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


                                  FORM 10-K/A



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<C>              <S>
(MARK ONE)
   [ ]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

                 FOR THE FISCAL YEAR ENDED       ,

                                              OR
   [X]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

                 FOR THE TRANSITION PERIOD FROM APRIL 1, 1999 TO DECEMBER 31,
                 1999
</TABLE>


                         COMMISSION FILE NUMBER 0-26962

                                 ADAM.COM, INC.

             (Exact name of registrant as specified in its charter)

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<S>                                            <C>
                   GEORGIA                                      58-1878070
          (State of incorporation)                   (IRS Employer Identification No.)
</TABLE>

                       1600 RIVEREDGE PARKWAY, SUITE 800
                             ATLANTA, GEORGIA 30328
               (Address of Principal Executive Offices--Zip Code)

              REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
                                 (770) 980-0888

          Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:

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<S>                                            <C>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
---------------------------------------------  ---------------------------------------------
        Common Stock, par value $.01                               NONE
</TABLE>

    INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES 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-K 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-K OR ANY AMENDMENT TO THIS
FORM 10-K. / /

    The aggregate market value of the common equity held by non-affiliates of
the Registrant (assuming for these purposes, but without conceding, that all
executive officers and directors are "affiliates" of the Registrant) as of
March 29, 2000 (based on the closing sale price of the Registrant's common
stock, par value $.01, as reported on the Nasdaq National Market on such date)
was $47,292,359. 5,414,838 shares of common stock were outstanding as of March
29, 2000.

                      DOCUMENTS INCORPORATED BY REFERENCE


NONE.


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                               TABLE OF CONTENTS


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                                     PART I

Item 1.   Business....................................................       1

Item 2.   Properties..................................................      13

Item 3.   Legal Proceedings...........................................      13

Item 4.   Submission of Matters to a Vote of Security Holders.........      13

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related
           Stockholder Matters........................................      14

Item 6.   Selected Financial Data.....................................      16

Item 7.   Management's Discussion and Analysis of Financial Condition
           and Results of Operations..................................      17

Item 7A.  Quantitative and Qualitative Disclosures About Market
           Risk.......................................................      24

Item 8.   Financial Statements and Supplementary Data.................      24

Item 9.   Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure...................................      24

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant..........      25

Item 11.  Executive Compensation......................................      27

Item 12.  Security Ownership of Certain Beneficial Owners and
           Management.................................................      30

Item 13.  Certain Relationships and Related Transactions..............      31

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
           8-K........................................................      32
</TABLE>

<PAGE>
                                    PART I.

ITEM 1. BUSINESS

    IN THIS REPORT, THE TERMS "ADAM.COM," "THE COMPANY" AND "WE" REFER TO
ADAM.COM, INC., (FORMERLY A.D.A.M. SOFTWARE, INC.). IN ADDITION, THE TERM FISCAL
2000, UNLESS OTHERWISE SPECIFICALLY INDICATED, REFERS TO THE NINE-MONTH PERIOD
ENDING DECEMBER 31, 1999. THE TERMS FISCAL 1999 AND 1998 REFER TO THE FISCAL
YEARS ENDED MARCH 31, 1999 AND 1998, RESPECTIVELY.

GENERAL

    adam.com is a business-to-business content service provider of health and
medical information products. The Company's primary markets are Internet-based
health information sites, health organizations, education and other vertical
markets engaged in providing or using health and medical information. Founded in
1990, adam.com is headquartered in Atlanta, Georgia and has historically
created, published and marketed medical and health-related information content
that was delivered to end-users primarily through multimedia CD-ROM, but also
included a variety of other second-tier distribution mediums, including
broadcast, print and Internet-ready applications. Historically, adam.com has
marketed its CD-ROM products in education, consumer retail and professional
markets. Since January 1999, adam.com has taken significant steps to transition
itself to a content service provider of health, medical and wellness information
primarily distributed online. In connection with this redirected strategy, we
decided to substantially reduce further sales and marketing efforts, including
product updates and upgrade support, for certain of our historical products.

    During the nine months ended December 31, 1999, adam.com made the strategic
decision to focus the majority of its efforts on the online distribution of
consumer health information, resulting in the May 1999 launch of www.adam.com,
adam.com's consumer health destination. As our Internet strategy evolved during
the year, we shifted our focus to marketing adam.com's highly recognized health
related content to the growing number of health and medically-oriented sites on
the Web instead of the online distribution of consumer health information
through our own Web site. Today, our Internet business model is based primarily
on the online syndication of adam.com's award winning health and medical content
to a variety of Web-based and other businesses including health sites, Internet
portals, e-commerce sites, media sites, health plans, governments and
institutions.

    The e-health market sector is estimated to grow to more than $200 billion by
2003 according to industry estimates. In addition, the number of health-related
Internet sites has proliferated to more than 20,000 and includes a growing
number of online consumer health destinations and Web sites hosted by healthcare
providers, payors and health information technology organizations. adam.com
believes this market provides the greatest marketing opportunity for its
products growth going forward. adam.com has adopted an Internet strategy that
emphasizes syndication of its powerful medical and health content to tap into
this market. Instead of competing with established Web sites, adam.com has
chosen to become the content provider for such Web sites. By doing so, the
Company eliminates some of the costs of advertising and promotion and can
concentrate its resources on further developing content, products and enhancing
its content management technology.

    adam.com's vast repository of proprietary health and medical content
includes:

    - the 4,000 topic adam.com HEALTH ILLUSTRATED ENCYCLOPEDIA, a web-enabled,
      hyperlinked collection of articles, photographs and illustrations on
      diseases, symptoms, injuries, tests, nutrition and other preventive health
      topics;

    - HEALTH PRESENTATIONS, a library of interactive, multimedia presentations
      that include surgeries, medical procedures and a collection of general
      patient education documents;

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    - the adam.com HEALTH IMAGE CATALOG, an indexed database of more than 40,000
      medical illustrations, 3-D images, interactive animations and broadcast
      quality video segments;

    - VISUAL HEALTH TOOLS, a collection of interactive, Web-enabled tools and
      applications that includes adam.com's signature dissectible anatomy; and

    - ILIAD, an expert knowledge base that calculates differential diagnosis
      options for medical conditions.

    These content assets have taken us more than 20 years to develop, and we
believe that collectively they represent the single largest collection of
proprietary medical content anywhere in the world.

    In the past nine months, adam.com has signed numerous syndication contracts
with many organizations including the National Library of Medicine, Merck-Medco,
Albertsons/Sav-on Drugs, Third Age, InLight Interactive, HealthAnswers.com,
Broadcast Health and HealthCentral.com. Additionally, in calendar year 2000
adam.com has already signed syndication contracts that are expected to generate
minimum aggregate revenues of approximately $2 million per year over their
contract terms.

    Finally, adam.com continues to build on important strategic relationships
that we believe significantly strengthen our distribution capabilities,
including relationships with leading Internet portal companies like Yahoo!, and
with Healtheon/WebMD and the CNN Newsource Sales.

STRATEGY

    Our strategy is to establish adam.com as the leading source of health
information content over the Internet. We will pursue this strategy by producing
health information products, derived from our proprietary repository of health
information, and syndicating these products in multi-year, recurring revenue
agreements to our target markets.

    In early 1999 we made a decision to enter the Internet market through the
creation of a consumer destination Web site. To accomplish this, we opened and
staffed an office in San Francisco to take advantage of the many
Internet-related resources available there. In response to rapidly changing
market conditions in the consumer e-health market, we made a strategic decision
in December of 1999 to move away from our business-to-consumer model and pursue
a business-to-business content syndication model. This resulted in a revision to
our personnel requirements, mainly affecting our San Francisco operations. We
believe that consolidating our production, editorial and marketing teams at our
corporate headquarters in Atlanta will allow us to accomplish our current
business objectives by streamlining our ability to produce and distribute new
health information products. The key elements of our strategy are:

        GROW OUR BUSINESS-TO-BUSINESS SYNDICATION NETWORK. Our revenue model is
    based on the syndication of adam.com's health and medical content to a
    variety of businesses engaged in distributing health and medical
    information. In addition to guaranteed minimum page view fees, licensing and
    platform fees, under some agreements, we share in advertising, e-commerce
    and sponsorship revenue with our syndication network customers. This revenue
    sharing enables us to capitalize on their growth. We believe that the need
    for online health information will continue to increase as more
    consumer-based content sites look to providing health information as either
    their predominant content offering or as a value-added content offering. We
    also believe that there will be an increased demand for our online health
    information as more healthcare providers look to the Internet for
    efficiencies in providing health education services to their customers. More
    importantly, we believe that we can offer each of our target customers
    solutions for reducing their infrastructure investments and speeding their
    time to market.

        EXPAND INTO NEW MARKETS. We plan to aggressively continue marketing our
    content to health-related Web sites, and we are evaluating our ability to
    expand the reach of adam.com's content into other areas of the e-health
    market. For example, we believe our health-content, which includes our
    visuals,

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    patient education materials and tools, can provide health information
    technology businesses a solution to delivering relevant health information
    between a provider and patient at the point of care.

        We plan to increase our presence in the international marketplace by
    engaging additional international resellers in an effort to increase unit
    volume sales of adam.com product outside the United States. Following the
    strategy of our domestic markets we plan to grow our international
    syndication network through business-to-business partnerships.

        LIDO.com, a subscribable database of more than 10,000 of adam.com's
    medical illustrations for legal professionals, is an example of how our
    image content can be offered to other vertical markets outside of e-health.
    We plan to leverage the architecture and business model that was developed
    for LIDO.com, a business unit of adam.com created in April 1999, to other
    vertical businesses such as educational and pharmaceutical companies and to
    the broadcast market who may have a need for medically-related clip media

        LEVERAGE OUR CURRENT EDUCATION MARKET FOR ONLINE OPPORTUNITIES. In the
    education market, we expect a rapid shift towards e-Learning, online course
    management systems and Web-based curriculum. We anticipate our strength and
    brand awareness in the education market to allow us to quickly capitalize on
    these new and growing opportunities. Our existing education CD-ROM products
    form a content basis for online product offerings that we expect to allow us
    to continue to expand our existing relationships in the traditional
    education community while increasing our ability to reach other education
    markets such as online continuing education and distance learning programs.
    In addition, we will continue to work with our educational distributors to
    develop programs to allow us to enter into new educational markets with our
    adam.com content. We are also evaluating opportunities to assist companies
    that produce Web-based curriculum and offer Internet-based solutions for
    virtual e-courses.

        ENHANCE OUR CONTENT. adam.com has created a repository of over 700
    gigabytes of health and medical information. Harvesting this content and
    creating new products to meet our customers needs is a major focus of
    adam.com's long-term strategy. In addition, we believe that having a strong
    technology platform upon which to distribute our content is vital to
    providing new products and up-to-date information to our customers. We are
    developing a content management system that will manage workflow from
    creation to delivery of adam.com content and provide the necessary
    infrastructure we will need to rapidly deploy and manage these products
    across our syndication network.

        INCREASE PRODUCTION, DEVELOPMENT, SALES TEAMS, CAPITAL BASE AND
    BUSINESS. In order to service the broader customer base we are developing,
    increase our focus on new markets and products and develop infrastructure,
    we plan to hire additional employees, most notably in the production,
    development, and sales and marketing areas. Additionally, we will actively
    seek opportunities for strategic transactions intended to raise capital to
    develop our emerging business strategy, potentially including the issuance
    of additional equity or debt instruments. Finally, we will continue to
    evaluate and may enter into strategic transactions, including mergers and
    acquisitions. We currently have no agreements or understandings relating to
    any such strategic transactions.

MARKETS

INTERNET

    For the nine months ended December 31, 1999, sales of products into the
Internet market accounted for approximately 23% of our revenues. This was the
first time period during which adam.com actively pursued revenue in the Internet
arena, and we expect the proportion of Internet revenues to total revenues to
increase during calendar 2000 as we continue to execute on our Internet
strategies.

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    Currently, our Internet-related revenues are derived from activities related
to providing adam.com health information to Web-based, third parties which
currently includes online syndication, page view-based user fees and
advertising, and subscription-based license fees.

    The assets and tools adam.com uses in this market are:

    - The Health Illustrated Series, consisting of:

       --HEALTH ILLUSTRATED ENCYCLOPEDIA, providing definitions, symptoms,
       causes and remedies for thousands of medical conditions and information
       on injuries, surgeries, tests, nutrition and preventative measures.
       Containing approximately 4,000 articles covering more than 1,500 medical
       topics, the Encyclopedia is enhanced with over 85,000 hyperlinks between
       articles and dozens of medical specialty areas.

       --HEALTH CENTERS, topical information centers that cover broad, commonly
       referenced health subjects. Currently, we plan to offer five Health
       Centers: Children's Health, Pregnancy Health, Cardiovascular Health,
       Outdoor Health and Child Safety Health.

       --HEALTH PRESENTATIONS, includes a series of more than 100 interactive
       Web-enabled presentations on common surgeries, tests and procedures and a
       library of more than 1,100 patient education documents that cover a
       variety of medical and healthcare topics such as treatments, after care,
       and associated gains and risks.

       --VISUAL HEALTH TOOLS, a collection of interactive tools and applications
       including a Web-enabled version of adam.com's dissectible anatomy

    - The Health Image Catalog, consisting of:

       --More than 40,000 medical illustrations, 3D images, animations and
       broadcast quality digital video segments

       --An e-commerce platform that allows for licensing and subscriptions to
       the content

    - The Health Content Platform is an XML-based content management platform
      and delivery system used for creation and delivery of our products to
      customers and the subsequent administration of the content across the
      network.

EDUCATION

    For the nine months ended December 31, 1999, sales of CD-ROM products to the
education market accounted for approximately 65% of our revenues. While sales of
these products still represent a significant portion of adam.com's revenues, we
expect this percentage to decrease during calendar 2000 as we focus on the
migration of our educational CD-ROM business to Internet-based products.

    We have historically created software products with varying levels of
content, functionality and price for the education market. Our educational
products serve the medical school, undergraduate, allied health (nursing,
physical therapy, occupational therapy, etc.) and K-12 markets. Some of the
products that contribute to our education market revenues are:

        A.D.A.M. INTERACTIVE ANATOMY ("AIA") is our flagship product released in
    April 1997, that provides an integrated environment for the teaching and
    study of human anatomy at the higher education and professional levels.
    Powerful tools and search capabilities offer the user access to over 20,000
    anatomical structures in six different views. Three-dimensional images based
    on the Visible Human data set, cadaver photographs from the Bassett
    collection, pinned anatomical images and Slide Show (a built-in curriculum
    integration and authoring tool) augment AIA's digital medical illustrations.
    Also, one-button Internet access provides solutions for distance learning as
    well as offering seamless integration of the Internet and its capabilities.

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        A.D.A.M. BENJAMIN/CUMMINGS INTERACTIVE PHYSIOLOGY ("IP") is a series of
    seven co-developed products between adam.com and Pearson Education ("AWL"),
    which were designed for the undergraduate health sciences curriculum and
    completed in stages during 1996, 1997 and early 1999. Each module is
    designed to integrate anatomical structures with physiological functions. IP
    uses animation, audio, narration and video to explain difficult and
    complicated physiology concepts and processes. Its organization and
    self-test features provide the methodology for curriculum integration.

        A.D.A.M. AT HOME SERIES--SCHOOL EDITIONS include A.D.A.M. The Inside
    Story-School Edition, Nine Month Miracle-School Edition and Life's Greatest
    Mysteries-School Edition. These products include comprehensive teachers'
    guides to meet the needs of a classroom setting. A.D.A.M. The Inside Story-
    School Edition enables study of human anatomy and physiology in a middle
    school biology or life sciences course, while, Nine Month Miracle-School
    Edition is designed to supplement the study of human reproduction at the
    high school level. The teachers' guides for each product include student
    worksheets, ideas for classroom activities, laboratory exercises, a
    bibliography of additional learning resources and teacher reference
    materials.

        A.D.A.M. MEDIA PRO contains over 2,000 anatomical clinical illustrations
    and A.D.A.M. MEDIA contains close to 500 anatomical illustrations and 65
    animation for use in presentations and on web pages displayed on an
    Intranet. All of the images are in a JPEG format, making them compatible
    with the most popular presentation packages available, such as PowerPoint,
    Adobe PhotoShop and AIA.

PROFESSIONAL

    For the nine months ended December 31, 1999, sales of products to the
professional market accounted for approximately 5% of our revenues. We have
historically marketed our software, as well as licensed our content and software
technologies to other potential software developers in the healthcare and health
information markets. Our professional market products serve the healthcare,
pharmaceutical, and legal markets. We do not plan to focus any resources in this
market in the future except as can be developed through our Internet online
syndication strategy.

CONSUMER

    For the nine months ended December 31, 1999, sales of CD-ROM products to the
consumer market accounted for approximately 5% of our revenues. We have created
several products specifically for the general consumer market which consists of
our At-Home Series of CD-ROM products sold through distributors to consumer
retail outlets. adam.com does not intend to continue to focus any resources in
this market except in connection with our Internet online syndication strategy.

PRODUCT AND CONTENT DEVELOPMENT

    We seek to expand our syndication network and leverage our position with our
current syndication customers by developing additional content, products and
technologies. We are developing complimentary product offerings that are derived
from our proprietary repository of health information and from content and
products that we acquire in strategic transactions. In addition, we are
developing an advanced distribution platform that will manage the workflow of
our content production from creation to delivery of the information to our
customers. The platform itself will become a value-added component to our
product offerings as more and more opportunities surface where there is a need
for our customers to maintain their own content management systems. Additional
products that we develop may be provided to our current network as content
enhancements or sold as add-ons to existing agreements.

    Our repository of health information consists of a vast medical image
database called the Health Image Catalog, the adam.com Health Encyclopedia and
numerous other reference products including Health Presentations, Health
Centers, and Visual Health Tools. The repository is layered with an indexing
scheme and medical professional vocabularies that will communicate with the
platform so that data from

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the repository may be easily extracted, packaged, licensed and managed for a
customer. By maintaining the repository and the platform in this way, we are
able to efficiently develop new products and streamline our time to market for
them. In addition, the use of various vocabularies and indexing terms will allow
us to achieve the broadest possible reach for our content. Development of these
enabling technologies will allow us to create highly targeted products with
different strategic purposes. Examples include:

    - Low-cost, text-only versions of the Health Encyclopedia that would expand
      our reach into the health site market;

    - Additional health centers that are focused on particular disease states;
      and

    - Image libraries that can be harvested for various purposes such as medical
      and pharmaceutical sales training.

