<PAGE>
HomeSeekers.com
Unaudited Pro Forma Combined Condensed Financial Statements
The following unaudited pro forma combined condensed financial statements give
effect to the merger of HomeSeekers.com, Incorporated ("HomeSeekers") and
Information Solutions Group, Inc. ("ISG") pursuant to the Agreement and Plan of
Merger (the "Merger"). The unaudited pro forma combined condensed balance sheet
gives effect to the Merger as if it occurred on March 31, 2000. The unaudited
pro forma combined condensed statement of operations gives effect to the Merger
as if it occurred on July 1, 1998.
The pro forma combined condensed financial statements are based on the
historical financial statements of HomeSeekers and ISG, giving effect to the
Merger applying the purchase method of accounting and the assumptions and
adjustments as discussed in the accompanying notes to the pro forma combined
condensed financial statements. The pro forma combined condensed financial
statements for the year ended June 30, 1999 have been prepared by HomeSeekers'
management based upon the audited consolidated financial statements of
HomeSeekers for the year then ended and the unaudited financial statements of
ISG for the year then ended. The pro forma combined condensed financial
statements as of and for the nine months ended March 31, 2000 have been prepared
by HomeSeekers management based upon the unaudited consolidated financial
statements of HomeSeekers and the unaudited financial statements of ISG as of
March 31, 2000 and for the nine months then ended.
The Merger will be accounted for using the purchase method of accounting. The
unaudited pro forma combined condensed financial statements have been prepared
on the basis of assumptions described in the notes thereto and include
assumptions relating to the allocation of the consideration paid for the assets
and liabilities of ISG based on preliminary estimates of their fair value. The
actual allocation of such consideration may differ materially from that
reflected in the unaudited pro forma combined condensed financial statements. In
the opinion of HomeSeekers, all adjustments necessary to present fairly the
unaudited pro forma condensed combined financial statements have been made based
on the proposed terms and structure of the Merger.
The pro forma information is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial position that would
have occurred if the Merger had been consummated on July 1, 1998 or March 31,
2000, respectively, nor is it necessarily indicative of future operating results
or financial position.
These pro forma combined condensed financial statements should be read in
conjunction with the historical consolidated financial statements and the
related notes thereto of HomeSeekers and ISG incorporated by reference and
included herein, respectively.
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HomeSeekers.com
Unaudited Pro Forma Balance Sheet
March 31, 2000
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Combined
HomeSeekers ISG Adjustments Reflecting Merger
--------------- -------------- ----------------- ------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,327 $ 5 $ - $ 6,332
Accounts receivable, net 2,029 153 - 2,182
Accounts receivable, related parties 83 - - 83
Prepaid expenses 658 - - 658
--------------- -------------- ----------------- ------------------
9,097 158 - 9,255
--------------- -------------- ----------------- ------------------
Investments, related party stock 861 - - 861
Other investments 5,730 - - 5,730
Property and equipment, net 4,572 75 - 4,647
Goodwill and other intangible assets, net 15,461 - 6,024 (A) 21,485
Other assets 60 - - 60
--------------- -------------- ----------------- ------------------
$ 35,781 $ 233 $ 6,024 $ 42,038
=============== ============== ================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable $ 452 $ 248 $ - $ 700
Accrued liabilities 3,263 83 100 (B) 3,446
Current portion of capital lease
obligations 99 22 - 121
Line of credit - 35 - 35
Notes payable 1,097 - - 1,097
Deferred revenue 5,110 413 - 5,523
--------------- -------------- ----------------- ------------------
Total current liabilities 10,021 801 100 10,922
Capital lease obligations - 48 - 48
Deferred revenue 196 - - 196
Stockholders' equity (deficit):
Common stock 18 8 (8)(A) 18
Additional paid in capital 53,950 226 5,082 (A) 59,258
Deferred stock compensation - (169) 169 (A) -
Notes receivable, officer/stockholder (320) - - (320)
Accumulated deficit (27,933) (681) 681 (A) (27,933)
Unrealized loss on securities (151) - - (151)
--------------- -------------- ----------------- ------------------
Total stockholders' equity (deficit) 25,564 (616) 5,924 30,872
--------------- -------------- ----------------- ------------------
$ 35,781 $ 233 $ 6,024 $ 42,038
=============== ============== ================= ==================
</TABLE>
(A) Reflects the allocation of the purchase price, based on estimated fair
values, to the historical ISG balance sheet. The adjustment includes
approximately $4.6 million of goodwill and approximately $1.5 million of
other intangible assets. The adjustment also reflects the elimination of
the ISG stockholders' equity accounts. The increase in additional paid-in
capital reflects the value of the shares to be issued by HomeSeekers to ISG
stockholders.
(B) Reflects estimated costs attributable to the transaction for HomeSeekers
($0.1 million).
