##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                         
|          
|          
|          
|          
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|          
|          
|          
|          
|           |  | For the quarterly period ended September 30, 2001                                       
|          
|          
|          
|          
|           |  | or                                                                                      
|          
|          
|          
|          
|[ ]        |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|          
|          
|          
|          
|           |  | For the transition period from ________________ to _______________                      

Commission File Number: 000-25273

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
(Exact name of registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-3422536                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  |                                     
|360 Central Avenue, St. Petersburg, Florida                    |  | 33701                               
|                                                               |  |                                     
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

(727) 803-2040

---

Registrants telephone
number, including area code


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

Indicate the number of shares outstanding of each of the issuers classes
of common stock as of the latest practicable date:

Class: Common Stock, $.01 par value                Outstanding at September 30, 2001:
12,800,261





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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.

Form 10-Q Quarterly Report

TABLE OF CONTENTS

|                              |         |                                                                                                                                  |  |            
|----------------------------- | ------- | -------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|                              |         |                                                                                                                                  |  | Page Number
|                              |         |                                                                                                                                  |  |            
|PART I. FINANCIAL INFORMATION |         |                                                                                                                                 
|                             
|                             
|                             
|                             
|                              | Item 1. | Financial Statements                                                                                                             |  | 1          
|                             
|                             
|                             
|                             
|                              |         | Consolidated Balance Sheets as of December 31, 2000 and September 30, 2001                                                       |  | 1          
|                             
|                             
|                             
|                             
|                              |         | Consolidated Statements of Operations for the three months and
nine months ended September 30, 2000 and 2001                     |  | 2          
|                             
|                             
|                             
|                             
|                              |         | Consolidated Statement of Shareholders Equity for the year ended
December 31, 2000 and the nine months ended September 30, 2001 |  | 3          
|                             
|                             
|                             
|                             
|                              |         | Consolidated Statements of Cash Flows for the nine months ended September 30,
2000 and 2001                                      |  | 4          
|                             
|                             
|                             
|                             
|                              |         | Notes to Consolidated Financial Statements                                                                                       |  | 5          
|                             
|                             
|                             
|                             
|                              | Item 2. | Managements Discussion and Analysis of Financial Condition and Results
of Operations                                            |  | 10         
|                             
|                             
|                             
|                             
|                              | Item 3. | Quantitative and Qualitative Disclosures about Market Risk                                                                       |  | 15         
|                             
|                             
|                             
|                             
|PART II. OTHER INFORMATION    |         |                                                                                                                                 
|                             
|                             
|                             
|                             
|                              | Item 1. | Legal Proceedings                                                                                                                |  | 16         
|                             
|                             
|                             
|                             
|                              | Item 5. | Other Information                                                                                                                |  | 16         
|                             
|                             
|                             
|                             
|                              | Item 6. | Exhibits and Reports on Form 8-K                                                                                                 |  | 19         

The statements contained in this report on Form 10-Q that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Companys expectations, hopes,
beliefs, intentions, or strategies regarding the future. Forward-looking
statements include statements regarding, among other things:
(i) the ability of the Company to meet anticipated working
capital and capital expenditure requirements; (ii) the ability
of the Company to consummate the pending sale of its Geotrac of
America, Inc. subsidiary; (iii) the Companys financing
plans; (iv) trends affecting the Companys financial condition or results of
operations; (v) the Companys growth and operating strategies; (vi) the financial
condition of the Companys clients; (vii) the ability of
the Company to control costs; (viii) the declaration and payment of dividends;
(ix) the impact of general economic
conditions and interest rate fluctuations on the demand for the Companys
services, including flood zone determination services; (x) the outcome of
certain litigation and administrative proceedings involving the Companys
principal customer; (xi) changes in existing service
agreements and arrangements; (xii) the ability to obtain new customers and
retain existing customers; (xiii) the ability to obtain third-party information
technology outsourcing services on a timely basis and at reasonable costs; and
(xiv) the ability to achieve expected expense reductions as a result of
management initiatives. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. All forward-looking statements included in this document are based on
information available to the Company on the date hereof and the Company assumes
no obligation to update any such forward-looking statement. Among the factors
that could cause actual results to differ materially are the factors detailed
in Item 2 of this Report and the risks discussed under the caption Risk
Factors included in the Companys Annual Report on Form 10-K for the year
ended December 31, 2000, as filed with the Securities Exchange Commission on
April 17, 2001. Prospective investors should also consult the risks described
from time to time in the Companys Reports on Form 10-Q, 8-K and 10-K and
Annual Reports to Shareholders.

ii



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##### 



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |            |             |  | 
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------------------------ | ------------------------------------ | ---------- | ------------ | ---------- | ------------- | ---------- | ----------- |  | 
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            | December 31, |            | September 30,
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            | 2000         |            | 2001         
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |              
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |            | (unaudited)
|ASSETS                               |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |              
|                                    
|                                    
|                                    
|                                    
|CURRENT ASSETS                       |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |              
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                                                                       |                      | $                                          | 5,192,161                            |            |              | $          | 8,419,601     |           
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable, net                                                                                                                                        |                      |                                            | 3,789,288                            |            |              |            | 4,082,479     |           
|                                    
|                                    
|                                    
|                                    
|                                     | Due from affiliates                                                                                                                                             |                      |                                            | 2,615,699                            |            |              |            | 9,907,036     |           
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses and other assets                                                                                                                               |                      |                                            | 1,573,037                            |            |              |            | 1,301,796     |           
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |           
|                                     |                                                                                                                                                                 | Total current assets |                                            | $                                    | 13,170,185 |              |            | $             | 23,710,912 |            
|                                    
|                                    
|                                    
|                                    
|PROPERTY AND EQUIPMENT, net          |                                                                                                                                                                 |                      | 9,116,552                                  |                                      |            |              | 10,373,045 |              
|                                    
|                                    
|                                    
|                                    
|OTHER ASSETS                         |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |              
|                                    
|                                    
|                                    
|                                    
|                                     | Goodwill, net                                                                                                                                                   |                      |                                            | 15,352,001                           |            |              |            | 14,672,754    |           
|                                    
|                                    
|                                    
|                                    
|                                     | Customer contracts, net                                                                                                                                         |                      |                                            | 916,667                              |            |              |            | 766,667       |           
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred tax assets                                                                                                                                             |                      |                                            | 682,081                              |            |              |            | 629,617       |           
|                                    
|                                    
|                                    
|                                    
|                                     | Capitalized software costs, net                                                                                                                                 |                      |                                            | 1,044,846                            |            |              |            | 700,715       |           
|                                    
|                                    
|                                    
|                                    
|                                     | Other                                                                                                                                                           |                      |                                            | 483,216                              |            |              |            | 129,448       |           
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |           
|                                     |                                                                                                                                                                 |                      | Total assets                               |                                      | $          | 40,765,548   |            |               | $          | 50,983,158  | 
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |           
|                                     |                                                                                                                                                                 |                      |                                            | LIABILITIES AND SHAREHOLDERS EQUITY |            |              |            |               |            |             |  | 
|                                    
|                                    
|                                    
|                                    
|CURRENT LIABILITIES                  |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |            |             |  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Current portion of long-term debt                                                                                                                               |                      | $                                          | 219,857                              |            |              | $          | 79,562        |           
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable, trade                                                                                                                                         |                      |                                            | 2,370,825                            |            |              |            | 1,864,617     |           
|                                    
|                                    
|                                    
|                                    
|                                     | Due to affiliates                                                                                                                                               |                      |                                            |                                     |            |              |            | 306,602       |           
|                                    
|                                    
|                                    
|                                    
|                                     | Employee related accrued expenses                                                                                                                               |                      |                                            | 1,693,823                            |            |              |            | 2,374,307     |           
|                                    
|                                    
|                                    
|                                    
|                                     | Other accrued expenses                                                                                                                                          |                      |                                            | 2,008,201                            |            |              |            | 3,125,520     |           
|                                    
|                                    
|                                    
|                                    
|                                     | Income taxes payable                                                                                                                                            |                      |                                            | 557,676                              |            |              |            | 3,518,852     |           
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |           
|                                     |                                                                                                                                                                 |                      | Total current liabilities                  |                                      | $          | 6,850,382    |            |               | $          | 11,269,460  | 
|                                    
|                                    
|                                    
|                                    
|LONG-TERM DEBT, LESS CURRENT PORTION |                                                                                                                                                                 |                      |                                           |                                      |            |              | 161,584    |              
|                                    
|                                    
|                                    
|                                    
|DEFERRED REVENUE                     |                                                                                                                                                                 |                      | 802,578                                    |                                      |            |              | 883,541    |              
|                                    
|                                    
|                                    
|                                    
|SHAREHOLDERS EQUITY                 |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |              
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred Stock, $.01 par value; 20,000,000 shares
authorized, no shares issued and outstanding                                                                 |                      |                                            |                                     |            |              |            |              |           
|                                    
|                                    
|                                    
|                                    
|                                     | Common Stock, $.01 par value; 100,000,000 shares authorized,
12,800,261 shares issued and outstanding at
December 31, 2000 and September 30, 2001, respectively |                      |                                            | 128,002                              |            |              |            | 128,002       |           
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                                                      |                      |                                            | 27,545,901                           |            |              |            | 27,680,901    |           
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                                                                                               |                      |                                            | 5,438,685                            |            |              |            | 10,859,670    |           
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |           
|                                     |                                                                                                                                                                 |                      | Total shareholders equity                 |                                      | $          | 33,112,588   |            |               | $          | 38,668,573  | 
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |           
|                                     |                                                                                                                                                                 |                      | Total liabilities and shareholders equity |                                      | $          | 40,765,548   |            |               | $          | 50,983,158  | 
|                                     |                                                                                                                                                                 |                      |                                            |                                      |            |              |            |               |           

