INSURANCE MANAGEMENT SOLUTIONS GROUP INC, 424B4, 1999-02-11

INSURANCE MANAGEMENT SOLUTIONS GROUP INC
424B4, 1999-02-11
FIRE, MARINE & CASUALTY INSURANCE

Previous: CATAPULT COMMUNICATIONS CORP, 424B1, 1999-02-11

Next: WEST ESSEX BANCORP INC, POS AM, 1999-02-11

<PAGE> 1
Filed Pursuant to Rule 424(b)(4)
Registration No. 333-57747

PROSPECTUS

3,350,000 SHARES

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (LOGO)

COMMON STOCK

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

Of the 3,350,000 shares of Common Stock offered hereby, 2,000,000 shares
are being issued and sold by Insurance Management Solutions Group, Inc. ("IMSG"
or the "Company") and 1,350,000 shares are being sold by Venture Capital
Corporation (the "Selling Shareholder"). The Company will not receive any
proceeds from the sale of Common Stock by the Selling Shareholder. See "Use of
Proceeds" and "Principal and Selling Shareholders."

Prior to this offering, there has been no public market for the Common
Stock. See "Underwriting" for a discussion of the factors considered in
determining the initial public offering price.

The Common Stock has been approved for inclusion on the Nasdaq National
Market under the symbol "INMG".
------------------------

SEE "RISK FACTORS" ON PAGES 5 THROUGH 11 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------

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.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDER
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........................ $11.00 $0.77 $10.23 $10.23
- ----------------------------------------------------------------------------------------------------------------------
Total(3)......................... $36,850,000 $2,579,500 $20,460,000 $13,810,500
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company, its principal shareholder Bankers Insurance Group, Inc., 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 expenses, estimated at $1,000,000, payable by the Company.
(3) The Company and the Selling Shareholder have granted the Underwriters a
30-day option to purchase up to 502,500 additional shares of Common Stock on
the same terms and conditions set forth above to cover over-allotments, if
any. If the Underwriters exercise the over-allotment option in full, the
total Price to Public will be $42,377,500, the total Underwriting Discounts
and Commissions will be $2,966,425, the total Proceeds to Company will be
$23,529,000 and the total Proceeds to the Selling Shareholder will be
$15,882,075. See "Underwriting."
------------------------

The shares of Common Stock are offered by the several Underwriters subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
certain other conditions, including the right of the Underwriters to withdraw,
cancel, modify or reject any order in whole or in part. It is expected that
delivery of the shares will be made on or about February 17, 1999, at the
offices of Raymond James & Associates, Inc., St. Petersburg, Florida.

RAYMOND JAMES & ASSOCIATES, INC. KEEFE, BRUYETTE & WOODS, INC.

The date of this Prospectus is February 10, 1999.
<PAGE> 2

[COVER FLAP]

<TABLE>
<S> <C> <C> <C>
PROPERTY & CASUALTY FINANCIAL
INSURANCE PRODUCERS INSTITUTIONS
</TABLE>

<TABLE>
<S> <C> <C> <C>
INSURANCE
MANAGEMENT
SOLUTIONS
GROUP [LOGO]

OUTSOURCING SERVICES

[PICTURE [COLLAGE [COLLAGE [COLLAGE
OF OF OF OF
A MAN AND TWO CAR, FLOODED TWO MEN AND A A HAND ON A
WOMEN HOUSE, WOMAN COMPUTER
VIEWING A BURNING HOME WORKING, AND A MOUSE,
COMPUTER AND HAND HOLDING A CLOCK,
SCREEN] A TELEPHONE] A MEASURING AND A
COMPASS, CALENDAR]
ALL OVERLAYING
A CLOCK]

POLICY CLAIMS FLOOD ZONE INFORMATION
ADMINISTRATION ADMINISTRATION DETERMINATIONS TECHNOLOGY
</TABLE>

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING TRANSACTIONS,
OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
<PAGE> 3

[INSIDE SPREAD LEFT]

IMSG OFFERS PROPERTY & CASUALTY PRODUCERS:

- Reduced overhead

- Cost-effective technology

- Fast, economic expansion of product lines

- Enhanced customer service

- Increased speed of product delivery

- Accounting and regulatory reporting

- Freedom to focus on strategic planning

IMSG OFFERS FINANCIAL INSTITUTIONS:

- Flood zone determinations

- Opportunities to add profit centers in
new lines of business

- A simplified flood compliance regulation
process

- Loan portfolio protection

- Increased speed of product delivery

OTHER POTENTIAL MARKETS INCLUDE:

- General Agencies

- Virtual Insurance Companies

- Governmental Agencies

- Lending Institutions

- Windpools

- Related Affinity Groups

<TABLE>
<S> <C>
INSURANCE
[LOGO] MANAGEMENT
SOLUTIONS
GROUP
</TABLE>

COMPREHENSIVE
OUTSOURCING
SERVICES

FOR

INSURANCE
PRODUCERS

FINANCIAL
INSTITUTIONS
<PAGE> 4

[INSIDE SPREAD RIGHT]

IMSG: RESOURCES FOR STRATEGIC INSURANCE MANAGEMENT

FLOOD, HOMEOWNERS & AUTOMOBILE INSURANCE PROGRAMS
- Comprehensive Policy Administration
- Experienced Claims Administration & Customer Service
- Integrated Technological Systems & Software
- Private Label Insurance Products
[Collage of a flood zone map, a hand - Flood Catastrophe Assistance
holding a measuring compass, a clock, a - Marketing & Advertising Support
car, a burning house, a flooded house, - Agent Training & Educational Courses
and two men and one woman working] - Financial & Statistical Reporting
FLOOD ZONE DETERMINATIONS
- Life-of-Loan Flood Compliance Tracking
- Force-placed Flood Insurance
- Database representing 85% of all U.S. Households
- National Flood Zone Database on CD ROM
</TABLE>
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. As used herein, the "Company" means Insurance
Management Solutions Group, Inc. and its wholly-owned subsidiaries, Insurance
Management Solutions, Inc., Geotrac of America, Inc. (formerly Bankers Hazard
Determination Services, Inc.) ("Geotrac"), IMS Direct, Inc., and Colonial Claims
Corporation, unless the context otherwise requires. Unless otherwise indicated,
the information in this Prospectus (i) reflects a one-for-two reverse split of
the Common Stock effected December 17, 1998, (ii) reflects the consummation of
the Company's acquisition (the "Geotrac Acquisition") of Geotrac, Inc. ("Old
Geotrac"), including the issuance of 524,198 shares of Common Stock pursuant
thereto, and (iii) assumes that the Underwriters' over-allotment option will not
be exercised. See "Recent Acquisitions" and "Underwriting."

THE COMPANY

The Company provides (1) comprehensive policy and claims outsourcing
services to the property and casualty ("P&C") insurance industry, with an
emphasis on providing these services to the flood insurance market, and (2)
flood zone determinations to financial institutions, mortgage lenders and
insurance companies. The Company's outsourcing services, which are offered on
either a bundled or "a la carte" basis, include policy administration, claims
administration and information technology services. The Company processed
approximately 575,000 and an estimated 667,000 insurance policies during the
twelve months ended September 30, 1997 and the nine months ended September 30,
1998, respectively (including approximately 450,000 and an estimated 540,000
flood insurance policies, respectively), making it a significant provider of
flood insurance outsourcing services. The Company provides outsourcing services
to its affiliate, Bankers Insurance Group, Inc. (together with its subsidiaries,
"BIG"), Mobile USA Insurance Company, Inc. and AAA Auto Club South Insurance
Company, as well as to insurance companies that offer flood insurance utilizing
BIG as their private label servicing carrier, such as Armed Forces Insurance
Corporation and AMICA Mutual Insurance Company. In conjunction with BIG, the
Company is able to offer insurance companies the ability to create a turnkey
private label flood insurance product. The Company believes this product is
attractive to insurance companies that desire to offer flood insurance but are
not approved by the Federal Emergency Management Agency ("FEMA") to sell and
service flood insurance. FEMA estimates that only 25% to 33% of U.S. properties
in high risk areas that are required to be covered by flood insurance are in
fact covered. Accordingly, the Company anticipates continued growth in the
demand for flood insurance and related flood outsourcing and flood zone
determination services over the next several years.

During 1997 and the nine months ended September 30, 1998, the Company
processed approximately 1.4 million and 1.2 million flood zone determinations,
respectively, for over 725 and 880 customers, respectively, including mortgage
lenders such as ABN Amro North America, Inc., and P&C insurance companies such
as Allendale Mutual Insurance Company and Wausau Underwriters Insurance Company.
Flood insurance is required by federal law in connection with virtually all
residential mortgage loans, including refinancing loans, covering properties
located within federally designated high-risk flood zones. A flood zone
determination is necessary in order to ascertain a property's flood zone
classification. In addition, due to more stringent underwriting criteria, P&C
insurers increasingly require flood zone determinations prior to issuing
commercial property policies. The Company uses its proprietary database,
compiled and digitized from flood maps maintained and distributed by FEMA, to
determine whether a particular property or structure is located within a flood
zone classification that requires flood insurance. The Company estimates that
over 85% of U.S. households are located in counties covered by its electronic
database.

The Company is a 74.4% owned subsidiary of BIG, a holding company chartered
in Florida in 1976. BIG provides multiple lines of P&C insurance, most notably
flood, homeowners and automobile insurance, to individuals and businesses
throughout the United States. From 1993 to 1997, BIG's total written premiums
grew from $113.7 million to $259.0 million, representing annual growth rates of
14.8%, 22.5%, 46.8% and 10.4%, respectively, and a compound annual growth rate
of 22.8%. BIG is the largest underwriter of flood insurance policies through
independent agents (and the second largest overall) in the United States. Upon
completion of this offering, BIG will beneficially own 62.7% of the Company's
Common Stock. BIG is the Company's principal customer, accounting for
approximately 75.6% (on a historical basis) and 56.4% (on a pro forma basis) of
the Company's total revenues and 98.0% (on both a historical basis and a pro
forma basis) of the Company's outsourcing revenues in 1997, and 56.2% and 96.8%
of the Company's total revenues and outsourcing revenues, respectively, for the
nine months ended September 30, 1998. See "Risk Factors -- Reliance on Key
Customer."

1
<PAGE> 6

The Company's principal growth strategies include (1) expanding the
Company's flood outsourcing business by (i) marketing flood outsourcing services
to existing carriers approved by FEMA, (ii) offering its outsourcing services to
potential new entrants into the flood insurance market, and (iii) marketing its
ability, in conjunction with BIG, to provide and service a private label
insurance product to insurance companies that desire to offer flood insurance
but are not approved by FEMA to sell and service flood insurance, (2) expanding
the Company's existing relationships with flood insurance outsourcing and flood
zone determination customers to generate additional outsourcing business, (3)
focusing on maximizing the Company's existing economies of scale to provide
customers with more cost-effective services, and continuing to expand such
efficiencies through greater utilization of the Company's existing
infrastructure and databases, (4) expanding the Company's direct sales force and
developing strategic relationships with other service providers, (5) generating
recurring revenues by providing services based on long-term contractual
relationships or based upon events which occur frequently in the course of a
customer's business, and (6) pursuing strategic acquisitions that offer
opportunities to increase market share or expand the Company's menu of
outsourcing services. The principal costs associated with implementing these
growth strategies include (i) compensation and overhead expenses associated with
establishing a direct sales team, (ii) expenses associated with implementing a
marketing program, (iii) incremental depreciation and amortization expense
associated with maintaining technological competency in the Company's principal
business segments and (iv) legal, accounting, due diligence and similar costs
and expenses incurred in connection with prospective acquisitions. See
"Business -- Growth Strategy."

The Company is a holding company that was incorporated in the State of
Florida in December, 1996 by BIG, which contributed to the Company two of its
wholly-owned operating subsidiaries, Insurance Management Solutions, Inc.
("IMS") and Bankers Hazard Determination Services, Inc. ("BHDS"), that were
previously formed in August, 1991 and June, 1988, respectively.

The Company's principal executive offices are located at 360 Central
Avenue, St. Petersburg, Florida 33701, and its telephone number is (727)
803-2040.

THE OFFERING

Common Stock offered by the
Company.................. 2,000,000 shares (1)

Common Stock offered by the
Selling Shareholder...... 1,350,000 shares (1)

Common Stock to be
outstanding after the
Offering................. 12,678,743 shares (1)(2)

Use of Proceeds............ To repay outstanding indebtedness, to fund capital
expenditures for upgraded technology and for
general corporate purposes, including working
capital and possible acquisitions. See "Use of
Proceeds."

Proposed Nasdaq National
Market Symbol............ INMG
- ---------------

(1) Excludes up to 300,000 shares and 202,500 shares that may be sold by the
Company and the Selling Shareholder, respectively, pursuant to the
Underwriters' over-allotment option. See "Underwriting."
(2) Includes 154,545 shares of Common Stock issued in connection with the
acquisition of Colonial Catastrophe Claims Corporation, and excludes (a)
875,000 shares of Common Stock reserved for issuance under the Company's
Long Term Incentive Plan, pursuant to which options to purchase 505,500
shares will be granted immediately upon the completion of this offering, (b)
200,000 shares of Common Stock reserved for issuance under the Company's
Non-Employee Directors' Stock Option Plan, pursuant to which options to
purchase 24,000 shares will be granted immediately upon completion of this
offering, and (c) 125,000 shares of Common Stock reserved for issuance under
the Company's Non-Qualified Stock Option Plan, pursuant to which options to
purchase 125,000 shares will be granted immediately upon the completion of
this offering. See "Recent Acquisitions -- Colonial Catastrophe
Acquisition," "Management -- Long Term Incentive Plan," "-- Non-Employee
Directors' Stock Option Plan" and "-- Non-Qualified Stock Option Plan."

2
<PAGE> 7

SUMMARY HISTORICAL AND PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The historical information presented for the years ended December 31, 1995,
1996 and 1997 was derived from the audited consolidated financial statements of
the Company. The historical information presented as of September 30, 1998 and
for the nine months ended September 30, 1997 and 1998 was derived from the
unaudited consolidated financial information of the Company. With respect to the
unaudited financial information, the Company is of the opinion that all material
adjustments, consisting only of normal recurring adjustments, necessary for the
fair presentation of the Company's interim results of operations have been
included. The pro forma condensed consolidated financial data are based on
assumptions and adjustments described in the notes to the pro forma condensed
consolidated financial statements and are not necessarily indicative of the
results of operations that may be achieved in the future. The information set
forth below should be read in conjunction with "Selected Consolidated Financial
Data of the Company," "Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company," the Company's Consolidated
Financial Statements and the Company's Pro Forma Condensed Consolidated
Statements of Income (unaudited). The results of operations presented below are
not necessarily indicative of the results of operations that may be achieved in
the future.

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------------ ---------------------------------------
PRO PRO PRO
FORMA FORMA FORMA
1995 1996 1997 1997(1) 1997 1998 1997(1) 1998(1)
------ ------- ------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Outsourcing services
revenues.................. $3,444 $ 5,125 $29,714 $30,577 $22,177 $27,508 $23,113 $27,508
Flood zone determination
services revenues......... 5,127 7,705 8,792 22,600 6,582 19,865 16,912 19,865
------ ------- ------- ------- ------- ------- ------- -------
Total revenues............ 8,571 12,830 38,506 53,177 28,759 47,373 40,025 47,373
Operating expenses.......... 8,083 11,742 32,806 46,242 24,331 40,259 35,055 39,607
Operating income............ 488 1,088 5,700 6,935 4,428 7,114 4,970 7,766
Net income.................. 254 617 3,410 4,008 2,528 2,907 3,141 3,664
Net income per common
share..................... $ .03 $ .06 $ .34 $ .38 $ .25 $ .29 $ .30 $ .35
====== ======= ======= ======= ======= ======= ======= =======
Weighted average common
shares outstanding........ 10,000 10,000 10,000 10,524 10,000 10,177 10,524 10,524
====== ======= ======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------
ACTUAL AS ADJUSTED(2)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)................................ $(4,969) $ 8,684
Total assets................................................ 47,021 43,659
Long-term debt, less current portion........................ 8,216 6,800
Notes payable -- affiliates, less current portion........... 5,891 1,500
Total shareholders' equity.................................. 7,744 27,204
</TABLE>

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

3
<PAGE> 8

(2) As adjusted to reflect (i) the application of the net proceeds to be
received by the Company from the issuance and sale of 2,000,000 shares of
Common Stock offered hereby by the Company, after deducting underwriting
discounts and commissions and estimated offering expenses payable by the
Company, and (ii) settlement or satisfaction of intercompany accounts from
funds made available to BIG by a loan from a subsidiary of the Selling
Shareholder, using a portion of the net proceeds of this offering received
by the Selling Shareholder. Does not reflect the issuance of 154,545 shares
of Common Stock in connection with the acquisition of Colonial Catastrophe
Claims Corporation. See "Recent Acquisitions -- Colonial Catastrophe
Acquisition," "Use of Proceeds" and "Capitalization."

4
<PAGE> 9

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should consider carefully the following
risk factors, as well as the other information set forth in this Prospectus, in
evaluating an investment in the Common Stock offered hereby.

This Prospectus contains statements that constitute forward-looking
statements. All statements other than statements of historical facts included in
this Prospectus, including without limitation statements set forth under
"Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of Operations of the
Company," "Management's Discussion and Analysis of Financial Condition and
Results of Operations of Geotrac" and "Business," regarding the Company's
financial position, business strategy and plans and objectives of management of
the Company for future operations, are forward-looking statements. When used in
this Prospectus, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to the Company or its
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of the Company's management as well as assumptions made
by and information currently available to the Company's management. Actual
results could differ materially from those contemplated by the forward-looking
statements as a result of certain factors, such as those disclosed under "Risk
Factors," including but not limited to the Company's reliance on a key customer,
dependence on economic and other factors, fluctuations in operating results,
changes in legal and regulatory requirements, integration of the Geotrac
Acquisition, conflicts of interest, and matters set forth elsewhere in this
Prospectus. Such statements reflect the current views of the Company with
respect to future events and are subject to those and other risks, uncertainties
and assumptions relating to the operations, results of operations, growth
strategy and liquidity of the Company. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this paragraph.

RELIANCE ON KEY CUSTOMER

The Company derives a substantial portion of its revenues from outsourcing
services provided to its principal shareholder, BIG. For the years ended
December 31, 1995, 1996, 1997 and 1997 (pro forma), and the nine months ended
September 30, 1998, revenues from services provided to BIG accounted for
approximately 40%, 37%, 76%, 56% and 56%, respectively, of the Company's total
revenues and approximately 100%, 93%, 98%, 98% and 97%, respectively, of the
Company's revenues from outsourcing services. The Company has entered into
contracts with BIG pursuant to which it will continue to provide administrative
services to BIG. See "Certain Transactions -- Service Agreements." The Company's
future financial condition and results of operations will depend to a
significant extent upon the commercial success of BIG and its continued
willingness to utilize the Company's services. Any significant downturn in the
business of BIG or its commitment to utilize the Company's services could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Customers."

DEPENDENCE ON ECONOMIC AND OTHER FACTORS; FLUCTUATIONS IN QUARTERLY OPERATING
RESULTS

The Company's business is dependent upon various factors, such as general
economic conditions and weather patterns, that are beyond its control. For
example, the demand for flood zone determinations by lenders and their customers
is directly related to the affordability of mortgage financing and refinancing.
Current interest rates are relatively low and therefore conducive to a higher
volume of mortgage lending and flood zone determinations. An increase in
interest rates could have a negative impact on mortgage lending and consequently
also on the level of flood zone determinations requested. Fluctuations in
interest rates will likely produce fluctuations in the Company's quarterly
earnings and operating results. Likewise, natural disasters such as hurricanes,
tornadoes, and floods, all of which are unpredictable, directly impact the
demand for both the Company's outsourcing, particularly claims outsourcing, and
flood zone determination services.

5
<PAGE> 10

REGULATORY INVESTIGATIONS

Bankers Insurance Company ("BIC"), a subsidiary of BIG, is currently
subject to an investigation by the Florida Department of Insurance (the "DOI"),
the principal regulator of insurance activities in the State of Florida,
stemming from BIC's use of a private investigator to gather information on a DOI
employee and the private investigator's unauthorized use of illegal wiretaps in
connection therewith. In addition, BIC and certain of its employees (one of whom
is now an officer of IMS and several of whom are now employees of the Company)
have been subpoenaed on behalf of FEMA to produce documentation or testify in
connection with its investigation of certain cash management and claims
processing practices of BIC. BIC is currently involved in discussions relating
to the resolution of certain matters raised in the investigation. If the parties
are unable to reach agreement in these matters, the United States could file
suit under the False Claims Act and/or various common law and equitable
theories. In the event either or both of these investigations or any consequence
thereof materially adversely affects the business or operations of BIC, it could
result in the loss of, or material decrease in, the Company's business from BIC,
which would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Legal Proceedings."

GOVERNMENT REGULATION

As a provider of policy and claims processing to the flood insurance
industry, the Company is subject to extensive and continuously changing
guidelines of the Federal Insurance Administration. No assurance can be given
with respect to the extent to which the Company may become subject to regulation
in the future, the ability of the Company to comply with any such regulation,
the cost of compliance or an abrupt change in the overall concept or delivery of
the flood insurance product on behalf of the federal government. Moreover, if
the federal government were to curtail the current federal flood program, it
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Market Opportunities."

The P&C insurance industry is subject to extensive regulation by state
governments. Because the Company markets and sells its services to P&C insurers,
certain aspects of the Company's business are affected by such regulation. The
Company must continuously update its software to reflect changes in regulations.
In addition, changes in regulations that adversely affect the Company's existing
and potential customers could have a material adverse effect on the Company's
business, financial condition and results of operations. Although the Company's
services are not directly subject to insurance regulations in the states where
the Company currently provides such services, the Company's outsourcing services
may be subject to insurance regulations in states where the Company may do
business in the future. Such regulations could require the Company to obtain a
license as a managing general agent or third-party administrator. Failure to
perform in accordance with state regulations could result in the loss of
significant insurance clients. No assurance can be given with respect to the
extent to which the Company may become subject to regulation in the future, the
ability of the Company to comply with any such regulation, or the cost of
compliance.

INTEGRATION OF GEOTRAC ACQUISITION

On July 31, 1997 the Company acquired a 49% equity interest in Old Geotrac.
In July, 1998, the Company acquired the remaining 51% equity interest in Old
Geotrac. The Company is in the process of consolidating its existing flood zone
determination operations with those of Old Geotrac in an effort to realize
economies of scale. There can be no assurance, however, that the Company will be
able to integrate the operations of Old Geotrac with its own operations, or that
such economies of scale will be realized. The failure to successfully integrate
its own operations with those of Old Geotrac could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Recent Acquisitions -- Geotrac Acquisition."

CONTROL BY PRINCIPAL SHAREHOLDER; CONFLICTS OF INTEREST

Prior to this offering, BIG owned approximately 74.4% of the outstanding
shares of Common Stock. After this offering, BIG will own 62.7% of the
outstanding shares of Common Stock. As a result, BIG will continue to be able to
elect the Company's directors and determine the outcome of other matters
requiring shareholder

6
<PAGE> 11

approval. BIG's ultimate parent, Bankers International Financial Corporation,
Ltd., is wholly owned by a discretionary charitable trust. David K. Meehan, the
Company's Chairman of the Board, President and Chief Executive Officer, and
Robert M. Menke and Robert G. Menke, directors of the Company, presently serve
on the board of directors of a corporation that possesses discretionary power
with respect to this trust to (i) direct the trustee to appoint the trust fund
to another trust for the benefit of one or more of the beneficiaries of the
trust and (ii) remove the trustee and appoint one or more new trustees. This
corporation possesses the same discretionary powers with respect to a
discretionary charitable trust that wholly owns the Selling Shareholder. See
"Principal and Selling Shareholders."

The ownership by BIG of shares of Common Stock after this offering may
discourage or prevent unsolicited mergers, acquisitions, tender offers, proxy
contests or changes of incumbent management, even when shareholders other than
BIG consider such a transaction or event to be in their best interests.
Accordingly, holders of Common Stock may be deprived of an opportunity to sell
their shares at a premium over the trading price of the shares.

Certain officers and directors of the Company, including David K. Meehan,
the Company's Chairman of the Board, President and Chief Executive Officer, also
serve as officers and directors of BIG. Effective as of the completion of this
offering, certain of these officers and directors will resign from their
positions with BIG. However, Mr. Meehan will continue to serve as Vice Chairman
of the Board of Directors of BIG, Robert M. Menke will continue to serve as
President and Chairman of the Board of Directors of BIG, and Robert G. Menke
will continue to serve as Executive Vice President of BIG. In addition, as
described below, the Company will continue to have a variety of contractual
relationships with BIG. As the interests of the Company and BIG may differ,
Messrs. Meehan, Robert M. Menke and Robert G. Menke may face certain conflicts
of interests. See "Principal and Selling Shareholders" and "Certain
Transactions."

The Company's relationship with BIG is governed by various agreements,
including (i) an administration services agreement pursuant to which BIG
provides benefits administration, cash management, and certain limited
accounting and legal services to the Company, (ii) service agreements pursuant
to which the Company provides policy and claims administration services for BIG,
(iii) lease agreements pursuant to which BIG leases certain facilities to the
Company, and (iv) an employee leasing agreement pursuant to which BIG leases
certain of its employees to the Company. The agreements generally are intended
to maintain the relationship between the Company and BIG in a manner consistent
in material respects with past practice, except that certain changes in the fee
structure for the Company's services have been implemented and the Company does
not anticipate receiving any loans or capital contributions from BIG following
this offering. None of these agreements resulted from arm's-length negotiations
and, as a result, the terms of such agreements may be more or less favorable to
the Company than could be obtained from an independent third party. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company" and "Certain Transactions."

RIGHTS OF FORMER GEOTRAC SHAREHOLDER

The Company has entered into a Corporate Governance Agreement with Geotrac
and Daniel J. White setting forth certain terms and conditions pertaining to the
operation of Geotrac following the Geotrac Acquisition. The Corporate Governance
Agreement provides, in part, that for so long as Mr. White is a shareholder of
the Company or Geotrac or has an option to purchase Geotrac stock, (i) the
Company will vote all of its shares of Geotrac stock to fix and maintain the
number of Geotrac directors at five, (ii) the Company will vote its shares of
Geotrac stock to elect as directors of Geotrac two persons designated by Mr.
White, (iii) Mr. White's termination as a Geotrac employee will require the vote
of four out of five members of the Board of Directors, and (iv) certain actions
by Geotrac will require the unanimous approval of the Geotrac Board of
Directors, including any merger or consolidation, the payment of management or
similar fees to the Company, or its subsidiaries or affiliates, the sale or
issuance of Geotrac stock, and the sale of Geotrac assets outside the ordinary
course of business to anyone other than an affiliate of Geotrac. Mr. White also
has a right of first refusal to purchase the assets of Geotrac in the event such
assets are to be sold. The Corporate Governance Agreement therefore allows Mr.
White to block certain transactions involving Geotrac even if such transactions
are approved by all of the other directors of Geotrac and may be in the best
interest of the
7
<PAGE> 12

Company and its shareholders. Mr. White is a director and shareholder of the
Company. See "Management," "Principal and Selling Shareholders" and "Certain
Transactions -- Geotrac Transactions."

DEPENDENCE ON SENIOR MANAGEMENT

The success of the Company is largely dependent upon the efforts, direction
and guidance of its senior management, and in particular David K. Meehan, the
Company's Chairman of the Board, President and Chief Executive Officer, Jeffrey
S. Bragg, the Company's Executive Vice President and Chief Operating Officer,
and Daniel J. White, Geotrac's President and Chief Executive Officer. Although
each of the Company's executive officers, including Messrs. Meehan, Bragg and
White, is a party to an employment agreement with the Company, no assurances can
be given that any of them will remain in the employment of the Company. The
Company's continued growth and success depends in part on its ability to attract
and retain qualified managers, and on the ability of its executive officers and
key employees to manage its operations successfully. The loss of any of the
Company's senior management or key personnel, or its inability to attract and
retain key management personnel in the future, could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Management."

LIMITED OPERATING HISTORY IN THIRD-PARTY OUTSOURCING

Since its inception, the Company has provided outsourcing services to BIG,
the largest underwriter of flood insurance policies through independent agents
(and the second largest overall) in the United States. As BIG's outsourcing
provider, the Company has become a significant provider of flood insurance
outsourcing services; however, to date it has not derived significant revenue
from unaffiliated third-party outsourcing customers. A key element of the
Company's growth strategy is to leverage its experience and expertise in
servicing BIG's flood, homeowners and automobile businesses to market its
outsourcing capabilities in various P&C lines, including flood, homeowners and
automobile insurance, to other insurance companies and financial institutions.
There can be no assurance that the Company will be successful in implementing
this growth strategy, and the failure to do so could have a material adverse
effect on the business, financial condition and results of operations of the
Company. See "Business -- Growth Strategy."

EXISTENCE OF WELL-POSITIONED COMPETITORS

The Company competes principally in three markets -- the market for flood
insurance outsourcing services, the market for other P&C insurance outsourcing
services and the market for flood zone determinations and related services. The
markets for these services are highly competitive. Management believes the
market for flood insurance outsourcing services is dominated by several
principal competitors. The Company competes for flood insurance outsourcing
customers largely on the basis of price, customer service and responsiveness.
The market for other P&C insurance outsourcing services is fragmented. In the
policy administration services segment of this market, the Company competes for
customers on the basis of customer service, performance and price. The claims
administration services segment of the outsourcing market is also highly
fragmented, with competition from a large number of claims administration
companies of varying size as well as independent contractors. Competition in
this segment of the outsourcing market is principally price driven. The Company
believes, however, that its most significant competition for outsourcing
services comes from policy and claims administration performed in-house by
insurance companies. Insurers that fulfill some or all of their policy and
claims administration needs in-house typically have made a significant
investment in their information processing systems and may be less likely to
utilize the Company's services. In addition, insurance company personnel may
have a vested interest in maintaining these responsibilities in-house.
Management believes the market for flood zone determination services is
dominated by several principal competitors. The Company believes that the
principal competitive factors in the market for flood zone determinations
include quality and reliability of services, response time and price.

quickly to emerging technologies and changes in customer requirements. In
addition, current and potential competitors may establish cooperative
relationships among themselves or with third parties to increase the ability of
their services and products to address customer needs. Accordingly, new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share. There can be no assurance that the Company will be
able to compete successfully against current and future competitors, or that
competitive pressure faced by the Company will not have a material adverse
effect on its business, financial condition and results of operations. See
"Business -- Competition."

IMPLEMENTATION OF ACQUISITION STRATEGY

A key element of the Company's growth strategy is to pursue potential
acquisitions that offer opportunities to increase market share or expand the
Company's menu of outsourcing services. Nevertheless, there can be no assurance
that the Company will be able to locate and consummate or, if consummated,
successfully integrate future acquisitions. Acquisitions involve significant
risks which could have a material adverse effect on the Company, including: (i)
the diversion of management's time and attention to the negotiation of the
acquisition and to the assimilation of the businesses acquired; (ii) the need to
modify financial and other systems and add management resources; (iii) potential
liabilities of the acquired business; (iv) unforeseen difficulties in the
acquired operations; (v) possible adverse short-term effects on the Company's
results of operations; (vi) the dilutive effect of the issuance of additional
equity securities; and (vii) the financial reporting effects of the amortization
of goodwill and other intangible assets. Furthermore, there can be no assurance
that any business interest acquired in the future will achieve acceptable levels
of revenue and profitability or otherwise perform as expected. Currently, the
Company has no arrangements or understandings with any party with respect to any
future acquisition. The Company, however, continues to monitor potential
acquisition opportunities. See "Business -- Growth Strategy."

POTENTIAL LIABILITY TO CLIENTS

Many of the Company's contractual engagements involve projects that are
critical to the operations of its clients' business and provide benefits that
may be difficult to quantify. Any failure in a client's system could result in a
claim for substantial damages against the Company, regardless of the Company's
responsibility for such failure. Although the Company may attempt to limit
contractually its liability for damages arising from negligent acts, errors,
mistakes or omissions in rendering its services, there can be no assurance that
the limitations of liability, if any, set forth in its service contracts will be
enforceable in all instances or would otherwise protect the Company from
liability for damages. Although the Company maintains general liability
insurance coverage, including coverage for errors or omissions, there can be no
assurance that such coverage will continue to be available on reasonable terms
or in sufficient amounts to cover one or more large claims, or that the insurer
will not disclaim coverage as to any future claim. The successful assertion of
one or more large claims against the Company that exceed available insurance
coverage, or changes in the Company's insurance policies, including premium
increases or the imposition of large deductible or co-insurance requirements,
could have a material adverse effect on the Company's business, financial
condition and results of operations.

DEPENDENCE ON TREND TOWARD OUTSOURCING

The Company's business and growth depend in large part on the insurance
industry's trend toward outsourcing administration and information technology
services. There can be no assurance that this trend will continue, as
organizations may elect to perform such services in-house. A significant change
in the direction of this trend could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Market Opportunities."

RELIANCE ON TECHNOLOGY AND COMPUTER SYSTEMS

The Company currently licenses its primary processing software systems from
BIG. Under the terms of its licensing agreement, the Company is responsible for
maintaining and upgrading such systems. The Company anticipates that it will be
necessary to continue to invest in and develop new technology to maintain its
competitiveness. Significant capital expenditures may be required to keep its
technology up-to-date. The
9
<PAGE> 14

Company's future success will also depend in part on its ability to anticipate
and develop information technology solutions which keep pace with evolving
industry standards and changing customer demands. The temporary or permanent
loss of any such equipment or systems, through operating malfunction or
otherwise, could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Company,"
"Business -- Information Systems" and "Certain Transactions."

In addition, the nature of the Company's business requires that it recruit
and retain qualified technical personnel. The Company generally experiences
significant turnover of its information technology personnel and is continuously
required to recruit and train replacement personnel. The demand for qualified
personnel conversant with certain technologies is intense and may exceed supply
as new and additional skills are required to keep pace with evolving computer
technology. There can be no assurance that the Company will be successful in
attracting and retaining the information technology personnel it requires to
conduct its operations successfully. Failure to attract and retain such
personnel could have a material adverse effect on the Company's business,
financial condition and results of operations.

YEAR 2000 ISSUES

There is significant uncertainty regarding the impact of Year 2000 issues,
which arise when computer systems do not properly recognize date-sensitive
information beyond December 31, 1999, thereby generating erroneous data or
failing altogether. The Company believes that its primary processing systems
will function properly with respect to dates in the Year 2000 and thereafter.
However, third parties that have relationships with the Company, including
suppliers, customers and creditors, may experience significant Year 2000 issues.
These issues may have a serious adverse impact on the operations of such third
parties, including a shut-down of operations for a period of time, which may, in
turn, have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, competitors, and other third
parties may experience significant Year 2000 issues and, as a result, seek to
hire the Company's programmers and other software-related personnel at higher
salaries to address these issues. The loss of certain employees or a significant
number of employees could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations of the
Company -- Year 2000 Compliance."

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of this offering, the Company will have 12,678,743
shares of Common Stock outstanding. Of these shares, the 3,350,000 shares of
Common Stock sold in this offering will be freely tradable without restriction
or registration under the Securities Act by persons other than "affiliates" of
the Company, as defined under the Securities Act. The remaining 9,328,743 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. Upon completion of the offering,
the Company will have options outstanding to purchase 654,500 shares of Common
Stock. In addition, 369,500 and 176,000 additional shares will remain available
for issuance under the Company's Long Term Incentive Plan and Non-Employee
Directors' Stock Option Plan, respectively. See "Management -- Long Term
Incentive Plan," "-- Non-Employee Directors' Stock Option Plan" and
"-- Non-Qualified Stock Option Plan" and "Shares Eligible for Future Sale."

The 7,950,000 restricted shares owned by BIG will, under Rule 144 (and
subject to the conditions thereof, including volume limitations), become
eligible for sale 90 days after the offering. However, BIG has agreed not to
sell, contract to sell or otherwise dispose of any of these shares of Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent of Raymond James & Associates, Inc., on behalf of the
Underwriters. After such 180-day period, this restriction will expire and shares
permitted to be sold under Rule 144 will be eligible for sale. Raymond James &
Associates, Inc., on behalf of the Underwriters, may at any time and without
prior notice, release all or any portion of the shares of Common Stock subject
to such agreement. See "Underwriting."
10
<PAGE> 15

Prior to this offering, there has been no public market for the Common
Stock and no predictions can be made of the effect, if any, that the sale or
availability for sale of additional shares of Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of substantial amounts of
such shares in the public market, or the perception that such sales could occur,
could materially and adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise capital through an offering
of its equity securities. See "Shares Eligible for Future Sale."

NO PRIOR PUBLIC MARKET; VOLATILITY OF STOCK PRICE

Prior to 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 this 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 has been determined by negotiations
among the Company, the Selling Shareholder and the Underwriters based on several
factors, and may not be indicative of the market price for the Common Stock
after this offering. See "Underwriting."

The Company believes that various factors such as general economic
conditions and changes or volatility in the financial markets, changing market
conditions, 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.

DILUTION

Purchasers of the Common Stock offered hereby will experience immediate and
substantial dilution of $10.11 in the net tangible book value per share of
Common Stock, while the net tangible book value of the shares of Common Stock
owned by BIG and the Selling Shareholder will increase by $1.68 per share. See
"Dilution."

BENEFITS OF THE OFFERING TO THE CURRENT SHAREHOLDERS

BIG and the Selling Shareholder will benefit from this offering in that a
public market will be created for their stock in the Company. The 7,950,000
shares of Common Stock that will be owned by BIG after this offering, which were
acquired at a cost of approximately $135,000, will have a value of approximately
$87.4 million, based upon the initial public offering price of $11.00 per share.
The 700,000 shares of Common Stock that will be owned by the Selling Shareholder
after this offering, which were acquired at a cost of approximately $13.5
million, will have a value of approximately $7.7 million, based upon the initial
public offering price of $11.00 per share. See "Principal and Selling
Shareholders."

RECENT ACQUISITIONS

GEOTRAC ACQUISITION

In July, 1997, the Company acquired a 49% equity interest in Geotrac, Inc.,
an unaffiliated Ohio corporation ("Old Geotrac"), from Daniel J. White and his
spouse (the "Whites"), as joint tenants, for $6.75 million in cash. In July,
1998, the Company acquired the remaining 51% equity interest in Old Geotrac from
the Whites and certain other minority shareholders in exchange for (i) 524,198
shares of Common Stock, (ii) a promissory note in the principal amount of $1.5
million, and (iii) cash in the amount of $728,069 (paid in December, 1998). The
Company also granted the Whites certain demand and piggyback registration rights
with respect to the shares of Common Stock issued to them pursuant to this
transaction. The transaction was effected pursuant to the merger of Old Geotrac
into a wholly-owned subsidiary of the Company, with the surviving entity being
known as "Geotrac of America, Inc.". See "Certain Transactions -- Geotrac
Transactions".

Old Geotrac, a leading provider of flood zone determinations, began
operations in 1987. In 1997, Old Geotrac's revenues were $6.3 million (on a
historical basis) and $14.1 million (on a pro forma basis) and its

11
<PAGE> 16

net income was $2.1 million (on a historical basis) and $1.9 million (on a pro
forma basis). For the six months ended June 30, 1998, the period immediately
prior to consummation of the Company's acquisition of the remaining 51% equity
interest in Old Geotrac, Old Geotrac's revenues and net income were $8.8 million
and $927,000, respectively. Old Geotrac's President, Chief Executive Officer and
joint majority shareholder, Daniel J. White, presently serves as President,
Chief Executive Officer and a director of Geotrac and as a director of the
Company.

The acquisition of Old Geotrac (the "Geotrac Acquisition") strengthens the
Company's position as a leader in the flood zone determination business and
broadens the range of flood data services the Company is able to provide. In
addition, the Company is in the process of consolidating its own flood zone
determination operations with those of Old Geotrac in an effort to realize
economies of scale. Finally, the Company believes that access to Old Geotrac's
customer base of financial institutions and insurance companies will facilitate
cross-selling opportunities and expansion of the Company's outsourcing services.

COLONIAL CATASTROPHE ACQUISITION

Effective January 7, 1999, the Company, through a wholly-owned subsidiary,
acquired all of the issued and outstanding capital stock of Colonial Catastrophe
Claims Corporation, a Florida corporation ("Colonial Catastrophe"), from J.
Douglas Branham and Felicia A. Rivas, husband and wife, in exchange for (i)
154,545 shares of Common Stock, (ii) cash in the amount of $500,000, (iii) a
promissory note in the principal amount of $500,000, and (iv) an additional
payment of up to $300,000, payable in additional shares of Common Stock, based
upon the net income before taxes of Colonial Claims (as hereinafter defined) for
the year ended December 31, 1999. On January 15, 1999, Colonial Catastrophe was
merged into the acquiring subsidiary and the name of the acquiring subsidiary
was changed to "Colonial Claims Corporation" (hereinafter "Colonial Claims").
Pursuant to a registration rights agreement, Mr. Branham and Ms. Rivas have been
granted certain piggyback registration rights with respect to all of the shares
(including the earn out shares, if any), issued in connection with the
acquisition. In addition, Colonial Claims entered into a separate employment
agreement with each of Mr. Branham and Ms. Rivas pursuant to which they serve as
employees of Colonial Claims. Each of the employment agreements is for a period
of five years and provides for an initial annual base salary of $102,000,
(subject to a 5% annual increase), plus additional compensation based on annual
revenues of the Colonial Claims business.

Colonial Claims contracts with P&C insurance carriers to handle property
and casualty claims on their behalf. Colonial Claims has assembled a large
network of independent claims adjusters who respond to individually reported
loss assignments from Colonial Claims and are compensated based upon a set
claims fee schedule. Colonial Claims reviews and approves claims settlements,
assures consistency and quality of settlement practices, and transmits claims
information to the insurance carriers. The insurers, in turn, approve and remit
claims payments to the insureds. Colonial Catastrophe was incorporated in 1994
and had revenues of approximately $3.4 million during the year ended December
31, 1997.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company, after deducting the underwriting discounts
and commissions and estimated offering expenses payable by the Company, are
estimated to be approximately $19.5 million. The Company intends to use
approximately $10.0 million of the net proceeds to repay indebtedness that is
outstanding at the time of this offering. Additionally, the Company intends to
use approximately $3.2 million for capital expenditures on upgraded technology,
including network and mainframe upgrades, and the remaining balance of
approximately $6.3 million for general corporate purposes including working
capital and possible acquisitions. The Company has no present commitments or
understandings with respect to the acquisition of any business, although the
Company continues to monitor potential acquisition opportunities. Pending such
uses, the Company intends to invest the net proceeds of this offering in
short-term, investment grade, interest-bearing securities. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations of the
Company -- Liquidity and Capital Resources" and "Business -- Growth Strategy."

12
<PAGE> 17

The indebtedness to be repaid by the Company with proceeds from this
offering includes: (i) a note payable to Bankers Insurance Company, dated April
1, 1998, used to fund the purchase of fixed assets from Bankers Insurance
Company, which note had an outstanding balance of $2,353,424 at September 30,
1998, bears interest at 8.5% and matures April, 1999; (ii) a note payable to
Southern Rental Leasing Company, dated April 1, 1998, used to fund the purchase
of fixed assets from Southern Rental Leasing Company, which note had an
outstanding balance of $356,250 at September 30, 1998, bears interest at 8.5%
and matures December, 2000; (iii) a note payable to bank, dated December 30,
1997, used to fund fixed asset purchases and general corporate activities, which
note had an outstanding balance of $1,647,499 at September 30, 1998, bears
interest at 8.19% and matures December, 2000; (iv) a note payable used to
repurchase outstanding Preferred Stock sold by BHDS in July 1997 to fund the
purchase of the Company's 49% interest in Old Geotrac, which note had an
outstanding balance of $6,750,000 at September 30, 1998, bears interest at
8.566% and matures August 2002; and (v) various other term loans used to fund
general operating activities, which loans had a combined outstanding balance of
$800,094 at September 30, 1998, bear interest at rates ranging from 8.19% to
8.50% and mature at various dates through December, 2000.