    We believe that the combination of a one-of-a-kind health information
repository, a vast majority of which we consider to be "evergreen" in nature,
and a tightly integrated content management system will allow us to achieve a
considerable competitive advantage in the Internet content provider market.

SALES, MARKETING AND DISTRIBUTION

    During the nine months ended December 31, 1999, we began to transition the
majority of our marketing efforts towards creating greater awareness for
adam.com, our newly launched consumer health destination Web site. Our
integrated marketing approach included market research, online and offline
advertising campaigns, and end-user promotional activities such as contests and
registration incentives. Media and consumer research allowed us to refine our
targeting and messaging, evaluate ad placement and develop product enhancements.
Internal and external resources were used for research, including site use
statistics, ad tracking, focus groups, and both online and offline surveys. We
also launched advertising campaigns in both online and offline media that
included placing advertisements on other Web sites, in newspapers and magazines
and on the radio.

    As the year progressed, our Internet focus and sales and marketing
strategies transitioned as we became a business-to-business content solution
provider. We expect this business model to be much more sustainable over time.
Along with this change in focus, future sales and marketing expenditures should
decrease with the largest portion of our marketing efforts directed toward
building awareness for adam.com content solutions in our target markets. As such
we have teamed up with several outside consulting firms that will assist us in
branding, awareness and promotion of adam.com in the business-to-business,
e-Health content service provider space.

    As a fundamental part of our transition from a business-to-consumer to a
business-to-business model, we developed a syndication strategy that allows us
to pursue multi-year, contractually recurring licensing agreements with other
Internet-based companies. Accordingly, we are able to span the entire range of
businesses in the e-Health sector, from consumer health sites, to health
organizations to educational markets and other vertical businesses connected to
health and medical information. As of December 31, 1999, we had content license
agreements with a major portal web site, numerous other well established
consumer health oriented sites and a government agency, the effect of which has
created awareness of the adam.com brand and quality of content while generating
revenue.

    During the twelve months ended March 31, 1999, we changed our distribution
model for CD-ROM based software into the education market. As a result, we began
transitioning much of the direct sales activity to an indirect distribution
model, relying mostly on our third party distributors and resellers. During the
second quarter of fiscal 1999, we began reducing our direct sales and marketing
operations, and increased our emphasis on enhancing our distribution and
reseller network. We were able to leverage our strong relationships with leading
educational resellers, resulting in a transition to a 100% indirect sales force
by the end of fiscal 1999. In the future, we will realize smaller margins from
this approach than we have historically achieved.

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STRATEGIC ALLIANCES

    We have established a number of important relationships with various
companies that operate in the markets adam.com serves. A summary of our
significant alliances is set forth below:

        HEALTHEON/WEBMD--Healtheon/WebMD Corp. has designed and developed an
    Internet-based information and transaction platform that facilitates and
    streamlines interactions among the participants in the healthcare industry.
    Healtheon/WebMD offers to members of the medical profession, the health care
    industry and the public on a commercial basis a unique integrated medical
    communications platform and extensive online health care information
    resource that enables its customers to obtain a broad range of medical and
    related information from a single source. Since February 1998, adam.com has
    signed numerous agreements with Healtheon/WebMD including an agreement
    whereby Healtheon/WebMD distributes our adam.com Interactive Anatomy product
    as a premium to its subscribers. Revenues from Healtheon/WebMD comprised 17%
    of our overall revenues for the nine months ended December 31, 1999.

        CNN NEWSOURCE, A DIVISION OF CNN--During the twelve months ended
    March 31, 1998, we signed an agreement with CNN Newssource, a division of
    CNN, for distribution of a special compilation of our content into the
    broadcast news marketplace. CNN Newssource was granted exclusive domestic
    rights to represent our image database to television news broadcasters for
    use in enhancing health and medical news coverage. CNN Newssource is
    responsible for the sales, marketing and distribution of our content into
    the local and national broadcast news market. CNN Networks, including CNN,
    CNN Headline News and CNN International were initial customers for this new
    service. The agreement between adam.com and CNN Newssource expires in
    January 2002.

        PEARSON EDUCATION, A SUBSIDIARY OF PEARSON PLC--Addison Wesley Longman
    (AWL) is a major publisher for the undergraduate market for science, health
    science, nursing and allied health. AWL is a major shareholder and it has
    product development and distribution relationships with us. AWL worked with
    us to and co-developed a series of multimedia products, known as A.D.A.M.
    Benjamin/ Cummings Interactive Physiology, for the undergraduate health
    science market. Both companies sell these products, with adam.com focused on
    the institutional market and AWL focused on the student market. AWL and
    adam.com are currently Web enabling the seven physiology series products.

        YAHOO!--Yahoo!, a leading global internet company, licenses adam.com
    content for its new Yahoo! health site. The adam.com content is highly
    branded and each page of our content on Yahoo! offers a link to the adam.com
    Web site. We believe the Yahoo! visibility will allow us to broaden our
    brand awareness and increase interest in our content products. adam.com and
    Yahoo! have a two-year licensing agreement that expires in May 2001.

MANUFACTURING

    The production of our software products includes CD-ROM pressing, assembly
of purchased product components, printing of product packaging and user manuals
and shipping of finished goods, which is performed by third-party vendors in
accordance with our specifications and forecasts. We believe that there are
alternate sources of these services that could be implemented without material
delay.

PROPRIETARY RIGHTS AND LICENSES

    We regard our software and the adam.com content repository as proprietary.
We rely primarily on a combination of copyright, trademark, trade secret and
confidential information laws, employee and third-party nondisclosure agreements
and other methods to protect our proprietary rights. There can be no assurance
that these protections will be adequate to protect our intellectual property
rights or that our competitors will not independently develop technologies that
are substantially equivalent or superior to our technologies. We have obtained
federal registrations of the trademarks "A.D.A.M.," "Scholar Series,"

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"Nine Month Miracle," and the "Walking Man" logo in the United States. We have
applied for registration of approximately ten additional trademarks in the
United States. We have also obtained registrations of the "A.D.A.M." trademark
in 22 foreign countries. We have applications for registration of the mark
pending in an additional five countries. We do not currently hold any patents or
have any patent applications pending. We believe that, due to the rapid pace of
innovation within the multimedia and software industries, factors such as the
technological and creative skills of our personnel and the quality of the
content of our products are more important in establishing and maintaining a
leadership position within the industry than are the various legal protections
of its technology.

    We license certain software programs from third-party developers and
incorporate them into our products. Such software products are widely licensed
by the respective developers thereof for incorporation by other developers (like
adam.com) in their products and provide specific functionality required in order
to operate the product. For example, we license Macromind Director, a program
distributed by Macromedia, which permits a product to display animated
sequences. This product is incorporated in several adam.com products. Generally,
the licenses grant to us non-exclusive, worldwide rights with respect to the
subject program and terminate only upon a material breach by us. Certain of the
licenses require payment of annual license fees (not exceeding $25,000 per annum
in the aggregate). If a third-party agreement for licensed software expires or
terminates and we are unable to renew or extend the agreement, we could be
required to engage in independent development of replacement software or to
obtain a suitable replacement. We generally believe that licenses for
alternative software programs are available on commercial terms from a number of
licensors. We own and do not license the anatomical illustrations included in
the adam.com image database, but we license certain additional multimedia
content from various third parties that we incorporate into our products,
including video, photographs, music and text. Such licenses generally provide us
with fully-paid perpetual, worldwide licenses to include the licensed content in
a designated product.

    We believe that our products, trademarks and other proprietary rights do not
infringe upon the proprietary rights of third parties. However, as the number of
software products in the multimedia industry increases and the functionality of
these products further overlaps, software developers may become increasingly
subject to infringement claims. There can be no assurance that third parties
will not assert infringement claims against us in the future with respect to
current or future products, trademarks or other works of adam.com or that any
assertion will not require us to enter into royalty arrangements or result in
costly litigation.

COMPETITION

    The market for the delivery of healthcare content services and products on
the Internet is relatively new, intensely competitive and rapidly changing. With
no substantial barriers to entry, over 20,000 Web sites presently offer users
healthcare content, products and services, and we expect that the number of
these sites will continue to grow.

    While we do not directly compete with these consumer-oriented Web sites for
user traffic, we do compete with health content providers that are currently
distributing health information in either online or through traditional
distribution channels.

    Presently, we consider our competitors to be the following types of
companies:

    - Publishers and distributors of traditional print media targeted to
      healthcare professionals, patients and health-conscious consumers, many of
      which have established or may establish their own Web sites or decide to
      license their content to others;

    - Large healthcare information systems companies, such as McKesson HBOC;

    - Online services or Web sites that are currently offering health
      information to the healthcare industry generally, such as Healtheon/WebMD
      and Intelihealth;

                                       8
<PAGE>
    - Public sector and non-profit Web sites that provide healthcare information
      without advertising or commercial sponsorships, such as the American
      Medical Association;

    - Web sites such as Yahoo! and America Online, which provide access to
      healthcare related information and services; and

    - Vendors of healthcare information, products and services distributed
      through other means.

    Many of our competitors enjoy significant competitive advantages including:
greater resources that can be devoted to the development, promotion and sale of
their products and services; longer operating histories; greater brand
recognition; and larger customer bases. Due to such factors, there can be no
assurances that we will be able to continue to compete effectively in this
market.

    We believe that the primary competitive factors in our target markets are:

    - comprehensiveness of content;

    - integration with existing technologies;

    - brand name recognition;

    - reliability;

    - scalability; and

    - quality of support.

    We believe that we are the only provider among our competitors to serve all
of our target markets with an integrated solution for multimedia-based health
information. We expect that the size, uniqueness, and high barrier to
competitive entry for replication of our repository will allow us to compete
favorably in each of our markets.

    We presently syndicate our content to other competing Web sites, including
Yahoo! and Healtheon/ WebMD. We believe that the benefits of content
syndication, including increased awareness of the adam.com brand and additional
revenue from page view traffic and advertising opportunities, outweigh the
disadvantages of a potential increase in competition that may result from our
content syndication to these competitors.

EMPLOYEES

    As of December 31, 1999, adam.com had 103 employees. Of these, 59 were
engaged primarily in product development, 23 in sales and marketing and 21 in
finance and administration with 44 employees located in Atlanta and 59 located
in San Francisco. In February 2000 the decision was made to relocate the
production group from San Francisco to Atlanta in accordance with the current
business plan and strategy. We expect the relocation of these production
resources to be complete no later than June 30, 2000.

    Our employees are not covered by a collective bargaining agreement and we
have experienced no work stoppages. We consider our employee relations to be
good. We believe that our future growth and success will depend upon our ability
to retain and continue to attract highly skilled and motivated personnel in all
areas of our operations.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

    Certain statements made in this report, and other written or oral statements
made by or on behalf of adam.com, may constitute "forward-looking statements"
within the meaning of the federal securities laws. When used in this report, the
words "believes," "expects," "estimates," "intends" and similar expressions are
intended to identify forward-looking statements. Statements regarding future
events and developments and our future performance, as well as our expectations,
beliefs, plans, intentions, estimates or projections

                                       9
<PAGE>
relating to the future, are forward-looking statements within the meaning of
these laws. Examples of such statements in this report include descriptions of
our plans and strategies with respect to developing the site, our plans to
develop additional strategic partnerships, our intention to add e-commerce to
our business strategy, and our continuing growth. All forward-looking statements
are subject to certain risks and uncertainties that could cause actual events to
differ materially from those projected. We believe that these forward-looking
statements are reasonable; however, you should not place undue reliance on such
statements. These statements are based on current expectations and speak only as
of the date of such statements. We undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of future events, new
information or otherwise.

    The following are some of the factors that could cause our actual results to
differ materially from the expected results described in the our forward-looking
statements:

    WE ARE A YOUNG COMPANY WITH A NEW INTERNET-BASED STRATEGY AND WE MAY
CONTINUE TO INCUR LOSSES.  We have experienced substantial losses of
$9.6 million for the nine months ended December 31, 1999, $2.1 million in the
twelve months ended March 31, 1999, $5.4 million in the twelve months ended
March 31, 1997, $3.9 million in the twelve months ended March 31, 1996 and
$3.2 million in the twelve months ended March 31, 1994. We may incur future
losses in connection with implementing our new Internet-based strategy. We
cannot be certain that we can obtain profitability in any future period.

    WE MAY BE UNABLE TO OBTAIN SUFFICIENT CAPITAL TO PURSUE OUR NEW
INTERNET-BASED STRATEGY, WHICH WOULD HURT OUR FINANCIAL RESULTS.  Since
inception we have funded operations with debt and equity capital. In the nine
months ended December 31, 1999, our total costs and expenses increased to
$13.1 million from $5.2 million in the nine months ended December 31, 1998. This
increase was caused in large part by our decision to focus on becoming an online
provider of healthcare information. We except to continue to have significant
cash needs as we continue to pursue and expand our Internet-based strategy and
offerings, and the funds currently available to us may be inadequate. There can
be no assurance that capital will be available to us on satisfactory terms or at
all.

    Under the terms of the Company's $6 million debenture issued to Fusion
Capital Fund I, LLC in January 2000, the cash received was pledged as security
to Fusion to secure the Company's obligation to convert the principal amount of
the debenture to common stock under the terms of the agreement. Even if the
Company is able to access all $12 million available under the agreement with
Fusion, we may still need additional capital to fully implement our business,
operating and development plans.

    In addition, one result of the raising of additional capital through the
conversion of the debenture issued to Fusion would be the issuance of additional
shares of our common stock. The issuance of additional shares to Fusion pursuant
to the conversion the currently outstanding debenture or an additional debenture
sold to Fusion could result in substantial dilution to our existing
shareholders.

    WE MAY BE UNABLE TO COMPETE EFFECTIVELY WITH OTHER ONLINE PROVIDERS OF
HEALTHCARE INFORMATION, WHICH WOULD CAUSE OUR INTERNET-BASED STRATEGY TO BE
UNSUCCESSFUL.  The market for providing healthcare information online is
intensely competitive, and we expect competition to increase in the future. As a
new entrant into this market, we expect our sensitivity to competitive pressures
to be especially strong until we can firmly establish ourselves. Our current
competitors include Dr. Koop.com and Healtheon/WebMD. We may not be able to
compete effectively against these companies, and if we fail to compete
effectively we may suffer reduced gross margins and loss of market share.

    Our competitors are generally larger and more established than we are and
therefore may have advantages over us because of their longer operating
histories, greater name recognition, or greater financial, technical and
marketing resources. As a result, they may be able to adapt more quickly to new
or emerging technologies and changes in customer requirements. They can also
devote greater resources to the promotion and sale of their products or services
than we can. Furthermore, mergers and acquisitions

                                       10
<PAGE>
among our competitors, such as the November 1999 merger of Healtheon, WebMD,
MEDE America Corporation and Medcasi to form Healtheon/WebMD, could intensify
our existing competition.

    STRATEGIC RELATIONSHIPS WILL BE AN IMPORTANT PART OF OUR FUTURE
SUCCESS.  The success of our business is and will be due in part to our ability
to enter into successful strategic marketing alliances and other strategic
relationships. There can be no assurance that:

    - such existing or contemplated relationships will be commercially
      successful;

    - we will be able to find additional strategic partners;

    - we will be able to negotiate terms acceptable to us with potential
      strategic partners; or

    - potential strategic relationships, if established, will be commercially
      successful.

The potential increased revenues from such relationships may be reduced by
requirements to provide volume price discounts and other allowances and
potential significant costs incurred in customizing products. In addition, there
can be no assurance that parties with whom strategic relationships are
established will not pursue alternative technologies or develop their alternate
products in addition to or in lieu of ours, either on their own or in
collaboration with others, including our competitors. Such alternative
technologies or products may be in direct competition with our products and may
significantly erode the benefits of such strategic relationships.

    WE FACE RAPID TECHNOLOGICAL CHANGE IN THE ONLINE HEALTH INFORMATION INDUSTRY
AND OUR BUSINESS WILL SUFFER IF WE CANNOT QUICKLY ADAPT TO THIS CHANGE.  Rapid
changes in technology pose significant risks to us. As a new entrant into the
market of Internet-based health information, we will be required to adapt
quickly, and without significant prior experience, to rapid changes in
technologies related to the Internet. Any failure by us to timely develop and
disseminate new content or to update and enhance our current content in the face
of changing technologies could aversely affect our ability to maintain market
share.

    WE MAY BE UNABLE TO SUCCESSFULLY ACQUIRE COMPLEMENTARY BUSINESSES, WHICH
WOULD LIMIT OUR POTENTIAL GROWTH TO INTERNALLY GENERATED GROWTH ONLY.  As part
of our growth strategy, we have recently acquired all of the assets of
Informational Medical Systems, Inc. and drgreene.com. We may continue to acquire
or make investments in, companies with products, technologies or professional
services that we determine to be useful in pursuing our business of providing
health-related information over the Internet. In acquiring companies in the
future, we could encounter difficulties in assimilating their personnel and
operations into our Company. These difficulties could disrupt our ongoing
business, distract our management and employees, increase our expenses and
adversely affect our results of operations. Future acquisitions may also cause
us to incur expenses such as the amortization of goodwill or in-process research
and development expenses which may affect our earnings. We cannot be certain
that we will successfully overcome these risks with respect to any future
acquisitions. In addition, in the past, we have paid a portion of the
consideration for some our acquisitions by issuing common stock. The issuance of
additional common stock or other securities convertible into common stock in
connection with future acquisitions could dilute the ownership interests of our
existing shareholders.

    WE MAY BE UNABLE TO ATTRACT NEW PERSONNEL, WHICH WOULD ADVERSELY AFFECT
IMPLEMENTATION OF OUR NEW INTERNET-BASED STRATEGY.  In order to promote the
development of our new Website, we will need to identify, attract and retain
software engineers, web designers and content editors. We will compete with
other companies both within and outside our market for such employees and we may
be unable to attract these employees. If we do not succeed in attracting these
types of new employees, we may be unable to fully implement our new
Internet-based strategy and our business will suffer.