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

1



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##### 



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS

|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |            | 
|----------------------------------------------- | ---------------------------------------------- | ---------------------------- | ---------- | ------------------ | ---------- | ----------------- | ---------- | ---------- | ---------- | ---- | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                                |                                                |                              |            | Three Months Ended |            | Nine Months Ended
|                                                |                                                |                              |            | September 30,      |            | September 30,    
|                                                |                                                |                              |            |                    |            |                  
|                                                |                                                |                              |            | 2000               |            | 2001              |            | 2000       |            | 2001
|                                                |                                                |                              |            |                    |            |                   |            |            |            |     
|                                                |                                                |                              |            | (unaudited)        |            | (unaudited)      
|REVENUES                                        |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |           
|                                               
|                                               
|                                               
|                                               
|                                                | Outsourcing services  affiliated              |                              | $          | 9,677,754          |            |                   | $          | 9,154,505  |            |      | $          | 28,659,004 |            |   | $          | 30,332,599 |           
|                                               
|                                               
|                                               
|                                               
|                                                | Outsourcing services                           |                              |            | 1,744,877          |            |                   |            | 10,385,473 |            |      |            | 4,809,871  |            |   |            | 15,322,563 |           
|                                               
|                                               
|                                               
|                                               
|                                                | Flood zone determination services              |                              |            | 4,471,168          |            |                   |            | 4,927,464  |            |      |            | 12,635,221 |            |   |            | 14,754,430 |           
|                                               
|                                               
|                                               
|                                               
|                                                | Flood zone determination services  affiliated |                              |            | 276,545            |            |                   |            | 339,659    |            |      |            | 749,184    |            |   |            | 892,806    |           
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|                                                |                                                | Total revenues               |            | $                  | 16,170,344 |                   |            | $          | 24,807,101 |      |            | $          | 46,853,280 |   |            | $          | 61,302,398 | 
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|EXPENSES                                        |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |           
|                                               
|                                               
|                                               
|                                               
|                                                | Cost of outsourcing services                   |                              |            | 9,072,449          |            |                   |            | 14,304,945 |            |      |            | 26,826,525 |            |   |            | 31,273,839 |           
|                                               
|                                               
|                                               
|                                               
|                                                | Cost of flood zone determination services      |                              |            | 1,992,061          |            |                   |            | 2,606,756  |            |      |            | 5,852,919  |            |   |            | 7,167,451  |           
|                                               
|                                               
|                                               
|                                               
|                                                | Selling, general and administrative            |                              |            | 3,916,174          |            |                   |            | 3,265,005  |            |      |            | 9,431,440  |            |   |            | 8,808,175  |           
|                                               
|                                               
|                                               
|                                               
|                                                | Management services from Parent                |                              |            | 515,870            |            |                   |            | 498,989    |            |      |            | 1,494,918  |            |   |            | 1,187,506  |           
|                                               
|                                               
|                                               
|                                               
|                                                | Depreciation and amortization                  |                              |            | 1,297,120          |            |                   |            | 1,302,114  |            |      |            | 4,049,729  |            |   |            | 4,026,733  |           
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|                                                |                                                | Total expenses               |            | $                  | 16,793,674 |                   |            | $          | 21,977,809 |      |            | $          | 47,655,531 |   |            | $          | 52,463,704 | 
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|OPERATING INCOME/(LOSS)                         |                                                |                              | ($623,330  | )                  |            | $                 | 2,829,292  |            |            |      | ($802,251  | )          |            | $ | 8,838,694  |           
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|OTHER INCOME/(EXPENSE):                         |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |           
|                                               
|                                               
|                                               
|                                               
|                                                | Interest income                                |                              |            | 71,091             |            |                   |            | 130,458    |            |      |            | 201,247    |            |   |            | 250,492    |           
|                                               
|                                               
|                                               
|                                               
|                                                | Interest expense                               |                              |            | (10,421            | )          |                   |            | (8,353     | )          |      |            | (52,831    | )          |   |            | (13,599    | )         
|                                               
|                                               
|                                               
|                                               
|                                                | Other                                          |                              |            |                   |            |                   |            | (23,001    | )          |      |            |           |            |   |            | (54,388    | )         
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|                                                |                                                | Total other income/(expense) |            | $                  | 60,670     |                   |            | $          | 99,104     |      |            | $          | 148,416    |   |            | $          | 182,505    | 
|                                               
|                                               
|                                               
|                                               
|INCOME/(LOSS) BEFORE PROVISION FOR
INCOME TAXES |                                                |                              | (562,660   | )                  |            |                   | 2,928,396  |            |            |      | (653,835   | )          |            |   | 9,021,299  |           
|                                               
|                                               
|                                               
|                                               
|PROVISION/(BENEFIT) FOR INCOME TAXES            |                                                |                              | (6,117     | )                  |            |                   | 1,147,414  |            |            |      | 99,483     |            |            |   | 3,600,214  |           
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|NET INCOME/(LOSS)                               |                                                |                              | ($556,543  | )                  |            | $                 | 1,780,982  |            |            |      | ($753,318  | )          |            | $ | 5,420,985  |           
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|NET INCOME/(LOSS) PER COMMON SHARE              |                                                |                              | ($.04      | )                  |            | $                 | .14        |            |            |      | ($.06      | )          |            | $ | .42        |           
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           
|Weighted average common shares outstanding      |                                                |                              | 12,800,261 |                    |            |                   | 12,800,261 |            |            |      | 12,791,835 |            |            |   | 12,800,261 |           
|                                                |                                                |                              |            |                    |            |                   |            |            |            |      |            |            |            |   |            |            |           

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

2



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##### 



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIESCONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

|                                          |                                                                                          |   |         |       |         |   |            |         |       |   |            |           |   |   |            |           |  
|----------------------------------------- | ---------------------------------------------------------------------------------------- | - | ------- | ----- | ------- | - | ---------- | ------- | ----- | - | ---------- | --------- | - | - | ---------- | --------- | -
|                                          |                                                                                          |   |         |       |         |   | Additional |         |       |   |            |           |   |   |           
|                                          |                                                                                          |   | Common  |       | Paid-In |   | Retained   |         |       |   |           
|                                          |                                                                                          |   | Stock   |       | Capital |   | Earnings   |         | Total
|                                          |                                                                                          |   |         |       |         |   |            |         |      
|Balance at January 1, 2000                |                                                                                          | $ | 126,787 |       |         | $ | 26,810,282 |         |       | $ | 5,948,051  |           |   | $ | 32,885,120 |          
|                                         
|                                         
|                                         
|                                         
|                                          | Issuance of Common Stock as
partial
consideration for the
acquisition of
Colonial Claims |   |         | 1,215 |         |   |            | 298,785 |       |   |            |          |   |   |            | 300,000   |  
|                                         
|                                         
|                                         
|                                         
|                                          | Initial public offering of
Common Stock,
net of offering costs                           |   |         |      |         |   |            | 338,200 |       |   |            |          |   |   |            | 338,200   |  
|                                         
|                                         
|                                         
|                                         
|                                          | Issuance of stock options to
non-employees                                               |   |         |      |         |   |            | 98,634  |       |   |            |          |   |   |            | 98,634    |  
|                                         
|                                         
|                                         
|                                         
|                                          | Net income/(loss)                                                                        |   |         |      |         |   |            |        |       |   |            | (509,366  | ) |   |            | (509,366  | )
|                                          |                                                                                          |   |         |       |         |   |            |         |       |   |            |           |   |   |            |          
|                                         
|                                         
|                                         
|                                         
|Balance at December 31, 2000              |                                                                                          | $ | 128,002 |       |         | $ | 27,545,901 |         |       | $ | 5,438,685  |           |   | $ | 33,112,588 |          
|                                          | Compensation expenses related to
stock
Options issued to non-employees
(unaudited)       |   |         |      |         |   |            | 135,000 |       |   |            |          |   |   |            | 135,000   |  
|                                         
|                                         
|                                         
|                                         
|                                          | Net income/(loss) (unaudited)                                                            |   |         |      |         |   |            |        |       |   |            | 5,420,985 |   |   |            | 5,420,985 |  
|                                          |                                                                                          |   |         |       |         |   |            |         |       |   |            |           |   |   |            |          
|Balance at September 30, 2001
(unaudited) |                                                                                          | $ | 128,002 |       |         | $ | 27,680,901 |         |       | $ | 10,859,670 |           |   | $ | 38,668,573 |          
|                                          |                                                                                          |   |         |       |         |   |            |         |       |   |            |           |   |   |            |          

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

3



---



##### 



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |           |             |  
|------------------------------------------------- | -------------------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------------------- | --------------------------------------------------- | ---------- | ------------------------------- | ----------- | ------- | ---------- | --------- | ----------- | -
|                                                  |                            |                                                                                          |                                                             |                                                     |            | Nine Months Ended September 30,
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                
|                                                  |                            |                                                                                          |                                                             |                                                     |            | 2000                            |             | 2001   
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |        
|                                                  |                            |                                                                                          |                                                             |                                                     |            | (unaudited)                    
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                            |                                                                                          |                                                             |                                                     |            |                                 |             |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            | Net income/(loss)                                                                        |                                                             |                                                     | ($753,318  | )                               |             | $       | 5,420,985  |          
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            | Adjustments to reconcile net income/(loss) to net cash
provided by
operating activities: |                                                             |                                                     |            |                                 |             |         |            |          
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          | Depreciation and amortization                               |                                                     |            | 4,049,729                       |             |         |            | 4,026,733 |            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          | Loss on disposal of property and equipment                  |                                                     |            | 177,546                         |             |         |            | 393,494   |            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          | Non-employee stock options                                  |                                                     |            | 135,000                         |             |         |            | 135,000   |            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          | Non-cash compensation expense related to phantom stock
plan |                                                     |            | 338,200                         |             |         |            |          |            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          | Deferred income taxes, net                                  |                                                     |            | 376,386                         |             |         |            | 52,464    |            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          | Changes in assets and liabilities:                          |                                                     |            |                                 |             |         |            |           |            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Accounts receivable                                 |            |                                 | 518,096     |         |            |           | (293,191    | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Income taxes recoverable                            |            |                                 | (314,006    | )       |            |           |            |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Prepaid expenses and other current assets           |            |                                 | 104,425     |         |            |           | 148,386     |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Other assets                                        |            |                                 | (478,992    | )       |            |           | (44,736     | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Accounts payable, trade                             |            |                                 | 896,425     |         |            |           | (506,208    | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Employee related accrued expenses                   |            |                                 | 225,376     |         |            |           | 680,484     |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Other accrued expenses                              |            |                                 | 738,525     |         |            |           | 1,117,319   |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Income taxes payable                                |            |                                 | (413,241    | )       |            |           | 2,961,176   |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            |                                                                                          |                                                             | Deferred revenue                                    |            |                                 | (185,207    | )       |            |           | 80,963      |  
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|                                                  |                            |                                                                                          |                                                             | Net cash provided by operating activities           |            | $                               | 5,414,944   |         |            | $         | 14,172,869  |  
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                            |                                                                                          |                                                             |                                                     |            |                                 |             |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            | Purchases of property and equipment                                                      |                                                             |                                                     | (4,081,015 | )                               |             |         | (4,451,577 | )        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            | Issuance of note receivable                                                              |                                                             |                                                     | (500,000   | )                               |             |         | (5,049,452 | )        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            | Collection of note receivable                                                            |                                                             |                                                     |           |                                 |             |         | 469,594    |          
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|                                                  |                            |                                                                                          |                                                             | Net cash used in investing activities               |            |                                 | ($4,581,015 | )       |            |           | ($9,031,435 | )
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                            |                                                                                          |                                                             |                                                     |            |                                 |             |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            | Net borrowings under line of credit                                                      |                                                             |                                                     |           |                                 |             |         |           |          
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            | Repayment of debt                                                                        |                                                             |                                                     | (392,374   | )                               |             |         | 21,289     |          
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                            | Net advances to/from
affiliates                                                          |                                                             |                                                     | 63,050     |                                 |             |         | (1,935,283 | )        
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|                                                  |                            |                                                                                          |                                                             | Net cash provided by/(used in) financing activities |            |                                 | ($329,324   | )       |            |           | ($1,913,994 | )
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS  |                            |                                                                                          | 504,605                                                     |                                                     |            |                                 | 3,227,440   |        
|                                                 
|                                                 
|                                                 
|                                                 
|CASH AND CASH EQUIVALENTS, beginning of period    |                            |                                                                                          | 4,702,861                                                   |                                                     |            |                                 | 5,192,161   |        
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|CASH AND CASH EQUIVALENTS, end of period          |                            | $                                                                                        | 5,207,466                                                   |                                                     |            | $                               | 8,419,601   |        
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW
ACTIVITIES: |                            |                                                                                          |                                                             |                                                     |            |                                 |             |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cash paid for interest     |                                                                                          | $                                                           | 50,557                                              |            |                                 | $           | 13,599  |           
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          
|                                                  | Cash paid for income taxes |                                                                                          | $                                                           | 450,345                                             |            |                                 | $           | 586,574 |           
|                                                  |                            |                                                                                          |                                                             |                                                     |            |                                 |             |         |            |          

