SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549

                              FORM 10-KSB

      X    Annual  Report  pursuant  to  Section  13 or  15(d)  of  the
           Securities  Exchange  Act of 1934 for the fiscal  year ended
           December 31, 1998

           Transition  Report  pursuant  to  Section 13 or 15(d) of the
           Securities Exchange Act of 1934--N/A

                      Commission File No. 0-24205

                          FACTUAL DATA CORP.
         (Exact name of Small Business Issuer in its charter)

                    Colorado                        84-1449911          
           (State or other jurisdiction of  (I.R.S. Employer Identification No.)
            incorporation or organization)

5200 Hahns Peak Drive, Loveland, Colorado                        80538
 (Address of principal executive offices)                     (Zip code)

                            (970) 663-5700
         (Registrant's telephone number, including area code)

   Securities Registered Pursuant to Section 12(b) of the Act: None.
      Securities Registered Pursuant to Section 12(g) of the Act:

                             Common Stock
                                  and
                   Warrants to Purchase Common Stock
                          (Title of Classes)

Check whether the Registrant  (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange 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 by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ X ]

The aggregate market value of the voting common equity held by non-affiliates of
the Registrant on March 24, 1999, was  approximately  $14,000,000 based upon the
reported  closing  sale price of such shares on the Nasdaq  SmallCap  Market for
that date. As of March 24, 1999,  there were  3,551,346  shares  outstanding  of
which 1,751,346 are held by non-affiliates.

              DOCUMENTS INCORPORATED BY REFERENCE: -NONE-

                The exhibit index appears on page E-1.


<PAGE>



                          FACTUAL DATA CORP.
                   1998 Annual Report on Form 10-KSB

                          Table of Contents

Item                           Description                         Page

Item 1.    Description of Business.......................            1

Item 2.    Description of Property.......................            10

Item 3.    Legal Proceedings.............................            12

Item 4.    Submission of Matters to a Vote of Security Holders       12

Item 5.    Market for Common Equity and Related Stockholder Matters  13

Item 6.    Management's Discussion and Analysis of Financial
           Condition and Results of Operation............            15

Item 7.    Financial Statements .........................            22

Item 8.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure...........            22

Item 9.    Directors, Executive Officers, Promoters and Control
           Persons; Compliance with Section 16(a) of the
           Exchange Act .................................            23

Item 10.   Executive Compensation........................            26

Item 11.   Security Ownership of Certain Beneficial Owners
           and Management................................            28

Item 12.   Certain Relationships and Related Transactions            30

Item 13.   Exhibits and Reports on Form 8-K..............            31



<PAGE>



Item 1.    Description of Business.

General

      Factual  Data  Corp.  (the  "Company"  or "FDC")  incorporated  in 1985 is
headquartered in Loveland,  Colorado and is an information  services provider to
the mortgage and consumer lending industries,  employers,  landlords,  and other
business  customers  located  throughout the United States.  FDC  specializes in
preparing  mortgage credit reports ("MCRs") that are customized to each mortgage
lender's  requirements  and  transmitted  to  lenders  via  modem,  network,  or
facsimile.  As of December 31, 1998,  the Company  marketed it services  through
seven  Company-owned  offices,  25 franchisees  and 29 licensees.  The Company's
franchisees and licensees are collectively  referred to as "System  Affiliates."
The  Company  is in the  process of  implementing  a  consolidation  plan in the
mortgage credit report industry. FDC's initial public offering took place in May
1998 and its Common Stock and Warrants trade on the Nasdaq SmallCap Market under
the symbols "FDCC" and "FDCCW,"  respectively.  The Company will be applying for
listing on the Nasdaq National Market System shortly,  and management hopes that
the  application  will be approved in May 1999,  although no  assurances to that
effect are given.

      Credit data  provided  directly  from the three major credit  repositories
(i.e., Equifax, Inc.; Experian,  Inc.; and TransUnion Corporation ) (the "Credit
Repositories")  is often  inconsistent,  is not  presented  in a  customized  or
consolidated format, and may be relatively difficult to interpret.  As such, the
Company's  services are valuable to the lending industry since MCR users can (i)
obtain credit reports from the Company which contain verified credit information
upon which such lenders can readily  rely;  and (ii) more easily  interpret  the
credit data since FDC formats and customizes such data.

      Through the expertise it has developed in mortgage credit  reporting,  the
Company has  recently  expanded  its  services to include  employment  screening
services and tenant screening services. The Company's MCR and other products and
services  are fully  automated,  thereby  allowing  it to  deliver  its  reports
directly to its customers' computers.

Products

      MCRs.  FDC provides  three types of MCR products to its  customers.  FDC's
"Bureau  Express" report is its most basic,  highest selling and fastest growing
MCR. Bureau Express reports provide only the merged credit information  obtained
from the Credit Repositories in a user-friendly,  integrated report formatted to
the client's  specifications.  The Company does not verify the information as it
does with respect to its most detailed report, the "Residential  Mortgage Credit
Report" ("RMCR"). Bureau Express reports are typically compiled by the Company's
proprietary computer and telecommunications system in less than 60 seconds, free
of  duplication.   The  Company's  system  also  provides  a  means  to  resolve
inconsistencies  between the Credit Repositories'  information.  Compared to the
RMCR, a Bureau Express report is more profitable to the Company since it is less
labor intensive.

      In preparing the detailed RMCR, FDC merges the credit data provided by the
three  Credit   Repositories,   verifies  the  credit,   employment   and  other
information,  and conducts a complete in-person or telephone  interview with the
loan applicant. RMCRs meet all government agency and government sponsored entity
standards, such as those promulgated by Freddie Mac and Fannie Mae.

                                     - 1 -
<PAGE>




      The  Company's  intermediate  MCR is its  "Merged  Plus  Report"  or "RMCR
Jr.(R)."  The RMCR Jr.  merges  the credit  data  provided  by the three  Credit
Repositories  and provides  prepaid balance updates and/or other items specified
by the customer. In addition,  RMCR Jr. reports can include applicant interviews
if so requested by the customer.

      The Company is one of five approved  information vendors for Freddie Mac's
automated  underwriting  system; and, in December 1998, the Company was selected
as a direct MCR provider for Fannie Mae's automated  underwriting system, making
it one  of  only  12  such  Fannie  Mae-approved  credit  agencies.  FDC  system
interfaces  with Fannie Mae are expected to be complete by the third  quarter of
1999.  As of the date of this  Report,  more than 750 lenders  are using  Fannie
Mae's  automated  underwriting  system  network to process more than 30,000 loan
submissions per day. Fannie Mae's recent announcement that loans approved by its
automated  underwriting system will qualify for lower private mortgage insurance
premiums  is  expected to cause an  increase  in  submissions  to its  automated
underwriting system network, other factors remaining equal.

      As the  mortgage  lending  industry  continues  to move  toward  automated
underwriting, FDC's relationships with Freddie Mac and Fannie Mae (collectively,
the  "Agencies")  will be a key factor in its growth since  third-party  lenders
utilizing  the  Agencies'  automated  underwriting  systems are  required to use
approved  credit  reporting  agencies,  such as FDC. As such, (i) large mortgage
originators  and lenders who do not portfolio  their loans and therefore want to
sell them in the secondary market will not produce MCRs in-house,  and (ii) many
small credit reporting agencies who do not have the size and resources to invest
in technology to become  Agency-approved  may have extreme difficulty  remaining
competitive.  This latter point has assisted, and should continue to assist, FDC
in its consolidation strategy. See "Acquisition Developments in 1998."

      With respect to its MCR products,  the Company's larger customers include,
among others, NationsBanc, North American Mortgage, Chase Manhattan Residential,
U.S. Home Mortgage,  First Union  Mortgage,  Regions  Mortgage and CTX Mortgage.
Based on publicly reported information  concerning mortgage loans originated and
refinanced in the United States,  management believes the Company and its System
Affiliates are collectively  one of the leading  suppliers of MCRs in the United
States.

      For the twelve months ended  December 31, 1998, the Company and its System
Affiliates delivered  approximately 2.8 million MCRs, of which approximately 2.3
million  consisted of Bureau  Express  reports,  representing  gross billings of
approximately $48.8 million. The average price of the Company's MCRs during 1998
was $16.12.

      Employment Screening Services.  Employment screening services,  along with
tenant screening services, are two of FDC's emerging business lines.  Employment
screening   services   assist   employers  in  determining  a  job   applicant's
productivity   potential,   tendencies  towards  theft  and  excessive  worker's
compensation  claims.  The Company's  "EMPfacts"  employment  screening  service
offers  state-of-the-art,  accurate background checks that verify an applicant's
professional,  educational and personal  history.  EMPfacts offers individual or
bundled screening services in the following areas:

                                     - 2 -
<PAGE>




            Substance Abuse Testing          Financial Reports
            Motor Vehicle Record             Property Search
            Worker's Compensation History    Employment Verification
            Public Records Information       Social Security Number Search
            Public Records Information       Professional License Verification
            Fraud Searches                   Psychological Testing
            Criminal History
            Education Verification

      The Company also offers its "QUICKpeek  Identifier"  employment  screening
service.  QUICKpeek  Identifier  enables  FDC  customers  to  receive an instant
employment  screening report, via Windows  compatible  software in 60 seconds or
less,  which can be viewed on screen or printed.  By  entering a persons'  name,
address and social security number,  QUICKpeek  Identifier  provides  employment
information,  a public records search, a fraud search,  financial  summaries and
residence  information.  For the twelve  months ended  December  31,  1998,  the
Company  and its  System  Affiliates  delivered  approximately  75,700  EMPfacts
reports and 10,800 QUICKpeek  Identifier  reports. In December 1998, the average
price of the Company's  EMPfacts  reports and QUICKpeek  Identifier  reports was
$25.62 and $10.25, respectively.

      Tenant Screening  Services.  In July 1998, the Company  introduced "Tenant
Qualifier," a tenant screening service designed  specifically for leasing agents
and landlords that verifies and reports information  regarding a proposed tenant
through  Credit  Repository  inquiries,   employment  history,  public  records,
residence  history,  payment  habits,  and criminal and  eviction  data.  Tenant
Qualifier is unique in that it provides a customizable  scoring system to help a
landlord or leasing agent impartially screen applicants and,  therefore,  comply
with fair housing  standards and  nondiscriminatory  rental  practices.  For the
twelve  months ended  December 31, 1998,  the Company and its System  Affiliates
delivered  approximately  34,350 Tenant screening reports. In December 1998, the
average price of the Company's Tenant Qualifier reports was $11.92.

Bundled MCR and Flood Determination Certificate Product

      In October  1998,  FDC  announced  the release of the first,  multi-vendor
integrated  software  for  requesting  credit and flood  determinations  for the
mortgage  industry.   This  product  allows  FDC  customers  to  request  credit
information and flood  determinations  from multiple  vendors by interfacing via
network or modem with FDC's  Technology  Center.  Both credit and flood services
may be ordered  together or in separate  communications  and are returned to the
client on-line.

      The  introduction  of this product is  consistent  with FDC's  strategy of
increasing revenues and customer  convenience by providing one-stop shopping for
its customers through expanded, bundled services. It also enables the Company to
expand its revenue base by providing additional  information  services,  such as
mortgage  flood  certification  information.  The United States market for flood
certifications, as derived from 1998 mortgage information from the Department of
Housing and Urban  Development and the MBAA,  correlates into  approximately  20
million flood determination requests annually.

                                     - 3 -
<PAGE>




Acquisition Developments in 1998

      The Company has commenced the  implementation  of a consolidation  plan in
the MCR business  that is designed to expand its  existing  business and to take
advantage  of its core  competencies,  including,  among other  things,  (i) its
highly  developed  customer  services  program,  (ii)  its use of  sophisticated
technology to achieve  efficiencies in the MCR market,  (iii) its development of
close working relationships with mortgage lenders, (iv) its knowledge of the MCR
market, and (v) its experienced management team. The Company believes that there
are  approximately  1,400 providers in the domestic  mortgage  credit  reporting
industry, of which approximately 70% are small independent  organizations and of
such less than 10% generate more than $5.0 million of annual revenues. Moreover,
virtually all the small  independent  agencies are  susceptible  to  acquisition
since  they are not  Agency-approved  nor  have the  capital  to  invest  in the
requisite technology needed to garner Agency approval. The Company believes that
a large number of these small  independent  providers  are  therefore  concerned
about their ability to survive in the industry as it  increasingly  moves toward
automated Agency underwriting.

      FDC focuses on the purchase of  unaffiliated  companies  active in the MCR
market, as well as companies that are presently System Affiliates,  and attempts
to  structure  an  acquisition  that  will be  immediately  accretive.  Targeted
acquisition  candidates are those  companies that (i)  immediately  add to FDC's
customer and revenue base; (ii) immediately offer significant economies of scale
through the consolidation of, among other things, their accounting  departments,
administration  costs,  technology  costs and owner  salaries  with those of the
Company;  and (iii)  recognize  the need to associate  with an  Agency-approved,
technologically  sophisticated MCR provider in order to remain competitive.  FDC
focuses on a potential acquiree's  revenue-generating  capability as its primary
interest is to acquire customers and revenues.

      The Company  consummated  11  acquisitions  of mortgage  credit  reporting
businesses from August 1998 through January 1999 for an aggregate purchase price
of $10 million. Six of the acquisitions were System Affiliates.  In addition, as
of the date of this  Report,  the  Company is in  negotiations  to  acquire  the
businesses  of  several  other  companies,  although  there  are  no  definitive
agreements  with any persons or entities as to any acquisition and no assurances
are given that any additional acquisitions will be effectuated.

      The  acquisitions  were generally asset purchases which included  customer
lists,   customer   agreements,   computer  equipment,   and  office  furniture.
Non-competition  and  confidentiality  agreements were obtained from appropriate
persons in all  acquisitions  and  employment  agreements  were  entered into in
connection  with  some  acquisitions.  The  consideration  paid  by the  Company
included an  aggregate  of  approximately  $4.2  million  cash,  $3.4 million in
promissory  notes and $2.4 million in FDC Common Stock value. The notes vary but
are generally payable over three to five years and bear interest of up to 8% per
annum. See Note 7 to the Consolidated Financial Statements.

      See  "Management's  Discussion  and  Analysis of Financial  Condition  and
Results of Operations"  in Item 6 below for  information  concerning  additional
financing.