    OUR STOCK PRICE IS EXTREMELY VOLATILE AND COULD DECLINE SIGNIFICANTLY.  Our
common stock has been publicly traded since our initial public offering on
November 15, 1995. Since that date, the closing price of the common stock has
ranged from a low price of $1.875 per share to a high price of $40 per share,
and there

                                       11
<PAGE>
has been significant volatility in the price of our common stock in the past
year. There can be no assurance that the market price of our common stock will
be maintained or that the volume of trading in our shares will not decrease.

    The stock prices for many high technology companies, especially those that
base their businesses on the Internet, recently have experienced wide
fluctuations and extreme volatility. This volatility has often been unrelated to
the operating performance of such companies, so our stock price could decline
even if our Internet-based strategy is successful. Such fluctuations have
adversely affected and may in the future adversely affect the market price of
our common stock.

    Furthermore, following periods of volatility in the market price of a
company's securities, securities class action claims frequently are brought
against the subject company. To the extent that the market price of our shares
falls dramatically in any period of time, shareholders may bring claims, with or
without merit, against us. Such litigation would be expensive to defend and
would divert management attention and resources regardless of outcome.

    WE HAVE ADOPTED CERTAIN ANTI-TAKEOVER PROVISIONS THAT MAY DETER A
TAKEOVER.  Our articles of incorporation and bylaws contain the following
provisions that may deter a takeover, including a takeover on terms that many of
our shareholders might consider favorable, such as:

    - the authority of our board of directors to issue common stock and
      preferred stock and to determine the price, rights (including voting
      rights), preferences, privileges and restrictions of each series of
      preferred stock, without any vote or action by our shareholders;

    - the existence of large amounts of authorized but unissued common stock and
      preferred stock;

    - staggered, three-year terms for our board of directors; and

    - advance notice requirements for board of directors nominations and for
      shareholder proposals.

    The rights and preferences of any series of preferred stock could include a
preference over the common stock on the distribution of our assets upon a
liquidation or sale of our company, preferential dividends, redemption rights,
the right to elect one or more directors and other voting rights. The rights of
the holders of any series of preferred stock that may be issued in the future
may adversely affect the rights of the holders of the common stock. We have no
current plans to issue preferred stock. In addition, certain provisions of
Georgia law and our stock option plan may also discourage, delay or prevent a
change in control of our company or unsolicited acquisition proposals.

    MANY OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE AND ARE SUBJECT TO
REGISTRATION RIGHTS THAT COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK.  adam.com has recently registered or is in the process of registering a
significant number of adam.com common stock to certain shareholders pursuant to
a financing transaction with Fusion Capital Fund I, LLC and the asset purchase
agreements for International Medical Systems and DrGreene.com. When registered,
these shares will be freely tradable. The sale of a significant amount of these
shares at any given time could cause the trading price of our common stock to
decline and to be highly volatile.

    If our shareholders sell substantial additional amounts of common stock
(including shares issued upon the exercise of outstanding stock options) in the
public market following this offering, the market price of our common stock
could fall. Such sales also could make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
appropriate.

    Certain shareholders may have the right, subject to certain conditions, to
include their shares in certain registration statements relating to our
securities. By exercising their registration rights and causing a large number
of shares to be registered and sold in the public market, these holders may
cause the price of our common stock to fall. In addition, any demand by holders
of registration rights to include shares of

                                       12
<PAGE>
common stock held by them in a registration initiated by us could adversely
affect our ability to raise needed capital.

    OUR PRINCIPAL SHAREHOLDERS HAVE SUBSTANTIAL INFLUENCE AND THEIR INTEREST MAY
DIFFER FROM THOSE OF OUR REMAINING SHAREHOLDERS.  As of December 31, 1999, our
executive officers, directors and persons who beneficially more than 10% of our
outstanding common stock controlled approximately 25% of the combined
outstanding voting power of our common stock. As a result, these holders exert
substantial influence with respect to all matters submitted to a vote of holders
of common stock, including election of our directors. If our remaining
shareholders have interests that differ from these holders, their needs may not
be met.

ITEM 2. PROPERTIES

    Our headquarters are located in approximately 26,000 square feet of leased
office space in Atlanta, Georgia. The space is leased for a term ending in 2002.
In February 1999, we sub-leased approximately 3,400 square feet of our leased
space to another company through the remainder of our lease term.

    In January 1999, we leased approximately 2,700 square feet of office space
in San Francisco, California to accommodate the expansion of our Web site
management and production teams. In June 1999 another 1,468 square feet of space
was leased near the existing San Francisco location. By December 1999, all
employees in San Francisco were consolidated in one location consisting of
12,258 square feet of space. In February 2000 we relocated the production unit
back to Atlanta in accordance with the current business plan and strategy.
Currently, only the original lease for 2,700 square feet of office space remains
in effect. The space is leased for a term ending in 2001. If additional
facilities are required, we believe that suitable facilities will be available
at market rates.

ITEM 3. LEGAL PROCEEDINGS

    On April 25, 1996, a shareholders' class action lawsuit in Fulton County
Superior Court in Atlanta, Georgia was filed against A.D.A.M. Software, Inc. and
certain of its then officers and directors. The complaint alleges violations of
sections 11, 12(2) and 15 of the Securities Act of 1933, violations of the
Georgia Securities Act and negligent misrepresentation arising out of alleged
disclosure deficiencies in connection with our initial public offering of common
stock which was completed on November 10, 1995. The complaint seeks compensatory
damages and reimbursements for plaintiff's fees and expenses. We and the other
named defendants have filed a motion to dismiss the claim, which is pending.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    No matters were submitted to a vote of security holders during the last
quarter of fiscal 2000.

                                       13
<PAGE>
                                    PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Our common stock is quoted on the NASDAQ National Market system under the
symbol "ADAM." The following table sets forth the high and low sales prices of
our common stock as reported by NASDAQ for the twelve months ended March 31,
1999 and the nine months ended December 31, 1999.

<TABLE>
<CAPTION>
                                                              HIGH       LOW
                                                            --------   --------
<S>                                                         <C>        <C>
TWELVE MONTHS ENDED MARCH 31, 1999
Quarter ended June 30, 1998...............................  6 5/8      2 7/8
Quarter ended September 30, 1998..........................  4 1/2      2 1/2
Quarter ended December 31, 1998...........................  5 1/2      2 1/8
Quarter ended March 31, 1999..............................  7 5/8      2 15/16

NINE MONTHS ENDED DECEMBER 31, 1999
Quarter ended June 30, 1999...............................  40         5 1/2
Quarter ended September 30, 1999..........................  22         9
Quarter ended December 31, 1999...........................  19 1/4     8 1/8
</TABLE>

    At March 29, 2000 there were 153 record holders of our common stock.

    We have never paid or declared any cash dividends on our common stock and we
do not intend to pay dividends on our common stock in the near future. We
presently expect to retain its future anticipated earnings to finance
development of and expansion of our business. The payment by adam.com of
dividends, if any, on our common stock in the future is subject to the
discretion of our board of directors and will depend on our earnings, financial
condition, capital requirements and other relevant factors.

(B) RECENT SALES OF UNREGISTERED SECURITIES

    On November 15, 1999 adam.com executed a securities purchase agreement with
Fusion Capital Fund I, LLC pursuant to which it agreed to issue to Fusion up to
two 0% senior secured convertible debentures, each with an aggregate principal
amount of $6.0 million. The first debenture was issued on January 28, 2000, and
the purchase price for the first debenture was $6.0 million in cash. The
issuance of the first debenture was made pursuant to Rule 506 under the
Securities Act of 1933, as amended ("Rule 506").

    Subject to certain limits on conversion and the redemption rights, each
month during the term of the first debenture Fusion has the right to convert up
to $1.0 of the principal amount of the first debenture, plus any amounts for any
prior month that have not been converted, into shares of our common stock at the
applicable conversion price. The conversion price per share is equal to the
lesser of:

    - the closing bid price of our common stock on the day of submission of a
      conversion notice by Fusion;

    - the average of the two lowest closing bid prices of our common stock
      during the 10 trading days prior to the submission of a conversion notice
      by Fusion; or

    - $16.76, which is 130% of the average of the closing bid prices of our
      common stock for the 10 trading days immediately preceding January 28,
      2000, the closing date. This is referred to as the "Fixed Conversion
      Price".

    If the closing sale price of our common stock is below the Fixed Conversion
Price for any three consecutive trading days, we have the unconditional right to
suspend conversions until the earlier of (1) our revocation of such suspension
and (2) when the closing sale price of our common stock is above the Fixed
Conversion Price for any three consecutive trading days.

                                       14
<PAGE>
    Additionally, under the terms of the purchase agreement with Fusion, in
connection with the issuance of the first debenture, Fusion received 59,542
shares of our common stock as a commitment fee. The sale of these shares to
Fusion was also made in reliance on Rule 506.

    The first debenture was be secured by a pledge of $6.0 million in cash by
adam.com, which was considered restricted cash of adam.com. adam.com is the
legal and beneficial owner of the cash and is also be the legal and beneficial
owner of all interest and investment income earned with respect to the proceeds
while held as restricted cash. adam.com will direct the investment of the cash.
Fusion has a security interest on customary terms in the cash. We expect that
the amount of cash subject to Fusion's security interest will be reduced at a
rate of at least $1.0 million per month as the outstanding principal amount of
the debenture is reduced upon conversion into common stock. The corresponding
amount of cash will become unrestricted cash of adam.com.

    As of March 30, 2000, Fusion has converted approximately $4.1 million of the
principal amount of the first debenture into shares of our common stock.
Consequently, $4.1 million of the $6.0 million in cash pledged by us to secure
our obligations with respect to the first debenture has become unrestricted and
freely available to us.

                                       15
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                    NINE MONTHS
                                                       ENDED             TWELVE MONTHS ENDED MARCH 31,
                                                    DECEMBER 31,   -----------------------------------------
                                                        1999         1999       1998       1997       1996
                                                    ------------   --------   --------   --------   --------
                                                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<S>                                                 <C>            <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS:
  Net revenues....................................    $ 3,144      $ 5,242     $6,888    $ 4,591    $ 6,447
  Cost and expenses:
    Cost of revenues..............................        559        1,421      1,178      1,280      1,491
    General and administrative....................      3,087        1,571      1,293      2,369      2,008
    Product and content development...............      5,607        2,074      1,512      2,260      2,847
    Sales and marketing...........................      2,754        2,704      2,778      4,494      4,090
    Restructuring.................................      1,049           47         --        490         --
                                                      -------      -------     ------    -------    -------
      Total costs and expenses....................     13,056        7,817      6,761     10,893     10,436
                                                      -------      -------     ------    -------    -------
  Income (Loss) before interest income............     (9,912)      (2,575)       127     (6,302)    (3,989)
  Interest income (expense), net..................        158          395        526        861         98
                                                      -------      -------     ------    -------    -------
    Income (loss) before income taxes, minority
      interest and extraordinary item.............    $(9,754)     $(2,180)    $  653    $(5,441)   $(3,891)
  Income taxes....................................         --           --        (75)        --         --
                                                      -------      -------     ------    -------    -------
    Net income (loss) before minority interest and
      extraordinary item..........................    $(9,754)     $(2,180)    $  578    $(5,441)   $(3,891)
  Minority interest in consolidated subsidiary....        175           --         --         --         --
                                                      -------      -------     ------    -------    -------
    Net income (loss) before extraordinary item...    $(9,579)     $(2,180)    $  578    $(5,441)   $(3,891)
  Extraordinary loss from early extinguishment of
    debt, net of income tax benefit of $29........         --           --         --         --        (46)
                                                      -------      -------     ------    -------    -------
    Net income (loss).............................    $(9,579)     $(2,180)    $  578    $(5,441)   $(3,937)
                                                      =======      =======     ======    =======    =======
  Net income (loss) per share.....................    $ (2.04)     $ (0.48)    $ 0.12    $ (1.03)   $ (1.14)
                                                      =======      =======     ======    =======    =======
  Weighted average number of common shares and
    share equivalents outstanding, basic..........      4,707        4,528      4,916      5,258      3,673
                                                      =======      =======     ======    =======    =======
  Weighted average number of common shares and
    share equivalents outstanding, diluted........      4,707        4,528      4,959      5,258      3,673
                                                      =======      =======     ======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                  MARCH 31,
                                                   DECEMBER 31,   -----------------------------------------
                                                       1999         1999       1998       1997       1996
                                                   ------------   --------   --------   --------   --------
                                                                        (IN THOUSANDS)
<S>                                                <C>            <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
  Cash and cash equivalents......................      1,477       2,369         704      2,422      5,352
  Working capital (deficiency)...................       (815)      6,393       9,011      9,982     15,354
  Total assets...................................      7,736       8,970      11,900     13,662     18,871
  Short-tem debt.................................        733          --          --         --        250
  Total shareholders' equity (deficit)...........      3,377       7,796      10,713     11,555     16,896
</TABLE>

                                       16
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO PRESENTED ELSEWHERE IN THIS ANNUAL REPORT ON FORM
10-K.

OVERVIEW

    adam.com, Inc. is a leading business-to-business content service provider of
health and medical information products. The Company's primary markets are
Internet-based health information sites, health organizations, education, and
other vertical markets engaged in providing or using health and medical
information. Founded in 1990, adam.com is headquartered in Atlanta, Georgia and
has historically created, published and marketed medical and health-related
information content that was delivered to end-users primarily through multimedia
CD-ROM, but also included a variety of other second-tier distribution mediums,
including broadcast, print and Internet-ready applications. Historically,
adam.com has marketed its products in education, consumer retail and
professional markets. Since January 1999, adam.com has taken significant steps
to transition itself as a content service provider of health, medical and
wellness information primarily distributed online. During 1999 the Company
changed its year end from March 31 to December 31.

    During the nine months ended December 31, 1999, adam.com made the strategic
decision to focus the majority of its efforts on the online distribution of
consumer health information, resulting in the May 1999 launch of www.adam.com,
adam.com's consumer health destination. In connection with this redirected
strategy, we decided to reduce substantially further sales and marketing
efforts, including product updates and upgrade support, for certain of our
historical products as of April 1, 1999. As our Internet strategy evolved during
the year, adam.com refined its focus further to concentrate efforts where the
company found its highly recognized content in demand by the growing number of
health and medically oriented sites on the Web. Today, adam.com's Internet
business model is based on the syndication of adam.com's award winning health
and medical content to a variety of Web-based and other businesses including
health sites, Internet portals, e-commerce sites, media sites, health plans,
governments, and institutions.

    Revenue from sales of software products are generally recognized at the time
of shipment to customers, distributors and resellers. Revenues from royalty
agreements are recognized as earned based upon performance or product shipments.
Licensing revenue is recognized when we have determined that:

    (1) contracts are finalized in cases where no further performance by us is
       required; or

    (2) over the term of the contract in cases where further performance by us
       is required;

    (3) there are no significant return or acceptance provisions; and

    (4) fees from the arrangement are fixed and determinable.

    Internet revenues consist of platform license fees and page view/advertising
fees. Platform license fees are recognized ratably over the term of the license
agreement and page view/advertising fees are recognized as earned based on page
hits by users. We record allowances for product returns based on historical
experience and anticipated returns. Payments received in advance of shipments
are recorded as deferred revenue in the balance sheet and are recognized as
revenue when the related software is shipped and all applicable obligations are
fulfilled.

                                       17
<PAGE>
RESULTS OF OPERATIONS

    The following table sets forth for the periods indicated selected financial
data and the percentages of our net revenues represented by each line item and
the percentage change in each line item.

<TABLE>
<CAPTION>
                                                                   NINE MONTHS                TWELVE MONTHS
                                                                      ENDED                       ENDED
                                                                   DECEMBER 31,                 MARCH 31,
                                                              ----------------------      ----------------------
                                                                1999          1998          1999          1998
                                                              --------      --------      --------      --------
<S>                                                           <C>           <C>           <C>           <C>
Net revenues................................................      100%         100%          100%          100%
Cost and expenses:
    Cost of revenues........................................     17.8%        23.9%         27.1%         17.1%
    General and administrative..............................     98.2%        48.3%         30.0%         18.8%
    Product and content development.........................    178.3%        26.1%         39.6%         22.0%
    Sales and marketing.....................................     87.6%        24.4%         51.6%         40.3%
    Restructuring...........................................     33.4%         0.0%          0.9%          0.0%
                                                               ------        -----         -----          ----
        Total costs and expenses............................    415.3%       122.7%        149.1%         98.2%
                                                               ======        =====         =====          ====
Operating income (loss).....................................   (315.3%)      (22.7%)       (49.1%)         1.8%
</TABLE>

    The following table sets forth for the periods indicated the revenues
derived by us from product sales, license fees and royalty income in the
academic, consumer, professional, online syndication, and from other sources.
Other revenues include support services, such as training, and other non-market
specific sales. We expect future revenues from the sales of products to the
academic, consumer and professional markets to decrease significantly as we
focus on our Internet strategies.

<TABLE>
<CAPTION>
                                                                 NINE MONTHS          TWELVE MONTHS
                                                                    ENDED                 ENDED
                                                                DECEMBER 31,            MARCH 31,
                                                             -------------------   -------------------
                                                               1999       1998       1999       1998
                                                             --------   --------   --------   --------
<S>                                                          <C>        <C>        <C>        <C>
Education..................................................   $2,053     $3,474     $4,068    $ 5,357
Consumer...................................................      146        227        289        652
Professional...............................................      132        423        695        821
Internet...................................................      732         --         --         --
Other revenues.............................................       81        140        190         58
                                                              ------     ------     ------    -------
                                                              $3,144     $4,264     $5,242    $26,888
                                                              ======     ======     ======    =======
</TABLE>

NINE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO NINE MONTHS ENDED DECEMBER 31,
  1998

    Total net revenues decreased $1,120,000, or 26.3%, to $3,144,000 for the
nine months ended December 31, 1999 compared to $4,264,000 for the nine months
ended December 31, 1998. The decrease is primarily attributable to a $1,421,000
decrease in net revenues from the education market as we moved our focus to the
online health market.

    Net revenues from the online syndication market increased to $732,000 for
the nine months ended December 31, 1999 compared to $0 for the nine months ended
December 31, 1998. During the nine months ended December 31, 1999, we began to
generate revenue from our Internet strategy through co-branding, advertising,
sponsorship, and LIDO.com subscriptions. As a percent of total net revenues, net
revenues from the online syndication market were 23.3% for the nine months ended
December 31, 1999.

