EMPIRE FINANCIAL HOLDING CO, S-1/A, 2000-09-27

EMPIRE FINANCIAL HOLDING CO
S-1/A, 2000-09-27
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES

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<PAGE>

As filed with the Securities and Exchange Commission on September 27, 2000
Registration No. 333-86365
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--------------------------------------------------------------------------------

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------

AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
EMPIRE FINANCIAL HOLDING COMPANY
(Exact Name of Registrant as Specified in Its Charter)

Florida 6211 59-3627212
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification
Incorporation or Classification Code Number)
Organization) Number)
---------------
1385 West State Road 434
Longwood, Florida 32750
(407) 774-1300
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
---------------
Kevin M. Gagne and Richard L. Goble
Co-Chief Executive Officers
Empire Financial Holding Company
1385 West State Road 434
Longwood, Florida 32750
(407) 774-1300
(Name, Address, Including Zip Code and Telephone Number, Including Area Code,
of Agent for Service)
---------------
Copies of communications to:
Phillip J. Kushner, Esq. Gerald F. Roach, Esq. and Amy J.
Greenberg Traurig, P.A. Meyers, Esq.
1221 Brickell Avenue Smith, Anderson, Blount, Dorsett,
Miami, Florida 33131 Mitchell & Jernigan, L.L.P.
Telephone No.: (305) 579-0500 2500 First Union Capitol Center
Facsimile No.: (305) 579-0717 Raleigh, North Carolina 27601
---------------
Telephone No.: (919) 821-1220
Facsimile No.: (919) 821-6800
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
<CAPTION>
Title of Each Class Proposed Proposed Amount of
of Securities to Be Amount to Be Maximum Offering Maximum Aggregate Registration
Registered Registered Price Per Unit(1) Offering Price(1) Fee
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value.................. 2,760,000(2) $13.00 $35,880,000 $9,472.32
-----------------------------------------------------------------------------------------
Common Stock, par value
$.01 per share, issuable
upon exercise of the
Underwriter's
Warrants(3)............ 175,050 $15.60 $2,730,780 $720.93
-----------------------------------------------------------------------------------------
Total Fee............. $10,193.25*
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and
pursuant to Rule 457.
(2) Includes 360,000 shares of Common Stock which may be issued upon exercise
of a 30-day option granted to the underwriters solely to cover over-
allotments, if any.
(3) Pursuant to Rule 416 under the Securities Act, this Registration Statement
also covers additional shares as may become issuable as a result of the
anti-dilution provisions contained in the warrants.
* Previously paid.
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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--------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained in this prospectus is not complete and may be changed. +
+These securities may not be sold until the registration statement filed with +
+the Securities and Exchange Commission is effective. This prospectus is not +
+an offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED SEPTEMBER 27, 2000

PRELIMINARY PROSPECTUS

[LOGO OF EMPIRE FINANCIAL HOLDING COMPANY]

2,400,000 Shares of Common Stock

-----------
EMPIRE FINANCIAL HOLDING COMPANY
-----------

This is our initial public offering. We have applied for listing on the
NASDAQ National Market under the proposed trading symbol EFHC.

We expect that the price to the public in the offering will be between $11.00
and $13.00 per share. The market price of the shares after the offering may be
higher or lower than the offering price.

An investment in our shares involves certain risks. See Risk Factors
beginning on page 6 of this prospectus.

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--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per Share Total
-----------------------------------------------------------------------------
<S> <C> <C>
Price to the public........................ $ $
-----------------------------------------------------------------------------
Underwriting discounts and commissions..... $ $
-----------------------------------------------------------------------------
Proceeds, before expenses, to us........... $ $
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

We have entered into a firm commitment underwriting agreement with the
underwriters for the sale of the shares in this offering. We have granted to
the underwriters a 30-day option to purchase up to an additional 360,000 shares
of common stock to cover over-allotments. One of our subsidiaries, Empire
Financial Group, Inc., will be one of the underwriters participating in this
offering.

-----------

The underwriters expect to deliver the shares to purchasers on , 2000.

WACHOVIA SECURITIES, INC. KEEFE, BRUYETTE & WOODS, INC.

EMPIRE FINANCIAL GROUP, INC.

The date of this prospectus is September , 2000
<PAGE>

Operating Structure

[LOGO OF EMPIRE FINANCIAL HOLDING COMPANY]

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

[LOGO OF EMPIRE [LOGO OF ADVANTAGE [LOGO OF EMPIRE
FINANCIAL GROUP, INC.] TRADING GROUP, INC.] INVESTMENT ADVISORS, INC.]

Empire Financial Group, Advantage Trading Group, Empire Investment
Inc. Inc. Advisors, Inc.

. Established in 1990 . Established in 1995 . Established in 1999

. Provides financial . Provides securities . Provides fee-based
brokerage services order execution and investment advisory
clearing services services
. 11,000 accounts and
assets clears 100% of states; applications
Empire's retail trades pending in remaining
. Provides private label states
discount brokerage . Approved and engaged
services to provide clearing
services for three
unaffiliated broker
dealers

. www.empirenow.com
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................. 1

Risk Factors............................................................. 6

Cautionary Note on Forward-Looking Statements............................ 12

Determination of Offering Price.......................................... 12

Use of Proceeds.......................................................... 13

Dividend Policy.......................................................... 14

Dilution................................................................. 14

Capitalization........................................................... 16

Selected Consolidated Financial Data..................................... 17

Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 18
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Business................................................................... 27

Directors and Executive Officers........................................... 38

Security Ownership of Certain Beneficial Owners and Management............. 42

Certain Transactions....................................................... 43

Description of Capital Stock............................................... 43

Shares Eligible for Future Sale............................................ 45

Underwriting............................................................... 46

Legal Matters.............................................................. 49

Experts.................................................................... 49

Where You Can Find More Information........................................ 50
</TABLE>

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of our common stock only in jurisdictions where offers and sales
are permitted. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.

Unless indicated otherwise, references to "we," "us" or "Empire" mean Empire
Financial Holding Company and its wholly owned subsidiaries Advantage Trading
Group, Inc., Empire Financial Group, Inc. and Empire Investment Advisors, Inc.
Empire Financial Holding Company was formed in February 2000 and prior to the
date of this prospectus acquired all of the issued and outstanding stock of
these entities from their two shareholders in exchange for an aggregate of
3,075,000 shares of Empire Financial Holding Company common stock.

Except as otherwise indicated, all information in this prospectus assumes no
exercise of the underwriters' over-allotment option to purchase an additional
360,000 shares, does not give effect to up to 1,000,000 shares of common stock
issuable upon the exercise of options that may be granted under our 2000 Stock
Option Plan or 175,050 shares of common stock issuable upon exercise of
warrants to be issued to the representative of the underwriters and assumes an
initial public offering price of $12.00 per share.

(i)
<PAGE>

SUMMARY

Because this is a summary, it does not contain all of the information that
may be important to you. You should read the entire prospectus carefully, and
you should consider the risk factors and our financial statements and
accompanying notes that appear later in this prospectus.

About Us

We are a financial brokerage services firm serving institutional and retail
investors through the Internet and traditional means. We also enable other
broker dealers to complete their customers' brokerage transactions by providing
securities order execution services. Our business model emphasizes three
important operating elements: retail securities brokerage, generating activity
via both telephone and the Internet, securities order execution, acting as
principal in securities transactions for approximately 80 broker dealers, and
securities clearing, settling securities trades on behalf of our customers. In
February 2000, we introduced a new service for financial institutions that
enables them to offer brokerage services to their retail customers through the
Internet using our established capabilities. We are currently providing these
private label brokerage services for two financial institutions and are
aggressively marketing these services. In addition, we have begun offering
securities clearing services to other broker dealers and fee-based portfolio
investment advice to our retail customers. Our proprietary technologies support
our operating elements, which produce a diversified revenue stream within the
financial brokerage services business.

Our securities order execution services involve filling orders to purchase
or sell securities received from approximately 80 independent broker dealers on
behalf of their retail and institutional customers. We typically act as
principal in these transactions and derive our order execution trading
revenues, net, from the difference between the price paid when a security is
bought and the price received when that security is sold. Therefore, we seek to
take advantage of daily stock price fluctuations to maximize our revenues. We
typically do not receive a fee or commission for providing order execution
services. Approximately 59% of our 1999 revenues and approximately 48% of our
revenues for the first six months of 2000 were derived from these services. We
reduce the expenses associated with our order execution services by clearing
our own trades. We believe that our ability to clear transactions, unlike many
other order execution firms, provides us with a competitive advantage in that
we are able to control costs and provide better service. We normally close out
our trade positions at the end of each day and do not maintain securities
inventory in order to reduce our risks from market volatility.

We also provide financial brokerage services directly to our retail
customers, including both individuals and small to mid-sized institutions such
as hedge funds, money managers, mutual funds and pension funds. Approximately
35% of our 1999 revenues and approximately 44% of revenues for the first six
months of 2000 were derived from commissions and fees generated in connection
with our retail financial brokerage services. Our retail customers can place
their securities orders online through our secure website located at
www.empirenow.com or over the telephone by calling our client support desk at
1-800-lowfees (1-800-569-3337). We charge our customers an agreed upon
brokerage commission. Our current online retail trading commissions start at
$6.95 per trade and our broker assisted trades start at $19.00 per trade.

In February 2000, we began offering our private label brokerage services to
broker dealers and other financial institutions that want to provide expanded
services to their retail customers. We are currently providing private label
brokerage services for two financial institutions. We provide their retail
customers the same level and range of products and services as we offer to our
own retail customers and charge their customers commissions and fees similar to
those charged to our own retail customers. We pay these institutions fees based
on transaction volume generated by their retail customers. Additionally, we
have begun to offer fee-based investment advisory services to our customers.

1
<PAGE>

In January 2000, we received regulatory approval to provide clearing
services for up to three unaffiliated broker dealers. Our clearing services
involve account, settlement and delivery functions. We have already been
engaged by three unaffiliated broker dealers to provide clearing services and
are currently in the process of establishing the necessary interfaces to
commence clearing for these broker dealers. We currently are seeking further
regulatory approval to increase the number of clearing service customers beyond
three broker dealers.

Empire Financial Group, Inc., our retail brokerage subsidiary, was
incorporated in 1990 to provide securities brokerage services to our retail and
institutional clients. In 1995, we founded Advantage Trading Group, Inc. to
provide trade execution services to our clients. In 1999, we incorporated a
third wholly owned subsidiary, Empire Investment Advisors, Inc., to provide
financial and investment advisory products and services to our clients. In
February 2000, we incorporated Empire Financial Holding Company to serve as the
corporate parent to each of our three wholly owned subsidiaries.

Recent Trends

The securities brokerage business has experienced rapid growth in
transaction volumes in recent years. This growth is due to many factors
including the emergence and dramatic growth of online trading via the Internet.
As a result of the growth of the Internet, online trading is now the fastest
growing segment of the discount securities brokerage business and is expected
to continue to grow significantly. Cerulli Associates, an independent industry
research firm, estimates that the number of U.S. households with Internet
access will grow from 34 million in 1999 to approximately 107 million by 2003.
Consequently, this trend is expected to greatly increase the number of
households that will access financial products and services, including
brokerage services, via the Internet. Cerulli expects online brokerage accounts
to increase from approximately 11.5 million in 1999 to 33.9 million by 2003.
Similarly, estimates published by Cerulli and Forrester Research project that
online brokerage assets will increase from approximately $750 billion to
between $1.8 and $3.0 trillion over the same period.

Our Growth

Our business has grown significantly during the past year:

. Our total revenues increased 122% to $17,598,303 for the year ended
December 31, 1999 from $7,933,999 in 1998 and 58% to $13,659,202 for the
six months ended June 30, 2000 from $8,647,287 for the same period in
1999;

. Our income before taxes increased 217% to $3,458,326 for the year ended
December 31, 1999 from $1,090,584 in 1998 and increased 12% to $2,896,072
for the six months ended June 30, 2000 from $2,596,728 for the same
period in 1999;

. Our retail customer accounts increased 122% to approximately 10,000 at
December 31, 1999 from approximately 4,500 at December 31, 1998 and 55%
to approximately 11,000 at June 30, 2000 from approximately 7,100 at June
30, 1999; and

. Our average trades per day increased 52% to approximately 1,224 during
1999 from approximately 803 during 1998 and 46% to approximately 1,786
for the six months ended June 30, 2000 from approximately 1,224 for the
same period in 1999.

2
<PAGE>

Our Business Strategy

. Become a leading order execution services provider to broker dealers. We
plan on aggressively marketing our established order execution
capabilities to additional broker dealers to expand our business. We also
plan to strengthen our relationships with these broker dealers by
offering our proprietary online trade execution system in addition to our
current telephone order capabilities. Successful implementation of these
strategies should increase our transaction volume, which may increase our
order execution trading revenues, net.

. Become a leading provider of private label brokerage solutions for other
financial institutions. We recently began providing private label
brokerage solutions to broker dealers, banks, savings and loan
institutions, credit unions, insurance companies and various other
financial institutions that want to provide expanded services to their
customers. We believe that this strategy of entering into agreements with
institutions that have large customer bases will allow us to grow our own
retail customer base rapidly and efficiently.

. Increase our retail customer base. The proceeds from this offering will
allow us to increase our marketing and promotional programs targeting
individuals, affinity groups, financial planners and investment advisors,
as well as potential institutional private label customers.

. Acquire other broker dealers. There are numerous small broker dealers
that do not have our securities order execution or securities clearing
capabilities. Many of these broker dealers may not have developed
proprietary technology to support their businesses. As a result, we
believe that these broker dealers may have significant cost and operating
disadvantages. We believe we can increase our revenues and profitability
by acquiring select broker dealers and leveraging their business by
utilizing our operational capabilities.

. Utilize our clearing capabilities to diversify our revenue base. We
recently received the necessary regulatory approvals to provide trade
clearing services for up to three unaffiliated broker dealers, and since
then have been engaged by three unaffiliated broker dealers to provide
clearing services. We intend to diversify our revenue base and realize
efficiencies by expanding our clearing operations through this new
service and by seeking regulatory approval to provide this service to
additional broker dealers.

. Utilize technology to sustain business advantages. We have been
successful in managing our costs through the in-house development and use
of proprietary technology. We plan to continue to invest in the
development of proprietary systems and software that we believe will
enhance the cost structure of our businesses. We believe that our
proprietary securities trading and processing software applications allow
us to monitor our potential risks of losses from volatility, reduce our
dependence on third party vendors and maintain low fixed processing and
labor costs.

. Supplement technology with personal interaction to increase transaction
volume and increase retail customer retention. We understand our
technology-based marketplace and are continually seeking to expand the
features offered to our retail customers. However, we believe that our
ability to offer access to client support representatives to complement
electronic investing will help increase our transaction volume and
improve customer retention rates.

. Establish expertise in investment advisory services. We have begun
offering fee-based portfolio investment advisory services to our retail
and private label customers. We are registered as an investment adviser
in 41 states and under the Investment Advisers Act of 1940, and have
applications pending in the remaining states. We believe this capability
will distinguish us from many of our competitors and will result in
stronger, more comprehensive relationships with our customers.

3
<PAGE>

How to Contact Us

Our principal executive offices are located at 1385 West State Road 434,
Longwood, Florida 32750, and our telephone number is 1-800-lowfees (1-800-569-
3337). Our website is located at www.empirenow.com. Information on our website
is not part of this prospectus.

About the Offering

Common stock offered...... 2,400,000 shares

Common stock to be
outstanding after the
offering.................
5,475,000 shares

Use of net proceeds....... For account acquisition programs and advertising,
new business initiatives, net capital and other
general corporate purposes.

Proposed Nasdaq Symbol.... EFHC

The 5,475,000 shares of common stock to be outstanding after the offering do
not include 360,000 shares that would be issued if the representative of the
underwriters exercised its over-allotment option, 175,050 shares of common
stock issuable upon the exercise of warrants to be issued to the representative
of the underwriters and up to 1,000,000 shares of common stock that are
reserved for issuance upon exercise of options that may be granted under our
2000 Stock Option Plan.

Conversion from S Corporation to C Corporation

We are currently an S corporation for federal income tax purposes and our
taxable income is a direct liability of our current shareholders. We
distributed $1,400,000 to our existing shareholders in April 2000 related to
their tax liability for our net income for 1999.

We will make a final distribution to our existing shareholders not later
than April 15, 2001 to help them pay their income taxes arising from our
earnings from January 1, 2000 until completion of this offering. We will
distribute to them approximately 40.5% of our earnings for the period. For the
six months ended June 30, 2000, 40.5% of our earnings equals approximately
$1,173,000.

4
<PAGE>

Summary Consolidated Financial Information

You should read the following summary of our financial statements in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements, including the related
notes, included in this prospectus.

<TABLE>
<CAPTION>
Six Months Ended
June 30,
(unaudited) Year Ended December 31,
---------------------- ---------------------------------
2000 1999 1999 1998 1997
----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Statement of Income
Data:
Order execution trading
revenues, net......... $ 6,532,697 $5,956,513 $10,441,910 $5,681,892 $4,612,693
Commissions and fees... 5,969,156 2,267,163 6,134,454 2,022,433 1,487,379
Total revenues......... 13,659,202 8,647,287 17,598,303 7,933,999 6,325,073
Net income............. 2,896,072 2,596,728 3,458,326 1,090,584 696,678
----------- ---------- ----------- ---------- ----------
Earnings per share--
basic and diluted..... $ .94 $ .84 $ 1.12 $ .35 $ .23
=========== ========== =========== ========== ==========
Unaudited pro forma
information:
Net income before
income taxes.......... $ 2,896,072 $2,596,728 $ 3,458,326 $1,090,584 $ 696,678
Provision for income
taxes................. 1,089,000 976,000 1,300,000 410,000 262,000
----------- ---------- ----------- ---------- ----------
Net income............. $ 1,807,072 $1,620,728 $ 2,158,326 $ 680,584 $ 434,678
=========== ========== =========== ========== ==========
Pro forma earnings per
share--basic and
diluted............... $ .59 $ .53 $ .70 $ .22 $ .14
=========== ========== =========== ========== ==========
Weighted average shares
outstanding............ 3,075,000 3,075,000 3,075,000 3,075,000 3,075,000
</TABLE>

<TABLE>
<CAPTION>
June 30, 2000
(unaudited) December 31, 1999
----------------------- -----------------
Actual As Adjusted Actual
----------- ----------- -----------------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents............ $ 883,042 $27,007,042 $ 1,880,142
Total assets......................... 29,005,396 54,526,396 22,166,240
Total liabilities.................... 24,913,162 26,086,162 19,016,198
Shareholders' equity................. 4,092,234 28,440,234 3,150,042
</TABLE>

We have operated as S corporations, and, accordingly, our taxable income has
been taxed directly to our shareholders. Pro forma net income amounts assume
that we were subject to federal income taxes and taxed as a C corporation at
the statutory tax rates in effect for the periods presented. On the effective
date of this offering, our election to be treated as an S corporation will
automatically terminate, and we will be subject to federal income taxes on
subsequent income.

The "As Adjusted" column reflects adjustments taking into account the sale
of the shares of common stock in this offering (based on an assumed public
offering price of $12.00 per share), the receipt of the estimated $25,521,000
net proceeds, the charge-off of $603,000 of deferred offering costs, and an
accrual for the expected payment to our existing shareholders of $1,173,000
relating to their tax liability for our earnings for the six months ended June
30, 2000.

5
<PAGE>

RISK FACTORS

You should carefully consider the risks and uncertainties described below
before making an investment decision. Our business, financial condition and
operating results could be adversely affected by any of the factors listed
below, which could cause the trading price of our common stock to decline, and
you could lose all or part of your investment.

Decreased transaction volume could reduce our revenues.

Our revenues depend on the volume of securities transactions that we handle
for our customers. Transaction volume in the securities industry can fluctuate
widely. Decreases in the volume of transactions we handle could result in
reduced revenues.

We face risks associated with our order execution services.

Our order execution services involve the purchase and sale of securities
predominantly as principal, instead of buying and selling securities as an
agent for our customers. As a result, we own securities or are required to buy
securities to complete customer transactions, and, therefore, are subject to
risks associated with market price fluctuations.

We are subject to securities regulation and failure to comply could subject us
to penalties or sanctions that could harm our business.

Our business is subject to federal and state laws regulating the securities
industry. In addition, the Securities and Exchange Commission, or the SEC, the
National Association of Securities Dealers, Inc., or the NASD, and other self-
regulatory organizations, as well as the various stock exchanges and state
securities commissions, require strict compliance with their rules and
regulations. Broker dealers are subject to regulations covering all aspects of
the securities business, including sales methods, trade practices among broker
dealers, use and safekeeping of clients' funds and securities, capital
structure, record keeping and the conduct of directors, officers and employees.
Failure to comply and disputes concerning compliance with any of these laws,
rules or regulations could result in substantial expenses for us as well as
censure, fines, the issuance of cease and desist orders or suspension or
expulsion as a broker dealer.

Potential governmental regulation of the Internet and online commerce could
harm our business.

Our business could be harmed by future legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not
currently apply to our business or the application of existing laws and
regulations to the Internet and other online services. The adoption of any
additional laws or regulations may decrease the growth of the Internet or other
online services, which could, in turn, decrease the demand for our trading
systems and services and increase our cost of doing business. Regulatory
requirements applicable to our business are discussed in "Business--Government
Regulation--Additional Regulation" at page 36 of this prospectus.

Failure to comply with net capital requirements could subject us to suspension
or revocation of our broker dealer registration by the SEC or expulsion by the
NASD.

We are subject to stringent rules promulgated by the SEC, the NASD and
various other regulatory agencies with respect to the maintenance of specific
levels of net capital by securities brokers. Failure to maintain the required
net capital may subject us to suspension or revocation of registration by the
SEC and suspension or expulsion by the NASD or other regulatory bodies and
ultimately could require our liquidation. In addition, a change in the net
capital rules, the imposition of new rules or any unusually large charge
against our net capital could limit our operations that require the intensive
use of capital, such as the financing of client account balances.

6
<PAGE>

Failure to qualify as a foreign corporation could harm our business.

Our subsidiaries Advantage Trading Group, Inc. and Empire Financial Group,
Inc. are both currently registered as broker dealers in all 50 states as well
as Puerto Rico, but are qualified to do business as a foreign corporation in
only a few states. Because our services are available over the Internet and we
have customers in many states, we or any of our subsidiaries may be required to
qualify as a foreign corporation. Failure to so qualify could result in the
imposition of taxes and penalties that would increase our costs. Regulatory
requirements applicable to our business are discussed in "Business--Government
Regulation--Additional Regulation" at page 36 of this prospectus.

