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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K
                                ---------------

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
           THE SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                 FOR THE FISCAL YEAR ENDED: SEPTEMBER 30, 1999
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER: 0-20735

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

                                 WEBHIRE, INC.

                            (FORMERLY RESTRAC, INC.)

             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                   <C>
             DELAWARE                           04-2935271
  (State or other jurisdiction of      (IRS Employer Identification
  incorporation or organization)                   No.)

        91 HARTWELL AVENUE
           LEXINGTON, MA                           02421
  (Address of principal executive               (zip code)
             offices)
</TABLE>

                                 (781) 869-5000

                        (Registrant's telephone number)

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

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 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 the 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 voting stock held by non-affiliates of the
registrant, based upon the closing price of the Common Stock on December 13,
1999, as reported on NASDAQ National Market System was approximately
$83,200,000. Shares of Common Stock held by each executive officer and director
and by each person who owned 5% or more of the outstanding Common Stock as of
such date have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

The number of shares of the registrant's $0.01 par value Common Stock
outstanding on December 17, 1999, was 14,502,921.

Part III incorporates by reference from the definitive proxy statement for the
registrant's fiscal 1999 annual meeting of stockholders to be filed with the
Commission pursuant to Regulation 14A not later than 120 days after the end of
the fiscal year covered by this Form.

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<PAGE>
                                 WEBHIRE, INC.
                                   FORM 10-K
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM                                                                      PAGE
----                                                                  --------
<S>     <C>                                                           <C>
                                    PART I
1.      Business....................................................      2
2.      Properties..................................................     12
3.      Legal Proceedings...........................................     12
4.      Submission of Matters to a Vote of Securities Holders.......     12

                                   PART II
5.      Market for Registrant's Common Stock and Related Stockholder     12
          Matters...................................................
6.      Selected Consolidated Financial Data........................     13
7.      Management's Discussion and Analysis of Financial Condition      14
          and Results of Operations.................................
8.      Financial Statements and Supplementary Data.................     27
9.      Changes in and Disagreements with Accountants on Accounting      27
          and Financial Disclosure..................................

                                   PART III
10.     Directors and Executive Officers of the Registrant..........     28
11.     Executive Compensation......................................     28
12.     Security Ownership of Certain Beneficial Owners and              28
          Management................................................
13.     Certain Relationships and Related Transactions..............     28

                                   PART IV
14.     Exhibits, Financial Statement Schedules, and Reports on Form     29
          8-K.......................................................
</TABLE>

                                       1
<PAGE>
                                     PART I

    STATEMENTS MADE OR INCORPORATED IN THIS FORM 10-K INCLUDE A NUMBER OF
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. FORWARD
LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, STATEMENTS CONTAINING THE WORDS
"ANTICIPATES", "BELIEVES", "EXPECTS", "INTENDS", "FUTURE", AND WORDS OF SIMILAR
IMPORT WHICH EXPRESS MANAGEMENT'S BELIEFS, EXPECTATIONS OR INTENTIONS REGARDING
THE COMPANY'S FUTURE PERFORMANCE. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. CERTAIN
FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE ARE DISCUSSED IN THE SECTION ENTITLED
"FACTORS AFFECTING FUTURE OPERATING RESULTS" WHICH BEGINS ON PAGE 19 OF THIS
FORM 10-K.

ITEM 1. BUSINESS

OVERVIEW

    Webhire, Inc. ("Webhire" or the "Company") designs, develops, markets,
implements and supports Internet- and intranet-based recruiting solutions to
automate candidate sourcing, Internet job posting, and recruitment management at
corporations, organizations, Internet portals, and online career sites. The
Company's solutions enable organizations to strategically manage their
recruiting and staffing activities online and streamline their Internet
recruiting process. The Company markets these services to corporations who are
experiencing rapid growth, a shortage of skilled labor and an urgent need to
complete staffing initiatives.

    In June 1999, the Company entered into an alliance with Yahoo!, Inc. (see
Note 3 of Notes to Consolidated Financial Statements). Through this alliance,
the Company develops, markets, and supports three services which are co-branded
with the Yahoo! name: Yahoo! Recruiter, a complete end-to-end Internet
recruiting solution which is sold primarily to corporate recruiters, Yahoo!
Careers Resume Shop, a free resume management application for job seekers, and
Yahoo! Resumes, an online tool that corporate recruiters use to search the
resumes contained in the Yahoo! Careers Resume Shop database. The Company's
solutions are the exclusive means for corporations to gain access to the online
candidates within the Yahoo! Careers Resume Shop. The Company shares revenues
from these services with Yahoo!.

    The Company also delivers products which are marketed under the Webhire
brand: Webhire Agent, an automated web search agent; Webhire Enterprise, a
complete, integrated recruiting suite designed to meet the needs of large
organizations; Webhire JobPost, an automated solution for corporate job posting;
and Webhire Job Canopy, a complete solution for career site management that is
marketed to Internet media company and portal sites.

    The Company delivers its Internet solutions to customers using a web
services model, selling the services on a subscription basis, for direct access
by subscribers over the Internet via a standard web browser. The Company's
solution for large organizations, Webhire Enterprise, is sold through both the
application service provider (ASP) model and also as traditionally licensed
software.

    The Company's principal offerings are Internet based online recruiting
services. These services are implemented using standard industry protocols, such
as TCP/IP, HTTP and XML. The service based approach provides our customers with
a robust set of product features and a high performance end user experience
without requiring them to install any software. Our service infrastructure is
based on leading edge technologies from a number of vendors including Microsoft,
Oracle and Sun. The infrastructure is designed for high performance,
scaleability and high availability. The use of open standards in the design of
our systems facilitates easy integration with applications operated by our
partners and customers.

                                       2
<PAGE>
    The Company was incorporated in 1982 as a Massachusetts corporation and was
reincorporated as a Delaware corporation in 1994. As of June 1, 1999 the Company
effected a name change to Webhire, Inc. Restrac Securities Corporation, a
wholly-owned subsidiary of Webhire, Inc., was incorporated in September, 1996 as
a Massachusetts securities corporation for the purpose of holding and managing
certain of the Company's cash and investments.

    In November 1998, the Company purchased the exclusive rights, within the
online recruiting space, to technology originally developed by Junglee
Corporation and owned, at that time, by Amazon.com (see Note 4 of Notes to
Consolidated Financial Statements). The Company acquired technology and
customers through this agreement. The Junglee technology has been integrated and
enhanced and is the backbone of the Company's JobPost and Job Canopy services.

    In May of 1999, the Company purchased Hireworks, Inc., a developer of
innovative resume searching technology that automatically searches the entire
Internet for resumes, matching them against customer specified criteria (see
Note 4 of Notes to Consolidated Financial Statements). This technology has been
enhanced and is today marketed as the Webhire Agent service.

INDUSTRY BACKGROUND

    Recruiting has emerged as one of the most strategic corporate initiatives.
U.S. employment, as reported by the U.S. Department of Labor, has reached
historically high levels. In general, there is an unprecedented shortage of
candidates available to fill an increasing number of jobs. In fact, today there
is a "job gap"--according to some industry analysts there are over 2 million
jobs that remain open because there are no qualified candidates in the labor
market to fill them. This is not a temporary phenomenon. U.S. Census data
indicates that the population of 30-45 year olds, the primary labor pool for
middle managers across U.S. corporations, peaked in 1997 and is actually
declining in real terms. Today's candidate shortage represents the norm for the
future labor market.

    Traditional recruiting methods, print advertisements and professional
recruiters (or "headhunters"), lose their effectiveness in a market where there
is a shortage of candidates. During the past three years, the Internet has
evolved into a sophisticated and ubiquitous communications infrastructure. The
Internet has emerged as the critical medium for recruiting because it brings
candidates and employers together in a directly connected marketplace. On the
Internet, an employer has access to literally millions of resumes, they can post
job openings at thousands of online job boards, and they can communicate with
candidates in seconds.

    Internet recruiting has become a central staffing strategy for today's
corporation. How effectively a company utilizes the Internet for recruiting is
rapidly becoming a synonym for how effectively a company recruits.

WEBHIRE INTERNET RECRUITING SOLUTIONS

    The Company's Internet recruiting services enable organizations to recruit
more efficiently in today's tight labor market. The Company's services enable
corporations to reduce the time and effort required to source candidates on the
Internet, provide tools that help corporate recruiters and hiring managers
identify the best possible talent for open positions and enable the management
of the entire staffing process online. Because the Company's primary solutions
are provided to employers over the Internet, start-up times and extensive IT
infrastructure requirements are eliminated.

    DIRECT INTERNET SOURCING.  The Company provides several services which
enable corporate recruiters to directly source candidates from the Internet. The
Company, as a result of the Yahoo!, Inc. business venture and its other
partners, manages and maintains large pools of candidate resumes on the
Internet. As of December 1999, there are approximately 250,000 resumes
accessible for targeted searching through the Company's proprietary recruiting
solutions. The Company, as a result of its HireWorks, Inc. acquisition,

                                       3
<PAGE>
also offers an automated intelligent search agent that conducts resume searching
and ranking across the entire Internet. It is estimated that approximately
2 million resumes are accessible through the Company's agent technology.

    INTEGRATED INTERNET JOB POSTING.  There are now hundreds of career sites and
thousands of use.net discussion groups in existence on the Web, each with its
own specific job posting format and protocol. A successful corporate recruiting
strategy includes job posting to use multiple destinations that reach national,
regional and special interest audiences. The Company provides integrated job
posting solutions that enable jobs to be posted to multiple job boards in one
simple operation. As of December 1999, the Company is managing 300,000 job
postings on behalf of its customers.

    RESUME PROCESSING.  The creation of a private online electronic database of
resumes is central to the Company's candidate management solutions. The Company
processes resumes, faxes, e-mail and direct web applications using the latest
optical character recognition technologies. The Company processed approximately
2 million resume pages during 1999. The processed resumes are stored online in
secure databases that are accessible only to the customer. The resulting
electronic resume pool represents a knowledge asset that can be shared
throughout an organization. Manual input is virtually eliminated, allowing
organizations to collect and store skills and experience data on hundreds of
thousands of candidates. The Company's services provide a shared, re-useable
pool of candidates, limiting the need for organizations to use employment
agencies and advertising to source candidates.

    SOPHISTICATED SKILLS MANAGEMENT AND SELECTION.  The Company's software uses
a sophisticated search process to rapidly identify and rank qualified candidates
based on skills criteria determined by the user. User searches are enhanced by
the Company's integrated skills library, which translates high-level job
requirements into the words and synonyms commonly used by candidates on resumes.

    CANDIDATE MANAGEMENT PROCESS.  The Company's solutions incorporate a
user-friendly, process-oriented graphical user interface (GUI) designed to
simplify the administration of the candidate management process including job
requisition creation and editing, candidate tracking, and integrated reporting
on the hiring process and sourcing effectiveness. These capabilities reduce
delays typical to the staffing process and eliminate redundancies.

    By providing an easily-accessible, shared, re-useable pool of candidates,
the Company's software allows organizations to significantly reduce recruitment
advertising costs and employment agency fees. In addition, the Company's
software is designed to increase recruiter productivity through the elimination
of manual entry of resume information and by increasing the efficiency of the
hiring process.

STRATEGY

    The Company's objective is to extend its current market leader position in
the Internet recruiting marketplace to become the standard solution for
corporate Internet recruiting. The Company has developed a pyramid of
subscription-based Internet recruiting services that offer many different entry
points into the Company's solution set. As customers' Internet recruiting needs
mature and grow, the Company provides additional service offerings that extend
the features and capabilities of the solution. Taken individually, the Company's
services meet the needs of virtually the entire corporate recruiting
marketplace. Today, the Company's solutions are used by companies as small as
25-50 employees, are the recruiting standard at hundreds of Fortune 1000
companies and are being adopted regularly across the broad market of companies
in the middle market. The Company estimates that there are approximately 250,000
corporations and 25 million hiring managers in its target audience.

    The Company's solutions range in price from hundreds of dollars per month
for entry-level Internet sourcing tools, to tens of thousands of dollars a month
for complete enterprise recruiting solutions. At the top of the Company's
solution pyramid, a customer has an option to purchase and install the Company's
solution as a traditionally licensed software application. The Company believes
that the solution pyramid

                                       4
<PAGE>
approach will yield larger subscription contracts through the placements of
additional services at existing accounts.

PRODUCTS

    The Company has developed a wide-ranging suite of service offerings that
span many aspects of Internet recruiting. These offerings, which are sold
primarily to small and mid-sized corporations, include Yahoo! Recruiter
(introduced as Webhire Recruiter in November 1997, upgraded and renamed in
September 1999), Yahoo! Resumes (introduced in December 1999), Webhire Agent
(introduced in November 1999), and Webhire JobPost (introduced in
November 1998). The Company also provides an infrastructure and site management
service, Webhire JobCanopy, introduced in November 1998, to Internet media
companies. Finally, the Company delivers Webhire Enterprise, released in
June 1998 as a comprehensive recruiting automation suite designed specifically
to meet the needs of large organizations.

    YAHOO! RECRUITER, powered by Webhire, is a complete, end-to-end solution for
Internet recruiting automation. Corporate recruiters use Yahoo! Recruiter to
manage requisitions online, post jobs, search for candidates at Yahoo! Careers
and within other Webhire-managed online candidate pools such as JWT Specialized
Communications Resume Works, track hiring status and report on staffing
activities. The service offering includes complete resume processing and
management, enabling corporations to save money and resources by moving their
entire recruiting process online.

    YAHOO! RESUMES, powered by Webhire, provides customers with direct access to
the candidate resumes at Yahoo! Careers. Using the service's sophisticated
searching screens, customers can create skills based searches that are targeted
geographically. The resulting ranked list of the best fitting resumes for a job
puts talent in front of a recruiter or hiring manager in seconds, without the
need for advertising campaigns and external recruiters.

    WEBHIRE AGENT is an intelligent web agent that searches the entire Internet
for resumes, evaluating and scoring found resumes against customer-defined
skills requirements for a job opening. Webhire Agent returns a relevance ranked
list of the best qualified resumes it discovered on the Internet. Optionally,
Webhire Agent can initiate an e-mail correspondence with candidates who meet or
exceed a user-specific scoring threshold.

    WEBHIRE JOBPOST is an automated job publishing service that collects job
listings from a customer's Web site and re-publishes those listings at career
sites across the Internet. A customer subscribing to JobPost need only keep
their careers pages up to date, the JobPost technology manages the movement of
those jobs to the one or more job boards that the customer has designated. At
any moment, the Company is managing approximately 300,000 active job postings
using this technology.

    WEBHIRE JOB CANOPY is a technology that Internet media companies use to
outsource the management of their online job listings to the Company. Job Canopy
provides career sites with integrated job listings, automated job posting for
their customers, job searching tools for job-seekers who visit the media company
career site and a direct job posting connection to the Company's customers who
are using the Company's JobPost service.

    WEBHIRE ENTERPRISE is a complete, integrated recruiting automation suite
designed specifically for large organizations. The technology can be delivered
to customers as an ASP service or as traditionally licensed software. Webhire
Enterprise incorporates requisition management, resume processing, candidate
ranking, staffing workflow automation, and customizable reporting features.
Through the service's Manager's Workbench option, customers can connect hiring
managers across their organization enabling hiring managers to directly initiate
job requisitions, review resumes online, manage team interviews and initiate a
job offer. New hire information contained in the Webhire Enterprise database is
easily integrated with PeopleSoft and SAP Human Resource Information Solutions.

                                       5
<PAGE>
CUSTOMER SERVICES

    The Company believes that superior customer service and support are critical
to customer satisfaction. As of September 30, 1999, the Company's customer
service organization included 60 employees, providing Professional Services,
Technical Support and Outsourced Services.

    PROFESSIONAL SERVICES.  The Professional Services Group manages system
implementation, provides additional services such as process design and system
tailoring and provides basic and advanced training both online, on-site during
system implementation and at the Company's Corporate Training Centers throughout
the year.

    TECHNICAL SUPPORT.  The Technical Support Group provides daily assistance to
customers with maintenance agreements through the Company's support help line.
The Company provides support Monday through Friday from 8:30 a.m.-8:00 p.m.
Eastern Time as well as 9:00 a.m.-6:00 p.m. Greenwich Time to support the
Company's European customers.

    OUTSOURCED SERVICES.  Outsourced Services were introduced by the Company in
July 1996 and consist of scanning services, provided principally through
third-party arrangements, and correspondence generation.

TECHNOLOGY

YAHOO! RECRUITER

    Yahoo! Recruiter, the Company's Internet-based service offering, is based on
open, extensible Internet development tools. It makes wide use of standard
technologies. This adherence to standard technologies ensures that Yahoo!
Recruiter can be scaled as demand for the service increases. Client access to
the Webhire system is provided through either Microsoft or Netscape World Wide
Web browsers.