                                     - 4 -
<PAGE>




Industry Overview and Competitive Factors

      The mortgage credit reporting ("MCR") industry is highly  fragmented.  The
Company faces both direct and indirect competition for its services from a large
number  of  companies.  A  significant  number  of these  competitors  are small
companies operating on a local scale, while a limited number are large companies
operating on a national scale.  Management believes that there are approximately
1,400  companies  in  the  United  States  providing  MCR  services,   of  which
approximately 70% are small independent organizations and of which less than 10%
have  revenues in excess of $5.0  million.  While the majority of the  Company's
competitors  are  small,  certain  competitors,  including  The  First  American
Financial Corp., CBC Companies, Inc., TransUnion Corporation, and Equifax Credit
Information Services,  Inc., are significantly larger and have greater financial
and marketing resources than the Company.  The Company and its System Affiliates
combined are believed by  management  to account for about 15% of national  MCRs
delivered  annually.  The Company also faces  intense  competition  from various
companies  engaged  in  employment  and  tenant   information  and  verification
services.

      The  primary  competitive  factors  in the MCR  industry,  and most of the
Company's  other  existing  and  contemplated  related  service  areas,  are (i)
customer   services,   (ii)  accuracy,   (iii)  readability  of  reports,   (iv)
technological  sophistication,  (v) delivery speed,  (vi) price,  and (vii) name
recognition.  Historically,  mortgage credit  reporting  entities have performed
their services by manual verification in the form of calling creditors, lenders,
employers,  landlords, and other businesses directly to verify information,  and
reviewing public files and other information sources.  However, the industry has
been undergoing  significant change in terms of how services are requested,  how
information  is delivered,  and the format in which the data is returned.  These
changes have been driven by advances in computer  software and  hardware,  along
with advances in communications technology. Since the mortgage lending industry,
along  with  other  users  of  credit  information,   continually  expect  quick
turnaround of accurate reports in a customized format in order to facilitate its
lending  decisions,  the Company  believes  that  entities  involved in mortgage
credit reporting must continually  develop and maintain  sophisticated  computer
and  communication  technology  to  compete.  Due to  the  costs  and  technical
competence  required to keep abreast of technological  advances in the industry,
the Company believes that the credit reporting  industry will  consolidate,  and
that the market may be  dominated  by a handful of  companies  that have  proven
technological  capabilities and diversified  product lines. The Company believes
that one of its most significant  advantages is its software and  communications
technology. Management believes that the industry is moving towards an automated
credit   reporting   system  which  mandates   quick   turnaround  of  reliable,
user-friendly   credit  reports.   The  Company  believes  its  state-of-the-art
Technology Center described in Item 2 below will allow it to continue to compete
favorably in the credit reporting industry.

      The  Company's  business is directly  influenced  by the mortgage  lending
industry  since its  primary  services  are MCRs used by mortgage  lenders.  The
mortgage  lending industry enjoyed near record years in 1997 and 1998 due to low
interest  rates  and  a  robust  economy.  According  to  the  Mortgage  Bankers
Association of America ("MBAA"),  mortgage originations (including refinancings)
are  estimated  to have  totaled  approximately  $870  billion  in 1997 and $1.4
trillion in 1998.  This loan activity  equated to the generation of an estimated
11 million MCRs in 1997 and 20 million MCRs in 1998.

                                     - 5 -
<PAGE>




      According to the MBAA, the outlook for 1999 appears  relatively stable due
to  demographics,  particularly  the  impact  of  the  aging  of the  baby  boom
generation,  which is entering its peak earnings period.  As of the date of this
Report,  home  ownership  rates are  approximately  66.5%.  For  1999,  the MBAA
projects  interest  rates  to  remain  at or  below  1998  levels  and  mortgage
originations  to  total  approximately  $1.2  trillion.  In  regard  to a longer
outlook,  although population growth and household formation rates are projected
to slow  during the next 10 years,  population  growth  within  the top  earning
groups  --ages  45-to-54 and 55-to-64 -- is projected to increase.  Assuming the
foregoing  home ownership and interest rate trends  continue,  strong demand for
MCRs should continue, although no such assurances are given.

      Management   also   believes  the  market  for  tenant   information   and
verification  services  will remain  strong.  In 1998,  the rental  industry was
composed of over 29 million single and multi-family properties and had an annual
turnover of  approximately  65%. This resulted in over 65 million  credit checks
and other verifications  annually.  Assuming these trends continue,  this market
will  continue  to  offer  opportunities  for the  Company  to grow  its  tenant
information and verification business, although no such assurances are given.

System Affiliates

     From 1989 to 1993, the Company  pursued a strategy of  franchising  its MCR
system.  The Company earns fees based on each  franchisee's use of its system to
generate reports for the franchisees' customers. In 1993, the Company terminated
its franchise  program and began  entering  into  licensing  agreements  whereby
licensees utilize the Company's systems to service their customers in return for
the payment to the Company of a percentage of their gross billings.  The Company
presently markets its services through seven Company owned offices and 54 System
Affiliates, which collectively provide services to lenders. The Company does not
intend to sell either franchises or licenses in the future.

     The Company's System Affiliates  currently provide  significant  revenue to
the Company.  For the years ended December 31, 1997 and 1998,  System Affiliates
provided 40.6% and 22.1% ,  respectively,  of the gross revenues of the Company.
This  percentage is expected to be reduced as the Company's  consolidation  plan
continues.

Suppliers

      The Company does not maintain its own consumer credit  database.  Instead,
the  Company  obtains   consumer   credit  data  from  large,   national  Credit
Repositories such as Experian,  Inc., TransUnion Corporation,  and Equifax, Inc.
pursuant to "reseller" agreements with these entities.  Generally,  the reseller
agreements are terminable without cause by either party within a short period of
time upon written notice.  While the Company believes its relationships with the
Credit  Repositories  are good,  there  can be no  assurance  that its  reseller
agreements with the Credit  Repositories  will not be terminated for any reason.
Each repository credit file contains the following information which the Company
accesses by computer modem:

      Identifying  Information -- name, address, former address, social security
number and employment.

                                     - 6 -
<PAGE>




      Credit  History -- balances and payment  history of credit cards,  finance
companies,  banks, mortgage loans, accounts referred for collection and accounts
written off.

      Public Records -- tax liens, civil judgments, bankruptcies, foreclosures.

      Inquiries -- credit grantors or authorized parties are listed as inquiries
when they have requested a copy of a credit file.

Government Regulation and Privacy Issues

      The Company is a "consumer  reporting  agency"  within the meaning of that
term as used in, and therefore is subject to, the  provisions of the Fair Credit
Reporting Act (referred to herein as the "FCRA") and is regulated by the Federal
Trade  Commission  ("FTC") under the Federal  Trade  Commission  Act.  Under the
provisions  of the FCRA,  a consumer  reporting  agency may  furnish a "consumer
report" in response to the order of a court having jurisdiction or in accordance
with  written  instructions  of the  consumer.  Such  information  may  also  be
furnished  to a person the  Company  has  reason to  believe  intends to use the
information:  (i) in connection with a credit  transaction;  (ii) for employment
purposes;  (iii) in  connection  with the  underwriting  of  insurance;  (iv) in
connection with a determination  of the consumer's  eligibility for a license or
other benefit granted by a governmental  instrumentality required by law; (v) as
a  potential  investor  or servicer or current  insurer,  in  connection  with a
valuation  of, or an assessment  of the credit or  prepayment  risks  associated
with, an existing obligation; or (vi) to a person who otherwise has a legitimate
business need for the  information.  The FCRA  prohibits  disclosure of obsolete
information   concerning  a  consumer.   Obsolete  information  generally  means
information which is more than seven years old.

      The FCRA provides for civil liability against a consumer  reporting agency
by a consumer for willful or negligent  noncompliance with the FCRA and criminal
sanctions  against  officers and  directors  thereof who knowingly and willfully
disclose  information  in a report to a person not  authorized  to  receive  the
information.

      State  laws also  impact  the  Company's  business.  There are a number of
states  which have laws  similar to the FCRA,  and some states  which have human
rights laws much like the Americans with Disabilities Act ("ADA").  In addition,
to the Company's  knowledge,  at least four states require  companies engaged in
investigative  reporting,  such as EMPfacts,  to be licensed in order to conduct
business within those states. A large number of states also regulate the type of
information  which can be made available to the public and/or impose  conditions
to the release of  information.  For example some state laws prohibit  access to
certain  types  of  information,  such as  workers'  compensation  histories  or
criminal  histories,  while others restrict access without a signed release from
the subject of the report. In addition,  many privacy and consumer advocates and
federal regulators have become  increasingly  concerned with the use of personal
information.  Attempts  have  been  made and will  continue  to be made by these
groups to adopt new or additional  federal and state legislation to regulate the
use  of  personal  information.  Existing  federal  and/or  state  laws,  future
modifications  thereto,  or  laws  enacted  in the  future  regulating  consumer
reporting agencies or access and use of personal information, in particular, and
privacy and civil rights,  in general,  could  materially  adversely  impact the
Company's operations.

                                     - 7 -
<PAGE>




Software Development Costs

      The Company incurs  research and  development  costs  associated  with the
development and improvement of software  utilized in its credit  information and
delivery system.

      The Company  adopted the  provisions of Statement of Position  (SOP) 98-1,
"Accounting for Costs of Computer  Software  Developed for Internal Use." Direct
costs  incurred  in  the  development  of  software  are  capitalized  once  the
preliminary project stage is completed,  management has committed to funding the
project and  completion  and use of the software  for its  intended  purpose are
probable.  The  Company  ceases  capitalization  of  development  costs once the
software has been  substantially  completed  and is ready for its intended  use.
Software  development  costs are amortized over their estimated  useful lives of
three years.  Costs  associated  with upgrades and  enhancements  that result in
additional  functionality  are  capitalized.  See  Note  1 to  the  Consolidated
Financial  Statements  for  information   concerning  the  Company's  accounting
policies for software development costs.

Intellectual Property

      The Company has not yet adopted a formal intellectual  property protection
program,  and  currently  relies on a  combination  of  trademark,  servicemark,
copyright,  trade secret and contract  protection  (licenses)  to establish  and
protect its proprietary  rights in its services and technology.  There can be no
assurance that such measures will provide meaningful  protection to the Company.
The Company currently  maintains  approximately 43 trademarks,  servicemarks and
copyrights all of which it believes are properly filed and recorded. The Company
does not have any knowledge of infringement of its proprietary rights.

Facilities

      The Company  relocated its corporate office to a new building in Loveland,
Colorado  on  April 3,  1998 and  commenced  a 20 year  operating  lease at that
facility. The lease calls for annual lease payments of $281,790 during the first
five year term of the lease subject to increases of 15% every five years for the
duration  of the lease.  The Company  anticipates  the space will be adequate to
meet the Company's office requirements for the foreseeable future.

     In connection with its acquisitions  described above under "Developments in
1998," the Company assumed  several  leases,  most of which are not material and
none of which have terms exceeding five years.  See Note 11 to the  Consolidated
Financial Statements.

Insurance

      The Company maintains commercial general liability and property insurance.
The policy provides for a general  liability  aggregate limit of $2 million.  In
addition, the policy also provides for products/completed  operations,  business
auto and personal property coverage.

                                     - 8 -
<PAGE>




Employees

      At February 15, 1999,  the Company  employed 216 persons  full-time and 19
persons  on a  part-time  basis.  There  are no union or  collective  bargaining
agreements  between the Company and its  employees  and employee  relations  are
considered by management to be excellent.

                                     - 9 -
<PAGE>




Item 2.    Description of Properties.

      The Company's MCR and other information  services  integrate data obtained
from national credit repositories,  criminal records,  motor vehicle records and
other public  information  databases.  The integration of this information,  and
delivery of its  services,  is  performed  by the  Company's  Technology  Center
located at its  Loveland,  Colorado  headquarters.  FDC has  invested  over $1.5
million in its Technology Center,  which utilizes  proprietary computer software
and   state-of-the-art   hardware  and  communication   systems.  The  Company's
information,  processing  and  telecommunications  systems are  scalable and the
Company  believes  its systems has  sufficient  back-up  and  disaster  recovery
capability. As such, the Company has experienced little downtime. The Technology
Center  can pull up to  18,000  bureau  files  an hour  and has a call  capacity
greater than 30,000 calls per day. The Technology Center processed approximately
225,000  reports  per month in 1998 and is  believed  by  management  to have an
infrastructure  to support  three times that  volume.  In  addition,  management
believes that the excess  capacity it has built into its systems and  operations
can be readily augmented to accommodate even greater growth. The Company credits
its success to its technological sophistication and employs 19 persons, eight of
whom are software programmers, who are assigned to the continued development and
maintenance of the Technology  Center. The Technology Center has enabled FDC (i)
to become an  Agency-approved  credit  reporting  agency,  (ii) to  provide  its
customers  with  strong  support  and  service,   and  (iii)  to  implement  its
consolidation  plan. The Company is committed to maintaining  its  technological
competitive  advantage,  and it intends to continue to devote  resources to this
effort.

      The Company uses proprietary  software developed in-house over the past 13
years.  The  Company  believes  its  proprietary  software  allows  it to remain
competitive in an increasingly competitive  marketplace.  The Company's software
was originally written in 1984, and began full production use in 1985. From 1987
through  1997,  the Company  significantly  developed  and expanded its software
capability  including its ability to completely customize reporting forms to the
various requirements of each customer. The Company has moved to Microsoft Visual
Studio for the majority of its new programs.

      Systems in the Technology Center are non-proprietary Windows 95 or Windows
NT based  Intel  platforms.  Each  system  has at least one  backup,  and can be
repaired or replaced easily and cheaply.  The server platform is Windows NT with
a mirrored  server that can replace the primary  server in minutes if necessary.
Backup  power  is  available  to the  servers  to  ensure  up to 45  minutes  of
uninterrupted  power.  Networking is achieved  through four 100Base-TX  backbone
connections to four 3COM Network switches.

      The Company's  operations  are  dependent  upon its ability to protect its
Technology  Center  against  damage from fire,  power  loss,  telecommunications
failure,  natural  disasters or a similar  event.  The Company  moved into a new
facility in Loveland,  Colorado in April 1998,  which is  outfitted  with backup
power and duplicate telecommunication facilities. Nonetheless, the Company could
experience  a natural  disaster,  hardware  or  software  malfunction,  or other
interruption of its Technology Center operations.  Extended interruptions in the
Company's  services  could  be  significantly  detrimental,  and  the  Company's
insurance may not be adequate to compensate the Company for all resulting losses
that may occur.

                                     - 10 -
<PAGE>




      The Company's  business is also dependent upon various  computer  software
programs and  operating  systems that utilize  dates and process data beyond the
year 1999. If the actions taken by the Company to mitigate its risks  associated
with year 2000 are inadequate,  there could be a material  adverse effect on the
financial condition and results of operations of the Company.  See "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  in
Item 6 below.

