
Company generated revenues of $5,231,458, an increase of $3,871,280, or
approximately 285%, from revenues of $1,360,178 for the three months ended March
31, 1999 ("First Quarter 1999"). This significant increase in revenues was
primarily the result of the Company's acquisition, subsequent to First Quarter
1999, of Travelers, and the full scale implementation, in accordance with the
Company's business plan, subsequent to First Quarter 1999, of the Company's
consumer retail loan (Travelers), mortgage banking and accounts receivable
factoring operations. During First Quarter 1999, the Company's revenue
generating operations were essentially limited to accounts receivable factoring
operations.

During First Quarter 2000, the Company recorded approximately $1.1 million
from the gains on the sales of mortgage loans and related broker fees. In
addition, during First Quarter 2000, the Company recorded approximately $2.1
million of finance interest attributable directly to its Travelers operations.
Moreover, during First Quarter 2000, the Company, through Travelers, recorded
approximately $655,000 of servicing income and an additional $309,000 from the
gain on the sale of the consumer installments contracts sold by the Company in
its first securitization. The Company did not securitize any of its finance
contracts during First Quarter 1999.

During First Quarter 2000, the Company incurred an increase of $3,844,949,
or approximately 214%, in total operating expenses over First Quarter 1999
figures. This increase was primarily the result of the Company's acquisition,
subsequent to First Quarter 1999, of Travelers and the full-scale
implementation, in accordance with the Company's business plan, subsequent to
First Quarter 1999, of the Company's consumer retail loan (Travelers), mortgage
banking and accounts receivable factoring operations. During First Quarter 1999,
the Company's operations were essentially limited to accounts receivables
factoring operations.

As a consequence of the Company's expansion, and, primarily, its
acquisition of Travelers, the Company, during First Quarter 2000, incurred
approximately $1.0 million of additional interest expense as compared to First
Quarter 1999 interest expense. This increase was directly related to borrowings
required under the Company's interest-bearing credit facilities to finance
consumer retail loans originated by Travelers. In addition, as a result of the
Company's growth and expansion (again, primarily relating to its acquisitions of
Travelers), the Company incurred approximately $2.9 million of additional
compensation and general overhead expenses during First Quarter 2000 as compared
to First Quarter 1999.

As a consequence of the foregoing, the Company recorded a net loss of
$412,306 for First Quarter 2000, as compared to a net loss $426,837 for First
Quarter 1999. When combined, however, with the provisions for dividends with
respect to shares of the Company's Series A and Series C Preferred Stock, the
Company incurred a net loss applicable to common stockholders for First Quarter
2000 of $749,328, or approximately $0.06 per share, as compared to a net loss
applicable to common stockholders for First Quarter 1999 of $495,037, or
approximately $0.11 per share. No shares of Series C Preferred were outstanding
during First Quarter 1999.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2000, the Company had total assets of $76,577,639, as compared
to total assets of $66,535,520 at December 31, 1999. This increase in total
assets is primarily the result of (i) the increased number of consumer retail
loans, equipment leases, factored accounts receivable, loans held for resale and
related financial instruments originated or underwritten by the Company during
First Quarter 2000, (ii) the receipt by the Company of approximately $7.1
million in proceeds from the Company's issuance, in privately negotiated
transactions (at differing per share purchase prices) with 16 accredited
investors, of 2,828,545 shares of Common Stock and (iii) the Company's receipt
of $6 million in the form of two short-term notes from the purchasers of $6.6
million of consumer finance contracts securitized and sold by the Company during
First Quarter 2000. The $11,496,617 of goodwill, net, recorded on the Company's
balance sheet at March 31, 2000 represents the premium over the fair value of
net assets acquired by the Company in connection with its

F-32
<PAGE> 71

acquisitions of its operating divisions. The Company anticipates that the future
earnings of the acquired companies will offset the amortization associated with
the recording of this goodwill.

At March 31, 2000, the Company had total liabilities of $49,801,943, as
compared to total liabilities of $47,372,402 at December 31, 1999. This slight
increase in total liabilities was primarily the result of increased borrowings
under the Company's lines of credit necessitated as a result of the Company's
increased business activities, primarily in the consumer retail loan (Travelers)
area. Due to the increased amount of consumer retail loan business originated by
the Company during First Quarter 2000, the Company was also required to record
an additional approximate $1.2 million in client reserves at March 31, 2000, as
compared to the amount of client reserves at December 31, 1999.

At March 31, 2000, the Company had total stockholders' equity of
$26,775,696, as compared to total stockholders' equity of $19,163,118 at
December 31, 1999. This increase in stockholders' equity is attributable
directly to the Company's issuance, during First Quarter 2000, of 2,828,545
shares of Common Stock to individual investors in consideration for
approximately $7.1 million in proceeds, net of the net loss incurred.

The Company anticipates, based on its current proposed plans and
assumptions relating to its operations and expansion, that it will be able to
satisfy its currently contemplated cash requirements for the next 12 months from
working capital, cash flow and its interest-bearing credit facilities. In the
event that the Company's plans change or its assumptions prove to be inaccurate,
or working capital, cash flow and availability under existing credit facilities
prove to be insufficient to fund the Company's operations and expansion (due to
unanticipated expenses, delays, problems or otherwise), the Company would be
required to seek additional funding. Depending upon the Company's financial
strength and the state of the capital markets, the Company may also determine
that it is advisable to raise additional equity capital. The Company has no
current arrangements with respect to, or sources of, any additional capital, and
there can be no assurance that such additional capital will be available to the
Company, if needed, on commercial reasonable terms, or at all. The inability of
the Company to obtain additional capital would have a material adverse effect on
the Company and could cause the Company to be unable to implement its business
strategy or to otherwise significantly curtail or cease operations.

In addition, subsequent to the end of First Quarter 2000, the Company
issued and sold, in separate, privately negotiated transactions (at differing
per share purchase prices), to nine accredited investors, an aggregate of
527,000 shares of Common Stock in consideration for an aggregate of
approximately $1.9 million.

YEAR 2000 COMPLIANCE

The inability of business processes to continue to function correctly after
the beginning of the Year 2000 could have serious adverse effects on companies
and entities throughout the world. In order to insulate itself from suffering
any such adverse effects after January 1, 2000, the Company, during Fiscal 1999,
purchased new software and hardware systems for itself and its subsidiaries.
These new systems all carry manufacturers' representations and warranties
concerning Year 2000 compliance. To date, all of these systems have functioned
properly and the Company has not been adversely impacted by any Year 2000
computer problems. No assurance can be given, however, that the Company's
software and hardware systems will not fail in the future. In such event, the
Company will be forced to expend such amounts of its working capital as may be
necessary to correct its software and hardware systems and implement contingency
plans.

F-33