WEBHIRE ENTERPRISE

    Webhire Enterprise is a Microsoft Windows-based application which operates
over a standard TCP/IP intranet connection. The application server component of
the product utilizes Microsoft Windows NT Server and Microsoft Internet
Information Server. Client access is provided via both a Windows application and
a browser interface which is compatible with Microsoft Windows 95/98 or
Microsoft Windows NT. This architecture combines the functionality of a
traditional client/server application with the easy deployability of an intranet
application.

PRODUCT DEVELOPMENT

    The Company believes that its future success will depend upon its ability to
enhance its existing software and develop and introduce new products and
functions which keep pace with rapid changes in the marketplace. The Company has
made increasing investments in its engineering and quality groups to broaden its
product and service offerings, enhance product functionality, improve
performance and expand the ability of its software to inter-operate with
third-party software. Research and development expenses totaled (in thousands)
$7,798, $5,588 and $5,446 for fiscal years 1999, 1998, and 1997, respectively.
While the Company expects that certain of its new products and functions will be
developed internally, the Company may, based on timing and cost considerations,
expand its product offerings through acquisitions or strategic relationships.
Software products as complex as those currently under development by the Company
are subject to frequent delays and there can be no assurance that the Company
will not encounter difficulties that could delay or prevent the successful and
timely development, introduction and marketing of these potential new products.

                                       6
<PAGE>
SALES AND MARKETING

    The Company markets its Recruiter service through telesales representatives
and sales personnel located in Lexington, Massachusetts, Foster City,
California, and Chicago, Illinois. The average sales cycle for this service is
substantially shorter than that experienced for the Company's enterprise
products.

    The Company markets its enterprise products and services through a direct
sales force in North America. The Company supports its sales force through
comprehensive marketing programs which include public relations, direct mail,
advertising, seminars, trade shows, ongoing customer communication programs and
strategic relationships. While the sales cycle varies from customer to customer,
it typically spans four to nine months from generation of a lead from one of
these sources to execution of a license agreement. The Company's direct sales
force is structured regionally and is managed through sales and service offices
in Lexington, Massachusetts and Foster City, California, and through sales
personnel located in Dallas, Chicago, New York, Raleigh, and Toronto.

CUSTOMERS

    The following is a partial listing of the Company's customers as of
September 30, 1999:

<TABLE>
<S>                            <C>                            <C>
FINANCIAL SERVICES             INSURANCE                      E-COMMERCE
Aim Management Group           Trigon Blue Cross/Blue Shield  Akamai Technologies
American Express               John Hancock                   Art Technology Group
Bank of America                Phoenix Home Life              CMGI
BankBoston                     Prudential                     daly.commerce
M&T Bank                                                      Encoding.com
Visa USA                       TECHNOLOGY/COMMUNICATIONS      iCopyright.com
The World Bank                 Amdahl                         Inforonics
                               The Boeing Company             LifetecNet.com
PUBLISHING/ENTERTAINMENT       EMC                            living.com
Blockbuster Entertainment      Hewlett-Packard                Morningstar, Inc.
Gannett                        Lockheed                       Oasis Technology
The New York Times             Microsoft                      One to One Interactive
Paramount Pictures                                            Open Market, Inc.
Random House                   CONSUMER                       Open Text Corporation
                               British Airways                PC Connection
ENGINEERING/CONSULTING         Canadian Tire                  Pets.com
CH2M Hill                      Cargill                        Point.com, Inc.
Logica                         Levi Strauss                   SilknetSoftware.com
Mason & Hanger                 Nabisco                        Silverstream
                               Staples                        Value America
HEALTHCARE/PHARMACEUTICALS     Starbucks                      WebLine Communications Corp.
Abbott Laboratories            the good guys!                 Yahoo! Inc.
Bristol Myers Squibb
Johnson & Johnson
The Mayo Clinic
Memorial Sloan Kettering
PacifiCare
Pfizer
SmithKline Beecham
Genentech
</TABLE>

                                       7
<PAGE>
STRATEGIC RELATIONSHIPS

    The Company has established a number of relationships both to leverage
marketing channels and complementary technologies and to meet customer demands
for open, integrated, multi-vendor solutions. Strategic partners are categorized
into four groups: Technology Partners, who provide the Company with innovative
technologies that are integrated into the Company's products; Applications
Partners, who provide the Company's customers with value-added software,
consulting or other services that are complementary to the Company's software
and services and that enable the Company's customers to better utilize the
Company's software; Service and Implementation Partners, who extend the
Company's support, implementation and service offerings by delivering the
specialized services our customers need; and Internet/Information Partners, who
provide the Company's customers with the ability to access and distribute
crucial staffing information, including job postings, candidate information, and
resumes, often via the Internet. Examples of the Company's strategic partners
include:

YAHOO!, INC.

    In June 1999, the Company entered into an alliance with Yahoo!, Inc. Through
this alliance, the Company develops, markets, and supports three services which
are co-branded with the Yahoo! name: Yahoo! Recruiter, a complete end-to-end
Internet recruiting solution which is sold primarily to corporate recruiters,
Yahoo! Careers Resume Shop, a free resume management service which is offered at
Yahoo! Careers, and Yahoo! Resumes, an online tool that corporate recruiters use
to search the resumes contained in the Yahoo! Careers Resume Shop database. The
Company's solutions are the exclusive means for corporations to gain access to
the online candidates within the Yahoo! Careers Resume Shop. The Company shares
revenues from these services with Yahoo!.

VERITY, INC.

    The Company's software incorporates the text search software tools developed
by Verity, Inc., a Technology Partner, which allows Webhire clients to search
through vast amounts of candidate and job data, delivering only the most
relevant information directly to the desktop.

SAZTEC INTERNATIONAL

    SAZTEC International, a leading provider of information management services,
is a certified Webhire scanning partner. As such, SAZTEC provides the Company
with a variety of resume processing services, including resume scanning,
clean-up and verification, contact information extraction, and acknowledgement
card shipping. SAZTEC processes hard copy, fax and e-mailed resumes. During
fiscal year 1999, SAZTEC processed over two million resume pages for the
Company.

INTERNET JOB POSTING PARTNERS

    The Company's Internet job posting services provide customers with access to
over 2,000 online job posting destinations. These destinations include major
national career sites, regional career sites, and special interest or affinity
sites. The following are a representative list of the Company's job posting
partners:

<TABLE>
<S>                                                       <C>
Yahoo! Careers                                            BlackVoices.com
Monster.com                                               washingtonjobs.com
Careerpath.com                                            GlobeCareers.com
America's Job Bank                                        thepavement.com
Career Mosaic                                             Careermag.com
Excite@Home Careers Network
</TABLE>

                                       8
<PAGE>
COMPETITION

    The marketplace for staffing solutions is intensely competitive and is
rapidly changing. Traditional Client/Server providers have been eclipsed by
providers of Internet recruiting services. The growth in the marketplace is
coming from smaller and mid-sized corporations who are demanding online
solutions that leverage the new online marketplace for candidates.

    Across the many market segments where the Company provides recruiting
solutions, the Company has distinct competitors. No single company competes with
the Company across all of its markets.

    The Company's chief direct competitors in the Internet recruiting business
services marketplace are Hire Systems, Inc. and ISearch, both privately-held
developers of online staffing automation solutions. The Company also competes
against other recruiting automation services providers and job posting services.

    The Company believes that the principal competitive factors affecting its
market include product functionality, breadth, ease of use, scaleability and
flexibility, integration and interoperability with standard platforms and
operating systems and other software products, price, product reputation,
customer service and support, sales and marketing effectiveness and company
reputation. Although the Company believes it competes favorably with respect to
such factors, there can be no assurance that the Company can maintain this
position against current and potential competitors.

INTELLECTUAL PROPERTY

    The Company relies on a combination of copyright and trade secret laws,
employee and third-party non-disclosure agreements and other methods to protect
its proprietary rights. The Company believes that, due to the rapid pace of
technological innovation within its industry, the Company's ability to establish
and maintain a position of technology leadership in the industry is dependent
more upon the skills of its development personnel and its existing skills
library than upon the legal protections afforded its existing technology.

    The Company's success is dependent in part upon its proprietary software.
There can be no assurance that the Company's agreements with employees,
consultants and others who participate in the development of its software will
not be breached, that the Company will have adequate remedies for any breach, or
that the Company's trade secrets will not otherwise become known. Furthermore,
there can be no assurance that the measures taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation of its
technology or independent development by others of similar technology.

    The Company is not aware of any patent infringement charge or any violation
of other proprietary rights claimed by any third party relating to the Company
or the Company's products. However, the computer technology market is
characterized by frequent and substantial intellectual property litigation.
Intellectual property litigation is complex and expensive, and the outcome of
such litigation is difficult to predict.

    The Company relies on certain technology which it licenses from third
parties. The Company's success will depend in part on its continued ability to
obtain and use licensed technology that is important to the functionality of its
products. An inability to continue to procure or use such technology would
likely have a material adverse effect on the Company's business, financial
condition and operating results.

EMPLOYEES

    As of September 30, 1999, the Company had 209 full time employees consisting
of 57 in sales and marketing, 47 in product development, 60 in client services
and 45 in corporate operations. The Company's employees are not represented by
any collective bargaining organizations, and the Company has never experienced
any work stoppages. The Company considers its relations with its employees to be
good.

                                       9
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS

<TABLE>
<CAPTION>
NAME                                                AGE                         POSITION
----                                              --------                      --------
<S>                                               <C>        <C>
Lars D. Perkins.................................     40      Chairman of the Board
Martin J. Fahey.................................     45      President, Chief Executive Officer and
                                                             Director
Thomas F. Brady.................................     47      Vice President of Internet Services and
                                                             Operations
Cynthia G. Eades................................     43      Chief Financial Officer, Vice President of
                                                             Finance, Treasurer and Secretary
Raymond M. Desrochers...........................     32      Vice President of Product Development
Ronald M. Visocchi..............................     50      Vice President, General Manager of Enterprise
                                                             Division
Robert J. Lederman, Jr..........................     42      Vice President of Internet Sales
Timothy J. McManus..............................     46      Vice President of Internet Business
                                                             Development
Robert J. Perry.................................     42      Vice President of Marketing
Edward F. Murray................................     44      Vice President of Development for Electronic
                                                             Commerce
Henry M. Margolis...............................     40      Vice President of Internet Strategic Marketing
Russell J. Campanello...........................     43      Director
J. Paul Costello................................     60      Director
Charles R. Lax..................................     40      Director
</TABLE>

    LARS D. PERKINS, co-founder of the Company, has served as Chairman of the
Board of the Company since 1986. Mr. Perkins served as President of the Company
from 1986 to 1997 and as Chief Executive Officer from 1986 to 1999.

    MARTIN J. FAHEY, was named Chief Executive Officer in July 1999. Mr. Fahey
was elected President of the Company and as a member of the Board of Directors
in July 1997. Mr. Fahey joined the Company as Vice President and Chief Operating
Officer in May 1996. From January 1995 to May 1996, Mr. Fahey was an independent
consultant for a variety of software companies. From July 1991 to
December 1994, he was Chief Executive Officer of Vertigo Development, a
multimedia company which Mr. Fahey co-founded. Mr. Fahey was employed by Lotus
Development Corporation, a software company, from January 1983 to June 1991,
most recently as the Director of Spreadsheet Marketing.

    THOMAS F. BRADY was named Vice President of Internet Services and Operations
in November 1998. Mr. Brady joined the Company as Vice President of Client
Services in October 1997. From May 1995 to October 1997, he served as Vice
President of Services of Kronos, Inc., a leading provider of labor management
software. Prior to joining Kronos, Inc., Mr. Brady was employed at Digital
Corporation from 1977 to 1995 in various operations and business development
management positions.

    RAYMOND M. DESROCHERS was named Vice President of Product Development in
November 1998. From October 1995 to October 1998 he served as Vice President of
Product Development and Quality. From April 1995 to October 1995, he served as
the Company's Director of Product Development and from October 1994 to
March 1995, he served as the Company's Manager of Software Development.
Mr. Desrochers was a senior software engineer for the Company from July 1992 to
September 1994. Prior to joining the Company in July 1992, he had been Software
Project Manager for New England Business Service, Inc., a company that provides
accounting software solutions to both small and medium-sized businesses, from
October 1991 to June 1992. Mr. Desrochers resigned from his position effective
December 10, 1999.

    CYNTHIA G. EADES joined the Company as Chief Financial Officer, Vice
President of Finance and Treasurer in December 1994. In May 1997, Ms. Eades was
elected to the office of Secretary to the Company. From February 1993 to
February 1994, she was Vice President and Chief Financial Officer of Virtual
World Entertainment, a developer and operator of virtual reality entertainment
centers. Prior to

                                       10
<PAGE>
such time, Ms. Eades was employed by Dun & Bradstreet Software Services, Inc., a
business applications software company, as Controller from October 1991 to
February 1993 and Director of Finance from June 1990 to October 1991. Ms. Eades
is a Certified Public Accountant and was employed by Price Waterhouse from
June 1978 to June 1990.

    RONALD M. VISOCCHI was elected Vice President, General Manager of the
Enterprise Division in April 1999. Mr. Visocchi joined the Company in
February 1998 as Director of Sales. From March 1995 to January 1998,
Mr. Visocchi was President of the Holos Corporation, a start-up company. From
June 1985 to March 1992, Mr. Visocchi was Vice President, General Manager of an
Atex Publishing Systems Business Unit of Eastman Kodak. Mr. Visocchi began his
career with 13 years in marketing and sales management at Xerox Corporation.

    ROBERT J. LEDERMAN, JR. was named Vice President of Internet Sales in
June 1999. Mr. Lederman joined the Company as Vice President of Human Resources
in January 1997. From June 1994 to January 1997, Mr. Lederman was employed by
Fidelity Investments as the Director of Human Resources. From June 1992 to
June 1994, Mr. Lederman was Director of Employment and Employee Relations for
Clean Harbors Environmental Services Company.

    TIMOTHY J. MCMANUS was named Vice President of Internet Business Development
in November 1998. Mr. McManus joined the Company as Vice President of Internet
Products in November 1997. From January 1997 to October 1997, Mr. McManus was
the founder of Calendarcast, Inc., a development stage company evaluating
applications of Internet-based push technologies. From March 1996 to
January 1997, Mr. McManus was Vice President of Product Management and
Development at Corechange LLC, a spin-off of Cambridge Technology
Partners, Inc. From October 1987 to March 1996, Mr. McManus was employed at
Lotus Development Corporation where he managed a number of key product and
business development functions within both the Communications Products Division
and the Desktop Products Organization.

    ROBERT J. PERRY assumed operational responsibility for the marketing
organization in November 1996 and was elected to the office of Vice President,
Marketing effective as of January 1, 1997. Mr. Perry joined the Company in
May 1996 as Director of Product Management. From November 1995 through
May 1996, Mr. Perry was an independent marketing and product management
consultant. From October 1983 to November 1995, Mr. Perry was employed by Lotus
Development Corporation and served most recently as Director of Advanced
Corporate Technology Liaisons. He had previously served as Director of Product
Management for Notes, Director of Product Management for Graphical Spreadsheets
and Group Product Manager for Spreadsheets.

    EDWARD F. MURRAY joined the Company as Vice President of Development for
Electronic Commerce in November 1998. From September 1996 to November 1998,
Mr. Murray was Vice President and Chief Technologist of the Product Development
division of The Instream Corporation. From October 1989 to October 1995,
Mr. Murray was employed by Lotus Development Corporation where he was
responsible for the development of several product lines including Lotus Works
and Lotus Forms.

    HENRY M. MARGOLIS joined the Company as Vice President of Internet Strategic
Marketing in July 1999. From March 1998 to July 1999, Mr. Margolis was founder
and Chief Executive Officer of Hireworks, Inc., which was acquired by Webhire.
Prior to Hireworks, Mr. Margolis was employed for 11 years at Viewlogic
Systems, Inc., most recently as Director of Consulting from 1996 to 1998.

    RUSSELL J. CAMPANELLO was elected as a director of the Company in
October 1994. Since March 1998, Mr. Campanello has served as Senior Vice
President, Human Resources at Genzyme Corporation. From March 1996 to
March 1998, Mr. Campanello was Vice President of Nets Incorporated, an
Internet-based marketing company. From June 1987 to February 1996,
Mr. Campanello served as Vice President of Human Resources of Lotus Development
Corporation.

                                       11
<PAGE>
    J. PAUL COSTELLO was a co-founder of the Company and a member of the Board
of Directors of the Company since its founding in 1982. Mr. Costello has served
as President of J. Paul Costello Associates, Inc., a consulting company, since
1969 and President of Costello & Company, Inc., a contract recruiting company,
since 1979. In December 1992, he also was named President of Corporate Staffing
Center, Inc., a provider of outsourced staffing services to large corporate
clients. Mr. Costello has been a human resource management consultant for over
thirty years.

