INTERCEPT GROUP INC
S-1/A, 1998-06-02
FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC
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<PAGE>
 
      
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 2, 1998     
                                                     REGISTRATION NO. 333-47197
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                ---------------
                   
                PRE-EFFECTIVE AMENDMENT NO. 3 TO FORM S-1     
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                                ---------------
 
                           THE INTERCEPT GROUP, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
   <S>                              <C>                             <C>
             GEORGIA                            6099                         58-2237359
STATE(OR OTHER JURISDICTION OF        (PRIMARY STANDARD INDUSTRIAL          (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)         CLASSIFICATION CODE NUMBER)       IDENTIFICATION NUMBER)
</TABLE>
 
                                JOHN W. COLLINS
                            CHIEF EXECUTIVE OFFICER
                           THE INTERCEPT GROUP, INC.
                      3150 HOLCOMB BRIDGE ROAD, SUITE 200
                            NORCROSS, GEORGIA 30071
                                (770) 248-9600
   (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
      OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES AND AGENT FOR SERVICE)
 
                                ---------------
 
                                  COPIES TO:
<TABLE>
   <S>                                       <C>
           ROBERT D. PANNELL, ESQ.                    M. HILL JEFFRIES, ESQ.
            SUSAN L. SPENCER, ESQ.                    R. BRANDON ASBILL, ESQ.
            JONATHAN R. COE, ESQ.                      R. DAVID PATTON, ESQ.
     NELSON MULLINS RILEY & SCARBOROUGH,
                    L.L.P.                               ALSTON & BIRD LLP
        FIRST UNION PLAZA, SUITE 1400                   ONE ATLANTIC CENTER
          999 PEACHTREE STREET, N.E.                1201 WEST PEACHTREE STREET
            ATLANTA, GEORGIA 30309                    ATLANTA, GEORGIA 30309
                (404) 817-6000                            (404) 881-7000
             (404) 817-6050 (FAX)                      (404) 881-4777 (FAX)
</TABLE>
 
                                ---------------
 
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
  If this Form is filed to register additional securities for any offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
  If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
                        
                     CALCULATION OF REGISTRATION FEE     
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                                                       PROPOSED
                                          PROPOSED      MAXIMUM
 TITLE OF EACH CLASS OF                   MAXIMUM      AGGREGATE   AMOUNT OF
    SECURITIES TO BE     AMOUNT TO BE  OFFERING PRICE  OFFERING   REGISTRATION
       REGISTERED        REGISTERED(1)  PER UNIT(2)    PRICE(2)      FEE(3)
- ------------------------------------------------------------------------------
<S>                      <C>           <C>            <C>         <C>
Common Stock, no par
 value.................    2,745,625       $9.00      $24,710,625    $7,290
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>    
   
(1) Includes 358,125 shares which the Underwriters have an option to purchase
    from the Company to cover over-allotments, if any.     
   
(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(a).     
   
(3) A filing fee of $10,134 has previously been paid.     
 
                                ---------------
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID
SECTION 8(A) MAY DETERMINE.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                    
                 SUBJECT TO COMPLETION, DATED JUNE 2, 1998     
 
PROSPECTUS
                                
                             2,387,500 SHARES     
                                      LOGO
 
                                  COMMON STOCK
   
  Of the 2,387,500 shares of Common Stock offered hereby (the "Offering"),
2,250,000 shares are being offered by The InterCept Group, Inc. ("InterCept" or
the "Company") and 137,500 shares are being offered by a shareholder of the
Company (the "Selling Shareholder"). See "Principal and Selling Shareholders."
The Company will not receive any of the proceeds from the sale of shares by the
Selling Shareholder. See "Use of Proceeds."     
   
  Prior to the Offering there has been no public market for the Common Stock.
It is currently anticipated that the initial public offering price for the
Common Stock will be between $8.00 and $9.00 per share. See "Underwriting" for
information relating to the determination of the initial public offering price.
       
  The Company has applied for listing of the Common Stock on The Nasdaq Stock
Market's National Market under the symbol "ICPT."     
 
  SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
 
                                  -----------
 
THESE SECURITIES  HAVE NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS  THE SECURITIES
 AND EXCHANGE  COMMISSION OR ANY  STATE SECURITIES COMMISSION  PASSED UPON THE
 ACCURACY OR  ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION  TO THE CONTRARY
  IS A CRIMINAL OFFENSE.
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
    
                                                            PROCEEDS TO
                   PRICE TO   UNDERWRITING   PROCEEDS TO     SELLING
                   PUBLIC      DISCOUNT(1)    COMPANY(2)    SHAREHOLDER
    
- --------------------------------------------------------------------------------
<TABLE>
<S>                <C>            <C>            <C>            <C>
Per Share.......   $              $              $              $
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S>                <C>            <C>            <C>            <C>
Total(3)........   $              $              $              $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   
(1) The Company and the Selling Shareholder have agreed to indemnify the
    Underwriters against certain liabilities, including liabilities under the
    Securities Act of 1933, as amended. See "Underwriting."     
 
(2) Before deducting estimated Offering expenses of $1,400,000, payable by the
    Company.
   
(3) The Company has granted the Underwriters a 30-day over-allotment option to
    purchase up to 358,125 additional shares of Common Stock on the same terms
    and conditions as set forth above. If all such shares are purchased by the
    Underwriters, the total Price to Public will be $     , the total
    Underwriting Discount will be $    , the total Proceeds to Company will be
    $     and the total Proceeds to Selling Shareholder will be $     . See
    "Underwriting."     
 
                                  -----------
 
  The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale, and to the Underwriters' right to
reject orders in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about         , 1998.
 
                                  -----------
 
J.C. Bradford & Co.                                            Wheat First Union
 
                                          , 1998
 

<PAGE>
 
ARTWORK (Inside Front Cover):
 
(1) Color map of the United States reflecting the outlines of the states and
    the Company's point of presence locations within each state, including the
    name of the city. The following heading is above the graphic: "The InterCept
    Group Communications Network LATA Map."
 
 
(2) Color map of the United States reflecting the outlines of the states. The
    states where the Company has customers or alliances with bankers banks are
    highlighted in yellow. The following heading is above the graphic: "States
    with customers or bankers bank alliances."
 
  CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE
COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
 
                               PROSPECTUS SUMMARY
   
  The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements and the related Notes thereto
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information contained in this Prospectus assumes an initial public offering
price per share of $8.50 and no exercise of the Underwriters' over-allotment
option. All Common Stock share numbers in this Prospectus reflect a 2.1053-for-
1 stock split on February 28, 1998. The terms "InterCept" and "Company" as used
in this Prospectus mean The InterCept Group, Inc. and its subsidiaries on a
consolidated basis. Industry information presented in this Prospectus is based
upon sources which the Company believes to be reliable but has not
independently verified.     
 
                                  THE COMPANY
   
  The InterCept Group, Inc. ("InterCept" or the "Company") designs, develops,
markets and implements a suite of fully integrated electronic commerce products
and services primarily for community financial institutions in the United
States. The Company's products and services include electronic funds transfer
("EFT"), data communications management, client/server enterprise software and
other processing solutions. InterCept currently serves over 580 financial
institutions and is the largest third-party processor of financial
institutions' automated teller machines ("ATMs") in the southeastern United
States. The Company has established marketing relationships with 9 of the 17
bankers' banks, which provide the Company access to over 4,500 of the
approximately 11,000 community financial institutions nationwide. For the years
ended December 31, 1996 and 1997 and for the three months ended March 31, 1998,
recurring revenues accounted for approximately 69.3%, 76.1% and 78.2%,
respectively, of the Company's revenues.     
 
  InterCept is a single source provider of a broad range of flexible electronic
commerce solutions and supporting value-added products and services. The
Company provides numerous EFT products and services, including ATM, point-of-
sale ("POS") and scrip debit services, debit card processing, funds transfer
and remote banking services. The Company licenses PC BancPAC(TM), a
client/server enterprise software system that operates in a personal computing
environment and (since October 1997) in a Windows NT(R) environment. Community
financial institutions can implement PC BancPAC(TM) on both a service bureau
and in-house basis, providing them with two alternatives for utilizing the
Company's technologies and processing expertise to improve operating efficiency
for their institutions. The Company also provides maintenance and technical
support services, supplies banking related equipment and offers numerous
ancillary products and services to its financial institution customers.
   
  As part of its integrated suite of electronic commerce products and services,
the Company provides end-to-end data communications management solutions to its
customers. The Company maintains nationwide data communications coverage and
has one of the largest private frame relay networks in the southeastern United
States (the "InterCept Frame Relay Network"). The InterCept Frame Relay Network
is the principal conduit through which the Company processes EFT transactions
and manages the data communications needs of its customers. The InterCept Frame
Relay Network contains approximately 1,200 drops which are located in 14
states, 41 local access transport areas ("LATAs") and all five markets of the
Regional Bell Operating Companies ("RBOCs"). The design of the InterCept Frame
Relay Network provides for efficient switching capabilities, which results in
rapid response time, as well as secure and reliable transmission and processing
of electronic commerce transactions conducted across the network. The Company
believes the InterCept Frame Relay Network enables it to provide its electronic
commerce products and services efficiently and on a more cost-effective basis
for its customers.     
 
  InterCept's top 9 senior officers have an average of over 22 years of
industry experience and have expertise in multiple areas of electronic commerce
(including EFT and data communications management), enterprise
 
                                       3
<PAGE>
 
software and transaction processing for financial institutions. The Company's
current market focus is on community financial institutions, which the Company
believes rely heavily on third-party providers for a majority of their EFT,
data communications management, enterprise software and transaction processing
solutions, including the products and services offered by the Company. As a
result of rapid technological, financial and other changes that have occurred
over the past several years, InterCept believes that the demand of community
financial institutions and their customers for technologically advanced
solutions has increased substantially and that such demand will continue to
grow in the future. The Company believes that its integrated suite of
electronic commerce solutions enables its community financial institution
customers to compete with larger financial institutions by allowing them to
offer similar products and services on a cost-competitive basis.
 
  The Company believes it is one of the largest providers of fully integrated
electronic commerce products and services for community financial institutions
in the southeastern United States, and its goal is to become one of the largest
such providers in the United States. To attain this goal, the Company plans to
grow significantly by implementing the following key strategies:
 
    (i) Cross-Market to Existing Customer Base and Maximize Recurring
  Revenues. InterCept plans to cross-market its EFT, data communications
  management, client/server enterprise software and numerous ancillary
  products and services to its existing customers, most of which already use
  the Company's EFT services. The Company seeks to develop and maintain long-
  term customer relationships by providing multiple electronic commerce
  products and services to community financial institutions pursuant to
  contracts with renewable terms. The Company intends to maximize its
  recurring revenues through these relationships by enhancing and increasing
  the use of its various products and services. The Company also plans to
  create and acquire additional sources of recurring revenues to meet the
  evolving needs of its customers.
 
    (ii) Increase Data Communications Management and Optimize the InterCept
  Frame Relay Network.  InterCept intends to increase the use of its data
  communications management services by offering customized, cost-competitive
  telecommunications connectivity to its customers and by managing their data
  traffic in a reliable and secure manner across the InterCept Frame Relay
  Network. The Company intends to optimize the InterCept Frame Relay Network
  by selling additional communications services to its customers, thereby
  increasing network utilization with minimal additional cost to the Company.
  InterCept plans to improve the speed and efficiency of transaction
  processing across the network by selectively enhancing and upgrading its
  processing and switching equipment and telecommunications lines. In
  addition, the Company will attempt to expand the InterCept Frame Relay
  Network into new geographic areas as business warrants. The Company
  believes that the strategic development of the InterCept Frame Relay
  Network will continue to provide for more efficient network utilization,
  allow it to reduce transmission and other operating costs, and support its
  current and future products and services.
     
    (iii) Complete Strategic Acquisitions. InterCept intends to acquire other
  companies with complementary technologies or services that will enhance and
  expand the products and services offered to existing customers, increase
  its market share, expand its geographic presence or optimize the InterCept
  Frame Relay Network. Since the beginning of 1996, the Company has completed
  several acquisitions of providers of complementary products and services.
  On April 28, 1998, the Company entered into a $20.0 million revolving line
  of credit agreement with First Union National Bank (the "First Union Credit
  Facility"), the proceeds of which will be available to fund acquisitions
  upon completion of this Offering and the satisfaction of certain other
  conditions set forth in such agreement. See "Management's Discussion and
  Analysis of Financial Condition and Results of Operations -- Liquidity and
  Capital Resources."     
 
    (iv) Expand Sales Force and Strategic Marketing Relationships. The
  Company plans to expand its customer base and penetrate new geographic
  markets by hiring sales personnel with expertise in community financial
  institutions' operations and/or electronic commerce products and services
  similar to those offered
  by the Company. InterCept currently has established relationships with
  several banking related business
 
                                       4
<PAGE>
 
  organizations, including strategic marketing relationships with 9 of the 17
  bankers' banks, which provide the Company access to over 4,500 of the
  approximately 11,000 community financial institutions nationwide. InterCept
  intends to use its expanded sales force to market its products and services
  directly to these institutions and to enhance its indirect marketing
  efforts by developing additional strategic marketing relationships with
  bankers' banks and various other business organizations.
 
    (v) Expand and Enhance its Products and Services. The Company has devoted
  and will continue to devote resources to developing and enhancing its suite
  of products and services. The Company plans to continue to combine its
  enhanced and expanded electronic commerce solutions with sophisticated
  technology to help its community financial institution customers remain
  competitive with other financial service providers. The Company continually
  strives to anticipate the most recent trends in the financial services
  industry and to develop and provide leading edge products and services.
 
  The Company is a Georgia corporation whose principal offices are located at
3150 Holcomb Bridge Road, Suite 200, Norcross, Georgia 30071, and its telephone
number is (770) 248-9600.
 
                                  THE OFFERING
 
<TABLE>   
 <C>                                         <S>
 Common Stock offered by the Company........ 2,250,000 shares
 Common Stock offered by the
  Selling Shareholder.......................   137,500 shares(1)
 Common Stock to be outstanding
  after the Offering........................ 9,000,114 shares(2)
 Use of proceeds by the Company............. To repay certain indebtedness and
                                             an amount owed to an officer;
                                             enhance marketing efforts;
                                             upgrade, enhance and expand the
                                             InterCept Frame Relay Network;
                                             redeem outstanding preferred
                                             stock; and for working capital
                                             and general corporate purposes,
                                             including acquisitions. See "Use
                                             of Proceeds."
 Nasdaq National Market symbol.............. ICPT
</TABLE>    
- --------
(1) See "Principal and Selling Shareholders."
 
(2) Excludes 595,853 shares issuable upon exercise of outstanding options
    granted pursuant to the Company's stock option plans. See "Management--
    Stock Option Plans."
 
                                       5
<PAGE>
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                             YEARS ENDED DECEMBER 31,        THREE MONTHS ENDED MARCH 31,
                          -------------------------------  ---------------------------------
                                                                                 AS ADJUSTED
                           1995(1)  1996(2)(3)    1997        1997       1998      1998(4)
                          --------- ----------  ---------  ---------- ---------- -----------
<S>                       <C>       <C>         <C>        <C>        <C>        <C>
STATEMENTS OF OPERATIONS
 DATA:
Revenues................  $   8,223 $  14,511   $  23,260  $    5,116 $    6,257 $    6,257
Costs of services.......      4,607     7,859      10,223       2,274      2,634      2,634
Selling, general and
 administrative
 expenses...............      2,213     6,852      10,105       2,316      2,532      2,532
Depreciation and
 amortization...........        242       351       1,323         308        285        285
Loss on impairment of
 intangibles............          0         0         728           0          0          0
Writeoff of purchased
 research and
 development costs......          0       810           0           0          0          0
                          --------- ---------   ---------  ---------- ---------- ----------
Total operating
 expenses...............      7,062    15,873      22,379       4,898      5,451      5,451
                          --------- ---------   ---------  ---------- ---------- ----------
Operating income
 (loss).................      1,161    (1,362)        881         218        806        806
Income (loss) before
 provision for income
 taxes and minority
 interest...............      1,098    (1,641)        232          55        646        814
Net income (loss)
 attributable to common
 shareholders...........  $     681 $  (1,427)  $    (427) $       29 $      376 $      476
                          ========= =========   =========  ========== ========== ==========
Net income (loss) per
 common share(5)........  $    0.12 $   (0.24)  $   (0.06) $     0.00 $     0.06 $     0.05
                          ========= =========   =========  ========== ========== ==========
Weighted average common
 shares outstanding.....  5,867,400 5,851,347   6,750,114   6,750,114  6,750,114  9,000,114
</TABLE>
 
<TABLE>   
<CAPTION>
                                                                  AS OF
                                                             MARCH 31, 1998
                                                          ----------------------
                                                          ACTUAL  AS ADJUSTED(6)
                                                          ------  --------------
<S>                                                       <C>     <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................ $  940     $10,694
Working capital..........................................    604      10,813
Total assets.............................................  9,885      19,639
Long-term debt...........................................  4,221         284
Shareholders' (deficit) equity...........................   (408)     15,938
</TABLE>    
- --------
(1) On June 4, 1996, Intercept Systems, Inc. ("Systems") merged with the
    Company in a share exchange combination by which Systems became a wholly-
    owned subsidiary of the Company. The results of operations of Systems have
    been included for the periods shown. See Note 3 of Notes to Consolidated
    Financial Statements.
(2) On June 4, 1996, the Company acquired Data Services Corp. ("Data Services")
    in a transaction accounted for as a purchase and the results of operations
    of Data Services have been included since the date of acquisition. On
    November 27, 1996, the Company acquired ProVesa, Inc. ("ProVesa") in a
    merger transaction accounted for as a purchase, and the results of
    operations of ProVesa have been included since the date of acquisition. On
    December 17, 1996, InterCept acquired FiNet, Inc. ("FiNet") in a merger
    transaction accounted for as a purchase, and the results of operations of
    FiNet have been included since the date of acquisition. On December 31,
    1996, InterCept acquired Bank Services Corporation ("Bank Services") in a
    merger transaction accounted for as a purchase, and the results of
    operations of Bank Services have been included since the date of
    acquisition. See Note 3 of Notes to Consolidated Financial Statements.
(3) On January 30, 1998, the Company acquired Technologies in a transaction
    accounted for as a pooling of interests, and the results of operations of
    Technologies have been included since its inception on January 1, 1996.
(4) The statements of operations data have been adjusted to reflect (i) the
    sale of 2,250,000 shares of Common Stock offered by the Company, (ii) the
    elimination of interest expense related to the Company's credit facilities,
    (iii) the elimination of interest expense related to a deferred
    compensation agreement with an officer of the Company and (iv) the
    elimination of preferred stock dividends related to preferred stock to be
    repurchased with proceeds of the Offering. See "Use of Proceeds."
(5) See Notes 2 and 10 of Notes to the Consolidated Financial Statements for a
    discussion of the historical computations of net income (loss) per common
    share. Pursuant to Staff Accounting Bulletin No. 98, the impact of any
    options are excluded as the issuances are not considered nominal.
    Accordingly, basic and fully diluted net income (loss) per common share are
    the same.
(6) Adjusted to reflect the sale of 2,250,000 shares of Common Stock offered by
    the Company and the application of the estimated net proceeds therefrom.
    See "Use of Proceeds" and "Capitalization."
 
                                       6
<PAGE>
 
                                 RISK FACTORS
 
  An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating an investment
in the Common Stock offered hereby. This Prospectus contains "forward-looking
statements" relating to, without limitation, future economic performance,
plans and objectives of management for future operations, projections of
revenue composition and other financial items that are based on the beliefs
of, as well as assumptions made by and information currently known to, the
Company's management. The words "may," "would," "could," "will," "expect,"
"estimate," "anticipate," "believe," "intends," "plans" and similar
expressions and variations thereof are intended to identify forward-looking
statements. The cautionary statements set forth in this "Risk Factors" section
and elsewhere in this Prospectus identify important factors with respect to
such forward-looking statements, including certain risks and uncertainties,
that could cause actual results to differ materially from those in such
forward-looking statements.
 
BRIEF COMBINED OPERATING HISTORY; PRIOR LOSSES
 
  The Company was incorporated in May 1996 and has acquired five companies in
transactions that occurred from June 1996 through January 1998. The members of
the Company's senior management have worked together to manage the Company as
a combined business for only a short time. Although the Company has generated
net income for the three months ended March 31, 1998 and other historical
operating periods, the Company had net losses of $1.4 million and $400,000 for
the years ended December 31, 1996 and 1997, respectively, and has had net
losses for several historical interim periods. See Consolidated Financial
Statements and the related Notes thereto. There can be no assurance that
management will be able to effectively manage the combined enterprise or
implement the Company's growth strategies or that the Company will be able to
achieve any cost savings or generate net income in future periods. The
Company's historical financial results cover periods when the Company was not
operating as a combined entity and, therefore, may not be indicative of the
Company's future operating results or financial condition. See "The Company,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Transactions."
 
ABILITY TO CONTINUE AND MANAGE GROWTH; ACQUISITION RISKS
 
  The Company's failure or inability to continue and manage its growth
successfully may have a material adverse effect on the Company's business,
financial condition and results of operations. The expansion of the Company's
operations has placed and will continue to place significant demands on its
administrative, operational and financial personnel and systems. The Company
intends to continue to grow through strategic business combinations and
through internal growth, including expanding its sales and marketing forces,
cross-marketing its suite of products and services to existing customers,
opening new data communications and item processing centers and expanding the
InterCept Frame Relay Network. The Company's ability to grow also will depend
on a number of factors beyond the Company's control, including general
economic and industry conditions, existing and emerging competition and the
strength of demand for the products and services provided by the Company.
There can be no assurance that the Company will be able to generate or obtain
capital sufficient to fund mergers and acquisitions and the enhancement and
expansion of its products and services, manage costs, adapt its infrastructure
and modify its operating systems to accommodate growth and attract and train
additional qualified sales and marketing personnel. Implementing the Company's
business strategies, including integrating other companies, introducing new
products and services and opening new data communications and item processing
centers, may divert management's attention from normal operating activities,
which, in addition to the costs associated with such activities, may
materially and adversely affect the Company's business, financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
  The inability to identify, acquire and integrate additional businesses,
products and services may have a material adverse effect on the Company's
business, financial condition and results of operations. An element of the
Company's strategy is the pursuit of business combinations that either
increase or enhance the products and
 
                                       7
<PAGE>
 
services currently offered by the Company. There can be no assurance that the
Company will be able to identify suitable acquisition candidates, establish
favorable consideration and other terms, arrange adequate financing on
acceptable terms, consummate any transaction, or successfully integrate the
operations, products, personnel and culture of any acquired business into
those of the Company, nor can there be any assurance that the Company will be
able to expand its market share. Future acquisitions may also result in
potentially dilutive issuances of equity securities, the incurrence of
additional debt, the loss of key employees, the writeoff of in-process product
development and capitalized product costs, integration costs, the amortization
of expenses related to goodwill and other intangible assets, and the
incurrence of unforeseen liabilities, all of which could have a material
adverse effect on the Company. In addition, the Company competes with other
electronic commerce providers for acquisition candidates, and consolidation in
the financial services industry in the United States has resulted in fewer
opportunities for acquisitions.
 
ABILITY TO EXPAND SALES AND MARKETING FORCES AND STRATEGIC MARKETING
RELATIONSHIPS
 
  If InterCept is unable to locate and hire experienced sales and marketing
personnel or establish and maintain key marketing relationships on a timely
basis, the Company's business, financial condition and results of operations
would likely be materially adversely affected. An integral part of the
Company's strategy is to expand its sales and marketing forces and its
strategic marketing relationships. Competition for experienced sales and
marketing personnel is intense, and there can be no assurance that the Company
will be able to retain existing personnel or to attract, integrate or keep
additional qualified personnel in the future. In addition, the Company has
relationships with various banking related organizations for the marketing and
endorsement of the Company's products and services that management believes
are important to its sales and marketing efforts and geographic expansion of
the Company's business. The loss of any of these marketing relationships or
the failure to enter into additional strategic marketing alliances could
impact the Company's ability to implement its business strategies and could
have a material adverse effect on its business, financial condition and
results of operations. See "Business--Business Strategy" and "--Sales and
Marketing."
 
TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS
 
  There can be no assurance that the Company will be successful in developing,
acquiring or marketing new or enhanced products or services that respond to
technological change or evolving customer needs, that the Company will not
experience difficulties that could delay or prevent the successful
introduction of such products or services, that its new or enhanced products
and services will satisfy the requirements of the marketplace and be accepted
by its customers or that incorporating new developments in data communications
or information processing technology or employing new technologies will not
involve substantial cost. Electronic commerce, including EFT, data
communications and enterprise software, has been characterized by rapid
technological change, and the introduction of new communications technologies
and new financial products and services can render existing technologies,
products and services obsolete in a short period of time. The Company believes
that its future success will depend in large part upon its ability to maintain
and enhance its current product and service offerings and to continually
develop and introduce new products and services that will keep pace with
technological advances and satisfy evolving customer requirements.
 
  In addition, telephone companies and media companies are likely to increase
communications services through the Internet, and if the Internet becomes an
accepted method of electronic commerce, the Company could lose customers,
which would reduce revenues from EFT and data communications management
services. Use of the Internet for electronic commerce services raises numerous
issues, including reliability, data security and data integrity, timely
transmission, and pricing of products and services. It is impossible to
predict whether the Internet will prove to be a viable commercial marketplace
or whether the Company will continue to design, develop and offer Internet
products and services which will be accepted in the marketplace.
 
  Delays or failures in the development and provision of new or enhanced
products or services, or the failure of such products or services to achieve
market acceptance, could have a material adverse effect on the business,
financial condition and results of operations of the Company. The Company
expects other vendors to continually
 
                                       8
<PAGE>
 
introduce new products and services, as well as enhancements to their existing
products and services, which will compete with the products and services
offered by the Company. The Company's success will depend significantly on its
ability to anticipate evolving industry trends, continue to apply advances in
electronic commerce, enhance existing products and services, and develop,
acquire and introduce new products and services on a timely basis to address
technological developments and meet increasing demands of its customers.
 
DEPENDENCE ON MANAGEMENT
 
  The loss of the services of one or more of the Company's senior officers or
key management personnel would likely have a material adverse effect on the
Company's business, financial condition and results of operations. The
Company's success depends on the abilities of John W. Collins, its Chief
Executive Officer, Donny R. Jackson, its President and Chief Operating
Officer, and a number of other senior officers and key management personnel
who have substantial experience with the Company's operations, the rapidly
changing electronic commerce industry and the particular community financial
institutions on which the Company focuses. The relationships established
between the Company and its customers and marketing partners would be impaired
if the Company lost the services of one or more of its senior officers, which
would likely have a material adverse effect on the Company's business,
financial condition and results of operations. As the Company implements its
business strategies, its success will depend on its ability to continue to
attract, manage and retain other qualified management and technical personnel,
and there can be no assurance that the Company will be able to attract or
retain such personnel. The Company is the beneficiary of key man life
insurance policies on Mr. Collins and Mr. Jackson. See "Management."
 
COMPETITION
 
  The EFT, data communications management, enterprise software and transaction
processing industries are intensely competitive and highly fragmented, and the
Company expects increased competition from both existing competitors and
entrants into the Company's existing or future markets. Such competition could
materially and adversely affect the Company's business, financial condition
and results of operations. The Company believes that its ability to compete
depends in part on a number of factors, including the development by others of
competing products and services, the price at which others offer competitive
products and services, the extent of competing competitors' responsiveness to
customer needs and the ability of the Company's competitors to hire, retain
and motivate key personnel. Numerous companies supply competing products and
services, and many of these companies specialize in one or more of the
services that the Company offers or intends to offer to its customers. The
Company believes that existing competitors are likely to expand their product
and service offerings and that new competitors are likely to enter the market
and attempt to integrate various electronic commerce products and services,
resulting in greater competition for the Company which could materially and
adversely affect its business, financial condition and results of operations.
 
  Current and potential competitors have established, and may establish in the
future, cooperative relationships among themselves or with third parties to
increase their ability to address the needs of the Company's prospective
customers. Accordingly, new competitors or alliances among competitors may
emerge and rapidly acquire significant market share. Many of the Company's
current and potential competitors have longer operating histories, greater
name recognition, larger customer bases and substantially greater financial,
personnel, marketing, engineering, technical and other resources than the
Company. As a result of these and other factors, the Company's competitors may
be able to adapt more quickly than the Company to new or emerging technologies
and changes in customer requirements, or to devote greater resources to the
promotion and sale of their products. There can be no assurance that the
Company will be able to compete successfully with existing or new competitors.
Failure by the Company to adapt to emerging market demands and to compete
successfully with existing and new competitors would have a material adverse
effect on the Company's business, financial condition and results of
operations.
 
  The Company's principal EFT competitors include regional ATM networks,
regional and local processing banks, non-bank processors and other independent
electronic commerce and data communications organizations.
 
                                       9
<PAGE>
 
There can be no assurance that the Company will be able to compete effectively
with such competitors. The Company's EFT services and its customers'
outsourced core processing data are transmitted to its customers over
telephone lines, and the Telecommunications Act of 1996 (the "Act") lifted
certain restrictions on regional telephone companies and others competing with
the Company, which will likely lead to these companies competing with the
Company by packaging information service offerings with other services and
providing them on a wider geographic scale. The competitive pricing pressures
that would result from any such increase in competition could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "--Government and Network Regulation," "Business--Competition"
and "Business--Government Regulation."
 
DEPENDENCE ON PROCESSING CENTERS AND COMMUNICATIONS
 
  Damage or destruction that interrupts the Company's processing services
could cause the Company to lose customers and may cause the Company to incur
substantial additional expense to repair or replace damaged equipment or to
avoid interruption of communications services, any of which would likely have
a material adverse effect on the Company's business, financial condition and
results of operations. The processing centers and communications network
operations of the Company depend upon its ability to protect computer
equipment and the information stored in the Company's data centers against
damage or destruction that may be caused by natural disasters, human causes,
fire, power loss, telecommunication failures, unauthorized intrusion, computer
viruses and disabling devices and other similar causes and events. The
Company's electronic commerce products and services depend upon long-distance
and local telecommunications carriers and access to telecommunications
facilities on a 24-hour basis. The Company maintains a single EFT processing
and communications switching facility and has established a limited disaster
recovery plan with certain telecommunications providers to provide alternative
communications capabilities in the event the Company experiences a natural
disaster or other interruption at such facility, rather than maintaining a
"hot site" backup location for its EFT processing and InterCept Frame Relay
Network switching hardware. There can be no assurance that a natural disaster,
telecommunications failure or other event, including national, regional or
local telecommunications outages, would not result in a prolonged interruption
of the Company's transaction processing services. In the event of a disaster,
and depending on the nature of any such disaster, several hours to several
days may pass before the Company's systems can become operational for all of
its customers. In the event that an interruption of the Company's network
extends for more than several hours, the Company may experience data loss or a
reduction in revenues by reason of such interruption. See "Business--The
InterCept Solution--Data Communications Management and The InterCept Frame
Relay Network."
 
RISKS ASSOCIATED WITH NEW PRODUCTS AND SERVICES
 
  There can be no assurance that any new products and services offered by the
Company will not have undetected errors or failures that could have a material
adverse effect upon the Company's business, financial condition and results of
operations. Electronic commerce products and services as complex as those
offered by the Company may contain undetected errors or failures when first
introduced or when new versions are released. If errors are discovered after
introduction to the marketplace, the Company could experience delayed or lost
revenues during the period required to correct these errors. There can be no
assurance that, despite testing by the Company and by current and potential
customers, errors will not be found in new products or releases after
introduction to the market, resulting in loss of or delay in market
acceptance, additional and unexpected expenses to fund further product
development or to add programming personnel to complete a development project,
and loss of revenue because of the inability to sell the new product on a
timely basis, any one or more of which could have a material adverse effect on
the Company's business, financial condition and results of operations. The
Company's agreements with its customers generally contain provisions designed
to limit the Company's exposure to potential product liability claims, such as
disclaimers of warranties and limitations on liability for special,
consequential and incidental damages. It is possible, however, that the
limitation of liability provisions contained in such agreements may not be
effective as a result of existing or future federal, state or local laws or
ordinances or unfavorable judicial decisions. The sale and support of products
by the Company may result in the
 
                                      10
<PAGE>
 
Company's being subject to product liability claims, and a successful product
liability claim brought against the Company could have a material adverse
effect on the Company's business, financial condition and results of
operations. The Company's ability to successfully develop new products and
services depends on a number of factors, including its ability to identify and
effectively integrate new services into the Company's suite of integrated
electronic commerce solutions. The identification and offering of new services
in which the Company has little or no experience or expertise could divert
management's attention and place significant demands on the Company's
operational, administrative and financial resources. See "Business--Business
Strategy."
 
FACTORS AFFECTING OPERATING RESULTS; POTENTIAL FLUCTUATIONS IN QUARTERLY
RESULTS
 
  The market for EFT, data communications management, client/server software
and other processing products and services is rapidly evolving and the
Company's revenues in any period may be affected by many factors, including
the introduction of new products and services by the Company's competitors as
well as alternative data communications technologies. The Company's expense
levels are based, in part, on its expectations as to future revenues. If
revenue levels are below expectations, the Company may be unable or unwilling
to reduce expenses proportionately and the Company's business, financial
condition and results of operations are likely to be adversely affected.
Customers may be lost at the expiration of a contract due to conversion to a
competing processor or to an in-house system. Prior to contract expiration,
customers may be lost due to business failure or acquisition by financial
institutions using other third party service providers. The Company's
quarterly operating results have varied in the past and will likely vary
significantly in the future. Factors that may cause the Company's future
operating results to vary include, without limitation, the timing of new
product and service announcements, changes in pricing policies by the Company
and its competitors, market acceptance of new and enhanced versions of the
Company's products and services, the lengthening of sales cycles for new or
existing customers, customer attrition, changes in operating expenses, changes
in Company strategy, personnel changes, the introduction of alternative
technologies, the Company's products becoming obsolete, the failure, delay and
expense in making software, systems and networks utilized in the Company's
business Year 2000 compliant, the effect of acquisitions and general economic
factors. The Company has limited or no control over many of these factors. As
a result, the Company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as indicative of future performance. Due to all of the foregoing factors,
it is likely that in some future quarter or quarters the Company's operating
results will be below the expectations of public market analysts and
investors. In such event, the price of the Company's Common Stock will likely
be adversely affected.
 
CONSOLIDATION IN THE FINANCIAL INSTITUTIONS INDUSTRY
 
  Any significant increase in the level of consolidation in the financial
institutions industry could adversely affect the Company's business, results
of operations and financial condition. Merger and acquisition activity has
been widespread in the financial institutions industry in recent years and is
expected to continue in future years. As a result, the industry has
experienced consolidation on a large scale, and this consolidation has had the
effect of reducing the number of customers of the Company and will continue to
have the effect of reducing the number of potential customers of the Company.
 
GOVERNMENT AND NETWORK REGULATION
 
  As a provider of services to financial institutions, the Company's data
processing operations are examined from time to time by various state and
federal regulatory agencies. These agencies can make findings or
recommendations regarding various aspects of operations, and the Company
generally must follow such recommendations to continue its data processing
operations. As part of its compliance efforts, the Company arranges for an
annual independent examination of certain of its data processing facilities.
The Company's ATM network operations are subject to federal regulations
governing consumers' rights with respect to ATM transactions. Certain fees
charged by ATM owners are currently regulated in several states, and
legislation regulating ATM fees has been proposed in several other states. It
is impossible to predict whether such legislation will continue to be proposed
and enacted in the future or whether existing consumer protection laws will be
 
                                      11
<PAGE>
 
expanded to apply to fees charged in connection with ATM transactions. If the
number of ATMs deployed decreases, then revenues from the Company's EFT
business may decline. Furthermore, the Company is subject to the regulations
and policies of various ATM and debit card associations and networks. If the
Company lost its privileges to provide transaction processing services across
these networks, the Company's revenues from ATM and POS transaction processing
might decrease significantly. The Clinton administration has announced an
initiative to establish a framework for global electronic commerce. Also,
there are a number of bills currently being considered in the United States at
the federal and state levels involving encryption and digital signatures, all
of which may impact the Company. No assurance can be given that such laws,
regulations and policies will not be amended or interpreted differently by
regulatory authorities, associations and networks, or that new laws,
regulations and policies will not be adopted, the effect of which could
materially and adversely affect the Company's business, financial condition
and results of operations. See "Business--Government Regulation."
 
RISKS ASSOCIATED WITH YEAR 2000
 
  The Company's business and relationships with its customers depend
significantly on a number of computer software programs, internal operating
systems and connections to other networks, and the failure of any of these
programs, systems or networks to successfully address the Year 2000 data
rollover problem could have a material adverse effect on the Company's
business, financial condition and results of operations. Many installed
computer software and network processing systems currently accept only two-
digit entries in the date code field and may need to be upgraded or replaced
in order to accurately record and process information and transactions on and
after January 1, 2000. The Company believes that its internal systems and
software and the network connections it maintains are adequately programmed to
address the Year 2000 issue. The Company currently provides service bureau
processing services to certain customers using a processing system that is not
Year 2000 compliant, and the Company is in the process of converting those
customers to its PC BancPAC(TM) software, which the Company believes is Year
2000 compliant. The Company currently anticipates that such conversion process
will be completed before the end of September 1999. The Company currently
anticipates that the cost of such conversion will total approximately
$200,000; however, it is difficult to predict with any certainty the costs the
Company will incur to implement this conversion and there can be no assurance
that the costs necessary to convert its customers to PC BancPAC(TM) will not
have a material adverse effect on the Company's business, financial condition
and results of operations. Further, any failure by the Company to complete the
conversion of any of its service bureau customers in a timely manner could
significantly interrupt the business operations of such customers, which could
have material adverse effect on the business, financial condition and results
of operations of both the affected customers and the Company.
 
  Other companies interact electronically with the Company and its customers,
and the Company must coordinate its EFT, data communications and enterprise
software processing with such companies, including interfacing and exchanging
information with customers, financial institutions' network processors and
other participants in the electronic commerce process. If such other companies
do not successfully address Year 2000 issues in their operations, and if the
Company or its customers cannot successfully transfer their processing
operations to another provider that is Year 2000 compliant, the Company's
processing operations may be impeded, hindered or delayed, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company believes that many financial institutions
and third party vendors and network processors are still in the preliminary
stages of analyzing their software and network applications for Year 2000
compliance and that it is impossible to estimate the potential expenses
involved or delays that may result as these institutions transition their
operations to resolve the Year 2000 issue. There can be no assurance that the
failure or delay of third parties in addressing the Year 2000 issue or the
costs involved in such process will not have a material adverse effect on the
Company's business, financial condition and results of operations.
 
STATE TAXATION
 
  Transaction processing companies such as the Company may be subject to state
taxation of certain portions of the fees charged for their services.
Application of this tax is an emerging issue in the industry, and the states
have not yet adopted uniform guidelines implementing these regulations. In the
event the Company is required
 
                                      12
<PAGE>
 
to bear all or a portion of these costs, and is unable to pass such costs
through to its customers, the financial condition and results of operations of
the Company could be adversely affected.
 
VOTING CONTROL BY MANAGEMENT
   
  After the Offering, the executive and key officers and directors of the
Company will own approximately 59.5% of the outstanding Common Stock
(approximately 57.2% if the Underwriters' over-allotment option is exercised
in full). As a result, the officers and directors of the Company, voting
together, will be able to control or, at a minimum, significantly impact the
outcome of matters requiring a shareholder vote, including the election of
directors, adopting or amending provisions of the Company's Articles of
Incorporation and Bylaws, and approving certain mergers or other similar
transactions, such as sales of substantially all the Company's assets.
Purchasers in this Offering will become minority shareholders of the Company
and will be unable to control the management or policies of the Company.
Moreover, the Company is not prohibited from engaging in transactions with its
management and principal shareholders, or with entities in which such persons
are interested, as long as such transactions are on terms that are no less
favorable to the Company than could be obtained from an unaffiliated third
party in an arm's length transaction. See "Management," "Principal and Selling
Shareholders" and "Certain Transactions."     
 
DISCRETION OF MANAGEMENT CONCERNING USE OF PROCEEDS
 
  The Company expects to use approximately $9.3 million of the net proceeds of
the Offering for specific, identified purposes, with the remaining net
proceeds to be used for working capital and general corporate purposes
including possible acquisitions. Accordingly, management will have substantial
discretion in spending a large part of the net proceeds to be received by the
Company. See "Use of Proceeds."
 
LIMITED PROTECTION OF PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT
 
  The Company attempts to protect its software, documentation and other
written materials principally under trade secret and copyright laws,
confidentiality procedures and contractual provisions, which afford only
limited protection. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy aspects of the Company's
products or to obtain and use information that the Company regards as
proprietary. There can be no assurance that the Company's means of protecting
its proprietary rights will be adequate or that the Company's competitors will
not independently develop similar technology. The Company does not believe
that any of its products infringe the proprietary rights of third parties.
There can be no assurance, however, that third parties will not claim
infringement by the Company with respect to current or future products, and
the Company has agreed to indemnify many of its customers against such claims.
The Company anticipates that the number of infringement claims will increase
as the number of electronic commerce products and services increase and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, and may not be resolved on terms acceptable to the Company, or at
all, which could have a material adverse effect on the Company's business,
financial condition or results of operations.
 
NO PRIOR PUBLIC MARKET; VOLATILITY OF STOCK PRICE
 
  Before this Offering, there has been no public market for the Common Stock,
and there can be no assurance that an active trading market will develop or
continue following the Offering or that the market price of the Common Stock
will not decline below the initial public offering price. The initial public
offering price for the Common Stock was determined by negotiation between the
Company and the Underwriters based on several factors and may not be
indicative of the market price for the Common Stock after this Offering. The
Company believes that various factors such as general economic conditions and
changes or volatility in the financial markets, changing conditions in the
Company's market and quarterly or annual variations in the Company's financial
results, some of which are unrelated to the Company's performance, could cause
the market price of the Common Stock to fluctuate substantially. See
"Underwriting."
 
                                      13
<PAGE>
 
IMMEDIATE AND SUBSTANTIAL DILUTION
   
  Purchasers of Common Stock offered hereby will experience immediate dilution
in the pro forma net tangible book value per share of Common Stock of $6.92
per share. See "Dilution."     
 
SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON MARKET PRICE
   
  A substantial number of outstanding shares of Common Stock, as well as
shares of Common Stock issuable on exercise of stock options granted or to be
granted under the Company's stock option plans, are or will be eligible for
future sale in the public market at prescribed times pursuant to Rule 144 or
Rule 701 under the Securities Act of 1933, as amended (the "Securities Act").
Sales of such shares in the public market, or the perception that such sales
may occur, could adversely affect the market price of the Common Stock or
impair the Company's ability to raise additional capital in the future through
the sale of equity securities. Upon completion of this Offering, there will be
outstanding 9,000,114 shares of Common Stock (9,358,239 shares if the
Underwriters' over-allotment option is exercised in full and options to
purchase 595,853 additional shares of Common Stock). Of these shares, the
2,387,500 shares of Common Stock sold in the Offering (2,745,625 shares if the
Underwriters' over-allotment option is exercised in full) will be freely
tradable by persons other than "affiliates" of the Company without restriction
under the Securities Act. The remaining 6,612,614 outstanding shares of Common
Stock will be "restricted" securities within the meaning of Rule 144 under the
Securities Act and may not be sold in the absence of registration under the
Securities Act unless an exemption from registration is available, including
the exemptions contained in Rule 144.     
   
  All executive officers, directors and current shareholders of the Company
have entered into contractual agreements with the Underwriters (the "Lock-up
Agreements") pursuant to which they have agreed, subject to certain
exceptions, not to sell, contract to sell, or otherwise dispose of any shares
of the Common Stock currently owned by them for a period of 180 days after the
date of this Prospectus (the "Lock-up Period") without the prior written
consent of J.C. Bradford & Co. Upon the expiration of the Lock-up Period,
3,871,585 shares of Common Stock that are "restricted securities" will be
eligible for sale in the public market subject to the limitations of Rule 144.
The Company intends to register on a registration statement on Form S-8 the
shares of Common Stock issuable upon exercise of options granted or reserved
for issuance under the 1996 Stock Option Plan and the ProVesa Plan, including
the 595,853 shares subject to options which are currently outstanding. In
addition, as soon as practical after the closing of this Offering, the Company
intends to register up to 2,000,000 shares of its Common Stock under the
Securities Act for use by the Company in connection with future acquisitions,
and it will be a condition to the issuance of any of these shares that the
holders agree similarly not to sell, contract to sell or otherwise dispose of
such shares for the remaining portion, if any, of the Lock-up Period.
Thereafter, these shares will generally be freely tradable after their
issuance, unless the sale thereof is contractually restricted. See
"Management--Stock Option Plans," "Shares Eligible for Future Sales" and
"Underwriting."     
   
  Upon expiration of the Lock-up Agreements, Mr. Collins and Mr. Jackson, who
will beneficially hold 2,472,113 and 605,625 shares of Common Stock,
respectively, upon completion of this Offering, will be entitled to certain
demand registration rights with respect to such shares if their employment is
terminated for any reason or if they are no longer directors of the Company.
If the exercise of their demand registration rights causes a large number of
shares to be registered and sold in the public market, such sales could have a
material adverse effect on the market price for the Common Stock. See "Shares
Eligible for Future Sale--Registration Rights."     
 
POTENTIAL ANTI-TAKEOVER EFFECTS OF ARTICLES AND BYLAWS PROVISIONS AND
EMPLOYMENT AGREEMENTS
 
  The Company's Articles of Incorporation and Bylaws, as well as employment
agreements between the Company and certain of its executive officers, contain
provisions that could have the effect of delaying, deferring or preventing an
unsolicited change in the control of the Company, which may adversely affect
the market price of the Common Stock or the ability of shareholders to
participate in a transaction in which they might otherwise receive a premium
for their shares over the then-current market price. The Company's Articles of
Incorporation authorize the Board of Directors to issue preferred stock
("Preferred Stock") without shareholder approval and
 
                                      14
<PAGE>
 
on such terms as the Board of Directors may determine. Following closing of
this Offering and the application of a portion of the net proceeds therefrom
to redeem the Company's Series A Preferred Stock, the Company will have no
shares of Preferred Stock outstanding. Although the Company has no present
plans to issue any shares of Preferred Stock, the rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights
of holders of any shares of Preferred Stock that may be issued in the future.
See "Description of Capital Stock--Preferred Stock." The Bylaws provide that
special meetings of shareholders may be called by shareholders only upon a
written request made by the holders of a majority of the votes entitled to be
cast on an issue and require compliance with certain advance notice procedures
to bring business before an annual meeting of shareholders and to nominate
directors.
 
  Certain of the Company's executive officers have entered into employment
agreements with the Company that contain change in control provisions. The
change in control provisions may hinder, delay, deter or prevent a tender
offer, proxy contest or other attempted takeover because the covered employees
can terminate their employment and receive one-twelfth of their annual base
salary and bonus for a varying number of consecutive 30-day periods following
the termination and, in some cases, the employees' options would vest and
become immediately exercisable. See "Management--Employment Agreements."
 
DIVIDEND POLICY; RESTRICTIONS ON PAYMENT
 
  The Company currently anticipates that after completion of this Offering all
of its earnings will be retained for development and expansion of its
business. The Company does not anticipate paying any cash dividends in the
foreseeable future. In addition, the Company's current loan facilities
prohibit the payment of cash dividends without the lenders' consent, and the
Company may in the future obtain loan or credit facilities containing similar
restrictions. See "Dividend Policy."
 
                                      15
<PAGE>
 
                                  THE COMPANY
 
  InterCept designs, develops, markets and implements a suite of fully
integrated electronic commerce products and services primarily for community
financial institutions in the United States, including EFT, data
communications management, client/server enterprise software solutions,
maintenance and technical support services and banking related equipment. John
W. Collins, the Company's Chairman and Chief Executive Officer, co-founded
InterCept Systems, Inc. ("Systems") in 1986 to provide EFT transaction
services to financial institutions. Mr. Collins, together with certain of the
Company's other senior officers, formed Data Services Corp. ("Data Services")
in 1989 to supply maintenance and technical support services and certain
banking related equipment required by financial institutions, and also formed
ProVesa, Inc. ("ProVesa") in 1994 to provide core bank processing services,
item processing, check imaging and related products and services to financial
institutions.
 
  The Company was incorporated in May 1996 to be a holding company for
Systems, Data Services and ProVesa. The Company acquired FiNet, Inc.
("FiNet"), a provider of merchant credit card portfolio management services,
and Bank Services Corporation ("Bank Services"), a provider of client/server
enterprise software and data processing solutions, in December 1996 to create
a single-source provider of electronic commerce solutions for community
financial institutions.
 
  In 1996, Mr. Collins and certain other members of the Company's management
formed Intercept Communications Technologies, L.L.C. ("Technologies") to
develop the InterCept Frame Relay Network and to offer data communications
management services to financial institutions on a more cost-effective basis
than previously available for its customers. On January 30, 1998, the Company
merged with certain of its wholly-owned subsidiaries, Systems, Data Services,
Bank Services and FiNet, to consolidate its corporate structure, and acquired
Technologies in a transaction accounted for as a pooling of interests. For a
description of the transactions pursuant to which these businesses were
acquired, see "Certain Transactions--Acquisitions."
 
  Prior to the merger of Bank Services with the Company on January 30, 1998,
Bank Services transferred all of its service bureau operations and related
assets to ProVesa, which the Company will continue to operate as a wholly-
owned subsidiary. ProVesa includes, on a consolidated basis, its wholly-owned
subsidiary, ProVesa Services, Inc., and ProImage, Inc. ("Pro Image"), 33.3% of
which is owned by ProVesa. The Company's other remaining subsidiary is
InterCept Switch, Inc. ("InterCept Switch"), which maintains the Company's
surcharge-free ATM network.
 
  The Company is a Georgia corporation whose principal offices are located at
3150 Holcomb Bridge Road, Suite 200, Norcross, Georgia, 30071, and its
telephone number is (770) 248-9600. InterCept maintains a site on the
Internet's World Wide Web. Information contained in the Company's website
shall not be deemed to be a part of this Prospectus.
 
                                      16
<PAGE>
 
                                USE OF PROCEEDS
   
  The net proceeds to the Company from the sale of the 2,250,000 shares of
Common Stock offered by the Company in this Offering are estimated to be
approximately $16.4 million (approximately $19.2 million if the Underwriters'
over-allotment is exercised in full), after deducting estimated underwriting
discounts and other offering expenses payable by the Company. The Company will
not receive any proceeds from the sale of the shares offered by the Selling
Shareholder. See "Principal and Selling Shareholders."     
 
  The Company intends to use a total of approximately $9.3 million of the net
proceeds of this Offering as follows: (i) approximately $2.7 million to repay
the indebtedness outstanding under the Company's loan facility with Georgia
State Bank (the "GSB Loan Facility"); (ii) approximately $1.3 million to repay
the indebtedness outstanding under the Company's loan facility with First
National Bank of Commerce (the "FNBC Loan Facility"); (iii) approximately
$400,000 to repay the indebtedness outstanding under the Company's loan
facility with Allied Bank of Georgia (the "Allied Loan Facility");
(iv) approximately $1.8 million to pay an amount owed to J. Ronnie Henderson,
an officer of the Company, for services previously rendered to the Company;
(v) approximately $1.6 million to upgrade, enhance and expand the InterCept
Frame Relay Network, the majority of which will be used to purchase currently
leased network equipment; (vi) approximately $1.0 million to enhance its
marketing efforts; and (vii) approximately $450,000 to redeem the outstanding
shares of the Company's Series A Preferred Stock. The GSB Loan Facility
matures on July 20, 2006 and bears interest at the lender's prime rate plus
2.5%. The FNBC Loan Facility matures on June 1, 2003 and bears interest at the
lender's prime rate plus 2.0%. The Allied Loan Facility matures on December
31, 1999 and bears interest at the lender's prime rate. The deferred
compensation amount owed to an officer is due on or before June 4, 2001 and
bears interest at an annual rate of approximately 10.0%. The Company's
Series A Preferred Stock accrues dividends, which are payable quarterly, at an
annual rate of 8.0% and is redeemable at any time by the Company upon 10 days'
notice. See "Certain Transactions--Acquisitions" and "Description of Capital
Stock."
   
  The Company intends to use the balance of the net proceeds, expected to be
approximately $7.1 million, for working capital and general corporate
purposes, including possible acquisitions. The Company continues to evaluate
potential strategic acquisitions of providers of complementary technologies
and services and to carry on discussions with several potential acquisition
candidates. The Company is not currently a party to any binding agreements or
commitments with respect to any such acquisitions. There can be no assurance
that any acquisitions will be consummated on terms favorable to the Company,
if at all. Pending application of the net proceeds as described above, the
Company intends to invest the net proceeds in short-term, interest-bearing,
investment grade securities. See "Risk Factors--Discretion of Management
Concerning Use of Proceeds" and "Business--Business Strategy."     
 
                                DIVIDEND POLICY
 
  The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future because it intends to retain its earnings, if
any, to finance the expansion of its business and for general corporate
purposes, including future acquisitions. Unless waived in writing by the
lender, the GSB Loan Facility, the FNBC Loan Facility and the First Union
Credit Facility restrict the declaration and payment of dividends. Any payment
of future dividends on the Common Stock will be at the discretion of the Board
of Directors and will depend upon, among other things, the Company's earnings,
financial condition, capital requirements, level of indebtedness, contractual
restrictions with respect to the payment of dividends and other factors that
the Company's Board of Directors deems relevant. See "Description of Capital
Stock."
 
                                      17
<PAGE>
 
                                   DILUTION
   
  The net tangible book value of the Company at March 31, 1998 was
$(2,110,555), or $(0.31) per share. The net tangible book value per share
represents the amount by which the Company's net tangible assets exceed the
Company's total liabilities divided by the number of shares of Common Stock
outstanding. After giving effect to the sale of the 2,250,000 shares of Common
Stock offered by the Company in this Offering and the application of the
estimated net proceeds as set forth under "Use of Proceeds," the Company's pro
forma net tangible book value as of March 31, 1998 would have been $14.2
million, or $1.58 per share, representing an immediate increase of $1.89 in
pro forma net tangible book value per share to existing shareholders and an
immediate dilution of $6.92 in pro forma net tangible book value per share to
persons purchasing shares in the Offering. The following table illustrates
this per share dilution:     
 
<TABLE>   
   <S>                                                           <C>     <C>
   Initial public offering price................................         $8.50
     Net tangible book value at March 31, 1998.................. $(0.31)
     Increase attributable to the sale of shares offered
      hereby....................................................   1.89
                                                                 ------
   Pro forma net tangible book value after the Offering.........          1.58
                                                                         -----
   Dilution per share to new investors(1).......................         $6.92
                                                                         =====
</TABLE>    
- --------
   
(1) If the underwriters' over-allotment option is exercised in full, pro forma
    net tangible book value of the Company would be $1.82 per share,
    representing an increase in pro forma net tangible book value of $2.13 per
    share and dilution to new investors of $6.68 per share.     
 
  The following table sets forth the number of shares of Common Stock
purchased from the Company, the total consideration paid and the average price
per share paid by existing shareholders and to be paid by the new investors
purchasing shares of Common Stock offered hereby.
 
<TABLE>   
<CAPTION>
                                 SHARES PURCHASED  TOTAL CONSIDERATION  AVERAGE
                                 ----------------- -------------------   PRICE
                                  NUMBER   PERCENT   AMOUNT    PERCENT PER SHARE
                                 --------- ------- ----------- ------- ---------
<S>                              <C>       <C>     <C>         <C>     <C>
Existing shareholders........... 6,750,114   75.0% $ 2,519,775   11.6%   $0.37
New investors................... 2,250,000   25.0   19,125,000   88.4     8.50
                                 ---------  -----  -----------  -----
  Total......................... 9,000,114  100.0% $21,644,775  100.0%
                                 =========  =====  ===========  =====
</TABLE>    
   
  Sales by the Selling Shareholder in the Offering will reduce the number of
shares of Common Stock held by existing shareholders to 6,612,614, or 73.5%,
and will increase the number of shares to be held by new investors to
2,387,500, or 26.5%, of the total number of shares of Common Stock to be
outstanding after this Offering (2,745,625 shares, or 29.3%, if the
Underwriters' over-allotment option is exercised in full). See "Principal and
Selling Shareholders."     
 
  The foregoing table assumes no exercise of outstanding stock options. At
March 31, 1998 there were outstanding options to purchase 595,853 shares of
Common Stock at a weighted average exercise price of $5.12 per share. See
"Management" and Note 10 of Notes to Consolidated Financial Statements.
 