                                     - 11 -
<PAGE>



Item 3.    Legal Proceedings.

      The  Company  has  disputed  charges by AT&T Corp.  for  telecommunication
services.  In November  1998,  AT&T brought suit claiming  damages for services,
disconnect fees and other items of $547,000.  The Company has responded  stating
that it believes it owes either  nothing or  substantially  less than the amount
claimed by AT&T. The case is in an early stage and no discovery has taken place.
Management intends to contest the case vigorously, however litigation counsel is
unable to provide an evaluation of the likelihood of the outcome.


Item 4.    Submission of Matters to a Vote of Security Holders.

      No matters were submitted by the Company to a vote of its security holders
during the fourth quarter of its fiscal year ended December 31, 1998.

Item 5.    Market  for   Registrant's   Common   Equity  and  Related  
Stockholder Matters.

      The  Company's  Common Stock and  Warrants  have been quoted on the Nasdaq
SmallCap  Market  under the  symbols  "FDCC" and  "FDCCW,"  respectively,  since
completion of its initial public  offering on May 13, 1998. The following  table
sets forth for the periods  indicated  the high and low bid prices of the Common
Stock and Warrants as reported on the Nasdaq SmallCap Market:

                                Common Stock           Warrants
      1998                       Bid Price             Bid Price      
                                High    Low         High      Low
      Second Quarter(from 
       May 13)                 $9-5/8 $5-1/2        $3-5/8    $0-1/2
      Third Quarter             9-1/2  6-1/2         3-3/8     1-3/8
      Fourth Quarter            8-3/8  6-3/8         2-13/16   1-1/4

      Dividends.  The  Company has not paid or declared  cash  distributions  or
dividends on its Common  Stock and does not intend to pay cash  dividends in the
foreseeable  future.  Future cash  dividends  will be determined by the Board of
Directors  based  on  the  Company's  earnings,   financial  condition,  capital
requirements and other relevant factors.

      On March 24,  1999,  the last  reported  bid price of the Common Stock and
Warrants  reported on the Nasdaq  SmallCap  Market was $7.88 per share and $1.88
per Warrant.  As of March 24,  1999,  there were only a few holders of record of
the Common Stock and record  holders of its Warrants and the Company  estimates,
based upon  information  provided  by brokers and  repositories,  that it has in
excess of 600 beneficial owners of its Common Stock and 600 beneficial owners of
its Warrants.

                                     - 12 -
<PAGE>




      In connection with, and as part of the consideration  for, the acquisition
of the  assets of three  companies  and the  acquisition  of all  equity  voting
securities of a fourth  company  during 1998,  the Company  issued shares of its
Common Stock as follows:

      Date                Acquisition                        Number of Shares

July 31, 1998             Heritage Credit Reporting, Inc.         11,595
July 31, 1998             American Credit Connection, Inc.         8,635
September 30, 1998        Landmark Financial Services, Inc.       53,782
December 16, 1998         Mortgage Credit Services, Inc.         297,334*
------------------
* These shares were issued into escrow at an arbitrary price of $6.00 per share;
the actual  number to be  distributed  from the escrow will be determined at the
first and second  anniversaries  after the  acquisition and will be based on the
price of the  Common  Stock at that time  (i.e.,  if the price is $12 per share,
only one-half of the shares will be  distributed  and the other half returned to
the Company).

      All  shares  listed  above  are  "restricted  securities"  as that term is
defined  under the  Securities  Act of 1933 ("'33 Act");  no  underwriters  were
involved in the issuances. The shares were issued in reliance on Section 4(2) of
the '33 Act as transactions  not involving public  offerings.  The offerees were
knowledgeable  in the  mortgage  credit  reporting  business,  able to fend  for
themselves  and agreed to take the shares for  investment and not with a view to
distribution.  All certificates  were  appropriately  legended and stop transfer
instructions were entered by the Company with its transfer agent.

Item 6.    Management's Discussion and Analysis of Financial Condition 
           and Results of Operations.

      This Report contains certain forward-looking statements within the meaning
of Section 21E of the  Securities  Exchange Act of 1934 and the Company  intends
that such  forward-looking  statements  be subject to the safe  harbors  created
thereby.  These  forward-looking  statements include the plans and objectives of
management for future  operations,  including  plans and objectives  relating to
services offered by and future economic performance of the Company.

      The  forward-looking  statements  included  herein  are  based on  current
expectations  that  involve  a number  of risks  and  uncertainties  that  might
adversely  affect the  Company's  operating  results in the future in a material
way. Such risks and uncertainties  include but are not limited to the following:
interest rate fluctuations, effects of national and regional economic and market
conditions,  seasonal  housing market  fluctuations,  labor and marketing costs,
operating  costs  such  as  telephone  and  repositories  costs,   intensity  of
competition,  success of the Company's  consolidation plan, legal claims and the
contingencies associated with year 2000 compliance.

Overview

      The Company  specializes  in preparing  mortgage  credit  reports that are
customized to meet each lender's  individual  needs. The Company also provides a
broad range of credit,  employment  and other  information  services to mortgage
lenders, consumer lenders, employers,  landlords, and other businesses. See Item
1.

                                     - 13 -
<PAGE>




      The Company  provides its services in two  different  fashions.  The first
involves  services sold directly by the Company to third party customers such as
mortgage lenders, financial institutions,  private enterprises,  and individuals
(referred  to as  "information  services").  Secondly,  the  Company  sells  its
services through its System Affiliates. The Company currently has 25 franchisees
and  29  licensees.  The  System  Affiliates  provide  information  services  to
customers using the Company's technology and pay royalty, license and other fees
to the Company. The Company does not intend to license or franchise  territories
to third parties in the foreseeable future.

      During  1997 and 1998,  the  Company's  primary  emphasis,  in addition to
expanding its market, was the completion and expansion of its technology center.
This center was necessary for the Company to provide its Bureau Express  reports
and other on-line services to both third party users and System Affiliates.  The
Company funded these expenditures principally from the proceeds from the sale of
certain Company operated territories and income from operations.

      In order to  expand  information  services,  the  Company  has  devised  a
consolidation  plan  whereby  it has  identified  both  competitors  and  System
Affiliates  as  potential  acquisition  candidates.  See Item 1. As the  Company
implements its consolidation plan, it expects  information  services revenue and
gross  profit to increase  and System  Affiliates  revenue to decrease as System
Affiliates are either acquired or their agreements with the Company expire.  The
Company also expects that revenue from the sale or licensing of Company operated
territories will substantially decrease or be eliminated in future periods.

Selected Financial Data

      The  following  consolidated  selected  financial  data  should be read in
conjunction with the Consolidated Financial Statements and related Notes thereto
appearing  elsewhere in this Report. The consolidated  statements of income data
for the years  ended  December  31, 1997 and 1998 and the  consolidated  balance
sheet data as of December  31, 1997 and 1998 are derived  from the  consolidated
financial  statements of the Company  which have been audited by Ehrhardt  Keefe
Steiner & Hottman PC, the Company's  independent auditors, as indicated in their
report  included  herein.  The selected  financial  data  provided  below is not
necessarily  indicative  of  the  future  results  of  operations  or  financial
performance of the Company.

                                     - 14 -
<PAGE>




                                                   For the Years Ended
                                                       December 31,
                                              ------------------------------
                                                  1997             1998
                                              -----------      -------------
                                                     (in thousands, except
                                                        per share data)
Statements of Income Data:
Revenue
  Information services ..................     $       606      $     6,236
  Ancillary income ......................             651            1,451
  System Affiliates .....................           1,429            2,198
 Proceeds from the sale of Company
  operated territories ..................             714             --
  Training, license and other ...........             120               59
                                              -----------      -----------
   Total revenue ........................           3,520            9,944
                                              -----------      -----------

Operating Expenses
  Costs of services provided ............           1,301            4,986
  Costs of Company operated territories .             506             --
  Selling, general and administrative ...             917            2,604
                                              -----------      -----------
   Total operating expenses .............           2,724            7,590
                                              -----------      -----------

Income from operations ..................             796            2,354
Other income ............................              28              185
Interest expense ........................             (77)            (152)
                                              -----------      -----------

Income before income taxes ..............             747            2,387
Income tax expense (benefit) ............             244              810
                                              -----------      -----------

Net income ..............................     $       503      $     1,577
                                              ===========      ===========

Basic earnings per share ................     $       .28      $       .59
                                              ===========      ===========

Basic weighted average shares 
 outstanding.............................       1,800,000        2,680,753
                                              ===========      ===========

Diluted earnings per share ..............     $       .28      $       .57
                                              ===========      ===========

Diluted weighted average shares 
 outstanding.............................       1,800,000        2,769,214
                                              ===========      ===========


                                     - 15 -
<PAGE>


                                                     For the Years Ended
                                                         December 31,
                                                ------------------------------
                                                    1997             1998
                                                -----------      -------------
                                                    (in thousands, except
                                                       per share data)


Balance Sheet Data:
Working capital ...............................     $   116     $ 1,786
Total assets ..................................       2,864      18,177
Total liabilities .............................       2,217       7,341
Shareholders' equity...........................         647      10,836

Results of Operations

      The following table sets forth for the periods indicated,  as a percentage
of total revenues, those items included in the Company's Consolidated Statements
of Income:

                                                 Years Ended
                                                 December 31,
                                           ----------------------
                                               1997         1998
                                           -----------   ---------

Revenue
  Information services ................        17.2%       62.7%
  Ancillary income ....................        18.5        14.6
  System Affiliates ...................        40.6        22.1
  Proceeds from the sale of Company
   operated territories ...............        20.3         --
  Training, license and other .........         3.4          .6
                                              -----       -----
   Total revenue ......................       100.0%      100.0%
                                              -----       -----

Operating Expenses
  Costs of services provided ..........        37.0        50.1
  Costs of Company operated territories        14.4         --
  Selling, general and administrative .        26.0        26.2
                                               -----       -----
   Total operating expenses ...........        77.4%       76.3
                                               -----       -----

Income (loss) from operations .........        22.6%       23.7%
Other income ..........................          .8         1.9
Interest expense ......................        (2.2)       (1.5)
                                               -----       -----

Income (loss) before income taxes .....        21.2%       24.1%
                                               -----       -----

Income tax (expense) benefit ..........        (6.9)%       8.1%
                                               -----       -----

Net income (loss) .....................        14.3%       16.0%
                                               =====       =====


                                     - 16 -
<PAGE>




Comparison of Operating  Results for Years Ended  December 31, 1998 and
1997

      Company information services revenue increased $5.63 million, or 929% from
$606,000 in 1997 to $6.24  million in 1998.  The increase was primarily a result
of the  Company's  third  and  fourth  quarter  acquisitions  (See Note 2 to the
consolidated  financial  statements).  These  acquisitions  produced  a total of
$5,677,000 in revenues  for  the year ended December 31, 1998.  Increased volume
of credit reports generated and additional  service offerings  accounted for the
remaining increase.

      Ancillary  income  represents  fees paid by system  affiliates for various
additional products and services provided to them. Ancillary income increased by
$800,000 or 123%,  from $651,000 in 1997 to $1,451,000 in 1998.  The increase is
primarily a result of the Company  providing  additional  services to its system
affiliates for a full year in 1998 compared to only two months in 1997.

      System affiliates  revenues  increased $770,000 or 54%, from $1.43 million
in 1997 to $2.2  million in 1998.  The  increase  is due to  additional  billing
volume by system affiliates and resultant royalty, license and other fees.

      The Company did not sell any  Company-operated  territories  during  1998;
thus it did not  generate  any  proceeds  from  the  sale  of  Company  operated
territories during 1998 compared to proceeds of $714,000 in 1997.

      Training,  license  and  other  revenue  decreased  $61,000  or 51%,  from
$120,000 in 1997 to $59,000 in 1998.  The majority of this decrease was due to a
one-time charge for a marketing software interface in 1997.

      Costs of services  increased  $3.69 million or 284%,  from $1.3 million in
1997 to $4.99  million in 1998.  The  increase  in costs of services is directly
related to the Company's  acquisitions  during the third and fourth  quarters of
1998 which resulted in an overall decrease in margins from 52% in 1997 to 50% in
1998.  Margins for the nine month ended  September 30, 1998 had  increased  over
1997  to  58%,  however,  during  the  last  three  months  of  the  year  eight
acquisitions  which had been added during the third and fourth  quarters of 1998
were not fully  integrated  into the Company's  operations.  It generally  takes
between  sixty and one  hundred and eighty  days to reduce  duplicate  personnel
costs,  integrate the acquisitions  credit reporting  systems into the Company's
technology  center  where  necessary,  incur  training  costs to ensure  Company
quality  standards,  and to eliminate other duplications in costs. The Company's
margins  are  also  impacted  by  the   seasonality  of  home  buying  which  is
traditionally slower in November and December.

      Selling,  general and administrative  expenses increased $1.7 million,  or
185%,  from $917,000 in 1997 to $2.60 million in 1998.  This increase is related
to costs  associated  with the  Company's  growth in 1998,  including  increased
personnel costs, rents, and depreciation and amortization.

      Total operating costs increased $4.87 million, or 179%, from $2.72 million
in 1997 to $7.59 million in 1998 with a resulting  increase in operating  income
of $1.55 million, or 195%, from $796,000 in 1997 to $2.35 million in 1998.

                                     - 17 -
<PAGE>




      Interest  expense  increased  $75,000,  or 97%  from  $77,000  in  1997 to
$152,000 in 1998.  This  increase is due to additional  notes payable  issued in
connection with the Company's business  acquisitions in third and fourth quarter
1998.

      Income  taxes  increased  $566,000,  or  232%,  from  $244,000  in 1997 to
$810,000 in 1998.  The Company's  effective  tax rate remained at  approximately
34%.

      As a result of the foregoing factors, net income increased $1,074,000,  or
214%, from $503,000 in 1997 to $1,577,000 in 1998.

Liquidity and Capital Resources

     The Company had cash balances of $1,093,295 and  short-term  investments of
$2,212,386  at December 31, 1998.  The Company was able to manage the net impact
of accounts receivable, accounts payable and accrued expenses on cash flows from
operations,   which  with  net  income  of  $1,576,734  and   depreciation   and
amortization  of $776,094  resulted in cash flow  provided  from  operations  of
$2,658,575.