The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Shareholder. The net proceeds to be received by the Selling
Shareholder from the sale of the 1,350,000 shares offered by the Selling
Shareholder will be approximately $13.8 million after deducting underwriting
discounts and commissions payable by the Selling Shareholder. A wholly-owned
subsidiary of the Selling Shareholder has agreed to loan $12.0 million to BIG in
exchange for a subordinated note. This loan will be funded using a portion of
the net proceeds to be received by the Selling Shareholder in this offering. BIG
has agreed with the Company to use a portion of such loan proceeds to satisfy
outstanding accounts and note payable to the Company not later than ten business
days following receipt of the loan proceeds. As of September 30, 1998, BIG's
accounts and note payable to the Company totaled approximately $11.3 million.
The balance of the loan proceeds will provide BIG with additional working
capital. The Company, in turn, has agreed with BIG to use a portion of the funds
received from BIG to satisfy accounts, income taxes and notes payable to BIG. As
of September 30, 1998, the Company's accounts, income taxes and notes payable to
BIG (other than those referred to in the preceding paragraph) totaled
approximately $10.9 million. See "Principal and Selling Shareholders" and
"Certain Transactions."

DIVIDEND POLICY

In December, 1996, December, 1997, and June, 1998, the Company paid
dividends of $1.0 million, $3.5 million, and $1.1 million, respectively, to BIG.
The Company currently anticipates that all of its earnings will be retained for
development and expansion of the Company's business and does not anticipate
declaring or paying any cash dividends in the foreseeable future.

13
<PAGE> 18

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1998: (1) on an actual basis; and (2) on an as adjusted basis to
reflect (i) the application of the net proceeds from the issuance and sale of
2,000,000 shares of Common Stock offered hereby by the Company, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company, and (ii) settlement or satisfaction of intercompany accounts
from funds made available to BIG by a loan from a subsidiary of the Selling
Shareholder, using a portion of the net proceeds of the offering received by the
Selling Shareholder. See "Use of Proceeds."

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------
ACTUAL AS ADJUSTED
--------- -------------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(UNAUDITED)
<S> <C> <C>
Current portion of long-term debt........................... $ 3,066 $ 2,035
Current portion of notes and interest
payable -- affiliates..................................... 10,330 --
Due to affiliates........................................... 802 --
Income taxes payable........................................ 4,615 --
Long-term debt, less current portion........................ 8,216 6,800
Notes payable -- affiliates, less current portion........... 5,891 1,500
Shareholders' equity:
Preferred stock, $.01 par value, 20,000,000 shares
authorized, no shares issued and outstanding........... -- --
Common stock, $.01 par value, 100,000,000 shares
authorized; 10,524,198 shares issued and outstanding;
12,524,198 shares issued and outstanding, as
adjusted(1)............................................ 105 125
Additional paid-in capital................................ 5,831 25,271
Retained earnings......................................... 1,808 1,808
------- -------
Total shareholders' equity................................ 7,744 27,204
------- -------
Total capitalization.............................. $40,664 $37,539
======= =======
</TABLE>

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

(1) Excludes (a) 875,000 shares of Common Stock reserved for issuance under the
Company's Long Term Incentive Plan, pursuant to which options to purchase
505,500 shares will be granted immediately upon the completion of this
offering, (b) 200,000 shares of Common Stock reserved for issuance under the
Company's Non-Employee Directors' Stock Option Plan, pursuant to which
options to purchase 24,000 shares will be granted immediately upon
completion of this offering, (c) 125,000 shares of Common Stock reserved for
issuance under the Company's Non-Qualified Stock Option Plan, pursuant to
which options to purchase 125,000 shares will be granted immediately upon
the completion of this offering, and (d) 154,545 shares of Common Stock
issued pursuant to the acquisition of Colonial Catastrophe Claims
Corporation. See "Recent Acquisitions -- Colonial Catastrophe Acquisition"
and "Management -- Long Term Incentive Plan," "-- Non-Employee Directors'
Stock Option Plan" and "-- Non-Qualified Stock Option Plan."

14
<PAGE> 19

DILUTION

Purchasers of the Common Stock offered hereby will experience an immediate
and substantial dilution in the net tangible book value (deficiency) of their
Common Stock from the initial public offering price. The net tangible book value
(deficiency) of the Company as of September 30, 1998 was approximately $(8.3
million), or $(.79) per share. Net tangible book value (deficiency) per share
represents the amount of the Company's tangible net worth (total tangible assets
less total liabilities) divided by the total number of shares of Common Stock
outstanding. After giving effect to the sale of 2,000,000 shares of Common Stock
by the Company in this offering and the application of the estimated net
proceeds therefrom (after deduction of underwriting discounts and commissions
and estimated offering expenses payable by the Company), the net tangible book
value of the Company as of September 30, 1998 would have been $11.1 million, or
$.89 per share of Common Stock. This represents an immediate increase in net
tangible book value of $1.68 per share to the existing shareholders and an
immediate dilution of $10.11 per share to purchasers of shares of Common Stock
in this offering. The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $ 11.00
Net tangible book value (deficiency) per share before this
offering............................................... (.79)
Increase per share attributable to new investors.......... 1.68
--------
Pro forma net tangible book value after this offering(1).... .89
--------
Dilution in net tangible book value per share to new
investors................................................. $ 10.11
========
</TABLE>

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

(1) If the Underwriters' over-allotment option is exercised in full, the net
tangible book value after this offering would be $1.11 per share, resulting
in dilution to new investors in this offering of $9.89 per share.

The following table sets forth on a pro forma basis as of September 30,
1998 the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share of Common Stock paid by the
Company's existing shareholders and to be paid by new investors in this offering
and before deduction of estimated underwriting discounts and commissions and
estimated offering expenses (and assuming no exercise of the Underwriters'
over-allotment option):

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION
-------------------- --------------------- AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE PER SHARE
---------- ------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Existing shareholders............ 10,524,198 84.0% $ 5,936,172 21.2% $ .56
New investors.................... 2,000,000 16.0 22,000,000 78.8 11.00(2)
---------- ---- ----------- ----
Total.................. 12,524,198 100% $27,936,172 100%
========== ==== =========== ====
</TABLE>

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

(1) Does not reflect the sale of 1,350,000 shares of Common Stock by the Selling
Shareholder in this offering and does not include (a) 154,545 shares of
Common Stock issued pursuant to the acquisition of Colonial Catastrophe
Claims Corporation and (b) an aggregate of 654,500 shares of Common Stock
issuable upon the exercise of stock options to be granted upon the
completion of this offering. See "Recent Acquisitions -- Colonial
Catastrophe Acquisition" and "Management -- Long Term Incentive Plan,"
"-- Non-Employee Directors' Stock Option Plan" and "-- Non-Qualified Stock
Option Plan." Sales by the Selling Shareholder in this offering will reduce
the number of shares held by existing shareholders to 9,174,198 shares, or
approximately 73.3%, and will increase the number of shares held by new
investors to 3,350,000, or approximately 26.7%, of the total number of
shares of Common Stock outstanding after this offering. See "Principal and
Selling Shareholders."
(2) Does not reflect the sale in this offering of 25,225 shares to certain
officers and directors of the Company at a price per share equal to the
initial public offering price per share, less the per share underwriting
discounts and commissions. See "Underwriting."

15
<PAGE> 20

SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements of the Company and Notes
thereto, Pro Forma Condensed Consolidated Statements of Income (unaudited) of
the Company, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company" included elsewhere in the Prospectus.
The following selected consolidated financial data of the Company as of and for
the years ended December 31, 1995, 1996, and 1997 has been derived from the
Company's audited consolidated financial statements. The historical information
presented as of and for the years ended December 31, 1993 and 1994 and the nine
months ended September 30, 1997 and 1998 was derived from the unaudited
financial statements of the Company. In 1997, the Company's investment in
Geotrac was accounted for using the equity method of accounting, since the
Company owned less than 50% and had a significant but not controlling influence.
In July, 1998, the Company acquired the remaining 51% of Geotrac. As a result,
the operations of Geotrac for the entire nine months in the period ended
September 30, 1998 are consolidated with that of the Company, with the portion
of Geotrac's net income allocable to the 51% interest held by the majority
stockholders prior to June 30, 1998 reflected as a minority interest. With
respect to the unaudited financial information, the Company is of the opinion
that all material adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the Company's results of operations and
financial position have been included. The results of operations presented below
are not necessarily indicative of the results of operations that may be achieved
in the future.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------------- --------------------
PRO FORMA
1993 1994 1995 1996 1997 1997(1) 1997 1998
------ ------ ------- ---------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues
Outsourcing services........... $1,454 $1,861 $ 3,444 $ 5,125 $ 29,714 $ 30,577 $22,177 $ 27,508
Flood zone determination
services..................... 2,661 2,975 5,127 7,705 8,792 22,600 6,582 19,865
------ ------ ------- ---------- ---------- --------- ------- ----------
Total revenues............. 4,115 4,836 8,571 12,830 38,506 53,177 28,759 47,373
------ ------ ------- ---------- ---------- --------- ------- ----------
Expenses
Cost of outsourcing services... 1,000 1,586 2,955 3,896 21,989 22,097 16,528 19,814
Cost of flood zone
determination services....... 2,052 1,842 3,415 5,362 4,764 10,552 3,361 8,524
Selling, general and
administrative............... 630 990 804 1,121 3,026 5,927 2,241 5,706
Management services from
Parent....................... 232 362 725 1,054 2,344 2,344 1,758 2,506
Deferred compensation (non-
recurring item).............. -- -- -- -- -- 1,461 -- 728
Depreciation and
amortization................. 37 106 184 309 684 3,861 443 2,981
------ ------ ------- ---------- ---------- --------- ------- ----------
Total expenses............. 3,951 4,886 8,083 11,742 32,807 46,242 24,331 40,259
------ ------ ------- ---------- ---------- --------- ------- ----------
Operating income (loss)......... 164 (50) 488 1,088 5,699 6,935 4,428 7,114
Equity in earnings (loss) of
Geotrac, Inc................... -- -- -- -- 201 -- (32) --
Minority interest............... -- -- -- -- -- -- -- (473)
Other income (non-recurring
item).......................... -- -- -- -- -- 1,700 -- --
Interest income................. -- -- -- -- -- -- -- 308
Interest expense(3)............. -- (48) (72) (75) (378) (1,601) (223) (1,653)
------ ------ ------- ---------- ---------- --------- ------- ----------
Income (loss) before income
taxes.......................... 164 (98) 416 1,013 5,522 7,034 4,173 5,296
Provision (benefit) for income
taxes.......................... 69 (31) 162 396 2,112 3,026 1,645 2,389
------ ------ ------- ---------- ---------- --------- ------- ----------
Net income (loss)............... $ 95 $ (67) $ 254 $ 617 $ 3,410 $ 4,008 $ 2,528 $ 2,907
====== ====== ======= ========== ========== ========= ======= ==========
Net income (loss) per common
share.......................... $ .01 $ (.01) $ .03 $ .06 $ .34 $ .38 $ .25 $ .29
====== ====== ======= ========== ========== ========= ======= ==========
Weighted average common shares
outstanding.................... 10,000 10,000 10,000 10,000 10,000 10,524 10,000 10,177
====== ====== ======= ========== ========== ========= ======= ==========
Dividends declared on Common
Stock(4)....................... $ -- $ -- $ -- $ 1,000 $ 3,500 $ 3,500 $ -- $ 1,100
====== ====== ======= ========== ========== ========= ======= ==========

<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
PRO FORMA PRO FORMA
1997(1) 1998(1)
---------- ----------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues
Outsourcing services........... $ 23,113 $ 27,508
Flood zone determination
services..................... 16,912 19,865
--------- ----------
Total revenues............. 40,025 47,373
--------- ----------
Expenses
Cost of outsourcing services... 16,646 19,532
Cost of flood zone
determination services....... 7,660 8,524
Selling, general and
administrative............... 4,560 5,706
Management services from
Parent....................... 1,758 2,506
Deferred compensation (non-
recurring item).............. 1,461 --
Depreciation and
amortization................. 2,970 3,339
--------- ----------
Total expenses............. 35,055 39,607
--------- ----------
Operating income (loss)......... 4,970 7,766
Equity in earnings (loss) of
Geotrac, Inc................... -- --
Minority interest............... -- --
Other income (non-recurring
item).......................... 1,700 --
Interest income................. -- 308
Interest expense(3)............. (1,161) (1,781)
--------- ----------
Income (loss) before income
taxes.......................... 5,509 6,293
Provision (benefit) for income
taxes.......................... 2,368 2,629
--------- ----------
Net income (loss)............... $ 3,141 $ 3,664
========= ==========
Net income (loss) per common
share.......................... $ .30 $ .35
========= ==========
Weighted average common shares
outstanding.................... 10,524 10,524
========= ==========
Dividends declared on Common
Stock(4)....................... $ -- $ 1,100
========= ==========
</TABLE>

16
<PAGE> 21

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, --------------------------------
------------------------------------------- AS ADJUSTED
1993 1994 1995 1996 1997 1997 1998 1998(2)
------ ------ ------ ------ ------- ------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)...... $ 28 $ (146) $ (141) $ (425) $ (148) $ 1,359 $ (4,969) $ 8,684
Total assets...................... 1,186 1,311 2,649 3,441 19,532 22,998 47,021 43,659
Long-term debt, less current
portion......................... 140 278 156 894 2,187 658 8,216 6,800
Notes and interest payable,
affiliates, less current
portion......................... -- -- -- -- -- -- 5,891 1,500
Preferred Stock of Subsidiary..... -- -- -- -- 6,750 6,750 -- --
Total shareholders' equity........ 172 125 529 260 170 2,788 7,744 27,204
</TABLE>

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

(1) Unaudited pro forma condensed consolidated Statement of Operations Data for
the nine months ended September 30, 1997 and 1998 and the year ended
December 31, 1997 reflect (i) the Geotrac Acquisition, which was completed
in July, 1998, using the purchase method of accounting as if the Geotrac
Acquisition had occurred at January 1, 1997, (ii) the new affiliated service
and administrative agreements that became effective January 1, 1998 as
though the new terms were in existence on January 1, 1997 and (iii) the
purchase of certain fixed assets from affiliated companies used in the
business, which occurred in April, 1998, as if such purchases had occurred
at January 1, 1997. See "Recent Acquisitions," "Certain Transactions" and
the Company's Pro Forma Condensed Consolidated Statements of Income
(unaudited).
(2) As adjusted to reflect (i) the application of the net proceeds from the
issuance and sale of 2,000,000 shares of Common Stock offered hereby by the
Company, after deducting underwriting discounts and commissions and
estimated offering expenses payable by the Company and (ii) settlement or
satisfaction of intercompany accounts from funds made available to BIG by a
loan from a subsidiary of the Selling Shareholder, using a portion of the
net proceeds of the offering received by the Selling Shareholder. Does not
reflect the issuance of 154,545 shares of Common Stock in connection with
the acquisition of Colonial Catastrophe Claims Corporation. See "Recent
Acquisitions -- Colonial Catastrophe Acquisition," "Use of Proceeds" and
"Capitalization."
(3) Dividends declared on Preferred Stock for 1997 and the nine months ended
September 30, 1997 and 1998 were $229,315, 113,500 and $189,370,
respectively, and were included in interest expense. See Note 8 to the
Company's Consolidated Financial Statements.
(4) In December, 1996, December, 1997, and June, 1998, the Company paid
dividends of $1.0 million, $3.5 million, and $1.1 million, respectively, to
BIG. The Company currently anticipates that all of its earnings will be
retained for development and expansion of the Company's business and does
not anticipate declaring or paying any cash dividends in the foreseeable
future. See "Dividend Policy."

17
<PAGE> 22

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

The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and the notes thereto included
elsewhere in this Prospectus.

OVERVIEW

Insurance Management Solutions Group, Inc. (together with its subsidiaries,
the "Company") is a holding company that was incorporated in the State of
Florida in December, 1996 by Bankers Insurance Group, Inc. (together with its
subsidiaries, "BIG"), which contributed to the Company two of its wholly-owned
operating subsidiaries, Insurance Management Solutions, Inc. ("IMS") and Bankers
Hazard Determination Services, Inc. ("BHDS"), that were previously formed in
August, 1991 and June, 1988, respectively. BIG is a diversified group of P&C
insurance companies with premium writings in all fifty states. BIG's principal
lines of business include flood, homeowners and automobile insurance lines. From
1993 to 1997, BIG experienced substantial growth in total written premiums from
$113.7 million to $259.0 million. For the nine months ended September 30, 1998,
BIG had total written premiums of $232.2 million.

Prior to 1997, the Company's outsourcing services principally related to
information technology services provided to BIG on a cost reimbursement basis.
In 1997, the Company entered into service arrangements with BIG to provide a
broader menu of outsourcing services. These services primarily consisted of
policy and claims administration (including policy issuance, billing and
collection functions, claims adjusting and processing) and information
technology services provided for BIG's flood and homeowners insurance lines of
business. Revenues for these services were derived based on a percentage of
direct written premiums for policy administration services and direct paid
claims for claims administration services. The Company also provided claims
administration services for BIG's other insurance lines, excluding flood and
homeowners, on a cost reimbursement basis in 1997.

Effective January 1, 1998, the Company entered into written service
agreements with BIG which modified the existing arrangements to (i) expand the
services provided by the Company to include policy administration for certain
automobile lines of business, (ii) recognize claims outsourcing revenue based
not on a cost reimbursement basis, but rather on a percentage of earned premiums
and, with respect to certain types of claims, a percentage of incurred losses,
and (iii) implement a change in fee structure from a percentage of incurred loss
to a percentage of earned premiums with respect to homeowners claims services.
These changes were negotiated in order to effect more uniform revenue
recognition. To obtain BIG's agreement to such changes, the Company, in turn,
agreed to the revised fee structure with respect to homeowners claims services.
BIG presently accounts for approximately 97% of the Company's outsourcing
services revenues and is expected to continue to account for a significant
majority of the Company's outsourcing revenues in the near future. See "Risk
Factors -- Reliance on Key Customer" and "Certain Transactions -- Service
Agreements."

Outsourcing service revenues are principally derived from written and
earned insurance premiums. Such premiums are affected by seasonal fluctuations
in volume of new and renewal policies received. Outsourcing service revenues
generated from the flood and homeowners lines of business increase in the late
second quarter and peak during the third quarter in conjunction with home sales.
In the Company's experience, increased levels of flood insurance purchases occur
in the Southeastern United States during the second and third quarters in
anticipation of the onset of the hurricane season.

Federal residential and commercial flood insurance rates are set by FEMA
and are the same for all flood insurance carriers. Consequently, policyholder
retention is typically dependent upon the quality of customer service being
offered. Higher retention or renewal rates provide more consistent recurring
revenues. Flood insurance carriers often utilize independent agents to sell
their product. Competing flood insurance carriers offering more attractive
commissions to such agents pose a significant risk for declines in business.

During periods of peak demand for flood and homeowners insurance, the
number of policies waiting to be issued increases. This backlog represents
future service fee income to be earned, generally within one month.

18
<PAGE> 23

Flood zone determination revenues, which are recognized as services are
performed, are cyclically impacted by both changes in mortgage interest rates
and trends in home sales.

The cost of outsourcing services primarily includes wages and related
benefits associated with personnel who perform policy and claims administration
services, as well as postage and telephone charges, data processing and other
direct costs associated with providing service to customers.

Cost of flood zone determination services primarily includes wages and
related benefits associated with personnel who perform flood zone determination
services, telephone expenses, general liability insurance, data processing and
other direct costs associated with providing service to customers. Due to the
ongoing automation of the Company's flood zone database, a gradual increase in
the number of automated flood zone determinations, versus manually determined
flood zones, has occurred. Automated flood zone determinations cost less for the
Company to perform than manually generated determinations.

Selling, general and administrative expenses include the wages and related
benefits of sales and marketing, executive, finance and accounting personnel, as
well as other general operating costs. In addition, wages and related benefits
of the management staff of each processing department (i.e. Customer Service,
Claims, and Information Services) are included in selling, general and
administrative expenses.

Management services from Parent have historically been charged to the
Company under a management agreement with BIG for common costs that are incurred
by BIG and allocated to its affiliated companies. These common costs include
human resources, legal, corporate planning and communications, cash management,
certain executive management and rent. Allocation of the management services is
based on employee head counts and estimates of time incurred, which management
believes to be a reasonable basis of allocation.

The Company presently purchases certain services, including human
resources, internal audit and legal services, from BIG. See "Certain
Transactions." If the Company develops the capability to provide these services
internally, certain sales and administrative support costs may fluctuate.

In 1997, the Company's investment in Geotrac was accounted for using the
equity method of accounting, since the Company owned less than 50% and had a
significant but not controlling influence. In July, 1998, the Company acquired
the remaining 51% of Geotrac. As a result, the operations of Geotrac for the
entire nine months in the period ended September 30, 1998 are consolidated with
that of the Company, with the portion of Geotrac's net income allocable to the
51% interest held by the majority stockholders prior to June 30, 1998 reflected
as a minority interest.

19
<PAGE> 24

QUARTERLY RESULTS

The following table presents unaudited quarterly operating results for the
Company for the quarters included in years 1996 and 1997 and the first three
quarters of 1998. In 1997, the Company's investment in Geotrac was accounted for
using the equity method of accounting, since the Company owned less than 50% and
had a significant but not controlling influence. In July, 1998, the Company
acquired the remaining 51% of Geotrac. As a result, the operations of Geotrac
for each of the quarters in the nine months ended September 30, 1998 are
consolidated with those of the Company, with the portion of Geotrac's net income
allocable to the 51% interest held by the majority stockholders prior to June
30, 1998 reflected as a minority interest. This information has been prepared on
the same basis as the Company's Consolidated Financial Statements included
elsewhere in this Prospectus, and includes all adjustments, consisting of normal
recurring accruals, that the Company considers necessary for a fair presentation
of the periods presented. These operating results are not necessarily indicative
of the Company's future performance.
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1996 1996 1996 1996 1997 1997 1997
--------- -------- ------------- ------------ --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Outsourcing services...... $1,200 $1,270 $1,279 $1,376 $6,857 $7,419 $ 7,901
Flood zone determination
services................ 1,822 2,237 1,888 1,758 1,947 2,394 2,241
------ ------ ------ ------ ------ ------ -------
Total revenues...... 3,022 3,507 3,167 3,134 8,804 9,813 10,142
------ ------ ------ ------ ------ ------ -------
Expenses
Cost of outsourcing
services................ 964 963 952 1,017 5,019 5,787 5,722
Cost of flood zone
determination
services................ 1,343 1,567 1,269 1,183 974 1,125 1,262
Selling, general and
administrative.......... 281 269 257 314 727 773 741
Management services from
Parent.................. 263 264 263 264 586 586 586
Deferred compensation
(non-recurring)......... -- -- -- -- -- -- --
Depreciation and
amortization............ 67 75 80 87 116 126 201
------ ------ ------ ------ ------ ------ -------
Total expenses...... 2,918 3,138 2,821 2,865 7,422 8,397 8,512
------ ------ ------ ------ ------ ------ -------
Operating income........... 104 369 346 269 1,382 1,416 1,630
Equity in earnings (loss)
of Geotrac, Inc........... -- -- -- -- -- -- (32)
Minority interest.......... -- -- -- -- --
Interest income............ -- -- -- -- -- -- --
Interest expense........... (19) (19) (18) (19) (36) (36) (151)
------ ------ ------ ------ ------ ------ -------
Income before income
taxes..................... 85 350 328 250 1,346 1,380 1,447
Provision for income
taxes..................... 35 136 127 98 513 527 605
------ ------ ------ ------ ------ ------ -------
Net income................. $ 50 $ 214 $ 201 $ 152 $ 833 $ 853 $ 842
====== ====== ====== ====== ====== ====== =======

<CAPTION>
QUARTER ENDED
---------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1997 1998 1998 1998
------------ --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues
Outsourcing services...... $7,537 $ 8,655 $ 9,099 $ 9,753
Flood zone determination
services................ 2,210 6,864 6,627 6,375
------ ------- ------- -------
Total revenues...... 9,747 15,519 15,726 16,128
------ ------- ------- -------
Expenses
Cost of outsourcing
services................ 5,461 6,428 6,367 7,020
Cost of flood zone
determination
services................ 1,403 3,067 3,016 2,442
Selling, general and
administrative.......... 785 1,685 1,855 2,164
Management services from
Parent.................. 586 678 690 1,137
Deferred compensation
(non-recurring)......... -- -- 728 --
Depreciation and
amortization............ 240 633 1,131 1,217
------ ------- ------- -------
Total expenses...... 8,475 12,491 13,787 13,980
------ ------- ------- -------
Operating income........... 1,272 3,028 1,939 2,148
Equity in earnings (loss)
of Geotrac, Inc........... 233 -- -- --
Minority interest.......... -- (425) (49) --
Interest income............ -- -- 106 201
Interest expense........... (156) (406) (580) (667)
------ ------- ------- -------
Income before income
taxes..................... 1,349 2,197 1,416 1,682
Provision for income
taxes..................... 467 1,089 599 700
------ ------- ------- -------
Net income................. $ 882 $ 1,108 $ 817 $ 982
====== ======= ======= =======
</TABLE>

20
<PAGE> 25

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain selected
historical operating results of the Company as a percentage of total revenues:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------------- -------------------------------------
PRO FORMA PRO FORMA PRO FORMA
1995 1996 1997 1997 1997 1998 1997 1998
----- ----- ----- --------- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Outsourcing services........ 40.2% 39.9% 77.2% 57.5% 77.1% 58.1% 57.7% 58.1%
Flood zone determination
services.................. 59.8 60.1 22.8 42.5 22.9 41.9 42.3 41.9
----- ----- ----- ----- ----- ----- ----- -----
Total revenues....... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- ----- ----- ----- -----
Expenses
Cost of outsourcing
services.................. 34.5 30.4 57.1 41.6 57.5 41.8 41.6 41.2
Cost of flood zone
determination services.... 39.8 41.8 12.4 19.8 11.7 18.0 19.1 18.0
Selling, general and
administrative............ 9.4 8.7 7.8 11.1 7.8 12.0 11.4 12.0
Management services from
Parent.................... 8.5 8.2 6.1 4.4 6.1 5.3 4.4 5.3
Deferred compensation (non-
recurring item)........... -- -- -- 2.8 -- 1.6 3.6 --
Depreciation and
amortization.............. 2.1 2.4 1.8 7.3 1.5 6.3 7.5 7.1
----- ----- ----- ----- ----- ----- ----- -----
Total expenses....... 94.3 91.5 85.2 87.0 84.6 85.0 87.6 83.6
----- ----- ----- ----- ----- ----- ----- -----
Operating income.............. 5.7 8.5 14.8 13.0 15.4 15.0 12.4 16.4
Equity in earnings (losses) of
Geotrac, Inc................ -- -- 0.5 -- (0.1) -- -- --
Minority interest............. -- -- -- -- -- (1.0) -- --
Other income (non-recurring
item)....................... -- -- -- 3.2 -- -- 4.2 --
Interest income............... -- -- -- -- -- 0.7 -- 0.6
Interest expense.............. (0.8) (0.6) (1.0) (3.0) (0.8) (3.5) (2.9) (3.8)
----- ----- ----- ----- ----- ----- ----- -----
Income before income taxes.... 4.9 7.9 14.3 13.2 14.5 11.2 13.7 13.2
Provision for income taxes.... 1.9 3.1 5.5 5.7 5.7 5.1 5.9 5.5
----- ----- ----- ----- ----- ----- ----- -----
Net income.................... 3.0% 4.8% 8.8% 7.5% 8.8% 6.1% 7.8% 7.7%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

Outsourcing Services Revenues. Outsourcing services revenues increased
$5.3 million, or 24.0%, to $27.5 million for the nine months ended September 30,
1998 from $22.2 million for the corresponding period in 1997. The increase was
primarily attributable to (i) the expansion of the services provided to BIG to
include policy administration for certain of BIG's automobile lines of
insurance, (ii) the change in fee structure for claims administration (excluding
BIG's flood and homeowners lines) from a cost reimbursement basis to a
percentage of earned premium and, in certain instances, incurred losses, and
(iii) increased services provided to BIG due to the growth in the volume of
BIG's flood insurance business. The increase was partially offset by the revised
fee structure pertaining to policy administration and claims administration for
BIG's homeowners insurance line.

Flood Zone Determination Services Revenues. Flood zone determination
services revenues increased $13.3 million, or 201.8%, to $19.9 million for the
nine months ended September 30, 1998 from $6.6 million for the corresponding
period in 1997. The revenue growth was primarily attributable to the inclusion
of the consolidated revenues of both Geotrac and BHDS for the nine months ended
September 30, 1998 as compared with the revenues of BHDS only for the nine
months ended September 30, 1997. The revenue growth was also attributable to the
increased number of flood zone determinations processed due to the large number
of mortgage financings and refinancings occurring largely as a result of
continued low interest rates.

21
<PAGE> 26

Cost of Outsourcing Services. Cost of outsourcing services increased $3.3
million, or 19.9%, to $19.8 million for the nine months ended September 30, 1998
from $16.5 million for the corresponding period in 1997. The increase in cost of
outsourcing services was primarily attributable to (i) increases in staffing due
to the expansion of the services provided to BIG to include policy
administration for certain of BIG's automobile lines of insurance, (ii)
increases in information services personnel costs due to additions to staff,
(iii) increased services provided to BIG due to the growth in the volume of
BIG's insurance business and (iv) the Company assuming responsibility for claims
costs for independent adjusters and appraisers that were previously borne by
BIG. These increases were partially offset by a decrease in the lease cost of
fixed assets that were purchased by the Company from BIG on April 1, 1998. Prior
to April 1, 1998, the depreciation for such equipment, which totaled $282,015
and $762,260 during the nine months ended September 30, 1998 and 1997,
respectively, was charged to the Company under an arrangement similar to an
operating lease and is included in cost of outsourcing services. Such costs are
now included in depreciation and amortization.

Cost of Flood Zone Determination Services. Cost of flood zone
determination services increased $5.2 million, or 153.6%, to $8.5 million for
the nine months ended September 30, 1998 from $3.4 million for the corresponding
period in 1997. The increase in cost of flood zone determinations was primarily
attributable to the inclusion of the consolidated expenses of both Geotrac and
BHDS for the nine months ended September 30, 1998 as compared with the expenses
of BHDS only for the nine months ended September 30, 1997. As a percentage of
flood zone determination services revenue, the decrease in cost of flood zone
determination services resulted primarily from a reduction of approximately
$527,000 in insurance costs associated with the Company's life of loan program
due to favorable loss experience under the life of loan program, partially
offset by cross-licensing fees for database management paid to Old Geotrac.
These cross-licensing fees were terminated upon the merger of Old Geotrac into
the Company in July, 1998. Effective June 1, 1998, the Company terminated its
insurance policy associated with its life of loan program. Consequently, from
such date forward, the Company defers each life of loan fee received in order to
account for its obligation to perform future flood zone redeterminations.

Selling, General and Administrative Expense. Selling, general and
administrative expenses increased $3.5 million, or 154.6%, to $5.7 million for
the nine months ended September 30, 1998 from $2.2 million for the corresponding
period in 1997. The increase is primarily related to additional wages and
related benefits associated with adding executive management, accounting, sales
and marketing and other administrative staff during 1998 to support the
Company's expanded operations, as well as the inclusion of the consolidated
expenses of both Geotrac and BHDS for the nine months ended September 30, 1998
as compared with the expenses of BHDS only for the nine months ended September
30, 1997.

Management Services from Parent. Management services from Parent increased
$748,000, or 42.6%, to $2.5 million for the nine months ending September 30,
1998 from $1.8 million for the corresponding period in 1997. The increase is
primarily related to the Company's portion of an employment practices judgment
totaling approximately $400,000 rendered in the third quarter of 1998 and an
increase in management services provided to the Company due to the Company's
expanded operations. Such increased services primarily include agency
accounting, audit services, cash management services and legal services.

Depreciation and Amortization Expense. Depreciation and amortization
expense increased $2.5 million, or 572.9%, to $3.0 million for the nine month
period ended September 30, 1998 from $443,000 for the same period in 1997
primarily as a result of depreciation related to assets consisting of telephone
equipment and computer hardware and software, transferred and assigned to the
Company in April, 1998 for use in its business. Prior to April 1, 1998, the
depreciation for such equipment, which totaled $282,015 and $762,260 during the
nine months ended September 30, 1998 and 1997, respectively, was charged to the
Company under an arrangement similar to an operating lease and is included in
cost of outsourcing services. Also, the nine-month period ended September 30,
1998 reflects amortization and depreciation related to the consolidation of
Geotrac that took place in July, 1998.

Equity in Earnings of Geotrac, Inc. During July, 1997, the Company
purchased a 49% interest in Old Geotrac. Equity in earnings of Old Geotrac
contributed a ($32,000) net loss to the Company for the nine

22
<PAGE> 27

months ended September 30, 1997. Geotrac was shown on a consolidated basis for
the nine months ended September 30, 1998.

Provision for Income Taxes. The Company's effective income tax rates were
45.1% and 39.4% for the nine months ended September 30, 1998 and 1997,
respectively. Income before income taxes for the first nine months of 1998,
excluding minority interest in Old Geotrac, resulted in a effective income tax
rate of 41.4%. This effective rate reflects the impact of a minority interest on
equity earnings in Old Geotrac presented net of tax and other items discussed in
Note 10 to the Consolidated Financial Statements of the Company.

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 ON A PRO FORMA
BASIS

Outsourcing Services Revenues. Outsourcing services revenues increased
$4.4 million, or 19.0%, to $27.5 million in 1998 from $23.1 million in 1997.
Continued strong flood premium production through the first nine months of 1998
generated an increase in related service fees. In addition, a higher level of
flood losses resulted in greater claims fee revenues.

Flood Zone Determination Services Revenues. Flood zone determination
services revenues increased $3.0 million, or 17.5%, to $19.9 million in 1998
from $16.9 million in 1997. The increase in revenues was due to an increase in
determinations performed resulting primarily from a substantial rise in
refinancing activity, particularly during the first half of 1998. This increase
was partially offset by a decrease in the average fee per determination as a
result of competitive pressures.

Cost of Outsourcing Services. Cost of outsourcing services increased $2.9
million, or 17.3%, to $19.5 million in 1998 from $16.6 million in 1997. As a
percentage of outsourcing services revenues, cost of outsourcing services
decreased from 72.0% in 1997 to 71.0% in 1998. The improvement in this
percentage was primarily the result of continued emphasis on managing actual
staffing levels to conform to the Company's staffing models, particularly with
respect to the customer service and claims service units for the homeowners and
automobile product lines. The increase in absolute costs was primarily due to an
increase in salary expenses, principally relating to information technology
professionals.

Cost of Flood Zone Determination Services. Cost of flood zone
determination services increased $864,000, or 11.3%, to $8.5 million in 1998
from $7.7 million in 1997. As a percentage of flood zone determination services
revenue, cost of flood zone determination services decreased from 45.3% in 1997
to 42.9% in 1998. The decrease in this percentage was primarily due to the
consolidation of two separate flood zone operations (BHDS and Geotrac) into one
operation, which resulted in a substantial short-term reduction in employees
engaged in the processing of flood zone determinations, as well as the
elimination of certain duplicative costs. The decrease was also due to reduced
insurance cost of approximately $527,000 related to the Company's life of loan
program due to favorable loss experience under the life of loan program.

COMPARISON OF THE YEARS ENDED DECEMBER 31, 1997 AND 1996

Outsourcing Services Revenues. Outsourcing services revenues increased
$24.6 million, or 479.8%, to $29.7 million in 1997 from $5.1 million in 1996.
During 1997, outsourcing services revenue was generated primarily from the
Company's service agreements with BIG to provide policy and claims
administration related to its flood and homeowners insurance programs. In
addition, during 1997, the Company provided claims administration services on a
cost reimbursement basis for most of BIG's other lines of business, excluding
flood and homeowners. During 1996, the Company provided only information
technology services to its affiliated companies on a cost reimbursement basis.

Flood Zone Determination Services Revenues. Flood zone determination
services revenues increased $1.1 million, or 14.1%, to $8.8 million in 1997 from
$7.7 million in 1996. The increase in revenues was due to the increase in
determinations performed, offset by a decrease of approximately 6.0% in the
average fee per determination as a result of competitive pressures.

Cost of Outsourcing Services. Cost of outsourcing services increased $18.1
million, or 464.4%, to $22.0 million in 1997 from $3.9 million in 1996. The
increase was primarily the result of the transfer of various

23
<PAGE> 28

policy and claims administration units from BIG to the Company, as well as
upward pressure on salaries resulting from continued competition for qualified
employees.

Cost of Flood Zone Determination Services. Cost of flood zone
determination services decreased $598,000, or 11.2%, to $4.8 million in 1997
from $5.4 million in 1996. As a percentage of flood zone determination services
revenue, cost of flood zone determination services decreased from 69.6% in 1996
to 54.2% in 1997. The decrease was primarily the result of reduced insurance
cost of approximately $800,000 related to the Company's life of loan program due
to favorable loss experience under the life of loan program. The cost savings
during 1997 under this program was partially offset by increases in personnel to
process the increased volume of flood zone determinations.

Selling, General and Administrative Expense. Selling, general and
administrative expenses increased $1.9 million, or 169.9%, to $3.0 million in
1997 from $1.1 million in 1996. The increase was primarily related to additional
wages and related benefits associated with adding executive management,
accounting, sales and marketing and other administrative staff during 1997 to
support the Company's expanded operations.

Management Services from Parent. Management services from Parent increased
$1.3 million, or 122.4%, to $2.3 million in 1997 from $1.1 million in 1996. The
increase is primarily related to the expansion of the Company's services during
1997 to include policy and claims administration. Prior to 1997, the Company
mainly provided data processing services to its affiliates. The expansion of
services resulted in a significant need for additional space and human resource
services, which were included in the management services allocation.

Depreciation and Amortization Expense. Depreciation and amortization
expense increased $375,000, or 121.1%, to $684,000 in 1997 from $309,000 in 1996
primarily as a result of upgrading existing data processing equipment.

Interest Expense. Interest expense increased $303,000, or 402.5%, to
$379,000 in 1997 from $75,000 in 1996 as a result of increased borrowings used
to fund the Company's capital expenditures.

Equity in Earnings of Geotrac, Inc. During July 1997, the Company
purchased a 49% interest in Old Geotrac. Equity in earnings of Old Geotrac
contributed $201,000 to the earnings of the Company in 1997.

Provision for Income Taxes. The Company's effective income tax rates were
38.3% and 39.1% in 1997 and 1996, respectively. Income before provision for
income taxes for 1997, excluding the equity in earnings of Old Geotrac, resulted
in an effective income tax rate of 39.7%. The equity in earnings in Old Geotrac
are presented net of tax.

COMPARISON OF THE YEARS ENDED DECEMBER 31, 1996 AND 1995

Outsourcing Services Revenues. Outsourcing services revenues increased
$1.7 million, or 48.8%, to $5.1 million in 1996 from $3.4 million in 1995
primarily as a result of an increase in the information technology services
provided to BIG due to the growth in the volume of BIG's insurance business.

Flood Zone Determination Services Revenues. Flood zone determination
services revenue increased $2.6 million, or 50.3%, to $7.7 million in 1996 from
$5.1 million in 1995, primarily as a result of significant growth in the
Company's client base and in the number of requests for flood zone
determinations, partially offset by a decrease in the average fee per
determination due to competitive pressures.

Cost of Outsourcing Services. Cost of outsourcing services increased
$941,000, or 31.8%, to $3.9 million in 1996 from $3.0 million in 1995. The
increase resulted primarily from additions to the Company's information
technology staff due to the growth in the volume of BIG's insurance business, as
well as salary adjustments due to the competitive market for qualified
personnel.

Cost of Flood Zone Determination Services. Cost of flood zone
determination services increased $2.0 million, or 57.0%, to $5.4 million in 1996
from $3.4 million in 1995. The increase was primarily attributable to an
increased demand for the Company's life of loan program, for which the Company
purchases insurance to fund its obligation to update flood zone determinations
under the life of loan program. Additionally, the

24
<PAGE> 29

increase in cost of flood zone determination services was attributable to the
addition of flood zone determination staff to handle higher business volume
levels.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $317,000 or 39.4%, to $1.1 million in 1996
from $804,000 for 1995, primarily as a result of adding additional
administrative staff to support the Company's growth.

Management Services from Parent. Management services from Parent increased
$329,000, or 45.4%, to $1.1 million in 1996 from $725,000 in 1995. The increase
is primarily related to the growth of the Company's data processing department
and resulting need for additional space and human resource services, which were
included in the management services allocation.

Depreciation and Amortization. Depreciation and amortization increased
$125,000, or 67.9%, to $309,000 in 1996 from $184,000 in 1995 primarily as a
result of adding $1.0 million of property and equipment in 1996.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically funded its operations through cash generated
from operations and receipt of service fees advanced from BIG. Bank borrowings
have been used to finance fixed asset purchases. Net cash provided by operating
activities for the nine months ended September 30, 1997 and 1998 was $4.8
million and $5.8 million, respectively. For 1995, 1996 and 1997, net cash
provided by operating activities was $831,000, $963,000 and $7.7 million,
respectively. The significant increase in net cash provided by operating
activities in 1997 was primarily attributable to the increased level of net
income, employee-related accrued expenses and income taxes payable to BIG.

Net cash used in investing activities for the nine months ended September
30, 1997 and 1998 was $7.7 million and $2.0 million, respectively. For 1995,
1996 and 1997, net cash used in investing activities was $464,000, $1.0 million
and $8.2 million, respectively. In July 1997, BHDS issued $6.75 million in non-
cumulative, 8% Preferred Stock. The proceeds from the sale of the Preferred
Stock were used to fund the purchase of the Company's 49% interest in Old
Geotrac. In May 1998, the Company repurchased the outstanding Preferred Stock in
exchange for a note. The note is currently payable in its entirety on August 25,
2002 and accrues interest at a rate of 8.566%. The Company intends to use a
portion of the net proceeds from this offering to repay the note. See "Use of
Proceeds."

Net cash provided by (used in) financing activities for the nine months
ended September 30, 1997 and 1998 was $3.2 million and $(4.3) million,
respectively. For 1995, 1996 and 1997, net cash provided by (used in) financing
activities was $(333,000), $12,000 and $681,000, respectively. Cash dividends
were paid to BIG in 1996 and 1997 in the amount of $1.0 million and $3.5
million, respectively. Additionally, the Company paid a cash dividend of $1.1
million to BIG in June, 1998 and repaid $2.8 million in debt. Net advances to
BIG were $3.3 million and $5.1 million for the nine months ended September 30,
1997 and the year ended December 31, 1997, respectively.

At December 31, 1997 and September 30, 1998 amounts due from BIG totaled
$8.8 million and $11.3 million, respectively. At the same dates, amounts due to
BIG (including income tax payable to BIG), totaled $5.1 million and $5.6
million, respectively. In addition, at September 30, 1998, notes payable to BIG
totaled $8.0 million. Upon completion of this offering, it is contemplated that
all intercompany balances will be satisfied. The Company maintained a zero
balance account arrangement with BIG through June, 1998. As a result of this
funding arrangement, the Company has a negative cash balance for financial
reporting purposes representing checks that have been issued but that have not
yet been presented to the bank for payment. This arrangement was discontinued in
June, 1998. See "Certain Transactions -- Miscellaneous."