                                      18
<PAGE>
 
                                CAPITALIZATION
 
  The following table sets forth the Company's capitalization at March 31,
1998 (i) on a historical basis and (ii) as adjusted to give effect to the sale
by the Company of 2,250,000 shares of Common Stock offered hereby and the
application of the net proceeds therefrom. See "Selected Consolidated
Financial Data" and "Use of Proceeds." This table should be read in
conjunction with the Company's Consolidated Financial Statements and the
related Notes thereto, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the other financial information
appearing elsewhere in this Prospectus.
 
<TABLE>   
<CAPTION>
                                                           MARCH 31, 1998
                                                       -----------------------
                                                         ACTUAL    AS ADJUSTED
                                                       ----------  -----------
<S>                                                    <C>         <C>
Long-term debt, including current maturities.......... $4,765,863  $   373,727
                                                       ----------  -----------
Series A Preferred Stock, 30,000 shares authorized,
 4,000 shares issued and outstanding (actual and pro
 forma), and none outstanding (pro forma as
 adjusted)............................................    400,000            0
                                                       ----------  -----------
Shareholders' equity(1):
  Preferred Stock, 1,000,000 shares (including Series
   A) authorized, none outstanding....................          0            0
  Common Stock, 50,000,000 shares authorized,
   6,750,114 shares issued and outstanding (actual),
   and 9,000,114 shares issued and outstanding (as
   adjusted)(2).......................................  2,764,405   19,110,655
  Accumulated deficit................................. (3,172,636)  (3,172,636)
                                                       ----------  -----------
   Total shareholders' (deficit) equity...............   (408,231)  15,938,019
                                                       ----------  -----------
    Total capitalization.............................. $4,757,632  $16,311,746
                                                       ==========  ===========
</TABLE>    
- --------
   
(1) On April 29, 1998, the Company filed Amended and Restated Articles of
    Incorporation to reflect 1,000,000 shares of authorized Preferred Stock
    and 50,000,000 shares of authorized Common Stock. See "Description of
    Capital Stock."     
   
(2) Excludes an aggregate of 1,263,180 shares reserved for issuance pursuant
    to the Company's stock option plans. At March 31, 1998, there were
    outstanding options to purchase 595,853 shares of Common Stock with a
    weighted average exercise price of $5.12 per share. See "Management" and
    Note 10 of Notes to Consolidated Financial Statements.     
       
                                      19
<PAGE>
 
                     SELECTED CONSOLIDATED FINANCIAL DATA
 
  The following selected consolidated financial data are qualified by
reference to, and should be read in conjunction with, the Consolidated
Financial Statements and the related Notes thereto and other financial
information included elsewhere in this Prospectus, as well as "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
selected consolidated financial data of the Company for the years ended
December 31, 1995, 1996 and 1997 were derived from the Company's Consolidated
Financial Statements, which have been audited by Arthur Andersen LLP,
independent public accountants. The selected consolidated financial data for
the years ended December 31, 1993 and 1994 and the three months ended
March 31, 1997 and 1998 were derived from unaudited consolidated financial
statements which, in the opinion of management, include all adjustments,
consisting only of normal recurring accruals, necessary for a fair
presentation of the Company's financial condition and results of operations.
These results may not be indicative of future results.
 
<TABLE>
<CAPTION>
                                       YEARS ENDED DECEMBER 31,                    THREE MONTHS ENDED MARCH 31,
                          ------------------------------------------------------  ---------------------------------
                                                                                                        AS ADJUSTED
                           1993(1)     1994       1995     1996(2)(3)    1997       1997       1998       1998(4)
                          ---------  ---------  ---------  ----------  ---------  ---------  ---------  -----------
                                                  (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                       <C>        <C>        <C>        <C>         <C>        <C>        <C>        <C>
STATEMENTS OF OPERATIONS
 DATA:
Revenues................  $   5,504  $   6,076  $   8,223  $  14,511   $  23,260  $   5,116  $   6,257   $   6,257
Costs of services.......      2,179      2,374      4,607      7,859      10,223      2,274      2,634       2,634
Selling, general and
 administrative
 expenses...............      2,727      3,490      2,213      6,852      10,105      2,316      2,532       2,532
Depreciation and
 amortization...........        172        172        242        351       1,323        308        285         285
Loss on impairment of
 intangibles............          0          0          0          0         728          0          0           0
Writeoff of purchased
 research and
 development costs......          0          0          0        810           0          0          0           0
                          ---------  ---------  ---------  ---------   ---------  ---------  ---------   ---------
Total operating
 expenses...............      5,078      6,036      7,062     15,873      22,379      4,898      5,451       5,451
                          ---------  ---------  ---------  ---------   ---------  ---------  ---------   ---------
Operating income
 (loss).................        426         40      1,161     (1,362)        881        218        806         806
Other income (expense),
 net....................        (87)       (86)       (63)       279        (649)      (163)      (160)          8
                          ---------  ---------  ---------  ---------   ---------  ---------  ---------   ---------
Income (loss) before
 provision for income
 taxes and minority
 interest...............        339        (46)     1,098     (1,641)        232         55        646         814
Provision (benefit) for
 income taxes...........        129        (17)       417       (236)        666         43        258         326
Minority interest
 (income) loss..........          0          0          0        (14)         39         25         (4)         (4)
                          ---------  ---------  ---------  ---------   ---------  ---------  ---------   ---------
Net income (loss).......        210        (29)       681     (1,419)       (395)        37        384         484
Preferred stock
 dividends..............          0          0          0         (8)        (32)        (8)        (8)         (8)
                          ---------  ---------  ---------  ---------   ---------  ---------  ---------   ---------
Net income (loss)
 attributable to common
 shareholders...........  $     210  $     (29) $     681  $  (1,427)  $    (427) $      29  $     376   $     476
                          =========  =========  =========  =========   =========  =========  =========   =========
Basic and diluted net
 income (loss) per
 common share(5)........  $    0.04  $   (0.01) $    0.12  $   (0.24)  $   (0.06) $    0.00  $    0.06   $    0.05
                          =========  =========  =========  =========   =========  =========  =========   =========
Weighted average common
 shares outstanding.....  5,867,400  5,867,400  5,867,400  5,851,347   6,750,114  6,750,114  6,750,114   9,000,114
</TABLE>
 
<TABLE>   
<CAPTION>
                                                                 AS OF MARCH 31,
                                  AS OF DECEMBER 31,                   1998
                         -------------------------------------  -------------------
                                                                            AS
                          1993   1994    1995   1996    1997    ACTUAL  ADJUSTED(6)
                         ------ ------  ------ ------- -------  ------  -----------
<S>                      <C>    <C>     <C>    <C>     <C>      <C>     <C>
BALANCE SHEET DATA:
Cash and cash
 equivalents............ $  206 $   63  $  356 $ 1,398 $ 2,010  $  940    $10,694
Working capital.........    341    334     825   1,509     992     604     10,813
Total assets............  1,431  1,155   1,980  10,941  10,156   9,885     19,639
Long-term debt..........    903    746     589   5,212   4,717   4,221        284
Shareholders' (deficit)
 equity.................    185    (89)    767      82    (784)   (408)    15,938
</TABLE>    
 
                                      20
<PAGE>
 
- --------
(1) On June 4, 1996, Intercept Systems, Inc. ("Systems") merged with the
    Company in a share exchange combination by which Systems became a wholly-
    owned subsidiary of the Company. The results of operations of Systems have
    been included for the periods shown. See Note 3 of Notes to Consolidated
    Financial Statements.
(2) On June 4, 1996, the Company acquired Data Services in a transaction
    accounted for as a purchase and the results of operations of Data Services
    have been included since the date of acquisition. On November 27, 1996,
    the Company acquired ProVesa in a merger transaction accounted for as a
    purchase and the results of operations of ProVesa have been included since
    the date of acquisition. On December 17, 1996, InterCept acquired FiNet in
    a merger transaction accounted for as a purchase and the results of
    operations of FiNet have been included since the date of acquisition. On
    December 31, 1996, InterCept acquired Bank Services in a merger
    transaction accounted for as a purchase and the results of operations of
    Bank Services have been included since the date of acquisition. See Note 3
    of Notes to Consolidated Financial Statements.
(3) On January 30, 1998, the Company acquired Technologies in a transaction
    accounted for as a pooling of interests, and the results of operations of
    Technologies have been included since January 1, 1996.
(4) The statements of operations data have been adjusted to reflect (i) the
    sale of 2,250,000 shares of Common Stock offered by the Company, (ii) the
    elimination of interest expense related to certain of the Company's credit
    facilities (iii) the elimination of interest expense related to a deferred
    compensation agreement with an officer of the Company and (iv) preferred
    stock to be repurchased with proceeds of the Offering. See "Use of
    Proceeds."
(5) See Notes 2 and 10 of Notes to the Consolidated Financial Statements for a
    discussion of the historical computations of net income (loss) per common
    share. Pursuant to Staff Accounting Bulletin No. 98, the impact of any
    options are excluded as the issuances are not considered nominal.
    Accordingly, basic and fully diluted net income (loss) per common share
    are the same.
(6) Adjusted to reflect the sale of 2,250,000 shares of Common Stock offered
    by the Company hereby and the application of the estimated net proceeds
    therefrom. See "Use of Proceeds" and "Capitalization."
 
                                      21
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
  This Prospectus contains "forward-looking statements" relating to, without
limitation, the Company's future economic performance, plans and objectives of
management for future operations, projections of revenue mix and other
financial items that are based on the beliefs of, as well as assumptions made
by and information currently known to, the Company's management. The words
"may," "could," "would," "will," "expect," "estimate," "anticipate,"
"believe," "intends," "plans" and similar expressions and variations thereof
are intended to identify forward-looking statements. The cautionary statements
set forth in this section, in "Risk Factors" and elsewhere in this Prospectus
identify important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
differ materially from those in such forward-looking statements. The following
discussion should be read in conjunction with the Company's Consolidated
Financial Statements and the related Notes thereto and other financial
information appearing elsewhere in this Prospectus. The dollar amounts and
percentages provided below have been rounded to simplify presentations.
 
OVERVIEW
 
  The Company designs, develops, markets and implements a suite of fully
integrated electronic commerce products and services, including EFT, data
communications management, enterprise software solutions, maintenance and
technical support services and banking related equipment primarily for
community financial institutions in the United States. John W. Collins, the
Company's Chairman and Chief Executive Officer, co-founded Systems in 1986,
Data Services in 1989 and ProVesa in 1994. The Company was incorporated in May
1996 to become a holding company for these three related entities and acquired
FiNet and Bank Services in December 1996 to create a single-source provider of
electronic commerce solutions for community financial institutions. In 1996,
Mr. Collins and certain other members of the Company's management formed
Technologies, and on January 30, 1998, the Company merged with its
subsidiaries Systems, Data Services, Bank Services and FiNet, and merged with
Technologies. See "The Company."
 
  The acquisitions of Data Services, ProVesa, FiNet and Bank Services have
been accounted for as purchases, and the results of operations of each entity
have been included since June 1, December 1, December 17 and December 31,
1996, respectively. As a result, historical combined results may not be
comparable to or indicative of future performance. The transaction with
Technologies has been accounted for as a pooling of interests and all results
of operations have been included since its inception on January 1, 1996. The
Company's revenues and expenses may be significantly affected by the number
and timing of future acquisitions or the introduction of new products and
services. The timing of such expansion activities may also affect period-to-
period comparisons.
   
  A substantial portion of the Company's revenues are derived from recurring
monthly charges to its customers under service agreements that generally have
terms of from one to five years. Recurring revenues are defined by the Company
as revenues derived from services that are used by the Company's customers
each year in connection with their ongoing businesses, and accordingly exclude
such items as conversion and deconversion fees, initial software license fees,
data communications line installation fees and hardware sales. For the years
ended December 31, 1996 and 1997 and the three months ended March 31, 1998,
approximately 69.3%, 76.1% and 78.2%, respectively, of the Company's
consolidated revenues were recurring revenues.     
 
  The Company derives revenues primarily from the following sources: (i) EFT
processing services; (ii) data communications management; (iii) client/server
enterprise software support, maintenance and related services; and (iv)
maintenance and technical support services, sales of banking related equipment
and complementary products and customer services. For the year ended December
31, 1997, the Company generated total pro forma revenues of $23.3 million, of
which $9.3 million, or 39.9%, was derived from EFT processing services; $3.1
million, or 13.4%, was derived from data communications management; $5.6
million, or 24.2%, was derived from client/server enterprise software support
and maintenance and related services; and $5.2 million, or 22.5%, was derived
from maintenance and technical support services, sales of banking related
equipment and complementary products and customer services. For the three
months ended March 31, 1998, the Company
 
                                      22
<PAGE>
 
generated total revenues of $6.3 million, of which $2.6 million, or 41.9%, was
derived from EFT processing services; $850,000, or 13.6%, was derived from
data communications management; $1.3 million, or 20.9%, was derived from
client/server enterprise software support and maintenance and related
services; and $1.5 million, or 23.6%, was derived from maintenance and
technical support services, sales of banking related equipment and
complementary products and customer services.
 
  The Company derives EFT revenues principally from processing ATM, POS and
debit card transactions. The Company receives a base fee for providing its ATM
processing services and an additional fee for each ATM serviced. Once the
number of transactions exceeds established levels (typically between 2,000 and
3,000 transactions), the Company charges additional fees for the extra
transactions processed. The Company also receives fees for installation,
maintenance and support of the ATMs it supplies to its customers. For its POS
services, the Company generally receives a portion of the interchange fees
charged by its community financial institution customers that issue debit
cards and charges a monthly fee if its customers do not meet a certain minimum
dollar amount of transactions for a particular month. Most charges due under
the Company's EFT service agreements are paid monthly. The Company generally
is permitted to raise prices on an annual basis subject to certain maximum
limits. Generally, the Company's EFT contracts automatically renew for varying
periods at the end of the initial or any renewal term unless either party
elects to cancel the agreement 180 days prior to its expiration.
 
  The Company's data communications management service revenues are
principally derived from network management services, data packet
transportation services across the InterCept Frame Relay Network, consulting,
and equipment configuration, installation and sales. The Company charges a
flat monthly fee for providing telecommunications connectivity and network
management as well as an initial installation charge.
 
  The Company licenses PC BancPAC(TM), the Company's proprietary Windows NT(R)
based client/server software system, on both a service bureau and in-house
basis. On a service bureau basis, the Company derives revenues from license
fees and service and item processing fees based on the volume of transactions
processed. If a customer chooses to implement the software on an in-house
basis, the Company derives revenues from software licensing, maintenance
contracts and certain consulting services. The Company recognizes service
revenues as the services are provided. It is the Company's policy to recognize
revenues for licensing of PC BancPAC(TM) in accordance with Statement of
Position 97-2 on "Software Revenue Recognition" issued by the American
Institute of Certified Public Accountants. Software license fees are
recognized when a non-cancelable license agreement has been signed, the
product has been shipped and all significant obligations to the customer have
been satisfied. Revenues for implementation, conversion, installation,
training, interface and consulting services are recognized when the services
are performed. Service revenues for ongoing customer and software support,
product updates and disaster recovery services provide recurring revenues as
they are recognized ratably over each year of the license agreement, the term
of which is typically five years.
 
  The Company's maintenance, support and equipment revenues consist primarily
of revenues from the Company's maintenance and technical support services,
which generate recurring revenues, as well as sales of specialized equipment
including ATMs, proof machines, teller equipment, personal computers, vaults
and other security equipment. Equipment revenues are recognized at the time of
shipment while maintenance and technical support service revenues are
recognized as the service period elapses.
 
  Costs of services consists primarily of network lines and leased router
equipment related to telecommunication transmission, the direct cost of the
Company's service bureau operations and the direct cost of equipment sales.
Historically, the Company's EFT customers directly bore the data
communications costs.
 
  Selling, general and administrative expenses consist of commissions to the
Company's strategic marketing partners, direct sales force salaries,
commissions and benefits, research and development, a deferred compensation
agreement with an officer in 1996 and other corporate administration expenses.
Historically, the Company has marketed its products and services primarily
through a direct sales force. Although the Company intends to increase both
its direct sales forces and indirect marketing relationships, it believes that
future revenues from products and services sold through indirect marketing
channels may become an increasingly significant
 
                                      23
<PAGE>
 
source of the Company's total revenues. Composition of revenues and expenses
will vary depending on whether a sale is made directly by the Company or
through an indirect marketing relationship. However, the Company believes that
the difference in the net revenues obtained from direct and indirect sales
should not have a material adverse effect on the Company's business, financial
condition and results of operations. The Company has entered into employment
agreements with certain officers of the Company providing for the payment of
bonuses. See "Management--Employment Agreements" and Note 12 of Notes to the
Company's Consolidated Financial Statements.
 
  Depreciation and amortization includes depreciation of computer and network
operations equipment, furniture and office equipment, buildings and leasehold
improvements and amortization of intangible assets. The Company provides for
depreciation using the straight-line method of depreciation over the estimated
useful lives of the assets, which range from 3 to 31 years. The Company's
amortization expense relates primarily to intangible assets allocated to
contracts, software purchased and goodwill associated with the Company's
acquisitions. The contracts, purchased software and goodwill are amortized
over a period of 18 months, 3 to 5 years, and 15 to 40 years, respectively.
 
  In accordance with generally accepted accounting principles, the Company
capitalizes both costs to develop software for internal use as well as costs
to develop software for sale to third parties upon reaching technological
feasibility and expenses all such costs prior to reaching this point. Costs
incurred to develop computer software are charged to product development
expense when incurred until technological feasibility has been established for
the product. Thereafter, all software production costs are capitalized and
recorded at the lower of unamortized cost or net realizable value.
Capitalization ceases upon internal software use or general release of the
software to customers. After general release, capitalized costs are amortized
using the straight-line method over the estimated useful life of three to five
years.
 
  In the quarter ended December 31, 1996, the Company purchased FiNet, a
merchant portfolio management company, for consideration of approximately
$570,000 of the Company's Common Stock. The purchase price of FiNet was
allocated to goodwill as of the acquisition date and written off as a
nonrecurring charge in the fourth quarter of 1997 due to uncertainties
regarding its recoverability. Additionally, during the quarter ended December
31, 1997, the Company wrote off approximately $190,000 related to purchased
software which was deemed to be impaired upon review under SFAS No. 121.
 
  ProImage, a corporation in which ProVesa has a 33.3% ownership interest, has
been consolidated in the accompanying consolidated financial statements since
its inception, due to ProVesa's management and control of ProImage's day-to-
day operations and limitations on the ability of the other investors to have
losses allocated to their capital accounts. All significant intercompany
accounts and transactions have been eliminated in consolidation. Minority
interest represents the minority shareholders' proportionate share of the
equity and earnings of ProImage in all periods.
 
  Provision for income taxes is a function of pretax earnings and the combined
effective rate of federal and state income taxes. Prior to June 4, 1996,
Systems and Data Services had elected to be taxed as S corporations and,
accordingly, a pro forma income tax provision (benefit) has been recorded.
 
  The Company's business and relationships with its customers depend
significantly on a number of computer software programs, internal operating
systems and connections to other networks, and the failure of any of these
programs, systems or networks to successfully address the Year 2000 data
rollover problem could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company believes
that its internal systems and software and the network connections it
maintains are adequately programmed to address the Year 2000 issue. The
Company currently anticipates that such conversion process will be completed
to address the Year 2000 issue. The Company currently provides service bureau
processing services to certain customers using a processing system that is not
Year 2000 compliant, and the Company is in the process of converting those
customers to its PC BancPAC(TM) software, which the Company believes is Year
2000 compliant, before the end of September 1999. The Company currently
estimates that the cost of such conversion will total
 
                                      24
<PAGE>
 
approximately $200,000; however, it is difficult to predict such costs with
any certainty, and there can be no assurance that the costs necessary to
convert its customers to PC BancPAC(TM) will not have a material adverse
effect on the Company's business, financial condition and results of
operations. Further, any failure by the Company to complete the conversion of
any of its service bureau customers in a timely manner could significantly
interrupt the business operations of such customers, which could have material
adverse effect on the business, financial condition and results of operations
of both the affected customers and the Company. See "Risk Factors--Risks
Associated With Year 2000."
 
  The Company's quarterly operating results have varied in the past and will
likely vary significantly in the future. Factors that may cause the Company's
future operating results to vary include, without limitation, the timing of
new product and service announcements, changes in pricing policies by the
Company and its competitors, market acceptance of new and enhanced versions of
the Company's products and services, the lengthening of sales cycles for new
or existing customers, customer attrition, changes in operating expenses,
changes in Company strategy, personnel changes, the introduction of
alternative technologies, the Company's products becoming obsolete, failure,
delay and expense in making software, systems and networks utilized in the
Company's business Year 2000 compliant, the effect of acquisitions and general
economic factors. Product and service revenues are difficult to forecast
because the market for electronic commerce products and services is rapidly
evolving, and the Company's sales cycle generally covers an extended period
but varies substantially from customer to customer. InterCept believes that
quarter to quarter comparisons of its results of operations should not be
relied upon as indications of future performance. See "Risk Factors--Factors
Affecting Operating Results; Potential Fluctuations in Quarterly Results."
 
RESULTS OF OPERATIONS
 
  The following table sets forth the percentage of revenues represented by
certain items in the Company's consolidated statements of operations for the
indicated periods.
 
<TABLE>
<CAPTION>
                                                                    THREE
                                                                   MONTHS
                                             YEAR ENDED             ENDED
                                            DECEMBER 31,          MARCH 31,
                                          --------------------   ------------
                                          1995   1996    1997    1997   1998
                                          -----  -----   -----   -----  -----
<S>                                       <C>    <C>     <C>     <C>    <C>
Revenues................................. 100.0% 100.0%  100.0%  100.0% 100.0%
Costs of services........................  56.0   54.2    44.0    44.4   42.1
Selling, general and administrative
 expenses................................  26.9   47.2    43.4    45.3   40.5
Depreciation and amortization............   3.0    2.4     5.7     6.0    4.5
Loss on impairment of intangibles........     0      0     3.1       0      0
Writeoff of purchased research and
 development costs.......................     0    5.6       0       0      0
                                          -----  -----   -----   -----  -----
Total operating expenses.................  85.9  109.4    96.2    95.7   87.1
                                          -----  -----   -----   -----  -----
Operating income (loss)..................  14.1   (9.4)    3.8     4.3   12.9
Other income (expense), net..............  (0.8)  (1.9)   (2.8)   (3.2)  (2.6)
                                          -----  -----   -----   -----  -----
Income (loss) before minority interest
 and provision for income taxes..........  13.3  (11.3)    1.0     1.1   10.3
Minority interest (income) loss..........     0   (0.1)    0.2     0.5   (0.1)
Provision (benefit) for income taxes.....   5.0   (1.6)    2.9     0.9    4.1
                                          -----  -----   -----   -----  -----
Net income...............................   8.3%  (9.8)%  (1.7)%   0.7%   6.1%
                                          =====  =====   =====   =====  =====
</TABLE>
 
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1997
   
  Revenues. Revenues increased 22.3%, or $1.1 million, to $6.3 million for the
three months ended March 31, 1998 from $5.1 million for the three months ended
March 31, 1997. The $1.1 million increase was primarily attributable to (i)
$620,000 generated by an increase in EFT processing services, (ii) $170,000
generated by an increase in data communications management services, (iii)
$230,000 generated by an increase in equipment sales and (iv) other net
increases of $80,000.     
 
                                      25
<PAGE>
 
  Costs of Services. Costs of services increased 15.9%, or $360,000, to $2.6
million for the three months ended March 31, 1998 from $2.3 million for the
three months ended March 31, 1997. The $360,000 increase was primarily
attributable to (i) $270,000 generated by an increase in equipment sales, (ii)
$80,000 generated by an increase in data communications management and (iii)
other net increases of $10,000.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 9.3%, or $220,000 to $2.5 million for the
three months ended March 31, 1998 from $2.3 million for the three months ended
March 31, 1997. The $220,000 increase was primarily attributable to additional
sales and administrative personnel to support the Company's growth.
 
  Depreciation and Amortization. Depreciation and amortization decreased 7.8%,
or $30,000 to $280,000 for the three months ended March 31, 1998 from $310,000
for the three months ended March 31, 1997. The $30,000 decrease was primarily
attributable to reduced amortization related to fully amortized intangibles
related to the Company's acquisitions in 1996.
 
  Other Income (Expense). Other expense decreased 1.7% to $160,000 for the
three months ended March 31, 1998 from $160,000 for the three months ended
March 31, 1997. The decrease was primarily attributable to payments of long-
term debt.
 
  Minority Interest Income (Loss). Minority interest income decreased 117.0%,
or $30,000, to a loss of $5,000 for the three months ended March 31, 1998 from
$25,000 for the three months ended March 31, 1997. The decrease was
attributable to profits in ProImage's operations.
 
  Provision (Benefit) for Income Taxes. Provision for income taxes increased
$220,000 to $260,000 for the three months ended March 31, 1998 from $40,000
for the three months ended March 31, 1997. The increase was attributable to
increased profits partially offset by a reduction in nondeductible
amortization.
 
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996
 
  Revenues. Revenues increased 60.3%, or $8.7 million, to $23.3 million for
the year ended December 31, 1997 from $14.5 million for the year ended
December 31, 1996. The $8.7 million increase was primarily attributable to (i)
$4.0 million generated by ProVesa as it was included for the full year in 1997
as compared to one month in 1996, (ii) $1.3 million generated by an increase
in EFT processing services, (iii) $1.3 million generated by Bank Services
since its acquisition on December 31, 1996, (iv) $1.2 million generated by
Data Services as it has been included for a full year in 1997 and (v) $930,000
generated by additional data communications management services.
 
  Costs of Services. Costs of services increased 30.0%, or $2.3 million, to
$10.2 million for the year ended December 31, 1997 from $7.9 million for the
year ended December 31, 1996. The $2.3 million increase was primarily due to
(i) an increase of $1.1 million related to the service bureau operations at
ProVesa as the operations were included for the full year in 1997 as compared
to one month in 1996, (ii) an increase of $570,000 related to data
communications management services, (iii) an increase of $310,000 related to
service bureau operations at Bank Services which were included for the full
year in 1997 and (iv) $320,000 related to additional equipment sales and
maintenance. Costs of services as a percentage of sales decreased from 54.2%
to 44.0% from 1996 to 1997, primarily due to additional higher margin EFT
revenues.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 47.5%, or $3.3 million, to $10.1 million for
the year ended December 31, 1997 from $6.8 million for the year ended December
31, 1996. The $3.3 million increase was primarily attributable to (i) $1.3
million related to ProVesa as a full year of operations was included in 1997
as compared to one month in 1996, (ii) $980,000 related to Bank Services since
its acquisition on December 31, 1996, of which approximately $500,000 was
related to research and development activities, (iii) $840,000 related to Data
Services as a full year of operations was included in 1997, (iv) $520,000
related to FiNet as a full year of operations was included in 1997 as compared
to one month in 1996, (v) $1.3 million related to additional personnel and
facilities to support the Company's growth and (vi) other expenses of $120,000
partially offset by a $1.8 million nonrecurring charge in 1996 related to a
deferred compensation agreement with an officer of the Company.
 
                                      26
<PAGE>
 
  Depreciation and Amortization. Depreciation and amortization increased
$970,000 to $1.3 million for the year ended December 31, 1997 from $350,000
for the year ended December 31, 1996. This increase was primarily due to (i)
the amortization of $620,000 of goodwill and contracts related to the
Company's purchase of ProVesa which was included for a full year in 1997 as
opposed to one month in 1996, (ii) amortization of $90,000 of goodwill and
contracts related to the Company's purchase of Data Services which was
included for a full year in 1997, (iii) an increase in depreciation expense of
$160,000 related primarily to acquisition and (iv) other net increases of
$100,000.
 
  Loss on Impairment of Intangibles. Loss on impairment of intangibles totaled
$730,000 for the year ended December 31, 1997. This was due to (i) the
writeoff of $540,000 of goodwill assumed in the Company's acquisition of FiNet
and (ii) the writeoff of $190,000 in purchased software assumed in the
Company's acquisition of ProVesa. These writeoffs were due to permanent
impairment in the related long term assets.
 
  Writeoff of Purchased Research and Development Costs. The $810,000 in
writeoff of purchased research and development costs in 1996 was due to
allocation of a component of the purchase price of Bank Services to incomplete
research and development costs at the time of purchase as the development of
certain projects had not yet reached technological feasibility and the
technology had no alternative use and required substantial additional
development.
 
  Operating Income (Loss). For the foregoing reasons, operating income
increased $2.2 million to $880,000 for the year ended December 31, 1997 from
an operating loss of $1.4 million for the year ended December 31, 1996.
Exclusive of the nonrecurring loss on impairment of intangibles, operating
income would have been $1.6 million in 1997.
 
  Other Income (Expense). Other expense increased $370,000 to $650,000 for the
year ended December 31, 1997 from $280,000 for the year ended December 31,
1996. This increase was primarily due to interest on new debt to fund the
Company's acquisitions during 1996 which was recorded for a full year in 1997.
 
  Minority Interest Income (Loss). Minority interest income decreased $50,000
to $(40,000) for the year ended December 31, 1997 from income of $10,000 for
the year ended December 31, 1996. The increase was primarily due to losses in
ProImage's operations.
 
  Provision (Benefit) For Income Taxes. Provision for income taxes increased
$900,000 to $670,000 for the year ended December 31, 1997 from a benefit of
$(230,000) for the year ended December 31, 1996. The increase was primarily
due to increased pre-tax income partially offset by deductible losses in 1996
primarily related to a deferred compensation agreement with an officer of the
Company.
 
YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
 
  Revenues. Revenues increased 76.5%, or $6.3 million, to $14.5 million for
the year ended December 31, 1996 from $8.2 million for the year ended December
31, 1995. The $6.3 million increase was primarily related to (i) $2.8 million
generated by additional equipment sales, (ii) $1.1 million generated by an
increase in EFT processing services, (iii) $1.3 million related to additional
maintenance services, (iv) $720,000 generated by an increase in data
communications management services and (v) $360,000 generated by ProVesa for
the one month of activity since its acquisition.
 
  Costs of Services. Costs of services increased 70.6%, or $3.3 million, to
$7.9 million for the year ended December 31, 1996 from $4.6 million for the
year ended December 31, 1995. The $3.3 million increase was primarily
attributable to (i) an increase of $2.6 million related to equipment sales and
maintenance services, (ii) an increase of $370,000 related to data
communications management services, (iii) an increase of $160,000 in network
operating expenses and (iv) other costs of $170,000.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 209.7%, or $4.6 million, to $6.9 million for
the year ended December 31, 1996 from $2.2 million for the year ended December
31, 1995. The $4.6 million increase was primarily due to (i) a $1.8 million
nonrecurring charge related to a deferred compensation agreement with an
officer of the Company, (ii) $1.7 million related to the acquisitions of Data
Services and ProVesa in 1996 and (iii) $1.1 million related to additional
personnel to support the Company's growth.
 
                                      27
<PAGE>
 
  Depreciation and Amortization. Depreciation and amortization increased
44.9%, or $110,000, to $350,000 for the year ended December 31, 1996 from
$240,000 for the year ended December 31, 1995. The decrease was primarily due
to an increase in amortization of intangibles related to the Company's
acquisitions in 1996.
 
  Writeoff of Purchased Research and Development Costs. The $810,000 in
writeoff of purchased research and development costs in the year ended
December 31, 1996 was due to allocation of a component of the purchase price
of Bank Services to incomplete research and development costs at the time of
purchase as the development of certain projects had not yet reached
technological feasibility and the technology had no alternative use and
required substantial additional developments.
 
  Operating Income (Loss). For the foregoing reasons, operating income
decreased $2.5 million to an operating loss of $1.4 million for the year ended
December 31, 1996 from an operating income of $1.1 million for the year ended
December 31, 1995. Exclusive of the writeoff of purchased research and
development and the $1.8 million nonrecurring charge related to a deferred
compensation agreement with an officer of the Company, operating income would
have been $1.2 million for the year ended December 31, 1996.
 
  Other Income (Expense). Other expense increased $220,000 to $280,000 for the
year ended December 31, 1996 from $60,000 for the year ended December 31,
1995. The increase was due to interest on new debt to fund the Company's
acquisitions as well as interest expense related to the repurchase of stock
from a shareholder.
 
  Minority Interest Income (Loss). The $10,000 in minority interest income
related primarily to the earnings of ProImage for the year ended December 31,
1996.
 
  Provision (Benefit) For Income Taxes. Benefit for income taxes decreased
$650,000 to $(230,000) for the year ended December 31, 1996 from $420,000 for
the year ended December 31, 1995. The decrease was primarily attributable to
deductible losses in 1996 related to a deferred compensation agreement with an
officer of the Company.
 
LIQUIDITY AND CAPITAL RESOURCES
   
  The Company has historically generated positive cash flow from operations,
but has historically relied upon the proceeds of several loan facilities (the
"Loan Facilities") to refinance debt assumed in connection with its
acquisitions. Borrowings under the Loan Facilities were available for use in
connection with certain acquisitions and other general corporate purposes. The
$3.0 million GSB Loan Facility matures on July 20, 2006 and bears interest at
the lender's prime rate plus 2.5%. The $1.7 million FNBC Loan Facility matures
on June 1, 2003 and bears interest at the lender's prime rate plus 2.0%. The
$598,995 Allied Loan Facility matures on December 31, 1999 and bears interest
at the lender's prime rate. At March 31, 1998, the Company owed an aggregate
of approximately $4.8 million in principal on the outstanding Loan Facilities.
See "Use of Proceeds." The Loan Facilities contain covenants with respect to
the maintenance of certain financial ratios and specified net worth and limit
the incurrence of additional indebtedness, the sale of substantial assets, the
sale of Common Stock by the Company (including through this Offering),
consolidations or mergers by the Company and the declaration and payment of
dividends. Any past or potential defaults or breaches of the provisions of the
Loan Facilities as a result of the Offering and the Company's business
combination transactions have been waived in writing by the lenders (such
waivers being conditioned upon the Offering), but there can be no assurance
that similar waivers can be obtained, if needed, in the future. The Loan
Facilities are secured by all assets of the Company and a pledge of 100% of
the stock of certain subsidiaries, which have guaranteed the repayment of
indebtedness under the Loan Facilities. The Company currently is negotiating
with certain other financial institutions to establish a credit facility for
future working capital and acquisition financing, but there can be no
assurance that such negotiations will be successful.     
 
  Net cash provided by operating activities was $2.1 million, $1.8 million,
and $1.1 million for the years ended December 31, 1997, 1996 and 1995,
respectively, and $110,000 and $200,000 for the three months ended March 31,
1998 and 1997, respectively. The decrease in net cash provided by operating
activities for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997 was attributable to
 
                                      28
<PAGE>
 
a reduction in accounts payable offset by increased earnings. The increase in
net cash provided by operating activities in 1997 as compared to 1996 was due
primarily to a decrease in accounts receivable. The reduction in net cash
provided by operating activities in 1996 as compared to 1995 was primarily due
to an increase in deferred tax assets related to the payment of a deferred
compensation agreement with an officer of the Company that is not currently
deductible.
 
  Net cash (used in) provided by investing activities was $(630,000),
$(300,000) and $(190,000) in 1997, 1996 and 1995, respectively, and $(440,000)
and $380,000 for the three months ended March 31, 1998 and 1997, respectively.
The increase in net cash used in investing activities for the three months
ended March 31, 1998 as compared to the three months ended March 31, 1997 was
due to additional capital expenditures in 1998 and collection of a note
receivable in 1997. The increase in net cash used in investing activities in
1997 as compared to 1996 was primarily due to increased fixed asset purchases,
partially offset by the collection of a related party receivable. The increase
in net cash used in investing activities in 1996 as compared to 1995 was
primarily related to an increase in a related party note receivable.
 
  Net cash used in financing activities was $860,000, $470,000 and $580,000
for the years ended December 31, 1997, 1996 and 1995, respectively, and
$740,000 and $130,000 for the three months ended March 31, 1998 and 1997,
respectively. The increase for the three months ended March 31, 1998 as
compared to March 31, 1997 is attributable to increased payments on the
Company's long-term debt. In 1997, this amount was related primarily to net
payments on long term debt while the amounts in 1996 and 1995 were related
primarily to S corporation distributions to certain shareholders of Systems
and Data Services.
   
  On April 28, 1998, the Company entered into the First Union Credit Facility,
under which the Company may borrow up to $20.0 million to fund acquisitions
and pay expenses related to acquisitions. In addition, at the Company's
election, $2.0 million of the First Union Credit Facility may become available
for working capital purposes. Before making any borrowings under the loan,
InterCept shall have successfully completed an initial public offering of its
Common Stock, shall have received gross offering proceeds of at least $17.0
million and shall have satisfied certain other conditions set forth in the
loan agreement. The First Union Credit Facility contains provisions which
require the Company to maintain certain financial ratios and minimum net worth
amounts and which restrict the Company's ability to incur additional debt,
make certain capital expenditures, enter into agreements for mergers,
acquisitions or the sale of substantial assets and pay dividends. The First
Union Credit Facility matures on April 28, 2001. Interest is payable monthly
and outstanding principal amounts accrue interest, at the Company's option, at
an annual rate equal to either (i) a floating rate equal to the lender's prime
rate minus one quarter of one percent or (ii) a fixed rate based upon the 30-
day LIBOR rate plus applicable margins.     
   
  The net proceeds from the Offering remaining after deducting (i)
underwriting discounts, (ii) Offering expenses, (iii) the repayment of the
indebtedness outstanding under the Company's Loan Facilities, (iv) the payment
of deferred compensation amounts owed to an officer of the Company and (v) the
redemption of the outstanding shares of the Company's Series A Preferred Stock
are expected to total approximately $9.8 million. The Company plans to use
these remaining net proceeds to expand and enhance the Company's marketing
efforts and the InterCept Frame Relay Network, and for working capital and
general corporate purposes, including possible acquisitions. Pending such
uses, the Company plans to invest the net proceeds in short-term, interest
bearing, investment grade securities. The Company also plans to register up to
an additional 2,000,000 shares of its Common Stock as soon as practicable
after completion of this Offering for use by the Company as consideration in
connection with future acquisitions. See "Shares Eligible for Future Sale."
       
  The Company plans to make capital expenditures of approximately $1.6 million
to upgrade and expand the InterCept Frame Relay Network, and it currently has
no other material commitments for capital expenditures. While there can be no
assurance, management believes that the proceeds of this Offering, funds
currently on hand, funds to be provided by operations and funds which may be
made available for working capital purposes under the First Union Credit
Facility will be sufficient to meet the Company's anticipated capital
expenditure and liquidity requirements for its operations through at least
1999. The Company intends to grow, in part, through strategic acquisitions and
will make additional expenditures to negotiate and consummate acquisition
transactions and integrate the acquired companies. While there can be no
assurance, management currently     
 
                                      29
<PAGE>
 
believes that the proceeds of this Offering and funds from the First Union
Credit Facility, together with the issuance of Common Stock and other
securities, will be sufficient to fund its acquisition needs for the next 12
months. No assurance can be made with respect to the actual timing and amount
of the expenditures and acquisitions. In addition, no assurance can be given
that the Company will complete any acquisitions on terms favorable to the
Company, if at all, or that additional sources of financing will not be
required during these time periods or thereafter. The Company's estimates are
forward looking statements that are subject to risks and uncertainties. Actual
results and working capital needs could differ materially from those estimated
due to a number of factors, including the factors discussed under "Risk
Factors."
 
EFFECTS OF ACCOUNTING STANDARDS
 
  Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
issued by the Financial Accounting Standards Board requires the Company to
review for impairment, and potentially write down, the carrying values of
long-lived assets and certain identifiable intangibles (including goodwill) to
be held and used by the Company. The
Company adopted SFAS No. 121, effective January 1, 1996, with no material
impact on the consolidated financial statements. The Company periodically
reviews the values assigned to long-lived assets to determine if any
impairments are other than temporary. Management believes that the long-lived
assets in the accompanying balance sheets are appropriately valued.
 
  SFAS No. 123, "Accounting for Stock Based Compensation" establishes a fair
value based method for financial accounting and reporting stock-based employee
compensation plans. Companies may elect to adopt the measurement criteria of
SFAS No. 123 for accounting purposes, thereby recognizing compensation expense
in results of operations on a prospective basis, or to disclose the pro forma
effects of the new measurement criteria. The Company has elected to disclose
the pro forma effects of the new measurement criteria. See Note 10 of Notes to
the Consolidated Financial Statements.
 
  In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share." SFAS No. 128 establishes standards for computing
and presenting earnings per share ("EPS"). It replaces the presentation of
basic and diluted EPS on the face of the statement of operations for all
entities with complex capital structures and requires a reconciliation of a
numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. Basic EPS excludes dilution and is
computed by dividing income available to common stockholders by the weighted-
average number of shares of common stock outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if convertible securities
or other contracts to issue common stock were exercised or converted into
common stock, resulting in the issuance of common stock that would then share
in the earnings of the entity. Diluted EPS is computed similarly to fully
diluted EPS pursuant to APB Opinion No. 15. The statement is effective for
financial statements issued for periods ending after December 15, 1997,
including interim periods; earlier application is not permitted. This
statement requires restatement of all prior-period EPS data presented.
 
  In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"), which establishes
standards for reporting and presentation of comprehensive income and its
components in a full set of general purpose financial statements. This
statement is effective for periods beginning after December 15, 1997. The
adoption of SFAS 130 is not expected to have an impact on the Company's
financial statements.
 
  In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"), which establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information
about operating segments in interim financial reports issued to stockholders.
It also establishes standards for related disclosures about products and
services, geographic areas and major customers. This Statement is effective
for financial statements for periods beginning after December 15, 1997. The
adoption of SFAS 131 is not expected to have a material impact on the
Company's financial statements.
 
                                      30
<PAGE>
 
                                   INDUSTRY
 
OVERVIEW
 
  The financial services industry has changed dramatically over the past
several years, causing the Company's community financial institution customers
to compete directly with diversified financial service providers offering a
wide array of sophisticated financial products and services, including
electronic commerce services. Electronic commerce involves the transaction of
business through the use of telecommunications networks and computer systems
that transmit and process commercial information and business documents
electronically. Electronic commerce for the financial services industry
includes value-added EFT services such as ATM, POS, funds transfer, scrip
debit services, remote banking and universal access to funds.
 
  The Company believes that the demand of community financial institutions and
their customers for third-party electronic commerce solutions has increased
substantially in recent years and will continue to grow in the future as a
result of numerous financial, strategic and technological factors. These
factors include: (i) the desire by these financial institutions to remain
competitive with larger institutions by using sophisticated technologies in
their operations without the expense and resource commitment required to
maintain an in-house system; (ii) the need for rapid and secure processing and
transmission of large amounts of data to multiple locations; (iii) the need to
accommodate the Year 2000 data rollover problem; (iv) the efforts of financial
institutions to control costs and improve operating efficiencies through the
use of service bureau outsourcing alternatives; and (v) the desire of
financial service providers to focus on their primary product and service
offerings. InterCept believes that, in order to stay competitive in the
changing marketplace, community financial institutions will continue to
require electronic commerce products and services, including the EFT, data
communications management, enterprise software and transaction processing
alternatives offered by the Company
 
EFT PROCESSING SERVICES
 
  EFT transaction processing enables financial institutions and their
customers to conduct numerous business transactions conveniently and quickly,
reduces operating costs and facilitates more accurate settlement of payments.
Although larger financial institutions typically process their EFT
transactions in-house, many community financial institutions have outsourced
EFT transaction processing to third-party processors. By aggregating the EFT
transaction processing of numerous community financial institutions, third
party processors create economies of scale, which allow them to price their
services competitively. According to an industry report, transaction volume
for general purpose electronic commerce cards totaled $1.8 trillion worldwide
in 1996 (which translates approximately into a $27 billion market for
processing services) and is projected to grow to $6.5 trillion by the year
2005.
 
  EFT transaction processing involves the on-line processing of transactions
initiated by a consumer at a terminal using a debit or credit card issued by
the consumer's financial institution. Various transactions, including cash
withdrawals, transfers and balance inquiries, are initialized, authorized,
completed and recorded against the consumer's accounts. According to industry
reports, there were over 175,000 ATMs and 1.3 million POS terminals in the
United States in 1997. Transaction volume has grown in recent years due to an
increase in the number of ATMs and POS terminals deployed, the number of
cardholders and the frequency of use by cardholders. Rapid technological
advances in data communications and transaction processing, particularly the
transition from paper-based to electronic processing, have contributed greatly
to wider acceptance and increased consumer use of EFT services. The number of
debit card transactions increased approximately 50.0% in 1996 and is projected
to increase 32.0% annually through the year 2005. The Company believes that
increased card acceptance and usage, coupled with technological advances in
electronic transaction processing, have created a need for financial service
providers to offer a variety of EFT solutions and value-added services to
their customers.
 
 
                                      31
<PAGE>
 
DATA COMMUNICATIONS MANAGEMENT
 
  EFT transaction processing mandates dependable and automated data
communications connectivity in a secure environment. Financial institutions
therefore require sophisticated technologies and value-added services to
perform critical functions and to facilitate rapid and accurate transaction
communications by and between different institutions. Electronic data
communications systems have dramatically changed in recent years from low
speed, inflexible analog circuits supporting legacy communications protocols
to high speed dynamic and flexible communications topologies based upon frame
relay, asynchronous transfer mode and other advanced technologies. These
technologies are now deployed widely in publicly available communications
platforms, including online services, the Internet (including the World Wide
Web) and interactive telephone information systems (such as those provided by
many banks). These communications resources enable individuals to locate and
retrieve large amounts of information from a remote location using standard
devices such as telephones and personal computers. Personal computers are now
commonly employed in businesses and homes, and many have various
communications devices (e.g., modems, ISDN terminal adaptors and network
interface cards) that allow remote communication with other computers. These
changes in the telecommunications marketplace are evidenced by the multitude
of communications devices and information services available today. The growth
in the number and types of communications devices has created a large market
in data communications and information exchange.
 
  Many large transaction processors provide data communications using
mainframe-based legacy systems that are difficult and expensive to maintain
and modify. Transaction processors that maintain these systems for their data
communications and transaction processing needs often find it difficult to
meet the increasing demands of financial institutions for reliable high speed
networking capabilities tailored to their specific and changing needs. Recent
advances in less costly, flexible and integrated computer software systems,
including client/server systems, afford transaction processors improved
capabilities and responsiveness in providing data and transaction processing
services. In addition, the use of fiber optic cables and advanced switching
technology in telecommunications networks, as well as competition among
telecommunications providers, enables third-party processors to provide faster
and more reliable service at lower per-transaction costs than previously
available. As a result of continued technological changes, the Company
anticipates increased demand for third-party data communications management
and transaction processing services.
 
ENTERPRISE SOFTWARE
 
  Changing technologies, business practices and financial products have
resulted in software-related issues of compatibility, scalability and
increased complexity for many financial institutions. The shift toward the
client/server processing environment has created the need for more user-
friendly applications and on-line support mechanisms and the integration of
highly complex systems and software with various telephony applications. The
technology surrounding the transmission, storage and retrieval of massive
amounts of data has further increased the complexity of data processing for
financial institutions. In addition, many existing software systems have a
Year 2000 data rollover problem because they do not store dates and process
data using codes which are written for four-digit years. These older systems
may produce inaccurate information or may even become inoperable at the turn
of the century, and may not otherwise offer the advanced technological
capabilities provided by newer systems. As a result, financial institutions
are demanding more complete and flexible data communications, information
technology, enterprise software and processing solutions, as well as
complementary products and services. According to a published market research
report, the size of the U.S. financial institutions information technology
outsourcing market was estimated to be approximately $2.8 billion in 1997 and
is projected to increase to $3.7 billion by the year 2000.
 
                                      32
<PAGE>
 
                                   BUSINESS
 
GENERAL
   
  The Company designs, develops, markets and implements a suite of fully
integrated electronic commerce products and services primarily for community
financial institutions in the United States. The Company's products and
services include EFT, data communications management, client/server enterprise
software and other processing solutions. InterCept currently serves over 580
financial institutions and is the largest third-party processor of financial
institutions' ATMs in the southeastern United States. The Company has
established marketing relationships with 9 of the 17 bankers' banks, which
provide the Company access to over 4,500 of the approximately 11,000 financial
institutions nationwide. The Company's revenues increased from $14.5 million
in the year ended December 31, 1996 to $23.3 million in the year ended
December 31, 1997. Revenues for the three months ended March 31, 1998 were
$6.3 million. Recurring revenues accounted for approximately 69.3%, 76.1% and
78.2%, respectively, of the Company's revenues for these three periods.     
 
  InterCept is a single source provider of a broad range of flexible
electronic commerce solutions and supporting value-added products and
services. The Company provides numerous EFT products and services, including
ATM, POS and scrip debit services, debit card transactions including both
MasterMoney(TM) and Visa(R) Check cards, funds transfer and remote banking
services. The Company licenses its PC-based client/server enterprise software,
PC BancPAC(TM), which operates in a personal computing environment and (since
October 1997) in a Windows NT(R) environment. Community financial institutions
can implement PC BancPAC(TM) on both an in-house and service bureau basis,
providing them with two alternatives for utilizing the Company's technologies
and processing expertise to improve operating efficiency for their
institutions. The Company offers its financial institution customers numerous
value-added products and services, including branch automation, optical disk
record storage and retrieval, check imaging and on-line signature
verification. The Company also provides maintenance and technical support
services, supplies ATMs, proof machines and other banking related equipment,
and offers numerous ancillary products and services to community financial
institutions.
 
  As part of its integrated suite of electronic commerce products and
services, the Company provides end-to-end data communications management
solutions for its customers. The Company maintains nationwide data
communications coverage and has the InterCept Frame Relay Network, one of the
largest private frame relay networks in the southeastern United States. The
InterCept Frame Relay Network is the principal conduit through which the
Company processes EFT transactions and manages the data communications needs
of its customers. Through the InterCept Frame Relay Network and its
telecommunications connectivity to various other networks, the Company manages
data communications and, in some instances, voice-over-frame communications,
which eliminates certain long distance charges for its customers. The Company
also designs and manages various local and wide area data communications
networks for its customers. The Company offers internet services, including
managed firewall and email services, to the desktop of its customers'
personnel across the InterCept Frame Relay Network.
   
  The InterCept Frame Relay Network contains approximately 1,200 drops which
are located in 14 states, 41 LATAs and all five of the RBOCs' markets. The
design of the InterCept Frame Relay Network provides for efficient switching
capabilities, which results in rapid response time, and secure and reliable
transmission and processing of electronic commerce transactions conducted
across the network. The Company believes the InterCept Frame Relay Network
enables it to provide its electronic commerce products and services more
efficiently and on a more cost-effective basis for its customers. The
attributes of the InterCept Frame Relay Network result in rapid response time,
and its considerable bandwidth facilitates the delivery of the Company's
numerous EFT, processing and ancillary services.     
 
  InterCept's top 9 senior officers have an average of over 22 years of
industry experience and have expertise in multiple areas of electronic
commerce (including EFT and data communications management), enterprise
software and transaction processing for financial institutions. The Company's
current market focus is on community financial institutions, which the Company
believes rely heavily on third-party providers for a majority
 
                                      33
<PAGE>
 
of their EFT, data communications management, enterprise software and
transaction processing solutions, including the products and services offered
by the Company. InterCept believes that as a result of rapid technological,
financial and other changes that have occurred over the past several years
that the demand of community financial institutions and their customers for
technologically advanced solutions has increased substantially and that such
demand will continue to grow in the future. The Company believes that its
integrated suite of electronic commerce solutions enables its community
financial institution customers to compete with larger financial institutions
by allowing them to offer their customers similar products and services on a
cost-competitive basis.
 
BUSINESS STRATEGY
 
  The Company believes it is one of the largest providers of fully integrated
electronic commerce products and services for community financial institutions
in the southeastern United States, and its goal is to become one of the
largest such providers in the United States. To attain this goal, the Company
plans to grow significantly by implementing the following key strategies:
 
    (i) Cross-Market to Existing Customer Base and Maximize Recurring
  Revenues. InterCept plans to cross-market its EFT, data communications
  management, client/server enterprise software and numerous ancillary
  products and services to its existing customers, most of which already use
  the Company's EFT services. The Company seeks to develop and maintain long-
  term customer relationships by providing multiple electronic commerce
  products and services to community financial institutions pursuant to
  contracts with renewable terms. Many of the Company's products and services
  generate recurring revenues, which the Company defines as revenues from
  services used by customers each month and year in connection with their
  ongoing business. The Company intends to maximize its recurring revenues
  through these relationships by enhancing and increasing the use of its
  various products and services. The Company also plans to create and acquire
  additional sources of recurring revenues to meet the evolving needs of its
  customers.
 
    (ii) Increase Data Communications Management and Optimize the InterCept
  Frame Relay Network. InterCept intends to increase its data communications
  management services by offering customized, cost-competitive
  telecommunications connectivity to its customers and managing their data
  traffic in a reliable and secure manner across the InterCept Frame Relay
  Network. The Company intends to optimize the InterCept Frame Relay Network
  by selling additional communications services to its customers, thereby
  increasing network utilization with minimal additional cost to the Company.
  In addition, the Company will attempt to expand the InterCept Frame Relay
  Network into new geographic areas as business warrants. InterCept plans to
  improve the speed and efficiency of transaction processing across the
  network by enhancing and selectively upgrading its processing and switching
  equipment and telecommunications lines. In addition, the Company will
  attempt to expand the InterCept Frame Relay Network into new geographic
  areas as business warrants. The Company believes that the strategic
  development of the InterCept Frame Relay Network will continue to provide
  for more efficient network utilization, allow it to reduce transmission and
  other operating costs, and support its current and future products and
  services.
     
    (iii) Complete Strategic Acquisitions. InterCept intends to acquire other
  companies with complementary technologies or services that will enhance and
  expand the products and services offered to existing customers, increase
  its market share, expand its geographic presence or optimize the InterCept
  Frame Relay Network. Since the beginning of 1996, the Company has completed
  several acquisitions of providers of complementary products and services.
  See "The Company." The Company believes that its previous acquisitions of
  providers of complementary technologies and services has strengthened its
  suite of products and services and expanded its geographic presence into
  new markets. The Company plans to continue to integrate and enhance the
  products and services it has acquired, pursue strategic acquisitions of
  additional products and services and cross-market its expanded suite of
  solutions to existing and future customers. On April 28, 1998, the Company
  entered into a $20.0 million revolving line of credit agreement with First
  Union National Bank, the proceeds of which will be available to fund
  acquisitions upon completion of this Offering and the satisfaction of
  certain other conditions set forth in such agreement. See "Management's
  Discussion and Analysis of Financial Condition and Results of Operations--
  Liquidity and Capital Resources."     
 
                                      34
<PAGE>
 
    (iv) Expand Sales Force and Strategic Marketing Relationships. The
  Company plans to expand its customer base and penetrate new geographic
  markets by hiring sales personnel with expertise in community financial
  institutions' operations and/or electronic commerce products and services
  similar to those offered by the Company. InterCept currently has
  established relationships with several banking related business
  organizations, including strategic marketing relationships with 9 of the 17
  bankers' banks, which provide the Company access to over 4,500 of the
  approximately 11,000 community financial institutions nationwide. Bankers'
  banks are local or regional business organizations that provide
  correspondent banking products and services to financial institutions that
  could not provide them in an efficient manner themselves due to cost,
  location, lack of resources or other circumstances. In addition, bankers'
  banks provide financial support and business advice to financial
  institutions with respect to various critical areas such as operations,
  profitability and federal and state regulation. The Company believes that
  the essential nature of the relationship between bankers' banks and
  community financial institutions makes the Company's alliances with
  bankers' banks an important part of its marketing strategy. InterCept
  intends to use its expanded sales force to market its products and services
  directly to community financial institutions and to enhance its indirect
  marketing efforts by developing additional strategic marketing
  relationships with bankers' banks and various other business organizations.
 
    (v) Expand and Enhance its Products and Services. The Company has devoted
  and will continue to devote resources to developing and enhancing its suite
  of products and services. The Company plans to continue to combine its
  enhanced and expanded electronic commerce solutions with sophisticated
  technology to help its community financial institution customers remain
  competitive with other financial service providers. The Company continually
  strives to anticipate the most recent trends in the financial services
  industry and to develop and provide leading edge products and services.
 
THE INTERCEPT SOLUTION
 
  The InterCept solution to addressing the complex and evolving needs of
community financial institutions is to continue to develop, enhance and
provide a comprehensive and flexible suite of fully integrated electronic
commerce products and services. These products and services include: (i) EFT
transaction services, including ATM, POS, scrip services, debit card
transactions, funds transfer, remote banking and universal access to funds;
(ii) data communications management services across the InterCept Frame Relay
Network; (iii) client/server enterprise software solutions to handle the core
processing needs of community financial institutions; (iv) other value-added
products and services, including item processing, branch automation and
optical disk storage products; and (v) equipment, maintenance and technical
support and merchant credit card portfolio management services.
 