     The Company used cash of $711,862  and $892,579 of capital  lease and notes
payable financing to purchase additional  equipment and furniture to furnish its
Loveland offices and in renovating  certain branch  locations  acquired in 1998.
The Company also used cash to fund $494,562 of additions to capitalized software
development costs in 1998. The Company successfully completed its initial public
offering in May of 1998 which  resulted in net cash provided of $6,289,696  (net
of offering costs of $1,438,304). The Company invested a portion of the offering
proceeds in high quality corporate and Government debt securities which resulted
in an increase to short term  investments of $2,212,386.  The offering  proceeds
received by the  Company  allowed it to close on eight  acquisitions  which were
funded by paying cash of $3,604,900, issuance of notes payable of $2,899,790 and
restricted common stock of $2,359,000. In connection with these acquisitions the
Company acquired primarily fixed assets and intangibles in addition to access to
certain key operating markets.

Inflation

      Although the Company cannot accurately  anticipate the effect of inflation
on its  operations,  the Company does not believe that  inflation has had, or is
likely in the  foreseeable  future to have, a material  effect on its results of
operations or financial condition.

                                     - 18 -
<PAGE>




Year 2000 Compliance

      The Company  utilizes a significant  number of computer systems across its
entire  organization.  The Company therefore must assess those systems Year 2000
compliance  and then  correct or replace  systems as  needed.  The  Company  has
completed  its  Year  2000  compliance  assessment  for  software  and  hardware
compliance.  This  assessment  concluded with a schedule for Year 2000 equipment
and software  updates as necessary,  and schedule for confirming  compliance via
testing.  The Company has  prioritized  the updating and testing of its systems.
Software for customer use has the highest priority, followed by internal systems
critical to operations. Modification of Company generated software for Year 2000
compliance  is complete,  and testing of compliance  was  completed  January 31,
1999.  Modification of current  hardware and low-level  system software for Year
2000  compliance is complete,  with  operating  system patches or upgrades being
applied as they become available. Updates of vendor supplied systems with either
Year 2000  compliant  patches or  upgrades  are in  progress.  All new  software
developed by the Company is 32-bit  Windows  software and is Year 2000 compliant
to the standards set forth by Microsoft Corporation's published guidelines.  All
of the  Company's  customers  will be  required  to upgrade  to 32-bit  Window's
software by December 31, 1999. Beginning first quarter 1999, the Company expects
to begin  testing  for Year 2000  compliance  with key  information  vendors and
customers in an industry-wide effort sponsored by Freddie Mac and the MBAA.

      Costs  for  Year  2000  compliance  include  administration  of Year  2000
compliance plan,  modifications  to existing  software,  updating of systems,  a
percentage of new software development, and testing costs. Total Year 2000 costs
are estimated at $200,000,  of which approximately $80,000 was incurred in 1998.
Although  the  Company  is  developing,   and  will,  if  necessary,   implement
appropriate  contingency plans to mitigate to the extent possible the effects of
any significant Year 2000 noncompliance,  such plans may not be adequate and the
cost of Year 2000 compliance may be higher than $200,000.

      Vendors for facilities  such as telephone and  electricity  have indicated
that they will be Year  2000  compliant  by the end of June  1999.  The  Company
believes  that it has completed  all software  updates  necessary to upgrade its
information source vendors to their proprietary Year 2000 versions. This project
is material,  but may be  unnecessary  for Year 2000  compliance  as the Company
already  interprets  the 2 digit  year  representations  of these  vendors.  The
Company's  results of  operations  and financial  condition  could be materially
adversely  affected  by the  failure  of outside  vendors  to achieve  Year 2000
compliance in a timely manner.

      With the exception of software  installed at customer  sites,  all Company
generated software is available to Company staff for immediate  modification and
update,  should Year 2000 compliance  problems be discovered.  Current  customer
software has a capability for the customer to automatically update the software,
via normal  communications with the Company,  should any problems be found after
the  software is installed at the  customer  site. A worst case  scenario  would
involve a fallback to legacy  software  that has been  modified to use available
century  information  or wherever  necessary  to  interpret  the  century  using
windowing  technology.   The  Company's  results  of  operations  and  financial
condition could be materially adversely affected by the failure of both original
and contingency plans to achieve Year 2000 compliance in a timely manner.

                                     - 19 -
<PAGE>




      The  Company's  development  of new 32-bit,  Year 2000  compliant  Windows
software  for systems  that are now running  DOS or 16-bit  Windows  software is
currently  scheduled  for  completion  during  1999.  The use of the new Company
generated  Windows  software is considered a contingency plan for the failure of
the existing DOS or 16-bit Windows software running with Year 2000 modifications
that interpret the century. Those modifications are currently in place, and were
tested for Y2K compliance as of January 31, 1999.  Contingency  plans for vendor
supplied  systems  are still being  developed,  and should be complete by end of
first quarter 1999.

      All of the Company's  systems used in the servicing of customer  requests,
customer billing,  accounting, and payroll have all been upgraded or replaced to
meet Year 2000 requirements, and have completed internal compliance testing. All
newly purchased  systems are being implemented  meeting Year 2000  requirements.
Most of the employee  desktop  machines have been either upgraded or replaced to
meet Year 2000  requirements,  and the remaining  employee desktop machines that
have not already been upgraded or replaced are  scheduled to be either  upgraded
or replaced by June of 1999.

      Internal  compliance  testing  has been  completed  successfully,  and the
Company is now participating in external testing with clients and vendors,  both
on an individual basis and as part of the MBA Year 2000 Readiness test, in order
to ensure client and vendor  readiness for the Year 2000.  Testing will continue
into June of 1999.

Item 7. Financial Statements.

 
                          FACTUAL DATA CORP.

                   Consolidated Financial Statements
                           December 31, 1998

<PAGE>


                          FACTUAL DATA, CORP.





                           Table of Contents




Independent Auditors' Report......................................F - 1

Consolidated Financial Statements

    Consolidated Balance Sheet....................................F - 2

    Consolidated Statements of Income.............................F - 3

    Consolidated Statement of Changes in Shareholders' Equity.....F - 4

    Consolidated Statements of Cash Flows.........................F - 5

Notes to Consolidated Financial Statements........................F - 7


<PAGE>




                                 F - 1



                     INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Shareholders
Factual Data Corp.
Fort Collins, Colorado

We have  audited the  accompanying  consolidated  balance  sheet of Factual Data
Corp. and  Subsidiaries  as of December 31, 1998,  and the related  consolidated
statements  of income,  changes in  shareholders'  equity and cash flows for the
years ended December 31, 1997 and 1998. These consolidated  financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Factual Data Corp.
and Subsidiaries as of December 31, 1998 and the results of their operations and
their cash flows for the years ended  December  31, 1997 and 1998 in  conformity
with generally accepted accounting principles.





                                /s/ Ehrhardt Keefe Steiner & Hottman PC
                                    Ehrhardt Keefe Steiner & Hottman PC
February 10, 1999
Denver, Colorado


<PAGE>


                          FACTUAL DATA CORP.

                      Consolidated Balance Sheet
                           December 31, 1998


                                   Assets
Current assets
  Cash .................................................     $ 1,093,295
  Short-term investments (Note 4) ......................       2,212,386
  Prepaid expenses and other ...........................         105,964
  Accounts receivable, net (Note 7) ....................       2,919,578
                                                             -----------
     Total current assets ..............................       6,331,223

Property and equipment, net (Notes 5 and 7) ............       2,976,419

Other assets (Notes 2 and 6) ...........................       8,869,259
                                                             -----------

                                                             $18,176,901

                    Liabilities and Shareholders' Equity
Current liabilities
  Current portion of long-term debt (Note 7) ...........     $ 1,304,953
  Accounts payable .....................................       2,225,685
  Accrued payroll and expenses .........................         431,441
  Income taxes payable .................................         524,186
  Deferred income taxes (Note 10) ......................          59,291
                                                             -----------
     Total current liabilities .........................       4,545,556

Long-term debt (Note 7) ................................       2,492,571

Deferred income taxes (Note 10) ........................         302,762

Commitments and contingency (Note 11)

Shareholders' equity (Note 8)
 Preferred stock, 1,000,000 shares authorized;
  none issued and outstanding ..........................            --   
 Common stock, 10,000,000 shares authorized;
  3,551,346 issued and outstanding .....................       8,614,705
  Retained earnings ....................................       2,221,307
                                                             -----------
     Total shareholders' equity ........................      10,836,012
                                                             -----------

                                                             $18,176,901

                See notes to consolidated financial statements.

                                     F - 2

<PAGE>



                          FACTUAL DATA CORP.

                   Consolidated Statements of Income


                                                      For the Years Ended
                                  December 31,
                                                 ----------------------------
                                                     1997             1998
                                                 -----------      -----------


Revenue
  Information services .....................     $   606,211      $ 6,235,604
  Ancillary income .........................         650,592        1,451,104
  System affiliates ........................       1,428,811        2,198,260
  Proceeds from the sale of Company
   operated territories (Note 12) ..........         714,365             --
  Training, license and other ..............         119,692           58,578
                                                 -----------      -----------
     Total revenue .........................       3,519,671        9,943,546
                                                 -----------      -----------

Operating Expenses
  Costs of services provided ...............       1,301,085        4,986,064
  Costs of Company operated territories sold         506,101             --
  Selling, general and administrative ......         916,521        2,603,589
                                                 -----------      -----------
     Total operating expenses ..............       2,723,707        7,589,653
                                                 -----------      -----------

Income from operations .....................         795,964        2,353,893

Other income (expense)
  Other income .............................          28,806          185,262
  Interest expense .........................         (77,497)        (152,421)
                                                 -----------      -----------
     Total other expense ...................         (48,691)          32,841
                                                 -----------      -----------

Income before income taxes .................         747,273        2,386,734

Income tax expense (Note 10) ...............         244,339          810,000
                                                 -----------      -----------

Net income .................................     $   502,934      $ 1,576,734
                                                 ===========      ===========

Basic earnings per share ...................     $       .28      $       .59
                                                 ===========      ===========

Basic weighted average shares
 outstanding (Note 13) .....................       1,800,000        2,680,753
                                                 ===========      ===========

Diluted earnings per share .................     $       .28      $       .57
                                                 ===========      ===========

Diluted weighted average shares
 outstanding (Note 13) .....................       1,800,000        2,769,214


                See notes to consolidated financial statements.

                                     F - 3
<PAGE>




                          FACTUAL DATA CORP.

       Consolidated Statement of Changes in Shareholders' Equity
            For the Years Ended December 31, 1997 and 1998

<TABLE>
<CAPTION>


                                                  Common Stock                Stock                            Total
                                           ---------------------------     Subscriptions     Retained       Shareholders'
                                             Shares          Amount         Receivable       Earnings          Equity
                                           -----------     -----------     ------------     -----------     -----------

<S>                                          <C>           <C>             <C>              <C>             <C>
Balance at December 31, 1996 .........       1,800,000     $     2,500     $      (500)     $   141,639     $   143,639

Collection of stock subscription .....            --              --               500             --               500

Net income for the year ended
 December 31, 1997 ...................            --              --              --            502,934         502,934
                                           -----------     -----------     -----------      -----------     -----------

Balance at December 31, 1997 .........       1,800,000           2,500            --            644,573         647,073

Net proceeds of initial public
 offering (net of offering costs
 of $1,474,795) ......................       1,380,000       6,253,205            --               --         6,253,205

Common stock issued in connection with
 business acquisitions (Note 2) ......         371,346       2,359,000            --               --         2,359,000

Net income for the year ended
 December 31, 1998 ...................            --              --              --          1,576,734       1,576,734
                                           -----------     -----------     -----------      -----------     -----------

Balance at December 31, 1998 .........       3,551,346     $ 8,614,705     $      --        $ 2,221,307     $10,836,012
                                           ===========     ===========     ===========      ===========     ===========

</TABLE>

                See notes to consolidated financial statements.

                                     F - 5

<PAGE>

                          FACTUAL DATA CORP.

                 Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                         For the Years Ended
                                                             December 31,
                                                     ----------------------------
                                                        1997             1998
                                                     -----------      -----------
<S>                                                 <C>              <C>
Cash flows from operating activities
  Net income ...................................     $   502,934      $ 1,576,734
                                                     -----------      -----------
  Adjustments to reconcile net income to net
   cash provided by operating activities
    Depreciation and amortization ..............         355,084          776,094
    Loss on sale of fixed assets ...............            --             25,454
    Deferred income taxes ......................         128,867          240,276
    Basis of non-current assets of territories .         391,330             --
    sold
    Changes in operating assets and
     liabilities
      Accounts receivable ......................        (325,503)      (1,920,392)
      Prepaid expenses and other ...............          10,217          (67,089)
      Other assets .............................         (23,460)         (37,604)
      Accounts payable .........................         111,590        1,323,142
      Accrued payroll, payroll taxes and
       expenses ................................          24,275          125,973
      Accrued taxes and other ..................          30,017          615,987
                                                     -----------      -----------
                                                         702,417        1,081,841
                                                     -----------      -----------
        Net cash provided by operating
         activities ............................       1,205,351        2,658,575
                                                     -----------      -----------

Cash flows from investing activities
  Purchases of property and equipment ..........        (592,868)      (1,206,424)
  Purchases of short-term investments ..........            --         (2,212,386)
  Proceeds from sale of property and equipment .          29,504             --
  Purchase of intangibles ......................            --           (123,809)
  Payments received on note receivable .........         185,000           45,000
  Increase in note receivable ..................         (72,160)            --
  Net cash used in the acquisition of businesses         (50,000)      (3,604,900)
                                                     -----------      -----------
        Net cash used in investing activities ..        (500,524)      (7,102,519)
                                                     -----------      -----------

Cash flows from financing activities
  Line-of-credit, net ..........................         (66,000)            --
  Principal payments on long-term debt .........        (255,078)      (1,149,209)
  Collection of common stock subscription ......             500             --
  Deferred offering costs incurred net of
   accounts payable ............................         (36,491)            --   
  Net proceeds in initial public offering
   (net of offering expenses paid of
    $1,438,304) ................................            --          6,289,696
                                                      -----------     ------------
        Net cash (used in) provided by
        financing activities ...................        (357,069)       5,140,487
                                                      -----------     ------------

Net increase in cash and cash equivalents ......         347,758          696,543

Cash and cash equivalents, at
 beginning of period ...........................          48,994          396,752
                                                     -----------      -----------

Cash and cash equivalents, at
  end of period ................................     $   396,752      $ 1,093,295
                                                     ===========      ===========
</TABLE>

Continued on following page.


                See notes to consolidated financial statements.

                                     F - 5
<PAGE>

                          FACTUAL DATA CORP.