The Company believes that cash flows from operations and net proceeds from
this offering will not only satisfy working capital needs for approximately one
year but will also be sufficient to retire or redeem most existing debts of the
Company, including (i) acquisition debt of approximately $1.5 million
outstanding as of September 30, 1998 and (ii) debts assigned to the Company in
conjunction with the transfer of certain fixed assets from its affiliates. See
"Recent Acquisitions" and "Use of Proceeds." Prior to the consummation of the
25
<PAGE> 30

Geotrac Acquisition, Geotrac's operations generated cash flows sufficient to
provide it with necessary working capital, and the Company anticipates this
trend will continue in the future, although no assurances can be given in this
regard. Unanticipated rapid expansion, business or systems development, or
potential acquisitions may cause the Company to require additional funds. In
addition, prior to this offering, the Company at times relied upon advances
against the service fees it charges its affiliates to support working capital
needs, which included payroll, particularly with respect to certain members of
the management team who had previously allocated or divided their duties between
the Company and the affiliates. After this offering, this practice will
discontinue. In January, 1999, the Company received a commitment for a $5.0
million revolving line of credit with NationsBank that will provide bridge
financing for working capital or acquisition needs. The Company identifies and
assesses, in the normal course of its business, technologies or businesses which
it believes to strategically fit its business plan. The Company has no current
commitments with respect to any such transaction. The Company may, however,
enter into such transactions should opportunities present themselves in the
future.

YEAR 2000 COMPLIANCE

The Company is currently addressing a universal situation commonly referred
to as the "Year 2000 Problem." The Year 2000 Problem relates to the inability of
certain computer software programs to properly recognize and process
date-sensitive information relative to Year 2000 and beyond, and the inability
of non-information technology systems to function properly when the Year 2000
arrives.

Information concerning the Company's (1) state of readiness, (2) cost of
addressing Year 2000 issues, (3) risk of Year 2000 issues, and (4) contingency
plans is provided below. The discussion is divided into two parts: the first
addresses the Company's outsourcing operations, and the second addresses the
Company's flood zone determination operations.

Outsourcing Operations. With respect to both information technology ("IT")
and non-information technology ("non-IT") systems associated with its
outsourcing operations, the Company has developed a detailed Year 2000 Project
Plan (the "Plan") and is in the process of carrying out the Plan. An independent
accounting firm has been engaged to validate the Plan. The Plan calls for
testing, validation and modification of the Company's systems in order to ensure
Year 2000 compliance. For IT hardware systems, the Plan addresses the Year 2000
Problem with respect to: production servers; imaging servers; communication
servers; development servers; Q&A servers; wide-area network and network
infrastructure; AS/400 processors and tape drives; desk-top personal computers;
telecommunications equipment, including voice, fax and modems; and printers. For
IT software systems, this Plan addresses the Year 2000 Problem with respect to:
AS/400 operating and applications systems; personal computer applications
software, including spreadsheets, "macros", "uploads" and "downloads"; and
electronic forms. Testing has commenced and is expected to continue through the
first two quarters of 1999. The Company is already issuing policies with terms
extending beyond the Year 2000 and believes it will not experience any
difficulty in processing business on its core processing systems.

For non-IT systems, the Plan provides for testing of elevators, generators,
utilities, card key access, alarms, uninterrupted power source, air
conditioning/heating units and thermostats. Non-IT systems testing is underway
and is expected to be completed during the first quarter of 1999.

The Plan also provides for certification of Year 2000 compliance by the
Company's business partners. Such partners provide office supplies, paper
supplies, copy center support, off-site tape management and disaster recovery
services. The Plan also provides for detailed questionnaires and follow-up
letters to be sent to all outside software vendors requiring responses, and
ultimately certification, as to their Year 2000 readiness. A review of these
responses by Company management will lead to decisions regarding the retention
or replacement of vendors and/or their products. Such decisions are expected to
be made prior to June 30, 1999. The Company will replace such vendors and
products if it believes their state of Year 2000 readiness poses a risk to the
Company sufficient to warrant doing so. The Company does not anticipate any
difficulty in securing adequate replacements for such vendors or products.

26
<PAGE> 31

Costs associated with addressing the Year 2000 Problem were immaterial
prior to 1998. For internally built applications software, the Company has
consistently accounted for the Year 2000 date as a normal part of program
development. Nearly all costs associated with addressing the Year 2000 Problem
are internal expenses, with the exception of the costs of engaging the
independent accounting firm. The Company currently estimates that total incurred
and future direct costs associated with addressing the Year 2000 Problem for its
outsourcing operations will be in the range of $300,000 to $400,000. The Company
does not anticipate the total replacement of any core system. In the event an
outside vendor's software is targeted for replacement, the Company may incur
additional costs relating to the purchase price of new software (which may be
inflated if demand is high), conversion of data to the new system, and training
of personnel on the new system. Management does not expect these costs to
materially adversely affect the Company's business or financial condition.

The most reasonably likely worst case scenario for the Company's
outsourcing operation is the possibility that the Company will be required to
process manually applications for insurance, which will result in increased
costs of issuing insurance policies. Manually-processed applications would
increase data entry and also increase customer service intervention as
representatives of the Company seek to obtain complete and accurate customer
information in order to issue correct insurance policies. These increased
responsibilities may require overtime on the part of customer service
representatives and supervisors. Moreover, the Company may be required to
perform additional internal cash processing if its lockbox vendor is required to
operate in a manual environment. The flood insurance product may require manual
flood zone searches in lieu of automatic determinations in the event such
automated flood zone processes become unavailable. In addition, the Company may
be required, for a period of time, to issue manual checks for return premiums,
claims payments and producers' commissions as well as to perform manual policy
assembly. Such activities may result in a substantial increase in overtime wages
for a significant percentage of the Company's workforce as well as require the
addition of a significant number of temporary employees. Non-computer generated
forms, manual check stock, retrieval of physical records rather than electronic
facsimiles and manual processing would supplant computer processing until such
systems are adapted to address the Year 2000 Problem. Risks associated with a
manual environment as described above could have a material adverse effect on
the Company's business, financial condition or results of operations.

The Company will develop a contingency plan to deal with situations which
may require manual processing. This plan, expected to be developed in the first
half of 1999, will incorporate each processing department's needs in the event
it must convert to manual systems from automated systems. Such needs may include
overtime hours, temporary employees, additional space, paper forms in
replacement of computer-generated forms, blank paper stock, physical file space,
additional copiers and fax machines, additional equipment, greater support for
data reconciliation and cash reconciliation processes in the absence of
computer-generated production data, and greater use of fiche and fiche readers.

Flood Zone Determination Operations. The Company has also adopted a
detailed plan (the "Project Plan") to address the Year 2000 Problem with respect
to its flood zone determination operations. The Project Plan also calls for
testing, validation and modification of the IT and non-IT systems associated
with the Company's flood zone determination operations in order to ensure Year
2000 compliance.

For IT hardware systems, the Project Plan addresses the Year 2000 Problem
with respect to: IBM AS/400 processors and tape drives; production servers;
communication servers; development servers; wide area network and network
infrastructure hardware; modems; printers; tape drives; desktop personal
computers; and fax servers. For IT software systems, the Plan addresses the Year
2000 Problem with respect to: network operating systems; software development
packages and third-party vendor software packages; in-house developed software
packages; GeoCompass(R), the Company's flood zone determination electronic
ordering and delivery package; and GMaS internal production routing.

The Company has reviewed and validated the Year 2000 compliance of the IBM
AS/400 business system used in its flood zone determination operations. This
process involved reviewing all internally developed application code, modules,
databases, and reports for correct date handling, changing all date fields to
handle the four digit century format, and upgrading the operating system to the
Year 2000 compliant

27
<PAGE> 32

version. The Company's internally developed GeoCompass(R) and GMaS software
packages have also been assessed for Year 2000 readiness. Updated versions of
such software that are Year 2000 compliant are expected to be put into service
during the first quarter of 1999. Of the Company's flood zone determination
network operating systems, the Company has determined that certain versions are
not Year 2000 compliant. These versions are expected to be upgraded in the
second quarter of 1999. The Company is in the process of having its other flood
zone determination hardware and software components validated for Year 2000
compliance by the vendors that supply those products.

The non-IT systems used in the Company's flood zone determination
operations include: internal telephone systems, auxiliary power supplies,
security systems, environmental control systems, and postal equipment. The
Company has contacted the various vendors providing such systems regarding
validation of their systems. This project is expected to be completed by July
31, 1999.

Testing methodology of existing internal systems includes the
identification of programs and Year 2000 critical dates for date rollover
testing. A test will be set up in February 1999 of a mirrored production
environment. This environment will test AS/400 applications, communication and
data transfer systems, electronically generated faxes and data files, LAN and
WAN connections, and production flow within the Company. All tests will be
documented, errors corrected and retested before verification can be signed-off.

The Company has a number of flood zone determination clients with which it
electronically exchanges data. The clients that use a proprietary method for
communicating data have been contacted by the Company regarding their need to
upgrade their interfaces. Most of the Company's flood zone determination clients
utilize its Compass product line. Version 3.x of that software has been tested
and verified for Year 2000 compliance. Users of non-compliant versions of such
software are expected to be upgraded to Year 2000 compliant versions by
September 30, 1999.

The Company estimates that, to date, it has spent approximately $150,000 in
time and materials (computing costs, network and telephone support, office
supplies, programming support and project coordination) in executing its Project
Plan with respect to its flood zone determination operations. The Company also
estimates that it will cost an additional $100,000 to address the Year 2000
Problem with respect to these operations. Nearly all costs, whether incurred or
to be incurred, are internal to the Company. The Company does not anticipate the
total replacement of any core system. In the event an outside vendor's software
is targeted for replacement, the Company may incur additional costs relating to
acquisition of replacement software, conversion of data, and personnel training.
Management does not expect these costs to materially adversely affect the
Company's business or financial condition.

The most reasonably likely worst case scenario for the Company's flood zone
determination operations is the possibility that the Company will be unable to
electronically exchange data with its clients. Such circumstances would require
the Company to revert to manually exchanging requests for searches and remitting
completed determinations to clients. This increase in manual operations would
likely result in significant increases in the cost of clerical support
(temporary employees), data entry (overtime wages), paper supplies, fax machines
and telephone customer service support (overtime wages). Moreover, the inability
to electronically exchange data with certain clients could result in a material
loss of revenue.

The Company is in the process of developing a contingency plan relating to
manual preparedness in the event of the impairment of its flood zone
determination IT systems. This plan involves construction of adequate staffing
models that provide an accurate indication of the number of additional employees
required to process determinations manually on a short-term basis. The plan also
addresses potential alternative forms of data exchange, such as faxes and data
tapes.

28
<PAGE> 33

SELECTED CONSOLIDATED FINANCIAL DATA OF GEOTRAC
(IN THOUSANDS)

The following selected financial data should be read in conjunction with
the Financial Statements of SMS Geotrac, Inc. (as the predecessor to Geotrac,
Inc. (formerly YoSystems, Inc.) ("Old Geotrac")) and the Notes thereto, the
Financial Statements of Old Geotrac and the Notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Geotrac" included elsewhere in this Prospectus. The following selected financial
data of SMS Geotrac, Inc. for the years ended June 30, 1996 and 1997 and for the
one month ended July 31, 1997 and of Old Geotrac for the years ended December
31, 1995, 1996, and 1997 have been derived from the company's audited financial
statements. The selected financial data presented as of June 30, 1998 and the
six months ended June 30, 1998 were derived from the unaudited financial
information of Old Geotrac. The pro forma selected financial data of Geotrac for
the years ended December 31, 1996 and 1997 was derived from the unaudited
financial statements and notes thereto of Old Geotrac. The pro forma selected
financial data of Geotrac for the six months ended June 30, 1997 was derived
from unaudited financial data of Old Geotrac and SMS Geotrac not included
herein. With respect to the unaudited financial information, the Company is of
the opinion that all material adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the company's interim
results of operations have been included. This data should be read in
conjunction with the Financial Statements of SMS Geotrac, Inc. and the Financial
Statements of Old Geotrac included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
OLD GEOTRAC (FORMERLY
SMS GEOTRAC, INC. YOSYSTEMS, INC.) GEOTRAC
------------------------------- ---------------------- ------------------------------------------
YEAR ENDED ONE MONTH YEAR ENDED YEAR ENDED SIX MONTHS ENDED
JUNE 30, ENDED DECEMBER 31, DECEMBER 31, JUNE 30,
------------------ JULY 31, ---------------------- ----------------- ----------------------
1996 1997 1997 1995 1996 1997 1996 1997 1997 1998
------- ------- ---------- ---- ---- ------ ------- ------- --------- ----------
PRO FORMA PRO FORMA HISTORICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues.................. $12,490 $12,522 $1,210 $ -- $ -- $6,336 $13,375 $14,063 $6,517 $8,848
------- ------- ------ ---- ---- ------ ------- ------- ------ ------
Expenses:
Cost of revenues........ 6,219 5,914 530 -- -- 2,679 6,673 6,043 2,834 3,919
Selling, general and
administrative........ 3,079 2,839 227 10 30 1,319 3,287 2,900 1,354 1,557
Deferred compensation
(non-recurring
item)................. -- -- -- -- -- 733 -- 733 -- 728
Depreciation and
amortization.......... 689 1,331 104 -- -- 594 1,639 1,908 1,150 727
------- ------- ------ ---- ---- ------ ------- ------- ------ ------
Total expenses.... 9,987 10,084 861 10 30 5,325 11,599 11,584 5,338 6,931
------- ------- ------ ---- ---- ------ ------- ------- ------ ------
Operating income (loss)... 2,503 2,438 349 (10) (30) 1,011 1,776 2,479 1,179 1,917
Other income
(non-recurring item).... -- -- -- 932 -- 1,700 -- 1,700 -- --
Interest expense.......... (82) (79) (8) -- -- (338) (770) (825) (391) (372)
------- ------- ------ ---- ---- ------ ------- ------- ------ ------
Income before income
taxes................... 2,421 2,359 341 922 (30) 2,373 1,006 3,354 788 1,545
Provision for income
taxes................... 1,047 1,079 148 -- -- 272 421 1,457 315 618
------- ------- ------ ---- ---- ------ ------- ------- ------ ------
Net income (loss)......... $ 1,374 $ 1,280 $ 193 $922 $(30) $2,101 $ 585 $ 1,897 $ 473 $ 927
======= ======= ====== ==== ==== ====== ======= ======= ====== ======
</TABLE>

<TABLE>
<CAPTION>
OLD GEOTRAC (FORMERLY
YOSYSTEMS, INC.)
-----------------------------
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
-------------- JUNE 30,
1996 1997 1998
---- ------- ------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)................................ $(25) $ 1,402 $ 2,516
Total assets................................................ -- 18,637 19,432
Long-term debt.............................................. -- 7,745 6,677
Total shareholders' equity (deficit)........................ (25) 7,126 8,781
</TABLE>

29
<PAGE> 34

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

The following discussion should be read in conjunction with the Financial
Statements of Old Geotrac and the Notes thereto and the Financial Statements of
SMS Geotrac, Inc. and the Notes thereto included elsewhere in this Prospectus.

OVERVIEW

During July, 1998, the Company completed the Geotrac Acquisition. The
Geotrac Acquisition occurred through a series of transactions beginning in July,
1997. At that time, the Company acquired 49% of the issued and outstanding
common stock of YoSystems, Inc. which had nominal net assets at the date of
acquisition. YoSystems, Inc. concurrently purchased all of the issued and
outstanding common stock of SMS Geotrac, Inc. ("SMS Geotrac"), an unaffiliated
entity. SMS Geotrac subsequently merged into YoSystems, Inc., which changed its
name to "Geotrac, Inc." ("Old Geotrac"). In July, 1998, the Company acquired the
remaining 51% of the issued and outstanding common stock of Old Geotrac.

For all periods presented herein and until August 1, 1997, Old Geotrac was
a relatively inactive S Corporation whose principal activity was to receive
contingent earn-out payments from the prior sale of its operating assets in 1994
and to distribute these earn-out payments to its shareholders.

Geotrac's primary source of revenues is derived from the performance of
flood zone determinations principally for mortgage origination and P&C insurance
companies. Revenues are recognized upon completion of services performed.
Mortgage interest rates and weather patterns have historically impacted
Geotrac's revenues. The current low level of interest rates, which has
stimulated the increase in the number of mortgage financings and refinancings,
and the increased awareness of severe weather occurrences have resulted in an
increase in the number of determinations processed by Geotrac.

Cost of revenues primarily consists of wages and related benefits for
personnel who perform flood zone determinations. As Geotrac continues to migrate
towards performing more automated than manual determinations, management
believes cost of revenues as a percentage of revenues will decrease.

For comparative purposes, the operating results herein reflect the pro
forma results of Old Geotrac for the years ended December 31, 1996 and 1997 and
the six months ended June 30, 1997 as if Old Geotrac acquired SMS Geotrac on
January 1, 1996. The pro forma adjustments that have been made reflect the
additional goodwill amortization and interest expense that would have been
incurred if Old Geotrac had acquired SMS Geotrac on January 1, 1996.
Additionally, for comparative purposes, the operating results herein reflect the
historical results of SMS Geotrac for the years ended June 30, 1996 and 1997.

Because Old Geotrac had limited operations during the year ended December
31, 1996 and for the period January 1, 1997 through July 31, 1997, the date of
the acquisition of SMS Geotrac, Inc., no comparisons of the six months ended
June 30, 1998 and 1997, the years ended December 31, 1997 and 1996, and the
years ended December 31, 1996 and 1995 are provided. Similarly, no comparison to
the prior period is provided for SMS Geotrac with respect to the one month ended
July 31, 1997.

30
<PAGE> 35

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of revenues represented by certain income and expense items.

<TABLE>
<CAPTION>
OLD GEOTRAC (FORMERLY
SMS GEOTRAC, INC. YOSYSTEMS, INC.) GEOTRAC
------------------------- ---------------------- -------------------------------------
YEAR ENDED ONE MONTH YEAR ENDED YEAR ENDED SIX MONTHS ENDED
JUNE 30, ENDED DECEMBER 31, DECEMBER 31, JUNE 30,
------------- JULY 31, ---------------------- ------------- ---------------------
1996 1997 1997 1995 1996 1997 1996 1997 1997 1998
----- ----- --------- ----- ----- ------ ----- ----- --------- ---------
PRO FORMA PRO FORMA HISTORICAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... 100.0% 100.0% 100.0% 0.0% 0.0% 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- --- --- ----- ----- ----- ----- -----
Expenses:
Cost of revenues........... 49.8 47.2 43.8 0.0 0.0 42.3 49.9 43.0 43.5 44.3
Selling, general and
administrative........... 24.7 22.7 18.7 0.0 0.0 20.8 24.6 20.6 20.8 17.6
Deferred compensation (non-
recurring item).......... 0.0 0.0 0.0 0.0 0.0 11.5 -- 5.2 -- 8.2
Depreciation and
amortization............. 5.5 10.6 8.6 0.0 0.0 9.4 12.2 13.6 17.6 8.2
----- ----- ----- --- --- ----- ----- ----- ----- -----
Total expenses....... 80.0 80.5 71.1 0.0 0.0 84.0 86.7 82.4 81.9 78.3
----- ----- ----- --- --- ----- ----- ----- ----- -----
Operating income............. 20.0 19.5 28.9 0.0 0.0 16.0 13.3 17.6 18.1 21.7
Other income (non-recurring
item)...................... 0.0 0.0 0.0 0.0 0.0 26.8 -- 12.1 -- --
Interest expense............. (0.6) (0.7) (0.7) 0.0 0.0 (5.3) (5.8) (5.8) (6.0) (4.2)
----- ----- ----- --- --- ----- ----- ----- ----- -----
Income before income taxes... 19.4 18.8 28.2 0.0 0.0 37.5 7.5 23.9 12.1 17.5
Provision for income taxes... 8.4 8.6 12.2 0.0 0.0 4.3 3.1 10.4 4.8 7.0
----- ----- ----- --- --- ----- ----- ----- ----- -----
Net income................... 11.0% 10.2% 16.0% 0.0% 0.0% 33.2% 4.4% 13.5% 7.3% 10.5%
===== ===== ===== === === ===== ===== ===== ===== =====
</TABLE>

31
<PAGE> 36

COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 ON A PRO FORMA
BASIS -- GEOTRAC

Revenues. Revenues increased $2.3 million, or 35.8%, to $8.8 million for
the six months ended June 30, 1998 from $6.5 million for the same period in
1997. This revenue growth was attributable to the increased number of
determinations processed due to the large number of mortgage financings and
refinancings as a result of continued low interest rates.

Cost of Revenues. Cost of revenues increased $1.1 million, or 38.2%, to
$3.9 million for the six months ended June 30, 1998 from $2.8 million for the
same period in 1997. As a percentage of revenues, cost of revenues increased to
44.3% for the six months ended June 30, 1998 from 43.5% for the same period in
1997. The increase primarily relates to additions to staffing in order to
process the increased number of determinations. During May, 1998, Old Geotrac
began processing large blocks of flood zone determinations for the Company.
Pursuant to their cross-license agreement, Old Geotrac was reimbursed on a flat
monthly fee basis. The flat monthly fee resulted in revenue per determination
that was significantly less than Old Geotrac was receiving from its other
customers. The increase was partially offset by the effect of the efficiencies
associated with the increased volume of determinations, coupled with the greater
proportion of automated determinations.

Selling, General and Administrative Expense. Selling, general and
administrative increased $203,000, or 15.0%, to $1.6 million for the six months
ended June 30, 1998 from $1.4 million for the same period in 1997. As a
percentage of revenues, selling, general and administrative expenses decreased
to 17.6% for the six months ended June 30, 1998 from 20.8% for the same period
in 1997. This percentage decrease was primarily due to spreading certain fixed
costs over a larger revenue base.

Interest Expense. Interest expense decreased $19,000, to $372,000 for the
six months ended June 30, 1998 from $391,000 for the same period in 1997.

Provision for Income Taxes. The effective income tax rate was 40.0% for
the six months ended June 30, 1998 and 1997.

COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996 ON A PRO FORMA
BASIS -- GEOTRAC

Revenues. Revenues increased $688,000, or 5.1%, to $14.1 million in 1997
from $13.4 million in 1996. Most of this revenue growth occurred after SMS
Geotrac was acquired in July, 1997, as a result of the increased number of
determinations processed due to the large number of mortgage financings and
refinancings as a result of continued low interest rates.

Cost of Revenues. Cost of revenues decreased $630,000, or 9.4%, to $6.0
million in 1997 from $6.7 million in 1996. As a percentage of revenues, cost of
revenues decreased to 43.0% in 1997 from 49.9% in 1996. The decrease, in both
actual dollar amount and as a percentage of revenues, resulted primarily from
(i) efficiencies associated with an increased volume of determinations, (ii) a
greater proportion of automated determinations, and (iii) higher expenses
incurred in 1996 related to the expansion of Old Geotrac's automated database.

Selling, General & Administrative Expense. Selling, general and
administrative expenses decreased $387,000, or 11.8%, to $2.9 million in 1997
from $3.3 million in 1996. As a percentage of revenues, selling, general and
administrative expenses decreased from 24.6% in 1996 to 20.6% in 1997. This
decrease was the result of a reduction of bad debt expense in 1997 resulting
from improved billing and collection procedures.

Deferred Compensation (Non-Recurring Item). On September 11, 1997, Old
Geotrac's Board of Directors, recognizing the nonbinding commitment of the
president of SMS Geotrac, which commitment originated prior to the acquisition
of SMS Geotrac, approved and granted bonuses to certain current and former
employees of SMS Geotrac. Such bonuses were principally related to prior
services rendered by these employees and resulted in additional compensation in
1997 of $732,795, which amount is separately disclosed in the statement of
operations as deferred compensation (non-recurring item) and of which
approximately $362,000 and $371,000 relate to cost of revenues and selling,
general and administrative expenses, respectively. These amounts are to be paid
to the individuals on or before December 31, 1998.

May 12, 1998, the president and his spouse awarded 46.45 shares of their common
stock to these individuals. In conjunction with the agreement and plan of merger
with the Company, Old Geotrac acquired the common stock held by these
individuals for approximately $728,069. In May, 1998, Old Geotrac recorded
additional compensation expense (non-recurring item) of $728,069 and an increase
to contributed capital of $728,069.

Interest Expense. Interest expense increased $55,000 to $825,000 from
$770,000 in 1996.

Other Income (Non-Recurring Item). In 1997, Old Geotrac received a
contingent earn-out of $1,700,000, representing the final payment under a 1994
sale agreement. No payment was received in 1996.

Provision for Income Taxes. The effective income tax rate was 43.4% in
1997 and 41.9% in 1996.

COMPARISON OF THE YEAR ENDED JUNE 30, 1997 AND 1996 -- SMS GEOTRAC, INC.

Revenues. Revenues remained relatively unchanged at $12.5 million in
fiscal 1997 and 1996. The flat revenues were primarily attributable to a lack of
marketing emphasis.

Cost of Revenues. Cost of revenues decreased $305,000, or 4.9%, to $5.9
million in fiscal 1997 from $6.2 million for fiscal 1996. As a percentage of
revenues, cost of revenues decreased to 47.2% in fiscal 1997 from 49.8% in
fiscal 1996. Management attributes this decrease to a greater proportion of
automated determinations, which are less costly than manual determinations.

Selling, General and Administrative Expense. Selling, general and
administrative expense decreased $240,000, or 7.8%, to $2.8 million in fiscal
1997 from $3.1 million in fiscal 1996. As a percentage of revenues, selling,
general and administrative expense decreased to 22.7% in fiscal 1997 from 24.7%
in fiscal 1996. The reduction of bad debt expense in 1997, resulting from
improved billing and collections procedures, accounted for the decrease in the
dollar amount and percentage.

Provision for Income Taxes. The effective income tax rate was 45.8% in
fiscal 1997 and 43.2% in fiscal 1996, reflecting an additional provision for
state income taxes in 1997.

LIQUIDITY AND CAPITAL RESOURCES

Historically, Geotrac has funded its operations primarily through cash
generated from operations and to a lesser extent from capital leases and a
revolving line of credit.

The July, 1997 acquisition of SMS Geotrac was funded by BHDS' contribution
of $6,750,000 in cash and proceeds of a seven-year term note of $8,750,000
entered into by Old Geotrac. The note, which had an outstanding balance of
$7,500,000 at June 30, 1998, currently bears interest at prime rate and is
collateralized by substantially all of the assets of Old Geotrac. In conjunction
with BHDS' purchase of the remaining 51% of Old Geotrac, BHDS was the surviving
company and changed its name to "Geotrac, Inc." Accordingly, Geotrac is
presently a wholly-owned subsidiary of the Company. As such, the above
information should be read in conjunction with "Selected Consolidated Financial
Data of the Company," "Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company," the Company's Consolidated
Financial Statements and the Company's Pro Forma Condensed Consolidated
Financial Statements (unaudited).

33
<PAGE> 38

BUSINESS

GENERAL

The Company provides (1) comprehensive policy and claims outsourcing
services to the property and casualty ("P&C") insurance industry, with an
emphasis on providing these services to the flood insurance market, and (2)
flood zone determinations to financial institutions, mortgage lenders and
insurance companies. The Company's outsourcing services, which are offered on
either a bundled or "a la carte" basis, include policy administration, claims
administration and information technology services. During the twelve months
ended September 30, 1997 and the nine months ended September 30, 1998, the
Company processed approximately 575,000 and an estimated 667,000 insurance
policies, respectively, including approximately 450,000 and an estimated 540,000
flood insurance policies, respectively, making it a significant provider of
flood administration services. The Company currently provides flood outsourcing
services to its affiliate, Bankers Insurance Group, Inc. (together with its
subsidiaries, "BIG"), Mobile USA Insurance Company, Inc. and AAA Auto Club South
Insurance Company, as well as to insurance companies that offer flood insurance
utilizing BIG as their private label servicing carrier, such as Armed Forces
Insurance Corporation and AMICA Mutual Insurance Company. In conjunction with
BIG, the Company is able to offer insurance companies the ability to create a
turnkey private label flood insurance product. The Company believes this product
is attractive to insurance companies that desire to offer flood insurance but
are not approved by the Federal Emergency Management Agency ("FEMA") to sell and
service flood insurance. FEMA estimates that only 25% to 33% of U.S. properties
in high risk areas that are required to be covered by flood insurance are in
fact covered. The Company anticipates continued growth in the demand for flood
insurance, and related flood outsourcing and flood zone determination services,
over the next several years.

During 1997 and the nine months ended September 30, 1998, the Company
processed approximately 1.4 million and 1.2 million flood zone determinations,
respectively, for over 725 and 880 customers, respectively, including mortgage
lenders such as ABN Amro North America, Inc., and P&C insurance companies such
as Allendale Mutual Insurance Company and Wausau Underwriters Insurance Company.
Flood insurance is required by federal law in connection with virtually all
residential mortgage loans, including refinancing loans, covering properties
located within federally designated high-risk flood zones. A flood zone
determination is necessary in order to ascertain a property's flood zone
classification. In addition, due to more stringent underwriting criteria, P&C
insurers increasingly require flood zone determinations prior to issuing
commercial property policies. The Company uses its proprietary database,
compiled and digitized from flood maps distributed by FEMA, to determine whether
a particular property or structure is located within a flood zone classification
that requires flood insurance. The Company estimates that over 85% of U.S.
households are in counties covered by its electronic database.

The Company is a 74.4% owned subsidiary of BIG, a holding company chartered
in Florida in 1976. BIG provides multiple lines of P&C insurance, most notably
flood, homeowners and automobile insurance, to individuals and businesses
throughout the United States. From 1993 to 1997, BIG's premiums grew from $113.7
million to $259.0 million, representing annual growth rates of 14.8%, 22.5%,
46.8% and 10.4%, respectively, and a compound annual growth rate of 22.8%. BIG
is the largest underwriter of flood insurance policies through independent
agents (and the second largest overall) in the United States. Upon completion of
this offering, BIG will beneficially own 62.7% of the Company's Common Stock.
BIG is the Company's principal customer, accounting for approximately 75.6% (on
a historical basis) and 56.4% (on a pro forma basis) of the Company's total
revenues and 98.0% (on both a historical basis and a pro forma basis) of the
Company's outsourcing revenues in 1997, and 56.2% and 96.8% of the Company's
total revenues and outsourcing revenues for the nine months ended September 30,
1998.

OVERVIEW OF THE FEDERAL FLOOD INSURANCE PROGRAM

The U.S. flood insurance market is regulated by FEMA, which launched the
National Flood Insurance Program (the "Flood Program") in 1968. FEMA created the
Flood Program to provide federally-backed flood insurance to residents in
designated floodplain communities, on the condition that such communities comply

34
<PAGE> 39

with the Flood Program's floodplain management requirements. The Flood Program,
as it exists today, is administered by the Federal Insurance Administration
("FIA").

The Flood Program was launched in 1968, and in 1983, FIA opened the flood
insurance market to private insurance companies by establishing the National
Flood Insurance Write Your Own ("WYO") program. The WYO program permits private
insurance companies who meet FEMA requirements to sell flood insurance
underwritten by the federal government and subject to federal regulation.

In 1994, Congress passed the National Flood Insurance Reform Act of 1994
(the "1994 Reform Act"). The 1994 Reform Act clarified and strengthened the
obligations of mortgage lenders to oversee and ensure the purchase of flood
insurance by borrowers who obtain federally-insured residential mortgage loans
on properties located in federally designated high-risk flood zones. Under the
1994 Reform Act, mortgage lenders must notify borrowers when flood insurance is
required, require flood insurance as a condition to making certain loans, and
place flood insurance premiums in escrow when other payments are escrowed.
Lenders who fail to comply with the 1994 Reform Act are subject to substantial
monetary penalties.

MARKET OPPORTUNITIES

Growth in the Flood Market. The U.S. flood insurance market has grown
significantly in recent years. Currently, almost 19,000 communities participate
in the Flood Program, and approximately 100 insurance companies are registered
to offer WYO flood insurance. The following table illustrates the growth in
flood insurance policies and premiums under the Flood Program since 1987 and
highlights the Company's increased penetration of this growing market:

<TABLE>
<CAPTION>
PERCENTAGE OF
ANNUAL TOTAL FLOOD
TOTAL NUMBER OF NUMBER OF FLOOD PROGRAM FLOOD PREMIUMS
POLICIES IN FLOOD POLICIES TOTAL ANNUAL PREMIUMS ADMINISTERED
FLOOD ADMINISTERED BY FLOOD ADMINISTERED BY BY THE
AS OF SEPTEMBER 30, PROGRAM(1) THE COMPANY PREMIUMS(2) THE COMPANY COMPANY
- ------------------- --------------- --------------- ------------- --------------- -------------
(IN 000'S) (IN 000'S) (IN 000'S) (IN 000'S)
<S> <C> <C> <C> <C> <C>
1987.......... 2,023 42 $ 554,249 $ 16,105 2.9%
1988.......... 2,052 67 571,265 17,918 3.1
1989.......... 2,167 85 623,409 21,277 3.4
1990.......... 2,341 110 658,359 27,055 4.1
1991.......... 2,459 139 716,650 33,171 4.6
1992.......... 2,530 154 779,746 37,723 4.8
1993.......... 2,690 185 859,128 49,591 5.8
1994.......... 2,805 211 946,898 58,737 6.2
1995.......... 3,265 274 1,114,059 79,914 7.2
1996.......... 3,546 376 1,209,178 101,973 8.4
1997.......... 3,811 453 1,390,015 132,041 9.5
1998.......... 4,178 542 1,599,231 205,405 12.8
</TABLE>

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

(1) Source: National Flood Insurance Program Bureau and Statistical Agent and
the 1997 FIA Annual Report.
(2) Source: National Flood Insurance Program Bureau and Statistical Agent.

35
<PAGE> 40

The following table illustrates the growth in the number of flood zone
determinations performed by the Company from 1994 through September 1998:

<TABLE>
<CAPTION>
TOTAL NUMBER OF TOTAL NUMBER OF
FLOOD ZONE DETERMINATIONS 1-4 FAMILY MORTGAGE
YEAR GENERATED BY THE COMPANY LOAN ORIGINATIONS IN U.S.(1)
- ---- ------------------------- ----------------------------
<S> <C> <C>
1994................................... 458,234 7,484,600
1995................................... 757,642 5,976,700
1996................................... 1,191,182 6,882,300
1997................................... 1,384,089 6,905,000
1998 (through September 30)............ 1,197,279 *
</TABLE>

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

(1) Reported by Mortgage Bankers Association of America ("MBAA") based on
statistics from the U.S. Department of Housing & Urban Development, the
Federal Housing Finance Board and the MBAA.
* Not Available.

The Company believes that the demand for flood outsourcing services and
flood zone determinations will continue to grow as a result of the following
factors:

- Higher Levels of Compliance with Federal Flood Laws. The 1994
Reform Act has compelled mortgage lenders to enforce federal flood
insurance requirements or be subject to substantial monetary
penalties. As a result, a higher percentage of purchasers of
residential property located in federally designated high-risk flood
zones are being required to purchase flood insurance as a condition
to receiving mortgage financing from a federally-backed financial
institution. Based on a FEMA estimate that only 25% to 33% of U.S.
properties in high risk areas that are required to be covered by
flood insurance are in fact covered, and given that only
approximately 3.8 million U.S. properties were covered as of
September 30, 1997, management estimates that approximately 11.4
million to 15.2 million U.S. properties are in fact required to be
covered by flood insurance. The Company believes the demand for
flood insurance outsourcing services will grow as compliance with
federal flood insurance requirements increases. The Company also
believes such compliance will result in greater demand for flood
zone determinations, since a flood zone determination is necessary
in order to determine whether a property is located in a high-risk
flood zone.

- Increase in Voluntary Purchase of Flood Insurance. The Company
expects the number of property owners who purchase flood insurance
on a voluntary basis to increase over the next several years.
Management believes consumers are increasingly aware that affordable
flood insurance is available to them through the Flood Program.
Management attributes this growing awareness to a number of factors,
including (1) the Flood Program's national advertising campaign,
known as Cover America, which began in 1995, (2) increasing consumer
awareness that the typical homeowners' policy does not cover flood
damage, and (3) the occurrence of several recent flooding disasters,
such as the Mississippi River floods of 1993 and the Red River
floods of 1997. Similarly, the substantial media attention given the
El Nino phenomenon and the resulting severe weather patterns, have
heightened the public's awareness that flood insurance may be
necessary even for properties not located in high-risk flood zone
classifications. Approximately 25% to 30% of flood damage claims
paid relate to properties located outside such flood zone
classifications. According to the National Flood Insurance Program
Bureau and Statistical Agency, the number of flood insurance
policies purchased by homeowners on a voluntary basis has increased
from 168,000 policies as of September 30, 1994 to 614,000 policies
as of September 30, 1998, a compound annual growth rate of 38.3%.

- Growth in Commercial Flood Zone Determination Business. The demand
for flood zone determinations by commercial property insurers and
commercial mortgage lenders has increased recently and the Company
expects this growth pattern to continue. Commercial property
insurance policies generally cover floods and similar events. As
public attention has focused more closely on severe weather patterns
in recent years and insurers have become increasingly aware of

36
<PAGE> 41

the importance of flood coverage, P&C insurers that issue such policies
have been developing more stringent underwriting criteria.

Trend Toward Outsourcing in the P&C Industry. The P&C industry provides
financial protection for individuals, businesses and others against losses of
property or losses by third parties for which the insured is liable. P&C
insurers underwrite policies that cover various types of risk, which can
generally be divided into personal lines of insurance covering individuals and
commercial lines of insurance covering businesses. Personal lines are comprised
primarily of automobile and homeowners insurance. Commercial lines cover a wide
range of commercial risks that affect businesses.

According to A.M. Best, premium revenues in the P&C industry have increased
by an average of 3.5% annually since 1990. The P&C industry is highly
competitive, with insurance companies competing primarily on the basis of price,
consumer satisfaction and the ability to pay claims. According to A.M. Best, as
of December 31, 1997, there were approximately 3,300 P&C insurance companies in
the United States. These companies generated approximately $277 billion in
annual P&C premium revenues in 1997, of which more than one-half related to
personal lines automobile, homeowners and flood insurance business, the core
markets serviced by the Company. The Company believes there are a significant
number of P&C insurance companies for which outsourcing is a viable alternative
to maintaining in-house processing capabilities. More specifically, the Company
believes it can offer many of these insurance companies the opportunity to
reduce their processing costs by outsourcing such functions to the Company for a
flat fee.

Over the past decade, many P&C insurance companies have begun using
third-party vendors to provide certain policy and claims administration services
that were traditionally performed in-house. This outsourcing of services allows
insurers to focus on their core competencies, reduce costs and eliminate capital
expenditures for the development, installation, operation and maintenance of
information management and automation systems. Insurance companies historically
have invested less in information technology than companies in other industries.
In 1996, for example, insurance companies spent only 2.4% of revenues on
information technology, as compared to 6.6% for banking firms and 2.9% for all
industry sectors combined. The Company believes that insurance companies will
increase their levels of outsourcing as they determine that policy and claims
administration and regulatory compliance are complicated and too costly to
perform efficiently in-house. According to forecasts published by The Yankee
Group, the amount spent annually by insurers on outsourcing is expected to
increase from $5 billion in 1997 to $13 billion within the next five years. The
Company believes it will have significant opportunities to market its
outsourcing services for the following reasons:

- Consolidation and Drive for Cost Efficiencies. Providers of
outsourcing services are able to consolidate large volumes of business
into automated and effective processing systems, thereby creating
significant cost efficiencies. The Company believes insurance
companies typically outsource administrative services because
outsource providers can provide better quality services at a lower
cost.

- Technological Challenges and Complexities. The investment in the
specialized technical knowledge required to develop, install and
operate information systems necessary for P&C insurers to remain
competitive is often cost prohibitive, particularly for smaller
companies and new entrants to the market. Insurance companies can take
advantage of the economies of technology created by an outsource
provider's investment in information systems. For example, the Company
believes the Year 2000 issue may generate additional demand for
outsourcing services because many insurance companies will resolve the
Year 2000 issue by either purchasing new software systems or
outsourcing some or all of their policy and claims requirements.

- Changing Distribution Channels. The Company believes that demand for
outsourcing services will increase as banks, credit unions and other
financial service companies enter the P&C market. These new entrants
were generally precluded from selling insurance until the U.S. Supreme
Court decision in Barnett Bank v. Nelson in 1996. The Company believes
that, following this decision, and despite continuing restrictions and
pressure from state regulators, banks and other financial institutions
will enter the P&C market at an increasing rate, often forming joint
ventures and other
37
<PAGE> 42

alliances with certain insurers to sell P&C insurance. Many new
entrants lack the technology, expertise or desire to perform policy
and claims processing in-house. These so-called "virtual insurance
companies" often focus their resources on the core marketing,
underwriting and financial aspects of the P&C business and seek to
outsource their policy and claims administration to third-party
vendors. The Company believes that it is well-positioned to provide
services to new entrants to the P&C market.

- Regulatory Reporting Requirements. State insurance regulators closely
regulate the product offerings, claims processes and premium rate
structures of insurance companies. To comply with such regulations,
companies must file annual and other reports relating to their
financial condition. Third-party vendors with effective policy and
claims administration systems can facilitate compliance with many
regulatory requirements by automating statutory reporting and other
compliance tasks.

THE IMSG SOLUTION

The Company believes it has positioned itself to capitalize on the
foregoing market opportunities in the following ways:

- Flood Insurance Experience. The Company is one of the leading
providers of flood insurance outsourcing services in the United
States, currently servicing over 540,000 flood insurance policies. As
a result, the Company has developed substantial expertise and scale in
virtually all aspects of the flood insurance servicing business.

- Flexible, Comprehensive, Turnkey Solutions. The Company offers a
comprehensive range of outsourcing services, both individually and on
a bundled basis, giving clients flexibility in selecting and matching
services to their needs. The Company's turnkey solutions allow clients
to focus on core competencies and better manage costs and allow new
market entrants an opportunity to offer insurance products on a
cost-effective basis by leveraging the Company's systems and business
processes.

- Insurance Industry Expertise. Unlike certain of its competitors, the
Company's senior management has substantial experience in the
insurance industry. See "Management." As a result of this core
competence, management believes the Company is better suited to
understand and address its customers' needs.

- Flood Zone Determination Services. The Company offers a highly
automated flood zone determination service based on its proprietary
national database. This service provides an accurate, prompt and
relatively low cost determination of a residential or commercial
property's status with respect to federal flood zones. Insurance
companies, credit unions, banks and other financial institutions use
this service to comply with federal laws requiring mortgage lenders to
oversee and ensure the purchase of flood insurance by certain
borrowers, create a competitive advantage in loan approval/insurance
underwriting response time and generate additional fees from their
borrowers.

- Modular, Integrated and Real-time Systems. The Company's information
systems are table-driven and modular in design, enabling the Company
to provide systems that address the specific needs of the client, such
as distinct underwriting rules. The core system permits integration of
a client's database, thereby eliminating the need for data re-entry
for multiple applications. The system provides real-time processing of
key functions, such as policy processing and endorsements, that
enhances completeness and accuracy in processing. The Company's system
also has a proven track record of reliability and low system
"down-time." The Company is committed to upgrading and maintaining its
systems in an effort to remain competitive.

- Customer Service to Independent Agent Networks and
Policyholders. Because residential and commercial flood insurance
rates are set by FEMA and therefore are not directly subject to
competitive pressures, the Company believes customer service is a
critical consideration for
38
<PAGE> 43

independent sales agents in determining which carrier's flood
insurance policies to sell. BIG is the largest underwriter of flood
insurance policies through independent agents in the United States,
and the Company processes and services all of BIG's flood insurance
policies. The Company believes that as a result of its affiliation
with BIG it has developed a customer service-oriented culture that
strengthens its clients' relationships with their independent sales
agent networks and policyholders. The Company focuses on providing
superior service, such as timely policy issuance and rapid and
professional response to agent and policyholder inquiries. The Company
maintains and monitors quality service standards and continually seeks
to measure customer satisfaction. The Company believes that its focus
on customer service has enabled it to retain all of its principal
outsourcing customers since 1994.