Intense competition from existing and new brokerage services may adversely
affect our revenues and profitability.

We cannot assure you that we will be able to compete effectively with
current or future competitors or that the competitive pressures we face will
not harm our business. The market for online brokerage services is relatively
new, rapidly evolving, intensely competitive and has few barriers to entry. We
expect competition to continue and intensify in the future. Discount brokerage
firms may continue to reduce their commission rates in an effort to offer the
lowest transaction costs to investors. Many of these firms have greater
transaction volume and offer a wider range of services than we do, which allows
them to compensate for lower commission rates. Our current commission fees for
online trading start at $6.95 per trade. Any rate reductions by us would
adversely affect our profitability.

Because many of our competitors have significantly greater financial,
technical, marketing and other resources, offer a wider range of products and
services and have more extensive client bases than us, they may be able to
respond more quickly to new or changing opportunities, technologies and client
requirements than us. They may also be able to undertake more extensive
promotional activities, offer more attractive terms to clients and adopt more
aggressive pricing policies than us. Moreover, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties or may consolidate to enhance their services
and products.

Employee misconduct could harm our business.

Because our business involves handling cash and marketable securities on
behalf of our customers, employee misconduct could result in unknown and
unmanaged risks or losses. Misconduct by employees could also include binding
us to transactions that exceed authorized limits or present unacceptable risks
or hiding from us unauthorized or unsuccessful activities.

We face risks associated with making orderflow payments.

We have arrangements with various investment banking and securities
brokerage firms under which we pay them to send their trade orders to us for
execution. This is known as paying for orderflow. Loss of the ability to have
orders routed to us in this manner could reduce our transaction volume and
therefore reduce our revenues. To attract orderflow, we must be competitive on:

. providing enhanced liquidity to our customers;

. the speed of our order execution;

. payment for orderflow;

. the sophistication of our trading technology; and

. the quality of our customer service.

This practice of paying for orderflow is widespread in the securities
industry. However, there can be no assurance that the SEC, the NASD, courts or
other regulatory agencies will continue to permit payments for orderflow.

7
<PAGE>

We face risks that our retail customers may not repay us for credit we extend
to them.

We are subject to the risks inherent in extending credit to the extent that
we permit our retail customers to purchase securities on a margin basis. In
margin transactions, credit is extended to customers and secured by cash and
securities in the client's account. Approximately 60% of our retail customers'
purchase transactions during 1999 were completed on a margin basis through
Advantage Trading Group, Inc., our subsidiary clearing firm, and Bear Stearns
Securities Corp., an independent clearing broker which we have agreed to
indemnify. Approximately 15% of all assets held in our retail customers'
accounts are subject to margin obligations. Periods of volatile markets
increase these risks because the value of the collateral held by us could fall
below the amount borrowed by the customer. In such circumstances, we may be
required to sell or buy securities at prevailing market prices and incur losses
to satisfy customer obligations. As of June 30, 2000, we had extended
approximately $23,085,000 in credit to our retail customers, accounting for
approximately 80% of our total assets.

We face risks associated with our clearing operations.

Errors in performing clearing functions and failure to comply with related
regulatory requirements could create liabilities to affected customers and lead
to civil penalties imposed by the SEC or the NASD. Clearing services include
the confirmation, receipt, settlement and delivery functions involved in
securities transactions. Clearing securities firms are subject to substantially
more regulatory control and examination than non-clearing firms because
clearing operations involve substantial risks of liability to customers due to
clerical errors related to the handling of customer funds and securities. We
are also required to maintain cash or qualified securities in a special reserve
bank account for the exclusive benefit of our customers.

We may not be able to keep up with rapid technological changes in a cost-
effective manner.

Our future success will depend, in part, on our ability to develop and use
new technologies, respond to technological advances, enhance our existing
services and products, and develop new services and products in a timely and
cost-effective manner. The market for brokerage services and, particularly,
electronic brokerage services over the Internet, is characterized by rapid
technological change, changing client requirements, frequent service and
product enhancements and introductions, and emerging industry standards. The
introduction of services or products embodying new technologies and the
emergence of new industry standards can render existing services or products
obsolete and unmarketable.

Interruption or loss of content provided by third parties could cause us to
lose customers, harming our business.

We rely on third-party content providers for much of the financial
information we offer through our website and are therefore dependent on the
ability of third-party content providers to deliver content in a timely and
consistent manner. Interruption or termination of our existing third-party
content supply would require us to seek content from other third parties.
Delays in obtaining replacement content could cause us to lose customers.

We depend heavily on computer systems, and system failures could harm our
business.

We rely heavily on various electronic media. We receive trade orders using
the Internet and telephone. In addition, we process trade orders through our
own systems and those of Bear Stearns Securities Corp., ABN Amro Incorporated,
The Vantra Group, Inc. and SunGard Financial Systems, Inc. These methods of
trading are heavily dependent on the integrity of the electronic systems
supporting them.

Heavy system traffic during peak trading times could cause our systems to
operate at unacceptably low speeds or fail altogether. Any significant
degradation or failure of our computer systems, those of our vendors, or any
other systems in the trading process (e.g., online service providers, record
keeping and data processing functions performed by third parties and third-
party software such as Internet browsers) could cause clients to suffer delays
in trading. These delays could cause substantial losses for our clients and
could subject us to

8
<PAGE>

claims from clients for losses, including litigation claiming fraud or
negligence. As a result, our revenues may decline and our business reputation
may be adversely affected. Our computer systems are also vulnerable to damage
or interruption from human error, natural disasters, power loss, sabotage or
computer viruses. Our business could be harmed if our website was subjected to
any such event or computer viruses.

Compromises of our systems' security could harm our business.

Any compromise of our systems' security could harm our business. The secure
transmission of confidential information over public networks is a critical
element of our operations. We rely on encryption and authentication technology
to provide the security and authentication necessary to effect secure
transmission of confidential information over the Internet. Moreover, we
continually evaluate advanced encryption technology to ensure the continued
integrity of our systems. However, we cannot assure you that advances in
computer capabilities, new discoveries in the field of cryptography or other
events or developments will not result in a compromise of the technology or
other means our vendors and we use to protect client transaction and other
data.

Our business could be adversely affected if we are not able to protect our
proprietary technology against infringement.

Our business depends to a significant degree on our proprietary internal
trade execution and clearing software applications. We rely on copyright and
trade secret protection for these applications. Unlike patent protection,
copyright and trade secret rights do not protect against competitors developing
similar applications independently. Development and use of similar software
applications by our competitors could adversely affect our ability to compete
effectively.

We may face claims of infringement.

Other parties may claim that we infringe their intellectual property rights.
Regardless of whether any such claims are valid, claims of infringement could
be time-consuming and expensive to defend, could divert our resources and our
management's attention and could disrupt our business or increase our costs if
we are forced to stop using any software, systems or processes.

We may not be able to obtain additional capital when we need it.

We currently anticipate that our available cash resources, combined with the
net proceeds from the offering, will be sufficient to meet our presently
anticipated working capital and capital expenditure requirements for at least
the next 12 months. In the future, however, we may need to raise additional
funds in order to support further expansion, develop new or enhanced services
and products, respond to competitive pressures, acquire complementary
businesses or technologies or respond to unanticipated requirements. We cannot
assure you that additional financing will be available when needed on terms
favorable to us or on terms that will not result in dilution to our existing
shareholders. Our line of credit is subject to annual renewal in May of each
year. We cannot assure you that our line of credit will be renewed.

Disagreements between our co-chief executive officers could hinder our growth.

Our management team is currently headed by our co-chairmen, co-chief
executive officers and co-presidents, Kevin M. Gagne and Richard L. Goble.
Messrs. Gagne and Goble may disagree in the future regarding business
decisions. Our bylaws provide that disagreements between our co-chairmen, co-
chief executive officers and co-presidents will be decided by our board of
directors. Nevertheless, our business could suffer if we frequently have to
resort to this dispute resolution procedure.

9
<PAGE>

Kevin M. Gagne and Richard L. Goble own most of our common stock and control
us.

Upon completion of this offering, our co-chairmen, co-chief executive
officers and co-presidents, Kevin M. Gagne and Richard L. Goble, will
beneficially own approximately 56% of our common stock. Accordingly, following
completion of this offering, these two individuals will control us and have the
power to, among other matters, elect all directors, increase our authorized
capital stock or cause us to dissolve, merge or sell our assets. Messrs. Gagne
and Goble have also entered into a voting agreement under which they have
agreed that corporate actions requiring their vote as shareholders will require
the approval of both of them, so that neither of them can act unilaterally,
thus strengthening their collective control of us. The voting agreement
provides that, if Messrs. Gagne and Goble are unable to agree as to a
particular proposal to be voted upon by our shareholders, they each agree to
abstain from voting, which may have the effect of preventing the other
shareholders from approving the proposal. Messrs. Gagne and Goble also have
entered into a shareholder agreement pursuant to which each of them has granted
to the other a right of first refusal (except in limited circumstances) to
purchase any shares of our common stock owned by them, thus further
strengthening their collective control of us.

Each of Messrs. Gagne and Goble also has entered into an employment
agreement with us for an initial term expiring on December 31, 2005. As a
result, they have the right to control our business and operations as our most
senior officers. Additional discussion of these employment agreements is found
at "Directors and Executive Officers--Employment Agreements" at page 40 of this
prospectus.

Investors will experience immediate and substantial dilution.

This offering involves an immediate and substantial dilution of $6.81 per
share (57%) between the net tangible book value per share after the offering
and the initial public offering price per share, assuming an initial public
offering price of $12.00 per share.

There has been no prior public market for our common stock and our stock price
may be volatile.

Prior to this offering, there has been no public market for our common
stock. We have applied for listing of our common stock on The Nasdaq National
Market; however, we cannot assure you that an active trading market will
develop or be sustained. The initial public offering price will be determined
by negotiations between us and Wachovia Securities, Inc., the representative of
the underwriters, and may not be indicative of the actual value of the common
stock and may bear no relationship to the price at which the common stock will
trade after completion of this offering. The market price of our common stock
may be subject to wide fluctuations in response to variations in operating
results, general trends in our industry, actions taken by competitors, the
overall performance of the stock market and Internet stocks in particular and
other factors.

There are many shares eligible for future sale and sales of those shares could
reduce the market price.

The 2,400,000 shares of common stock offered hereby will be freely tradable
without restriction or further registration under the Securities Act of 1933 by
persons other than "affiliates" within the meaning of Rule 144 under the
Securities Act. The holders of the remaining 3,075,000 shares of common stock
generally will be entitled to sell these shares in the public securities market
commencing in September 2001, without registration under the Securities Act to
the extent permitted by Rule 144 under the Securities Act. In addition, the
holders of these restricted shares have agreed not to sell or dispose of those
shares for a period of 180 days from the date of this prospectus without the
written consent of Wachovia Securities, Inc. Future sales of a substantial
amount of our common stock in the public market, or the perception that future
sales may occur, could reduce the market price of our common stock.

We may issue preferred stock with preferential rights that may adversely affect
your rights.

The rights of the holders of our common stock will be subject to, and may be
adversely affected by, the rights of holders of any preferred stock that we may
issue in the future. Preferred stock could be issued to

10
<PAGE>

discourage, delay or prevent a change in our control. Our articles of
incorporation authorize our board of directors to issue 1,000,000 shares of
preferred stock and to fix the rights, preferences, privileges and
restrictions, including voting rights of these shares without further
shareholder approval. The holders of preferred stock will have a preference on
the receipt of dividends and payment upon liquidation compared to the holders
of our common stock.

Certain provisions of Florida law may discourage, delay or prevent a change of
control which might otherwise be beneficial to our shareholders.

Certain provisions of the Florida Business Corporation Act could delay,
defer or impede the removal of incumbent directors and could make more
difficult a merger, tender offer or proxy contest involving us, even if these
events could be beneficial to our shareholders. These provisions could also
limit the price that certain investors might be willing to pay in the future
for our common stock. In addition, Florida has certain laws that may deter or
frustrate takeovers of Florida corporations, although we have at the present
time opted out of these statutes.

11
<PAGE>

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

Forward-looking statements represent our judgment about the future and are
not based on historical facts. These statements are typically identified by the
use of words such as "may," "will," "expect," "believe," "anticipate,"
"intend," "could," "estimate" or "continue" and similar expressions or
variations. Certain important factors may affect our actual results and could
cause those results to differ materially from any forward-looking statements
made in this prospectus or that are otherwise made by us or on our behalf.

Investing in our common stock is risky. You should carefully consider the
risks and uncertainties identified in this prospectus, including the factors
described in the preceding risk factors, and our financial statements and the
related notes before making an investment decision. Our business, operating
results and financial condition could be adversely affected by any of the
preceding risks. The trading price of our common stock could decline due to any
of these risks, and you could lose all or part of your investment.

DETERMINATION OF OFFERING PRICE

Prior to this offering, there has been no public market for our common
stock. As a result, the offering price for our common stock has been determined
by discussions between us and Wachovia Securities, Inc., the representative of
the underwriters, which is acting as a qualified independent underwriter. The
offering price is based on Wachovia's recommendations, and may not necessarily
be related to our asset value, net worth, or other established criteria of
value. The factors considered in such negotiations, in addition to prevailing
market conditions, include the history of and prospects for the industry in
which we compete, an assessment of our management, our prospects, our capital
structure, our past performance and future plans for products and services.

12
<PAGE>

USE OF PROCEEDS

We estimate we will receive approximately $25,521,000 from the sale of
2,400,000 shares of common stock offered at an assumed initial public offering
price of $12.00 per share after deducting the underwriting discount, a finder's
fee of approximately $258,000 to be paid to Mr. Donald A. Wojnowski Jr., who is
our vice president business development and additional offering expenses
payable by us (estimated to be approximately $1,005,000). We expect to use the
net proceeds as follows:

<TABLE>
<S> <C> <C>
Account Acquisition
Programs and $15,000,000 Represents costs associated with
Advertising............ acquisitions of other broker dealers,
establishment of additional relationships
with broker dealers for their clearing and
trade execution business and advertising
efforts.

New Business 6,000,000 Represents expenses associated with
Initiatives............ expanding our product and service
offerings, including our private label
brokerage solutions, investment advisory
services and clearing operations.

Increase Net Capital.... 4,521,000 Represents increase in net capital.
-----------
Total................. $25,521,000
===========
</TABLE>

If the underwriters exercise their over-allotment option in full, we will
realize additional net proceeds of approximately $4,018,000, based on an
assumed initial public offering price of $12.00 per share after deducting the
underwriting discount, which will be added initially to our net capital.

This represents our best estimate of the allocation of the net proceeds of
this offering based upon the current status of our business. This estimate is
based on certain assumptions, including continued expansion of our client base
and corresponding increases in revenues and that the proposed expansion of our
products and services can be completed without unanticipated delays or costs.
If any of these factors change, we may find it necessary to reallocate a
portion of the proceeds within the above-described categories or use portions
of the proceeds for other purposes. Our estimates may prove to be inaccurate,
we may undertake new programs or activities that will require considerable
additional expenditures, or unforeseen expenses may occur.

From time to time we evaluate potential opportunities for acquisitions of
complementary businesses, including other broker dealers, but we cannot assure
you that we will complete any particular acquisition. We have no present
commitment or agreement with respect to a material acquisition of another
business.

Based on currently proposed plans and assumptions relating to implementing
our business plans, we believe that the proceeds of this offering, combined
with cash flow from operations, will enable us to fund our presently
anticipated operations for at least the next 12 months. However, if our plans
change, our assumptions change or prove to be inaccurate or if the proceeds of
this offering and our operating cash flow otherwise prove to be insufficient to
implement our business plans, we may find it necessary or desirable to
reallocate a portion of the proceeds within the above-described categories, use
proceeds for other purposes, seek additional financing or curtail our
operations or plans. We cannot assure you that any additional financing will be
available to us on acceptable terms, or at all.

Proceeds not immediately required for the purposes described above will be
used to fund debit balances, and any remaining proceeds will be invested
principally in United States government securities, short-term certificates of
deposit, money market funds or other short-term interest-bearing investments.

13
<PAGE>

DIVIDEND POLICY

From time to time we paid dividends to our existing shareholders during
1998, 1999 and the period from January 1, 2000 to the date of this prospectus
in the amounts of $304,241, $2,247,574 and $1,953,878, respectively. We are
currently an S corporation for federal tax purposes and our taxable income is a
direct liability of our current shareholders. We will make a final distribution
to our existing shareholders not later than April 15, 2001 to help them pay
their income taxes arising from our earnings from January 1, 2000 until the
completion of this offering. We will distribute to them approximately 40.5% of
our earnings for the period. For the six months ended June 30, 2000, 40.5% of
our earnings equals approximately $1,173,000.

We will automatically become a C corporation effective with the completion
of this offering, and we do not intend to pay any other dividends to our
shareholders for the foreseeable future. We intend to retain any earnings to
finance the development and expansion of our business. Payment of dividends in
the future will be subject to the discretion of our board of directors and will
depend on our ability to generate earnings, our need for capital and our
overall financial condition among other factors.

DILUTION

The difference between the initial public offering price per share of our
common stock and the pro forma net tangible book value per share after this
offering constitutes the dilution to investors in this offering. Pro forma net
tangible book value per share of common stock is determined by dividing our net
tangible book value (total tangible assets less total liabilities) by the
number of shares of common stock outstanding.

As of June 30, 2000, our pro forma net tangible book value was $2,316,234 or
$.75 per share of common stock. Pro forma net tangible book value represents
the amount of our total assets, less any intangible assets, total liabilities
and the expected payment to our existing shareholders of approximately
$1,173,000 relating to their tax liability for our earnings for the six months
ended June 30, 2000. After giving effect to the sale of the 2,400,000 shares of
common stock offered through this prospectus, and after deducting the
underwriting discount, finder's fee and other estimated expenses of the
offering, our adjusted pro forma net tangible book value as of June 30, 2000,
would have been $28,440,234 or $5.19 per share. This represents an immediate
increase in net tangible book value of $4.44 per share to existing shareholders
and an immediate dilution of $6.81 per share to investors in the offering. The
following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price...................................... $12.00
Pro forma net tangible book value before offering................. $ .75
Increase attributable to investors in this offering............... 4.44
Net tangible book value after offering............................. 5.19
------
Dilution to new investors.......................................... $ 6.81
======
</TABLE>

If the underwriters exercise their over-allotment option in full, the pro
forma adjusted net tangible book value per share of common stock after the
offering would be $5.56 which would result in dilution to your investment of
$6.44 per share of common stock.

14
<PAGE>

The following table shows, at June 30, 2000, a comparison of the total
number of shares of common stock purchased from us, the total consideration
paid and the average price paid per share by existing common shareholders and
to be paid by investors who purchase shares of common stock in this offering:

<TABLE>
<CAPTION>
Shares Purchased Total Consideration
----------------- ------------------- Average Price
Number Percent Dollars Percent Per Share
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders....... 3,075,000 56% $ 264,379 1% $ 0.09
New Investors............... 2,400,000 44% 28,800,000 99 12.00
--------- --- ----------- ---
Total..................... 5,475,000 100% $29,064,379 100%
========= === =========== ===
</TABLE>

The above table assumes no exercise of the underwriters' over-allotment
option to purchase an additional 360,000 shares of common stock and does not
give effect to up to 1,000,000 shares of common stock issuable upon the
exercise of options that may be granted under our 2000 Stock Option Plan or
175,050 shares of common stock issuable upon exercise of warrants to be issued
to the representative of the underwriters. If the underwriters' over-allotment
option is exercised in full, the new investors will have paid $33,120,000 for
2,760,000 shares of common stock, representing approximately 47% of the total
number of shares of common stock outstanding.

15
<PAGE>

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2000, as
adjusted to give effect to the sale of 2,400,000 shares of common stock offered
in this offering at an assumed public offering price of $12.00 per share and
the receipt of the net proceeds from the sale. You should read this table in
conjunction with our consolidated financial statements and the notes included
elsewhere in this prospectus.

<TABLE>
<CAPTION>
June 30, 2000
-----------------------
Actual As Adjusted
----------- -----------
<S> <C> <C>
Short-term borrowings from banks....................... $ 7,971,000 $ 7,971,000
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued and outstanding.............. -- --
Common stock, $.01 par value, 100,000,000 shares
authorized; 3,075,000 shares issued and outstanding,
actual; 5,475,000 shares issued and outstanding, as
adjusted............................................. 30,750 54,750
Additional paid-in capital............................ 233,629 28,385,484
Retained earnings..................................... 3,827,855 --
----------- -----------
Total shareholders' equity............................. $ 4,092,234 $28,440,234
----------- -----------
Total capitalization................................... $12,063,234 $36,411,234
=========== ===========
</TABLE>

The above table assumes no exercise of the underwriters' over-allotment
option to purchase an additional 360,000 shares of common stock, does not give
effect to up to 1,000,000 shares of common stock issuable upon the exercise of
options that may be granted under our 2000 Stock Option Plan or 175,050 shares
of common stock issuable upon exercise of warrants to be issued to the
representative of the underwriters. Further, the above table does not reflect
the issuance of such warrants. Upon issuance of the warrants, we will record
the fair value of the warrants in shareholders' equity with a corresponding
reduction in additional paid-in capital.

The "As Adjusted" column reflects adjustments to take into account the sale
of 2,400,000 shares of common stock in this offering at an assumed initial
public offering price of $12.00 per share and the receipt of the net proceeds
therefrom (after deducting the underwriting discount, finder's fee and the
estimated expenses of this offering). These figures are further adjusted to
reflect the charge-off of deferred offering costs of approximately $603,000 and
the expected payment to our existing shareholders of approximately $1,173,000
relating to their tax liability for our earnings for the six months ended June
30, 2000 and also include a reclassification in the amount of $2,654,855 from
retained earnings to additional paid-in capital by our existing shareholders,
as a result of the automatic conversion to a C corporation upon completion of
this offering.

16
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data is qualified by reference
to, and should be read in conjunction with, our consolidated financial
statements and the notes to those statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this prospectus. We have operated as S corporations, and, accordingly, our
taxable income has been taxed directly to our shareholders. Unaudited pro forma
information assumes that we were subject to federal income taxes and taxed as a
C corporation at the statutory tax rates in effect for the periods presented.