                 Consolidated Statements of Cash Flows


Continued from previous page.


Supplemental disclosure of cash flow information:

      Interest paid on borrowings for the years ended December 31, 1997 and 1998
      was $108,919 and $131,731, respectively.

      Cash paid for income taxes for the years ended  December 31, 1997 and 1998
      was $36,516 and $155,138, respectively.

Supplemental disclosure of non-cash investing and financing activities:

      During 1997 and 1998, the Company financed fixed assets purchases totaling
      $50,918 and $892,579, respectively, with notes payable and capital leases.

      During  1997,  the Company  incurred  $61,739 in offering  costs that were
      included in accounts payable.

      During 1997,  the Company  acquired a business for $50,000 cash and a note
      payable of $469,419  (Note 2).  During 1998,  the Company  acquired  eight
      companies  for  $3,604,900  cash,  notes  payable  of  $2,899,790  and the
      issuance of restricted stock of $2,359,000 (Note 2).



                See notes to consolidated financial statements.

                                     F - 6




<PAGE>


                          FACTUAL DATA CORP.

              Notes to Consolidated Financial Statements


Note 1 - Organization and Summary of Significant Accounting Policies

Organization

Factual Data Corp was incorporated in the state of Colorado in 1985. The company
was established for the purpose of providing  information services nationally to
financial lending  institutions  primarily in the mortgage lending industry.  In
April of 1997,  the  shareholders  of Factual  Data Corp and Lenders  Resources,
Incorporated  exchanged  all of their  outstanding  shares  of  common  stock in
exchange  for 1.8  million  shares of  common  stock in a newly  formed  holding
company called Factual Data Corp. (the Company).

The Company provides  information  services to lenders from its Company operated
offices and 54 franchised and licensed offices.  Franchised and licensed offices
of the Company are referred to as system  affiliates and related revenue derived
from such system affiliates is referred to as system affiliate revenues.

In exchange for system affiliate revenue from its system affiliates, the Company
provides  certain  on-going  services  that  include  sophisticated   technology
systems,  training,  marketing/sales  assistance,  management,  techniques,  and
policy and procedure manuals.

The Company's  sophisticated  technology  platforms used to develop new products
and  services  allowed  the  Company  to  begin  providing  employee  background
information under EMPfactsSM QuickPeek IdentifierSM, and Tenant Qualifer reports
for employers and landlords.

Principles of Consolidation

The Company's  consolidated financial statements include the accounts of Lenders
Resources  Incorporated,   FDC  Group,  Inc.  and  FDC  Acquisition,   Inc.  All
intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers highly liquid
short-term  investments with an original  maturity of three months or less to be
cash  equivalents.  As of the  balance  sheet  date,  balances  of cash and cash
equivalents at financial  banking  institutions  exceeded the federally  insured
limit by approximately  $627,000.  The Company has not experienced any losses in
such accounts and believes it is not exposed to any  significant  credit risk on
cash and cash equivalents.

                                     F - 7
<PAGE>




Note 1 - Organization and Summary of Significant  Accounting  Policies 
(continued)

Accounts Receivable

In the normal  course of  business,  the  Company  extends  unsecured  credit to
virtually  all of its  customers  and system  affiliates  related  to  providing
information services.  The Company's customers and system affiliates are located
throughout the United States.

Because of the credit risks  involved,  management has provided an allowance for
doubtful accounts of approximately $25,000 which reflects its opinion of amounts
which will eventually become  uncollectible.  In the event of a complete default
by the Company's  customers or system  affiliates,  the maximum  exposure to the
Company is the outstanding accounts receivable balance at the date of default.

Property and Equipment

Property and equipment are stated at cost.  Depreciation  is computed  using the
straight-line  method  based on the  estimated  useful lives of the assets which
range from three to 39 years.

Intangible Assets

Intangible  assets are stated at cost, and consist of goodwill,  customer lists,
covenants  not-to-compete and deferred acquisition costs.  Goodwill and customer
lists are amortized using the straight-line method over fifteen years. Covenants
not-to-compete are amortized over the life of the agreements, which extend up to
five years.

Deferred  acquisition  costs  consist  of costs  associated  with the  Company's
investigation of potential future acquisitions.  These costs will be capitalized
upon  completion of the  acquisition or charged to expense if the acquisition is
unsuccessful.

Software Development Costs

The Company  adopted the provisions of Statement of Position  98-1,  "Accounting
for Costs of  Computer  Software  Developed  for  Internal  Use."  Direct  costs
incurred in the  development of software are  capitalized  once the  preliminary
project stage is completed,  management has committed to funding the project and
completion  and use of the software for its intended  purpose are probable.  The
Company ceases  capitalization  of development  costs once the software has been
substantially  completed and is ready for its intended use. Software development
costs are  amortized  over their  estimated  useful lives of three years.  Costs
associated   with   upgrades  and   enhancements   that  result  in   additional
functionality are capitalized.

                                     F - 8
<PAGE>




Note 1 - Organization and Summary of Significant  Accounting  Policies 
(continued)

Income Taxes

Deferred income taxes result from temporary timing differences. Temporary timing
differences are differences  between the tax basis of assets and liabilities and
their reported  amounts in the financial  statements that will result in taxable
or deductible  amounts in future  years.  The  Company's  temporary  differences
result primarily from depreciation of fixed assets,  amortization of intangibles
and accrued vacation.

Revenue Recognition

Information Services

The Company  recognizes revenue generated from mortgage credit reports and other
information services when the information has been provided to the customer,  as
substantially all required services have been performed.  The services represent
revenue earned through Company owned locations.

Ancillary Income

Ancillary  income  consists  of fees  charged to  licenses  and  franchises  for
additional products and services provided to them.

System Affiliate

Pursuant to the various franchise and license agreements,  system affiliates are
required  to pay the  Company  royalties  based on a  percentage  of  sales.  In
addition,  system affiliates  providing  EMPfactsSM services are required to pay
$100 per month for national advertising conducted by the Company.

Royalties as allowed by the franchise and license  agreements  are accrued based
on the percentage of adjusted gross billings,  as reported by system  affiliates
and are included in accounts receivable.

Advertising  fees paid to the Company  are  included  in the  Company's  balance
sheet.  At December 31, 1998,  the Company had  collected  fees in excess of the
amount expended for advertising by approximately $24,000.

Software License Fees

The Company  recognizes revenue from the licensing of computer software when the
customer accepts the configured master.  Subsequent to customer acceptance,  the
Company has no significant post contract support obligations.

                                     F - 9
<PAGE>




Note 1 - Organization and Summary of Significant  Accounting  Policies 
(continued)

Advertising Costs

The Company expenses advertising and promotional expenses as incurred.

Valuation of Long-Lived Assets

The Company assesses valuation of long-lived assets in accordance with Statement
of Financial  Accounting Standards (SFAS) No. 121, Accounting for the Impairment
of Long-Lived  Assets and for  Long-Lived  Assets to be disposed of. The Company
periodically  evaluates the carrying  value of long-lived  assets to be held and
used,   including  goodwill  and  other  intangible  assets,   when  events  and
circumstances warrant such a review. The carrying value of a long-lived asset is
considered impaired when the anticipated  undiscounted cash flow from such asset
is separately identifiable and is less than its carrying value. In that event, a
loss is recognized  based on the amount by which the carrying  value exceeds the
fair market  value of the  long-lived  asset.  Fair market  value is  determined
primarily using the  anticipated  cash flows  discounted at a rate  commensurate
with the risk involved.

Use of Estimates

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

Fair Value of Financial Instruments

The  carrying  amounts  of  financial   instruments   including  cash  and  cash
equivalents,   receivables,  prepaid  expenses,  accounts  payable  and  accrued
expenses  approximate  their fair values as of December  31, 1998 because of the
relatively short maturity of these instruments.

The carrying  amounts of notes  payable and debt  outstanding  also  approximate
their fair  values as of  December  31,  1998  because  interest  rates on these
instruments  approximate  the interest rate on debt with similar terms available
to the Company.

Earnings Per Share

The  Company  computes  earnings  per  share in  accordance  with  Statement  of
Financial  Accounting  Standard  No. 128.  Basic  earnings per share is computed
based on the  weighted  average  number of common  shares  outstanding.  Diluted
earnings per share is computed  based on the weighted  average  number of common
shares plus potential  dilutive common shares  outstanding which includes common
stock options  granted under the Company's stock option plan and warrants issued
in connection with the Company's IPO.

                                     F - 10
<PAGE>




Note 1 - Organization and Summary of Significant  Accounting  Policies 
(continued)

Short-Term Investments

The Company  follows  Statement of Financial  Accounting  Standards No.
115  (SFAS  115) to  account  for  investments.  Under  SFAS  No.  115,
equity  securities which have readily  determinable fair values and all
investments in debt  securities are  classified  into three  categories
and accounted for as follows:

o       Debt  securities that the Company has the positive intent and ability to
        hold to maturity  are  classified  as  held-to-maturity  and reported at
        amortized cost.

o       Debt and equity  securities that are bought and held principally for the
        purpose  of  selling  them in the near term are  classified  as  trading
        securities and reported at fair value,  with unrealized gains and losses
        included in earnings.

o       Debt and equity  securities  not  classified as either  held-to-maturity
        securities or trading  securities are  classified as  available-for-sale
        securities and reported at fair value,  with unrealized gains and losses
        excluded  from  earnings  and  reported  in  a  separate   component  of
        stockholders' equity net of deferred income taxes.

The Company  classifies  its  investments  in  corporate  debt  securities  with
original  maturities  in  excess  of  three  months  as  short-term  investments
available  for sale.  The  Company  has the  ability  and  intent to sell  these
securities as needed.

Recently Issued Accounting Pronouncements

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
130, "Reporting  Comprehensive  Income" (SFAS 130), which establishes  standards
for  reporting  and  display  of  comprehensive   income,   its  components  and
accumulated balances.  Comprehensive income is defined to include all changes in
equity except those resulting from  investments by owners and  distributions  to
owners.  Among  other  disclosures,  SFAS 130  requires  that all items that are
required to be recognized  under current  accounting  standards as components of
comprehensive  income,  be reported in a financial  statement  that is displayed
with the same prominence as other financial statements.  Currently the Company's
only component,  which would comprise  comprehensive  income,  is its results of
operations.

                                     F - 11
<PAGE>




Note 1 - Organization and Summary of Significant  Accounting  Policies 
(continued)

Recently Issued Accounting Pronouncements (continued)

Also, in June 1997, the FASB issued Statement of Financial  Accounting Standards
No. 131,  "Disclosures about Segments of an Enterprise and Related  Information"
(SFAS 131), which supersedes Statement of Financial Accounting Standards No. 14,
"Financial   Reporting  for  Segments  of  a  Business   Enterprise."  SFAS  131
establishes standards for the way that public companies report information about
operating  segments in annual  financial  statements  and requires  reporting of
selected  information about operating  segments in interim financial  statements
issued to the public.  It also establishes  standards for disclosures  regarding
products and services,  geographic areas and major  customers.  SFAS 131 defines
operating  segments as components of a company  about which  separate  financial
information  is  available  that is evaluated  regularly by the chief  operating
decision  maker  in  deciding  how  to  allocate   resources  and  in  assessing
performance.

SFAS  No.'s 130 and 131 are  effective  for  financial  statements  for  periods
beginning  after  December 15, 1997,  and require  comparative  information  for
earlier periods to be restated.

In  February  of  1998,   the  FASB  issued   Statement   of  Financial
Accounting  Standards No. 132,  "Employers'  Disclosures about Pensions
and Other  Postretirement  Benefits" (SFAS No. 132),  which  supercedes
SFAS No.'s 87, 88, and 106.  SFAS No.  132  addresses  disclosure  only
and is effective for fiscal years  beginning  after  December 15, 1997.
Restatement  of  disclosures   for  prior  periods  is  required.   The
adoption of SFAS No. 132 will have no current  impact on the  Company's
financial  statements,  as no prior  disclosures under SFAS No. 87, 88,
or 106 were applicable.

In June of 1998, the FASB issued Statement of Financial Accounting Standards No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities"(SFAS  No.
133).  SFAS  No.  133  addresses  the  accounting  for  derivative  instruments,
including  certain  derivative  instruments  embedded  in other  contracts,  and
hedging  activities.  SFAS No. 133 is effective  for all fiscal  quarters of all
fiscal years beginning after June 15,1999.  Initial  application of SFAS No. 133
shall be as of the  beginning  of an  entity's  fiscal  quarter,  on that  date,
hedging  relationships  shall  be  designated  anew  and  documented  under  the
provisions  of this  statement.  The  adoption  of SFAS  No.  133  shall  not be
retroactively  applied.  This statement currently has no impact on the financial
statements  of  the  Company,  as the  Company  does  not  hold  any  derivative
instruments or participate in any hedging activities.

Reclassifications

Certain  amounts in the 1997 financial  statements  haven been  reclassified  to
conform with the 1998 presentation.

                                     F - 12
<PAGE>




Note 2 - Acquisition of Assets

During the third and forth quarters of 1998, the Company purchased the assets of
seven  businesses and acquired another Company in a merger  transaction  through
its wholly owned subsidiary FDC Acquisition,  Inc. These  transactions have been
accounted for as purchases.  Amortization  of acquired  covenants not to compete
are  over  the  life of the  agreements  of two to five  years.  Customer  lists
acquired are amortized over fifteen years.  Subsequent to December 31, 1998, the
Company acquired the assets of three businesses.

The  aggregate  purchase  price  of the  Company's  1998  acquisitions  has been
allocated to the assets purchased based on the fair market values on the date of
acquisition, as follows:

   Accounts receivable.....................         $366,169
   Computer equipment, furniture and fixtures        463,150
   Prepaid expenses and other assets.......           45,942
   Non-compete agreements..................          450,000
   Customer lists..........................        7,924,744
   Liabilities assumed.....................         (386,315)
                                                  ----------
       Subtotal............................        8,863,690
   Notes payable less imputed discount.....       (2,899,790)
   Common stock issued                            (2,359,000)
                                                  ----------

   Cash paid, net..........................       $3,604,900
                                                  ==========

The  following  table  depicts the  unaudited  pro forma  results of the Company
giving effect to its 1998 and January 1999  acquisitions  as if they occurred on
January  1,  1997.  The  unaudited  pro  forma  information  is not  necessarily
indicative of the results of  operations  of the Company had these  acquisitions
occurred  at  the  beginning  of the  years  presented,  nor  is it  necessarily
indicative of future results.