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

4



---



##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements of Insurance Management
Solutions Group, Inc. and subsidiaries (the Company) have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
disclosures required by generally accepted accounting principles. In the
opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments, consisting of normal and recurring
adjustments, necessary for a fair presentation of the consolidated financial
position, results of operations and cash flows for the periods presented. The
accompanying consolidated financial statements should be read in conjunction
with the Companys Annual Report on Form 10-K for the year ended December 31,
2000, as filed with the Securities and Exchange Commission on April 17, 2001.
The results of operations for the three months and nine months ended September
30, 2001 are not necessarily indicative of the results that should be expected
for a full fiscal year.

Net Income/(Loss) Per Common Share

Net income/(loss) per common share, which represents both basic and diluted
earnings per share (EPS), is computed by dividing net income/(loss) by the
weighted average common shares outstanding. The following table reconciles the
numerator and denominator of the basic and dilutive EPS computation:

|             |                                                                                                  |  |                    |            |                   |  |      |            |      |  |  |            |   |  |   |            | 
|------------ | ------------------------------------------------------------------------------------------------ |  | ------------------ | ---------- | ----------------- |  | ---- | ---------- | ---- |  |  | ---------- | - |  | - | ---------- | 
|             |                                                                                                  |  | Three Months Ended |            | Nine Months Ended
|             |                                                                                                  |  | September 30,      |            | September 30,    
|             |                                                                                                  |  |                    |            |                  
|             |                                                                                                  |  | 2000               |            | 2001              |  | 2000 |            | 2001
|             |                                                                                                  |  |                    |            |                   |  |      |            |     
|Numerator:   |                                                                                                  |  |                    |            |                   |  |      |            |      |  |  |            |   |  |   |           
|            
|            
|            
|            
|             | Net income/(loss)                                                                                |  |                    | ($556,543  | )                 |  | $    | 1,780,982  |      |  |  | ($753,318  | ) |  | $ | 5,420,985  | 
|             |                                                                                                  |  |                    |            |                   |  |      |            |      |  |  |            |   |  |   |            | 
|Denominator: |                                                                                                  |  |                    |            |                   |  |      |            |      |  |  |            |   |  |   |           
|            
|            
|            
|            
|             | Weighted average number of Common Shares
used in basic EPS                                       |  |                    | 12,800,261 |                   |  |      | 12,800,261 |      |  |  | 12,791,835 |   |  |   | 12,800,261 | 
|            
|            
|            
|            
|             | Diluted stock options                                                                            |  |                    |           |                   |  |      |           |      |  |  |           |   |  |   |           | 
|             |                                                                                                  |  |                    |            |                   |  |      |            |      |  |  |            |   |  |   |            | 
|             | Weighted average number of Common Shares
and diluted potential Common Shares used in
diluted EPS |  |                    | 12,800,261 |                   |  |      | 12,800,261 |      |  |  | 12,791,835 |   |  |   | 12,800,261 | 
|             |                                                                                                  |  |                    |            |                   |  |      |            |      |  |  |            |   |  |   |            | 

For the nine months ended September 30, 2000 and 2001, options to purchase
703,000 and 548,500 shares, respectively, of Common Stock were outstanding
during the periods but were not included in the computation of diluted earnings
per share because the options exercise prices were greater than the average
market price of the Common Stock, and therefore, the effect would be
antidilutive.

Reclassifications

Certain prior year balances have been reclassified in order to conform to the
current years presentation.

New Accounting Pronouncements

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141, Business Combinations,
and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all
business combinations completed after June 30, 2001. SFAS 142 is effective for
the year beginning January 1, 2002; however certain provisions of that
Statement apply to goodwill and other intangible assets acquired between July
1, 2001 and the effective date of SFAS 142. The Company has not yet analyzed
the effect of these new standards; accordingly, the Company is unable at
present to state what effect the adoption of these standards will have on the
Companys financial statements.

In August 2001, the FASB issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. This statement addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and
supersedes FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of. The provisions of the statement are effective for
financial statements issued for fiscal years beginning after
December 15, 2001. The Company is evaluating the impact of the
adoption of this standard and has not yet determined the effect of
adoption on its financial position and results of operations.

5



---



##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 2. RESTRICTED NET ASSETS AND RETAINED EARNINGS

In conjunction with the Companys acquisition
of Geotrac, Inc., it entered into a
Corporate Governance Agreement, dated July 31, 1998, with Geotrac of America,
Inc. (Geotrac) and Daniel J. White (Mr. White), Geotracs president and
majority shareholder of Geotrac, Inc. prior to the acquisition, setting forth certain terms and conditions
pertaining to the operation of Geotrac. This agreement contains, among other
things, a provision that restricts the Companys ability to make distributions
or transfer funds from Geotrac by means of intercompany loans, advances or
dividends without the unanimous approval of Geotracs Board of
Directors. Mr.
White is presently a director of Geotrac. Therefore, pursuant to the Corporate
Governance Agreement, Mr. White may impede the Companys ability to access
excess cash balances retained by its Geotrac subsidiary, even if all of the
other directors of Geotrac were to approve the distribution thereof to the
Company. To date, the Company has been able to access Geotracs excess cash
when necessary, primarily through the prepayment of outstanding intercompany
indebtedness. No assurances can be given, however, that the Company will be
able to obtain available cash from Geotrac. If the Company is unable to do so,
it ultimately could have a material adverse effect on the Companys business,
financial condition and results of operations.

On April 2, 2001, the Geotrac Board of
Directors authorized the payment of dividends to the Company, to be distributed
quarterly beginning July 15, 2001 for the next 12 months, based upon Year 2000
earnings of Geotrac. In early August 2001, Geotrac authorized the payment
of an additional dividend to the Company in the amount of $200,000. This dividend was paid on August 22,
2001.

As of September 30, 2001, the Company had total consolidated net assets of
approximately $38.7 million, of which approximately $22.1 million represented
the net assets of Geotrac. As of such date, the tangible net assets of Geotrac
consisted primarily of cash of $3.6 million, other current assets of $4.4
million (including $1.7 million due from affiliates) and current liabilities
of $4.5 million (including $1.1 million due to affiliates). As a result of the
restrictions described in the first paragraph of this note, the Companys
consolidated retained earnings, which totaled $10.9 million as of September 30,
2001, are not completely available for dividend distribution.

With regard to the proposed sale of Geotrac, Inc.,
see Note 6. Proposed Sale of Geotrac of America,
Inc. following.

NOTE 3. CONTINGENCIES

On September 28, 2000, October 25, 2000 and October 30, 2000, three alleged
shareholders of the Company filed three nearly identical lawsuits in the United
States District Court for the Middle District of Florida, each on behalf of a
putative class of all persons who purchased shares of the Companys Common
Stock pursuant and/or traceable to the registration statement for the Companys
February 1999 initial public offering (the IPO). The lawsuits were
consolidated on December 1, 2000, and the consolidated action is proceeding
under Case No. 8:00-CV-2013-T-26MAP. The plaintiffs Consolidated Amended
Class Action Complaint, filed February 7, 2001, names as defendants the
following parties: the Company; Bankers Insurance Group, Inc., the Companys
principal shareholder and customer together with its subsidiaries (BIG);
Venture Capital Corporation, a selling shareholder in the IPO; the five inside
directors of the Company at the time of the IPO; and Raymond James &
Associates, Inc. and Keefe, Bruyette & Woods, Inc., the underwriters for the
IPO. The complaint alleges, among other things, that the defendants violated
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, by
making certain false and misleading statements in the roadshow presentations,
registration statement and prospectus relating to the IPO. More specifically,
the complaint alleges that, in connection with the IPO, the defendants made
various material misrepresentations and/or omissions relating to: (i) the
Companys ability to integrate Geotracs flood zone determination business with
the Companys own flood zone determination business and with its insurance
outsourcing services business; (ii) actual and anticipated synergies between
the Companys flood zone determination and outsourcing services business lines;
and (iii) the Companys use of the IPO proceeds. The complaint seeks
unspecified damages, including interest, and equitable relief, including a
rescission remedy. On July 11, 2001, U.S. District Judge Richard A. Lazzara
denied all of the defendants motions to dismiss the Amended Complaint.

6



---



##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The defendants answers to the Amended
Complaint currently were filed in late August 2001. Written discovery
has commenced and, later this year, various pre-trial deadlines and a
trial date likely will be set.
Management of the Company believes the material allegations of the Amended
Complaint are without merit and intends to vigorously defend the lawsuit. No
assurances can be given, however, with respect to the outcome of the
litigation, and an adverse result could have a material adverse effect on the
Companys business, financial condition and results of operations.