GROWTH STRATEGY

The Company's objectives are (1) to become a leading provider of
outsourcing services to the P&C industry and (2) to become the leading provider
of flood zone determinations to financial institutions, mortgage lenders and P&C
insurers. The Company's principal strategies for achieving these objectives are
as follows:

- Expand Flood Outsourcing Business. The Company has extensive
experience and expertise in virtually all aspects of the flood
insurance servicing business and occupies a leading position in that
market. Key aspects of the Company's growth strategy include (1)
marketing flood outsourcing services to existing WYO carriers that
it believes will benefit for cost or infrastructure reasons from the
Company's services, (2) offering its outsourcing services to new
entrants that lack the infrastructure or expertise necessary to
service flood insurance customers, (3) marketing its ability, in
conjunction with BIG, to provide and service a private label
insurance product to insurance companies that desire to offer flood
insurance but are not approved by FEMA to sell and service flood
insurance, and (4) increasing the volume of flood outsourcing
services business from the Company's existing customer base, which
includes over 20 customers under contract, either directly or
through BIG.

- Expand Relationships with Existing Customers. The Company intends
to capitalize on its existing flood insurance outsourcing customer
base and substantial flood zone determination customer base by
cross-marketing its flood, homeowners and automobile outsourcing
services to certain of these customers. Management believes these
marketing opportunities are especially prevalent today, given that
recent regulatory changes have permitted non-traditional insurance
companies -- most notably banks, credit unions and other financial
services companies -- to enter the P&C insurance industry. These new
entrants -- many of which are existing flood zone determination
customers of the Company -- often do not have the necessary
infrastructure or expertise in place and are natural candidates for
outsourcing. See "-- Market Opportunities."

- Focus on Maximizing Economies of Scale. The Company believes that
demand for P&C insurance outsourcing services will grow as such
services become more affordable and cost effective. To achieve such
affordability and cost effectiveness, a P&C outsourcing provider
must develop certain economies of scale. The Company currently
services an estimated 667,000 insurance policies annually. As a
result, it has developed a large number of efficiencies in most
aspects of its operations, from the receipt of policy applications
to billings and collections. By deploying internally developed
applications software, rating disks for applications input, lockbox
and cash office processing, automated voice response, computerized
forms and automated policy assembly, the Company has attained
expense efficiencies that management believes are characteristic of
insurers processing substantially greater policy volumes. As a
consequence, the Company believes it is well-positioned to
capitalize on the growing trend toward outsourcing administrative
functions in the P&C industry by offering insurers better quality
and more cost-effective "back office" operations. Moreover, the
Company intends to continue expanding these efficiencies by
increasing the utilization of its existing infrastructure and
databases.

39
<PAGE> 44
- Expand Direct Sales Force and Develop Strategic Relationships. The
Company has recently begun to develop a direct sales force and sales
support organization to focus on new customer opportunities and
generate additional business from the Company's current customer base.
The Company is also seeking to develop new business opportunities by
creating additional strategic distribution and marketing alliances.
For example, the Company's flood zone determination business targets
credit unions of all sizes through its marketing alliance with CUNA
Mutual Group, the largest provider of insurance products to credit
unions, and large mortgage lenders through its marketing alliance with
Equifax Mortgage Services, the nation's largest mortgage credit
reporting agency. See "-- Services."

- Generate Recurring Revenues. The Company seeks to generate recurring
revenues by entering into contractual relationships (typically one to
three years) with its outsourcing customers and by offering services
that are structured to generate revenues based on events that occur
frequently in the normal course of a customer's business, such as
claims, mortgage applications and insurance policy renewals.

- Pursue Strategic Acquisitions. A key element of the Company's growth
strategy is to pursue potential acquisitions that offer opportunities
to increase market share or expand the Company's menu of outsourcing
services. The Company's recent Geotrac Acquisition enabled it to
solidify its position as a leader in the flood zone determination
business and broaden the range of ancillary services the Company is
able to provide. Moreover, the Company is currently in the process of
consolidating its own flood zone determination operations with those
of Old Geotrac. See "Recent Acquisitions."

SERVICES

Outsourcing Services. The Company's outsourcing services include policy
administration, claims administration and information technology services. The
Company works with each customer in an effort to ensure a seamless integration
of the customer's in-house and outsourced activities.

Policy administration describes the range of services the Company offers
customers that are considering outsourcing their policy administration
functions. When policy administration is outsourced, the customer retains all
financial risk and works with the Company to set underwriting and rating
guidelines. The Company typically receives a percentage of premiums for
performing policy administration services. The Company's policy administration
menu includes the following services: policy processing and related data entry;
policy issuance and acceptance; premium management and distribution; accounting,
billing and collections; customer service phone center for policyholders and
agents; and data collection, statutory reporting and regulatory compliance.

Claims administration describes the range of services the Company offers in
connection with the management of insurance claims. In reviewing a claim, the
Company performs a thorough claim analysis and, if warranted, prepares a check
for payment of the claim. The Company has a special investigative unit that
assists in detecting and deterring fraud in the claim review process. The
Company also offers a fully automated, stand-alone catastrophe claims operation,
distinguishing its outsourcing services in the P&C insurance market. The Company
is typically compensated for claims administration services on either a
percentage of earned premiums or claims-paid basis. The Company's claims
administration menu includes the following services: toll-free claim reporting;
initial coverage confirmation services; loss investigation and determination;
review and appraisal of claims; special investigation services, including fraud
detection; adjustment of claims and vendor management; litigation management;
and settlement and payment of claims.

The Company also offers a range of information technology services to
assist customers in operating, maintaining and enhancing information systems.
The Company integrates the customer's system platform with the Company's
processing platform, including the installation of all necessary hardware
components, depending on the customer's needs. This integration allows the
customer to administer its policies and claims internally by using the Company's
systems and software. The Company typically receives a percentage of premiums as
compensation, subject to a minimum fee. The Company's information technology
menu includes
40
<PAGE> 45

the following services: information management via integrated, secure computer
systems; document imaging; on-line rating and underwriting services; monetary
systems services, including payment processing; automated printing, packaging
and distribution of documents; generation of agent commission statements and
production reports; security administration and access control; software
application enhancement and maintenance; problem resolution and reporting; and
data backup and disaster recovery functions.

Because the Company is affiliated with and provides comprehensive
outsourcing services to BIG, a approved WYO carrier under the Flood Program, it
emphasizes to prospective customers its ability to provide third-party
administration outsourcing for flood insurance. The Company offers its flood
outsourcing services, including software and processing functions, policy
administration, claims administration and statistical reporting, on either a
bundled or "a la carte" basis. New market entrants and certain other insurers
may prefer to purchase unbundled services, allowing them to retain in-house
control over specific aspects of their businesses. The Company makes available
virtually any combination of outsourcing services required by the customer.

The Company also offers flood outsourcing services to insurance companies
that seek to provide flood insurance, but do not want to become approved WYO
carriers. In this case, the services are provided in conjunction with a
proprietary flood product. An insurance company can establish a private label
insurance product written through BIG whereby the customer's name and logo
appear on the policy documents, while BIG acts as the servicing carrier. The
Company also intends to market its outsourcing services to banks, credit unions
and other financial institutions as they become increasingly involved in the
sale of insurance.

Flood Zone Determination Business. For a fixed fee, the Company will
provide a customer -- typically a mortgage loan originator or an insurance
company -- with a determination as to whether a specified property is located
within a federally-designated flood zone classification. The Company uses its
proprietary national flood zone database to make flood zone determinations. This
database, which is continually updated, allows the Company to determine if a
particular structure is located within the special flood hazard areas
established by FEMA. These determinations assist mortgage lenders in complying
with federal regulations under which they must require borrowers to purchase the
appropriate level of flood insurance. Management estimates that over 85% of U.S.
households are located in counties covered by the Company's electronic flood
zone database. For approximately 75% of determinations requested, the Company is
able to perform automated flood zone determinations in a matter of seconds.
Determinations made on a fully-automated basis are significantly more cost
effective than manual determinations. In some cases, particularly where a
property is not clearly within or outside a flood hazard area, the database
search will not produce an automatic determination, or "hit," and a manual
search becomes necessary. Manual searches require extra time and labor and are
not nearly as cost effective as fully-automated searches.

The Company provides both one-time and life-of-loan flood zone
determinations. Under a "life of loan" determination, the Company is responsible
for updating the initial flood zone determination based on revisions to the
federal flood maps occurring during the term of the loan. The Company also
provides portfolio analyses and audits for mortgage service agencies by
reviewing blocks of loans that usually require between 100 and 50,000 flood zone
determinations.

In addition to flood zone determinations, the Company provides
flood-related ancillary services. For example, the Company provides a standard
flood compliance packet to lenders which includes information on community
status, mapping, specific structure location, amount of flood insurance
required, secondary market and government program restrictions, and floodway and
coastal zone barrier restrictions. The life-of-loan product tracks both
community status and FEMA map changes on a daily basis for the life of the loan.
If changes occur that affect the subject property, a new report is automatically
generated for no additional charge. Certain ancillary services are transferable
if the mortgage loan for which the flood zone determination was done is sold or
transferred. Through its GeoCompass(R) service, the Company provides certain
CD-ROM services on-site at customer locations. The CD-ROM delivery system offers
customers the ability to perform certain flood zone determinations at their own
desktops.

The Company also actively seeks to leverage its expertise in mapping
technology by providing ancillary mapping services. For example, the Company has
been engaged by various municipalities or has partnered
41
<PAGE> 46

with software firms to digitize manual property tax maps and then integrate
these maps with appraisal data. Most municipality property tax maps have not
been digitized and the Company believes there is a significant opportunity to
penetrate this market. Additionally, the Company was recently hired by the
Columbus, Ohio Police Department to digitize property records and then integrate
these records with crime statistics in order to better monitor crime trend
activity. Each police precinct in Columbus is now able to analyze where and when
crimes occur and thus become more proactive in crime prevention. The Company
believes there are numerous other related opportunities to apply its core
mapping technology expertise.

The Company has established a relationship with Kirloskar Computer Services
("KCS"), located in India, which the Company believes can provide certain
services that will increase the efficiency of the Company's flood zone
determination business. Under a Secrecy and Confidentiality Agreement, KCS has
agreed, for a period of five years from the date of termination of its
relationship with Geotrac, not to engage, directly or indirectly, in certain
activities relating to Geotrac's business. KCS currently builds databases and
creates digitized maps that the Company uses in connection with its flood zone
determination business. In addition, Geotrac presently leases employees from KCS
who perform manual flood zone determination searches at costs significantly
below U.S. market rates. The Company expects that such leased employees will
become direct employees of Geotrac in the near future. These employees currently
perform approximately 300 manual searches per day. As the Company continues to
shift its manual search processing to India, it expects to have approximately
1,000 manual searches per day performed in that country by August 1999. These
plans are subject to change based upon various factors, including the demand for
manual searches as well as political and economic conditions in India. The
Company also has retained two KCS systems analysts on a consulting basis at its
Norwalk, Ohio headquarters to assist in the design and programming of
GeoCompass(R) technologies. Each of these consultants directs a team of
programmers in Bangalore, India.

The Company uses different pricing and contractual arrangements for
one-time and life-of-loan flood zone determinations. The Company performs flood
zone determinations for both residential and commercial properties, with
determinations for residential properties comprising approximately 85% of such
business.

CUSTOMER SUPPORT AND INSTALLATION

The Company's outsourcing services are provided from two separate customer
service centers in St. Petersburg, Florida -- one for policy and claims
administration and one for catastrophic claims administration.

The policy administration center has approximately 210 employees, most of
whom are trained customer service representatives. Customer service
representatives are responsible for the timely handling and resolution of
incoming phone calls related to underwriting, rating, billing, policy status and
other policy administration matters. While most calls come from insurance
agents, the phone center also handles calls from mortgage companies,
policyholders and insureds. The policy administration phone center handles an
average of approximately 15,000 calls per week (19,000 calls per week during
peak periods).

The claims administration customer service center is responsible primarily
for handling calls from claimants and insureds reporting property losses. The
center also handles calls from agents and others related to coverage of existing
claims. The center has approximately 160 employees, approximately half of which
are licensed claims representatives responsible for the adjustment of claims.
Incoming calls are taken by 11 customer service representatives who are trained
to handle all types of insurance claims. Unlike many other claims administration
centers, the Company's service center is able to immediately assign each claim
to a licensed adjuster for processing. The claims administration switchboard is
open weekdays from 7:30 a.m. to 9:00 p.m. (Eastern time), and customer service
representatives and licensed adjusters are available 24 hours a day, seven days
a week, to handle emergency claims.

The Company currently maintains two separate customer service centers
relating exclusively to its flood zone determination business, one of which was
acquired as part of the acquisition of Geotrac. The Company is currently in the
process of consolidating its own flood zone determination operations with those
of Geotrac. See "Geotrac Acquisition." The Company believes the service center
acquired as part of the Geotrac Acquisition is one of the largest flood zone
determination service centers in the industry. A team comprised of a senior
manager and up to four service representatives is assigned to each customer
account. The team
42
<PAGE> 47

advises the customer in all matters of flood compliance and will train a
customer's staff at their own or the Company's offices. The team also provides
direct support to their customers' independent direct sales agent networks.

The Company installs its GeoCompass(R) CD-ROM system on site at customer
locations. GeoCompass(R), which enables customers to make their own flood zone
determinations, is based on the Windows operating system, operates on the
customer's network and is relatively simple for customers to learn to use.

SALES AND MARKETING

The Company seeks to market its outsourcing capabilities by leveraging its
existing expertise in flood insurance administration, expanding its
relationships with existing flood zone determination customers and targeting
prospective customers, such as insurers with high expense ratios or limited
expertise in certain P&C lines. The Company recently formed a sales and
marketing division dedicated to direct sales of its outsourcing services. The
Company began staffing its sales and marketing division in 1997. This division
now includes a senior vice president, a marketing vice president, two full-time
sales representatives, three project managers and a marketing assistant. The
Company plans to add two additional full-time sales representatives in the near
future. In addition to direct marketing, the Company markets its P&C outsourcing
services through insurance brokers, reinsurers and other strategic partners. The
Company also advertises in various trade publications and participates in
industry conventions and trade shows to enhance the penetration of its flood and
non-flood markets.

The Company markets its flood zone determination services both directly
through its own sales personnel and indirectly through its alliances with other
service providers. For example, the Company targets credit unions of all sizes
through its alliance with CUNA Mutual Group, the nation's largest provider of
insurance products to credit unions, and large mortgage lenders through its
alliance with Equifax Mortgage Services, believed by the Company to be the
largest mortgage credit reporting agency in the U.S.

INFORMATION SYSTEMS

The Company utilizes fully-integrated, real-time, processing systems at its
St. Petersburg facilities to provide many of its outsourcing services. These
systems, which run on an IBM AS/400 platform coupled with a relational database,
enable the Company to provide on-line ratings and underwriting information,
issue required insurance forms to policyholders and agents and produce renewal
and non-renewal notices. The processing systems interface with a disbursement
system which enables the Company to generate checks automatically.

A separate IBM AS/400 is used to develop, enhance, and test new and
existing systems. In the event of a power failure, the AS/400 site is supported
by a fully-functional backup system that provides additional processing time of
one hour under full load. Insurance policies and related documents are scanned
to optical disks, and are retrievable at most LAN workstations. The Company also
has an optical jukebox that can store approximately 10 million documents. The
Company data center has controls to ensure security and a disaster recovery plan
which is tested regularly.

The Company also utilizes computer systems at its Geotrac location,
including two IBM AS/400 processors. Geotrac also has several major production
systems, including GeoCompass(R) and life-of-loan tracking.

The Company is capable of developing modifications or enhancements to its
licensed software to meet its outsourcing customers' particular needs. Business
analysts from the Company work with each customer to ensure that the Company
understands the customer's system requirements. Once the system requirements
have been documented, the Company dedicates a team of systems analysts to
develop the appropriate modifications or enhancements to its software system.

The Company believes that the principal computer equipment and software
currently used by the Company will function properly with respect to dates in
the year 2000 and thereafter. See "Risk Factors --

43
<PAGE> 48

Year 2000 Issues" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company -- Year 2000 Compliance."

CUSTOMERS

The Company currently provides outsourcing services to 18 companies. The
Company's largest customer, BIG, accounted for approximately 40%, 37%, 76%, 56%
and 56%, respectively, of the Company's revenues in 1995, 1996, 1997, 1997 (pro
forma) and for the nine months ended September 30, 1998. Any material decrease
in the outsourcing business from BIG would have a material adverse effect on the
Company's business, financial condition and results of operations. See "Risk
Factors -- Reliance on Key Customer." The Company provides outsourcing services
to other WYO carriers, including AAA Auto Club South Insurance Company and
Mobile USA Insurance Company, Inc. The Company also provides outsourcing
services to various insurance companies, such as Armed Forces Insurance
Corporation and AMICA Mutual Insurance Company, that utilize BIG as their
servicing carrier.

The Company provides flood zone determination services to over 880 banks,
credit unions, mortgage lenders, insurance companies and, other financial
institutions. The Company's principal insurance company customers for such
services include Allendale Mutual Insurance Company and Wausau Underwriters
Insurance Company. In addition, the Company provides flood zone determination
services to numerous credit unions, a number of which became customers as a
result of the Company's alliance with CUNA Mutual Group, the nation's largest
provider of insurance products to credit unions. The Company also provides such
services to mortgage lenders such as ABN Amro North America, Inc. primarily
through its alliance with Equifax Mortgage Services, believed by the Company to
be the largest mortgage credit reporting agency in the U.S.

COMPETITION

The Company competes principally in three markets: (1) the market for flood
insurance outsourcing services, (2) the market for other P&C insurance
outsourcing services and (3) the market for flood zone determination services.
The markets for these services are highly competitive.

The market for flood insurance outsourcing services is dominated by the
Company and several principal competitors, including National Con-Serv, Inc. and
Electronic Data Systems, Inc. The Company competes for these outsourcing
customers largely on the basis of price, customer service and responsiveness.

The market for other P&C insurance outsourcing services is fragmented. In
the policy administration services segment of this market, principal competitors
include Policy Management Services Corporation and INSpire Insurance Solutions,
Inc. In this segment of the market, the Company competes for customers on the
basis of customer service, performance and price. The claims administration
services segment of the P&C outsourcing market also is highly fragmented, with
competition from a large number of claims administration companies of varying
size, as well as independent contractors. Competition in this segment of the
outsourcing market is principally price driven. Competitors include Lindsey
Morden Claim Services, Inc., Crawford & Company, Inc. and INSpire Insurance
Solutions, Inc.

The Company believes, however, that its most significant competition for
P&C insurance outsourcing services comes from policy and claims administration
performed in-house by insurance companies. Insurers that fulfill some or all of
their policy and claims administration needs in-house typically have made a
significant investment in their information processing systems and may be less
likely to utilize the Company's services. In addition, insurance company
personnel have a vested interest in maintaining these responsibilities in-house.

The market for flood zone determination services is dominated by the
Company and several principal competitors, including First American Financial,
TransAmerica, Chicago Title Corp. and Palma Lazar & Ulsh. The Company believes
that the principal competitive factors in the market for flood zone
determinations include price, quality and reliability of services, and response
time.

44
<PAGE> 49

Certain of the Company's competitors in each of these markets have longer
operating histories and significantly greater financial, technical, marketing
and other resources than the Company, including name recognition with current
and potential customers. As a result, these competitors may devote more
resources to the development, promotion and sale of their services or products
than the Company and respond more quickly to emerging technologies and changes
in customer requirements. There can be no assurance that the Company will be
able to compete successfully against current and future competitors, or that
competitive pressure faced by the Company will not have a material adverse
effect on its business, financial condition and results of operations.

FACILITIES

The following table sets forth certain information with respect to the
principal facilities used in the Company's operations:

<TABLE>
<CAPTION>
SQUARE
LOCATION FEET FUNCTION LEASE EXPIRATION
-------- ------ -------- ----------------
<S> <C> <C> <C>
St. Petersburg, 76,700 Corporate Headquarters December 1999(2)
Florida(1)............ and Outsourcing
St. Petersburg, 7,400 Outsourcing December 1999(2)
Florida(1)............
St. Petersburg, 6,600 Flood Zone Determination May 1999(3)
Florida(1)............
Norwalk, Ohio........... 12,400 Flood Zone Determination August 1999(4)
Norwalk, Ohio........... 21,000 Flood Zone Determination November 2002(4)
</TABLE>

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

(1) Each of these facilities is leased or subleased from BIG. See "Certain
Transactions."
(2) The Company has the option to renew each of these leases for an additional
two-year period.
(3) The Company is currently negotiating with BIG to reassign this lease to BIG
as of the summer of 1999. No assurances can be given that such assignment
will occur.
(4) The Company has the option to renew each of these leases for an additional
five-year period.

The Company believes that its existing facilities and additional or
alternate space available to it are adequate to meet its requirements for the
foreseeable future.

EMPLOYEES

As of December 1, 1998, the Company had 785 full-time and 31 part-time
employees, consisting of 51 in sales and marketing, 587 in customer service and
support, 136 in technical support, and 42 in management, administration and
finance. None of the Company's employees is subject to a collective bargaining
agreement, and the Company considers its relations with its employees generally
to be good.

LEGAL PROCEEDINGS

The Company is not involved in any pending legal proceedings other than
routine litigation arising in the ordinary course of business. The Company does
not believe that the results of such litigation, even if the outcome were
unfavorable to the Company, would have a material adverse effect on the
Company's business, financial condition or results of operations.

Bankers Insurance Company ("BIC"), a subsidiary of BIG, the Company's
principal shareholder and customer, is currently subject to an investigation by
the Florida Department of Insurance (the "DOI"), the principal regulator of
insurance activities in the State of Florida, stemming from BIC's use of a
private investigator to gather information on a DOI employee and the private
investigator's unauthorized use of illegal wiretaps in connection therewith. In
addition, BIC and certain of its employees (one of whom is now an officer of IMS
and several of whom are now employees of the Company) have been subpoenaed on
behalf of FEMA to produce documentation or testify in connection with its
investigation of certain of BIC's cash management and claims processing
practices. BIC is currently involved in discussions relating to the resolution
of certain

45
<PAGE> 50

matters raised in the investigation. If the parties are unable to reach
agreement in these matters, the United States could file suit under the False
Claims Act and/or various common law and equitable theories. In the event either
or both of these investigations or any consequence thereof materially adversely
affects the business or operations of BIC, it could result in the loss of or
material decrease in the Company's business from BIC, which would have a
material adverse effect on the Company's business, financial condition and
results of operations.

46
<PAGE> 51

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Company's Board of Directors consists of eight members divided into
three classes, with the members of each class serving three-year terms expiring
at the third annual meeting of shareholders. The following table sets forth
information, as of the date of this Prospectus, regarding the directors and
executive officers of the Company.

<TABLE>
<CAPTION>
TERM AS
DIRECTOR
NAME AGE POSITION EXPIRES
- ---- --- -------- --------
<S> <C> <C> <C>
David K. Meehan........................... 51 Chairman of the Board, President, Chief 1999
Executive Officer and Director
Jeffrey S. Bragg.......................... 50 Executive Vice President, Chief Operating 2001
Officer and Director
Kathleen M. Batson........................ 56 Senior Vice President
Kelly K. King............................. 41 Senior Vice President, Treasurer, Chief
Financial Officer and Secretary
Daniel J. White........................... 48 President and Chief Executive Officer of 1999
Geotrac and Director
Robert M. Menke........................... 65 Director 2000
Robert G. Menke........................... 36 Director 2001
John A. Grant, Jr......................... 55 Director 1999
William D. Hussey......................... 65 Director 2000
E. Ray Solomon............................ 69 Director 2000
Alejandro M. Sanchez...................... 41 Director 2001
</TABLE>

David K. Meehan has served as the Chairman of the Board, Chief Executive
Officer and a director of the Company since December, 1996. Mr. Meehan joined
BIG in 1976 as Corporate Secretary. He was appointed President of BIG in 1979
and will serve in such capacity until the completion of this offering. He is
currently Vice Chairman of the Board of BIG and Bankers Insurance Company. Mr.
Meehan has served on the Board of Governors of each of the Florida Joint
Underwriting Association, the Florida Property and Casualty Joint Underwriting
Association and the Florida Residential Property and Casualty Joint Underwriting
Association. Mr. Meehan is Director/Vice Chairman of the Florida Insurance
Council and past Chairman and President of the Florida Association of Domestic
Insurance Companies.

Jeffrey S. Bragg has served as Executive Vice President and Chief Operating
Officer of the Company since November, 1997 and as a director of the Company
since May, 1997. Mr. Bragg has 20 years experience in the insurance and
insurance related information technology industries. He was with Policy
Management Systems Corporation from 1987 to 1995, most recently serving as
Senior Vice President and Group Manager. He was also appointed by President
Reagan in 1981 to head the Federal Insurance Administration, with responsibility
for administering the Flood Program, Federal Crime Insurance program, and
Federal Riot Reinsurance programs. Mr. Bragg has served on Legislating and
Advising Boards for the Alliance of American Insurance and the National
Association of Mutual Insurance Companies.

Kathleen M. Batson has served as Senior Vice President of the Company and
Insurance Management Solutions, Inc., the Company's outsourcing subsidiary
("IMS"), since December, 1996. Mrs. Batson joined BIG in 1983 and most recently
served as Senior Vice President of BIG from June, 1992 to December, 1996. Prior
to such time, she was employed with Colonial Penn Insurance Company as Sales
Manager from 1977 to 1983. Mrs. Batson was the founding Director and Secretary
and past President of the Flood Insurance Servicing Companies Association of
America, Inc. and is a member of the national Write Your Own (WYO) Flood
Marketing Committee and the Institute for Business and Home Safety Flood
Committee.

47
<PAGE> 52

Kelly K. King has served as Senior Vice President of the Company since
January 28, 1999, as Treasurer and Chief Financial Officer of the Company since
December, 1996 and as Secretary of the Company since May, 1998. He also served
as Vice President of the Company from December, 1996 through January, 1999. Mr.
King joined BIG in 1992 and served as Vice President and Chief Financial Officer
from February, 1993 to October, 1997. Prior to 1992, he was employed in various
capacities with Integon Insurance Corporation, NAC Re Corporation, A.M. Best
Company and Kemper Group. He is a CPA and a Chartered Property Casualty
Underwriter.

Daniel J. White has served as a director of the Company since May, 1998.
Mr. White founded Geotrac in 1987 and has served as President of Geotrac since
that time and as Chief Executive Officer of Geotrac since September, 1994. Mr.
White also currently serves as a director of Independent Community Bank Corp.

Robert M. Menke has served as a Director of the Company since December,
1996. Mr. Menke founded BIG in 1976 and has been the Chairman of the Board since
1979. He was honored as "Insurance Man Of The Year" in 1986 by the Florida
Association of Domestic Insurance Companies. Mr. Menke is also a member of the
Florida Insurance Council. Mr. Menke is currently Chairman of the Board and
President of First Community Insurance Company, Bankers Security Insurance
Company, Bankers Life Insurance Company and Bankers Insurance Company, all
affiliates of BIG and the Company. He is also a director of the Florida
Windstorm Association and First Community Bank of America.

Robert G. Menke has served as a Director of the Company since December,
1996. Mr. Menke, the son of Robert M. Menke, joined BIG in 1985 and has held
positions as programmer, systems analyst, systems manager, manager of
information services, and Vice President and Senior Vice President of Corporate
Services. He is currently Executive Vice-President of BIG and has served in such
capacity since October, 1997. Mr. Menke also serves as President of each of
Bankers Insurance Company, First Community Insurance Company and Bankers
Security Insurance Company, subsidiaries of BIG, and has served in such
capacities since November, 1998. He previously served as Executive Vice
President of each of such entities.

John A. Grant, Jr. has served as a Director of the Company since December,
1996. Mr. Grant has been a partner with the St. Petersburg, Florida-based law
firm of Harris, Barrett, Mann, and Dew since 1989. Since 1986, he has also been
a member of the Florida State Senate, where he currently serves as Chairman of
the Judiciary Committee and where he previously served as the Chairman of the
Banking & Insurance, Commerce, Criminal Justice, Education, and Government
Reform committees. He was a former Advisory Board Member of the United States
Small Business Administration and served on the Graduate Fellows Board of the
United States Department of Education.

William D. Hussey has served as a Director of the Company since December,
1996. Mr. Hussey is a retired President and Chief Executive Officer of the
Florida League of Financial Institutions and is an advisor with the Florida
Bankers Association.

E. Ray Solomon, Ph.D., CLU, has served as a Director of the Company since
December, 1996. Dr. Solomon is a retired Professor and the former Dean of the
School of Business at Florida State University.

Alejandro M. Sanchez has served as a Director of the Company since July,
1998. Mr. Sanchez is also Chief Executive Officer of the Florida Bankers
Association and has served in such capacity since February, 1998. From November,
1993 to January, 1998, he served as Vice President for Government Affairs of the
Florida Bankers Association. He previously served as Senior Corporate Attorney
for GTE Information Services in Tampa, Florida.

Messrs. Robert M. Menke, Meehan and Hussey are also members of the Board of
Directors of First Community Insurance Company (a company owned 72% by BIG and
28% by Bankers Life Insurance Company). Messrs. Robert M. Menke and Meehan are
on the Board of Directors of Bankers Security Insurance Company, which is
wholly-owned indirectly by BIG. Messrs. Robert M. Menke and Meehan are on the
Board of Directors of each of Bankers Insurance Company and Bankers Life
Insurance Company, which are owned directly or indirectly by BIG.

48
<PAGE> 53

KEY EMPLOYEES

James J. Andrews has served as Vice President -- Information Systems of
Geotrac since March, 1998. Mr. Andrews joined Geotrac in June, 1996 as AS/400
Project Leader and served in such capacity until March, 1998. Prior to joining
Geotrac, Mr. Andrews was President and owner of Andrews Technical Services,
Inc., a computer consulting firm, from May, 1995 to June, 1996, and MIS Manager
of Green Circle Growers, Inc. and Express Seed Company from August, 1984 to May,
1995.

Thomas Becker has served as Vice President -- Production and Operations of
Geotrac since March, 1996. Prior to joining Geotrac, Mr. Becker spent over 15
years with Equifax, Inc., most recently as Regional Office Manager from October,
1988 to February, 1996.

Howard B. Davis has served as Vice President -- Customer Service and
Residual Markets of IMS since December, 1996. He also served as Vice
President -- Customer Service and Residential Markets of the Company from
August, 1997 to June, 1998. Mr. Davis joined BIG in 1988 and served as its Vice
President -- Customer Service and Residual Markets from 1990 to 1997. He was
appointed Executive Vice President of Universal Acceptance Corporation in 1991
and will continue to serve in such capacity until the completion of this
offering. Prior to joining BIG, Mr. Davis was with Colonial Penn Insurance
Company. He is a past President of the Florida Premium Finance Association and
past Chairman of the Florida Auto Joint Underwriting Association Operating
Committee.

Robert G. Gantley has served as Vice President -- Claims of IMS since
August, 1997. He also served as Vice President-Claims of the Company from
August, 1997 to June, 1998. Mr. Gantley joined BIC in October, 1996 and will
serve as Vice President -- Claims until the completion of this offering. Prior
to joining BIC, Mr. Gantley was the Assistant Director of the Massachusetts
State Lottery from 1993 to 1996 and a Territorial Claims Manager with Allstate
Insurance Company from 1989 to 1993.

Karen R. Kiedrowicz has served as Vice President -- Human Resources of
Geotrac since January, 1996. Ms. Kiedrowicz joined Geotrac in September, 1993
and served as Training Leader from September, 1993 to May, 1995 and as Human
Resources Manager from May, 1995 to January, 1996. Prior to joining Geotrac, she
served as Recruiting and Training Manager of KPMG Peat Marwick LLP from
September, 1989 to July, 1992.

S. Kyle Moll has served as Vice President and Chief Information Officer of
IMS since December, 1996. He also served as Vice President and Chief Information
Officer of the Company from December, 1996 to June, 1998. Mr. Moll joined BIG in
1993 and served as its Vice President and Chief Information Officer from
October, 1996 to October, 1997. Prior to joining BIG, he was employed by
Electronic Data Systems from July, 1985 to September, 1993 as Systems Engineer
Manager.

Kay L. Womble has served as Vice President -- Marketing of IMS since July
1998. Prior to joining IMS, Ms. Womble spent eighteen years with Policy
Management System Corporation, most recently as Alternative Markets Sales
Manager and Assistant Vice President from December 1994 to June 1998,
Catastrophe Plan Manager and Assistant Vice President from February 1994 to
December 1994, and Government Sales Executive from 1991 to 1994.

49
<PAGE> 54

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation
paid to or earned by the Company's Chairman of the Board and Chief Executive
Officer and each of the Company's four other current executive officers for the
years ended December 31, 1997 and 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
-------------------------------------
OTHER
NAME AND ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) COMPENSATION(4)
------------------ ---- -------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
David K. Meehan
Chairman of the Board and Chief Executive 1998 $239,092 $ -- $ -- $8,978
Officer(5) 1997 221,000 59,000 -- 9,000
Jeffrey S. Bragg
Executive Vice President and Chief Operating 1998 156,552 -- -- 5,714
Officer(6) 1997 84,806 10,000 -- --
Kathleen M. Batson 1998 124,010 -- -- 6,718
Senior Vice President(7) 1997 -- -- -- --
Kelly K. King
Senior Vice President, Treasurer, Chief
Financial Officer and Secretary(8) 1998 117,390 -- -- 7,094
1997 56,151 7,500 -- 3,909
Daniel J. White 1998 66,050 -- -- 1,044
President and Chief Executive Officer of
Geotrac(9)................................... 1997 -- -- -- --
</TABLE>

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

(1) During the year ended December 31, 1997, certain of the executive officers
of the Company were also executive officers or employees of BIG, and, in
certain instances, BIG paid a portion of their respective compensation. The
amounts reflected in the table above for such year were all paid to the
respective executive officers by the Company. David K. Meehan was the only
executive officer of the Company who was paid in excess of $100,000 by the
Company in 1997. During the year ended December 31, 1998, all of the
executive officers of the Company spent substantially all of their time on
the Company's business and were compensated solely by the Company.
(2) Excludes accrued bonuses for 1998 for the named executive officers in
amounts equal to their 1997 bonuses. The Compensation Committee has not yet
approved, and may adjust, such bonuses.
(3) Does not include the value of the perquisites provided to certain of the
named executive officers which in the aggregate did not exceed 10% of such
officer's salary and bonus. Also excludes benefits, if any, accruing to
Messrs. Meehan, Bragg and King and Mrs. Batson under the Executive Phantom
Stock Plan of Bankers Financial Corporation, the parent of BIG. Upon
completion of this offering, no officers or directors of the Company (with
the exception of Robert M. Menke and Robert G. Menke) will be eligible to
receive additional grants under such Phantom Stock Plan. The Company did not
grant any options, restricted stock or other long-term incentive
compensation to its executive officers during either 1997 or 1998.
(4) Reflects matching amounts paid by the Company under its 401(k)plan for the
year indicated.
(5) Mr. Meehan did not receive any cash compensation from BIG during the year
ended December 31, 1997. During, Mr. Meehan spent a majority of his time on
the Company's business.
(6) Mr. Bragg joined the Company in May, 1997. He did not receive any cash
compensation from BIG during the year ended December 31, 1997.
(7) Excludes $111,000 in salary and $15,000 in bonus paid to Ms. Batson for her
service as an executive officer of BIG during the year ended December 31,
1997. During such year, Ms. Batson spent less than one-half of her time on
the Company's business.
(8) Excludes $56,151 in salary and $7,500 in bonus paid to Mr. King by BIG for
his service as an executive officer of BIG during the year ended December
31, 1997. During such year, Mr. King spent approximately one-half of his
time on the Company's business.
(9) Mr. White did not join the Company as an officer until the consummation of
the Geotrac Acquisition in July, 1998.

50
<PAGE> 55

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with each of Messrs.
Meehan, Bragg and King, and Mrs. Batson, which shall become effective as of the
completion of this offering. The initial annual base salary payable to these
executive officers under their respective employment agreements are as follows:
David K. Meehan, $245,000; Jeffrey S. Bragg, $145,000; Kathleen M. Batson,
$120,000; and Kelly K. King, $125,000. The remaining terms of each of the
employment agreements are substantially the same. Each employment agreement
provides for an initial term of three years, subject to automatic continuation
until terminated by either party. Each agreement further provides that, if the
employee is terminated by the Company without cause (as defined therein), the
employee shall be entitled to severance payments, payable in accordance with the
Company's usual payroll practices, equal to the employee's then current annual
base salary. In the event the employee secures employment during the twelve
months following termination, then the Company shall be entitled to a credit
against its obligation to make severance payments in the amount of 75% of the
base salary paid to the employee by his or her new employer during the
twelve-month period following termination by the Company.

Each employment agreement provides that the employee shall be provided
benefits, such as health, life and disability insurance, on the same basis as
the Company's other employees. In addition, to the extent authorized by the
Board of Directors, the employee also shall be entitled to participate in the
Company's bonus, stock option and other plans, if any. Each agreement further
provides that, during the term of the agreement and for a period of two years
thereafter, the employee will not, directly or indirectly, compete with the
Company by engaging in certain proscribed activities.

In connection with the Geotrac Acquisition, Geotrac entered into an
employment agreement with Daniel J. White pursuant to which Mr. White will
continue to serve as President and Chief Executive Officer of Geotrac. This
agreement provides for an initial term of four years and shall continue in
effect thereafter until terminated by either party upon 90 days prior written
notice. The agreement provides for an initial annual base salary of $150,000,
subject to annual review by Geotrac's board of directors. To the extent
authorized by Geotrac's board of directors, Mr. White shall be entitled to
participate in any bonus programs established by Geotrac. Mr. White shall also
be entitled comparable benefits, including health, life and disability
insurance, as are offered to any of Geotrac's other executive officers. In the
event of Mr. White's death or disability, Geotrac's obligations under the
agreement will automatically terminate, except that Mr. White shall be entitled
to severance equal to his then current annual base salary. The agreement further
provides that, in the event of termination by Geotrac without cause (as defined
therein) or by Mr. White for good reason (as defined therein), or in the event
the agreement is not renewed for any reason other than death, disability or for
cause, then Geotrac shall pay Mr. White at the rate of his annual base salary
then in effect for the longer of (i) the remainder of the term of the agreement
and (ii) one year after such termination date, subject to a credit of up to 75%
of the base salary paid to Mr. White by his new employer, if any.

This agreement also provides that, for a period of two years following Mr.
White's termination of employment other than by Mr. White for good reason or by
Geotrac without cause, Mr. White will not, directly or indirectly, engage (or
have an interest) in the flood zone compliance business nor in any other
business engaged or planned to be engaged in by Geotrac within any state or
country in which Geotrac is doing or plans to do business. Finally, the
agreement provides that, during the term of the agreement and for a period of
two years thereafter, Mr. White will not, directly or indirectly, employ,
attempt to employ, or solicit for employment, any of Geotrac's employees.

LONG TERM INCENTIVE PLAN

The Company currently maintains a Long Term Incentive Plan (the "Incentive
Plan") to attract, retain and motivate participating employees of the Company
and its subsidiaries through awards of shares of Common Stock, options to
purchase shares of Common Stock and stock appreciation rights ("SARs"). A total
of 875,000 shares of Common Stock may be issued pursuant to the Incentive Plan.
The Incentive Plan has been approved by the Company's Board of Directors and
shareholders.

51
<PAGE> 56

The Incentive Plan provides for the grant of incentive or nonqualified
stock options to purchase shares of Common Stock. Upon the completion of this
offering, the executive officers of the Company will be granted options to
purchase a total of 205,000 shares of Common Stock at the initial public
offering price as follows: David K. Meehan, 60,000 shares; Jeffrey S. Bragg,
50,000 shares; Kathleen M. Batson, 35,000 shares; Kelly K. King, 35,000 shares;
and Daniel J. White, 25,000 shares. All employees of the Company as a group,
including these executive officers, will be granted options to purchase a total
505,500 shares of Common Stock at the initial public offering price. All of such
options expire on the tenth anniversary of the date of grant. Options shall
become exercisable 60% after three years, 20% after four years and 20% after
five years. The Incentive Plan is administered by the Compensation Committee of
the Board of Directors.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

The Company also maintains a Non-Employee Directors' Stock Option Plan (the
"Non-Employee Director Plan") to secure for the Company and its shareholders the
benefits of the incentive inherent in increased Common Stock ownership by the
members of the Company's Board of Directors who are not employees of the
Company. The Non-Employee Director Plan has been approved by the Company's Board
of Directors and shareholders.

The Non-Employee Director Plan provides for the grant of nonqualified stock
options to purchase up to 7,200 shares of Common Stock in any three-year period
to members of the Board of Directors who are not employees of the Company. A
total of 200,000 shares of Common Stock may be issued pursuant to this plan. As
of the date of this Prospectus, such members held no options under the
Non-Employee Director Plan. Upon the completion of this offering, each
non-employee director will be granted options to purchase 6,000 shares of Common
Stock. Non-employee directors receiving such options will become vested in
options for the purchase of 800 shares of Common Stock after the adjournment of
each annual meeting of shareholders of the Company, to the extent he or she has
been granted options that have not yet vested, and provided that he or she is
then a non-employee director of the Company. In addition, each non-employee
director shall become vested in options for the purchase of 400 shares of Common
Stock upon the adjournment of each regularly scheduled quarterly meeting of the
Board of Directors (other than following the annual meeting of shareholders), to
the extent he or she has been granted options that have not yet vested, and
provided that he or she is then a non-employee director of the Company.
Notwithstanding the foregoing, neither Robert M. Menke nor Robert G. Menke will
be granted any option grants under the Non-Employee Director Plan. All options
granted will have an exercise price equal to the fair market value of the Common
Stock as of the date of grant, will become exercisable upon vesting, and will
expire on the sixth anniversary of the date of grant. The Non-Employee Director
Plan is a formula plan and accordingly is intended to be self-governing. To the
extent that questions of interpretation arise, they will be resolved by the
Board of Directors.

NON-QUALIFIED STOCK OPTION PLAN

The Company's Board of Directors and shareholders also have adopted a
Non-Qualified Stock Option Plan (the "Non-Qualified Plan"), which plan is
expected to be approved by the shareholders of the Company prior to the
consummation of this offering. The Non-Qualified Plan provides for the grant of
non-qualified stock options to purchase up to 125,000 shares of Common Stock.
Upon the completion of this offering, options to purchase 125,000 shares of
Common Stock at the initial public offering price will be granted to certain
executive officers of BIG, including options to purchase 25,000 shares each to
Messrs. Robert M. Menke and Robert G. Menke, directors of the Company. All of
such options expire on the tenth anniversary of the date of grant. Options shall
become exercisable 60% after three years, 20% after four years and 20% after
five years. The Non-Qualified Plan is administered by the Compensation Committee
of the Board of Directors of the Company.

DIRECTOR COMPENSATION

Directors who are executive officers of the Company receive no compensation
as such for service as members of either the Board of Directors or committees
thereof. Directors who are not executive officers of the Company receive $1,000
per Board meeting attended and $150 ($200 in the case of a committee
52
<PAGE> 57

chairperson) per committee meeting attended, plus reimbursement of reasonable
expenses. The outside directors are also eligible to receive options to purchase
Common Stock under the Company's 1998 Non-Employee Directors' Stock Option Plan.
See " -- Stock Option Plans -- 1998 Non-Employee Directors' Stock Option Plan."