                                                         Year Ended
                                                        December 31,
                                                   -----------------------
                                                     1997           1998
                                                   -------        --------


Revenue.....................                     $17,422,753     $23,970,038
                                                 ===========     ===========

Net income after taxes......                     $   373,146     $ 2,993,917
                                                 ===========     ===========

Basic earnings per share....                     $       .18     $      1.02
                                                 ===========     ===========

Diluted earnings per share..                     $       .18     $       .99
                                                 ===========     ===========


                                     F - 13
<PAGE>




Note 2 - Acquisition of Assets (continued)

The  Company  pays  an  entity  owned  by a  stockholder  a  commission  on  all
successfully  completed  business  acquisitions  in which the entity is actively
involved.  During the year ended  December  31,  1998,  the Company paid related
commissions on successful business acquisitions of approximately $70,000.


Note 3 - Employee Benefit Plan

The Company adopted a 401(k) plan effective  November 1, 1998.  Participation is
voluntary  and  employees  are eligible to  participate  at age 21 and after one
month of employment  with the Company.  The Company matches 50% of the employees
contribution up to 4% of the employee's salary.

A participant's  vested benefits if fairly  distributed upon death or disability
and is distributed  upon  termination  of employment  according to the following
vesting schedule:

    Years of Service     Percentage
    ----------------     ----------


          1                    20%
          2                    40%
          3                    60%
          4                    80%
          5                    100%

The Company contributed $9,031 to the Plan for the year ended December 31, 1998.


Note 4 - Investment Securities

Due to the types of investments, the fair market values approximate the carrying
value as of December 31, 1998,  therefore,  no unrealized  gain or loss has been
recorded.

The Company's investments are classified as  available-for-sale  and include the
following:

      Corporate debt securities                     $  743,688
      U.S. Government debt securities                1,468,698
                                                    ----------

                                                    $2,212,386
                                                    ==========

                                     F - 14

<PAGE>




Note 5 - Property and Equipment

Property and equipment consists of the following:
                                                               December 31,
                                                                   1998
                                                               -----------

    Computer equipment and software....................          $1,895,551
    Furniture and fixtures.............................           1,853,048
    Software development costs.........................             947,477
    Leasehold improvements.............................             198,402
    Vehicles...........................................             149,626
                                                                 ----------
                                                                  5,044,104
       Less accumulated depreciation...................          (2,067,685)
                                                                 ----------

                                                                 $2,976,419
                                                                 ==========


Note 6 - Other Assets

Other assets consist of the following:
                                                               December 31,
                                                                  1998
                                                               ------------


    Deposits and other.................................          $   91,385
    Customer lists (Note 2)............................           8,370,673
    Goodwill...........................................               8,771
    Covenants not to compete (Note 2)..................             498,750
    License agreement..................................              75,000
    Deferred acquisition costs and other...............              48,810
                                                                 ----------
                                                                  9,093,389
       Less accumulated amortization...................            (224,130)
                                                                 ----------

                                                                 $8,869,259
                                                                 ==========

                                     F - 15
<PAGE>




Note 7 - Long-Term Debt

Long-Term Obligations
                                                               December 31,
                                                                   1998
                                                               ------------
Long-term debt obligations consist of the following:

Unsecured  note  payable to a  corporation  incurred  in the
 acquisition  of a  business.  Note is  payable  in  monthly
 installments  of $9,667.  Note is non interest  bearing and 
 matures May 2000......................................           $155,042

Unsecured note payable to a corporation,  monthly  principal
 and  interest  payments of $6,000  through  November  1999.        
 Interest at 9.5%......................................             90,655

Unsecured  note payable to a individual,  monthly  principal
 payments  are the  greater of $750 or 5% of gross  billable
 revenue  of a certain  corporate-owned  franchise  with the        
 balance due August 31, 2002.  Interest at 8.5%........             57,640

Various  notes  payable to financial  institutions.  Monthly
 principal  and  interest  payments  ranging  from  $394  to
 $855.  Interest  rates  vary  from  7.7%  to  8.15%.  Notes
 mature at various  times  ranging  from May 2001 to October
 2003.  Notes are  collateralized  by certain  fixed  assets        
 and automobiles.......................................             65,039

Note payable to a corporation  incurred in an acquisition of
 a business.  Quarterly  principal and interest  payments of
 $95,450  through  June  2003.   Interest  at  8%.  Note  is
 collateralized by a security  agreement and assets acquired  
 in the acquisition....................................           1,430,991

Notes payable to two individuals  and a related  corporation
 incurred in the  acquisition  of a business.  The Notes are
 payable  by the  following  terms:  lump  sum  payment  due
 January  1,  1999 in the  amount  of  $61,500  and  monthly
 principal  payments of $12,501  through August 2000.  Notes
 are  non-interest  bearing  and are  secured  by a security
 agreement and assets acquired in the acquisition......            343,135

Various notes payable to corporations  incurred  in  several
 acquisitions.   Quarterly   principal   payments   totaling
 $52,500.  Notes are non interest bearing and are  beginning
 September  2000 to  October  2000.  Notes are  secured by a
 382,691  security agreement  and   assets  acquired  in the
 acquisitions..........................................            382,691

                                     F - 16
<PAGE>




Note 7- Long-Term Debt (continued)
                                                               December 31,
                                                                  1998
                                                               ------------
Notes  payable to a  corporation  incurred in  acquisitions.
 Monthly principal  payments totaling $9,027.  Notes are non
 interest    bearing    and    expires    September    2000.
 Collateralized  by security  agreement and assets  acquired 
 in the acquisition....................................            456,029

Various  capital  leases  with  monthly  payments   totaling
 $18,285,  including  interest and expiring through December
 2003.  Collateralized  by office  furniture and  equipment.
 The net  book  value at  December  31,  1998 for the  fixed
 assets leased amounte to $811,795....................             816,302
                                                                  --------
                                                                 3,797,524
   Less current portion                                         (1,304,953)

                                                                $2,492,571
                                                                ==========

As of December 31, 1998,  future  maturities  of  long-term  obligations  are as
follows:

                                    Long-term       Capital
Year ending December 31,               Debt          Leases          Total
                                   ------------   -----------     -----------


         1999.............         $1,165,510      $  216,194     $1,381,704
         2000.............            884,035         219,961      1,103,996
         2001.............            341,399         219,961        561,360
         2002.............            360,705         219,961        580,666
         2003.............            216,933         159,874        376,807
         Thereafter.......             12,640              -          12,640
                                   ----------      ----------     ----------
                                    2,981,222       1,035,951      4,017,173
         Less amount
         representing interest.            -         (219,649)      (219,649)
                                   ----------      ----------     ----------
         Total principal..          2,981,222         816,302      3,797,524
         Less current portion      (1,165,510)       (139,443)    (1,304,953)
                                   ----------      ----------     ----------

                                   $1,815,712      $  676,859     $2,492,571
                                   ==========      ==========     ==========


                                     F - 17
<PAGE>




Note 8 - Shareholders' Equity

Warrants

The Company has reserved (i) 1.5 million  shares of Common Stock for issuance on
exercise  of 1.5 million  warrants  issued  with  respect to its initial  public
offering,  (ii)  120,000  shares of Common  Stock for  issuance  on  exercise of
options granted to the Company's  underwriters  of its initial public  offering,
and (iii)  200,000  shares of Common  Stock for  issuance on exercise of options
issued under the Company's  1997 Stock  Incentive  Plan (the  "ISOs"),  of which
options to purchase 31,500 shares had been granted as of December 31, 1998. With
respect to the  Warrants,  (a) 1.38 million have an exercise  price of $7.15 per
share and do not expire until May 13, 2001 (the "Redeemable Warrants");  and (b)
120,000  have an exercise  price of $9.15 per share and do not expire  until May
13, 2002. Commencing on May 13, 1999, the Redeemable Warrants may be redeemed by
the Company, in whole but not in part, at a price of $.05 per Redeemable Warrant
at such time as the  closing  bid price of the  Common  Stock  equals or exceeds
$10.73  (150% of the  exercise  price)  for 20  consecutive  trading  days.  The
Underwriter  Options have an exercise price of $7.04 per share and do not expire
until May 13, 2004.

Stock Option Plan

Management  of the Company has adopted a stock  option plan whereby the Board of
Directors  can issue both tax qualified  and  nonqualified  options to officers,
employees,  consultants  and  others.  Under  the  plan,  200,000  shares of the
Company's stock is reserved for options to be issued in the future.  The Company
issued 22,000 shares to employees  under the plan in connection  with its IPO of
which 21,500  shares were  outstanding  at December 31, 1998.  These shares vest
equally over three years from the date of grant.  The following  summarizes  the
activity under the Company's stock option plan:


                                   Number of      Exercise
                                     Shares         Price       Expiration
                                   ---------     -----------   ------------

Balance  at January 1, 1997
 and 1998                              -              -

Stock options granted                32,000     $5.50 - 6.50  May 2001-June 2001

Stock options cancelled                (500)            5.50  May 2001
                                    --------    ------------

Balance at December 31,
 1998                                31,500     $5.50 - 6.50  May 2001-June 2001
                                    ========    ============

                                     F - 18
<PAGE>




Note 8 - Shareholders' Equity (continued)

Stock Option Plan (continued)

The  weighted  average  exercise  price at  December  31, 1998 was $5.74 and the
weighted average  remaining  contractual life of the Company's  options was 2.42
years.

The Company has adopted the disclosure only provisions of Statement of Financial
Accounting  Standards No. 123,  Accounting for  Stock-Based  Compensation  (SFAS
123). Had the Company  determined  compensation  cost based on the fair value at
the grant date for its stock  options  under SFAS No. 123,  there would not be a
material  effect on 1998 net  income.  The fair  value of each  grant  option is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following  weighted average  assumptions used for grants:  dividend yield of
0%;  expected  volatility of 35%;  discount rate of 5.5% and expected lives of 3
years.


Note 9 - Business Segments

Operating  results and other  financial  data are  presented  for the  principal
business segments of the Company for the years ended December 31, 1997 and 1998.
Total  revenue in one  business  segment  includes  information  services  which
represent sales by Company operated territories,  in another segment,  ancillary
revenues,  the third segment consists of system affiliate  revenue and training,
license,  and other  revenues  with the fourth  segment  being  sales of Company
operated  territories,  as  reported  in the  Company's  consolidated  financial
statements.

Identifiable  assets by business  segment are those assets used in the Company's
operation of each segment.

<TABLE>
<CAPTION>
 
                                                           System
                                                         Affiliates      Sales of
                                                        and License,     Company
                          Information     Ancillary     Training and     Operated
                            Services        Income         Other        Territories      Totals
                           ----------     ----------     ----------     ----------     ----------
<S>                        <C>            <C>            <C>            <C>            <C>
December 31, 1997
Net sales ............     $  606,211     $  650,592     $1,548,503     $  714,365     $3,519,671
Cost of services and
 territory sales .....     $  236,640     $     --       $1,064,445     $  506,101     $1,807,186
Gross profit .........     $  369,571     $  650,592     $  484,058     $  208,264     $1,712,485
  Total assets .......     $1,364,049     $     --       $1,500,036     $     --       $2,864,085
Depreciation and
 amortization ........     $  111,100     $     --       $  214,824     $   29,160     $  355,084
Capital expenditures .     $    2,069     $     --       $  590,799     $     --       $  592,868
</TABLE>

                                     F - 19

<PAGE>




Note 9 - Business Segments (continued)
<TABLE>
<CAPTION>


                                                           System
                                                         Affiliates      Sales of
                                                        and License,     Company
                          Information     Ancillary     Training and     Operated
                            Services        Income         Other        Territories   Totals
                           ----------     ----------     ----------     ----------  ----------

<S>                         <C>            <C>             <C>             <C>       <C>
December 31, 1998
Net sales .............     $ 6,235,604     $ 1,451,104     $ 2,256,838     $--     $ 9,943,546
Cost of services and
 territory sales ......     $ 3,988,948     $      --       $   997,116     $--     $ 4,986,064
Gross profit ..........     $ 2,246,656     $ 1,451,104     $ 1,259,722     $--     $ 4,957,482
Total assets ..........     $17,006,221     $      --       $ 1,170,680     $--     $18,176,904
Depreciation and
 amortization .........     $   671,484     $      --       $   104,610     $--     $   776,094
 Capital expenditures .     $ 1,833,284     $      --       $   265,719     $--     $ 2,099,003
</TABLE>


Note 10 - Income Taxes

Deferred  tax  liabilities  and assets are  determined  based on the  difference
between the financial  statement assets and liabilities and tax basis assets and
liabilities  using the tax rates in effect for the year in which the differences
occur. The measurement of deferred tax assets is reduced,  if necessary,  by the
amount of any tax benefits that based on available evidence, are not expected to
be realized.

The  components  of the  provision  for  income tax  expense  for the year ended
December 31, 1997 and 1998 are as follows:
                                                          December 31,
                                                   -----------------------
                                                      1997          1998
                                                   -----------   ---------


   Current.................................         $115,472      $661,236
   Deferred................................          128,867       148,764
                                                    --------      --------

                                                    $244,339      $810,000
                                                    ========      ========

The deferred income tax assets and liabilities  result  primarily from differing
depreciation   and  amortization   periods  of  certain  assets,   research  and
development  credits,  and the  recognition  of certain  expenses for  financial
statement purposes and not for tax purposes.


<PAGE>




Note 10 - Income Taxes (continued)

The net current and  long-term  deferred  tax  liabilities  in the  accompanying
balance sheet include the following items:
                                                    December 31,
                                                        1998
                                                   ---------------


   Current deferred tax asset..............         $   48,090
   Current deferred tax liability..........           (107,381)
                                                    ----------

                                                    $  (59,291)
                                                    ==========

   Long-term deferred tax asset............         $   30,529
   Long-term deferred tax liability........           (333,291)
                                                    ----------

                                                    $ (302,762)
                                                    ==========

Rate Reconciliation

The  reconciliation  of income tax expense by applying the Federal statutory tax
rates to the Company's effective income tax rate is as follows:

                                                          December 31,
                                                   -----------------------
                                                      1997          1998
                                                   -----------   ---------


Federal statutory rate.....................              34.0%         34.0%
State tax on income, net of federal income tax            3.3           3.3
  benefit..................................
Research tax credits.......................              (3.6)        (1.0)
Other, net.................................              (1.0)        (2.4)
                                                    ---------     --------

                                                         32.7%        33.9%
                                                     ========     ========


Note 11 - Commitments

During 1998, the Company  relocated its corporate office and began a new 20 year
lease.  The lease is an operating lease agreement which provides for the monthly
payment of $23,483 and expires  March 2018.  Rent expense  under this  operating
lease and the previous  corporate office lease totaled $147,452 and $276,053 for
the years ended December 31, 1997 and 1998, respectively.