  The Company maintains nationwide data communications coverage and uses the
InterCept Frame Relay Network to support the complex electronic commerce
transaction requirements of its community financial institution customers. The
Company seeks to maximize the benefits of available technologies to enable it
to deliver highly reliable data communications, client/server enterprise
software and transaction processing solutions and related products and
services on a cost-effective basis. The Company attempts to establish long-
term business relationships with its customers to maximize the Company's
recurring revenues and optimize the InterCept Frame Relay Network. The Company
believes that each of its products and services efficiently and effectively
supports the various needs of community financial institutions and that, when
combined, its integrated electronic commerce products and services offer
community financial institutions a single source for comprehensive electronic
commerce solutions and allow its community financial institution customers to
remain competitive with larger financial service providers.
 
 EFT Processing Services
 
  InterCept offers a wide range of EFT transaction services, including ATM,
POS, scrip services, debit card transactions including MasterMoney(TM) and
VISA(R) Check cards, funds transfer, remote banking and universal access to
funds. The Company's EFT transaction processing business is conducted
primarily through its network connections to most regional and all national
ATM and POS switch networks, including HONOR(TM), PULSE(TM), Cirrus(R),
PLUS(R), Maestro(R) and INTERLINK(R). Based on the number of financial
institutions that use third parties
 
                                      35
<PAGE>
 
to process their ATM transactions, the Company is the largest third-party
processor of financial institutions' ATM transactions in the southeastern
United States. As of March 31, 1998, the Company provided EFT services to
approximately 400 customers. Revenues from these activities were $9.3 million,
or 39.9%, of the Company's revenues for the year ended December 31, 1997 and
$2.6 million or 41.9% of revenues, for the three months ended March 31, 1998.
 
  Historically, the national ATM switching networks prohibited member
institutions from charging fees for ATM usage on their networks. In April
1996, national switching networks Cirrus(R) and PLUS(R) voted to lift the ban
on these ATM surcharges. After the ban lifted, several financial institutions
began charging fees to non-customers for using their ATMs to conduct
transactions across their switching networks. The Company's community
financial institution customers became concerned that their customers would
migrate to institutions with a larger number of ATMs for the availability of a
larger number of surcharge-free ATMs. In response to this concern, the Company
formed a wholly-owned subsidiary, InterCept Switch, Inc., and introduced
InterCept Switch, a surcharge-free ATM network designed to keep its community
financial institution customers competitive with larger banks by allowing them
to waive ATM surcharges for customers of InterCept Switch members, while
retaining the ability to surcharge non-member customers that use their ATMs.
The InterCept Switch ATM network is run by PULSE(TM) for a fee based on the
number of ATM transactions conducted through the InterCept Switch network.
 
  InterCept gives its financial institution customers the flexibility to
design the exact ATM program they wish to offer by providing full functional
support of all major ATM hardware. The Company provides necessary ATM support
services and products, including terminal processing, network support, POS and
ATM equipment, and maintenance services. The Company's customers may elect to
forego the purchase of ATM hardware by choosing the Company's card issue only
service option, which permits institutions to offer ATM services to their
customers without the expense of purchasing and maintaining ATM hardware.
 
  The ATM transactions processed by the Company begin when a cardholder
inserts a card issued by a financial institution (a "Card Issuer") into an ATM
to withdraw funds, obtain a balance, make other account inquiries or transfer
funds. The transaction is routed from the ATM across the InterCept Frame Relay
Network to the Company's data communications and processing center. The
Company's computer identifies the Card Issuer by the financial institution
identification number contained within the card's magnetic strip. The Company
then either (i) authorizes or denies the requested transaction or (ii)
switches the transaction to the Card Issuer or its designated processor for
authorization. Once authorization is received, the authorization message is
routed back to the ATM almost immediately and the transaction is completed.
For its customers' clients, the Company updates the cardholder's account
information on a daily basis.
 
  Throughout these steps, the Company charges various fees to the financial
institutions that are in addition to any fees that the Card Issuer might
charge the ATM user. The Company receives a base fee for providing its ATM
processing services and an additional fee for each ATM serviced. Once the
number of transactions exceeds established maximums (typically between 2,000
and 3,000 transactions), the Company charges additional fees for the extra
transactions processed. The Company also receives fees for installation,
maintenance and support of the ATMs it supplies to its customers.
 
  The Company processes debit card transactions for banks issuing such cards,
including MasterMoney(TM) and Visa(R) Check cards, which permit direct payment
debit from POS terminals at over 13 million locations worldwide against the
cardholder's deposit account. InterCept's POS and scrip services provide
instant access to funds without the expense of installing a traditional ATM.
With a small initial investment in a POS or scrip terminal, the Company's
financial institution customers can support EFT transactions from virtually
any merchant location.
 
  The electronic debit card transaction process begins when a consumer
presents a debit card to the merchant who then "swipes" the card at a POS
terminal and enters the transaction amount. The transaction data is
transmitted from the POS terminal through the applicable credit and debit
processing networks to the InterCept Frame Relay Network. The Company then
compares the purchase transaction against the authorization data
 
                                      36
<PAGE>
 
accessed through the Company's system, places a hold for the transaction
amount, authorizes the transaction and transmits the authorization response
almost immediately back through the network to the POS terminal. The
appropriate processing network settles the payment and credits the merchant
with the transaction amount less any discounts. The merchant delivers final
transaction information to the credit processing network and the network
submits the transaction to the Company, which facilitates posting and
reporting of the transaction with the issuing bank. To complete the
transaction, the issuing bank debits its customer's account for the
transaction amount. For its POS services, the Company generally receives a
portion of the interchange fees charged by its community financial institution
customers that issue debit cards and charges a monthly fee if its customers do
not meet a certain minimum dollar amount of transactions for a particular
month.
 
  A scrip transaction requires a customer to obtain a cash voucher, using an
ATM card, at a self-service terminal located within the store but not at the
check-out. The customer purchases goods with the voucher and receives any
overage from the transaction in cash (if permitted by the merchant) or in the
form of a voucher from the cashier. InterCept's scrip and POS services include
access to multiple networks, settlement reports, card management support and
administrative terminal support.
 
  The Company markets its EFT services primarily to community financial
institutions in the southeastern and central United States. The Company's EFT
service contracts generally provide for an initial term of three to five years
and automatically renew for similar terms unless notice of non-renewal is
given prior to expiration. Most charges due under these agreements are paid
monthly. The Company generally is permitted to raise prices on an annual basis
subject to certain maximum limits. The Company provides ATM and various other
banking equipment and maintenance services to approximately 250 customers in
Georgia, Alabama, Florida, Tennessee and South Carolina. Where applicable, the
Company enters into standard ATM and other equipment maintenance contracts
with its customers that generally provide for a term of between one and three
years. Generally, these contracts automatically renew for varying periods at
the end of the initial or any renewal term unless either party elects to
cancel the agreement 180 days prior to its expiration.
 
 Data Communications Management and The InterCept Frame Relay Network
 
  In response to the relatively high cost and low efficiency of the data
communications operations of many of its community financial institution
customers, the Company developed the InterCept Frame Relay Network and began
to offer end-to-end data communications management services to financial
institutions on a more cost-effective basis than previously available. Through
the InterCept Frame Relay Network and its telecommunications connectivity to
various other networks, the Company manages data communications and, in some
instances, voice-over-frame communications, which eliminates certain long
distance charges for its customers. The Company also designs and manages
various local and wide area data communications networks for its customers.
The Company offers internet services, including managed firewall and email
services, to the desktop of its customers' personnel across the InterCept
Frame Relay Network. By providing end-to-end data communications management
services across the InterCept Frame Relay Network, the Company believes it
will have greater success in cross-marketing its fully integrated suite of
electronic commerce products and services and that it is able to better
monitor and maintain the quality of these products and services to help ensure
continued customer satisfaction. As of March 31, 1998, the Company provided
data communications services to 339 customers. Revenues from these activities
were $3.1 million, or 13.4%, of the Company's revenues for the year ended
December 31, 1997 and $850,000, or 13.6% of revenues for the three months
ended March 31, 1998.
   
  The Company maintains nationwide data communications coverage and uses the
InterCept Frame Relay Network, the Company's private frame relay
telecommunications network with approximately 1,200 drops which are located in
14 states, 41 LATAs and all five RBOCs' markets. According to industry data,
based upon the number of drops, the InterCept Frame Relay Network is one of
the largest private frame relay networks in the southeastern United States.
The InterCept Frame Relay Network is the principal conduit through which the
Company provides its end-to-end data communications management services. The
key advantages of frame relay versus legacy protocols include: (i) the ability
to accommodate data packets of various sizes; and (ii) protocol independence--
not only can any set of data be accepted, switched and transported across a
network, but the     
 
                                      37
<PAGE>
 
specific data is undisturbed in the process of encapsulation. The design of
the InterCept Frame Relay Network provides efficient switching capabilities,
which results in rapid response time, as well as secure and reliable
transmission and processing for electronic commerce transactions conducted
across the network.
 
  The InterCept Frame Relay Network uses the fiber optic networks of WorldCom,
Inc. and BellSouth Telecommunications, Inc. to provide the substantial
bandwidth capable of supporting the transaction-intensive services offered by
the Company. The InterCept Frame Relay Network is linked to the Company's
customer operations by T-1 and fractional T-1 communication lines to ensure
adequate bandwidth for rapid processing of electronically transmitted data. As
customer needs change and as technology improves, management believes that it
will be able to adapt and customize the InterCept Frame Relay Network as
necessary to achieve the processing speeds and functionality it desires.
 
  The InterCept Frame Relay Network implements advanced satellite technology
provided by GE Capital SpaceNet Services, Inc. ("GE SpaceNet") and
sophisticated telecommunications equipment supplied by Motorola, Inc.
("Motorola"). Further, the InterCept Frame Relay Network topology gives the
Company the ability to acquire telecommunications access from providers other
than WorldCom. Management believes that, if necessary or desirable, the
Company could utilize the networks of any major telecommunications access
provider to operate the InterCept Frame Relay Network. Management believes
that transferring the InterCept Frame Relay Network to another
telecommunications access provider could be accomplished without significant
service interruption or delay, although such a transfer may increase the
Company's expenses for its telecommunications services.
 
  The Company's relationship with GE SpaceNet augments the InterCept Frame
Relay Network in areas where frame relay connectivity is either unavailable or
not economically feasible. Because GE SpaceNet builds, launches and maintains
its own private satellites rather than leasing such services from third
parties, the Company is able to provide a high level of reliability in its
network services and provide better customer service. The Company maintains an
automated backup system for the most critical data circuits in the InterCept
Frame Relay Network in the event of a network outage or other similar
occurrence. The Company also provides shared hub satellite transmission
services as well as multi-drop and point-to-point hard line telecommunication
networks. The Company uses Motorola telecommunications equipment and
processing hardware to enable the InterCept Frame Relay Network to support the
various data communications protocols most commonly used by its customers.
 
  The Company monitors and maintains the InterCept Frame Relay Network's
lines, circuits and equipment functions on a seven-day, 24-hour basis from a
central computer location in Norcross, Georgia. The Company maintains this EFT
processing and data communications switching facility and has established a
limited disaster recovery plan with certain telecommunications providers to
provide alternative communications capabilities in the event the Company
experiences a natural disaster or other interruption at its Norcross facility,
rather than maintaining a "hot site" backup location for its EFT processing
and InterCept Frame Relay Network switching hardware.
 
 Client/Server Enterprise Software and Services
 
  The Company offers client/server enterprise software processing and related
products and services on both an in-house and service bureau basis primarily
to community financial institutions. The Company satisfies its service bureau
customers' core processing requirements, including general ledger and
financial management, customer information file maintenance, loan and deposit
processing, financial accounting and reporting and ATM and automated clearing
house ("ACH") interfaces, through on-line data communications utilizing the
InterCept Frame Relay Network. Historically, InterCept delivered its core data
processing solutions on a service bureau basis using legacy computer system
technology. However, in December 1996 the Company acquired PC BancPAC(TM) and
has since licensed this client/server accounting software system on an in-
house basis and implemented this software in its service bureau operations.
Revenues from the Company's enterprise software and related services were $5.6
million, or 24.2%, of the Company's revenues, for the year ended December 31,
1997 and $1.3 million, or 20.9% of revenues, for the three months ended March
31, 1998.
 
 
                                      38
<PAGE>
 
  PC BancPAC(TM) consists of a series of integrated software modules which,
together, accommodate the core data processing needs of the Company's
financial institution customers, including general ledger and financial
management, customer information file maintenance, loan and deposit
processing, financial accounting and reporting and ATM and ACH interfaces. PC
BancPAC(TM) and related products operate in a Windows NT(R) environment and
the Company believes they are well-suited for both in-house and service bureau
core processing for financial institutions. The Company believes PC
BancPAC(TM) is Year 2000 compliant and permits the Company to offer flexible
alternatives to its existing customers and to pursue other segments of the
financial institution processing market. Processing in a client/server
environment provides superior flexibility in tailoring procedures and improves
customer service throughout the institution. Using personal computers as
workstations (the "client") and connecting them via a network to another
personal computer containing the database (the "server"), client/server
computing offers fast and easy processing on economical computer hardware. The
Company believes PC BancPAC(TM) is a user-friendly product with easy-to-learn
"point and click" and "drag and drop" features.
 
  As part of its software processing services, the Company also provides item
processing and back office services including proofing and encoding, bulk
filing, statement preparation and check imaging to accommodate the additional
needs of its financial institution customers. The Company's data processing
and item processing services are typically priced on the basis of account or
item volume. The Company delivers its check imaging and item processing
services from five service centers located in Georgia and Colorado. Fees for
check imaging services are generally based upon the volume of information and
images (document pages) processed, stored or retrieved. The Company also
offers a variety of owned and licensed complementary value-added services and
products to its customers to enable them to compete with larger financial
institutions that offer a broad array of services and products to their
customers. These services and products include an integrated voice response
banking system, safe deposit box accounting, cash management services, check
imaging services and optical disk storage.
 
  The Company's data communications, EFT and outsourced client/server
enterprise processing services utilize the InterCept Frame Relay Network and
are coordinated through the Company's two host data centers located in Georgia
and Colorado and five check imaging and item processing facilities located in
those states. The Company's data centers have a combined processing capacity
of over 820 RPMs (relative performance measure units). The Company continually
plans for testing and implementation of new technology and emphasizes
flexibility in structuring the services it offers using new technology. The
Company's data centers, together with its remote check imaging and item
processing centers, provide the comprehensive and customized data processing
services required by InterCept's service bureau customers. The Company's data
processing centers in Macon, Georgia and Colorado Springs and Denver, Colorado
each act as a back-up facility for the others in the event another site
experiences a natural disaster, destruction or other similar event which
eliminates or diminishes its processing capabilities.
 
  As of March 31, 1998, the Company provided data processing and/or item
processing services to over 50 financial institutions pursuant to contracts
which generally provide for three year renewable terms. The Company also
provides account processing software support and maintenance to nine financial
institution customers that implement its products in-house.
 
 Complementary Products and Customer Services
 
  To complement its integrated suite of electronic commerce solutions, the
Company provides maintenance and technical support services, which generate
recurring revenues, and supplies specialized equipment including ATMs, proof
machines, teller equipment, personal computers, vaults and other security
equipment. Revenues from these activities were $5.2 million, or 22.5%, of the
Company's revenues, for the year ended December 31, 1997 and $1.5 million, or
23.6% of revenues, for the three months ended March 31, 1998. The Company
anticipates that, as revenues from its other operations increase, revenues
from supplying equipment and maintenance and technical support services will
decrease as a percentage of total revenues.
 
                                      39
<PAGE>
 
  In December 1996, InterCept expanded its product offerings to include
merchant portfolio management services. The Company's merchant credit card
portfolio management services are tailored to help its customers meet day-to-
day challenges and satisfy their needs for portfolio growth and increased
revenue in today's competitive marketplace. By partnering with InterCept, the
Company's financial institution customers retain ownership and control of
their merchant credit card portfolio accounts while benefiting from economies
of scale and the ability to select flexible processes for product delivery.
 
  The Company offers extensive customer services and technical support for its
electronic commerce products and services. InterCept believes that well-
trained support personnel are essential to attract and retain financial
institution customers. InterCept's trained customer service and technical
support personnel employ methodologies to enhance the Company's ability to
offer reliable, secure and automated solutions. The Company's customer service
departments are responsible for educating and assisting its customers in the
use of the Company's integrated services, for resolving billing related issues
and, in consultation with InterCept's technical support personnel, for solving
any technical problems customers may experience. As of March 31, 1998, the
Company employed 14 people in its customer service departments, which are
available 24 hours per day, seven days per week. Customer service
representatives who support vital processing functions are also accessible by
a toll-free telephone number.
 
  The Company employs separate personnel who are responsible for technical
support functions. These employees are generally responsible for consulting
with InterCept's financial institution customers regarding technical issues,
and for solving any technical issues brought to their attention by the
customer service department. The Company's technical support department is
also responsible for maintaining the Company's backup systems and for
coordinating the disaster recovery services maintained by certain of the
Company's information processing customers. As of March 31, 1998, the Company
employed 25 technical support representatives who are available 24 hours a
day, seven days per week. Technical support representatives who support vital
processing functions are also accessible by a toll-free telephone number.
 
CUSTOMER BASE AND RECURRING REVENUES
 
  The Company achieves growth in its recurring revenues and customer base
primarily through cross-marketing its integrated products and services. The
Company's customer base consists of more than 580 financial institutions in 20
states which primarily are community financial institutions located in the
southeastern United States and Colorado. As of March 31, 1998, the Company
provided EFT products and services to more than 400 customers, 315 of which
are full-service EFT customers. The Company also had 251 maintenance
customers, some of which also use the Company's EFT services. In addition, the
Company had 61 customers using its enterprise software, processing solutions
and ancillary products and services, including 51 service bureau customers and
10 customers processing on an in-house basis. Of these customers, 22 use check
imaging and item processing services. The Company also has approximately 14
merchant portfolio management customers as of March 31, 1998.
   
  Approximately 69.3%, 76.1 % and 78.2% of the Company's revenues for the
years ended December 31, 1996 and December 31, 1997 and the three months ended
March 31, 1998, respectively, were recurring. Recurring revenues are defined
by the Company as revenues derived from services that are used by the
Company's customers each year in connection with their ongoing businesses, and
accordingly exclude such items as conversion and deconversion fees, initial
software license fees, data communications line installation fees and hardware
sales revenues.     
 
SALES AND MARKETING
 
  The Company's sales force is made up of nine sales representatives for EFT
transaction processing products and services, one sales representative for
data communications management services and two sales representatives for
client/server enterprise software and related services as of March 31, 1998.
Maintaining separate sales forces for its various service lines allows the
Company's sales representatives to concentrate on
 
                                      40
<PAGE>
 
particular services, product technology and customer markets, thereby keeping
them informed of developments in these areas. Sales representatives in the
various groups are, however, informed as to the full suite of the Company's
products and services and are encouraged to market the full suite of products
and services to customers and to refer prospects to the appropriate
professionals. The Company offers its products and services on a stand-alone
basis and combined with one or more other products and services to create
customized solutions for each community financial institution.
 
  The Company markets its EFT and processing services by designing custom-
tailored solutions that it believes are attractive to its community financial
institution customers in terms of features, quality of service and price. The
Company markets its services and products through direct sales forces located
in the southeastern United States, Colorado and Texas. InterCept intends to
expand its existing customer base and penetrate new geographic markets by
hiring sales personnel with expertise in community financial institutions'
operations and/or the Company's electronic commerce products and services. The
Company cross-markets its data communications management, client/server
enterprise processing and other value-added products and services to its
existing customers, most of which already use the Company's EFT services.
 
  The Company's indirect marketing efforts include obtaining referrals and
endorsements from its financial institution customers and various banking
related organizations. InterCept currently has written marketing agreements
with 6 of the 17 bankers' banks and has other relationships with 3 additional
bankers' banks. Bankers' banks are local or regional business organizations
that provide correspondent banking products and services to financial
institutions that could not provide them in an efficient manner themselves due
to cost, location, lack of resources or other similar circumstances. In
addition, bankers' banks provide financial support and business advice to
financial institutions with respect to various critical areas such as
operations, profitability and federal and state regulation. The Company
believes that the essential nature of the relationship between bankers' banks
and community financial institutions makes the Company's alliances with
bankers' banks an important part of its marketing strategy. Through its
relationship with these bankers' banks, the Company has a referral source to
over 4,500 financial institutions nationwide. The Company seeks to enter into
additional strategic marketing arrangements to augment its indirect marketing
efforts and increase the number of its referral sources.
 
COMPETITION
 
  The data communications, enterprise software and transaction processing
industries are intensely competitive and highly fragmented, and the Company
expects increased competition from both existing competitors and companies
that enter the Company's existing or future markets. Many of the Company's
current and potential competitors have longer operating histories, greater
name recognition, larger customer bases and substantially greater financial,
personnel, marketing, engineering, technical and other resources than the
Company. Numerous companies supply competing products and services, and many
of these companies specialize in one or more of the services which the Company
offers or intends to offer to its customers. The Company's market share
represents a small percentage of the total information processing market. The
Company believes that existing competitors are likely to expand their product
and service offerings and that new competitors are likely to enter the market
and attempt to integrate electronic commerce, information processing and other
services, resulting in greater competition for the Company. Such competition
could materially adversely affect the Company's business, financial condition
and results of operations.
 
  Although the Company is not aware of any major competitor that is marketing
an integrated suite of solutions identical to that marketed by the Company,
many of the Company's competitors have substantial resources and technical
expertise, and could likely develop such comprehensive solutions if they chose
to expend sufficient resources. The Company believes that the principal
competitive factors affecting the market for its services generally are price,
quality and reliability of service, degree of service integration, ease of use
and service features. Generally, the Company believes that it competes
effectively in these areas.
 
  The Company's principal EFT competitors include major regional ATM networks,
regional and local processing banks, non-bank processors and other independent
electronic commerce and data communications
 
                                      41
<PAGE>
 
organizations, many of which have substantially greater capital, management,
marketing and technological resources than those of the Company. There can be
no assurance that the Company will continue to be able to compete effectively
with such competitors. The Company's EFT and outsourced core bank processing
services are transmitted to its customers over telephone lines and the
Telecommunications Act of 1996 (the "Act") lifted certain restrictions on
regional telephone companies and others competing with the Company, which will
likely lead to these companies competing with the Company by packaging
information service offerings with other services and providing them on a
wider geographic scale. The competitive pricing pressures that would result
from any increase in competition could have a material adverse effect on the
Company's business, financial condition and results of operations. See "--
Government Regulation".
 
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
 
  The Company relies on a combination of copyright, trademark and trade secret
laws, confidentiality procedures and contractual provisions to protect its
proprietary rights. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy aspects of the Company's
products or to obtain and use information that the Company regards as
proprietary. There can be no assurance that the Company's means of protecting
its proprietary rights will be adequate or that the Company's competitors will
not independently develop similar technology. The Company does not believe
that any of its products infringe the proprietary rights of third parties.
There can be no assurance, however, that third parties will not claim
infringement by the Company with respect to current or future products, and
the Company has agreed to indemnify many of its customers against such claims.
The Company anticipates that the number of infringement claims will increase
as the number of electronic commerce and information technology products and
services increase and the functionality of products in different industry
segments overlaps. Any such claims, with or without merit, could be time-
consuming, result in costly litigation, and may not be resolved on terms
acceptable to the Company, or at all, which could have a material adverse
effect on the Company's business, financial condition and results of
operations.
 
EMPLOYEES
 
  At March 31, 1998, the Company had 170 full-time employees, of which 25 were
in sales and marketing, 104 were in operations and 41 were corporate and
general administrative employees. Of these employees, 105 were based in
Norcross, Georgia, 23 were based in Thomson, Georgia at the Company's
operations center, nine were based in Macon, Georgia, 17 were based in
Colorado Springs and Denver, Colorado, 1 was based in New Jersey, 5 were based
in Texas, 2 were based in Florida, and 8 were based in Tennessee. None of the
Company's employees is represented by a collective bargaining agreement nor
has the Company ever experienced any work stoppage. Management believes that
the Company's relationship with its employees is satisfactory.
 
GOVERNMENT REGULATION
 
  The Company's network services are transmitted to its customers over
dedicated and public telephone lines. These lines are governed by federal and
state regulations establishing the rates, terms and conditions for their use.
Changes in the legislative and regulatory environment relating to online
services, electronic commerce or the Internet access industry, including
regulatory or legislative changes which directly or indirectly affect
telecommunication costs, restrict content or increase the likelihood of
competition from regional telephone companies or others, could have an adverse
effect on the Company's business. The Act amended the federal
telecommunications laws by lifting restrictions on regional telephone
companies and others competing with the Company. The Act set in motion certain
events that will lead to the elimination of restrictions on regional telephone
companies providing transport between defined geographic boundaries associated
with the provision of their own information services. This will enable
regional telephone companies to compete more readily with the Company by
packaging information service offerings with other services and providing them
on a wider geographic scale. The Clinton administration has announced an
initiative to establish a framework for global electronic commerce. Also,
there are a number of bills currently being considered in the United States at
the federal and state levels involving encryption and digital signatures, all
of which may impact the Company. The
 
                                      42
<PAGE>
 
Company cannot predict the impact, if any, that the Act and future court
opinions, legislation, regulations or regulatory changes in the United States
may have on its business.
 
  The Company is not directly subject to federal or state regulations
specifically applicable to financial institutions. As a provider of services
to banking institutions, however, the Company's service bureau processing
operations are examined from time to time by various state and federal
regulatory agencies. These agencies make recommendations to the Company
regarding various aspects of outsourcing operations and the Company generally
implements such recommendations. The Company also arranges for an annual
independent examination of its service bureau processing facilities.
 
  The Company's ATM network operations are subject to federal regulations
governing consumers' rights with respect to ATM transactions. Fees charged by
ATM owners are currently regulated in several states and legislation has been
proposed in several other states, and there can be no assurance that such
regulations or legislation will not continue to be enacted in the future or
that existing consumer protection laws will not be expanded to apply to fees
charged in connection with ATM transactions.
 
PROPERTY AND FACILITIES
   
  The Company's principal office consists of 14,641 square feet of leased
space located in Norcross, Georgia. The Company leases two additional offices
in Norcross that are used for item processing and operations. The Company owns
a facility in Thomson, Georgia that is used as a data and item processing
center for the Company's service bureau operations. A leased facility in
Macon, Georgia serves as an item and image processing center. The Company also
leases two locations in Colorado related to its service bureau operations,
including one in Colorado Springs which serves as a data and item processing
center, and another in Denver used for item processing. The Company leases
office space in Tennessee, Texas and New Jersey, primarily to support its
sales and marketing efforts in these areas. The Company believes these
facilities are adequate for its needs and does not anticipate any material
difficulty in replacing such facilities or securing facilities for new
offices.     
 
LEGAL PROCEEDINGS
 
  The Company is not a party to any pending material legal proceedings.
 
                                      43
<PAGE>
 
                                  MANAGEMENT
 
  The executive and certain other key officers and directors of the Company
and their ages and positions as of March 31, 1998, are as follows.
 
<TABLE>
<CAPTION>
 NAME                     AGE CLASS(1) POSITION
 ----                     --- -------- --------
 <C>                      <C> <C>      <S>
                                       Chief Executive Officer and Chairman of
 John W. Collins.........  50   III     the Board
                                       President, Chief Operating Officer and
 Donny R. Jackson........  48   III     Director
 Scott R. Meyerhoff......  29    --    Chief Financial Officer and Secretary
                                       Executive Vice President of Sales and
 Michael R. Boian........  58    --     Marketing
                                       Executive Vice President of Network
 Michael D. Sulpy........  37    --     Communications
                                       Senior Vice President of Merchant
 Paul D. England.........  47    --     Portfolio Management
 Farrell S. Mashburn.....  51    --    Senior Vice President of Data Services
                                       Senior Vice President of Service Bureau
 Philip R. Meinert.......  56    --     Operations
 Vir A. Nanda............  55    --    Senior Vice President of Technology
 Jon R. Burke............  50    I     Director
 Boone A. Knox...........  61    II    Director
 Bruce P. Leonard........  44    II    Director
 Glenn W. Sturm..........  44    I     Director
</TABLE>
- --------
(1) Class I term expires in 1999; Class II term expires in 2000; and Class III
    term expires in 2001.
 
BIOGRAPHICAL INFORMATION FOR EXECUTIVE AND CERTAIN OTHER KEY OFFICERS AND
DIRECTORS
 
  John W. Collins, a co-founder of the Company, has served as its Chief
Executive Officer and Chairman of the Board of Directors since its formation.
Mr. Collins also has served as the Chairman and Chief Executive Officer of
InterCept Switch since its formation in 1996. Mr. Collins co-founded Systems
in 1986, Data Services in 1989, ProVesa in 1994 and Technologies in 1996. He
served as the Chief Executive Officer of Systems prior to its merger with
InterCept in January 1998. Mr. Collins also served as Chairman of the boards
of Systems, Data Services, Bank Services, FiNet and Technologies prior to
their merger with the Company in January 1998. Mr. Collins has over 25 years
of experience in multiple areas of electronic commerce for community financial
institutions.
 
  Donny R. Jackson, a co-founder of the Company, has served as President,
Chief Operating Officer and director of the Company since its formation. Mr.
Jackson also has served as the President and Chief Operating Officer of
InterCept Switch since its formation in 1996. Mr. Jackson was President and
Chief Operating Officer and director of Systems from July 1996 until its
merger with the Company. He has also served as the President and Chief
Executive Officer and director of ProVesa since July 1994 and the President of
ProImage, Inc. since July 1996. Mr. Jackson also served as President and a
member of the board of managers of Technologies from March 1996 until its
merger with the Company. From January 1993 to June 1994, Mr. Jackson was the
Chief Financial Officer of Systems. Prior to joining the Company, Mr. Jackson
was the President of Bank Atlanta from 1991 to 1992. Mr. Jackson has over 23
years of experience working with community financial institutions, including
in service bureau, enterprise software and other processing and accounting
operations.
 
  Scott R. Meyerhoff has served as Chief Financial Officer and Secretary of
the Company since January 1998. For the seven years prior to joining the
Company, Mr. Meyerhoff was employed by Arthur Andersen LLP, most recently as
an audit manager. Mr. Meyerhoff received his B.S. degree, with honors, in
accounting from The Pennsylvania State University, where he was a member of
The University's Scholars Program, and is a Certified Public Accountant.
 
  Michael R. Boian has been Executive Vice President of Sales and Marketing
for the Company since January 1998. From February 1997 to January 1998, Mr.
Boian served as Vice President of Sales and Marketing of the Company. Prior to
joining the Company, he was Regional Vice President of Debit Services for
MasterCard
 
                                      44
<PAGE>
 
International from May 1992 to November 1996. Mr. Boian has over 32 years of
financial technology experience, primarily in electronic funds transfer and
authorization systems, including debit and credit authorization systems.
 
  Michael D. Sulpy has served as Executive Vice President of Network
Communications for the Company since January 1998. Mr. Sulpy co-founded
Technologies in March 1996 and served as its Vice President of Communications
until its merger with the Company in January 1998. He joined Systems in 1987,
and from January 1993 to January 1996, he served as its network manager,
responsible for data network design and maintenance and personnel training.
Mr. Sulpy has over 15 years of data communications management and
telecommunications network experience.
 
  Paul D. England has served as Senior Vice President of Merchant Banking for
the Company since January 1998. He co-founded FiNet in June 1996 and served as
its President and Chief Executive Officer until its merger with the Company.
He also served as a director of the Company from December 1996 to January
1998. Prior to co-founding FiNet, Mr. England was Senior Vice President of
First American National Bank, where he had worked since 1989. Mr. England has
over 23 years of experience working with financial institutions, including
merchant credit card portfolio management.
 
  Farrell S. Mashburn has served as Senior Vice President of Data Services for
the Company since January 1998 and Secretary of the Company since June 1996.
He served as the President of Data Services from May 1990 until its merger
with the Company in January 1998. Mr. Mashburn also served as a director of
the Company from May 1996 to January 1998. Mr. Mashburn has over 31 years of
experience in providing banking related equipment, maintenance and technical
support services, primarily to community financial institutions.
 
  Philip R. Meinert has served as Senior Vice President of Service Bureau
Operations for the Company since January 1998. From December 1996 to January
1998, Mr. Meinert was President of Bank Services. Mr. Meinert also served as a
director of the Company from December 1996 to January 1998. Mr. Meinert was
the President of Bank Services until its acquisition by the Company in
December 1996. He had been with Bank Services since 1977, managing its service
bureau and software operations and monitoring the development of PC
BancPAC(TM). Mr. Meinert has over 28 years of financial institution core data
processing experience, including client/server enterprise software development
and service bureau processing.
 
  Vir A. Nanda has served as Senior Vice President of Technology for the
Company since January 1998. From June 1996 to January 1998, Mr. Nanda was the
Director of Technology for the Company. Mr. Nanda served as a director of the
Company from May 1996 to January 1998. He co-founded Systems in 1986 and prior
to its merger with the Company, served Systems in several capacities, most
recently as the Executive Vice President of Technology. Mr. Nanda has over 23
years of experience in EFT transaction processing and technology, primarily
for community financial institutions.
 
  Jon R. Burke has served as a director of the Company since February 1998. He
is presently the managing member of Capital Appreciation Management Company,
L.L.C., which is the managing general partner of an Atlanta-based merchant
banking fund specializing in acquiring controlling interests in companies
located in the southeastern United States. Mr. Burke is also a principal with
Brown, Burke Capital Partners, Inc., which provides financial advisory
services to middle market corporations in connection with mergers and
acquisitions and financing. He also is a director of United Companies
Financial Corporation, a financial services holding company engaged in
consumer lending. From 1973 to 1996, Mr. Burke was employed by The Robinson-
Humphrey Company, Inc., most recently serving as a Senior Vice President and
the head of its financial institutions/banking research.
 
  Boone A. Knox has served as a director of the Company since February 1998.
He is Chairman of the board of Merry Land & Investment Co., Inc., a publicly
held real estate investment trust, and is also a director of Cousins
Properties, Inc., a publicly-held Atlanta-based real estate development
company. He serves as chairman of the board of directors of Allied Bank of
Georgia, Inc. ("Allied"), a subsidiary of Regions Financial Corp., and served
as Allied's President and Chief Executive Officer from 1975 through 1986. He
was Chairman of the board of directors and Chief Executive Officer of Allied
Bankshares, Inc., the holding company of Allied, from its formation in 1984
until January 1997.
 
 
                                      45
<PAGE>
 
  Bruce P. Leonard has served as a director of the Company since May 1997. Mr.
Leonard has been the President and Chief Executive Officer of The Bankers Bank
in Atlanta, Georgia, and its holding company, Community Financial Services,
Inc., since 1990.
   
  Glenn W. Sturm has served as a director of the Company since May 1997. Mr.
Sturm has been a partner in the law firm of Nelson Mullins Riley &
Scarborough, L.L.P. since 1992, where he serves as Corporate Chairman and as a
member of the executive committee. Since 1996, Mr. Sturm has been a director
of Phoenix International Ltd., Inc., a publicly-held provider of client/server
application software for the financial services industry.     
 
DIRECTOR COMPENSATION
 
  Upon initial election to the Board of Directors, certain non-employee
directors receive options to acquire 35,000 shares of Common Stock each,
11,667 of which vest immediately and the remainder of which vest ratably on
the first and second anniversaries of such initial election. In addition, on
each anniversary date of a director's initial election to the Board of
Directors, each will receive an automatic grant of options to acquire 5,000
additional shares of Common Stock which vest on the date of grant. The
exercise price of these options is equal to the fair market value of the
Common Stock on the date of grant. See "--Stock Option Plans." Directors of
the Company may be reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors or its committees and for other expenses
incurred in their capacity as directors. Directors do not receive cash fees
for their services as directors of the Company.
 
EXECUTIVE COMPENSATION
 
  The following table summarizes the compensation paid or accrued by the
Company for services rendered by the Company's Chief Executive Officer and the
four most highly compensated other executive officers whose total salary and
bonus exceeded $100,000 (collectively, the "Named Executive Officers") during
the year ended December 31, 1997. The Company did not grant any stock
appreciation rights or make any long-term incentive plan payouts during the
periods shown.
 
                          SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                    LONG-TERM
                                    ANNUAL        COMPENSATION
                                 COMPENSATION        AWARDS
                              ------------------ ---------------
                                                   SECURITIES
                                                   UNDERLYING       ALL OTHER
                         YEAR SALARY($) BONUS($) OPTIONS/SARS(#) COMPENSATION($)
                         ---- --------- -------- --------------- ---------------
<S>                      <C>  <C>       <C>      <C>             <C>
John W. Collins......... 1997  240,000   10,000         --            7,059(1)
 Chief Executive Officer
Donny R. Jackson........ 1997  172,500    7,500      75,000           7,059(1)
 President and Chief
  Operating Officer
Michael R. Boian........ 1997  106,570    5,000      10,000           1,094(2)
 Executive Vice
  President of Sales and
  Marketing
Vir A. Nanda............ 1997  204,167      --          --            7,059(1)
 Senior Vice President
  of Technology
Farrell S. Mashburn..... 1997  125,000    7,500         --            2,965(3)
 Senior Vice President
  of Data Services
</TABLE>
- --------
(1)Includes for each executive (i) $6,109 for health insurance premiums paid
   by the Company and (ii) $950 for contributions made by the Company on
   behalf of the executive to the Company's 401(k) plan.
 
(2)Represents health insurance premiums paid by the Company.
 
(3)Includes (i) $2,015 for health insurance premiums paid by the Company and
   (ii) $950 for contributions made by the Company on behalf of the executive
   to the Company's 401(k) plan.
 
                                      46
<PAGE>
 
EMPLOYMENT AGREEMENTS
 
  Collins and Jackson Agreements. Mr. Collins and the Company entered into an
employment agreement effective as of January 30, 1998 (the "Collins
Agreement") pursuant to which he will serve as the Chief Executive Officer of
the Company. The Collins Agreement provides that Mr. Collins will receive a
base salary of not less than $265,000 per year. Mr. Jackson and the Company
entered into an employment agreement effective as of January 30, 1998 (the
"Jackson Agreement") pursuant to which he will serve as the President and
Chief Operating Officer of the Company. The Jackson Agreement provides that
Mr. Jackson will receive a base salary of not less than $190,000 per year. Mr.
Collins' and Mr. Jackson's base salaries may be increased upon a periodic
review by the Board of Directors or a committee thereof. In addition, each of
Mr. Collins and Mr. Jackson are entitled to incentive compensation as
determined by the Board of Directors or a committee thereof based upon
achievement of targeted levels of performance and such other criteria as the
Board of Directors or a committee thereof shall establish from time to time,
and an additional annual bonus as determined by the Board of Directors or a
committee thereof. Each of Mr. Collins and Mr. Jackson may participate in the
Company's Amended and Restated 1996 Stock Option Plan (the "1996 Stock Option
Plan") and will receive health insurance for himself and his dependents, long-
term disability insurance, civic and social club dues, use of an automobile
owned or leased by the Company and other benefits.
 
  The Collins Agreement and the Jackson Agreement each have terms of three
years and renew daily until either party fixes the remaining term at three
years by giving written notice. The Company can terminate the Collins
Agreement and the Jackson Agreement upon the executive's death or disability
or for cause, and the executive can terminate his employment for any reason
within a 90-day period beginning on the 30th day after any occurrence of a
change in control or within a 90-day period beginning on the one-year
anniversary of the occurrence of any change in control. If Mr. Collins' or Mr.
Jackson's employment is terminated after a change in control (i) by the
Company without cause or otherwise in breach of the Collins Agreement or the
Jackson Agreement, as applicable, or (ii) by Mr. Collins or Mr. Jackson for
any reason, the Company must pay the executive all accrued compensation and
bonus amounts and one-twelfth of his annual base salary and bonus for each of
36 consecutive 30-day periods following the termination. In addition, the
Company must continue life and health insurance for the executive until he
reaches age 65, and the executive's outstanding options to purchase Common
Stock would vest and become immediately exercisable.
 
  In the event Mr. Collins ceases to be Chief Executive Officer of the Company
for any reason other than by voluntary resignation, the Company must offer to
repurchase all of the Common Stock owned by Mr. Collins at a purchase price
equal to Fair Market Value (as defined in the Collins Agreement). Also, in the
Collins Agreement and the Jackson Agreement, the Company granted, with respect
to their shares of Common Stock, piggyback and, after any termination of
employment, demand registration rights to each of Mr. Collins and Mr. Jackson.
See "Shares Eligible for Future Sale." Under the Collins Agreement and the
Jackson Agreement, Mr. Collins and Mr. Jackson agree to maintain the
confidentiality of the Company's trade secrets and for a period of one year,
if terminated for cause, not to solicit employees or customers of the Company.
 
  Other Employment Agreements. The Company and Mr. Nanda entered into an
employment agreement dated June 4, 1996 pursuant to which Mr. Nanda receives
an annual salary of not less than $200,000. Mr. Nanda's employment agreement
permits the Company to terminate the agreement upon the completion of an
initial public offering. The Company and Mr. Nanda have agreed to negotiate a
new employment arrangement upon the closing of the Offering. On February 1,
1998, Mr. Meyerhoff and the Company entered into an employment agreement (the
"Meyerhoff Agreement") pursuant to which he will serve as the Chief Financial
Officer of the Company. The Meyerhoff Agreement has a term of one year which
renews automatically at the end of each term unless earlier terminated by the
Company or Mr. Meyerhoff. The Company can terminate the Meyerhoff Agreement
upon his death or disability or for cause, and Mr. Meyerhoff can terminate his
employment for any reason within a 90-day period beginning on the 30th day
after any occurrence of a change in control or within a 90-day period
beginning on the one-year anniversary of the occurrence of any change in
control. If Mr. Meyerhoff's employment is terminated for any reason after a
change in control, the Company must pay Mr. Meyerhoff a lump sum cash payment
equal to three-fourths of his annual base salary and bonus.
 
                                      47
<PAGE>
 
OPTION GRANTS
 
  The following table sets forth information concerning each grant of stock
options to the Named Executive Officers during the year ended December 31,
1997:
 
<TABLE>   
<CAPTION>
                                                                              POTENTIAL REALIZABLE VALUE
                                                                                AT ASSUMED ANNUAL RATES
                                                                              OF STOCK PRICE APPRECIATION
                                          INDIVIDUAL GRANTS                       FOR OPTION TERM(1)
                         ---------------------------------------------------- ----------------------------
                                          PERCENT OF
                            NUMBER OF    TOTAL OPTIONS
                           SECURITIES     GRANTED TO    EXERCISE
                           UNDERLYING    EMPLOYEES IN    OR BASE   EXPIRATION
NAME                     OPTIONS GRANTED  FISCAL YEAR  PRICE($/SH)    DATE        5%($)        10%($)
- ----                     --------------- ------------- ----------- ---------- ------------- --------------
<S>                      <C>             <C>           <C>         <C>        <C>           <C>
Donny R. Jackson........     157,898         88.2%        $2.16(2)  1/14/07       1,845,134     3,140,088
Michael R. Boian........      21,053         11.8%        $2.16(2)  2/24/07         246,017       418,677
</TABLE>    
- --------
(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
    are mandated by rules of the Securities and Exchange Commission. There can
    be no assurance that the actual stock price appreciation over the term
    will be at the assumed 5% and 10% levels or at any other defined level.
    Unless the market price of the Common Stock appreciates over the option
    term, no value will be realized from the option grants made to the Named
    Executive Officers.
 
(2) Options were granted at the fair market value of the Common Stock on the
    date of grant as determined by the Board of Directors, based upon the
    purchase price established in arms-length negotiations with unrelated
    third parties with respect to the Common Stock issued in the December 1996
    acquisitions of Bank Services and FiNet and other information available to
    the Company at or about that time. These options vest ratably over five
    years beginning with the date of the grant.
 
  The following table sets forth certain information regarding the exercise of
options and the number of options held by the Named Executive Officers who
have been granted stock options, as of December 31, 1997:
 
<TABLE>   
<CAPTION>
                               NUMBER OF UNEXERCISED
                               SECURITIES UNDERLYING   VALUE OF UNEXERCISED IN-
                                OPTIONS AT DATE OF     THE-MONEY OPTIONS AT DATE
                                    OFFERING(#)            OF OFFERING($)(1)
                             ------------------------- -------------------------
NAME                         EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----                         ----------- ------------- ----------- -------------
<S>                          <C>         <C>           <C>         <C>
John W. Collins.............   16,843           --       103,248          --
Donny R. Jackson............   40,001       126,318      251,838      800,856
Michael R. Boian............    8,421        12,632       53,389       80,087
Farrell S. Mashburn.........    8,421           --        51,621          --
</TABLE>    
- --------
   
(1)Based upon the price of the Common Stock to be sold in this Offering, which
   is assumed to be $8.50 per share.     
 
STOCK OPTION PLANS
 
 1996 Stock Option Plan
 
  The Board of Directors and the Company's shareholders have approved the
Company's 1996 Stock Option Plan, effective as of November 12, 1996. The
purpose of the 1996 Stock Option Plan is to advance the interests of the
Company, its subsidiaries and its shareholders by affording certain employees
and directors of the Company, as well as key consultants and advisors to the
Company or any subsidiary, an opportunity to acquire or increase their
proprietary interests in the Company. The objective of the issuance of stock
options and grants of restricted stock under the Plan is to promote the growth
and profitability of the Company and its subsidiaries because the optionees
and grantees will be provided with an additional incentive to achieve the
Company's objectives through participation in its success and growth and by
encouraging their continued association with or service to the Company.
 
  Awards under the 1996 Stock Option Plan are currently granted by the Board
of Directors but, after this Offering, will be granted by a committee composed
of at least two independent directors (the "Committee") when it is
established. Awards issued under the 1996 Stock Option Plan may include
incentive stock options ("ISOs") and/or non-qualified stock options ("NQSOs")
and/or grants of restricted stock. The Committee will
 
                                      48
<PAGE>
 
administer the 1996 Stock Option Plan and generally has discretion to
determine the terms of an option grant, including the number of option shares,
option price, term, vesting schedule, the post-termination exercise period and
whether the grant will be an ISO or NQSO. Notwithstanding this discretion: (i)
the number of shares subject to options granted to any individual in any
fiscal year may not exceed 315,795 shares (subject to certain adjustments);
(ii) if an option is intended to be an ISO and is granted to a shareholder
holding more than 10% of the combined voting power of all classes of the
Company's stock or the stock of its parent or subsidiary on the date of the
grant of the option, the option price per share of Common Stock may not be
less than 110% of the fair market value of such share at the time of grant;
and (iii) the term of an ISO may not exceed 10 years, or 5 years if granted to
a shareholder owning more than 10% of the total combined voting power of all
classes of stock on the date of the grant of the option.
 
  The Stock Option Plan provides for the granting of non-qualified stock
options to the directors of the Company ("Director Grants"). The Board of
Directors has authorized the issuance of up to 175,000 shares of Common Stock
under the Stock Option Plan pursuant to options having an exercise price equal
to the fair market value of the Common Stock on the date the options are
granted. The Board of Directors has approved Director Grants of (i) options to
purchase 35,000 shares to each non-employee director of the Company who
beneficially owns less than 4% of the Company's outstanding Common Stock on
the date of such director's election to the Board of Directors, and (ii)
options to purchase 5,000 shares to each director on each anniversary date of
such director's election to the Board at an exercise price equal to the fair
market value of the Common Stock on the date the options are granted. Each
initial Director Grant option vests over the director's three year term of
service and each annual grant vests on the date of grant. Each Director Grant
expires five years after the date of grant, unless canceled sooner as a result
of termination of service or death, or unless such option is fully exercised
prior to the end of the option period.
 
  The maximum number of shares of Common Stock that currently may be subject
to outstanding options, determined immediately after the grant of any option,
is 1,263,180 shares (subject to certain adjustments). The 1996 Stock Option
Plan provides that the number of shares of Common Stock available for issuance
thereunder shall be automatically increased on the first trading day of each
calendar year beginning January 1, 1999 by the lesser of (i) three percent of
the number of shares outstanding on the preceding trading day or (ii) 315,795
shares (subject to certain adjustments). Shares of Common Stock that are
attributable to awards which have expired, terminated or been canceled or
forfeited during any calendar year are available for issuance or use in
connection with future awards.
 
  The 1996 Stock Option Plan will remain in effect until terminated by the
Board of Directors. The 1996 Stock Option Plan may be amended by the Board of
Directors without the consent of the shareholders of the Company, except that
any amendment, although effective when made, will be subject to shareholder
approval within one year after approval by the Board of Directors if the
amendment increases the total number of shares issuable pursuant to ISOs
(other than the permitted annual increase), changes the class of employees
eligible to receive ISOs that may participate in the 1996 Stock Option Plan,
or otherwise materially increases the benefits accruing to recipients of ISOs.
 
  The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code of 1986, as amended. Section 162(m) generally disallows
a public company's tax deduction for compensation to the chief executive
officer and four other most highly compensated executive officers in excess of
$1,000,000 in any tax year beginning on or after January 1, 1994. Compensation
that qualifies as "performance-based compensation" is excluded from the
$1,000,000 deductibility cap, and therefore remains fully deductible by the
company that pays it. The Company intends that options granted with an
exercise price at least equal to 100% of fair market value of the underlying
stock at the date of grant will qualify as such "performance-based
compensation," although other awards under the 1996 Stock Option Plan may not
so qualify.
 
 ProVesa, Inc. 1994 Stock Option Plan
 
  In November 1996, as part of the ProVesa Merger, the Company executed a
Stock Option Plan Assumption Agreement, pursuant to which 20,000 options
outstanding under the ProVesa, Inc. 1994 Stock Option Plan (the
 
                                      49
<PAGE>
 
"ProVesa Plan") were converted into options to acquire 42,106 shares of Common
Stock. The Company assumed the rights and obligations of ProVesa under the
ProVesa Plan.
 
  The purpose of the ProVesa Plan is to advance the interests of the Company,
its subsidiaries, and its shareholders by affording certain employees and
directors of the Company and its subsidiaries, as well as key consultants and
employees of the Company's suppliers and contractors, an opportunity to
acquire or increase their proprietary interests in the Company. The objective
of the issuance of stock options and grants of restricted stock under the
ProVesa Plan is to promote the growth and profitability of the Company and its
subsidiaries because the optionees and grantees will be provided with an
additional incentive to achieve the Company's objectives through participation
in its success and growth and by encouraging their continued association with
or service to the Company.
 
  Awards under the ProVesa Plan are granted by the Board of Directors but may
be granted by a committee of at least two directors appointed by the Board of
Directors. Awards under the ProVesa Plan may include ISOs, NQSOs or restricted
stock. The committee that administers the ProVesa Plan generally has
discretion to determine the terms of an option grant, including the number of
option shares, option price, term, vesting schedule, the post-termination
exercise period and whether the grant will be an ISO or NQSO. Notwithstanding
this discretion, if an option is intended to be an ISO and is granted to a
shareholder holding more than 10% of the combined voting power of all classes
of the Company's stock or of its parent or subsidiary on the date of the grant
of the option, the option price per share of Common Stock may not be less than
110% of the fair market value of such shares and the term of any option may
not exceed 10 years, or 5 years if the option is intended to be an ISO and is
granted to a shareholder owning more than 10% of total combined voting power
of all classes of stock on the date of the grant of the option.
 
  The ProVesa Plan may be amended by the Board of Directors without the
consent of the shareholders of the Company, except that any amendment,
although effective when made, will be subject to shareholder approval within
one year after approval by the Board of Directors if the amendment increases
the total number of shares issuable pursuant to ISOs or changes the class of
employees eligible to receive ISOs that may participate in the ProVesa Plan or
otherwise materially increases the benefits accruing to recipients of ISOs.
Effective February 24, 1998, the Board of Directors determined that the
Company will not issue any additional options under the ProVesa Plan.
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
  The Board of Directors intends to establish an Audit Committee, a
Compensation Committee and an Executive Committee. The members of each
committee are expected to be determined at the first meeting of the Board of
Directors following the closing of the Offering. The members of the Audit and
Compensation Committees will consist of a majority of outside directors.
 
                                      50
<PAGE>
 
                      PRINCIPAL AND SELLING SHAREHOLDERS
   
  The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 31, 1998 and as adjusted to
reflect the sale of the Common Stock offered hereby with respect to: (i) each
of the Company's directors and Named Executive Officers; (ii) each person
known by the Company to own beneficially more than 5% of the Common Stock;
(iii) the Selling Shareholder; and (iv) all directors and executive and key
officers of the Company as a group. Unless otherwise indicated, each of the
holders listed below has sole voting power and investment power over the
shares beneficially owned and each person known by the Company to beneficially
own more than 5% of the Common Stock has an address in care of the Company's
principal office.     
 
<TABLE>   
<CAPTION>
                             SHARES BENEFICIALLY            SHARES BENEFICIALLY
                             OWNED PRIOR TO THIS              OWNED AFTER THIS
                              STOCK OFFERING(1)   NUMBER OF  STOCK OFFERING(1)
                             --------------------  SHARES   --------------------
NAME                          NUMBER   PERCENTAGE  OFFERED   NUMBER   PERCENTAGE
- ----                         --------- ---------- --------- --------- ----------
<S>                          <C>       <C>        <C>       <C>       <C>
John W. Collins(2).........  3,123,352    45.8%             2,472,113    27.4%
Donny R. Jackson(3)........    605,625     8.9                605,625     6.7
Michael R. Boian(4)........      8,421       *                  8,421       *
Michael D. Sulpy...........    497,202     7.4                497,202     5.5
Farrell S. Mashburn(5).....    212,635     3.1                212,635     2.4
Vir A. Nanda...............  1,038,544    15.4     137,500    901,044    10.0
Jon R. Burke(6)............     11,667       *                 11,667       *
Boone A. Knox(7)...........     11,667       *                 11,667       *
Bruce P. Leonard(8)........     11,667       *                 11,667       *
Glenn W. Sturm(9)..........    373,865     5.5                373,865     4.2
James R. Henderson(10).....    385,270     5.7                385,270     4.3
All directors and executive
 and key officers as
 a group (13 persons)......  5,615,312    82.2%             5,353,005    59.5%
</TABLE>    
- --------
   
 (1) Shares Beneficially Owned is calculated assuming 6,750,114 shares of
     Common Stock were outstanding on May 31, 1998 and 9,000,114 shares will
     be outstanding immediately after this Offering. This percentage also
     includes Common Stock of which such individual or group has the right to
     acquire beneficial ownership within 60 days of May 31, 1998, including
     but not limited to the exercise of an option; however, such Common Stock
     is not deemed outstanding for the purpose of computing the percentage
     owned by any other individual or group. See "Underwriting."     
   
 (2) Includes (i) 2,455,270 shares of Common Stock owned by Mr. Collins, (ii)
     currently exercisable options held by Mr. Collins to purchase a total of
     16,843 shares of Common Stock, (iii) prior to completion of this
     Offering, 594,131 outstanding shares of Common Stock and 57,108 shares of
     Common Stock issuable upon the exercise of currently outstanding options
     which are subject to a voting trust for which Mr. Collins is the trustee
     with the sole power to vote. The voting trust automatically expires upon
     completion of this Offering; therefore, the number of shares beneficially
     owned after this Offering by Mr. Collins does not include the shares
     covered by the voting trust. See "Certain Transactions."     
 
 (3) Includes currently exercisable options held by Mr. Jackson to purchase a
     total of 71,580 shares of Common Stock.
 
 (4) Includes currently exercisable options held by Mr. Boian to purchase a
     total of 8,421 shares of Common Stock.
 
 (5) Includes currently exercisable options held by Mr. Mashburn to purchase a
     total of 8,421 shares of Common Stock.
          
 (6) Includes options held by Mr. Burke to purchase a total of 11,667 shares
     of Common Stock which are vested but not currently exercisable.     
   
 (7) Includes options held by Mr. Knox to purchase a total of 11,667 shares of
     Common Stock which are vested but not currently exercisable.     
   
 (8) Includes options held by Mr. Leonard to purchase a total of 11,667 shares
     of Common Stock which are vested but not currently exercisable.     
   
 (9) Mr. Sturm's address is Nelson Mullins Riley & Scarborough, L.L.P., 999
     Peachtree Street, N.E., Suite 1400, Atlanta, Georgia 30309. The 373,865
     shares owned by Mr. Sturm are subject to a voting trust agreement
     pursuant to which Mr. Collins has the right to vote such shares. Such
     voting trust expires, by its terms, upon completion of the Offering.     
   
(10) Includes currently exercisable options held by Mr. Henderson to purchase
     a total of 8,421 shares of Common Stock. From June 4, 1996 to January 30,
     1998, Mr. Henderson served as a director and officer of the Company.
     Prior to June 1996, Mr. Henderson was an officer and director of Systems.
         