<TABLE>
<CAPTION>
Six Months Ended
June 30,
(unaudited) Year Ended December 31,
---------------------- -------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenues:
Order execution trading revenues,
net............................. $ 6,532,697 $5,956,513 $10,441,910 $5,681,892 $4,612,693 $1,861,528 $ 495,686
Commissions and fees............. 5,969,156 2,267,163 6,134,454 2,022,433 1,487,379 925,707 566,058
Orderflow........................ 92,016 38,287 102,806 149,246 209,522 301,915 229,076
Interest......................... 927,372 337,441 829,381 66,675 -- -- --
Other............................ 137,961 47,883 89,752 13,753 15,479 72,907 73,864
----------- ---------- ----------- ---------- ---------- ---------- ----------
$13,659,202 $8,647,287 $17,598,303 $7,933,999 $6,325,073 $3,162,057 $1,364,684
----------- ---------- ----------- ---------- ---------- ---------- ----------
Expenses:
Employee compensation and
benefits........................ 4,419,787 2,113,590 4,436,719 2,715,069 2,415,490 1,200,386 535,233
Commissions and clearing costs... 2,416,280 1,153,943 2,846,408 1,345,528 1,102,466 427,421 207,609
Orderflow payments............... 1,310,201 1,507,015 2,775,599 1,661,488 1,617,153 713,742 199,630
Interest......................... 565,566 167,105 461,843 44,363 1,360 1,079 687
Communications and data
processing...................... 425,272 223,007 672,778 164,829 70,482 220,137 68,336
General and administrative....... 1,359,196 711,543 2,385,496 642,845 286,986 286,235 96,981
Advertising...................... 266,828 174,356 561,134 269,293 134,458 72,660 5,510
----------- ---------- ----------- ---------- ---------- ---------- ----------
10,763,130 6,050,559 14,139,977 6,843,415 5,628,395 2,921,660 1,113,986
----------- ---------- ----------- ---------- ---------- ---------- ----------
Net income........................ $ 2,896,072 $2,596,728 $ 3,458,326 $1,090,584 $ 696,678 $ 240,397 $ 250,698
=========== ========== =========== ========== ========== ========== ==========
Earnings per share--basic and
diluted.......................... $ .94 $ .84 $ 1.12 $ .35 $ .23 $ .08 $ .08
=========== ========== =========== ========== ========== ========== ==========
Unaudited pro forma information:
Income before income taxes....... $ 2,896,072 $2,596,728 $ 3,458,326 $1,090,584 $ 696,678 $ 240,397 $ 250,698
Provision for income taxes....... 1,089,000 976,000 1,300,000 410,000 262,000 90,000 94,000
----------- ---------- ----------- ---------- ---------- ---------- ----------
Net income....................... $ 1,807,072 $1,620,728 $ 2,158,326 $ 680,584 $ 434,678 $ 150,397 $ 156,698
=========== ========== =========== ========== ========== ========== ==========
Pro forma earnings per share--
basic and diluted............... $ .59 $ .53 $ .70 $ .22 $ .14 $ .05 $ .05
=========== ========== =========== ========== ========== ========== ==========
Weighted average shares
outstanding--basic and diluted... 3,075,000 3,075,000 3,075,000 3,075,000 3,075,000 3,075,000 3,075,000
Balance Sheet Data (at period end):
Total assets...................... $29,005,396 $22,166,240 $8,860,788 $1,501,802 $1,047,379 $ 953,267
Total liabilities................. 24,913,162 19,016,198 6,921,498 348,855 339,077 511,085
Shareholders' equity.............. 4,092,234 3,150,042 1,939,290 1,152,947 708,302 442,182
</TABLE>

17
<PAGE>

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

Introduction

We were incorporated in February 2000. Our business is conducted entirely
through our wholly owned subsidiaries. Prior to the date of this prospectus, we
acquired all of the outstanding capital stock of Empire Financial Group, Inc.,
Advantage Trading Group, Inc. and Empire Investment Advisors, Inc. from our co-
chief executive officers, co-presidents and co-chairmen of the board, Kevin M.
Gagne and Richard L. Goble, the former co-owners of these entities. In
exchange, we issued an aggregate of 3,075,000 shares of our common stock, half
of these shares to Mr. Gagne and the other half to Mr. Goble. Accordingly, the
following discussion and analysis of our financial condition and results of
operations is based on the combined results of these businesses.

We are also a financial brokerage services firm providing discount brokerage
services directly to retail and institutional customers. Our retail customers
can place their securities orders online through our secure website located at
www.empirenow.com or over the telephone at 1-800-lowfees (1-800-569-3337). We
provide our retail customers access to useful financial products and services
through our website and by telephone. Our customers may, upon request, also
receive advice from our brokers regarding mutual funds and bonds. Our brokers
do not provide advice regarding specific equity securities or options.

We added clearing capabilities for our order execution business in 1996 and
for our financial brokerage services business in 1998. Prior to that, we
cleared all of our customer equity and option transactions through third-party
clearing firms that processed our trades, prepared transaction confirmations
and acted as the custodian for our customers' securities. Clearing services
involve the confirmation, receipt, settlement, custody and delivery functions
involved in securities transactions. We began hiring associates to perform
these functions in August 1997 and incurred significant non-recurring costs to
hire and train our associates, as well as systems integration costs during this
period. The addition of clearing capabilities has allowed us to clear
approximately 96% of our total trades during 1999 and to realize significant
cost savings that allow us to competitively price our services. Our direct
costs per transaction that we clear have decreased approximately 67% since
implementing clearing operations.

As of June 30, 2000, our subsidiary, Advantage Trading Group, Inc., provided
clearing services for approximately 65% of the transactions initiated by our
subsidiary Empire Financial Group, Inc. including 100% of Empire Financial
Group, Inc.'s retail transactions. Advantage recently received the necessary
regulatory approvals to provide trade clearing services for up to three
unaffiliated broker dealers and has been engaged by three unaffiliated broker
dealers to provide its clearing services. Advantage is currently in the process
of establishing the necessary interfaces to commence clearing for these broker
dealers.

Sources and Description of Revenues

Order execution trading revenues, net

Approximately 59% of our 1999 revenues, and approximately 48% of our
revenues for the first six months of 2000 consist of order execution trading
revenues, net. Order execution trading revenues are generated from the
difference between the price we pay to buy securities and the price we are paid
when we sell securities. Volatility of stock prices, which can result in
significant price fluctuations in short periods of time, may result in trading
gains or losses. Our order execution trading revenues are dependent on our
ability to evaluate and act rapidly on market trends and manage risk
successfully. We typically act as principal in these transactions and do not
receive a fee or commission for providing order execution services.

18
<PAGE>

Commissions and Fees

Approximately 35% of our 1999 revenues and approximately 44% of our revenues
for the first six months of 2000 consist of commissions and fees. Commissions
and fees include revenues generated from transactional fees charged to retail
and institutional customers. Commissions and fees also include mutual fund
transaction commissions and trailer fees, which are periodic fees paid by
mutual funds as an incentive to keep assets invested with them over time.
Transactional fees charged to retail and institutional customers are primarily
affected by changes in transaction volumes and changes in the commission or fee
rates charged per transaction. The significant growth in daily average trading
volumes in the U.S. and major global equities markets, combined with our
introduction of online trading services, has increased our trading volume.

Orderflow

Approximately 1% of our 1999 revenues and approximately 1% of our revenues
for the first six months of 2000 consist of orderflow payments. We send retail
transactions to other broker dealers for execution in exchange for monthly
payments, referred to as orderflow payments, based on the number of shares
involved in the transactions.

Interest

Approximately 5% of our 1999 revenues and approximately 7% of our revenues
for the first six months of 2000 consist of interest revenues. Interest
revenues consist of profits from the interest we charge retail customers when
they borrow from us, as well as interest earned on our interest-bearing assets.

Other

Approximately 1% of our 1999 revenues and approximately 1% of our revenues
for the first six months of 2000 consist of other income. Other income derives
from miscellaneous fees (other than the order execution trading revenues, net
and commissions and fees described above) charged to clients.

Description of Operating Expenses

Employee compensation and benefits

Employee compensation and benefits, which includes salaries and wages,
incentive compensation and related employee benefits and taxes, is our largest
operating expense, accounting for approximately 31% of our expenses during 1999
and approximately 41% of our expenses during the first six months of 2000. Our
registered representatives, which make up approximately half of our employees,
are compensated primarily on a performance basis. Therefore, a significant
portion of compensation and benefits expense will fluctuate based on our
operating results.

Commissions and clearing costs

Commissions and clearing costs include commissions paid to independent
brokers, fees paid to floor brokers and exchanges for trade execution costs,
fees paid to third-party vendors for data processing services and fees paid to
clearing entities for certain clearance and settlement services. Commissions
and clearing costs generally fluctuate based on transaction volume.
Approximately 20% of our 1999 expenses and approximately 22% of our expenses
for the first six months of 2000 consist of commissions and clearing costs.

Orderflow payments

We make payments to other broker dealers to compensate them for directing
trades to us for execution. We make these payments monthly based on either per
share prices or total transaction value. Approximately 20% of our 1999 expenses
and approximately 12% of our expenses for the first six months of 2000 consist
of orderflow payments.

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<PAGE>

Interest

Interest expenses consist of interest charges associated with our interest-
bearing liabilities such as customer credit balances and drawdowns under our
short-term bank loan, accounting for approximately 3% of our expenses during
1999 and approximately 5% of our expenses for the first six months of 2000.

Communications and data processing

Communications and data processing expenses consist primarily of costs
related to our computer systems. Communications expenses include costs
associated with traditional communications expenses, such as voice telephone,
and the costs to maintain our Internet access capabilities. These costs also
include amounts paid to provide customers access to automated quote
information, stock and option orders or account balance information.
Approximately 5% of our 1999 expenses and approximately 4% of our expenses for
the first six months of 2000 consist of communications and data processing.

General and administrative

Our general and administrative expenses consist primarily of legal,
accounting and other professional fees, software consulting fees, travel and
entertainment expenses, insurance coverage, depreciation, occupancy expenses
and other similar operating expenses, accounting for approximately 17% of our
expenses during 1999 and approximately 13% of our expenses for the first six
months of 2000.

Advertising

Advertising expenses include television, online, print and direct mail
advertising expenses and other costs incurred to create brand awareness,
promote our product and service offerings and introduce new products and
services accounting for approximately 4% of our expenses during 1999 and
approximately 2% of our expenses for the first six months of 2000.

Results of Operations

Six Months Ended June 30, 2000 Compared with Six Months Ended June 30, 1999

Total revenues for the six months ended June 30, 2000 increased $5,011,915,
or 58%, to $13,659,202 from $8,647,287 reported for the six months ended June
30, 1999. This increase was primarily due to the reasons described below.

Order execution trading revenues, net in the first six months of 2000
increased $576,184, or 10% to $6,532,697 from $5,956,513 in the first six
months of 1999, primarily due to an approximately 20% increase in the number of
order execution transactions, offset by a slight decrease in the average
profitability per trade. The number of order execution trade transactions
increased from 123,230 in the first six months of 1999 to 147,606 in the first
six months of 2000.

Commissions and fee revenues in the first six months of 2000 increased
$3,701,993, or 163%, to $5,969,156 from $2,267,163 for the first six months of
1999, primarily due to increased retail trading volume. In the first six months
of 2000, we processed approximately 77,500 transactions for our retail
customers, versus approximately 31,000 in the first six months of 1999, an
increase of approximately 150%. Furthermore, our retail customer accounts
totaled approximately 11,000 at June 30, 2000 compared to approximately 7,100
at June 30, 1999, an increase of approximately 55%.

Orderflow revenues in the first six months of 2000 increased $53,729, or
140%, to $92,016 from $38,287 in the first six months of 1999, reflecting
primarily increases in the number of trades for which orderflow payments were
received by us.

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<PAGE>

Interest revenues in the first six months of 2000 increased $589,931, or
175%, to $927,372 from $337,441 in the first six months of 1999, an increase
primarily attributable to increased retail customers' margin account balances.
The average month end customer margin account balance for the first six months
of 2000 was $21,186,000, compared to $8,821,000 for the first six months of
1999, an increase of 12,365,000 or 140%.

Other revenues in the first six months of 2000 increased $90,078 or 188% to
$137,961 from $47,883 in the first six months of 1999, primarily as a result of
the increase in miscellaneous income and fee revenues.

Total operating expenses in the first six months of 2000 increased
$4,712,571, or 78%, to $10,763,130 from $6,050,559 in the first six months of
1999, primarily due to the reasons described below.

Employee compensation and benefits in the first six months of 2000 increased
$2,306,197, or 109%, to $4,419,787 from $2,113,590 in the first six months of
1999. The growth in employee compensation and benefits was primarily due to an
increased number of employees. At June 30, 2000 we employed 108 people as
compared to 57 at June 30, 1999.

Commissions and clearing costs in the first six months of 2000 increased
$1,262,337, or 109%, to $2,416,280 from $1,153,943 in the first six months of
1999. The primary reasons for the increase were increased volume and clearing
costs incurred in connection with our institutional retail operations. In the
first six months of 2000, we processed approximately 77,500 transactions for
our retail customers versus approximately 31,000 in the first six months of
1999, an increase of approximately 150%. As compared to related revenues,
commissions and clearing costs increased by a lesser percentage because of
costs savings realized through our clearing operations.

Orderflow payments decreased $196,814, or 13%, to $1,310,201 in the first
six months of 2000 from $1,507,015 in the first six months of 1999. The
decrease is primarily attributable to a reduction in the number of trade
transactions that required orderflow payments.

Interest expense in the first six months of 2000 increased $398,461, or
239%, to $565,566 from $167,105 in the first six months of 1999, primarily due
to an increase in interest incurred on short-term borrowings and interest paid
on customer credit balances. A portion of the increase is attributable to
larger customer credit balances for which we pay interest. The average
outstanding month end customer credit balance was approximately $14,000,000 for
the six months ended June 30, 2000 compared to approximately $7,500,000 for the
six months ended June 30, 1999. The remaining increase is attributable to
increased borrowings and higher interest rates on our short-term borrowing
arrangement. At June 30, 2000 and 1999, our interest rate on short-term
borrowings was 7.5% and 6.0%, respectively.

Communications and data processing expenses in the first six months of 2000
increased $202,265, or 91%, to $425,272 from $223,007 in the first six months
of 1999. This increase was attributable to costs associated with the continued
growth of our clearing operations, the establishment of online services and
telephone communications and expenses related to establishment of backoffice
support systems and quote services.

General and administrative expenses in the first six months of 2000
increased $647,653, or 91%, to $1,359,196 from $711,543 in the first six months
of 1999. This increase is primarily attributable to an increase of
approximately $282,000 in computer consulting expenses, $147,000 in stationary,
printing and office supplies, and $180,000 in rental and facility expenses,
partially offset by a $175,000 recovery of a customer account previously
written off in 1999.

Advertising expenses in the first six months of 2000 increased $92,472, or
53%, to $266,828 from $174,356 in the first six months of 1999. The increase in
advertising expense was primarily due to costs

21
<PAGE>

incurred in connection with increased promotion of our general business
activities. As a percentage of total revenues, advertising expenses were
approximately 2% in each of the first six months of 2000 and 1999.

As a result of all of the foregoing factors, net income in the first six
months of 2000 increased $299,344, or 12%, to $2,896,072, compared to
$2,596,728 in the first six months of 1999. Net income does not reflect
provision for income taxes, given that we have been an S corporation and will
continue to be an S corporation until completion of this offering.

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

Total revenues for the year ended December 31, 1999 increased $9,664,304, or
122%, to $17,598,303 from $7,933,999 reported for the year ended December 31,
1998. This increase was primarily due to the reasons described below.

Order execution trading revenues, net, in 1999 increased $4,760,018, or 84%,
to $10,441,910 from $5,681,892 in 1998, due to an approximately 34% increase in
the number of order execution transactions and a 37% increase in the average
profitability per trade. The number of order execution trade transactions
increased from 175,661 in 1998 to 236,176 in 1999.

Commission and fee revenues in 1999 increased $4,112,021, or 203%, to
$6,134,454, from $2,022,433 for 1998, primarily due to increased retail trading
volume. Our retail customer accounts totaled approximately 10,000 at December
31, 1999 compared to approximately 4,500 at December 31, 1998, an increase of
approximately 122%. Furthermore, in 1999 we processed approximately 72,203
transactions for our retail customers versus approximately 26,686 in 1998, an
increase of approximately 171%.

Orderflow revenues in 1999 decreased $46,440, or 31%, to $102,806 from
$149,246 in 1998, reflecting primarily decreases in the number of trades for
which orderflow payments were received by us.

Interest revenues in 1999 increased $762,706, or 1,143%, to $829,381 from
$66,675 in 1998. This increase is directly attributable to the increase in 1999
in receivables from customers' margin accounts of $10,584,611, or 212%, to
$15,585,002 from $5,000,391 in 1998, resulting mainly from our initiating
clearing operations, which allowed us to collect all interest on customer
margin loans beginning in the last quarter of 1998.

Other revenues in 1999 increased $75,999, or 553%, to $89,752 from $13,753
in 1998, primarily as a result of the increase in miscellaneous income items,
including interest income, miscellaneous fee revenues and net gains on
investments.

Total operating expenses in 1999 increased $7,296,562, or 107%, to
$14,139,977 from $6,843,415 in 1998, due primarily to the reasons described
below.

Employee compensation and benefits in 1999 increased $1,721,650, or 63%, to
$4,436,719 from $2,715,069 in 1998. The growth in employee compensation and
benefits was consistent with and reflects the costs associated with our overall
business growth. At December 31, 1999, we employed 84 people as compared to 23
in 1998.

Commissions and clearing costs in 1999 increased $1,500,880, or 112%, to
$2,846,408 from $1,345,528 in 1998. The primary reasons for the increase were
increased volume and clearing costs incurred in connection with our retail
trades for institutions. As compared to related revenues, commissions and
clearing costs increased by a lesser percentage because of the reduction in
expenses realized through our clearing operations.

Orderflow payments increased $1,114,111, or 67%, to $2,775,599 in 1999 from
$1,661,488 in 1998. The effect of increases in trading volume was partially
offset by a reduction in orderflow payment rates per transaction.

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<PAGE>

Interest expense in 1999 increased $417,480, or 941%, to $461,843 from
$44,363 in 1998. The increase was principally due to interest incurred on
short-term borrowings and interest paid on customer credit balances during all
of 1999, as compared to only the last quarter of 1998.

Communications and data processing expenses in 1999 increased $507,949, or
308%, to $672,778 from $164,829 in 1998. This increase was attributable to
costs associated with commencing our clearing operations, the establishment of
online services and telephone communications and expenses related to
establishment of backoffice support systems and quote services.

General and administrative expenses in 1999 increased $1,742,651, or 271%,
to $2,385,496 from $642,845 in 1998. The increase is primarily attributable to
the growth in our business, and includes approximately $305,000 in fees paid to
professional and legal advisors, approximately $284,000 in consulting expenses
and a $231,000 provision for doubtful accounts.

Advertising expenses in 1999 increased $291,841, or 108%, to $561,134 from
$269,293 in 1998. The increase in advertising expenses was primarily due to
costs incurred in connection with increased promotion of our general business
activities. As a percentage of total revenues, advertising expenses were
approximately 3% in each of 1999 and 1998.

As a result of all of the foregoing factors, net income in 1999 increased
$2,367,742, or 217%, to $3,458,326, compared to $1,090,584 in 1998. Net income
does not reflect provision for income taxes, given that we have been an S
corporation and will continue to be an S corporation until completion of this
offering.

Year Ended December 31, 1998 Compared with Year Ended December 31, 1997

Total revenues for the year ended December 31, 1998 increased $1,608,926, or
25%, to $7,933,999 from $6,325,073 reported for the year ended December 31,
1997. Revenue growth in 1998 primarily was due to the reasons described below.

Order execution trading revenues, net, in 1998 increased $1,069,199 or 23%
to $5,681,892 from $4,612,693 in 1997 primarily due to a 30% increase in
overall volume of transactions performed for independent broker dealers. Our
annual trading volume was 175,661 in 1998 as compared to 135,516 in 1997.

Commission and fee revenues in 1998 increased $535,054 or 36% to $2,022,433
from $1,487,379 in 1997 due to increased trading volume, which was partially
offset by lower commission rates per trade. For 1998, our trading volume for
our retail customers was 26,686 versus 13,076 in 1997, or a 104% increase.

Orderflow revenues in 1998 decreased $60,276 or 29% to $149,246 from
$209,522 in 1997, reflecting reductions in the rates realized on orderflow
payments.

Interest revenues in 1998 were $66,675, as compared to none in 1997. We
commenced our clearing operations in the fourth quarter of 1998.

Other revenues in 1998 decreased $1,726 or 11% to $13,753 from $15,479 in
1997.

Total operating expenses in 1998 increased $1,215,020, or 22% to $6,843,415
from $5,628,395 in 1997, due primarily to the reasons described below.

Employee compensation and benefits in 1998 increased $299,579 or 12% to
$2,715,069 from $2,415,490 in 1997. Employee compensation and benefit expenses
are largely performance based and tend to increase with total revenue.

Commissions and clearing costs in 1998 increased $243,062 or 22% to
$1,345,528 from $1,102,466 in 1997, primarily as a result of the increase in
trading volume.

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<PAGE>

Orderflow payments remained relatively stable in 1998 compared to 1997.

Interest expense in 1998 increased $43,003 or 3,162% to $44,363 from $1,360
in 1997, due to interest charges on loans taken to finance customer margin
loans. The loan balance outstanding at December 31, 1998 was $942,000. At
December 31, 1997, there was no loan balance outstanding, since we did not
provide clearing operations at that date.

Communications and data processing expenses in 1998 increased $94,347, or
134%, to $164,829 from $70,482 in 1997 mainly due to implementation of clearing
operations in the fourth quarter of 1998.

General and administrative expenses in 1998 increased $355,859, or 124%, to
$642,845 from $286,986 in 1997, primarily due to the growth of our businesses
and the commencement of clearing operations in the fourth quarter of 1998.

Advertising expenses in 1998 increased $134,835, or 100%, to $269,293 from
$134,458 in 1997 and is mainly attributable to increased marketing efforts.

As a result of all of the foregoing factors, net income in 1998 increased by
$393,906, or 57%, to $1,090,584 from $696,678 in 1997. Net income does not
reflect provision for income taxes, given that we have been an S corporation
and will continue to be an S corporation until completion of this offering.

Liquidity and Capital Resources

We maintain a highly liquid balance sheet with the majority of our assets
consisting of cash and cash equivalents and receivables from customers,
brokers, dealers and clearing brokers arising from customer-related securities
transactions. Receivables from customers consist primarily of collateralized
customer margin loans, which are typically secured with marketable equity
securities.

At December 31, 1999, we had shareholders' equity of $3,150,042,
representing an increase of $1,210,752 from December 31, 1998. At June 30,
2000, we had shareholders' equity of $4,092,234, representing an increase of
$756,001 from June 30, 1999. Cash and cash equivalents at December 31, 1999
were $1,880,142 compared to $367,825 at December 31, 1998. Cash and cash
equivalents at June 30, 2000 were $883,042 compared to $1,201,864 at June 30,
1999. In April 2000, we distributed $1,400,000 to our existing shareholders
related to their tax liability for our net income for 1999.