Bankers Insurance Company (BIC), a subsidiary of BIG, and Bankers Life
Insurance Company (BLIC) and Bankers Security Insurance Company (BSIC),
subsidiaries of BIC, have been subject to an investigation by the Florida
Department of Insurance (the DOI), the principal regulator of insurance
activities in the State of Florida, stemming from their use of a private
investigator to gather information on a DOI employee and the private
investigators unauthorized use of illegal wiretaps in connection therewith.
On March 23, 2000, the Treasurer and Insurance Commissioner of the State of
Florida, as head of the DOI, filed an administrative complaint against BIC,
BLIC and BSIC based upon the results of such investigation. The administrative
complaint charges BIC, BLIC and BSIC with violating various provisions of the
Florida Insurance Code including, among other things, a provision requiring
insurance companies to have management, officers or directors that are, among
other things, trustworthy. The complaint further notifies BIC, BLIC and BSIC
that the Insurance Commissioner intends to impose such penalties or take such
other administrative actions as may be proper or appropriate under applicable
law, including possibly entering an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as
insurance companies in the State of Florida.

BIC, BLIC and BSIC have informed the Company that they intend to vigorously
defend against such action, but no assurances can be given as to the outcome
thereof. In the event the DOI were to enter an order suspending or revoking
the certificates of authority of BIC, BLIC and BSIC to conduct business as
insurance companies in the State of Florida, or impose other significant
penalties on any of them, it would materially adversely affect the business
and/or operations of BIG and, in turn, could result in the loss of or material
decrease in the Companys business from BIG, which would have a material
adverse effect on the Companys business, financial condition and results of
operations.

On November 19, 1999, the United States, on behalf of the Federal Emergency
Management Association (FEMA), filed a civil action against BIC in the U.S.
District Court for the District of Maryland stemming from FEMAs investigation
of certain cash management and claims processing practices of BIC in connection
with its participation in the National Flood Insurance Program (NFIP). The
complaint alleges, among other things, that BIC knowingly failed to report and
pay interest income it had earned on NFIP funds to the United States in
violation of the False Claims Act. The complaint further alleges various
common law theories, including fraud, breach of contract, unjust enrichment and
negligent misrepresentation. The complaint seeks civil penalties of $1.08
million and actual damages of approximately $1.1 million as well as treble,
punitive and consequential damages, costs and interest. The suit is currently
administratively closed pending an appeal on the preliminary issue of whether
the controversy is subject to arbitration. BIC has informed the Company that
it intends to vigorously defend against the action, but no assurances can be
given as to the outcome thereof. However, BIG and its legal counsel have
advised the Company that an adverse judgment in this action would not have a
material adverse affect on the business and/or operations of BIC, although no
assurances can be given in this regard.

7



---



##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

FEMAs investigation of certain claims processing practices of BIC in
connection with its participation in the NFIP is continuing, and BIC has
produced documentation in connection therewith. If the parties are unable to
reach agreement in these matters, the United States could amend its complaint
against BIC to add additional claims under the False Claims Act and/or various
common law and equitable theories relating to such matters. In the event such
continuing investigation or any consequence thereof materially adversely
affects the business or operations of BIC, it could result in the loss of or
material decrease in the Companys business from BIC, which would have a
material adverse effect on the Companys business, financial condition and
results of operations.

The Company is involved in various legal actions arising in the ordinary course
of business. Management believes that the ultimate resolution of these actions
will not have a material adverse effect on the Companys financial position,
results of operations, or liquidity, although no assurances can be given in
this regard.

NOTE 4. SEGMENT INFORMATION

The following table presents summarized financial information for the Companys
reportable segments:

|                                                    |  |             |             |                |  |              |            |              |  |              |              |   |  |   |            |  
|--------------------------------------------------- |  | ----------- | ----------- | -------------- |  | ------------ | ---------- | ------------ |  | ------------ | ------------ | - |  | - | ---------- | -
|                                                    |  |             |             |                |  |              |            |              |  | Intercompany |              |   |  |  
|                                                    |  | Outsourcing |             | Flood Zone     |  | Eliminations |            | Consolidated
|                                                    |  | Services    |             | Determinations |  | and Other    |            | Totals      
|                                                    |  |             |             |                |  |              |            |             
|Three months ended September 30,
2000 - (unaudited) |  |             |             |                |  |              |            |              |  |              |              |   |  |   |            |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues  affiliated                     |  | $           | 9,959,049   |                |  | $            | 276,545    |              |  |              | ($281,295    | ) |  | $ | 9,954,299  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues  unaffiliated                   |  | $           | 1,744,877   |                |  | $            | 4,471,168  |              |  |              |             |   |  | $ | 6,216,045  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating income/(loss)                             |  |             | ($1,791,038 | )              |  | $            | 1,167,708  |              |  |              |             |   |  |   | ($623,330  | )
|                                                   
|                                                   
|                                                   
|                                                   
|Identifiable assets                                 |  | $           | 29,606,136  |                |  | $            | 26,926,790 |              |  |              | ($16,427,631 | ) |  | $ | 40,105,295 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Three months ended September 30,
2001 - (unaudited) |  |             |             |                |  |              |            |              |  |              |              |   |  |   |            |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues  affiliated                     |  | $           | 9,491,564   |                |  | $            | 339,659    |              |  |              | ($337,059    | ) |  | $ | 9,494,164  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues  unaffiliated                   |  | $           | 10,385,473  |                |  | $            | 4,927,464  |              |  |              |             |   |  | $ | 15,312,937 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating income/(loss)                             |  | $           | 2,020,067   |                |  | $            | 809,225    |              |  |              |             |   |  | $ | 2,829,292  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Identifiable assets                                 |  | $           | 39,147,649  |                |  | $            | 27,437,480 |              |  |              | ($15,601,971 | ) |  | $ | 50,983,158 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Nine months ended September 30, 2000
- (unaudited)  |  |             |             |                |  |              |            |              |  |              |              |   |  |   |            |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues  affiliated                     |  | $           | 29,437,938  |                |  | $            | 749,184    |              |  |              | ($778,934    | ) |  | $ | 29,408,188 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues  unaffiliated                   |  | $           | 4,809,871   |                |  | $            | 12,635,221 |              |  |              |             |   |  | $ | 17,445,092 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating income/(loss)                             |  |             | ($3,548,462 | )              |  | $            | 2,746,211  |              |  |              |             |   |  |   | ($802,251  | )
|                                                   
|                                                   
|                                                   
|                                                   
|Identifiable assets                                 |  | $           | 29,606,136  |                |  | $            | 26,926,790 |              |  |              | ($16,427,631 | ) |  | $ | 40,105,295 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Nine months ended September 30, 2001
- (unaudited)  |  |             |             |                |  |              |            |              |  |              |              |   |  |   |            |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues  affiliated                     |  | $           | 31,225,405  |                |  | $            | 892,806    |              |  |              | ($892,806    | ) |  | $ | 31,225,405 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating revenues  unaffiliated                   |  | $           | 15,322,563  |                |  | $            | 14,754,430 |              |  |              |             |   |  | $ | 30,076,993 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Operating income/(loss)                             |  | $           | 5,682,391   |                |  | $            | 3,156,303  |              |  |              |             |   |  | $ | 8,838,694  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Identifiable assets                                 |  | $           | 39,147,649  |                |  | $            | 27,437,480 |              |  |              | ($15,601,971 | ) |  | $ | 50,983,158 |  

8



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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 5. RELATED PARTY TRANSACTIONS

Secured Line of Credit with BIG

On August 14, 2001, the Company entered into a Credit and Security Agreement
with BIG (together with the related loan documentation, the Credit
Agreement), pursuant to which the Company established a short-term, secured
line of credit in favor of BIG in the amount of up to $5.0 million (the Line
of Credit). As of the date of this Report, the aggregate principal amount
outstanding under the Line of Credit is $5.0 million. The principal purpose of
the Line of Credit is to assist BIG, the Companys principal customer and
shareholder, with certain short-term working capital needs.

Pursuant to the Credit Agreement, interest is payable monthly on amounts
outstanding under the Line of Credit at an annual rate equal to the Prime Rate
(as defined in the Credit Agreement), plus 1.5%. The Credit Agreement further
provides that the Line of Credit will expire on February 28, 2002, unless
repaid in full prior to such time or otherwise terminated pursuant to the terms
of the Credit Agreement.

The Line of Credit is secured by (i) a first lien security interest in all
accounts and contract rights of Bankers Underwriters, Inc., a wholly-owned
subsidiary of BIG (BUI), with insurance agents (including but not limited to
general agents with respect to the sale of federal flood insurance)
(collectively, the Flood Book), and (ii) an option (the Option) to purchase
from BIG the outstanding capital stock, consisting of 10,898 shares (the
Option Shares) of common stock, $318 par value per share, of First Community
Insurance Company, a New York insurance company licensed in all fifty states
(FCIC). BUI currently is a Florida general insurance agent for FCIC and BIC,
a Florida insurance company licensed in approximately 30 states and a
wholly-owned subsidiary of BIG. As of the date of this Report, management of
the Company believes the fair market value of the Flood Book exceeds the
aggregate principal amount of the Line of Credit.

With respect to the Option, the aggregate exercise price for the Option Shares
is $108,980, or $10.00 per Option Share. The Option Shares are subject to
certain outstanding liens relating to certain indebtedness of BIG having an
aggregate outstanding balance, as of September 30, 2001, totaling approximately
$11.5 million. The Option will become exercisable only at such time as (i)
there shall be a default in the payment of any amounts due under the Credit
Agreement for more than ten days after the date when they shall become due or
(ii) there shall be any other default under the Credit Agreement if, after
notice thereof, such default has not been cured within thirty days of such
notice. In addition, any acquisition of the Option Shares by the Company
pursuant to the Option would require the prior approval of the New York
Department of Insurance. In the event the Option were to be exercised, no
assurances can be given that such approval could be obtained.

The foregoing description of the Line of Credit is qualified in its entirety by
reference to the Credit and Security Agreement, dated August 14,
2001, including the related Master Promissory Note, Collateral Assignment of Flood Book and Stock Option
Agreement, filed as Exhibits 10.110.4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001.

NOTE 6. PROPOSED SALE OF GEOTRAC OF AMERICA,
INC.

On September 20, 2001 the Company entered into an agreement (the Stock Purchase
Agreement) with certain other parties to dispose of the stock of the Companys
wholly-owned subsidiary, Geotrac of America, Inc. (Geotrac). The parties to
the Stock Purchase Agreement are the Company, Geotrac, Geotrac Holdings, Inc.
(Geotrac), Daniel J. White, the Daniel J. White Trust, the Sandra A. White
Trust, and, solely for purposes of a non-competition covenant, Bankers Insurance
Group, Inc. (BIG). Mr. White is currently a director of the Company and the
President, Chief Executive Officer and a director of Geotrac. BIG is the
Companys majority shareholder and principal customer.