    Net revenues from the education market decreased $1,421,000, or 40.9%, to
$2,053,000 for the nine months ended December 31, 1999 compared to $3,474,000
for the nine months ended December 31, 1998. The decrease is primarily due to
decreased selling prices for products and decreased number of units sold. As a
percent of total net revenues, net revenues from the education market decreased
to 65.3% for the nine months ended December 31, 1999 compared to 81.5% for the
nine months ended December 31, 1998.

                                       18
<PAGE>
    Net revenues from the professional market decreased $291,000, or 68.8%, to
$132,000 for the nine months ended December 31, 1999 compared to $423,000 for
the nine months ended December 31, 1998. The decrease is attributable to (1) a
decrease in revenue of $130,000 related to MLI series products, which decreased
to $14,000 for the nine months ended December 31, 1999 from $144,000 for the
nine months ended December 31, 1998 and (2) a decrease in revenue of $161,000
related to custom services and license fees, which decreased to $118,000 for the
nine months ended December 31, 1999 from $279,000 for the nine months ended
December 31, 1998. As a percent of total net revenues, net revenues from the
professional market decreased to 4.2% for the nine months ended December 31,
1999 compared to 9.9% for the nine months ended December 31, 1998.

    Net revenues from the consumer market decreased $81,000, or 35.7%, to
$146,000 for the nine months ended December 31, 1999 compared to $227,000 for
the nine months ended December 31, 1998. This decrease was due to our decision
in 1997 to leave the consumer market. As such we experienced continued reduced
sales activity, insignificant consumer product marketing expenditures, and
incurred no product upgrade costs for the consumer market during the nine months
ended December 31, 1999 compared to the nine months ended December 31, 1998. As
a percent of total net revenues, net revenues from the consumer market decreased
to 4.6% for the nine months ended December 31, 1999 compared to 5.3% for the
nine months ended December 31, 1998.

    Average net revenue for the 30,000 units of software sold for the nine
months ended December 31, 1999 increased to approximately $61.00 per unit
compared with approximately $47.00 per unit for 70,000 units sold for the nine
months ended December 31, 1998. This was the result of (1) reduced unit sales of
our lower priced consumer products for the nine months ended December 31, 1999
and (2) increased unit sales of higher priced multi-SKU products as a proportion
of total units. Unit shipments of lower priced, lower margin consumer products
were approximately 4,000 for the nine months ended December 31, 1999 compared to
5,000 for the nine months ended December 31, 1998. Approximately 58% of revenues
for the nine months ended December 31, 1999 were derived from product shipments,
compared to 77% for the nine months ended December 31, 1998. We expect future
sales of our CD-ROM products to decrease as we focus on our Internet strategies.

    Cost of revenues decreased $458,000, or 45.0%, to $559,000 for the nine
months ended December 31, 1999 compared to $1,017,000 for the nine months ended
December 31, 1998. Cost of revenues, which includes the cost of support,
packaging, documentation, royalties and amortization of capitalized software
development costs, decreased primarily due the lower volumes of products sold
and reduced amortization expenses for capitalized software development costs.
Amortization of capitalized software development costs decreased $286,000, or
70.6%, to $119,000 for the nine months ended December 31, 1999 from $405,000 for
the nine months ended December 31, 1998. The decrease in amortization is the
result of previously capitalized costs having become fully amortized in prior
years.

    Sales and marketing expense increased $693,000, or 33.6%, to $2,754,000 for
the nine months ended December 31, 1999 from $2,061,000 for the nine months
ended December 31, 1998. We experienced large increases in Advertising, Trade
Show expenses and Public Relations costs for the nine months ended December 31,
1999 compared to the nine months ended December 31, 1998 as a result of
executing our transition from an education company to an Internet company. The
decreases we expected in sales costs due to the release of the majority of our
sales staff in March 1999, did materialize but were offset by the increases
listed above plus the costs associated with starting up the LIDO.com Web site.
As a percent of total net revenues, sales and marketing expense increased to
87.6% for the nine months ended December 31, 1999 compared to 48.3% for the nine
months ended December 31, 1998 due to the lower sales amounts reported during
the current period.

    Product and content development costs increased $4,495,000, or 404.2%, to
$5,607,000 for the nine months ended December 31, 1999 from $1,112,000 for the
nine months ended December 31, 1998. To implement our plan of becoming an online
content provider, we added substantial production and engineering personnel,
through direct hire or by short-term contract, during the nine months ended

                                       19
<PAGE>
December 31, 1999 resulting in large increases in consulting expenses and
salaries. We also increased our purchases of or license of additional content
during the nine months ended December 31, 1999 compared to the nine months ended
December 31, 1998. As a percent of total net revenues, product development costs
increased to 178.3% for the nine months ended December 31, 1999 compared to
26.1% for the nine months ended December 31, 1998.

    General and administrative expenses increased $2,046,000, or 196.5%, to
$3,087,000 for the nine months ended December 31, 1999 from $1,041,000 for the
nine months ended December 31, 1998. This increase is primarily attributable to
increases in rent, salaries, and other general and administrative costs related
to the expansion of the office in San Francisco during the nine months ended
December 31, 1999. As a percent of total net revenues, general and
administrative costs increased to 98.2% for the nine months ended December 31,
1999 compared to 24.4% for the nine months ended December 31, 1998.

    During the nine months ended December 31, 1999, the Company recorded a
restructuring charge of $1,049,000 due to the cost of severance agreements for
several executives that were released due to our re-focused Internet strategy.

    Interest income, net, decreased $158,000, or 50%, to $158,000 for the nine
months ended December 31, 1999 from $316,000 for the nine months ended
December 31, 1998 due to reduced average cash and short-term securities balances
during the nine months ended December 31, 1999. The lower balances during the
nine months ended December 31, 1999 are the result of the loss during the nine
months ended December 31, 1999.

    The Company's consolidated subsidiary ThePort.com, a software development
company, incurred operating losses of $383,000 for the nine month period ended
December 31, 1999. The full amount of this loss is included in Income (loss)
before income taxes and minority interest. The Company is required to recognize
these losses on its financial statements due to the interest in ThePort.com
owned by the Company's Chairman and CEO. The financial statements also reflect a
$175,000 benefit in Minority interest in consolidated subsidiary to account for
the other shareholders' share of the operating loss of ThePort.com.

    As a result of the above, we incurred a net loss of $9.6 million for the
nine month period ended December 31, 1999 compared to a net loss of $651,000 for
the nine month period ended December 31, 1998.

FISCAL 1999 COMPARED TO FISCAL 1998

    Total net revenues decreased $1,646,000, or 23.9%, to $5,242,000 in fiscal
1999 compared to $6,888,000 in fiscal 1998. The decrease is primarily
attributable to (1) a $750,000 one time, 99-year international license agreement
executed in fiscal 1998, (2) decreased consumer product revenues and
(3) decreased product sales in international markets, reflective of the
downturned economic environments in overseas markets during fiscal 1999. In
March 1997, we ceased direct sales of product to the consumer market and
outsourced distribution. Total unit shipments of our CD-ROM products decreased
to approximately 85,000 units in fiscal 1999 from approximately 120,000 units in
fiscal 1998, but average revenue per unit increased 36% during this same period
resulting from higher priced, education market CD-ROM products and decreased
unit sales of lower priced consumer products.

    Net revenues from the education market decreased $1,289,000, or 24.0% to
$4,068,000 in fiscal 1999 from $5,357,000 in fiscal 1998 primarily due to the
one-time international license agreement in fiscal 1998 and decreased selling
prices for products not offset by increases in units sold. Additionally,
international unit product sales decreased $549,000, or 62.1% to $335,000 from
$884,000 in fiscal 1998 reflective of downturned economic markets abroad. As a
percent of total net revenues, net revenues from the education market remained
steady at 78% in fiscal 1999 compared to fiscal 1998.

    Net revenues from the professional market decreased $126,000, or 15.3%, to
$695,000 in fiscal 1999 from $821,000 in fiscal 1998. The decrease is primarily
attributable to a decrease in revenue related to MLI

                                       20
<PAGE>
series products introduced during fiscal 1997, which decreased 57% to $156,000
in fiscal 1999 compared to $363,000 in fiscal 1998. The revenue was derived from
sales of custom services, license fees for software components developed by us,
and product sales, each of which accounted for 15%, 63% and 22% of total
professional market net revenues, respectively, in fiscal 1999, compared to 15%,
41% and 44% in fiscal 1998. As a percent of total net revenues, net revenues
from the professional market increased to 13.3% in fiscal 1999 compared to 11.9%
in fiscal 1998.

    Net revenues from the consumer market decreased $363,000, or 55.7% to
$289,000 in fiscal 1999 compared to $652,000 in fiscal 1998 due to reduced sales
activity, insignificant consumer product marketing expenditures, and
discontinued product upgrade for fiscal 1999. As a percent of total net
revenues, net revenues from the consumer market decreased to 5.5% in fiscal 1999
compared to 9.5% in fiscal 1998.

    Average net revenue for the 85,000 units software sold for the twelve months
ended March 31, 1999 increased to approximately $49.00 per unit compared with
approximately $36.00 per unit for 120,000 units sold for the twelve months ended
March 31, 1998. This was the result of (1) reduced unit sales of our lower
priced consumer products for the year ended March 31, 1999 and (2) increased
unit sales of higher priced multi-SKU products. Unit shipments of lower priced,
lower margin consumer products were approximately 6,000 for the twelve months
ended March 31, 1999 compared to 48,000 for the twelve months ended March 31,
1998. Unit shipments of higher priced multi-SKU products were approximately
3,000 for the nine months ended December 31, 1999 compared to 1,000 for the nine
months ended December 31, 1998. Unit shipments of higher priced multi-SKU
products were approximately 1,500 for the twelve months ended March 31, 1999
compared to 1,000 for the twelve months ended March 31, 1998.

    Cost of revenues increased $243,000, or 20.6%, to $1,421,000 in fiscal 1999
compared to $1,178,000 in fiscal 1998. Cost of revenues, which includes the cost
of support, packaging, documentation, royalties and amortization of capitalized
software development costs, increased almost exclusively due to amortization of
capitalized software development costs which increased $220,000, or 64.7%, to
$560,000 in fiscal 1999 from $340,000 in fiscal 1998. The increase in
amortization is primarily the result of reductions in previously recorded
capitalized development costs in order to bring levels closer to expected future
revenues to be generated, or net realizable value (NRV). Reductions in net
realizable value are the result of our decision not to support certain products
moving forward and instead to focus on development and execution of our Internet
strategies. As a percent of total net revenues, cost of revenues increased to
27.1% in fiscal 1999 compared to 17.1% in fiscal 1998.

    Sales and marketing expenses decreased $74,000, or 2.7%, to $2,704,000 in
fiscal 1999 from $2,778,000 in fiscal 1998. The elimination of our direct sales
force as a result of a more indirect distribution model at the end of fiscal
1999 did not significantly reduce costs for that year, and other staffing levels
and costs remained consistent with fiscal 1998 levels. As a percent of total net
revenues, sales and marketing expenses increased to 51.6% in fiscal 1999 from
40.3% in fiscal 1998 resulting from the decrease in revenues described above.

    Product development costs increased $562,000, or 37.2%, to $2,074,000 in
fiscal 1999 compared to $1,512,000 in fiscal 1998. The increase in product
development costs is primarily attributable to (1) the shift in production
activity to research and development of the Web site, which is not subject to
capitalization of development costs and (2) our $1.2 million grant from the
National Institute of Science and Technology (NIST). As a percentage of total
net revenues, product development expenses increased to 39.6% in fiscal 1999
compared to 22.0% in fiscal 1998. Total expenditures for product development,
including capitalized expenses, increased 6.2% to $2,182,000 in fiscal 1999
compared to $2,054,000 in fiscal 1998. We capitalized product development
expenses of $108,000 and $542,000 in fiscal 1999 and fiscal 1998, which
represented 5.0% and 26.4% of total expenditure for product development for
these respective periods. Amortization of capitalized product development costs
totaled $560,000 and $340,000 in fiscal 1999 and fiscal 1998, and is included in
cost of revenues described above.

                                       21
<PAGE>
    General and administrative expenses increased $278,000, or 21.5%, to
$1,571,000 in fiscal 1999 from $1,293,000 in fiscal 1998. As a percentage of
total net revenues, general and administrative expenses increased to 30.0% in
fiscal 1999 compared to 18.8% in fiscal 1998. The increase was mainly due to
increased legal, bad debt, investor relations, and compensation expenses.

    Net interest income decreased $131,000, or 24.9%, to $395,000 in fiscal 1999
from $526,000 in fiscal 1998 due to reduced average cash and short-term
securities balances during fiscal 1999. The lower balances during fiscal 1999
are the result of our net loss during fiscal 1999 and the repurchase of our
common stock during both fiscal 1999 and fiscal 1998.

LIQUIDITY AND CAPITAL RESOURCES

    As of December 31, 1999, adam.com had cash and cash equivalents of
$1,477,000, and a working capital deficit of $815,000. Cash used in operating
activities was $6,365,000 for the nine months ended December 31, 1999, as
compared to $161,000 for the nine months ended December 31, 1998.

    During 1999 we used existing working capital to finance ongoing operations,
fund the development and introduction of new products and acquire capital
equipment. As of March 31, 1999, we held 847,240 shares of common stock
purchased on the open market during the years ended March 31, 1999 and 1998 at
an average price of approximately $2.58 per common share for an aggregate
purchase price of approximately $2,186,000. During the nine months ended
December 31, 1999, we reissued 349,028 shares related to option and warrant
exercises and intangible asset acquisitions. Remaining repurchased shares
represent approximately 9.2% of the shares of common stock issued and
outstanding as of December 31, 1999. adam.com is not authorized to repurchase
additional shares at this time.

    We incurred a significant increase in our expenditures during the nine
months ended December 31, 1999 compared to the same period in 1998. This
increase was a result of our strategy to enter the business to consumer Internet
market with development of our consumer oriented web site launched in
March 1999. We hired additional personnel and opened an office in San Francisco
to execute this strategy. The Internet business space changed rapidly in 1999
and we addressed this change by changing our Internet focus from business to
consumer to a business to business focus. As a result, we discontinued incurring
costs to improve our consumer site and consolidated operations back to the
Atlanta headquarters. While this will reduce future expenses, such savings will
be offset by our plan to hire additional personnel and incur additional costs in
2000 to enhance our business to business Internet strategy focusing on the
syndication of our content. Certain of these additional expenses in 2000 are
discretionary and subject to factors such as the timing of hiring qualified
individuals of which the availability is tight.

    In December 1999, adam.com issued two notes payable of $500,000 each to an
officer and director of the Company and an outside institutional investor. Both
notes bear interest at 10%, payable upon the maturity date. These notes payable
each included 25,000 warrants exercisable into an equal number of shares of
common stock for $11.11 per share. These notes are scheduled to mature on
December 31, 2000, however, the term may be extended to June 30, 2001, at the
option of each holder. The Company is also required to issue 25,000 additional
warrants to the holders with an exercise price of 80% of the then current value
in the event that the debt is not repaid as of June 30, 2000.

    On November 15, 1999 adam.com signed an agreement with a Chicago-based
institutional investor, Fusion Capital Fund I, LLC. In exchange for $6,000,000,
Fusion Capital received a debenture which is convertible into common shares of
adam.com at either 130% of the fair value on the date of closing, or the average
of the two lowest bid prices in the previous 10 trading days to conversion. The
debenture allows for either the Company or Fusion to initiate conversions into
common stock. Through March 30, 2000 the Company has issued 353,600 shares at an
average conversion price of $11.55 to satisfy the conversion obligation and in
exchange for $4,083,000. The unconverted funds are being held in a custodial
account and will be reported as restricted cash. The funds become unrestricted
and available to adam.com as the debenture is converted into common stock. The
debenture does not bear any interest or premium accrual. We believe that this
financing agreement gives adam.com the necessary funds to continue our expansion

                                       22
<PAGE>
and development of our Internet strategies. With this agreement adam.com has the
resources necessary to continue our deployment of our business-to-business
strategy. Additionally, adam.com has the right to sell another $6,000,000
debenture with the same terms within six months of the closing of the first
debenture. The company currently intends to sell the second debenture as a
component of its overall plans to raise capital.

    Upon the sale of this second $6,000,000 debenture to Fusion, we anticipate
that our available cash resources will be sufficient to meet our anticipated
needs for working capital and capital expenditures at least through the end of
calendar 2000. We may raise additional funds, however, in order to fund more
rapid expansion, to develop new and enhance existing services and products, to
respond to competitive pressures and to possibly acquire complementary products,
businesses or technologies. There can be no assurance that any required
additional financing will be available in terms favorable to us, or at all. If
additional funds are raised by the issuance of equity securities, our
shareholders may experience dilution of their ownership interest and these
securities may have rights senior to those of the holders of the common stock.
If additional funds are raised by the issuance of debt securities, we may be
subject to certain limitations on its operations, including limitations on the
payment of dividends. If adequate funds are not available or not available on
acceptable terms, we may be unable to fund our expansion, successfully promote
our brand name, take advantage of acquisition opportunities, develop or enhance
services or respond to competitive pressures, any of which could have a material
adverse effect on our business, financial condition and results of operations.

YEAR 2000 COMPLIANCE

    adam.com previously recognized the material nature of the business issues
surrounding computer processing of dates into and beyond the Year 2000 and began
taking corrective action. adam.com's efforts included replacing and testing
three basic aspects of its business operations: internal information technology
("IT") systems, including sales order processing, contract management, financial
systems and service management; internal non-IT systems, including office
equipment and test equipment products; and material third-party relationships.
Management believes adam.com has completed all of the activities within its
control to ensure that adam.com's systems are Year 2000 compliant and adam.com
has experienced no interruptions to normal operations due to the start of the
Year 2000.

    adam.com's Year 2000 readiness costs were approximately $50,000, none of
which was incurred in 2000. adam.com funded these costs through funds generated
from operations and such costs were generally not incremental to existing IT
budgets; internal resources were re-deployed and timetables for implementation
of replacement systems were accelerated. adam.com does not currently expect to
apply any further funds to address Year 2000 issues.