    CHARLES R. LAX was elected as a director of the Company in September 1999.
Mr. Lax is a general partner and a co-founder of SOFTBANK Capital Partners L.P.,
an investment group founded in July 1999. Mr. Lax was also a co-founder and is a
general partner with SOFTBANK Technology Ventures (SBTV). Mr. Lax also
co-founded Flatiron Partners as a SOFTBANK joint venture with Chase Capital
Partners. Prior to becoming a General Partner with SBTV, Mr. Lax served as Vice
President at SOFTBANK Holdings Inc. from 1996 until the establishment of SBTV.

ITEM 2. PROPERTIES

    The Company's corporate headquarters are located in Lexington,
Massachusetts, where it occupies approximately 60,000 square feet of office
space under a lease expiring in December 2003. In addition, the Company has a
regional sales and service office in Foster City, California under a lease
expiring in January 2002. The Company also leases office space for its sales
representatives in Dallas, Texas and New York, New York.

ITEM 3. LEGAL PROCEEDINGS

    The Company is not involved in any pending legal proceedings other than
those arising in the ordinary course of the Company's business. Management
believes that the resolution of these matters will not materially affect the
Company's business or the financial condition of the Company.

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

    Special Meeting of the Stockholders on September 21, 1999: At the special
meeting of the Company's stockholders, 7,830,562 shares, or 75% of the Company's
outstanding common stock as of the record date of August 25, 1999, voted on the
following matter:

    The approval of the issuance of 3,960,396 shares of the Company's common
stock to SOFTBANK Capital Partners LP and its affiliates in a private placement
transaction. Shares were voted as follows:

<TABLE>
<CAPTION>
         FOR                  AGAINST          WITHHELD
---------------------         --------         --------
<S>                           <C>              <C>
      7,639,486               188,106           2,970
</TABLE>

See Note 2 to the Consolidated Financial Statements.

                                    PART II

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

MARKET PRICE OF COMMON STOCK

    The Company's common stock (NASDAQ symbol: HIRE) began trading publicly in
the over-the-counter market through the NASDAQ National Market System on
July 23, 1996. The following table sets forth, for the period indicated, the
high and low closing prices of the common stock as reported on the NASDAQ
National Market System. These prices do not include retail markups, markdowns,
or commissions.

                                       12
<PAGE>
                               COMMON STOCK PRICE

<TABLE>
<CAPTION>
PERIOD                                                          HIGH       LOW
------                                                        --------   --------
<S>                                                           <C>        <C>
October 1, 1997--December 31, 1997..........................   $ 7.50     $5.00
January 1, 1998--March 31, 1998.............................   $ 7.00     $4.63
April 1, 1998--June 30, 1998................................   $ 8.63     $4.38
July 1, 1998--September 30, 1998............................   $ 6.13     $3.00
October 1, 1998--December 31, 1998..........................   $ 7.69     $2.25
January 1, 1999--March 31, 1999.............................   $ 6.00     $4.25
April 1, 1999--June 30, 1999................................   $ 5.63     $4.13
July 1, 1999--September 30, 1999............................   $14.13     $4.75
</TABLE>

    The closing sale price of the Common Stock on September 30, 1999 was
$10.813. On December 17, 1999 the closing price reported on the NASDAQ National
Market System for the Common Stock was $16.875.

    The market price of the Company's Common Stock has fluctuated significantly
and is subject to significant fluctuations in the future.

HOLDERS OF COMMON STOCK

    As of December 17, 1999, there were approximately 65 shareholders of record
of the Company's Common Stock and 14,502,921 shares of common stock outstanding.

DIVIDEND POLICY

    The Company has never paid any cash dividends on the Common Stock and does
not anticipate paying dividends in the foreseeable future. The Company intends
to retain any future earnings for use in the Company's business. The payment of
any future dividends will be determined by the Board of Directors in light of
conditions then existing, including the Company's financial condition and
requirements, future prospects, restrictions in financing agreements, business
conditions and other factors deemed relevant by the Board of Directors.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

    The selected financial data set forth below with respect to the Company's
statements of operations for the three fiscal years ended September 30, 1999,
1998 and 1997 and the balance sheets at September 30, 1999 and 1998 are derived
from the consolidated financial statements of the Company included elsewhere in
this Form 10-K. The data set forth below should be read in conjunction with
"Management's Discussion

                                       13
<PAGE>
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and Notes thereto included elsewhere in this
Form 10-K.

<TABLE>
<CAPTION>
                                                          FISCAL YEAR ENDED SEPTEMBER 30,
                                                ----------------------------------------------------
                                                  1999       1998       1997       1996       1995
                                                --------   --------   --------   --------   --------
                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                             <C>        <C>        <C>        <C>        <C>
Statement of Operations Data:
  Revenue.....................................  $ 25,295   $30,855    $22,048    $21,592    $15,014
  Cost of revenue.............................    10,354     9,001      7,061      6,312      4,409
  Research and development....................     7,798     5,588      5,446      2,341      1,365
  Sales and marketing.........................    11,273    10,613      8,703      8,004      5,978
  General and administrative..................     6,297     4,322      3,541      2,610      1,714
  Amortization of acquired technologies.......     6,642        --         --         --         --
  Stock-based consideration...................       173        --         --         --         --
  Non-recurring charge........................        --        --         --         --      1,011
                                                --------   -------    -------    -------    -------
  (Loss) income from operations...............   (17,242)    1,331     (2,703)     2,325        537
  Other income, net...........................       455       593        671        326        138
                                                --------   -------    -------    -------    -------
  (Loss) income before (benefit) provision for
    income taxes..............................   (16,787)    1,924     (2,032)     2,651        675
  (Benefit) provision for income taxes........      (568)      577       (752)     1,167        274
                                                --------   -------    -------    -------    -------
  Net (loss) income...........................  $(16,219)  $ 1,347    $(1,280)   $ 1,484    $   401
  Diluted net (loss) income per common
    share.....................................  $  (1.62)  $   .16    $  (.16)   $   .21    $   .06
  Diluted weighted average number of common
    shares outstanding........................    10,005     8,518      8,056      7,222      6,949
</TABLE>

<TABLE>
<CAPTION>
                                                                     SEPTEMBER 30,
                                                  ----------------------------------------------------
                                                    1999       1998       1997       1996       1995
                                                  --------   --------   --------   --------   --------
                                                                     (IN THOUSANDS)
<S>                                               <C>        <C>        <C>        <C>        <C>
Balance Sheet Data:
  Cash, cash equivalents and short term
    investments.................................  $20,126    $16,436    $15,155    $20,368     $2,967
  Working capital...............................  $16,848    $15,304    $14,684    $17,418     $2,079
  Total assets..................................  $45,358    $31,431    $27,053    $26,310     $9,139
  Total liabilities.............................  $11,342    $11,108    $ 8,513    $ 7,337     $9,498
  Stockholders' equity (deficit)................  $34,016    $20,323    $18,540    $18,973     $ (359)
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

    THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE STATEMENTS CONTAINED IN THIS REPORT THAT ARE NOT PURELY
HISTORICAL ARE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF
THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES AND
EXCHANGE ACT OF 1934, AS AMENDED. FORWARD LOOKING STATEMENTS INCLUDE, WITHOUT
LIMITATION, STATEMENTS CONTAINING THE WORDS "ANTICIPATES", "BELIEVES",
"EXPECTS", "INTENDS", "FUTURE", AND WORDS OF SIMILAR IMPORT WHICH EXPRESS
MANAGEMENT'S BELIEF, EXPECTATIONS OR INTENTIONS REGARDING THE COMPANY'S FUTURE
PERFORMANCE. ALL FORWARD LOOKING STATEMENTS INCLUDED IN THIS REPORT ARE BASED ON
INFORMATION AVAILABLE TO THE COMPANY ON THE DATE HEREOF, AND THE COMPANY HAS NO
OBLIGATION TO UPDATE ANY SUCH FORWARD LOOKING STATEMENTS. THE COMPANY'S ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM ITS HISTORICAL OPERATING RESULTS AND FROM
THOSE ANTICIPATED IN THESE FORWARD LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING, WITHOUT LIMITATION, THOSE SET FORTH BELOW, UNDER "FACTORS
AFFECTING FUTURE OPERATING RESULTS" AND ELSEWHERE IN THIS REPORT.

                                       14
<PAGE>
OVERVIEW

    The Company's products and services and the markets it serves have evolved
and expanded in concert with the rapid advancements in technology and the
elevated focus on human resource management. From its inception in 1982 through
the first half of fiscal year 1993, the Company's product revenue consisted
primarily of DOS-based applicant tracking and succession planning systems. In
June 1993, the Company introduced a Windows-based, client/server staffing
solution, which incorporates high-volume resume-scanning, skills management and
search capabilities. In November 1997, the Company broadened its offerings with
the introduction of WEBHIRE RECRUITER, a service which provides candidate
management functions via the Internet and the World Wide Web. In June 1998, the
Company released WEBHIRE ENTERPRISE, the next generation enterprise-level
automated recruitment solution designed specifically for corporate intranets.
The new product and service releases in fiscal year 1998 enhanced the Company's
enterprise software operating segment and solidified its emerging Internet and
transaction-based solutions segment. Webhire JobPost was added to the Internet
service offerings with the completion of the Junglee transaction in
November 1998.

    Total revenue consists of product revenue and services revenue. Product
revenue is generated in the enterprise software operating segment and is derived
from perpetual end-user licenses to use the Company's products. Product revenue
is recognized upon delivery, provided there are no significant Company
obligations remaining and collectibility of the revenue is probable. Services
revenue from customer maintenance fees for postcontract support is recognized
ratably over the maintenance term, which is typically 12 months. When customer
maintenance fees are included in an initial software license fee, the Company
allocates approximately 15 - 17% of the software license fee to the first year's
maintenance. The amount allocated to customer maintenance fees for the first
year is comparable to customer maintenance fees charged separately by the
Company. Other services revenue from training, installation, consulting and
outsourced services (e.g., scanning, acknowledgement mailings) is recognized as
the related services are performed. Services revenue from WEBHIRE RECRUITER and
WEBHIRE JOBPOST is recognized ratably over the service term. All customer
maintenance fees for postcontract support and other services revenue for
training, installation and consulting related to enterprise software licensed is
attributed to the enterprise software operating segment. Services revenue for
WEBHIRE RECRUITER/YAHOO! RECRUITER, WEBHIRE JOBPOST and for outsourced services
is attributed to the Internet and transaction-based solutions segment.

                                       15
<PAGE>
RESULTS OF OPERATIONS
($ EXPRESSED IN THOUSANDS)

    The following table sets forth, for the periods indicated, the percentage of
total revenue represented by each item reflected in the Company's Consolidated
Statements of Operations.

<TABLE>
<CAPTION>
                                                                   FISCAL YEAR ENDED
                                                             ------------------------------
                                                                     SEPTEMBER 30,
                                                             ------------------------------
AS A PERCENTAGE OF TOTAL REVENUE:                              1999       1998       1997
---------------------------------                            --------   --------   --------
<S>                                                          <C>        <C>        <C>
Revenue:
  Product revenue..........................................     31%        55%        49%
  Services revenue--Enterprise.............................     49         38         47
  Services revenue--Internet...............................     20          7          4
                                                               ---        ---        ---
    Total revenue..........................................    100        100        100
                                                               ---        ---        ---
Cost of revenue:
  Product revenue..........................................      3          2          3
  Services revenue--Enterprise.............................     22         21         27
  Services revenue--Internet...............................     16          6          2
                                                               ---        ---        ---
    Total cost of revenue..................................     41         29         32
                                                               ---        ---        ---
Gross margin...............................................     59         71         68
                                                               ---        ---        ---
Operating expenses:
  Research and development.................................     31         18         25
  Sales and marketing......................................     44         35         39
  General and administrative...............................     25         14         16
  Amortization of acquired technologies....................     26         --         --
  Amortization of stock-based consideration................      1         --         --
                                                               ---        ---        ---
    Total operating expenses...............................    127         67         80
                                                               ---        ---        ---
(Loss) income from operations..............................    (68)         4        (12)
Other income, net..........................................      2          2          3
                                                               ---        ---        ---
(Loss) income before (benefit) provision for income
  taxes....................................................    (66)         6         (9)
(Benefit) provision for income taxes.......................     (2)         2         (3)
                                                               ---        ---        ---
Net (loss) income..........................................    (64)%        4%        (6)%
                                                               ===        ===        ===
</TABLE>

    REVENUE

    PRODUCT REVENUE.  Product revenue was $7,755, $16,826 and $10,783 in fiscal
1999, 1998 and 1997, respectively, representing a decrease of 54% from fiscal
1998 to fiscal 1999 and an increase of 56% from fiscal 1997 to fiscal 1998.
Protracted sales cycles resulting from the transition to an Internet/intranet
product line, the introduction in the market of competitive Internet-based and
outsourced solutions, a general stagnation in sales of client-server software
solutions, and Year 2000 and other information technology constraints were the
primary contributors to the decrease in fiscal 1999. The increase in product
revenue in fiscal 1998 resulted largely from an increase in the number of seats
associated with shipments to both new and existing customers as well as an
increase in the average price per seat. Because the Company's product revenue
consists of a small number of large dollar transactions, wide fluctuations can
be experienced from period to period. Such fluctuations are not necessarily
indicative of future results.

    SERVICES REVENUE.  Services revenue--Enterprise was $12,484, $11,912 and
$10,454 in fiscal 1999, 1998 and 1997, respectively, representing an increase of
5% from fiscal 1998 to fiscal 1999 and 14% from fiscal 1997 to fiscal 1998.
Services revenue--Internet increased 139% to $5,056 for fiscal 1999 from $2,117
for

                                       16
<PAGE>
fiscal 1998. Services revenue--Internet increased 161% to $2,117 for fiscal 1998
from $811 for fiscal 1997. Continued growth of the WEBHIRE RECRUITER customer
base in the Internet segment and the additional revenue stream introduced with
WEBHIRE JOBPOST account for the increases realized. There were 251 WEBHIRE
RECRUITER customers as of September 30, 1999 compared to 47 at the end of the
previous fiscal year.

    COST OF REVENUE

    COST OF PRODUCT REVENUE.  Cost of product revenue includes royalty payments
for third-party software embedded in the Company's products and costs of
documentation and shipping. Cost of product revenue was 9%, 4% and 7% of product
revenue in fiscal 1999, 1998 and 1997, respectively. The percentage increase for
fiscal 1999 is due primarily to increased royalties due under third party
licensing arrangements for the WEBHIRE ENTERPRISE product. The percentage
decrease for fiscal 1998 was due primarily to favorable rate revisions in
royalties due.

    COST OF SERVICES REVENUE.  Cost of services revenue includes all costs of
maintaining the client services organization and the Internet and
transaction-based solutions segment operations, including salaries and
personnel-related expenses, travel, outside consulting services, facilities cost
and, to a lessor extent, third party scanning services and royalty payments for
software maintenance.

    Cost of services revenue--Enterprise decreased 12% to $5,580 for fiscal 1999
from $6,347 for fiscal 1998. Cost of services revenue--Enterprise increased 9%
to $6,347 for fiscal 1998 from $5,838 for fiscal 1997. The reduction in fiscal
1999 is due to management's cost containment measures. The increase in fiscal
1998 is principally attributable to increased personnel and associated costs to
support a larger client base and proportionately higher services revenue.

    Cost of services revenue--Internet increased 101% to $4,068 for fiscal 1999
from $2,023 for fiscal 1998. Cost of services revenue--Internet increased 290%
to $2,023 for fiscal 1998 from $519 for fiscal 1997. The increases in absolute
dollars for both periods are principally attributable to costs associated with
supporting the expanding WEBHIRE RECRUITER customer base and, for the fiscal
1999 period, the introduction of Webhire JobPost.

    OPERATING EXPENSES

    RESEARCH AND DEVELOPMENT.  Research and development expenses include all
costs associated with the product engineering and quality functions, including
salaries and personnel-related expenses, travel, outside consulting services and
facilities costs. Research and development expenses were $7,798 or 31% of total
revenue for fiscal 1999 as compared to $5,588 or 18% of total revenue for fiscal
1998 and $5,446 or 25% of total revenue for fiscal 1997. The increases in
absolute dollars for the years presented are primarily due to increases in both
personnel and consulting expenses in support of the Company's new and existing
product development initiatives and its quality assurance programs. The Internet
and transaction-based solutions segment accounted for 51%, 29% and 33% of total
research and development expenses in fiscal 1999, 1998 and 1997, respectively.
Research and development expenses will vary from period to period as a
percentage of total revenue dependent upon the stage in product development and
the requisite investment funding of ongoing projects. The Company considers
continued investment in research and development to be integral to its future
success. All of the Company's research and development costs have been expensed
as incurred.

