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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
 
                                   FORM 10-K
 
<TABLE>
<C>               <S>
   (MARK ONE)
      [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
 
                                               OR
 
      [  ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE TRANSITION PERIOD FROM ____________ TO ____________
</TABLE>
 
                        Commission File Number: 0-29204
 
                          HomeCom Communications, Inc.
              (Exact name of registrant specified in its charter)
 
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<S>                                               <C>
                    DELAWARE                                         58-2153309
        (State or other jurisdiction of                 (I.R.S. Employer Identification No.)
         incorporation or organization)
</TABLE>
 
                             BUILDING 14, SUITE 100
                               3535 PIEDMONT ROAD
                             ATLANTA, GEORGIA 30305
             (Address of principal executive offices and zip code]
 
              Registrant's Telephone Number, Including Area Code:
                                 (404) 237-4646
 
          Securities registered pursuant to Section 12(b) of the Act:
 
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<CAPTION>
                    TITLE OF EACH CLASS                       NAME OF EXCHANGE ON WHICH REGISTERED
                    -------------------                       ------------------------------------
<S>                                                           <C>
Common Stock, par value $0.0001 per share                       The Nasdaq SmallCap(TM) Market
</TABLE>
 
          Securities registered pursuant to Section 12(g) of the Act:
                                      NONE
 
     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  NO [ ]
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]
 
     The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the average of the closing bid and ask quotations for
the Common Stock on March 26, 1999 as reported by The Nasdaq Stock Market, was
approximately $30,505,000. The shares of Common Stock held by each officer and
director and by each person known to the company who owns 5% or more of the
outstanding Common Stock 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. As of March 26, 1999, Registrant
had outstanding 6,399,571 shares of Common Stock.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     The Registrant's definitive Proxy Statement to be filed on or about April
30, 1999, for the Annual Meeting of Shareholders to be held on or about June 21,
1999 is incorporated by reference in Part III of this Form 10-K to the extent
stated herein.
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                               TABLE OF CONTENTS
 
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<CAPTION>
ITEM NO.                          DESCRIPTION                           PAGE NO.
--------                          -----------                           --------
<C>       <S>                                                           <C>
  PART I
      1.  BUSINESS....................................................      1
      2.  PROPERTIES..................................................      6
      3.  LEGAL PROCEEDINGS...........................................      6
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........      7
 
 PART II
      5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          SHAREHOLDER MATTERS.........................................      7
      6.  SELECTED FINANCIAL DATA.....................................      8
      7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS...................................      9
      8.  FINANCIAL STATEMENTS........................................     14
      9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE....................................     32
 
PART III
     10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..........     32
     11.  EXECUTIVE COMPENSATION......................................     32
     12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT..................................................     32
     13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............     32
 
 PART IV
     14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
          8-K.........................................................     32
          SIGNATURES..................................................     32
</TABLE>
 
                                       ii
<PAGE>   3
 
                                     PART I
 
ITEM 1.  BUSINESS
 
GENERAL
 
     HomeCom Communications, Inc. is a Delaware corporation, organized in 1994
to provide advanced software applications and integration services to businesses
seeking to take advantage of the Internet. In the fourth quarter of 1997, the
Company made a strategic decision to move away from horizontally focused
Internet Web design and hosting services to become a vertically focused
financial applications and solutions provider to the financial services market,
including banking, insurance, and securities brokerage firms.
 
     HomeCom Communications, Inc. develops and markets specialized software
applications, products and services that enable consumers and financial
institutions to use the Internet and intranets/extranets to obtain and
communicate important business information, conduct commercial transactions and
improve business productivity. HomeCom's principal mission is to enable
financial institutions to establish an electronic channel to consumers and
business by providing secure, innovative, Internet-based solutions to the
banking, insurance and brokerage industries. As a technology provider to this
electronic channel, HomeCom intends to continually enrich the content, host and
maintain its own as well as third party software applications, and to provide
strategic consulting to financial institutions on e-commerce and marketing.
HomeCom derives revenue from software licensing, application development, and
hosting and transactions fees. HomeCom has grown to approximately 100 full-time
employees and occupies approximately 30,000 square feet of office space with
offices in Atlanta, Houston, New York City, and the Washington, D.C. area.
 
     HomeCom's solutions, which are built around industry standards such as Open
Financial Exchange ("OFX"), are designed to enable its clients to increase
revenues, achieve distinct competitive advantages, reduce costs, and improve
customer support. The Company employs full time multimedia artists, Ph.D.
computer programmers, Internet security experts, licensed financial brokers and
agents, and network engineers. HomeCom provides Internet/intranet solutions in
three areas: (i) the design, development and integration of customized software
application, including World Wide Web site development and related network
outsourcing; (ii) the development, sale and integration of HomeCom's existing
software applications into the client's operations; and, (iii) security
consulting and integration services.
 