Net cash used in operating activities was $1,089,730 in 1999 versus
$1,161,424 cash used in 1998. Net cash used in operating activities was
$764,085 for the six months ended June 30, 2000 versus $512,491 provided by
operating activities for the six months ended June 30, 1999. Our net cash used
in or provided by operating activities is materially impacted by changes in the
brokerage-related assets and liabilities of our subsidiary, Advantage Trading
Group, Inc.

Net cash used in investing activities was $191,379 in 1999, compared to
$77,086 in 1998. Net cash used in investing activities was $267,135 for the six
months ended June 30, 2000, compared to $10,666 for the six months ended June
30, 1999. The increases were primarily due to increased expenditures for the
purchase of property and equipment.

Net cash provided by financing activities was $2,793,426 in 1999 and
$637,759 in 1998. The net increase in 1999 was due to $5,041,000 in draws on
our short-term bank loans, less $2,247,574 distributed to our shareholders. Net
cash provided by financing activities was $34,120 for the six months ended June
30, 2000, compared to net cash provided by financing activities of $332,214 for
the six months ended June 30, 1999. The net decrease in 2000 was due to
$1,988,000 in draws on our short-term bank loan, less $1,953,880 distributed to
our shareholders. We are currently permitted to borrow up to $25,000,000 under
short-term loan agreements with Firstar Bank, N.A. Until May 30, 2000, the
interest rate applicable to any outstanding balance was 100 basis points above
the federal funds rate of interest (6.0% at December 31, 1999). Beginning May
30, 2000, the interest rate applicable to any outstanding balance varies,
depending on the rate quoted by the bank, on any balance due prior to a demand
for repayment (7.5% at June 30, 2000). Following a demand for repayment, the
interest rate changes to the bank's prime rate plus two percent. Any
outstanding balance is payable on demand.

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<PAGE>

The short-term bank loan balance was $5,983,000 at December 31, 1999, and it
was collateralized by $9,350,000 of customers' margin account securities. At
June 30, 2000, the short-term bank loan balance was $7,971,000 and was
collateralized by $14,531,000 of customers' margin account securities. The term
of our current loan agreement expires May 30, 2001.

We are currently an S corporation for federal income tax purposes and our
taxable income is a direct liability of our current shareholders. In April
2000, we distributed $1,400,000 to our existing shareholders related to their
tax liability for our net income for 1999. We will automatically become a C
corporation upon completion of this offering. We will make a final distribution
to our existing shareholders not later than April 15, 2001 to help them pay
their income taxes arising from our earnings from January 2000 until completion
of this offering. We will distribute to them approximately 40.5% of our
earnings for this period. For the six months ended June 30, 2000, 40.5% of our
earnings equals approximately $1,173,000.

Based on currently proposed plans and assumptions relating to the
implementation of our business plan, we believe that the proceeds of this
offering, combined with cash flow from operations, will enable us to fund our
presently planned operations, both for at least 12 months and thereafter. If
not, or if our plans change, our assumptions change or prove to be inaccurate,
or if the proceeds of this offering and our operating cash flow otherwise prove
to be insufficient to implement our business plans, we may require additional
financing and may seek to raise funds through subsequent equity or debt
financings or other sources. We cannot assure you that additional funds will be
available in adequate amounts or on acceptable terms. If funds are needed but
are not available, our business would be harmed.

Net Capital Requirements

Our broker dealer subsidiaries, Advantage Trading Group, Inc. and Empire
Financial Group, Inc., are subject to the requirements of the Uniform Net
Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934. This rule
requires that aggregate indebtedness, as defined, not exceed 15 times net
capital, as defined. Rule 15c3-1 also provides for an "alternative net capital
requirement" which, if elected, requires that net capital be equal to the
greater of $250,000 or 2% of aggregate debit items computed in applying the
formula for determination of reserve requirements. Net capital positions of
each of our broker dealer subsidiaries were as follows:

<TABLE>
<CAPTION>
December 31,
June 30, ----------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Advantage Trading Group, Inc.:
(alternative method elected November 1999)
Net capital................................ $2,033,217 $2,233,982 $1,392,009
Required net capital....................... 475,926 350,766 458,751
---------- ---------- ----------
Excess net capital......................... $1,557,291 $1,883,216 $ 933,258
Ratio of aggregate indebtedness to net
capital................................... N/A N/A 4.94 to 1
Net capital as a percentage of aggregate
debit items............................... 8.5% 12.7% N/A
Empire Financial Group, Inc.:
Net capital................................ $ 356,853 $ 316,073 $ 335,281
Required net capital....................... 250,000 250,000 250,000
---------- ---------- ----------
Excess net capital......................... $ 106,853 $ 66,073 $ 85,281
========== ========== ==========
Ratio of aggregate indebtedness to net
capital................................... 2.42 to 1 2.08 to 1 .37 to 1
</TABLE>

Accounting Standards

We intend to grant stock options to certain employees and consultants with
an exercise price not less than the fair market value at the date of grant.
Certain of these options will be granted as of the date of this prospectus. In
accordance with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-

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<PAGE>

Based Compensation" or SFAS 123, issued by the Financial Accounting Standards
Board or FASB, we will apply the intrinsic value method of accounting for
employee stock compensation plans prescribed by Accounting Principles Opinion
No. 25 rather than the fair value method of accounting prescribed by SFAS 123.
We will be providing the required pro forma disclosures going forward.

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" or SFAS
133. SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging
activities. SFAS 133, as amended by SFAS 137, is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000, with earlier
application encouraged. We do not currently use derivative instruments and,
therefore, do not expect that the adoption of SFAS 133 will have any impact on
our financial position or results of operations.

Change in Accountants

We engaged the independent accounting firm of PricewaterhouseCoopers LLP to
act as our principal accountants and audit our financial statements for the
year ended December 31, 1999.

PricewaterhouseCoopers LLP replaced our former principal accountants,
Sweeney, Gates & Co., effective as of January 14, 2000. The decision to change
accountants was approved by our board of directors. During our two most recent
fiscal years there were no disagreements with Sweeney, Gates & Co. on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Sweeney, Gates & Co., would have caused it to make reference to
the subject matter of the disagreements in connection with its report. We had
no consultation with PricewaterhouseCoopers LLP prior to their engagement
regarding application of any accounting principles or the type of audit opinion
that they might render on our consolidated financial statements.

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<PAGE>

BUSINESS

Overview

Our securities order execution services involve filling orders to purchase
or sell securities received from approximately 80 independent broker dealers on
behalf of their retail and institutional customers. We typically act as
principal in these transactions and derive our order execution trading
revenues, net, from the difference between the price paid when a security is
bought and the price received when that security is sold. Therefore, we seek to
take advantage of daily stock price fluctuations to maximize our revenues. We
typically do not receive a fee or commission for providing order execution
services. Approximately 59% of our 1999 revenues and approximately 48% of our
revenues for the first six months of 2000 were derived from these services. In
order to take full advantage of market volatility in providing order execution
services, we have developed and implemented sophisticated software systems for
transaction monitoring and risk management. We have also employed and trained
personnel with the necessary expertise to efficiently provide our order
execution services. We normally close out our trade positions at the end of
each day and do not maintain securities inventory in order to reduce our risks
from market volatility.

We also provide financial brokerage services directly to our retail
customers, including both individuals and small to mid-sized institutions such
as hedge funds, money managers, mutual funds and pension funds. Approximately
35% of our 1999 revenues and approximately 44% of our revenues for the first
six months of 2000 were derived from commissions and fees generated in
connection with our retail financial brokerage services. Our retail customers
can place their securities orders online through our secure website located at
www.empirenow.com or over the telephone by calling our client support desk at
1-800-lowfees (1-800-569-3337). We charge our customers an agreed upon
brokerage commission. Our current online retail trading commissions start at
$6.95 per trade and our broker assisted trades start at $19.00 per trade. We
provide our retail customers access to useful financial products and services
through our website and by telephone. Our retail customers may, upon request,
also receive advice from our brokers regarding mutual funds and bonds. Our
brokers do not provide advice regarding specific equity securities or options.

In February 2000, we began offering private label brokerage solutions to
broker dealers and other financial institutions that want to provide expanded
services to their retail customers. We are currently providing private label
brokerage services for two financial institutions and are aggressively
marketing these services. Our private label solution benefits these
institutions by providing them with an additional revenue source and allowing
them to retain customers and increase traffic to their own websites,
potentially leading to additional business. We provide their retail customers
the same level and range of products and services as we provide to our own
retail customers and charge their customers commissions and fees similar to
those charged to our own retail customers. We pay these institutions fees based
on transaction volume generated by their retail customers.

In January 2000, we received regulatory approval to provide clearing
services for up to three unaffiliated broker dealers. Our clearing services
involve account, settlement and delivery functions. We have already been
engaged by three unaffiliated broker dealers to provide clearing services and
are currently in the process of establishing the necessary interfaces to
commence cleaning for these broker dealers. We currently are seeking

27
<PAGE>

further regulatory approval to increase the number of clearing service
customers beyond three broker dealers. We also are developing online order
execution services, which we plan to integrate with our clearing operations. We
believe that providing online order execution services with our clearing
operations will strengthen our existing relationships with independent broker
dealers, attract additional broker dealer clients seeking low cost, online
order execution and clearing services and provide us with an additional revenue
source.

We recently have begun offering fee-based investment advisory services to
our retail customers, which will assist us in establishing more comprehensive
relationships with them. The investment advisory services we provide include
investment portfolio planning with recommendations on overall portfolio
allocations for different types of investments, based on each customer's long
term needs, and recommendations regarding mutual fund and bond investments. We
do not provide recommendations regarding trades of particular equity
securities.

We were incorporated in Florida in February 2000 and conduct all of our
operations through our three wholly owned subsidiaries: Empire Financial Group,
Inc., Advantage Trading Group, Inc. and Empire Investment Advisors, Inc., that
were incorporated in Florida in 1990, 1995 and 1999, respectively. Each of
these companies was owned by Messrs. Goble and Gagne. Prior to the date of this
prospectus we acquired these companies from Messrs. Goble and Gagne solely in
exchange for shares of our common stock. We conduct our discount brokerage
business through Empire Financial Group, while Advantage Trading Group provides
order execution and clearing services for independent broker dealers, as well
as clearing and some trade execution services for Empire Financial Group.
Empire Investment Advisors offers fee-based investment advisory services to our
retail customers.

Securities Brokerage Business

The securities brokerage business involves the purchase and sale of
securities. A retail customer who desires to purchase or sell a specific
security usually places a securities order with a broker dealer. Broker
dealers, including us, charge retail customers a commission or fee for
processing these orders. Our commissions and fees revenues are derived entirely
from commissions or fees charged to retail customers.

In order to fill the customer's order, the broker dealer generally places an
order with an order execution service or market maker. The order execution
service or market maker most often fills the order as principal by either
buying or selling the specific security. Both order execution service firms and
market makers obtain net revenues from the difference between the price paid
when a specific security is bought and the price received when that security is
sold. We offer order execution services to approximately 80 broker dealers and
derive our order execution trading revenues, net, from these differences.

Each securities transaction also involves clearing activities which include
sending a confirmation to both the buyer and seller, obtaining payment from the
buyer and custody of the security from the seller, and delivering payment to
the seller and the security to the buyer. Companies that provide clearing
services receive a fee for these services from the broker dealers involved in
the securities transaction. We currently provide clearing services for most of
the securities transactions initiated by our retail customers (thus saving
clearing fees) and have regulatory approval initially to provide clearing
services for up to three unaffiliated broker dealers, which will be a new
revenue source for us.

Recent Trends

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increase the number of households that will access financial products and
services, including brokerage services, via the Internet. Cerulli expects
online brokerage accounts to increase from approximately 11.5 million in 1999
to 33.9 million by 2003. Similiarly, estimates published by Cerulli and
Forrester Research project that online brokerage assets will increase from
approximately $750 billion to between $1.8 and $3.0 trillion over the same
period.

Our Business Strategy

We plan to succeed in the financial brokerage business by offering order
execution and other services to broker dealers and by providing competitively
priced retail brokerage services. We believe that our proprietary and online
technologies will provide us with competitive and cost advantages in our
targeted businesses. We have developed our business infrastructure to provide a
full range of securities brokerage services directly to our own customers, as
well as to the customers of other financial institutions such as broker dealers
and banks through private labeling of our retail customer services. We plan to
grow our business while minimizing our costs by implementing the following
business strategy:

. Utilize our clearing capabilities to diversify our revenue base. We
recently received the necessary regulatory approvals to provide trade
clearing services for up to three other broker dealers, and since then
have been engaged by three unaffiliated broker dealers to provide
clearing services. We intend to diversify our revenue base and realize
efficiencies by expanding our clearing operations through this new
service and by seeking regulatory approval to provide this service to
additional broker dealers.

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<PAGE>

Our Business

We enable other broker dealers to complete their customers' brokerage
transactions by providing securities order execution services. We are also a
financial brokerage services firm serving institutional and retail investors
through the Internet and traditional means. We have trade clearing capabilities
that support our businesses. We have also begun offering a combination of our
execution, clearing and securities brokerage services as a private label
securities trading solution for other financial institutions such as broker
dealers, banks, savings and loan institutions, credit unions and insurance
companies.

Order Execution Services

We provide order execution services for equity securities to approximately
80 independent broker dealers. Our current trade execution capabilities allow
us to handle orders via telephone, and we are in the process of expanding our
trade execution capabilities to include online orders. Order execution services
consist of filling orders received from independent broker dealers to buy
securities or sell securities. We typically act as principal in these
transactions and derive our order execution trading revenue, net, from the
difference between the price we pay when we buy a security and the price we
receive when we sell that security. We typically do not receive a fee or
commission for providing order execution services.

Our order execution trading revenues, net, are dependent on our ability to
take advantage of daily stock price fluctuations. Thus, we must be able to
evaluate and act rapidly on market trends and manage risk successfully. Our
methodology focuses on the dynamic, real-time analysis of market activity and
price movements, which enables us to increase our revenues and manage risk
better. Additionally, we have developed an internal trade order and risk
management software application we refer to as the "e-blotter," which allows
real-time analysis of our trading positions in individual securities and
monitoring of our short and long positions and our aggregate profits and
losses. We normally close out our trade positions at the end of each day and do
not maintain securities inventories, which reduces our exposure to risk from
market volatility.

Retail Brokerage Services

We provide securities brokerage services to retail investors, including both
individuals and small to mid-sized institutions such as hedge funds, money
managers, mutual funds and pension funds. We charge our customers an agreed
upon brokerage commission. Our current online retail trading commissions start
at $6.95 per trade and our broker assisted trades start at $19.00 per trade.
Our client support representatives are available from 7:00 a.m. to 7:00 p.m.
eastern time. Our services currently allow for after hours trading.

Customers can directly place orders to buy and sell Nasdaq and exchange-
listed securities, as well as equity and index options, through our automated
order processing system. We support a range of order types, including market
orders, limit orders (good-till-cancelled or day), stop orders and short sales.
Our system automatically checks the parameters of an order, together with the
customer's buying power and positions held, prior to executing an order. All
listed market orders, subject to certain size limitations, are executed at the
National Best Bid/Offer, or NBBO, or better at the time of receipt by a third
market firm or exchange. The NBBO is a dynamically updated representation of
the combined highest bid and lowest offer quoted across all United States stock
exchanges and market makers registered in a specific stock. Eligible orders are
exposed to the marketplace for possible price improvement, but in no case are
orders executed at a price inferior to the NBBO. Limit orders are executed
based on an indicated price and time priority. All Nasdaq market orders,
subject to certain size limitations, are executed at the Best Bid/Offer or
better at the time of receipt by the market maker.

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Our retail brokerage services are readily accessible to our brokerage
customers through multiple gateways:

. Internet Access. Customers using personal computers can access our
brokerage services through the Internet by direct modem access. Our
website, www.empirenow.com, combines an easy-to-use interface with the
trading capabilities and financial content that experienced investors
demand. We have designed our website to appeal to a broad range of retail
investors, from novice to more sophisticated investors, particularly
those seeking competitively priced online services. We intend to
continually develop the features of our website and to position ourselves
as the high value/low cost provider in our pricing segment.

. Voice Telephone. We provide customers with a toll-free number to access
our brokers and other client support representatives. We also provide our
clients with direct access to our registered representatives and
principals through our client support desk to allow them to execute
trades other than online. Our brokers are committed to using their
trading desks to obtain for our clients the fastest execution of their
order at the best possible price at the time the order is given. As of
June 30, 2000, our retail client support division consisted of 67
employees, of which 30 are registered representatives and principals.

. Touch-tone Telephone. We have implemented a touch-tone telephone system
to provide an alternate delivery channel for customers to access
automated quote information, place stock and option orders, review
account balances and check messages from any touch-tone telephone.

. Wireless Communications. We are also in the process of implementing
wireless communications systems allowing the use of pagers and other
wireless non-voice based technology to process orders and receive market
and account information.

Margin Lending

We make loans to customers collateralized by securities held in their
accounts. Margin lending is subject to the margin requirements of the Federal
Reserve and NASD and our internal policies, which are more stringent than
those requirements. Under applicable NASD rules, in the event of a decline in
the market value of the securities in a margin account, we are obligated to
require the customer to deposit additional securities or cash in the account
so that at all times the customer's equity in the account is at least 25% of
the value of the securities in the account. Our current internal requirement,
however, is that the customer's equity not fall below 35%. If it does, the
customer will be required to increase the account's equity to 40%. We also
restrict access to margin lending with regard to trading of certain stocks we
determine to be too volatile. Margin lending to customers constitutes the
major portion of the basis on which our net capital requirements are
determined under the SEC's Net Capital Rule. To the extent these activities
expand, our net capital requirements will increase.

Private Label Brokerage Solutions

Financial institutions are increasingly seeking to enter the securities
brokerage business. Given the time and the complexity involved in obtaining
the necessary regulatory approvals, one efficient method for financial
institutions to enter the securities brokerage business is to contract with a
third-party provider of online investing solutions in order to provide this
packaged solution to their customers. In February 2000, we began offering our
private label brokerage services to broker dealers and other financial
institutions that want to provide expanded services to their retail customers.
We are currently providing private label brokerage services for two financial
institutions and aggressively marketing these services to other broker
dealers, banks, savings and loan institutions, credit unions, insurance
companies, financial planners and various other financial institutions.

Our private label brokerage solutions are designed to provide our full
range of retail customer brokerage services through the financial
institution's website. The website screens have the financial institution's
look and feel, with a reference to Empire Financial Group, Inc. as the
provider for the services. Customers that use our services through these other
financial institutions have accounts directly with us and are treated as our
customers. We charge the customers of these financial institutions similar
fees we charge our own retail customers and pay these institutions fees based
on transaction volume generated by their retail customers.

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Our focus is to offer our services to smaller institutions that may lack the
resources to efficiently implement their own brokerage solution. Our services
benefit these institutions by allowing them to retain customers and their
customer credit balances, create additional revenue sources and increase
traffic to their own websites, potentially leading to additional business. We
have developed our own software systems to provide such services tailored to
the needs of these institutions while providing the same level and range of
products and services we offer to our own retail customers. We believe that
this strategy will allow us to grow rapidly and efficiently by gaining access
to the customer bases of other financial institutions.

Clearing Operations

Clearing operations include the confirmation, receipt, settlement, custody
and delivery functions involved in securities transactions. We added clearing
capabilities for our order execution business in 1996 and for our financial
brokerage services business in 1998. Prior to that, we cleared all of our
customer equity and option transactions through third-party clearing firms that
processed our trades, prepared transaction confirmations and acted as the
custodian for our customers' securities. The addition of clearing capabilities
allowed us to clear approximately 96% of our total trades during 1999 and to
realize significant cost savings that permit us to competitively price our
services. Performing our own clearing operations allows us to retain customer
free credit balances and securities for use in margin lending activities
subject to SEC and NASD rules. In August 1998, we entered into a three-year
agreement with SunGard Financial Systems, Inc. for the provision of computer
services to support order entry, order routing, securities processing, customer
statements, tax reporting, regulatory reporting and other services necessary to
the management of a brokerage clearing business.

The retail customer accounts we clear are carried on a fully disclosed basis
with our subsidiary, Advantage Trading Group, Inc. Our clients' securities
positions and credit balances carry $2,000,000 insurance coverage through
Lloyds of London that is supplemental to standard SIPC protection for clients'
accounts up to $500,000 subject to a limitation of $100,000 for claims for cash
balances. All customer credit balances are subject to immediate withdrawal from
our clearing firm, at the discretion of the customer.

Ancillary Retail Brokerage Services

We offer the following ancillary services in connection with our retail
brokerage services:

. Securities Borrowing. We borrow securities both to cover short sales and
to complete customer transactions in the event a customer fails to
deliver securities by the required settlement date. We collateralize such
borrowings by depositing cash or securities with the lender and receive a
rebate, in the case of cash collateral, or pay a fee calculated to yield
a negotiated rate of return. Securities borrowing transactions are
executed pursuant to written agreements with counterparties that require
the securities borrowed be marked to market on a daily basis and that
additional collateral be furnished in the event of changes in the market
value of the securities. The securities usually are marked to market on a
daily basis through the facilities of the various national clearing
organizations. We do not currently engage in securities lending, but may
do so in the future.

. Market Data and Financial Information. During trading hours, we
continually receive a direct feed of detailed quote data, market
information and news. Our retail customers can create their own personal
lists of stocks and options for quick access to current pricing
information. We provide our customers free access to delayed quotes,
including stocks, options, major market indices, most active issues and
largest gainers and losers for the major exchanges. Real-time quotes are
also available for a small fee. Upon placing an order, the customer is
provided with a real-time bid and ask quote, at no extra charge. We also
offer our customers a real-time quote service for $14.95 per month, which
entitles the customer to receive 250 real-time quotes per month, plus
$.05 for each additional real-time quote. Customers who purchase this
service also receive 100 real-time quotes with each trade placed through
us. Through our strategic alliances and content provider relationships,
we have expanded our services to include immediate access to breaking
news, charts, market commentary and analysis and company financial

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information. Our website, www.empirenow.com, provides comprehensive
investment research content as well as access to SEC filings of public
companies, among other features.