    SALES AND MARKETING.  Sales and marketing expenses include promotional costs
and trade shows and costs associated with personnel involved in sales and
marketing functions, including salaries, commissions and other personnel-related
expenses, travel, outside consulting services and facilities costs. Sales and
marketing expenses were $11,273 or 44% of total revenue for fiscal 1999 as
compared to $10,613 or 35% of total revenue for fiscal 1998 and $8,703 or 39% of
total revenue for fiscal 1997. The increase in absolute dollars in fiscal 1999
from fiscal 1998 is due primarily to the increase in sales costs associated with
the ramping up of the Internet sales organization and Webhire JobPost,
introduced in the first quarter of fiscal

                                       17
<PAGE>
1999. There were 26 employees in the Internet sales organization as of
September 30, 1999 as compared to 5 at the end of the previous year. The
increase in absolute dollars in fiscal 1998 from fiscal 1997 was due primarily
to increased commissions expense resulting from the increase in revenue and to
the sales and marketing costs associated with WEBHIRE RECRUITER, introduced in
the first quarter of fiscal 1998. The Company expects that sales and marketing
expenses will increase in absolute dollars and will vary from year to year as a
percentage of total revenue.

    GENERAL AND ADMINISTRATIVE.  General and administrative expenses consist
principally of costs for corporate operations personnel (executive, finance and
accounting, information technology, human resources, legal and administrative),
professional fees and other general corporate expenses. General and
administrative expenses were $6,297 or 25% of total revenue for fiscal 1999 as
compared to $4,322 or 14% of total revenue for fiscal 1998 and $3,541 or 16% of
total revenue for fiscal 1997. The absolute dollar increases for both periods
are primarily the result of personnel increases and investments in systems in
support of the Internet operations. Increased accounts receivable reserves also
contributed to the fiscal 1999 increase.

    AMORTIZATION OF ACQUIRED TECHNOLOGIES

    During fiscal 1999, the Company acquired certain technologies in connection
with an asset purchase from Amazon.com and the acquisition of HireWorks, Inc.
(see Note 4 to the Consolidated Financial Statements). The investments in these
technologies are being amortized over a two year life from the respective
transaction dates.

    OTHER INCOME, NET

    Other income was $455, $593 and $671 in fiscal 1999, 1998 and 1997,
respectively. The variances from period to period are due to fluctuations in the
average combined cash and cash equivalents and short- and long-term investment
balances. The Company expects to continue to yield investment income on its
average balance of combined cash and cash equivalents and short- and long-term
investments at an average rate comparable to that experienced for fiscal 1999.

    (BENEFIT) PROVISION FOR INCOME TAXES

    The Company's effective tax rate was (3%), 30%, (37%) for the fiscal years
ended 1999, 1998 and 1997, respectively. The changes in the effective tax rate
for both fiscal 1999 as compared to fiscal 1998 and for fiscal 1998 as compared
to fiscal 1997 relate principally to the generation of income or losses from
operations during the respective periods.

LIQUIDITY AND CAPITAL RESOURCES

    At September 30, 1999, the Company had cash and cash equivalents and
short-and long-term investments of $20,126, an increase of $2,797 from $17,329
at September 30, 1998. Working capital was $16,848 at September 30, 1999 as
compared to $15,304 at September 30, 1998, an increase of $1,544.

    Cash used in operating activities was $6,187 during the year ended
September 30, 1999. Cash used in operating activities consisted mainly of the
net loss for the 1999 fiscal year of $16,219 partially offset by the effects of
depreciation and amortization of $8,754 and of fluctuations in certain assets
and liabilities.

    Cash used in investing activities was $2,652 during the year ended
September 30, 1999. Cash used in investing activities consisted mainly of
purchases of technologies aggregating $7,167 and of property and equipment of
$3,191 (primarily computer equipment) partially offset by the net proceeds of
$7,557 from short- and long-term investment activity.

                                       18
<PAGE>
    Net cash provided by financing activities for the year ended September 30,
1999 was $19,193, consisting principally of the net proceeds from the SOFTBANK
stock issuance of $18,983, which was consummated on September, 1999.

    To date, the Company has not invested in derivative securities or any other
financial instruments that involve a high level of complexity or risk. Cash has
been, and the Company contemplates that it will continue to be, invested in
interest-bearing, investment grade securities.

    From time to time, the Company may evaluate potential acquisitions of
products, businesses and technologies that may complement or expand the
Company's business. Any such transactions consummated may use a portion of the
Company's working capital and/or require the issuance of equity or debt.

    The Company believes that its current cash and cash equivalent balance will
be sufficient to meet its working capital expenditure requirements through
fiscal 2000. Because operating and investing activities are expected to use cash
in the near term, any future growth will more likely than not require the
Company to obtain additional equity or debt financing.

IMPACT OF YEAR 2000 ISSUE

    The Year 2000 issue results from computer programs written using two digits
rather than four to define the applicable year. Any of the Company's computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities. The following paragraphs in this section
include "Year 2000 readiness disclosure" within the meaning of the Year 2000
Information and Readiness Disclosure Act.

    The Company has attempted to make an assessment with regard to whether its
own internal information systems are Year 2000 compliant. In particular, the
Company has upgraded its accounting (excluding payroll) and customer management
systems with systems that are warranted by the vendors to be Year 2000
compliant. In addition, the Company plans to seek assurances from its existing
vendors whose systems are not warranted to be Year 2000 compliant that such
systems are Year 2000 compliant. Currently, the Company does not anticipate
purchasing additional systems. The Company does not separately track the
internal costs incurred for Year 2000 projects. Although the Company does not
believe that any additional Year 2000 compliance-related costs will be
significant, there can be no such assurance. Any failure of third-party
equipment or software comprising any part of the Company's systems to operate
properly with regard to Year 2000 and thereafter could require the Company to
incur unanticipated expenses to address associated problems. The Company has
received assurances that all material embedded systems included in the Company's
products are Year 2000 compliant.

    The Company believes, based on an internal assessment, that the current
versions of its software products are Year 2000 compliant. The Company limits
its contractual warrantees on Year 2000 compliance to objective performance
standards that the Company has tested, and the Company makes no warrantees for
nonconformance if the Company's software products are combined with other
software or data that are not conducive to accurately calculating, comparing or
sequencing date and time data between the twentieth and twenty-first centuries.
The Company has no plan to ascertain whether the internal systems and products
of its customers are Year 2000 compliant. Although the Company has not been
involved in any litigation or proceeding to date involving its products or
services related to Year 2000 issues, there can be no assurance that the Company
will not in the future be required to defend its products or services or to
negotiate resolutions of claims based on Year 2000 issues.

    The Company does not have any specific contingency plans if any Year 2000
problems develop with respect to the Company's embedded systems, systems
acquired from vendors or systems used by third parties with whom the Company has
a mutual relationship. Contingency plans will be developed if it

                                       19
<PAGE>
appears the Company or its key vendors will not be Year 2000 compliant, and such
non-compliance is expected to have a material adverse impact on the Company's
operations.

    Year 2000 issues may affect the purchasing patterns of customers and
potential customers in a variety of ways. Many companies are expending
significant resources to replace or remedy their current hardware and software
systems for Year 2000 compliance. These expenditures may result in reduced funds
available to purchase software products such as those offered by the Company.
The Company does not believe that there is any practical way to ascertain the
extent of, and has no plan to address problems associated with such a reduction
in purchasing resources of its customers. Any such reduction could, however,
result in a material adverse effect on the Company's business, operating results
and financial condition. The Year 2000 issue is pervasive and complex, as
virtually every computer operation will be affected in some way. Consequently,
no assurance can be given that Year 2000 compliance can be achieved without
significant additional costs.

FACTORS AFFECTING FUTURE OPERATING RESULTS

    An investment in Webhire's equity securities involves various risks. Current
and prospective investors in Webhire's securities should carefully consider the
following risk factors. These risk factors are not exhaustive and should be read
together with the other reports and documents that we file with the Securities
and Exchange Commission, which may include additional or more current
information that is important to an investment in Webhire.

TO COMPETE EFFECTIVELY, WE MUST ADAPT QUICKLY TO ADVANCES IN TECHNOLOGY AND
CHANGES IN CUSTOMER REQUIREMENTS.

    The market for automated recruiting products and services is undergoing
rapid changes including continuing advances in technology and changes in
customer requirements and preferences. These market dynamics have been amplified
by the emergence of the Internet as a tool for recruiting solutions. Our future
success will depend in significant part on our ability to continually improve
the performance, features and reliability of our software and services in
response to the evolving demands of the marketplace and competitive product
offerings. Any failure on our part to quickly develop products and services that
address changes in technology or customer demands will likely result in loss of
market share to a competitor.

OUR BUSINESS IS DEPENDENT ON THE DEVELOPMENT AND MAINTENANCE OF THE INTERNET
INFRASTRUCTURE.

    Our success will depend, in large part, upon the development and maintenance
of the Internet infrastructure as a reliable network backbone with the necessary
speed, data capacity and security, and timely development of enabling products,
such as high speed modems, for providing reliable Internet access and services.
We cannot assure you that the Internet infrastructure will continue to
effectively support the demands placed on it as the Internet continues to
experience increased numbers of users, greater frequency of use or increased
bandwidth requirements of users. Even if the necessary infrastructure or
technologies are developed, we may have to spend considerable resources to adapt
our offerings accordingly. Furthermore, in the past, the Internet has
experienced a variety of outages and other delays. Any future outages or delays
could affect the Internet sites on which our customers' job advertisements are
posted and the willingness of employers and job seekers to use our online
recruitment offerings. If any of these events occur, our business, results of
operations and financial condition could be materially and adversely affected.

                                       20
<PAGE>
WEBHIRE HAS RECENTLY EXPANDED ITS TECHNOLOGY INTO SEVERAL NEW BUSINESS AREAS AND
CANNOT BE CERTAIN THAT ITS EXPANSION WILL BE SUCCESSFUL.

    Webhire has recently expanded its technology into products and services that
can be offered over the Internet to foster long-term growth. These areas are
relatively new to Webhire's product development, sales and marketing personnel
and Webhire cannot be assured that the markets for these products and services
will develop or that it will be able to compete effectively or will generate
significant revenues in these new areas making Webhire's success in this area
difficult to predict.

    The success of Internet computing and, in particular, the Company's current
Internet computing software products and services is difficult to predict
because Internet computing represents a method of computing that is new. The
success of Internet computing will depend in large measure on (i) the lower cost
of ownership of Internet computing relative to client/server architecture,
(ii) the ease of use and administration relative to client/server architecture,
and (iii) how hardware and software vendors choose to compete in this market.
There can be no assurances that sufficient numbers of vendors will undertake
this commitment, that the market will accept Internet computing or that Internet
computing will generate significant revenues for the company.

OUR BUSINESS MODEL IS UNPROVEN.

    We began offering online subscriptions for Webhire Recruiter in fiscal 1998.
Product revenue from software sales are expected over a relatively short period
of time to become a much smaller component of our revenue. Maintenance revenue
associated with product sales will also decrease over time. Our long-term
business model and profit potential are unproven. To be successful, we must
develop and market online recruitment offerings that achieve broad market
acceptance by employers, job seekers and interactive media companies.

    It is possible that we will be required to further adapt our business model
in response to additional changes in the online recruitment market or if our
current business model is not successful. If we are not able to anticipate
changes in the online recruitment market or if our business model is not
successful, our business, financial condition and results of operations will be
materially and adversely affected.

WE MAY BE UNABLE TO CONTINUE TO BUILD CUSTOMER AWARENESS.

    We believe that continuing to build brand recognition is critical to
achieving widespread acceptance of our online recruitment offerings. Brand
recognition is a key differentiating factor among providers of online
recruitment offerings and we believe it could become more important as
competition in the online recruitment market increases. We may find it necessary
to accelerate expenditures on our sales and marketing efforts or otherwise
increase our financial commitment to creating and maintaining brand awareness
among potential customers. If we fail to successfully promote and maintain our
brand or incur significant expenses in promoting our brand, our business,
results of operations and financial condition could be materially and adversely
affected.

THE GROWTH IN DEMAND FOR AUTOMATED RECRUITING SOFTWARE AND SERVICES AND THE USE
OF THE INTERNET AS A RECRUITING MEDIUM ARE UNCERTAIN.

    Our future success is substantially dependent on broader recognition of the
potential benefits of automated recruiting software and services and the growth
in demand for these products and services. It is difficult to assess the size of
the market that will develop and the rate at which it will develop. If the
market does not develop as we anticipate, or if it develops more slowly than we
expect, our business, operating results and financial condition will be
materially and adversely affected.

    Our future is highly dependent on a significant increase in the use of the
Internet as a recruiting medium. The online recruitment market is new and
rapidly evolving, and we cannot yet gauge its

                                       21
<PAGE>
effectiveness as compared to traditional recruiting methods. As a result, demand
and market acceptance of online recruitment offerings are uncertain. The
adoption of online recruiting, particularly by those entities that have
historically relied upon traditional methods of recruiting, requires the
acceptance of a new way of conducting business, exchanging information and
advertising for jobs. We cannot assure you that the online recruitment market
will continue to emerge or become sustainable. If the online recruitment market
fails to develop or develops more slowly than we expect, our business, results
of operations and financial condition will be materially and adversely affected.

OUR COMPUTER SYSTEMS COULD FAIL OR OVERLOAD.

    The success of our online recruitment offerings is highly dependent on the
efficient and uninterrupted operation of our computer and communications
systems. Power loss, telecommunications failures, computer viruses, electronic
break-ins or other similar disruptive problems could damage or cause
interruptions in these systems. If our systems are affected by any of these
occurrences, our business, results of operations and financial condition could
be materially and adversely affected. Our insurance policies may not cover, or
if covered, may not adequately compensate us for, any losses that may occur due
to any failures or interruptions in our systems. We do not presently have any
secondary "off-site" systems or a formal disaster recovery plan.

    In addition, Webhire must accommodate a high volume of traffic and deliver
frequently updated information. Webhire.com has in the past and may in the
future experience slower response times or decreased traffic for a variety of
reasons. In addition, our users depend on Internet service providers and other
internet site operators for access to Webhire.com. Many of the Internet service
providers have experienced significant outages in the past, and could experience
outages, delays and other difficulties due to system failures unrelated to our
systems.

    If we experience any of these problems, our business, results of operations
and financial condition could be materially and adversely affected.

IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL AS NEEDED IN THE FUTURE, OUR
BUSINESS MAY BE ADVERSELY AFFECTED.

    We currently anticipate that our available cash will be sufficient to meet
our anticipated working capital and capital expenditure requirements through
fiscal 2000. We may need to raise additional capital, however, to fund more
rapid expansion to develop new and to enhance existing services to respond to
competitive pressures, and to acquire complementary services, businesses or
technologies. If we raise additional funds through further issuances of equity
or convertible debt securities, the percentage of ownership of our current
stockholders will be reduced and such securities may have rights, preferences
and privileges senior to those of our current stockholders. In addition, we may
not be able to obtain additional financing on terms favorable to us, if at all.
If adequate funds are not available or are not available on terms favorable to
us, our business, results of operations and financial condition could be
materially and adversely affected.

OUR NEW PRODUCT INTRODUCTIONS MAY HAVE DEFECTS WHICH COULD RESULT IN ADVERSE
PUBLICITY OR HAVE OTHER NEGATIVE EFFECTS.

    As the marketplace for recruiting solutions continues to evolve, we plan to
develop and introduce new products and services to enable us to effectively meet
the changing needs of the market. Products as complex as those we offer may
contain undetected errors when first introduced or when new versions are
released. In the past, despite prior testing, we have discovered software errors
in some of our products after their introduction. Product defects may result in
adverse publicity, loss of or delay in market acceptance, injury to our
reputation and brand awareness, or claims against us, any one of which could
have a material adverse effect on our business, financial condition and results
of operations.

                                       22
<PAGE>
WE HAVE SIGNIFICANT COMPETITION FROM A VARIETY OF SOURCES.

    The market for recruitment solutions is intensely competitive and highly
fragmented. We compete with companies that offer a single database "job board"
solution, such as Monster.com and Career Mosaic, as well as newspapers,
magazines and other traditional media companies that provide online job search
services, such as Careerpath.com. We also compete with other large Internet
information portals, such as AOL.com. In addition, we compete with traditional
recruiting services, such as newspapers and employee recruiting agencies that
provide or source full-time, contract or temporary labor, for a share of
employers' total recruiting budgets. We expect to face additional competition as
other established and emerging companies, including print media companies and
employee recruiting agencies with established brands, enter the online
recruitment market.

    Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical, marketing and other
resources than we do. In addition, current and potential competitors may make
strategic acquisitions or establish cooperative relationships to expand their
offerings and to offer more comprehensive solutions.

    We believe that there will be rapid business consolidation in the online
recruitment industry. Accordingly, new competitors may emerge and rapidly
acquire significant market share. In addition, new technologies will likely
increase the competitive pressures that we face. The development of competing
technologies by market participants or the emergence of new industry standards
may adversely affect our competitive position. An increase in competition could
result in price reductions, render our existing software and services obsolete
or unmarketable and/or result in loss of market share.

WE MUST MANAGE OUR GROWTH IN ORDER TO ACHIEVE DESIRED RESULTS.

    The evolution of our business and the expansion of our customer base has
resulted in substantial growth in the number of our employees and the scope of
our operations of the last few years. Our future results of operations will
depend in part on the ability of our officers and other key employees to
continue to implement our operational, customer support, and financial control
systems and to expand, train, and manage our employee base.