COMMITTEES OF THE BOARD

The Board of Directors has established committees whose responsibilities
are summarized as follows:

Audit Committee. The Audit Committee is comprised of Messrs. Solomon
(Chairman), Hussey (Vice Chairman) and Grant and is responsible for
reviewing the independence, qualifications and activities of the Company's
independent certified public accountants and the Company's financial
policies, control procedures and accounting staff. The Audit Committee
recommends to the Board the appointment of the independent certified public
accountants and reviews and approves the Company's financial statements.
The Audit Committee is also responsible for the review of transactions
between the Company and any Company officer, director or entity in which a
Company officer or director has a material interest.

Compensation Committee. The Compensation Committee is comprised of
Messrs. Solomon (Chairman), Hussey (Vice Chairman) and Grant and is
responsible for establishing the compensation of the Company's directors,
officers and other managerial personnel, including salaries, bonuses,
termination arrangements, and other executive officer benefits. In
addition, the Compensation Committee is responsible for the administration
of the Incentive Plan and the Non-Qualified Plan, including the recipients,
amounts and terms of stock option grants under each.

Marketing Committee. The Marketing Committee is comprised of Messrs.
Meehan, Bragg, Robert M. Menke, Robert G. Menke and Sanchez and is
responsible for establishing the marketing policy of the Company and
providing overall supervision of its marketing efforts.

Executive Committee. The Executive Committee is comprised of Messrs.
Meehan (Chairman), Robert M. Menke (Vice Chairman), Robert G. Menke, Bragg
and Grant. The Executive Committee, to the fullest extent allowed by the
Florida Business Corporation Act (the "FBCA"), and subject to the powers
and authority delegated to the Audit Committee, the Compensation Committee
and the Marketing Committee, has and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Company during intervals between meetings of the Board of
Directors. Pursuant to the FBCA, the Executive Committee shall not have the
authority to, among other things: approve actions requiring shareholder
approval, such as the sale of all or substantially all of the Company's
assets; fill vacancies on the Board or any committee thereof; adopt, repeal
or amend the Company's Bylaws; or, subject to certain exceptions, reacquire
or issue shares of the Company's capital stock.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee recently was established in connection
with this offering. Except for David K. Meehan, no officer or employee of the
Company has participated in deliberations of the Board of Directors prior to
this offering concerning executive officer compensation.

53
<PAGE> 58

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the date of this Prospectus, and as adjusted to
reflect the sale of Common Stock offered hereby, with respect to: (i) each of
the Company's directors and the executive officers named in the Summary
Compensation Table; (ii) all directors and executive officers of the Company as
a group; and (iii) each person known by the Company to own beneficially more
than 5% of the Common Stock. Each of the shareholders listed below has sole
voting and investment power over the shares beneficially owned.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING SHARES AFTER OFFERING
------------------- BEING -------------------
NAME SHARES PERCENT OFFERED SHARES PERCENT
- ---- --------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Bankers Insurance Group, Inc.(1)......... 7,950,000 74.4% -- 7,950,000 62.7%
Venture Capital Corporation(2)........... 2,050,000 19.2 1,350,000 700,000 5.5
David K. Meehan(3)....................... -- -- -- 2,200 *
Jeffrey S. Bragg......................... -- -- -- 2,000 *
Kathleen M. Batson....................... -- -- -- 200 *
Kelly K. King............................ -- -- -- 1,500(4) *
Daniel J. White.......................... 524,198(5) 4.9 -- 524,198(5) 4.1
Robert M. Menke(3)....................... -- -- -- 7,000 *
Robert G. Menke.......................... -- -- -- 2,200 *
John A. Grant, Jr........................ -- -- -- 2,500 *
William D. Hussey........................ -- -- -- 2,000 *
E. Ray Solomon........................... -- -- -- 2,000 *
Alejandro M. Sanchez..................... -- -- -- 1,000 *
All directors and executive officers as a
group (11 persons)(3)(5)............... 524,198 4.9 -- 546,798 4.3
</TABLE>

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

* Less than 1%.
(1) The business address of Bankers Insurance Group, Inc. is 360 Central Avenue,
St. Petersburg, Florida 33701. Bankers Insurance Group, Inc. is an indirect
subsidiary of Bankers International Financial Corporation, Ltd. ("BIFC"), a
Cayman Islands corporation wholly owned by Bankers International Financial
Corporation II Trust, a discretionary charitable trust. The sole trustee of
this trust is Ansbacher (Cayman) Limited, a Cayman Islands corporation
unaffiliated with BIG, the Company or their respective officers or
directors. Pursuant to the trust's declaration of trust, Independent
Foundation for the Pursuit of Charitable Endeavors, Ltd., a not for profit
Cayman Islands corporation ("IFPCE"), possesses the discretionary power to
(i) direct the trustee to appoint the trust fund to another trust for the
benefit of one or more of the beneficiaries of the trust and (ii) remove the
trustee and appoint one or more new trustees outside the Cayman Islands. A
majority vote of the directors of IFPCE is required to take either of these
actions. The Articles of Association of IFPCE provide that the Board of
Directors shall consist of seven members, three of whom shall be the top
three executives of Bankers International Financial Corporation, a Florida
corporation and subsidiary of BIFC, three of whom shall be Mr. Robert M.
Menke and his lineal descendants, and one of whom shall be a director
elected by a majority vote of the remaining six directors (or, if they
cannot agree, appointed by a court of competent jurisdiction). Until his
death or adjudication of incompetency, Robert M. Menke shall have five votes
and all other directors shall have one vote, and Robert M. Menke's presence
at a meeting shall be required for a quorum. As of the date of this
Prospectus, the directors of IFPCE include David K. Meehan, Robert M. Menke
and Robert G. Menke.
(2) The business address of Venture Capital Corporation is Bank America
Building, Fort Street, Georgetown, Grand Cayman, British West Indies.
Venture Capital Corporation is a Cayman Islands corporation wholly owned by
Venture II Trust, a discretionary charitable trust. The sole trustee of this
trust is Cayman National Trust Company Limited, a Cayman bank unaffiliated
with BIG, the Company or their

54
<PAGE> 59

respective officers or directors. Pursuant to the trust's declaration of
trust, IFPCE possesses the same discretionary powers as described in note
(1) above.
(3) Excludes 7,950,000 shares held by Bankers Insurance Group, Inc. and
2,050,000 shares (1,350,000 of which are to be sold in the offering) held by
Venture Capital Corporation. See Notes (1) and (2) above.
(4) Held jointly with his spouse.
(5) Includes 262,099 shares held in trust by his spouse.

CERTAIN TRANSACTIONS

ADMINISTRATION SERVICES AGREEMENT

Effective as of January 1, 1998, the Company and BIG entered into an
Administration Services Agreement (the "Administration Agreement") pursuant to
which BIG (i) provides the Company with various administrative and support
services, including human resources and benefits administration, accounting,
legal, cash management and investment services, requested by the Company from
time to time and reasonably necessary in the conduct of its operations, and (ii)
makes available its facilities to the Company as requested by the Company from
time to time and as reasonably necessary to the conduct of its operations. The
Company reimburses BIG for all direct and directly allocable expenses determined
by BIG to be attributable to the provision of such services and facilities, plus
an agreed upon assessment for direct overhead. For the services and facilities
being provided in 1998, the Company shall pay BIG a quarterly fee of $396,250,
subject to renegotiation by either party. In addition, the Company shall pay BIG
an annual fee of $120,000 for routine legal services provided. Legal services
provided with respect to non-routine matters, such as mergers and acquisitions
and equity or debt offerings, will be billed to the Company at negotiated
prices. The current term of the Administration Agreement expires on December 31,
1999, but may be renewed by the Company, at its sole option, for an additional
one-year period upon 30 days prior written notice. Thereafter, the
Administration Agreement may be terminated by either party upon 60 days prior
written notice. The Administration Agreement memorializes the administrative
service arrangements that existed between the Company and BIG prior to such
time.

Effective as of January 1, 1999, the Administration Agreement was amended
to eliminate certain accounting and audit service functions (which functions are
currently performed by the Company directly) and to reduce the quarterly fee
payable by the Company to BIG to $258,750, subject to renegotiation by either
party.

SERVICE AGREEMENTS

During 1995, 1996 and 1997, the Company provided information technology
services to BIG based generally on actual cost incurred (including selling,
general and administrative expenses), which amounted to $3,443,628, $4,787,772
and $3,236,255 in outsourcing revenue for 1995, 1996 and 1997, respectively, and
$2,467,447 for the nine months ended September 30, 1997. For the nine months
ended September 30, 1998, these charges are included in the fee structure
related to the affiliated service agreement discussed below.

Under the terms of its service arrangements with BIG in 1997, the Company
charged a monthly fee for its policy and claims administration services based on
certain factors. For policy and claims administration, the Company charged a fee
based on a percentage of direct written premiums and a percentage of direct paid
losses for certain lines of business, respectively. The fee ranged from 8.5% to
9.0% for services rendered in connection with policy administration and 0.5% to
15.0% for claims administration services related to these policies. Also, in
1997, the Company processed claims for BIG and its other affiliates related to
those lines of business not covered under the service agreement and provided
other miscellaneous services on a cost reimbursement basis. Charges related to
this claims processing and other miscellaneous services amounted to $9,518,525
for 1997 and $7,138,896 for the nine months ended September 30, 1997.

55
<PAGE> 60

Effective as of January 1, 1998, the Company entered into a separate
Service Agreement (each a "Service Agreement") with each of Bankers Insurance
Company, First Community Insurance Company and Bankers Security Insurance
Company, all direct or indirect subsidiaries of BIG, pursuant to which the
Company will continue to provide policy administration, claims administration
and data processing services to such entities in connection with their flood,
homeowners and automobile lines of business, and claims administration and data
processing services for all such entities' other P&C lines of business. Under
the Service Agreements, as amended, each entity pays the Company as follows: (1)
for its policy administration services a monthly fee based upon direct written
premiums for the flood, homeowners and automobile insurance programs; (2) for
its claims administration services a monthly fee based upon direct earned
premiums for the property, casualty, automobile property, automobile casualty,
flood, and workers' compensation insurance programs (In addition, a monthly fee
based upon direct incurred losses is charged for flood claims administration and
a reimbursement not to exceed 5% of direct incurred losses from a single event
in excess of $2 million is charged to property claims.); (3) for its data
processing services, a monthly fee based upon direct written premiums for all
insurance programs; and (4) for certain customer services such as mailroom,
policy assembly, records management and cash office a monthly fee based upon
direct written premiums (except, if provided in connection with their flood,
homeowner and automobile insurance lines, where no such fees are imposed).
Effective January 1, 1999, these fee arrangements were modified to provide for
tiered pricing based on the volume of business processed. These modifications
resulted in a reduction in the base fees charged for certain lines of business
and increases in base fees charged for other lines of business to better reflect
the services provided and competitive market rates for such services. The term
of each Service Agreement shall expire on June 1, 2001, provided that it shall
thereafter be automatically extended until terminated upon 90 days prior notice
by either party.

In addition, under the Service Agreement with BIC, the Company administers
an AYO Claims Agreement between BIG and Florida Windstorm Underwriting
Association, which agreement BIG assigned to BIC on December 15, 1998. The
Company processes and adjusts all claims made under the AYO Claims Agreement.
The administrative fee (equal to a percentage of each loss paid) is allocated
between BIC and the Company.

Effective December 1, 1998, the Company, through its subsidiary, Insurance
Management Solutions, Inc., entered into a Service Agreement with Bankers Life
Insurance Company ("BLIC"), an indirect subsidiary of BIG, pursuant to which the
Company provides certain administrative services and allows BLIC to make use of
certain of the Company's property, equipment and facilities in connection with
BLIC's day-to-day operations. Under the Service Agreement, as amended, BLIC
agrees to pay the Company predetermined fees on a quarterly basis. The term of
the Service Agreement with BLIC ends on June 1, 2001, but may be terminated at
any time by BLIC upon 90 days prior written notice.

PROPERTY LEASES

The Company currently leases from BIC approximately 76,700 square feet of
office space in St. Petersburg, Florida at a monthly rate of approximately
$76,700. The initial term of this lease expires on December 31, 1999. The
Company has an option to renew this lease for an additional two-year term at a
monthly rate not to exceed approximately $83,200.

The Company currently leases from BIG approximately 7,400 square feet of
office space in St. Petersburg, Florida at a monthly rate of approximately
$7,400. The initial term of this lease also expires on December 31, 1999,
subject to the Company's right to renew the lease for an additional two-year
period at a monthly rate not to exceed approximately $8,000.

Effective January 1, 1998, BIG assigned to the Company a lease of
approximately 6,600 square feet of office space in St. Petersburg, Florida. This
lease expires on May 31, 1999, subject to the Company's right to renew the lease
for four successive one-year terms. The current monthly rental rate under this
lease is approximately $2,500. The Company is currently negotiating with BIG to
reassign this lease to BIG as of the summer of 1999. No assurances can be given
that such assignment will occur.

56
<PAGE> 61

EMPLOYEE LEASING AGREEMENT

Effective as of January 1, 1998, the Company entered into an Employee
Leasing Agreement with BIC (the "Employee Leasing Agreement") pursuant to which
the Company continues to lease customer service personnel from BIC. The number
of employees to be leased will vary depending on the needs of the Company and
the availability of employees from BIC. The Company shall be responsible for all
expenses associated with such leased employees, including salaries, bonuses and
benefits. The Company may terminate any leased employee for disloyalty,
misconduct or other similar cause. The Employee Leasing Agreement is terminable
by either the Company or BIC upon 60 days prior notice.

SALES AND ASSIGNMENT AGREEMENT

In May, 1998, the Company entered into a sales and assignment agreement
with BIG and certain affiliated companies whereby certain assets were
transferred and assigned to the Company, effective retroactively to April, 1998,
for use in its business. The assets, including, but not limited to, telephone
equipment, computer hardware and software, and service marks were transferred at
their net book value as of the date of transfer. The Company paid consideration
consisting of $325,075 in cash and entered into two promissory notes amounting
to $2,802,175. The notes require monthly installment payments of $15,417 plus
accrued interest and mature in April, 1999 and December, 2000. In addition, the
Company assumed the existing leases with unaffiliated third parties relating to
various computer equipment.

SOFTWARE LICENSING AGREEMENT

Effective January 1, 1998, the Company entered into a non-exclusive license
agreement with BIG and BIC pursuant to which the Company licenses its primary
operating systems from BIG and BIC in exchange for a nominal fee. The term of
the license is perpetual. The license agreement provides that the Company shall
be solely responsible for maintaining and upgrading the systems and shall have
the authority to sell or license such systems to third parties.

TAX INDEMNITY AGREEMENT

As of July 31, 1998, BIG had sold a sufficient number of shares in the
Company such that the Company will no longer file its tax return with Bankers
International Financial Corporation ("BIFC") on a consolidated basis. Effective
as of July 31, 1998, the Company and BIFC entered into a Tax Indemnity Agreement
pursuant to which (i) BIFC agrees to indemnify the Company in the event the
Company incurs a tax liability as a result of taxable income of BIFC or one of
its subsidiaries, and (ii) the Company agrees to indemnify BIFC in the event
BIFC incurs a tax liability as a result of taxable income of the Company or one
of its subsidiaries. Each party also agrees to reimburse the other for certain
tax credits arising on or before July 31, 1998. Under the Tax Indemnity
Agreement, the parties terminated a previous tax allocation agreement which had
been in effect since October 1, 1993.

GEOTRAC TRANSACTIONS

DJWW Corp., an Ohio corporation, was formed in June, 1987 by Daniel J.
White ("Mr. White"), the corporation's president and sole shareholder. In May,
1991, the corporation changed its name to Geotrac, Inc. In August, 1994,
Geotrac, Inc. sold substantially all of its assets to SMS Geotrac, Inc., a
Delaware corporation ("SMS Geotrac"), for a purchase price of $1,000,000 in
cash, plus a contingent payment based on net profits after taxes for the fiscal
year ended June 30, 1995. SMS Geotrac was a wholly-owned subsidiary of Strategic
Holdings USA, Inc. ("Strategic"). During the year ended June 30, 1996 and on
July 30, 1997, SMS Geotrac made payments of $932,222 and $1,700,000,
respectively, to Mr. White in satisfaction of the contingent payment obligations
under the acquisition agreement. The amounts were recorded as an increase to
goodwill and an additional capital contribution to SMS Geotrac. In connection
with the sale of assets to SMS Geotrac, Mr. White became the president of SMS
Geotrac and received a four-year employment contract at a base salary of
$100,000 per year. In September, 1994, Geotrac, Inc. changed its name to
YoSystems, Inc. During the year ended June 30, 1997, SMS Geotrac and Strategic
agreed to treat all outstanding amounts owed to the

57
<PAGE> 62

parent, $1,611,140, as an additional capital contribution. In addition,
Strategic contributed $500,000 to SMS Geotrac.

During the one month period ended July 31, 1997, SMS Geotrac advanced
$797,000 to YoSystems, Inc. In July, 1997, YoSystems acquired all of the issued
and outstanding shares of capital stock of SMS Geotrac from Strategic for
$15,000,000 in cash. The purchase price was funded through an $8.75 million loan
from Huntington National Bank to YoSystems ($8.25 million of which was used in
the purchase) plus $6.75 million in cash paid by the Company in connection with
its acquisition of a 49% interest in YoSystems, as described below. The Company
has since assumed the loan from Huntington National Bank, which is payable in
quarterly installments of $312,500 plus interest, with the final installment due
on June 30, 2004.

Neither YoSystems nor Mr. White, its president and sole shareholder, had a
preexisting right to acquire SMS Geotrac pursuant to the August, 1994
transaction. The purchase price of the SMS Geotrac stock was determined by arm's
length negotiations. After the stock purchase transaction, SMS Geotrac merged
into YoSystems, with YoSystems being the surviving entity and changing its name
back to Geotrac, Inc.

Concurrent with the acquisition of SMS Geotrac by YoSystems, the Company,
through its subsidiary, BHDS, purchased a 49% interest in YoSystems for
$6,750,000 in cash. At that time, the Company did not contemplate acquiring the
remaining 51% of YoSystems, Inc.

In connection with the Company's purchase of a 49% interest in YoSystems,
BHDS issued 675,000 shares of non-cumulative 8% preferred stock to Heritage
Hotel Holding Company ("Heritage"), a corporation owned by Richard M. Brubaker,
the half brother of Robert M. Menke, a director of the Company. The preferred
stock of BHDS issued to Heritage had a par value of $10 per share and was
subject to redemption at the option of the board of directors of BHDS. The
preferred stock could be redeemed at any time at a price equal to 108% of the
original consideration paid for the stock by the shareholder plus the amount of
the dividends declared and unpaid on the redemption date. Heritage funded the
preferred stock purchase by entering into a note agreement with a commercial
bank for $6,750,000, with the preferred stock serving as collateral. On May 8,
1998, the Company purchased the outstanding preferred stock of BHDS in exchange
for a note to Heritage in the principal amount of $6,750,000. The note is
currently payable in its entirety on August 25, 2002 and accrues interest at a
rate of 8.566%. After May 8, 1998, the preferred stock of BHDS held by the
Company was exchanged for 675,000 shares of 8.5% cumulative preferred stock of
BHDS. The shares of non-cumulative 8% preferred stock were then retired. The new
preferred stock serves as collateral on the note payable to the commercial bank.
Dividends declared on the preferred stock for 1997 were $229,315 and for the
nine months ended September 30, 1997 and 1998 were $113,500 and $189,370,
respectively.

In July, 1998, the Company acquired the remaining 51% equity interest in
Geotrac, Inc. (formerly YoSystems) pursuant to the merger of Geotrac, Inc. with
and into BHDS, with the surviving entity being known as "Geotrac of America,
Inc." The Company acquired the remaining 51% interest from Mr. White and his
wife and certain minority shareholders in exchange for (i) 524,198 shares of
Common Stock, (ii) a promissory note in the principal amount of $1,500,000
bearing interest at a rate of 8.5%, and (iii) cash in the amount of $728,069
(paid in December, 1998), for a total purchase price of $7,994,000. In addition,
the Company assumed the loan in the original principal amount of $8,750,000 from
Huntington National Bank made to YoSystems in July, 1997. In connection with
this transaction, Geotrac of America, Inc. entered into an employment agreement
with Mr. White pursuant to which Mr. White will serve as the President and Chief
Executive Officer of Geotrac of America, Inc. See "Recent
Acquisitions -- Geotrac Acquisition" and "Management -- Employment Agreements."

In addition, the Company entered into a Corporate Governance Agreement with
Mr. White and Geotrac setting forth certain terms and conditions upon which
Geotrac will operate following the merger. The Corporate Governance Agreement
provides, in part, that, for so long as Mr. White owns stock in the Company or
Geotrac, or has an option to purchase stock in Geotrac, (i) the Company will
vote all of its shares in Geotrac to fix and maintain the number of directors on
the Geotrac Board of Directors at five, (ii) the Company will vote its shares in
Geotrac to elect as directors of Geotrac two persons designated by Mr. White,
(iii) the termination of Mr. White as an employee of Geotrac will require the
vote of four out of five members of the Board of Directors, and (iv) certain
actions by Geotrac will require the unanimous approval of the
58
<PAGE> 63

Geotrac Board of Directors, including any merger or consolidation, the payment
of management or similar fees to the Company or its subsidiaries and affiliates,
the sale or issuance of Geotrac stock, and the sale of Geotrac assets outside
the ordinary course of business to anyone other than an affiliate of Geotrac.
Mr. White also has a right of first refusal to purchase the assets of Geotrac in
the event such assets are to be sold. The Company does not currently intend to
sell or otherwise dispose of all or part of the operations of Geotrac.

The board of directors of Geotrac of America, Inc. consists of five
members: Robert M. Menke (Chairman), David K. Meehan, David M. Howard, Daniel J.
White and John Payne. Pursuant to his rights under the Corporate Governance
Agreement, Mr. White appointed himself and Mr. Payne to such board. Mr. Howard
is an executive officer of various subsidiaries of BIG and the former President
of BHDS.

Geotrac currently leases a 12,400 square-foot facility in Norwalk, Ohio
from DanYo LLC, a limited liability company wholly owned by Daniel J. White and
his spouse. This lease is for a term of five years, expiring on August 31, 1999,
and provides for monthly rental payments of approximately $8,717, plus payment
of utilities, real estate taxes and assessments, insurance, repairs and similar
expenses.

MISCELLANEOUS

A wholly-owned subsidiary of the Selling Shareholder has agreed to loan
$12.0 million to BIG in exchange for a subordinated note. It is anticipated that
this loan will be funded by using a portion of the net proceeds to be received
by the Selling Shareholder in this offering. BIG has agreed with the Company to
use a portion of such loan proceeds to satisfy outstanding accounts and note
payable to the Company not later than ten business days following receipt of the
loan proceeds. As of September 30, 1998, BIG's accounts and note payable to the
Company totaled approximately $11.3 million. The balance of the loan proceeds
will provide BIG with additional capital to repay other outstanding indebtedness
and expand its operations. The Company, in turn, has agreed with BIG to use a
portion of the funds received from BIG to satisfy accounts, income taxes and
notes payable to BIG. As of September 30, 1998, the Company's accounts, income
taxes and notes payable to BIG totaled approximately $10.9 million. See "Use of
Proceeds" and "Principal and Selling Shareholders."

The Audit Committee of the Board of Directors is responsible for reviewing
all future transactions between the Company and any officer or director of the
Company or any entity in which an officer or director has a material interest.
Any such transactions must be on terms no less favorable than those that could
be obtained on an arms-length basis from independent third parties.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.01 per share, and 20,000,000 shares of Preferred
Stock, par value $.01 per share. As of the date of this Prospectus, there were
issued and outstanding 10,678,743 shares of Common Stock and no shares of
Preferred Stock. See "Principal and Selling Shareholders." The following
description is qualified in its entirety by reference to the Company's Amended
and Restated Articles of Incorporation (the "Articles of Incorporation") and
Amended and Restated Bylaws (the "Bylaws"), which are filed as exhibits to the
Registration Statement of which this Prospectus is a part.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Cumulative voting in
the election of directors is not permitted. Subject to preferences that may be
granted to holders of Preferred Stock, holders of Common Stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available therefor. See "Dividend Policy." In the event of
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of
liabilities and

59
<PAGE> 64

the liquidation preference, if any, which may be granted to the holders of
Preferred Stock. Holders of Common Stock have no conversion, preemptive or other
rights to subscribe for additional shares or other securities, and there are no
redemption or sinking fund provisions with respect to such shares. The issued
and outstanding shares of Common Stock are, and the shares offered hereby will
be upon payment therefor, fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors has the authority to issue up to 20,000,000 shares
of Preferred Stock in one or more series and to fix the number of shares
constituting any such series and the rights and preferences thereof, including
dividend rates, terms of redemption (including sinking fund provisions),
redemption price or prices, voting rights, conversion rights and liquidation
preferences of the shares constituting such series, without any further vote or
action by the Company's shareholders. The issuance of Preferred Stock by the
Board of Directors could adversely affect the rights of holders of Common Stock.
For example, an issuance of Preferred Stock could result in a class of
securities outstanding that would have preferences over the Common Stock with
respect to dividends and liquidations, and that could (upon conversion or
otherwise) enjoy all of the rights appurtenant to Common Stock.

CERTAIN STATUTORY AND OTHER PROVISIONS

The Florida Business Corporation Act (the "Florida Act"), the Company's
Articles of Incorporation and the Company's Bylaws contain provisions that could
have an anti-takeover effect. These provisions are intended to enhance the
likelihood of continuity and stability in the composition of the Board and in
the policies formulated by the Board and to discourage certain types of
transactions described below, which may involve an actual or threatened change
of control of the Company. The provisions are designed to encourage any person
interested in acquiring the Company to negotiate with and obtain the approval of
the Board in connection with the transaction. However, certain of these
provisions may discourage a future acquisition of the Company not approved by
the Board in which shareholders might receive the maximum value for their shares
or which a substantial number and perhaps even a majority of the Company's
shareholders believes to be in the best interests of all shareholders. As a
result, shareholders who might desire to participate in such a transaction may
not have the opportunity to do so. See "Risk Factors -- Anti-Takeover
Considerations."

Statutory Provisions. The Company is subject to several anti-takeover
provisions under Florida law that apply to a public corporation organized under
Florida law unless the corporation has elected to opt out of such provisions in
its Articles of Incorporation or (depending on the provision in question) its
Bylaws. The Company has not elected to opt out of these provisions. The Florida
Act contains a provision that prohibits the voting of shares in a publicly held
Florida corporation which are acquired in a "control share acquisition" unless
the board of directors approves the control share acquisition or the holders of
a majority of the corporation's voting shares (exclusive of shares held by
officers of the corporation, inside directors or the acquiring party) approve
the granting of voting rights as to the shares acquired in the control share
acquisition. A control share acquisition is defined as an acquisition that
immediately thereafter entitles the acquiring party to vote in the election of
directors within each of the following ranges of voting power: (i) one-fifth or
more but less than one-third of such voting power, (ii) one-third or more but
less than a majority of such voting power and (iii) a majority or more of such
voting power. This statutory voting restriction is not applicable in certain
circumstances set forth in the Florida Act.

The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested shareholder,
(ii) the interested shareholder has owned at least 80% of the Company's
outstanding voting shares for at least five years, or (iii) the transaction is
approved by the holders of two-thirds of the Company's voting shares other than
those owned by the interested shareholder. An interested shareholder is defined
as a person who, together with affiliates and associates, beneficially owns (as
defined in Section 607.0901(1)(e), Florida Statutes) more than 10% of the
Company's outstanding voting shares.
60
<PAGE> 65

Classified Board of Directors. Under the Company's Articles of
Incorporation and Bylaws, the Board of Directors of the Company is divided into
three classes, with staggered terms of three years each. Each year the term of
one class expires. The Company's Articles of Incorporation provide that any
vacancies on the Board of Directors shall be filled only by the affirmative vote
of a majority of the directors then in office, even if less than a quorum. The
Articles of Incorporation of the Company also provide that any director may be
removed from office, with or without cause.

Special Voting Requirements. The Company's Articles of Incorporation
provide that all actions taken by shareholders must be taken at an annual or
special meeting of the shareholders or by unanimous written consent. The
Articles of Incorporation provide that special meetings of shareholders may be
called by only a majority of the members of the Board of Directors, the Chairman
of the Board or the holders of not less than 10% of the Company's outstanding
voting shares. Under the Company's Bylaws, shareholders will be required to
comply with advance notice provisions with respect to any proposal submitted for
shareholder vote, including nominations for elections to the Board of Directors.
The Articles of Incorporation and Bylaws of the Company contain provisions
requiring the affirmative vote of the holders of at least two-thirds of the
Common Stock to amend certain provisions thereof.

Indemnification and Limitation of Liability. The Florida Act authorizes
Florida corporations to indemnify any person who was or is a party to any
proceeding (other than an action by, or in the right of, the corporation), by
reason of the fact that he or she is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation or other
entity, against liability incurred in connection with such proceeding, including
any appeal thereof, if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or on behalf of a corporation, indemnification may not be made if the
person seeking indemnification is adjudged liable, unless the court in which
such action was brought determines such person is fairly and reasonably entitled
to indemnification. The indemnification provisions of the Florida Act require
indemnification if a director or officer has been successful on the merits or
otherwise in defense of any action, suit or proceeding to which he or she was a
party by reason of the fact that he or she is or was a director or officer of
the corporation. The indemnification authorized under Florida law is not
exclusive and is in addition to any other rights granted to officers and
directors under the Articles of Incorporation or Bylaws of the corporation or
any agreement between officers and directors and the corporation. A corporation
may purchase and maintain insurance or furnish similar protection on behalf of
any officer or director against any liability asserted against the officer or
director and incurred by the officer or director in such capacity, or arising
out of the status, as an officer or director, whether or not the corporation
would have the power to indemnify him or her against such liability under the
Florida Act.

The Company's Articles of Incorporation provide for the indemnification of
directors, officers, employees and agents of the Company to the maximum extent
permitted by Florida law and for the advancement of expenses incurred in
connection with the defense of any action, suit or proceeding that the director,
officer, employee or agent was a party to by reason of the fact that he or she
is or was a director or executive officer of the Company so long as he or she
has undertaken to repay such amount if it is ultimately determined that such
person is not entitled to indemnification.

Under the Florida Act, a director is not personally liable for monetary
damages to the Company or any other person for acts or omissions in his or her
capacity as a director except in certain limited circumstances such as certain
violations of criminal law and transactions in which the director derived an
improper personal benefit. As a result, shareholders may be unable to recover
monetary damages against directors for actions taken by them which constitute
negligence or gross negligence or which are in violation of their fiduciary
duties, although injunctive or other equitable relief may be available.

The foregoing provisions of the Florida Act and the Company's Articles of
Incorporation and Bylaws could have the effect of preventing or delaying a
person from acquiring or seeking to acquire a substantial equity interest in, or
control of, the Company.

61
<PAGE> 66

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Firstar Bank
Milwaukee, N.A., Milwaukee, Wisconsin.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of this offering, the Company will have 12,678,743
shares of Common Stock outstanding. Of these shares, the 3,350,000 shares of
Common Stock sold in this offering will be freely tradable by persons other than
affiliates of the Company, without restriction under the Securities Act of 1933,
as amended (the "Securities Act"). The remaining 9,328,743 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 of the restricted shares beneficially
owned by BIG will be eligible for public sale pursuant to Rule 144 commencing 90
days after the date of this Prospectus, subject to the volume restrictions
discussed below. However, BIG has agreed not to sell, contract to sell or
otherwise dispose of any shares of Common Stock for a period of 180 days after
the date of this Prospectus without the prior written consent of the
Underwriters.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned his or her shares 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 the Common Stock, or the average
weekly trading volume during the four calendar weeks preceding each such sale.
Sales under Rule 144 also are 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 or has not
been 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 discussed above.

Prior to this offering, there has been no public market for the Common
Stock. Sales of substantial amounts of Common Stock in the public market could
adversely affect prevailing market prices.

62
<PAGE> 67

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company and the Selling Shareholder have agreed to sell to each
of the Underwriters listed below, and the Underwriters, for whom Raymond James &
Associates, Inc. and Keefe, Bruyette & Woods, Inc. are acting as representatives
(the "Representatives"), have severally agreed to purchase the respective number
of shares of Common Stock set forth opposite their names below:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Raymond James & Associates, Inc............................. 1,603,000
Keefe, Bruyette & Woods, Inc................................ 687,000
Bear, Stearns & Co. Inc..................................... 65,000
BT Alex. Brown Incorporated................................. 65,000
CIBC Oppenheimer Corp....................................... 65,000
Donaldson, Lufkin & Jenrette Securities..................... 65,000
Hambrecht & Quist LLC....................................... 65,000
ING Baring Furman Selz LLC.................................. 65,000
Lehman Brothers Inc......................................... 65,000
Morgan Stanley & Co. Incorporated........................... 65,000
Prudential Securities Incorporated.......................... 65,000
Salomon Smith Barney Inc.................................... 65,000
SG Cowen Securities Corporation............................. 65,000
Warburg Dillon Read LLC..................................... 65,000
Conning & Co................................................ 35,000
Fox-Pitt, Kelton Inc........................................ 35,000
Hanifen, Imhoff Inc......................................... 35,000
William R. Hough & Co....................................... 35,000
Piper Jaffray Inc........................................... 35,000
The Robinson-Humphrey Company, LLC.......................... 35,000
SoundView Technology Group, Inc............................. 35,000
Southwest Securities, Inc................................... 35,000
----------

Total............................................. 3,350,000
==========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
their counsel and to various other conditions. The Underwriters are obligated to
purchase all the shares of Common Stock offered hereby, excluding shares covered
by the over-allotment option granted to the Underwriters, if any are purchased.

The Company and the Selling Shareholder have been advised by the
Representatives that the Underwriters propose to offer the 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 of not in
excess of $0.45 per share, and that the Underwriters and such dealers may
re-allow a concession of not in excess of $0.10 per share to other dealers. The
public offering price and concessions and re-allowances to dealers may be
changed by the Representatives after the initial public offering.

Of the shares being offered hereby, an aggregate of 25,225 shares of Common
Stock will be sold to certain officers and directors of the Company at a price
per share equal to the initial public offering price per share, less the per
share underwriting discounts and commissions.

The Company and the Selling Shareholder have granted to the Underwriters an
option, exercisable within 30 days after the date of the initial public
offering, to purchase up to an additional 502,500 shares of Common Stock to
cover over-allotments, at the same price per share to be paid by the
Underwriters for the other shares offered hereby. If the Underwriters purchase
any such additional shares pursuant to this option, each of the Underwriters
will be committed to purchase such additional shares in approximately the same
proportion as

63
<PAGE> 68

set forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments, if any, in connection with the offering.

This offering 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 this offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.

Until the distribution of Common Stock in this offering is completed, rules
of the Securities and Exchange Commission may limit the ability of the
Underwriters and certain selling group members to bid for and purchase the
Common Stock. As an exception to these rules, the Representatives are permitted
to engage in certain transactions that stabilize the price of the Common Stock.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Common Stock. If the Underwriters create
a short position in the Common Stock in connection with this offering, i.e., if
they sell more shares of Common Stock than are set forth on the cover page of
this Prospectus, the Representatives may reduce the short position by purchasing
Common Stock in the open market. The Representatives may also elect to reduce
any short position by exercising all or part of the over-allotment option
described above. The Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the Representatives
purchases shares of Common Stock in the open market to reduce the Underwriters'
short position or to stabilize the price of the Common Stock, they may reclaim
the amount of the selling concession from the Underwriters and selling group
members who sold those shares as part of this offering. In general, purchases of
a security for the purpose of stabilization or to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases. The imposition of a penalty bid might also have an effect on the
price of a security to the extent that it discouraged resales of any security.
Neither the Company, the Selling Shareholder nor any of the Underwriters makes
any representations or predictions as to the direction or magnitude of any
effect that the transactions described above may have on the price of the Common
Stock. In addition, neither the Company, the Selling Shareholder nor any of the
Underwriters makes any representation that the Representatives will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.

The Company, BIG, the Selling Shareholder and certain officers and
directors of the Company have agreed that they will not, without the prior
written consent of the Representatives, sell, offer to sell, contract to sell or
otherwise transfer or dispose of any shares of Common Stock (other than the
shares offered by the Selling Shareholder in this offering), options, rights or
warrants to acquire shares of Common Stock, or securities exchangeable for or
convertible into shares of Common Stock, during the 180-day period commencing on
the date of this Prospectus, except that the Company may grant additional
options under the Incentive Plan and the Non-Employee Director Plan, provided
that without the prior written consent of Raymond James & Associates, Inc., such
additional options shall not be exercisable during such period. See "Shares
Eligible for Future Sale."

Prior to this 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. The factors
considered in determining the initial public offering price included the history
of and prospects for the business in which the Company operates, past and
present operations, revenues and earnings of the Company and the trend of such
earnings, the prospects for such earnings, the general condition of the
securities markets at the time of the offering and the demand for similar
securities of reasonably comparable companies.

The Representatives have informed the Company that the Underwriters do not
intend to make sales to any accounts over which they exercise discretionary
authority.

The Company, BIG, the Selling Shareholder and the Underwriters have agreed
to indemnify, or to contribute to payments made by, each other against certain
civil liabilities, including certain civil liabilities under the Securities Act.

64
<PAGE> 69

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Foley & Lardner, Tampa, Florida. Certain
legal matters in connection with the sale of the Common Stock offered hereby
will be passed upon for the Underwriters by Powell, Goldstein, Frazer & Murphy
LLP, Atlanta, Georgia.

EXPERTS

The consolidated financial statements of Insurance Management Solutions
Group, Inc. as of December 31, 1996 and 1997 and for each of the three years in
the period ended December 31, 1997 appearing in this Prospectus and in the
Registration Statement, have been audited by Grant Thornton LLP, independent
certified public accountants, as set forth in their report thereon appearing
elsewhere herein and in the Registration Statement, and are included herein in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

The financial statements of Geotrac, Inc. (formerly YoSystems, Inc.) as of
December 31, 1996 and 1997 and for each of the three years in the period ended
December 31, 1997 appearing in this Prospectus and in the Registration
Statement, have been audited by Grant Thornton LLP, independent certified public
accountants, as set forth in their report thereon appearing elsewhere herein and
in the Registration Statement, and are included herein in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

The financial statements of SMS Geotrac, Inc. for each of the two years in
the period ended June 30, 1997 and for the one month period ended July 31, 1997
appearing in this Prospectus and in the Registration Statement, have been
audited by Grant Thornton LLP, independent certified public accountants, as set
forth in their report thereon appearing elsewhere herein and in the Registration
Statement, and are included herein in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part)
under the Securities Act with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. Statements contained in the Prospectus as to
the contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference and the exhibits and schedules
thereto. For further information regarding the Company and the Common Stock
offered hereby, reference is hereby made to the Registration Statement and such
exhibits and schedules which may be obtained from the Commission at the public
reference facilities maintained by the Commission at 450 Fifth Street, N. W.,
Washington, D. C. 20549, at prescribed rates. The Commission maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants, including the Company, that file
electronically with the Commission. The address of such web site is
http://www.sec.gov.

The Company intends to furnish its shareholders with annual reports
containing audited financial statements certified by an independent public
accounting firm and quarterly reports containing unaudited financial statements
for the first three quarters of each fiscal year.

65
<PAGE> 70

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Pro Forma Condensed Consolidated Financial Information...... F-2
Pro Forma Condensed Consolidated Statements of Income for
the year ended December 31, 1997 and for the nine months
ended September 30, 1998 and 1997, and Notes to Pro Forma
Condensed Consolidated Statements of Income............... F-3
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. CONSOLIDATED
FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants.......... F-14
Consolidated Balance Sheets as of December 31, 1996 and
1997, and September 30, 1998 (unaudited).................. F-15
Consolidated Statements of Income for the years ended
December 31, 1995, 1996 and 1997, and for the nine months
ended September 30, 1997 and 1998 (unaudited)............. F-16
Consolidated Statement of Shareholders' Equity for the years
ended December 31, 1995, 1996 and 1997, and for the nine
months ended September 30, 1998 (unaudited)............... F-17
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997, and for the nine months
ended September 30, 1997 and 1998 (unaudited)............. F-18
Notes to Consolidated Financial Statements.................. F-20
GEOTRAC, INC. (FORMERLY YOSYSTEMS, INC.) FINANCIAL
STATEMENTS
Report of Independent Certified Public Accountants.......... F-40
Balance Sheets as of December 31, 1996 and 1997, and June
30, 1998 (unaudited)...................................... F-41
Statements of Operations for the years ended December 31,
1995, 1996 and 1997, and for the six months ended June 30,
1997 and 1998 (unaudited)................................. F-42
Statement of Shareholders' Equity (Deficit) for the years
ended December 31, 1995, 1996 and 1997, and for the six
months ended June 30, 1998 (unaudited).................... F-43
Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997, and for the six months ended June 30,
1997 and 1998 (unaudited)................................. F-44
Notes to Financial Statements............................... F-46
SMS GEOTRAC, INC. FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants.......... F-54
Statements of Income for the years ended June 30, 1996 and
1997, and for the one month period ended July 31, 1997.... F-55
Statement of Shareholder's Equity for the years ended June
30, 1996 and 1997, and for the one month period ended July
31, 1997.................................................. F-56
Statements of Cash Flows for the years ended June 30, 1996
and 1997, and for the one month period ended July 31,
1997...................................................... F-57
Notes to Financial Statements............................... F-58
</TABLE>

F-1
<PAGE> 71

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

INTRODUCTION

The accompanying unaudited pro forma condensed consolidated statements of
income for the year ended December 31, 1997 and for the nine months ended
September 30, 1998 and 1997 reflect (i) the acquisition of Geotrac, Inc., which
was completed in July 1998, using the purchase method of accounting as if the
acquisition of Geotrac, Inc. had occurred at January 1, 1997 (ii) the new
affiliated service and administrative agreements that are effective January 1,
1998 as though the new terms were in existence on January 1, 1997 and (iii)
fixed asset purchases from affiliated companies, consisting of telephone
equipment and computer hardware and software, to be used in operating the
business, which occurred in April 1998, as if the purchase had occurred at
January 1, 1997.

The unaudited pro forma condensed consolidated statements of income are
based on currently available information and do not purport to represent what
the Company's results of operations would have been if the events referred to
occurred on the above dates, or to project the Company's results of operations
for any future periods.

The pro forma condensed consolidated financial statements should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company," "Management's Discussion and Analysis
of Financial Condition and Results of Operations of Geotrac," the Company's
Consolidated Financial Statements, Geotrac, Inc.'s (formerly YoSystems, Inc.)
Financial Statements and SMS Geotrac, Inc.'s Financial Statements.