                                      51
<PAGE>
 
                             CERTAIN TRANSACTIONS
 
ACQUISITIONS
 
  The Company was incorporated in 1996 to be a holding company for Systems,
Data Services and ProVesa and has since acquired three other companies to
create a single-source provider of electronic commerce solutions for community
financial institutions. Historically, the Company operated the acquired
companies as wholly-owned subsidiaries. On January 30, 1998, the Company
acquired Technologies, consolidated its corporate structure and now operates
two wholly-owned subsidiaries, ProVesa and InterCept Switch. See "The
Company." In certain of these transactions, persons who were previously
officers, directors and/or shareholders of the acquired companies became
executive officers, directors or holders of at least 5% of the outstanding
Common Stock ("Interested Persons") and may have received other consideration
from the Company. The following table summarizes the total number of shares of
Common Stock issued by the Company to Interested Persons in those
acquisitions:
 
<TABLE>
<CAPTION>
                                                                     SHARES OF
       ACQUIRED COMPANY                                             COMMON STOCK
       ----------------                                             ------------
       <S>                                                          <C>
       Systems.....................................................  2,431,622
       Data Services...............................................    610,537
       ProVesa.....................................................    221,056
       Bank Services...............................................    501,129
       FiNet.......................................................    244,741
       Technologies................................................  2,741,029
                                                                     ---------
           Total...................................................  6,750,114
                                                                     =========
</TABLE>
 
 Intercept Systems, Inc. and Data Services Corp.
   
  On June 4, 1996, pursuant to an Agreement of Share Exchange by and between
the Company, Systems, Data Services, John W. Collins, Vir A. Nanda, James R.
Henderson, and Farrell S. Mashburn, the Company acquired all of the
outstanding capital stock of Systems and Data Services. In exchange for
substantially all of the capital stock of Systems, the Company issued the
following shares of Common Stock: John W. Collins--1,042,124 shares; Vir A.
Nanda--1,042,124 shares and J. Ronney Henderson--347,375 shares. The Company
and The Ronney Henderson Charitable Remainder Trust (the "Henderson Trust"),
for which J. Ronney Henderson is the trustee, entered into a Share Purchase
Agreement dated June 4, 1996, pursuant to which the Company purchased 206
shares of the common stock of Systems for the purchase price of $1.0 million.
In exchange for all of the capital stock of Data Services, the Company issued
427,376 shares of Common Stock to Mr. Collins and 183,161 shares of Common
Stock to Mr. Mashburn. Based upon the price at which the Henderson Trust sold
its shares to the Company, the value of the shares of Common Stock issued in
exchange for the capital stock of Systems and Data Services was approximately
$1.44 per share. Pursuant to a voting agreement, Mr. Nanda agreed to vote his
1,038,544 shares as Mr. Collins directed through May 1998.     
 
  The Company entered into an employment agreement with Mr. Henderson dated
June 4, 1996, pursuant to which Mr. Henderson receives an annual salary of not
less than $60,000. In addition, pursuant to his employment agreement, the
Company is required to pay Mr. Henderson (x) $15,000 per month until the
earlier of (i) the completion of 60 consecutive months, or (ii) the payment of
$1.8 million on or, at the Company's discretion, at any time prior to June 4,
2001. The Company also entered into an employment agreement with Mr. Nanda
dated June 4, 1996, pursuant to which Mr. Nanda receives an annual salary of
not less than $200,000. See "Management--Employment Agreements."
 
  Also in connection with the acquisition of Systems and Data Services, the
Company entered into the GSB Loan Facility on June 17, 1996, pursuant to which
it borrowed $3.0 million from the Georgia State Bank. The proceeds of the loan
were used to acquire the stock of Data Services and Systems and to satisfy
existing indebtedness in the amount of $686,421 owed to The Bankers Bank,
Atlanta, Georgia ("The Bankers Bank"). Data Services, Systems and Mr. Collins
guaranteed the GSB Loan Facility. The stock of Data Services and Systems was
pledged to secure the GSB Loan Facility, and, as additional security, Mr.
Collins assigned to the
 
                                      52
<PAGE>
 
lender a life insurance policy on his life in the amount of $1.0 million. In
connection with the GSB Loan Facility, Mr. Henderson agreed to subordinate his
rights to payments from the Company pursuant to his employment agreement dated
June 4, 1996 to the rights of the lender.
   
  On June 17, 1996, The Bankers Bank purchased an 83.0% interest in the GSB
Loan Facility. Bruce P. Leonard, a director of the Company, is the President
and Chief Executive Officer of The Bankers Bank. As of March 31, 1998, the
outstanding balance owed under the GSB Loan Facility was $2,682,714. See "Use
of Proceeds."     
 
 ProVesa Inc.
 
  Pursuant to an Agreement and Plan of Merger effective November 27, 1996,
among the Company, PV Acquisition Corp., a wholly-owned subsidiary of the
Company ("PVAC"), and ProVesa, Inc., ProVesa, Inc. merged with and into PVAC,
which then changed its name to ProVesa Inc. In connection with the merger, all
outstanding shares of capital stock of ProVesa, Inc. were converted into an
equal number of shares of the capital stock of the Company. Based upon
information available to the Company at the time, the value of the shares of
Common Stock issued in this transaction was approximately $2.29 per share. As
a result of such conversion, the Company issued a total of 221,057 shares of
Common Stock and 4,000 shares of Series A Preferred Stock. Interested Persons
receiving shares of Common Stock in connection with this transaction included:
John W. Collins--58,948 shares; Donny R. Jackson--36,843 shares; Farrell S.
Mashburn--21,053 shares; J. Ronney Henderson--29,474 shares; Michael D.
Sulpy--4,211 shares; Vir A. Nanda--4,211 shares; and Glenn W. Sturm--4,211
shares.
 
 FiNet, Inc.
   
  On December 17, 1996, pursuant to an Acquisition and Merger Agreement dated
as of November 30, 1996, Intercept Acquisitions II, Inc., a wholly-owned
subsidiary of the Company, acquired by merger all of the capital stock of
FiNet in exchange for 244,741 shares of Common Stock and changed its name to
FiNet, Inc. Paul D. England, an officer and shareholder of the acquired
company, received 73,422 shares of Common Stock and options to acquire 171,319
shares of Common Stock (which options have been canceled). Based upon
information available to the Company at the time, the value of the Shares of
Common Stock issued in exchange for the Capital Stock of FiNet was $2.35 per
share. Following the acquisition, Mr. England remained the President of FiNet
and entered into an employment agreement with the Company which provides for a
current annual salary of $120,000. Glenn W. Sturm, a director of the Company,
exchanged options to acquire 333 shares of common stock of FiNet for 12,236
shares of Common Stock of the Company in connection with this transaction. On
December 31, 1996, Mr. Sturm was granted options to acquire 28,554 shares of
Common Stock at an exercise price of $2.16 per share.     
 
  The Company, John W. Collins, Glenn W. Sturm, Salem Capital Corporation,
Paul D. England, Jack L. Lance and Jerry McKamey entered into a Voting Trust
Agreement dated as of December 31, 1996 (the "Voting Trust"), Pursuant to the
Voting Trust, Messrs. England, Lance, Sturm and McKamey and Salem Capital
Corporation agreed to place into a voting trust all shares of Common Stock
received upon exercise of options granted to them by the Company and all other
securities of the Company acquired or held by them at any future time in
connection with the performance of employment and consulting services to
FiNet. The options to acquire 513,956 shares of Common Stock held by Messrs.
England, Lance and McKamey were terminated in January 1998. However, in
connection with their continued employment by the Company following the merger
of the Company and FiNet in January 1998, Messrs. England, Lance and McKamey
agreed to subject the shares of Common Stock owned by them to the Voting
Trust. John W. Collins is the trustee of the trust and has the right to vote
shares subject to the Voting Trust. The Voting Trust terminates automatically
upon completion of this Offering. The options owned by Mr. Sturm and Salem
Capital Corporation are not currently exercisable.
 
 Bank Services Corporation
 
  On December 31, 1996, pursuant to an Acquisition and Merger Agreement dated
as of November 26, 1996, Intercept Acquisitions, Inc., a wholly-owned
subsidiary of the Company, acquired by merger all of the capital
 
                                      53
<PAGE>
 
stock of Bank Services in exchange for 501,129 shares of Common Stock. Based
upon information available to the Company at the time, the value of the shares
of Common Stock issued in exchange for the capital stock of Bank Services was
approximately $2.16 per share. Philip R. Meinert, an officer of the Company,
received 129,602 shares of Common Stock in exchange for his shares of Bank
Services owned prior to the merger.
 
  In connection with the acquisition, Bank Services entered into a Loan
Agreement dated December 27, 1996 with Community Bank of Georgia, pursuant to
which it borrowed $450,000. The Company pledged all of the stock of Bank
Services it received in the transaction as security for the loan. Messrs.
Collins and Jackson and Data Services were guarantors of the loan. In
addition, life insurance policies on the lives of Messrs. Collins and Jackson
with a face value of $200,000 were pledged as additional collateral. On
January 26, 1998, Bank Services paid $406,336 to Community Bank of Georgia in
full satisfaction of the loan. As a result of such repayment, the Bank
Services stock was released from the pledge, Messrs. Collins and Jackson were
released from their guaranties and the life insurance policies previously
pledged as collateral for the loan were also released.
 
 Intercept Communications Technologies, Inc.
 
  Pursuant to an Agreement and Plan of Merger dated as of January 30, 1998,
the Company merged with Technologies. In exchange for the membership units of
Technologies, the Company issued a total of 2,741,029 shares of Common Stock
to 17 individuals, including the following Interested Persons: John W.
Collins--926,823 shares; Donny R. Jackson--492,990 shares; Glenn W. Sturm--
357,419 shares; Michael D. Sulpy--492,992 shares and a total of 470,804 shares
to certain family members of John W. Collins, some of whom work for the
Company. Based upon information available to the Company at the time, the
value of the shares of Common Stock issued in this transaction was
approximately $7.40 per share. Pursuant to agreements dated July and August of
1997, Messrs. Jackson, Sturm and Sulpy granted Mr. Collins the right to vote
their interests in Technologies.
 
OTHER TRANSACTIONS AND RELATIONSHIPS
 
  In connection with a $3.5 million loan from Sirrom Investments, Inc. to Dyad
Corporation ("Dyad"), Mr. Collins guaranteed the loan and pledged 1,222,758
shares of Common Stock to secure his guaranty. The shares of Common Stock
pledged by Mr. Collins will be released upon completion of the Offering.
Messrs. Collins, Jackson and Sturm are directors and shareholders of Dyad.
 
  On December 31, 1997, the Company received $1,254,121 from Dyad for
repayment of a loan to Dyad from the Company. The shareholders of Dyad
include: the Company; John W. Collins; Donny R. Jackson; Glenn W. Sturm;
Michael D. Sulpy; JCB Venture Partnership III, an affiliate of J.C. Bradford &
Co.; and Phoenix International Ltd., Inc. ("Phoenix"), of which Mr. Sturm is a
director.
   
  Prior to their acquisition by the Company, Data Services and Systems were S
corporations. As a result, Messrs. Collins and Mashburn received distributions
in amounts (totaling $40,000) necessary to pay their personal taxes
attributable to the income of Data Services and Messrs. Collins, Henderson and
Nanda received distributions of $532,479, $526,122 and $520,446, respectively,
necessary to pay their personal taxes attributable to the income of Systems.
From its inception in March 1996 until October 1997, Technologies was taxed as
a partnership. Upon its election in October 1997 to be taxed as a C
corporation, Technologies made distributions of $380,495, of which $69,758
remains unpaid after the January 15, 1998 distribution to its members,
including Messrs. Collins, Jackson, Sulpy and Sturm.     
 
  During the period from January 1, 1996 to May 31, 1996, the Company incurred
costs of $119,400 and $44,775, respectively, for equipment maintenance
services from Data Services.
 
  During 1995, the Company incurred costs of $102,821 for transportation
services provided by Javiar, Inc. ("Javiar" ), a corporation owned by Messrs.
Collins, Henderson and Nanda, In May 1996, Javiar was merged into Systems, and
each of the shareholders of Javiar received nine shares of stock of Systems as
part of the
 
                                      54
<PAGE>
 
merger. The Company had a note receivable from Javiar in the amount of
$182,179, which was extinguished upon the merger.
 
  The Company incurred costs of $168,018 and $125,296 in 1995 and 1996,
respectively, for supplies and services from ATM Source, a corporation wholly-
owned by Mr. Collins. There were no transactions between these entities in
1997.
 
  The Company and Phoenix have entered into Software License and Development
Agreements dated December 31, 1997 (the "December Agreement"). Under the
December Agreement, the Company licensed ATM and voice response software from
Phoenix and obtained the rights to develop the software and integrate it with
the Company's existing software programs. On January 15, 1998, Phoenix and the
Company entered into an agreement (the "January Agreement") whereby Phoenix
licensed EFT software from the Company and obtained the rights to develop the
software and integrate it with Phoenix's existing programs. Glenn W. Sturm, a
director of the Company, is also a director of Phoenix. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
 
  ProVesa paid Systems a total of $174,774 and $166,572 for the year ended
December 31, 1995 and the eleven month period ended November 30, 1996 for ATM
processing and card supplies.
 
COMPANY POLICY
 
  Following the closing of this Offering, all transactions with the Company's
shareholders, officers and directors or their affiliates, if any, will be
subject to the approval of a majority of the independent and disinterested
outside directors and will be conducted on terms no less favorable than could
be obtained from unaffiliated third parties on an arm's length basis.
 
                                      55
<PAGE>
 
                         DESCRIPTION OF CAPITAL STOCK
 
  The following description of the capital stock of the Company is only a
summary and is subject to the provisions of the Articles of Incorporation and
Bylaws, which are included as exhibits to the Registration Statement of which
this Prospectus forms a part, and the provisions of applicable law.
 
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
   
  The Company's Amended and Restated Articles of Incorporation (the "Articles
of Incorporation"), filed on April 29, 1998, authorize the Board of Directors
to issue 50,000,000 shares of Common Stock without par value and 1,000,000
shares of Preferred Stock without par value, in one or more classes or series
and, within certain limitations, to determine the voting rights (including the
right to vote as a series on particular matters), preferences as to dividends
and in liquidation, and conversion and other rights of such series. The rights
of the holders of the Common Stock are subject to the rights of the Company's
Series A 8% Cumulative Preferred Stock (the "Series A Preferred Stock")
(discussed below) and such other rights as the Board of Directors may
hereafter confer on the holders of preferred stock; accordingly, such rights
conferred on holders of any additional preferred stock that may be issued in
the future under the Articles of Incorporation may adversely affect the rights
of holders of the Common Stock. As of May 31, 1998, there were 6,750,114
shares of Common Stock outstanding.     
 
COMMON STOCK
 
  Under the Articles of Incorporation, holders of Common Stock are entitled to
receive such dividends as may be legally declared by the Board of Directors.
Each shareholder is entitled to one vote per share on all matters to be voted
upon and will not be entitled to cumulate votes for the election of directors.
Holders of Common Stock will not have preemptive, redemption or conversion
rights and, upon liquidation, dissolution or winding up of the Company, will
be entitled to share ratably in the net assets of the Company available for
distribution to common shareholders. All outstanding shares prior to the
Offering are, and all shares to be issued in this Offering will be, validly
issued, fully paid and non-assessable. The rights, preferences and privileges
of holders of Common Stock are subject to the rights, preferences and
privileges of holders of the Series A Preferred Stock, as well as any
additional classes or series of preferred stock that the Company may issue in
the future.
 
PREFERRED STOCK
 
  The Articles of Incorporation authorize the Board of Directors to issue,
without further action by the holders of the Common Stock, shares of preferred
stock in one or more series and to fix any preferences, conversion and other
rights, voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as shall be set forth in resolutions adopted by the
Board of Directors. Articles of amendment must be filed with the Georgia
Secretary of State prior to the issuance of any shares of preferred stock of
the applicable series. Any preferred stock so issued may rank senior to the
Common Stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding-up, or both. In addition, any such shares
of preferred stock may have class or series voting rights. Issuances of
preferred stock, while providing the Company with flexibility in connection
with general corporate purposes, may, among other things, have an adverse
effect on the rights of holders of Common Stock and, in certain circumstances,
could have the effect of making it more difficult for a third party to acquire
a majority of the outstanding voting stock of the Company or the effect of
decreasing the market price of the Common Stock. The Company has no present
plan to issue any additional shares of preferred stock.
 
 Series A Preferred Stock
 
  On November 27, 1996, the Company filed Articles of Amendment to its
Articles of Incorporation for the designation of 30,000 shares of Series A
Preferred Stock. The stated value of the Series A is $100 per share. Holders
of Series A Preferred Stock are entitled to receive dividends at the annual
rate of 8% of the stated value
 
                                      56
<PAGE>
 
per share, or $8.00 per share, payable quarterly. Dividends are cumulative
from the date of issue. The Company may not declare or pay cash dividends on
any other series of Preferred Stock that is junior to or on parity with the
Series A Preferred Stock, or on the Common Stock, nor may it redeem, purchase
or otherwise acquire any of such stock, unless full cumulative dividends have
been or are contemporaneously declared and paid on the Series A Preferred
Stock. In the event of any liquidation or dissolution of the Company, the
holders of shares of Series A Preferred Stock are entitled to receive out of
assets of the Company available for distribution to shareholders, before any
distributions are made to holders of Common Stock or of any other shares of
stock of the Company ranking junior to the Series A Preferred Stock,
liquidating distributions in the amount of $100 per share, plus accrued and
unpaid dividends.
 
  The Series A Preferred Stock is redeemable at the option of the Company for
cash at any time, in whole or in part, on at least 10 days' notice. The price
payable upon redemption is 110% of stated value per share, or $110 per share,
plus accrued but unpaid dividends. At any time after the third anniversary of
the initial issuance of shares of Series A Preferred Stock, any holder of
Series A Preferred Stock may tender all or part of such holder's Series A
Preferred Stock for redemption at a price equal to 100% of stated value, or
$100 per share, plus accrued and unpaid dividends. The holders of the Series A
Preferred Stock have no voting rights except as otherwise required by the
Georgia Business Corporation Code (the "Georgia Code") and applicable law. The
holders of shares of Series A Preferred Stock have no preemptive or other
rights to subscribe for any other shares or securities, nor do they have any
conversion rights. The Series A Preferred Stock ranks prior to the Common
Stock as to dividends and upon liquidation of the Company.
 
  As of March 31, 1998, there were 4,000 shares of Series A Preferred Stock
outstanding. The Company will redeem all of the 4,000 shares of Series A
Preferred Stock using net proceeds of the Offering. See "Use of Proceeds."
 
CLASSIFIED BOARD OF DIRECTORS
 
  The Articles of Incorporation provide that the Board of Directors shall
consist of not less than four nor more than 12 members. The Board of Directors
is divided into three classes of directors serving staggered three-year terms.
As a result, approximately one-third of the Board of Directors are elected at
each annual meeting of shareholders. The classification of directors, together
with other provisions in the Articles of Incorporation and Bylaws that limit
the removal of directors and permit the remaining directors to fill any
vacancies on the Board of Directors, has the effect of making it more
difficult for shareholders to change the composition of the Board of
Directors. As a result, at least two annual meetings of shareholders may be
required for the shareholders to change a majority of the directors, whether
or not such change in the Board of Directors would be beneficial to the
Company and its shareholders and whether or not a majority of the Company's
shareholders believes that such a change would be desirable. The Company
believes, however, that the longer time required to elect a majority of a
classified Board of Directors will help to ensure the continuity and stability
of the Company's management and policies. Currently, the terms of Class I
directors expire in 1999, the terms of Class II directors expire in 2000 and
the terms of Class III directors expire in 2001.
 
REMOVAL OF DIRECTORS AND FILLING VACANCIES
 
  The Bylaws provide that, unless the Board of Directors otherwise determines,
any vacancies, including vacancies resulting from an increase in the number of
directors, will be filled by the affirmative vote of a majority of the
remaining directors, even if less than a quorum. A director may be removed
only with cause by the vote of the holders of 66 2/3% of the shares entitled
to vote for the election of directors at a meeting of shareholders called for
the purpose of removing such director.
 
ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER NOMINATIONS AND SHAREHOLDER
PROPOSALS
 
  The Bylaws provide that with respect to an annual meeting of shareholders,
the proposal of business to be considered by shareholders and nominations of
persons for election to the Board of Directors may be made only
 
                                      57
<PAGE>
 
(i) by or at the direction of the Board of Directors, the Chairman of the
Board of Directors or the President, or (ii) by a shareholder who has complied
with the advance notice procedures set forth in the Bylaws.
 
  The purpose of requiring shareholders to give the Company advance notice of
nominations and other business is to afford the Board of Directors a
meaningful opportunity to consider the qualifications of the proposed nominees
or the advisability of the other proposed business and, to the extent deemed
necessary or desirable by the Board of Directors, to inform shareholders and
make recommendations about such qualifications or business, as well as to
provide a more orderly procedure for conducting meetings of shareholders.
Although the Bylaws do not give the Board of Directors any power to disapprove
timely shareholder nominations for the election of directors or proposals for
action, they may have the effect of precluding a contest for the election of
directors or the consideration of shareholder proposals if the proper
procedures are not followed and of discouraging or deterring a third party
from conducting a solicitation of proxies to elect its own slate of directors
or to approve its own proposal.
 
SPECIAL MEETINGS
 
  Under the Bylaws, provided that the Company has more than 100 beneficial
owners (as defined by the Georgia Code) of its shares, special meetings of the
shareholders may be called by shareholders only if such shareholders hold
outstanding shares representing a majority of all votes entitled to be cast on
any issue proposed to be considered at any such special meeting. If the
Company has less than 100 beneficial owners, the holders of shares
representing 25% or more of the votes entitled to be cast may call a special
meeting.
 
INDEMNIFICATION AND LIMITATION OF LIABILITY
 
  The Articles of Incorporation eliminate, subject to certain exceptions, the
personal liability of a director to the Company or its shareholders for
monetary damage for breaches of such director's duty of care or other duties
as a director. The Articles do not provide for the elimination of or any
limitation on the personal liability of a director for (i) any appropriation,
in violation of the director's duties, of any business opportunity of the
Company, (ii) acts or omissions that involve intentional misconduct or a
knowing violation of law, (iii) unlawful corporate distributions, or (iv) any
transactions from which the director derived an improper personal benefit. The
Articles of Incorporation of the Company further provide that if the Georgia
Code is amended to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director of the
Company shall be eliminated or limited to the fullest extent permitted by the
Georgia Code, as amended, without further action by the shareholders. These
provisions of the Articles of Incorporation will limit the remedies available
to a shareholder in the event of breaches of any director's duties to such
shareholder or the Company.
 
  The Company's Bylaws require the Company to indemnify and hold harmless any
director who was or is a party or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative (including any action or suit by or
in the right of the Company) because he or she is or was a director of the
Company, against expenses (including, but not limited to, attorney's fees and
disbursements, court costs and expert witness fees), and against judgments,
fines, penalties, and amounts paid in settlement incurred by him or her in
connection with the action, suit or proceeding. Indemnification would be
disallowed under any circumstances where indemnification may not be authorized
by action of the Board of Directors, the shareholders or otherwise.
 
  The Company has entered into separate indemnification agreements with each
of its directors and executive officers, whereby the Company agreed, among
other things, to provide for indemnification and advancement of expenses in a
manner and subject to terms and conditions similar to those set forth in the
Bylaws. These agreements also provide that the Company shall purchase and
maintain liability insurance for the benefit of its directors and executive
officers. These agreements may not be abrogated by action of the shareholders.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to
 
                                      58
<PAGE>
 
which indemnification is being sought, nor is the Company aware of any pending
or threatened litigation that may result in claims for indemnification by any
director, officer, employee or other agent.
 
REGISTRATION RIGHTS
   
  Upon expiration of the Lock-up Agreements, Mr. Collins and Mr. Jackson, who
will beneficially hold 2,472,113 and 605,625 shares of Common Stock,
respectively, upon completion of this Offering, will be entitled to certain
demand registration rights with respect to such shares, if their employment is
terminated for any reason or if they are no longer directors of the Company.
If the exercise of their demand registration rights causes a large number of
shares to be registered and sold in the public market, such sales could have a
material adverse effect on the market price for the Common Stock. See "Shares
Eligible for Future Sale."     
 
ANTI-TAKEOVER PROVISIONS AND GEORGIA LAW
 
  Board and Shareholder Action Required for Certain Transactions. The Articles
of Incorporation require the affirmative vote of at least 66 2/3% of the
directors for the following actions by the Company to be submitted to a vote
of the shareholders: (i) a sale of all or substantially all of the assets of
the Company; (ii) a liquidation or dissolution of the Company; (iii) the
merger, consolidation or reorganization of the Company, unless the
shareholders of the Company immediately prior to such transaction own at least
a majority of the combined voting power of the Company resulting from such
merger, consolidation or reorganization; or (iv) any increase in the number of
directors above 12 directors. In addition, the affirmative vote of 66 2/3% of
the holders of the Common Stock is required for shareholder approval of any
such actions.
 
  Issuance of Preferred Stock. The Board of Directors has the power to issue
1,000,000 shares of preferred stock, in one or more classes or series and with
such rights and preferences as determined by the Board of Directors, all
without shareholder approval. Because the Board of Directors has the power to
establish the preferences and rights of each class or series of preferred
stock, it may afford the holders in any series of preferred stock preferences,
powers and rights, voting or otherwise, senior to the rights of holders of
Common Stock. The Board of Directors has no present plans to issue any
additional shares of preferred stock.
 
  Georgia Anti-Takeover Statutes. The Georgia Code generally restricts a
company from entering into certain business combinations with an interested
shareholder (which is defined as any person or entity that is the beneficial
owner of at least 10% of the company's voting stock) or its affiliates for a
period of five years after the date on which such shareholder became an
interested shareholder, unless (i) the transaction is approved by the Board of
Directors of the Company prior to the date such person became an interested
shareholder, (ii) the interested shareholder acquires 90% of the company's
voting stock in the same transaction in which it exceeds 10%, or (iii)
subsequent to becoming an interested shareholder, such shareholder acquires
90% of the company's voting stock and the business combination is approved by
the holders of a majority of the voting stock entitled to vote thereon (the
"Business Combination Statute"). The Georgia Code provides that the Business
Combination Statute will not apply unless the bylaws of the corporation
specifically provide that the Business Combination Statute is applicable to
the corporation. The Company has not elected to be covered by such statute,
but it could do so by action of the Board of Directors at any time.
 
TRANSFER AGENT AND REGISTRAR
 
  The transfer agent and registrar for the Common Stock is SunTrust Bank,
Atlanta.
 
                                      59
<PAGE>
 
                        SHARES ELIGIBLE FOR FUTURE SALE
   
  Upon completion of this Offering, the Company will have outstanding
9,000,114 shares of Common Stock and options to purchase 595,583 additional
shares of Common Stock. The 2,387,500 shares sold in this Offering (2,745,625
shares if the Underwriters over-allotment option is exercised in full) will be
freely tradable by persons other than affiliates of the Company, without
restriction. The remaining 6,612,614 shares of Common Stock will be
"restricted" securities within the meaning of Rule 144 under the Securities
Act and may be sold pursuant to a registration under the Securities Act or
pursuant to an exemption from registration, including the exemption contained
in Rule 144 discussed below. The officers, directors and current shareholders
of the Company have agreed, subject to certain exceptions, not to sell or
otherwise dispose of any shares of Common Stock for a period of 180 days (the
"Lock-up Period") after the date of this Prospectus without the prior written
consent of J.C. Bradford & Co., Inc. See "Underwriting." Upon the expiration
of the Lock-up Period, 3,871,585 of these restricted shares will be eligible
for immediate sale in the public market, subject to the provisions of Rule 144
in certain cases, and the remaining 2,741,029 restricted shares will become
available for public sale, subject to the provisions of Rule 144 (including
the volume restrictions) on January 31, 1999.     
   
  In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares of
Common Stock for at least one year (including the prior holding period of any
prior owner other than an affiliate) is entitled to sell within any three-
month period that number of shares which does not exceed the greater of 1% of
the outstanding shares of Common Stock and the average weekly trading volume
during the four calendar weeks preceding each such sale. Sales under Rule 144
are also subject to certain manner of sale provisions, notice requirements and
the availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed an "affiliate" of the
Company for at least three months and who has beneficially owned shares for at
least two years (including the holding period of any prior owner other than an
affiliate) would be entitled to sell such shares under Rule 144 without regard
to the limitations described above. Rule 144 defines "affiliate" of a company
as a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such company.
Affiliates of a company generally include its directors, officers and
principal shareholders. Upon the expiration of the Lock-up Period, 3,871,585
shares of Common Stock that are "restricted" securities will be eligible for
sale in the public market subject to the limitations of Rule 144.     
 
  The Company intends to register on a registration statement on Form S-8 the
shares of Common Stock issuable upon exercise of options granted or reserved
for issuance under the 1996 Stock Option Plan and the ProVesa Plan including
the 595,853 shares subject to options which are currently outstanding. Upon
such registration, such shares will be eligible for resale in the public
market without restrictions by persons who are not affiliates of the Company,
and to the extent they are held by affiliates, pursuant to Rule 144 without
observance of the holding period requirements.
 
  As soon as practical after the closing of this Offering, the Company intends
to register up to 2,000,000 shares of its Common Stock under the Securities
Act for use in connection with future acquisitions, and it will be a condition
to the issuance of any of these shares that the holders agree similarly not to
sell, contract to sell or otherwise dispose of such shares for the remaining
portion, if any, of the Lock-up Period. Thereafter, these shares will
generally be freely tradable after their issuance, unless the sale thereof is
contractually restricted.
 
  The Company has also granted Mr. Collins and Mr. Jackson, with respect to
their shares of Common Stock, piggyback and, after any termination of
employment or if no longer a director of the Company, demand registration
rights. The Company generally is required to bear the expense relating to the
sale of the shareholders' securities under these registration rights, except
for underwriting discounts and commissions, and in certain cases the fees and
expenses of the shareholders' counsel and filing fees related to the
registration statement. The Company also is obligated to indemnify the
shareholders whose shares are included in any of the Company's registrations
against certain losses and liabilities, including liabilities under the
Securities Act and state securities laws.
 
                                      60
<PAGE>
 
  Prior to this Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that the sale
of shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of
Common Stock in the public market could adversely affect prevailing market
prices and the ability of the Company to raise equity capital in the future.
 
                                      61
<PAGE>
 
                                 UNDERWRITING
   
  Pursuant to the Underwriting Agreement, and subject to the terms and
conditions thereof, the Underwriters listed below, who are represented by J.C.
Bradford & Co. and Wheat First Union, a division of Wheat First Securities,
Inc. (the "Representatives"), have agreed, severally, to purchase from the
Company and the Selling Shareholder the number of shares of Common Stock set
forth below opposite their respective names:     
 
<TABLE>   
<CAPTION>
   UNDERWRITER                                                  NUMBER OF SHARES
   -----------                                                  ----------------
<S>                                                             <C>
J.C. Bradford & Co.
Wheat First Securities, Inc. ..................................
                                                                   ---------
  Total........................................................    2,387,500
                                                                   =========
</TABLE>    
   
  The Underwriters have committed to purchase all of such shares if any are
purchased, subject to the terms of the Underwriting Agreement. The Company and
the Selling Shareholder have been advised by the Representatives that the
Underwriters propose initially to offer the shares of Common Stock to the
public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $     per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $     per share to certain other
dealers. After the public offering, the public offering price and such
concessions may be changed. The Representatives have informed the Company and
the Selling Shareholder that the Underwriters do not intend to confirm sales
to accounts over which they exercise discretionary authority.     
 
  The offering of the shares of Common Stock is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.
   
  The Company has granted the Underwriters an option, exercisable not later
than 30 days from the date of this Prospectus, to purchase up to 358,125
additional shares of Common Stock to cover over-allotments, if any, on the
same terms as those on which the 2,387,500 shares of Common Stock are being
offered. To the extent that the Underwriters exercise such option, each of
them will have a firm commitment to purchase approximately the same percentage
thereof which the number of shares of Common Stock to be purchased by it shown
in the table above bears to the total number of shares in such table, and the
Company will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover over-
allotments made in connection with the Offering.     
          
  Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price has been determined by negotiation among the
Company, the Selling Shareholder and the Representatives. In determining such
price, consideration was given to, among other things, the financial and
operating history and trends of the Company, the experience of its management,
the position of the Company in its industry, the Company's prospects and the
Company's financial results. In addition, consideration was given to the
status of the securities markets, market conditions for new offerings of
securities and the prices of similar securities of comparable companies.     
   
  The Company's executive officers and directors and all of its current
shareholders have agreed with the Representatives not to offer, sell or
otherwise dispose of any shares of Common Stock, any securities exercisable
for or convertible into Common Stock or any options to acquire Common Stock
owned by them prior to the expiration of the Lock-up Period, without the prior
written consent of the J.C. Bradford & Co. See "Shares Eligible for Future
Sale."     
 
  As soon as practical after the closing of this Offering, the Company intends
to register up to 2,000,000 shares of its Common Stock under the Securities
Act for use in connection with future acquisitions, and it will
 
                                      62
<PAGE>
 
be a condition to the issuance of any of these shares that the holders agree
similarly not to sell, contract to sell or otherwise dispose of such shares
for the remaining portion, if any, of the Lock-up Period. Thereafter, these
shares will generally be freely tradable after their issuance, unless the sale
thereof is contractually restricted.
   
  The Underwriting Agreement provides that the Company and the Selling
Shareholder will indemnify the Underwriters and controlling persons, if any,
against certain civil liabilities, including liabilities under the Securities
Act, or will contribute to payments that the Underwriters or any such
controlling persons may be required to make in respect thereof.     
 
  In connection with this Offering, the Underwriters and other persons
participating in the Offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the Common Stock. Specifically, the
Underwriters may over-allot in connection with the Offering, creating a short
position in the Common Stock for their own account. To cover over-allotments
or to stabilize the price of the Common Stock, the Underwriters may bid for,
and purchase, shares of Common Stock in the open market. The Underwriters may
also impose a penalty bid whereby they may reclaim selling concessions allowed
to an underwriter or a dealer for distributing Common Stock in the Offering,
if the Underwriters repurchase previously distributed Common Stock in
transactions to cover their short position, in stabilization transactions or
otherwise. Finally, the Underwriters may bid for, and purchase, shares of
Common Stock in market making transactions. These activities may stabilize or
maintain the market price of Common Stock above market levels that may
otherwise prevail. The Underwriters are not required to engage in these
activities and may end any of these activities at any time.
   
  On April 28, 1998, the Company entered into a $20.0 million revolving line
of credit agreement with First Union National Bank, the proceeds of which will
be available to fund acquisitions upon completion of this Offering and the
satisfaction of certain other conditions set forth in such agreement. Wheat
First Union, one of the Representatives, is a division of Wheat First
Securities, Inc. First Union National Bank owns 100% of the capital stock of
Wheat First Securities, Inc.     
 
                                 LEGAL MATTERS
 
  The validity of shares of Common Stock offered hereby is being passed upon
for the Company by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta,
Georgia. Glenn W. Sturm, a partner in Nelson Mullins Riley & Scarborough,
L.L.P., is a director of the Company, and certain members of the firm,
including Mr. Sturm, own an aggregate of 380,181 shares of Common Stock and
options to acquire 28,554 shares of Common Stock. See "Management" and
"Principal and Selling Shareholders." Certain legal matters related to this
Offering will be passed upon for the Underwriters by Alston & Bird LLP,
Atlanta, Georgia.
 
                                    EXPERTS
 
  The Consolidated Financial Statements for the years ended December 31, 1995,
1996 and 1997, included elsewhere in this Prospectus, have been audited by
Arthur Andersen LLP ("Andersen"), independent public accountants, as indicated
in their reports with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in giving such reports.
 
  On January 16, 1998, the Company's Board of Directors decided to retain
Arthur Andersen LLP as the Company's independent public accountants and
dismissed the Company's former auditors. The former auditors' report on the
Company's consolidated financial statements for the two years ended December
31, 1996 does not cover the consolidated financial statements of the Company
included in this Prospectus. Such report did not contain an adverse opinion or
disclaimer of opinion and was not modified as to uncertainty, audit scope or
accounting principles. There were no disagreements with the former auditors on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure at the time of the change or with
respect to the Company's consolidated financial statements for the years ended
December 31, 1995 and 1996 which, if not resolved to the former auditors'
satisfaction, would have caused them to make reference to
 
                                      63
<PAGE>
 
the subject matter of the disagreement in connection with their report. Prior
to retaining Arthur Andersen LLP, the Company had consulted with Arthur
Andersen LLP regarding accounting principles in connection with the
acquisition of FiNet. Arthur Andersen LLP issued a report in connection with
this engagement regarding the poolability of FiNet. The engagement did not
include a review of the poolability of the Company. The Company ultimately
determined that the acquisition of FiNet should be accounted for as a purchase
due to treasury stock transactions of the Company.
 
                            ADDITIONAL INFORMATION
 
  The Company has filed with the Commission through the Electronic Data
Gathering and Retrieval ("EDGAR") system a registration statement on Form S-1
(together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered by this Prospectus. This Prospectus does not contain all of the
information set forth in such Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are necessarily summaries and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. For further information, reference is made to such registration
statement, including the exhibits thereto, which may be inspected without
charge at the Commission's principal office at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549; and at the following Regional Offices of the
Commission, except that copies of the exhibits may not be available at certain
of the Regional Offices: Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of all or any part
of such material may be obtained from the Commission at 450 Fifth Street, N.W.
Room 1024, Washington, D.C. 20549, upon payment of certain fees prescribed by
the Commission. The Commission maintains a World Wide Web site on the Internet
at http://www.sec.gov that contains reports, proxies, information statements,
and registration statements and other information filed with the Commission
through the EDGAR system.
 
  The Company is not presently a reporting company and does not file reports
or other information with the Commission. On the effective date of the
Registration Statement, however, the Company will register its Common Stock
under the Exchange Act. Accordingly, the Company will become subject to the
reporting requirements of the Exchange Act and in accordance therewith will
file reports, proxy statements and other information with the Commission. In
addition, after the completion of this Offering, the Company intends to
furnish its shareholders with annual reports containing audited financial
statements and with quarterly reports containing unaudited summary financial
information for each of the first three quarters of each fiscal year.
 
                                      64
<PAGE>
 
                   THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<S>                                                                        <C>
The InterCept Group, Inc. and Subsidiaries
  Report of Independent Public Accountants................................  F-2
  Consolidated Balance Sheets--December 31, 1996 and 1997 and March 31,
   1998 (unaudited).......................................................  F-3
  Consolidated Statements of Operations for the years ended December 31,
   1995, 1996 and 1997 and for the three months ended March 31, 1997 and
   1998 (unaudited).......................................................  F-4
  Consolidated Statements of Changes in Shareholders' Equity (Deficit) for
   the years ended December 31, 1995, 1996 and 1997 and for the three
   months ended March 31, 1997 and 1998 (unaudited).......................  F-5
  Consolidated Statements of Cash Flows for the years ended December 31,
   1995, 1996 and 1997 and for the three months ended March 31, 1997 and
   1998 (unaudited).......................................................  F-6
  Notes to Consolidated Financial Statements..............................  F-7
ProVesa, Inc. and Subsidiaries
  Report of Independent Public Accountants................................ F-24
  Consolidated Balance Sheets--June 30, 1995 and 1996 and November 27,
   1996................................................................... F-25
  Consolidated Statements of Operations for the years ended June 30, 1995
   and 1996 and the period from July 1, 1996 to November 27, 1996......... F-26
  Consolidated Statements of Shareholders' Equity for the years ended June
   30, 1995 and 1996 and the period from July 1, 1996 to November 27,
   1996................................................................... F-27
  Consolidated Statements of Cash Flows for the years ended June 30, 1995
   and 1996 and the period from July 1, 1996 to November 27, 1996......... F-28
  Notes to Consolidated Financial Statements.............................. F-29
FiNet, Inc.
  Report of Independent Public Accountants................................ F-37
  Balance Sheet--December 17, 1996........................................ F-38
  Statement of Operations for the period from June 21, 1996 to December
   17, 1996 .............................................................. F-39
  Statement of Shareholders' Deficit for the period from June 21, 1996 to
   December 17, 1996 ..................................................... F-40
  Statement of Cash Flows for the period from June 21, 1996 to December
   17, 1997 .............................................................. F-41
  Notes to Financial Statements........................................... F-42
Bank Services Corporation
  Report of Independent Public Accountants................................ F-43
  Balance Sheets--December 31, 1995 and 1996.............................. F-44
  Statements of Operations for the years ended December 31, 1995 and
   1996................................................................... F-45
  Statements of Shareholders' Equity (Deficit) for the years ended Decem-
   ber 31, 1995 and 1996.................................................. F-46
  Statements of Cash Flows for the years ended December 31, 1995 and 199-
   6...................................................................... F-47
  Notes to Financial Statements........................................... F-48
Data Services Corporation
  Report of Independent Public Accountants................................ F-51
  Balance Sheets--December 31, 1995 and June 4, 1996...................... F-52
  Statements of Operations for the year ended December 31, 1995 and the
   period from January 1, 1996 to June 4, 1996............................ F-53
  Statements of Shareholders' Deficit for the year ended December 31, 1995
   and the period from January 1, 1996 to June 4, 1996.................... F-54
  Statements of Cash Flows for the year ended December 31, 1995 and the
   period from January 1, 1996 to June 4, 1996............................ F-55
  Notes to Financial Statements........................................... F-56
</TABLE>
 
                                      F-1
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To The InterCept Group, Inc.:
 
  We have audited the accompanying consolidated balance sheets of THE
INTERCEPT GROUP, INC. (a Georgia corporation) AND SUBSIDIARIES as of December
31, 1996 and 1997 and the related consolidated statements of operations,
changes in shareholders' deficit, and cash flows for each of the three years
in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
 
  We conducted our audits 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 provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
InterCept Group, Inc. and subsidiaries as of December 31, 1996 and 1997 and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.
 
                                          /s/ Arthur Andersen LLP
 
Atlanta, Georgia
February 27, 1998 (except with respect
 to the matter discussed in Note 14 for
 which the date is April 28, 1998)
 
                                      F-2
<PAGE>
 
                   THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                              DECEMBER 31,
                                         ------------------------   MARCH 31,
                                            1996         1997         1998
                                         -----------  -----------  -----------
<S>                                      <C>          <C>          <C>
              A S S E T S                                          (UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents..............  $ 1,398,118  $ 2,010,236  $   939,770
Accounts receivable, less allowance for
 doubtful accounts of $157,772 and
 $156,616 in 1996 and 1997, respective-
 ly....................................    2,835,964    2,775,608    2,439,710
Related party note receivable..........      466,941            0            0
Inventory, prepaid expenses and other..      216,132      229,969    1,093,115
                                         -----------  -----------  -----------
  Total current assets.................    4,917,155    5,015,813    4,472,595
PROPERTY AND EQUIPMENT, net............    2,091,298    2,515,868    2,780,908
DEFERRED TAX ASSETS....................      653,236      668,331      663,875
NOTES RECEIVABLE.......................            0       45,408       42,698
INTANGIBLE ASSETS, net of accumulated
 amortization of $216,879 and $824,588
 in 1996 and 1997, respectively........    3,166,606    1,683,097    1,702,324
OTHER NONCURRENT ASSETS................      112,530      227,945      222,934
                                         -----------  -----------  -----------
                                         $10,940,825  $10,156,462  $ 9,885,334
                                         ===========  ===========  ===========
 LIABILITIES AND SHAREHOLDERS' EQUITY
               (DEFICIT)
CURRENT LIABILITIES:
 Current maturities of notes payable...  $   518,883  $   580,590  $   544,829
 Line of credit........................            0      200,000            0
 Accounts payable and accrued liabili-
  ties.................................    1,771,911    1,871,209    1,352,856
 Accrued income taxes..................       45,285      232,359      251,311
 Deferred revenue......................    1,071,753    1,139,614    1,719,110
                                         -----------  -----------  -----------
  Total current liabilities............    3,407,832    4,023,772    3,868,106
                                         -----------  -----------  -----------
NOTES PAYABLE, less current portion....    5,212,208    4,716,511    4,221,034
                                         -----------  -----------  -----------
DEFERRED COMPENSATION..................    1,800,000    1,800,000    1,800,000
                                         -----------  -----------  -----------
  Total liabilities....................   10,420,040   10,540,283    9,889,140
                                         -----------  -----------  -----------
MINORITY INTEREST......................       38,563            0        4,425
COMMITMENTS AND CONTINGENCIES..........
SERIES A REDEEMABLE PREFERRED STOCK 8%
 CUMULATIVE, NO PAR VALUE; 30,000
 SHARES AUTHORIZED; 4,000 SHARES ISSUED
 AND OUTSTANDING.......................      400,000      400,000      400,000
SHAREHOLDERS' EQUITY (DEFICIT):
 Preferred stock, no par value; 50,000
  shares authorized; Series A reported
  above................................            0            0            0
 Common stock, no par value; 10,000,000
  shares authorized; 6,750,114 shares
  issued and outstanding...............    2,770,522    2,764,405    2,764,405
 Accumulated deficit...................   (2,688,300)  (3,548,226)  (3,172,636)
                                         -----------  -----------  -----------
  Total shareholders' equity (defi-
   cit)................................       82,222     (783,821)    (408,231)
                                         -----------  -----------  -----------
                                         $10,940,825  $10,156,462  $ 9,885,334
                                         ===========  ===========  ===========
</TABLE>
 
   The accompanying notes are an integral part of these consolidated balance
                                    sheets.
 
                                      F-3
<PAGE>
 
                   THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                               YEARS ENDED DECEMBER 31,               MARCH 31,
                          ------------------------------------  ----------------------
                             1995        1996         1997         1997        1998
                          ----------  -----------  -----------  ----------  ----------
<S>                       <C>         <C>          <C>          <C>         <C>
                                                                     (UNAUDITED)
REVENUES:
 Service fee income.....  $6,480,607  $ 9,215,549  $16,841,276  $3,832,122  $4,573,235
 Equipment product
  sales, services and
  other.................     262,131    3,100,380    3,299,488     602,557     835,271
 Data communications
  management income.....   1,479,908    2,194,766    3,119,318     681,383     848,709
                          ----------  -----------  -----------  ----------  ----------
  Total revenues........   8,222,646   14,510,695   23,260,082   5,116,062   6,257,215
                          ----------  -----------  -----------  ----------  ----------
COSTS OF SERVICES:
 Cost of service fee in-
  come..................   2,886,698    3,196,893    5,215,251   1,285,610   1,292,363
 Cost of equipment and
  product sales.........     182,344    2,753,891    2,595,892     442,354     712,925
 Cost of data
  communications
  management income.....   1,538,061    1,908,551    2,411,508     545,705     629,335
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSE................   2,212,724    6,852,444   10,105,317   2,315,745   2,532,034
DEPRECIATION AND AMORTI-
 ZATION.................     242,202      350,991    1,323,771     308,849     284,661
LOSS ON IMPAIRMENT OF
 INTANGIBLES............           0            0      727,500           0           0
WRITEOFF OF PURCHASED
 RESEARCH AND
 DEVELOPMENT COSTS......           0      810,000            0           0           0
                          ----------  -----------  -----------  ----------  ----------
  Total operating ex-
   penses...............   7,062,029   15,872,770   22,379,239   4,898,263   5,451,318
                          ----------  -----------  -----------  ----------  ----------
OPERATING INCOME
 (LOSS).................   1,160,617   (1,362,075)     880,843     217,799     805,897
INTEREST EXPENSE........     (86,516)    (320,431)    (770,175)   (189,855)   (175,669)
INTEREST AND OTHER
 INCOME, net............      23,993       41,686      121,535      27,386      15,980
                          ----------  -----------  -----------  ----------  ----------
INCOME (LOSS) BEFORE
 PROVISION (BENEFIT) FOR
 INCOME TAXES AND
 MINORITY INTEREST......   1,098,094   (1,640,820)     232,203      55,330     646,208
PROVISION (BENEFIT) FOR
 INCOME TAXES...........     417,276     (236,379)     666,125      43,613     258,193
MINORITY INTEREST IN
 (INCOME) LOSS OF
 CONSOLIDATED
 SUBSIDIARY.............           0      (14,558)      38,564      25,415      (4,425)
                          ----------  -----------  -----------  ----------  ----------
NET INCOME (LOSS) BEFORE
 PREFERRED DIVIDENDS....     680,818   (1,418,999)    (395,358)     37,132     383,590
PREFERRED DIVIDENDS.....           0       (8,000)     (32,000)     (8,000)     (8,000)
                          ----------  -----------  -----------  ----------  ----------
NET INCOME (LOSS)
 ATTRIBUTABLE TO COMMON
 SHAREHOLDERS...........  $  680,818  $(1,426,999) $  (427,358) $   29,132  $  375,590
                          ==========  ===========  ===========  ==========  ==========
NET INCOME (LOSS) PER
 COMMON SHARE:
 Basic..................  $     0.12  $     (0.24) $     (0.06) $     0.00  $     0.06
                          ==========  ===========  ===========  ==========  ==========
 Diluted................  $     0.12  $     (0.24) $     (0.06) $     0.00  $     0.06
                          ==========  ===========  ===========  ==========  ==========
</TABLE>
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                      F-4
<PAGE>
 
                   THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
      CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
 
<TABLE>
<CAPTION>
                                    COMMON STOCK
                                ---------------------
                                                         RETAINED
                                                         EARNINGS
                                                       (ACCUMULATED
                                 SHARES      AMOUNT      DEFICIT)      TOTAL
                                ---------  ----------  ------------  ----------
<S>                             <C>        <C>         <C>           <C>
BALANCE, December 31, 1994..... 5,867,400  $  106,128  $   (16,863)  $   89,265
 Distributions for taxes to
  shareholders of pass through
  entities.....................         0           0     (420,600)    (420,600)
 Net income attributable to
  common shareholders..........         0           0      680,818      680,818
 Pro forma tax provision.......         0           0      417,276      417,276
                                ---------  ----------  -----------   ----------
BALANCE, December 31, 1995..... 5,867,400     106,128      660,631      766,759
 Distributions for taxes to
  shareholders of pass through
  entities.....................         0           0   (1,579,045)  (1,579,045)
 Reclassification of
  accumulated deficit upon
  conversion to a C
  corporation..................         0    (369,969)     369,969            0
 Acquisition and retirement of
  treasury stock...............  (694,750)     (8,916)    (991,084)  (1,000,000)
 Issuance of common stock in
  connection with the
  acquisition of Data Services
  Corporation..................   610,537     878,700            0      878,700
 Issuance of common stock in
  connection with the
  acquisition of ProVesa.......   221,057     505,303            0      505,303
 Issuance of common stock in
  connection with the
  acquisition of FiNet.........   244,741     576,000            0      576,000
 Issuance of common stock in
  connection with the
  acquisition of Bank Services
  Corporation..................   501,129   1,083,276            0    1,083,276
 Net loss attributable to
  common shareholders..........         0           0   (1,426,999)  (1,426,999)
 Pro forma tax provision.......         0           0      278,228      278,228
                                ---------  ----------  -----------   ----------
BALANCE, December 31, 1996..... 6,750,114   2,770,522   (2,688,300)      82,222
 Distributions for taxes to
  shareholders of pass through
  entities.....................         0           0     (596,796)    (596,796)
 Reclassification of
  accumulated deficit upon
  conversion to a C
  corporation..................         0     (11,717)      11,717            0
 Issuance of common stock......         0       5,600            0        5,600
 Net loss attributable to
  common shareholders..........         0           0     (427,358)    (427,358)
 Pro forma tax provision.......         0           0      152,511      152,511
                                ---------  ----------  -----------   ----------
BALANCE, December 31, 1997..... 6,750,114   2,764,405   (3,548,226)    (783,821)
 Net income attributable to
  common shareholders
  (unaudited)..................         0           0      375,590      375,590
                                ---------  ----------  -----------   ----------
BALANCE, March 31, 1998
 (unaudited)................... 6,750,114  $2,764,405  $(3,172,636)  $ (408,231)
                                =========  ==========  ===========   ==========
</TABLE>
 
 
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                      F-5
<PAGE>
 
                   THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                              YEARS ENDED DECEMBER 31,              MARCH 31,
                          ----------------------------------  ----------------------
                            1995        1996         1997        1997        1998
                          ---------  -----------  ----------  ----------  ----------
                                                                   (UNAUDITED)
<S>                       <C>        <C>          <C>         <C>         <C>
CASH FLOWS FROM OPERAT-
 ING ACTIVITIES:
 Net income (loss)......  $ 680,818  $(1,418,999) $ (395,358) $   37,132  $  383,590
 Adjustments to
  reconcile net income
  (loss) to net cash
  provided by operating
  activities:
  Depreciation and amor-
   tization.............    242,202      350,991   1,323,771     308,849     284,661
  Writeoff of purchased
   research and
   development..........          0      810,000           0           0           0
  Loss on impairment of
   intangibles..........          0            0     727,500           0           0
  Minority interest in
   income (loss) of
   consolidated
   subsidiary...........          0       14,558     (38,564)    (25,415)      4,425
  Deferred income tax
   provision (benefit)..          0     (706,075)    (15,095)     (4,676)      4,451
  Pro forma tax ex-
   pense................    417,276      278,228     152,511           0           0
  Changes in operating
   assets and
   liabilities, net of
   effects of purchase
   acquisitions:
  Accounts receivable...   (476,210)    (790,494)     60,356     478,633     335,898
  Inventory, prepaid ex-
   penses, and other....     (6,190)     234,049      (4,992)    (39,020)   (868,652)
  Other assets..........   (102,930)     (25,968)    (65,415)    (72,805)   (118,502)
  Accounts payable and
   accrued expenses.....    304,729      941,754     286,372    (483,587)   (494,945)
  Deferred revenue......          0      331,899      67,861         358     579,496
  Deferred compensa-
   tion.................          0    1,800,000           0           0           0
                          ---------  -----------  ----------  ----------  ----------
   Net cash provided by
    operating activi-
    ties................  1,059,695    1,819,943   2,098,947     199,469     110,422
                          ---------  -----------  ----------  ----------  ----------
CASH FLOWS FROM
 INVESTING ACTIVITIES,
 net of effects of
 purchase acquisitions:
 (Decrease) increase in
  note receivable.......    (92,794)    (556,326)    412,688     477,977       8,216
 Purchases of property
  and equipment.........    (96,716)    (137,124)   (992,331)   (101,437)   (449,866)
 Purchase of businesses,
  net of cash acquired..          0      388,751           0           0           0
 Increase in
  investments...........          0            0     (50,000)          0           0
                          ---------  -----------  ----------  ----------  ----------
   Net cash (used in)
    provided by
    investing
    activities..........   (189,510)    (304,699)   (629,643)    376,540    (441,650)
                          ---------  -----------  ----------  ----------  ----------
CASH FLOWS FROM
 FINANCING ACTIVITIES,
 net of effect of
 purchase acquisitions:
 Proceeds from notes
  payable and line of
  credit................          0    3,000,000     280,000           0           0
 Payments on notes
  payable and line of
  credit................   (157,000)    (860,639)   (513,990)   (126,514)   (731,238)
 Distributions for taxes
  to shareholders of
  pass through
  entities..............   (420,600)  (1,579,045)   (596,796)          0           0
 Issuance of common
  stock.................          0            0       5,600       5,600           0
 Retirement of preferred
  stock.................          0      (25,000)          0           0           0
 Payment of preferred
  dividends.............          0       (8,000)    (32,000)     (8,000)     (8,000)
 Purchase and retirement
  of treasury stock.....          0   (1,000,000)          0           0           0
                          ---------  -----------  ----------  ----------  ----------
   Net cash used by fi-
    nancing activities..   (577,600)    (472,684)   (857,186)   (128,914)   (739,238)
                          ---------  -----------  ----------  ----------  ----------
NET INCREASE (DECREASE)
 IN CASH................    292,585    1,042,560     612,118     447,095  (1,070,466)
CASH, AT BEGINNING OF
 YEAR...................     62,973      355,558   1,398,118   1,398,118   2,010,236
                          ---------  -----------  ----------  ----------  ----------
CASH, AT END OF YEAR....  $ 355,558  $ 1,398,118  $2,010,236  $1,845,213  $  939,770
                          =========  ===========  ==========  ==========  ==========
SUPPLEMENTAL DISCLOSURES
 OF CASH FLOW
 INFORMATION:
 Cash paid for inter-
  est...................  $  87,131  $   382,240  $  725,923  $  191,481  $  177,450
                          =========  ===========  ==========  ==========  ==========
 Cash paid for income
  taxes.................  $       0  $   146,184  $  341,604  $   59,750  $  227,000
                          =========  ===========  ==========  ==========  ==========
</TABLE>
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                      F-6
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
  DECEMBER 31, 1995, 1996, AND 1997, AND MARCH 31, 1997 AND 1998 (UNAUDITED)
 
1. ORGANIZATION AND NATURE OF BUSINESS
 
  The InterCept Group, Inc. ("Intercept" or the "Company") (a Georgia
corporation) designs, develops, markets, and implements a suite of fully
integrated electronic commerce products and services primarily for community
financial institutions in the United States. The Company's products and
services include electronic funds transfer ("EFT"), data communications
management, client/server enterprise software, and other processing solutions.
 