THE SUCCESSFUL OPERATION OF OUR BUSINESS DEPENDS IN LARGE PART ON OUR
RELATIONSHIPS WITH THIRD PARTIES.

    A key element of our business strategy is to develop relationships with
leading industry organizations in order to increase our market presence, expand
distribution channels and broaden our product line. We believe that our
continued success depends in large part on our ability to maintain such
relationships and cultivate additional relationships. There can be no assurance
that our existing strategic partners will not discontinue their relationships
with us, or that we will be able to successfully develop additional strategic
relationships.

    In addition, certain technology incorporated in our software is licensed
from third parties on a nonexclusive basis. The termination of any of these
licenses, or the failure of the third party licensors to adequately maintain or
update their products, could result in delay in our ability to ship certain of
our products while we seek to implement technology offered by alternative
sources. In addition, any required replacement licenses could prove more costly
than our current license relationships and might not provide technology as
powerful and functional as the third-party technology we currently license.
Also, any such delay, to the extent it becomes extended or occurs at or near the
end of a fiscal quarter, could have a material adverse effect on our results of
operations for that quarter. While it may be necessary or desirable in the
future to obtain other licenses relating to one or more of our products or
relating to current or future technologies, we may not be able to do so on
commercially reasonable terms or at all.

                                       23
<PAGE>
OUR OPERATING RESULTS MAY BE SUBJECT TO SIGNIFICANT QUARTERLY FLUCTUATIONS.

    Our results of operations have been, and may in the future be, subject to
significant quarterly fluctuations. Such fluctuations could be due to a variety
of factors, including the following:

    - the fact that our product revenue consists of a relatively small number of
      large dollar transactions and, as a result, may fluctuate significantly
      from one quarter to another if the number of transactions completed varies
      slightly;

    - the introduction of new products by us or our competitors;

    - the capital spending patterns of our customers;

    - our sales incentive strategy which is based in part on annual sales
      targets;

    - the fact that a substantial portion of our product revenue often occurs
      during the last few weeks of each quarter and, as a result, any delays in
      orders or shipments are more likely to result in revenue not being
      recognized until the following quarter; and

    - our current expense levels are based in part on our expectations of future
      revenue and, as a result, net income for a given period could be
      disproportionately affected by any reduction in revenue.

    To the extent our level of revenue in the future decreases from past levels
or in some future quarter our revenue or operating results are below the
expectations of stock market securities analysts and investors, our
profitability and the price of our common stock is likely to be materially and
adversely affected.

ONE LARGE STOCKHOLDER BENEFICIALLY OWNS APPROXIMATELY 37% OF OUR OUTSTANDING
STOCK, IS REPRESENTED ON OUR BOARD OF DIRECTORS AND HAS RIGHTS TO PARTICIPATE IN
CERTAIN WEBHIRE TRANSACTIONS: SUCH STOCKHOLDER'S INTERESTS COULD CONFLICT WITH
YOURS AND SIGNIFICANT SALES OF STOCK HELD BY IT COULD HAVE A NEGATIVE EFFECT ON
OUR STOCK PRICE.

    SOFTBANK beneficially owns approximately 37% of our outstanding common
stock. In addition, Yahoo! Inc., of which SOFTBANK owns approximately 27.8%,
owns approximately 2.0% of our outstanding common stock. As a result of their
stock ownership, SOFTBANK and its affiliate have significant control over all
matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions, and their interests could
conflict with those of other stockholders. Such concentration of ownership may
also have the effect of delaying or preventing a change in control of Webhire.
In addition, sales of significant amounts of shares held by these entities, or
the prospect of these sales, could adversely affect the market price of our
common stock.

    SOFTBANK has the right to nominate two members of our Board of Directors,
which currently consists of an aggregate of 5 members (one of whom is a SOFTBANK
representative), and so long as it continues to hold 10% of our outstanding
common stock, it is entitled to nominate one director each time a class of
directors in which one of its representatives serves is subject to election.
Further, one of SOFTBANK's directors is entitled to serve as a member of the
Board's audit and compensation committees. As a result of SOFTBANK's board
representation, it has significant influence in all Webhire matters requiring
Board approval.

    In addition, in the event we propose to enter into a joint venture for
operations in the United Kingdom, continental Europe or Japan or a business
transaction with any competitor of SOFTBANK's affiliate ZDNet, we are required
by the terms of the stock purchase agreement pursuant to which SOFTBANK acquired
our common stock to offer SOFTBANK or one of its affiliates the opportunity to
participate in the transaction on terms and conditions mutually acceptable to us
and them. As a result of these requirements, potential third parties may be
reluctant to negotiate joint ventures or business

                                       24
<PAGE>
transactions with us because they know SOFTBANK and its affiliates will be given
the opportunity to participate in such transactions.

WE DEPEND ON KEY PERSONNEL WHO MAY NOT CONTINUE TO WORK FOR US.

    Our future success depends to a significant extent on our senior management
and other key employees, many of whom have acquired specialized knowledge and
skills with respect to our operations. As a result, if any of these individuals
were to leave Webhire, we could face substantial difficulty in hiring qualified
successors and could experience a loss of productivity while any such successor
obtains the necessary training and experience. We also believe that our future
success will depend in large part on our ability to attract and retain
additional key employees. Competition for qualified personnel in the high tech
industry is intense. If we do not succeed in attracting new personnel, or
retaining and motivating existing personnel, our business will be adversely
affected.

OUR STOCK PRICE MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS AND OUR
STOCKHOLDERS MAY NOT BE ABLE TO RESELL THEIR SHARES AT OR ABOVE THEIR PURCHASE
PRICE.

    We cannot predict the extent to which investors' interest in us will lead to
a stable trading market or how liquid the market might become. The stock market
in general and the market prices of shares in technology companies, particularly
those such as ours that offer Internet-based products and services, have been
extremely volatile and have experienced fluctuations that have often been
unrelated or disproportionate to the operating performance of such companies.
The market price of our common stock could be highly volatile and subject to
wide fluctuations in response to many factors, including the following:

    - quarterly variations in our results of operations;

    - adverse business developments impacting Webhire;

    - changes in financial estimates by securities analysts;

    - investor perception of Webhire and online recruitment services in general;

    - announcements by our competitors of new products and services; and

    - fluctuations in our common stock price may affect our visibility and
      credibility in the online recruitment market.

In the event of broad fluctuations in the market price of our common stock, our
stockholders may be unable to resell your shares at or above your purchase
price.

IT IS DIFFICULT TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS.

    We regard our intellectual property rights as critical to our success and
rely on a combination of copyright and trade secret laws, employee and third
party non-disclosure agreements and other methods to protect these rights. We
cannot be assured that the measures we have taken to protect our proprietary
rights will be adequate to prevent misappropriation of our technology or
independent development by others of similar technology. Our inability to
protect our proprietary rights would have a material adverse effect on our
business, financial condition and results of operations.

WE MAY BE SUBJECT TO COSTLY INTELLECTUAL INFRINGEMENT CLAIMS.

    As the number of products and services in our industry increases and these
solutions further overlap, the likelihood that our current or future products
may become subject to infringement claims increases. There has been substantial
litigation regarding copyright, patent and other intellectual property rights
involving computer software companies. Any claims or litigation, with or without
merit, could be costly and could result in a diversion of management's
attention, which could have a material adverse effect on our

                                       25
<PAGE>
business, financial condition and results of operations. Adverse determinations
in such claims or litigation may require us to obtain a license and/or pay
damages, which could also have a material adverse effect on our business,
financial condition and results of operations.

WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS.

    Although we have not experienced any product liability claims to date, the
sale and support of our products and the incorporation of products from other
companies may entail the risk of product liability claims. Our license
agreements with our customers typically contain provisions intended to limit our
exposure to such claims. For example, we limit our contractual warranties on
"Year 2000" compliance to objective performance standards that we have tested,
and we do not make any warranties for nonconformance if our software products
are combined with other software or data that is not conducive to accurately
calculating, comparing or sequencing date and time data between the twentieth
and twenty-first centuries. There can be no guarantee, however, that such
provisions will be effective in limiting our exposure. A successful product
liability action brought against us could adversely affect our business,
financial condition and results of operations.

THE YEAR 2000 PROBLEM COULD AFFECT OUR PRODUCTS, OUR INTERNAL INFORMATION
SYSTEMS AND/OR OUR CUSTOMERS.

    PRODUCTS.  We believe, based on an internal assessment, that the current
versions of our software products that are licensed to customers are Year 2000
compliant. In addition, we expect the software that is used in our service
offerings is to be compliant by December 31, 1999. We also limit our contractual
warranties on Year 2000 compliance to objective performance standards that we
have tested, and we make no warranties for nonconformance if our software
products are combined with other software or data that are not conducive to
accurately calculating, comparing or sequencing date and time data between the
twentieth and twenty-first centuries. Nonetheless, in the event that the current
versions of our licensed software products are not Year 2000 compliant, or that
the software that is used in our service offerings is not Year 2000 compliant,
there can be no assurance that we will not be required to defend our products or
services or negotiate resolutions of claims based on Year 2000 issues.

    INTERNAL INFORMATION SYSTEMS.  We have attempted to make an assessment with
regard to whether our own internal information systems are Year 2000 compliant
and have upgraded certain systems to make them Year 2000 compliant. In addition,
we have sought assurances from our existing vendors whose systems are not
warranted to be Year 2000 compliant that such systems are Year 2000 compliant.
To the extent any of our internal information systems fail to be Year 2000
compliant, however, we may be required to incur unanticipated expenses to
address associated problems.

    CUSTOMERS.  Year 2000 issues are affecting the purchasing patterns of
customers and potential customers in a variety of ways. Many companies are
expending significant resources to replace or remedy their current hardware and
software systems for Year 2000 compliance. These expenditures may result in
reduced funds available to purchase our software products. We do not believe
that there is any practical way to ascertain the extent of such a reduction in
purchasing resources of our customers. Any such reduction could, however, have a
material adverse effect on our business, operating results and financial
condition.

    GENERAL.  The Year 2000 issue is pervasive and complex, as virtually every
computer operation will be affected in some way. Consequently, no assurance can
be given that Year 2000 compliance can be achieved without significant
additional costs.

ANTI-TAKEOVER PROVISIONS COULD MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO
ACQUIRE US.

    Our Board of Directors has the authority to issue up to 5,000,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares

                                       26
<PAGE>
without any further vote or action by the stockholders. The rights of the
holders of common stock may be subject to, and may be adversely affected by, the
rights of the holders of any preferred stock that may be issued in the future.
The issuance of preferred stock may have the effect of delaying, deferring or
preventing a change of control of Webhire without further action by the
stockholders any may adversely affect the voting and other rights of the holders
of common stock. We have no present plans to issue shares of preferred stock.
Further, certain provisions of our charter documents, including provisions
eliminating the ability of stockholders to take action by written consent,
providing for a staggered board of directors and limiting the ability of
stockholders to raise matters at a meeting of stockholders without giving
advance notice, may have the effect of delaying or preventing changes in control
or management of Webhire, which could have an adverse effect on the market price
of our stock.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company owns financial instruments that are sensitive to market risks as
part of its investment portfolio. The investment portfolio is used to preserve
the Company's capital until it is required to fund operations. All of these
market-risk sensitive instruments are classified as held-to-maturity and are not
held for trading purposes. The Company does not own derivative financial
instruments in its investment portfolio. The investment portfolio contains
instruments that are subject to the risk of a decline in interest rates.

    Interest Rate Risk--The Company's investment portfolio includes investment
grade debt instruments. These bonds are subject to interest rate risk, and could
decline in value if interest rates fluctuate. Due to the short duration and
conservative nature of these instruments, the Company does not believe that it
has a material exposure to interest rate risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The Consolidated Financial Statements and Supplementary Data of the Company
are listed under Part IV, Item 14, of this Form 10-K.

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

    None.

                                       27
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by this Item 10 is hereby incorporated by reference
to the text appearing under Part I, Item 1--Business under the caption
"Executive Officers and Directors" in this Report, and by reference to the
information included under the headings "Information Regarding Directors",
"Executive Officers" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's definitive Proxy Statement for the 1999 Annual
Meeting of Stockholders to be filed by the Company within 120 days after the
close of its fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

    The information required by this Item 11 is hereby incorporated by reference
to the information under the heading "Executive Compensation" in the Company's
definitive Proxy Statement for the 1999 Annual Meeting of Stockholders to be
filed by the Company within 120 days after the close of its fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this Item 12 is hereby incorporated by reference
to the information under the heading "Principal And Management Stockholders" in
the Company's definitive Proxy Statement for the 1999 Annual Meeting of
Stockholders to be filed by the Company within 120 days after the close of its
fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this Item 13 is hereby incorporated by reference
to the information under the heading "Certain Relationships and Related
Transactions", if any, in the Company's definitive Proxy Statement for the 1999
Annual Meeting of Stockholders to be filed by the Company within 120 days after
the close of its fiscal year.

                                       28
<PAGE>
                                    PART IV

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

(A)(1) FINANCIAL STATEMENTS

    1.  Report of Arthur Andersen LLP dated October 21, 1999 (See Page F-2
       hereof).

    2.  Consolidated Balance Sheets as of September 30, 1999 and 1998. (See Page
       F-3 hereof).

    3.  Consolidated Statements of Operations for the years ended September 30,
       1999, 1998 and 1997 (See Page F-4 hereof).

    4.  Consolidated Statements of Stockholders' Equity for the years ended
       September 30, 1999, 1998 and 1997. (See Page F-5 hereof).

    5.  Consolidated Statements of Cash Flows for the years ended September 30,
       1999, 1998 and 1997. (See Page F-6 hereof).

    6.  Notes to Consolidated Financial Statements. (See pages F-7 through F-21
       hereof).

(A)(2) FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
SCHEDULE NO.                                            DESCRIPTION
------------                                            -----------
<S>                                          <C>
Schedule II                                  Valuation and Qualifying Accounts
</TABLE>

    Other schedules are not provided because of the absence of conditions under
which they are required or because the required information is given in the
financial statements or notes thereto.

(A)(3) EXHIBITS

    (a) Exhibits. The following is a complete list of Exhibits filed as part of
       this Form 10-K.

<TABLE>
<CAPTION>
EXHIBIT NO.                                     DESCRIPTION
-----------                                     -----------
<C>                     <S>
      ******2.1         Agreement and Plan of Merger, dated as of July 9, 1999, by
                        and among Webhire, Inc., HWK Acquisition Corp., Hireworks,
                        Inc. and the stockholders of Hireworks, Inc.

           *3.1         Form of Third Amended and Restated Certificate of
                        Incorporation of the Company

           *3.2         Amended and Restated By-laws of the Company
           *4.1         Specimen certificate for shares of Common Stock, $.01 par
                        value, of the Company

          *10.1         Stock Purchase Agreement dated January 5, 1994, as amended,
                        by and between the Company and the Purchasers identified
                        therein

     ******10.1         Stock Purchase Agreement dated July 19, 1999, between
                        Webhire, Inc. and SOFTBANK Capital Partners, LP

          *10.2         Stock Redemption Agreement dated January 5, 1994 between the
                        Company and J. Paul Costello, Lars D. Perkins and John P.
                        Jopling
    +******10.2         Yahoo! Inc. and Webhire, Inc. Services Agreement dated as of
                        June 3, 1999, by and between Yahoo! Inc. and Webhire, Inc.

          *10.3         Registration Rights Agreement dated January 5, 1994 between
                        the Company and Lars D. Perkins, J. Paul Costello and John
                        P. Jopling

    +******10.3         Amendment No. 1 to Yahoo! Inc. and Webhire, Inc. Services
                        Agreement dated July 27, 1999, by and between Yahoo! Inc.
                        and Webhire, Inc.

          *10.4         Restrac, Inc. 1994 Stock Option Plan
          *10.5         Restrac, Inc. 1996 Stock Option and Grant Plan
</TABLE>

                                       29
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                                     DESCRIPTION
-----------                                     -----------
<C>                     <S>
        ***10.6         Restrac, Inc. 1996 Employee Stock Purchase Plan

          *10.7         Paid-up Software License dated as of January 1, 1993 by and
                        between the Company and Costello and Company, Inc.

         +*10.8         VAR Agreement dated November 27, 1991 between the Company
                        and Verity, Inc. and amendments #1 and #2 thereto

         +*10.9         Value Added Reseller License Agreement dated August 31, 1992
                        by and between The Analytic Sciences Corporation and the
                        Company and all amendments thereto

          *10.12        Form of Director's Indemnification Agreements

          *10.13        Form of Employment Agreement with Senior Management

          *10.14        Form of Addendum to Employment Agreement with Senior
                        Management

          *10.15        Agreement Pertaining to the Election of Directors dated
                        January 5, 1994 by Lars D. Perkins, J. Paul Costello and the
                        Purchasers identified therein

          *10.16        Shareholder Agreement dated January 5, 1994 by and among the
                        Company and the Shareholders identified therein

          *10.17        Agreement Pertaining to Certain Activities dated January 5,
                        1994 by and between Lars D. Perkins and the Company

          *10.18        Termination Agreement dated September 30, 1995 by and among
                        the Company and Borwick International, Inc. and Irving P.
                        Borwick

          *10.19        Finder's Fee and Non-Competition Agreement dated September
                        30, 1995 between the Company and Irving P. Borwick

        ***10.22        Lease agreement dated November 12, 1996 between Boston
                        Properties, Inc. and the Company

        +**10.24        Amendment #3 to VAR Agreement dated November 27, 1991,
                        between the Company and Verity, Inc.