<PAGE>




Note 11 - Commitments (continued)

The Company  assumed  various  other  operating  leases for equipment and office
space in  connection  with its  business  acquisitions  described in Note 2. The
leases have expiration dates ranging from 1999 to 2003. Payments on these leases
totaled $139,222 in 1998. In addition, the Company signed two new leases in 1998
for office space to consolidate several acquired offices within the same cities.
These leases expire in 2008 and 2009.  Payments on these leases totaled  $21,658
in 1998.

Future minimum annual lease payments are as follows:

      Year Ended December 31,

             1999..........................         $1,026,585
             2000..........................            887,348
             2001..........................            871,129
             2002..........................            850,934
             2003..........................            793,341
             Thereafter....................          7,715,507
                                                    ----------

                                                   $12,144,844
                                                   ===========

The Company is subject from time to time to legal  proceedings  and claims which
arise in the ordinary  course of its  business.  The Company  believes  that the
final disposition of such matters will not have a material adverse effect on the
financial position or results of operations of the Company.

The  Company  maintains  a  self-insured   medical  insurance  program  for  its
employees. The Company reimburses employees for qualified medical services up to
$10,000 per employee per plan year.  The  reimbursement  owed to employees as of
December 31, 1998 amounted to approximately $42,000.


Note 12 - Sale of Territories

In January 1997, the Company sold its Texas territories which were reacquired by
the Company  from  certain  franchisees  from 1990 to 1995.  The sales price was
$714,000 which was paid in cash. The purchaser  acquired accounts  receivable of
$115,000,  net intangibles of $276,000, and net fixed assets of $115,000. In the
third  quarter  of  1998,  the  Company   repurchased   these   territories  for
approximately $1,600,000 (Note 2).


<PAGE>




Note 13 - Earnings Per Share

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted earnings per share (EPS) computations:


                                        For the Year Ended December 31, 1998
                                        ------------------------------------
                                           Income       Shares      Per-Share
                                        (Numerator) (Denominator)    Amount
                                        -----------  -----------   ----------


Net income                               $ 1,576,734                

Basic EPS
  Weighted average beginning
  shares outstanding                              -   1,800,000
  Weighted average IPO shares
   issued                                         -     850,220   
  Weighted average shares issued
  in business acquisitions                        -      30,534
                                         ----------- ----------
  Income available to common
   stockholders                            1,576,734  2,680,753    $     .59
                                                                   =========

Effect of Dilutive Common Stock
  Options                                                11,897
  Warrants                                        -      76,564

Diluted EPS
  Income available to common
   stockholders plus assumed
   conversions                           $ 1,576,734  2,769,214    $    .57
                                         ===========  =========    =========

                                     F - 23
<PAGE>







Item 8.    Changes in and Disagreements with Accountants on Accounting 
           and Financial Disclosure.

      Not applicable.

                                     - 20 -
<PAGE>



Item 9.    Directors,   Executive  Officers,  Promoters  and  Control  
           Persons; Compliance with Section 16(a) of the Exchange Act.

Executive Officers and Directors

      The executive officers and directors of the Company are as follows:

Name                     Age                       Position

Jerald H. Donnan          53              Chairman of the Board,  Chief
                                          Executive Officer and President

Marcia R. Donnan          54              Executive Vice President

Todd A. Neiberger         34              Chief  Financial  Officer and
                                          a Director

Russell E. Donnan         34              Vice President

James N. Donnan           27              Vice President and a Director

Robert J. Terry           58              Director

Abdul H. Rajput           51              Director


      The Company's Articles of Incorporation  provide for a Board of Directors,
the  size of  which  is set by the  Board of  Directors.  The  current  Board of
Directors  consists of five members.  All  directors  hold office until the next
annual meeting of  shareholders,  or until their  successors  have been elected.
Officers serve at the discretion of the Board of Directors, except for Jerald H.
Donnan and Marcia R. Donnan who are employed pursuant to employment agreements.

      Jerald H.  Donnan,  Chairman  of the Board,  Chief  Executive  Officer and
President, has been with the Company since its incorporation in January 1985. He
is  responsible  for oversight of corporate  development  and  services,  and is
responsible for operations,  technical  development and policies and procedures.
Mr.  Donnan's  early  career  experience  includes 15 years with Avco  Financial
Services,   Inc.  where  he  was   responsible  for  lending  and  collecting  a
multi-hundred  million  dollar  portfolio  and managing  geographically  diverse
branches  with  many  employees.  Mr.  Donnan  was a  founding  member  and past
president of the National  Credit  Reporting  Association,  a trade  association
founded to promote  ethical  standards  and fair  competition  within the credit
reporting industry.

                                     - 21 -

<PAGE>








      Marcia R.  Donnan,  Executive  Vice  President,  has been with the Company
since its  incorporation in January 1985. She is responsible for compliance with
the FCRA and all  other  federal,  state  and  local  laws as they  apply to the
gathering, processing and distribution of credit information. Staff training and
education  are also areas of her primary  responsibility.  Ms.  Donnan  spent 15
years in credit  reporting  with Credit  Information  Systems  (formerly  Credit
Bureau of Council  Bluffs,  Inc.) as operations  manager,  prior to  co-founding
Factual Data Corp. in 1985. Ms. Donnan is active in Associated  Credit  Bureaus,
Inc.,  a credit  reporting  association,  and she  concluded  a  second  term as
director in January 1997.

      Todd A.  Neiberger,  Chief  Financial  Officer and a Director,  joined the
Company in March 1995. Mr.  Neiberger  graduated from the University of Northern
Colorado  in 1987  with a  degree  in  accounting.  Mr.  Neiberger  has 10 years
experience in staff,  senior and management  level positions with various public
accounting  firms.  From 1994 through  1995,  he served as the audit  manager of
Rickards & Co. P.C., and from 1991 through 1993 he served as the tax manager for
Krutchen & Co., both Fort Collins,  Colorado based certified  public  accounting
firms.  From 1988 through 1990 he was employed with Lemke,  Feis & Co.,  P.C., a
certified public  accounting firm, as a staff and senior level accountant in the
audit and tax department.  Mr. Neiberger is a Certified Public  Accountant and a
member of the Colorado Society of Certified Public  Accountants and the American
Institute of Certified Public Accountants.

      Russell E. Donnan, Vice President,  has been employed by the Company since
August 1993. He is responsible for technical project management for software and
support  services.  Before coming to Factual Data Corp.,  he was a senior design
engineer at Apple  Computer in the Power Book  division  from  February  1992 to
August 1993. He is  experienced  in the super  computer field and was previously
employed by Convex Computer (1990-1992) and as a founding member and employee of
Key Computer  (1988-1990),  now a subsidiary of Amdahl  Corporation.  Mr. Donnan
graduated  from  Ohio  State  University  in 1987  with a degree  in  electrical
engineering.

      James N. Donnan,  Vice President and a Director,  has been employed by the
Company on a full-time basis since 1994, and prior to that, on a part-time basis
since 1986. He is responsible for management of Company operated mortgage credit
reporting production offices and EMPfacts employment screening  operations.  His
duties also include overall sales, growth and customer service development.  Mr.
Donnan  graduated  from  Colorado  State  University  in 1994  with a degree  in
history.

      Robert J. Terry has been a Director  since  February  1998.  From February
1994 to his  retirement  in  January  1998,  Mr.  Terry  served  as a  director,
president  and chief  operating  officer of Mail-Well,  Inc., a publicly  traded
envelope  manufacturer and printing company. From January 1992 to February 1994,
Mr. Terry served as executive vice president of Mail-Well Envelope, a subsidiary
of  Georgia  Pacific.  From June 1989 to  December  1991,  Mr.  Terry  served as
regional  vice  president  for Butler Paper in  Englewood,  Colorado.  Mr. Terry
obtained a Bachelor of Science degree in Business from DePaul University in 1963
and attended the Executive Program at the University of Michigan in 1988.


                                     - 22 -
<PAGE>



      Abdul H.  Rajput has been a Director  since  February  1998.  From 1991 to
September  1998,  Mr. Rajput was employed in San Diego,  California,  by Bank of
America, a federal savings bank and a subsidiary of Bank America Corp., where he
held  the  position  of  executive  vice  president,   administrative  services.
Presently,  Mr.  Rajput is executive  vice  president of national  operations of
GreenPoint  Credit Corp.  From 1990 and until its  acquisition by the Company in
August, 1998, Mr. Rajput owned and operated Factual Data Minnesota, Inc., one of
the Company's now former  franchises  which operates in Minnesota and Iowa. From
1980 to 1989, Mr. Rajput was employed by Green Tree Financial  Corp.,  St. Paul,
Minnesota,  initially  as vice  president  and then  senior vice  president  for
administration.  Mr.  Rajput also serves on the board of directors of GreenPoint
Credit Corp. Mr. Rajput obtained a Bachelor of Science degree in Mathematics and
a Master of Science degree in Statistics from the University of Sind,  Pakistan,
in 1968 and 1970, respectively.

      Russell  and James  Donnan are sons of Jerald  and  Marcia  Donnan who are
husband and wife.

Director Compensation

      Employee  directors  of the Company do not receive any fixed  compensation
for their services as directors while non-employee  directors  presently receive
compensation  of $7,500  annually  plus a $500  travel  allowance  per  calendar
quarter.

Board Committees

      The  Company  has  two   Committees,   an  Audit   Committee  and
Compensation   Committee.   Messrs.   Terry   and   Rajput,   the   two
independent  directors,  serve on each  committee.  Mr. Jerald  Donnan,
President of the Company, also serves on each committee.

      The primary function of the  Compensation  Committee is to review and make
recommendations  to  the  Board  with  respect  to the  compensation,  including
bonuses,  of the Company's  officers and to administer the Stock Incentive Plan.
The function of the Audit  Committee is to review and approve the scope of audit
procedures employed by the Company's independent auditors, to review and approve
the audit reports rendered by the Company's  independent auditors and to approve
the audit fee charged by the independent  auditors.  The Audit Committee reports
to the Board of  Directors  with  respect to such  matters  and  recommends  the
selection of independent auditors.

Section 16(a) Beneficial Ownership Reporting Compliance

      Based on a review of the  record,  the Company  believes  that all reports
required to be filed by its officers, directors and principal shareholders under
Section 16(a) of the Securities Exchange Act of 1934 have been duly filed.

                                     - 23 -
<PAGE>



Item 10.   Executive Compensation.

      The  following  table sets forth  compensation  awarded by the  Company to
Jerald H.  Donnan,  its Chief  Executive  Officer and  President,  and Marcia R.
Donnan, its Executive Vice President,  for services rendered during fiscal 1995,
1996 and 1997.  Jerald H. Donnan and Marcia R.  Donnan are husband and wife.  No
other persons serving as an executive officer during the reported years received
compensation in excess of $100,000 during any of those years.

                     SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                        Long-Term Compensation
                                                                   -------------------------------
                                          Annual Compensation               Awards         Payouts
                                     ----------------------------  ---------------------  --------
                                                                   Restricted Securities
                                                        Other        Stock    Underlying    LTIP       All Other
     Name and               Fiscal   Salary   Bonus     Annual      Award(s)   Options/   Payouts   Compensation
Principal Position   Year     ($)     (&)      ($)   Compensation     ($)        SARs      ($)          ($)
------------------  ------  -------  -------  -----  ------------  ---------  --------  ----------  ------------

<S>                  <C>   <C>       <C>      <C>         <C>          <C>      <C>       <C>          <C>
Jerald H. Donnan     1998  105,100   9,300     --          --           --       --        --           3,061
President, Chief     1997   82,445    --       --          --           --       --        --          10,265
Executive Officer    1996   48,031    --       --          --           --       --        --          10,220

Marcia R. Donnan     1998  105,100   9,300     --          --           --       --        --           4,107
Executive Vice       1997   93,773    --       --          --           --       --        --           6,093
President            1996   89,217    --       --          --           --       --        --           8,137
------------------
</TABLE>

*Consists of certain  health and accident  insurance  benefits and automobile
expense reimbursements.

Employment Agreements

      Jerald H. Donnan and Marcia R. Donnan are parties to three year employment
agreements  with the Company  effective July 1, 1997. Each of Mr. and Ms. Donnan
is entitled to health and accident  insurance  benefits  and certain  automobile
reimbursements.  Both employment agreements also provide that if the employee is
terminated due to a change in control of the Company,  then they are entitled to
severance  pay equal to the  product  of 2.99  times  the  previous  year's  pay
(including bonuses).  The employment  agreements contain customary provisions as
to death, disability and termination for cause.

Stock Incentive Plan

      In April 1997,  the Company  adopted  the 1997 Stock  Incentive  Plan (the
"Stock Incentive  Plan").  The purpose of the Stock Incentive Plan is to provide
continuing incentives to the Company's key employees, which may include officers
and members of the Board of Directors.  The Stock Incentive Plan provides for an
authorization of 200,000 shares of Common Stock for issuance  thereunder.  Under
the Stock Incentive Plan, the Company may grant to participants  awards of stock
options and restricted stock or any combination thereof.

                                     - 24 -

<PAGE>



      The  Stock  Incentive  Plan  is to be  administered  by  the  Compensation
Committee  of the Board of  Directors  composed  of at least  one  disinterested
member.  Subject  to the terms of the Stock  Incentive  Plan,  the  Compensation
Committee  determines,  among  other  matters,  the  persons to whom  awards are
granted,  the type of award granted,  the number of shares granted,  the vesting
schedule,  employment  requirements or performance  goals relating to restricted
stock awards,  the type of consideration to be paid to the Company upon exercise
of options and the terms of any option (which cannot exceed ten years).

      Under the stock option  component of the Stock Incentive Plan, the Company
may grant both incentive stock options  ("incentive stock options")  intended to
qualify under Section 422 of the Internal  Revenue Code of 1986, as amended (the
"Code"),  and  options  which are not  qualified  as  incentive  stock  options;
provided that incentive  stock options cannot be granted to any  participant who
is not an  employee  of the  Company.  Stock  options  may not be  granted at an
exercise  price of less than the fair  market  value of the Common  Stock on the
date of grant.  The exercise price of incentive stock options granted to holders
of more than 10% of the Common  Stock  must be at least 110% of the fair  market
value of the Common  Stock on the date of grant,  and the term of these  options
cannot exceed five years. Options granted under the Stock Incentive Plan are not
transferable otherwise than by will or the laws of descent and distribution and,
during the lifetime of the  optionholder,  options are exercisable  only by such
optionholder.  In addition,  outstanding  options may not be exercised more than
three months (but in no event beyond the  expiration  date of the option)  after
the  optionholder  ceases to be an employee of the  Company,  except that in the
event of the death or permanent and total  disability of the  optionholder,  the
option may be exercised by the holder (or his estate,  as the case may be) until
the first to occur of the  expiration of the option period or the  expiration of
one year after the date of death or permanent or total disability.  The exercise
price may be paid in cash,  in shares of Common  Stock  (valued  at fair  market
value  at the  date  of  exercise)  by  delivery  of a  promissory  note or by a
combination of such means of payment,  as may be determined by the  Compensation
Committee.