The Stock Purchase Agreement contemplates that all issued and outstanding
capital stock of Geotrac (the Shares) will be purchased by Geotrac Holdings,
Inc., a Delaware corporation formed by Daniel J. White, for purposes of the acquisition of such stock. The purchase price payable
for the Shares is to be $19,000,000 in cash plus 524,198 shares of the
outstanding Common Stock, $.01 par value, of the Company (Company Common
Stock). The Stock Purchase Agreement also contemplates that certain of the
parties will enter into additional agreements as of the closing of the
transactions contemplated by the Stock Purchase Agreement, including
a ten-year
agreement for the provision of certain ongoing flood zone determination services
at favorable pricing. The favorable long-term Flood Zone Determination Service
Agreement with Geotrac was valued at approximately $2,189,000 by management of
the Company and supported by an independent third-party investment banking
firms valuation.

The transactions contemplated by the Stock Purchase Agreement are anticipated to
close not later than January 31, 2002. However, the transactions contemplated by
the Stock Purchase Agreement will not be consummated unless certain conditions
are either satisfied or waived prior to closing. These conditions include, among
other things, that the shareholders of the Company approve the Stock Purchase
Agreement and the transactions contemplated thereby in accordance with Florida
law. Although BIG (including its wholly-owned subsidiaries) owns sufficient
shares of the outstanding Company Common Stock to approve or disapprove the
Stock Purchase Agreement, BIG has informed the Company that it intends to vote
its shares with respect to the transaction in the same manner as the holders of
a majority of the outstanding shares of Company Common Stock held by persons
other than BIG and its affiliates.

In addition, in order to consummate the transactions contemplated by the Stock
Purchase Agreement, Geotrac Holdings will need to obtain substantial financing
from third-party sources. As of the date hereof, Geotrac Holdings has received
non-binding financing commitments totaling $17,000,000; however, no assurances
can be given that such financing will ultimately be obtained. If for any reason
Geotrac Holdings cannot finally obtain such financing, it may be unable to
consummate the transactions contemplated by the Stock Purchase Agreement. In
such event, the Company may have no or only limited remedies available to it
under the Stock Purchase Agreement.

Because of the uncertainties surrounding the conditions of the Stock Purchase
Agreement, such as obtaining the requisite shareholder approval, and due to the lack of
a formal plan of disposition of Geotrac, if the sale is not consummated,
Geotracs operations have not been presented herein as discontinued. Note 4 to
the interim financial statements does however provide the reader separate
segment data pertaining to Geotrac.

At present, the Company expects that Geotracs operations will continue to be
profitable through the date of closing. While subject to what the fair market
value of the Companys Common Stock will be at date of closing, the Company does
not currently expect to realize a substantial pre-tax gain or loss on the
transaction. Currently, the Company expects the transaction costs
(e.g. legal, financial advisory fees) to be approximately $700,000. Through
September 30, 2001, approximately $450,000 of this amount has been
expensed as indicated in the attached financial statements. It should be noted that no
assurances can be given about Geotracs ability to continue to generate profits
until closing nor the magnitude of the gain or loss to be realized from the
transaction itself when it is completed.

Because of the existence of unamortized non-deductible goodwill (for income tax
purposes) which was created when Geotrac was acquired by the Company, the
current tax liability and income tax expense for financial statement purposes
associated with the Geotrac sale will be greater by the tax effect of the
remaining balance of non-deductible goodwill or approximately $2,200,000 based
upon an effective income tax rate of 40% and a goodwill balance of $5,400,000 at
September 30, 2001.

On a pro forma basis, as if the sale of Geotrac was completed on September
30, 2001 when the fair market value of the Companys Common Stock was $2.37 a
share or $1,242,349 in total, the Company would have realized a pre-tax gain of
$290,500, before the recognition of an income tax expense of approximately
$2,200,000.

9



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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION

Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations

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

|                                                |                                           |                |          |      |                    |  |                   |      |       |  |      |      |       |  |      |      |       |  | 
|----------------------------------------------- | ----------------------------------------- | -------------- | -------- | ---- | ------------------ |  | ----------------- | ---- | ----- |  | ---- | ---- | ----- |  | ---- | ---- | ----- |  | 
|                                                |                                           |                |          |      | Three Months Ended |  | Nine Months Ended
|                                                |                                           |                |          |      | September 30,      |  | September 30,    
|                                                |                                           |                |          |      |                    |  |                  
|                                                |                                           |                |          |      | 2000               |  | 2001              |      | 2000  |  | 2001
|                                                |                                           |                |          |      |                    |  |                   |      |       |  |     
|                                                |                                           |                | Revenues |      |                    |  |                   |      |       |  |      |      |       |  |      |      |       |  | 
|                                               
|                                               
|                                               
|                                               
|                                                | Outsourcing services                      |                |          | 70.6 | %                  |  |                   | 78.8 | %     |  |      | 71.4 | %     |  |      | 74.5 | %    
|                                               
|                                               
|                                               
|                                               
|                                                | Flood zone determination services         |                |          | 29.4 |                    |  |                   | 21.2 |       |  |      | 28.6 |       |  |      | 25.5 |      
|                                                |                                           |                |          |      |                    |  |                   |      |       |  |      |      |       |  |      |      |      
|                                                |                                           | Total revenues |          |      | 100.0              |  |                   |      | 100.0 |  |      |      | 100.0 |  |      |      | 100.0 | 
|                                                |                                           |                |          |      |                    |  |                   |      |       |  |      |      |       |  |      |      |      
|                                                |                                           |                | Expenses |      |                    |  |                   |      |       |  |      |      |       |  |      |      |       |  | 
|                                               
|                                               
|                                               
|                                               
|                                                | Cost of outsourcing services              |                |          | 56.1 |                    |  |                   | 57.7 |       |  |      | 57.3 |       |  |      | 51.0 |      
|                                               
|                                               
|                                               
|                                               
|                                                | Cost of flood zone determination services |                |          | 12.3 |                    |  |                   | 10.5 |       |  |      | 12.5 |       |  |      | 11.7 |      
|                                               
|                                               
|                                               
|                                               
|                                                | Selling, general and administrative       |                |          | 24.2 |                    |  |                   | 13.2 |       |  |      | 20.1 |       |  |      | 14.4 |      
|                                               
|                                               
|                                               
|                                               
|                                                | Management services from Parent           |                |          | 3.2  |                    |  |                   | 2.0  |       |  |      | 3.2  |       |  |      | 1.9  |      
|                                               
|                                               
|                                               
|                                               
|                                                | Depreciation and amortization             |                |          | 8.0  |                    |  |                   | 5.2  |       |  |      | 8.6  |       |  |      | 6.6  |      
|                                                |                                           |                |          |      |                    |  |                   |      |       |  |      |      |       |  |      |      |      
|                                                |                                           | Total expenses |          |      | 103.8              |  |                   |      | 88.6  |  |      |      | 101.7 |  |      |      | 85.6  | 
|                                                |                                           |                |          |      |                    |  |                   |      |       |  |      |      |       |  |      |      |      
|Operating income/(loss)                         |                                           |                | (3.8     | )    |                    |  | 11.4              |      |       |  | (1.7 | )    |       |  | 14.4 |     
|                                               
|                                               
|                                               
|                                               
|Interest income                                 |                                           |                | 0.4      |      |                    |  | 0.5               |      |       |  | 0.4  |      |       |  | 0.4  |     
|                                               
|                                               
|                                               
|                                               
|Interest expense                                |                                           |                | (0.1     | )    |                    |  |                  |      |       |  | (0.1 | )    |       |  |     |     
|                                               
|                                               
|                                               
|                                               
|Other                                           |                                           |                |         |      |                    |  | (0.1              | )    |       |  |     |      |       |  | (0.1 | )   
|                                                |                                           |                |          |      |                    |  |                   |      |       |  |      |      |       |  |      |      |      
|Income/(loss) before provision
for income taxes |                                           |                | (3.5     | )    |                    |  | 11.8              |      |       |  | (1.4 | )    |       |  | 14.7 |     
|                                               
|                                               
|                                               
|                                               
|Provision for income taxes                      |                                           |                | 0.0      |      |                    |  | 4.6               |      |       |  | 0.2  |      |       |  | 5.9  |     
|                                                |                                           |                |          |      |                    |  |                   |      |       |  |      |      |       |  |      |      |      
|Net income/(loss)                               |                                           |                | (3.5     | )    | %                  |  | 7.2               | %    |       |  | (1.6 | )    | %     |  | 8.8  | %   
|                                                |                                           |                |          |      |                    |  |                   |      |       |  |      |      |       |  |      |      |      

Comparison of the Three Months Ended September 30, 2000 and 2001

Overview. On April 13, 2001 the Company
entered into a Letter Agreement with
BIG (including BIC, BSIC and FCIC, direct or indirect subsidiaries of BIG) (the
Letter Agreement). Pursuant to the Letter Agreement, the parties agreed, among
other things, to extend the term
of each of the service agreements between the Company and BIG until December 1,
2002. To obtain BIGs agreement to such extension, the Company, in turn,
agreed to certain service fee modifications. Under the service agreements, as
amended, BIG pays the Company (1) a monthly fee based upon direct written
premiums for policy administration services relating to its flood, homeowners
and commercial lines of business and (2) a monthly fee based upon net claims
(after deductibles) for claims administration services relating to its flood
line of business. The service fees payable under the service agreements with
respect to (a) policy administration services relating to the automobile line
of business and (b) claim administration services relating to all lines of
business other than flood, remain unchanged. If such amendments to the
service agreements had been in effect for the fiscal year ended December 31,
2000, the Companys affiliated outsourcing revenues, which totaled
approximately $38.0 million on an actual basis, would have been approximately
$30.0 million on a pro forma basis. As of September 30,
2001, any anticipated
reduction in affiliated outsourcing revenues resulting from the implementation
of such service fee changes was largely offset by a corresponding reduction
in operating costs as a result of, among other things, the elimination of data
and technical support services from the administration services to be provided
by the Company to BIG under the service agreements. The Company
believes that any future anticipated reduction in affiliated
outsourcing revenues resulting from the implementation of such service
fee changes should continue to be offset by a corresponding reduction
in operating costs,
although no assurances can
be given in this regard.