. Portfolio Tracking and Records Management. Customers have online access
to a listing of all their portfolio assets held with us, including data
on the date of purchase, cost basis, current price and current market
value. The system automatically calculates unrealized profits and losses
for each asset held. Information provided to our customers also includes
total short-term or long-term gain/loss and commissions paid. Detailed
account balance and transaction information includes cash and money fund
balances, buying power, net market portfolio value, dividends paid,
interest earned, deposits and withdrawals. Customers can also create
watchlists to include any number of stocks, options, mutual funds and
other financial investments a customer is interested in tracking. All
transaction and portfolio records are automatically updated to reflect
trading activity. Buy and sell orders placed when the markets are closed
are automatically submitted prior to the next day's market opening.
Online account holders receive electronic notification of order
execution, and all of our customers receive printed trade confirmations
and detailed monthly statements. We also provide for the transmittal of
proxy, annual report and tender offer materials to customers. We are
planning to offer our online customers electronic confirmations and are
planning to offer electronic statements.

. Cash Management Services. Customer payments received through the mail or
federal wire system are credited to customer accounts upon receipt. We
also provide cash management services to our customers. For example,
uninvested funds earn interest in a credit interest program or can be
invested in money market funds. In addition, we provide free checking
services and debit cards for our customer accounts through a commercial
bank. We are exploring the expansion of these services.

. Account Security. We use a combination of proprietary and industry
standard security measures to protect customers' assets. Customers are
assigned unique account numbers, user identifications and passwords that
must be used each time they log on to our system. We rely on encryption
and authentication technology to provide the security necessary to effect
the confidential exchange of information. We do not plan to share
customer data with third parties.

Business Expansion Initiatives

We plan to distinguish ourselves from our competitors and attract new
customers through our ongoing initiatives to expand our business. Our current
efforts include:

. Correspondent Clearing Services. In January 2000, we received regulatory
approval to provide clearing services for up to three unaffiliated broker
dealers. We have already been engaged by three unaffiliated broker
dealers to provide clearing services and are currently in the process of
establishing the necessary interfaces to commence clearing for these
broker dealers. We are seeking further regulatory approval to increase
the number of clearing service customers beyond three broker dealers. We
are developing online order execution services which will be integrated
with our clearing operations. We believe that providing online order
execution services combined with our clearing operations will strengthen
our existing relationships with independent broker dealers, attract
additional broker dealer clients seeking low cost, online order execution
and clearing services and provide us with an additional revenue source.

. Private Label Brokerage Solutions. In February 2000, we initiated a
direct marketing effort in connection with our private label brokerage
solutions. We are currently providing private label brokerage services
for two financial institutions. Our current efforts to expand our private
label customer base include direct marketing to web-enabled banks and
banks that do not offer brokerage services to their customers. We are
also meeting with various banking trade organizations and are formulating
a strategic marketing plan targeting domestic and international financial
institutions. We have also engaged an independent consulting and
marketing firm to further our marketing efforts in this area.

. Investment Advisory Services. In July 2000, our subsidiary, Empire
Investment Advisors, Inc., began to offer fee-based investment advisory
services to our customers, which will assist us in establishing

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more comprehensive relationships with our customers. The investment
advisory services we provide include investment portfolio planning with
recommendations on overall portfolio allocations for different types of
investments, based on customers' long term needs, and recommendations
regarding mutual fund and bond investments. We do not provide
recommendations regarding trades of particular equity securities. We have
registered Empire Investment Advisors, Inc. as an investment adviser in
41 states and under the Investment Adviser's Act of 1940, and have
applications pending in the remaining states.

. Strategic Marketing Efforts. We plan to increase our brand recognition to
attract new retail customers and broker dealers. We are developing a
comprehensive marketing plan to attract more clients and broker dealers
to clear their trades through us, as well as build market awareness,
educate the investing public about our services and broaden and enhance
brand name recognition and loyalty. We are actively pursuing additional
alliances with various companies to increase trading volume and
operational efficiencies and to further enhance name recognition. In
addition, we regularly examine new ways to provide additional products
and services to our current clients, as well as new clients, including,
for example, banks and other financial institutions seeking to provide
expanded services to their customers. We also intend to expand our market
share through, among other things, television, direct-response
advertising, advertising on our own and other websites, a public
relations program and live seminars.

. www.myempirenow.com. We are in the early stages of developing a financial
portal, www.myempirenow.com, which is targeted to be available to our
customers during 2001. A portal site is an Internet site that provides
direct access to a greater variety of resources on the Internet than a
website. Our portal site, www.myempirenow.com, will provide access to a
full range of financial and investment information and services,
including customer account information, order entry and execution, as
well as online training and investor tools and news. We plan to offer
through our portal access to online banking and loan processing,
insurance and other financial products and services provided by banking,
insurance and other financial institutions with which we develop
strategic relationships in the future. We also plan to offer through our
portal site audiovisual presentations to customers, including online
seminars conducted by investment managers and industry analysts for
investor training and general investment information. We plan to
diversify and increase our revenues by gaining access to a wider customer
base and developing revenue sharing relationships with other businesses
through cross-marketing opportunities created by our portal presence.

Our Technology

We believe that our proprietary systems and software allow us to maintain
low fixed processing and labor costs in both our order execution and retail
brokerage businesses. By developing proprietary software applications, we are
able to customize and better control our operations and reduce our dependence
on third-party software vendors. Our proprietary software applications include
our customized trade order and risk management system, which we refer to as the
"e-blotter." This system allows real-time analysis of our trading positions in
individual securities and reduces our potential exposure to losses from trade
volatility. We have also developed and expect to implement a web-based order
system that will directly link our broker dealer customers to our order
execution services employees. This system allows us to process trade
transactions more effectively by maximizing the use of our execution and
clearing services in trade orders we receive.

We utilize local consultants and also outsource software development
projects to contractors in India for rapid application development at reduced
rates. We have entered into independent contractor arrangements with these
individuals on an as-needed basis to assist with programming and developing
proprietary technologies.

Competition

We provide order execution services for equity securities to approximately
80 independent broker dealers. The market for these services is rapidly
evolving and intensely competitive. We expect competition to continue to
intensify in the future. We compete primarily with wholesale, national and
regional broker dealers and trade

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execution firms such as Knight/Trimark Group, as well as electronic
communications networks, which provide a direct trading venue to institutional
and retail investors. We compete primarily on the basis of execution quality,
customer service and technology.

The market for brokerage services, particularly over the Internet, is
rapidly expanding and extremely competitive. This competition is expected to
continue to grow in the future. Major competitors include Charles Schwab & Co.
Inc., E*Trade Group, Inc., TD Waterhouse Group, Inc., Ameritrade Holding
Corporation and Fidelity Brokerage Services, Inc., among many others. In
addition, we compete with financial institutions and investing services that
offer online brokerage services. We believe the major competitive factors for
brokerage services include cost, service, quality, ease of use and customer
satisfaction.

Some of the strongest competition comes from companies who have greater
marketing, financial and technical resources than ours. These competitors can
offer a wider range of services and financial products than we can at the
current time. Some of our competitors also have greater name recognition and
more extensive client bases. These competitors may be able to respond more
quickly to new or changing opportunities, technologies and client requirements
and may be able to undertake more extensive promotional activities, offer more
attractive terms to clients and adopt more aggressive pricing policies.
Moreover, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties or may
consolidate to enhance their services and products. We expect that new
competitors or alliances among competitors will emerge and may acquire
significant market share.

Government Regulation

Broker Dealer Regulation

The securities industry is subject to extensive regulation under federal and
state law. The SEC is the federal agency responsible for administering the
federal securities laws. In general, broker dealers are required to register
with the SEC under the Securities Exchange Act of 1934 or the Exchange Act. Our
subsidiaries Empire Financial Group, Inc. and Advantage Trading Group, Inc. are
broker dealers registered with the SEC. Under the Exchange Act, every
registered broker dealer that does business with the public is required to be a
member of and is subject to the rules of the NASD. The NASD has established
conduct rules for all securities transactions among broker dealers and private
investors, trading rules for the over-the-counter markets and operational rules
for its member firms. The NASD conducts examinations of member firms,
investigates possible violations of the federal securities laws and its own
rules, and conducts disciplinary proceedings involving member firms and
associated individuals. The NASD administers qualification testing for all
securities principals and registered representatives for its own account and on
behalf of the state securities authorities.

We are also subject to regulation under state law. Empire Financial Group,
Inc. and Advantage Trading Group, Inc. are currently registered as broker
dealers in all 50 states and in Puerto Rico. An amendment to the federal
securities laws prohibits the states from imposing substantive requirements on
broker dealers which exceed those imposed under federal law. This amendment,
however, does not preclude the states from imposing registration requirements
on broker dealers that operate within their jurisdiction or from sanctioning
these broker dealers for engaging in misconduct.

Net Capital Requirements; Liquidity

As registered broker dealers and members of the NASD, Empire Financial
Group, Inc. and Advantage Trading Group, Inc. are subject to the Net Capital
Rule. The Net Capital Rule, which specifies minimum net capital requirements
for registered broker dealers, is designed to measure the general financial
integrity and liquidity of a broker dealer and requires that at least a minimum
part of its assets be kept in relatively liquid form. In general, net capital
is defined as net worth (assets minus liabilities), plus qualifying
subordinated borrowings and certain discretionary liabilities, and less certain
mandatory deductions that result from

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<PAGE>

excluding assets that are not readily convertible into cash and from valuing
conservatively certain other assets. Among these deductions are adjustments
which reflect the possibility of a decline in the market value of an asset
prior to disposition.

Failure to maintain the required net capital may subject a firm to
suspension or revocation of registration by the SEC and suspension or expulsion
by the NASD and other regulatory bodies and ultimately could require the firm's
liquidation. The Net Capital Rule prohibits payments of dividends, redemption
of stock, the prepayment of subordinated indebtedness and the making of any
unsecured advance or loan to a shareholder, employee or affiliate, if the
payment would reduce the firm's net capital below a certain level.

The Net Capital Rule also provides that the SEC may restrict for up to 20
business days any withdrawal of equity capital, or unsecured loans or advances
to shareholders, employees or affiliates if the capital withdrawal, together
with all other net capital withdrawals during a 30-day period, exceeds 30% of
excess net capital and the SEC concludes that the capital withdrawal may be
detrimental to the financial integrity of the broker dealer. In addition, the
Net Capital Rule provides that the total outstanding principal amount of
certain of a broker dealer's subordinated indebtedness, the proceeds of which
are included in its net capital, may not exceed 70% of the sum of the
outstanding principal amount of all subordinated indebtedness included in net
capital, par or stated value of capital stock, paid in capital in excess of
par, retained earnings and other capital accounts for a period in excess of 90
days.

Empire Financial Group, Inc. and Advantage Trading Group, Inc. are members
of SIPC which provides, in the event of the liquidation of a broker dealer,
protection for clients' accounts up to $500,000, subject to a limitation of
$100,000 for claims for cash balances. We also carry $2,000,000 additional
insurance through Lloyds of London on client accounts that we clear.

Additional Regulation

Due to the increasing popularity and use of the Internet and other online
services, various regulatory authorities are considering laws and/or
regulations with respect to the Internet or other online services covering
issues such as user privacy, pricing, copyrights and quality of services. The
growth and development of the market for online commerce may prompt more
stringent consumer protection laws that may impose additional burdens on those
companies conducting business online. Moreover, the recent increase in the
number of complaints by online traders could lead to more stringent regulations
of online trading firms and their practices by the SEC, NASD and other
regulatory agencies.

Furthermore, the applicability to the Internet and other online services of
existing laws in various jurisdictions governing issues such as property
ownership, sales and other taxes and personal privacy is uncertain and may take
years to resolve. As our services are available over the Internet in multiple
states and foreign countries, and as we have numerous clients residing in these
states and foreign countries, these jurisdictions may claim that we are
required to qualify to do business as a foreign corporation in each such state
and foreign country.

Employees

As of June 30, 2000, we had 108 full-time employees, of which 51 are
registered representatives. We have 33 people in management and operations and
75 providing order execution services and retail brokerage services to our
customers. No employee is covered by a collective bargaining agreement or is
represented by a labor union. We consider our employee relations to be
excellent.

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Facilities

Our principal executive offices consist of 11,800 square feet of a 19,400
square foot facility located in Longwood, Florida. This facility is owned by
G&G Holdings, Inc., an entity owned by Kevin M. Gagne and Richard L. Goble. Our
subsidiaries Empire Financial Group and Advantage Trading Group have each
entered into leases with G&G Holdings, Inc. which expire on May 31, 2009 and
provide for an average rent of approximately $24,000 per month, plus sales and
property taxes. We also have a branch office in Delray Beach, Florida, and a
branch office in Cocoa Beach, Florida. We do not have lease agreements for our
branch offices. The rent for these facilities is paid by the independent
brokers who are located there.

Legal Proceedings

We are not a party to any material legal proceedings.

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DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names, ages and positions held with
respect to each director and executive officer:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Richard L. Goble................... 39 Co-Chief Executive Officer, Co-President
and Co-Chairman of the Board
Kevin M. Gagne..................... 40 Co-Chief Executive Officer, Co-President
and Co-Chairman of the Board
Donald A. Wojnowski Jr. ........... 40 Vice President Business Development
Patrick E. Rodgers................. 60 Chief Financial Officer
Craig Macnab....................... 44 Director Appointee
Gregory M. Misiak.................. 53 Director Appointee
John J. Tsucalas................... 59 Director Appointee
</TABLE>

Richard L. Goble is our co-chairman of the board, co-chief executive officer
and co-president. He is also the chief executive officer of Empire Financial
Group, Inc., which he co-founded in 1990, and president of Advantage Trading
Group, Inc. Mr. Goble is responsible for the creation, development and
management of our execution and clearing operations. Mr. Goble was formerly a
stock broker with Drexel Burnham Lambert and was president of Metta Financial
Group.

Kevin M. Gagne is our co-chairman of the board, co-chief executive officer
and co-president. He is also the president of Empire Financial Group, Inc.,
which he co-founded in 1990, and the chief executive officer of Advantage
Trading Group, Inc. Mr. Gagne was responsible for the creation of Empire's
online trading operations and development of our institutional operations. Mr.
Gagne was formerly employed by American Express Financial Services as well as
Thompson McKinnon Securities.

Donald A. Wojnowski Jr. is our vice president business development and has
entered into a formal employment agreement effective upon completion of this
offering. Mr. Wojnowski joined Empire Financial Group, Inc. in March 1993 as an
independent broker and has been the managing principal of our Cocoa Beach,
Florida branch since March 1993. From 1987 to March 1993, Mr. Wojnowski was
vice president of investments with Dean Witter Reynolds, Inc. Mr. Wojnowski has
served as a director of Eckler Industries, Inc. and Smart Choice Automotive
Group, Inc., both publicly traded companies.

Patrick E. Rodgers joined us in December 1999 and is our chief financial
officer. From September 1998 to December 1999, Mr. Rodgers served as vice
president-finance and administration and chief financial officer for
PowerAdz.Com, LLC, an Internet infrastructure provider and aggregator of local
content for publishers. From November 1997 to September 1998, Mr. Rodgers was a
self-employed financial and business consultant for manufacturing companies and
service organizations. From June 1995 to November 1997, he served as executive
vice president-finance and chief financial officer for The Med-Design
Corporation, a manufacturer of safety medical devices. From April 1994 to June
1995, Mr. Rodgers served as chief financial officer of Saratoga Beverage Group,
Inc., a manufacturer of bottled water. Mr. Rodgers received a B.S. degree in
accounting from Rutgers University and is a certified public accountant.

Craig Macnab will become a director upon completion of the offering. Mr.
Macnab is currently the Chief Executive Officer and a director of JDN Realty
Corp., a real estate development and asset management company and Unidial
Communications, an integrated telecommunications provider. Mr. Macnab was
previously the president of Tandem Capital, a venture capital firm. From 1993
to 1996, Mr. Macnab was a general partner of Macneil Advisors, which was the
general partner of three partnerships investing in equity securities. Mr.
Macnab is also a director of Environmental Tectonics Corp., a manufacturer of
aircrew training systems and public entertainment systems.

38
<PAGE>

Gregory M. Misiak will become a director upon completion of the offering.
Mr. Misiak has been providing consulting and venture capital services to
various Internet startup companies since 1998. From 1992 to 1998, Mr. Misiak
was president of Litton Systems, Inc.'s Laser Systems Division, which is
engaged in the manufacture of laser systems.

John J. Tsucalas will become a director upon completion of the offering.
Since February 2000, Mr. Tsucalas has been chief executive officer and chief
financial officer of Littlefield Adams & Company, a company engaged in the sale
of men's apparel. He held these positions on an interim basis from July 1999 to
February 2000. From 1995 to July 1999, Mr. Tsucalas operated his own corporate
financial services company, John James Tsucalas & Co. He is a chartered
financial analyst.

Other Key Employees

George R. Cupples has been our chief compliance officer and controller since
August 1999. From 1990 to 1999, Mr. Cupples worked for the SEC as an examiner
of broker dealers for compliance with various federal and NASD rules and
regulations. His activities also included reviewing litigation involving broker
dealers in enforcement proceedings. From 1982 to 1990, he worked for the NASD
examining broker dealers for compliance with net capital requirements, customer
protection, sales practices and supervisory procedures.

William C. Fraley has been a vice president of our subsidiary Empire
Financial Group, Inc. since February 1993. He is responsible for sales and
servicing of our clients. Mr. Fraley is a Series 4, 7 and 63 licensed
registered representative.

Steven P. Sitkowski joined our subsidiary Empire Financial Group, Inc. as
its national sales manager, and our subsidiary Empire Investment Advisors as
its lead manager in November 1999. From 1995 to 1999, Mr. Sitkowski was a
national lecturer in the field of personal finance.

Other Information

There are no family relationships between any of our executive officers, key
employees and directors.

Directors hold their offices until the next annual meeting of our
shareholders and until their successors have been duly elected and qualified or
their earlier resignation, removal from office or death. There are currently no
committees of the board of directors, but we plan to establish audit and
compensation committees upon completion of this offering. The audit committee
will be composed of Messrs. Macnab, Misiak and Tsucalas. The compensation
committee will be composed of Messrs. Gagne, Goble, Macnab and Misiak.

Officers serve at the pleasure of the board of directors (except for Messrs.
Goble, Gagne and Wojnowski who each have entered into employment agreement with
us that have initial terms of approximately five, five and four years,
respectively) and until the first meeting of the board of directors following
the next annual meeting of our shareholders and until their successors have
been chosen and qualified.

Director Compensation

We do not currently pay our directors any fees for attending board meetings.
We anticipate that following this offering we will pay non-employee directors
an annual retainer of $5,000, in addition to $500 per meeting, plus travel
reimbursements. In addition, each non-employee director will receive stock
options covering 10,000 shares of our common stock at an exercise price equal
to the initial offering price.

Executive Compensation

The following table summarizes all compensation paid by us during the last
three completed fiscal years for our co-chief executive officers and each other
executive officer whose annual compensation exceeded $100,000 during the year
ended December 31, 1999.

39
<PAGE>

Summary Compensation Table

<TABLE>
<CAPTION>
Summary Compensation Table
-------------------------------------
Annual
Compensation Other Annual
Name and Principal Position Fiscal Year Salary Compensation
--------------------------- ----------- ------------ ------------
<S> <C> <C> <C>
Richard L. Goble.......................... 1999 $302,160 $700,000
Co-Chief Executive Officer and 1998 254,879 566,681
Co-Chairman of the Board 1997 416,846 346,900

Kevin M. Gagne............................ 1999 $302,160 $700,000
Co-Chief Executive Officer and 1998 254,879 566,681
Co-Chairman of the Board 1997 416,846 346,900
</TABLE>

"Other Annual Compensation" consists of distributions to these individuals
as shareholders to cover their subchapter S tax liability.

Employment Agreements

We have entered into employment agreements, effective as of the date of this
prospectus, with each of Messrs. Gagne and Goble which provide that each of
them shall serve as our co-chairman of the board, co-chief executive officer
and co-president. Each of these agreements provides for annual base
compensation of $375,000. In addition, each of these agreements provides
incentive and other compensation and benefits to the executive. These
employment agreements have an initial term expiring on December 31, 2005.
Beginning on January 1, 2003, and each following January 1, the term of each
agreement will be automatically extended for one additional year unless we give
written notice of termination to the employee not later than at least six
months prior to that date. As a result, if we elect to terminate either of
these agreements we will be obligated to employ the employee for at least two
and a half years after making this election to terminate. These agreements may
also be terminated by us after a conviction of (and such conviction is
sustained on all appeals) or the entry of a plea of guilty by the employee to a
felony, if the employee materially breaches the agreement, if the employee
commits any act or omission constituting willful misconduct, gross negligence,
fraud, misappropriation, embezzlement or competitive business activities which
we believe could cause us material harm or upon the employee's disability as
defined in the employment agreement. Each of these employment agreements
contains confidentiality provisions and also noncompetition provisions during
the term of the agreement and for two years thereafter.

Messrs. Gagne and Goble each may terminate his agreement at any time upon 90
days prior written notice. If he terminates his agreement because he is
assigned duties that are materially inconsistent with his current position,
because of our material breach of his agreement or as a result of a change in
control, then we must compensate the employee for the remainder of the term. In
the event we terminate the agreement because of the employee's disability, we
must pay that employee his base salary until the earlier of nine months after
his termination or the date on which his long term disability insurance
payments begin.

We have also entered into an employment agreement, effective as of the date
of this prospectus, with Donald Wojnowski Jr., which provides that he shall
serve as vice president business development. His agreement provides for annual
base compensation of $150,000 and also provides incentive and other
compensation and benefits to him. He also will be granted stock options under
the 2000 Stock Option Plan upon completion of this offering covering 200,000
shares of our common stock at an exercise price equal to the initial public
offering price. This employment agreement has an initial term expiring on
December 31, 2004, and automatically extends until either party provides 90
days prior written notice of termination. We may terminate the employment
agreement for cause, which means a material breach of the employment agreement
that is not cured within 10 days of receipt of notice from us, indictment for a
criminal felony or a material breach of Mr. Wojnowski's representation that his
performance under the employment agreement does not violate any other agreement
under which he is bound. We also can terminate the employment agreement upon
his disability as defined in the employment agreement. Either party may
terminate the employment agreement upon 90 days prior written notice. In the
event we terminate his employment without cause, we will pay Mr. Wojnowski his
base salary for the then remaining term of the agreement. If Mr. Wojnowski
terminates the

40
<PAGE>

agreement for good reason, which means a termination resulting from our
material breach or otherwise occurring within three months of a change in
control as defined in the employment agreement, we will pay him his base salary
for the remaining term of the agreement. This employment agreement contains
confidentiality provisions and also noncompetition provisions during the term
of the agreement and for three years thereafter.