      Upon a change in control (as defined in the Stock  Incentive  Plan) of the
Company,  all stock options  granted under the Stock  Incentive Plan will become
exercisable  in full, and all  restricted  stock grants will become  immediately
vested and any applicable restrictions will lapse. Also, in the event the number
of outstanding  shares of Common Stock is increased or decreased or changed into
or  exchanged  for a  different  number  or kind of  shares  of  stock  or other
securities of the Company or of another  company  whether as the result of stock
split, stock dividend,  combination or exchange of shares,  merger or otherwise,
each share subject to an unexercised  option shall be substituted for the number
and kind of shares of stock  into which  each  share of the  outstanding  Common
Stock is to be  changed  for which each such  share is to be  exchanged  and the
option price shall be increased or decreased proportionately.

      As of March 24, 1999,  options to purchase  31,500  shares of Common Stock
had been granted to certain  employees  and two  non-executive  directors of the
Company  (26,500 shares at an exercise price of $5.50 per share and 5,000 shares
at $6.50 per share).

                                     - 25 -
<PAGE>



Item 11.   Security   Ownership  of  Certain  Beneficial  Owners  and  
           Management.

      The  following  table  sets  forth  certain   information   regarding  the
beneficial  ownership of the Company's  Common Stock as of March 24, 1999 by (i)
each person who is known by the Company to own beneficially  more than 5% of the
Company's  outstanding  Common  Stock,  (ii)  each  of the  Company's  executive
officers and  directors,  and (iii) all  executive  officers and  directors as a
group.  Common Stock not outstanding but deemed  beneficially owned by virtue of
the right of an  individual  to  acquire  shares  within 60 days are  treated as
outstanding  only when  determining  the amount and  percentage  of Common Stock
owned by such individual.  Each person has sole voting and sole investment power
with respect to the shares shown except as noted.

                                                  Shares Beneficially
                                                         Owned          
                                                  -------------------
                                                           Percent of
                                                  Number  Outstanding 
                                                  ------- ------------
Executive Officers & Directors(1)
Jerald H. Donnan(2).........................     630,000       17.7%
Marcia R. Donnan(2).........................     630,000       17.7
Russell E. Donnan(2)........................     270,000        7.6
James N. Donnan(2)..........................     270,000        7.6
Todd A. Neiberger(3)........................       5,000         *
Robert J. Terry(4)..........................       5,000         *
Abdul H. Rajput(4)..........................       5,000         *
All officers and directors as a group 
 (seven persons)............................   1,815,000       51.1

Other Beneficial Owners(5)
Kennedy Capital Management..................     126,650        5.3%
Quilcap Corp. (shared voting & investment 
  power)....................................     264,800        7.5
------------------

*Less than 1%

(1)The address  for each of the  Donnans  and Mr.  Neiberger  is 5200 Hahns Peak
     Drive,  Loveland,  Colorado 80538;  the address for Mr. Terry is 5402 South
     Cottonwood Court,  Greenwood  Village,  Colorado 80121; and the address for
     Mr. Rajput is Post Office Box 8310, Rancho Santa Fe, California 82067.

(2)Shares  beneficially  owned include an aggregate of 500,000  shares of Common
     Stock held in custody and subject to release to the Company's  shareholders
     in  2003  or  earlier  upon  the  Company  reaching   certain   performance
     objectives.  For further  information  regarding  the terms of such custody
     arrangement, see immediately below.

(3)Represents  options  to  purchase  shares of Common  Stock at $6.50 per share
     which are presently exercisable.

(4)Represents  options  to  purchase  shares of Common  Stock at $5.50 per share
     which are presently exercisable.

(5)The address for Kennedy  Capital  Management  is 10829 Olive  Boulevard,  St.
     Louis, Missouri 63141 and for Quilcap Corp. is 375 Park Avenue, Suite 1404,
     New York, New York 10152.

      As a condition to its initial public offering,  the four Donanns listed in
the  ownership  table  above were  required to deposit an  aggregate  of 500,000
shares of Common Stock of the Company owned by such  shareholders (on a pro-rata
basis) in custody  pursuant  to a custody  agreement  with  American  Securities
Transfer & Trust, Inc. and the  representative  of the underwriters.  The Common
Stock  deposited  in the  custody  account  will be  subject  to  release to the
shareholders  upon the earlier of: (i) the Company  achieving pre-tax net income
(excluding  extraordinary  items) of $3,000,000  in the four  complete  calendar
quarters  immediately  subsequent  to May 13, 1998;  (ii) the Company  achieving
pre-tax net income (but excluding extraordinary items) of $8,000,000 in the four
complete  calendar  quarters  commencing  one year after May 13,  1998;  (iii) a
merger  or sale of all or  substantially  all of the  Company's  assets  if such
transaction  is  approved  by  the  holders  of  a  majority  of  the  Company's
outstanding  shares  not  including  shares  held  by  parties  to  the  custody
agreement;  or (iv) seven years after May 13,  1998.  The  determination  of net
income will be made in accordance with generally accepted accounting  principles
and will be based upon the audited  financial  statements  of the  Company.  The
shares held in custody are not transferable or assignable,  although they may be
voted by the holder.

                                     - 26 -
<PAGE>



Item 12.   Certain Relationships and Related Transactions.

      Jerald H. Donnan and Marcia R.  Donnan  personally  guaranteed  a $500,000
loan from a financial  institution in 1995. No separate  consideration  was paid
for such guarantee. The balance of the loan of $435,000 was paid using a portion
of the proceeds from the Company's  initial  public  offering  completed May 13,
1998.

      On September 16,1998,  the Company closed its acquisition of the assets of
Factual Data  Minnesota,  Inc. ("FD  Minnesota")  pursuant to an Asset  Purchase
Agreement (the  "Agreement").  Since 1990, FD Minnesota had been a franchisee of
the Company located in the Saint Paul, Minnesota area and operating in Minnesota
and Iowa.  Pursuant to the  Agreement,  the Company  acquired the fixed  assets,
contract  rights,  intellectual  property  rights to trade  names  and  computer
software,  personnel files, books and records,  deposits, prepaid assets and the
goodwill of FD Minnesota  in exchange  for  $353,243  cash paid at closing and a
non-interest bearing promissory note in the principal amount of $353,243 payable
in twenty-four equal monthly installments commencing September 1, 1998. The note
is secured by a lien on all of the assets  purchased  pursuant to the Agreement.
The Company also assumed the lease obligations on the FD Minnesota  facility and
continues  operations of FD Minnesota at such facility.  In connection  with the
purchase, the Company entered into two year non-competition  agreements with the
two shareholders of FD Minnesota.

      Abdul Rajput, one of the shareholders of FD Minnesota, has been a director
of the Company since  February  1998.  Mr. Rajput  disclosed all of the material
facts as to his  relationship  and interest in FD Minnesota and  abstained  from
voting on the acquisition.  The acquisition was approved by all of the remaining
directors of the Company and the  acquisition  was made on terms believed by the
Board to be no less favorable than could have been obtained from an unaffiliated
party. The Company retained an independent firm of certified public  accountants
to appraise the fair market value of the operating  assets,  excluding  cash and
accounts receivable, of FD Minnesota.  Based on such firm's study and analytical
review  procedures  such firm concluded  that a reasonable  estimate of the fair
market value of the operating assets, excluding cash and accounts receivable, of
FD Minnesota as of May 31, 1998 was $720,000.

      The Company has adopted a policy that all transactions between the Company
and its officers,  directors and 5% or more shareholders are subject to approval
by a majority of the  disinterested  independent  directors of the Company.  Any
such  transactions  will be on terms believed to be no less favorable than could
be obtained from unaffiliated parties.

                                     - 27 -
<PAGE>



Item 13.   Exhibits and Reports on Form 8-K.

      (a)  Exhibits  Filed  Herewith or  Incorporated  by Reference to 
           Previous   Filings  with  the   Securities   and  Exchange  
           Commission:

      (1)  The following  exhibits were included with the initial  filing of the
           Company's Registration  Statement #333-47051,  or amendments thereto,
           effective May 13, 1998 and are hereby incorporated by reference:

      Exhibit
      Number                        Exhibit

       1.1        -- Revised form of Underwriting Agreement.
       1.3        -- Form of Selected Dealers Agreement.
       1.4        -- Revised form of Warrant Exercise Fee Agreement.
       1.5        -- Form of Custody Agreement.
       3.1        -- Restated and Amended Articles of Incorporation.
       3.2        -- Amended Bylaws of the Registrant.
       4.1        -- Specimen   Common   Stock   Certificate   of   the
                     Registrant.
       4.2        -- Specimen Warrant Certificate of the Registrant.
       4.3        -- Form of  Representative's  Option for the Purchase
                     of Common Stock.
       4.3A       --   Revised form of  Representative's  Option for
                     the Purchase of Warrants.
       4.4        -- Form of Warrant Agreement.
       10.1       --   Office  Lease  between  FDC Office I, LLC and
                     Lenders  Resource  Incorporated  dated  August 14,
                     1997 and as amended December 26, 1997.
       10.2       -- Registrant's 1997 Stock Incentive Plan, as amended, with
                     form of Stock Option Agreement.
       10.3       --   Employment Agreement with Jerald H. Donnan.
       10.3A      -- Amendment  to  Employment  Agreement  of Jerald H.
                     Donnan dated March 31, 1998.
       10.4       --   Employment Agreement with Marcia R. Donnan.
       10.4A      -- Amendment  to  Employment  Agreement  of Marcia R.
                     Donnan dated March 31, 1998.
       10.5       --   Form of Indemnification Agreement.
       10.6A      -- Form of Franchise Agreement.
       10.6B      -- Form of License Agreement.
       10.6C      -- Credit  Reporting  Service  Agreement  with  Trans
                     Union Corporation.
       10.6D      -- Agreement    for    Service--Consumer    Reporting
                     Agencies   with   Equifax    Credit    Information
                     Services, Inc.
       10.6E      -- Reseller   Services    Agreement   with   Experian
                     Information Solutions, Inc.
       10.6F      -- Asset Purchase  Agreement  between the Company and
                     Mirocon, Inc. dated December 1, 1997.

                                     - 28 -
<PAGE>



       10.6H      -- Asset  Purchase  Agreement  between  Factual  Data
                     Corp  and  C  B  Unlimited,   Inc.  regarding  the
                     Indiana territory.
       10.6I      -- Purchase   Agreement   by  and  between   Landmark
                     Financial  Services,  Inc.  and Factual Data Corp.
                     regarding the Texas territories.

      (2)  Filed as  exhibits  to  Reports  on Form 8-K of the  Company  are the
           following, which are incorporated by reference:

      Date of
       Filing                             Exhibit

      August 25, 1998     Asset Purchase Agreement--FD Northwest, Inc.

      August 25, 1998     AssetPurchase Agreement--American Credit
                           Connection, Inc.

      August 25, 1998     Asset   Purchase   Agreement--Heritage   Credit
                           Reporting, Inc.

      September 16, 1998  Asset   Purchase    Agreement--Factual   Data
                           Minnesota, Inc.

      October 15, 1998    Asset  Purchase  Agreement--Landmark  Financial
                           Services, Inc.

      October 31, 1998    Asset  Purchase  Agreement--ARI  of Minnetonka,
                           Inc.

      December 16, 1998   Plan and Agreement of  Merger--Mortgage  Credit
                           Services, Inc.

      January 5, 1999     Asset  Purchase  Agreement--Oxbow  Enterprises,
                           Inc.

      January 19, 1999    Asset  Purchase   Agreement--Premier   Mortgage
                           Services, Inc.

      (3)  Filed herewith:

      Exhibit
      Number                        Description

        21           List of Subsidiaries
        27           Financial Data Schedule


                                     - 29 -
<PAGE>



      (b)  Reports on Form 8-K Filed During the Quarter Ended December 
           31, 1998:

      Date of Report      Item Reported        Financial Statements Filed

      September 16, 1998  Item 2--Factual             Yes *
                          Data Minnesota, Inc.

      October 15, 1998    Item 2--Landmark            Yes *
                          Financial Services, Inc.

      October 31, 1998    Item 2--ARI of              No **
                          Minnetonka, Inc.

      December 16, 1998   Item 2--Mortgage Credit     Yes ***
                          Services, Inc.
----------------

*  Filed on Form 8-K/A on November 24, 1998.

** Immaterail acquisition, hence no financial statements filed.

***Filed on Form 8-K/A dated February 25, 1999.


                                     - 30 -
<PAGE>



                             SIGNATURES

      In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of
1934, the  Registrant  duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    FACTUAL DATA CORP.


Date:  March 25, 1999                     By:/s/ Jerald H. Donnan
                                             --------------------------
                                                 Jerald H. Donnan,  Chairman,
                                                  President and Chief Executive
                                                  Officer


      In accordance  with the Securities  Exchange Act of 1934,  this report has
been  signed by the  following  persons on behalf of the  Registrant  and in the
capacities and on the dates indicated.


                                     - 31 -
<PAGE>





       Signature                    Title                 Date

/s/Jerald H. Donnan       Chairman of the Board       March 25, 1999
   Jerald H. Donna         of Directors, President
                           and Chief Executive 
                           Officer (Principal
                           Executive Officer)

/s/Todd A. Neiberger      Chief Financial             March 25, 1999
   Todd A. Neiberger       Officer  and a Director
                           (PrincipalFinancial
                           and Accounting Officer)

/s/James N.  Donnan       Vice President and a        March 25, 1999
   James N. Donnan         Director

/s/ Robert J. Terry       Director                    March 25, 1999
    Robert J. Terry

/s/ Abdul H. Rajput       Director                    March 25, 1999
    Abdul H. Rajput


                                     - 32 -
<PAGE>






                            EXHIBIT INDEX


Exhibit
  No.                Description

21              Subsidiaries of Registrant

27              Financial Data Schedule