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HomeSeekers.com
Unaudited Pro Forma Statement of Operations
For the nine months ended March 31, 2000
(In thousands, except share and per share
amounts)
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Combined
HomeSeekers ISG Adjustments Reflecting Merger
---------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Revenues $ 4,312 $ 2,384 $ - $ 6,696
Costs and expenses:
Cost of sales 1,189 1,393 - 2,582
Operating expenses 8,326 1,469 1,049 (A) 10,844
---------------- ----------------- ----------------- ------------------
Total costs and expenses 9,515 2,862 1,049 13,426
---------------- ----------------- ----------------- ------------------
Loss from operations (5,203) (478) (1,049) (6,730)
Other income (expense):
Interest expense (8) (7) - (15)
Investment income 53 2 - 55
Other gain 56 - - 56
Minority interest income 1 - - 1
---------------- ----------------- ----------------- ------------------
Total other income (expense) 102 (5) - 97
---------------- ----------------- ----------------- ------------------
Net loss (5,101) (483) (1,049) (6,633)
Other comprehensive income 83 - - 83
---------------- ----------------- ----------------- ------------------
Net comprehensive loss $ (5,018) $ (483) $ (1,049) $ (6,550)
================ ================= ================= ==================
Basic and diluted net loss per common
share $ (0.29) $ (0.08)(B) $ (0.37)
================ ================= ==================
Shares used in the calculation of basic
and diluted net loss per common share 17,665,329 279,582 (B) 17,944,911
================ ================= ==================
</TABLE>
(A) Reflects the amortization of goodwill and other intangible assets
identified in the purchase price allocation.
(B) Reflects the shares of HomeSeekers common stock issued in the
transaction and the increase in net loss per common share for the net
loss of ISG.
<PAGE>
HomeSeekers.com
Unaudited Pro Forma Statement of Operations
For the year ended June 30, 1999
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Combined
HomeSeekers ISG Adjustments Reflecting Merger
--------------- -------------- --------------- -------------------
<S> <C> <C> <C> <C>
Revenues $ 3,419 $ 1,718 $ - $ 5,137
Costs and Expenses:
Cost of sales 567 821 - 1,388
Operating expenses 8,009 1,060 1,398 (A) 10,467
--------------- -------------- --------------- -------------------
Total costs and expenses 8,576 1,881 1,398 11,855
--------------- -------------- --------------- -------------------
Loss from operations (5,157) (163) (1,398) (6,718)
Other income (expense)
Interest expense (31) - - (31)
Investment income 192 - - 192
Gain on sale of marketable securities 200 - - 200
Other (44) - - (44)
--------------- -------------- --------------- -------------------
Total other income 317 - - 317
--------------- -------------- --------------- -------------------
Loss before provision for income taxes (4,840) (163) (1,398) (6,401)
Income tax expense (2) - - (2)
--------------- -------------- --------------- -------------------
Net loss (4,842) (163) (1,398) (6,403)
Dividends on preferred stock (595) - - (595)
--------------- -------------- --------------- -------------------
--------------- -------------- --------------- -------------------
Net loss attributable to common
stockholders $ (5,437) $ (163) $ (1,398) $ (6,998)
=============== ============== =============== ===================
Basic and diluted net loss per common
share $ (0.53) $ (0.14)(B) $ (0.67)
=============== =============== ===================
Shares used in the calculation of basic
and diluted net loss per common share 10,235,286 279,582 (B) 10,514,868
=============== =============== ===================
</TABLE>
(A) Reflects the amortization of goodwill and other intangible assets
identified in the purchase price allocation.
(B) Reflects the shares of HomeSeekers common stock issued in the
transaction and the increase in net loss per common share for the net
loss of ISG.
<PAGE>
HomeSeekers.com
Notes to Unaudited Pro Forma
Combined Condensed Financial Statements
NOTE 1
The unaudited pro forma combined condensed balance sheet of HomeSeekers and
ISG has been prepared as if the Merger, which is being accounted for as a
purchase, was completed as of March 31, 2000. Based on an average of closing
prices per share of HomeSeekers common stock just prior to and after April 3,
2000 (the agreement and announcement date of the merger) such balance sheet
reflects the conversion of ISG common stock outstanding as of March 31, 2000
(906,137 shares) into approximately 280,000 shares of HomeSeekers common
stock valued at $4.2 million. The terms of the Merger Agreement provide for
additional shares to be issued in the event that ISG revenues exceed certain
targeted levels. This additional value has been estimated at $0.9 million
based upon current revenue levels of ISG, and is subject to further
adjustment. The aggregate purchase price to be allocated to the acquired
assets and goodwill is estimated to be approximately $6.3 million, consisting
of the following:
<TABLE>
<CAPTION>
<S> <C>
HomeSeekers common stock $ 5,100
Liabilities assumed 1,100
Estimated transaction costs 100
------------------
$ 6,300
==================
</TABLE>
A summary of the purchase price allocation is as follows:
<TABLE>
<CAPTION>
<S> <C>
Tangible assets acquired $ 200
Goodwill 4,600
Customer list 1,000
Assembled workforce 500
------------------
$ 6,300
==================
</TABLE>
The allocation of the ISG purchase price is preliminary and is based on
management's estimate of the fair value of the assets, goodwill and other
intangible assets acquired. The final allocation of the purchase price could be
materially different from the current estimate.
The goodwill will be amortized over 5 years from the date of acquisition. The
other intangibles will be amortized over a useful life of 3 years.
NOTE 2
The unaudited pro forma combined condensed statements of operations of
HomeSeekers and ISG have been prepared as if the Merger was completed as of July
1, 1998, and reflects the amortization of goodwill and other intangible assets
for the year ended June 30, 1999 and the nine months ended March 31, 2000.
<PAGE>
NOTE 3
The shares used in computing the unaudited pro forma combined net loss per share
for the year ended June 30, 1999 and the nine months ended March 31, 2000 are
based upon the historical weighted average common shares outstanding adjusted to
reflect the issuance, as of July 1, 1998, of approximately 280,000 shares of
HomeSeekers common stock as described in Note 1.