Indemnification Agreements

We have entered into indemnification agreements with each of our directors
and executive officers. Under these agreements, we have agreed to indemnify
them against certain liabilities and expenses in proceedings other than those
we bring against them that they become involved in because of their status as a
director, officer or agent of ours. In order to be entitled to indemnification,
they must have acted in good faith and in a manner they reasonably believed to
be in or not opposed to our best interests and, with respect to any criminal
proceedings, had no reasonable cause to believe their conduct was unlawful.
With respect to any action brought by us or in our right, a director or
executive officer will also be indemnified, to the extent not prohibited by
law, for liabilities and expenses they reasonably incur if a court determines
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to our best interests. Under the terms of the agreement, no legal
action can be brought by us or on our behalf against a former officer or
director more than two years after the officer or director has ceased serving
us in that capacity, if the action would give rise to a claim for
indemnification.

Option Grants in Last Fiscal Year

There were no options granted in 1999 to any of our executive officers.

Options Exercised in Last Fiscal Year and Fiscal Year End Option Values

There were no options exercised in 1999 or held as of December 31, 1999 by
any of our executive officers.

Stock Option Plan

We have reserved 1,000,000 shares of common stock for issuance upon exercise
of options granted under our 2000 Stock Option Plan. The 2000 Plan is designed
to serve as an incentive for retaining qualified and competent directors,
employees, consultants and independent contractors. Options will be granted to
certain persons in proportion to their contributions to our overall success as
determined by the board of directors and our compensation committee in their
sole discretion.

Our board of directors, or a committee thereof, administers and interprets
the 2000 Plan and is authorized to grant options to all eligible employees,
including our directors and executive officers (whether current or former
employees), as well as consultants and independent contractors. The 2000 Plan
provides for the granting of both "incentive stock options" (as defined in
Section 422 of the Internal Revenue Code of 1986, as amended) and nonstatutory
stock options. Incentive stock options may only be granted, however, to
employees. Options can be granted under the 2000 Plan on the terms and at the
prices determined by the board of directors, or a committee thereof, except
that the per share exercise price of incentive stock options granted under the
2000 Plan will not be less than the fair market value of the common stock on
the date of grant and, in the case of an incentive stock option granted to a
10% shareholder, the per share exercise price will not be less than 110% of the
fair market value as defined in the 2000 Plan.

Options under the 2000 Plan that would otherwise qualify as incentive stock
options will not be treated as incentive stock options to the extent that the
aggregate fair market value of the shares covered by the incentive stock
options which are exercisable for the first time by any individual during any
calendar year exceeds $100,000.

Options granted under the 2000 Plan will be exercisable after the period or
periods specified in the option agreement. Options granted under the 2000 Plan
are exercisable no later than ten years from the date of the grant. Incentive
stock options are not transferable. Nonstatutory stock options may be
transferred by the optionee by will or the laws of descent and distribution.
Adjustments in the number of shares subject to options granted under the 2000
Plan can be made by the board of directors or the appropriate committee in the
event of a stock dividend or recapitalization resulting in a stock split-up,
combination or exchange of shares.

41
<PAGE>

Effective as of the date of this prospectus, we have granted options under
the 2000 Plan to purchase an aggregate of 810,200 shares of common stock. These
options will be exercisable at a price equal to the initial public offering
price per share of the shares of common stock offered and will expire no later
than ten years from the date of grant. In addition, exercise of the options is
contingent on the optionee's continued employment by us.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of
our common stock as of the date of this prospectus, by (1) each person who owns
beneficially more than 5% of our outstanding common stock, (2) each of our
directors, (3) each of our executive officers and (4) all directors and
executive officers as a group.

<TABLE>
<CAPTION>
Percent of Class
-----------------
Amount and Nature of Before After
Name and Address of Beneficial Owner Beneficial Ownership Offering Offering
------------------------------------ -------------------- -------- --------
<S> <C> <C> <C>
Richard L. Goble....................... 1,537,500 50% 28.1%
Kevin M. Gagne......................... 1,537,500(1) 50 28.1
Craig Macnab........................... -- -- --
Gregory M. Misiak...................... -- -- --
Patrick E. Rodgers..................... -- -- --
John J. Tsucalas....................... -- -- --
Donald A. Wojnowski Jr. ............... -- -- --
--------- ----- ----
All directors and executive officers as
a group (7 persons)................... 3,075,000 100.0% 56.2%
========= ===== ====
</TABLE>

(1) Held by Kevin M. Gagne as trustee of the Gagne First Revocable Trust.

The business address of all directors and executive officers is c/o Empire
Financial Holding Company, Inc., 1385 West State Road 434, Longwood, Florida
32750.

42
<PAGE>

CERTAIN TRANSACTIONS

We currently lease the facilities where our principal offices are located
from G&G Holdings, Inc., a corporation owned by our principal shareholders, co-
chairmen of the board and co-chief executive officers, Messrs. Gagne and Goble.
The lease expires on May 31, 2009 and provides for average rent of
approximately $24,000 per month, plus sales and property taxes. Our Cocoa
Beach, Florida branch facility is owned by Donald A. Wojnowski, our vice
president business development. Rent for this facility is paid by the
independent brokers who are located at this facility.

Prior to the date of this prospectus, we acquired all of the outstanding
capital stock of each of Advantage Trading Group, Inc., Empire Financial Group,
Inc. and Empire Investment Advisors, Inc. from Messrs. Gagne and Goble in
exchange for a total of 3,075,000 shares of our common stock, issued in equal
amounts to Messrs. Gagne and Goble. We have also agreed to grant to Mr.
Wojnowski, as of the date of this prospectus, options to purchase 100,000
shares of our common stock that become exercisable in January 2002 at an
exercise price equal to the offering price and options to purchase an
additional 100,000 shares of our common stock that vest over a five-year period
at an exercise price equal to the offering price, none of which is exercisable
before January 2002. We have agreed to purchase Mr. Wojnowski's retail
brokerage account relationships for $200,000, effective as of the date of this
prospectus. We have also agreed to pay Mr. Wojnowski a finder's fee equal to
one percent of the net proceeds of this offering which we anticipate will be
approximately $258,000.

From time to time we paid dividends to our existing shareholders, Messrs.
Gagne and Goble, during 1998, 1999 and the period from January 1, 2000 to the
date of this prospectus in the amounts of $304,241, $2,247,574 and $1,953,878,
respectively. We are currently an S corporation for federal tax purposes, and
our taxable income is a direct liability of our shareholders. We will
automatically become a C corporation upon completion of this offering. As a
final payment to Messrs. Gagne and Goble to assist them in the payment of their
estimated income tax liability related to our 2000 earnings prior to the
offering, we have agreed to make a final distribution to them no later than
April 15, 2001 equal to approximately 40.5% of our net income from January 1,
2000 through the completion of the offering. For the six months ended June 30,
2000, 40.5% of our earnings equals approximately $1,173,000.

We intend that following completion of this offering, all transactions
between us and our directors, executive officers and principal shareholders
will be on terms no less favorable than could be obtained from unaffiliated
third parties and will be approved by a majority of our independent directors.

DESCRIPTION OF CAPITAL STOCK

After this offering, our authorized capital stock will consist of
100,000,000 shares of common stock, par value $.01 per share, 5,475,000 shares
of which will be issued and outstanding, and 1,000,000 shares of preferred
stock, par value $.01 per share, no shares of which will be issued and
outstanding.

Common Stock

Subject to the rights of the holders of any preferred stock that may be
outstanding and that may have preferential dividend rights, each holder of our
common stock on the applicable record date is entitled to receive the dividends
declared by our board of directors out of funds legally available, and, in the
event of liquidation, to share pro rata in any distribution of our assets after
payment or providing for the payment of liabilities and the liquidation
preference of any of our outstanding preferred stock.

Each holder of our common stock is entitled to one vote for each share held
of record on the applicable record date on all matters presented to a vote of
shareholders. Holders of our common stock have no

43
<PAGE>

cumulative voting rights or preemptive rights to purchase or subscribe for any
stock or other securities, and there are no conversion rights or redemption or
sinking fund provisions with respect to this stock. All outstanding shares of
our common stock are, and the shares of our common stock offered will be, when
issued, fully paid and nonassessable.

Preferred Stock

Our board of directors has the authority to issue 1,000,000 shares of
preferred stock in one or more series and to fix, by resolution, conditional,
full, limited or no voting powers, and the designations, preferences and
relative, participating, optional or other special rights, if any, and the
qualifications, limitations or restrictions thereof, if any, including the
number of shares in the series (which our board of directors may increase or
decrease as permitted by Florida law), liquidation preferences, dividend rates,
conversion or exchange rights, redemption provisions of the shares constituting
any series and such other special rights and protective provisions with respect
to any class or series as our board of directors may deem advisable without any
further vote or action by the shareholders. Any shares of our preferred stock
so issued could have priority over the common stock with respect to dividend or
liquidation rights or both and could have voting and other rights of
shareholders.

One of the effects of the existence of our unissued preferred stock and
large quantity of authorized but unissued common stock is to render it more
difficult and discourage an attempt to obtain control of us through a merger,
tender offer, proxy contest or otherwise. This could result in delay or
prevention of a change in control even if some of our shareholders believe that
a change in control is in their best interests. We have no present plans to
issue any shares of our preferred stock.

Anti-takeover Effects of Bylaws

General

Certain provisions of our bylaws may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt,
including attempts that might result in a premium being paid over the market
price for the shares held by shareholders. The following provisions may not be
amended in our bylaws without the affirmative vote of a majority of the total
number of directors then constituting our board of directors or by the holders
of at least two-thirds of our outstanding shares of common stock.

Special Meetings of Shareholders

Our bylaws provide that special meetings of our shareholders may be called
only by our co-chairmen of the board or, if neither of the co-chairmen of the
board is present or able, by our co-presidents, or by our co-secretaries
pursuant to a resolution adopted by a majority of our board of directors.

Advance Notice Requirements for Shareholder Proposals and Director Nominations

Our bylaws provide that shareholders seeking to bring business before an
annual meeting of shareholders, or to nominate candidates for election as
directors at an annual or special meeting of shareholders, must provide timely
notice in writing. To be timely, a shareholder's notice must be delivered to
our secretary at our principal executive offices not less than 60 days nor more
than 90 days prior to the first anniversary of the date on which we first
mailed our proxy materials to shareholders for the preceding year's annual
meeting of shareholders; provided, however, that in the event that if the date
of the annual meeting is more than 30 days before or more than 30 days after
the anniversary of the preceding year's annual meeting of shareholders, notice
by the shareholder must be delivered not later than the close of business on
the later of the 90th day prior to such meeting or the 10th day following the
day on which public announcements of the date of such meeting is first made.
The bylaws also specify certain requirements as to the content and form of a
shareholder's notice. These provisions may preclude shareholders from bringing
matters before the shareholders at an annual or special meeting or from making
nominations for directors at an annual or special meeting.

44
<PAGE>

Amendment of Bylaws

The bylaws may only be altered, amended or repealed by the majority vote of
the board of directors or the affirmative vote of the holders of at least two-
thirds of our outstanding shares of common stock.

Anti-takeover Effects of Florida Law

Florida has enacted legislation that may deter or frustrate takeovers of
Florida corporations. The Florida Control Share Act generally provides that
shares acquired in a "control share acquisition" will not possess any voting
rights unless such voting rights are approved by a majority of the
corporation's disinterested shareholders. A "control share acquisition" is an
acquisition, directly or indirectly, by any person of ownership of, or the
power to direct the exercise of voting power with respect to, issued and
outstanding "control shares" of a publicly held Florida corporation. "Control
shares" are shares, which, except for the Florida Control Share Act, would have
voting power that, when added to all other shares owned by a person or in
respect to which such person may exercise or direct the exercise of voting
power, would entitle such person, immediately after acquisition of such shares,
directly or indirectly, alone or as a part of a group, to exercise or direct
the exercise of voting power in the election of directors within any of the
following ranges: (1) at least 20% but less than 33 1/3% of all voting power;
(2) at least 33 1/3% but less than a majority of all voting power; or (3) a
majority or more of all voting power.

The Florida Affiliated Transactions Act generally requires supermajority
approval by disinterested shareholders of certain specified transactions
between a public corporation and holders of more than 10% of the outstanding
voting shares of the corporation or their affiliates.

At the present time we have opted out of both of these statutes as permitted
thereunder.

Additionally, Florida law and our articles and bylaws also authorize us to
indemnify our directors, officers, employees and agents. In addition, our
articles of incorporation and Florida law presently limit the personal
liability of corporate directors for monetary damages, except where the
directors (1) breach their fiduciary duties, and (2) such breach constitutes or
includes certain violations of criminal law, a transaction from which the
directors derived an improper personal benefit, certain unlawful distributions
or certain other reckless, wanton or willful acts or misconduct.

Transfer Agent

The transfer agent for our common stock is Continental Stock Transfer and
Trust Company, New York, New York.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, we will have 5,475,000 shares of common
stock outstanding. Of these shares, the 2,400,000 shares of common stock sold
in the offering will be freely tradable without restriction under the
Securities Act. The remaining 3,075,000 shares of common stock will be
"restricted securities" as defined in Rule 144 and will become eligible for
public sale subject to the restrictions of Rule 144 commencing in September
2001.

In general, under Rule 144, if a period of at least one year has elapsed
since the later of the date the "restricted shares" (as that phrase is defined
in Rule 144) were acquired from us and the date they were acquired from an
"affiliate" of ours, as that term is defined in Rule 144 (an "Affiliate"), then
the holder of the restricted shares (including an Affiliate) is entitled to
sell a number of shares within any three-month period that does not exceed the
greater of 1% of the then outstanding shares of the common stock or the average
weekly reported volume of trading of the common stock on The Nasdaq National
Market during the four calendar weeks preceding the sale. The holder may only
sell the shares through unsolicited brokers'

45
<PAGE>

transactions or directly to market makers. Sales under Rule 144 are also
subject to certain requirements pertaining to the manner of the sales, notices
of the sales and the availability of current public information concerning us.
An Affiliate may sell shares not constituting restricted shares in accordance
with the foregoing volume limitations and other requirements but without regard
to the one-year holding period.

Under Rule 144(k), if a period of at least two years has elapsed between the
later of the date restricted shares were acquired from us and the date they
were acquired from an Affiliate, as applicable, a holder of these restricted
shares who is not an Affiliate at the time of the sale and has not been an
Affiliate for at least three months prior to the sale would be entitled to sell
the shares immediately without regard to the volume limitations and other
conditions described above.

Our directors, executive officers and shareholders who own an aggregate of
3,075,000 shares of common stock (representing all of the issued and
outstanding shares prior to this offering) have entered into written agreements
not to sell or otherwise dispose of the shares of common stock beneficially
owned by them for 180 days after the date of this prospectus without the
consent of Wachovia Securities.

We also plan to issue to certain of our employees and consultants on the
date of this prospectus options to purchase 810,200 shares of our common stock
under our 2000 Plan. These options will have an exercise price equal to the
offering price and none of the options will be exercisable until January 2002.
However, the shares issuable upon exercise will not be freely tradeable until
we file a registration statement covering these shares.

We can make no predictions as to the effect, if any, that sales of shares or
the availability of shares for sale will have on the market price prevailing
from time to time. Nevertheless, sales of significant amounts of the common
stock in the public market, or the perception that these sales may occur, could
adversely affect prevailing market prices.

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement among us
and the underwriters named below, who are represented by Wachovia Securities,
Inc., each underwriter has severally agreed to purchase from us, and we have
agreed to sell to the several underwriters, the number of shares of common
stock set forth opposite their names below:

<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ---------
<S> <C>
Wachovia Securities, Inc. ...................
Keefe, Bruyette & Woods, Inc. ...............
Empire Financial Group, Inc. ................
---------
Total...................................... 2,400,000
=========
</TABLE>

The underwriting agreement provides that the underwriters' obligations are
subject to approval of certain legal matters by counsel and to various other
conditions customary in a firm commitment underwritten public offering. The
underwriters are committed to purchase and pay for all the shares offered by
this prospectus, other than those covered by the over-allotment option
described below, if any are purchased.

46
<PAGE>

The underwriters propose to offer the shares of common stock directly to the
public at the public offering price listed on the cover page of this prospectus
and to selected securities dealers at that price less a concession not in
excess of $ per share. The underwriters may allow, and the selected dealers
may reallow, a concession not in excess of $ per share to other brokers and
dealers. We expect that the shares of common stock will be ready for delivery
on or about , 2000. After the shares of common stock are released for
sale, the offering price and other selling terms may change.

We have granted the underwriters an option, exercisable within 30 days after
the date of this prospectus, to purchase up to 360,000 additional shares of
common stock to cover over-allotments, if any, at the public offering price
listed on the cover page of this prospectus, less the underwriting discount.
The underwriters may purchase these shares only to cover over-allotments made
in connection with this offering. To the extent that the underwriters exercise
the option, each underwriter will become obligated, subject to certain
conditions, to purchase the additional shares in approximately the same
proportion as set forth in the preceding table.

The following table summarizes the per share and total underwriting discount
we will pay to the underwriters:

<TABLE>
<CAPTION>
Total
-----------------------------------------
Without Exercise of With Full Exercise of
Per Share Over-Allotment Over-Allotment
--------- ------------------- ---------------------
<S> <C> <C>
$ ............................... $ $
</TABLE>

We have agreed to pay Donald A. Wojnowski Jr., our vice president business
development, a finder's fee equal to approximately $258,000. We also have
agreed to purchase Mr. Wojnowski's retail brokerage account relationships for
$200,000. These amounts may be deemed to be part of the underwriters'
compensation under the rules of the NASD.

In September 1999, we paid $100,000 to LM Capital Securities, Inc. as an
advance against expenses in connection with the offering. LM Capital is no
longer acting as a representative of the underwriters, however, LM Capital will
participate in the offering on the same terms and conditions as the other
underwriters. Payment of these expenses may be deemed to be part of the
underwriters' compensation under the rules of the NASD.

We have agreed to sell to Wachovia Securities and its designees warrants to
purchase up to 175,050 shares of common stock at an exercise price of $ per
share (120% of the public offering price per share). Wachovia Securities will
pay a purchase price of $100 for the warrants. The warrants are restricted from
sale, transfer, assignment, pledge or hypothecation by any person for one year
from the date of this prospectus, except to the officers and partners of
Wachovia Securities or members of the underwriting syndicate and selling group
or their officers or partners. The holders may exercise the warrants as to all
or any lesser number of the underlying shares of common stock at any time
during the four-year period commencing one year after the date of this
prospectus. As a result, the holders of the warrants will have the opportunity
to profit from a rise in the market price of the common stock at nominal cost
during the term of the warrants. To the extent that the warrants are exercised,
the newly issued shares will dilute the interests of our shareholders. Further,
the terms upon which we will be able to obtain additional equity capital may be
adversely affected since the holders of the warrants can be expected to
exercise them at a time when we would, in all likelihood, be able to obtain any
needed capital on terms more favorable to us than those provided in the
warrants. Any profit realized by the underwriters on the sale of the warrants
or the underlying shares of common stock may be deemed additional underwriting
compensation.

We have agreed that, at any time during the four-year period beginning one
year after the date of this prospectus, Wachovia Securities may require us to
file one registration statement, at our expense, covering the sale of the
shares of common stock underlying the warrants. Wachovia Securities may require
us to file a second registration statement covering the warrant shares at their
own expense during the same period. We also agreed to include the warrant
shares in any appropriate registration statement we file during the seven years
following the date of this prospectus.

47
<PAGE>

We estimate that our total expenses of the offering, excluding the
underwriting discount and amounts payable to Mr. Wojnowski, will be
approximately $1,005,000.

Empire Financial Group, Inc., one of our subsidiaries, will participate in
the offering upon the same terms and conditions as the other underwriters.
Because Empire Financial Group is our affiliate, this offering is being
conducted in accordance with Rule 2720 of the NASD's conduct rules. When an
NASD member participates in the underwriting of its parent's equity securities,
this rule requires, among other things, that the initial public offering price
per share can be no higher than that recommended by a "qualified independent
underwriter," as defined by the NASD. In accordance with this requirement,
Wachovia Securities has assumed the responsibilities of acting as a qualified
independent underwriter. Both in its role as a lead manager in this offering
and in its role as a qualified independent underwriter, Wachovia Securities has
performed due diligence investigations and reviewed and participated in the
preparation of the registration statement of which this prospectus forms a
part. Wachovia Securities will receive no additional compensation for serving
in this capacity. We have agreed to indemnify Wachovia Securities against
certain liabilities it may incur in connection with its responsibilities as a
qualified independent underwriter, or to contribute to payments Wachovia
Securities may be required to make in connection with those liabilities.

We and all of our directors, executive officers and shareholders have agreed
not to sell or otherwise dispose of any shares of our common stock or any
securities that can be converted into or exchanged for shares of our common
stock, or publicly announce an intention to do so, or enter into any swap or
other arrangement that transfers to another any of the economic consequences of
ownership of common stock or make any demand or filing for the registration of
shares of common stock for a period of 180 days from the date of this
prospectus without the prior written consent of Wachovia Securities.

Prior to this offering, there has been no public market for our common
stock. The initial public offering price for the common stock has been
determined arbitrarily by negotiations between us and Wachovia Securities and
is not necessarily related to our asset value, net worth or other established
criteria of value. The factors considered in determining the initial public
offering price include:

. our past and present revenues, earnings and cash flows;

. our prospects for growth, revenues, earnings and cash flows;

. an assessment of our management and our capital structure;

. the history of and prospects for the industry in which we compete;

. prevailing market conditions, recent market prices of comparable publicly
traded companies;

. the current state of the economy in the United States and the level of
economic activity in our industry; and

. certain other factors as were deemed relevant.

The underwriters will not sell shares of our common stock to any account
over which they exercise discretionary authority without the prior specific
written approval of the customer.

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, as currently in effect, or to
contribute to payments that the underwriters may be required to make in
connection with those liabilities.

48
<PAGE>

In connection with this offering the underwriters may engage in transactions
that stabilize, maintain or otherwise affect the market price of our common
stock. These transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M, pursuant to which the underwriters or
selling group members may bid for or purchase common stock for the purpose of
stabilizing its market price. The underwriters also may create a short position
by selling more common stock in connection with the offering than they are
committed to purchase from us. In that event, the underwriters may purchase
common stock in the open market following completion of the offering to cover
all or a portion of that short position. The underwriters also may cover all or
a portion of that short position by exercising the over-allotment option. In
addition, if the representative purchases shares in the open market in a
stabilizing transaction or to cover a short position, the representative may
reclaim a selling concession, known as a penalty bid, 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 common stock to remain 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 the common stock to the extent
that it were to discourage resales of the common stock. None of the
transactions described in this paragraph are required, and, if any are
undertaken, they may be discontinued at any time. These transactions may be
effected on the Nasdaq National Market, the over-the-counter market or
otherwise.