      +****10.25        Amendment #4 to VAR Agreement dated November 27, 1991,
                        between the Company and Verity, Inc.

      +****10.26        VAR Agreement dated June 25, 1998, between the Company and
                        Prime Recognition Corporation

     +*****10.27        Software and Trademark License Agreement dated November 18,
                        1998 between the Company, Amazon.com, Inc. and Junglee
                        Corporation

    *******10.28        Amended and Restated Restrac, Inc. 1996 Stock Option and
                        Grant Plan

    *******10.29        Amended and Restated Restrac, Inc. 1996 Employee Stock
                        Purchase Plan

        ***21.1         Subsidiaries of registrant

           23.1         Consent of Arthur Andersen LLP

           27.1         Financial Data Schedule.
</TABLE>

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

*        Incorporated by reference to the specified exhibit with the
         corresponding numbers in the Company's Registration Statement on
         Form S-1, as amended (No. 333-03521), declared effective on July 22,
         1996.

**       Incorporated by reference to the specified exhibit with the
         corresponding numbers in the Company's Annual Report on Form 10- K,
         filed with the Commission on December 27, 1996.

***      Incorporated by reference to the specified exhibit with the
         corresponding numbers in the Company's Annual Report on Form 10- K,
         filed with the Commission on December 27, 1997.

                                       30
<PAGE>
****     Incorporated by reference to the specified exhibit with the
         corresponding numbers in the Company's Annual Report on Form 10- K,
         filed with the Commission on December 29, 1998.

*****    Incorporated by reference to the specified exhibit with the
         corresponding numbers in the Company's Quarterly Report on Form 10- Q,
         filed with the Commission on February 16, 1999.

******   Incorporated by reference to the specified exhibit with the
         corresponding numbers in the Company's Quarterly Report on Form 10-Q,
         filed with the Commission on August 16, 1999.

*******  Incorporated by reference to the specified exhibit with the
         corresponding numbers in the Company's Proxy Statement, filed with the
         Commission on January 7, 1998.

+  Confidential treatment requested as to portions of this document.

(b) Report on Form 8-K.

    The Company has not filed any Form 8-K's during the fourth quarter of 1999.

                                       31
<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 on this 29th day of
December 1999.

<TABLE>
<S>                                                    <C>  <C>
                                                       By:             /s/ MARTIN J. FAHEY
                                                            -----------------------------------------
                                                                         Martin J. Fahey,
                                                                     Chief Executive Officer
</TABLE>

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

<TABLE>
<CAPTION>
                  SIGNATURE                                  TITLE                       DATE
                  ---------                                  -----                       ----
<C>                                            <S>                                 <C>
             /s/ MARTIN J. FAHEY               Director, President and Chief
    ------------------------------------         Executive Officer (Principal      December 29, 1999
               Martin J. Fahey                   Executive Officer)

            /s/ CYNTHIA G. EADES               Chief Financial Officer (Principal
    ------------------------------------         Financial Officer and Principal   December 29, 1999
              Cynthia G. Eades                   Accounting Officer)

             /s/ LARS D. PERKINS
    ------------------------------------       Director, Chairman of the Board     December 29, 1999
               Lars D. Perkins

          /s/ RUSSELL J. CAMPANELLO
    ------------------------------------       Director                            December 29, 1999
            Russell J. Campanello

            /s/ J. PAUL COSTELLO
    ------------------------------------       Director                            December 29, 1999
              J. Paul Costello

             /s/ CHARLES R. LAX
    ------------------------------------       Director                            December 29, 1999
               Charles R. Lax
</TABLE>

                                       32
<PAGE>
                                 WEBHIRE, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Report of Independent Public Accountants....................    F-2

Consolidated Balance Sheets as of September 30, 1999 and
  1998......................................................    F-3

Consolidated Statements of Operations for the Years Ended
  September 30, 1999, 1998 and 1997.........................    F-4

Consolidated Statements of Stockholders' Equity for the
  Years Ended
  September 30, 1999, 1998 and 1997.........................    F-5

Consolidated Statements of Cash Flows for the Years Ended
  September 30, 1999, 1998 and 1997.........................    F-6

Notes to Consolidated Financial Statements..................    F-7
</TABLE>

                                      F-1
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of Webhire, Inc.:

    We have audited the accompanying consolidated balance sheets of
Webhire, Inc., as of September 30, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended September 30, 1999. These consolidated financial
statements and schedule referred to below are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and schedule based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Webhire, Inc. as of September 30, 1999 and 1998, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended September 30, 1999, in conformity with generally accepted accounting
principles.

    Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. Schedule II is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
October 21, 1999 (except with respect to
the matter discussed in Note 12, as to which
the date is December 13, 1999)

                                      F-2
<PAGE>
                                 WEBHIRE, INC.

                          CONSOLIDATED BALANCE SHEETS

                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
                           ASSETS
Current Assets:
  Cash and cash equivalents.................................  $20,126    $ 9,772
  Short-term investments....................................       --      6,664
  Accounts and installments receivable, less allowance for
    doubtful accounts of $700 and $400 at September 30, 1999
    and 1998, respectively..................................    4,693      7,282
  Other current assets......................................    2,321      1,445
  Refundable income taxes...................................      700        135
  Deferred income taxes.....................................       --        900
                                                              -------    -------
      Total current assets..................................   27,840     26,198
                                                              -------    -------
Long-term installments receivable, net......................      444        581
Property and equipment, net.................................    4,593      2,967
Long-term investments.......................................       --        893
Acquired technologies, net of accumulated amortization of
  $6,642 at September 30, 1999..............................   10,770         --
Deferred income taxes.......................................    1,068         --
Other assets, net...........................................      643        792
                                                              -------    -------
      TOTAL ASSETS..........................................  $45,358    $31,431
                                                              =======    =======

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Current portion of capital lease obligations..............  $   578    $   131
  Accounts payable..........................................    1,922      1,799
  Accrued expenses..........................................    3,150      3,272
  Deferred revenue..........................................    5,342      5,481
  Accrued income taxes......................................       --        211
                                                              -------    -------
      Total current liabilities.............................   10,992     10,894
                                                              -------    -------
Deferred income taxes.......................................       --         19
                                                              -------    -------
Deferred rent...............................................      228        195
                                                              -------    -------
Capital lease obligations...................................      122         --
                                                              -------    -------
Commitments (Note 5)
Stockholders' Equity:
  Preferred stock, $.01 par value--Authorized--5,000,000
    shares, Issued and outstanding--none at September 30,
    1999 and 1998...........................................       --         --
  Common stock, $.01 par value--Authorized--30,000,000
    shares, Issued--15,089,067 shares at September 30, 1999,
    9,022,674 shares at September 30, 1998..................      151         90
Additional paid-in capital..................................   49,353     19,502
Treasury stock, at cost.....................................     (831)      (831)
(Accumulated deficit) retained earnings.....................  (14,657)     1,562
                                                              -------    -------
      Total stockholders' equity............................   34,016     20,323
                                                              -------    -------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............  $45,358    $31,431
                                                              =======    =======
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-3
<PAGE>
                                 WEBHIRE, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED SEPTEMBER 30,
                                                             ----------------------------------
                                                                1999        1998        1997
                                                             ----------   ---------   ---------
<S>                                                          <C>          <C>         <C>
Revenue:
  Product revenue..........................................  $    7,755   $  16,826   $  10,783
  Services revenue--Enterprise.............................      12,484      11,912      10,454
  Services revenue--Internet...............................       5,056       2,117         811
                                                             ----------   ---------   ---------
    Total revenue..........................................      25,295      30,855      22,048
                                                             ----------   ---------   ---------
Cost of Revenue:
  Product revenue..........................................         706         631         704
  Services revenue--Enterprise.............................       5,580       6,347       5,838
  Services revenue--Internet...............................       4,068       2,023         519
                                                             ----------   ---------   ---------
    Total cost of revenue..................................      10,354       9,001       7,061
                                                             ----------   ---------   ---------
Gross margin...............................................      14,941      21,854      14,987
                                                             ----------   ---------   ---------
Operating Expenses:
  Research and development.................................       7,798       5,588       5,446
  Sales and marketing......................................      11,273      10,613       8,703
  General and administrative...............................       6,297       4,322       3,541
Amortization of acquired technologies......................       6,642          --          --
  Amortization of stock-based consideration................         173          --          --
                                                             ----------   ---------   ---------
    Total operating expenses...............................      32,183      20,523      17,690
                                                             ----------   ---------   ---------
(Loss) income from operations..............................     (17,242)      1,331      (2,703)
Other income, net..........................................         455         593         671
                                                             ----------   ---------   ---------
(Loss) income before (benefit) provision for income
  taxes....................................................     (16,787)      1,924      (2,032)
(Benefit) provision for income taxes.......................        (568)        577        (752)
                                                             ----------   ---------   ---------
Net (loss) income..........................................  $  (16,219)  $   1,347   $  (1,280)
                                                             ==========   =========   =========
Basic and diluted net (loss) income per common share.......  $    (1.62)  $     .16   $    (.16)
                                                             ==========   =========   =========
Basic weighted average number of common shares
  outstanding..............................................  10,004,662   8,273,177   8,056,272
                                                             ==========   =========   =========
Diluted weighted average number of common shares
  outstanding..............................................  10,004,662   8,517,770   8,056,272
                                                             ==========   =========   =========
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-4
<PAGE>
                                 WEBHIRE, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                       COMMON STOCK                       TREASURY STOCK      (ACCUMULATED
                                   --------------------   ADDITIONAL   --------------------     DEFECIT)         TOTAL
                                    NUMBER     $.01 PAR    PAID-IN      NUMBER                  RETAINED     STOCKHOLDERS'
                                   OF SHARES    VALUE      CAPITAL     OF SHARES     COST       EARNINGS        EQUITY
                                   ---------   --------   ----------   ---------   --------   ------------   -------------
<S>                                <C>         <C>        <C>          <C>         <C>        <C>            <C>
Balance, September 30, 1996......    8,570       $ 86       $18,223       687       $(831)      $  1,495        $18,973
Exercise of common stock
  options........................      265          3           208        --          --             --            211
Tax benefits from options
  exercised......................       --         --           285        --          --             --            285
Employee stock purchase plan
  stock issuance.................       17         --            79        --          --             --             79
Compensation expense on warrant
  grants.........................       --         --            99        --          --             --             99
Compensation expense on stock
  options........................       --         --           173        --          --             --            173
Net loss.........................       --         --            --        --          --         (1,280)        (1,280)
                                    ------       ----       -------       ---       -----       --------        -------
Balance, September 30, 1997......    8,852         89        19,067       687        (831)           215         18,540
Exercise of common stock
  options........................      122          1           254        --          --             --            255
Employee stock purchase plan
  stock issuance.................       49         --           181        --          --             --            181
Net income.......................       --         --            --        --          --          1,347          1,347
                                    ------       ----       -------       ---       -----       --------        -------
Balance, September 30, 1998......    9,023         90        19,502       687        (831)         1,562         20,323
Exercise of common stock
  options........................       90          1           356        --          --             --            357
Employee stock purchase plan
  stock issuance.................       34         --           104        --          --             --            104
Compensation expense on stock
  options........................       --         --            49        --          --             --             49
Issuance of common stock in
  connection with acquired
  technologies...................    1,982         20        10,226        --          --             --         10,246
Issuance of common stock in
  connection with private
  placement, net of issuance
  costs of $1,017................    3,960         40        18,943        --          --             --         18,983
Stock-based consideration........       --         --           173        --          --             --            173
Net loss.........................       --         --            --        --          --        (16,219)       (16,219)
                                    ------       ----       -------       ---       -----       --------        -------
Balance, September 30, 1999......   15,089       $151       $49,353       687       $(831)      $(14,657)       $34,016
                                    ======       ====       =======       ===       =====       ========        =======
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-5
<PAGE>
                                 WEBHIRE, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                YEARS ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Cash Flows from Operating Activities:
  Net (loss) income.........................................  $(16,219)  $ 1,347    $ (1,280)
Adjustments to reconcile net (loss) income to net cash (used
  in) provided by operating activities--
  Depreciation and amortization.............................     8,754     1,694       1,245
  Provision for doubtful accounts...........................       802       495          15
  Deferred income taxes, net................................      (187)       --        (110)
  Deferred rent.............................................        33        23         172
  Amortization of stock-based consideration.................       173        --          --
  Compensation expense on stock options and warrant
    grants..................................................        49        --         272
  Changes in assets and liabilities--
    Accounts and installments receivable....................     1,787    (2,647)     (1,758)
    Other current assets....................................      (602)     (665)       (482)
    Refundable income taxes.................................      (565)      813        (948)
    Long-term installments receivable.......................       137      (581)         --
    Accounts payable........................................       123       340         888
    Accrued expenses........................................      (122)      749        (930)
    Deferred revenue........................................      (139)    1,397         943
    Accrued income taxes....................................      (211)      211        (168)
                                                              --------   -------    --------
      Net cash (used in) provided by operating activities...    (6,187)    3,176      (2,141)
                                                              --------   -------    --------
Cash Flows from Investing Activities:
  Purchases of acquired technologies........................    (7,167)       --          --
  Purchases of property and equipment.......................    (3,191)   (1,278)     (2,877)
  Maturities and purchases of short-term investments, net...     6,664     2,746      (9,410)
  Maturities and purchases of long-term investments, net....       893      (893)         --
  Change in other assets....................................       149       (16)       (743)
                                                              --------   -------    --------
      Net cash (used in) provided by investing activities...    (2,652)      559     (13,030)
                                                              --------   -------    --------
Cash Flows from Financing Activities:
  Payments of capital lease obligations.....................      (251)     (144)        (27)
  Proceeds from exercise of common stock options............       357       255         211
  Proceeds from employee stock purchase plan stock
    issuance................................................       104       181          79
  Proceeds from issuance of common stock in connection with
    private placement, net..................................    18,983        --          --
  Tax benefit of stock options exercised....................        --        --         285
                                                              --------   -------    --------
      Net cash provided by financing activities.............    19,193       292         548
                                                              --------   -------    --------
Net increase (decrease) in Cash and Cash Equivalents........    10,354     4,027     (14,623)
                                                              --------   -------    --------
Cash and Cash Equivalents, beginning of period..............     9,772     5,745      20,368
                                                              --------   -------    --------
Cash and Cash Equivalents, end of period....................  $ 20,126   $ 9,772    $  5,745
                                                              ========   =======    ========
Supplemental Disclosure of Cash Flow Information:
  Cash paid during the period for
    Interest................................................  $     13   $    19    $      5
                                                              --------   -------    --------
    Income taxes............................................  $    395   $   379    $    442
                                                              --------   -------    --------
Supplemental Disclosure of Noncash Investing Activities:
    Acquisition of equipment under capital lease
     obligations............................................  $    546   $    --    $    246
                                                              --------   -------    --------
Supplemental Disclosure of Noncash Financing Activities:
    Issuance of common stock in connection with Junglee
     investment.............................................  $  8,529   $    --    $     --
                                                              --------   -------    --------
    Issuance of common stock in connection with HireWorks
     Acquisition............................................  $  1,717   $    --    $     --
                                                              --------   -------    --------
    Tax benefit of stock options exercised..................  $     --   $    --    $    285
                                                              --------   -------    --------
    Issuance of common stock warrants.......................  $    173   $    --    $     99
                                                              --------   -------    --------
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-6
<PAGE>
                                  WEBHIRE, INC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

    The Company designs, develops, markets, implements and supports human
resource staffing software and services to automate the recruitment, selection
and placement of an organization's workforce. The Company's staffing software
enables organizations to strategically manage their human capital by reducing
hiring and placement costs, decreasing time to fill positions and providing more
effective skills management and worker deployment. The Company's products
provide human resource departments with solutions to quickly and efficiently
build and search comprehensive "pools" of resumes to find the workers they need,
while also managing the workflow of the staffing process.

    Effective June 1, 1999, the Company effected a name change from
Restrac, Inc. to Webhire, Inc.

    The accompanying consolidated financial statements include the accounts of
Webhire, Inc. and its wholly-owned subsidiaries, Restrac Securities Corporation
and Hireworks, Inc. (from date of acquisition), collectively referred to in
these Notes to Consolidated Financial Statements as "the Company." All
intercompany accounts and transactions have been eliminated in consolidation.

    The accompanying consolidated financial statements reflect the application
of certain significant accounting policies as described below and elsewhere in
the Notes to Consolidated Financial Statements.