    As of March 29, 2000, adam.com has not experienced any material disruptions
of its internal computer systems or software applications, and has not
experienced any problems with the computer systems or software applications of
its third party venders, suppliers or service providers. adam.com will continue
to monitor these third parties to determine the impact, if any, on the business
of adam.com and the actions adam.com must take, if any, in the event of
non-compliance by any of these third parties. Based upon adam.com's assessment
of compliance by third parties, there appears to be no material business risk
posed by any such noncompliance. Moreover, adam.com generally believes that the
vendors that supply products to adam.com for resale are responsible for the
products' Year 2000 functionality.

    In addition, adam.com currently does not know of any material difficulties
encountered by consumers of its products as a result of the Year 2000 issue.

RECENT ACCOUNTING PRONOUNCEMENTS

    In December 1999 the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition in financial statements
("SAB 101"). This bulletin summarizes certain of the staff's views in apply
generally accepted accounting principles to revenue recognition in financial
statements. Management of the Company does not believe that SAB 101 will have a
significant effect on the Company's results of operations.

                                       23
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    As of December 31, 1999, the Company had cash and cash equivalents of
$1.5 million invested in liquid money market funds or bank accounts with average
maturities of less than 90 days. The cash and cash equivalents are subject to
interest rate risk and we may receive higher or lower interest income if market
interest rates increase or decrease. A hypothetical increase or decrease in
market interest rates by 10 percent from levels at December 31, 1999 would not
have a material impact on our future earnings, fair values or cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    This information is set forth under Item 14(a)(1) and (2).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURES

    None.

                                       24
<PAGE>
                                   PART III.


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



<TABLE>
<CAPTION>
NAME                                     AGE                             POSITION
----                                   --------   -------------------------------------------------------
<S>                                    <C>        <C>
Robert S. Cramer, Jr.................     39      Chairman of the Board, Chief Executive Officer and
                                                  Director

Michael S. Fisher....................     37      Corporate Secretary and Vice President of Finance and
                                                  Administration

Neal Alen............................     41      Vice President of Sales

Kevin S. Noland......................     38      Vice President of Marketing and Corporate
                                                  Communications

Cynthia L. Logan.....................     41      Vice President of Operations

Linda B. Davis.......................     56      Director

Daniel S. Howe.......................     38      Director

John W. McClaugherty.................     39      Director

Francis J. Tedesco...................     55      Director
</TABLE>



    ROBERT S. CRAMER, JR.  Mr. Cramer, a co-founder of adam.com, has served as
Chairman of the Board and a director since adam.com's inception in March 1990,
and Chief Executive Officer since September 1996. From 1987 to 1992, he served
as Chairman of the Board of Directors of MLI. In 1989, Mr. Cramer served as an
Executive Editor and Co-Publisher of Atlanta Computer Spectrum, a regional
technology publication he helped to create. Also, since 1994 Mr. Cramer has
served as Chairman of the Board of the Atlanta Task Force for the Homeless, a
community-wide non profit organization working with and on the behalf of
homeless people.



    MICHAEL S. FISHER.  Mr. Fisher joined adam.com in September 1993 as
Controller, became Vice President of Finance and Administration in
February 1997 and was appointed Corporate Secretary in March 1997. From
June 1990 through August 1993 he served as Controller for Morgan Medical
Holdings, Inc., a publicly held medical diagnostic services firm, and was
responsible for all financial functions. Previously thereto, he served two years
as an accountant with BDO/Seidman. Mr. Fisher is a CPA licensed in the state of
New York.



    NEAL ALEN.  Mr. Alen has been Vice President of Sales for adam.com since
January 2000. Prior to that time he served as adam.com's Vice President, CD ROM
unit from January 1999 to December 1999 and as adam.com's Director of Sales from
April 1996 to December 1999. From December 1994 to December 1996 Mr. Alen was
Director of Sales and Marketing at Edutech, Inc., a reseller of education
products based in Monterey, California.



    KEVIN S. NOLAND.  Mr. Noland joined adam.com in November 1994 and currently
serves as Vice President of Marketing and Corporate Communications. From
September 1996 to April 1999 Mr. Noland was adam.com's Director of Marketing,
and from November 1994 to September 1996 he served as adam.com's Product
Manager.



    CYNTHIA L. LOGAN.  Ms. Logan joined adam.com in January 1999 as
Manager--NIST Advanced Technology Project, and since October 1999, she has
served as adam.com's Vice President of Operations. From January 1995 to
December 1998, Ms. Logan worked at AT&T, a global telecommunications company, as
a consultant on telemedicine and internet health management issues.



    LINDA B. DAVIS.  Ms. Davis has been a director of adam.com since
September 1998. Ms. Davis is the General Manager of the Science and Nursing
Division of Addison Wesley Longman, Inc., a position she


                                       25
<PAGE>

has held since September 1997. She joined Addison Wesley in 1990 as Vice
President of Product Development and was subsequently promoted to Vice President
and Editorial Director of the Math, Physics and Statistics Division. Previously,
Ms. Davis was Vice President and Director of Development at W.H.
Freeman/Scientific American Books from 1986 to 1990.



    DANIEL S. HOWE.  Mr. Howe has been a Director of adam.com since
December 1996. Mr. Howe has been President of DSH Enterprises, Inc., a real
estate development and investment company, since January 1990.



    JOHN W. MCCLAUGHERTY.  Mr. McClaugherty, a co-founder of adam.com, has
served as a director of adam.com since its inception in March 1990. Since 1994,
Mr. McClaugherty has served as President of J.S.K., Inc., a provider of medical
illustrations to the legal profession. Mr. McClaugherty served as Chief
Executive Officer of adam.com from its inception until March 1994. Prior
thereto, Mr. McClaugherty was the Vice President of Sales and Marketing and a
director of MLI from March 1985 until March 1990.



    FRANCIS J. TEDESCO.  Dr. Tedesco has been a director of adam.com since
July 1996. He has served as Chief Executive Officer of Health Sciences
University and as President of the Medical College of Georgia ("MCG") since
1988, and has been a Professor of Medicine at MCG since 1981. He also is a
consultant to Dwight David Eisenhower Medical Center--Fort Gordon, Georgia;
Veterans Administration Medical Center--Augusta, Georgia and Walter Reed Army
Medical Center--Washington, D.C. Prior to coming to MCG in 1978, Dr. Tedesco
held academic appointments beginning in 1971 at the Hospital of the University
of Pennsylvania; Washington University School of Medicine, St. Louis, Missouri;
and University of Miami School of Medicine. Dr. Tedesco currently serves on the
Board of Directors and is Vice President of the Georgia Division of the American
Cancer Society, and he is a director of URO Health, a medical products
manufacturer.



ELECTION TO THE BOARD



    Under our Articles of Incorporation, directors are elected to the Board for
three-year terms, and one-third of the Board members stand for election each
year. Currently, the terms of Messrs. Howe, Tedesco and Ms. Davis are scheduled
to expire at the annual meeting of shareholders in 2000, and the terms of
Messrs. Cramer and McClaugherty are scheduled to expire at the annual meeting of
shareholders in 2002.



MEETINGS OF THE BOARD OF DIRECTORS



    During the nine months ended December 31, 1999, the Board held six meetings.
Each director that served during the nine months ended December 31, 1999
attended at least 75% of all Board meetings and the aggregate number of meetings
held by all committees on which the individual director served in the nine
months ended December 31, 1999.



COMMITTEES OF THE BOARD OF DIRECTORS



    The Board has standing Audit, Stock Repurchase and Compensation/Stock Option
Committees that assist it in discharging its responsibilities. These committees,
their members and functions are discussed below.



    The Audit Committee, which held one meeting during the nine months ended
December 31, 1999, is responsible for recommending independent accountants,
reviewing with the accountants the scope and results of the audit engagement,
and consulting with independent accountants and management with regard to
adam.com's accounting methods and control procedures. The Audit Committee is
composed of Messrs. McClaugherty and Howe (Chairman).


                                       26
<PAGE>

    The Stock Repurchase Committee, which held no meetings during the nine
months ended December 31, 1999, is responsible for adam.com's repurchase of its
own shares pursuant to the Stock Repurchase Program. The Stock Repurchase
Committee is composed of Messrs. Cramer (Chairman) and Howe.



    The Compensation/Stock Option Committee, which held 1 meeting during the
nine months ended December 31, 1999, is responsible for reviewing
recommendations from the Chairman of the Board of Directors with regard to the
compensation of officers of adam.com and reporting to the Board of Directors its
recommendations with regard to such compensation and is responsible for
operating and administering adam.com's 1991 Employee Stock Option Plan and its
Amended and Restated 1992 Stock Option Plan. The Compensation/Stock Option
Committee is composed of Mr. Howe and Dr. Tedesco (Chairman).



SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



    Section 16(a) of the Exchange Act requires our executive officers and
directors and persons who beneficially own more than ten percent of our common
stock to file with the Securities and Exchange Commission certain reports, and
to furnish copies thereof to us, with respect to each such person's beneficial
ownership of our equity securities. Based solely upon a review of the copies of
such reports furnished to us and certain representations of such persons, all
such persons have complied with the applicable reporting requirements.



ITEM 11. EXECUTIVE COMPENSATION



SUMMARY COMPENSATION TABLE



    The table below sets forth certain information relating to the compensation
earned during the nine-month transition period ended December 31, 1999 and the
fiscal years ended March 31, 1999 and March 31, 1998, by our Chief Executive
Officer and each of the other highest paid executive officers whose total annual
salary and bonus exceeded $100,000 during the nine months ended December 31,
1999 (collectively, the "Named Executive Officers").



<TABLE>
<CAPTION>
                                                               LONG-TERM
                                                          ANNUAL COMPENSATION
                                                   ---------------------------------
                                                                          SECURITIES            ALL
                                                                          UNDERLYING           OTHER
NAME AND PRINCIPAL POSITIONS           PERIOD(1)   SALARY($)   BONUS($)   OPTIONS(#)      COMPENSATION($)
----------------------------           ---------   ---------   --------   ----------      ---------------
<S>                                    <C>         <C>         <C>        <C>             <C>
Robert S. Cramer, Jr.................    TP99       140,082        --        40,000             1,906(2)
  Chief Executive Officer                FY99       164,000        --       225,000(3)          1,906(2)
                                         FY98       155,000        --       120,000(4)          2,111(2)

Gregory M. Swayne....................    TP99       130,272        --        30,000           203,414(5)
  Vice Chairman                          FY99       159,000        --       220,000(2)          2,039(2)
                                         FY98       155,000        --       120,000(3)          2,257(2)

Neal Alen............................    TP99       155,577        --        12,000                --
  Vice President of Sales                FY99       124,717        --        12,000                --
                                         FY98       127,455        --        25,500                --
</TABLE>


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


(1) "TP99" represents the nine-month period ending December 31, 1999. "FY99"
    represents the twelve-month period ending March 31, 1999. "FY98" represents
    the twelve-month period ending March 31, 1998.



(2) Represents life insurance premiums paid on behalf of such executive
    officers.



(3) Includes 195,000 shares subject to previously-granted options repriced and
    reissued on January 14, 1999.



(4) Options to purchase these shares were repriced and reissued on January 14,
    1999.


                                       27
<PAGE>

(5) Includes $201,375 the Company accrued under the terms of his termination
    agreement dated December 31, 1999 (described below) and $2,039 in life
    insurance premiums paid on behalf of Mr. Swayne.



OPTION GRANTS IN LAST FISCAL YEAR



    The following table provides information regarding stock options granted to
the Named Executive Officers during the nine months ended December 31, 1999.



<TABLE>
<CAPTION>
                                                                                       POTENTIAL REALIZABLE
                                                                                             VALUE AT
                                                                                       ASSUMED ANNUAL RATES
                                                 INDIVIDUAL GRANTS                              OF
                               -----------------------------------------------------        STOCK PRICE
                               NUMBER OF     % OF TOTAL                                  APPRECIATION FOR
                               SECURITIES     OPTIONS                                     OPTION TERM (1)
                               UNDERLYING    GRANTED TO    EXERCISE OR                 ---------------------
                                OPTIONS     EMPLOYEES IN    BASE PRICE    EXPIRATION
NAME                           GRANTED(#)   FISCAL YEAR    ($/SHARE)(1)      DATE        5%($)      10%($)
----                           ----------   ------------   ------------   ----------   ---------   ---------
<S>                            <C>          <C>            <C>            <C>          <C>         <C>
Robert S. Cramer, Jr.........    40,000          5.9%         $7.94        04/11/09    $517,200    $823,600
Gregory M. Swayne............    30,000          4.4           7.94        04/11/09     387,900     617,700
Neal Alen....................    12,000          1.8           7.94        04/11/09     155,160     247,080
</TABLE>


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


(1) The potential realizable value portion of the foregoing table illustrates
    value that might be realized upon exercise of the options immediately prior
    to the expiration of their term, assuming the specified compounded rates of
    appreciation on the common stock over the term of the options. These numbers
    do not take into account plan provisions providing for termination of the
    option following termination of employment or nontransferability.



AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
  TABLE



    The following table shows the number and value of exercisable and
unexercisable options held by adam.com's Named Executive Officers as of the end
of the nine months ended December 31, 1999. No stock appreciation rights were
outstanding during the nine months ended December 31, 1999.



<TABLE>
<CAPTION>
                                        NUMBER OF UNEXERCISED OPTIONS    VALUE OF UNEXERCISED IN-THE MONEY
                                           AT FISCAL YEAR-END (#)       OPTIONS/SARS AT FISCAL YEAR-END ($)
NAME                                      EXERCISABLE/UNEXERCISABLE        EXERCISABLE/UNEXERCISABLE(2)
----                                    -----------------------------   -----------------------------------
<S>                                     <C>                             <C>
Robert S. Cramer, Jr. (1).............      36,500/290,600                  $275,125/1,856,100
Gregory M. Swayne.....................       666/249,001                      5,162/1,809,480
Neal Alen.............................      17,998/46,500                     185,959/221,597
</TABLE>


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


(1) Does not include warrants to purchase 48,375 shares of common stock issued
    in connection with the Subordinated Bridge Notes.



(2) The closing price of our common stock on December 31, 1999 was $12.75.



    We have not awarded stock appreciation rights to any employee, we have no
long-term incentive plans, as that term is defined in SEC regulations, and we
have no defined benefit or actuarial plans covering any of our employees.



COMPENSATION OF DIRECTORS



    To date, directors have not received cash compensation for their services as
directors of adam.com. On April 12, 1999, each non-employee director of adam.com
was awarded an option to purchase 3,000 shares of adam.com common stock. Such
options have a term of five years from the date of grant and vest one year from
the date of grant. Each option has an exercise price of $7.94 per share.


                                       28
<PAGE>

EMPLOYMENT AGREEMENTS



    We have entered into an employment agreement with Mr. Cramer that agreement
is currently scheduled to expire on December 31, 2001 (the "Expiration Date")
and is automatically renewable for successive one-year periods unless written
notice of non-renewal is given by either party. This agreement also may be
terminated by us with or without cause or upon the employee's death or inability
to perform his duties on account of a disability for a period of twelve
consecutive months or by the employee. If the agreement is terminated prior to
the Expiration Date for any reason, except by the employee, by us for cause or
upon the employee's death or disability, we must continue to pay the employee's
base salary and bonus either (1) for the period from the date of termination
through the Expiration Date if the agreement is terminated prior to the first
anniversary thereof or (2) for the two year period following the date of
termination if the agreement is terminated after the first anniversary thereof.
If the agreement is terminated because of the death or disability of the
employee, we must pay the employee or his beneficiaries his base salary and
bonus for a period of one year following the date of termination; provided,
however, that, in the case of termination for disability, we may elect, in lieu
of making such payments, to provide the employee with disability insurance
coverage. The agreement provides for a minimum base salary of $120,000 for each
of and for annual discretionary bonuses. The agreement also contains a two year
noncompetition, customer and employee nonsolicitation and confidentiality
provision. In addition, we have executed Employee Confidentiality, Nondisclosure
and Noncompetition Agreements with all of our employees.



    We have entered into a Termination of Employment Agreement with Mr. Swayne
on December 31, 1999. Under the terms of the agreement Mr. Swayne resigned as an
officer and employee of the Company and accepted the termination of his previous
Employment Agreement dated December 19, 1994 in exchange for $201,375 to be paid
out over the thirteen and one half months from December 31, 1999. Mr. Swayne
will, at the request of the Chief Executive Officer, also provide up to thirty
hours of consulting services for the Company each month. Stock options
previously granted to Mr. Swayne will continue to vest pursuant to their terms
through April 22, 2000, at which time all further unvested stock options will
terminate. At the end of the term of the agreement, the parties have agreed to a
mutual release of all claims against each other.



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION



    During the nine months ended December 31, 1999 our Compensation Committee
consisted of Dr. Tedesco and Mr. Howe. During the nine months ended
December 31, 1999 , we did not engage in any transactions with the members of
the Compensation Committee. No member of the Compensation Committee was an
officer or employee of adam.com or any of our subsidiaries during the nine
months ended December 31, 1999 or any time prior thereto.


                                       29
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF MANAGEMENT



    The following table sets forth the beneficial ownership of shares of common
stock as of April 26, 2000 for (1) directors of adam.com, (2) the Named
Executive Officers, (3) the directors and executive officers of adam.com as a
group and (4) each shareholder of adam.com holding more than a 5% interest in
adam.com. Unless otherwise indicated in the footnotes, all of such interests are
owned directly, and the indicated person or entity has sole voting and
disposition power. The number of shares represents (a) the number of shares of
common stock the person beneficially owns plus (b) the number of shares issuable
upon exercise of currently exercisable options and warrants.



<TABLE>
<CAPTION>
                                                               NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1)                       BENEFICIALLY OWNED   PERCENT OF CLASS(2)
---------------------------------------                       ------------------   -------------------
<S>                                                           <C>                  <C>
Robert S. Cramer(3).........................................          825,465             14.6%
Gregory M. Swayne(4)........................................          192,520              3.6
Neal Alen(5)................................................           21,998                *
Linda B. Davis..............................................               --               --
Daniel S. Howe(6)...........................................           30,333                *
John W. McLaugherty(7)......................................            6,202                *
Francis J. Tedesco, M.D.....................................               --               --
Addison-Wesley Longman......................................          700,000             13.0
All executive officers and directors as a group
  (7 persons)(8)............................................        1,076,518             18.1%
</TABLE>


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


*   Less than 1%.