PRODUCTS AND SERVICES
 
     Businesses such as banks, brokerage firms, and insurance companies can use
HomeCom's Personal Internet Banker(TM) and InsureRate(TM) software to allow
customers to access account information and insurance quotes. Its Harvey(TM)
software collects demographic information from users for personally tailored
marketing efforts. HomeCom also creates Web sites, designs custom software for
interactive Web sites, intranets/extranets, sells third party Internet security
software, and provides server hosting and outsourcing facilities.
 
     HomeCom provides its product and service offerings through four distinct
but integrated business units:
 
     - HomeCom Financial Applications, Solutions and Technology ("FAST") creates
       Internet and intranet business applications, solutions and technology
       focused on the banking, insurance and brokerage client markets.
       Applications include software programs ranging from simple mathematical
       calculators to extremely sophisticated intranets/extranets communicating
       with legacy systems and client/server databases. HomeCom also provides
       turnkey hosting and security integration services for these applications.
 
                                        1
<PAGE>   4
 
     - HomeCom's Financial Solutions provides cost effective, one-stop financial
       services to the banking, credit union and brokerage industries that allow
       customers on-line access to transact personal banking business. HomeCom's
       turnkey solutions are targeted to the 14,000 banks and credit unions with
       assets between $500 million and $20 billion:
 
      - Personal Internet Banker(TM) ("PIB") provides interactive Internet
        banking including bill payment, balance inquiry, funds transfer, and
        statement download for checking, savings and credit card accounts.
 
      - Harvey(TM) enables banks to both advertise and market targeted consumers
        based on demographics and web site browsing preferences. As consumers
        interact with the financial institution's web site, Harvey(TM) mines the
        data they enter on application forms, adds information about what they
        looked at or clicked on and then combines that information with data
        from a variety of legacy systems to dramatically increase the financial
        institution's cross selling and profit capability.
 
      - Post on the Fly(TM) Conference is an online bulletin board,
        collaboration and conferencing system, allowing customers to capture
        their most valuable property -- the living, moving body of knowledge
        within an organization, its business partners and its customers.
        Specifically designed for the needs of financial services companies,
        Conference can run unlimited numbers of investor forums, private analyst
        meetings, financial planning workshops, or customer support groups.
 
     - HomeCom Internet Security Services ("HISS") provides professional
       services to businesses that are concerned about network applications and
       information security. Management and technological staff directly support
       end customers by offering both consulting and integration engagements.
       HomeCom believes HISS world-class services provide a distinct competitive
       edge to the financial services industry. Customers include Fortune 500
       financial service providers, airlines, energy companies, media
       conglomerates, manufacturers and others. Since its inception in 1996,
       HISS has successfully completed nearly 50 contract engagements including
       eleven with Fortune 500 companies. Its customers include Citicorp, the
       CIA, Fiserv, Washington Post, Reebok, Raytheon E-Systems, MCI WorldCom,
       Crestar, HomeDepot and others. HISS is the only business unit that
       provides services to non-financial institutions. Management believes that
       knowledge gained from these assignments serves it well in the financial
       services marketplace.
 
     - HomeCom's InsureRate(TM) provides consumer information and education on
       insurance via its website -- www.insurerate.com. Consumers are also
       offered a choice of competitively priced and innovative insurance
       products for direct purchase via the Internet. InsureRate's technology
       makes it a low cost insurance product vendor. Management also intends to
       add broker/dealer operations and expects to derive additional profits by
       sharing in the reinsurance product selling agreements and sharing
       management fees on client assets that it accumulates. Management expects
       to offer a selection of fixed annuity, term life, modified endowment
       contracts, long-term care, personal auto, homeowners and other policies.
 
       On March 24, 1999, HomeCom acquired First Institutional Marketing, Inc.
       ("FIMI") which (i) provides innovative insurance products and marketing
       programs for the commercial banking industry, (ii) introduces banks to
       the sale of insurance and investment products, and (iii) trains bank
       personnel to market and sell leading insurance and investment products to
       their customers. The Company plans to combine FIMI and InsureRate(TM) to
       provide integrated insurance offerings. InsureRate(TM) will in effect
       become the electronic distribution arm of FIMI. FIMI was recognized as
       the 7th largest third party marketing company selling insurance products
       in the banking channel in 1996 and has sold $2 billion worth of annuities
       through this channel. In 1998 FIMI generated approximately $4 million in
       revenues.
 