  The Company is a single source provider of a broad range of flexible
electronic commerce solutions supporting value-added products and services.
The Company provides numerous EFT products and services, including automated
teller machine ("ATM"), point-of-sale ("POS") and script debit services, debit
card transactions, funds transfer services, and remote banking services. The
Company licenses client/server enterprise software, which operates in a
Windows NT(R) environment, to community financial institutions on both a
service bureau and in-house basis. The Company also supplies banking related
equipment, provides related maintenance and technical support and offers
numerous ancillary products and services to its financial institution
customers.
 
  The Company was incorporated on April 30, 1996 as a shell entity. On June 4,
1996, InterCept Systems, Inc. ("Systems") was combined with the Company.
Systems provides electronic funds transfer services through multi-year
contracts.
 
  On June 4, 1996, the Company acquired Data Services Corporation ("Data
Services"), which is engaged in providing maintenance and repair on computer-
related equipment primarily through annual service contracts, and equipment
sales.
 
  On November 27, 1996, the Company acquired ProVesa, Inc. and its subsidiary,
ProVesa Services, Inc. (collectively, "ProVesa"), which provide information
technology and data processing services to financial institutions through the
operation of an on-line service bureau serving community banks.
 
  On December 17, 1996, the Company acquired FiNet, Inc. ("FiNet"), a merchant
portfolio management company that provides a complete outsourcing solution for
banks and merchants.
 
  On December 31, 1996, the Company acquired Bank Services Corporation ("Bank
Services"), which is engaged in providing data processing services and
developing core accounting software for internal use and sale.
 
  On January 30, 1998, the Company acquired Intercept Communication
Technologies, L.L.C. ("Technologies"), which provides end to end
communications management solutions to its customers and maintains nationwide
data communications coverage.
 
  See Note 3 where acquisitions are discussed.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Presentation
 
  The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries Systems, Data Services, ProVesa, FiNet, Bank
Services and Technologies. Additionally, ProImage, Inc. ("ProImage"), a
corporation in which ProVesa has a 33.3% ownership interest, has been
consolidated in the accompanying consolidated financial statements since its
inception, due to InterCept's control of ProImage. Management of InterCept
retains responsibility for all day to day operations of ProImage, and has and
will
 
                                      F-7
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
continue to provide complete financial support for ProImage subsequent to its
formation due to legal limitations on the other investors' ability to fund
losses. All significant intercompany accounts and transactions have been
eliminated in consolidation. Minority interest represents the minority
shareholders' proportionate share of the equity and earnings of ProImage.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Cash and Cash Equivalents
 
  The Company considers all short-term highly liquid investments with an
original maturity of three months or less to be cash equivalents.
 
 Property and Equipment
 
  Property and equipment are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives of the respective assets
for financial reporting purposes. Major additions and improvements are charged
to the property accounts while replacements, maintenance, and repairs which do
not improve or extend the lives of respective assets are expensed in the
current period. Estimated useful lives for the Company's assets are as
follows:
 
<TABLE>
         <S>                                       <C>
         Computer equipment....................... 5 to 7 years
         Furniture and office equipment........... 5 to 10 years
         Software................................. 3 to 5 years
         Building and improvements................ 31 years
         Transportation equipment................. 3 to 5 years
</TABLE>
 
 Software Development Costs
 
  The Company capitalizes software development costs incurred from the time
that technological feasibility of the software is established until the
software is saleable. These costs are amortized on a straight-line basis over
three years, the estimated economic life of the software. Research and
development costs and maintenance costs related to software development are
expensed as incurred.
 
 Intangible Assets
 
  Intangible assets include goodwill, customer contracts, capitalized product
technology, and organizational costs. The Company evaluates the realizability
of intangible assets based on estimates of undiscounted future cash flows over
the remaining useful life of the related asset. If the amount of such
estimated undiscounted future cash flow is less than the net book value of the
asset, the asset is written down to the amount of the estimated undiscounted
cash flows.
 
  Goodwill
 
    Goodwill represents the excess of the purchase price over the net
  tangible and identifiable intangible assets of acquired businesses.
  Goodwill is amortized on a straight-line basis over periods of 15 to 40
  years.
 
  Customer Contracts
 
    In connection with the Company's acquisitions of Data Services, ProVesa,
  and Bank Services, the Company allocated a portion of the purchase price to
  customer contracts acquired based upon a discounted
 
                                      F-8
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
  cash flow analysis of the applicable contracts. The estimated fair values
  attributed to the contracts are being amortized over periods of 18 months,
  which represents the estimated average remaining life of the contracts.
 
 
  Product Technology
 
    Product technology represents internally developed software acquired as a
  result of the ProVesa and Bank Services acquisitions for the processing of
  data transactions. Product technology is amortized on a straight-line basis
  over periods of three to five years.
 
  Organizational Costs
 
    Organizational costs are amortized on a straight-line basis over a period
  of five years.
 
 Revenue Recognition
 
  Revenues include service fee income, data processing fees, data
communications management fees, equipment sales, installation and maintenance,
software license fees, and software maintenance. Service fee income, data
processing fees, data communications management fees, and installation
revenues are recognized as services are performed. Revenue from software and
equipment sales are recognized upon shipment of the product to customers,
provided that there are no significant obligations remaining and
collectibility of the revenue is probable. Any postcontract support included
in the contract is separately priced and deferred and recognized over the
period of the postcontract support in accordance with AICPA Statement of
Position No. 97-2. The Company recognizes revenue from software license fees,
services and maintenance ratably over the period or as the applicable services
or maintenance are performed.
 
 Deferred Revenue
 
  Deferred revenues represent the liability for advanced billings to customers
primarily related to maintenance contracts. Such amounts are recognized as
revenue when the related services are performed.
 
 Long-Lived Assets
 
  The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," on January 1, 1996. SFAS No. 121 established
accounting standards for the impairment of long-lived assets and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangible assets to be disposed of. The effect of
adopting SFAS No. 121 was not material to the Company's consolidated financial
statements.
 
  The Company reviews its long-lived assets for impairment at each balance
sheet date or whenever events or changes in circumstances indicate that the
carrying amount of an asset should be assessed. Management evaluates the
intangible assets related to each acquisition individually to determine
whether an impairment has occurred. An impairment is recognized when the
discounted future cash flows estimated to be generated by the acquired
business are not sufficient to recover the unamortized balance of the
intangible asset with the amount of any such deficiency charged to income in
the current year. Estimates of future cash flows are based on many factors,
including current operating results, expected market trends, and competitive
influences.
 
 Income Taxes
 
  Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
 
                                      F-9
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  In the event the future tax consequences of differences between the
financial reporting bases and the tax bases of the Company's assets and
liabilities result in deferred tax assets, an evaluation of the probability of
being able to realize the future benefits indicated by such asset is required.
A valuation allowance is provided for a portion of the deferred tax asset when
it is more likely than not that some portion or all of the deferred tax asset
will not be realized. In assessing the realizability of the deferred tax
assets, management considers the scheduled reversals of deferred tax
liabilities, projected future taxable income, and tax planning strategies.
 
  Through May 15, 1996, Systems had elected by consent of its shareholders to
be taxed under the provisions of Subchapter S of the Internal Revenue Code.
Under those provisions, the shareholders included their respective shares of
the company's earnings or losses in their individual income tax returns.
 
  From January 1, 1996 to October 31, 1997, in accordance with the provisions
of the Internal Revenue Code, the income or loss of Technologies is included
in the income tax returns of the members of the limited liability corporation.
 
  The income tax provision reflects pro forma income taxes as if Systems and
Technologies had been C corporations for all periods presented. The provision
includes pro forma taxes of $417,276, $278,228, and $152,511 for the years
ended December 31, 1995, 1996, and 1997, respectively.
 
  In connection with the change in tax status of Systems, in 1996, and
Technologies, in 1997, to C corporations, accumulated deficits of $369,969 and
$11,717 were reclassified from accumulated deficit to common stock in the
accompanying statement of shareholders' equity (deficit).
 
 Fair Value of Financial Instruments
 
  The fair value of financial instruments classified as current assets or
liabilities, including cash and cash equivalents, accounts receivable and
accounts payable, approximate carrying value due to the short-term maturity of
the instruments. The fair value of short-term and long-term debt, and deferred
compensation amounts approximate carrying value and are based on their
effective interest rates compared to current market rates.
 
 Advertising Costs
 
  The Company expenses all advertising costs as incurred.
 
 Sources of Supplies
 
  The Company voluntarily uses a single vendor for routing equipment issued in
the Company's network. However, if this vendor were unable to meet the
Company's needs, management believes that other sources for this equipment
exist on commensurate terms and that operating results would not be affected.
 
 Net Income (Loss) Per Common Share
 
  The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
128 effective December 31, 1997. Basic earnings per share is computed based on
the weighted average number of total common shares outstanding during the
respective years. Diluted earnings per share is computed based on the weighted
average number of total shares of common stock outstanding, adjusted for
common stock equivalents.
 
  On February 4, 1998, the Securities and Exchange Commission released Staff
Accounting Bulletin ("SAB") No. 98 "Computation of Earnings Per Share." SAB
No. 98 requires the retroactive inclusion of nominal issuances of common stock
and common stock equivalents in earnings per share calculations for all
periods presented and precludes the use of the treasury stock method for these
issuances. Management believes that all issuances of common stock and stock
options have been made at the current market value at the time of issuance and
that there have been no nominal issuances.
 
                                     F-10
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
3. ACQUISITIONS
 
  On June 4, 1996, Systems merged into the Company in a share exchange
combination whereby Systems became a wholly-owned subsidiary of the Company.
The merger was effected by the exchange of 721 out of the 927 outstanding
shares of common stock of Systems for 2,431,622 shares of common stock of the
Company. The remaining 206 common shares of Systems (equivalent to 694,750
shares of the Company) were acquired for $1,000,000 and retired.
 
  On June 4, 1996, the Company acquired all of the outstanding shares of
common stock of Data Services for 610,537 shares of common stock of the
Company with a total value of $878,700. The transaction was accounted for as a
purchase. This consideration exceeded the net tangible asset value of Data
Services by approximately $917,750. Of this excess, $360,000 was allocated to
customer contracts based upon a discounted cash flow analysis and amortized
over a period of 18 months and the remaining $468,000 was allocated to
goodwill and amortized over a period of 20 years. The results of operations of
the acquired business have been included in the Company's consolidated
financial statements from the date of acquisition.
 
  On November 27, 1996, the Company acquired all of the outstanding shares of
common and Series A preferred stock of ProVesa in exchange for 221,057 shares
of common stock and 4,250 shares of Series A preferred stock of the Company
with a total fair value of approximately $905,303. The transaction was
accounted for as a purchase. The consideration exchanged exceeded the net
tangible asset value of ProVesa by approximately $1,304,700. Of this excess,
$441,600 was allocated to customer contracts based upon a discounted cash flow
analysis and amortized over a period of 18 months, $300,000 was allocated to
existing product technology and amortized over a period of 3 years, and the
remaining $563,100 was allocated to goodwill and amortized over a period of 40
years. The results of operations of the acquired business have been included
in the Company's consolidated financial statements from the date of
acquisition. In December 1997, the Company made a decision to write off the
costs allocated to product technology as the software was not Year 2000
compliant, and the Company made a decision not to further develop or support
the software. The Company took a charge of $191,000 in arriving at operating
income in its accompanying financial statements during the fourth quarter of
1997. Customers using the software are being migrated to other software
products of the Company which are year 2000 compliant.
 
  On December 17, 1996, the Company acquired all of the outstanding shares of
FiNet in exchange for 244,741 shares of common stock of the Company with a
total fair value of approximately $576,000. The transaction was accounted for
as a purchase. The consideration exchanged exceeded the net tangible asset
value of FiNet by approximately $575,800. This amount was allocated to
goodwill and amortized over a period of 15 years. The results of operations of
the acquired business have been included in the Company's consolidated
financial statements from the date of acquisition.
 
  During 1997, the operating losses of FiNet significantly exceeded budgeted
amounts. In addition, FiNet was not successful in implementing its sales plan
to targeted customers, and the Company anticipates that FiNet will continue to
incur operating losses for the foreseeable future. The Company is currently
evaluating its future plans with regard to FiNet. Based upon the current and
projected losses, the Company determined in December 1997 that the goodwill
recorded on the purchase of FiNet was impaired, and accordingly recorded a
$536,000 charge to operating income. In addition, in January 1998, the Company
canceled certain performance stock options which had been granted to the
officers of FiNet.
 
  On December 31, 1996, the Company acquired all of the outstanding shares of
Bank Services in exchange for 501,129 shares of common stock of the Company
with a total fair value of approximately $1,087,300. The transaction was
accounted for as a purchase. The consideration exchanged exceeded the net
tangible asset value of Bank Services by approximately $1,310,000. Of this
excess, $810,000 was allocated to incomplete research and development projects
based upon a third party appraisal report, and expensed in the statement of
operations
 
                                     F-11
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
on the acquisition date. The incomplete research and development projects had
not reached technological feasibility, had no alternative use, and required
substantial additional development by the Company. Of the remaining excess,
$150,000 was allocated to product technology and amortized over a period of 3
years and the remaining $350,000 was allocated to goodwill and amortized over
a period of 20 years. The results of operations of the acquired business have
been included in the consolidated financial statements from the date of
acquisition.
 
  On January 31, 1998, the Company acquired all of the outstanding shares of
Technologies in exchange for 2,741,029 shares of common stock of the Company.
The transaction was accounted for as a pooling of interests. The results of
operations of Technologies have been included in the accompanying financial
statements for all periods presented.
 
  The following table summarizes the shares issued and the value of the
consideration exchanged for each of the purchase acquisitions during the
periods presented.
 
<TABLE>
<CAPTION>
                      DATE OF                               SHARE    AMOUNT OF
ENTITY ACQUIRED     ACQUISITION        NUMBER OF SHARES     VALUE  CONSIDERATION
- ---------------  ----------------- ------------------------ ------ -------------
<S>              <C>               <C>     <C>              <C>    <C>
Data Services    June 4, 1996      610,537 common shares    $ 1.44   $ 878,700
ProVesa          November 27, 1996 221,057 common shares      2.29     505,303
                                     4,000 preferred shares 100.00     400,000
FiNet            December 17, 1996 244,741 common shares      2.35     576,000
Bank Services    December 31, 1996 501,129 common shares      2.16   1,087,300
</TABLE>
 
  The following unaudited pro forma consolidated financial information for the
years ended December 31, 1995 and 1996 assume the acquisitions of Data
Services, ProVesa, FiNet, and Bank Services had occurred as of January 1,
1995.
 
<TABLE>
<CAPTION>
                                                         1995        1996
                                                      ----------- -----------
      <S>                                             <C>         <C>
      Revenues....................................... $15,131,938 $21,556,149
      Net income (loss) before income taxes and
       minority interest.............................     936,009    (227,480)
      Net income (loss) per common share............. $      0.16 $     (0.04)
</TABLE>
 
  Pro forma net loss before income taxes and minority interest for the year
ended December 31, 1996 excludes the charge of $810,000 for incomplete
research and development projects acquired in the Bank Services acquisition.
 
  The unaudited pro forma consolidated financial information is not
necessarily indicative of the actual results that would have occurred had the
acquisitions been consummated at the beginning of the periods presented or of
the future operations of the combined entities.
 
4. PROPERTY AND EQUIPMENT
 
  Property and equipment at December 31, 1996 and 1997 consisted of the
following:
 
<TABLE>
<CAPTION>
                                                            1996        1997
                                                         ----------  ----------
      <S>                                                <C>         <C>
      Land and building................................. $  624,514  $  629,404
      Leasehold improvements............................     82,255      87,182
      Computer equipment................................  1,621,416   1,780,449
      Furniture and office equipment....................    986,727   1,467,510
      Software..........................................    263,837     484,697
      Transportation equipment..........................    312,641     392,280
                                                         ----------  ----------
                                                          3,891,390   4,841,522
      Less accumulated depreciation..................... (1,800,092) (2,325,654)
                                                         ----------  ----------
                                                         $2,091,298  $2,515,868
                                                         ==========  ==========
</TABLE>
 
                                     F-12
<PAGE>
 
                   THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5. INTANGIBLES
 
  Intangibles at December 31, 1996 and 1997 are summarized as follows:
 
<TABLE>
<CAPTION>
                                                            1996        1997
                                                         ----------  ----------
      <S>                                                <C>         <C>
      Goodwill.......................................... $2,111,885  $1,536,085
      Product technology................................    450,000     150,000
      Customer contracts................................    801,600     801,600
      Organizational costs..............................     20,000      20,000
                                                         ----------  ----------
                                                          3,383,485   2,507,685
      Less accumulated amortization.....................   (216,879)   (824,588)
                                                         ----------  ----------
                                                         $3,166,606  $1,683,097
                                                         ==========  ==========
</TABLE>
 
6. NOTES PAYABLE AND LINE OF CREDIT
 
  Notes payable and line of credit consisted of the following:
 
<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                            ----------------------  MARCH 31,
                                               1996        1997        1998
                                            ----------  ----------  ----------
   <S>                                      <C>         <C>         <C>
   Note payable to Georgia State Bank, in-
   terest payable monthly at prime plus
   2.5%; monthly principal and interest
   payments (with adjustments for changes
   in prime) beginning July 20, 1996
   through June 20, 2006; the note is col-
   lateralized by common stock and assets
   of the Company, and a life insurance
   policy and personal guarantee of a ma-
   jor shareholder........................  $2,917,601  $2,732,974  $2,682,714
   Note payable to FNB Commerce, interest
   payable monthly at prime plus 2%;
   monthly principal and interest payments
   (with adjustments for changes of prime)
   beginning July 1, 1996 through June 1,
   2003; the note is collateralized by
   common stock and assets of the Company,
   and a life insurance policy and per-
   sonal guarantee of a shareholder.......   1,553,907   1,377,522   1,329,720
   Note payable to Community Bank of Geor-
   gia, all outstanding amounts repaid in
   1998...................................     450,000     402,963           0
   Mortgage note payable to Allied Bank,
   interest payable at prime, in monthly
   principal and interest payments through
   December 1, 1999, with remaining prin-
   cipal due December 31, 1999; the note
   is collateralized by land and build-
   ing....................................     426,437     389,493     379,705
   Note payable to First Macon Bank &
   Trust interest payable at prime;
   monthly principal and interest pay-
   ments, payable in full on September 15,
   2001; the note is collateralized by as-
   sets of the Company, and a corporate
   guarantee by ProVesa of one-third of
   the balance of the debt................     383,146     316,123     298,941
   Note payable to First Macon Bank &
   Trust, interest payable at prime,
   monthly principal and interest pay-
   ments, the note is collateralized by
   assets of the Company, and a corporate
   guarantee by ProVesa of one-third of
   the balance of the debt................           0      78,026      74,783
                                            ----------  ----------  ----------
                                             5,731,091   5,297,101   4,765,863
   Less current maturities................    (518,883)   (580,590)   (544,829)
                                            ----------  ----------  ----------
                                            $5,212,208  $4,716,511  $4,221,034
                                            ==========  ==========  ==========
</TABLE>
 
                                      F-13
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Future maturities of notes payable and line of credit at December 31, 1997
are as follows:
 
<TABLE>
      <S>                                                             <C>
      1998........................................................... $  580,590
      1999...........................................................  1,245,348
      2000...........................................................    603,266
      2001...........................................................    648,837
      2002...........................................................    637,565
      Thereafter.....................................................  1,581,495
                                                                      ----------
                                                                      $5,297,101
                                                                      ==========
</TABLE>
 
  Certain loan agreements contain covenants with respect to the maintenance of
certain financial ratios and specified net worth and limit the incurrence of
additional indebtedness, the sale of substantial assets, the sale of common
stock by the Company, consolidations or mergers by the Company and the
declaration and payment of dividends. Any past or potential defaults or
breaches of the provisions of the above loan agreements as a result of the
Company's business combination transactions or potentially as a result of the
planned initial public offering of common stock (Note 13) have been waived in
writing by the lenders (such waivers being conditioned upon the initial public
offering), but there can be no assurance that similar waivers can be obtained,
if needed, in the future. The loans are secured by all assets of the Company
and a pledge of 100% of the stock of certain subsidiaries, which have
guaranteed the repayment of indebtedness under the loans.
 
 Line of Credit
 
  On February 5, 1997, the Company entered into a $200,000 line of credit
agreement with The Bank of Gwinnett County. Interest was payable monthly at
the bank's prime rate plus 1.5%. At December 31, 1997, $200,000 of this line
of credit was outstanding. The balance was repaid in full in 1998.
 
7. INCOME TAXES
 
  The components of income tax (benefit) provision in the consolidated
statements of operations for the years ended December 31, 1996 and 1997 are as
follows:
 
<TABLE>
<CAPTION>
                                                     1995     1996       1997
                                                   -------- ---------  --------
<S>                                                <C>      <C>        <C>
Current expense................................... $      0 $ 191,468  $528,709
Deferred benefit..................................        0  (706,075)  (15,095)
Pro forma tax expense.............................  417,276   278,228   152,511
                                                   -------- ---------  --------
    Provision (benefit) for income taxes.......... $417,276 $(236,379) $666,125
                                                   ======== =========  ========
</TABLE>
 
  The income tax provision reflects pro forma income taxes as if Systems and
Technologies had been C corporations for all periods presented. The provision
includes pro forma taxes of $417,276, $278,228, and $152,511 for the years
ended December 31, 1995, 1996, and 1997, respectively.
 
  The income tax (benefit) provision, as reported in the statements of income,
differs from the amounts computed by applying federal statutory rates due to
the following for the years ended December 31, 1997 and 1996:
 
<TABLE>
<CAPTION>
                                                     1995     1996       1997
                                                   -------- ---------  --------
<S>                                                <C>      <C>        <C>
Federal income tax (benefit) expense at statutory
 rate............................................  $373,352 $(557,879) $ 78,949
Nondeductible amortization of goodwill...........         0    62,411   493,671
Purchased research and development...............         0   275,400         0
Meals and entertainment..........................         0     5,613    16,562
State tax (benefit) provision, net of federal ef-
 fect............................................    43,924   (59,825)   72,594
Net effect of an S corporation conversion to a
 C corporation...................................         0    36,563         0
Other............................................         0     1,338     4,349
                                                   -------- ---------  --------
                                                   $417,276 $(236,379) $666,125
                                                   ======== =========  ========
</TABLE>
 
                                     F-14
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  In May 1996, Systems converted from S Corporation status to C Corporation
status. On the conversion date, the Company recorded an expense through its
tax provision to record the effect of cumulative temporary differences through
such date. In November 1997, Technologies converted from L.L.C. status to C
corporation status. The effect of recording cumulative temporary differences
was immaterial.
 
  Deferred income tax assets and liabilities for 1996 and 1997 reflect the
impact of temporary differences between the amounts of assets and liabilities
for financial reporting and income tax reporting purposes. Temporary
differences that give rise to deferred tax assets and liabilities at December
31, 1996 and 1997 are as follows:
 
<TABLE>
<CAPTION>
                                                               1996      1997
                                                             --------  --------
      <S>                                                    <C>       <C>
      Deferred tax assets:
       Deferred compensation................................ $683,281  $683,281
       Accounts receivable reserves.........................   59,890    59,451
       Other................................................   14,561    40,338
                                                             --------  --------
          Deferred tax assets...............................  757,732   783,070
                                                             --------  --------
      Deferred tax liabilities:
       Accelerated depreciation............................. (104,496) (114,739)
                                                             --------  --------
          Deferred tax liabilities.......................... (104,496) (114,739)
                                                             --------  --------
          Net deferred asset................................ $653,236  $668,331
                                                             ========  ========
</TABLE>
 
8. PREFERRED STOCK
 
  Shares of preferred stock may be issued from time to time in one or more
series as may be established by resolution of the board of directors of the
Company. Each resolution shall include the number of shares issued,
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as determined by the board.
 
  The Articles of Incorporation authorize the Board of Directors to issue,
without further action by the holders of the common stock, shares of preferred
stock in one or more series and to fix any preferences, conversion and other
rights, voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as shall be set forth in resolutions adopted by the
Board of Directors. Articles of amendment must be filed with the Georgia
Secretary of State prior to the issuance of any shares of preferred stock of
the applicable series. Any preferred stock so issued may rank senior to the
common stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding-up, or both. In addition, any such shares
of preferred stock may have class or series voting rights.
 
 Series A Preferred Stock
 
  On November 27, 1996, the Company filed Articles of Amendment to its
Articles of Incorporation for the designation of 30,000 shares of Series A
preferred stock. The stated value of the Series A preferred stock is $100 per
share. Holders of Series A preferred stock are entitled to receive dividends
at the annual rate of 8% of the stated value per share, or $8.00 per share,
payable quarterly. Dividends are cumulative from the date of issue. The
Company may not declare or pay cash dividends on any other series of preferred
stock that is junior or on parity with the Series A preferred stock, or on
common stock, nor may it redeem, purchase, or otherwise acquire
 
                                     F-15
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
any of such stock, unless full cumulative dividends have been or are
contemporaneously declared and paid on the Series A preferred stock. In the
event of any liquidation or dissolution of the Company, the holders of shares
of Series A preferred stock are entitled to receive out of assets of the
Company available for distribution to shareholders, before any distributions
are made to holders of common stock or of any other shares of stock of the
Company ranking junior to the Series A preferred stock, liquidating
distributions in the amount of $100 per share, plus accrued and unpaid
dividends.
 
  The Series A preferred stock is redeemable at the option of the Company for
cash at any time, in whole or in part, on at least 10 days' notice. The price
payable upon redemption is 110% of stated value per share, or $110 per share,
plus accrued but unpaid dividends. At any time after the third anniversary of
the initial issuance of shares of Series A preferred stock, any holder of
Series A preferred stock may tender all or part of such holder's Series A
preferred stock for redemption at a price equal to 100% of stated value, or
$100 per share, plus accrued and unpaid dividends. The holders of the Series A
preferred stock have no voting rights except as otherwise required by the
Georgia Business Corporation Code and applicable law. The holders of shares of
Series A preferred stock have no preemptive or other rights to subscribe for
any other shares of securities, nor do they have any conversion rights. The
Series A preferred stock ranks prior to the common stock as to dividends and
upon liquidation of the Company.
 
9. SHAREHOLDERS' EQUITY
 
  Under the Articles of Incorporation, the Board of Directors has the
authority to issue 10,000,000 shares of common stock without par value and
50,000 shares of preferred stock without par value in one or more classes or
series and, within certain limitations, to determine the voting rights,
preferences as to dividends and in liquidation, and conversion or other rights
of such series.
 
  Pursuant to a voting agreement, the Chief Executive Officer of the Company
has voting control over approximately 62% of the common stock of the Company.
The voting agreement expires in May 1998.
 
10. STOCK OPTION PLANS
 
 1996 Stock Option Plan
 
  The Board of Directors and the Company's shareholders approved the Company's
1996 Stock Option Plan effective as of November 12, 1996. Awards under the
1996 Stock Option Plan are currently granted by the Board of Directors, but
will be granted by a committee composed of at least two independent directors
(the "Committee") of the Board of Directors when it is established. Awards
issued under the 1996 Stock Option Plan may include incentive stock options
("ISOs") and/or non-qualified stock options ("NQSOs") and/or grants of
restricted stock. The Committee will administer the 1996 Stock Option Plan and
generally has discretion to determine the terms of an option grant, including
the number of option shares, option price, term, vesting schedule, the post-
termination exercise period and whether the grant will be an ISO or NQSO.
Notwithstanding this discretion: (i) the number of shares subject to options
granted to any individual in any fiscal year may not exceed 315,795 shares
(subject to certain adjustments); (ii) if an option is intended to be an ISO
and is granted to a shareholder holding more than 10% of the combined voting
power of all classes of the Company's stock or the stock of its parent or
subsidiary on the date of the grant of the option, the option price per share
of common stock may not be less than 110% of the fair market value of such
share at the time of grant; and (iii) the term of an ISO may not exceed 10
years, or 5 years if granted to a shareholder owning more than 10% of the
total combined voting power of all classes of stock on the date of the grant
of the option.
 
  The Stock Option Plan provides for the granting of non-qualified stock
options to the directors of the Company ("Director Grants"). The Board of
Directors has authorized the issuance of up to 175,000 shares of
 
                                     F-16
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
common stock under the Stock Option Plan pursuant to options having an
exercise price equal to the fair market value of the common stock on the date
the options are granted. The Board of Directors has approved Director Grants
of (i) options to purchase 35,000 shares to each non-employee director of the
Company who beneficially owns less than 4% of the Company's outstanding common
stock on the date of such directors' initial election to the Board of
Directors, and (ii) options to purchase 5,000 shares to each director on each
anniversary date of such director's election to the Board at an exercise price
equal to the fair market value of the common stock on the date the options are
granted. Each Director Grant option vests ratably over the remaining term of
service and shall expire five years after the date of grant, unless canceled
sooner as a result of termination of service or death, or unless such option
is fully exercised prior to the end of the option period.
 
  The maximum number of shares of common stock that currently may be subject
to outstanding options, determined immediately after the grant of any option,
is 1,263,180 shares (subject to certain adjustments). The 1996 Stock Option
Plan provides that the number of shares of common stock available for issuance
thereunder shall be automatically increased on the first trading day of each
calendar year beginning January 1, 1999 by the lesser of (i) three percent of
the number of shares outstanding on the preceding trading day or (ii) 315,795
shares (subject to certain adjustments). Shares of common stock that are
attributable to awards which have expired, terminated or been canceled or
forfeited during any calendar year are available for issuance or use in
connection with future awards during such calendar year.
 
  The 1996 Stock Option Plan will remain in effect until terminated by the
Board of Directors. The 1996 Stock Option Plan may be amended by the Board of
Directors without the consent of the shareholders of the Company, except that
any amendment, although effective when made, will be subject to shareholder
approval within one year after approval by the Board of Directors if the
amendment increases the total number of shares issuable pursuant to ISOs
(other than the permitted annual increase), changes the class of employees
eligible to receive ISOs that may participant in the 1996 Stock Option Plan,
or otherwise materially increases the benefits accruing to recipients of ISOs.
 
 ProVesa, Inc. 1994 Stock Option Plan
 
  In November 1996, as part of the ProVesa Acquisition, the Company executed a
Stock Option Plan Assumption Agreement, pursuant to which 20,000 options
outstanding under the ProVesa, Inc. 1994 Stock Option Plan (the "ProVesa
Plan") were converted into options to acquire 42,106 shares of common stock of
the Company. The Company assumed the rights and obligations of ProVesa under
the ProVesa Plan.
 
  Awards under the ProVesa Plan are granted by the Board of Directors but may
be granted by a committee of at least two directors appointed by the Board of
Directors. Awards under the ProVesa Plan may include ISOs, NQSOs or restricted
stock. The committee that administers the ProVesa Plan generally has
discretion to determine the terms of an option grant, including the number of
option shares, option price, term, vesting schedule, the post-termination
exercise period and whether the grant will be an ISO or NQSO. Notwithstanding
this discretion, if an option is intended to be an ISO and is granted to a
shareholder holding more than 10% of the combined voting power of all classes
of the Company's stock or of its parent or subsidiary on the date of the grant
of the option, the option price per share of common stock may not be less than
110% of the fair market value of such shares and the term of any option may
not exceed 10 years, or 5 years if the option is intended to be an ISO and is
granted to a shareholder owning more than 10% of total combined voting power
of all classes of stock on the date of the grant of the option.
 
  The ProVesa Plan may be amended by the Board of Directors without the
consent of the shareholders of the Company, except that any amendment,
although effective when made, will be subject to shareholder approval within
one year after approval by the Board of Directors if the amendment increases
the total number of shares issuable pursuant to ISOs or changes the class of
employees eligible to receive ISOs that may participate in the
 
                                     F-17
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ProVesa plan or otherwise materially increases the benefits accruing to
recipients of IPOs. Effective February 24, 1998, the Board of Directors
determined that the Company will not issue any additional options under the
ProVesa Plan.
 
  A summary status of the Company's stock option plans as of December 31,
1995, 1996, 1997, and changes during the year, is presented below:
 
<TABLE>
<CAPTION>
                                                                        PRICE
                                                              SHARES    RANGE
                                                              ------- ---------
      <S>                                                     <C>     <C>
      Outstanding at December 31, 1995.......................       0 $     --
       Granted............................................... 571,065      2.16
       Assumed in ProVesa Acquisition........................  42,106      2.37
                                                              ------- ---------
      Outstanding at December 31, 1996....................... 613,171 2.16-2.37
       Granted............................................... 178,951      2.16
                                                              ------- ---------
      Outstanding at December 31, 1997....................... 792,122 2.16-2.37
                                                              ======= =========
</TABLE>
 
 Statement of Financial Accounting Standards No. 123
 
  During 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which defines a fair value-based
method of accounting for an employee stock option or similar equity instrument
and encourages all entities to adopt that method of accounting for all of
their employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the method of
accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees." Entities electing to remain with
the accounting methodology required by APB Opinion No. 25 must make pro forma
disclosures of net income and, if presented, earnings per share as if the fair
value-based method of accounting defined in SFAS No. 123 had been applied.
 
  The Company has elected to account for its stock based compensation plans
under APB Opinion No. 25, under which no compensation cost has been recognized
by the Company. However, the Company has computed, for pro forma disclosure
purposes, the value of all options for shares of its common stock granted
since January 1, 1995 to employees of the Company using the Black-Scholes
option pricing model prescribed by SFAS No. 123 and the following weighted
average assumptions:
 
<TABLE>
<CAPTION>
                                                             1996       1997
                                                          ---------- -----------
      <S>                                                 <C>        <C>
      Risk-free interest rate............................ 6.22%      6.15%-6.29%
      Expected dividend yield............................ 0%         0%
      Expected lives..................................... Five years Five years
      Expected volatility................................ 0%         0%
</TABLE>
 
  The weighted average fair value of options for the stock granted to
employees of the Company in 1996 and 1997 was $1.19 per share. The total value
of options granted to employees of the Company during 1996 and 1997 was
computed as approximately $321,432 and $101,447, respectively, which would be
amortized on a pro forma basis over the five-year vesting period of the
options. If the Company had accounted for these plans in accordance with SFAS
No. 123, the Company's net loss for the years ended December 31, 1996 and 1997
would have decreased as follows:
 
<TABLE>
<CAPTION>
                                                    AS REPORTED   PRO FORMA
                                                    -----------  -----------
      <S>                                           <C>          <C>
      Net loss attributable to common shareholders
       for the year ended December 31, 1996........ $(1,426,999) $(1,426,999)
      Net loss attributable to common shareholders
       for the year ended December 31, 1997........    (427,358)    (473,302)
</TABLE>
 
                                     F-18
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The following table sets forth the number of shares, exercise price, and
weighted average contractual lives by groups of similar price and grant date:
 
<TABLE>
<CAPTION>
                                                                                        WEIGHTED
                                                                                         AVERAGE
       NUMBER                         EXERCISE                                         CONTRACTUAL
      OF SHARES                        PRICE                                              LIFE
      ---------                       --------                                         -----------
                                                                                       (IN YEARS)
      <S>                             <C>                                              <C>
      750,015                          $2.16                                               5.2
       42,106                           2.37                                                 7
</TABLE>
 
  At December 31, 1997, 77,896 options for the Company's common stock with a
weighted average exercise price of $2.27 per share were exercisable by
employees of the Company. At December 31, 1996, 42,106 options for the
Company's common stock with a weighted average exercise price of $2.37 per
share were exercisable by employees of the Company.
 
 Net Income (Loss) Per Common Share
 
  Net income (loss) per common share at December 31, 1995, 1996 and 1997 were
as follows:
 
<TABLE>
<CAPTION>
                                                           1995
                                              --------------------------------
                                                                     PER SHARE
                                                INCOME      SHARES    AMOUNT
                                              -----------  --------- ---------
      <S>                                     <C>          <C>       <C>
      Net income............................. $   680,818
       Less preferred stock dividends........           0
                                              -----------
      Net income available to common share-
       holders............................... $   680,818
                                              ===========
      Basic net income per common share......              5,867,400  $ 0.12
                                                           =========  ======
      Diluted net income per common share....              5,867,400  $ 0.12
                                                           =========  ======
<CAPTION>
                                                           1996
                                              --------------------------------
                                                                     PER SHARE
                                                 LOSS       SHARES    AMOUNT
                                              -----------  --------- ---------
      <S>                                     <C>          <C>       <C>
      Net loss............................... $(1,418,999)
       Less preferred stock dividends........      (8,000)
                                              -----------
      Net loss attributable to common share-
       holders............................... $(1,426,999)
                                              ===========
      Basic net loss per common share........              5,851,347  $(0.24)
                                                           =========  ======
      Diluted net loss per common share......              5,851,347  $(0.24)
                                                           =========  ======
<CAPTION>
                                                           1997
                                              --------------------------------
                                                                     PER SHARE
                                                 LOSS       SHARES    AMOUNT
                                              -----------  --------- ---------
      <S>                                     <C>          <C>       <C>
      Net loss............................... $  (395,358)
       Less preferred stock dividends........     (32,000)
                                              -----------
      Net loss attributable to common share-
       holders............................... $  (427,358)
                                              ===========
      Basic net loss per common share........              6,750,114  $(0.06)
                                                           =========  ======
      Diluted net loss per common share......              6,750,114  $(0.06)
                                                           =========  ======
</TABLE>
 
 
                                     F-19
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
  Basic and diluted earnings per common share were computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Outstanding stock options were anti-dilutive in each of the
three years ended December 31, 1995, 1996 and 1997.
 
11. EMPLOYEE BENEFITS
 
  The Company maintains a separate defined contribution 401(k) savings plan,
which covers substantially all employees subject to certain minimum age and
service requirements. Contributions to this plan by employees are voluntary;
however, the Company matches a percentage of the employees' contributions.
This percentage is determined annually by the Company. The Company's
contributions approximated $115,000, $13,000 and $38,000 in 1995, 1996 and
1997, respectively.
 
12. COMMITMENTS AND CONTINGENCIES
 
  The Company leases various equipment and facilities under operating lease
agreements. Future minimum annual obligations under these leases as of
December 31, 1997 are as follows:
 
<TABLE>
         <S>                                          <C>
         1998........................................ $1,131,000
         1999........................................    854,000
         2000........................................    634,000
         2001........................................    480,000
         2002........................................    103,000
                                                      ----------
                                                      $3,202,000
                                                      ==========
</TABLE>
 
  Net rental expense was approximately $68,000, $621,000 and $1,030,000 during
1995, 1996 and 1997, respectively.
 
 Employment Agreements
 
  The Company entered into an employment agreement with the Chief Executive
Officer (the "CEO") effective as of January 30, 1998 (the "CEO Agreement").
The CEO Agreement provides that the CEO will receive a base salary of not less
than $265,000 per year. The Company entered into an employment agreement with
the President and Chief Operating Officer (the "President") effective as of
January 30, 1998 (the "President Agreement"). The President Agreement provides
that the President will receive a base salary of not less than $190,000 per
year. In addition, each of the President and the CEO are entitled to incentive
compensation as determined by the Board of Directors or a committee thereof
based upon achievement of targeted levels of performance and such other
criteria as the Board of Directors or a committee thereof shall establish from
time to time, and an additional annual bonus as determined by the Board of
Directors or a committee thereof. In addition, each of the President and the
CEO may participate in the Company's Amended and Restated 1996 Stock Option
Plan (the "1996 Stock Option Plan") and will receive health insurance for
himself and his dependents, long-term disability insurance, civic and social
club dues, use of an automobile owned or leased by the Company, and other
benefits. Base salaries may be increased upon a periodic review by the Board
of Directors or a committee thereof. The CEO Agreement and the President
Agreement have terms of three years and renew daily until either party fixes
the remaining term at three years by giving written notice. The Company can
terminate the CEO Agreement and the President Agreement upon the executive's
death or disability or for cause, and the executive can terminate his
employment for any reason within a 90-day period beginning on the 30th day
after any occurrence of a change in control or within a 90-day period
beginning on the one-year anniversary of the occurrence of any change in
control. If the President's or the CEO's employment is terminated after a
change in control (i) by the Company without cause or (ii) by the CEO or
President for any reason, the Company must pay the executive all
 
                                     F-20
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
accrued compensation and bonus amounts and one-twelfth of his annual base
salary and bonus for each of 36 consecutive 30-day periods following the
termination. In addition, the Company must continue life and health insurance
for the executive until he reaches age 65, and the executive's outstanding
options to purchase common stock would vest and become immediately
exercisable.
 
  The Company and another executive who is also a shareholder entered into an
employment agreement dated June 4, 1996 pursuant to which such person receives
an annual salary of not less than $200,000. On February 2, 1998, the Company
entered into an employment agreement with its Chief Financial Officer (the
"CFO") (the "CFO Agreement"). The CFO Agreement has a term of one year which
renews automatically at the end of each term unless earlier terminated by the
Company or the CFO. The Company can terminate the CFO Agreement upon
disability or for cause, and the CFO can terminate his employment for any
reason within a 90-day period beginning on the 30th day after any occurrence
of a change in control or within a 90-day period beginning on the one-year
anniversary of the occurrence of any change in control. If the CFO's
employment is terminated by the Company in breach of the CFO Agreement or if
the CFO terminates the CFO Agreement for any reason after a change in control,
the Company must pay the CFO a lump sum cash payment equal to three-fourths of
his annual base salary and bonus.
 
  In June 1996, the Company entered into an employment agreement with an
employee and stockholder in connection with a significant reduction in the
individual's employment responsibilities with the Company. Under the
agreement, the employee's salary was set at an amount of not less than $60,000
per year for the 60 month term of the agreement. In addition, the agreement
requires the Company to pay to the employee in consideration of past services
the sum of $1,800,000, and $15,000 per month until the principal amount of
$1,800,000 is paid for a maximum of 60 months, at which time the principal
amount is due if not paid earlier. The Company has recorded the $1,800,000 as
a non-current liability in the accompanying financial statements, with a
corresponding compensation expense charge as of the date of the agreement. The
$15,000 monthly payments are recorded as interest expense as due, resulting in
an effective interest rate on the obligation of approximately 10% per year,
which approximates the Company's incremental borrowing rate.
 
 State Taxation
 
  Transaction processing companies like the Company may be subject to state
taxation of certain portions of the fees charged for their services.
Application of this tax is an emerging issue in the industry, and the states
have not yet adopted uniform guidelines implementing these regulations. In the
event the Company is required to bear all or a portion of these costs, and is
unable to pass such costs through to its customers, the financial condition
and results of operations of the Company could be adversely affected.
 
 Limitation of Liability Provisions
 
  The Company's agreements with its customers generally contain provisions
designed to limit the Company's exposure to potential product liability
claims, such as disclaimers of warranties and limitations on liability for
special, consequential and incidental damages. It is possible, however, that
the limitation of liability provisions contained in such agreements may not be
effective as a result of existing or future federal, state or local laws or
ordinances or unfavorable judicial decisions. The sale and support of products
by the Company may result in the Company's being subject to product liability
claims, and a successful product liability claim brought against the Company
could have a material adverse effect on the Company's business, financial
condition and results of operations.
 
                                     F-21
<PAGE>
 
                  THE INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
13. RELATED PARTY TRANSACTIONS
 
  During 1995, the Company incurred costs of $102,800 for transportation
services provided by Javiar, Inc. ("Javiar"), a corporation owned by certain
of the Company's shareholders.
 
  During the years ended December 31, 1995 and 1996, the Company incurred
costs for supplies and services in the amount of $168,018 and $125,296,
respectively, with ATM Source, a corporation owned 100% by a shareholder of
the Company.
 
  During the years ended December 31, 1996 and 1997, the Company incurred fees
of $137,967 and $31,489 respectively, for legal services to a law firm in
which one of its partners is also a director of ProVesa and a director and
shareholder of the Company.
 
  During the year ended December 31, 1995 and the period from January 1, 1996
to May 31, 1996, the Company incurred costs of $119,400 and $44,775 from Data
Services related to equipment maintenance services. Such amounts are included
in selling, general and administrative expenses in the accompanying income
statements.
 
  The Company provided EFT services to ProVesa, a company partially owned by
certain shareholders of the Company prior to its acquisition on November 27,
1996, totaling $174,774 and $166,572 for the year ended December 31, 1995 and
the period from January 1, 1996 to November 27, 1996. Such amounts are
included in service fee income in the accompanying consolidated statements of
operations.
 
  The Company and Phoenix International Ltd., Inc. ("Phoenix") have entered
into software license and development agreements dated December 31, 1997 (the
"December Agreement") and January 15, 1998 (the "January Agreement"). Under
the December Agreement, the Company licensed ATM and voice response software
from Phoenix and obtained the rights to develop the software and integrate it
with the Company's existing software programs. Under the January Agreement,
Phoenix licensed EFT software from the Company and obtained the rights to
develop the software and integrate it with Phoenix's existing programs. A
director and shareholder of the Company, is also a director of Phoenix.
 
  The Company had a note receivable of $466,941 at December 31, 1996 from Dyad
Corporation, a company partially owned by certain shareholders of the Company.
During 1997, the loan increased to $1,254,122. This note was paid in full on
December 31, 1997. The Company also owns 2% of the outstanding common stock of
Dyad, which is reflected at its cost of $50,000 and included in other assets
in the accompanying consolidated balance sheets.
 
14. SUBSEQUENT EVENTS
 
 Proposed Initial Public Offering of Common Stock
   
  The Company plans to offer 2,250,000 shares of its common stock (2,608,125
shares if the underwriters' overallotment option is exercised in full) for
sale to the public at a proposed price range of $8 to $9 per share during the
second quarter of 1998 (the "Equity Offering"). There can be, however, no
assurance that the Equity Offering will be completed at a per share price
within the estimated range, or at all. There are significant potential risks
associated with the Equity Offering, as well as with the Companies' ability to
compete profitably in this industry.     
 
                                     F-22
<PAGE>
 
                    INTERCEPT GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Common Stock Split
 
  On February 25, 1998, the Board of Directors declared a stock split on the
Company's common stock. The stock split was effected in the form of a stock
dividend of 1.1053 shares of common stock issued for each share of common
stock held by shareholders of record on February 28, 1998. The effect of the
stock split has been retroactively reflected as of December 31, 1994 in the
statement of changes in shareholder equity and for all periods presented. All
references to the per share amounts and elsewhere in consolidated financial
statements and related footnotes have been restated as appropriate to reflect
the effect of the stock split.
 
 Credit Facility
   
  On April 28, 1998, the Company entered into a loan and security agreement
with a third party lender for a three year revolving line of credit of up to
$20,000,000 for permitted acquisitions ($2,000,000 of which may become
available for working capital and capital expenditures). Obligations under the
facility will be guaranteed by substantially all assets of the Company.
Certain financial covenants include maintenance of (i) funded debt/EBITDA;
(ii) funded debt/total capitalization and (iii) consolidated tangible net
worth, as defined. As a condition to the loan, InterCept shall (i) have
successfully completed an initial public offering of its common stock and
shall have received gross proceeds of at least $17,000,000 and (ii) repaid
certain long term debt instruments.     
 
                                     F-23
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To ProVesa, Inc.:
 
  We have audited the accompanying consolidated balance sheets of PROVESA,
INC. (a Georgia corporation) AND SUBSIDIARIES as of June 30, 1995 and 1996 and
November 27, 1996 and the related consolidated statements of operations,
shareholders' equity, and cash flows for the years ended June 30, 1995 and
1996 and the period from July 1, 1996 to November 27, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits 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 provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ProVesa,
Inc. and subsidiaries as of June 30, 1995 and 1996 and November 27, 1996 and
the results of their operations and their cash flows for the years ended June
30, 1995 and 1996 and the period from July 1, 1996 to November 27, 1996 then
ended in conformity with generally accepted accounting principles.
 
                                          /s/ Arthur Andersen LLP
 
Atlanta, Georgia
February 27, 1998
 
                                     F-24
<PAGE>
 
                         PROVESA, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                  JUNE 30, 1995 AND 1996 AND NOVEMBER 27, 1996
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                 JUNE 30
                                          -----------------------  NOVEMBER 27,
                                             1995        1996          1996
                                          ----------  -----------  ------------
<S>                                       <C>         <C>          <C>
CURRENT ASSETS:
 Cash and cash equivalents............... $  219,721  $   180,031   $  286,036
 Accounts receivable.....................     81,653      447,365      508,786
 Inventory, prepaid expenses and other...    113,685      142,979       92,683
                                          ----------  -----------   ----------
      Total current assets...............    415,059      770,375      887,505
PROPERTY AND EQUIPMENT, net..............  1,131,909    1,004,021    1,377,970
DEFERRED TAX ASSET.......................          0       63,298            0
OTHER ASSETS, net........................  1,581,890    1,325,082    1,282,678
                                          ----------  -----------   ----------
                                          $3,128,858  $ 3,162,776   $3,548,153
                                          ==========  ===========   ==========
 
                      LIABILITIES AND SHAREHOLDERS' EQUITY
 
<CAPTION>
CURRENT LIABILITIES:
<S>                                       <C>         <C>          <C>
 Current maturities of notes payable and
  capital lease obligations.............. $  219,483  $   207,936   $  283,288
 Accounts payable........................    155,753      139,740      135,879
 Accrued liabilities.....................     57,892       85,908       26,295
                                          ----------  -----------   ----------
      Total current liabilities..........    433,128      433,584      445,462
LONG-TERM LIABILITIES:
 Long-term debt and capital lease
  obligations, net of current
  obligations............................  2,097,673    1,873,643    2,102,692
 Deferred income taxes...................     49,455       34,996       36,493
                                          ----------  -----------   ----------
      Total liabilities..................  2,580,256    2,342,223    2,584,647
                                          ----------  -----------   ----------
MINORITY INTEREST........................          0       50,000       24,005
 
COMMITMENTS AND CONTINGENCIES
SERIES A PREFERRED STOCK 8% CUMULATIVE,
 NO PAR VALUE; 30,000 SHARES AUTHORIZED;
 4,250 SHARES ISSUED AND OUTSTANDING.....    425,000      425,000      425,000
 
SHAREHOLDERS' EQUITY:
 Preferred stock, no par value; 1,000,000
  shares authorized; Series A reported
  above..................................          0            0            0
 Common stock, no par value, 9,000,000
  shares authorized; 105,000 shares is-
  sued and outstanding...................    390,895      390,895      390,895
 Accumulated (deficit) earnings..........   (267,293)     (45,342)     123,606
                                          ----------  -----------   ----------
      Total shareholders' equity.........    123,602      345,553      514,501
                                          ----------  -----------   ----------
                                          $3,128,858  $ 3,162,776   $3,548,153
                                          ==========  ===========   ==========
</TABLE>
 
   The accompanying notes are an integral part of these consolidated balance
                                    sheets.
 
                                      F-25
<PAGE>
 
                         PROVESA, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
                   FOR THE YEARS ENDED JUNE 30, 1995 AND 1996
             AND THE PERIOD FROM JULY 1, 1996 TO NOVEMBER 27, 1996
 
<TABLE>
<CAPTION>
                                                                      PERIOD
                                            YEARS ENDED JUNE 30       ENDED
                                           ----------------------  NOVEMBER 27,
                                              1995        1996         1996
                                           ----------  ----------  ------------
<S>                                        <C>         <C>         <C>
REVENUES.................................  $3,423,037  $3,998,055   $1,870,893
                                           ----------  ----------   ----------
COSTS AND EXPENSES:
 Cost of service fee income..............     175,846     330,009      164,693
 Cost of equipment and product sales.....     354,650     208,534       40,061
 Cost of data communications income......     177,398     282,403      129,767
Selling, general and administrative......   1,949,830   2,101,041    1,074,670
Depreciation and amortization............     741,238     674,474      141,340
                                           ----------  ----------   ----------
  Total operating expense ...............   3,398,962   3,596,461    1,550,531
                                           ----------  ----------   ----------
OPERATING INCOME.........................      24,075     401,594      320,362
INTEREST EXPENSE.........................    (292,738)   (223,948)     (90,564)
INTEREST INCOME..........................       7,526       7,698        5,038
                                           ----------  ----------   ----------
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT)
 PROVISION...............................    (261,137)    185,344      234,836
INCOME TAX (BENEFIT) PROVISION...........           0     (77,757)      83,383
MINORITY INTEREST IN NET LOSS OF SUBSIDI-
 ARY.....................................           0           0      (25,995)
                                           ----------  ----------   ----------
NET (LOSS) INCOME BEFORE PREFERRED DIVI-
 DENDS...................................  $ (261,137) $  263,101   $  177,448
PREFERRED DIVIDENDS......................       6,156      41,150        8,500
                                           ----------  ----------   ----------
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
 SHAREHOLDERS............................  $ (267,293) $  221,951   $  168,948
                                           ==========  ==========   ==========
</TABLE>
 
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                      F-26
<PAGE>
 
                         PROVESA, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
                   FOR THE YEARS ENDED JUNE 30, 1995 AND 1996
             AND THE PERIOD FROM JULY 1, 1996 TO NOVEMBER 27, 1996
 
<TABLE>
<CAPTION>
                                          COMMON STOCK   ACCUMULATED
                                        ----------------  (DEFICIT)
                                        SHARES   AMOUNT   EARNINGS     TOTAL
                                        ------- -------- ----------- ---------
<S>                                     <C>     <C>      <C>         <C>
BALANCE, June 30, 1994.................  22,000 $ 11,000  $       0  $  11,000
 Proceeds from issuance of common
  stock, net...........................  83,000  379,895          0    379,895
 Net loss attributable to common
  shareholders.........................       0        0   (267,293)  (267,293)
                                        ------- --------  ---------  ---------
BALANCE, June 30, 1995................. 105,000  390,895   (267,293)   123,602
 Net income attributable to common
  shareholders.........................       0        0    221,951    221,951
                                        ------- --------  ---------  ---------
BALANCE, June 30, 1996................. 105,000  390,895    (45,342)   345,553
 Net income attributable to common
  shareholders.........................       0        0    168,948    168,948
                                        ------- --------  ---------  ---------
BALANCE, November 27, 1996............. 105,000 $390,895  $ 123,606  $ 514,501
                                        ======= ========  =========  =========
</TABLE>
 
 
 
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                      F-27
<PAGE>
 
                         PROVESA, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                   FOR THE YEARS ENDED JUNE 30, 1995 AND 1996
             AND THE PERIOD FROM JULY 1, 1996 TO NOVEMBER 27, 1996
 
<TABLE>
<CAPTION>
                                                                      PERIOD
                                             YEARS ENDED JUNE 30      ENDED
                                             --------------------  NOVEMBER 27,
                                                1995       1996        1996
                                             ----------  --------  ------------
<S>                                          <C>         <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss).......................... $ (261,137) $263,101    $177,448
 Adjustments to reconcile net income (loss)
  to net cash provided by operating activi-
  ties:
  Minority interest in ProImage.............          0         0     (25,995)
  Deferred income tax benefit...............          0   (77,757)     64,795
  Depreciation and amortization.............    741,238   674,474     141,340
  Change in operating assets and
   liabilities, net of effects of
   acquisition:
   Accounts receivable......................     36,967  (365,712)    (61,421)
   Inventory and prepaids...................    (85,044)  (29,294)     50,296
   Other assets.............................                    0      (3,217)
   Accounts payable and accrued expenses....     77,025    12,003     (63,474)
                                             ----------  --------    --------
    Net cash provided by operating activi-
     ties...................................    509,049   476,815     279,772
                                             ----------  --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Payment on notes receivable................    100,000         0           0
 Purchase of property and equipment, net....   (138,462) (289,778)   (469,668)
 Contributions from minority investors......          0    50,000           0
 Payments for business acquired............. (2,240,000)        0           0
 Organizational costs.......................    (47,979)        0           0
                                             ----------  --------    --------
    Net cash provided by (used in) investing
     activities............................. (2,326,441) (239,778)   (469,668)
                                             ----------  --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from (payments on) long-term debt,
  net.......................................  1,153,473  (235,577)    304,401
 Issuance of preferred stock................    425,000         0           0
 Issuance of common stock, net of issuance
  costs.....................................    390,895         0           0
 Payment of preferred dividends.............     (6,156)  (41,150)     (8,500)
                                             ----------  --------    --------
    Net cash provided by (used in) financing
     activities.............................  1,963,212  (276,727)    295,901
                                             ----------  --------    --------
NET INCREASE (DECREASE) IN CASH.............    145,820   (39,690)    106,005
CASH, beginning of period...................     73,901   219,721     180,031
                                             ----------  --------    --------
CASH, end of period......................... $  219,721  $180,031    $286,036
                                             ==========  ========    ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:
 Cash paid for interest..................... $  292,738  $223,948    $ 90,564
                                             ==========  ========    ========
 Cash paid for income tax...................          0         0      23,200
                                             ==========  ========    ========
</TABLE>
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                      F-28
<PAGE>
 
                        PROVESA, INC. AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                 JUNE 30, 1995 AND 1996 AND NOVEMBER 27, 1996
 
1. ORGANIZATION AND NATURE OF BUSINESS
 
  ProVesa, Inc. (the "Company") (a Georgia corporation) was incorporated on
June 30, 1994 for the purpose of providing information technology and data
processing services to financial institutions, primarily community banks. On
July 8, 1994, the Company acquired all of the stock of Data Bank Solutions,
Inc. ("DBS") for $2,240,000 with the proceeds of a loan provided by a
commercial bank. The Company is continuing the business of DBS, which operates
a data processing service bureau serving community banks, primarily in
Georgia. The name of DBS was subsequently changed to ProVesa Services, Inc.
 