F-2
<PAGE> 72

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
INSURANCE
MANAGEMENT
SOLUTIONS GROUP PRO FORMA PRO FORMA PRO FORMA
AND SUBSIDIARIES GEOTRAC, INC.(2) SUB TOTAL ADJUSTMENTS(3) ADJUSTMENTS(4) PRO FORMA(1)
---------------- ---------------- ----------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Outsourcing services... $29,714,044 $ -- $29,714,044 $ -- $ 862,756(g) $ 30,576,800
Flood zone
determination
services............. 8,791,935 14,062,665 22,854,600 (254,683)(a) -- 22,599,917
----------- ----------- ----------- ----------- ----------- ------------
Total revenues... 38,505,979 14,062,665 52,568,644 (254,683) 862,756 53,176,717
----------- ----------- ----------- ----------- ----------- ------------
EXPENSES
Cost of outsourcing
services............. 21,988,824 -- 21,988,824 -- 1,124,810(h)
-- (1,016,349)(i) 22,097,285
Cost of flood zone
determination
services............. 4,763,723 6,042,664 10,806,387 (254,683)(a) -- 10,551,704
Selling, general and
administrative....... 3,026,388 2,900,281 5,926,669 -- -- 5,926,669
Management services
from Parent.......... 2,343,866 -- 2,343,866 -- -- 2,343,866
Deferred compensation
(non-recurring
item)................ -- 732,795 732,795 728,069(b) -- 1,460,864
Depreciation and
amortization......... 683,672 1,908,276 2,591,948 252,882(c) 1,016,349(i) 3,861,179
----------- ----------- ----------- ----------- ----------- ------------
32,806,473 11,584,016 44,390,489 726,268 1,124,810 46,241,567
----------- ----------- ----------- ----------- ----------- ------------
Operating income
(loss)............... 5,699,506 2,478,649 8,178,155 (980,951) (262,054) 6,935,150
Equity in earnings of
Geotrac, Inc......... 201,009 -- 201,009 (201,009)(d) -- --
Interest expense....... (378,660) (824,621) (1,203,281) (127,500)(e) (270,619)(j) (1,601,400)
Other income (non-
recurring item)...... -- 1,700,000 1,700,000 -- -- 1,700,000
----------- ----------- ----------- ----------- ----------- ------------
Income before income
taxes................ 5,521,855 3,354,028 8,875,883 (1,309,460) (532,673) 7,033,750
Provision (benefit) for
income taxes......... 2,112,200 1,456,600 3,568,800 (342,200)(f) (200,400)(k) 3,026,200
----------- ----------- ----------- ----------- ----------- ------------
Net income............. $ 3,409,655 $ 1,897,428 $ 5,307,083 $ (967,260) $ (332,273) $ 4,007,550
=========== =========== =========== =========== =========== ============
Net income per common
share................ $ .34 $ .38
=========== ============
Weighted average common
shares outstanding... 10,000,000 10,524,198
=========== ============
</TABLE>

See accompanying notes.

F-3
<PAGE> 73

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1997

(1) See the introduction to Pro Forma Condensed Consolidated Financial
Information.

(2) Represents the historical financial statements of SMS Geotrac, Inc. and
Geotrac, Inc. (formerly YoSystems, Inc.) adjusted to reflect the pro forma
1997 operations of the two entities on a calendar year basis as if Geotrac,
Inc. had acquired SMS Geotrac on January 1, 1997. A summary of pro forma
Geotrac, Inc. follows:

<TABLE>
<CAPTION>
PRO FORMA
SMS GEOTRAC, INC. GEOTRAC, INC. GEOTRAC, INC.
SEVEN MONTHS ENDED YEAR ENDED PRO FORMA YEAR ENDED
JULY 31, 1997 DECEMBER 31, 1997 SUB TOTAL ADJUSTMENTS DECEMBER 31, 1997
------------------ -------------------- ----------- ----------- -----------------
(UNAUDITED) (AUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Flood zone determination
revenue............... $7,726,640 $6,336,025 $14,062,665 $ -- $14,062,665
---------- ---------- ----------- ----------- -----------
EXPENSES
Cost of flood zone
determination
services.............. 3,364,107 2,678,557 6,042,664 -- 6,042,664
Selling, general and
administrative........ 1,580,847 1,319,434 2,900,281 -- 2,900,281
Deferred compensation
(non-recurring
item)................. -- 732,795 732,795 -- 732,795
Depreciation and
amortization.......... 911,439 594,045 1,505,484 402,792(a) 1,908,276
---------- ---------- ----------- ----------- -----------
Total expenses... 5,856,393 5,324,831 11,181,224 402,792 11,584,016
---------- ---------- ----------- ----------- -----------
Operating income.......... 1,870,247 1,011,194 2,881,441 (402,792) 2,478,649
Interest expense.......... (48,339) (338,391) (386,730) (437,891)(b) (824,621)
Other income
(non-recurring item).... -- 1,700,000 1,700,000 -- 1,700,000
---------- ---------- ----------- ----------- -----------
Income before income
taxes................... 1,821,908 2,372,803 4,194,711 (840,683) 3,354,028
Provision for income
taxes................... 840,900 272,000 1,112,900 343,700(c) 1,456,600
---------- ---------- ----------- ----------- -----------
Net income................ $ 981,008 $2,100,803 $ 3,081,811 $(1,184,383) $ 1,897,428
========== ========== =========== =========== ===========
</TABLE>

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

(a) Reflect amortization of goodwill, customer contracts and deferred financing
costs, assuming Geotrac, Inc. was purchased in its entirety on January 1,
1997. Following is a summary of the pro forma adjustment:

<TABLE>
<S> <C>
Goodwill ($8,847,119 amortized over 20 years)
January 1, 1997 through July 31, 1997..................... $258,041
Customer contracts ($1,600,000 amortized over 8 years)
January 1, 1997 through July 31, 1997..................... 116,667
Deferred financing costs ($385,171 amortized over 8 years)
January 1, 1997 through July 31, 1997..................... 28,084
--------
Total pro forma adjustment........................ $402,792
========
</TABLE>

F-4
<PAGE> 74
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED) -- (CONTINUED)

(3) The following pro forma adjustments were made to reflect the results of
operations as though Geotrac, Inc. was purchased in its entirety on January
1, 1997.

(a) Eliminate intercompany transactions between the Company and Geotrac,
Inc. related to the Cross-License Agreement.

(b) In conjunction with the acquisition, Geotrac, Inc.'s majority
shareholders granted 46.45 shares of Common Stock to certain former and
current employees for prior employee services rendered while employed
at Geotrac. These shares were granted prior to the closing of this
transaction. In accordance with the purchase agreement, the Company
reacquired for $728,069 the stock held for these individuals.
Accordingly, compensation expense has been reflected in Geotrac's
historical financial statements in May 1998.

On July 31, 1997, the Company, through its subsidiary, BHDS, invested cash
in the amount of $6,750,000 in YoSystems in exchange for 490 shares of common
stock issued by YoSystems, representing a 49% equity interest. At the time of
the Company's investment, YoSystems' President and his wife owned 510 shares of
YoSystems' common stock, representing a 100% equity interest. In addition, at
the time of the Company's contribution, YoSystems had nominal net assets. As a
result of the Company's capital infusion, the net assets of YoSystems increased
to approximately $6,750,000. The Company's equity share of these net assets of
$6,750,000 equated to $3,307,500 (49% X $6,750,000), with the remainder of the
Company's investment of $3,442,500 ($6,750,000 - $3,307,500) representing
goodwill.

On July 31, 1997, YoSystems concurrently acquired all of the issued and
outstanding shares of capital stock of SMS Geotrac, Inc. SMS Geotrac, Inc.
merged into YoSystems, with YoSystems becoming the surviving entity, which then
changed its name to Geotrac, Inc. YoSystems entered into a term note for
$8,750,000 to provide additional funds required to fund the total purchase price
of $15,000,000.

In July 1998, the Company acquired the remaining 51% of the outstanding
shares of Geotrac, Inc.'s common stock for a total consideration of $7,994,250
consisting of:

<TABLE>
<S> <C>
524,198 shares of the Company's Common Stock valued at
$11.00 per share (the initial public offering price)... $5,766,181
Promissory note............................................. 1,500,000
Short-term obligation paid in December 1998................. 728,069
----------
$7,994,250
==========
</TABLE>

Following the Company's acquisition of the remaining 51% of Geotrac, Inc.,
Geotrac, Inc. was merged into BHDS, with BHDS as the surviving company, which
simultaneously changed its name to Geotrac of America, Inc.

The acquisition of the remaining 51% of the outstanding shares of Geotrac,
Inc. has increased the Company's total investment in Geotrac, Inc. to
$15,272,512 at July 1, 1998, consisting of:

<TABLE>
<S> <C>
Original July 31, 1997 investment........................... $ 6,750,000
August 1, 1997 - July 30, 1998, 49% share in Geotrac's net
income, net of amortization of goodwill of
approximately $158,000................................. 528,262
Additional July 1, 1998 investment.......................... 7,994,250
-----------
$15,272,512
===========
</TABLE>

F-5
<PAGE> 75
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED) -- (CONTINUED)

The recording of the Company's additional 51% interest in Geotrac, Inc. and
the elimination of the investment in Geotrac, Inc. account through the
consolidation process at July 1, 1998 results in the recognition of consolidated
goodwill of $14,933,247 and net assets of $339,265 recorded at estimated fair
values as follows:

<TABLE>
<CAPTION>
JULY 1, 1998
-------------
<S> <C>
Current assets.............................................. $ 5,968,680
Property and equipment...................................... 3,305,740
Customer contracts.......................................... 1,416,667
Other assets................................................ 299,065
Current liabilities......................................... (3,453,093)
Long-term obligations....................................... (7,197,794)
-----------
Net assets acquired......................................... 339,265
Goodwill.................................................... 14,933,247
-----------
$15,272,512
===========
</TABLE>

The goodwill of $14,933,247 includes the unamortized goodwill of $3,284,719
at June 30, 1998, previously recorded when the 49% interest was acquired July
31, 1997. Goodwill is amortized using the straight-line method over twenty
years, the estimated period of benefit. Customer contracts are amortized using
the straight-line method over seven years, which does not materially differ from
the underlying contract lives.

For pro forma purposes, the adjustment to reflect amortization of
consolidated goodwill is as follows:

<TABLE>
<S> <C>
Annual amortization calculated ($15,000,000 divided by 20
years)................................................. $750,000
Less amortization reflected in:
Company's historical records.............................. (71,719)
Geotrac's pro forma....................................... (442,356)
Other..................................................... 16,957
--------
Total pro forma adjustment........................ $252,882
========
</TABLE>

(d) Eliminate the equity in earnings of Geotrac, Inc. which has been
reflected historically on the equity method of accounting.

(e) Reflect interest, at a rate of 8.5%, on a $1,500,000 promissory note
issued as partial purchase consideration for the acquisition of the
remaining 51% interest in Geotrac, Inc. in July 1998.

(f) Reflect the income tax effect of the Company and Geotrac, Inc.,
recognizing the following pro forma adjustments:

<TABLE>
<S> <C>
Total pro forma adjustments before income taxes............. $(1,309,000)
Equity in earnings.......................................... 201,000
Non-deductible goodwill amortization........................ 253,000
-----------
Additional taxable loss..................................... $ (855,000)
===========
</TABLE>

Since the above items relate to Geotrac, Inc., its statutory rate of
approximately 40% was used to calculate the income tax effect.

F-6
<PAGE> 76
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED) -- (CONTINUED)

(4) The following pro forma adjustments were made to reflect the results of
operations for the year ended December 31, 1997 under the Company's new
service agreements, which were effective January 1, 1998:

(g) Reflects outsourcing revenues based on the revised policy and claims
administration agreements adopted January 1, 1998. The adjustment
reflects (i) a change in the service fee percentage charged for policy
administration for certain lines of business, (ii) a change in the
claims service fee from a cost reimbursement basis to percentage of
earned premium for certain lines of business, (iii) a change in the
claims service fee from a percentage of direct incurred losses to a
percentage of direct earned premium for certain lines of business, and
(iv) claims administration revenue related to the Florida Automobile
Joint Underwriting Association ("FAJUA") and the Florida Residential
Property and Casualty Joint Underwriting Association ("FRPCJUA"). The
FAJUA and FRPCJUA contracts are currently in run-off and were charged
on a cost reimbursement basis during 1997. Also included is a pro forma
adjustment to reflect a deferral of claims service fee income based on
the 1998 service agreement as claims service fees are being charged on
an earned premium basis, which is in advance of the total claims
expense that will be recognized by the Company.

(h) Reflects additional claims adjustment expenses that would have been
recognized by the Company during 1997 had it operated under the
provisions of the 1998 service agreements. Such expenses were
previously passed through to the affiliated companies under the 1997
service agreements.

(i) Reclassify amounts previously charged to the Company related to fixed
assets that were owned by affiliated companies and purchased at their
net book value by the Company.

(j) Reflect interest, at a rate of 8.5%, on two promissory notes entered
into to fund equipment purchases from affiliated companies.

(k) Represents the income tax effects on the year ended December 31, 1997
pro forma adjustments at the statutory rate of 37.63%.

(5) The following is provided for informational purposes only:

(A) As a result of the acquisition of Geotrac, in July 1998 the Company
wrote-off (charged to expense) approximately $123,000 of duplicate
database costs.

(B) Effective January 1, 1998, the Company began servicing its affiliated
companies automobile lines of insurance under its servicing agreements.
Had this servicing commenced January 1, 1997, outsourcing service
revenue and cost of outsourcing services would have increased by
approximately $2,670,000 and $2,472,000, respectively, for the year
ended December 31, 1997.

F-7
<PAGE> 77

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
INSURANCE
MANAGEMENT
SOLUTIONS
GROUP AND PRO FORMA
SUBSIDIARIES ADJUSTMENTS(2) PRO FORMA(1)
------------ -------------- ------------
<S> <C> <C> <C>
REVENUE
Outsourcing services............................ $27,507,410 $ -- $27,507,410
Flood zone determination services............... 19,865,141 -- 19,865,141
----------- --------- -----------
Total revenues.......................... 47,372,551 -- 47,372,551
----------- --------- -----------
EXPENSES
Cost of outsourcing services.................... 19,813,902 (282,015)(a) 19,531,887
Cost of flood zone determination services....... 8,524,121 -- 8,524,121
Selling, general and administrative............. 5,705,077 -- 5,705,077
Deferred compensation (non-recurring item)...... 728,069 (728,069)(b) --
Management services from Parent................. 2,506,321 -- 2,506,321
Depreciation and amortization................... 2,981,179 282,015(a)
76,237(c) 3,339,431
----------- --------- -----------
40,258,669 (651,832) 39,606,837
----------- --------- -----------
Operating income.................................. 7,113,882 651,832 7,765,714
Interest income................................... 307,905 -- 307,905
Interest expense.................................. (1,653,165) (63,750)(d-1)
(64,177)(d-2) (1,781,092)
Minority interest................................. (472,803) 472,803(e) --
----------- --------- -----------
Income before income taxes........................ 5,295,819 996,708 6,292,527
Provision for income taxes........................ 2,388,400 240,100(f) 2,628,500
----------- --------- -----------
Net income........................................ $ 2,907,419 $ 756,608 $ 3,664,027
=========== ========= ===========
Net income per common share....................... $ .29 $ .35
=========== ===========
Weighted average common shares outstanding........ 10,176,653 10,524,198
=========== ===========
</TABLE>

See accompanying notes.

F-8
<PAGE> 78

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(1) See the introduction to Pro Forma Condensed Consolidated Financial
Information.

(2) The following pro forma adjustments were made to reflect the results of
operations as though Geotrac was purchased in its entirety on January 1,
1997.

(a) Reclassify amounts previously charged to the Company related to fixed
assets that were owned by affiliated companies and purchased at their net
book value by the Company.

(b) Reversal of compensation expense reflected in Geotrac's historical
financial statements during the nine months ended September 30, 1998. This
compensation expense arose prior to the closing of Geotrac and is
reflected in the Pro Forma Condensed Consolidated Statement of Income for
the year ended December 31, 1997. See Note (3)(b) to the Company's Pro
Forma Condensed Consolidated Statement of Income (unaudited) for the year
ended December 31, 1997.

(c) Reflects amortization of goodwill assuming Geotrac was purchased in its
entirety on January 1, 1997. Following is a summary of the pro forma
adjustment:

<TABLE>
<S> <C>
Nine months amortization calculated ($15,000,000 divided by
240 months multiplied by 9 months)........................ $562,500
Less amortization reflected in the Company's records........ (498,976)
Other....................................................... 12,713
--------
Total pro forma adjustment.................................. $ 76,237
========
</TABLE>

(d-1) Reflect interest, at a rate of 8.5%, on a $1,500,000 promissory note
issued as partial purchase consideration for the acquisition of the
remaining 51% interest in Geotrac, Inc.

(d-2) Reflect interest, at a rate of 8.5%, on two promissory notes entered into
on April 1, 1998 to fund equipment purchases from affiliated companies.

(e) Eliminate the minority interest, which represents net income earned by the
former majority shareholder prior to the Company's acquisition of the
remaining 51% of Geotrac.

(f) Represents the income tax effects on the nine months ended September 30,
1998 pro forma adjustments, not including the minority interest of
$472,803 and non-deductible goodwill amortization of $76,237, at the
statutory rate of 40%.

(3) The following is provided for informational purposes only:

Prior to July 31, 1998, the Company, as a wholly-owned subsidiary, was
included in its Parent's consolidated income tax return, subject to a tax
sharing and allocation agreement with its affiliates. As the Company's
Parent now owns less than 80% of the Company's Common Stock, the Company
is a separate tax paying entity. The change in income tax reporting status
does not result in a pro forma adjustment herein as the Company's income
tax provision has historically been determined on a separate return basis.

F-9
<PAGE> 79

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
INSURANCE
MANAGEMENT
SOLUTIONS GROUP PRO FORMA PRO FORMA PRO FORMA
AND SUBSIDIARIES GEOTRAC, INC.(2) SUB TOTAL ADJUSTMENTS(3) ADJUSTMENTS(4) PRO FORMA(1)
---------------- ---------------- ----------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Outsourcing services... $22,176,943 $ -- $22,176,943 $ -- $ 936,270(f) $ 23,113,213
Flood zone
determination
services............. 6,582,012 10,329,835 16,911,847 -- -- 16,911,847
----------- ----------- ----------- ----------- ----------- ------------
Total revenues... 28,758,955 10,329,835 39,088,790 -- 936,270 40,025,060
----------- ----------- ----------- ----------- ----------- ------------
EXPENSES
Cost of outsourcing
services............. 16,528,033 -- 16,528,033 -- 880,717(g)
-- (762,260)(h) 16,646,490
Cost of flood zone
determination
services............. 3,361,144 4,299,032 7,660,176 -- -- 7,660,176
Selling, general and
administrative....... 2,240,930 2,318,897 4,559,827 -- -- 4,559,827
Management services
from Parent.......... 1,757,898 -- 1,757,898 -- -- 1,757,898
Deferred compensation
(non-recurring
item)................ -- 732,795 732,795 728,069(a) -- 1,460,864
Depreciation and
amortization......... 443,062 1,549,908 1,992,970 214,762(b) 762,260(h) 2,969,992
----------- ----------- ----------- ----------- ----------- ------------
24,331,067 8,900,632 33,231,699 942,831 880,717 35,055,247
----------- ----------- ----------- ----------- ----------- ------------
Operating income
(loss)............... 4,427,888 1,429,203 5,857,091 (942,831) 55,553 4,969,813
Equity in earnings
(loss) of Geotrac,
Inc.................. (32,325) -- (32,325) 32,325(c) -- --
Interest expense....... (223,309) (638,882) (862,191) (95,625)(d) (202,964)(i) (1,160,780)
Other income (non-
recurring item)...... -- 1,700,000 1,700,000 -- -- 1,700,000
----------- ----------- ----------- ----------- ----------- ------------
Income before income
taxes................ 4,172,254 2,490,321 6,662,575 (1,006,131) (147,411) 5,509,033
Provision (benefit) for
income taxes......... 1,644,700 1,108,650 2,753,350 (329,500)(e) (55,470)(j) 2,368,380
----------- ----------- ----------- ----------- ----------- ------------
Net income............. $ 2,527,554 $ 1,381,671 $ 3,909,225 $ (676,631) $ (91,941) $ 3,140,653
=========== =========== =========== =========== =========== ============
Net income per common
share................ $ .25 $ .30
=========== ============
Weighted average common
shares outstanding... 10,000,000 10,524,198
=========== ============
</TABLE>

See accompanying notes.

F-10
<PAGE> 80

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

(1) See the introduction to Pro Forma Condensed Consolidated Financial
Information.

(2) Represents the historical financial statements of SMS Geotrac, Inc. and
Geotrac, Inc. (formerly YoSystems, Inc.) adjusted to reflect the pro forma
1997 operations of the two entities for the nine months ended September 30,
1997 as if Geotrac, Inc. had acquired SMS Geotrac on January 1, 1997. A
summary of pro forma Geotrac, Inc. follows:

<TABLE>
<CAPTION>
PRO FORMA
SMS GEOTRAC, INC. GEOTRAC, INC. GEOTRAC, INC.
SEVEN MONTHS ENDED NINE MONTHS ENDED PRO FORMA NINE MONTHS ENDED
JULY 31, 1997 SEPTEMBER 30, 1997(D) SUB TOTAL ADJUSTMENTS SEPTEMBER 30, 1997
------------------ --------------------- ----------- ----------- ------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Flood zone
determination
revenue.............. $7,726,640 $2,603,195 $10,329,835 $ -- $10,329,835
---------- ---------- ----------- ----------- -----------
EXPENSES
Cost of flood zone
determination
services............. 3,364,107 934,925 4,299,032 -- 4,299,032
Selling, general and
administrative....... 1,580,847 738,050 2,318,897 -- 2,318,897
Deferred compensation
(non-recurring
item)................ -- 732,795 732,795 -- 732,795
Depreciation and
amortization......... 911,439 235,677 1,147,116 402,792(a) 1,549,908
---------- ---------- ----------- ----------- -----------
Total
expenses...... 5,856,393 2,641,447 8,497,840 402,792 8,900,632
---------- ---------- ----------- ----------- -----------
Operating income
(loss)................. 1,870,247 (38,252) 1,831,995 (402,792) 1,429,203
Interest expense......... (48,339) (152,652) (200,991) (437,891)(b) (638,882)
Other income (non-
recurring item)........ -- 1,700,000 1,700,000 -- 1,700,000
---------- ---------- ----------- ----------- -----------
Income before income
taxes.................. 1,821,908 1,509,096 3,331,004 (840,683) 2,490,321
Provision (benefit) for
income taxes........... 840,900 (75,950) 764,950 343,700(c) 1,108,650
---------- ---------- ----------- ----------- -----------
Net income............... $ 981,008 $1,585,046 $ 2,566,054 $(1,184,383) $ 1,381,671
========== ========== =========== =========== ===========
</TABLE>

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

(b) Reflect interest, at a rate of 8.5%, on a promissory note, of which
$8,250,000 was used as partial consideration to acquire SMS Geotrac, Inc. on
July 31, 1997.
(c) Provision for income taxes is calculated at an effective tax rate of 40%.
(d) The results of operations for Geotrac, Inc. for the nine months ended
September 30, 1997 were derived from Geotrac's audited statement of
operations for the year ended December 31, 1997 (included

F-11
<PAGE> 81
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED) -- (CONTINUED)

elsewhere herein) and from Geotrac's unaudited statement of operations for
the quarter ended December 31, 1997 (not included in this prospectus).
Following is a summary of the calculation:

<TABLE>
<CAPTION>
GEOTRAC, INC. GEOTRAC, INC. GEOTRAC, INC.
YEAR ENDED QUARTER ENDED NINE MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1997 SEPTEMBER 30, 1997
----------------- ----------------- ------------------
(AUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Total revenues................ $6,336,025 $3,732,830 $2,603,195
Total expenses................ 5,324,831 2,683,384 2,641,447
Other income (expense), net... 1,361,609 (185,739) 1,547,348
Net income.................... 2,100,803 515,757 1,585,046
</TABLE>

(3) The following pro forma adjustments were made to reflect the results of
operations as though Geotrac, Inc. was purchased in its entirety on January
1, 1997.

(a) In conjunction with the acquisition, Geotrac, Inc.'s majority
shareholders granted 46.45 shares of Common Stock to certain former and
current employees for prior employee services rendered while employed
at Geotrac. These shares were granted prior to the closing of this
transaction. In accordance with the purchase agreement, the Company
reacquired for $728,069 the stock held for these individuals.
Accordingly, compensation expense has been reflected in Geotrac's
historical financial statements in May 1998.

(b) Reflect amortization of consolidated goodwill related to the
acquisition of Geotrac, Inc. as follows:

<TABLE>
<S> <C>
Nine months of amortization calculated ($15,000,000 divided
by 240 months multiplied by 9 months)..................... $562,500
Less amortization reflected in:
Company's historical records........................... (28,688)
Geotrac's pro forma.................................... (331,763)
Other.................................................. 12,713
--------
Total pro forma adjustment........................ $214,762
========
</TABLE>

(c) Eliminate the equity in earnings (loss) of Geotrac, Inc. which has been
reflected historically using the equity method of accounting.

(d) Reflect interest, at a rate of 8.5%, on a $1,500,000 promissory note
issued as partial purchase consideration for the acquisition of the
remaining 51% interest in Geotrac, Inc. in July 1998.

(e) Reflect the income tax effect of the Company and Geotrac, Inc.,
recognizing the following pro forma adjustments:

<TABLE>
<S> <C>
Total pro forma adjustments before income taxes............. $(1,006,131)
Equity in earnings (loss) of Geotrac, Inc................... (32,325)
Non-deductible goodwill amortization........................ 214,762
-----------
Additional taxable loss..................................... $ (823,694)
===========
</TABLE>

Since the above items relate to Geotrac, Inc., its statutory rate of
approximately 40% was used to calculate the income tax effect.

F-12
<PAGE> 82
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED) -- (CONTINUED)

(4) The following pro forma adjustments were made to reflect the results of
operations for the nine months ended September 30, 1997 under the Company's
new service agreements, which were effective January 1, 1998:

(f) Reflects outsourcing revenues based on the revised policy and claims
administration agreements adopted January 1, 1998. The adjustment
reflects (i) a change in the service fee percentage charged for policy
administration for certain lines of business, (ii) a change in the
claims service fee from a cost reimbursement basis to percentage of
earned premium for certain lines of business, (iii) a change in the
claims service fee from a percentage of direct incurred losses to a
percentage of direct earned premium for certain lines of business, and
(iv) claims administration revenue related to the Florida Automobile
Joint Underwriting Association ("FAJUA") and the Florida Residential
Property and Casualty Joint Underwriting Association ("FRPCJUA"). The
FAJUA and FRPCJUA contracts are currently in run-off and were charged
on a cost reimbursement basis during 1997. Also included is a pro forma
adjustment to reflect a deferral of claims service fee income based on
the 1998 service agreement as claims service fees are being charged on
an earned premium basis, which is in advance of the total claims
expense that will be recognized by the Company.

(g) Reflects additional claims adjustment expenses that would have been
recognized by the Company during 1997 had it operated under the
provisions of the 1998 service agreements. Such expenses were
previously passed through to the affiliated companies under the 1997
service agreements.

(h) Reclassify amounts previously charged to the Company related to fixed
assets that were owned by affiliated companies and purchased at their
net book value by the Company.

(i) Reflect interest, at a rate of 8.5%, on two promissory notes entered
into to fund equipment purchases from affiliated companies.

(j) Represents the income tax effects on the nine months ended September
30, 1997 pro forma adjustments at the statutory rate of 37.63%.

(5) The following is provided for informational purposes only:

(A) As a result of the acquisition of Geotrac, in July 1998 the Company
wrote-off (charged to expense) approximately $123,000 of duplicate
database costs.

(B) Effective January 1, 1998, the Company began servicing its affiliated
companies automobile lines of insurance under its servicing agreements.
Had this servicing commenced January 1, 1997, outsourcing service
revenue and cost of outsourcing services would have increased by
approximately $2,147,000 and $1,898,000, respectively, for the nine
months ended September 30, 1997.

F-13
<PAGE> 83
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
Insurance Management Solutions Group, Inc.

We have audited the accompanying consolidated balance sheets of Insurance
Management Solutions Group, Inc. and subsidiaries as of December 31, 1996 and
1997, and the related consolidated statements of income, shareholders' equity,
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 consolidated financial position of
Insurance Management Solutions Group, Inc. and subsidiaries as of December 31,
1996 and 1997, and the consolidated 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.

GRANT THORNTON LLP

Tampa, Florida
May 29, 1998
(Except for Notes 1 and 3, and paragraph three of Note 2
as to which the date is July 31, 1998, and December 17, 1998, respectively.)

F-14
<PAGE> 84

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1996 1997 1998
---------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.............................. $ -- $ 115,070 $ 3,550,338
Accounts receivable, net............................... 894,323 1,218,741 3,892,290
Due from affiliates.................................... 903,789 8,834,733 6,120,773
Note and interest receivable -- affiliate.............. -- -- 5,163,881
Prepaid expenses and other assets...................... 63,119 108,150 828,026
---------- ----------- -----------
Total current assets........................... 1,861,231 10,276,694 19,555,308
PROPERTY AND EQUIPMENT, net.............................. 1,446,376 2,331,336 8,792,238
INVESTMENT IN GEOTRAC, INC............................... -- 6,879,291 --
OTHER ASSETS
Goodwill, net.......................................... -- -- 14,711,079
Customer contracts, net................................ -- -- 1,366,667
Deferred tax assets.................................... 128,700 -- 1,659,665
Other.................................................. 4,935 44,384 935,929
---------- ----------- -----------
Total assets................................... $3,441,242 $19,531,705 $47,020,886
========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt...................... $ 315,500 $ 1,522,822 $ 3,066,325
Current portion of notes and interest
payable -- affiliates............................... -- -- 10,329,861
Note payable........................................... 600,000 600,000 --
Accounts payable, trade................................ 53,519 271,165 705,249
Due to affiliates...................................... 26,303 2,889,212 802,432
Employee related accrued expenses...................... 570,312 1,850,553 2,337,101
Other accrued expenses................................. 241,257 596,424 1,768,328
Income taxes payable................................... 472,729 2,239,058 4,615,473
Deferred compensation.................................. -- -- 692,461
Deferred revenue....................................... 6,811 455,827 207,308
---------- ----------- -----------
Total current liabilities...................... 2,286,431 10,425,061 24,524,538
LONG-TERM DEBT, less current portion..................... 894,475 2,186,653 8,216,139
NOTES PAYABLE -- AFFILIATES, less current portion........ -- -- 5,891,377
DEFERRED REVENUE......................................... -- -- 645,241
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK OF SUBSIDIARY............................ -- 6,750,000 --
SHAREHOLDERS' EQUITY
Preferred Stock, $.01 par value; 20,000,000 shares
authorized, no shares issued and outstanding........ -- -- --
Common Stock, $.01 par value; 100,000,000 shares
authorized, 10,000,000 shares at December 31, 1996
and 1997, and 10,524,198 shares at September 30,
1998 issued and outstanding......................... 100,000 100,000 105,242
Additional paid-in capital............................. 160,336 69,991 5,830,930
Retained earnings...................................... -- -- 1,807,419
---------- ----------- -----------
Total shareholders' equity..................... 260,336 169,991 7,743,591
---------- ----------- -----------
Total liabilities and shareholders' equity..... $3,441,242 $19,531,705 $47,020,886
========== =========== ===========
</TABLE>

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

F-15
<PAGE> 85

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -------------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Outsourcing services -- affiliated...... $ 3,443,628 $ 4,787,772 $29,114,601 $21,738,733 $26,614,949
Outsourcing services.................... -- 337,458 599,443 438,210 892,461
Flood zone determination services....... 4,886,946 7,291,031 7,763,576 5,884,640 18,800,574
Flood zone determination
services -- affiliated................ 239,980 414,209 1,028,359 697,372 1,064,567
----------- ----------- ----------- ----------- -----------
Total revenues................... 8,570,554 12,830,470 38,505,979 28,758,955 47,372,551
----------- ----------- ----------- ----------- -----------
EXPENSES
Cost of outsourcing services............ 2,954,766 3,895,801 21,988,824 16,528,033 19,813,902
Cost of flood zone determination
services.............................. 3,415,023 5,362,154 4,763,723 3,361,144 8,524,121
Selling, general and administrative..... 804,003 1,121,467 3,026,388 2,240,930 5,705,077
Management services from Parent......... 724,904 1,053,546 2,343,866 1,757,898 2,506,321
Deferred compensation (non-recurring
item)................................. -- -- -- -- 728,069
Depreciation and amortization........... 184,155 309,188 683,672 443,062 2,981,179
----------- ----------- ----------- ----------- -----------
Total expenses................... 8,082,851 11,742,156 32,806,473 24,331,067 40,258,669
----------- ----------- ----------- ----------- -----------
OPERATING INCOME.......................... 487,703 1,088,314 5,699,506 4,427,888 7,113,882
----------- ----------- ----------- ----------- -----------
EQUITY IN EARNINGS (LOSS) OF GEOTRAC,
INC. ................................... -- -- 201,009 (32,325) --
----------- ----------- ----------- ----------- -----------
MINORITY INTEREST......................... -- -- -- -- (472,803)
OTHER INCOME (EXPENSE):
Interest income......................... -- -- -- -- 307,905
Interest expense........................ (71,493) (75,350) (378,660) (223,309) (1,653,165)
----------- ----------- ----------- ----------- -----------
Total other income (expense)..... (71,493) (75,350) (378,660) (223,309) (1,345,260)
INCOME BEFORE PROVISION FOR INCOME
TAXES................................... 416,210 1,012,964 5,521,855 4,172,254 5,295,819
PROVISION FOR INCOME TAXES................ 162,400 396,000 2,112,200 1,644,700 2,388,400
----------- ----------- ----------- ----------- -----------
NET INCOME................................ $ 253,810 $ 616,964 $ 3,409,655 $ 2,527,554 $ 2,907,419
=========== =========== =========== =========== ===========
NET INCOME PER COMMON SHARE............... $ .03 $ .06 $ .34 $ .25 $ .29
=========== =========== =========== =========== ===========
Weighted average common shares
outstanding............................. 10,000,000 10,000,000 10,000,000 10,000,000 10,176,653
=========== =========== =========== =========== ===========
</TABLE>

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

F-16
<PAGE> 86

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON PAID-IN EARNINGS
STOCK CAPITAL (DEFICIT) TOTAL
-------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1995..................... $100,000 $ 91,000 $ (66,138) $ 124,862
Capital contribution from Parent............. -- 150,000 -- 150,000
Net income................................... -- -- 253,810 253,810
-------- ---------- ----------- -----------
Balance at December 31, 1995................... 100,000 241,000 187,672 528,672
Capital contribution from Parent............. -- 114,700 -- 114,700
Cash dividends to Parent..................... -- (195,364) (804,636) (1,000,000)
Net income................................... -- -- 616,964 616,964
-------- ---------- ----------- -----------
Balance at December 31, 1996................... 100,000 160,336 -- 260,336
Cash dividends to Parent..................... -- (90,345) (3,409,655) (3,500,000)
Net income................................... -- -- 3,409,655 3,409,655
-------- ---------- ----------- -----------
Balance at December 31, 1997................... 100,000 69,991 -- 169,991
Cash dividends to Parent (unaudited)......... -- -- (1,100,000) (1,100,000)
Issuance of Common Stock as partial
consideration for the acquisition of
Geotrac, Inc. (Note 3) (unaudited)........ 5,242 5,760,939 -- 5,766,181
Net income (unaudited)....................... -- -- 2,907,419 2,907,419
-------- ---------- ----------- -----------
Balance at September 30, 1998 (unaudited)...... $105,242 $5,830,930 $ 1,807,419 $ 7,743,591
======== ========== =========== ===========
</TABLE>

The accompanying notes are an integral part of this consolidated statement.

F-17
<PAGE> 87

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- -------------------------
1995 1996 1997 1997 1998
--------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................ $ 253,810 $ 616,964 $ 3,409,655 $ 2,527,554 $ 2,907,419
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization........... 184,155 309,188 683,672 443,062 2,981,179
Depreciation and amortization of Geotrac
prior to July 1998 acquisition........ -- -- -- -- (712,990)
Loss on disposal of property and
equipment............................. 7,124 72,726 2,329 -- 37,914
Equity in (earnings) loss of Geotrac,
Inc................................... -- -- (201,009) 32,325 (485,034)
Deferred income taxes, net.............. (4,200) (119,800) 131,000 42,300 (1,074,665)
Changes in assets and liabilities:
Accounts receivable................... (379,694) (179,713) (324,418) (517,611) (474,170)
Prepaid expenses and other current
assets............................. (7,075) (11,751) (45,031) (353,781) (542,464)
Other assets.......................... -- (4,935) (40,394) (31,377) 6,279
Accounts payable, trade............... 290,755 (301,090) 217,646 6,577 125,587
Employee related accrued expenses..... 196,858 136,210 1,280,241 723,662 (163,486)
Other accrued expenses................ 147,516 79,591 352,867 (5,072) 696,250
Income taxes payable.................. 137,127 365,515 1,766,329 1,575,996 2,172,415
Deferred revenue...................... 4,861 (153) 449,016 406,494 319,369
--------- ----------- ----------- ----------- -----------
Net cash provided by operating
activities....................... 831,237 962,752 7,681,903 4,850,129 5,793,603
--------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Geotrac, cash acquired..... -- -- -- -- 2,797,008
Cash investment in Geotrac, Inc........... -- -- (6,750,000) (6,750,000) --
Purchases of property and equipment....... (464,048) (1,011,807) (1,498,298) (993,505) (825,358)
--------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
investing activities............. (464,048) (1,011,807) (8,248,298) (7,743,505) 1,971,650
--------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit....... 213,000 -- -- -- --
Proceeds from issuance of Preferred Stock
of Subsidiary........................... -- -- 6,750,000 6,750,000 --
Proceeds from the issuance of debt........ -- 1,054,000 2,815,000 -- --
Repayment of debt......................... (122,000) (122,025) (315,500) (236,640) (2,798,665)
Cash dividends paid to Parent............. -- (1,000,000) (3,500,000) -- (1,100,000)
Capital contribution from Parent.......... 150,000 114,700 -- -- --
Net advances to (from) affiliates......... (573,847) (34,886) (5,068,035) (3,338,410) 183,476
Deferred offering costs................... -- -- -- -- (614,796)
--------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities............. (332,847) 11,789 681,465 3,174,950 (4,329,985)
--------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................... 34,342 (37,266) 115,070 281,574 3,435,268
CASH AND CASH EQUIVALENTS, beginning of
period.................................... 2,924 37,266 -- -- 115,070
--------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period.... $ 37,266 $ -- $ 115,070 $ 281,574 $ 3,550,338
========= =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
ACTIVITIES:
Cash paid for:
Interest................................ $ 71,493 $ 75,350 $ 149,345 $ 111,685 $ 819,754
========= =========== =========== =========== ===========
Income taxes............................ $ 50,000 $ 150,290 $ 214,743 $ -- $ 675,000
========= =========== =========== =========== ===========
</TABLE>

F-18
<PAGE> 88
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)

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

F-19
<PAGE> 89

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS

Insurance Management Solutions Group, Inc. ("IMSG") is a holding company
that was incorporated in the State of Florida in December 1996 by its Parent,
Bankers Insurance Group ("BIG" or the "Parent"), which contributed to IMSG two
of its wholly-owned operating subsidiaries, Insurance Management Solutions, Inc.
("IMS") and Bankers Hazard Determination Services, Inc. ("BHDS"), which were
previously formed in August 1991 and June 1988, respectively. In July 1997, the
Company acquired a 49% interest in Geotrac, Inc. and, in July 1998 acquired the
remaining 51% interest. Geotrac was subsequently merged into BHDS with the
surviving Company being known as Geotrac of America, Inc. ("Geotrac of
America"). In September 1998, IMS Direct, Inc. was formed as a wholly-owned
subsidiary of IMSG (see Note 12). IMSG, IMS, IMS Direct and Geotrac of America
are hereinafter collectively known as the "Company".

On July 31, 1998, BIG sold 2,050,000 shares of the issued and outstanding
common shares it held in IMSG to Venture Capital Corporation, a Cayman Islands
company. See Note 12 for further discussion.

The Company operates in two major business segments: providing outsourcing
services to the property and casualty insurance industry with an emphasis on
flood insurance; and providing flood zone determinations primarily to insurance
companies and financial institutions. The Company's outsourcing services, which
are provided by IMS, include policy and claims administration (policy issuance,
billing and collection functions, claims adjusting and processing) and
information technology services. The Company's flood zone determination services
are provided by Geotrac of America.

Prior to 1997, the Company's outsourcing services principally related to
information technology services provided to BIG and its other affiliates on a
cost reimbursement basis. Commencing in 1997, the Company also provided, on a
fee basis, policy and claims administration services, previously provided by BIG
and its other affiliates, related to flood and homeowners insurance lines
accounting for approximately 55% of total outsourcing revenues for 1997, and 54%
and 97% for the nine months ended September 30, 1997 and 1998, respectively.
Starting in 1998, the automobile insurance line has also been added to these
services. During 1997, the Company also provided claims administration services
to its affiliates on all other insurance lines on a cost reimbursement basis
accounting for approximately 29% of total outsourcing revenues. In 1998, the
company receives a fee for claims administration on these insurance lines
similar to that for flood, homeowners and automobile lines. In addition, in
1998, third-party claims adjustment costs, such as outside appraisers, are
recognized by the Company. In 1997, these costs were paid and absorbed by the
Company's affiliates.

The Company is substantially dependent on the business of its affiliated
insurance companies under the common control of BIG as the Company derives a
substantial portion of its revenue from outsourcing services provided to these
affiliated companies and BIG.

See Notes 2 and 12 for further organization and business information.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The formation of IMSG as described in Note 1, is reflected in the financial
statements retroactively on a historical cost basis as if the entities under
common control had been consolidated for all years presented. IMSG, IMS and BHDS
have historically maintained separate accounting records as their operations
have generally been on a stand-alone basis in regards to BIG and its other
affiliates.

The Company, under a management agreement with BIG, is charged a management
fee for common costs that are incurred by its Parent on behalf of all affiliated
companies. Management services include human resources, legal, corporate
planning and communications, cash management, certain executive management

F-20
<PAGE> 90
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
and rent. The basis of allocation for the management services is employee head
counts and estimates of time incurred, which management believes to be a
reasonable basis of allocation.

In January 1998, the Board of Directors increased the amount of the
Company's authorized shares of Common Stock from 1,000,000 to 100,000,000 shares
and changed the Common Stock's par value from $1.00 to $.01 per share. Effective
May 8, 1998, the Company declared a stock dividend of 40,000 (pre-split) shares
of Common Stock for each share of Common Stock then outstanding, resulting in an
increase in the number of outstanding shares of Common Stock from 500
(pre-split) to 20,000,000 (pre-split) shares. On December 17, 1998 the Company
effected a one-for-two reverse split of its Common Stock. The May and December
1998 recapitalizations have been retroactively reflected in the accompanying
consolidated financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of Insurance
Management Solutions Group, Inc. and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation. In 1997, the Company's investment in Geotrac, Inc. was accounted
for using the equity method since the Company owned less than 50% and had a
significant but not controlling influence. In 1998, the operations of Geotrac
for the entire nine months ended September 30, 1998 are consolidated in the
Company's statement of income. The minority interest deduction in the statement
of income represents the net income of Geotrac allocable to the 51% interests
held by the other stockholders during the six months ended June 30, 1998, prior
to the Company acquiring the remaining 51% interest in Geotrac.

Use of Estimates

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

Cash Equivalents

The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. There were no cash
equivalents at December 31, 1995, 1996 and 1997, and September 30, 1997.

Prior to June 1998, the Company maintained a zero balance account
arrangement with its Parent. As a result of this funding arrangement, the
Company had a negative cash balance for financial reporting purposes
representing checks that have been issued but that have not yet been presented
to the bank for payment. Such negative cash balances have been reclassified to
accounts payable in the accompanying consolidated balance sheets.

Accounts Receivable, Trade and Concentration of Credit Risk

Accounts receivable, trade represents amounts due from Geotrac customers.
Geotrac provides flood zone determination services to insurance companies and
financial institutions. Credit is granted to customers of Geotrac based on
management's assessment of their credit worthiness. Customer deposits are
required in certain instances. The allowance for doubtful accounts is immaterial
for all periods presented.

F-21
<PAGE> 91
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided for using the
straight-line method over the assets' estimated service lives. Accelerated
methods are used for tax purposes.

Deferred Offering Costs

The Company incurred accounting, legal, printing and other expenses in
connection with its proposed initial public offering of its Common Stock. These
offering costs are being deferred and will be charged to additional paid-in
capital when the proceeds from the initial public offering are received. At
September 30, 1998, $631,581 of deferred offering costs are included in other
assets in the consolidated balance sheet. To the extent the Company's initial
public offering is not consummated, the deferred offering costs will be charged
to expense.