10



---



##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION

Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Outsourcing Services Revenues.Outsourcing services revenues increased $8.1
million, or 71.1%, to $19.5 million for the three months ended September 30,
2001 from $11.4 million for the corresponding period in 2000. The increase was
primarily attributable to the impact of Tropical Storm Allison, which storm
occurred in June, 2001. Although this was a June storm, it impacted July
results as well. The increase in year-to-year third quarter revenue related to processing for this storm
was approximately $7.7 million, consisting primarily of Unaffiliated Revenue
service fees.

Flood Zone Determination Services Revenues.Flood zone determination services
revenues increased $519,000, or 10.9%, to $5.3 million for the three months
ended September 30, 2001 from $4.7 million for the corresponding period in
2000. This increase was primarily attributable to an increase in the number of
flood zone determinations processed by the Company during the third quarter of
2001 as compared to the corresponding period in 2000. The increase in the
number of flood zone determinations processed was primarily due to a decrease
in mortgage interest rates and corresponding increase in mortgage refinancings
and loan originations, which have historically driven the demand for flood zone
determinations.

Cost of Outsourcing Services.Cost of
outsourcing services increased $5.2 million, or
57.7%, to $14.3 million for the three months ended September 30, 2001 from $9.1
million for the corresponding period in 2000. As a percentage of outsourcing
services revenues, cost of outsourcing services decreased to 73.2% for the
three months ended September 30, 2001 from 79.4% for the
corresponding period in 2000.
The decrease in cost of outsourcing services as a percentage of outsourcing services was primarily
attributable to a decrease in payroll costs due to two staffing reductions
completed in late 2000 and early 2001 and a decrease in contract labor/consulting
costs due to the reduction in staffing needs and related support. In addition,
as part of the revision of the Companys contractual arrangements with
BIG, the Companys
Information Technology staff was terminated and transferred to
BIG effective June 1, 2001. These decreases were
more than offset, in dollar terms, by a combination of several
factors. First, the Company experienced an increase in revenue from
the corresponding period of the prior year, as a result of Tropical Storm
Allison, from Colonial Claims Corporation (Colonial Claims), the Companys
claims catastrophe subsidiary. Approximately 70% of each dollar of
revenue generated by Colonial Claims is
paid to its independent adjusters who adjust claims on the companys behalf.
Second, there was an increase from the corresponding period of the prior year for costs related to the conversion
to a new document imaging system and the opening of a new document output
center in late 2000.

Cost of Flood Zone Determination Services.Cost of flood zone determination
services increased $615,000, or 30.9%, to $2.6 million for the three months
ended September 30, 2001 from $2.0 million for the corresponding period in
2000. The increase in Cost of Flood Zone Determination Services was primarily
attributable to an increase in revenues related to flood zone
determination services, as described in the preceding paragraph.
As a percentage of flood zone determination services revenues, cost of
flood zone determination services increased to 49.5% for the three months ended
September 30, 2001 from 42.0% for the corresponding period in 2000.

Selling, General and Administrative Expenses.Selling, general and
administrative expenses decreased $651,000, or 16.6%, to $3.3 million for the
three months ended September 30, 2001 from $3.9 million for the corresponding
period in 2000. This decrease was due primarily to the one-time
recognition of $848,000 in bad debt
expense in the third quarter of 2000 related to the write-off of
non-collectible unaffiliated revenue,
offset slightly by increased administrative salary expense related to increased
sales volumes. In addition, selling, general, and administrative expenses for
the quarter ended September 30, 2000 included certain severance payments made
to former officers of the Company, and no such payments were made during the
quarter ended September 30, 2001.

Management Services from Parent.Management services from Parent decreased
$17,000, or 3.3%, to $499,000 for the three months ended September 30, 2001
from $516,000 for the corresponding period in 2000. The decrease was primarily
related to the assumption of certain administrative services, including human
resources, agency accounting, cash management and legal services, that were
previously provided to the Company by BIG under a management service agreement.

11



---



##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION

Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Interest Expense.Interest expense decreased $2,000, or 19.8%, to $8,000 for
the three months ended September 30, 2001 from $10,000 for the corresponding
period in 2000. The decrease resulted primarily from the payment of
substantially all of the Companys outstanding debt obligations.

Provision for Income Taxes.The Companys effective income tax rates
were 39.2% and 1.1% the three months ended September 30, 2001 and 2000,
respectively. The effective tax rates reflect various non-deductible items,
including goodwill recognized in connection with the acquisitions of Geotrac in
July, 1998 and Colonial Claims in January, 1999. For additional information on
the reconciliation of the Companys effective income tax rate to the federal
statutory income tax rate, see Note 10, Income Taxes, in Notes to the
Consolidated Financial Statements for the year-ended December 31, 2000, as
reported in the Companys Annual Report on Form 10-K filed with the Securities
and Exchange Commission on April 17, 2001.

Comparison of the Nine Months Ended September 30, 2000 and 2001

Outsourcing Services Revenues.Outsourcing services revenues increased $12.2
million, or 36.4%, to $45.7 million, for the nine months ended September 30,
2001 from $33.5 million for the corresponding period in 2000. The increase was
primarily attributable to the impact of Tropical Storm Allison, which storm
occurred during June, 2001. The increase in revenue related to processing for
this storm was approximately $4.2 million, including an increase of $2.2
million in Affiliated Revenue, and an increase of $2.0 million in Unaffiliated
Revenue. The Companys Colonial Claims subsidiary also
experienced an increase in revenue of $8.1 million, from the
corresponding period of the prior year, due primarily to an increase
in claims business as a result of Tropical Storm Allison.
Additionally, revenue generated by the Company's automobile line of
business increased approximately $1.3 million for the nine months ended
September 30, 2001 as compared to the corresponding period in 2000 due
principally to significant volume increases in new business for Non-standard
Auto. The foregoing increases were partially offset by a decrease in
revenue from a third-party outsourcing customer, as the contract
with this customer has been terminated and, accordingly, processing
on behalf of each customer is winding down and will cease no later
than December, 2002.

Flood Zone Determination Services Revenues.Flood zone determination services
revenues increased $2.3 million, or 16.9%, to $15.6 million for the nine months
ended September 30, 2001 from $13.4 million for the corresponding period in
2000. The increase was primarily attributable to an increase in the number of
flood zone determinations processed by Geotrac during the first nine months of
2001 as compared to the corresponding period in 2000. The increase in the
number of flood zone determinations processed was primarily due to
the existence of continued
historically low mortgage interest rates. These continued low interest
rates resulted, in turn, in a
corresponding increase in mortgage refinancing activity and loan
originations,
which historically drive the demand for flood zone determinations.

Cost of Outsourcing Services.Cost of outsourcing services increased $4.4
million, or 16.6%, to $31.3 million for the nine months ended September 30,
2001 from $26.8 million for the corresponding period in 2000. As a percentage
of outsourcing services revenues, cost of outsourcing services decreased to
68.5% for the nine months ended September 30, 2001 from 80.2% for the
corresponding period in 2000. The increase in the dollar amount of cost of
outsourcing services was primarily attributable to the increase in Colonial
Claims costs of $6.0 million related to claims adjuster expenses necessitated
due to the aforementioned Tropical Storm Allison, which storm occurred in June,
2001. This increase was partially offset by (i) a decrease of $3.1 million in
payroll costs due to two staffing reductions completed in late 2000 and early in
2001, (ii) the termination and transfer of the Company's information technology staff to
BIG effective June 1, 2001 (iii) a decrease of $869,000 in
third-party contract labor/consulting costs, and (iv) an increase in costs due
to the conversion to a new document imaging system and the opening of a new document
output center in late 2000.

12



---



##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION

Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Cost of Flood Zone Determination Services. Cost of flood zone determination
services increased $1.3 million, or 22.5%, to $7.2 million for the nine months
ended September 30, 2001 from $5.9 million for the corresponding period in
2000. As a percentage of flood zone determination services revenues, cost of
flood zone determination services increased to 45.8% for the nine months ended
September 30, 2001 from 43.7% for the corresponding period in 2000. The
increase in Cost of Flood Zone Determination Services was primarily
attributable to corresponding increases in revenues related to flood zone
determinations, as described in the preceding paragraph.

Selling, General and Administrative Expenses.Selling, general and
administrative expenses decreased $623,000, or 6.6%, to $8.8 million for the
nine months ended September 30, 2001 from $9.4 million for the corresponding
period in 2000. This decrease was
primarily attributable to the continued assumption of certain administrative
services that were previously provided to the Company by BIG under a management
service agreement, partially offset by a decrease in payroll costs as a result
of the staffing reductions described above and the completion of certain severance
payment obligations.

Management Services from Parent.Management services from Parent decreased
$307,000, or 20.6%, to $1.2 million for the nine months ended September 30,
2001 from $1.5 million for the corresponding period in 2000. The decrease was
primarily related to the assumption of certain administrative services,
including human resources, agency accounting, cash management and
legal services, that were previously provided to the Company by BIG
under a management service agreement.

Interest Expense.Interest expense decreased $39,000, or 74.3%, to $14,000 for
the nine months ended September 30, 2001 from $53,000 for the corresponding
period in 2000. The decrease resulted primarily from the payment of
substantially all of the Companys outstanding debt obligations.
Interest expense for the period ended September 30, 2001 relates to expenses for capital leases for
information technology equipment. These leases will expire during the fourth
quarter of 2001.

Provision for Income Taxes. The Companys effective income tax rates
were 39.9% and 15.2% for the nine months ended September 30, 2001 and 2000,
respectively. The effective tax rates reflect various non-deductible items,
including goodwill recognized in connection with the acquisitions of Geotrac in
July, 1998 and Colonial Claims in January, 1999. For additional information on
the reconciliation of the Companys effective income tax rate to the federal
statutory income tax rate, see Note 10  Income Taxes, in Notes to the
Consolidated Financial Statements for the year-ended December 31, 2000, as
reported in the Companys Annual Report on Form 10-K filed with the Securities
and Exchange Commission on April 17, 2001.

Liquidity and Capital Resources

During the year ended December 31, 2000, the Companys principal sources of
liquidity consisted of cash on-hand and cash flows from operations.