LEGAL MATTERS

Greenberg Traurig, P.A., a professional association, Miami, Florida will
give an opinion regarding the validity of the common stock offered under this
prospectus. Certain legal matters relating to the offering will be passed upon
for the underwriters by Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan,
L.L.P., a limited liability partnership, Raleigh, North Carolina.

EXPERTS

The consolidated financial statements as of December 31, 1999 and for the
year ended December 31, 1999 included in this prospectus have been so included
in reliance on the report of PricewaterhouseCoopers LLP, independent certified
public accountants, given on the authority of that firm as experts in auditing
and accounting.

The consolidated financial statements as of December 31, 1998 and for each
of the two years in the period ended December 31, 1998 included in this
prospectus have been so included in reliance on the report of Sweeney, Gates &
Co., independent certified public accountants, given on the authority of that
firm as experts in auditing and accounting.

49
<PAGE>

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement containing this prospectus with the
SEC with respect to the common stock being offered in this offering. This
prospectus does not contain all the information set forth in the registration
statement and the exhibits and schedules thereto, certain portions of which are
omitted as permitted by SEC rules and regulations. Statements made in this
prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to any contract,
agreement or other document filed as an exhibit to the registration statement,
please refer to the exhibit for a more complete description of the matter
involved. Each statement in this prospectus is deemed qualified in its entirety
by reference to the registration statement and to the financial statements,
schedules and exhibits filed as a part of it.

The registration statement we filed with the SEC can be inspected and copied
at the public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the
Regional Offices of the SEC located in the Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and at 7 World Trade Center, 13th
Floor, New York, New York 10048; filings may also be obtained from the SEC's
website at www.sec.gov. You may also call the SEC at 1-800-SEC-0330 for more
information.

As of the date of this prospectus, we will become subject to the reporting
requirements of the Securities Exchange Act of 1934 and will file reports,
proxy statements and other information with the SEC. These reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the SEC set forth above, and copies of these materials
can be obtained from the SEC's Public Reference Section at prescribed rates. We
intend to furnish our shareholders with annual reports containing audited
financial statements and any other periodic reports we deem appropriate or as
may be required by law.

50
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2000 and 1999 and the
Years Ended December 31, 1999, 1998 and 1997

TABLE OF CONTENTS

<TABLE>
<S> <C>
Consolidated Statement of Financial Condition
June 30, 2000 (unaudited)................................................. F-2

Consolidated Statement of Income
Six Months Ended June 30, 2000 and 1999 (unaudited)....................... F-3

Consolidated Statement of Shareholders' Equity
Six Months Ended June 30, 2000 (unaudited)................................ F-4

Consolidated Statement of Cash Flows
Six Months Ended June 30, 2000 and 1999 (unaudited)....................... F-5

Notes to Consolidated Financial Statements (unaudited)..................... F-6

Report of Independent Certified Public Accountants
Year Ended December 31, 1999.............................................. F-8

Report of Independent Certified Public Accountants
Years Ended December 31, 1998 and 1997.................................... F-9

Consolidated Statement of Financial Condition
December 31, 1999 and 1998................................................ F-10

Consolidated Statement of Income
Years Ended December 31, 1999, 1998 and 1997.............................. F-11

Consolidated Statement of Shareholders' Equity
Years Ended December 31, 1999, 1998 and 1997.............................. F-12

Consolidated Statement of Cash Flows
Years Ended December 31, 1999, 1998 and 1997.............................. F-13

Notes to Consolidated Financial Statements................................. F-14
</TABLE>

F-1
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (Unaudited)

<TABLE>
<CAPTION>
Pro forma
June 30, 2000 June
(Note 3) 30, 2000
------------- -----------
<S> <C> <C>
Assets
Cash and equivalents................................. $ 883,042 $ 883,042
Cash and treasury bills segregated pursuant to
federal regulations................................. 1,250,064 1,250,064
Receivables from customers, net of allowance for
doubtful accounts of $25,491........................ 23,084,800 23,084,800
Receivables from brokers and dealers and clearing
organizations....................................... 1,709,667 1,709,667
Deposits at clearing organizations................... 704,051 704,051
Furniture and equipment net of accumulated
depreciation of $155,454............................ 433,297 433,297
Other assets......................................... 940,475 940,475
----------- -----------
$29,005,396 $29,005,396
=========== ===========

Liabilities and Shareholders' Equity
Liabilities:
Short-term borrowings from banks.................... $ 7,971,000 $ 7,971,000
Accounts payable, accrued expenses and other
liabilities........................................ 2,922,358 2,922,358
Payable to customers................................ 13,689,610 13,689,610
Payable to brokers and dealers and clearing
organizations...................................... 330,194 330,194
Distributions payable to shareholders............... 1,173,000 --
----------- -----------
26,086,162 24,913,162
----------- -----------
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued and outstanding............ -- --
Common stock, $.01 par value, 100,000,000 shares
authorized; 3,075,000 shares issued and
outstanding........................................ 30,750 30,750
Additional paid-in capital.......................... 2,888,484 233,629
Retained earnings................................... -- 3,827,855
----------- -----------
Total shareholders' equity.......................... 2,919,234 4,092,234
----------- -----------
$29,005,396 $29,005,396
=========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements (unaudited)
are an integral part of these financial statements.

F-2
<PAGE>

EMPIRE FINANCIAL HOLDING AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------
2000 1999
----------- ----------
<S> <C> <C>
Revenues:
Order execution trading revenues, net.................. $ 6,532,697 $5,956,513
Commissions and fees................................... 5,969,156 2,267,163
Orderflow.............................................. 92,016 38,287
Interest............................................... 927,372 337,441
Other.................................................. 137,961 47,883
----------- ----------
13,659,202 8,647,287
----------- ----------
Expenses:
Employee compensation and benefits..................... 4,419,787 2,113,590
Commissions and clearing costs......................... 2,416,280 1,153,943
Orderflow payments..................................... 1,310,201 1,507,015
Interest............................................... 565,566 167,105
Communications and data processing..................... 425,272 223,007
General and administrative............................. 1,359,196 711,543
Advertising............................................ 266,828 174,356
----------- ----------
10,763,130 6,050,559
----------- ----------
Net income.............................................. $ 2,896,072 $2,596,728
=========== ==========
Earnings per share--basic and diluted................... $ .94 $ .84
=========== ==========
Unaudited pro forma information:
Income before income taxes............................. $ 2,896,072 $2,596,728
Provision for income taxes............................. 1,089,000 976,000
----------- ----------
Net income............................................. $ 1,807,072 $1,620,728
=========== ==========
Pro forma earnings per share--basic and diluted........ $ .59 $ .53
=========== ==========
Weighted average shares outstanding..................... 3,075,000 3,075,000
=========== ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements (unaudited)
are an integral part of these financial statements.

F-3
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)

<TABLE>
<CAPTION>
Additional
Paid-in Retained
Common Stock Capital Earnings
----------------- ---------- ----------
Shares Amount
--------- -------
<S> <C> <C> <C> <C>
Balance at January 1, 2000............. 3,075,000 $30,750 $233,629 $2,885,663

Net income............................. -- -- -- 2,896,072

Shareholders' distribution............. -- -- -- (1,953,880)
--------- ------- -------- ----------

Balance at June 30, 2000............... 3,075,000 $30,750 $233,629 $3,827,855
========= ======= ======== ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements (unaudited)
are an integral part of these financial statements.

F-4
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
2000 1999
----------- -----------
<S> <C> <C>
Operating activities:
Net income.......................................... $ 2,896,072 $ 2,596,728
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation....................................... 69,650 18,883
Provision for doubtful accounts.................... (205,433) --
Loss on disposal of furniture and equipment........ 4,016 --
Change in assets and liabilities:
Segregated cash and treasury bills................ (30,652) 539,571
Receivable from customers......................... (7,294,365) (5,308,248)
Receivable from brokers and dealers and clearing
organizations.................................... 508,481 (948,186)
Deposits at clearing organizations................ 7,248 734,522
Other assets...................................... (628,066) 42,277
Accounts payable, accrued expenses and other
liabilities...................................... 1,003,682 218,557
Payable to customers.............................. 2,920,296 2,711,862
Payable to brokers and dealers and clearing
organizations.................................... (15,014) (93,475)
----------- -----------
Net cash (used in) provided by operating
activities....................................... (764,085) 512,491
----------- -----------
Investing activities:
Purchase of furniture and equipment................. (267,135) (10,666)
----------- -----------
Net cash used in investing activities............. (267,135) (10,666)
----------- -----------
Financing activities:
Change in short-term borrowings from banks.......... 1,988,000 1,532,000
Shareholder distributions........................... (1,953,880) (1,199,786)
----------- -----------
Net cash provided by financing activities......... 34,120 332,214
----------- -----------
Net (decrease) increase in cash and cash
equivalents......................................... (997,100) 834,039
Cash and cash equivalents at beginning of period..... 1,880,142 367,825
----------- -----------
Cash and cash equivalents at end of period........... $ 883,042 $ 1,201,864
=========== ===========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest........................................... $ 565,566 $ 167,105
=========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements (unaudited)
are an integral part of these financial statements.

F-5
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Six Months Ended June 30, 2000 and 1999

1. Nature of Business and Summary of Significant Accounting Policies

Organization and Operations

Empire Financial Holding Company (the "Company"), a Florida corporation, was
formed on February 16, 2000 to acquire Empire Financial Group, Inc. ("Empire
Group"), Advantage Trading Group, Inc. ("Advantage") and Empire Investment
Advisors, Inc. ("Advisors"). Because all of these entities were owned by the
same shareholders, the acquisitions have been accounted for at historical cost
in a manner similar to a pooling of interests. Accordingly, the consolidated
financial statements reflect the results of operations of the acquired
companies for all periods presented. All subsidiaries are wholly owned and all
significant intercompany transactions and accounts have been eliminated in
consolidation.

The accompanying unaudited consolidated financial statements include the
accounts of the Company, Empire Group, Advantage and Advisors and, in the
opinion of management, reflect all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods. Certain footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to SEC rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. The nature of the Company's business is such that the
results of an interim period are not necessarily indicative of the results for
the full year. These consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's audited financial statements as of December 31, 1999 included in this
prospectus.

2. Net Capital and Reserve Requirements

The broker dealer subsidiaries of the Company are subject to the Securities
and Exchange Commission Uniform Net Capital Rule 15c3-1 and the requirements of
the securities exchanges of which they are members. This rule requires that
aggregate indebtedness, as defined, not exceed 15 times net capital, as
defined. Rule 15c3-1 also provides for an "alternative net capital requirement"
which, if elected, requires that net capital be equal to the greater of
$250,000 or 2% of aggregate debit items computed in applying the formula for
determination of reserve requirements. Net capital positions of the Company's
broker dealer subsidiaries were as follows:

<TABLE>
<CAPTION>
June 30, 2000
-------------
<S> <C>
Advantage (alternative method elected in
1999):
Net capital as a percentage of aggregate
debit items............................ 8.5%
Ratio of aggregate indebtedness to net
capital................................ N/A
Net capital............................. $2,033,217
Required net capital.................... $ 475,926
Empire Group:
Ratio of aggregate indebtedness to net
capital................................ 2.42 to 1
Net capital............................. $ 356,853
Required net capital.................... $ 250,000
</TABLE>

Advantage is also subject to Rule 15c3-3 under the Securities Exchange Act
of 1934 which specifies certain conditions under which brokers and dealers
carrying customer accounts are required to maintain cash or qualified
securities in a special reserve bank account for the exclusive benefit of
customers. Amounts to be maintained, if required, are computed in accordance
with a formula defined in the Rule. At June 30, 2000, Advantage had a reserve
requirement of $193,695.

F-6
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)--(Continued)

For the Six Months Ended June 30, 2000 and 1999

Empire Group is exempt from the provisions of Rule 15c3-3 under Paragraph
(k)(2)(ii) of the Rule as it clears all transactions with and for customers on
a fully-disclosed basis with affiliated and unaffiliated clearing brokers.

3. Pro Forma Information

The Company's presentation of the unaudited pro forma consolidated statement
of financial condition at June 30, 2000 reflects the effect on historical
retained earnings of a planned S corporation distribution to the existing
shareholders of approximately $1,173,000 and the contribution
(reclassification) of the remaining undistributed earnings to additional paid-
in capital.

Empire Group, Advantage and Advisors, individually, with the consent of
their shareholders, elected to be taxed under Subchapter S of the Internal
Revenue Code, which provides for taxable income of the respective company to be
included in the income tax returns of the individual shareholders. The pro
forma adjustments shown in the consolidated statements of income reflect
provisions for income taxes computed based upon statutory tax rates as if the
Company had been subject to federal and state taxation during the periods
presented.

4. Financial Information by Business Segment

The Company operates in two primary business segments retail brokerage
services and order execution services. Retail brokerage services (including
sale of equities, mutual funds and fixed income products) are provided on a
discount basis to retail and institutional customers through online trading or
the three retail branches of Empire Group located in Florida. Order execution
services are conducted through Advantage, which fills orders to purchase or
sell securities received from independent broker dealers on behalf of their
retail customers. Advantage typically acts as principal in these transactions
and derives order execution trading revenues, net, from the difference between
the price paid when a security is bought and the price received when that
security is sold. Advantage does not typically receive a fee or commission for
providing order execution services. Advantage normally closes out of its trade
positions at the end of each day and does not maintain securities inventory in
order to reduce the risks from market volatility. Advantage also clears
securities transactions for its own account and for its affiliate, Empire
Group.

All of the Company's business and long-lived assets are located in the U.S.
Information concerning operations in these segments of business is as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30, 2000
----------------
<S> <C>
Revenue:
Order execution services.............. $ 7,831,699
Retail brokerage services............. 6,393,974
Eliminations.......................... (566,471)
-----------
$13,659,202
===========
Net income:
Order execution services.............. $ 1,745,950
Retail brokerage services............. 1,150,122
-----------
$ 2,896,072
===========
Identifiable assets:
Order execution services.............. $27,615,216
Retail brokerage services............. 1,768,937
Eliminations.......................... (378,757)
-----------
$29,005,396
===========
</TABLE>

Eliminations represent revenues and receivables from intercompany
transactions resulting from clearing activities between Empire Group and
Advantage.

F-7
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
Empire Financial Holding Company

In our opinion, the accompanying consolidated statement of financial condition
and the related consolidated statements of income, of shareholders' equity and
of cash flows present fairly, in all material respects, the financial position
of Empire Financial Holding Company and its subsidiaries at December 31, 1999,
and the results of their operations and their cash flows for the year then
ended, in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

Tampa, Florida
February 24, 2000, except as to the
first paragraph of Note 1, which is
as of September 5, 2000.

F-8
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
Empire Financial Holding Company

We have audited the accompanying consolidated statement of financial
condition of Empire Financial Holding Company as of December 31, 1998, and the
related statements of income and shareholders' equity and cash flows for the
years ended December 31, 1998 and 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 audits to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Empire Financial Holding
Company at December 31, 1998, and the results of its operations and its cash
flows for the years ended December 31, 1998 and 1997 in conformity with
generally accepted accounting principles.

/s/ Sweeney, Gates & Co.

Ft. Lauderdale, Florida
February 19, 1999,
except as to the first
paragraph of Note 1,
which is as of September
5, 2000.

F-9
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents............................ $ 1,880,142 $ 367,825
Cash and treasury bills segregated pursuant to
federal regulations................................. 1,219,412 1,343,622
Receivables from customers, net of allowance for
doubtful accounts of $230,924 and $0................ 15,585,002 5,000,391
Receivable from brokers and dealers and clearing
organizations....................................... 2,218,148 515,729
Deposits at clearing organizations................... 711,299 1,445,941
Furniture and equipment net of accumulated
depreciation of $100,787 and $45,779................ 239,828 111,575
Other assets......................................... 312,409 75,705
----------- ----------
$22,166,240 $8,860,788
=========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Short-term borrowings from banks.................... $ 5,983,000 $ 942,000
Accounts payable, accrued expenses and other
liabilities........................................ 1,918,676 1,012,653
Payable to customers................................ 10,769,314 4,384,361
Payable to brokers and dealers and clearing
organizations...................................... 345,208 582,484
----------- ----------
19,016,198 6,921,498
----------- ----------
Commitments and contingencies (Note 7)
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued and outstanding............ -- --
Common stock, $.01 par value, 100,000,000 shares
authorized; 3,075,000 shares issued and
outstanding........................................ 30,750 30,750
Additional paid-in capital.......................... 233,629 233,629
Retained earnings................................... 2,885,663 1,674,911
----------- ----------
Total shareholders' equity.......................... 3,150,042 1,939,290
----------- ----------
$22,166,240 $8,860,788
=========== ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-10
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1999 1998 1997
----------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Order execution trading revenues, net....... $10,441,910 $5,681,892 $4,612,693
Commissions and fees........................ 6,134,454 2,022,433 1,487,379
Orderflow................................... 102,806 149,246 209,522
Interest.................................... 829,381 66,675 --
Other....................................... 89,752 13,753 15,479
----------- ---------- ----------
17,598,303 7,933,999 6,325,073
----------- ---------- ----------
Expenses:
Employee compensation and benefits.......... 4,436,719 2,715,069 2,415,490
Commissions and clearing costs.............. 2,846,408 1,345,528 1,102,466
Orderflow payments.......................... 2,775,599 1,661,488 1,617,153
Interest.................................... 461,843 44,363 1,360
Communications and data processing.......... 672,778 164,829 70,482
General and administrative.................. 2,385,496 642,845 286,986
Advertising................................. 561,134 269,293 134,458
----------- ---------- ----------
14,139,977 6,843,415 5,628,395
----------- ---------- ----------
Net income................................... $ 3,458,326 $1,090,584 $ 696,678
=========== ========== ==========
Earnings per share-basic and diluted......... $ 1.12 $ .35 $ .23
=========== ========== ==========
Unaudited pro forma information (Note 1):
Income before income taxes................. $ 3,458,326 $1,090,584 $ 696,678
Provision for income taxes................. 1,300,000 410,000 262,000
----------- ---------- ----------
Net income................................. $ 2,158,326 $ 680,584 $ 434,678
=========== ========== ==========
Pro forma earnings per share--basic and
diluted................................... $ .70 $ .22 $ .14
=========== ========== ==========
Weighted average shares outstanding.......... 3,075,000 3,075,000 3,075,000
=========== ========== ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-11
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
Common Stock Additional
----------------- Paid-In Retained
Shares Amount Capital Earnings
--------- ------- ---------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1997............ 3,075,000 $30,750 $233,629 $ 443,923
Net income............................ -- -- -- 696,678
Shareholders' distribution............ -- -- -- (252,033)
--------- ------- -------- -----------
Balance at December 31, 1997.......... 3,075,000 30,750 233,629 888,568
Net income............................ -- -- -- 1,090,584
Shareholders' distribution............ -- -- -- (304,241)
--------- ------- -------- -----------
Balance at December 31, 1998.......... 3,075,000 30,750 233,629 1,674,911
Net income............................ -- -- -- 3,458,326
Shareholders' distribution............ -- -- -- (2,247,574)
--------- ------- -------- -----------
Balance at December 31, 1999.......... 3,075,000 $30,750 $233,629 $ 2,885,663
========= ======= ======== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-12
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1999 1998 1997
------------ ----------- ---------
<S> <C> <C> <C>
Operating activities:
Net income.............................. $ 3,458,326 $ 1,090,584 $ 696,678
Adjustments to reconcile net income to
net cash (used in) provided by
operating activities:
Depreciation........................... 59,395 33,224 31,811
Provision for doubtful accounts........ 230,924 -- --
Loss on disposal of furniture and
equipment............................. 3,731 16,081 1,461
Change in assets and liabilities:
Segregated cash and treasury bills.... 124,210 (1,070,592) (273,030)
Receivable from customers............. (10,815,535) (5,000,391) --
Receivable from brokers and dealers
and clearing organizations........... (1,702,419) (462,753) 402,467
Deposits at clearing organizations.... 734,642 (1,335,812) (30,129)
Other assets.......................... (236,704) (62,408) 4,141
Accounts payable, accrued expenses and
other liabilities.................... 906,023 833,324 (159,748)
Payable to customers.................. 6,384,953 4,384,361 --
Payable to brokers and dealers and
clearing organizations............... (237,276) 412,958 169,526
------------ ----------- ---------
Net cash (used in) provided by
operating activities................. (1,089,730) (1,161,424) 843,177
------------ ----------- ---------
Investing activities:
Purchases of furniture and equipment.... (191,379) (77,086) (65,000)
------------ ----------- ---------
Net cash used in investing
activities........................... (191,379) (77,086) (65,000)
------------ ----------- ---------
Financing activities:
Change in short-term borrowings from
banks.................................. 5,041,000 942,000 --
Shareholder distributions............... (2,247,574) (304,241) (252,033)
------------ ----------- ---------
Net cash provided by (used in)
financing activities................. 2,793,426 637,759 (252,033)
------------ ----------- ---------
Net increase (decrease) in cash and cash
equivalents............................. 1,512,317 (600,751) 526,144
Cash and cash equivalents at beginning of
year.................................... 367,825 968,576 442,432
------------ ----------- ---------
Cash and cash equivalents at end of
year.................................... $ 1,880,142 $ 367,825 $ 968,576
============ =========== =========
Supplemental disclosures of cash flow
information
Cash paid during the year for:
Interest............................... $ 190,403 $ 43,363 $ 1,360
============ =========== =========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-13
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1999, 1998 and 1997

1. Nature of Business and Summary of Significant Accounting Policies

Organization and Operations

Empire Group was incorporated in Florida on August 20, 1990 and is a
securities broker dealer that provides discount brokerage services to retail
and institutional customers. Advantage was incorporated in Florida on July 18,
1995 and is a securities broker dealer which acts as principal in providing
order execution services for independent broker dealers and also acts as a
clearing broker for its affiliate, Empire Group. Advisors was incorporated on
September 10, 1999 for the purpose of providing fee-based investment advisory
services to retail customers. Advisors had no activities during 1999. The
Company's executive office is located in Longwood, Florida, and the Company
maintains branch offices in Cocoa Beach and Delray Beach, Florida. The Company
operates in two primary business segments--retail brokerage services (Empire
Group) and order execution services (Advantage). Disaggregated financial
information by segment is set forth in Note 10.

Management Estimates and Assumptions

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

Segment Reporting

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS 131
supersedes SFAS 14, "Financial Reporting for Segments of a Business
Enterprise," replacing the "industry segment" approach with the "management"
approach. The management approach designates the internal organization that is
used by management for making operating decisions and addressing performance as
the source of the Company's reportable segments. SFAS 131 also requires
disclosures about products and services, geographic areas, and major customers.
The adoption of SFAS 131 did not affect the Company's financial position or
results of operations but did affect the disclosure of segment information
(Note 10).