(1) Unless otherwise indicated, the addresses of the persons listed is c/o
    adam.com, 1600 River Edge Parkway, Suite 800, Atlanta, Georgia 30328.



(2) Assumes 5,400,581 shares outstanding, excluding shares held in treasury by
    adam.com. Except as indicated in the footnotes set forth below, the persons
    named in the table, to adam.com's knowledge, have sole voting and investment
    power with respect to all shares of common stock shown as beneficially owned
    by them. The number of shares shown as owned by, and the voting power of,
    individual shareholders include shares which are not currently outstanding
    but which such shareholders are entitled to acquire or will be entitled to
    acquire within 60 days. Such shares are deemed to be outstanding for the
    purpose of computing the percentage of outstanding common stock owned by the
    particular shareholder, but are not deemed to be outstanding for the purpose
    of computing the percentage ownership of any other person.



(3) Includes 243,833 shares issuable upon exercise of outstanding options and
    23,375 shares issuable upon exercise of outstanding warrants.



(4) Includes 212,333 shares issuable upon exercise of outstanding options.



(5) Represents shares issuable upon exercise of outstanding options.



(6) Represents 12,333 shares issuable upon exercise of outstanding options.



(7) Includes 6,000 shares issuable upon exercise of outstanding options.



(8) Includes 496,464 shares issuable upon exercise of outstanding options and
    23,375 shares issuable upon exercise of outstanding warrants.


                                       30
<PAGE>

ITEM 13. CERTAIN TRANSACTIONS



    During December 1999, adam.com issued a note payable in the amount of
$500,000 to Robert S. Cramer, Chief Executive Officer and Chairman of the Board
of adam.com. This note bears interest at 10%, payable upon the maturity date.
This note payable included 25,000 warrants exercisable into an equal number of
shares of common stock at an exercise price of $11.11 per share. This note is
scheduled to mature on December 31, 2000, however, the term may be extended to
June 30, 2001, at the option of the holder.



    During the nine month period ended December 31, 1999, adam.com sold
approximately $6,000 of product to Addison Wesley Longman, a shareholder in
adam.com. During the period ended December 31, 1999, adam.com sold approximately
$6,000 of product to Benjamin/Cummings (BC), a subsidiary of a shareholder of
adam.com. adam.com earned royalty revenues of approximately $218,000 related to
BC during the period ended December 31, 1999. Additionally, adam.com purchased
approximately $10,000 of product from BC during the period ended December 31,
1999 and paid royalty expenses to BC of approximately $164,000. Linda B. Davis,
a director of adam.com, is the General Manager of the Science and Nursing
division of Addison Wesley.



    As of December 31, 1999, there are 23,375 warrants that remain outstanding
which were issued in connection with various debt and equity financings. Such
warrants are held by Robert S. Cramer. adam.com received approximately $356,000
during the nine-month period ended December 31, 1999 from the exercise of 44,438
warrants issued in connection with these financing transactions.



    It is our policy that all future transactions, if any, with affiliated
parties will be approved by the disinterested members of our Board of Directors
(or a committee thereof) or by the shareholders of adam.com.


                                       31
<PAGE>
                                    PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) THE FOLLOWING DOCUMENTS ARE INCLUDED AS PART OF THIS REPORT:

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
(1) FINANCIAL STATEMENTS:
Report of Independent Accountants...........................     F-1
Consolidated Balance Sheet at December 31, 1999 and March
  31, 1999..................................................     F-2
Consolidated Statement of Operations for the nine months
  ended December 31, 1999 and 1998 (unaudited) and the two
  years ended March 31, 1999 and 1998.......................     F-3
Consolidated Statement of Changes in Shareholders' Equity
  for the nine months ended December 31, 1999 and the two
  years ended March 31, 1999 and 1998.......................     F-4
Consolidated Statement of Cash Flows for the nine months
  ended December 31, 1999 and 1998 (unaudited) and the two
  years ended March 31, 1999 and 1998.......................     F-5
Notes to Consolidated Financial Statements..................     F-6

(2) FINANCIAL STATEMENT SCHEDULE:
For the nine months ended December 31, 1999 and the two
  years ended March 31, 1999 and 1998
II--Valuation and Qualifying Accounts
</TABLE>

All other schedules have been omitted because they are not applicable or are not
required or the information required to be set forth therein is included in the
Financial Statements or Notes thereto.

(b) EXHIBITS. THE FOLLOWING EXHIBITS ARE FILED AS PART OF, OR ARE INCORPORATED
    BY REFERENCE INTO, THIS REPORT ON FORM 10-K:

    The Company hereby agrees to furnish to the Commission upon request any
additional instruments defining the rights of the holders of long-term debt of
the Company.


<TABLE>
<CAPTION>
       EXHIBIT
         NO.                                    DESCRIPTION
---------------------   ------------------------------------------------------------
<S>                     <C>
 3.1(a)                 Articles of Restatement of the Articles of Incorporation of
                        A.D.A.M. Software, Inc.
 3.2(a)                 Amendment to the Articles of Incorporation of A.D.A.M.
                        Software, Inc. filed September 30, 1999
 3.2(b)                 Amended and Restated By-Laws of the Company.
 4.1                    Amended and Restated Articles of Incorporation of the
                        Company (incorporated by reference to Exhibit 3.1).
 4.2                    Amended and Restated By-Laws of the Company (incorporated by
                        reference to Exhibit 3.2).
 4.3(b)                 Specimen Common Stock Certificate
 4.4(b)                 Form of Option Certificate relating to the Company's 1992
                        Stock Option Plan
 4.5(b)                 Form of Warrants to Purchase shares of Common Stock, dated
                        April through November 1994
 4.6(c)                 Form of Debenture to be issued to Fusion Capital Fund I, LLC
 4.7*                   Form of Warrant to be issued to Union Street Partners, L.P
                        and Robert S. Cramer, Jr.
10.1(b)                 Amended and Restated 1992 Stock Option Plan
10.2(b)                 401(k) Adoption Agreement and Trust.
10.3(b)                 Employment Agreement between the Company and Robert S.
                        Cramer, Jr., dated December 21, 1994.
</TABLE>


                                       32
<PAGE>


<TABLE>
<CAPTION>
       EXHIBIT
         NO.                                    DESCRIPTION
---------------------   ------------------------------------------------------------
<S>                     <C>
10.4(b)                 Employment Agreement between the Company and Gregory M.
                        Swayne, dated December 19, 1994.
10.5(b)                 Publishing Agreement by and between Williams & Wilkins and
                        the Company, dated February 22, 1994
10.6(b)(d)              Software Reseller Agreement among the Company, Addison
                        Wesley Longman, through its Addison Wesley/Benjamin Cummings
                        Group Sales Force Division, Benjamin/Cummings, and Addison
                        Wesley Publishers Ltd., dated as of August 4, 1994.
10.7(b)(d)              Software Reseller Agreement among the Company and Addison
                        Wesley Longman, through its Addison Wesley School Division,
                        dated as of February 9, 1995.
10.8(e)                 Localization Agreement between ZEMI Corp. and the Company
                        dated June 7, 1996.
10.9(f)                 Asset Purchase and Sale agreement between Mosby, Inc. and
                        the Company dated October 16, 1998.
10.10(f)                Copyright License Agreement between Kainos Laboratories,
                        Inc. and the Company, dated December 29, 1997
10.11(f)                License Agreement between CNN Newsource, Inc. and the
                        Company dated January 15, 1998.
10.12(c)                Securities Purchase Agreement dated as of November 15, 1999,
                        between the Company and Fusion Capital Fund, LLC
10.13*                  Bridge Note and Warrant Purchase Agreement between Union
                        Street Partners, L.P and Robert S. Cramer, Jr. and the
                        Company dated December 31, 1999
10.14*                  Registration Rights Agreement between Union Street Partners,
                        L.P and Robert S. Cramer, Jr. and the Company dated
                        December 31, 1999
23.1                    Consent of PricewaterhouseCoopers LLP
27.1*                   Financial Data Schedule--December 31, 1999 (for SEC use
                        only)
</TABLE>


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


       *   Previously filed


       (a) Incorporated by reference to the Company's Quarterly Report on
           Form 10-Q for the quarter ended September 30, 1999

       (b) Incorporated by reference to the Company's Registration Statement on
           Form S-1, File No. 33-96864, dated September 12, 1995, as amended).

       (c) Incorporated by reference to the Company's Current Report on
           Form 8-K filed November 30, 1999

       (d) The Company has been granted confidential treatment of portions of
           this Exhibit. Accordingly, portions thereof have been omitted and
           filed separately.

       (e) Incorporated by reference to the Company's Annual Report on
           Form 10-K for the fiscal year ended March 31, 1996.

       (f) Incorporated by reference to the Company's Annual Report on
           Form 10-K for the fiscal year ended March 31, 1998

(c) REPORTS ON FORM 8-K

    The Company filed a report on Form 8-K on November 30, 1999 relating to the
execution of a Securities Purchase Agreement between the Company and Fusion
Capital Fund I, LLC.

    The Company filed a report on Form 8-K on December 30, 1999 announcing the
change in its fiscal year end from March 31 to December 31.

                                       33
<PAGE>
                                   SIGNATURES

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


<TABLE>
<S>                                                    <C>  <C>
Date: April 28, 2000                                   ADAM.COM, INC.
                                                       (Registrant)

                                                       By:          /s/ ROBERT S. CRAMER, JR.
                                                            -----------------------------------------
                                                                      Robert S. Cramer, Jr.
                                                                      CHAIRMAN OF THE BOARD,
                                                             CO-FOUNDER, CHIEF EXECUTIVE OFFICER, AND
                                                                             DIRECTOR
</TABLE>



    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on April   , 2000.



<TABLE>
<CAPTION>
                      SIGNATURE                                                TITLE
                      ---------                                                -----
<C>                                                         <S>
              /S/ ROBERT S. CRAMER, JR.                     Chairman of the Board, Co-Founder, Chief
     -------------------------------------------              Executive Officer, and Director (Principal
                Robert S. Cramer, Jr.                         Executive Officer)

                /S/ MICHAEL S. FISHER                       Corporate Secretary, Vice President of
     -------------------------------------------              Finance and Administration (Principal
                  Michael S. Fisher                           Financial Officer)

     -------------------------------------------            Director
                     Linda Davis

                /S/ DANIEL S. HOWE  *
     -------------------------------------------            Director
                   Daniel S. Howe

             /S/ JOHN W. MCCLAUGHERTY  *
     -------------------------------------------            Director
                John W. McClaugherty
</TABLE>


                                       34
<PAGE>

<TABLE>
<CAPTION>
                      SIGNATURE                                                TITLE
                      ---------                                                -----
<C>                                                         <S>
     -------------------------------------------            Director
              Francis J. Tedesco, M.D.
</TABLE>


<TABLE>
<S>   <C>                                                    <C>                          <C>
*By:                /s/ ROBERT S. CRAMER, JR.
             --------------------------------------
                      Robert S. Cramer, Jr.
                        ATTORNEY-IN-FACT
</TABLE>


                                       35
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
adam.com, Inc.


    In our opinion, the accompanying consolidated financial statements listed in
the index appearing under item 14(a)(1) on page 32 present fairly, in all
material respects, the financial position of adam.com, Inc. and its subsidiary
at December 31, 1999 and March 31, 1999, and the results of their operations and
their cash flows for the nine months ended December 31, 1999, and the years
ended March 31, 1999 and 1998, in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, the
financial statement schedule listed in the accompanying index under item
14(a)(2) on page 32 presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements and financial statement
schedule are the responsibility of the Company's management; our responsibility
is to express an opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.



PricewaterhouseCoopers LLP
Atlanta, Georgia
February 28, 2000, except as to the
second paragraph of Note 17 which is
as of
March 30, 2000


                                      F-1
<PAGE>
                                 ADAM.COM, INC.

                           CONSOLIDATED BALANCE SHEET

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                              DECEMBER 31,   MARCH 31,
                                                                  1999         1999
                                                              ------------   ---------
<S>                                                           <C>            <C>
ASSETS
Current assets
  Cash and cash equivalents.................................     $ 1,477      $ 2,369
  Investment securities.....................................          --        3,792
  Accounts receivable, net of allowances of $103 and $373...         828          950
  Inventories...............................................         314          292
  Prepaids and other........................................         925          164
                                                                 -------      -------
      Total current assets..................................       3,544        7,567
Property and equipment, net.................................       1,749          644
Intangible assets, net......................................       1,827          237
Restricted time deposits....................................         449          522
Other non-current assets....................................         167           --
                                                                 -------      -------
      Total assets..........................................     $ 7,736      $ 8,970
                                                                 =======      =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable and accrued expenses.....................     $ 2,877      $ 1,052
  Deferred revenue..........................................         749          122
  Note payable..............................................         386           --
  Note payable to related party.............................         347           --
                                                                 -------      -------
      Total current liabilities.............................       4,359        1,174
                                                                 -------      -------
Commitments and contingencies
Shareholders' equity
  Preferred stock, no par value; 10,000,000 shares
    authorized; no shares issued and outstanding............          --           --
  Common stock, $.01 par value; 20,000,000 shares
    authorized; 5,400,581 and 5,285,747 shares issued and
    outstanding, respectively...............................          54           53
  Common stock warrants.....................................         366          135
  Additional paid-in capital................................      37,938       33,911
  Treasury stock at cost, 498,212 and 847,240 shares,
    respectively............................................      (1,285)      (2,186)
  Accumulated deficit.......................................     (33,696)     (24,117)
                                                                 -------      -------
                                                                   3,377        7,796
                                                                 -------      -------
Total liabilities and shareholders' equity..................     $ 7,736      $ 8,970
                                                                 =======      =======
</TABLE>

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

                                      F-2
<PAGE>
                                 ADAM.COM, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                     (UNAUDITED)
                                                      NINE MONTHS    NINE MONTHS        YEAR ENDED
                                                         ENDED          ENDED            MARCH 31,
                                                      DECEMBER 31,   DECEMBER 31,   -------------------
                                                          1999           1998         1999       1998
                                                      ------------   ------------   --------   --------
<S>                                                   <C>            <C>            <C>        <C>
Internet revenues, net..............................    $   732         $   --      $    --     $  --
Product revenues, net...............................      2,412          4,264        5,242     6,888
                                                        -------         ------      -------     -----
    Total revenues..................................      3,144          4,264        5,242     6,888
                                                        -------         ------      -------     -----
Cost and expenses
  Cost of revenues..................................        559          1,017        1,421     1,178
  Sales and marketing...............................      2,754          2,061        2,704     2,778
  Product and content development...................      5,607          1,112        2,074     1,512
  General and administrative........................      3,087          1,041        1,571     1,293
  Restructuring charges.............................      1,049             --           47        --
                                                        -------         ------      -------     -----
                                                         13,056          5,231        7,817     6,761
                                                        -------         ------      -------     -----
    Operating income (loss).........................     (9,912)          (967)      (2,575)      127
Interest income, net................................        158            316          395       526
                                                        -------         ------      -------     -----
    Income (loss) before income taxes and minority
      interest......................................     (9,754)          (651)      (2,180)      653
Income taxes........................................         --             --           --       (75)
Minority interest in consolidated subsidiary........        175             --           --        --
                                                        -------         ------      -------     -----
      Net income (loss).............................    $(9,579)        $ (651)     $(2,180)    $ 578
                                                        =======         ======      =======     =====
Net income (loss) per share Basic and diluted.......    $ (2.04)        $(0.14)     $ (0.48)    $0.12
                                                        =======         ======      =======     =====
Weighted average shares outstanding
  Basic.............................................      4,707          4,559        4,528     4,916
                                                        =======         ======      =======     =====
  Diluted...........................................      4,707          4,559        4,528     4,959
                                                        =======         ======      =======     =====
</TABLE>

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

                                      F-3
<PAGE>
                                 ADAM.COM, INC.