    (a) REVENUE RECOGNITION

    Product revenue includes software license fees. Services revenue--Enterprise
includes customer maintenance fees and fees for training, installation and
consulting. Services revenue--Internet includes fees for scanning, job posting
services and WEBHIRE RECRUITER, formerly known as RESTRAC WEBHIRE. The Company
recognizes product and services revenue in accordance with the provisions of
Statement of Position No. 97-2, SOFTWARE REVENUE RECOGNITION.

    Product revenue from software license fees is recognized upon delivery,
provided there are no significant Company obligations remaining and
collectibility of the revenue is probable. If an acceptance period is allowed,
revenue is recognized upon the earlier of the acceptance or the expiration of
the acceptance period, as defined in the applicable software license agreement.

    Installments receivable represent the present value of future payments
related to the financing of noncancelable term license agreements that provide
for payment in installments over a five-year period. A portion of each
installment is recognized as interest income in the accompanying consolidated
statements of operations.

    Services revenue from customer maintenance fees for postcontract support is
recognized ratably over the maintenance term, which is typically 12 months. When
customer maintenance fees are included in an initial software license fee, the
Company allocates approximately 15-17% of the software license fee to the first
year's maintenance. The amount allocated to customer maintenance fees for the
first year is comparable to customer maintenance fees charged separately by the
Company. Services revenue from training, installation, consulting, and resume
scanning is recognized as the related services are performed. Services revenue
from WEBHIRE RECRUITER and WEBHIRE JOBPOST is recognized ratably over the
service term.

    Deferred revenue represents payments received by the Company in advance of
product delivery or service performance.

                                      F-7
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    (b) RESEARCH AND DEVELOPMENT COSTS

    Research and development costs are generally charged to operations as
incurred. Statement of Financial Accounting Standards (SFAS) No. 86, ACCOUNTING
FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE MARKETED,
requires capitalization of certain software development costs subsequent to the
establishment of technological feasibility. Based on the Company's product
development process, technological feasibility is established upon completion of
a working model. Costs incurred by the Company between completion of the working
model and the point at which the product is ready for general release have not
been material. For the years ended September 30, 1999, 1998 and 1997, all
research and development costs have been expensed.

    (c) CASH AND CASH EQUIVALENTS

    Cash equivalents are recorded at amortized cost and consist of highly liquid
investments with original maturities of three months or less. At September 30,
1999 and 1998, cash and cash equivalents consisted of the following:

<TABLE>
<CAPTION>
                                                                SEPTEMBER 30,
                                                             -------------------
                                                               1999       1998
                                                             --------   --------
<S>                                                          <C>        <C>
Cash and money market funds................................  $20,126     $2,273
Municipal securities.......................................       --      7,499
                                                             -------     ------
                                                             $20,126     $9,772
                                                             =======     ======
</TABLE>

    As of October 15, 1999, $15 million of the above balance was invested in
investment grade commercial paper.

    (d) SHORT- AND LONG-TERM INVESTMENTS

    Short-term investments of $6,664 at September 30, 1998, consisted of
investments with original maturities between three and twelve months. Long-term
investments of $893 at September 30, 1998, consisted of investments with greater
than twelve months scheduled maturities from the balance sheet date. The Company
classified these short-and long-term investments as held-to-maturity, and
accordingly, they were carried at amortized cost, which approximates fair market
value. These investments consisted of municipal debt securities. As of
September 30, 1999, the Company did not have any short- and long-term
investments.

    (e) OTHER CURRENT ASSETS

    Other current assets primarily consist of prepaid operating expenses. The
Company capitalizes prepaid expenses and amortizes them over the applicable
period of their use. Prepaid expenses amounted to $2,286 and $1,378 at
September 30, 1999 and 1998, respectively.

                                      F-8
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    (f) PROPERTY AND EQUIPMENT

    The Company records property and equipment at cost and provides for
depreciation and amortization on a straight-line basis over the estimated useful
lives of the assets, as follows:

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                                 ESTIMATED     -------------------
ASSET CLASSIFICATION                            USEFUL LIFE      1999       1998
--------------------                            -----------    --------   --------
<S>                                            <C>             <C>        <C>
Computer and office equipment................   3--5 Years     $ 9,807     $6,317
Furniture and fixtures.......................   3--7 Years         636        636
Leasehold improvements.......................  Life of Lease       348        277
Equipment under capital lease................     3 Years          546        369
                                                               -------     ------
                                                                11,337      7,599
Less--Accumulated depreciation and
  amortization...............................                    6,744      4,632
                                                               -------     ------
                                                               $ 4,593     $2,967
                                                               =======     ======
</TABLE>

    Depreciation and amortization expense for the years ended September 30,
1999, 1998, and 1997 amounted to approximately $2,112, $1,694 and $1,245,
respectively.

    (g) INCOME TAXES

    The Company accounts for income taxes in accordance with SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. Under SFAS No. 109, a deferred tax asset or
liability is measured by the currently enacted tax rates applied to the
differences between the financial statement and tax bases of assets and
liabilities.

    (h) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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

    (i) CONCENTRATION OF CREDIT RISK

    The Company has no significant off-balance-sheet concentration of credit
risk such as foreign exchange contracts, option contracts or other foreign
hedging arrangements. The Company places its cash, cash equivalents and
short-and long-term investments in highly rated institutions or securities. The
Company's accounts receivable credit risk is not concentrated within any
geographical area, and no single customer accounts for greater than 10% of total
revenue or represents a significant credit risk to the Company.

    (j) POSTRETIREMENT BENEFITS

    The Company offers no postretirement benefits.

                                      F-9
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    (k) NET (LOSS) INCOME PER SHARE

    SFAS No. 128, EARNINGS PER SHARE, establishes standards for computing and
presenting earnings per share and applies to entities with publicly held common
stock or potential common stock. In accordance with SFAS No. 128, basic net
(loss) income per share for 1999, 1998 and 1997 is calculated by dividing net
(loss) income by the weighted average number of common shares outstanding for
those periods. Diluted net (loss) income per share is calculated by dividing net
(loss) income by the diluted weighted average number of common shares
outstanding for all periods presented. The following table reconciles the
weighted average common shares outstanding to the shares used in computation of
diluted weighted average common shares outstanding:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED SEPTEMBER 30,
                                                             ----------------------------------
                                                                1999        1998        1997
                                                             ----------   ---------   ---------
<S>                                                          <C>          <C>         <C>
Weighted average common shares outstanding.................  10,004,662   8,273,177   8,056,272
Dilutive effect of options, using the treasury stock
  method...................................................          --     244,593          --
                                                             ----------   ---------   ---------
Diluted weighted average common shares outstanding.........  10,004,662   8,517,770   8,056,272
</TABLE>

    As of September 30, 1999, 1998 and 1997, 1,421,912, 356,250, and 1,003,123
potential common shares were outstanding, respectively, but not included in the
above calculation as their effect would have been antidilutive.

    (l) STOCK-BASED COMPENSATION

    SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, requires the
measurement of the fair value of stock options granted to employees to be
included in the statement of operations or disclosed in the notes to the
consolidated financial statements. The Company determined that it will continue
to account for employee stock-based compensation under Accounting Principles
Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and elect the
disclosure only alternative under SFAS No. 123. The Company accounts for options
granted to non-employees at fair value in accordance with SFAS No. 123.

    (m) NEW ACCOUNTING STANDARDS

    In June 1999, the Financial Accounting Standards Board (FASB) issued SFAS
No.137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES--DEFERRAL
OF THE EFFECTIVE DATE OF FASB STATEMENT NO. 133, which defers the effective date
of SFAS No. 133 to all fiscal quarters of all fiscal years beginning after
June 15, 2000. SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, issued in June 1998, establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. It requires an entity to recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company does not
expect adoption of this statement to have a material impact on its consolidated
financial position or results of operations.

                                      F-10
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    (n) FINANCIAL INSTRUMENTS

    The estimated fair value of the Company's financial instruments, which
include cash equivalents, short- and long-term investments and accounts and
installments receivable, approximates their carrying value.

(2) SOFTBANK INVESTMENT

    On July 19, 1999, the Company entered into a stock purchase agreement with
SOFTBANK Capital Partners LP and its affiliates (collectively, "SOFTBANK"),
pursuant to which SOFTBANK agreed to purchase in a private placement (the
"Private Placement") 3,960,396 shares of common stock at a price per share of
$5.05, for an aggregate purchase price of $20,000,000. The purchase price of
$5.05 per share represented the average closing price of the common stock for
the twenty trading days immediately preceding the date the parties entered into
the stock purchase agreement. The Private Placement was consummated on
September 24, 1999 upon the approval of the stockholders of the Company.

    Also on July 19, 1999, SOFTBANK entered into a separate stock purchase
agreement with Amazon.com, Inc. ("Amazon") to purchase 1,670,273 shares of the
common stock of Webhire held by Amazon. After consummation of the Private
Placement and the acquisition of common stock from Amazon, SOFTBANK and its
affiliates own 5,630,669 shares of Webhire common stock, representing
approximately 39.1% of the total outstanding shares as of September 30, 1999.

(3) YAHOO! INVESTMENT AND SERVICE AGREEMENT

    Yahoo! Inc., a SOFTBANK affiliate ("Yahoo!"), agreed to participate in the
Private Placement with the purchase of 274,726 of the Private Placement shares
of common stock of Webhire.

    Additionally, Webhire and Yahoo! have entered into a service agreement
whereby, among other things, Webhire provided resume management technology and
services to Yahoo! to create an online resume database.

    In connection with this service agreement, the Company granted to Yahoo!
warrants to purchase 199,218 shares of common stock at $4.95 per share. The
warrants vest on June 3, 2000 provided the agreement is in effect on the vesting
date. At September 30, 1999, the fair value of the warrants was estimated at
approximately $1,381 using the Black-Scholes option pricing model in accordance
with SFAS No. 123. The Company is recognizing the expense related to the
warrants over the vesting period. For fiscal 1999, $173 was charged to operating
expense in the accompanying consolidated statement of operations.

(4) ACQUIRED TECHNOLOGIES

    On November 18, 1998, the Company acquired certain assets and assumed
certain obligations of the Junglee Employment Services business of Amazon.com.
In exchange for cash of $6 million and 1,670,273 shares of Webhire common stock
valued at $8.5 million, Webhire received exclusive rights to Junglee's online
recruitment technologies. Webhire also acquired Junglee's Internet production
sites and assumed management and development of the employer and career site
business relationships established by

                                      F-11
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(4) ACQUIRED TECHNOLOGIES (CONTINUED)

Junglee Corp. ("Junglee"). Webhire did not retain any Junglee personnel in
connection with the transaction. The investment is being amortized over two
years.

    On July 9, 1999, the Company acquired 100% of the outstanding capital stock
of HireWorks, Inc. in exchange for cash of $385 and 312,072 shares of common
stock of Webhire valued at approximately $1.8 million. HireWorks, Inc. is a
developer of an Internet-based candidate search agent to be called HireFast. The
acquisition was accounted for as a purchase and accordingly the results of
operations from the date of acquisition are included in the Company's
consolidated statement of operations. The purchase price was allocated to the
technology acquired and will be amortized over two years. HireWorks Inc.'s
assets, liabilities and operations were not significant to the Company.
Accordingly proforma information has not been presented.

(5) LEASE COMMITMENTS

    The Company's corporate headquarters are located in Lexington,
Massachusetts, where it currently occupies approximately 60,000 square feet of
office space under a lease expiring in December 2003. The Company also has a
regional sales and service office in Foster City, California, where it occupies
approximately 6,000 square feet, under a lease expiring in January 2002. In
addition, the Company leases office space for its sales representatives in
Dallas, Texas and New York, New York.

    Capital lease obligations consist of amounts due under a software lease
agreement expiring in March 2001. At September 30, 1999, the cost and
accumulated depreciation of the related software was $546 and $46, respectively.

    Future minimum rental payments as of September 30, 1999 under both the
operating and capital leases, are shown in the following table:

<TABLE>
<CAPTION>
                                                             CAPITAL    OPERATING
                                                              LEASES     LEASES
                                                             --------   ---------
<S>                                                          <C>        <C>
2000.......................................................    $597      $1,805
2001.......................................................     124       1,632
2002.......................................................      --       1,541
2003.......................................................      --       1,502
2004.......................................................      --         626
                                                               ----      ------
                                                                721      $7,106
                                                                         ======
  Less--amounts representing interest......................      21
                                                               ----
Present value of minimum lease payments....................     700
  Less--current portion....................................     578
                                                               ----
                                                               $122
                                                               ====
</TABLE>

    Aggregate net rental expense included in the accompanying statements of
income for the fiscal years ended September 30, 1999, 1998 and 1997 is
approximately $1,633, $1,713 and $1,496, respectively.

                                      F-12
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(5) LEASE COMMITMENTS (CONTINUED)

    Leases with escalating rents or free rent periods are expensed on a
straight-line basis over the fixed term of the lease. Deferred rent of
approximately $228 and $195 is included in the accompanying consolidated balance
sheets at September 30, 1999 and 1998, respectively.

(6) STOCKHOLDERS' EQUITY

    (a) EMPLOYEE STOCK PURCHASE PLAN

    On May 8, 1996, the Board of Directors authorized the 1996 Employee Stock
Purchase Plan (the Employee Plan). Under the Employee Plan, the Company may
issue up to an aggregate of 400,000 shares of common stock to employees at 85%
of the lower of the fair market value of the common stock on the first or last
day of each six-month purchase period. During fiscal 1999, 1998 and 1997,
33,918, 48,956 and 17,126 shares, respectively, were issued pursuant to the
Employee Plan. On October 1, 1999, 17,901 shares of common stock were issued
pursuant to the Employee Plan.

    (b) STOCK OPTION PLANS

    The Company has two stock option plans, the 1994 Stock Option Plan (the 1994
Plan) and the 1996 Stock Option and Grant Plan (the 1996 Plan). The 1994 and
1996 Plans enable the Company's Board of Directors to grant nonqualified and
incentive stock options (ISOs) and shares of Common Stock. ISOs are granted at
the then fair market value. Under the terms of the 1994 and 1996 Plans, options
generally vest over four years and expire ten years after the date of grant.

    The 1994 and 1996 Plans are administered by the Compensation Committee as
appointed by the Board of Directors from time to time. On December 18, 1997, the
Company amended the 1996 Plan to increase the number of shares available for
grant to 1,708,156 shares of common stock. A total of 641,844 shares of common
stock are reserved for issuance under the 1994 Plan as amended.

    In connection with a software development agreement in July 1996, the
Company granted, to a third party, warrants to purchase 66,000 shares of common
stock at $11.00 per share. The warrants vest upon completion of certain events.
At the time of issuance, the fair value of the warrants was estimated at
approximately $85. For fiscal 1996, $14 was charged to cost of product revenue
and additional paid-in capital. The warrants were canceled and reissued at a
price of $4.38 per share in January 1997. The Company recorded a charge of $99
in fiscal 1997, representing the revised fair market value of the warrants, as
calculated using the Black-Scholes option pricing model in accordance with SFAS
No. 123. In July 1998, 27,300 shares of common stock were purchased under these
warrants and the remaining warrants to purchase 38,700 shares of common stock
were canceled.

                                      F-13
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(6) STOCKHOLDERS' EQUITY (CONTINUED)

    Stock option activity for the 1994 and 1996 Plans is as follows:

<TABLE>
<CAPTION>
                                                                                       WEIGHTED
                                                         NUMBER OF   OPTION PRICE       AVERAGE
                                                          SHARES      PER SHARE     PRICE PER SHARE
                                                         ---------   ------------   ---------------
<S>                                                      <C>         <C>            <C>
Outstanding, September 30, 1996........................    802,291   $0.44-$19.75        $4.59
  Granted..............................................  1,116,725     2.88-17.00         4.75
  Exercised............................................   (265,466)     0.44-3.88         0.81
  Canceled.............................................   (650,427)    0.44-19.75         7.57
                                                         ---------   ------------        -----
Outstanding, September 30, 1997........................  1,003,123     0.44-17.00         3.87
                                                         ---------   ------------        -----
  Granted..............................................    363,700      5.63-8.25         6.15
  Exercised............................................   (121,415)     0.44-4.67         2.10
  Canceled.............................................   (152,157)     0.44-8.25         4.05
                                                         ---------   ------------        -----
Outstanding, September 30, 1998........................  1,093,251     0.44-17.00         4.80
                                                         ---------   ------------        -----
  Granted..............................................    732,150     3.63-11.13         4.88
  Exercised............................................    (89,734)     0.44-6.38         3.98
  Canceled.............................................   (313,755)     2.00-8.25         4.83
                                                         ---------   ------------        -----
Outstanding, September 30, 1999........................  1,421,912   $0.44-$17.00        $4.89
                                                         =========   ============        =====
Vested, September 30, 1997.............................    154,657   $0.44-$11.00        $2.42
                                                         =========   ============        =====
Vested, September 30, 1998.............................    295,473   $0.44-$17.00        $3.88
                                                         =========   ============        =====
Vested, September 30, 1999.............................    501,554   $0.44-$17.00        $4.45
                                                         =========   ============        =====
</TABLE>

    The weighted-average fair value per share of the options granted was $4.52,
$4.60 and $3.09 for the years ended September 30, 1999, 1998 and 1997,
respectively.