  The acquisition was accounted for using the purchase method of accounting,
with the excess of the purchase price over the net assets acquired recorded as
goodwill, which is being amortized using the straight-line method over a 40-
year period.
 
  In May 1996, the Company purchased a one-third ownership of ProImage, Inc.,
a check imaging corporation ("ProImage"). The remaining two-thirds of ProImage
are owned equally by two community banks. The Company is a one-third guarantor
of a $400,000 note obtained in September 1996, the proceeds of which were used
to start the corporation. Consideration for the Company's interest was
$25,000. As the Company maintains control over ProImage, ProImage is included
in the consolidated financial statements of the Company since beginning
operations. The remaining two-thirds interest is treated as minority
interests. As of June 30, 1996, ProImage had no operations or assets other
than receivables from its shareholders.
 
  On November 27, 1996, the Company's Board of Directors approved a share for
share exchange with The InterCept Group, Inc. ("InterCept") making the Company
a wholly-owned subsidiary of InterCept. InterCept currently has operating
subsidiaries in equipment sales and maintenance services as well as electronic
funds transfer support services.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Presentation
 
  The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiary, ProVesa Services, Inc. and its one third owned
subsidiary, ProImage, Inc. ("ProImage"). ProImage has been consolidated in the
accompanying consolidated financial statements since its inception, due to
ProVesa's control of ProImage and limitations on the ability of the other
investors to have losses allocated to their capital accounts. All significant
intercompany accounts and transactions have been eliminated in consolidation.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Cash and Cash Equivalents
 
  The Company considers all short-term highly liquid investments with an
original maturity date of three months or less to be cash equivalents.
 
                                     F-29
<PAGE>
 
                        PROVESA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Property and Equipment
 
  Property and equipment are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets. For
financial reporting purposes, major additions and improvements are charged to
property accounts while replacements, maintenance, and repairs which do not
improve or extend the lives of respective assets are expensed in the current
period. Estimated useful lives for the Company's assets are as follows:
 
<TABLE>
        <S>                                         <C>
        Buildings and improvements................. 10-30 years
        Computer equipment.........................     5 years
        Furniture and fixtures.....................     7 years
        Software...................................     3 years
        Vehicles...................................     5 years
</TABLE>
 
 Computer Software Licenses
 
  Acquired software and licensing rights are capitalized and amortized using
the straight-line method over an estimated useful life of three to five years.
 
 Software Development Costs
 
  The Company capitalizes software development costs incurred from the time
technological feasibility of the software is established until the software is
sold. These costs are amortized on a straight-line basis over three years, the
estimated economic life of the software. Research and development costs and
maintenance costs related to software development are expensed as incurred.
 
 Intangible Assets
 
  Intangible assets include goodwill and organizational costs.
 
  Goodwill
 
    Goodwill represents the excess of the purchase price over the net
  tangible and identifiable intangible assets of acquired businesses.
  Goodwill is amortized on a straight-line basis over 40 years.
 
  Organizational Costs
 
    Organizational costs are amortized on a straight-line basis over a period
  of five years.
 
 Long-Lived Assets
 
  The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," on July 1, 1995. SFAS No. 121 established
accounting standards for the impairment of long-lived assets and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangible assets to be disposed of. The effect of
adopting SFAS No. 121 was not material to the Company's consolidated financial
statements.
 
  The Company reviews its long-lived assets for impairment at each balance
sheet date or whenever events or changes in circumstances indicate that the
carrying amount of an asset should be assessed. Management evaluates the
intangible assets related to each acquisition individually to determine
whether an impairment has
 
                                     F-30
<PAGE>
 
                        PROVESA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
occurred. An impairment is recognized when the discounted future cash flows
estimated to be generated by the acquired business are not sufficient to
recover the unamortized balance of the intangible asset with the amount of any
such deficiency charged to income in the current year. Estimates of future
cash flows are based on many factors, including current operating results,
expected market trends, and competitive influences.
 
 Income Taxes
 
  Deferred tax assets and liabilities are recognized for the future tax
consequences attributed to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
 
  In the event the future tax consequences of differences between the
financial reporting bases and the tax bases of the Company's assets and
liabilities results in deferred tax assets, an evaluation of the probability
of being able to realize the future benefits indicated by such asset is
required. A valuation allowance is provided for a portion of the deferred tax
asset when it is more likely than not that some portion or all of the deferred
tax asset will not be realized. In assessing the realizability of the deferred
tax assets, management considers the scheduled reversals of deferred tax
liabilities, projected future taxable income, and tax planning strategies.
 
 Revenue Recognition
 
  Revenues are recognized as services are provided.
 
 Concentration of Credit Risk
 
  During the years ended June 30, 1995 and 1996 and the period ended November
27, 1996, revenues from one customer constituted approximately 28%, 20% and
18% of total revenues, respectively.
 
3. PROPERTY AND EQUIPMENT
 
  Property and equipment at June 30, 1995 and 1996, and November 27, 1996
consisted of the following:
 
<TABLE>
<CAPTION>
                                                   JUNE 30
                                            ----------------------  NOVEMBER 27,
                                               1995        1996         1996
                                            ----------  ----------  ------------
   <S>                                      <C>         <C>         <C>
   Land.................................... $   67,157  $   67,157   $   67,157
   Building and improvements...............    557,357     557,357      566,544
   Computer equipment......................  1,963,930     647,082      988,935
   Furniture and fixtures..................    111,630     118,331      118,331
   Software................................    123,643     131,083      249,711
   Vehicles................................     25,304      25,304       25,304
                                            ----------  ----------   ----------
                                             2,849,021   1,546,314    2,015,982
   Less accumulated depreciation........... (1,717,112)   (542,293)    (638,012)
                                            ----------  ----------   ----------
                                            $1,131,909  $1,004,021   $1,377,970
                                            ==========  ==========   ==========
</TABLE>
 
                                     F-31
<PAGE>
 
                         PROVESA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
4. OTHER ASSETS
 
  Other assets at June 30, 1995 and 1996 and November 27, 1996 consisted of the
following:
 
<TABLE>
<CAPTION>
                                                   JUNE 30
                                            ----------------------  NOVEMBER 27,
                                               1995        1996         1996
                                            ----------  ----------  ------------
   <S>                                      <C>         <C>         <C>
   Goodwill................................ $1,494,533  $1,494,533   $1,494,533
   Noncompete agreement....................    400,000           0            0
   Organizational costs....................     47,979      47,979       51,196
   Software licensing rights...............    123,002           0            0
                                            ----------  ----------   ----------
                                             2,065,514   1,542,512    1,545,729
   Less accumulated amortization...........   (483,624)   (217,430)    (263,051)
                                            ----------  ----------   ----------
                                            $1,581,890  $1,325,082   $1,282,678
                                            ==========  ==========   ==========
</TABLE>
 
5. LONG-TERM DEBT
 
  Long-term debt at June 30, 1995 and 1996 and November 27, 1996 consisted of
the following:
 
<TABLE>
<CAPTION>
                                                  JUNE 30
                                           ----------------------  NOVEMBER 27,
                                              1995        1996         1996
                                           ----------  ----------  ------------
<S>                                        <C>         <C>         <C>
  Note payable to Allied Bank, interest at
  prime (8.25% at June 30, 1996), monthly
  principal and interest installments of
  $6,000 through December 1, 1999, with
  remaining principal due December 31,
  1999; the note is collateralized by land
  and building............................ $  475,973  $  444,020   $  429,385
  Note payable to FNB Commerce, interest
  at prime plus 2%; monthly principal and
  interest payments of $28,434 (with
  adjustments for changes of prime)
  beginning July 1, 1996, payable in full
  on June 1, 2003; the note is
  collateralized by 674 shares of common
  stock of ProVesa Services, Inc., a life
  insurance policy and personal guarantee
  of a major stockholder..................  1,687,500   1,637,559    1,567,799
  Note payable to First Macon Bank and
  Trust, interest at prime (8.25% at
  loan's inception at September 13, 1996),
  monthly principal and interest payments
  of $8,185.72 until the maturity date of
  September 15, 2001; the note is
  collateralized by all furnitures,
  fixtures, equipment, inventory and
  accounts receivables and guarantees from
  all shareholders of ProImage, Inc. .....          0           0      388,796
  Capital Lease obligations, computer
  equipment...............................    153,683           0            0
                                           ----------  ----------   ----------
                                            2,317,156   2,081,579    2,385,980
Less current portion......................   (219,483)   (207,936)    (283,288)
                                           ----------  ----------   ----------
Long-term debt and capital lease
 obligations net of current portion....... $2,097,673  $1,873,643   $2,102,692
                                           ==========  ==========   ==========
</TABLE>
 
  Maturities of long-term debt at November 30, 1996 are as follows:
 
<TABLE>
<CAPTION>
         1997........................................ $  283,288
         <S>                                          <C>
         1998........................................    310,365
         1999........................................    341,500
         2000........................................    635,116
         2001........................................    348,040
         Thereafter..................................    467,671
                                                      ----------
                                                      $2,385,980
                                                      ==========
</TABLE>
 
                                      F-32
<PAGE>
 
                        PROVESA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The loan agreement with FNB Commerce contains restrictions on the payment of
dividends on common stock and restrictions on capital expenditures.
 
6. INCOME TAXES
 
  The components of income tax expense provision (benefit) for the years ended
June 30, 1995 and 1996 and the period ended November 27, 1996 are as follows:
 
<TABLE>
<CAPTION>
                                                    JUNE 30
                                              --------------------  NOVEMBER 27,
                                                1995       1996         1996
                                              ---------  ---------  ------------
<S>                                           <C>        <C>        <C>
Current...................................... $       0  $       0    $18,588
Deferred.....................................  (107,411)    29,654     64,795
Change in valuation allowance................   107,411   (107,411)         0
                                              ---------  ---------    -------
      Total.................................. $       0  $ (77,757)   $83,383
                                              =========  =========    =======
</TABLE>
 
  The differences between the income tax benefit and the amount computed by
applying the statutory federal income tax rate to the net income (loss) for
the years ended June 30, 1995 and 1996 are due to unrecorded net operating
loss carryforwards.
 
  The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
basis, which give rise to deferred tax assets and liabilities, as of June
30,1995 and 1996 and November 27, 1996 are as follows:
 
<TABLE>
<CAPTION>
                                                    JUNE 30
                                                ----------------- NOVEMBER 27,
                                                  1995     1996       1996
                                                --------  ------- ------------
   <S>                                          <C>       <C>     <C>
   Current deferred tax asset:
    Deferred tax asset:
     Accrued vacation pay...................... $  1,509  $ 2,057   $     0
     Net operating loss carryforwards..........  143,141   61,241         0
                                                --------  -------   -------
       Deferred tax assets.....................  144,650   63,298         0
                                                --------  -------   -------
     Less valuation allowance.................. (144,650)       0         0
                                                --------  -------   -------
       Net deferred tax assets................. $      0  $63,298   $     0
                                                ========  =======   =======
   Noncurrent deferred tax liability,
    consisting of accelerated depreciation..... $ 49,455  $34,996   $36,493
                                                ========  =======   =======
</TABLE>
 
7. PREFERRED STOCK
 
  Shares of preferred stock may be issued from time to time in one or more
series as may be established by resolution of the board of directors of the
Company. Each resolution shall include the number of shares issued,
 
                                     F-33
<PAGE>
 
                        PROVESA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as determined by the board.
 
 Series A Preferred Stock
 
  On June 30, 1994, the Company filed Articles of Amendments to its Articles
of Incorporation for the designation of 30,000 shares of Series A preferred
stock. The stated value of the Series A is $100 per share. Holders of Series A
preferred stock are entitled to receive dividends at the annual rate of 8% of
the stated value per share, or $8.00 per share, payable quarterly. Dividends
are cumulative from the date of issue. The Company may not declare or pay cash
dividends on any other series of preferred stock that is junior or on parity
with the Series A preferred stock, or on common stock, nor may it redeem,
purchase, or otherwise acquire any of such stock, unless full cumulative
dividends have been or are contemporaneously declared and paid on the Series A
preferred stock. In the event of any liquidation or dissolution of the
Company, the holders of shares of Series A preferred stock are entitled to
receive out of assets of the Company available for distribution to
shareholders, before any distributions are made to holders of common stock or
of any other shares of stock of the Company ranking junior to the Series A
preferred stock, liquidating distributions in the amount of $100 per share,
plus accrued and unpaid dividends.
 
  The Series A preferred stock is redeemable at the option of the Company for
cash at any time, in whole or in part, on at least 10 days' notice. The price
payable upon redemption is 110% of stated value per share, or $110 per share,
plus accrued but unpaid dividends. At any time after the fifth anniversary of
the initial issuance of shares of Series A preferred stock, any holder of
Series A preferred stock may tender all or part of such holder's Series A
preferred stock for redemption at a price equal to 100% of stated value, or
$100 per share, plus accrued and unpaid dividends. The holders of the Series A
preferred stock have no voting rights except as otherwise required by the
Georgia Business Corporation Code (the "Georgia Code") and applicable law. The
holders of shares of Series A preferred stock have no preemptive or other
rights to subscribe for any other shares of securities, nor do they have any
conversion rights. The Series A preferred stock ranks prior to the common
stock as to dividends and upon liquidation of the Company.
 
8.STOCK OPTION PLAN
 
  The Company adopted a Stock Option Plan covering up to 25,000 shares of its
common stock. This plan is administered by a committee of the Board of
Directors and provides that restricted stock and stock options may be granted.
The Plan is intended as an incentive for and as a means of encouraging stock
ownership by persons who are employees or directors of the Company. Options
may be granted either as incentive stock options or as nonqualified stock
options. The exercise price of each option granted under the Plan will not be
less than the fair market value of the shares of common stock subject to the
option on the date of grant as determined by the Board of Directors. Options
will be exercisable in whole or in part upon such terms as may be determined
by the committee. During 1995, options for 20,000 shares were granted. The
options granted are nonqualified stock
options with an exercise price of $5.00 per share and exercise period up to 10
years. None of the options had been exercised as of November 27, 1996.
 
                                     F-34
<PAGE>
 
                        PROVESA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  In 1994, the board of directors adopted a stock option plan under which
25,000 shares of common stock were reserved for grant. During 1995, options to
purchase 20,000 shares of the Company's common stock were granted at an
exercise price of $5.00 per share. At November 27, 1996, 20,000 shares were
vested of which none had been exercised.
 
  A summary status of the Company's stock option plan as of June 30, 1995 and
1996, and November 27, 1996 and changes during the year, is presented below:
 
<TABLE>
<CAPTION>
                                                                        EXERCISE
                                                                 SHARES  PRICE
                                                                 ------ --------
     <S>                                                         <C>    <C>
     Outstanding at June 30, 1995............................... 20,000  $5.00
      Granted...................................................      0    --
                                                                 ------
     Outstanding at June 30, 1996............................... 20,000   5.00
      Granted...................................................      0    --
                                                                 ------
     Outstanding at November 27, 1996........................... 20,000   5.00
                                                                 ======
</TABLE>
 
 Statement of Financial Accounting Standards No. 123
 
  During 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which defines a fair value-based
method of accounting for an employee stock option or similar equity instrument
and encourages all entities to adopt that method of accounting for all of
their employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the method of
accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees." Entities electing to remain with
the accounting methodology required by APB Opinion No. 25 must make pro forma
disclosures of net income and, if presented, earnings per share as if the fair
value-based method of accounting defined in SFAS No. 123 had been applied.
 
  The Company has elected to account for its stock based compensation plans
under APB Opinion No. 25, under which no compensation cost has been recognized
by the Company. Under SFAS No. 123 the value of all options for shares of the
Company's common stock granted in fiscal years beginning after December 15,
1996 must be computed for pro forma disclosure purposes. The Company has
granted no options during this period, and no disclosures have been made.
 
  The following table sets forth the number of shares, exercise price and
weighted average contractual lives by groups of similar price and grant date:
 
<TABLE>
<CAPTION>
                                                                                       WEIGHTED
                                                                                        AVERAGE
          NUMBER                       EXERCISE                                       CONTRACTUAL
         OF SHARES                      PRICE                                            LIFE
         ---------                     --------                                       -----------
                                                                                      (IN YEARS)
        <S>                            <C>                                            <C>
          20,000                        $5.00                                             8.2
</TABLE>
 
  At June 30, 1996, 20,000 options for the Company's stock with a weighted
average exercise price of $5.00 per share were exercisable by employees of the
Companies. At November 27, 1996, 20,000 options for the Company's stock with a
weighted average exercise price of $5.00 per share were exercisable by
employees. At November 27, 1996, all 20,000 options outstanding under the plan
were converted into options to acquire an equal number of shares of InterCept
common stock.
 
 
                                     F-35
<PAGE>
 
                        PROVESA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 9. COMMITMENTS
 
  The Company leases various equipment and facilities under operating lease
agreements. Future minimum payments on these leases at November 27, 1996 are
summarized as follows:
 
<TABLE>
         <S>                                             <C>
         1997........................................... $31,200
         1998...........................................  31,200
         1999...........................................  26,000
                                                         -------
                                                         $88,400
                                                         =======
</TABLE>
 
  Rent expense for all operating leases was $17,757, $55,506 and $27,151 for
the years ended June 30, 1995 and 1996 and the period from July 1, 1996 to
November 27, 1996, respectively.
 
10. RELATED-PARTY TRANSACTIONS
 
  During the years ended June 30, 1995 and 1996, the Company incurred costs of
$5,953 and $4,888, respectively, for transportation services provided by
Javiar, Inc., a corporation owned by certain shareholders of the Company.
 
  The Company purchased equipment and services during the years ended June 30,
1995, 1996 and the period from July 1, 1996 to November 27, 1996 in the
amounts of $177,761, $261,231, and $93,931 respectively, from Data Services
Corporation, a corporation owned by certain shareholders of the Company.
 
  During the years ended June 30, 1995, 1996 and the period from July 1, 1996
to November 27, 1996 the Company incurred costs for supplies and services in
the amounts of $19,383, $29,456, and $1,769 respectively, with ATM Source, a
corporation owned by one of the shareholders of the Company.
 
  The Company incurred costs of $66,962, $195,070, and $112,011 during the
years ended June 30, 1995, 1996 and the period from July 1, 1996 to November
27, 1996, respectively, for supplies and services provided by InterCept
Systems, Inc., a corporation owned by certain shareholders of the Company.
 
  During the years ended June 30, 1995, 1996 and the period from July 1, 1996
to November 27, 1996, the Company paid $58,164, $2,879, and $120 respectively,
for legal services to Nelson, Mullins, Riley & Scarborough. One of the
partners in the law firm is also a director and shareholder of the Company.
 
  The Company incurred costs of $52,268 and $41,737 during the year ended June
30, 1995 and for the period from July 1, 1996 to November 27, 1996
respectively for data line services provided by InterCept Communications
Technologies, L.L.C., a corporation owned by certain shareholders of the
Company.
 
                                     F-36
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To FiNet, Inc.:
 
  We have audited the accompanying balance sheet of FiNet, Inc. (a Tennessee
corporation) as of December 17, 1996 and the related statements of operations,
shareholders' deficit, and cash flows for the period from Inception (June 21,
1996) to December 17, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
this financial statement based on our audit.
 
  We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of FiNet, Inc. as of December
17, 1996 and the results of its operations and its cash flows for the period
from Inception (June 21, 1996) through December 17, 1996 in conformity with
generally accepted accounting principles.
 
                                          /s/ Arthur Andersen LLP
 
Atlanta, Georgia
February 27, 1998
 
                                     F-37
<PAGE>
 
                                  FINET, INC.
 
                                 BALANCE SHEET
 
                               DECEMBER 17, 1996
 
<TABLE>
<S>                                                                     <C>
                                    ASSETS
CURRENT ASSETS
Cash................................................................... $10,200
                                                                        -------
    Total Assets....................................................... $10,200
                                                                        =======
                     LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES
 Note payable, current................................................. $10,000
 Accrued liabilities...................................................  44,795
                                                                        -------
 Total liabilities.....................................................  54,795
Shareholders' Equity:
 Common Stock..........................................................      60
 Paid in capital.......................................................     140
 Accumulated deficit................................................... (44,795)
                                                                        -------
    Total shareholders' deficit........................................ (44,595)
                                                                        -------
      Total liabilities & shareholders' deficit........................ $10,200
                                                                        =======
</TABLE>
 
 
 
       The accompanying notes are an integral part of this balance sheet.
 
                                      F-38
<PAGE>
 
                                   FINET INC.
 
                            STATEMENT OF OPERATIONS
 
       FOR THE PERIOD FROM INCEPTION (JUNE 21, 1996) TO DECEMBER 17, 1996
 
<TABLE>
<S>                                                                      <C>
GENERAL AND ADMINISTRATIVE EXPENSES..................................... $44,795
                                                                         -------
OPERATING LOSS..........................................................  44,795
                                                                         -------
LOSS BEFORE PROVISION FOR INCOME TAXES..................................  44,795
PROVISION FOR INCOME TAXES..............................................     --
                                                                         -------
NET LOSS................................................................ $44,795
                                                                         =======
</TABLE>
 
 
 
         The accompanying notes are an integral part of this statement.
 
                                      F-39
<PAGE>
 
                                  FINET, INC.
 
                       STATEMENT OF SHAREHOLDER'S DEFICIT
 
       FOR THE PERIOD FROM INCEPTION (JUNE 21, 1996) TO DECEMBER 17, 1996
 
<TABLE>
<CAPTION>
                                  COMMON STOCK ADDITIONAL
                                  ------------  PAID-IN   ACCUMULATED
                                  STOCK AMOUNT  CAPITAL     DEFICIT    TOTAL
                                  ----- ------ ---------- ----------- --------
<S>                               <C>   <C>    <C>        <C>         <C>
INCEPTION, June 21, 1996.........     0  $ 0      $  0     $      0   $      0
Issuance of common stock......... 6,000   60       140            0        200
Net loss.........................     0    0         0      (44,795)   (44,795)
                                  -----  ---      ----     --------   --------
Balance, December 17, 1996....... 6,000  $60      $140     $(44,795)  $(44,595)
                                  -----  ---      ----     --------   --------
</TABLE>
 
 
 
         The accompanying notes are an integral part of this statement.
 
                                      F-40
<PAGE>
 
                                   FINET, INC
 
                            STATEMENT OF CASH FLOWS
 
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 17, 1996
 
<TABLE>
<S>                                                                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss........................................................... $(44,795)
  Adjustments to reconcile net loss to cash provided by operating
   activities:
    Change in:
      Accrued liabilities............................................   44,795
                                                                      --------
        Net cash provided by operating activities....................        0
                                                                      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from related party note payable...........................   10,000
  Issuance of common stock...........................................      200
                                                                      --------
    Net cash provided by financing activities........................   10,200
                                                                      --------
NET INCREASE IN CASH.................................................   10,200
CASH, AT INCEPTION...................................................        0
                                                                      --------
CASH, AT END OF PERIOD............................................... $ 10,200
                                                                      ========
</TABLE>
 
 
         The accompanying notes are an integral part of this statement.
 
                                      F-41
<PAGE>
 
                                  FINET, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. ORGANIZATION AND NATURE OF BUSINESS
 
  FiNet, Inc. (a Tennessee corporation) (the "Company") was incorporated on
June 21, 1996 under the Tennessee Business Corporation Act. FiNet, Inc. is in
the business of providing merchant portfolio management services to community
banks.
 
  Effective December 17, 1996, the Company was merged with and into InterCept
Acquisitions II, Inc., a wholly owned subsidiary of The InterCept Group Inc.
("InterCept"), whereby shareholders of the Company received 116,250 shares of
no par value InterCept common stock in exchange for all of the issued and
outstanding shares of common stock of the Company as of December 17, 1996 (the
"Merger"). The accompanying financial statements of the Company are exclusive
of the effects of the Merger.
 
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of Estimates
 
  Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of asset and liabilities and the 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.
 
 Cash and Cash Equivalents
 
  The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
 
 Note Payable
 
  The note payable represents an advance made by InterCept to fund FiNet's
general working capital needs.
 
 
                                     F-42
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Bank Services Corporation:
 
  We have audited the accompanying balance sheets of BANK SERVICES CORPORATION
(a Colorado corporation) as of December 31, 1995 and 1996 and the related
statements of operations, shareholders' equity (deficit), and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide 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 Bank Services Corporation
as of December 31, 1995 and 1996 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
 
                                          /s/ Arthur Andersen LLP
 
Atlanta, Georgia February 27, 1998
 
                                     F-43
<PAGE>
 
                           BANK SERVICES CORPORATION
 
                                 BALANCE SHEETS
 
                           DECEMBER 31, 1995 AND 1996
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                               1995      1996
                                                             --------  --------
<S>                                                          <C>       <C>
CURRENT ASSETS:
 Cash....................................................... $144,453  $ 39,088
 Accounts receivable........................................   76,442    83,735
 Prepaid expenses...........................................   14,429    25,493
                                                             --------  --------
      Total current assets..................................  235,324   148,316
                                                             --------  --------
PROPERTY AND EQUIPMENT:
 Office equipment...........................................   31,177    23,674
 Computer equipment and software............................  853,329   641,331
 Vehicles...................................................   13,500    13,500
                                                             --------  --------
                                                              898,006   678,505
 Less accumulated depreciation.............................. (766,450) (562,189)
                                                             --------  --------
      Net property and equipment............................  131,556   116,316
                                                             --------  --------
SOFTWARE DEVELOPMENT, net...................................   30,000    45,600
                                                             --------  --------
                                                             $396,880  $310,232
                                                             ========  ========
</TABLE>
                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
<TABLE>
<S>                                                                     <C>      <C>
 Accounts payable...................................................... $  5,930 $ 23,814
 Accrued expenses......................................................   15,116   22,155
 Accrued income tax....................................................    6,000        0
 Current portion of long-term debt.....................................        0   47,850
                                                                        -------- --------
      Total current liabilities........................................   27,046   93,819
DEFERRED TAX LIABILITY.................................................    4,500    4,500
LONG-TERM DEBT, less current portion...................................        0  402,150
                                                                        -------- --------
      Total liabilities................................................   31,546  500,469
                                                                        -------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
 Preferred stock, no par value; 50,000 shares authorized at December
  31, 1996; no shares issued or outstanding............................        0        0
 Common stock, no par value, 400,000 and 1,000,000 shares authorized
  in 1995 and 1996, respectively; 162,857 and 177,857 shares issued
  and 162,857 and 87,000 shares outstanding in 1995 and 1996,
  respectively.......................................................    267,600  341,850
 Treasury stock, 90,857 shares as of December 31, 1996, at cost........        0 (450,000)
 Additional paid-in capital............................................   43,045   43,045
 Deferred compensation.................................................        0  (56,875)
 Retained earnings (accumulated deficit)...............................   54,689  (68,257)
                                                                        -------- --------
      Total shareholders' equity (deficit)........................       365,334 (190,237)
                                                                        -------- --------
                                                                        $396,880 $310,232
                                                                        ======== ========
</TABLE>
 
      The accompanying notes are an integral part of these balance sheets.
 
                                      F-44
<PAGE>
 
                           BANK SERVICES CORPORATION
 
                            STATEMENTS OF OPERATIONS
 
                 FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                                             1995      1996
                                                           --------  ---------
<S>                                                        <C>       <C>
REVENUES:
 Data processing fees..................................... $853,067  $ 825,055
 Software sales and maintenance...........................   93,845     60,475
 Consulting and other.....................................   33,012     60,821
                                                           --------  ---------
      Total revenues......................................  979,924    946,351
                                                           --------  ---------
COSTS OF SERVICES.........................................  281,150    284,274
SELLING, GENERAL AND ADMINISTRATIVE.......................  640,563    786,660
                                                           --------  ---------
      Total operating expenses............................  921,713  1,070,934
                                                           --------  ---------
OPERATING INCOME (LOSS)...................................   58,211   (124,583)
INTEREST INCOME...........................................    2,233      1,637
                                                           --------  ---------
INCOME (LOSS) BEFORE PROVISION FOR TAXES..................   60,444   (122,946)
PROVISION FOR INCOME TAXES................................   (8,165)         0
                                                           --------  ---------
NET INCOME (LOSS)......................................... $ 52,279  $(122,946)
                                                           ========  =========
</TABLE>
 
 
        The accompanying notes are an integral part of these statements.
 
                                      F-45
<PAGE>
 
                           BANK SERVICES CORPORATION
 
                  STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
 
                 FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
 
<TABLE>
<CAPTION>
                           COMMON STOCK              ADDITIONAL              RETAINED
                         ---------------- TREASURY    PAID-IN     DEFERRED   EARNINGS
                          STOCK   AMOUNT    STOCK     CAPITAL   COMPENSATION (DEFICIT)    TOTAL
                         ------- -------- ---------  ---------- ------------ ---------  ---------
<S>                      <C>     <C>      <C>        <C>        <C>          <C>        <C>
BALANCE, December 31,
 1994................... 162,857 $267,600 $       0   $43,045     $      0    $ 2,410   $ 313,055
 Net income.............       0        0         0         0            0     52,279      52,279
                         ------- -------- ---------   -------     --------   --------   ---------
BALANCE, December 31,
 1995................... 162,857  267,600         0    43,045            0     54,689     365,334
 Issuance of common
 stock..................  15,000   74,250         0         0      (68,250)         0       6,000
 Stock compensation ex-
 pense..................       0        0         0         0       11,375          0      11,375
 Repurchase of common
 stock..................       0        0  (450,000)        0            0          0    (450,000)
 Net loss...............       0        0         0         0            0   (122,946)   (122,946)
                         ------- -------- ---------   -------     --------   --------   ---------
BALANCE, December 31,
 1996................... 177,857 $341,850 $(450,000)  $43,045     $(56,875)  $(68,257)  $(190,237)
                         ======= ======== =========   =======     ========   ========   =========
</TABLE>
 
 
 
 
        The accompanying notes are an integral part of these statements.
 
                                      F-46
<PAGE>
 
                           BANK SERVICES CORPORATION
 
                            STATEMENTS OF CASH FLOWS
 
                 FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                                             1995      1996
                                                           --------  ---------
<S>                                                        <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)........................................ $ 52,279  $(122,946)
 Adjustments to reconcile net income (loss) to net cash
  provided by
  (used in) operating activities:
  Depreciation and amortization...........................   48,830     46,667
  Stock compensation expense .............................        0     11,375
 Changes in operating assets and liabilities:
   Accounts receivable....................................   10,762     (7,293)
   Prepaid expenses.......................................    3,976    (11,064)
   Accounts payable.......................................    2,396     17,884
   Accrued expenses.......................................    2,049      7,039
   Accrued income taxes ..................................    6,000     (6,000)
   Deferred income taxes..................................    3,500          0
                                                           --------  ---------
    Net cash provided by (used in) operating activities...  129,792    (64,338)
                                                           --------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Software development costs...............................  (13,500)   (15,600)
 Purchase of equipment....................................  (96,766)   (31,427)
 Proceeds from sale of assets.............................    3,000          0
                                                           --------  ---------
    Net cash used in investing activities................. (107,266)   (47,027)
                                                           --------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Issuance of common stock.................................        0      6,000
 Repurchase of common stock...............................        0   (450,000)
 (Payments on) proceeds from long-term debt...............  (40,332)   450,000
                                                           --------  ---------
    Net cash (used in) provided by financing activities...  (40,332)     6,000
                                                           --------  ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS.................  (17,806)  (105,365)
CASH AND CASH EQUIVALENTS, beginning of year..............  162,259    144,453
                                                           --------  ---------
CASH AND CASH EQUIVALENTS, end of year.................... $144,453  $  39,088
                                                           ========  =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Cash paid for income taxes............................... $      0  $   6,000
                                                           ========  =========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-47
<PAGE>
 
                           BANK SERVICES CORPORATION
 
                         NOTES TO FINANCIAL STATEMENTS
 
                          DECEMBER 31, 1995 AND 1996
 
1. ORGANIZATION AND NATURE OF BUSINESS
 
  Bank Services Corporation (the "Company"), provides data processing,
software, and support services to independent community banks which utilize
the Company's software. The Company also licenses its software and offers
system maintenance contracts.
 
  Effective December 31, 1996, the Company was merged with and into InterCept
Acquisitions, Inc., a wholly owned subsidiary of The InterCept Group Inc.
("InterCept"), whereby shareholders of the Company received 221,429 shares of
no par value InterCept common stock in exchange for the 87,000 shares of
outstanding common stock of the Company (the "Merger"). The accompanying
financial statements of the Company are exclusive of the effects of the
Merger.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of Estimates
 
  Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of asset and liabilities and the 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.
 
 Cash and Cash Equivalents
 
  The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
 
 Property and Equipment
 
  Property and equipment are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets for
financial reporting purposes. Major additions and improvements are charged to
the property accounts while replacements, maintenance, and repairs which do
not improve or extend the lives of respective assets are expensed in the
current period. The estimated useful life of the property and equipment is
five to ten years.
 
 Software Development Costs
 
  The Company capitalizes software development costs incurred from the time
technological feasibility of the software is established until the software is
ready for use. These costs are amortized on the straight-line basis over three
years, the estimated economic life of the software. Research and development
costs and maintenance costs related to software development are expensed as
incurred.
 
 Income Taxes
 
  Deferred tax assets and liabilities are recognized for the future tax
consequences attributed to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred
 
  In the event that the future tax consequences of differences between the
financial reporting bases and the tax bases of the Company's assets and
liabilities results in deferred tax assets, an evaluation of the probability
of being able to realize the future benefits indicated by such asset is
required. A valuation allowance is provided for a portion of the deferred tax
asset when it is more likely than not that some portion or all of the deferred
tax
 
                                     F-48
<PAGE>
 
                  BANK SERVICES CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
asset will not be realized. In assessing the realizability of the deferred tax
assets, management considers the scheduled reversals of deferred tax
liabilities, projected future taxable income, and tax planning strategies.
 
 Fair Value of Financial Instruments
 
  The fair value of financial instruments classified as current assets or
liabilities, including cash and cash equivalents, accounts receivable and
accounts payable, approximates carrying value due to the short-term maturity
of the instruments. The fair value of short-term and long-term debt amounts is
based on their effective interest rates compared to current market rates.
 
 Revenue Recognition
 
  Data processing fees are recognized as the services are provided. Software
sales are recognized as the systems are installed and training is complete.
Maintenance fees are recognized ratably over the contract term.
 
3. INCOME TAXES
 
  The components of the provision for income taxes for the years ended
December 31, 1995 and 1996 are as follows:
 
<TABLE>
<CAPTION>
                                              1995      1996
                                             -------  --------
         <S>                                 <C>      <C>
         Current............................ $ 4,665  $      0
         Deferred...........................   3,500         0
                                             -------  --------
             Total.......................... $ 8,165  $      0
                                             =======  ========
 
  The differences between the provision for income taxes and the amounts
computed by applying the statutory federal income tax rate to the net earnings
(loss) for the years ended December 31, 1995 and 1996 consist of the
following:
 
<CAPTION>
                                              1995      1996
                                             -------  --------
         <S>                                 <C>      <C>
         Federal income taxes (benefit) at
          statutory rate.................... $ 9,067  $(41,800)
         State taxes (benefit), net of
          federal benefit...................   3,000    (4,900)
         Change in valuation allowance......       0    49,000
         Other, net.........................  (3,902)   (2,300)
                                             -------  --------
                                             $ 8,165  $      0
                                             =======  ========
 
  The following summarizes the sources and expected tax consequences of future
taxable deductions (income), which comprise the deferred tax accounts at
December 31, 1995 and 1996.
 
<CAPTION>
                                              1995      1996
                                             -------  --------
         <S>                                 <C>      <C>
         Current deferred tax asset:
          Deferred tax asset:
           Accrued vacation pay............. $ 1,000  $  1,000
           Net operating loss
            carryforwards...................       0    49,000
                                             -------  --------
             Total deferred assets..........   1,000    50,000
           Less valuation allowance.........       0   (49,000)
                                             -------  --------
             Net deferred tax asset......... $ 1,000  $  1,000
                                             =======  ========
         Noncurrent deferred tax liability,
          consisting of accelerated
          depreciation...................... $ 4,500  $  4,500
                                             =======  ========
</TABLE>
 
                                     F-49
<PAGE>
 
                  BANK SERVICES CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
4. LONG-TERM DEBT
 
  In anticipation of the merger with InterCept, the Company entered into a
$450,000 loan agreement with a bank in December 1996. The proceeds of the loan
were used to repurchase common stock of the Company (Note 6). This loan bears
interest at the prime rate (8.25% at December 31, 1996) plus 1% and is due in
full in December 1999. Future principal payments of debt as of December 31,
1996 are as follows:
 
<TABLE>
         <S>                                            <C>
         1997.......................................... $ 47,850
         1998..........................................   52,409
         1999..........................................  349,741
                                                        --------
                                                        $450,000
                                                        ========
</TABLE>
 
  The debt is secured by substantially all assets of the Company, as well as
the Company's common stock and life insurance policies of board members. The
debt is guaranteed by a company related through common ownership with
InterCept (Note 1) and by certain members of the board of directors.
 
5. COMMITMENTS AND CONTINGENCIES
 
 Leases
 
  The Company leases two facilities under operating lease agreements. Future
minimum payments on these leases at December 31, 1996 are summarized as
follows:
 
<TABLE>
         <S>                                             <C>
         1997........................................... $54,492
         1998...........................................  18,680
                                                         -------
                                                         $73,172
                                                         =======
</TABLE>
 
  Rental expense was $47,868 and $51,828 for the years ended December 31, 1995
and 1996, respectively.
 
 Sales Agreement
 
  Pursuant to various agreements between the Company and certain banks, the
Company is obligated to pay up to $40,000 in the aggregate for certain sales
of software made by the Company. The Company has accrued $6,154 and $9,231 at
December 31, 1995 and 1996, respectively, related to this obligation.
 
6. SHAREHOLDERS' EQUITY
 
  In June 1996, the Company issued 15,000 shares of common stock to an
employee for $6,000 cash. These shares are subject to repurchase by the
Company for a period of three years at a price of $7,392 plus interest if the
employee leaves the Company or is terminated for just cause. The difference of
$68,250 between the amount paid and the estimated fair market value of the
stock at the date of issuance has been recorded as deferred compensation and
will be amortized over the restricted period. The Company recognized $11,375
in compensation expense during 1996.
 
  In December 1996, the Company repurchased 90,857 shares of common stock from
a shareholder for $450,000. This amount has been recorded as treasury stock,
at cost.
 
  Effective December 31, 1996, the Company amended the Articles of
Incorporation, authorizing 50,000 shares of preferred stock and 1,000,000
shares of voting common stock. As of December 31, 1996, there were no issued
or outstanding preferred shares and 87,000 outstanding common shares.
 
7. CONCENTRATION OF CREDIT RISK
 
  The Company's three largest customers accounted for approximately 38% and
39% of total revenues for the years ended December 31, 1995 and 1996,
respectively.
 
                                     F-50
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Data Services Corporation:
 
  We have audited the accompanying balance sheets of DATA SERVICES CORPORATION
(a Georgia corporation) as of December 31, 1995 and June 4, 1996 and the
related statements of operations, shareholders' deficit, and cash flows for
the year ended December 31, 1995 and the period from January 1, 1996 to June
4, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
  We conducted our audits 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 provide 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 Data Services Corporation
as of December 31, 1995 and June 4, 1996 and the results of its operations and
its cash flows for the year ended December 31, 1995 and the period from
January 1, 1996 to June 4, 1996 in conformity with generally accepted
accounting principles.
 
                                       /s/ Arthur Andersen LLP
 
Atlanta, Georgia
April 27, 1998
 
                                     F-51
<PAGE>
 
                           DATA SERVICES CORPORATION
 
                                 BALANCE SHEETS
 
                       DECEMBER 31, 1995 AND JUNE 4, 1996
 
                                     ASSETS
<TABLE>
<CAPTION>
                                                         DECEMBER 31, JUNE 4,
                                                             1995       1996
                                                         ------------ --------
<S>                                                      <C>          <C>
CURRENT ASSETS:
 Cash and cash equivalents..............................  $  268,095  $ 53,427
 Accounts receivable....................................     492,559   343,676
 Inventory..............................................      82,249   115,775
 Prepaid expenses and other receivables.................     123,437   173,131
                                                          ----------  --------
    Total current assets................................     966,340   686,009
                                                          ----------  --------
PROPERTY AND EQUIPMENT:
 Office equipment.......................................      16,443    16,443
 Machinery and equipment................................     100,239   103,950
 Vehicles...............................................      10,500    10,500
                                                          ----------  --------
                                                             127,182   130,893
 Less accumulated depreciation..........................     (54,672)  (63,554)
                                                          ----------  --------
    Net property and equipment..........................      72,510    67,339
                                                          ----------  --------
                                                          $1,038,850  $753,348
                                                          ==========  ========
 
                     LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
 Accounts payable.......................................   $ 360,413  $ 36,828
 Accrued expenses.......................................       5,947    13,536
 Deferred revenues......................................     875,017   739,854
                                                          ----------  --------
    Total current liabilities...........................   1,241,377   790,218
                                                          ----------  --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT
 Common stock, $1 par value 1,000,000 shares authorized
  in 1995 and 1996; 500 shares issued and outstanding in
  1995 and 1996.........................................         500       500
 Accumulated deficit....................................    (203,027)  (37,370)
                                                          ----------  --------
    Total shareholders' deficit.........................    (202,527)  (36,870)
                                                          ----------  --------
                                                          $1,038,850  $753,348
                                                          ==========  ========
</TABLE>
 
        Accompanying notes are an integral part of these balance sheets.
 
                                      F-52
<PAGE>
 
                           DATA SERVICES CORPORATION
 
                            STATEMENTS OF OPERATIONS
 
            FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
                        JANUARY 1, 1996 TO JUNE 4, 1996
 
<TABLE>
<CAPTION>
                                                        YEAR ENDED
                                                       DECEMBER 31, PERIOD ENDED
                                                           1995     JUNE 4, 1996
                                                       ------------ ------------
<S>                                                    <C>          <C>
REVENUES:
 Maintenance fees.....................................  $1,921,538   $  938,516
 Equipment sales and other............................   2,279,209    1,148,446
                                                        ----------   ----------
    Total revenues....................................   4,200,747    2,086,962
                                                        ----------   ----------
COSTS AND EXPENSES:
 Cost of maintenance fee income.......................     175,000       72,317
 Cost of equipment sales..............................   1,761,751      818,514
 Selling, general, and administrative.................   2,007,746      986,731
 Depreciation.........................................      15,582        8,882
                                                        ----------   ----------
    Total costs and expenses..........................   3,960,079    1,886,444
                                                        ----------   ----------
OPERATING INCOME......................................     240,668      200,518
OTHER INCOME..........................................       5,279        5,139
                                                        ----------   ----------
NET INCOME............................................     245,947      205,657
                                                        ==========   ==========
</TABLE>
 
 
 
          Accompanying notes are an integral part of these statements.
 
                                      F-53
<PAGE>
 
                           DATA SERVICES CORPORATION
 
                      STATEMENTS OF SHAREHOLDERS' DEFICIT
 
            FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
                        JANUARY 1, 1996 TO JUNE 4, 1996
 
<TABLE>
<CAPTION>
                                            COMMON STOCK
                                            ------------ ACCUMULATED
                                            STOCK AMOUNT   DEFICIT     TOTAL
                                            ----- ------ ----------- ---------
<S>                                         <C>   <C>    <C>         <C>
BALANCE, DECEMBER 31, 1994.................  500   $500   $(448,974) $(448,474)
 Net income................................    0      0     245,947    245,947
                                             ---   ----   ---------  ---------
BALANCE, DECEMBER 31, 1995.................  500    500    (203,027)  (202,527)
 Net income................................    0      0     205,657    205,657
 Distributions to shareholders.............    0      0     (40,000)   (40,000)
                                             ---   ----   ---------  ---------
BALANCE, JUNE 4, 1996......................  500   $500   $ (37,370) $ (36,870)
                                             ===   ====   =========  =========
</TABLE>
 
 
 
 
          Accompanying notes are an integral part of these statements.
 
                                      F-54
<PAGE>
 
                           DATA SERVICES CORPORATION
 
                            STATEMENTS OF CASH FLOWS
 
            FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
                        JANUARY 1, 1996 TO JUNE 4, 1996
 
<TABLE>
<CAPTION>
                                                     YEAR ENDED     PERIOD ENDED
                                                  DECEMBER 31, 1995 JUNE 4, 1996
                                                  ----------------- ------------
<S>                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income.....................................      $ 245,947      $ 205,657
 Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
   Depreciation.................................         15,582          8,882
   Changes in operating assets and liabilities:
    Accounts receivable.........................        (93,225)       148,883
    Inventory...................................        (63,301)       (33,526)
    Prepaid expenses and other receivables......       (121,472)       (49,694)
    Accounts payable............................        255,807       (323,585)
    Accrued expenses............................         (3,091)         7,589
    Deferred revenues...........................         65,212       (135,163)
                                                      ---------      ---------
     Net cash provided by (used in) operating
      activities................................        301,459       (170,957)
                                                      ---------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of equipment..........................        (42,366)        (3,711)
                                                      ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Repayments of note payable.....................        (89,033)             0
 Distributions to shareholders..................              0        (40,000)
                                                      ---------      ---------
     Net cash used in financing activities......        (89,033)       (40,000)
                                                      ---------      ---------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS....................................        170,060       (214,668)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..         98,035        268,095
                                                      ---------      ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD........      $ 268,095      $  53,427
                                                      =========      =========
</TABLE>
 
 
          Accompanying notes are an integral part of these statements.
 
                                      F-55
<PAGE>
 
                           DATA SERVICES CORPORATION
 
                         NOTES TO FINANCIAL STATEMENTS
 
                      DECEMBER 31, 1995 AND JUNE 4, 1996
 
1. ORGANIZATION AND NATURE OF BUSINESS
 
  Data Services Corporation (the "Company") (a Georgia corporation) provides
maintenance and technical support services and supplies, and specialized
equipment, including ATMs, proof machines, teller equipment, vaults, and other
security equipment.
 
  Effective June 4, 1996, the Company was merged with and into InterCept
Holdings, Inc., subsequently renamed as The InterCept Group, Inc.
("InterCept"), whereby shareholders of the Company received 290,000 shares of
no par value InterCept common stock in exchange for all the issued and
outstanding shares of common stock of the Company as of June 4, 1996.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
USE OF ESTIMATES
 
  Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of asset and liabilities and the 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.
Cash and Cash Equivalents
 
  The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
 
PROPERTY AND EQUIPMENT
 
  Property and equipment are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets for
financial reporting purposes. Major additions and improvements are charged to
the property accounts while replacements, maintenance, and repairs which do
not improve or extend the lives of respective assets are expensed in the
current period. The estimated useful lives of the property and equipment range
from five to ten years.
 
 Long-Lived Assets
 
  The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," on January 1, 1995. SFAS No. 121 established
accounting standards for the impairment of long-lived assets to be held and
used and for long-lived assets and certain identifiable intangible assets to
be disposed of. The effect of adopting SFAS No. 121 was not material to the
Company's consolidated financial statements.
 
  The Company reviews its long-lived assets for impairment at each balance
sheet date or whenever events or changes in circumstances indicate that the
carrying amount of an asset should be assessed. Management has determined that
no impairment exists at June 4, 1996.
 
INCOME TAXES
 
  The Company is an S corporation for federal and state tax reporting
purposes. As such, all taxable income and loss of the Company is included in
the shareholders' tax returns. Distributions consist of recurring amounts to
allow shareholders to satisfy their tax obligations. Accordingly, the Company
has not recorded any provision for income taxes in the accompanying financial
statements.
 
                                     F-56
<PAGE>
 
                           DATA SERVICES CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
  The fair value of financial instruments classified as current assets or
liabilities, including cash and cash equivalents, accounts receivable, and
accounts payable, approximates carrying value due to the short-term maturity
of the instruments. The fair value of short-term and long-term debt amounts is
based on their effective interest rates compared to current market rates.
 
REVENUE RECOGNITION
 
  Maintenance fees are recognized ratably over the contract term. Equipment
sales are recognized upon shipment of the product to customers, provided that
there are no significant obligations remaining and collectibility of the
revenue is probable.
 
3. COMMITMENTS AND CONTINGENCIES
 
LEASES
 
  The Company leases office space and equipment under operating lease
agreements. Future minimum payments on these leases at June 4, 1996 are
summarized as follows:
 
<TABLE>
      <S>                                                               <C>
      1997............................................................. $ 54,000
      1998.............................................................   58,000
      1999.............................................................   19,000
                                                                        --------
                                                                        $131,000
                                                                        ========
</TABLE>
 
  Rental expense was approximately $57,000 and $25,000 for the year ended
December 31, 1995 and the period ended June 4, 1996, respectively.
 
4. RELATED-PARTY TRANSACTIONS
 
  During the year ended December 31, 1995 and the period from January 1, 1996
to June 4, 1996, the Company provided equipment maintenance services to The
InterCept Group, a company related through common ownership. Revenues were
$119,400 and $44,775 for these periods, respectively.
 
 
                                     F-57
<PAGE>
 
                              [INSIDE BACK COVER]
 
  Graphic display of the Company's frame relay network, indicating that
electronic funds transfer, data communications management and core bank
processing are performed through the network. Additional graphic picturing a
bank and examples of services for which the bank can use the frame relay
network, including ATM processing, bank branch management, POS and debit card
transactions, remote banking and PCBancPac(TM) client/server software.
<PAGE>
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
  NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON
STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS
OR AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
 
  UNTIL            , 1998 ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
 
                               -----------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   3
Risk Factors.............................................................   7
The Company..............................................................  16
Use of Proceeds..........................................................  17
Dividend Policy..........................................................  17
Dilution.................................................................  18
Capitalization...........................................................  19
Selected Consolidated Financial Data.....................................  20
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  22
Industry.................................................................  31
Business.................................................................  33
Management...............................................................  44
Principal and Selling Shareholders.......................................  51
Certain Transactions.....................................................  52
Description of Capital Stock.............................................  56
Shares Eligible for Future Sale..........................................  60
Underwriting.............................................................  62
Legal Matters............................................................  63
Experts..................................................................  63
Additional Information...................................................  64
Index to Consolidated Financial Statements............................... F-1
</TABLE>
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
                                
                             2,387,500 SHARES     
 
                                     LOGO
[Logo of The InterCept Group, Inc. Appears Here]
 
                                 COMMON STOCK
 
                                ---------------
 
                                  PROSPECTUS
 
                                ---------------
 
 
                              J.C. Bradford & Co.
 
                               Wheat First Union
 
                                        , 1998
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

<PAGE>
 
                PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
  The following table sets forth the estimated expenses in connection with the
Offering described in the Registration Statement:
 
<TABLE>
   <S>                                                               <C>
   SEC Registration Fee............................................. $   10,134
   NASD Fees........................................................ $    3,935
   Nasdaq Fees...................................................... $   40,001
   Blue Sky Fees and Expenses....................................... $    3,000
   Printing and Engraving........................................... $  200,000
   Legal Fees and Expenses.......................................... $  600,000
   Accounting Fees and Expenses..................................... $  500,000
   Transfer Agent Fees.............................................. $   15,000
   Miscellaneous Expenses........................................... $   27,930
                                                                     ----------
   Total:........................................................... $1,400,000
                                                                     ==========
</TABLE>
- --------
*  All amounts other than the SEC Registration Fee and NASD Fees reflect
   Company estimates.
 
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  The Company's Articles of Incorporation eliminate, subject to certain
limited exceptions, the personal liability of a director to the Company or its
shareholders for monetary damage for any breach of duty as a director. There
is no elimination of liability for (i) a breach of duty involving
appropriation of a business opportunity of the Company; (ii) an act or
omission which involves intentional misconduct or a knowing violation of law;
(iii) any transaction from which the director derives an improper personal
benefit; or (iv) as to any payments of a dividend or any other type of
distribution that is illegal under Section 14-2-832 of the Georgia Business
Corporation Code (the "Code"). In addition, if at any time the Code is amended
to authorize further elimination or limitation of the personal liability of a
director, then the liability of each director of the Company shall be
eliminated or limited to the fullest extent permitted by such provisions, as
so amended, without further action by the shareholders, unless the provisions
of the Code require such action. The provision does not limit the right of the
Company or its shareholders to seek injunctive or other equitable relief not
involving payments in the nature of monetary damages.
 
  The Company's bylaws contain certain provisions which provide
indemnification to directors of the Company that is broader than the
protection expressly mandated in Sections 14-2-852 and 14-2-857 of the Code.
To the extent that a director or officer of the Company has been successful,
on the merits or otherwise, in the defense of any action or proceeding brought
by reason of the fact that such person was a director or officer of the
Company, Sections 14-2-852 and 14-2-857 of the Code would require the Company
to indemnify such persons against expenses (including attorney's fees)
actually and reasonably incurred in connection therewith. The Code expressly
allows the Company to provide for greater indemnification rights to its
officers and directors, subject to shareholder approval.
 
  The indemnification provisions in the Company's bylaws require the Company
to indemnify and hold harmless any director who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(including any action or suit by or in the right of the Company) because he or
she is or was a director of the Company, against expenses (including, but not
limited to, attorney's fees and disbursements, court costs and expert witness
fees), and against judgments, fines, penalties, and amounts paid in settlement
incurred by him or her in connection with the action, suit or proceeding.
Indemnification would be disallowed under any circumstances where
indemnification may not be authorized by action of the Board of Directors, the
shareholders or otherwise. The Board of Directors of the Company also has the
authority to extend to officers, employees and agents the same indemnification
rights
 
                                     II-1
<PAGE>
 
held by directors, subject to all the accompanying conditions and obligations.
Indemnified persons would also be entitled to have the Company advance
expenses prior to the final disposition of the proceeding. If it is ultimately
determined that they are not entitled to indemnification, however, such
amounts would be repaid. Insofar as indemnification for liability arising
under the Securities Act may be permitted to officers and directors of the
Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
 
  The Company has entered into separate indemnification agreements with each
of its directors and executive officers, whereby the Company agreed, among
other things, to provide for indemnification and advancement of expenses in a
manner and subject to terms and conditions similar to those set forth in the
Bylaws. These agreements also provide that the Company shall purchase and
maintain liability insurance for the benefit of its directors and executive
officers. These agreements may not be abrogated by action of the shareholders.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to which indemnification is being
sought, nor is the Company aware of any pending or threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent.
 
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
 
  No securities which were not registered under the Securities Act have been
sold by the Company within the past three years except for those indicated
below. Share numbers do not reflect the 2.1053-for-1 stock split with respect
to the Company's common stock effected on February 28, 1998.
 
  (i) Pursuant to that certain Agreement of Share Exchange dated as of June 4,
1996 by and among the Company, Intercept Systems, Inc. ("ISI"), Data Services
Corp. ("Data"), John W. Collins ("Collins"), Vir A. Nanda ("Nanda"), James E.
Henderson ("Henderson") and Farrell S. Mashburn ("Mashburn"), the Company
acquired all of the outstanding capital stock of Data and ISI. In exchange for
all of the capital stock of Data and ISI, the Company issued 698,000 shares of
Common Stock to Collins, 87,000 shares of Common Stock to Mashburn, 495,000
shares to Nanda and 165,000 shares to Henderson.
 
  (ii) Pursuant to that certain Agreement and Plan of Merger effective as of
November 27, 1996 by and among the Company, PV Acquisition Corp. ("PVAC") and
Provesa, Inc. ("ProVesa"), PVAC, a wholly-owned subsidiary of the Company,
merged with ProVesa. Upon the effectiveness of the merger, all of the issued
and outstanding shares of capital stock of ProVesa was converted into an equal
number of shares of the capital stock of the Company, and the Company issued
an aggregate of 105,000 shares of Common Stock and 4,250 shares of Series A
Preferred Stock to the shareholders of ProVesa. Also pursuant to such
agreement, the Company issued options to acquire an aggregate of 20,000 shares
of Common Stock to holders of options to acquire 20,000 shares of ProVesa
common stock.
 