Cash and Cash Equivalents

The Company considers all highly liquid investments with an initial maturity
of three months or less to be cash equivalents for purposes of the consolidated
statement of cash flows.

Securities Owned and Securities Sold, Not Yet Purchased

Securities owned, which are readily marketable, and securities sold, not yet
purchased (short sales), are recorded at market value with unrealized gains or
losses reflected in income currently. At December 31, 1999

F-14
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the Years Ended December 31, 1999, 1998 and 1997

1. Nature of Business and Summary of Significant Accounting Policies--
(Continued)

and 1998 the Company had securities owned of approximately $827 and $33,750,
respectively, which are included in other assets in the consolidated statement
of financial condition. At December 31, 1999 and 1998 the Company had
securities sold, not yet purchased, of approximately $1,075 and $7,725,
respectively, which are included in accounts payable, accrued expenses and
other liabilities in the consolidated statement of financial condition.

Securities sold, not yet purchased, represent obligations of the Company to
deliver specified securities at the contracted prices, thereby creating a
liability to purchase the securities at prevailing market prices. Accordingly,
these transactions result in off-balance-sheet risk as the Company's ultimate
obligation to satisfy the sale of these securities may exceed the amount
recorded in the consolidated statement of financial condition.

Revenue Recognition

Securities transactions and the related revenues and expenses are recorded
in the accounts on trade date.

Order Execution Trading Revenues, Net

Order execution trading revenues, net, are generated from the difference
between the price paid to buy securities and the amount received from the sale
of securities. Volatility of stock prices, which can result in significant
price fluctuations in short periods of time, may result in trading gains or
losses. The Company typically acts as principal in these transactions and does
not receive a fee or commission for providing order execution services.

Commissions and Fees

Commissions and fees include revenues generated from transactional fees
charged to retail and institutional customers. Commissions and fees also
include mutual fund transaction sales commissions and trailer fees, which are
periodic fees paid by mutual funds as an incentive to keep assets invested
with them over time.

Furniture and Equipment

Furniture and equipment are recorded at cost. Depreciation and amortization
on furniture and equipment are provided utilizing the double declining balance
method over the estimated useful lives of the related assets, which range from
five to seven years.

Income Taxes

Empire Group and Advantage, individually, with the consent of their
shareholders, elected to be taxed under Subchapter S of the Internal Revenue
Code, which provides for taxable income of the respective company to be
included in the income tax returns of the individual shareholders.
Accordingly, the accompanying consolidated financial statements reflect no
provision for income taxes for the years ended December 31, 1999, 1998, or
1997. The Company and its subsidiaries will automatically terminate their
Subchapter S elections concurrently with the offering. The pro forma
adjustments shown in the consolidated statements of income reflect provisions
for income taxes computed based upon statutory tax rates as if the Company had
been subject to federal and state taxation during 1999, 1998 and 1997.

Fair Value of Financial Instruments

The financial instruments of the Company are reported in the accompanying
consolidated statement of financial condition at their carrying values which
approximate their fair values.

F-15
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the Years Ended December 31, 1999, 1998 and 1997

2. Pro Forma Statement of Financial Condition (Unaudited)

The Company's unaudited pro forma consolidated statement of financial
condition at June 30, 2000 is presented on Page F-2.

3. Clearing Agreements

In connection with its retail brokerage services business, the Company has
clearing agreements with two unaffiliated clearing brokers. Under such
agreements, the clearing brokers provide the Company execution and clearing
services on a fully disclosed basis. In order to facilitate transactions with
the unaffiliated clearing brokers, the Company maintains a deposit of
approximately $200,000 which earns interest at a rate equal to 1% above the
rate customarily paid on credit balances to the clients of the clearing broker.
The $200,000 is included in deposits at clearing organizations on the
consolidated statements of financial condition.

4. Receivable from and Payable to Brokers and Dealers and Clearing
Organizations

Amounts receivable from and payable to brokers and dealers and clearing
organizations consists of the following:

<TABLE>
<CAPTION>
December 31,
-------------------
1999 1998
---------- --------
<S> <C> <C>
Receivable:
Securities failed to deliver......................... $ 54,899 $ 74,499
Deposits on securities borrowed...................... 221,700 239,269
Other amounts due from brokers and dealers........... 1,941,549 201,961
---------- --------
$2,218,148 $515,729
========== ========
Payable:
Securities failed to receive......................... $ 73,107 $ 42,685
Payable to clearing organizations.................... 73,542 501,421
Orderflow payable.................................... 198,559 38,378
---------- --------
$ 345,208 $582,484
========== ========
</TABLE>

Deposits on securities borrowed represent cash on deposit with other brokers
and dealers relating to securities borrowed. If the counterparty failed to
return these deposits, the Company may sustain a loss if the market value of
the securities borrowed declines.

5. Receivable from and Payable to Customers

Receivable from and payable to customers arise from cash and margin
transactions executed by the Company on the customer's behalf. Receivables are
collateralized by securities owned by customers. Such collateral is not
reflected in the accompanying consolidated statements of financial condition.
In management's opinion, prior to 1999 no allowance for doubtful accounts was
required. A provision for doubtful accounts of $230,924 was recorded in 1999.

6. Short-Term Borrowings from Banks

The Company maintains a $15,000,000 line of credit with a commercial bank
collateralized by customer receivables ("Customer LOC"). The Company also
maintains a $1,500,000 line of credit with the same

F-16
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the Years Ended December 31, 1999, 1998 and 1997

6. Short-Term Borrowings from Banks--(Continued)

commercial bank, collateralized by firm inventory ("Firm LOC"). The Company may
draw on these lines up to an aggregate amount of $15,000,000. Borrowings under
the lines of credit bear interest, at the Company's option, at the federal
funds rate plus 100 basis points and are restricted to a percentage of the
market value of the related collateral securities, and are due on demand. These
lines of credit expire on September 30, 2000. At December 31, 1999 and 1998,
approximately $5,983,000 and $942,000, respectively, were outstanding under the
Customer LOC. There were no draws on the Customer LOC during 1997. At December
31, 1999 and 1998 the Company pledged approximately $9,350,000 and $3,000,000,
respectively, of non-fully or partially paid customer securities against the
outstanding balance on the Customer LOC. There were no draws on the Firm LOC
during 1999, 1998, or 1997. The maximum and average amounts outstanding on the
Customer LOC during the year ended December 31, 1999 were approximately
$5,983,000 and $2,375,000, respectively ($1,150,000 and $500,000, respectively,
for the year ended December 31, 1998). The average interest rates at and during
the year ended December 31, 1999 and 1998 were 6.6% and 6.0%, respectively.

7. Commitments and Contingencies

In November 1999, the Company entered into a lease agreement for operating
facilities with a corporation owned by the two controlling shareholders of the
Company. The lease contains escalating rental payments and expires in May 2009.
Rental expense is reflected on a straight-line basis over the term of the
lease. Total rental expense for 1999 was approximately $127,000, including
approximately $48,000 under the operating facilities lease with the two
controlling shareholders. Total rental expense for 1998 and 1997 was
approximately $78,109 and $58,550, respectively. The Company does not have
lease agreements for its branch offices in Cocoa Beach and Delray Beach,
Florida. The rent for the branch office facilities is paid by the independent
contractor registered representatives who are located in these facilities.

At December 31, 1999, future minimum annual lease payments, all of which
relate to the operating facilities lease, are as follows:

<TABLE>
<S> <C>
2000........................................ $ 224,520
2001........................................ 234,496
2002........................................ 246,212
2003........................................ 258,528
2004........................................ 271,452
Thereafter.................................. 1,490,808
----------
$2,726,016
==========
</TABLE>

The Company is a defendant or co-defendant in various lawsuits incidental to
its retail brokerage services business. The Company is contesting the
allegations of the complaints in these cases. In view of the number and
diversity of claims against the Company, the number of jurisdictions in which
litigation is pending and the inherent difficulty of predicting the outcome of
litigation and other claims, the Company cannot state with certainty what the
eventual outcome of pending litigation or other claims will be. In the opinion
of management, based on discussions with legal counsel, the outcome of the
matters will not result in a material adverse effect on the financial position
or results of operations of the Company.

8. Net Capital and Reserve Requirements

F-17
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the Years Ended December 31, 1999, 1998 and 1997

8. Net Capital and Reserve Requirements--(Continued)

This rule requires that aggregate indebtedness, as defined, not exceed 15
times net capital, as defined. Rule 15c3-1 also provides for an "alternative
net capital requirement" which, if elected, requires that net capital be equal
to the greater of $250,000 or 2% of aggregate debit items computed in applying
the formula for determination of reserve requirements. Net capital positions of
the Company's broker dealer subsidiaries were as follows:

<TABLE>
<CAPTION>
December 31,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
Advantage (alternative method elected in 1999):
Net capital as a percentage of aggregate debit
items............................................. 12.74% N/A
Ratio of aggregate indebtedness to net capital..... N/A 4.94 to 1
Net capital........................................ $2,233,982 $1,392,009
Required net capital............................... $ 350,766 $ 458,751
Empire Group:
Ratio of aggregate indebtedness to net capital..... 2.08 to 1 .37 to 1
Net capital........................................ $ 316,073 $ 335,281
Required net capital............................... $ 250,000 $ 250,000
</TABLE>

Advantage is also subject to Rule 15c3-3 under the Securities Exchange Act
of 1934 which specifies certain conditions under which brokers and dealers
carrying customer accounts are required to maintain cash or qualified
securities in a special reserve bank account for the exclusive benefit of
customers. Amounts to be maintained, if required, are computed in accordance
with a formula defined in the Rule. At December 31, 1999 and 1998, Advantage
had a reserve requirement of $158,536 and $0, respectively.

9. Off-Balance-Sheet Risk

In the normal course of business, the Company purchases and sells securities
as principal for its own account and on behalf of its customers. The Company
normally closes out its trade positions at the end of each day and normally
does not maintain a securities inventory in order to minimize its risks from
market volatility. Nevertheless, if either the customer or a counterparty fails
to perform, the Company may be required to discharge the obligations of the
nonperforming party. In such circumstances, the Company may sustain a loss if
the market value of the security contract is different from the contract value
of the transaction.

In addition, the Company has sold securities that it does not currently own
and will, therefore, be obligated to purchase such securities at a future date.
At December 31, 1999, the Company has recorded these obligations in the
financial statements at the estimated fair value of the related securities and
may incur a loss if the market value of the securities increases subsequent to
December 31, 1999.

In the normal course of business, the Company's customer clearance
activities involve the execution, settlement, and financing of various customer
securities transactions. These activities may expose the Company to off-
balance-sheet risk in the event the customer or other broker is unable to
fulfill its contracted obligations and the Company has to purchase or sell the
financial instrument underlying the contract at a loss.

The Company's customer securities activities are transacted on either a cash
or margin basis. In margin transactions, the Company extends credit to its
customers, subject to various regulatory and internal margin

F-18
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the Years Ended December 31, 1999, 1998 and 1997

9. Off-Balance-Sheet Risk--(Continued)

requirements, collateralized by cash and securities in the customers' accounts.
In connection with these activities, the Company executes and clears customer
transactions involving the sale of securities not yet purchased, substantially
all of which are transacted on a margin basis subject to individual exchange
regulations. Nevertheless, margin transactions may expose the Company to
significant off-balance-sheet risk in the event margin requirements are not
sufficient to fully cover losses that customers may incur. In the event the
customer fails to satisfy its obligations, the Company may be required to
purchase or sell financial instruments at prevailing market prices to fulfill
the customer's obligations.

The Company seeks to control the risks associated with its customer
activities by requiring customers to maintain margin collateral in compliance
with various regulatory and internal guidelines. The Company monitors required
margin levels daily and requires the customer to deposit additional collateral
pursuant to such guidelines or to reduce positions. The Company's policy is to
impose more stringent margin requirements than those required by the Federal
Reserve or the NASD, and it also may restrict access to margin lending with
regard to trading of certain stocks determined by it to be too volatile.

10. Financial Information by Business Segment

The Company operates in two primary business segments: retail brokerage
services and order execution services. Retail brokerage services (including
sale of equities, mutual funds and fixed income products) are provided on a
discount basis to retail and institutional customers through online trading or
through the three retail branches of Empire Group located in Florida. Order
execution services are conducted through Advantage, which fills orders to
purchase or sell securities received from independent broker dealers on behalf
of their retail customers. Advantage typically acts as principal in these
transactions and derives order execution trading revenues, net, from the
difference between the price paid when a security is bought and the price
received when that security is sold. Advantage does not typically receive a fee
or commission for providing order execution services. Advantage normally closes
out of its trade positions at the end of each day and does not maintain
securities inventory in order to reduce the risks from market volatility.
Advantage also clears securities transactions for its own account and for its
affiliate, Empire Group.

F-19
<PAGE>

EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the Years Ended December 31, 1999, 1998 and 1997

The accounting policies of the Company's segments are the same as those
described in the "Nature of Business and Summary of Significant Accounting
Policies." All of the Company's business and long-lived assets are located in
the U.S. Information concerning operations in these segments of business is as
follows:

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1999 1998 1997
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Order execution services............... $11,628,511 $6,147,226 $4,772,400
Retail brokerage services.............. 6,906,442 2,341,912 1,714,223
Eliminations........................... (936,650) (555,139) (161,550)
----------- ---------- ----------
$17,598,303 $7,933,999 $6,325,073
=========== ========== ==========
Net income:
Order execution services............... $ 2,855,586 $1,025,382 $ 594,522
Retail brokerage services.............. 602,740 65,202 102,156
----------- ---------- ----------
$ 3,458,326 $1,090,584 $ 696,678
=========== ========== ==========
Identifiable assets:
Order execution services............... $21,250,103 $8,429,209 $1,041,717
Retail brokerage services.............. 1,202,302 554,725 474,585
Eliminations........................... (286,165) (123,146) (14,500)
----------- ---------- ----------
$22,166,240 $8,860,788 $1,501,802
=========== ========== ==========
</TABLE>

Eliminations represent revenues and receivables from intercompany
transactions resulting from clearing activities between Empire Group and
Advantage.

F-20
<PAGE>

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

No dealer, salesperson, or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this prospectus, and, if given or made, the
information or representations must not be relied upon as having been
authorized by us or the underwriters. Neither the delivery of this prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in our affairs since the date hereof
or since the dates as of which information is set forth herein. This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any jurisdiction to any person to whom it
is unlawful to make an offer in such jurisdiction.

Until , 2000 (25 days after the date of this prospectus), all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition to
the dealers' obligation to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.

EMPIRE FINANCIAL
HOLDING COMPANY

2,400,000 Shares of
Common Stock
---------------
PROSPECTUS
---------------
WACHOVIA SECURITIES, INC.
KEEFE, BRUYETTE & WOODS, INC.
EMPIRE FINANCIAL GROUP, INC.
September , 2000

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The Registrant estimates that expenses payable by the Registrant in
connection with the offering described in this registration statement (other
than underwriting discounts and commissions) will be as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission
registration fee........................ $ 12,990.32
NASD filing fee.......................... 4,088.00
Nasdaq National Market listing fee....... 63,725.00
Printing expenses........................ 125,000.00
Accounting fees and expenses............. 300,000.00
Legal fees and expenses.................. 450,000.00
Blue Sky fees and expenses............... 15,000.00
Transfer Agent's fees and expenses....... 5,000.00
Miscellaneous............................ 29,196.68
-------------
Total.................................... $1,005,000.00
=============
</TABLE>

All amounts except the Securities and Exchange Commission registration fee,
the Nasdaq National Market listing fee and the NASD filing fee are estimated.

Item 14. Indemnification of Directors and Officers.

The Registrant has authority under the Florida Business Corporation Act to
indemnify its directors and officers to the extent provided for in such
statute. The Registrant's Articles of Incorporation and Bylaws provide that the
Registrant may insure, shall indemnify and shall advance expenses on behalf of
its officers and directors to the fullest extent not prohibited by law. The
Registrant is also a party to indemnification agreements with each of its
directors and officers.

Item 15. Recent Sales of Unregistered Securities.

In September 1999, Empire Investment Advisors, Inc., issued an aggregate of
1,000 shares of its common stock, $.01 par value per share, 500 shares to Kevin
M. Gagne and 500 shares to Richard L. Goble, in exchange for $10.00, services
provided by them in connection with the organization of said corporation and
other good and valuable consideration. These shares were later exchanged by
Messrs. Gagne and Goble for shares of the Registrant's common stock as
discussed below.

Prior to the effective date of this Registration Statement the Registrant
issued an aggregate of 3,075,000 shares of its common stock, 1,537,500 shares
to each of Messrs. Kevin M. Gagne and Richard L. Goble, in exchange for all of
the outstanding capital stock of each of Empire Financial Group, Inc.,
Advantage Trading Group, Inc. and Empire Investment Advisors, Inc. pursuant to
the terms of an Amended and Restated Share Exchange Agreement among the
Registrant, Mr. Gagne and Mr. Goble.

In connection with the offering, we have agreed to sell to Wachovia
Securities and its designees warrants to purchase up to 175,050 shares of
common stock at an exercise price of 120% of the public offering price per
share. Wachovia Securities will pay a purchase price of $100 for the warrants.
The warrants are restricted from sale, transfer, assignment, pledge or
hypothecation by any person for one year from the date of this prospectus,
except to the officers and partners of Wachovia Securities or members of the
underwriting syndicate and selling group or their officers or partners. The
holders may exercise the warrants as to all or any lesser number of the
underlying shares of common stock at any time during the four-year period
commencing one year after the date of this prospectus.

In connection with the above-referenced issuances, the Registrant relied (or
plans to rely) on Section 4(2) under the Securities Act of 1933, as amended, as
transactions by an issuer not involving any public offering. Each of the above
investors had (or will have) full access to information relating to the
Registrant and

II-1
<PAGE>

represented (or will represent) to the Registrant that he had (or has) the
required investment intent. In addition, the above-referenced securities will
bear appropriate restrictive legends, and stop transfer orders will be placed
against such securities.

Item 16. Exhibits and Financial Statement Schedules.

(a)Exhibits

<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
1.1 --Form of Underwriting Agreement(1)
2.1 --Share Exchange Agreement among the Registrant, Kevin M. Gagne and
Richard L. Goble(3)
2.2 --Amended and Restated Share Exchange Agreement among the Registrant,
Kevin M. Gagne and Richard L. Goble(3)
3.1 --Registrant's Articles of Incorporation(3)
3.2 --Registrant's Bylaws(3)
4.1 --Form of Underwriter's Warrant Agreement, including Form of Warrant
Certificate(3)
4.2 --Form of Registrant's Common Stock Certificate(3)
5.1 --Opinion of Greenberg Traurig, P.A.(3)
9.1 --Voting Agreement between Kevin M. Gagne and Richard L. Goble(3)
10.1 --2000 Stock Option Plan*(3)
10.2 --Employment Agreement between the Registrant and Kevin M. Gagne*(3)
10.3 --Employment Agreement between the Registrant and Richard L. Goble*(3)
10.4 --Employment Agreement between the Registrant and Donald A. Wojnowski
Jr.*(3)
10.5 --Lease between Advantage Trading Group, Inc. and G&G Holdings, Inc.
relating to principal offices of Registrant located at 1385 W.
Highway 434, Longwood, Florida(3)
10.6 --Lease between Empire Financial Group, Inc. and G&G Holdings, Inc.
relating to principal offices of Registrant located at 1385 W.
Highway 434, Longwood, Florida(3)
10.7 --Form of Indemnification Agreement between the Registrant and each of
its directors and executive officers*(3)
10.8 --Clearing Agreement between Empire Financial Group, Inc. and Bear
Stearns Securities Corp.(3)
10.9 --Firm Inventory Credit Agreement between Advantage Trading Group,
Inc. and Mercantile Bank National Association (now named Firstar
Corporation), as amended(3)
10.10 --Remote Processing Agreement between SunGard Financial Systems, Inc.
and Advantage Trading Group, Inc.(3)
10.11 --Shareholders Agreement by and among the Registrant, Kevin M. Gagne
and Richard L. Goble(3)
10.12 --Form of Letter Agreement between the Registrant and Donald A.
Wojnowski Jr.(3)
10.13 --Brokerage Credit Agreement between Advantage Trading Group, Inc. and
Firstar Bank, N.A.(3)
16.1 --Letter from Sweeney Gates, & Co. regarding change in certifying
accountants(3)
21.1 --Subsidiaries of the Registrant(3)
23.1 --Consent of Greenberg Traurig, P.A. (included in its opinion filed as
Exhibit 5.1)(3)
23.2 --Consent of Sweeney, Gates & Co.(1)
23.3 --Consent of PricewaterhouseCoopers LLP(1)
23.4 --Consent of Director Appointee Craig Macnab(3)
23.5 --Consent of Director Appointee Gregory M. Misiak(3)
23.6 --Consent of Director Appointee John J. Tsucalas(3)
25.1 --Power of Attorney (included on the signature page of this
Registration Statement)(3)
27.1 --Financial Data Schedule(3)
</TABLE>
--------
* Compensation Plan or Arrangement
(1) Filed herewith.
(2) To be filed by amendment.
(3) Previously filed.

II-2
<PAGE>

(b)Financial Statement Schedules

Schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related instructions
or the required information is provided in the financial statements.

Item 17. Undertakings

The undersigned Registrant hereby undertakes:

(1) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.

(2) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to each
purchaser.

(3) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense or any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

(4) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(5) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 4 to this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Longwood, State of Florida, on September 27, 2000.

Empire Financial Holding Company

/s/ Richard L. Goble
By: _________________________________
Richard L. Goble
Co-Chief Executive Officer

/s/ Kevin M. Gagne
By: _________________________________
Kevin M. Gagne
Co-Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to this Registration Statement has been signed by the following persons
in the capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ Richard L. Goble Co-Chief Executive Officer and September 27,
_________________________________ Director (Co-Principal Executive 2000
Richard L. Goble Officer)

/s/ Kevin M. Gagne Co-Chief Executive Officer and September 27,
_________________________________ Director (Co-Principal Executive 2000
Kevin M. Gagne Officer)

/s/ Patrick E. Rodgers Chief Financial Officer September 27,
_________________________________ (Principal Accounting Officer) 2000
Patrick E. Rodgers
</TABLE>

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
1.1 --Form of Underwriting Agreement
23.2 --Consent of Sweeney, Gates & Co.
23.3 --Consent of PricewaterhouseCoopers LLP
</TABLE>

II-5