                                      F-14
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(6) STOCKHOLDERS' EQUITY (CONTINUED)

    The following table summarizes significant ranges of outstanding and
exercisable options at September 30, 1999.

<TABLE>
<CAPTION>
                          OPTIONS OUTSTANDING                                 OPTIONS EXERCISABLE
-----------------------------------------------------------------------   ----------------------------
                                          WEIGHTED
                                          AVERAGE           WEIGHTED                       WEIGHTED
      RANGES OF           NUMBER         REMAINING          AVERAGE         NUMBER         AVERAGE
   EXERCISE PRICES      OUTSTANDING   CONTRACTUAL LIFE   EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
---------------------   -----------   ----------------   --------------   -----------   --------------
<S>                     <C>           <C>                <C>              <C>           <C>
0.00$-$1.97......           20,250           5.2              $0.44          20,250          $0.44
1.98-3.95.......           558,189           7.0               3.64         249,630           3.57
3.96-5.92.......           526,638           8.2               5.00         140,597           4.89
5.93-7.90.......           259,529           7.7               6.30          77,959           6.22
7.91-9.87.......            13,306           7.7               8.25           5,121           8.25
9.88-11.85......            36,500           9.7              11.11           2,843          11.00
15.80-17.78.....             7,500           7.0              17.00           5,154          17.00
                         ---------                                          -------
                        1,421,912..                                         501,554
                         =========                                          =======
</TABLE>

    The weighted-average fair value of the shares issued under the Employee Plan
was $3.08, $3.70 and $3.49 for the years ended September 30, 1999, 1998 and
1997, respectively.

    The fair value of the stock awards, including the options granted under the
1994 Plan and the 1996 Plan, and the shares issued under the Employee Plan, was
estimated using the Black-Scholes model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Expected life...............................................  7 years    7 years    6 years
Risk free interest rate.....................................    5.63%      5.59%      6.30%
Volatility..................................................   129.6%      80.0%      65.0%
Dividend yield..............................................     0.0%       0.0%       0.0%
</TABLE>

    The pro forma effect of applying SFAS No. 123 would be as follows:

<TABLE>
<CAPTION>
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net (loss) income as reported...............................  $(16,219)   $1,347    $(1,280)
                                                              ========    ======    =======
Pro forma net (loss) income as adjusted.....................  $(17,557)   $  320    $(1,500)
                                                              ========    ======    =======
Basic and diluted net (loss) income per share as reported...  $  (1.62)   $  .16    $  (.16)
                                                              ========    ======    =======
Basic and diluted pro forma net (loss) income per share as
  adjusted..................................................  $  (1.75)   $  .04    $  (.19)
                                                              ========    ======    =======
</TABLE>

                                      F-15
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(7) INCOME TAXES

    The (benefit) provision for income taxes in the accompanying consolidated
statements of operations consists of the following for the fiscal years ended
September 30, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                           1999          1998          1997
                                                         --------      --------      --------
<S>                                                      <C>           <C>           <C>
Current--
  Federal..........................................       $(400)        $ 557         $(658)
  State............................................          --            20            16
                                                          -----         -----         -----
                                                           (400)          577          (642)
                                                          -----         -----         -----
Deferred--
  Federal..........................................        (168)           --           (85)
  State............................................          --            --           (25)
                                                          -----         -----         -----
                                                           (168)           --          (110)
                                                          -----         -----         -----
      Total (benefit) provision....................       $(568)        $ 577         $(752)
                                                          =====         =====         =====
</TABLE>

    The deferred tax amounts as of September 30, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                               --------      --------
<S>                                                            <C>           <C>
Deferred tax asset--
  Net operating loss carry forward.......................       $3,605        $   --
  Acquired technology....................................        2,302            --
  Nondeductible reserves.................................          750           667
  Deferred revenue.......................................           86           259
  Buyout of distribution rights..........................          146           159
                                                                ------        ------
      Total gross deferred tax asset.....................        6,889         1,085
  Less--Valuation allowance..............................        5,821           185
                                                                ------        ------
      Net deferred tax asset.............................       $1,068        $  900
                                                                ======        ======
Deferred tax liability...................................       $   --        $   19
                                                                ======        ======
</TABLE>

    At September 30, 1999, the Company had available net operating loss ("NOL")
carryforwards of approximately $9,000 which may be used to offset future taxable
income, if any, and expire through 2019. The NOL carryforwards available for use
in any given year may be limited in the event of a significant change in
ownership, as defined by the Internal Revenue Code.

    The Company has recorded a deferred tax asset for that portion of that asset
for which it is "more likely than not" to receive benefit in the future. The
Company has placed a significant valuation allowance against the remaining net
deferred assets totaling approximately $5,821.

    At September 30, 1999 and 1998, the Company had refundable income taxes of
$700 and $135, respectively, related to the carryback of taxable losses to prior
periods.

                                      F-16
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(7) INCOME TAXES (CONTINUED)

    The (benefit) provision for income taxes differs from the amount computed by
applying the statutory federal income tax rate as follows:

<TABLE>
<CAPTION>
                                                            1999          1998          1997
                                                          --------      --------      --------
<S>                                                       <C>           <C>           <C>
(Benefit) provision at federal statutory rate.......       (34.0)%        34.0%        (34.0)%
State income tax, net of federal benefit............        (6.3)          6.3          (6.3)
Tax exempt interest income..........................          --          (8.3)           --
Valuation allowance established.....................        36.9            --            --
Other, net..........................................          --          (2.0)          3.3
                                                           -----         -----         -----
      Effective tax rate............................        (3.4)%        30.0%        (37.0)%
                                                           =====         =====         =====
</TABLE>

(8) EMPLOYEE BENEFIT PLAN

    The Company maintains an employee benefit plan (the Benefit Plan) under
Section 401(k) of the Internal Revenue Code. The Benefit Plan is available to
all full-time U.S. employees. The Benefit Plan allows for employees to make
contributions up to a specified percentage of their compensation. Under the
Benefit Plan, the Company makes discretionary contributions, which for the
fiscal year ended September 30, 1997 was a match of 20% of the employees'
contributions up to a maximum annual match of 5% of each employee's salary. In
September 1997, the Company's discretionary contribution was amended to a match
of 50% of the employees' contributions up to a maximum annual match of 3% of
each employee's salary. The Company contributed approximately $144, $154 and $85
during the fiscal years ended September 30, 1999, 1998 and 1997, respectively.

(9) ACCRUED EXPENSES

    Accrued expenses at September 30, 1999 and 1998 consist of the following:

<TABLE>
<CAPTION>
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Payroll and payroll-related costs...........................   $1,979     $1,913
Buyout of distribution rights...............................       --         50
Other accrued expenses......................................    1,171      1,309
                                                               ------     ------
                                                               $3,150     $3,272
                                                               ======     ======
</TABLE>

                                      F-17
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(10) OTHER INCOME

    Other income consists of the following:

<TABLE>
<CAPTION>
                                                            1999       1998       1997
                                                          --------   --------   --------
<S>                                                       <C>        <C>        <C>
Interest income.........................................    $493       $651       $677
Interest expense........................................     (13)       (19)        (5)
Other...................................................     (25)       (39)        (1)
                                                            ----       ----       ----
                                                            $455       $593       $671
                                                            ====       ====       ====
</TABLE>

(11) BUSINESS SEGMENT INFORMATION

    Effective for the year ended September 30, 1998, the Company adopted SFAS
No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION,
which requires disclosure of financial and descriptive information about the
Company's reportable operating segments. The operating segments reported below
are the segments for which separate financial information is available and for
which operating profit/loss amounts are evaluated regularly by senior management
in deciding how to allocate resources and in assessing performance.

    The Company has two reportable segments: Enterprise software solutions and
Internet and transaction-based solutions, the latter of which started to emerge
in fiscal 1997 with the offering of outsourced services (e.g., resume scanning,
acknowledgement letters) and the research and development activities undertaken
for this segment. The Internet and transaction-based solutions segment provides
outsourced management of private candidate pools via WEBHIRE RECRUITER,
subscription services to public pools and job-posting sites, the job-posting
services initiated with the Junglee transaction, resume scanning, reference
checking and other fee-based staffing functions. The enterprise software
solutions segment provides perpetual licenses to the Company's software products
and the related maintenance, training, implementation and consulting services in
support of such licenses.

    The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Expenses related to general
corporate functions such as Information Technology, Finance and Human Resources
and general and administrative costs such as depreciation, rent and utilities
are allocated to the reportable segments based on relative headcount as a basis
of relative usage. Income tax provision (benefit) is allocated to the reportable
segments in deriving segment profit (loss) based on each segment's pro rata
income or loss before income tax provision (benefit). The Company has no
intersegment sales and transfers, and does not allocate assets to the operating
segments.

                                      F-18
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(11) BUSINESS SEGMENT INFORMATION (CONTINUED)

    The Company's reportable segments are strategic business units that offer
different solutions tailored to a customer's needs. They are managed separately
because each business requires different technology and sales and marketing
strategies.

<TABLE>
<CAPTION>
                                                               YEAR ENDED SEPTEMBER 30, 1999:
                                                     ---------------------------------------------------
                                                     INTERNET AND   ENTERPRISE
                                                     TRANSACTIONS    SOFTWARE     OTHER     CONSOLIDATED
                                                     ------------   ----------   --------   ------------
<S>                                                  <C>            <C>          <C>        <C>
Revenue:
  Product revenue..................................    $     --       $ 7,755     $   --      $  7,755
  Services revenue.................................       5,056        12,484         --        17,540
                                                       --------       -------     ------      --------
    Total revenue..................................       5,056        20,239         --        25,295
                                                       --------       -------     ------      --------
Cost of revenue:
  Product revenue..................................          --           706         --           706
  Services revenue.................................       4,068         5,580         --         9,648
                                                       --------       -------     ------      --------
    Total cost of revenue..........................       4,068         6,286         --        10,354
                                                       --------       -------     ------      --------
Gross margin.......................................         988        13,953         --        14,941
                                                       --------       -------     ------      --------
Operating expenses:
  Research and development.........................       4,008         3,790         --         7,798
  Sales and marketing..............................       4,548         6,725         --        11,273
  General and administrative.......................       2,545         3,752         --         6,297
  Amortization of acquired technologies............       6,642            --         --         6,642
  Stock-based consideration........................         173            --         --           173
                                                       --------       -------     ------      --------
    Total operating expenses.......................      17,916        14,267         --        32,183
                                                       --------       -------     ------      --------
(Loss) income from operations......................     (16,928)         (314)        --       (17,242)
Other income, net..................................          --            --        455           455
                                                       --------       -------     ------      --------
(Loss) income before (benefit) provision for income
  taxes............................................     (16,928)         (314)       455       (16,787)
(Benefit) provision for income taxes...............        (551)          (42)        25          (568)
                                                       --------       -------     ------      --------
Net (loss) income..................................    $(16,377)      $  (272)    $  430      $(16,219)
                                                       ========       =======     ======      ========

Depreciation and amortization......................    $  7,186       $ 1,568     $   --      $  8,754
                                                       ========       =======     ======      ========
</TABLE>

                                      F-19
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(11) BUSINESS SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30, 1998:
                                                       ---------------------------------------------------
                                                       INTERNET AND   ENTERPRISE
                                                       TRANSACTIONS    SOFTWARE     OTHER     CONSOLIDATED
                                                       ------------   ----------   --------   ------------
<S>                                                    <C>            <C>          <C>        <C>
Revenue:
  Product revenue....................................    $    --        $16,826      $ --        $16,826
  Services revenue...................................      2,117         11,912        --         14,029
                                                         -------        -------      ----        -------
    Total revenue....................................      2,117         28,738        --         30,855
                                                         -------        -------      ----        -------
Cost of revenue:
  Product revenue....................................         --            631        --            631
  Services revenue...................................      2,023          6,347        --          8,370
                                                         -------        -------      ----        -------
    Total cost of revenue............................      2,023          6,978        --          9,001
                                                         -------        -------      ----        -------
Gross margin.........................................         94         21,760        --         21,854
                                                         -------        -------      ----        -------
Operating expenses:
  Research and development...........................      1,608          3,980        --          5,588
  Sales and marketing................................      1,142          9,471        --         10,613
  General and administrative.........................        540          3,782        --          4,322
  Amortization of acquired technologies..............         --             --        --             --
  Stock-based consideration..........................         --             --        --             --
                                                         -------        -------      ----        -------
    Total operating expenses.........................      3,290         17,233        --         20,523
                                                         -------        -------      ----        -------
(Loss) income from operations........................     (3,196)         4,527        --          1,331
Other income, net....................................         --             --       593            593
                                                         -------        -------      ----        -------
(Loss) income before (benefit) provision for income
  taxes..............................................     (3,196)         4,527       593          1,924
(Benefit) provision for income taxes.................     (1,375)         1,948         4            577
                                                         -------        -------      ----        -------
Net (loss) income....................................    $(1,821)       $ 2,579      $589        $ 1,347
                                                         =======        =======      ====        =======

Depreciation and amortization........................    $   218        $ 1,476      $ --        $ 1,694
                                                         =======        =======      ====        =======
</TABLE>

                                      F-20
<PAGE>
                                  WEBHIRE, INC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1999

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(11) BUSINESS SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30, 1997:
                                                       ---------------------------------------------------
                                                       INTERNET AND   ENTERPRISE
                                                       TRANSACTIONS    SOFTWARE     OTHER     CONSOLIDATED
                                                       ------------   ----------   --------   ------------
<S>                                                    <C>            <C>          <C>        <C>
Revenue:
  Product revenue....................................    $    --        $10,783      $ --        $10,783
  Services revenue...................................        811         10,454        --         11,265
                                                         -------        -------      ----        -------
    Total revenue....................................        811         21,237        --         22,048
                                                         -------        -------      ----        -------
Cost of revenue:
  Product revenue....................................         --            704        --            704
  Services revenue...................................        519          5,839        --          6,358
                                                         -------        -------      ----        -------
    Total cost of revenue............................        519          6,543        --          7,062
                                                         -------        -------      ----        -------
Gross margin.........................................        292         14,694        --         14,986
                                                         -------        -------      ----        -------
Operating expenses:
  Research and development...........................      1,818          3,628        --          5,446
  Sales and marketing................................         --          8,703        --          8,703
  General and administrative.........................        407          3,133        --          3,540
  Amortization of acquired technologies..............         --             --        --             --
  Stock-based consideration..........................         --             --        --             --
                                                         -------        -------      ----        -------
    Total operating expenses.........................      2,225         15,464        --         17,689
                                                         -------        -------      ----        -------
(Loss) income from operations........................     (1,933)          (770)       --         (2,703)
Other income, net....................................         --             --       671            671
                                                         -------        -------      ----        -------
(Loss) income before (benefit) provision for income
  taxes..............................................     (1,933)          (770)      671         (2,032)
(Benefit) provision for income taxes.................       (540)          (215)        3           (752)
                                                         -------        -------      ----        -------
Net (loss) income....................................    $(1,393)       $  (555)     $668        $(1,280)
                                                         =======        =======      ====        =======

Depreciation and amortization........................    $   120        $ 1,125      $ --        $ 1,245
                                                         =======        =======      ====        =======
</TABLE>

(12) SUBSEQUENT EVENT

    On December 13, 1999, the Company acquired certain assets, consisting
principally of technology, and assumed certain liabilities of Human Resources
Sites International, Inc. ("HR Sites") in exchange for $1,500,000 in cash plus
junior subordinated convertible promissory notes totaling $3,425,000. HR Sites
was the developer of a leading Internet job posting platform that provided
online job posting connections to more than 2,000 career sites and Internet news
groups. All of the existing HR Sites employees have joined the Company and the
Internet-recruiting services provided by HR Sites will continue to be developed
and supported in the former HR Sites offices in Chicago, Illinois.

                                      F-21
<PAGE>
                                                                     SCHEDULE II

                                 WEBHIRE, INC.

                       VALUATION AND QUALIFYING ACCOUNTS

                   YEARS ENDED SEPTEMBER 30, 1999, 1998, 1997

<TABLE>
<CAPTION>
                                                      BALANCE,
                                                    BEGINNING OF    CHARGED                   BALANCE,
ALLOWANCE FOR DOUBTFUL ACCOUNTS                         YEAR       TO EXPENSE   WRITE-OFFS   END OF YEAR
-------------------------------                     ------------   ----------   ----------   -----------
<S>                                                 <C>            <C>          <C>          <C>
Year ended September 30, 1999.....................      $400          $802         $502          $700
Year ended September 30, 1998.....................      $320          $495         $415          $400
Year ended September 30, 1997.....................      $350          $ 15         $ 45          $320
</TABLE>