     HomeCom employs a team of highly trained Internet/intranet software
developers and multimedia and graphics professionals who design and develop
specialized Internet/intranet software applications. These applications enable
companies to obtain and communicate vital business information, such as sales
reports, order status systems, employee directories and client account
information. The Company works closely with
 
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<PAGE>   5
 
its customers to analyze and design Internet-based software solutions that
facilitate the interactive exchange of business information. Through its
experience in designing custom Internet solutions for businesses, HomeCom
believes that it has developed and continues to develop in-depth knowledge
concerning industry-specific Internet applications and requirements. The Company
plans to leverage this knowledge to develop additional Internet-enabled
applications targeted for the financial services industry.
 
     The Company's staff of 58 full-time software engineers design and develop
custom applications and software products. The Company's software engineers have
experience with various computer operating systems, including Sun Solaris, SGI's
IRIX, Windows NT, Digitars Unix on the Alpha platform, Intel's Pentium Pro on
BSDI Unix, Hewlett Packard's HP 9000 and Apple's Macintosh operating system. The
software engineers write software programs using various tools and languages,
including Perl, JAVA, CGI Programming, C and C ++. The software engineers also
have database expertise in Oracle, Informix, Sybase and SQL, and many software
development tools. The Company's multimedia artists and engineers utilize many
of the generally available software programs and tools such as Adobe Photoshop,
MacroMedia Shockwave, RealAudio and VDOLive.
 
ACQUISITIONS AND DIVESTITURES
 
     On April 16, 1998, the Company acquired all of the outstanding capital
stock of The Insurance Resource Center, Inc. ("IRC") for 351,391 shares of the
Company's common stock. IRC provides Internet development and hosting services
to the insurance industry and was incorporated into the Company's FAST group.
 
     On November 6, 1998 the Company signed a definitive agreement and plan of
merger (the "Merger Agreement") to acquire, among other things, all of the
outstanding shares of First Institutional Marketing, Inc. and certain of its
affiliates ("FIMI") for 1,252,174 shares of common stock. In addition, the
Company entered into employment agreements for an initial term of 3 years with
the three principals of FIMI, calling for them to continue in their current
roles for the acquired companies. On March 24, 1999, the Company completed this
acquisition.
 
     On June 9, 1998, the Company sold substantially all of the assets of its
HostAmerica Internet network outsourcing services division to Sage Acquisition
Corp. ("Sage") for cash of $4,250,000 and Sage's assumption of approximately
$250,000 of unearned revenue. The Company recorded a gain on the sale of
approximately $4,402,000. This transaction allowed the Company to further
consolidate its business focus on the financial services market.
 
     The Company will seek to make additional strategic and tactical
acquisitions of companies that have developed specific industry expertise or
have existing relationships with large businesses needing Internet/intranet
solutions. However, the Company has not entered into any additional binding
agreements or commitments. Moreover, the Company has extremely limited sources
of cash. Consequently, the Company has limited resources available to complete
an acquisition and no assurance can be given that the Company will be able to
successfully complete any additional acquisitions.
 
SALES AND MARKETING
 
     The Company's products and services have been developed to serve the needs
of the financial services market, including banking, insurance, and securities
brokerage. The Company markets its products and services through its direct
sales force, print advertising and its own Web site. The Company also generates
customer leads through its business partner relationships with leading
technology companies. The Company also utilizes traditional print and media
marketing strategies to enhance Company and product name recognition.
 
     In February 1999, HomeCom and USATODAY created a marketing alliance to
provide direct online access and online promotion for InsureRate(TM). The
agreement should build further momentum for sales to banks, credit unions,
brokerage companies and other financial institutions.
 
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COMPETITION
 
     The market for specialized Internet applications is highly competitive, and
the Company expects that this competition will intensify in the future. In
providing specialized software application design and development, the Company
competes with numerous businesses that also provide software design and
development services, companies that have developed and market application
specific Internet software products, companies that provide software tools that
enable customers to develop specific Internet-enabled software applications and
companies that choose to develop Internet application products internally.
Andersen Consulting L.L.P., Electronic Data Systems Corporation ("EDS"),
International Business Machines Corporation ("IBM") and Cap Gemini America are
significant custom software developers, integrators and resellers whose services
include a broad range of Internet and Intranet software applications design and
development services. Companies such as Broadvision, Inc., Edify Corporation and
Security First Network Bank have developed application specific Internet
software products that are broadly marketed and licensed and perform such
functions as interactive one-to-one marketing, human resources benefits inquiry,
enrollment and training and Internet banking. In addition, companies that offer
and sell client/server based Internet-enabled software products, such as
Netscape and Microsoft, may in the future bundle software capabilities and
applications with existing products in a manner which may limit the need for
software capabilities and application services such as those offered by the
Company. The Company also competes with the information technology departments
of significant business enterprises who may choose to design and develop their
Internet applications internally. The emergence of sophisticated software
products and tools that enable companies to build customized Internet-enabled
software applications internally also may have the effect of encouraging
internal development and, thus, may materially reduce the demand for the
Company's custom software application services.
 