  (iii) Pursuant to that certain Acquisition and Merger Agreement dated as of
November 30, 1996 by and among the Company, Intercept Acquisition II, Inc.,
FiNet, Inc. ("FiNet") and the shareholders of FiNet, Intercept Acquisitions
II, a wholly-owned subsidiary of the Company, merged with FiNet. Upon the
effectiveness of the merger on December 17, 1996, all of the issued and
outstanding stock of FiNet was converted into stock of the Company, and the
Company issued an aggregate of 116,250 shares of Common Stock to the
shareholders of FiNet.
 
  (iv) Pursuant to that certain Acquisition and Merger Agreement dated as of
November 26, 1996 by and among the Company, Intercept Acquisitions, Inc., Bank
Services Corporation ("Bank Services"), and the shareholders of Bank Services,
Intercept Acquisitions, a wholly-owned subsidiary of the Company, merged with
Bank Services. Upon the effectiveness of the merger on December 31, 1996, all
of the issued and outstanding stock of Bank Services was converted into stock
of the Company, and the Company issued an aggregate of 238,032 shares of
Common Stock to the shareholders of Bank Services.
 
                                     II-2
<PAGE>
 
  (v) On December 31, 1996, the Company issued options to acquire an aggregate
of 271,251 shares of Common Stock to certain officers of and consultants to
the Company and one of its subsidiaries at an exercise price of $4.55 per
share. In January 1997, the Company issued options to acquire 75,000 shares of
Common Stock at an exercise price of $4.55 per share to an executive officer
of the Company. In February 1997, the Company issued options to acquire 10,000
shares of Common Stock at an exercise price of $4.55 per share to another
executive officer of the Company.
 
  (vi) Pursuant to that certain Agreement and Plan of Merger dated as of
January 30, 1998 by and between the Company and Intercept Communications
Technologies, L.L.C. ("ICT"), ICT merged with and into the Company. Upon the
effectiveness of the merger, all of the membership units of ICT were converted
into stock of the Company, and the Company issued an aggregate of 1,301,966
shares of Common Stock to the members of ICT.
 
  (vii) Effective as of February, 1998, the Company granted options to acquire
150,899 shares of Common Stock at an exercise price of $7.70 per share to
certain employees, consultants and directors pursuant to one of the Company's
stock option plans.
 
  The issuances of securities described above were made in reliance on one or
more of the exemptions from registration, including those provided for by
Section 4(2) (for those issuances described in (i) through (vi) above and for
the grant of options to the Company's directors described in (vii) above),
Regulation D for those issuances described in (i) through (vi) above and for
the grant of options to the Company's directors described in (vii) above) and
Rule 701 (for those issuances described in (vii) above) of the Securities Act.
The recipients of the securities in the above transactions represented their
intention to acquire the securities for investment purposes only and not with
a view to or for the sale in connection with any distribution thereof, and
appropriate legends were affixed to the share certificates issued in such
transactions. The recipients of these securities had adequate access, through
their relationship with the Company, to information about the Company.
 
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
  (A) EXHIBITS
 
<TABLE>   
<CAPTION>
 EXHIBIT
   NO.                                 DESCRIPTION
 -------                               -----------
 <C>     <S>
  1.1    Form of Underwriting Agreement
  2.1    Agreement of Share Exchange dated as of June 4, 1996 by and between
         the Company, Intercept Systems, Inc., Data Services Corporation, John
         Collins, Vir A. Nanda, J. Ronney Henderson and Farrell Mashburn*
  2.2    Acquisition and Merger Agreement dated as of November 30, 1996 by and
         among the Company, Intercept Acquisitions II, Inc., FiNet, Inc., and
         the shareholders named therein*
  2.3    Acquisition and Merger Agreement dated as of November 26, 1996 by and
         among the Company, Intercept Acquisitions, Inc., Bank Services
         Corporation and the shareholders named therein*
  2.4    Agreement and Plan of Merger dated as of November 25, 1996 by and
         among the Company, PV Acquisition Corp. and ProVesa, Inc.*
  2.5    Agreement and Plan of Merger dated as of January 30, 1998 by and
         between the Company and Intercept Communications Technologies, L.L.C.*
  2.6    Plan of Merger dated as of January 30, 1998 by and between the Company
         and Bank Services Corporation*
  2.7    Plan of Merger dated as of January 30, 1998 by and among the Company,
         Data Services Corp., FiNet, Inc. and Intercept Systems, Inc.*
  3.1    Amended and Restated Articles of Incorporation of the Company (as
         filed with the Secretary of State of Georgia on April 29, 1998)*
  3.2    Bylaws (Amended and Restated) of the Company*
  4.1    See Exhibits 3.1 and 3.2 for provisions of the Articles of
         Incorporation and Bylaws defining the rights of the holders of Common
         Stock of the Registrant
  4.2    Specimen Common Stock Certificate*
  5.1    Opinion of Nelson Mullins Riley & Scarborough, L.L.P.*
</TABLE>    
 
 
                                     II-3
<PAGE>
 
<TABLE>
<CAPTION>
 EXHIBIT
   NO.                                 DESCRIPTION
 -------                               -----------
 <C>     <S>
  9.1    Voting Trust Agreement dated as of December 31, 1996 by and between
         the Company, John W. Collins, Glenn W. Sturm, Salem Capital
         Corporation, Paul D. England, Jack K. Lance and Jerry McKamey*
 10.1    The InterCept Group, Inc. Amended and Restated 1996 Stock Option Plan*
 10.2    Form of Stock Option Agreement under The InterCept Group, Inc. Amended
         and Restated 1996 Stock Option Plan*
 10.3    ProVesa, Inc. 1994 Stock Option Plan*
 10.4    Employment Agreement by and between the Company and John W. Collins
         dated as of January 30, 1998*
 10.5    Employment Agreement by and between the Company and Donny R. Jackson
         dated as of January 30, 1998*
 10.6    Employment Agreement by and between the Company and Scott R. Meyerhoff
         dated as of February 1, 1998*
 10.7    Employment Agreement by and between the Company, Vir Nanda and
         Intercept Systems, Inc. dated June 4, 1996*
 10.8    Stock Option Agreement by and between the Company and Donny R. Jackson
         dated January 14, 1997*
 10.9    Stock Option Agreement dated as of February 1, 1998 by and between the
         Company and Scott R. Meyerhoff*
 10.10   Stock Option Agreement dated as of February 24, 1997 by and between
         the Company and Michael R. Boian*
 10.11   Form of Indemnification Agreement entered into between the Company and
         its directors and officers*
 10.12   Form of General Marketing Agent Agreement*
 10.13   Form of Master Electronic Funds Transfer Services Agreement*
 10.14   Form of Data Processing Agreement*
 10.15   Form of Service Agreement for Data Communications*
 10.16   Form of Software License Agreement for PC BancPAC(TM)*
 10.17   Loan Agreement dated as of June 17, 1996 by and between the Company,
         Georgia State Bank, John W. Collins, Data Services Corp. and Intercept
         Systems, Inc.*
 10.18   Loan Agreement dated as of May 2, 1995 by and between ProVesa, Inc.
         and First National Bank of Commerce*
 10.19   Channel Services Payment Plan Agreement dated December 22, 1993
         between Intercept Systems, Inc. and BellSouth Communications, Inc.*
 10.20   Form of Special Service Arrangement Agreement with BellSouth
         Telecommunications, Inc. for frame relay services*
 10.21   Form of SynchroNet Service Agreement with Southern Bell Telephone and
         Telegraph Company*
 10.22   Service Agreement dated as of February 25, 1998 by and between GE
         Capital Spacenet Services, Inc. and Intercept Communications
         Technologies, L.L.C.*
 10.23   WorldCom Data Services Agreement dated as of February 27, 1998 by and
         between WorldCom, Inc. and Intercept Communications Technologies,
         L.L.C.*+
 10.24   Form of Stock Option Agreement for Directors under The InterCept
         Group, Inc. Amended and Restated 1996 Stock Option Plan*
 10.25   Loan and Security Agreement dated April 28, 1998 by and among the
         Company, its wholly-owned subsidiaries and First Union National Bank*
 21.1    Subsidiaries of the Company*
 23.1    Consent of Arthur Andersen LLP
</TABLE>
 
 
                                      II-4
<PAGE>
 
<TABLE>
<CAPTION>
 EXHIBIT
   NO.                                DESCRIPTION
 -------                              -----------
 <C>     <S>
 23.3    Consent of Nelson Mullins Riley & Scarborough, L.L.P. (filed as part
         of Exhibit 5.1)
 24.1    Power of Attorney (contained on the signature page hereof)*
 27.1    Financial Data Schedule for the period ending December 31, 1997 (for
         SEC use only)*
 27.2    Financial Data Schedule for period ending March 31, 1998 (for SEC use
         only)*
</TABLE>
- --------
*  Previously filed.
   
+  Confidential treatment has been granted for certain confidential portions
   of this exhibit pursuant to Rule 406 under the Act. In accordance with Rule
   406, these confidential portions have been omitted from this exhibit and
   filed separately with the Commission.     
 
  (b) Financial Statement Schedules
 
    Schedule II: Valuation and Qualifying Accounts
 
ITEM 17. UNDERTAKINGS.
 
  The Company hereby undertakes to provide to the underwriter at the closing
specified in the underwriting agreement, certificates in such denominations
and registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
 
  Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
 
  The Company hereby undertakes that:
 
    (1) For purposes of determining any liability under the Securities Act of
  1933, the information omitted from the form of prospectus filed as part of
  this registration statement in reliance upon Rule 430A and contained in a
  form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4),
  or 497(h) under the Securities Act shall be deemed to be part of this
  registration statement as of the time it was declared effective.
 
    (2) For the purpose of determining any liability under the Securities Act
  of 1933, each post-effective amendment that contains a form of prospectus
  shall be deemed to be a new registration statement relating to the
  securities offered therein, and the offering of such securities at that
  time shall be deemed to be the initial bona fide offering thereof.
 
                                     II-5
<PAGE>
 
                                  SIGNATURES
   
  Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on June 2, 1998.     
 
                                          THE INTERCEPT GROUP, INC.
 
                                          By:     /s/ John W. Collins
                                            ___________________________________
                                                      JOHN W. COLLINS
                                                  CHIEF EXECUTIVE OFFICER
 
  Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities listed and on the dates indicated.
 
<TABLE>   
<CAPTION>
             SIGNATURE                           TITLE                    DATE
             ---------                           -----                    ----
 
<S>                                  <C>                           <C>
      /s/ John W. Collins            Chairman of the Board of         June 2, 1998
____________________________________  Directors and Chief
          John W. Collins             Executive Officer
                                      (Principal Executive Officer)
 
                *                    President, Chief Operating       June 2, 1998
____________________________________  Officer and Director
          Donny R. Jackson
 
     /s/ Scott R. Meyerhoff          Chief Financial Officer          June 2, 1998
____________________________________  (Principal Financial and
         Scott R. Meyerhoff           Accounting Officer)
 
                *                    Director                         June 2, 1998
____________________________________
            Jon R. Burke
 
                *                    Director                         June 2, 1998
____________________________________
           Boone A. Knox
 
                *                    Director                         June 2, 1998
____________________________________
          Bruce P. Leonard
 
                *                    Director                         June 2, 1998
____________________________________
           Glenn W. Sturm
</TABLE>    
 
*By:  /s/ John W. Collins
  ---------------------------
  ATTORNEY-IN-FACT PURSUANT
  TO POWER OF ATTORNEY
  GRANTED IN REGISTRATION
  STATEMENT FILED ON MARCH
  2, 1998
 
 
                                     II-6
<PAGE>
 
            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE II
 
To The InterCept Group, Inc.:
 
  We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of The InterCept Group, Inc. and
Subsidiaries included in this Registration Statement and have issued our
report thereon dated February 27, 1998. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule listed in Item 16(b) of the Registration Statement is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
 
                                          /s/ Arthur Andersen LLP
 
February 27, 1998
Atlanta, Georgia
 
                                      S-1
<PAGE>
 
THE INTERCEPT GROUP, INC.
 
  SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31,
1995, 1996, AND 1997
 
<TABLE>
<CAPTION>
                                       CHARGED TO
                                     BEGINNING COSTS           ENDING
         DESCRIPTION                   AND BALANCE   EXPENSE  WRITEOFFS BALANCE
         -----------                 --------------- -------  --------- -------
<S>                                  <C>             <C>      <C>       <C>
1994 Allowance for doubtful ac-
 counts.............................      25,201       4,376       --    29,577
1995 Allowance for doubtful ac-
 counts.............................      29,577      69,210   (14,000)  84,787
1996 Allowance for doubtful ac-
 counts.............................      84,787     134,153   (61,168) 157,772
1997 Allowance for doubtful ac-
 counts.............................     157,772      (1,156)      --   156,616
</TABLE>
 
                                      S-2
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>   
<CAPTION>
 EXHIBIT
   NO.                                 DESCRIPTION
 -------                               -----------
 <C>     <S>
  1.1    Form of Underwriting Agreement
  2.1    Agreement of Share Exchange dated as of June 4, 1996 by and between
         the Company, Intercept Systems, Inc., Data Services Corporation, John
         Collins, Vir A. Nanda, J. Ronney Henderson and Farrell Mashburn*
  2.2    Acquisition and Merger Agreement dated as of November 30, 1996 by and
         among the Company, Intercept Acquisitions II, Inc., FiNet, Inc., and
         the shareholders named therein*
  2.3    Acquisition and Merger Agreement dated as of November 26, 1996 by and
         among the Company, Intercept Acquisitions, Inc., Bank Services
         Corporation and the shareholders named therein*
  2.4    Agreement and Plan of Merger dated as of November 25, 1996 by and
         among the Company, PV Acquisition Corp. and ProVesa, Inc.*
  2.5    Agreement and Plan of Merger dated as of January 30, 1998 by and
         between the Company and Intercept Communications Technologies, L.L.C.*
  2.6    Plan of Merger dated as of January 30, 1998 by and between the Company
         and Bank Services Corporation*
  2.7    Plan of Merger dated as of January 30, 1998 by and among the Company,
         Data Services Corp., FiNet, Inc. and Intercept Systems, Inc.*
  3.1    Amended and Restated Articles of Incorporation of the Company (as
         filed with the Secretary of State of Georgia on April 29, 1998)*
  3.2    Bylaws (Amended and Restated) of the Company*
  4.1    See Exhibits 3.1 and 3.2 for provisions of the Articles of
         Incorporation and Bylaws defining the rights of the holders of Common
         Stock of the Registrant
  4.2    Specimen Common Stock Certificate*
  5.1    Opinion of Nelson Mullins Riley & Scarborough, L.L.P.*
  9.1    Voting Trust Agreement dated as of December 31, 1996 by and between
         the Company, John W. Collins, Glenn W. Sturm, Salem Capital
         Corporation, Paul D. England, Jack K. Lance and Jerry McKamey*
 10.1    The InterCept Group, Inc. Amended and Restated 1996 Stock Option Plan*
 10.2    Form of Stock Option Agreement under The InterCept Group, Inc. Amended
         and Restated 1996 Stock Option Plan*
 10.3    ProVesa, Inc. 1994 Stock Option Plan*
 10.4    Employment Agreement by and between the Company and John W. Collins
         dated as of January 30, 1998*
 10.5    Employment Agreement by and between the Company and Donny R. Jackson
         dated as of January 30, 1998*
 10.6    Employment Agreement by and between the Company and Scott R. Meyerhoff
         dated as of February 1, 1998*
 10.7    Employment Agreement by and between the Company, Vir Nanda and
         Intercept Systems, Inc. dated June 4, 1996*
 10.8    Stock Option Agreement by and between the Company and Donny R. Jackson
         dated January 14, 1997*
 10.9    Stock Option Agreement dated as of February 1, 1998 by and between the
         Company and Scott R. Meyerhoff*
</TABLE>    
<PAGE>
 
<TABLE>
<CAPTION>
 EXHIBIT
   NO.                                 DESCRIPTION
 -------                               -----------
 <C>     <S>
 10.10   Stock Option Agreement dated as of February 24, 1997 by and between
         the Company and Michael R. Boian*
 10.11   Form of Indemnification Agreement entered into between the Company and
         its directors and officers*
 10.12   Form of General Marketing Agent Agreement*
 10.13   Form of Master Electronic Funds Transfer Services Agreement*
 10.14   Form of Data Processing Agreement*
 10.15   Form of Service Agreement for Data Communications*
 10.16   Form of Software License Agreement for PC BancPAC(TM)*
 10.17   Loan Agreement dated as of June 17, 1996 by and between the Company,
         Georgia State Bank, John W. Collins, Data Services Corp. and Intercept
         Systems, Inc.*
 10.18   Loan Agreement dated as of May 2, 1995 by and between ProVesa, Inc.
         and First National Bank of Commerce*
 10.19   Channel Services Payment Plan Agreement dated December 22, 1993
         between Intercept Systems, Inc. and BellSouth Communications, Inc.*
 10.20   Form of Special Service Arrangement Agreement with BellSouth
         Telecommunications, Inc. for frame relay services*
 10.21   Form of SynchroNet Service Agreement with Southern Bell Telephone and
         Telegraph Company*
 10.22   Service Agreement dated as of February 25, 1988 by and between GE
         Capital Spacenet Services, Inc. and Intercept Communications
         Technologies, L.L.C.*
 10.23   WorldCom Data Services Agreement dated as of February 27, 1998 by and
         between WorldCom, Inc. and Intercept Communications Technologies,
         L.L.C.*+
 10.24   Form of Stock Option Agreement for Directors under The InterCept
         Group, Inc. Amended and Restated 1996 Stock Option Plan*
 10.25   Loan and Security Agreement dated April 28, 1998 by and among the
         Company, its wholly-owned subsidiaries and First Union National Bank*
 21.1    Subsidiaries of the Company*
 23.1    Consent of Arthur Andersen LLP
 23.3    Consent of Nelson Mullins Riley & Scarborough, L.L.P. (filed as part
         of Exhibit 5.1)
 24.1    Power of Attorney (contained on the signature page hereof)*
 27.1    Financial Data Schedule for the period ending December 31, 1997 (for
         SEC use only)*
 27.2    Financial Data Schedule for period ending March 31, 1998 (for SEC use
         only)*
</TABLE>
- --------
*  Previously filed.
   
+  Confidential treatment has been granted for certain confidential portions
   of this exhibit pursuant to Rule 406 under the Act. In accordance with Rule
   406, these confidential portions have been omitted from this exhibit and
   filed separately with the Commission.     
 

<PAGE>
 
                                                                     EXHIBIT 1.1


                            THE INTERCEPT GROUP, INC.
    
                                2,387,500 Shares     

                                       of

                                  Common Stock


                             UNDERWRITING AGREEMENT

                                                                 _________, 1998

J. C. BRADFORD & CO.
WHEAT FIRST SECURITIES, INC.
As Representatives of the Several Underwriters
c/o J. C. Bradford & Co.
J. C. Bradford Financial Center
330 Commerce Street
Nashville, Tennessee 37201


Ladies and Gentlemen:
    
         The Intercept Group, Inc., a Georgia corporation (the "Company"),
proposes to sell to the underwriters named in SCHEDULE I hereto (the
"Underwriters") for whom you are acting as the representatives (the
"Representatives") 2,250,000 shares of the common stock, no par value ("Common
Stock"), of the Company (the "Company Shares"), and the shareholder of the
Company named in Schedule II hereto (the "Selling Shareholder") proposes to
sell to the Underwriters 137,500 shares of Common Stock (the "Selling
Shareholder Shares"). The Company Shares and the Selling Shareholder Shares are
hereinafter referred to as the "Firm Shares". The Firm Shares are to be sold to
the Underwriters, acting severally and not jointly, in such amounts as are set
forth in SCHEDULE I hereto opposite the name of each Underwriter. The Company
also proposes to grant to the Underwriters an option to purchase up to 358,125
additional shares of Common Stock (the "Option Shares") as provided for in
Section 3 of this Agreement for the purpose of covering over-allotments in
connection with the distribution and sale of the Firm Shares. The Firm Shares
and the Option Shares are herein called the "Shares."     

         1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter and agrees as follows:

                  (a) The Company has filed with the Securities and Exchange
         Commission (the "Commission") under the Securities Act of 1933, as
         amended (the "Securities Act"), a registration statement on Form S-1
         (Registration No. 333-47197), including the related preliminary
         prospectus relating to the Shares, and has filed one or more amendments
         thereto. Copies of such registration statement and any amendments,
         including any post-effective amendments, and all forms of the related
         prospectuses contained therein and any supplements thereto, have been
         delivered to you. Such registration statement, together with any
         registration statement filed by the Company 
<PAGE>
 
         pursuant to Rule 462(b) of the Securities Act, including the
         prospectus, Part II, all financial schedules and exhibits thereto, and
         all information deemed to be a part of such registration statement
         pursuant to Rule 430A under the Securities Act, as amended, at the time
         when it shall become effective, is herein referred to as the
         "Registration Statement." The prospectus included as part of the
         Registration Statement on file with the Commission that discloses all
         the information that was omitted from the prospectus on the effective
         date pursuant to Rule 430A of the Rules and Regulations (as defined
         below) and in the form filed pursuant to Rule 424(b) under the
         Securities Act is herein referred to as the "Final Prospectus." The
         prospectus included as part of the Registration Statement on the date
         when the Registration Statement became effective (including the
         information deemed to be a part thereof pursuant to Rule 430A) is
         referred to herein as the "Effective Prospectus." Any prospectus
         included in the Registration Statement and in any amendment thereto
         prior to the effective date of the Registration Statement is referred
         to herein as a "Preliminary Prospectus." For purposes of this
         Agreement, "Rules and Regulations" mean the rules and regulations
         promulgated by the Commission under either the Securities Act or the
         Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
         applicable.

                  (b) The Company has not received and has no knowledge of any
         order preventing or suspending the use of any Preliminary Prospectus,
         and each Preliminary Prospectus, at the time of filing thereof,
         complied with the requirements of the Securities Act and the Rules and
         Regulations, and did not include any untrue statement of a material
         fact or omit to state any material fact required to be stated therein
         or necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading; except that
         the foregoing does not apply to statements or omissions made in
         reliance upon and in conformity with written information furnished to
         the Company by any Underwriter specifically for use therein (it being
         understood that the only information so provided is the information
         included in the last paragraph on the cover page, the paragraph
         relating to stabilization practices on the inside front cover and the
         first five paragraphs and the last paragraph under the caption
         "Underwriting" in the Final Prospectus). When the Registration
         Statement becomes effective and at all times subsequent thereto up to
         and including the later of (X) the First Closing Date (as hereinafter
         defined) and (Y) the Option Closing Date (as hereinafter defined), (i)
         the Registration Statement, the Effective Prospectus and Final
         Prospectus and any amendments or supplements thereto will contain all
         statements which are required to be stated therein in accordance with
         the Securities Act, the Exchange Act and the Rules and Regulations and
         will comply with the requirements of the Securities Act, the Exchange
         Act and the Rules and Regulations, and (ii) neither the Registration
         Statement nor any amendment thereto will include any untrue statement
         of a material fact or omit to state any material fact required to be
         stated therein or necessary to make the statements therein not
         misleading and neither the Effective Prospectus nor the Final
         Prospectus nor any supplement thereto will contain an untrue statement
         of a material fact or omit to state a material fact required to be
         stated therein or necessary to make the statements therein, in the
         light of the circumstances under which they were made, not misleading;
         except that the foregoing does not apply to statements or omissions
         made in reliance upon and in conformity with written information
         furnished to the Company by any Underwriter specifically for use
         therein (it being understood that the only information so provided is
         the information included in the last paragraph on the cover page, the
         paragraph relating to stabilization practices on the inside front cover
         and the first five paragraphs and the last paragraph under the caption
         "Underwriting" in the Final Prospectus).

                  (c) The Company and each subsidiary of the Company (as used
         herein, the term "subsidiary" includes any corporation, joint venture
         or partnership in which the Company or any subsidiary of the Company
         has an ownership interest in excess of 30%) is duly organized and

                                      -2-
<PAGE>
 
         validly existing and in good standing under the laws of the respective
         jurisdictions of their organization or incorporation, as the case may
         be, with full corporate power and authority to own their properties and
         conduct their businesses as now conducted and described in the Final
         Prospectus and the Registration Statement, and are duly qualified or
         authorized to do business and are in good standing in all jurisdictions
         wherein the nature of their business or the character of property owned
         or leased may require them to be qualified or authorized to do business
         except where the failure to be so qualified or authorized would not
         have a material adverse effect on the Company's and its subsidiaries'
         business, financial condition and results of operations taken as a
         whole and would not materially hinder or delay the consummation of the
         transactions contemplated by this Agreement and the performance of the
         Company's obligations hereunder (a "Material Adverse Effect"). The
         Company and its subsidiaries hold all licenses, consents and approvals,
         and have satisfied all eligibility and other similar requirements
         imposed by federal and state regulatory bodies, administrative agencies
         or other governmental bodies, agencies or officials, except where any
         failure to hold any such license, consent or approval or to satisfy any
         such requirement would not have a Material Adverse Effect. Each of the
         Company's subsidiaries is set forth on Exhibit 21.1 to the Registration
         Statement. There are no other corporations, joint ventures or
         partnerships in which the Company or any subsidiary of the Company has
         an ownership interest in excess of 5%.

                  (d) The outstanding stock of each of the Company's corporate
         subsidiaries is duly authorized, validly issued, fully paid and
         nonassessable. Other than as disclosed in the Effective Prospectus and
         the Final Prospectus, all of the outstanding stock of each of the
         Company's subsidiaries is owned by the Company, free and clear of any
         lien, encumbrance, pledge, equity or claim of any kind, and was issued
         and sold in compliance with all applicable federal and state securities
         laws. No shares of capital stock of any of the Company's subsidiaries
         have been issued in violation of any preemptive or similar rights.
         Other than as disclosed in the Effective Prospectus and the Final
         Prospectus, no options or warrants or other rights to purchase,
         agreements or other obligations to issue or other rights to convert any
         obligations into any shares of capital stock or of ownership interests
         in any of the Company's subsidiaries are outstanding. Other than as
         disclosed in the Effective Prospectus and the Final Prospectus, neither
         the Company nor any of its subsidiaries is a partner or joint venturer
         in any partnership or joint venture.

                  (e) The historical capitalization of the Company as of
         December 31, 1997 is as set forth under the caption "Capitalization" in
         the Effective Prospectus and the Final Prospectus, and the Company's
         capital stock conforms to the description thereof contained in the
         Effective Prospectus and the Final Prospectus, including under the
         caption "Description of Capital Stock." All of the issued and
         outstanding shares of capital stock of the Company have been duly
         authorized and validly issued and are fully paid and nonassessable.
         None of the issued shares of capital stock of the Company have been
         issued in violation of any preemptive or similar rights. The Company
         Shares have been duly and validly authorized and, upon issuance and
         delivery and payment therefor in the manner herein described, will be
         validly issued, fully paid and nonassessable. There are no preemptive
         rights or other rights to subscribe for or to purchase, or any
         restriction upon the transfer of, any shares of Common Stock pursuant
         to the Company's articles of incorporation, bylaws or other governing
         documents or any agreement or other instrument to which the Company is
         a party or by which it is bound except as described in the Effective
         Prospectus and the Final Prospectus and except for restrictions on
         transfer imposed under applicable securities laws. Neither the filing
         of the Registration Statement nor the offer or sale of the Shares as
         contemplated by this Agreement gives rise to any rights for or relating
         to the registration of any shares of 

                                      -3-
<PAGE>
 
         Common Stock or any other securities of the Company, other than rights
         relating to shares included in the Firm Shares or the Option Shares and
         such other rights as have been waived by the holder or holders thereof
         prior to the date hereof. The Underwriters will receive good and
         marketable title to the Shares to be issued and delivered by the
         Company hereunder, free and clear of all liens, encumbrances, claims,
         security interests, restrictions, shareholders' agreements and voting
         trusts whatsoever. Except as disclosed in the Effective Prospectus and
         the Final Prospectus, there are no outstanding warrants, options,
         convertible securities or other rights to purchase or commitments of
         sale related to or entitling any person to purchase or otherwise
         acquire any securities or interest in the Company or any subsidiary.

                  (f) All offers and sales of the Company's securities by the
         Company prior to the date hereof were at all relevant times exempt from
         the registration requirements of the Securities Act and were duly
         registered or the subject of an available exemption from the
         registration requirements of the applicable state securities or Blue
         Sky laws.

                  (g) The Company has full legal right, power and authority to
         enter into this Agreement and to issue, sell and deliver the Shares to
         the Underwriters as provided herein, and this Agreement has been duly
         authorized, executed and delivered by the Company and constitutes a
         valid and binding agreement of the Company enforceable against the
         Company in accordance with its terms, except as may be limited by
         bankruptcy and other creditor rights laws and general principles of
         equity, including the availability of the equitable remedy of specific
         performance. No consent, approval, authorization or order of any court
         or governmental agency or body or third party is required for the
         performance of this Agreement by the Company or the consummation by the
         Company of the transactions contemplated hereby, except such as have
         been obtained and such as may be required by the National Association
         of Securities Dealers, Inc. ("NASD") or under the Securities Act, or
         state securities or Blue Sky laws in connection with the purchase and
         distribution of the Shares by the Underwriters. The issue and sale of
         the Shares by the Company, the Company's performance of this Agreement
         and the consummation of the transactions contemplated hereby will not
         result in a breach or violation of, or conflict with, any of the terms
         and provisions of, or constitute a default by the Company or any of its
         subsidiaries under, any indenture, mortgage, deed of trust, loan
         agreement, lease or other agreement or instrument to which the Company
         or any of its subsidiaries is a party or to which the Company or any of
         its subsidiaries or any of their respective properties is subject, the
         articles of incorporation or bylaws of the Company or any of its
         subsidiaries or any statute or any judgment, decree, order, rule or
         regulation of any court or governmental agency or body applicable to
         the Company or any subsidiary or any of their respective properties.
         Neither the Company nor any subsidiary is in violation of its articles
         of incorporation, bylaws or other governing instrument or any law,
         administrative rule or regulation or arbitrators' or administrative or
         court decree, judgment or order or, except as would not have a Material
         Adverse Effect, in violation or default (there being no existing state
         of facts known to the Company which with notice or lapse of time or
         both would constitute a default) in the performance or observance of
         any obligation, agreement, covenant or condition contained in any
         material contract, indenture, deed of trust, mortgage, loan agreement,
         note, lease, agreement or other instrument or permit to which it is a
         party or by which it or any of its properties is bound.

                  (h) The consolidated financial statements and the related
         notes of the Company, together with related notes and schedules,
         included in the Registration Statement, the Effective Prospectus and
         the Final Prospectus present fairly the financial position, results of
         operations and changes in financial position and cash flow of the
         Company and its subsidiaries at the dates and for the periods to which
         they relate and have been prepared in accordance with generally
         accepted 

                                      -4-
<PAGE>
 
         accounting principles applied on a consistent basis throughout the
         periods indicated (except as may otherwise be indicated in the notes
         thereto), and all adjustments necessary for a fair presentation of
         results for such periods have been made. The other financial statements
         and schedules included in or as schedules to the Registration Statement
         conform to the requirements of the Securities Act, the Exchange Act and
         the Rules and Regulations and present fairly the information presented
         therein for the periods shown. The financial and statistical data set
         forth in the Effective Prospectus and the Final Prospectus, including
         such data under the captions "Prospectus Summary," "Use of Proceeds,"
         "Dilution," "Capitalization," "Selected Consolidated Financial Data,"
         "Management's Discussion and Analysis of Financial Condition and
         Results of Operations," "Industry," "Business," "Management,"
         "Principal and Selling Shareholders," and "Certain Transactions,"
         present fairly the information set forth therein, and such data has
         been compiled and presented on a basis consistent with the financial
         statements presented therein and in the books and records of the
         Company. The Company and its subsidiaries have no material contingent
         obligations that are required to be disclosed in the Company's
         financial statements in accordance with generally accepted accounting
         principles which have not been so disclosed in the financial statements
         included in the Registration Statement. Arthur Andersen LLP, who have
         certified the financial statements of the Company, are independent
         public accountants as required by the Securities Act and the Rules and
         Regulations.

                  (i) Subsequent to December 31, 1997, neither the Company nor
         any subsidiary has sustained any material loss or interference with its
         business or properties from fire, flood, hurricane, accident or other
         calamity, whether or not covered by insurance, or from any labor
         dispute or court or governmental action, order or decree, which is not
         disclosed in the Effective Prospectus and the Final Prospectus; and
         subsequent to the respective dates as of which information is given in
         the Registration Statement, the Effective Prospectus and the Final
         Prospectus, (i) neither the Company nor any of its subsidiaries has
         incurred any material liabilities or obligations, direct or contingent,
         or entered into any material transactions other than in the ordinary
         course of business, and (ii) there has not been any change in the
         capital stock, partnership interests, joint venture interests,
         long-term debt, obligations under capital leases or short-term
         borrowings of the Company and its subsidiaries or any issuance of
         options, warrants or rights to purchase the capital stock of the
         Company, or any adverse change, or any development known to the Company
         involving a prospective adverse change, in the general affairs,
         management, business, prospects, financial position, net worth or
         results of operations of the Company or its subsidiaries, except in
         each case as described in or contemplated by the Effective Prospectus
         and the Final Prospectus or as would not have a Material Adverse
         Effect.

                  (j) Except as described in the Effective Prospectus and the
         Final Prospectus, there is not pending or, to the knowledge of the
         Company, threatened, any action, suit, proceeding, inquiry or
         investigation to which the Company, any of its subsidiaries or any of
         their officers or directors is a party, or to which the property of the
         Company or any subsidiary is subject, before or brought by any court,
         administrative agency, governmental agency, body or otherwise, wherein
         an unfavorable decision, ruling or finding could result in a Material
         Adverse Effect.

                  (k) There are no contracts or other documents required by the
         Securities Act or by the Rules and Regulations to be described in the
         Registration Statement, the Effective Prospectus or the Final
         Prospectus or to be filed as exhibits to the Registration Statement
         which have not been described or filed as required.

                                      -5-
<PAGE>
 
                  (l) Except as described in the Effective Prospectus and the
         Final Prospectus, the Company and each of its subsidiaries have good
         and marketable title to all real and material personal property owned
         by them, free and clear of all liens, charges, encumbrances or defects,
         except those reflected in the financial statements hereinabove
         described. The real and personal property and buildings referred to in
         the Effective Prospectus and the Final Prospectus which are leased from
         others by the Company are held under valid, subsisting and enforceable
         leases. The Company or its subsidiaries owns or leases all such
         properties as are necessary to its operations as now conducted.

                  (m) The Company maintains a system of internal accounting
         controls sufficient to provide reasonable assurances that (i)
         transactions are executed in accordance with management's general or
         specific authorization; (ii) transactions are recorded as necessary to
         permit preparation of financial statements in conformity with generally
         accepted accounting principles and to maintain accountability for
         assets; (iii) access to assets is permitted only in accordance with
         management's general or specific authorization; (iv) the recorded
         accountability for assets is compared with existing assets at
         reasonable intervals and appropriate action is taken with respect to
         any differences and (v) such controls would prevent or detect errors or
         irregularities in amounts that would be material in relation to the
         Company's financial statements. Neither the Company nor any of its
         subsidiaries, nor any director, officer, agent, employee or other
         person acting, with the Company's knowledge, on behalf of the Company
         or any such subsidiary, has, directly or indirectly used any funds of
         the Company or any of its subsidiaries for unlawful contributions,
         gifts, entertainment or other unlawful expenses relating to political
         activity; made any unlawful payment to foreign or domestic government
         officials or employees or to foreign or domestic political parties or
         campaigns from funds of the Company or any of its subsidiaries;
         violated any provision of the Foreign Corrupt Practices Act of 1977, as
         amended; or made any bribe, rebate, payoff, influence payment, kickback
         or other payment, or received or retained any funds, in violation of
         any law, rule or regulation.

                  (n) The Company and its subsidiaries have filed all federal,
         state and local tax returns required to be filed through the date
         hereof and have paid all taxes shown as due therefrom; and there is no
         tax deficiency, assessment, fine or penalty that has been, nor does the
         Company or any subsidiary have knowledge of any tax deficiency,
         assessment, fine or penalty which is likely to be, asserted against the
         Company or its subsidiaries, which if determined adversely could have a
         Material Adverse Effect. All tax liabilities incurred as of the
         respective dates of the financial statements have been adequately
         provided for in the financial statements of the Company.

                  (o) The Company and its subsidiaries operate their business in
         each jurisdiction in which the Company or any of its subsidiaries is
         doing business in conformity with all applicable statutes, ordinances,
         decrees, orders, rules and regulations of all applicable governmental
         bodies, including federal, state and local governing bodies in the
         United States and all foreign governments in areas outside of the
         United States. The Company and its subsidiaries have all material
         licenses, approvals or consents necessary to operate their respective
         businesses in all locations in which such businesses are currently
         being operated, and the Company and its subsidiaries are not aware of
         any existing or imminent matter which may adversely impact their
         operations or business prospects other than as specifically disclosed
         in the Effective Prospectus and the Final Prospectus. The Company has
         not engaged in any activity, whether alone or in concert with one of
         its customers, creating exposure to civil or criminal monetary
         liability or other material sanctions under federal or state laws
         regulating consumer credit transactions, debt collection practices or
         other violations of law.

                                      -6-
<PAGE>
 
                  (p) Neither the Company nor any of its subsidiaries have
         failed to file with the applicable regulatory authorities any
         statement, report, information or form required by any applicable law,
         regulation or order; all such filings or submissions were in compliance
         with applicable laws when filed and no deficiencies have been asserted
         by any regulatory commission, agency or authority with respect to such
         filings or submissions. Neither the Company nor any of its subsidiaries
         have failed to maintain in full force and effect any license or permit
         necessary for the conduct of its business, or received any notification
         that any revocation or limitation thereof is threatened or pending,
         and, to the knowledge of the Company, there is not pending any change
         under any law, regulation, license or permit which could have a
         Material Adverse Effect. Neither the Company nor any of its
         subsidiaries have received any notice of violation of or been
         threatened with a charge of violating, and, to the knowledge of the
         Company, are not under investigation with respect to a possible
         violation of, any provision of any law, regulation or order.

                  (q) No labor dispute exists with the Company's employees or
         with employees of its subsidiaries or is imminent which could have a
         Material Adverse Effect. The Company is not aware of any existing or
         imminent labor disturbance by its employees or by any employees of its
         subsidiaries which could be expected to have a Material Adverse Effect.

                  (r) The Company and its subsidiaries own or possess the
         licenses, patents, patent rights, copyrights, trademarks, service
         marks, trade names and proprietary and other confidential information
         and trade secrets presently employed by them in connection with the
         businesses now operated by them, and neither the Company nor any of its
         subsidiaries have received any notice of infringement of or conflict
         with asserted rights of others with respect to any of the foregoing
         which, alone or in the aggregate, if the subject of an unfavorable
         decision, ruling or finding, would result in a Material Adverse Effect.

                  (s) The Company and each of its subsidiaries are insured by
         insurers of recognized financial responsibility against such losses and
         risks and in such amounts as are prudent and adequate for the conduct
         of their respective businesses and the value of their respective
         properties and is customary for companies engaged in similar
         industries; and neither the Company nor any such subsidiary has any
         reason to believe that it will not be able to renew its existing
         insurance coverage as and when such coverage expires or to obtain
         similar coverage from similar insurers as may be necessary to continue
         its business at a comparable cost.

                  (t) Except as described in the Effective Prospectus and the
         Final Prospectus, no subsidiary of the Company is currently prohibited,
         directly or indirectly, from paying any dividends to the Company, from
         making any other distributions on such subsidiary's capital stock, from
         repaying to the Company any loans or advances to such subsidiary or
         from transferring any of such subsidiary's property or assets to the
         Company or any other subsidiary of the Company.

                  (u) The Company is not, will not become as a result of the
         transactions contemplated hereby, and does not intend to conduct its
         business in a manner that would cause it to become, an "investment
         company" or a company "controlled" by an "investment company" within
         the meaning of the Investment Company Act of 1940, as amended (the
         "1940 Act").

                  (v) Neither the Company nor any of its subsidiaries nor, to
         the Company's knowledge, any of the directors, officers, employees or
         agents of the Company and its subsidiaries have taken, and the Company
         and its subsidiaries will not take, directly or indirectly, any action
         designed to 

                                      -7-
<PAGE>
 
         cause or result in, or which has constituted or which might be expected
         to constitute, stabilization or manipulation of the price of the Common
         Stock.
    
                  (w) The Shares have been approved for listing on the Nasdaq
         Stock Market's National Market (or such other trading market as shall 
         be approved by you) upon notice of issuance.      

                  (x) The Company has previously disclosed and delivered or made
         available to the Underwriters or their representatives prior to the
         date the Registration Statement was declared effective copies of all
         pension, retirement, profit-sharing, deferred compensation, stock
         option, employee stock ownership, severance pay, vacation, bonus or
         other incentive plans, all other written employee programs,
         arrangements or agreements, all medical, vision, dental or other health
         plans, all life insurance plans and all other employee benefit plans or
         fringe benefit plans, including, without limitation, "employee benefit
         plans" as that term is defined in Section 3(3) of the Employee
         Retirement Income Security Act of 1974, as amended ("ERISA"), adopted,
         maintained, sponsored in whole or in part or contributed to by the
         Company, its predecessors or any subsidiary of the Company or its
         predecessors for the benefit of employees, retirees, dependents,
         spouses, directors, independent contractors or other beneficiaries and
         under which employees, retirees, dependents, spouses, directors,
         independent contractors or other beneficiaries are eligible to
         participate (collectively, the "Company Benefit Plans").

                  The Company and its subsidiaries (and each predecessor of the
         Company or a subsidiary that adopted or contributed to a Company
         Benefit Plan) have maintained all Company Benefit Plans (including
         filing all reports and returns required to be filed with respect
         thereto) in accordance with their terms and in compliance with the
         applicable terms of ERISA, the Internal Revenue Code and any other
         applicable federal and state laws the breach or violation of which
         would have, individually or in the aggregate, a Material Adverse
         Effect. Each Company Benefit Plan which is intended to be qualified
         under Section 401(a) of the Internal Revenue Code has either received a
         favorable determination letter from the Internal Revenue Service or
         timely requested such a letter and has at all times been maintained in
         accordance with Section 401 of the Internal Revenue Code, except where
         any failure to receive or seek such a favorable determination letter or
         so maintain such Company Benefit Plan would not have, individually or
         in the aggregate, a Material Adverse Effect. Neither the Company nor
         its subsidiaries has engaged in a transaction with respect to any
         Company Benefit Plan that, assuming the taxable period of such
         transaction expired as of the date hereof, would subject the Company or
         any subsidiary to a tax or penalty imposed by either Section 4975 of
         the Internal Revenue Code or Section 502(i) of ERISA in amounts which
         are reasonably likely to have, individually or in the aggregate, a
         Material Adverse Effect.

                  Neither the Company nor any subsidiary is obligated to provide
         post-retirement medical benefits or any other unfunded post-retirement
         welfare benefits (except COBRA continuation coverage required to be
         provided by ERISA Section 601), which such liabilities to the Company
         would have, individually or in the aggregate, a Material Adverse
         Effect. Neither the Company nor any member of a group of trades or
         businesses under common control (as defined in ERISA Sections
         4001(a)(14) and 4001(b)(1)) with the Company have at any time within
         the last six years sponsored, contributed to or been obligated under
         Title I or IV of ERISA to contribute to a "defined benefit plan" (as
         defined in ERISA Section 3(35)). Within the last six years, neither the
         Company nor any member of a group of trades or businesses under common
         control (as defined in ERISA Sections 4001(a)(14) and 4001(b)(1)) with
         Company have had an "obligation to 

                                      -8-
<PAGE>
 
         contribute" (as defined in ERISA Section 4212) to a "multiemployer
         plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).

                  (y) Neither the Company nor any of its subsidiaries is in
         violation of any federal or state law or regulation relating to
         occupational safety and health, and the Company and its subsidiaries
         have received all permits, licenses or other approvals required of them
         under applicable federal and state laws and regulations necessary to
         conduct their respective businesses, and the Company and each such
         subsidiary is in compliance with all terms and conditions of any such
         permit, license or approval, except any such violation of law or
         regulation, failure to receive required permits, licenses or other
         approvals or failure to comply with the terms and conditions of such
         permits, licenses or approvals which would not, singly or in the
         aggregate, result in a Material Adverse Effect.

                  (z) The Company has not violated any applicable laws relating
         to immigration and has employed only individuals authorized to work in
         the United States and has never been the subject of any inspection or
         investigation relating to its compliance with or violation of the
         Immigration Reform and Control Act of 1986 and all Regulations
         promulgated thereunder.

                  (aa) The property, assets and operations of the Company and
         its subsidiaries comply in all material respects with all applicable
         federal, state or local law, common law, doctrine, rule, order, decree,
         judgment, injunction, license, permit or regulation relating to
         environmental matters (the "Environmental Laws"), except to the extent
         that failure to comply with such Environmental Laws would not have a
         Material Adverse Effect. To the knowledge of the Company, none of the
         property, assets or operations of the Company and its subsidiaries is
         the subject of any foreign, federal, state or local investigation
         evaluating whether any remedial action is needed to respond to a
         release into the environment of any substance regulated by, or form the
         basis of liability under, any Environmental Laws (a "Hazardous
         Material"), or is in contravention of any Environmental Law that would
         have a material adverse effect on the earnings, business, management,
         properties, assets, rights, operations, condition (financial or
         otherwise) or prospects of the Company and its subsidiaries. Neither
         the Company nor the Subsidiary has received any notice or claim, nor
         are there pending, reasonably anticipated or, or to the Company's
         knowledge, threatened lawsuits against them with respect to violations
         of an Environmental Law or in connection with the release of any
         Hazardous Material into the environment. Neither the Company nor the
         Subsidiary has any material contingent liability in connection with any
         release of Hazardous Material into the environment.

                  (bb) Other than as set forth in the Effective Prospectus and
         the Final Prospectus, the Company's internal systems and software and
         the network connections it maintains are adequately programmed to
         address the Year 2000 issue.

                  (cc) Neither the Company nor any of its subsidiaries has
         received any communication (written or oral) relating to the
         termination or modification or threatened termination or modification
         of any of the agreements specifically named in the Effective Prospectus
         or the Final Prospectus, nor has it received any communication (written
         or oral) relating to any determination not to renew or extend any
         agreement specifically named in the Effective Prospectus or the Final
         Prospectus at the end of the current term of any such agreement, except
         where any such termination, modification, non-renewal or non-extension
         would not have a Material Adverse Effect.

                                      -9-
<PAGE>
 
                  (dd) Each certificate signed by any officer of the Company and
         delivered to the Representatives or counsel for the Underwriters shall
         be deemed to be a representation and warranty by the Company to each
         Underwriter as to the matters covered thereby.
    
         2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING
SHAREHOLDER. The Selling Shareholder represents, warrants and covenants to each
Underwriter and agrees as follows:      

                  (a) Such Selling Shareholder now has, and at the First Closing
         Date will have, or upon the exercise of options for the purchase of
         such Shares will have, good and marketable title to the Selling
         Shareholder Shares to be sold by such Selling Shareholder, free and
         clear of any liens, encumbrances, equities and claims (other than as
         imposed by the Securities Act or this Agreement), and full right, power
         and authority to effect the sale and delivery of such Selling
         Shareholder Shares; and upon the delivery of and payment for the
         Selling Shareholder Shares pursuant to this Agreement, good and
         marketable title to such Selling Shareholder Shares, free and clear of
         any liens, encumbrances, equities, claims, security interests,
         restrictions, shareholder agreements or voting trusts, will be
         transferred to the Underwriters.
    
                  (b) Such Selling Shareholder has duly executed and delivered
         the Custody Agreement and Power of Attorney in the form previously
         delivered to the Representatives, appointing each of John W. Collins
         and Donny R. Jackson as such Selling Shareholder's duly authorized
         attorney-in-fact (the "Attorney-in-Fact") and SunTrust Bank, Atlanta as
         the duly authorized custodian (the "Custodian") of the Selling
         Shareholder Shares. The Attorneys-in-Fact are authorized to execute,
         deliver and perform this Agreement on behalf of such Selling
         Shareholder, to exercise options relating to Selling Shareholder
         Shares, to deliver the Selling Shareholder Shares to be sold by such
         Selling Shareholder hereunder, to accept payment therefor and otherwise
         to act on behalf of such Selling Shareholder in connection with this
         Agreement. Shares of Common Stock, in suitable form for transfer,
         representing the Selling Shareholder Shares to be sold by such Selling
         Shareholder hereunder have been deposited with the Custodian pursuant
         to the Custody Agreement and Power of Attorney for the purpose of
         delivery pursuant to this Agreement. Such Selling Shareholder agrees
         that its Selling Shareholder Shares on deposit with the Custodian are
         subject to the interest of the Underwriters hereunder, that the
         arrangements made for such custody and the appointment of the Attorneys
         in-Fact are to that extent irrevocable, and that the obligations of
         such Selling Shareholder hereunder shall not be terminated by any act
         or deed of the Selling Shareholder (or by any other person, firm or
         corporation, including the Company or the Custodian) without the prior
         written consent of the Underwriters or by operation of law (including
         the death of the Selling Shareholder) or by the occurrence of any other
         event or events, except as provided in this Agreement and the Custody
         Agreement. If such Selling Shareholder should die or become
         incapacitated or if any other event should occur before the delivery of
         the Shares of such Selling Shareholder hereunder which renders such
         Selling Shareholder incapable of acting on his own behalf, to
         the fullest extent provided by law the Selling Shareholder's
         obligations hereunder shall continue and the Selling Shareholder Shares
         deposited with the Custodian shall be delivered by the Custodian in
         accordance with the terms and conditions of this Agreement as if such
         death, incapacity, or other event had not occurred, regardless of
         whether or not the Custodian or the Attorneys-in-Fact shall have
         received notice thereof.      

                  (c) Such Selling Shareholder, acting individually or through
         the Attorneys-in-Fact, has duly executed and delivered this Agreement.
         This Agreement constitutes a legal, valid and binding obligation of
         such Selling Shareholder, enforceable against such Selling Shareholder
         in 

                                      -10-
<PAGE>
 
         accordance with its terms, except as may be limited by bankruptcy and
         other creditor rights laws and general principles of equity, including
         the availability of the equitable remedy of specific performance. All
         authorizations and consents necessary for the execution and delivery of
         this Agreement and the Custody Agreement and Power of Attorney on
         behalf of such Selling Shareholder and for the sale and delivery of the
         Selling Shareholder Shares to be sold by such Selling Shareholder
         hereunder have been given. Such Selling Shareholder has the legal
         capacity and full right, power and authority to execute this Agreement
         and the Custody Agreement and Power of Attorney.

                  (d) The performance of this Agreement and the Custody
         Agreement and Power of Attorney and the consummation of the
         transactions contemplated hereby and thereby by such Selling
         Shareholder will not result in a breach or violation of, or conflict
         with, any of the terms or provisions of, or constitute a default by
         such Selling Shareholder under, any indenture, mortgage, deed of trust,
         trust (constructive or other), loan agreement, lease, franchise,
         license or other agreement or instrument to which such Selling
         Shareholder or any of such Selling Shareholder's properties is bound,
         any statute, or any judgment, decree, order, rule or regulation of any
         court or governmental agency or body applicable to such Selling
         Shareholder or any of such Selling Shareholder's properties.

                  (e) Such Selling Shareholder has not taken and will not take,
         directly or indirectly, any action designed to, or which might
         reasonably be expected to, cause or result in stabilization or
         manipulation of the price of the Common Stock. Such Selling Shareholder
         has not distributed and will not distribute any prospectus or other
         offering material in connection with the offer and sale of the Shares
         other than any Preliminary Prospectus filed with the Commission or the
         Final Prospectus or other material permitted by the Securities Act.

                  (f) To the knowledge of such Selling Shareholder, the
         representations and warranties of the Company in Section 1 of this
         Agreement are true and correct. Such Selling Shareholder has reviewed
         and is familiar with the Registration Statement as originally filed
         with the Commission, and as amended, and the Preliminary Prospectus. To
         the knowledge of such Selling Shareholder, there are no facts,
         conditions or information not disclosed in such Preliminary Prospectus
         that have adversely affected or could adversely affect the business,
         financial position, net worth or results of operations, or could
         adversely affect the properties or assets, of the Company or any of its
         subsidiaries. To the knowledge of such Selling Shareholder, the
         Preliminary Prospectus does not include an untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading. Such Selling Shareholder
         represents that it was not prompted to sell the Selling Shareholder
         Shares by any information concerning the Company or any subsidiary that
         is not set forth in the Preliminary Prospectus, the Effective
         Prospectus or the Final Prospectus.

                  (g) At the time the Registration Statement became effective
         (A) such parts of the Registration Statement and any amendments and
         supplements thereto as specifically refer to such Selling Shareholder
         did not contain an untrue statement of a material fact or omit to state
         a material fact required to be stated therein or necessary to make the
         statements therein not misleading and (B) such parts of the Effective
         Prospectus and Final Prospectus as specifically refer to such Selling
         Shareholder did not and will not include an untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading.

                                      -11-
<PAGE>
 
                  (h) In order to document the Underwriters' compliance with the
         reporting and withholding provisions of the Tax Equity and Fiscal
         Responsibility Act of 1982 with respect to the transactions herein
         contemplated, such Selling Shareholder agrees to deliver to you prior
         to or at the First Closing Date (as defined below) a properly completed
         and executed United States Treasury Department Form W-9 (or other
         applicable form or statement specified by Treasury Department
         regulations in lieu thereof).

                  (i) Any certificate signed by or on behalf of such Selling
         Shareholder as such and delivered to the Representatives or to counsel
         for the Representatives shall be deemed a representation and warranty
         by such Selling Shareholder to each Underwriter as to the matters
         covered thereby.

         3. PURCHASE, SALE AND DELIVERY OF THE SHARES.
    
                  (a) On the basis of the representations, warranties,
         agreements and covenants herein contained and subject to the terms and
         conditions herein set forth, the Company agrees to sell to the
         Underwriters 2,250,000 Firm Shares; the Selling Shareholder
         agrees to sell to the Underwriters the number of Firm Shares set forth
         opposite such Selling Shareholder's name in Schedule II hereto; and
         each of the Underwriters severally and not jointly, agrees to purchase
         at a purchase price of $_____ per share, the number of Firm Shares set
         forth opposite such Underwriter's name in Schedule I hereto.      

                  (b) The Company also grants to the Underwriters an option to
         purchase, solely for the purpose of covering over-allotments in
         connection with the distribution and sale of the Firm Shares, all or
         any portion of the Option Shares at the purchase price per share set
         forth above. The option granted hereby may be exercised as to all or
         any part of the Option Shares at any time within 30 days after the date
         the Registration Statement becomes effective or, if such 30th day shall
         be a Saturday or Sunday or a holiday, on the next business day
         thereafter when the New York Stock Exchange is open for trading. The
         Underwriters shall not be under any obligation to purchase any Option
         Shares prior to the exercise of such option. The option granted hereby
         may be exercised by the Underwriters by the Representatives giving
         written notice or notice by telephone (confirmed in writing) to the
         Company setting forth the number of Option Shares to be purchased and
         the date and time for delivery of and payment for such Option Shares
         and stating that the Option Shares referred to in such notice are to be
         used for the purpose of covering over-allotments in connection with the
         distribution and sale of the Firm Shares. If such notice is given prior
         to the First Closing Date (as defined herein), the date set forth
         therein for such delivery and payment shall not be earlier than two
         full business days thereafter or the First Closing Date, whichever
         occurs later. If such notice is given on or after the First Closing
         Date, the date set forth therein for such delivery and payment shall
         not be earlier than three full business days thereafter. In either
         event, the date so set forth shall not be more than 15 full business
         days after the date of such notice. The date and time set forth in such
         notice is herein called the "Option Closing Date." Upon exercise of the
         option, the Company shall become obligated to sell to the Underwriters,
         and, subject to the terms and conditions herein set forth, the
         Underwriters shall become obligated to purchase, for the account of
         each Underwriter, from the Company the number of Option Shares
         specified in such notice. Option Shares shall be purchased for the
         accounts of the Underwriters in proportion to the number of Firm Shares
         set forth opposite such Underwriter's name in Schedule I hereto, except
         that the respective purchase obligations of each Underwriter shall be
         adjusted so that no Underwriter shall be obligated to purchase
         fractional Option Shares. To the extent, if any, that the option is
         exercised, payment for the Option Shares shall be made on the Option
         Closing Date in 

                                      -12-
<PAGE>
 
         same day funds by wire transfer to an account designated by the Company
         against delivery of certificates therefor at the offices of J.C.
         Bradford & Co., 330 Commerce Street, Nashville, Tennessee 37201, or at
         such other place as you, the Company and the Attorneys-in-Fact shall
         agree upon.
    