In conjunction with the Companys acquisition
of Geotrac, Inc., it entered into a
Corporate Governance Agreement, dated July 31, 1998, with
Geotrac of America, Inc. (Geotrac) and Daniel J.
White (Mr. White), Geotracs president and the
majority shareholder of Geotrac, Inc. prior to the acquisition, setting
forth certain terms and conditions pertaining to the operation of Geotrac. The
Corporate Governance Agreement provides, among other things, that for so long
as Mr. White owns stock in the Company or Geotrac, or has an option to purchase
stock in Geotrac, certain actions by Geotrac will require the unanimous
approval of Geotracs Board of Directors, including any merger or
consolidation, the payment of management or similar fees to the Company or its
subsidiaries and affiliates, the sale or issuance of Geotrac stock, and the
sale of Geotrac assets outside the ordinary course of business to anyone other
than an affiliate of Geotrac. In addition, under the terms of the
Corporate Governance Agreement, unanimous board approval is required in order to make cash distributions
to the Company, whether by dividend or otherwise.

13



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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION

Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Consequently, pursuant to the Corporate Governance Agreement, Mr. White may impede the
Companys ability to access excess cash balances retained by its Geotrac
subsidiary, even if all of the other directors of Geotrac were to approve such
a distribution. Mr. White is presently a director and shareholder of the
Company. To date, the Company has been able to access Geotracs excess cash
when necessary, primarily through the prepayment of outstanding intercompany
indebtedness. No assurances can be given, however, that the Company will be
able to obtain available cash from Geotrac. If the Company is unable to do so,
it could have a material adverse effect on the Companys business, financial
condition and results of operations.

On April 2, 2001, the Geotrac Board of
Directors authorized the payment of dividends to the Company, to be distributed quarterly beginning
July 15, 2001 for the next 12 months based upon Year 2000 earnings of Geotrac.
In early August, 2001, Geotrac authorized the payment of an additional dividend to the Company in the amount of $200,000.

In addition to the foregoing, the Company, on
September 20, 2001, entered into an agreement with certain other
parties to dispose of the stock of Geotrac of America, Inc. See
Note 6. to the Consolidated Financial Statements and
also Item 5. Other Information, following.

On April 13, 2001, the Company entered into a Commitment Letter to advance
service fee payments (the Commitment Letter) with BIG, pursuant to which BIG
has agreed to advance to the Company up to $1.5 million per month as a
prepayment of service fees due by BIG and its affiliates under the service
agreements with such companies. Such advances are available to the Company
beginning June 1, 2001 and continuing through December 1, 2002 and shall be
payable upon demand by the Company. Any funds advanced by BIG to the Company
under the Commitment Letter shall constitute a prepayment of, and shall be
credited toward, the service fees charged to BIG by the Company during the
month following such advance. The Company presently has no intention
of
requesting any such advances from BIG, but no assurances can be given
that the Company will not be required to do so in the future.

On August 14, 2001, the Company entered into a credit arrangement with BIG
pursuant to which the Company established a $5.0 million secured line of credit
in favor of BIG (the Line of Credit), which Line of Credit will expire no
later than February 28, 2002. BIG, the Companys principal customer and
shareholder, requested the Line of Credit to assist with certain short-term
working capital needs. The Company believes that cash on-hand, cash flows from
operations, and cash advances under the Commitment Letter are, and will
continue to be, sufficient to support the Line of Credit and to satisfy the
Companys currently-anticipated working capital requirements until the Line of
Credit expires. Given the significance of BIG as the principal customer of the
Company, management of the Company, including the Audit Committee of the Board
of Directors, determined that it was in the best interests of the Company and
its shareholders to extend this Line of Credit. For additional information
regarding the Line of Credit, see Item 5. Other
Information.

The Company believes that cash on-hand, cash flows from operations and cash
advances available under the Commitment Letter will be sufficient to satisfy
currently anticipated working capital and capital expenditure requirements for
the foreseeable future. However, unanticipated rapid expansion, business or systems
development, or other unforeseen factors may cause the Company to require
additional funds, which may not be available to the Company upon
acceptable terms.

14



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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART I. FINANCIAL INFORMATION

Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations (continued)

New Accounting Pronouncements

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141, Business Combinations,
and SFAS 142, Goodwill and Intangible Assets.SFAS 141 is effective for all
business combinations completed after June 30, 2001. SFAS 142 is effective for
the year beginning January 1, 2002; however certain provisions of that
Statement apply to goodwill and other intangible assets acquired between July
1, 2001 and the effective date of SFAS 142. The Company has not yet analyzed
the effect of these new standards and, accordingly, is unable to state what
effect, if any, the adoption of these standards will have on the Companys financial
statements.

In August 2001, the FASB issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long Lived
Assets. This statement addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and
supersedes FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposal Of.The provisions of the statement are effective for
financial statements issued for fiscal years beginning after
December 15, 2001. The Company is evaluating the impact of the
adoption of this standard and has not yet determined the effect of
adoption on its financial position and results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company has not entered into any transactions using derivative financial
instruments or derivative commodity instruments and believes that its exposure
to market risk associated with other financial instruments (such as variable
rate debt) are not material.

15



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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On September 28, 2000, October 25, 2000 and October 30, 2000, three alleged
shareholders of the Company filed three nearly identical lawsuits in the United
States District Court for the Middle District of Florida, each on behalf of a
putative class of all persons who purchased shares of the Companys Common
Stock pursuant and/or traceable to the registration statement for the Companys
February 1999 initial public offering (the IPO). The lawsuits were
consolidated on December 1, 2000, and the consolidated action is proceeding
under Case No. 8:00-CV-2013-T-26MAP. The plaintiffs Consolidated Amended
Class Action Complaint, filed February 7, 2001, names as defendants the
following parties: the Company; BIG;
Venture Capital Corporation, a selling shareholder in the IPO; the five inside
directors of the Company at the time of the IPO; and Raymond James &
Associates, Inc. and Keefe, Bruyette & Woods, Inc., the underwriters for the
IPO. The complaint alleges, among other things, that the defendants violated
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, by
making certain false and misleading statements in the roadshow presentations,
registration statement and prospectus relating to the IPO. More specifically,
the complaint alleges that, in connection with the IPO, the defendants made
various material misrepresentations and/or omissions relating to: (i) the
Companys ability to integrate Geotracs flood zone determination business with
the Companys own flood zone determination business and with its insurance
outsourcing services business; (ii) actual and anticipated synergies between
the Companys flood zone determination and outsourcing services business lines;
and (iii) the Companys use of the IPO proceeds. The complaint seeks
unspecified damages, including interest, and equitable relief, including a
rescission remedy. On July 11, 2001, U.S. District Judge Richard A. Lazzara
denied all of the defendants motions to dismiss the Amended Complaint.

The defendants answers to the Amended Complaint were filed in late
August 2001. Written discovery has commenced and, later this year, various
pre-trial deadlines and a trial date likely will be set.
Management of the Company believes the material allegations of the Amended
Complaint are without merit and intends to vigorously defend the lawsuit. No
assurances can be given, however, with respect to the outcome of the
litigation, and an adverse result could have a material adverse effect on the
Companys business, financial condition and results of operations.

Except as set forth in the preceding two paragraphs, there have been no material
changes to the disclosure set forth under the caption Item 3. Legal
Proceedings in the Companys Annual Report on Form 10-K for the year ended
December 31, 2000.

Item 5. Other Information

As previously reported, on April 13, 2001, the
Company entered into a Letter
Agreement (the Letter Agreement) with BIG
and Bankers Insurance Company (BIC), Bankers Security Insurance Company
(BSIC) and First Community Insurance Company (FCIC), all direct or indirect
subsidiaries of BIG, pursuant to which the various contractual arrangements
between the Company and such affiliated entities have been significantly
altered.

With respect to the Administrative Services Agreement, effective as of January
1, 1998, between the Company and BIG (the Administration Agreement), the
Letter Agreement provides that the existing Administration Agreement was
terminated effective as of April 1, 2001 and will be replaced with a new
Corporate Services Agreement (the Corporate Services Agreement). Pursuant to
the Corporate Services Agreement, BIG will provide the Company with various
corporate marketing and corporate training services requested by the Company
from time to time at fixed hourly rates ranging from $40.00 to $100.00 per
hour, depending on the services being provided. The Letter Agreement further
provides that the parties will negotiate in good faith to execute and deliver
the Corporate Services Agreement incorporating those terms on or before June 1,
2001; provided however, that in the event such agreement is not
executed and delivered by that date, BIG will provide such services at the
rates specified in the Letter Agreement. As of the date of this Report, the
parties have not executed the Corporate Services Agreement and, thus, BIG
continues to provide the aforementioned services at the rates specified in the
Letter Agreement.

16



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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART II. OTHER INFORMATION

Item 5. Other Information (continued)

The Letter Agreement also provides that the
Technical Support Agreement, dated
April 1, 1999, between the Company and BIG (the Old Support Agreement), was
terminated effective April 1, 2001 and will be replaced with a New Technical
Support Services Agreement (the New Support Agreement). Pursuant to the New
Support Agreement, BIG will provide the Company with certain technical support,
computer programming and systems analysis services at specified rates (except
for software development services, which shall be provided on a time and
materials basis). The Letter Agreement further provides that the parties will
negotiate in good faith to execute and deliver the New Support Agreement
incorporating these terms on or before June 1, 2001; provided, however, that in
the event such agreement is not executed and delivered by that date, BIG will
provide such services at the rates specified in the Letter Agreement until the
earlier of (a) the execution and delivery of the New Support Agreement, or (b)
December 1, 2002. As of the date of this Report the parties have not executed
the New Support Agreement and, thus, BIG continues to provide the
aforementioned services at the rates specified in the Letter Agreement.

With respect to the separate Service Agreements, effective as of
January 1, 1998, and as amended between the Company and each of BIC, BSIC and
FCIC (each a Service Agreement and collectively the Service Agreements),
the Letter Agreement amended each of the Service Agreements, effective June 1,
2001 to, among other things, extend the term of each Service Agreements to
December 1, 2001, modify certain of the service fees payable thereunder, and
eliminate data and technical support services from the administrative services
to be provided. The Letter Agreement further provides that the parties will
act in good faith to execute and deliver, on or before June 1, 2001, a more
definitive amendment (each an Amendment and collectively the Amendments) to
each of the Service Agreements incorporating the terms set forth in the Letter
Agreement; provided, however, that in the event such Amendments to the Service
Agreements have not been executed and delivered by that date, the amendments to
the Service Agreements set forth in the Letter Agreement shall continue in
effect. As of the date of this Report, the parties have not executed the
Amendments and; thus, the amendments to the Service Agreements set forth in the
Letter Agreement are still controlling.

As previously reported, on August 14, 2001, the Company entered into a Credit and Security Agreement
with BIG (together with the related loan documentation, the Credit
Agreement), pursuant to which the Company established a
short-term, secured line of credit in favor of BIG in the amount of up to $5.0 million (the Line
of Credit). As of the date of this Report, the aggregate principal amount
outstanding under the Line of Credit is $5.0 million. The principal purpose of
the Line of Credit is to assist BIG, the Companys principal customer and
shareholder, with certain short-term working capital needs.