           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                        COMMON STOCK       ADDITIONAL    COMMON
                                    --------------------    PAID-IN      STOCK     ACCUMULATED   TREASURY
                                     SHARES      AMOUNT     CAPITAL     WARRANTS     DEFICIT      STOCK      TOTAL
                                    ---------   --------   ----------   --------   -----------   --------   --------
<S>                                 <C>         <C>        <C>          <C>        <C>           <C>        <C>
BALANCE AT MARCH 31, 1997.........  5,274,647    $   52      $33,883      $135       $(22,515)   $    --    $11,555
Repurchase of stock...............         --        --           --        --             --     (1,420)    (1,420)
Net income........................         --        --           --        --            578         --        578
                                    ---------    ------      -------      ----       --------    -------    -------
BALANCE AT MARCH 31, 1998.........  5,274,647        52       33,883       135        (21,937)    (1,420)    10,713
Exercise of common stock
  options.........................     11,100         1           28        --             --         --         29
Repurchase of stock...............         --        --           --        --             --       (766)      (766)
Net loss..........................         --        --           --        --             --     (2,180)    (2,180)
                                    ---------    ------      -------      ----       --------    -------    -------
BALANCE AT MARCH 31, 1999.........  5,285,747        53       33,911       135        (24,117)    (2,186)     7,796
Exercise of common stock options
  and warrants....................    114,834         1        1,540       (36)            --        620      2,125
Issuance of common stock
  warrants........................         --        --           --       267             --         --        267
Issuance of treasury stock........         --        --        1,797        --             --        281      2,078
Modifications to common stock
  options.........................         --        --          690        --             --         --        690
Net loss..........................         --        --           --        --         (9,579)        --     (9,579)
                                    ---------    ------      -------      ----       --------    -------    -------
BALANCE AT DECEMBER 31, 1999......  5,400,581    $   54      $37,938      $366       $(33,696)   $(1,285)   $ 3,377
                                    =========    ======      =======      ====       ========    =======    =======
</TABLE>

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

                                      F-4
<PAGE>
                                 ADAM.COM, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                  (UNAUDITED)
                                                   NINE MONTHS    NINE MONTHS
                                                      ENDED          ENDED        YEAR ENDED MARCH 31,
                                                   DECEMBER 31,   DECEMBER 31,   ----------------------
                                                       1999           1998         1999          1998
                                                   ------------   ------------   --------      --------
<S>                                                <C>            <C>            <C>           <C>
Cash flows from operating activities
  Net income (loss)..............................    $(9,579)       $  (651)     $(2,180)      $   578
  Adjustments to reconcile net income (loss) to
    net cash used in operating activities
    Depreciation and amortization................        883            673          906           707
    Loss on sale of assets.......................        106             (4)          --            --
    Minority interest share of loss..............       (175)            --           --            --
    Stock compensation charges...................        730             --           --            --
    Changes in assets and liabilities
      Accounts receivable........................        122            105          288          (601)
      Inventories................................        (22)            58          175           (92)
      Prepaids and other assets..................       (451)           (17)         (39)          (16)
      Accounts payable and accrued liabilities...      1,395           (293)         (95)         (468)
      Deferred revenue...........................        626            (32)          84          (452)
                                                     -------        -------      -------       -------
        Net cash used in operating activities....     (6,365)          (161)        (861)         (344)
                                                     -------        -------      -------       -------
Cash flows from investing activities
  Purchases of short-term investments............         --        (18,720)     (22,475)      (32,116)
  Proceeds from maturities of short-term
    investments..................................      3,762         20,858       26,343        32,998
  Purchases of property and equipment............     (1,589)          (243)        (494)         (134)
  Redemption of restricted time deposit..........        345            160          160            --
  Purchase of restricted time deposit............       (271)          (162)        (162)         (160)
  Software development costs.....................         (4)          (383)        (108)         (542)
  Content acquisition............................        (52)            --           --            --
                                                     -------        -------      -------       -------
        Net cash provided by investing
          activities.............................      2,191          1,510        3,264            46
                                                     -------        -------      -------       -------
Cash flows from financing activities
  Sale of common stock to a related party by the
    consolidated subsidiary......................        175             --           --            --
  Proceeds from exercise of common stock options
    and warrants.................................      2,107             13           28            --
  Repurchase of common stock.....................         --           (766)        (766)       (1,420)
  Proceeds from notes payable....................      1,000             --           --            --
                                                     -------        -------      -------       -------
        Net cash provided by (used) in financing
          activities.............................      3,282           (753)        (738)       (1,420)
                                                     -------        -------      -------       -------
Increase (decrease) in cash and cash
  equivalents....................................       (892)           596        1,665        (1,718)
Cash and cash equivalents, beginning of period...      2,369            704          704         2,422
                                                     -------        -------      -------       -------
Cash and cash equivalents, end of period.........    $ 1,477        $ 1,300      $ 2,369       $   704
                                                     =======        =======      =======       =======
</TABLE>

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

                                      F-5
<PAGE>
                                 ADAM.COM, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    adam.com, Inc. ("adam.com" or the "Company") is a developer of health
education content and software technologies, and since January 1999, the Company
has taken steps to become a leading provider of health, medical and wellness
information online. The Company creates, publishes and markets multimedia
software products, content and Internet-ready applications providing anatomical,
medical, and health-related information for the education, consumer and
professional markets.

    BASIS OF PRESENTATION

    During 1999, the Company changed its year end from March 31 to December 31.
Accordingly, the financial position and results of operations as of and for the
nine month period ended December 31, 1999 are presented in the accompanying
financial statements. The accompanying financial statements include the accounts
of the Company and a controlled subsidiary. The Company controls the operations
of its subsidiary through its effective 63% voting interest, common management
and Board of Directors position.

    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 net revenues and expenses during the
reporting period. Actual results could differ from those estimates.

    REVENUE RECOGNITION

    Revenues are derived from the sale of software products, license agreements,
royalty agreements and Internet licensing agreements. Revenues from product
sales are generally recognized at the time of shipment to customers,
distributors or resellers or, in the case of consignment arrangements, at the
time of shipment from the consignee to its customers. Revenues from royalty
agreements are recognized as earned based upon performance or product shipment.
Revenues from license sales are recognized after delivery when the Company has
determined that the fees from the agreement are fixed and determinable and there
are no significant return or acceptance provisions. Payments received in advance
of shipments are recorded as deferred revenue in the accompanying balance sheets
and are recognized as revenue when the related software is shipped.

    Internet revenues consist primarily of platform license fees and page
view/advertising fees. Platform license fees are recognized ratably over the
term of the license agreement and page view/advertising fees are recognized as
earned based on page hits by users. Internet fees billed and received in advance
of the performance of services are recorded as deferred revenue in the
accompanying balance sheets and are recognized as revenue when the services are
performed.

    Allowances for estimated product returns are provided at the time of sale.
The Company evaluates the adequacy of allowances for returns and doubtful
accounts primarily based upon its evaluation of historical and expected sales
experience and by channel of distribution. To the extent the future market, sell
through experience, channels of distribution and general economic conditions
change, the estimated reserves required for returns and allowances may also
change.

                                      F-6
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
    CONCENTRATION OF CREDIT RISK

    Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of marketable securities and trade receivables.
The Company restricts investment of marketable securities to short-term
investment grade securities and direct or guaranteed obligations of the United
States government.

    FAIR VALUE OF FINANCIAL INSTRUMENTS

    The carrying amounts of the Company's financial instruments, including cash
and cash equivalents, accounts receivable, accounts payable, accrued expenses
and other liabilities, approximate fair value due to their short maturities.

    CASH AND CASH EQUIVALENTS

    Cash and cash equivalents include cash on hand and or deposit and highly
liquid investments with an original maturity of three months or less.

    INVENTORIES

    Inventories consist principally of computer software media and related
shipping materials and are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method.

    PROPERTY AND EQUIPMENT

    Property and equipment are recorded at cost, less accumulated depreciation
and amortization. Depreciation and amortization are provided using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes over the estimated useful lives of three to five years.

    INTANGIBLE ASSETS

    Intangible assets consist of purchased intellectual content and internal
capitalized software development costs. Purchased intellectual content
represents intangible assets acquired from the Company's I.M.S. and
dr.greene.com asset acquisitions. The Company acquired these assets for cash of
$52,000 and through the issuance of 104,000 shares of common stock valued at
$2,038,000. The Company is amortizing these amounts to product and content
development expense over two to five years. Amortization expense for the nine
month period ended December 31, 1999 approximated $385,000.

    Capitalized software consists principally of salaries and certain other
expenses directly related to the development and modifications of software
products capitalized in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed". Amortization of capitalized
software development costs is provided at the greater of the ratio of current
product revenue to the total of current and anticipated product revenue or on a
straight-line basis over the estimated economic life of the software, which the
Company has determined to generally be twenty-four months.

                                      F-7
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
    PRODUCT DEVELOPMENT

    Product development includes costs incurred in the development of the
Company's web sites, deployment of content to these sites, and maintenance of
the web page content. These costs have been charged to expense as incurred.

    RESTRICTED TIME DEPOSITS

    In connection with the Company's noncancelable operating leases for its
office space and telephone system, the Company is required to purchase time
deposits to secure letters of credit with the bank guaranteeing payments under
the leases. The time deposits bear interest at an average rate of approximately
5.50% and are carried at cost which approximates market. The classification of
these investments is determined based on the expected term of the collateral
requirement and not necessarily the maturity date of the underlying securities.

    INCOME TAXES

    The Company accounts for income taxes utilizing the liability method and
deferred income taxes are determined based on the estimated future tax effects
of differences between the financial reporting and income tax basis of assets
and liabilities given the provisions of the enacted tax laws. A valuation
allowance is provided against deferred tax assets for which it is more likely
than not that the asset will not be realized.

    STOCK-BASED COMPENSATION

    The Company has chosen to continue to account for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
Interpretations and to elect the disclosure option of SFAS No. 123, "Accounting
for Stock-Based Compensation". Accordingly, compensation cost for stock options
issued to employees is measured as the excess, if any, of the quoted market
price of the Company's stock at the date of the grant over the amount an
employee must pay to acquire the stock.

    EARNINGS (LOSS) PER SHARE

    The computation of basic earnings (loss) per share is based on the weighted
average number of common shares outstanding during the period. The computation
of diluted earnings per share is based on the weighted average number of common
shares outstanding plus, when their effect is dilutive, potential common stock
consisting of shares subject to stock options and stock warrants. For the year
ended March 31, 1998, potential common stock shares of 43,620 have been included
in computing diluted earnings per share.

    COMPREHENSIVE INCOME

    The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS 130), to be
effective for all fiscal years beginning after December 15, 1997. This Statement
requires that all items which are to be recognized as components of
comprehensive income be reported on a financial statement that is displayed with
the same prominence as other financial statements. The Company's comprehensive
income is the same as its net income.

                                      F-8
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
    RECLASSIFICATIONS

    Certain comparative amounts have been reclassified to conform with current
year presentation.

2. INVESTMENT SECURITIES

    There were no held-to-maturity investments at December 31, 1999, and there
were no realized gains or losses for the nine month periods ended December 31,
1999 and December 31, 1998 (unaudited), and the years ended March 31, 1999 and
March 31, 1998.

    As of March 31, 1999, the Company held commercial paper which it classified
as held-to-maturity. Held-to-maturity securities represent those securities that
the Company has both the positive intent and ability to hold to maturity and are
carried at amortized cost. Securities with a maturity date within one year are
classified as short-term investments and are stated at cost plus accrued
interest.

3. INVENTORIES

    The components of inventory are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                        DECEMBER 31,   MARCH 31,
                                                            1999         1999
                                                        ------------   ---------
<S>                                                     <C>            <C>
Raw materials.........................................      $213         $173
Finished goods........................................       101          119
                                                            ----         ----
                                                            $314         $292
                                                            ====         ====
</TABLE>

4. PROPERTY AND EQUIPMENT

    Property and equipment is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                        DECEMBER 31,   MARCH 31,
                                                            1999         1999
                                                        ------------   ---------
<S>                                                     <C>            <C>
Computers.............................................     $1,965       $1,364
Equipment.............................................        374          234
Furniture and fixtures................................        580          532
Leasehold improvements................................        670          174
                                                           ------       ------
                                                            3,589        2,304
Less--Accumulated depreciation and amortization.......     (1,840)      (1,660)
                                                           ------       ------
                                                           $1,749       $  644
                                                           ======       ======
</TABLE>

    Depreciation and amortization of property and equipment totaled
approximately $379,000 and $269,000 for the nine month periods ended
December 31, 1999 and 1998 (unaudited), respectively, and approximately $349,000
and $367,000 for the years ended March 31, 1999 and 1998, respectively.

                                      F-9
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. PRODUCT AND CONTENT DEVELOPMENT EXPENDITURES

    Product and content development expenditures are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                     (UNAUDITED)
                                                      NINE MONTHS    NINE MONTHS        YEAR ENDED
                                                         ENDED          ENDED            MARCH 31,
                                                      DECEMBER 31,   DECEMBER 31,   -------------------
                                                          1999           1998         1999       1998
                                                      ------------   ------------   --------   --------
<S>                                                   <C>            <C>            <C>        <C>
Total development expenditures......................     $5,226         $1,495       $2,182     $2,054
Amortization of content acquisition.................        385
Less: Additions to capitalized software
  development.......................................         (4)          (383)        (108)      (542)
                                                         ------         ------       ------     ------
Product development expense.........................     $5,607         $1,112       $2,074     $1,512
                                                         ======         ======       ======     ======
</TABLE>

    Intangible assets include purchased intellectual content of $1,705,000 (net
of accumulated amortization and capitalized software development). The activity
in the capitalized software development account is summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                        (UNAUDITED)
                                                         NINE MONTHS    NINE MONTHS        YEAR ENDED
                                                            ENDED          ENDED            MARCH 31,
                                                         DECEMBER 31,   DECEMBER 31,   -------------------
                                                             1999           1998         1999       1998
                                                         ------------   ------------   --------   --------
<S>                                                      <C>            <C>            <C>        <C>
Balance at beginning of year, net......................      $237           $689         $689       $487
Additions, net of impairment...........................         4            383          108        542
Amortization expense...................................      (119)          (405)        (560)      (340)
                                                             ----           ----         ----       ----
Balance at end of year, net............................      $122           $667         $237       $689
                                                             ====           ====         ====       ====
</TABLE>

    Additions, net of impairment, for the year ended March 31, 1999 includes a
$316,000 impairment of capitalized software for certain products under
development that the Company is no longer supporting.

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

    Accounts payable and accrued expenses consists of the following:

<TABLE>
<CAPTION>
                                                        DECEMBER 31,   MARCH 31,
                                                            1999         1999
                                                        ------------   ---------
<S>                                                     <C>            <C>
Accounts payable......................................     $  714       $  332
Accrued severance costs...............................        293           47
Accrued financing costs...............................        496           --
Accrued compensation and employee benefits............        130          161
Accrued professional fees.............................        534          120
Deferred rent.........................................        123          160
Other accrued expenses................................        587          232
                                                           ------       ------
                                                           $2,877       $1,052
                                                           ======       ======
</TABLE>

                                      F-10
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. NOTES PAYABLE

    On December 31, 1999, the Company issued notes payable of $500,000 each to a
director and officer of the Company and a commercial bank. This debt bears
interest at 10% per annum with principal and interest due on December 31, 2000.
The term of this debt may be extended for six months to June 30, 2001 at the
option of the holders.

    The Company issued 25,000 common stock warrants to each lender in
conjunction with the issuance of the notes. The warrants are exercisable at any
time at the option of the holders through December 31, 2003 and entitle the
holders to purchase an equal number of shares of common stock at $11.11 per
share. The Company is required to issue an additional 25,000 warrants to each
lender at 80% of the then fair market value of the common stock price if the
notes are not repaid by June 30, 2000. The Company estimated the fair value of
the warrants issued at the date of issuance using the Black-Scholes pricing
model and recorded a debt discount based on the relative fair value of the
warrants and the related debt. The discount on the notes payable of $267,000
will be amortized as additional interest expense using the straight-line method
over the twelve-month term of the notes.

    On November 15, 1999, the Company entered into a securities purchase
agreement whereby the Company agreed to issue up to two senior secured
convertible debentures, each with an aggregate principal amount of $6,000,000.
The closing and issuance of the convertible debentures can not occur until the
effective date of a Registration statement by the Company to register the
underlying common stock. Each debenture will be convertible into shares of
common stock of the Company at a price equal to the lessor of (1) 130% of the
fair value at the time of issuance (2) the closing bid price at the date of
conversion, or (3) average of the two lowest closing bid prices for the
Company's common stock during the 10 trading days prior to a conversion of the
debenture. The Company also may redeem the security for 106% of the remaining
principal. As of December 31, 1999, neither of these debentures had been issued.
In February 2000, the Company issued commitment shares at the closing of the
agreement that have a fair value equal to approximately $780,000. This amount
includes shares with a fair value of $180,000 to secure the Company's right to
sell the second $6 million debenture. Additional commitment shares with a fair
value of $420,000 will be issued at the sale of the second $6 million debenture,
if issued.

                                      F-11
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES

    The provision for income taxes differs from the amount computed by applying
the applicable U.S. statutory federal income tax rate of 34 percent to income
(loss) before income taxes as a result of the following (in thousands):

<TABLE>
<CAPTION>
                                                       (UNAUDITED)
                                        NINE MONTHS    NINE MONTHS        YEAR ENDED
                                           ENDED          ENDED            MARCH 31,
                                        DECEMBER 31,   DECEMBER 31,   -------------------
                                            1999           1998         1999       1998
                                        ------------   ------------   --------   --------
<S>                                     <C>            <C>            <C>        <C>
Federal tax provision (benefit) on
  income (loss) before income taxes at
  statutory federal income tax rate...    $(3,316)        $(221)       $ (741)     $222
  Change in valuation allowance.......      3,452           654         1,416      (205)
  State taxes, net of federal
    benefit...........................       (369)          (25)         (131)       26
  Research and development credits....       (230)          (58)          (77)      (37)
  Stock compensation charges..........        266            --
  Foreign taxes withheld..............         --            --            --        75
Other.................................        197          (350)         (467)       (6)
                                          -------         -----        ------      ----
                                          $    --         $  --        $   --      $ 75
                                          =======         =====        ======      ====
</TABLE>

    The components of the Company's deferred tax assets and liabilities are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                              DECEMBER 31,   MARCH 31,
                                                                  1999         1999
                                                              ------------   ---------
<S>                                                           <C>            <C>
DEFERRED TAX ASSETS
  Accrued expenses and other liabilities....................     $   210      $  209
  Allowance for doubtful accounts...........................          13         126
  Intangible assets.........................................         124          --
  Fixed assets..............................................         100         145
  Research and development credits..........................         531         301
  Net operating loss carryforwards..........................      12,338       9,127
                                                                 -------      ------
                                                                  13,316       9,908
                                                                 -------      ------
Deferred tax liabilities
  Software development costs................................         (46)        (90)
                                                                 -------      ------
                                                                     (46)        (90)
                                                                 -------      ------
Net deferred tax asset before valuation allowance...........      13,270       9,818
Valuation allowance.........................................     (13,270)     (9,818)
                                                                 -------      ------
                                                                 $    --      $   --
                                                                 =======      ======
</TABLE>

    At December 31, 1999, the Company had net operating loss and general
business credit carryforwards available for tax purposes of approximately
$32,470,000 and $531,000, respectively, which will expire in years 2012 through
2019 and 2007 through 2014, respectively. Under the Tax Reform Act of 1986, the
amounts of, and the benefit from net operating loss carryforwards may be
impaired or limited in certain

                                      F-12
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES (CONTINUED)
circumstances, including ownership changes (as defined by the Internal Revenue
Service). At December 31, 1999 and March 31, 1999, the Company has recorded a
valuation allowance equal to its net deferred tax assets as management believes
it is more likely than not that the net deferred tax assets will not be
realized. Management's estimate of the valuation allowance could be effected in
the near term based on taxable income generated in future periods.

9. TREASURY STOCK

    In April 1997, the Company's Board of Directors adopted a stock repurchase
program. The program authorized repurchase of the Company's common stock from
time to time in open market transactions on the Nasdaq Stock market. During the
year ended March 31, 1999, the Company repurchased common stock at various times
with an aggregate cost of $766,000. The Company used cash on hand to fund the
repurchase program. The repurchased stock is held as treasury stock. There were
no repurchases of common stock during the nine month period ended December 31,
1999. However, the Company reissued 349,028 shares of treasury stock to satisfy
the exercise of common stock options and other stock issuances during the nine
months ended December 31, 1999.