                  (c) Certificates in definitive form for the Firm Shares which
         each Underwriter has agreed to purchase hereunder shall be delivered by
         or on behalf of the Company and the Selling Shareholder to the
         Underwriters for the account of such Underwriter against payment by
         such Underwriter or on its behalf of the purchase price therefor, in
         same day funds by wire transfer to the respective accounts designated
         by the Company or the Selling Shareholder, as the case may be, at the
         offices of J. C. Bradford & Co., 330 Commerce Street, Nashville,
         Tennessee 37201, or at such other place as may be agreed upon by J.C.
         Bradford & Co., the Company and the Attorneys-in-Fact, at 10:00 A.M.,
         Nashville time, on the third (or if the Firm Shares are priced, as
         contemplated by Rule 15c6-1(c) promulgated pursuant to the Exchange
         Act, after 4:30 P.M., Washington, D.C. time, the fourth) full business
         day after this Agreement becomes effective, or at such other time not
         later than the seventh full business day thereafter as the
         Representatives, the Company and the Attorneys-in-Fact may determine,
         such time of delivery against payment being herein referred to as the
         "First Closing Date." The First Closing Date and the Option Closing
         Date are herein individually referred to as the "Closing Date" and
         collectively referred to as the "Closing Dates." Certificates in
         definitive form for the Option Shares which each Underwriter shall have
         agreed to purchase hereunder shall be similarly delivered by or on
         behalf of the Company on the Option Closing Date. The certificates in
         definitive form for the Shares to be delivered will be in good delivery
         form and in such denominations and registered in such names as J.C.
         Bradford & Co. may request not less than 48 hours prior to the First
         Closing Date or the Option Closing Date, as the case may be. Such
         certificates will be made available for checking and packaging, at a
         location designated by you, at least 24 hours prior to the First
         Closing Date or the Option Closing Date, as the case may be. It is
         understood that you may (but shall not be obligated to) make payment on
         behalf of any Underwriter or Underwriters for the Shares to be
         purchased by such Underwriter or Underwriters. No such payment shall
         relieve such Underwriter or Underwriters from any of its or their
         obligations hereunder.     

         4. OFFERING BY THE UNDERWRITERS. After the Registration Statement
becomes effective, the several Underwriters propose to offer for sale to the
public the Firm Shares and any Option Shares which may be sold at the price and
upon the terms set forth in the Final Prospectus.

         5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Underwriters that:

                  (a) The Company will use its best efforts to cause the
         Registration Statement to become effective and to comply with the
         provisions of and make all requisite filings with the Commission
         pursuant to Rules 424, 430A, 434 and 462(b), if relied upon by the
         Company, of the Rules and Regulations and to notify you promptly in
         writing of all such filings. The Company shall notify you promptly in
         writing of any request by the Commission for any amendment of or
         supplement (including any Term Sheet) to the Registration Statement,
         the Effective Prospectus or 

                                      -13-
<PAGE>
 
         the Final Prospectus or for additional information; the Company shall
         prepare and file with the Commission, promptly upon your request, any
         amendments of or supplements to the Registration Statement, the
         Effective Prospectus or the Final Prospectus which, in your reasonable
         opinion, may be necessary or advisable in connection with the
         distribution of the Shares; and the Company shall not file any
         amendment of or supplement to the Registration Statement, the Effective
         Prospectus or the Final Prospectus to which you reasonably object after
         reasonable notice thereof. The Company shall advise you promptly after
         it receives notice and obtains knowledge of the issuance by the
         Commission or any jurisdiction or other regulatory body of any stop
         order or other order suspending the effectiveness of the Registration
         Statement, suspending or preventing the use of any Preliminary
         Prospectus, the Effective Prospectus or the Final Prospectus or
         suspending the qualification of the Shares for offering or sale in any
         jurisdiction, or of the institution of any proceedings for any such
         purpose; and the Company shall use its best efforts to prevent the
         issuance of any stop order or other such order and, should a stop order
         or other such order be issued, to obtain as soon as possible the
         lifting thereof.

                  (b) The Company will take or cause to be taken all necessary
         action and furnish to whomever you direct such information as may be
         reasonably required in qualifying the Shares for offer and sale under
         the securities or Blue Sky laws of such jurisdictions as the
         Underwriters may designate and will continue such qualifications in
         effect for as long as may be reasonably necessary to complete the
         distribution and for a period of not less than one year after the
         Effective Date; provided that, in connection therewith, the Company
         shall not be required to qualify as a foreign corporation or to file a
         general consent to service of process in any jurisdiction in which the
         Company is not currently so subject.

                  (c) Within the time during which a Final Prospectus relating
         to the Shares is required to be delivered under the Securities Act, the
         Company shall comply with all requirements imposed upon it by the
         Securities Act, as now and hereafter amended, and by the Rules and
         Regulations, as from time to time in force, so far as is necessary to
         permit the continuance of sales of or dealings in the Shares as
         contemplated by the provisions hereof and the Final Prospectus. If
         during such period any event occurs as a result of which the Final
         Prospectus as then amended or supplemented would include an untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements therein, in the light of the circumstances under
         which they were made, not misleading, or if during such period it is
         necessary to amend the Registration Statement or supplement the Final
         Prospectus to comply with the Securities Act, the Company shall
         promptly notify you and shall amend the Registration Statement or
         supplement the Final Prospectus (at the expense of the Company) so as
         to correct such statement or omission or effect such compliance.

                  (d) The Company will furnish without charge to the
         Representatives copies of the Registration Statement (two of which
         shall be signed and shall be accompanied by all exhibits thereto) and
         will furnish without charge to the Representatives, each Underwriter
         and to any dealer in securities each Preliminary Prospectus, the
         Effective Prospectus and the Final Prospectus, and all amendments and
         supplements thereto, including any prospectus or supplement prepared
         after the effective date of the Registration Statement, in each case as
         soon as available and in such quantities as the Underwriters may
         reasonably request.

                  (e) The Company will (i) deliver to you at such office or
         offices as you may designate as many copies of the Preliminary
         Prospectus and Final Prospectus as you may reasonably request, and (ii)
         for a period of not more than nine months after the Registration
         Statement becomes effective or such longer period that a Final
         Prospectus relating to the Shares is required to be delivered under the
         Securities Act, send to the Underwriters as many additional copies of
         the Final Prospectus and any supplement thereto as you may reasonably
         request.

                  (f) The Company shall make generally available to its security
         holders, in the manner contemplated by Rule 158(b) under the Securities
         Act as promptly as practicable and in any event 

                                      -14-
<PAGE>
 
         no later than 45 days after the end of its fiscal quarter in which the
         first anniversary of the effective date of the Registration Statement
         occurs, an earnings statement satisfying the provisions of Section
         11(a) of the Securities Act covering a period of at least 12
         consecutive months beginning after the effective date of the
         Registration Statement.

                  (g) The Company will apply the net proceeds from the sale of
         the Company Shares as set forth under the caption "Use of Proceeds" in
         the Final Prospectus and will report the use of such proceeds in
         accordance with Rule 463 under the Securities Act.

                  (h) During a period of three years from the effective date of
         the Registration Statement, the Company will furnish to the
         Representatives, without charge, copies of all reports and other
         communications (financial or other) furnished by the Company to its
         shareholders and, as soon as available, copies of any reports or
         financial statements furnished or filed by the Company to or with the
         Commission or any national securities exchange or over-the-counter
         market on which any class of securities of the Company may be listed or
         traded and such additional information concerning the business and
         financial condition of the Company and its subsidiaries as you from
         time to time may reasonably request.

                  (i) The Company will, from time to time, after the effective
         date of the Registration Statement file with the Commission such
         reports as are required by the Securities Act, the Exchange Act and the
         Rules and Regulations, and shall also file with state securities
         commissions in states where the Shares have been sold by you (as you
         shall have advised us in writing) such reports as are required to be
         filed by the securities acts and the regulations of those states.

                  (j) The Company has provided agreements executed by all of 
         the Company's executive officers, directors and shareholders providing
         that none of them will, for a period of 180 days from the effective
         date of the Registration Statement, directly or indirectly, make, agree
         to or cause any offer, sale (including short sale), loan, pledge or
         other disposition of, or grant any options, rights or warrants to
         purchase with respect to, or otherwise transfer or reduce any risk of
         ownership of, directly or indirectly, any shares of Common Stock or any
         securities convertible into or exchangeable or exercisable for shares
         of Common Stock or other capital stock of the Company, or derivatives
         thereof, or request the registration of any of the foregoing, except
         that the Company's executive officers, directors and shareholders may
         acquire shares of Common Stock pursuant to the exercise of stock
         options granted pursuant to the Company's stock option plans, and may
         gift, pledge or assign shares of Common Stock if the donee, pledgee or
         assignee agrees similarly not to sell, contract to sell or otherwise
         dispose of such shares for the remaining portion, if any, of the Lock-
         up Period. Except with the prior written consent of J.C. Bradford &
         Co., the Company will not issue any of the 2,000,000 shares of
         Common Stock to be registered under the Securities Act as described
         under the caption "Shares Eligible for Future Sale" in the Final
         Prospectus unless and until each person or entity to whom or which such
         shares are to be issued agrees in writing not to sell, contract to sell
         or otherwise dispose of such shares for the remaining portion, if any,
         of the Lock-up Period.

                  (k) If at any time during the 30 day period after the
         Registration Statement is declared effective, any rumor, publication or
         event relating to or affecting the Company shall occur as a result of
         which, in your opinion, the market price for the Shares has been or is
         likely to be materially affected (regardless of whether such rumor,
         publication or event necessitates a 

                                      -15-
<PAGE>
 
         supplement to or amendment of the Final Prospectus), the Company will,
         after written notice from you advising it to do so, prepare, consult
         with you concerning the substance of, and disseminate a press release
         or other public statement, reasonably satisfactory to you, responding
         to or commenting on such rumor, publication or event.

                  (l) Neither the Company nor any of its officers, directors or
         affiliates will take, directly or indirectly, any action designed to
         cause or result in, or which might constitute or be expected to
         constitute, stabilization or manipulation of the price of the Common
         Stock.

                  (m) The Company will cause the Shares to be listed on the
         Nasdaq Stock Market's National Market at each Closing Date and will use
         its reasonable best efforts to cause the Shares to be so listed for at
         least one year from the date hereof.

                  (n) The Company shall not invest or otherwise use the proceeds
         received by the Company from its sale of the Shares in such a manner as
         would require the Company or any subsidiary to register as an
         investment company under the 1940 Act.

                  (o) The Company will maintain a transfer agent and, if
         necessary under the jurisdiction of incorporation of the Company, a
         registrar for the Common Stock.
    
         6. EXPENSES. The Company and the Selling Shareholder agree with the
Underwriters that (a) whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay
all fees and expenses incident to the performance of the obligations of the
Company and the Selling Shareholder, including, but not limited to, (i) the
Commission's registration fee, (ii) the expenses of printing (or reproducing)
and distributing the Registration Statement (including the financial statements
therein and all amendments and exhibits thereto), each Preliminary Prospectus,
the Effective Prospectus, the Final Prospectus, any amendments or supplements
thereto, and this Agreement and other underwriting documents, including
Underwriter's Questionnaires, Underwriter's Powers of Attorney, Blue Sky
Memoranda, Agreements Among Underwriters and Selected Dealers Agreements, (iii)
fees and expenses of accountants and counsel for the Company and the Selling
Shareholder, (iv) expenses of registration or qualification of the Shares under
state Blue Sky and securities laws, including the fees and disbursements of
counsel to the Underwriters in connection therewith, (v) filing fees paid or
incurred by the Underwriters and related fees and expenses of counsel to the
Underwriters in connection with filings with the NASD, (vi) expenses of listing
the Shares on the Nasdaq Stock Market's National Market (or such other trading 
market as shall be approved by you), (vii) any expenses for
travel, lodging and meals incurred by the Company in connection with marketing,
dealer and other meetings attended by the Company and the Underwriters in
marketing the Shares, (viii) the costs and charges of the Company's transfer
agent and registrar and the cost of preparing the certificates for the Shares,
and (ix) all other costs and expenses incident to the performance of its
obligations hereunder not otherwise provided for in this Section; and (b) all
out-of-pocket expenses, including counsel fees, disbursements and expenses,
incurred by the Underwriters in connection with investigating, preparing to
market and marketing the Shares and proposing to purchase and purchasing the
Shares under this Agreement will be borne and paid by the Company if the sale of
the Shares provided for herein is not consummated by reason of the termination
of this Agreement by the Representatives pursuant to Sections 10 or 13(iv) or
pursuant to Section 13(ii) because of any failure or refusal on the part of the
Company or the Selling Shareholder to comply with the terms in all material
respects or fulfill in all material respects any of the conditions of this
Agreement. To the extent, if at all, that the Selling Shareholder engages
special legal counsel to represent him in connection with the transactions
contemplated by this Agreement, the fees and expenses of such counsel shall be
borne by such Selling Shareholder. Any transfer taxes imposed on the sale of the
Shares to the several Underwriters       

                                      -16-
<PAGE>
 
    
will be paid by the Company and the Selling Shareholder pro rata. The Company
and the Selling Shareholder have agreed between themselves with regard to the
sharing of fees and expenses. It is understood, however, that except as provided
in this Section 6 and Sections 8 and 10, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel and any advertising
expenses in connection with any offers they may make.       

    
         7. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The respective
obligations of the Underwriters hereunder shall be subject, in their discretion,
to the accuracy of the representations and warranties of the Company and the
Selling Shareholder herein as of the date hereof and as of the Closing Date as
if made on and as of the Closing Date, to the accuracy of the statements of the
Company's officers made pursuant to the provisions hereof, to the performance by
the Company and the Selling Shareholder of all of their covenants and agreements
hereunder and to the following additional conditions:       

                  (a) The Registration Statement and all post-effective
         amendments thereto shall have become effective not later than 4:00
         p.m., Washington, D.C. time, on the day following the date of this
         Agreement, or such later time and date as shall have been consented to
         by the Representatives and all filings required by Rule 424, Rule 430A,
         Rule 434 or Rule 462(b), if applicable, of the Rules and Regulations
         shall have been made; no stop order suspending the effectiveness of the
         Registration Statement shall have been issued and no proceedings for
         that purpose shall have been instituted or threatened or, to the
         knowledge of the Company or the Underwriters, shall be contemplated by
         the Commission; any request of the Commission for additional
         information (to be included in the Registration Statement or the Final
         Prospectus or otherwise) shall have been complied with to your
         reasonable satisfaction; and the NASD, upon review of the terms of the
         public offering of the Shares, shall not have objected to such offering
         or the terms or the Underwriters' participation in the same.

                  (b) No Underwriter shall have advised the Company that the
         Registration Statement or any amendment thereto contains an untrue
         statement of fact which, in your judgment, is material, or omits to
         state a fact which, in your judgment, is material and is required to be
         stated therein or necessary to make the statements therein not
         misleading, or that any Preliminary Prospectus, the Effective
         Prospectus or the Final Prospectus, or any supplement thereto, contains
         an untrue statement of fact which, in your judgment, is material, or
         omits to state a fact which, in your judgment, is material and is
         required to be stated therein or necessary to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading.

    
                  (c) The Representatives shall have received an opinion, dated
         the Closing Date, from Nelson Mullins Riley & Scarborough, L.L.P.,
         counsel for the Company and the Selling Shareholder, to the effect
         that:       

                           (i) The Company is a corporation duly organized and
                  validly existing and in good standing under the laws of the
                  State of Georgia, with full corporate power and authority to
                  own its properties and conduct its business as now conducted.

                           (ii) Each of the Company's subsidiaries (as defined
                  in this Agreement) is a corporation duly organized and validly
                  existing and in good standing under the laws of the state of
                  its incorporation, with full corporate power and authority to
                  own its properties and conduct its business as now conducted.
                  The outstanding stock of each of the Company's subsidiaries is
                  duly authorized, validly issued, fully paid and nonassessable.
                  Other than as disclosed in the Effective Prospectus and the
                  Final Prospectus, all of the outstanding stock 

                                      -17-
<PAGE>
 
                  of each of the subsidiaries is owned by the Company, free and
                  clear of all possessory (and, to the knowledge of such
                  counsel, other) liens, encumbrances, pledges, equities or
                  claims of any kind. Other than as disclosed in the Effective
                  Prospectus and the Final Prospectus, to the knowledge of such
                  counsel, no options or warrants or other rights to purchase
                  from the Company or any subsidiary, agreements or other
                  obligations to issue or other rights to convert any
                  obligations into any shares of capital stock or of ownership
                  interests in any of the Company's subsidiaries are
                  outstanding.

                           (iii) The Company and each of its subsidiaries is
                  duly qualified or authorized to do business as a foreign
                  corporation in good standing in all jurisdictions where the
                  nature of its business or character of property owned or
                  leased by it require it to be so qualified or authorized to do
                  business, except where the failure to be so qualified or
                  authorized to do business would not have a Material Adverse
                  Effect.

                           (iv) As of the date specified therein, the Company
                  had historical authorized and issued capital stock as set
                  forth under the caption "Capitalization" in the Final
                  Prospectus, and the Company's capital stock conforms to the
                  description thereof contained under the caption "Description
                  of Capital Stock" in the Final Prospectus. All of the issued
                  and outstanding shares of Common Stock (including the Selling
                  Shareholder Shares and the Option Shares) have been duly
                  authorized and are validly issued, fully paid and
                  nonassessable. The Company Shares have been duly and validly
                  authorized, and upon issuance thereof and payment therefor as
                  provided in this Agreement, will be validly issued, fully paid
                  and nonassessable.

    
                           (v) None of the issued shares of capital stock of the
                  Company (including the Selling Shareholder Shares) have been
                  issued in violation of or subject to any preemptive or similar
                  rights arising under, and there are no preemptive rights or
                  other rights to subscribe for or to purchase, or any
                  restriction upon the transfer of, the Shares or any other
                  shares of Common Stock pursuant to, the Company's Articles of
                  Incorporation, Bylaws or, to the knowledge of such counsel,
                  any agreement (other than this Agreement) or instrument to
                  which the Company or the Selling Shareholder is a party or by
                  which it may be bound. To the knowledge of such counsel,
                  neither the filing of the Registration Statement nor the offer
                  or sale of the Shares as contemplated thereby gives rise to
                  any rights for or relating to the registration of any shares
                  of Common Stock or any other securities of the Company, other
                  than rights relating to shares included in the Firm Shares and
                  such other rights as have been waived by the holder or holders
                  thereof prior to the date hereof. Upon issuance of the Company
                  Shares and payment therefor as provided in this Agreement, the
                  Underwriters will receive good and marketable title to the
                  Company Shares, free and clear of all liens, encumbrances,
                  claims, security interests, restrictions, shareholders
                  agreements and voting trusts whatsoever. The form of
                  certificate for the Shares is in due and proper form.       

                           (vi) To the knowledge of such counsel, all sales of
                  the Company's securities by the Company prior to the date
                  hereof were at all relevant times duly registered or exempt
                  from the registration requirements of the Securities Act and
                  were duly registered or the subject of an exemption from the
                  registration requirements of applicable state securities or
                  blue sky laws, or if not registered or exempt in compliance
                  with the Securities Act and applicable state securities or
                  blue sky laws, any private rights of action for rescission or

                                      -18-
<PAGE>
 
                  damages arising from such failure to register any such
                  securities are time barred by applicable statutes of
                  limitations or equitable principles, including laches.

                           (vii) No consent, approval, authorization or order of
                  any court, governmental agency or body or, to the knowledge of
                  such counsel, any third party, is required for the performance
                  of this Agreement by the Company or the consummation by the
                  Company of the transactions contemplated hereby, except such
                  as have been obtained under the Securities Act and such as may
                  be required from the NASD or under state securities or blue
                  sky laws in connection with the purchase and distribution of
                  the Shares by the several Underwriters. The performance of
                  this Agreement by the Company and the consummation by the
                  Company of the transactions contemplated hereby will not
                  conflict with or result in a breach or violation by the
                  Company or any of its subsidiaries of any of the terms or
                  provisions of, or constitute a default by the Company or any
                  of its subsidiaries under, (a) the Articles of Incorporation
                  or Bylaws of the Company or any of its subsidiaries, (b) any
                  indenture, mortgage, deed of trust, loan agreement, lease or
                  other agreement or instrument to which the Company or any of
                  its subsidiaries is a party or to which the Company or any of
                  its subsidiaries or their properties are subject and that is
                  an exhibit to the Registration Statement (each, a "Material
                  Agreement"), (c) any federal statute or (d) to the knowledge
                  of such counsel, any judgment, decree, order, rule or
                  regulation of any court or governmental agency or body
                  applicable to the Company or any of its subsidiaries or their
                  properties; provided, however, that such counsel need not
                  express any opinion under this paragraph (vii) as to
                  compliance with federal securities laws (certain aspects of
                  which are covered elsewhere in this Agreement) or as to
                  compliance with the securities or blue sky laws of any other
                  jurisdiction.

                           (viii) This Agreement has been duly authorized,
                  executed and delivered by the Company and constitutes the
                  valid and legally binding obligation of the Company,
                  enforceable against the Company in accordance with its terms,
                  and the Company has the full corporate power and authority to
                  enter into this Agreement and to issue, sell and deliver the
                  Company Shares to be sold by it to the Underwriters as
                  provided herein.

                           (ix) To the knowledge of such counsel, except as
                  described in the Final Prospectus, there is not pending or
                  threatened, any action, suit, proceeding, inquiry or
                  investigation to which the Company or any of its subsidiaries
                  is a party, or to which the property of the Company or any of
                  its subsidiaries is subject, before or brought by any court or
                  governmental agency or body, which, if determined adversely to
                  the Company or any of its subsidiaries, could result in a
                  Material Adverse Effect.

                           (x) To the knowledge of such counsel, no default
                  exists and no event has occurred which, with notice or after
                  the lapse of time to cure or both, would constitute a default
                  in the due performance and observance of any term, covenant or
                  condition of any Material Agreement, which default or event
                  would have a Material Adverse Effect.

                           (xi) Neither the Company nor any subsidiary is in
                  violation of its Articles of Incorporation or Bylaws or, to
                  the knowledge of such counsel, in violation of any law,
                  administrative rule or regulation or arbitrators' or
                  administrative or court decree, judgment or order or, to the
                  knowledge of such counsel, in violation or default (there
                  being no existing state of facts, to the knowledge of such
                  counsel, which with notice or lapse of time or both would
                  constitute a default) in the performance or observance of any
                  obligation, 

                                      -19-
<PAGE>
 
                  agreement, covenant or condition contained in any Material
                  Agreement where such violation or default could have a
                  Material Adverse Effect, taking into account any enforceable
                  and valid indemnity that the Company may have from a third
                  party.
    
                           (xii) The Registration Statement and all
                  post-effective amendments thereto have become effective under
                  the Securities Act, no stop order suspending the effectiveness
                  of the Registration Statement has been issued and, to the
                  knowledge of such counsel, no proceedings for that purpose
                  have been instituted or are pending, threatened or
                  contemplated by the Commission. All filings required by Rules
                  424, 430A, 434 and 462(b), if relied upon by the Company, of
                  the Rules and Regulations have been made. The Registration
                  Statement, the Effective Prospectus and Final Prospectus, and
                  any amendments or supplements thereto, as of their respective
                  effective or issue dates, complied as to form with the
                  requirements of the Securities Act and the Rules and
                  Regulations (other than the financial statements, data and
                  schedules which are contained therein, and the first five
                  paragraphs and the last paragraph of the section captioned
                  "Underwriting" contained therein, as to which such counsel
                  need not express any opinion). The descriptions in the
                  Registration Statement, the Effective Prospectus and the Final
                  Prospectus of statutes, regulations, legal and governmental
                  proceedings, and contracts and other documents are accurate in
                  all material respects and present fairly the information
                  required to be stated. To the knowledge of such counsel, there
                  are no pending or threatened legal or governmental
                  proceedings, statutes or regulations required to be described
                  in the Final Prospectus which are not described nor are there
                  any contracts or other documents of a character required to be
                  described in the Registration Statement or the Final
                  Prospectus or to be filed as exhibits to the Registration
                  Statement which are not described and filed as required. The
                  Shares have been approved for listing on the Nasdaq Stock
                  Market's National Market (or such other trading market as 
                  shall be approved by you) upon notice of issuance.     

                           (xiii) The Company is not, and will not be as a
                  result of the consummation of the transactions contemplated by
                  this Agreement, an "investment company" within the meaning of
                  the 1940 Act.
    
                           (xiv) This Agreement and the Custody Agreement and
                  Power of Attorney described herein have been duly executed and
                  delivered by or on behalf of the Selling Shareholder and
                  constitute valid and binding agreements of such Selling
                  Shareholder enforceable against such Selling Shareholder. To
                  the knowledge of such counsel, there are no facts which would
                  cause the Selling Shareholder to lack the legal capacity and
                  full right, power and authority to execute this Agreement and
                  the Custody Agreement and Power of Attorney.     
    
                           (xv) To the knowledge of such counsel, the
                  performance of this Agreement and the Custody Agreement and
                  Power of Attorney and the consummation of the transactions
                  contemplated thereby by the Selling Shareholder will not
                  result in a breach or violation of, or conflict with, any of
                  the terms or provisions of, or constitute a default by the
                  Selling Shareholder under, any indenture, mortgage, deed of
                  trust, trust (constructive or other), loan agreement, lease
                  franchise, license or other agreement or instrument to which
                  such Selling Shareholder or any of such Selling Shareholder's
                  properties is bound, any statute, or any judgment, decree,
                  order, rule or regulation of any court or governmental agency
                  or body applicable to such Selling Shareholder; provided,
                  however, that such counsel need not express any opinion under
                  this paragraph (xv) as to compliance with     

                                      -20-
<PAGE>
 
                  federal securities laws (certain aspects of which are covered
                  elsewhere in this Agreement) or as to compliance with the
                  securities or blue sky laws of any other jurisdiction.
    
                           (xvi) To the knowledge of such counsel, no consent,
                  approval, authorization or order of any court or governmental
                  agency or body is required for the consummation by the Selling
                  Shareholder of the transactions contemplated by this Agreement
                  in connection with the Selling Shareholder Shares to be sold
                  by the Selling Shareholder hereunder, except such as have been
                  obtained under the Securities Act and such as may be required
                  from the NASD or under state securities or blue sky laws in
                  connection with the purchase and distribution of the Shares by
                  the several Underwriters.

                           (xvii) As of the Closing Date, the Selling
                  Shareholder has made good delivery, duly endorsed, to the
                  Underwriters or to a financial intermediary designated by the
                  Underwriters of the Selling Shareholder Shares and, assuming
                  that the Underwriters constitute bona fide purchasers as
                  defined in Section 8-302 of the Uniform Commercial Code, the
                  Selling Shareholder has transferred all rights and interests
                  therein to the Underwriters free and clear of any and all
                  liens, pledges, encumbrances, charges, agreements, equities,
                  claims, security interests, restrictions, shareholder
                  agreements or voting trusts.
     
                  In addition to the matters set forth above, such opinion
         letter shall also include a statement to the effect that nothing has
         come to the attention of such counsel which leads them to believe that
         the Registration Statement or any amendment thereto contains an untrue
         statement of a material fact or omits to state a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading (except that such counsel need express no view as to
         financial statements, schedules and other financial information
         included therein) or that the Effective Prospectus or the Final
         Prospectus or any supplement thereto contains an untrue statement of a
         material fact or omits to state a material fact required to be stated
         therein or necessary to make the statements therein, in the light of
         the circumstances under which they were made, not misleading (except
         that such counsel need express no view as to financial statements,
         schedules and other financial information included therein).

                  (d) The Representatives shall have received an opinion or
         opinions, dated the Closing Date, of Alston & Bird LLP, counsel for the
         Underwriters, with respect to the Registration Statement and the Final
         Prospectus and such other related matters as the Underwriters may
         require, and the Company shall have furnished to such counsel such
         documents as they may reasonably request for the purpose of enabling
         them to pass upon such matters.

                  (e) The Representatives shall have received from Arthur
         Andersen, LLP, a letter dated the date hereof and, at the Closing Date,
         a second letter dated the Closing Date in form and in substance
         satisfactory to the Representatives, stating that they are independent
         public accountants with respect to the Company and its subsidiaries
         within the meaning of the Securities Act and the applicable Rules and
         Regulations, and to the effect that:

                           (i) In their opinion, the financial statements and
                  schedules examined by them and included in the Registration
                  Statement comply as to form in all material respects with the
                  applicable accounting requirements of the Securities Act and
                  the published Rules and Regulations and are presented in
                  accordance with generally accepted accounting principles
                  consistently applied; and they have made a review in
                  accordance with standards 

                                      -21-
<PAGE>
 
                  established by the American Institute of Certified Public
                  Accountants of the consolidated interim financial statements,
                  selected financial data, and/or condensed financial statements
                  derived from audited financial statements of the Company;

                           (ii) The unaudited summary and selected financial
                  information included in the Preliminary Prospectus and the
                  Final Prospectus under the captions "Prospectus Summary" and
                  "Selected Consolidated Financial Data" agrees with the
                  corresponding amounts in the audited financial statements
                  included in the Final Prospectus or previously reported on by
                  them;

                           (iii) On the basis of a reading of the latest
                  available interim consolidated financial statements
                  (unaudited) of the Company and its subsidiaries, a reading of
                  the minute books of the Company and its subsidiaries,
                  inquiries of officials of the Company responsible for
                  financial and accounting matters and other specified
                  procedures, all of which have been agreed to by the
                  Representatives, nothing came to their attention that caused
                  them to believe that:

                                    (A) the unaudited financial statements
                           included in the Registration Statement do not comply
                           as to form in all material respects with the
                           accounting requirements of the federal securities
                           laws and the related published rules and regulations
                           thereunder or are not in conformity with generally
                           accepted accounting principles applied on a basis
                           substantially consistent with the basis for the
                           audited financial statements contained in the
                           Registration Statement;

                                    (B) any other unaudited financial statement
                           data included in the Final Prospectus do not agree
                           with the corresponding items in the unaudited
                           consolidated financial statements from which data was
                           derived and any such unaudited data were not
                           determined on a basis substantially consistent with
                           the basis for the corresponding amounts in the
                           audited financial statements included in the
                           Prospectus;

                                    (C) at a specified date not more than three
                           days prior to the date of delivery of such respective
                           letter, there was any change in the consolidated
                           capital stock, decline in shareholders' equity or
                           increase in long-term debt of the Company and its
                           subsidiaries, or other items specified by the
                           Underwriters, in each case as compared with amounts
                           shown in the latest balance sheets included in the
                           Final Prospectus, except in each case for changes,
                           decreases or increases which the Final Prospectus
                           discloses have occurred or may occur or which are
                           described in such letters; and

                                    (D) for the period from the closing date of
                           the latest consolidated statements of operations
                           included in the Effective Prospectus and the Final
                           Prospectus to a specified date not more than three
                           days prior to the date of delivery of such respective
                           letter, there were any decreases in total revenues or
                           net income of the Company, or other items specified
                           by the Underwriters, or any increases in any items
                           specified by the Underwriters, in each case as
                           compared with the corresponding period of the
                           preceding year, except in each case for decreases
                           which the Final Prospectus discloses have occurred or
                           may occur or which are described in such letter.

                                      -22-
<PAGE>
 
                           (iv) They have carried out certain specified
                  procedures, not constituting an audit, with respect to certain
                  amounts, percentages and financial information specified by
                  you which are derived from the general accounting records of
                  the Company and its subsidiaries, which appear in the
                  Effective Prospectus and the Final Prospectus and have
                  compared and agreed such amounts, percentages financial
                  information with the accounting records of the Company and its
                  subsidiaries or to analyses and schedules prepared by the
                  Company and its subsidiaries from its detailed accounting
                  records.

                  In the event that the letters to be delivered referred to
         above set forth any such changes, decreases or increases, it shall be a
         further condition to the obligations of the Underwriters that the
         Underwriters shall have determined, after discussions with officers of
         the Company responsible for financial and accounting matters and with
         Arthur Andersen LLP, that such changes, decreases or increases as are
         set forth in such letters do not reflect a material adverse change in
         the shareholders' equity or long-term debt of the Company as compared
         with the amounts shown in the latest consolidated balance sheets of the
         Company included in the Final Prospectus, or a material adverse change
         in total revenues or net income, of the Company, in each case as
         compared with the corresponding period of the prior year.

                  (f) There shall have been furnished to you a certificate,
         dated the Closing Date and addressed to you, signed by the Chief
         Executive Officer and by the Chief Financial Officer of the Company to
         the effect that:

                           (i) the representations and warranties of the Company
                  in Section 1 of this Agreement are true and correct, as if
                  made at and as of the Closing Date, and the Company has
                  complied with all the agreements and satisfied all the
                  conditions on its part to be performed or satisfied at or
                  prior to the Closing Date;

                           (ii) the Registration Statement has become effective
                  under the Securities Act and no stop order suspending the
                  effectiveness of the Registration Statement has been issued,
                  and no proceedings for that purpose have been initiated or are
                  pending or, to their knowledge, threatened under the
                  Securities Act;

                           (iii) all filings required by Rules 424, 430A, 434
                  and 462(b), if relied upon by the Company, of the Rules and
                  Regulations have been made;

                           (iv) they have carefully examined the Registration
                  Statement, the Effective Prospectus and the Final Prospectus,
                  and any amendments or supplements thereto, and the
                  Registration Statement and any amendments thereto do not
                  contain any untrue statement of a material fact or omit to
                  state any material fact required to be stated therein or
                  necessary to make the statements therein not misleading, and
                  the Effective Prospectus and the Final Prospectus, and any
                  supplements thereto, do not contain any untrue statement of a
                  material fact or omit to state any material fact required to
                  be stated therein or necessary to make the statements therein,
                  in the light of the circumstances under which they were made,
                  not misleading; and

                           (v) since the effective date of the Registration
                  Statement, there has occurred no event required to be set
                  forth in an amendment or supplement to the Registration

                                      -23-
<PAGE>
 
                  Statement, the Effective Prospectus or the Final Prospectus
                  which has not been so set forth.
    
                  (g) The representations and warranties of the Selling
         Shareholder shall be true and correct as if made at and as of the
         Closing Date, and the Selling Shareholder shall deliver to you a
         certificate to that effect, dated the Closing Date, signed by the 
         Selling Shareholder or such Selling Shareholder's duly appointed
         Attorney-in-Fact.
     
                  (h) Subsequent to the respective dates as of which information
         is given in the Registration Statement and the Final Prospectus, and
         except as stated therein, the Company and its subsidiaries have not
         sustained any material loss or interference with their respective
         businesses or properties from fire, flood, hurricane, accident or other
         calamity, whether or not covered by insurance, or from any labor
         dispute or any court or governmental action, order or decree, or become
         a party to or the subject of any litigation which is material to the
         Company or its subsidiaries, nor shall there have been any material
         adverse change, or any development involving a prospective material
         adverse change, in the business, properties, key personnel,
         capitalization, net worth, results of operations or condition
         (financial or other) of the Company or its subsidiaries, which loss,
         interference, litigation or change, in your judgment shall render it
         inadvisable to commence or continue the offering of the Shares at the
         offering price to the public set forth on the cover page of the
         Prospectus or to proceed with the delivery of the Shares.
    
                  (i) The Shares shall have been approved for listing upon
         notice of issuance on the Nasdaq Stock Market's National Market (or 
         such other trading market as shall be approved by you).
     
                  (j) The Agreements relating to the matters described in
         Sections 2(f) and 5(j) hereof shall be in full force and effect.
    
                  (k) You shall have been furnished by the Company and the
         Selling Shareholder such additional documents and certificates as you
         may reasonably request.

         All such opinions, certificates, letters and documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory to the Representatives and their counsel. The
Company and the Selling Shareholder shall furnish to the Representatives such
conformed copies of such opinions, certificates, letters and documents in such
quantities as the Representatives shall reasonably request.
     
         The respective obligations of the Underwriters to purchase and pay for
the Option Shares shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Shares, except that all references to
the "Closing Date" shall be deemed to refer to the Option Closing Date, if it
shall be a date other than the Closing Date.

         8. INDEMNIFICATION AND CONTRIBUTION.

                  (a) The Company agrees to indemnify and hold harmless each
         Underwriter and each person, if any, who controls any Underwriter
         within the meaning of the Securities Act against any losses, claims,
         damages or liabilities, joint or several, to which such Underwriter or
         controlling person may become subject under the Securities Act or
         otherwise, insofar as such losses, claims, damages or liabilities (or
         actions in respect thereof) arise out of or are based in whole or in
         part 

                                      -24-
<PAGE>
 
         upon (i) any inaccuracy in the representations and warranties of the
         Company contained herein, (ii) any failure of the Company to perform
         their obligations hereunder or under law or (iii) any untrue statement
         or alleged untrue statement of any material fact contained in the
         Registration Statement, any Preliminary Prospectus, the Effective
         Prospectus or Final Prospectus, or any amendment or supplement thereto,
         any audio or visual materials supplied by the Company and used in
         connection with the marketing of the Shares, including without
         limitation, slides, videos, films and tape recordings, or in any Blue
         Sky application or other written information furnished by the Company
         filed in any state or other jurisdiction in order to qualify any or all
         of the Shares under the securities laws thereof (a "Blue Sky
         Application"), or arise out of or are based upon the omission or
         alleged omission to state in the Registration Statement, any
         Preliminary Prospectus, the Effective Prospectus or Final Prospectus or
         any amendment or supplement thereto or any Blue Sky Application a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading, and will reimburse each Underwriter
         and each such controlling person of each Underwriter upon demand for
         any legal or other expenses reasonably incurred by such Underwriter or
         such controlling person of each Underwriter in connection with
         investigating or defending any such loss, claim, damage, liability or
         action as such expenses are incurred, whether or not such Underwriter
         or controlling person is a party to any action or proceeding; provided,
         however, that the Company will not be liable in any such case to the
         extent that any such loss, claim, damage, or liability arises out of or
         is based upon (i) any untrue statement or alleged untrue statement or
         omission or alleged omission made in the Registration Statement, the
         Preliminary Prospectus, the Effective Prospectus or Final Prospectus or
         such amendment or such supplement in reliance upon and in conformity
         with written information furnished to the Company by any Underwriter
         specifically for use therein (it being understood that the only
         information so provided is the information included in the last
         paragraph on the cover page, the paragraph relating to stabilization
         practices on the inside front cover and in the first five paragraphs
         and the last paragraph under the caption "Underwriting" in any
         Preliminary Prospectus and the Final Prospectus and the Effective
         Prospectus) or (ii) the failure of the Underwriters to deliver the
         Final Prospectus after the effective date, as required under Section
         4(3) of the Securities Act and Rule 174 thereunder (provided, that such
         failure to deliver was not the result of the failure of the Company to
         timely supply sufficient quantities of the Final Prospectus to the
         Underwriters upon the Underwriter's reasonable request).
    
                  (b) The Selling Shareholder agrees to indemnify and hold
         harmless each Underwriter and each person, if any, who controls any
         Underwriter within the meaning of the Securities Act against any
         losses, claims, damages or liabilities, joint or several, to which such
         Underwriter or controlling person may become subject under the
         Securities Act or otherwise, insofar as such losses, claims, damages or
         liabilities (or actions in respect thereof) arise out of or are based
         in whole or in part upon (i) any inaccuracy in the representations and
         warranties of such Selling Shareholder contained herein, (ii) any
         failure of such Selling Shareholder to perform his obligations
         hereunder or under law or (iii) any untrue statement or alleged untrue
         statement of any material fact contained in the Registration Statement,
         any Preliminary Prospectus, the Effective Prospectus or Final
         Prospectus, or any amendment or supplement thereto, or in any Blue Sky
         Application or arise out of or are based upon the omission or alleged
         omission to state in the Registration Statement, any Preliminary
         Prospectus, the Effective Prospectus or Final Prospectus or any
         amendment or supplement thereto or any Blue Sky Application a material
         fact required to be stated therein or necessary to make the statements
         therein not misleading, and will reimburse each Underwriter and each
         such controlling person of each Underwriter for any legal or other
         expenses reasonably incurred by such Underwriter or such controlling
         person of each Underwriter in connection with investigating or
         defending any such loss, claim, damage, liability or action as such
         expenses are incurred, provided, however, that the Selling
     
                                      -25-
<PAGE>
 
    
         Shareholder shall only be liable in his capacity as a Selling
         Shareholder pursuant to clause (iii) to the extent that any statements
         in or omissions or alleged omissions to state in the Registration
         Statement, any Preliminary Prospectus, the Effective Prospectus, the
         Final Prospectus or any amendment or supplement thereto are based upon
         written information furnished to the Company by such Selling
         Shareholder specifically for use therein or to the extent such Selling
         Shareholder has failed to bring to the attention of the Underwriters
         anything that has come to the attention of such Selling Shareholder to
         cause such Selling Shareholder to believe that there is any untrue
         statement relating to the Company of any material fact contained in the
         Registration Statement, the Preliminary Prospectus, the Effective
         Prospectus, the Final Prospectus, or any amendment or supplement
         thereto, or any omission to state therein a material fact relating to
         the Company required to be stated therein or necessary to make the
         statements therein not misleading; provided, however, that the Selling
         Shareholder shall not be liable pursuant to clause (iii) to the extent
         that any such loss, claim, damage, or liability arises out of or is
         based upon (a) any untrue statement or alleged untrue statement or
         omission or alleged omission made in the Registration Statement, the
         Preliminary Prospectus, the Effective Prospectus or Final Prospectus or
         such amendment or such supplement in reliance upon and in conformity
         with written information furnished to the Company by any Underwriter
         specifically for use therein (it being understood that the only
         information so provided is the information included in the last
         paragraph on the cover page, the paragraph relating to stabilization
         practices on the inside front cover and the first five paragraphs and
         the last paragraph under the caption "Underwriting" in any Preliminary
         Prospectus and the Final Prospectus and the Effective Prospectus), (b)
         the fourth sentence under the heading "Legal Matters" or (c) the
         failure of the Underwriters to deliver the Final Prospectus after the
         effective date, as required under Section 4(3) of the Securities Act
         and Rule 174 thereunder (provided, that if such failure to deliver was
         the result of the failure of the Company to timely supply sufficient
         quantities of the Final Prospectus to the Underwriters upon the
         Underwriter's reasonable request, then the Company shall indemnify the
         Underwriters and other persons set forth in this Section 8(b) with
         respect to any associated losses, claims, damages or liabilities
         pursuant to Section 8(a) above).       

    
                  (c) Notwithstanding Section 8(b) above, in no event shall the
         liability of the Selling Shareholder under Section 8(b) exceed the net
         proceeds received by such Selling Shareholder from the Underwriters
         with respect to the sale of the Selling Shareholder Shares.       

    
                  (d) Neither the Company nor the Selling Shareholder will,
         without prior written consent of the Representatives, settle or
         compromise or consent to the entry of any judgment in any pending or
         threatened claim, action, suit or proceeding (or related cause of
         action or portion thereof) in respect of which indemnification may be
         sought hereunder (whether or not such Representative is a party to such
         claim, action, suit or proceeding) unless such settlement, compromise
         or consent includes an unconditional release of such Representative
         from all liability arising out of such claim, action, suit or
         proceeding (or related cause of action or portion thereof).       

    
                  (e) Each Underwriter will indemnify and hold harmless the
         Company, each of its directors, each of its officers who signed the
         Registration Statement, and each person, if any, who controls the
         Company within the meaning of the Securities Act and the Selling
         Shareholder against any losses, claims, damages or liabilities to which
         the Company or any such director, officer or controlling person or the
         Selling Shareholder may become subject, under the Securities Act or
         otherwise, insofar as such losses, claims, damages or liabilities (or
         actions in respect thereof) arise out of or are based upon any untrue
         statement or alleged untrue statement of any material fact contained in
         the Registration Statement, any Preliminary Prospectus, the       

                                      -26-

<PAGE>
 
         Effective Prospectus or Final Prospectus, or any amendment or
         supplement thereto, or arise out of or are based upon the omission or
         the alleged omission to state in the Registration Statement, any
         Preliminary Prospectus, the Effective Prospectus or Final Prospectus or
         any amendment or supplement thereto a material fact required to be
         stated therein or necessary to make the statements therein not
         misleading, in each case to the extent, but only to the extent, that
         such untrue statement or alleged untrue statement or omission or
         alleged omission was made in reliance upon and in conformity with
         written information furnished to the Company by any Underwriter
         specifically for use therein (it being understood that the only
         information so provided is the information included in the last
         paragraph on the cover page, the paragraph relating to stabilization
         practices on the inside front cover and the first five paragraphs and
         the last paragraph under the caption "Underwriting" in any Preliminary
         Prospectus and in the Effective Prospectus and the Final Prospectus);

                  (f) Promptly after receipt by an indemnified party under this
         Section 8 of notice of the commencement of any action, including
         governmental proceedings, such indemnified party will, if a claim in
         respect thereof is to be made against the indemnifying party under this
         Section 8, notify the indemnifying party of the commencement thereof;
         but the omission so to notify the indemnifying party will not relieve
         it from any liability which it may have to any indemnified party
         otherwise than under this Section 8. In case any such action is brought
         against any indemnified party and it notifies the indemnifying party of
         the commencement thereof, the indemnifying party will be entitled to
         participate therein, and to the extent that it may wish, jointly with
         any other counsel satisfactory to such indemnified party; and after
         notice from the indemnifying party to such indemnified party of its
         election to so assume the defense thereof, the indemnifying party will
         not be liable to such indemnified party under this Section 8 for any
         legal or other expenses subsequently incurred by such indemnified party
         in connection with the defense thereof other than reasonable costs of
         investigation, except that the indemnified party shall have the right
         to employ separate counsel if, in its reasonable judgment, it is
         advisable for the indemnified party and any other similarly situated
         indemnified party to be represented by separate counsel, and in that
         event the fees and expenses of separate counsel shall be paid by the
         indemnifying party. However, in no event, shall the indemnifying
         parties be liable for fees and expenses of more than one counsel (in
         addition to local counsel, if any) separate from their own counsel for
         all indemnified parties in connection with any action or separate, but
         similar or related, actions arising out of the same general allegations
         or circumstances.

    
                  (g) In order to provide for just and equitable contribution in
         circumstances in which the indemnity agreement provided for in the
         preceding part of this Section 8 is for any reason held to be
         unavailable to the Underwriters, the Company or the Selling
         Shareholder or is insufficient to hold harmless an indemnified party,
         then the Company and the Selling Shareholder shall contribute to the
         damages paid by the Underwriters, and the Underwriters shall contribute
         to the damages paid by the Company and the Selling Shareholder;
         provided, however, that no person guilty of fraudulent
         misrepresentation (within the meaning of Section 11(f) of the
         Securities Act) shall be entitled to contribution from any person who
         was not guilty of such fraudulent misrepresentation. In determining the
         amount of contribution to which the respective parties are entitled,
         there shall be considered the relative benefits received by each party
         from the offering of the Shares (taking into account the portion of the
         proceeds of the offering realized by each), the parties' relative
         knowledge and access to information concerning the matter with respect
         to which the claim was asserted, the opportunity to correct and prevent
         any statement or omission, and any other equitable considerations
         appropriate under the circumstances. The Company and the Selling
         Shareholder and the Underwriters agree that it would not be equitable
         if the amount of such contribution were determined by pro rata or per
         capita allocation (even if the Underwriters were 
     

                                      -27-
<PAGE>
 
    
         treated as one entity for such purpose). No Underwriter or person
         controlling such Underwriter shall be obligated to make contribution
         hereunder which in the aggregate exceeds the underwriting discount
         applicable to the Shares purchased by such Underwriter under this
         Agreement, less the aggregate amount of any damages which such
         Underwriter and its controlling persons have otherwise been required to
         pay in respect of the same or any similar claim. The Underwriters'
         obligations to contribute hereunder are several in proportion to their
         respective underwriting obligations and not joint. For purposes of this
         Section, each person, if any, who controls an Underwriter within the
         meaning of Section 15 of the Securities Act shall have the same rights
         to contribution as such Underwriter, and each director of the Company,
         each officer of the Company who signed the Registration Statement, and
         each person, if any, who controls the Company within the meaning of
         Section 15 of the Securities Act, and the Selling Shareholder shall
         have the same rights to contribution as the Company.       

    
                  (h) The obligations of the Company and the Selling
         Shareholder under this Section 8 shall be in addition to any liability
         which the Company and the Selling Shareholder may otherwise have and
         shall extend, upon the same terms and conditions, to each person, if
         any, who controls any Underwriter within the meaning of the Securities
         Act; and the obligations of the Underwriters under this Section 8 shall
         be in addition to any liability which the respective Underwriters may
         otherwise have and shall extend, upon the same terms and conditions, to
         each officer and director of the Company and to each person, if any,
         who controls the Company within the meaning of the Securities Act and
         to the Selling Shareholder.       

    
         9. DEFAULT OF UNDERWRITERS. If any Underwriter defaults in its
obligation to purchase Shares hereunder and if the total number of Shares which
such defaulting Underwriter agreed but failed to purchase is ten percent or less
of the total number of Shares to be sold hereunder, the non-defaulting
Underwriters shall be obligated severally to purchase (in the respective
proportions which the number of Shares set forth opposite the name of each
non-defaulting Underwriter in Schedule I hereto bears to the total number of
Shares set forth opposite the names of all the non-defaulting Underwriters) the
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase. If any Underwriter so defaults and the total number of Shares with
respect to which such default or defaults occur is more than ten percent of the
total number of Shares to be sold hereunder, and arrangements satisfactory to
the other Underwriters, the Company and the Selling Shareholder for the
purchase of such Shares by other persons (who may include the non-defaulting
Underwriters) are not made within 36 hours after such default, this Agreement,
insofar as it relates to the sale of the Shares, will terminate without
liability on the part of the non-defaulting Underwriters, the Company or the
Selling Shareholder except for (i) the provisions of Section 8 hereof, and (ii)
the expenses to be paid or reimbursed by the Company pursuant to Section 6
hereof. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 9. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.       

    
         10. DEFAULT BY THE SELLING SHAREHOLDER. If the Selling Shareholder
shall fail to sell the number of Selling Shareholder Shares that the Selling
Shareholder is obligated to sell, the Representatives may, at their option, by
notice to the Company, either (a) require the Company to sell and deliver the
number of Selling Shareholder Shares as to which the Selling Shareholder has
defaulted or such lesser number as may be requested by the Representatives, (b)
elect to purchase the Firm Shares that the Company has agreed to sell pursuant
to this Agreement, or (c) terminate this Agreement without liability on the part
of the Underwriters or the Company, except for the provisions of Section 8
hereof and the expenses to be paid or reimbursed by the Company pursuant to
Section 6 hereof.       

                                      -28-
<PAGE>
 
    
         In the event of a default under this Section 10 that does not result in
the termination of this Agreement, the Representatives shall have the right to
postpone the First Closing Date or Option Closing Date for a period not
exceeding ten days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. No action
taken pursuant to this Section shall relieve the Company or the Selling
Shareholder from liability, if any, in respect of such default.       

    
         11. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, the Selling Shareholder and the Underwriters set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, the Selling Shareholder, any Underwriter or any controlling person,
and(ii) delivery of and payment for the Shares. The respective representations,
warranties, agreements, covenants, indemnities and other statements set forth in
Sections 1, 2, 5 (other than paragraphs (c) and (m)), 6 and 8 hereof shall
remain in full force and effect, regardless of any termination of this
Agreement.       

         12. EFFECTIVE DATE. This Agreement shall become effective at whichever
of the following times shall first occur: (i) at 11:30 a.m., Eastern Time, on
the next full business day following the date on which the Registration
Statement becomes effective or (ii) at such time after the Registration
Statement has become effective as the Representatives shall release the Firm
Shares for sale to the public; provided, however, that the provisions of
Sections 6, 8, 11 and 12 hereof shall at all times be effective. For purposes of
this Section 12, the Firm Shares shall be deemed to have been so released upon
the release by the Representatives for publication, at any time after the
Registration Statement has become effective, of any newspaper advertisement
relating to the Firm Shares or upon the release by the Representatives of
telegrams offering the Firm Shares for sale to securities dealers, whichever may
occur first.

         13. TERMINATION.

         (a) This Agreement may be terminated by the Company by notice to the
Representatives at any time before it becomes effective in accordance with
Section 12 hereof.

    
         (b) This Agreement may be terminated by the Representatives by notice
to the Company and the Selling Shareholder (i) at any time before it becomes
effective in accordance with Section 12 hereof; (ii) in the event that at or
prior to the First Closing Date the Company or the Selling Shareholder shall
have failed, refused or been unable to perform any agreement on the part of the
Company or the Selling Shareholder to be performed hereunder (or any other
condition to the obligations of the Underwriters hereunder is not fulfilled);
(iii) if at or prior to the Closing Date trading in securities on the New York
Stock Exchange or the Nasdaq National Market (or such other trading market as
shall be approved by you) shall have been suspended or materially limited or
minimum prices shall have been established on the New York Stock Exchange or the
Nasdaq National Market (or such other trading market as shall be approved by
you), or a banking moratorium shall have been declared by Federal or state
authorities; (iv) if at or prior to the Closing Date trading in securities of
the Company shall have been suspended; or (v) if there shall have been such a
material change in general economic, political or financial conditions or if the
effect of international conditions on the financial markets in the United States
shall be such as, in your reasonable judgment, makes it inadvisable to commence
or continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to proceed with the delivery of the
Shares.       

                                      -29-
<PAGE>
 
                  (c)  Termination of this Agreement pursuant to this
Section 13 shall be without liability of any party to any other party other than
as provided in Sections 6 and 8 hereof.

    
         14. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to the Representatives in care of J. C. Bradford & Co., One
Buckhead Plaza, 3060 Peachtree Rd. NW, Suite 1200, Atlanta, Georgia 30305,
Attention: Kip R. Caffey, or, if sent to the Company or the Selling Shareholder,
shall be mailed, delivered or telegraphed and confirmed in writing to the
Company at 3150 Holcomb Bridge Road, Suite 200, Norcross, Georgia 30071,
Attention: John W. Collins.       

    
         15. MISCELLANEOUS. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company, the Selling Shareholder and
their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Company, the Selling
Shareholder and the several Underwriters and for the benefit of no other person
except that (i) the representations and warranties of the Company and the
Selling Shareholder contained in this Agreement shall also be for the benefit
of any person or persons who control any Underwriter within the meaning of
Section 15 of the Securities Act, and (ii) the indemnities by the Underwriters
shall also be for the benefit of the directors of the Company, officers of the
Company who have signed the Registration Statement and any person or persons who
control the Company within the meaning of Section 15 of the Securities Act. No
purchaser of Shares from any Underwriter will be deemed a successor because of
such purchase. The validity and interpretation of this Agreement shall be
governed by the laws of the State of Tennessee. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. You hereby
represent and warrant to the Company that you have authority to act hereunder on
behalf of the several Underwriters, and any action hereunder taken by you will
be binding upon all the Underwriters.       

                                      -30-
<PAGE>
 
     
         If the foregoing is in accordance with your understanding of our
agreement, please indicate your acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between the Company, the Selling Shareholder and each of the several
Underwriters.     

                                    Very truly yours,

                                    THE INTERCEPT GROUP, INC.

                                    By:
                                       -----------------------------------
                                             Name:    John W. Collins
                                             Title:   Chairman and CEO


    
                                    SELLING SHAREHOLDER     

                                    By:
                                       -----------------------------------
                                                Attorney-in-Fact

Confirmed and accepted as of the date first above written.

J. C. BRADFORD & CO.
WHEAT FIRST SECURITIES, INC.
For themselves and as Representatives
of the Several Underwriters

By:      J. C. Bradford & Co.

By:
   ---------------------------------------
         (Authorized Representative)

                                      -31-
<PAGE>
 
     
                                   SCHEDULE I

                                  UNDERWRITERS

                                                           NUMBER OF OPTION
                                     NUMBER OF          SHARES TO BE PURCHASED
                                    FIRM SHARES               IF MAXIMUM
UNDERWRITER                       TO BE PURCHASED          OPTION EXERCISED
- -----------                       ---------------       -----------------------
J. C. Bradford & Co.
Wheat First Securities, Inc.





                                     ---------                    -------
         TOTAL                       2,387,500                    358,125
                                     =========                    =======
     
<PAGE>
 
                                   SCHEDULE II
    
                        SCHEDULE OF SELLING SHAREHOLDER
                                   FIRM SHARES


                                             NUMBER OF FIRM SHARES
SELLING SHAREHOLDER:                               TO BE SOLD
- --------------------                         ---------------------  
Vir A. Nanda                                        137,500




         TOTAL                                     137,500
                                                   =======
     

<PAGE>
 
                                                                    EXHIBIT 23.1

        As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of
Registration Statement File No. 333-47197.

                                /s/ ARTHUR ANDERSEN LLP

Atlanta, GA
    
June 1, 1998     



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