Pursuant to the Credit Agreement, interest is payable monthly on amounts
outstanding under the Line of Credit at an annual rate equal to the Prime Rate
(as defined in the Credit Agreement), plus 1.5%. The Credit Agreement further
provides that the Line of Credit will expire on February 28, 2002, unless
repaid in full prior to such time or otherwise terminated pursuant to the terms
of the Credit Agreement.

17



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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART II. OTHER INFORMATION

Item 5. Other Information (continued)

The Line of Credit is secured by (i) a first lien security interest in all
accounts and contract rights of Bankers Underwriters, Inc., a wholly-owned
subsidiary of BIG (BUI), with insurance agents (including but not limited to
general agents with respect to the sale of federal flood insurance)
(collectively, the Flood Book), and (ii) an option (the Option) to purchase
from BIG the outstanding capital stock, consisting of 10,898 shares (the
Option Shares) of common stock, $318 par value per share, of First Community
Insurance Company, a New York insurance company licensed in all fifty states
(FCIC). BUI currently is a Florida general insurance agent for FCIC and BIC,
a Florida insurance company licensed in approximately 30 states and a
wholly-owned subsidiary of BIG. As of the date of this Report, management of
the Company believes the fair market value of the Flood Book well exceeds the
aggregate principal amount of the Line of Credit.

With respect to the Option, the aggregate exercise price for the Option Shares
is $108,980, or $10.00 per Option Share. The Option Shares are subject to
certain outstanding liens relating to certain indebtedness of BIG having an
aggregate outstanding balance, as of September 30, 2001, totaling approximately
$11.5 million. The Option will become exercisable only at such time as (i)
there shall be a default in the payment of any amounts due under the Credit
Agreement for more than ten days after the data when they shall become due or
(ii) there shall be any other default under the Credit Agreement if, after
notice thereof, such default has not been cured within thirty days of such
notice. In addition, any acquisition of the Option Shares by the Company
pursuant to the Option would require the prior approval of the New York
Department of Insurance. In the event the Option were to be exercised, no
assurances can be given that such approval could be obtained.

The foregoing description of the Line of Credit is qualified in its entirety by
reference to the Credit and Security Agreement, Master Promissory Note,
Collateral Assignment of Flood Book and Stock Option Agreement filed as
Exhibits 10.1 through 10.4 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2001.

As previously reported, on September 20, 2001,
the Company entered into an agreement (the Stock Purchase
Agreement) with certain other parties to sell all of the
outstanding capital stock of Geotrac of America, Inc., a
wholly-owned subsidiary of the Company (Geotrac). The
parties to the Stock Purchase Agreement are the Company, Geotrac,
Geotrac Holdings, Inc. (Geotrac Holdings), Daniel J.
White, the Daniel J. White Trust, the Sandra A. White Trust, and,
solely for purposes of a non-competition covenant, BIG.
Mr. White is currently a director of the Company and the
President, Chief Executive Officer and a director of Geotrac. BIG is the
Company's majority shareholder and principal customer.

The Stock Purchase Agreement contemplates that all
issued and outstanding capital stock of Geotrac (the
Shares) will be purchased by Geotrac Holdings, a Delaware
corporation formed by Daniel J. White for purposes of the acquisition of
such stock. The purchase price payable for the Shares is to be
$19,000,000 in cash plus 524,198 shares of the outstanding Common
Stock, $.01 par value, of the Company (Company Common
Stock). The Stock Purchase Agreement also contemplates that
certain of the parties will enter into additional agreements as of
the closing of the transactions contemplated by the Stock Purchase Agreement,
including an agreement for the provision of certain ongoing flood
zone determination services.

The transactions contemplated by the Stock Purchase
Agreement are anticipated to close not later than January 31,
2002. However, the transactions contemplated by the Stock Purchase
Agreement will not be consummated unless certain conditions are
either satisfied or waived prior to closing. These conditions
include, among other things, that the shareholders of the Company
approve the Stock Purchase Agreement and the transactions
contemplated thereby in accordance with Florida law. To this end, the
Company is presently scheduled to hold a Special Meeting of
Shareholders on December 26, 2001 for the sole purpose of
approving or disapproving of the Stock Purchase Agreement and the
transactions contemplated thereby. (On November 9, 2001, the
Company filed preliminary proxy materials with the Securities and
Exchange Commission relating to the solicitation of proxies in
connection with such Special Meeting of Shareholders.) Although BIG
(including its wholly-owned subsidiaries) owns sufficient shares of
the outstanding Company Common Stock to approve or disapprove the
Stock Purchase Agreement, BIG has informed the Company that it
intends to vote its shares with respect to the transaction in the
same manner as the holders of a majority of the outstanding shares of
Company Common Stock held by persons other than BIG.

In addition, in order to consummate the
transactions contemplated by the Stock Purchase Agreement, Geotrac
Holdings will need to obtain substantial financing from third-party
sources. As of the date hereof, Geotrac Holdings has received
non-binding financing commitments totaling $17,000,000; however, no
assurances can be given that such financing will ultimately be
obtained. If for any reason Geotrac Holdings cannot finally obtain
such financing, it may be unable to consummate the transactions
contemplated by the Stock Purchase Agreement. In such event, the
Company may have no or only limited remedies available to it under
the Stock Purchase Agreement.

The foregoing description is qualified in its
entirety by reference to the Stock Purchase Agreement (including the
Exhibits thereto) filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K filed on September 21, 2001.

On October 1, 2001, the Company and Anthony R.
Marando extended his employment agreement as Chief Financial Officer
of the Company. This employment agreement is attached as Exhibit 10.5.

The Company has recently received several unsolicited
inquiries and/or proposals from unaffiliated third parties regarding
the possible sale of all of the business and assets of the Company
(including its subsidiaries) after the consummation of the Geotrac
Sale. Although the Company continues to engage in informal discussions with
certain of such third parties regarding a possible transaction, as of
the date of this Report, the Company is not a party to any letter of intent
or similar agreement with respect to any such proposed transaction. Consequently,
regardless of whether the Geotrac Sale is consummated, no assurance can
be given as to whether the Company will seek, or be able to enter into,
a transaction relating to the sale of the business and assets of the
Company other than Geotrac.

18



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##### 



INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K



| |            
| | -----------
| | a) Exhibits



| |      |  |                                                                                                                                                                                                                                                                                                                                                     
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.1  |  | Stock Purchase Agreement, dated as of September 20, 2001, by and among
Insurance Management Solutions Group, Inc., Geotrac of America, Inc.,
Geotrac Holdings, Inc., Daniel J. White, the Daniel J. White Trust,
the Sandra A. White Trust and, solely for purposes of Section 7.2,
Bankers Insurance Group, Inc. (including the exhibits thereto).*
| | 10.1 |  | Credit and Security Agreement, dated August 14,
2001, between Insurance Management Solutions Group, Inc. and Bankers
Insurance Group, Inc.**                                                                                                                                                                                                        
| | 10.2 |  | Master Promissory Note, dated August 14, 2001, by
Bankers Insurance Group, Inc.**                                                                                                                                                                                                                                                                   
| | 10.3 |  | Collateral Assignment of Flood Book, dated August
14, 2001, by Bankers Underwriters, Inc.**                                                                                                                                                                                                                                                         
| | 10.4 |  | Stock Option Agreement, dated August 14, 2001,
between Bankers Insurance Group, Inc. and Insurance Management
Solutions Group, Inc.**                                                                                                                                                                                                               
| | 10.5 |  | Employment Agreement, dated October 1, 2001,
between Anthony R. Marando and Insurance Management Solutions Group,
Inc.                                                                                                                                                                                                                              

---

|   |                                                                                                   
|-- | --------------------------------------------------------------------------------------------------
|*  | Previously filed as part of the Company's
Current Report on Form 8-K filed on September 21, 2001. 
|** | Previously filed as part of the Company's
Form 10-Q for June 30, 2001 as filed on August 20, 2001.



| |                       
| | ----------------------
| | b) Reports on Form 8-K



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company filed a Current Report on Form
8-K on September 21, 2001 to report that on September 20, 2001, the
Company entered into an agreement with certain other parties to sell
all of the outstanding capital stock of Geotrac of America, Inc., a
wholly-owned subsidiary of the Company.

19



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##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        |  |                                                                                        
|----------------------- |  | ---------------------------------------------------------------------------------------
|                        |  | INSURANCE MANAGEMENT
SOLUTIONS GROUP, INC.
(Registrant)                                
|                       
|                        |  |                                                                                        
|                       
|Date: November 14, 2001 |  | By: /s/ DAVID M. HOWARD                                                                
|                        |  |                                                                                        
|                        |  | David M. Howard
President and Chief Executive Officer
(Principal Executive Officer)    
|                       
|                        |  | By: /s/ ANTHONY R. MARANDO                                                             
|                        |  |                                                                                        
|                        |  | Anthony R. Marando
Chief Financial Officer (Principal Financial
and Accounting Officer)

20



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##### 



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                      
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                                                                                                                                      
|NUMBER  |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                          
|2.1     |  | Stock Purchase
Agreement, dated as of September 20, 2001, by and among
Insurance Management Solutions Group, Inc., Geotrac of America, Inc.,
Geotrac Holdings, Inc., Daniel J. White, the Daniel J. White Trust,
the Sandra A. White Trust and, solely for purposes of
Section 7.2, Bankers Insurance Group, Inc., (including the
exhibits thereto).*
|10.1    |  | Credit and
Security Agreement, dated August 14, 2001, between Insurance
Management Solutions Group, Inc. and Bankers Insurance Group, Inc.*                                                                                                                                                                                                          
|10.2    |  | Master
Promissory Note, dated August 14, 2001, by Bankers Insurance
Group, Inc.*                                                                                                                                                                                                                                                                     
|10.3    |  | Collateral
Assignment of Flood Book, dated August 14, 2001, by Bankers
Underwriters, Inc.*                                                                                                                                                                                                                                                           
|10.4    |  | Stock Option
Agreement, dated August 14, 2001, between Bankers Insurance
Group, Inc. and Insurance Management Solutions Group, Inc.*                                                                                                                                                                                                                 
|10.5    |  | Employment
Agreement, dated October 1, 2001, between Anthony R. Marando and
Insurance Management Solutions Group, Inc.                                                                                                                                                                                                                               

|  |                           
|- | --------------------------
| 
|* | Incorporated by reference.

E-1