                                      F-13
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. COMMON STOCK OPTIONS AND WARRANTS

    The Company has two stock option plans (the 1992 Option Plan and the 1991
Option Plan) under which the Company may grant incentive or non-qualified stock
options to full-time employees and key persons. Options are granted at an
exercise price as determined by the Company's Board of Directors which is not
less than fair market value of the Company's common stock and vest ratably over
a three-year period. Options granted under the 1992 Option Plan expire ten years
from the date of grant. With respect to the 1991 Option Plan, all options
granted under the plan were exercised or expired. No further grants under the
1991 Option Plan are authorized.

    The Company has reserved 3,000,000 shares of common stock for issuance under
the 1992 Option Plan.

    The notes payable issued during 1999 (see Note 7) include 50,000 warrants
exercisable into an equal number of shares of common stock for $11.11 per share.
These warrants are exercisable beginning on December 31, 1999 and expire four
years thereafter. No warrants were exercised prior to December 31, 1999.

    Additionally, as of December 31, 1999, there are 75,875 warrants outstanding
with an exercise price of $8.00 per share related to various debt and equity
financings of the Company which occurred prior to March 31, 1998. The warrants
are fully vested and exercisable, and they expire in fiscal 2000. (See
Note 13).

    The Company has adopted the disclosure only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation ("SFAS 123")". Had compensation cost
for the Company's stock option grants been determined based on the fair value at
the grant date for awards in the nine month period ended December 31, 1999 and
the years ended March 31, 1999 and 1998 consistent with the provisions of
SFAS 123, the Company's net income (loss) and net income (loss) per share would
have been changed to the pro forma amounts indicated below (in thousands, except
per share amounts):

<TABLE>
<CAPTION>
                                                              NINE MONTHS        YEAR ENDED
                                                                 ENDED            MARCH 31,
                                                              DECEMBER 31,   -------------------
                                                                  1999         1999       1998
                                                              ------------   --------   --------
<S>                                                           <C>            <C>        <C>
Net income (loss)
        As reported.........................................    $ (9,579)    $(2,180)     $578
        Pro forma...........................................     (10,116)     (2,560)      380
Basic and diluted net income (loss) per share
        As reported.........................................    $  (2.04)    $ (0.48)     $.12
        Pro forma...........................................       (2.15)      (0.57)      .07
</TABLE>

    The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in the nine month period ended December 31, 1999 and
the fiscal years ended March 31, 1999 and March 31, 1998, respectively: Dividend
yield of 0% for all years; expected volatility of 81%, 70% and 56%,
respectively; average risk-free interest rates of 5.74%, 4.94% and 6.01%,
respectively; and an expected life of 3.5 for the period ended December 31, 1999
and the years ended March 31, 1999 and 1998 with the exception of options
granted during the period ended December 31, 1999 and the year ended March 31,
1999 with one-year vesting periods, which have an expected life of two years.

                                      F-14
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. COMMON STOCK OPTIONS AND WARRANTS (CONTINUED)
    The following table summarizes stock option activity for the nine month
period ended December 31, 1999 and the years ended March 31, 1999 and March 31,
1998:

<TABLE>
<CAPTION>
                                                                                     WEIGHTED   WEIGHTED
                                                                                     AVERAGE    AVERAGE
                                                                  EXERCISE PRICE     EXERCISE     FAIR
                                                     SHARES         PER SHARE         PRICE      VALUE
                                                    ---------   ------------------   --------   --------
<S>                                                 <C>         <C>                  <C>        <C>
Outstanding at March 31, 1997.....................    653,027   $       2.25-12.00    $6.06
  Granted.........................................    515,600           2.00-10.00     4.96      $0.95
  Exercised.......................................         --                   --       --
  Canceled or expired.............................   (214,893)          2.00-11.11     5.10
                                                    ---------
Outstanding at March 31, 1998.....................    953,734           2.00-12.00     5.73
  Granted.........................................    706,000            2.75-5.25     4.15       2.02
  Exercised.......................................    (11,100)           2.00-2.38     2.04
  Canceled or expired.............................   (550,434)          2.00-11.11     5.60
                                                    ---------
Outstanding at March 31, 1999.....................  1,098,200           2.00-12.00     5.37
  Granted.........................................    701,750           7.94-21.00    12.13       6.65
  Exercised.......................................   (222,101)           2.00-8.00     4.65
  Canceled or expired.............................   (196,527)         13.00-20.63    15.25
                                                    ---------
Outstanding at December 31, 1999..................  1,381,322           2.00-21.00     6.81
                                                    =========
  Options exercisable at December 31, 1999........    266,892
                                                    =========
</TABLE>

    The following table summarizes additional information about stock options
outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                                   OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
                                         ---------------------------------------   -------------------------
                                                           WEIGHTED
                                             NUMBER         AVERAGE     WEIGHTED       NUMBER       WEIGHTED
                                         OUTSTANDING AT    REMAINING    AVERAGE    EXERCISABLE AT   AVERAGE
               RANGE OF                   DECEMBER 31,    CONTRACTUAL   EXERCISE    DECEMBER 31,    EXERCISE
            EXERCISE PRICE                    1999           LIFE        PRICE          1999         PRICE
--------------------------------------   --------------   -----------   --------   --------------   --------
<S>                                      <C>              <C>           <C>        <C>              <C>
$2.00 to 2.94.........................       174,204          6.35       $2.25         117,852       $2.23
$3.25 to 4.75.........................       115,668          7.59        3.59          38,523        3.60
$5.00 to 5.25.........................       517,444          8.00        5.22          59,139        5.04
$7.00 to 12.00........................       415,034          7.49        8.51          49,156        7.74
$12.00 to 21.00.......................       158,972          9.47       14.91           2,222       20.63
                                           ---------                                   -------
                                           1,381,322          7.77       $6.81         266,892       $4.22
                                           =========                                   =======
</TABLE>

    In April 1997, the Company granted non-qualified stock options to two
officers of the Company to acquire 120,000 shares each of the Company's common
stock. The vesting period for 60,000 of the options granted to each officer is
one-third per year for three years. The vesting period of the remaining 60,000
options granted to each officer is one-third per year for three years or, if the
Company's stock price reaches certain targets, vesting will occur in blocks of
20,000 options for each target price met. The exercise price for the first
20,000 options granted to each officer is $5.00 per share. The exercise price
for the remaining options increases by $1.00 for each block of 20,000 options.

                                      F-15
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. COMMON STOCK OPTIONS AND WARRANTS (CONTINUED)
    In January 1999, the Company provided employee holders of options with
exercise prices from $3.50 and higher the opportunity to cancel such options in
exchange for an equal number of options with a vesting period of one year at the
then current market price of $5.25. As a result of this election, 423,400
options were canceled and reissued in January 1999. The new option exercise
price equals the market price on the date of the repricing and, correspondingly,
compensation expense was not recognized. The vesting period of these options is
one year.

11. CONSOLIDATED SUBSIDIARY

    ThePort.com, a software development company, began its operations in
May 1999. The Company and its CEO and chairman as of December 31, 1999 are the
only outside investors. The Company acquired a preferred stock interest in
ThePort.com, for $250,000 in cash representing a 40% voting interest, and the
Company's CEO and chairman invested $125,000 to acquire common stock
representing a 20% voting interest. During November 1999, the Company's CEO and
chairman invested an additional $50,000 decreasing the Company's direct interest
to 37%. The results of this entity have been consolidated due to the combined
voting interest of the Company and its CEO and chairman as well as common
management and the Board of Director position. The loss from operations of
ThePort.com for the nine-month period ended December 31, 1999 of $208,000, net
of the minority interest, is included in the consolidated financial statements
of the Company.

12. EMPLOYEE BENEFIT PLAN

    The Company sponsors a defined contribution plan that provides all permanent
employees of the Company an opportunity to accumulate funds for their
retirement. In January 1999, the Company began to match the contributions of
participating employees to the extent of 50% of the first 6% contributed by the
participant. Company matching contributions to the plan were approximately
$70,000 and $17,000 for the nine month period ended December 31, 1999 and the
year ended March 31, 1999, respectively.

13. RELATED PARTY TRANSACTIONS

    During December 1999, the Company issued a note payable in the amount of
$500,000 to an officer and director of the Company. This note bears interest at
10%, payable upon the maturity date. This note payable included 25,000 warrants
exercisable into an equal number of shares of common stock for $11.11 per share
(see Note 7). This note is scheduled to mature on December 31, 2000, however,
the term may be extended to June 30, 2001, at the option of the holder.

    During the periods ended December 31, 1999 and 1998 (unaudited) and the
years ended March 31, 1999 and 1998, the Company sold approximately $6,000,
$334,000, $353,000 and $17,000, respectively, of product to Addison Wesley
Longman, Inc., a shareholder in the Company. During the periods ended
December 31, 1999 and 1998 (unaudited) and the years ended March 31, 1999 and
1998, the Company sold approximately $6,000, $0, $0 and $42,000, respectively,
of product to Benjamin/ Cummings (BC), a subsidiary of a shareholder of the
Company. The Company earned royalty revenues of approximately $218,000,
$200,000, $248,000 and $217,000 related to BC during the periods ended
December 31, 1999 and 1998 (unaudited) and the years ended March 31, 1999 and
1998, respectively. Additionally, the Company purchased approximately $10,000,
$3,000, $6,000 and $43,000 of product from BC during the periods ended
December 31, 1999 and 1998 (unaudited) and the years ended March 31, 1999 and
1998,

                                      F-16
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. RELATED PARTY TRANSACTIONS (CONTINUED)
respectively, and paid royalty expenses to BC of approximately $164,000,
$157,000, $217,000 and $215,000, respectively.

    As of December 31, 1999, there are 24,000 warrants that remain outstanding
which were issued in connection with various debt and equity financings (see
Note 10). Such warrants are held by an officer and shareholder of the Company.
The Company received approximately $356,000 during the nine-month period ended
December 31, 1999 from the exercise of 44,438 warrants issued in connection with
these financing transactions.

14. COMMITMENTS AND CONTINGENCIES

    The Company leases office space and equipment under noncancelable lease
agreements expiring on various dates through 2002. In February 1999, the Company
entered into a noncancelable agreement to sublease a portion of its office
space. At December 31, 1999, future minimum rentals, net of sublease rental
income, for noncancelable leases with terms in excess of one year were as
follows (in thousands):

<TABLE>
<CAPTION>
                                                   MINIMUM    SUBLEASE     NET
                   YEAR ENDING                      ANNUAL     ANNUAL    MINIMUM
                  DECEMBER 31,                     RENTALS    RENTALS    RENTALS
                  ------------                     --------   --------   --------
<S>                                                <C>        <C>        <C>
2000.............................................   $  963     $ (70)     $  893
2001.............................................      932       (70)        862
2002.............................................      656       (35)        621
2003.............................................      390        --         390
2004.............................................      367        --         367
Thereafter                                           1,770        --       1,770
                                                    ------     -----      ------
                                                    $5,078     $(175)     $4,903
                                                    ======     =====      ======
</TABLE>

    Rent expense for the nine-month periods ended December 31, 1999 and 1998
(unaudited) was $473,000 and $285,000, respectively, and $403,000 and $417,000
for the years ended March 31, 1999 and 1998, respectively.

    On April 25, 1996 the Company and certain of its officers and directors were
named in a class action lawsuit. The complaint alleges violations of
Section 11, 12(2) and 15 of the Securities Act of 1933, violations of the
Georgia Securities Act and negligent misrepresentation arising out of alleged
disclosure deficiencies in connection with the Company's initial public offering
which was completed on November 10, 1995. The complaint seeks compensatory
damages and reimbursements for plaintiff's fees and expenses. The Company and
its officers and directors are vigorously defending against the allegations. The
Company cannot estimate the impact of the outcome of the lawsuit on the
financial condition or results of operations.

    The Company is subject to legal proceedings and claims which have arisen in
the ordinary course of its business. Management believes, based upon the advice
of counsel, that ultimate resolution of these matters will not have a material
adverse effect on the financial statements taken as a whole.

15. SEGMENT INFORMATION

    During June 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (FAS 131). The

                                      F-17
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. SEGMENT INFORMATION (CONTINUED)
statement requires detailed disclosures surrounding operating segments and
certain enterprise-wide disclosures. Management believes that it has only a
single operating segment that is focused on the development and distribution of
anatomy/medical content. The enterprise-wide disclosures required by FAS 131 are
presented in the tables below (in thousands):

<TABLE>
<CAPTION>
                                                                     (UNAUDITED)
                                                      NINE MONTHS    NINE MONTHS        YEAR ENDED
                                                         ENDED          ENDED            MARCH 31,
                                                      DECEMBER 31,   DECEMBER 31,   -------------------
REVENUES BY MARKET                                        1999           1998         1999       1998
------------------                                    ------------   ------------   --------   --------
<S>                                                   <C>            <C>            <C>        <C>
Education...........................................     $2,053         $3,474       $4,068     $5,357
Consumer............................................        146            227          289        652
Professional........................................        132            423          695        821
Internet............................................        732             --           --         --
Other...............................................         80            140          190         58
                                                         ------         ------       ------     ------
                                                         $3,144         $4,264       $5,242     $6,888
                                                         ======         ======       ======     ======
</TABLE>

    The Company exports its products through agreements with international and
domestic distributors which grant territorial rights. During the nine-month
periods ended December 31, 1999 and 1998 (unaudited) and the years ended
March 31, 1999 and 1998, the Company had net revenue from international sales of
approximately $222,000, $305,000, $355,000 and $1,643,000, respectively. A
summary of revenues based on geographic location of the customer is as follows
(in thousands):

<TABLE>
<CAPTION>
                                                                     (UNAUDITED)
                                                      NINE MONTHS    NINE MONTHS        YEAR ENDED
                                                         ENDED          ENDED            MARCH 31,
                                                      DECEMBER 31,   DECEMBER 31,   -------------------
                                                          1999           1998         1999       1998
                                                      ------------   ------------   --------   --------
<S>                                                   <C>            <C>            <C>        <C>
United States.......................................     $2,922         $3,959       $4,887     $5,245
Europe..............................................        105            129          150        371
Pacific Rim and Asia................................         36             40           56      1,003
Other...............................................         81            136          148        269
                                                         ------         ------       ------     ------
                                                         $3,144         $4,264       $5,242     $6,888
                                                         ======         ======       ======     ======
</TABLE>

    For the nine-month period ended December 31, 1999 and 1998 (unaudited), the
Company had sales to a single customer which totalled 17% and 11.5% of net
revenues, respectively.

    For the year ended March 31, 1999, two customers accounted for approximately
11.5% and 11.1% of net sales. For the year ended March 31, 1998, the Company had
sales to a single customer which totalled 10.9% of net revenues.

16. RESTRUCTURING CHARGES

    During the last quarter of the period ended December 31, 1999, the Company
terminated three key executives which resulted in a pre-tax charge to
compensation totaling approximately $1 million. Approximately $690,000 of this
charge related to compensation expense associated with the modification of the
employees' stock options. As of December 31, 1999, the Company has approximately
$300,000 of other accrued severance costs.

                                      F-18
<PAGE>
                                 ADAM.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16. RESTRUCTURING CHARGES (CONTINUED)
    During the fourth quarter of the year ended March 31, 1999, the Company
implemented a plan to release substantially all of its direct sales force. This
restructuring plan resulted in a pre-tax charge of approximately $47,000
relating to the severance costs for the employees terminated. During
April 1999, additional employees were terminated with a severance cost of
approximately $35,000.

17. SUBSEQUENT EVENTS

    In January 2000, the Company substantially reduced its workforce in San
Francisco. On February 24, 2000, the Company canceled the lease associated with
the San Francisco location for no penalty and arranged for the sale of the
related leasehold improvements and certain furniture and fixtures to a new
tenant.

    As of March 30, 2000, the Company has issued 353,600 shares of its common
stock at an average price of $11.55 to satisfy the conversion obligation and in
exchange for $4,083,000 pursuant to the convertible debentures described in
Note 7.

                                      F-19
<PAGE>
                                                                     SCHEDULE II

                                 ADAM.COM, INC.

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNT

                  FOR THE NINE MONTHS ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                       BALANCE AT   CHARGED TO   ACCOUNTS   BALANCE AT
                                                       BEGINNING    COSTS AND    WRITTEN      END OF
                                                       OF PERIOD     EXPENSES      OFF        PERIOD
                     DESCRIPTION                       ----------   ----------   --------   ----------
                                                                   (THOUSANDS OF DOLLARS)
<S>                                                    <C>          <C>          <C>        <C>
Allowance for Doubtful Accounts......................    $  330       $   23      $(319)      $    34
                                                         ======       ======      =====       =======
Valuation allowance for deferred taxes...............    $9,818       $3,452      $  --       $13,270
                                                         ======       ======      =====       =======
</TABLE>

                   FOR THE TWELVE MONTHS ENDED MARCH 31, 1999

<TABLE>
<CAPTION>
                                                       BALANCE AT   CHARGED TO   ACCOUNTS   BALANCE AT
                                                       BEGINNING    COSTS AND    WRITTEN      END OF
                                                       OF PERIOD     EXPENSES      OFF        PERIOD
                     DESCRIPTION                       ----------   ----------   --------   ----------
                                                                   (THOUSANDS OF DOLLARS)
<S>                                                    <C>          <C>          <C>        <C>
Allowance for Doubtful Accounts......................    $   45       $  294      $  (9)      $   330
                                                         ======       ======      =====       =======
Valuation allowance for deferred taxes...............    $$8,402      $1,416      $  --       $ 9,818
                                                         ======       ======      =====       =======
</TABLE>

                   FOR THE TWELVE MONTHS ENDED MARCH 31, 1998

<TABLE>
<CAPTION>
                                                       BALANCE AT   CHARGED TO   ACCOUNTS   BALANCE AT
                                                       BEGINNING    COSTS AND    WRITTEN      END OF
                                                       OF PERIOD     EXPENSES      OFF        PERIOD
                     DESCRIPTION                       ----------   ----------   --------   ----------
                                                                   (THOUSANDS OF DOLLARS)
<S>                                                    <C>          <C>          <C>        <C>
Allowance for Doubtful Accounts......................    $   90       $  (40)     $  (5)      $    45
                                                         ======       ======      =====       =======
Valuation allowance for deferred taxes...............    $7,699       $  703      $  --       $ 8,402
                                                         ======       ======      =====       =======
</TABLE>