Goodwill

Goodwill related to the acquisition of Geotrac is being amortized using the
straight-line method over twenty years. The amortization period was determined
based on various factors including the nature of the product or service
provided, the Company's strong market position and historical and projected
operating results. Accumulated amortization at December 31, 1997 and September
30, 1998 was $71,719 and $346,825, respectively.

Customer Contracts

Customer contracts related to the acquisition of Geotrac are being
amortized using the straight-line method over seven years. The amortization
period, which does not materially differ from the underlying contract lives, was
determined based on historical and expected contract duration periods as well as
the nature of the products and services provided. Accumulated amortization at
September 30, 1998 was $50,000.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets
(including goodwill) in accordance with Statement of Financial Accounting
Standards No. 121, ("SFAS No. 121"), Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of. SFAS No. 121 requires
long-lived assets to be reviewed for impairment whenever circumstances indicate
that the carrying amount of an asset may not be recoverable. An impairment is
recognized to the extent the sum of undiscounted estimated future cash flows
expected to result from the use of the asset is less than the carrying value.

Revenue Recognition and Deferred Revenue

Revenue generated from outsourcing and flood zone determination services
are recognized as earned when services are provided.

In 1997, the Company's affiliated service arrangements, as they pertain to
policy administration, resulted in deferred revenue being recorded as the
related fees are billed and payable based on a percentage of the customers'
premiums written which is in advance of a portion of the administrative services
being performed by the Company. In 1998, the service arrangements were changed
so that fees related to policy administration services are billed based on a
percentage of written premiums, which generally eliminates the need for any
deferral. The transition from the 1997 service arrangements to the 1998 service
agreements resulted in the

F-22
<PAGE> 92
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Company reclassifying on January 1, 1998 deferred revenue of $443,704 recorded
at December 31, 1997 to due to affiliates.

In 1998, the affiliated service agreements as they pertain to claims
administration, resulted in deferred revenue being recorded as the related fees
are billed and payable based on a percentage of the customers' earned premiums
which is in advance of a portion of the total claims expense that will be
incurred by the Company. In 1997, deferred revenue related to claims
administration was not recorded, as the Company was paid, either on a fee or
cost reimbursement basis, as the claims and related expenses were incurred. The
Company, in 1998, estimates the deferred revenue amounts based on several
factors including actual historical claims expense and related development
factors. The transition from the 1997 to the 1998 service agreements resulted in
the Company recording, at January 1, 1998, deferred revenue of approximately
$2,138,000 along with a due from affiliates for the same amount, representing
the Company's estimated future cost of servicing claims associated with premiums
earned prior to December 31, 1997.

The Company has recorded deferred revenues totaling $2,276,044 at September
30, 1998 relating to its outsourcing services, of which $2,068,736 represents
amounts billed and due from its affiliates. As such, for financial statement
reporting purposes, the $2,068,736 amount has been netted against amounts due
from affiliates at September 30, 1998.

Under the affiliated claims service agreements, the payment of claim costs
associated with the litigation of the claims remains the customers'
responsibility. In addition, the agreements contain a catastrophe provision
under which the Company would be reimbursed for costs associated with
independent adjusters and appraisers when indemnity losses from a single event
exceed $2,000,000, subject to a cap of 5% of direct incurred losses from that
storm.

The Company's flood zone revenues are principally derived from flood zone
determination services and life-of-loan monitoring services. Flood zone
determinations involve the Company ascertaining and certifying to a property's
flood zone classification. Each determination is completed within a short period
of time and is performed with a high degree of accuracy. Revenues for these
services are recognized upon completion of each flood zone determination.

The Company receives an up-front, non-refundable fee to provide life of
loan monitoring of flood zone determinations whereby the Company notifies its
customers of changes in previously issued flood zone determinations. The Company
defers the fee associated with this future obligation and amortizes these
amounts using the straight-line method over the average life of the underlying
loan, approximately 7 years.

Income Taxes

The Company accounts for income taxes on the liability method, as provided
by SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities as measured by the enacted tax
rates which will be in effect when these differences reverse. Deferred tax
expense is the result of changes in deferred tax assets and liabilities. Prior
to July 31, 1998, the Company's results of operations were included in the
consolidated federal and state income tax returns of its Parent. As provided by
SFAS No. 109 and in accordance with the intercompany tax sharing/allocation
agreement with its Parent and affiliates, income taxes are determined by the
amount that would have been due and payable had the Company filed a separate
income tax return. Included in income taxes payable in the accompanying
consolidated balance sheets, are income taxes payable to parent totaling
$472,729, $2,239,058 and $4,850,907 at December 31, 1996 and 1997 and at
September 30, 1998, respectively.

F-23
<PAGE> 93
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
As of July 31, 1998, BIG had sold a sufficient number of shares in the
Company such that the Company no longer files its tax return with Bankers
International Financial Corporation ("BIFC") on a consolidated basis. Effective
as of July 31, 1998, the Company and BIFC entered into a Tax Indemnity Agreement
pursuant to which (i) BIFC agrees to indemnify the Company in the event the
Company incurs a tax liability as a result of taxable income of BIFC or one of
its subsidiaries, and (ii) the Company agrees to indemnify BIFC in the event
BIFC incurs a tax liability as a result of taxable income of the Company or one
of its subsidiaries. Each party also agrees to reimburse the other for certain
tax credits arising on or before July 31, 1998. Under the Tax Indemnity
Agreement, the parties terminated a previous tax allocation agreement which had
been in effect since October 1, 1993.

Net Income Per Common Share

Net income per common share, which represents both basic and diluted
earnings per share ("EPS") since no dilutive securities were outstanding for all
periods presented, is computed by dividing net income by the weighted average
common shares outstanding. The following table reconciles the numerator and
denominator of the basic and dilutive EPS computation:

Fair Value of Financial Instruments

The carrying amount of the Company's financial instruments, which include
cash, accounts receivable, due from affiliates, accounts payable, due to
affiliates and debt, approximate fair value due to the short maturity of those
instruments. The Company considers the fixed and variable rate debt instruments
to be representative of current market interest rates and, accordingly, the
recorded amounts approximate their present fair market value.

Unaudited Financial Statements

The unaudited financial statements and the related notes thereto for
September 30, 1997 and 1998 include all normal and recurring adjustments, which
in the opinion of management are necessary for a fair presentation and are
prepared on the same basis as the audited annual financial statements. The
interim results are not necessarily indicative of the results that may be
expected for the full year.

F-24
<PAGE> 94
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. INVESTMENT IN AND ACQUISITION OF GEOTRAC, INC.

Year Ended December 31, 1997:

On July 31, 1997, the Company, through its subsidiary, BHD,invested cash in
the amount of $6,750,000 in YoSystems in exchange for 490 shares of common stock
issued by YoSystems, representing a 49% equity interest. At the time of the
Company's investment, YoSystems' President and his wife owned 510 shares of
YoSystems' common stock, representing a 100% equity interest. In addition, at
the time of the Company's contribution, YoSystems had nominal net assets. As a
result of the Company's capital infusion, the net assets of YoSystems increased
to approximately $6,750,000 . The Company's equity share of these net assets of
$6,750,000 equated to $3,307,500 (49% X $6,750,000), with the remainder of the
Company's investment of $3,442,500 ($6,750,000 - $3,307,500) representing
goodwill.

The following table represents summarized financial information of Geotrac,
Inc. for the period August 1, 1997 to December 31, 1997:

<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 1,
1997 TO
DECEMBER 31,
1997
--------------
<S> <C>
Condensed Statement of Income:
Total revenues............................................ $ 6,336,025
Operating income.......................................... 1,001,775
Net income................................................ 410,222
Condensed Balance Sheet:
Current assets............................................ 4,693,232
Noncurrent assets......................................... 13,943,450
Current liabilities....................................... 3,291,024
Non-current liabilities................................... 8,219,856
Shareholders' equity...................................... 7,125,802
</TABLE>

The Company's investment in Geotrac, Inc. of $6,879,291 at December 31,
1997 includes unamortized goodwill of $3,370,782.

In connection with the acquisition, the Company and Geotrac, Inc. entered
into a Cross-License Agreement in which the flood zone databases of each company
were made available to one another in exchange for specified license fees. In
addition to the use of each Company's database, Geotrac, Inc. is primarily
responsible for the development, modification and maintenance of the respective
databases. Total amounts incurred during 1997 for maintenance of the databases
amounted to $129,056. The Company incurred $125,627 for usage of Geotrac, Inc.'s
database for 1997.

F-25
<PAGE> 95
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. INVESTMENT IN GEOTRAC, INC. -- (CONTINUED)
Nine Months Ended September 30, 1998:

In July 1998, the Company, acquired the remaining 51% of the outstanding
shares of Geotrac, Inc.'s common stock for a total consideration of $7,994,250
consisting of:

<TABLE>
<S> <C>
524,198 shares of the Company's common stock valued at
$11.00 per share, the initial public offering price....... $5,766,181
Promissory note............................................. 1,500,000
Cash paid in December 1998.................................. 728,069
----------
$7,994,250
==========
</TABLE>

The shares of the Company's Common Stock to be issued as partial
consideration will be adjusted to reflect the actual initial public offering
price.

In addition, the Cross-License Agreement with BHDS, referred to above, has
been terminated along with any amounts due to each other, which were
insignificant.

The acquisition of the remaining 51% of the outstanding shares of Geotrac
has increased the Company's total investment in Geotrac to $15,272,512 at July
1, 1998, consisting of:

<TABLE>
<S> <C>
Original July 31, 1997 investment........................... $ 6,750,000
August 1, 1997-June 30, 1998, 49% share in Geotrac's net
income, net of amortization of goodwill of approximately
$158,000.................................................. 528,262
Additional July 1, 1998 investment.......................... 7,994,250
-----------
$15,272,512
===========
</TABLE>

The recording of the Company's additional 51% interest in Geotrac and the
elimination of the investment in Geotrac account through the consolidation
process at July 1, 1998 results in the recognition of consolidated goodwill of
$14,933,247 and net assets of $339,265 recorded at estimated fair values under
the purchase method of accounting as follows:

<TABLE>
<CAPTION>
JULY 1, 1998
------------
<S> <C>
Current assets.............................................. $ 5,968,680
Property and equipment...................................... 3,305,740
Customer contracts.......................................... 1,416,667
Other assets................................................ 299,065
Current liabilities......................................... (3,453,093)
Long-term obligations....................................... (7,197,794)
-----------
Net assets acquired......................................... 339,265
Goodwill.................................................... 14,933,247
-----------
$15,272,512
===========
</TABLE>

F-26
<PAGE> 96
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. INVESTMENT IN GEOTRAC, INC. -- (CONTINUED)
The following unaudited pro forma consolidated results of operations for
the year ended December 31, 1997 and the nine months ended September 30, 1997
and 1998 are presented as if the acquisition of Geotrac, Inc. had been made on
January 1, 1997. The unaudited pro forma information reflects the additional
goodwill amortization and interest expense that would have been incurred if the
Company had purchased Geotrac, Inc. on January 1, 1997. These pro forma results
are not necessarily indicative of the results of operations that would have
occurred had the purchase been made at January 1, 1997 or the future results of
the consolidated operations (in thousands, except per share data):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -----------------
1997 1997 1998
------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C>
Revenue................................................ $52,314 $39,089 $47,373
Operating income....................................... 7,197 4,914 7,766
Net income............................................. 4,340 3,233 3,664
Net income per common share............................ $ .41 $ .31 $ .35
</TABLE>

In addition, the Company entered into a Corporate Governance Agreement with
Geotrac and its president and former majority shareholder (the "former majority
shareholder") setting forth certain terms and conditions upon which Geotrac will
operate following the merger. The Corporate Governance Agreement provides, in
part, that, for so long as the former majority shareholder owns stock in the
Company or Geotrac, or has an option to purchase stock in Geotrac, (i) the
Company will vote all of its shares in Geotrac to fix and maintain the number of
directors on the Geotrac Board of Directors at five, (ii) the Company will vote
its shares in Geotrac to elect as directors of Geotrac two persons designated by
the former majority shareholder, (iii) the termination of the former majority
shareholder as an employee of Geotrac will require the vote of four out of five
members of the Board of Directors, and (iv) certain actions by Geotrac will
require the unanimous approval of the Geotrac Board of Directors, including any
merger or consolidation, the payment of management or similar fees to the
Company or its subsidiaries and affiliates, the sale or issuance of Geotrac
stock, and the sale of Geotrac assets outside the ordinary course of business to
anyone other than an affiliate of Geotrac. The former majority shareholder also
has a right of first refusal to purchase the assets of Geotrac in the event such
assets are to be sold.

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
LIFE ------------------------ SEPTEMBER 30,
(YEARS) 1996 1997 1998
------- ---------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Computer equipment and acquired
software............................... 3-5 $1,475,970 $ 2,864,348 $ 7,864,196
Office furniture and equipment........... 5 545,773 575,940 2,000,667
Leasehold improvements................... 5 31,673 31,673 125,372
Maps and map database.................... 5 107,633 194,954 1,955,514
---------- ----------- -----------
2,161,049 3,666,915 11,945,749
Less -- accumulated depreciation and
amortization........................... (714,673) (1,335,579) (3,153,511)
---------- ----------- -----------
$1,446,376 $ 2,331,336 $ 8,792,238
========== =========== ===========
</TABLE>

F-27
<PAGE> 97
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4. PROPERTY AND EQUIPMENT (CONTINUED)
Maps and map database, which are used as a basis for making flood zone
determinations, include the capitalized costs of purchasing maps as well as the
direct labor cost of converting the maps to digitized computer files.

Depreciation and amortization expense was $184,155, $309,188, and $611,954
in 1995, 1996 and 1997, respectively, and $414,374 and $2,290,123 for the nine
months ended September 30, 1997 and 1998, respectively.

NOTE 5. NOTE PAYABLE

The Company had a revolving line of credit agreement with a bank that
provided for borrowings of up to $600,000 subject to 80% of eligible
receivables, as defined. Interest was payable monthly at the bank's prime rate
plus 1% (9.5% at December 31, 1997). The principal balance plus accrued interest
were due on demand. The line of credit was repaid in August 1998 and the
agreement was terminated.

NOTE 6. NOTES RECEIVABLE AND PAYABLE -- AFFILIATES

On March 31, 1998, the Company entered into a $4,950,000 promissory note
with an affiliate that had previously advanced funds to the Company. The note,
which is included in "Current portion of notes and interest
payable -- affiliates" in the accompanying September 30, 1998 consolidated
balance sheets, bears interest at 8.5% per annum and is payable in full together
with accrued interest in April 1999.

On April 1, 1998, the Company entered into a $4,950,000 promissory note
with an affiliate to which the Company had previously advanced funds. The note,
which is reflected as "note and interest receivable -- affiliate" in the
accompanying September 30, 1998 consolidated balance sheet, bears interest at
8.5% per annum and is payable in full together with accrued interest in April
1999.

In May 1998, the Company entered into a sales and assignment agreement with
certain affiliated companies whereby certain assets were transferred and
assigned to the Company, effective April 1998, for use in its business. The
assets, consisting of telephone equipment and computer hardware and software,
were transferred at their net book value as of the date of transfer in exchange
for consideration consisting of $325,075 in cash and entered into two promissory
notes totaling $2,802,175 ($2,709,674 at September 30, 1998). The notes, which
are included in "notes payable -- affiliates, less current portion" in the
accompanying September 30, 1998 consolidated balance sheet, require monthly
installment payments of $15,417 plus accrued interest at a rate of 8.5% and
mature in April, 1999 and December 2000.

In July 1998, in connection with the Geotrac acquisition, the Company
issued a note payable to the previous majority shareholder in the amount of
$1,500,000. The note requires quarterly interest payments at a fixed interest
rate of 8.5%. The entire principal and accrued interest is payable on January 6,
2000. The note is included in "Notes payable -- affiliates, less current
portion" in the accompanying consolidated balance sheet at September 30, 1998.

F-28
<PAGE> 98
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1996 1997 1998
---------- ---------- --------------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to bank, interest at Company's
option of: 1) the current prime rate; 2) a
seven year fixed rate; 3) a certain
percentage over the LIBOR rate based upon a
formula; or 4) or a combination of the above
rates, due in quarterly installments of
$312,500, plus accrued interest thereon (8.5%
at December 31, 1997), plus annual
prepayments in an amount equal to fifty
percent of excess cash flow, as defined with
the final payment due June 2004,
collateralized by certain fixed assets of the
Company...................................... $ -- $ -- $ 7,187,500
Note payable to bank, interest at a fixed rate
of 8.19%, due in monthly principal and
interest installments of $66,965, with the
final payment due December 2000,
collateralized by certain fixed assets of the
Company...................................... -- 2,131,000 1,647,499
Note payable to bank, interest at the lender's
base lending rate (8.5% at December 31,
1997), due in monthly principal installments
of $16,854, plus accrued interest thereon,
with the final payment due December 2000,
collateralized by certain fixed assets of the
Company and guaranteed by the Company's
Parent....................................... 809,000 606,750 455,062
Promissory note to bank, interest at a fixed
rate of 8.19%, due at maturity on February
28, 1998, collateralized by certain fixed
assets of the Company........................ -- 500,000 --
Notes payable to banks, interest at both fixed
(8.19%) and at the lender's base lending rate
(8.5% at December 31, 1997), due in monthly
principal installments ranging from $1,000 to
$5,104, with the final payments due ranging
from December 1999 to 2000, collateralized by
certain fixed assets of the Company, with
certain notes guaranteed by the Company's
Parent....................................... 400,975 471,725 345,032
Capitalized equipment lease obligations (net of
interest of approximately $114,250) due in
monthly principal and interest payments of
approximately $74,000 through 2001........... -- -- 1,647,371
---------- ---------- -----------
1,209,975 3,709,475 11,282,464
Less current maturities........................ 315,500 1,522,822 3,066,325
---------- ---------- -----------
$ 894,475 $2,186,653 $ 8,216,139
========== ========== ===========
</TABLE>

Certain of the Company's debt agreements contain cross-default provisions
whereby the Company's debt instruments could be in default if any of the
Company's affiliates are in default on debt instruments with the same financial
institution. Additionally, the note payable to bank totaling $7,187,500 at
September 30, 1998 contains various covenants requiring the Company to maintain
certain financial ratios, as follows: (1) net worth, as defined, of at least
$7,750,000 through December 31, 1998 increasing by 50% of net income thereafter,
(2) leverage ratio, as defined, of not greater than 2.5 to 1.0 through December
1999 and 2.0 to 1.0

F-29
<PAGE> 99
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7. LONG-TERM DEBT -- (CONTINUED)
thereafter, (3) cash flow coverage ratio, as defined, of at least 1.10 to 1.0
through December 1998, 1.15 to 1.0 through December 1999 and 1.20 to 1.0
thereafter), restricts the payment of dividends to 50% of excess cash flows (as
defined), and limits the payment of management fees to $350,000 on an annual
basis. In the opinion of management, the Company and BIG and its affiliates were
in compliance with their required debt covenants. The Company anticipates it
will repay all of its debt instruments containing cross-default provisions from
the proceeds received from the contemplated initial public offering.

Aggregate maturities of long-term debt are as follows for the years ended
December 31:

At September 30, 1998, property and equipment includes $1,713,591 and
$180,060 of assets and accumulated amortization, respectively, recorded under
capital leases. At September 30, 1998, $784,524 of the capital lease obligations
are included in "current portion of long-term debt" and $862,847 is included in
"long-term debt, less current portion" in the accompanying consolidated balance
sheet. The leases bear interest at various rates between 3% to 5% per annum and
expire at various dates through September 2001.

NOTE 8. PREFERRED STOCK OF SUBSIDIARY

In connection with the Company's purchase of a 49% interest in Geotrac,
Inc., BHDS issued 675,000 shares of non-cumulative, 8% Preferred Stock to a
corporation owned by the half-brother of a director of the Company. The related
party funded the Preferred Stock purchase by entering into a note agreement with
a bank. The Preferred Stock served as collateral on the bank note and the
Company acts as a guarantor. In May 1998, IMSG repurchased the outstanding
Preferred Stock of BHDS in exchange for a note in the same amount. Subsequent to
September 30, 1998, the note, which was payable in its entirety on December 31,
1998, was refinanced with the same lender into an installment note requiring
monthly payments of principal plus accrued interest of $138,701 (interest rate
of 8.566%) commencing in January 1999 until its maturity in August 2002. At
September 30, 1998, $2,529,873 is included in "Current portion of notes and
interest payable -- affiliates" and $4,220,127 is included in "Notes
payable -- affiliates, less current portion," in the accompanying consolidated
balance sheet, which reflects the modification of the terms of the loan.
Subsequent to May 1998, the Preferred Stock of BHDS, currently held by IMSG, was
exchanged for 675,000 shares of 8 1/2% cumulative Preferred Stock of BHDS. The
non-cumulative 8% Preferred Stock was then retired. The new Preferred Stock
serves as collateral on the bank note held by the related party. Dividends
declared on the Preferred Stock during 1997 were $229,315 and for the nine
months ended September 30, 1997 and 1998 were $113,500 and $189,370,
respectively, and are included in "interest expense" in the accompanying
consolidated statements of income as the amounts are insignificant and the
preferred stock has certain characteristics similar to debt.

NOTE 9. SHAREHOLDERS' EQUITY

Long Term Incentive Plan

The Long-Term Incentive Plan (the "Incentive Plan") has been approved by
the Company's Board of Directors and shareholders. A total of 875,000 shares of
Common Stock may be issued pursuant to the Incentive Plan. The Incentive Plan
provides for the grant of incentive or nonqualified stock options to purchase
shares of Common Stock. Upon the completion of the contemplated initial public
offering, certain employees

F-30
<PAGE> 100
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9. SHAREHOLDERS' EQUITY -- (CONTINUED)
of the Company will be granted options to purchase a total of 505,500 shares of
Common Stock at the initial public offering price. All such options expire on
the tenth anniversary from the date of grant. Options shall become exercisable
60% after three years, 20% after four years and 20% after five years.

Non-Employee Directors' Stock Option Plan

The Non-Employee Directors' Stock Option Plan (the "Non-Employee Director
Plan") has been approved by the Company's Board of Directors and shareholders.
The Non-Employee Director Plan provides for the grant of nonqualified stock
options to purchase up to 7,200 shares of Common Stock in any three-year period
to members of the Board of Directors who are not employees of the Company. A
total of 200,000 shares may be issued pursuant to this plan. Upon the completion
of the contemplated initial public offering, each non-employee director will be
granted options to purchase 6,000 shares of Common Stock. Non-employee directors
receiving such options will become vested in options for the purchase of 800
shares of Common Stock after the adjournment of each annual meeting of
shareholders of the Company, to the extent he or she has been granted options
that have not yet vested, and provided that he or she is then a non-employee
director of the Company. In addition, each non-employee director shall become
vested in options for the purchase of 400 shares of Common Stock upon the
adjournment of each regularly scheduled quarterly meeting of the Board of
Directors (other than following the annual meeting of shareholders), to the
extent he or she has been granted options that have not yet vested, and provided
that he or she is then a non-employee director of the Company. All options
granted will have an exercise price equal to the fair market value of the Common
Stock as of the date of grant, will become exercisable upon vesting, and will
expire on the sixth anniversary of the date of grant.

Non-Qualified Stock Option Plan

The Non-Qualified Stock Option Plan (the "Non-Qualified Plan") has been
approved by the Company's Board of Directors and shareholders. The Non-Qualified
Plan provides for the grant of non-qualified stock options to purchase up to
125,000 shares of Common Stock. Upon the completion of the contemplated initial
public offering, options to purchase 125,000 shares of Common Stock at the
initial public offering price will be granted to certain executive officers of
BIG. All of such options expire on the tenth anniversary from the date of grant.
Options shall become exercisable 60% after three years, 20% after four years and
20% after five years.

Preferred Stock

The Company is authorized to issue 20,000,000 shares of Preferred Stock,
$.01 par value per share. The Board of Directors has the authority, without any
further vote or action by the Company's shareholders, to issue Preferred Stock
in one or more series and to fix the number of shares, designations, relative
rights (including voting rights), preferences, and limitations of those series
to the full extent now or hereafter permitted by Florida law. The Company has no
present intention to issue shares of Preferred Stock, although it may determine
to do so in the future.

F-31
<PAGE> 101
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10. INCOME TAXES

The provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------- ------------------------
1995 1996 1997 1997 1998
-------- -------- ---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal...................... $142,200 $441,600 $1,686,500 $1,324,500 $ 2,874,300
State........................ 24,400 70,200 294,700 231,500 591,400
-------- -------- ---------- ---------- -----------
166,600 511,800 1,981,200 1,556,000 3,465,700
-------- -------- ---------- ---------- -----------
Deferred:
Federal...................... (3,600) (98,900) 112,400 76,100 (919,800)
State........................ (600) (16,900) 18,600 12,600 (157,500)
-------- -------- ---------- ---------- -----------
(4,200) (115,800) 131,000 88,700 (1,077,300)
-------- -------- ---------- ---------- -----------
$162,400 $396,000 $2,112,200 $1,644,700 $ 2,388,400
======== ======== ========== ========== ===========
</TABLE>

Reconciliation of the federal statutory income tax rate of 34% to the
effective income tax rate is as follows:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------- -----------------------
1995 1996 1997 1997 1998
-------- -------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Federal income taxes, at
statutory rates............... $141,500 $344,400 $1,877,400 $1,418,600 $1,800,600
State taxes, net of federal
benefit....................... 15,700 35,200 200,400 151,500 253,400
Equity in earnings of Geotrac,
Inc........................... -- -- (68,300) -- --
Minority interest............... -- -- -- -- 160,800
Dividends declared on Preferred
Stock of Subsidiary........... -- -- 78,000 38,600 64,400
Non-deductible goodwill......... -- -- 24,400 9,800 56,700
Other, net...................... 5,200 16,400 300 26,200 52,500
-------- -------- ---------- ---------- ----------
$162,400 $396,000 $2,112,200 $1,644,700 $2,388,400
======== ======== ========== ========== ==========
</TABLE>

F-32
<PAGE> 102
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10. INCOME TAXES -- (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for income tax reporting purposes.
Significant components of the Company's deferred tax assets and liabilities are
as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1996 1997 1998
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets
Currently non-deductible items, principally
vacation pay and deferred compensation.......... $183,900 $172,400 $ 499,000
Deferred recognition of life of loan premium......... -- -- 1,200,165
Deferred tax liability
Depreciation and fixed asset bases differences..... (55,200) (174,700) (39,500)
-------- -------- ----------
Net deferred tax asset (liability)................... $128,700 $ (2,300) $1,659,665
======== ======== ==========
</TABLE>

NOTE 11. COMMITMENTS AND CONTINGENCIES

Risks and Uncertainties

The Company derives a substantial portion of its revenues from outsourcing
services provided to its principal shareholder, BIG. The Company has entered
into contracts with BIG pursuant to which it will continue to provide
administrative services to BIG (See Note 12). The Company's future financial
condition and results of operations will depend to a significant extent upon the
commercial success of BIG and its continued willingness to utilize the Company's
services. Any significant downturn in the business of BIG or its commitment to
utilize the Company's services could have a material adverse effect on the
Company's business, financial condition and results of operations.

The Company's business is dependent upon various factors, such as general
economic conditions and weather patterns, that are beyond its control. For
example, the demand for flood zone determinations by lenders and their customers
is directly related to the affordability of mortgage financing and refinancing.
Current interest rates are relatively low and therefore conducive to a higher
volume of mortgage lending and flood zone determinations. An increase in
interest rates could have a negative impact on mortgage lending and consequently
also on the level of flood zone determinations requested. Fluctuations in
interest rates will likely produce fluctuations in the Company's quarterly
earnings and operating results. Likewise, natural disasters such as hurricanes,
tornadoes and floods, all of which are unpredictable, directly impact the demand
for both the Company's outsourcing and flood zone determination services.

Legal Proceedings

Bankers Insurance Company ("BIC"), the Company's principal customer and a
wholly-owned subsidiary of BIG, is currently subject to an investigation by the
Florida Department of Insurance (the "DOI"), the principal regulator of
insurance activities in the State of Florida, stemming from BIC's use of a
private investigator to gather information on a DOI employee and the private
investigator's unauthorized use of illegal wiretaps in connection therewith. In
addition, BIC and certain of its employees (one of whom is now an officer of IMS
and several of whom are now employees of the Company) have been subpoenaed on
behalf of the Federal Emergency Management Agency ("FEMA") to produce
documentation or testify in connection with its investigation of certain cash
management and claims processing practices of BIC. BIC is currently involved in
discussions relating to the resolution of certain matters raised in the
investigation. If the parties are unable to reach agreement in these matters,
the United States could file suit under the False Claims Act and/or

F-33
<PAGE> 103
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
various common law and equitable theories. In the event either or both of these
investigations or any consequence thereof materially adversely affects the
business or operations of BIC, it could result in the loss or material decrease
in the Company's business from BIC, which would have a material adverse effect
on the Company's business, financial condition and results of operations. The
management of BIC and the Company do not believe the outcome of these
investigations will have a material adverse effect on the business, financial
condition or results of operations of BIC or the Company. Since the
investigations are in the early stages, it is impossible at this time to predict
the ultimate outcome of these investigations.

The Company is involved in various legal actions arising in the ordinary
course of business. Management cannot predict the outcome of these matters. It
is management's belief, after discussion with legal counsel, that the ultimate
resolution of these actions will not have a material adverse effect on the
Company's financial position, results of operations, or liquidity.

Tax Examination

The Company's ultimate parent, Bankers International Financial Corporation,
recently completed an income tax examination by the Internal Revenue Service
related to the years 1995 and 1996 in which no material assessment was levied to
the Company.

Common Stock Awards

Prior to the Company's acquisition of Geotrac, Inc., the president had a
nonbinding commitment to grant to certain former and current employees options
to purchase shares of Geotrac, Inc. common stock held by the president and his
wife, for prior employee services rendered. During May 1998, the president and
his wife contributed 46.45 shares of their Common Stock to these individuals
which is recorded as deferred compensation (non-recurring item) totaling
$728,069 in the accompanying September 30, 1998 Statement of Income. The
valuation of the Common Stock used to compute the deferred compensation expense
was determined by dividing the purchase price of $7,994,250 for the 51% interest
in Geotrac by 510 shares, the remaining shares purchased.

Employment Agreements

The Company entered into employment agreements with certain members of its
executive management team, which will be effective on completion of the
contemplated initial public offering. The agreements provide for employment
terms of three years and shall continue indefinitely until terminated by either
party pursuant to the terms of the agreements. In the event an employment
agreement is terminated by the Company without cause, the employee shall be
entitled to earned, but unpaid benefits as well as a "Severance Payment" equal
to the employee's then current annual base salary, subject to adjustment as
defined. The agreements contain non-compete provisions, which prevent a
terminated employee from soliciting customers, prospective customers or
employees of the Company.

In connection with the acquisition of Geotrac, Inc., the Company entered
into an employment agreement with the President and Chief Executive Officer of
Geotrac, Inc. ("Mr. White"). This agreement provides for an initial term of four
years and shall continue in effect thereafter until terminated by either party
upon 90 days prior written notice. The agreement provides for an initial annual
base salary of $150,000 subject to annual review by Geotrac, Inc.'s Board of
Directors. In the event of Mr. White's death or disability, Geotrac, Inc.'s
obligations under the agreement will automatically terminate, except that Mr.
White shall be entitled to severance equal to his then current annual base
salary. The agreement further provides that, in the event of termination by
Geotrac, Inc. without cause (as defined therein) or by Mr. White for good reason
(as defined

F-34
<PAGE> 104
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
therein), or in the event the agreement is not renewed for any reason other than
death, disability or for cause, then Geotrac, Inc. shall pay Mr. White at the
rate of his annual base salary then in effect for the longer of (i) the
remainder of the term of the agreement and (ii) one year after such termination
date, subject to a credit of up to 75% of the base salary paid to Mr. White by
his new employer, if any. The agreement contains certain non-compete provisions
which prevent Mr. White from engaging in the flood zone compliance business
within a specified area and soliciting or employing any Geotrac, Inc. employees.

NOTE 12. RELATED PARTY TRANSACTIONS

Service and Administrative Agreements

During 1995, 1996 and 1997, the Company provided information technology
services to affiliated entities based generally on actual cost incurred
(including selling, general and administrative expenses), which amounted to
$3,443,628, $4,787,772 and $3,236,255 of the outsourcing revenues for 1995, 1996
and 1997, respectively, and $2,467,447 for the nine months ended September 30,
1997. For the nine months ended September 30, 1998, these charges are included
in the fee structure related to the affiliated service agreement discussed
below.

In 1997, the Company charged a monthly fee for its policy and claims
administration services based on certain factors under the terms of the 1997
service agreements with BIG and other affiliated companies. For policy and
claims administration, the Company charged a fee based on a percentage of direct
written premiums and a percentage of direct paid losses for certain lines of
business, as defined, respectively. The fee ranged from 8.5% to 9% for services
rendered in connection with policy administration and .5% to 15% for claims
administration related to these policies. Also, in 1997 the Company processed
claims for BIG and its other affiliates related to those lines of business not
covered under the servicing agreement and provided other miscellaneous services
on a cost reimbursement basis. Amounts charged related to this claims processing
and other miscellaneous services amounted to $9,518,525 for 1997 and $7,138,896
for the nine months ended September 30, 1997.

Effective January 1, 1998, the Company and BIG, along with its affiliates,
entered into a service agreement which replaced the previous arrangement. For
policy administration, the Company charges a fee, ranging from 8% to 10% of
direct written premiums for certain lines of business, as defined. In 1998, in
addition to policy processing services previously provided under the 1997
service agreements, the Company also provides policy processing related to its
affiliated companies' automobile lines of business. In addition, claims services
that were previously provided on a cost reimbursement basis are included in its
1998 affiliated servicing agreements. For claims administration, the Company
charges fees ranging from 7% to 12.50% of direct earned premiums, except for
flood related programs which are based on 1% of earned premiums and 1.5% of
incurred losses. Also, a service fee of 2% of direct earned premiums is charged
related to information technology services.

Under these service agreements, the Parent Company accounted for
$16,359,821 of total outsourcing revenue in 1997, and $11,999,314 and
$26,614,949 for the nine months ended September 30, 1997 and 1998, respectively.

Effective December 1, 1998, the Company entered into a Service Agreement
with Bankers Life Insurance Company ("BLIC"), an indirect subsidiary of BIG,
pursuant to which the Company provides certain administrative services and
allows BLIC to make use of certain of the Company's property, equipment and
facilities in connection with BLIC's day-to-day operations. Under the Service
Agreement, as amended, BLIC agrees to pay the Company predetermined fees on a
quarterly basis. The term of the Service Agreement

F-35
<PAGE> 105
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12. RELATED PARTY TRANSACTIONS -- (CONTINUED)
with BLIC ends on June 1, 2001, but may be terminated at any time by BLIC upon
90 days prior written notice.

Effective January 1, 1999, these fee arrangements were modified to provide
for tiered pricing based on the volume of business processed. These
modifications resulted in a reduction in the base fees charged for certain lines
of business and increases in base fees charged for other lines of business to
better reflect the services provided and competitive market rates for such
services. The term of each Service Agreement shall expire in June, 2001,
provided that it shall thereafter be automatically extended until terminated
upon 90 days prior notice by either party.

The Company has historically been charged a monthly management fee under an
administrative services agreement with BIG for common costs that are incurred by
its Parent and allocated to its affiliated companies. These common costs include
human resources, legal, corporate planning and communications, cash management,
certain executive management and rent. The basis of allocation for the
management services is employee head counts and estimates of time incurred,
which management believes to be a reasonable basis of allocation. Total
management fees in 1995, 1996, 1997 and the nine months ended September 30, 1997
were $724,904, $1,053,546, $2,343,866 and $1,757,898, respectively. Effective
January 1, 1998, the Company is being charged for these services, exclusive of
rent, generally based on agreed-upon amounts (quarterly fee of $396,250 and an
annual fee of $120,000 for routine legal services) totaling $1,749,405 for the
nine months ended September 30, 1998. The current term of the agreement expires
on December 31, 1999, but may be renewed by the Company, at its sole option, for
an additional one-year period. Thereafter, the agreement may be terminated by
either party.

Effective as of January 1, 1999, the administration services agreement was
amended to eliminate certain accounting and audit service functions (which
functions are currently performed by the Company directly) and to reduce the
quarterly fee payable by the Company to BIG to $258,750, subject to
renegotiation by either party.

Prior to December 31, 1997, the Company was also charged for rental
expenses through the management services allocated from its Parent as discussed
above. Subsequent to this time, the Company entered into specific lease
agreements for its office space. The future minimum lease payments under these
non-cancelable operating leases are $1,150,535 and $1,384,180 for the years
ending December 31, 1998 and 1999, respectively. For financial statement
purposes, rent expense of $756,916 for the nine months ended September 30, 1998
is included in management services from Parent.

The Company leases certain employees, from time to time, that have been
trained in customer service and other areas of property and casualty insurance
from its affiliated companies. The Company has agreed to pay all direct and
indirect expenses in connection with these employees. These charges are included
in cost of outsourcing services and selling, general and administrative expenses
and amounted to $6,635,249 for 1997, and $4,327,914 and $4,303,152 for the nine
months ended September 30, 1997 and 1998, respectively.

Effective January 1, 1998, the Company entered into a perpetual license
agreement with BIG and BIC pursuant to which the Company licensed its primary
operating systems from BIG and BIC in exchange for a nominal fee. The license
agreement provides that the Company shall be solely responsible for maintaining
and upgrading the systems and shall have the authority to license such systems
to third parties.

Flood zone determination services performed for affiliated companies
amounted to $239,980, $414,209 and $1,028,359 for 1995, 1996 and 1997,
respectively, and $697,372 and $1,064,567 for the nine months ended September
30, 1997 and 1998, respectively.

F-36
<PAGE> 106
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12. RELATED PARTY TRANSACTIONS -- (CONTINUED)
Intercompany Accounts

The Company's due from affiliates, including the note
receivable -- affiliate, generally resulted from the zero balance account
arrangement with BIG (See Note 2) whereby the Company's excess cash was swept
into BIG's operating cash account. The Company's due to affiliates, including
the note payable -- affiliate, generally resulted from the Company's affiliates
advancing service fees and paying certain expenses on behalf of the Company. The
Company's income tax payable to Parent represents the current income tax
liability owed to the Parent under the intercompany tax sharing/allocation
agreement.

On July 31, 1998, the Parent sold an approximate 20% interest in the
Company to Venture Capital Corporation ("VCC"), a Cayman Islands corporation.
VCC acquired its interest in the Company directly from the Company's Parent. VCC
is wholly owned by a discretionary charitable trust. The sole trustee of this
trust is a Cayman Islands bank unaffiliated with BIG, the Company or their
respective officers or directors. BIG is indirectly owned by a separate Cayman
Islands corporation which is owned by a separate discretionary charitable trust.
The sole trustee of this trust is a Cayman Islands corporation unaffiliated with
BIG, the Company or their respective officers or directors. The declaration of
each trust provides that the same not-for-profit Cayman Islands corporation
possesses the discretionary power to (i) direct the trustee to appoint the trust
fund to another trust for the benefit of one or more of the beneficiaries of the
trust and (ii) remove the trustee and appoint one or more new trustees outside
the Cayman Islands. The Board of Directors of this entity includes certain
executive officers of BIG and the Company. VCC is selling a portion of its
interest in the Company in the offering, and a subsidiary of VCC has agreed to
loan approximately $12.0 million to BIG in exchange for a subordinated note. A
portion of the funds to be received by BIG will be used to satisfy the due from
affiliates and note receivable -- affiliate balances recorded by the Company.
With the funds, the Company will repay the entire due to affiliate, income taxes
payable to Parent and note payable -- affiliate balances at that time.

Certain officers and directors of the Company also serve as officers and
directors of BIG. Effective as of the completion of the Company's initial public
offering, certain of these officers and directors will resign from their
positions with BIG. However, the Company's Chairman of the Board, President and
Chief Executive Officer will continue to serve as Vice Chairman of the Board of
Directors of BIG, and two other directors of the Company will continue to serve
as executive officers and/or directors of BIG. As the interests of the Company
and BIG may differ, these individuals may face certain conflicts of interests.

In the event that the Company's offering is not completed, the due to
affiliates (including income taxes payable to Parent) and due from affiliates,
which are without any specific terms and are non-interest bearing, will be
satisfied during the ordinary course of business.

In September 1998, the Company formed IMS Direct, Inc., a Florida
corporation, to directly market insurance products to consumers. IMS Direct,
Inc. purchased nominal assets from BIG to begin operations.

This note should also be read in conjunction with the other notes to the
financial statements for additional related party transactions.

NOTE 13. EMPLOYEE BENEFIT PLANS

The Company's employees participate in its Parent company's 401(k) plan.
The Plan covers substantially all employees. Benefits vest based on the number
of years of service. To participate in the plan, employees must be at least 21
years old and have completed twelve months of service. The Company, at its
discretion, can make matching contributions based upon the participant's
deferral depending on the participant's annual salary up to a maximum of 6% of
compensation. The Company's expense related to this plan was

F-37
<PAGE> 107
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 13. EMPLOYEE BENEFIT PLANS (CONTINUED)
approximately $70,191, $121,390 and $466,096 in 1995, 1996 and 1997,
respectively, and $305,809 and $450,131 for the nine months ended September 30,
1997 and 1998, respectively.

In addition, the Company's employees participate in self-insured medical
and dental plans provided by the Parent. The medical program provides for
specific excess loss reinsurance for individual claims greater than $60,000 for
any one claimant and aggregate claims greater than $1,000,000. The Company
accrues the estimated liabilities for the ultimate costs of both reported claims
and incurred but not reported claims.

NOTE 14. SEGMENT INFORMATION

The Company primarily operates in two business segments within the United
States; providing policy and claims administration services and flood zone
determinations. No unaffiliated customer accounted for more than 10% of the
Company's total revenues for the periods presented. The following table provides
information about these reportable segments as required by SFAS No. 131
"Disclosures About Segments of an Enterprise and Related Information":

<TABLE>
<CAPTION>
INTERCOMPANY
OUTSOURCING FLOOD ZONE ELIMINATIONS CONSOLIDATED
SERVICES DETERMINATIONS AND OTHER TOTALS
----------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
1995
Operating revenues -- affiliated.......... $3,516,704.. $ 239,980 $ (73,076) $ 3,683,608
Operating revenues -- unaffiliated........ -- 4,886,946 -- 4,886,946
Operating income.......................... (244,370) 732,073 -- 487,703
Interest expense.......................... 17,527 53,966 -- 71,493
Depreciation and amortization............. 92,597 91,558 -- 184,155
Identifiable assets....................... 613,022 2,036,315 -- 2,649,337
Equity in earnings of Geotrac, Inc........ -- -- -- --
1996
Operating revenues -- affiliated.......... $ 4,819,786 $ 417,949 $ (35,754) $ 5,201,981
Operating revenues -- unaffiliated........ 337,458 7,291,031 -- 7,628,489
Operating income.......................... (78,801) 1,167,115 -- 1,088,314
Interest expense.......................... 11,901 63,449 -- 75,350
Depreciation and amortization............. 171,683 137,505 -- 309,188
Identifiable assets....................... 1,508,426 1,932,816 -- 3,441,242
Equity in earnings of Geotrac, Inc........ -- -- -- --
1997
Operating revenues -- affiliated.......... $30,374,066 $ 1,028,359 $ (1,259,465) $30,142,960
Operating revenues -- unaffiliated........ 599,443 7,763,576 -- 8,363,019
Operating income.......................... 3,290,830 2,408,676 -- 5,699,506
Interest expense.......................... 69,781 308,879 -- 378,660
Depreciation and amortization............. 404,830 278,842 -- 683,672
Identifiable assets....................... 8,178,483 11,353,222 -- 19,531,705
Equity in earnings of Geotrac, Inc........ -- 201,009 -- 201,009
SEPTEMBER 30, 1997 -- (UNAUDITED)
Operating revenues -- affiliated.......... $22,571,143 $ 697,372 $ (832,410) $22,436,105
Operating revenues -- unaffiliated........ 438,210 5,884,640 -- 6,322,850
Operating income.......................... 2,369,918 2,057,970 -- 4,427,888
Interest expense.......................... 52,336 170,973 -- 223,309
Depreciation and amortization............. 257,534 185,528 -- 443,062
Identifiable assets....................... 12,556,045 10,442,159 -- 22,998,204
Equity in earnings (loss) of Geotrac,
Inc..................................... -- (32,325) -- (32,325)
</TABLE>

F-38
<PAGE> 108
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 14. SEGMENT INFORMATION -- (CONTINUED)

<TABLE>
<CAPTION>
INTERCOMPANY
OUTSOURCING FLOOD ZONE ELIMINATIONS CONSOLIDATED
SERVICES DETERMINATIONS AND OTHER TOTALS
----------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
SEPTEMBER 30, 1998 -- (UNAUDITED)
Operating revenues -- affiliated.......... $27,872,981 $ 1,064,567 $ (1,258,032) 27,679,516
Operating revenues -- unaffiliated........ 892,461 18,800,574 -- 19,693,035
Operating income.......................... 1,250,767 5,863,115 -- 7,113,882
Interest expense.......................... 733,371 919,794 -- 1,653,165
Depreciation and amortization............. 1,487,956 1,493,223 -- 2,981,179
Identifiable assets....................... 24,303,879 32,958,313 (10,241,306) 47,020,886
Minority interest......................... -- (472,803) -- (472,803)
</TABLE>

NOTE 15. SUBSEQUENT EVENT (UNAUDITED)

Effective January 7, 1999, the Company, through a wholly-owned subsidiary,
acquired all of the issued and outstanding capital stock of Colonial Catastrophe
Claims Corporation, a Florida corporation ("Colonial Catastrophe"), from J.
Douglas Branham and Felicia A. Rivas, husband and wife, in exchange for (i)
154,545 shares of Common Stock, (ii) cash in the amount of $500,000, (iii) a
promissory note in the principal amount of $500,000, and (iv) an additional
payment of up to $300,000, payable in additional shares of Common Stock, based
upon the net income before taxes of Colonial Claims (as hereinafter defined) for
the year ended December 31, 1999. On January 15, 1999, Colonial Catastrophe was
merged into the acquiring subsidiary and the name of the acquiring subsidiary
was changed to "Colonial Claims Corporation" (hereinafter "Colonial Claims").
Pursuant to a registration rights agreement, Mr. Branham and Ms. Rivas have been
granted certain piggyback registration rights with respect to all of the shares
(including the earn out shares, if any), issued in connection with the
acquisition. In addition, Colonial Claims entered into a separate employment
agreement with each of Mr. Branham and Ms. Rivas pursuant to which they will
serve as employees of Colonial Claims. Each of the employment agreements is for
a period of five years and provides for an initial annual base salary of
$102,000 (subject to a 5% annual increase), plus additional compensation based
on annual revenues of the Colonial Claims business.

F-39
<PAGE> 109

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
Geotrac, Inc.

We have audited the accompanying balance sheets of Geotrac, Inc. (formerly
YoSystems, Inc.) as of December 31, 1996 and 1997, and the related statements of
income, shareholders' equity 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Geotrac, Inc. as of December
31, 1996 and 1997 and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.

GRANT THORNTON LLP

Tampa, Florida
May 29, 1998

F-40
<PAGE> 110

GEOTRAC, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- JUNE 30,
1996 1997 1998
-------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................... $ 138 $ 1,897,262 $ 2,797,008
Accounts receivable, net................................ -- 2,227,236 2,413,260
Prepaid expenses........................................ -- 278,734 177,412
Deferred tax assets..................................... -- 290,000 581,000
-------- ----------- -----------
Total current assets............................ 138 4,693,232 5,968,680
PROPERTY AND EQUIPMENT, net............................... -- 3,419,916 3,305,740
OTHER ASSETS
Goodwill, net........................................... -- 8,662,804 8,441,626
Customer contracts, net................................. -- 1,516,667 1,416,667
Deferred tax assets..................................... -- 25,000 4,000
Other................................................... -- 319,063 295,065
-------- ----------- -----------
Total assets.................................... $ 138 $18,636,682 $19,431,778
======== =========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current portion of long-term debt....................... $ -- $ 1,250,000 $ 1,250,000
Current portion of capital lease obligations............ -- 288,952 288,952
Accounts payable........................................ -- 120,754 308,497
Accounts payable -- related party....................... 25,139 -- --
Income taxes payable.................................... -- 297,000 204,000
Deferred compensation................................... -- 705,000 692,461
Other current liabilities............................... -- 629,318 709,183
-------- ----------- -----------
Total current liabilities....................... 25,139 3,291,024 3,453,093
LONG-TERM DEBT, less current portion...................... -- 7,187,500 6,250,000
CAPITAL LEASE OBLIGATIONS, less current portion........... -- 557,356 426,737
DEFERRED REVENUE.......................................... -- 475,000 521,057
COMMITMENTS AND CONTINGENCIES............................. -- -- --
SHAREHOLDERS' EQUITY (DEFICIT)
Common Stock, $.01 par value, 1,000 shares authorized;
490, 1,000 and 1,000 shares issued and outstanding at
December 31, 1996, 1997 and June 30, 1998,
respectively......................................... 5 10 10
Additional paid-in capital.............................. 5,995 6,715,570 7,443,639
Retained earnings (deficit)............................. (31,001) 410,222 1,337,242
-------- ----------- -----------
Total shareholders' equity (deficit)............ (25,001) 7,125,802 8,780,891
-------- ----------- -----------
Total liabilities and shareholders' equity
(deficit)..................................... $ 138 $18,636,682 $19,431,778
======== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-41
<PAGE> 111

GEOTRAC, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- ----------------------
1995 1996 1997 1997 1998
-------- -------- ---------- ------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Flood zone determination services...... $ -- $ -- $6,242,815 $ -- $8,718,117
Other revenues......................... -- -- 93,210 -- 129,536
-------- -------- ---------- ------- ----------
Total revenues................. -- -- 6,336,025 -- 8,847,653
-------- -------- ---------- ------- ----------
EXPENSES
Cost of revenues....................... -- -- 2,678,557 -- 3,918,662
Selling, general and administrative
expense............................. 9,755 29,841 1,319,434 9,419 1,556,638
Deferred compensation (non-recurring
item)............................... -- -- 732,795 -- 728,069
Depreciation and amortization.......... -- -- 594,045 -- 727,486
-------- -------- ---------- ------- ----------
Total expenses................. 9,755 29,841 5,324,831 9,419 6,930,855
-------- -------- ---------- ------- ----------
OPERATING INCOME (LOSS).................. (9,755) (29,841) 1,011,194 (9,419) 1,916,798
OTHER INCOME (non-recurring item)........ 932,222 -- 1,700,000 -- --
INTEREST EXPENSE......................... -- -- (338,391) -- (371,778)
-------- -------- ---------- ------- ----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME
TAXES.................................. 922,467 (29,841) 2,372,803 (9,419) 1,545,020
PROVISION FOR INCOME TAXES............... -- -- 272,000 -- 618,000
-------- -------- ---------- ------- ----------
NET INCOME (LOSS)........................ $922,467 $(29,841) $2,100,803 $(9,419) $ 927,020
======== ======== ========== ======= ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-42
<PAGE> 112

GEOTRAC, INC.

STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON PAID-IN EARNINGS
STOCK CAPITAL (DEFICIT) TOTAL
------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1995....................... $ 5 $ 5,995 $ 78,744 $ 84,744
Dividend paid to shareholder................... -- -- (1,002,371) (1,002,371)
Net income..................................... -- -- 922,467 922,467
--- ---------- ----------- -----------
Balance at December 31, 1995..................... 5 5,995 (1,160) 4,840
Net loss....................................... -- -- (29,841) (29,841)
--- ---------- ----------- -----------
Balance at December 31, 1996..................... 5 5,995 (31,001) (25,001)
Dividend paid to S Corporation shareholder..... -- -- (1,700,000) (1,700,000)
Sale of Common Stock........................... 5 6,749,995 -- 6,750,000
Recapitalization of Company for change from S
Corporation to C Corporation................ (40,420) 40,420 --
Net income..................................... -- -- 2,100,803 2,100,803
--- ---------- ----------- -----------
Balance at December 31, 1997..................... 10 6,715,570 410,222 7,125,802
Contribution of shares from shareholder to
employees for services rendered
(unaudited)................................. -- 728,069 -- 728,069
Net income (unaudited)......................... -- -- 927,020 927,020
--- ---------- ----------- -----------
Balance at June 30, 1998 (unaudited)............. $10 $7,443,639 $ 1,337,242 $ 8,780,891
=== ========== =========== ===========
</TABLE>

The accompanying notes are an integral part of this statement.

F-43
<PAGE> 113

GEOTRAC, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------ ---------------------
1995 1996 1997 1997 1998
----------- -------- ----------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...................... $ 922,467 $(29,841) $ 2,100,803 $(9,419) $ 927,020
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization....... -- -- 594,045 -- 727,486
Contribution of shares from
shareholder to employees for
services rendered................. -- 728,069
Deferred federal income tax
credit............................ -- -- (315,000) -- (270,000)
Changes in assets and liabilities:
Accounts receivable............... 84,298 -- 8,284 -- (186,024)
Prepaid expenses and other
assets......................... -- -- (73,945) -- 101,923
Accounts payable and other
liabilities.................... -- 25,139 63,058 -- 267,608
Deferred compensation............. -- -- 705,000 -- (12,539)
Income taxes payable.............. -- -- 297,000 -- (93,000)
Deferred revenue.................. -- -- (25,000) -- 46,057
----------- -------- ----------- ------- -----------
Net cash provided by (used in)
operating activities......... 1,006,765 (4,702) 3,354,245 (9,419) 2,236,600
----------- -------- ----------- ------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment.... -- -- (153,371) -- (268,735)
Acquisition of business, net of cash
acquired............................ -- -- (6,163,057) -- --
----------- -------- ----------- ------- -----------
Net cash used in investing
activities................... -- -- (6,316,428) -- (268,735)
----------- -------- ----------- ------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of note payable from
shareholder......................... -- -- (200,000) -- --
Proceeds from note payable............. -- -- 447,800 -- --
Payments on note payable............... -- -- (312,500) -- (937,500)
Payments on capital lease
obligations......................... -- -- (125,993) -- (130,619)
Dividend paid S corporation
shareholder......................... (1,002,371) -- (1,700,000) -- --
Sale of common stock................... -- -- 6,750,000 -- --
----------- -------- ----------- ------- -----------
Net cash provided by (used in)
financing activities......... (1,002,371) -- 4,859,307 (1,068,119)
----------- -------- ----------- ------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS....................... 4,394 (4,702) 1,897,124 899,746
CASH AND CASH EQUIVALENTS, beginning of
period................................. 446 4,840 138 -- 1,897,262
----------- -------- ----------- ------- -----------
CASH AND CASH EQUIVALENTS, end of
period................................. $ 4,840 $ 138 $ 1,897,262 $ 2,797,008
=========== ======== =========== ======= ===========
SUPPLEMENT DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid for interest................. $ -- $ -- $ 155,110 $ -- $ 744,666
=========== ======== =========== ======= ===========
Cash paid for income taxes............. $ -- $ -- $ 290,000 $ -- $ 981,000
=========== ======== =========== ======= ===========
</TABLE>

F-44
<PAGE> 114
GEOTRAC, INC.

STATEMENTS OF CASH FLOWS -- (CONTINUED)

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the year ended December 31, 1997, the Company financed the
acquisition of SMS Geotrac, Inc. with $8,250,000 of debt and incurred $337,035
of deferred financing costs.

During the year ended December 31, 1997, the Company acquired $25,398 in
equipment under a capital lease.

Acquisition of Business Net of Cash Acquired:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
------------
<S> <C>
Fair value of assets acquired............................... $17,308,778
Liabilities assumed......................................... (2,308,778)
Debt issued................................................. (8,250,000)
Cash acquired............................................... (586,943)
-----------
$ 6,163,057
===========
</TABLE>

During the six months ended June 30, 1998, the president of Geotrac, Inc.
and his wife contributed 46.45 shares of Geotrac, Inc.'s Common Stock owned by
them to certain employees for prior services rendered. The contribution of
shares to these employees and the corresponding expense recognized by the
Company, totaling $728,069, has been reflected as deferred compensation
(non-recurring item) and additional paid-in capital in the accompanying
financial statements. See Note 7.

The accompanying notes are an integral part of these statements.

F-45
<PAGE> 115

GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND ORGANIZATION

Geotrac, Inc. (the "Company"), formerly YoSystems, Inc., is a provider of
flood zone determination services for financial services companies and
individuals located throughout the United States.

On July 31, 1997, the Company acquired the outstanding stock of SMS
Geotrac, Inc., a wholly-owned subsidiary of Strategic Mortgage Services, Inc.
("SMS"), an unrelated company, for $15,000,000. Prior to the acquisition, the
Company had limited activity and was an S corporation for federal income tax
purposes. The Company's principal activity prior to July 31, 1997 was to receive
contingent earnout payments from the sale of its operating assets during 1994
and to distribute any payments received to its shareholder.

Simultaneous with the acquisition of SMS Geotrac, Inc., the Company sold
49% of its outstanding shares to Bankers Hazard Determination Services, Inc.
("BHDS"), a subsidiary of Insurance Management Solutions Group, Inc. ("IMSG"),
for $6,750,000. Such proceeds of the stock sale together with the proceeds of
$8,250,000 from a bank borrowing were used to acquire SMS Geotrac, Inc.
Subsequent to the acquisition, the Company changed its name from YoSystems, Inc.
to Geotrac, Inc. As of July 31, 1997, the Company became a C corporation for
federal income tax purposes.

On May 12, 1998, the Company, its shareholders (including BHDS), IMSG and
IMSG's parent, Bankers Insurance Group, Inc., executed a definitive agreement
whereby all the shares of common stock held by the Company's president, his wife
and by certain employees representing 51% of the outstanding shares, were
acquired by IMSG and BHDS for total consideration of $7,994,250 consisting of:

<TABLE>
<S> <C>
Shares of IMSG Common Stock................................. $5,766,181
Promissory note............................................. 1,500,000
Cash........................................................ 728,069
----------
$7,994,250
==========
</TABLE>

During July 1998, the transaction was completed with the Company merging
into BHDS, with BHDS as the surviving corporation, which simultaneously changed
its name to Geotrac of America, Inc. The cross-license agreement with BHDS (See
Note 3) was terminated upon completion of the merger.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

In preparing the financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Cash Equivalents

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

Concentration of Credit

The Company provides flood zone determination services primarily to
insurance companies and financial institutions throughout the United States.
Credit is extended to customers (primarily financial services

F-46
<PAGE> 116
GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
companies) based on management's assessment of their credit worthiness. Customer
deposits are required in certain instances.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization is provided for using the straight
line method over the estimated useful life of the assets.

Capitalized costs include the cost of purchasing maps as well as the direct
labor cost of converting the maps to digitized computer files. The Company
capitalizes the costs of acquiring and computerizing maps that are used as a
basis for making flood zone determinations.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets and
intangibles (including goodwill) held whenever adverse events or changes in
business climate indicate that the expected undiscounted future cash flows from
the related asset may be less than previously anticipated. If the net book value
of the related asset exceeds the undiscounted future cash flows of the asset,
the carrying amount would be reduced to the present value of its expected future
cash flows and an impairment loss would be recognized. Management does not
believe that an impairment reserve was required for all periods presented.

Goodwill

Goodwill of $8,847,119 related to the acquisition of SMS Geotrac, Inc., is
being amortized using the straight-line method over twenty years. The
amortization period was determined based on various factors including the nature
of the product or service provided, the Company's strong market position and
historical and projected operating results. Accumulated amortization at December
31, 1997 and June 30, 1998 was $184,315 and $405,493, respectively.

Customer Contracts

In connection with the acquisition of SMS Geotrac, Inc., the Company
estimated the fair value of its customer contracts and allocated $1,600,000 of
the purchase price to such contracts. Customer contracts are being amortized
using the straight-line method over eight years. The amortization period, which
does not materially differ from the underlying contract uses, was determined
based on historical and expected contract duration periods as well as the nature
of the product and services provided. Accumulated amortization at December 31,
1997 and June 30, 1998 was $83,333 and $183,333, respectively.

Revenues

The Company receives an up-front fee to provide life of loan monitoring of
flood zone determinations whereby the Company notifies its customers of changes
in previously issued flood zone determinations. The Company defers the fee
associated with this future obligation and amortizes these amounts using the
straight-line method over the average life of the underlying loan, approximately
7 years.

F-47
<PAGE> 117
GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Income Taxes

For the year ended December 31, 1996 and through July 31, 1997 the Company
was an S Corporation for federal income tax purposes. Accordingly, federal
income taxes on net income of the Company were payable by the shareholder.

Beginning August 1, 1997, the Company accounts for income taxes on the
asset and liability method. Deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of assets
and liabilities as measured by the enacted tax rates which will be in effect
when these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities. At the date of the termination of the S
Corporation election, there were no deferred tax assets or liabilities created.

Deferred Financing Costs

The Company incurred financing costs of approximately $337,000 related to
its bank borrowings. Such costs are being amortized using the straight line
method (approximates the effective yield method) over the term of the loan (see
Note 5).

Fair Value of Financial Instruments

The carrying amount of the Company's financial instruments at December 31,
1997, and June 30, 1998, which includes cash, accounts receivable, accounts
payable and debt, approximates fair value due to the short maturity of those
instruments. The Company considers the fixed rate and variable rate financial
instruments to be representative of current market interest rates and,
accordingly, the recorded amounts approximate their present fair market value.

Unaudited Financial Statements

The unaudited financial statements and the related notes thereto for June
30, 1998 include all normal and recurring adjustments, which in the opinion of
management are necessary for a fair presentation and are prepared on the same
basis as audited annual statements. The interim results are not necessarily
indicative of the results that may be expected for the full year.

Segments and Related Information

The Company adopted SFAS No. 131, "Disclosure 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 shareholders. This statement also establishes standards for
related disclosures about products and geographic service areas, and major
customers. This statement requires the reporting of financial and descriptive
information about an enterprise's reportable operating segments. The Company
only has one operating segment and one principal product or service (See Note
1). All the Company's operations are located within the United States and no
individual customer represents more than 10% of total revenues for all periods
presented herein.

New Accounting Pronouncement

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting of Comprehensive Income" ("SFAS 130"), which establishes standards
for reporting and display of comprehensive income and its components (revenues,
expense, gains and losses) in a full set of financial statements as components
of comprehensive income be reported in a financial statement that is displayed
with the same

F-48
<PAGE> 118
GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
prominence as other financial statements. This statement is effective for fiscal
years beginning after December 15, 1997. Earlier application is permitted.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. The adoption of SFAS 130 in 1998 did not have
any effect on the financial statements.

NOTE 3. ACQUISITION OF SMS GEOTRAC, INC.

On July 31, 1997 the Company acquired all of the outstanding common stock
of SMS Geotrac, Inc. (Note 1) for a purchase cost of $15,000,000 which was
funded as follows:

<TABLE>
<S> <C>
Cash contributed by BHDS.................................... $ 6,750,000
Bank borrowing.............................................. 8,750,000
Excess cash not required for acquisition.................... (500,000)
-----------
$15,000,000
===========
</TABLE>

The acquisition has been accounted for as a purchase, and accordingly the
net assets acquired on July 31, 1997 were recorded at their estimated fair value
as follows:

<TABLE>
<S> <C>
Current assets.............................................. $ 3,026,152
Property and equipment...................................... 3,547,454
Excess of cost over assets acquired......................... 8,847,119
Customer contracts.......................................... 1,600,000
Other assets................................................ 288,053
Liabilities assumed......................................... (2,308,778)
-----------
$15,000,000
===========
</TABLE>

In addition, BHDS and the Company entered into a cross licensing agreement
whereby the Company is to receive a total of $900,000 for the use of its
database of digitized maps, for the period from the date of acquisition through
June 2000. Further, BHDS will reimburse the Company for fifty percent of its
cost to maintain the database. As of December 31, 1997 and June 30, 1998,
approximately $250,000 and $345,000, respectively have been recorded under this
agreement.

The following unaudited pro forma consolidated results of operations for
the years ended December 31, 1996 and 1997 is presented as if the acquisition of
SMS Geotrac, Inc. had been made on January 1, 1996. The unaudited proforma
information reflects the additional goodwill amortization and interest expense
that would have been incurred if the Company had purchased SMS Geotrac, Inc. on
January 1, 1996. These pro forma

F-49
<PAGE> 119
GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. ACQUISITION OF SMS GEOTRAC, INC. -- (CONTINUED)
results are not necessarily indicative of the results of operations that would
have occurred had the purchase been made at January 1, 1996 or the future
results of the consolidated operations:

<TABLE>
<CAPTION>
1996 1997
------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Revenues.................................................... $13,375 $14,063
Cost of revenues............................................ 6,673 6,043
Selling, general and administrative......................... 3,287 2,900
Deferred compensation (non-recurring item).................. -- 733
Depreciation and amortization............................... 1,639 1,908
------- -------
Total expenses.................................... 11,599 11,584
------- -------
Operating income............................................ 1,776 2,479
Other income (non-recurring item)........................... -- 1,700
Interest expense............................................ (770) (825)
------- -------
Income before income taxes.................................. 1,006 3,354
Provision for income taxes.................................. 421 1,457
------- -------
Net income.................................................. $ 585 $ 1,897
======= =======
</TABLE>

The following table distinguishes the condensed historical results of
operations for the year ended December 31, 1997 by the period before and after
the acquisition of SMS Geotrac, Inc.

<TABLE>
<CAPTION>
AUGUST 1,
JANUARY 1, 1997
1997 THROUGH
THROUGH DECEMBER 31,
JULY 31, 1997 1997 TOTAL
------------- ------------ ----------
<S> <C> <C> <C>
Revenues.......................................... $ -- $6,336,025 $6,336,025
Operating income (loss)........................... (9,419) 1,001,775 1,011,194
Other income (expense)............................ 1,700,000 (338,391) 1,361,609
Net income........................................ 1,690,581 410,222 2,100,803
</TABLE>

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
LIFE DECEMBER 31, JUNE 30,
YEARS 1997 1998
------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment..................................... 3-5 $1,343,736 $1,438,209
Furniture and fixtures................................. 7 498,002 510,760
Transportation equipment............................... 5 28,908 28,908
Maps and map database.................................. 3-5 1,855,554 2,016,308
---------- ----------
3,726,200 3,994,185
Less accumulated depreciation and amortization......... (306,284) (688,445)
---------- ----------
$3,419,916 $3,305,740
========== ==========
</TABLE>

Depreciation and amortization expense for the year ended December 31, 1997
and the six month period ended June 30, 1998 was $306,284 and $383,303,
respectively.

F-50
<PAGE> 120
GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5. LONG-TERM DEBT

In connection with the purchase of SMS Geotrac, Inc., the Company borrowed
$8,750,000 from a bank. The note is payable in quarterly installments of
$312,500 plus interest, with the final installment due June 30, 2004. Interest
is charged, at the Company's option, at 1) the current prime rate; 2) a seven
year fixed rate; 3) a certain percentage over the LIBOR rate based upon a
formula; or 4) a combination of the above rates. In addition to the quarterly
payments, annual prepayments may be required in an amount equal to fifty percent
of excess cash flow, as defined in the loan agreement. The agreement contains
covenants that require the Company to maintain certain financial ratios (e.g.,
stockholders' equity of at least $6,250,000 through June 30, 1998 increasing by
50% of net income thereafter), limits the dollar value of capital expenditures
and restricts the payment of dividends to 50% of excess cash flows (as defined).
The note is collateralized by substantially all the assets of the Company. The
outstanding balance (and prime interest rate) at December 31, 1997 and June 30,
1998 was $8,437,500 (8.5%) and $7,500,000 (8.5%), respectively.

Scheduled maturities of the note payable to bank at December 31, 1997 are
as follows:

<TABLE>
<S> <C>
1998........................................................ $1,250,000
1999........................................................ 1,250,000
2000........................................................ 1,250,000
2001........................................................ 1,250,000
2002........................................................ 1,250,000
Thereafter.................................................. 2,187,500
----------
$8,437,500
==========
</TABLE>

NOTE 6. OTHER INCOME (NON-RECURRING ITEM)

During 1996 and on July 30, 1997 the Company received contingent earn-out
payments of $932,222 and $1,700,000 (final payment), respectively associated
with the sale of its operating assets during 1994. These amounts are classified
as other income (non-recurring item).

NOTE 7. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases office space and equipment under operating leases with
unexpired terms ranging from a month-to-month basis to seven years. Rent expense
under all operating leases was approximately $186,000 and $221,000 for the year
ended December 31, 1997 and the six month period ended June 30, 1998,
respectively. The Company is currently leasing one of its operating facilities
from its 51 percent shareholder. This lease requires monthly rental payments of
$8,717 through August 1999.

The future minimum lease payments under these operating lease agreements
are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
<S> <C>
1998........................................................ 423,792
1999........................................................ 380,650
2000........................................................ 263,368
2001........................................................ 219,331
----------
1,287,141
==========
</TABLE>

F-51
<PAGE> 121
GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
Capital Leases

The Company has capital lease agreements for computer equipment and
furniture and fixtures. At December 31, 1997 and June 30, 1998 property and
equipment includes $695,623 of assets recorded under capital leases and
accumulated amortization of $57,543 and $127,108, respectively.

The future minimum lease payments under these capital lease agreements are
as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
<S> <C>
1998........................................................ $343,762
1999........................................................ 323,763
2000........................................................ 241,835
2001........................................................ 38,099
--------
Total............................................. 947,459
Less amount representing interest........................... 101,151
--------
Present value of minimum lease payments..................... 846,308
Less amount representing current portion.................... 288,952
--------
Long-term portion......................................... $557,356
========
</TABLE>

Deferred Compensation

On September 11, 1997 the Company's Board of Directors, recognizing SMS
Geotrac, Inc.'s president's nonbinding commitment which originated prior to the
acquisition of SMS Geotrac, approved and granted bonuses to certain current and
former employees of SMS Geotrac. Such bonuses were principally related to prior
services rendered by these employees and resulted in additional compensation of
$732,795 which is separately disclosed in the statement of operations as
deferred compensation (a non-recurring item) of which approximately $362,000 and
371,000 relates to cost of revenues and selling, general and administrative
expenses, respectively. These amounts are to be paid to the individuals on or
before December 31, 1998.

Common Stock Awards

Prior to and at the time of the acquisition of SMS Geotrac, the president
of SMS Geotrac also had a nonbinding commitment to grant to certain former and
current employees options to purchase shares of Geotrac, Inc. (formerly
YoSystems) common stock held by the president and his wife, for prior employee
services rendered. During May 1998, the president and his wife contributed 46.45
shares of their common stock to these individuals, which is recorded as deferred
compensation (non-recurring item) totaling $728,069, in the accompanying June
30, 1998 statement of operations. The valuation of the Company's Common Stock
used to compute the deferred compensation expense was determined by dividing the
purchase price for the remaining 51% of the Company ($7,994,250) by the
remaining shares to be purchased (510).

Risks and Uncertainties

The nature of the Company's business is such that it is dependent upon
various factors such as general economic conditions and weather patterns that
are beyond its control. The demand for flood zone determinations by lenders and
their customers is directly related to the affordability of mortgage financing
and refinancing. Current interest rates are relatively low and therefore
conducive to a higher volume of mortgage lending and flood zone determinations.
An increase in interest rates would have a negative impact on mortgage lending
and consequently on the level of flood zone determinations performed.
Fluctuations in interest rates will likely produce fluctuations in the Company's
operating results. Likewise, natural disasters such as hurricanes, tornadoes,
and floods, all or which are unpredictable, directly impact the demand for the
Company's flood zone determination business.

F-52
<PAGE> 122

GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8. INCOME TAXES

The provision for income taxes consists of the following components:

<TABLE>
<CAPTION>
YEAR SIX MONTHS ENDED
ENDED JUNE 30,
DECEMBER 31, -------------------
1997 1997 1998
------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Federal:
Current............................................ $ 461,000 $ -- $690,000
Deferred........................................... (249,000) -- (210,000)
--------- -------- --------
212,000 -- 480,000
--------- -------- --------
State:
Current............................................ 126,000 -- 198,000
Deferred........................................... (66,000) -- (60,000)
--------- -------- --------
60,000 -- 138,000
--------- -------- --------
Total...................................... $ 272,000 $ -- $618,000
========= ======== ========
</TABLE>

A reconciliation of the federal statutory income tax rate of 34% to the
Company's effective income tax rate is as follows:

<TABLE>
<CAPTION>
YEAR SIX MONTHS ENDED
ENDED JUNE 30,
DECEMBER 31, -------------------
1997 1997 1998
------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Federal income taxes, at statutory rates............. $ 807,000 $ -- $525,000
S corporation earnings not subject to tax............ (575,000) -- --
State taxes, net..................................... 40,000 -- 93,000
--------- -------- --------
$ 272,000 $ -- $618,000
========= ======== ========
</TABLE>

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

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current deferred tax assets (liabilities):
Vacation accrual.......................................... $(18,000) $ (4,000)
Deferred compensation..................................... 303,000 565,000
Allowance for doubtful accounts........................... 5,000 20,000
-------- --------
Net current deferred tax asset............................ $290,000 $581,000
======== ========
Long-term deferred tax asset:
Depreciation and amortization............................. $ 25,000 $ 4,000
======== ========
</TABLE>

NOTE 9. EMPLOYEE BENEFIT PLAN

From August 1, 1997 through December 31, 1997, the Company participated in
a 401(k) plan established by the former parent of SMS Geotrac, Inc. Eligible
full-time employees of the Company made voluntary contributions to the plan. No
Company contributions were made to the plan. Effective January 1, 1998 the
Company established its own 401(k) plan. Any contributions to the new plan by
the Company are discretionary.

F-53
<PAGE> 123

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
SMS Geotrac, Inc.

We have audited the accompanying statements of income, shareholder's equity
and cash flows of SMS Geotrac, Inc. for each of the two years in the period
ended June 30, 1997 and the one month period ended July 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of its operations its and cash flows of
SMS Geotrac, Inc. for each of the two years in the period ended June 30, 1997
and the one month period ended July 31, 1997, in conformity with generally
accepted accounting principles.

GRANT THORNTON LLP

Tampa, Florida
May 29, 1998

F-54
<PAGE> 124

SMS GEOTRAC, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
ONE MONTH
ENDED
YEAR ENDED JUNE 30, JULY 31,
------------------------- ----------
1996 1997 1997
----------- ----------- ----------
<S> <C> <C> <C>
REVENUES
Flood zone determination services...................... $12,286,525 $12,313,735 $1,197,314
Other revenues......................................... 203,301 207,772 12,365
----------- ----------- ----------
Total revenues................................. 12,489,826 12,521,507 1,209,679
----------- ----------- ----------
EXPENSES
Cost of revenues....................................... 6,219,142 5,913,800 529,597
Selling, general and administrative expense............ 3,079,377 2,839,433 227,286
Depreciation and amortization.......................... 688,678 1,330,876 103,560
----------- ----------- ----------
Total expenses................................. 9,987,197 10,084,109 860,443
----------- ----------- ----------
OPERATING INCOME......................................... 2,502,629 2,437,398 349,236
INTEREST EXPENSE......................................... (81,495) (78,850) (8,215)
----------- ----------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES................. 2,421,134 2,358,548 341,021
PROVISION FOR INCOME TAXES............................... 1,046,900 1,079,100 148,000
----------- ----------- ----------
NET INCOME............................................... $ 1,374,234 $ 1,279,448 $ 193,021
=========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-55
<PAGE> 125

SMS GEOTRAC, INC.

STATEMENT OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at July 1, 1996............................ $1 $1,464,047 $ 326,215 $1,790,263
Capital contribution from parent................. -- 932,222 -- 932,222
Net income....................................... -- -- 1,374,234 1,374,234
-- ---------- ---------- ----------
Balance at June 30, 1996........................... 1 2,396,269 1,700,449 4,096,719
Capital contributions from parent................ -- 2,111,140 -- 2,111,140
Net income....................................... -- -- 1,279,448 1,279,448
-- ---------- ---------- ----------
Balance at June 30, 1997........................... 1 4,507,409 2,979,897 7,487,307
Capital contribution from parent................. -- 1,700,000 -- 1,700,000
Net income....................................... -- -- 193,021 193,021
-- ---------- ---------- ----------
Balance at July 31, 1997........................... $1 $6,207,409 $3,172,918 $9,380,328
== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-56
<PAGE> 126

SMS GEOTRAC, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
ONE MONTH
ENDED
YEAR ENDED JUNE 30, JULY 31,
------------------------- -----------
1996 1997 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.......................................... $ 1,374,234 $ 1,279,448 $ 193,021
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................... 688,678 1,330,876 103,560
Deferred federal income tax (credit) expense..... (240,400) 53,100 8,000
Income taxes due to Parent....................... 1,304,440 1,106,539 139,988
Gain on sale of property and equipment........... (1,252) -- --
Provision for bad debts.......................... 385,908 -- --
Changes in assets and liabilities:
Accounts receivable............................ (1,204,784) 517,209 49,514
Prepaid expenses and other assets.............. (99,933) (38,993) (38,223)
Accounts payable and other liabilities......... 241,530 (459,510) (11,793)
Deferred revenue............................... 231,261 157,880 (1,490)
----------- ----------- -----------
Net cash provided by operating activities... 2,679,682 3,946,549 442,577
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment deposit returned............. -- -- 130,670
Purchases of property and equipment................. (1,679,980) (1,457,719) (60,941)
Proceeds from disposal of property and equipment.... 12,400 -- --
----------- ----------- -----------
Net cash provided by (used in) investing
activities................................ (1,667,580) (1,457,719) 69,729
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advance from officer................................ -- -- 200,000
Advance to related party............................ -- -- (796,597)
Net repayments on revolving line of credit.......... (283,884) -- --
Repayment of capital lease obligations.............. (146,788) (291,219) (22,433)
Advances to parent.................................. -- (905,780) (1,850,000)
Capital contribution from parent.................... -- 500,000 --
----------- ----------- -----------
Net cash used in financing activities....... (430,672) (696,999) (2,469,030)
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.................................... 581,430 1,791,831 (1,956,724)
CASH AND CASH EQUIVALENTS, beginning of period........ 170,406 751,836 2,543,667
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period.............. $ 751,836 $ 2,543,667 $ 586,943
=========== =========== ===========
SUPPLEMENT DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid for interest.............................. $ 81,495 $ 78,850 $ 8,215
=========== =========== ===========
</TABLE>

Supplemental disclosures of non-cash investing and financing activities:

During the year ended June 30, 1996 and on July 31, 1997, the Company's
parent made a payment of $932,222 and $1,700,000 to the Company's former owner
in conjunction with the August 1, 1994 purchase of the Company. The amounts were
recorded as an increase to goodwill and an additional capital contribution to
the Company.

During the year ended June 30, 1997, the Company and its parent agreed to
treat $1,611,140 of intercompany obligations as a capital contribution to the
Company.

During the year ended June 30, 1997, the Company entered into capital lease
agreements relating to equipment with a cost of $427,452.

The accompanying notes are an integral part of these statements.

F-57
<PAGE> 127

SMS GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND ORGANIZATION

SMS Geotrac, Inc. (the "Company"), headquartered in Norwalk, Ohio, is
principally a provider of flood zone determination services for insurance
companies and financial institutions located throughout the United States. The
Company is a wholly-owned subsidiary of Strategic Mortgage Services, Inc.
("Parent").

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Cash Equivalents

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

Concentration of Credit

The Company provides professional flood zone determination services for
financial services companies and individuals throughout the United States.
Credit is extended to customers (primarily financed services companies) based on
management's assessment of their credit worthiness. Customer deposits are
required in certain instances.

Depreciation and Amortization of Property and Equipment

Depreciation and amortization is computed using accelerated methods for
financial reporting and federal income tax purposes, over the estimated useful
lives of the assets which range from 3-5 years for computer equipment and 5-7
years for furniture and fixtures, transportation equipment and maps.
Depreciation and amortization for the years ended June 30, 1996 and 1997 were
$594,797 and $1,226,820, respectively and $94,889 for the one month period ended
July 31, 1997.

Goodwill

Goodwill is being amortized using the straight-line method over fifteen
years. Amortization for the years ended June 30, 1996 and 1997 was $93,881 and
$104,056, respectively; and $8,671 for the one month period ended July 31, 1997.

Revenues

The Company's flood zone revenues are principally derived from flood zone
determination services and life of loan monitoring services. Flood zone
determinations involve the Company ascertaining and certifying to a property's
flood zone classification. Each determination is completed within a short period
of time and is performed with a high degree of accuracy. Revenues for these
services are recognized upon completion of each flood zone determination.

The Company receives an up-front fee to provide life of loan monitoring of
flood zone determinations whereby the Company notifies its customers of changes
in previously issued flood zone determinations. The Company defers a portion of
the fee associated with this future obligation and amortizes these amounts using
the straight-line method over the average life of the underlying loan,
approximately 7 years.

F-58
<PAGE> 128
SMS GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Income Taxes

Income taxes are accounted for on the asset and liability method. Deferred
tax assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities as measured by the
enacted tax rates which will be in effect when these differences reverse.
Deferred tax expense is the result of changes in deferred tax assets and
liabilities.

Segments and Related Information

The Company adopted SFAS No. 131, "Disclosure 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 shareholders. This statement also establishes standards for
related disclosures about products and services geographic areas, and major
customers. This statement requires the reporting of financial and descriptive
information about an enterprise's reportable operating segments. The Company
only has one operating segment and one principal product or service (See Note
1). All the Company's operations are located within the United States and no
individual customer represents more than 10% of total revenues for all periods
presented herein.

NOTE 3. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases office space and equipment under operating leases with
unexpired terms ranging from a month to month basis to seven years. Rent expense
under all operating leases was approximately $438,000 and $405,000 for the years
ended June 30, 1996 and 1997, respectively and $41,000 for the one month period
ended July 31, 1997. The Company leases one of its operating facilities from a
Company controlled by the President of the Company. This lease requires monthly
rental payments of $8,717 through August 1999.

The future minimum lease payments under these operating lease agreements
are as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
- -------------------
<S> <C>
1998........................................................ $ 419,400
1999........................................................ 410,159
2000........................................................ 316,359
2001........................................................ 291,600
2002........................................................ 219,399
Thereafter.................................................. 90,280
----------
$1,747,197
==========
</TABLE>

F-59
<PAGE> 129
SMS GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
Capital Leases

The Company has capital lease agreements for computer equipment and
furniture and fixtures. The future minimum lease payments under these capital
lease agreements are as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
- -------------------
<S> <C>
1998........................................................ $ 356,670
1999........................................................ 316,670
2000........................................................ 316,670
2001........................................................ 105,460
2002........................................................ 4,412
----------
Total............................................. 1,099,882
Less amount representing interest........................... 130,546
----------
Present value of minimum lease payments..................... 969,336
Less amount representing current portion.................... 304,950
----------
Long-term portion........................................... $ 664,386
==========
</TABLE>

Risks and Uncertainties

NOTE 4. INCOME TAXES

The Company's results of operations are included in the consolidated
federal income tax return of its Parent. Income taxes are determined and
recorded in the amount that would have been due and payable had the Company
filed a separate income tax return on an accrual basis. Federal and state income
taxes payable is included in the amount due to Parent. The provision for income
taxes consists of the following components:

<TABLE>
<CAPTION>
ONE MONTH
ENDED
YEAR ENDED JUNE 30, JULY 31,
----------------------- ---------
1996 1997 1997
---------- ---------- ---------
<S> <C> <C> <C>
Federal:
Current.......................................... $1,016,500 $ 793,000 $111,000
Deferred......................................... (164,700) 37,100 6,000
---------- ---------- --------
851,800 830,100 117,000
---------- ---------- --------
State:
Current.......................................... 270,800 233,000 29,000
Deferred......................................... (75,700) 16,000 2,000
---------- ---------- --------
195,100 249,000 31,000
---------- ---------- --------
Totals................................... $1,046,900 $1,079,100 $148,000
========== ========== ========
</TABLE>

F-60
<PAGE> 130
SMS GEOTRAC, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4. INCOME TAXES -- (CONTINUED)
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:

<TABLE>
<CAPTION>
ONE MONTH
ENDED
YEAR ENDED JUNE 30, JULY 31,
----------------------- ---------
1996 1997 1997
---------- ---------- ---------
<S> <C> <C> <C>
Federal income taxes, at statutory rates........... $ 823,000 $ 802,000 $116,000
State taxes........................................ 195,100 249,000 31,000
Other.............................................. 28,800 28,000 1,000
---------- ---------- --------
$1,046,900 $1,079,000 $148,000
========== ========== ========
</TABLE>

NOTE 5. EMPLOYEE BENEFIT PLAN

The Company participates in a 401(k) plan established by its Parent.
Eligible full-time employees of the Company may make voluntary contributions to
the plan. Matching Company contributions to the plan may be made at the
discretion of the Board of Directors. No Company contributions were made during
the years ended June 30, 1996 and 1997 or for the one month ended July 31, 1997.

NOTE 6. RELATED PARTY TRANSACTIONS

During the year ended June 30, 1996 and on July 30, 1997, the Parent made a
payment of $932,222 and $1,700,000 to the Company's former owner (a company
controlled by the President of the Company) in conjunction with the August 1,
1994 purchase of the Company. The amounts were recorded as an increase to
goodwill and an additional capital contribution to the Company.

During the year ended June 30, 1997, the Company and its Parent agreed to
treat all outstanding amounts owed to the Parent, $1,611,140, as an additional
capital contribution. In addition, the Parent contributed $500,000 to the
Company.

During the one month period ended July 31, 1997, the Company advanced
$796,597 to YoSystems, Inc, a company owned by the Company's President.

NOTE 7. SUBSEQUENT EVENT

On July 31, 1997 all of the outstanding stock of the Company was acquired
by YoSystems, Inc., which is owned by the Company's President, for $15 million.
Concurrent with the acquisition of the Company, YoSystems, Inc. sold 49% of its
common stock to Bankers Hazard Determination Services, Inc.

F-61
<PAGE> 131

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 5
Recent Acquisitions................... 11
Use of Proceeds....................... 12
Dividend Policy....................... 13
Capitalization........................ 14
Dilution.............................. 15
Selected Consolidated Financial Data
of the Company...................... 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations of the Company........ 18
Selected Consolidated Financial Data
of Geotrac.......................... 29
Management's Discussion and Analysis
of Financial Condition and Results
of Operations of Geotrac............ 30
Business.............................. 34
Management............................ 47
Principal and Selling Shareholders.... 54
Certain Transactions.................. 55
Description of Capital Stock.......... 59
Shares Eligible for Future Sale....... 62
Underwriting.......................... 63
Legal Matters......................... 65
Experts............................... 65
Available Information................. 65
Index to Financial Statements......... F-1
</TABLE>

UNTIL MARCH 7, 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT
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.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
3,350,000 SHARES

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (LOGO)

COMMON STOCK
------------------------
PROSPECTUS
------------------------
RAYMOND JAMES & ASSOCIATES, INC.

KEEFE, BRUYETTE & WOODS, INC.
FEBRUARY 10, 1999
- ------------------------------------------------------
- ------------------------------------------------------