     The Company's security services division faces competition from many
sources, including companies that provide security consulting services and
companies that market specific Internet-based security solutions. Such
competitors include Digital Equipment Corporation, IBM, Andersen Consulting,
L.L.P. and EDS. In addition, many companies currently market Internet-based
application-specific software products that incorporate security and
confidentiality features and functions.
 
     The Company believes that the rapid expansion of the market for Internet
software applications will foster the growth of many significant competitors
performing comparable services and offering comparable products to those offered
by the Company. The Company competes on the basis of creative talent, price,
reliability of services, and responsiveness. Many of the Company's current and
prospective competitors have substantially greater financial, technical,
marketing and other resources than the Company. The Company believes that it
presently competes favorably with respect to each of its various service
offerings. There can be no assurance that the Company's present and proposed
products will be able to compete successfully with current or future competitors
or that competitive pressures faced by the Company will not have a material
adverse effect on the Company's business, financial condition and operating
results.
 
INTELLECTUAL PROPERTY RIGHTS
 
     In accordance with industry practice, the Company relies primarily on a
combination of copyright, patent and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect its proprietary
rights. The Company seeks to protect its software, documentation and other
written materials principally under trade secret and copyright laws, which
afford only limited protection. The Company has a registered service mark for
its logo, and has applied for federal registration of the names "HomeCom(TM),"
"Post On The Fly(TM)" and "Personal Internet Banker(TM)." Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Company's products or to obtain and use information that the
Company regards as proprietary. There can be no assurance that the Company's
means of protecting its proprietary rights will be adequate or that the
Company's competitors will not independently develop competing products and
services. In distributing its software products, the Company intends to rely on
"shrink wrap" licenses that are not signed by licensees and, therefore, may be
unenforceable under the laws of certain jurisdictions. In addition, the laws of
some foreign countries do not protect the Company's proprietary rights to as
great an extent as the laws of the United States. The Company does not
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believe that any of its proposed products infringe the proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim infringement by the Company with respect to its products. The Company
expects that software product developers will increasingly be subject to
infringement claims as the number of products and competitors in electronic
commerce grows and the functionality of products in different industry segments
overlaps. Any such claims, with or without merit, could be time-consuming,
result in costly litigation, cause product shipment delays or require the
Company to enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to the
Company. In addition, Web site developers such as the Company face potential
liability for the actions of customers and others using their services,
including liability for infringement of intellectual property rights, rights of
publicity, defamation, libel fraud, misrepresentation, unauthorized computer
access, theft, tort liability and criminal activity under the laws of the United
States, various states and foreign jurisdictions. The Company routinely enters
into non-disclosure and confidentiality agreements with employees, vendors,
contractors, consultants and customers.
 
     There can be no assurance that the Company's means of protecting its
proprietary rights will be adequate or that the Company's competitors will not
independently develop similar technology. The Company believes that, due to the
rapid pace of Internet innovation and related software industries, factors such
as the technological and creative skills of its personnel are more important in
establishing and maintaining a leadership position within the industry than are
the various legal protections of its technology.
 
CUSTOMERS
 
     During 1996, 1997 and 1998, no customer accounted for more than 10% of the
Company's total net sales. Because substantially all of the Company's customers
have retained the Company for a single project, customers from whom the Company
generated substantial revenue in one quarter generally have not been a
substantial source of revenue in a subsequent quarter.
 
EMPLOYEES
 
     At March 26, 1999, the Company employed 103 full-time employees, of whom 58
were technical personnel engaged in maintaining or developing the Company's
products or performing related services, 33 were marketing and sales personnel
and 12 were involved in administration and finance.
 
INSURANCE
 
     The Company maintains liability and other insurance that it believes to be
customary and generally consistent with industry practice. The Company believes
that such insurance is adequate to cover potential claims relating to its
existing business activities.
 
GOVERNMENT REGULATION
 
     The Telecommunications Act of 1996 (the "1996 Telecommunications Act"),
which became effective on February 8, 1996, imposes criminal liability on
persons sending or displaying in a manner available to minors indecent material
on an interactive computer service such as the Internet. The 1996
Telecommunications Act also imposes criminal liability on an entity knowingly
permitting facilities under its control to be used for those activities. The
constitutionality of these provisions was successfully challenged in federal
district court and ultimately found unconstitutional by the United States
Supreme Court in Reno v. American Civil Liberties Union.
 
     Except for the 1996 Telecommunications Act, the Company does not believe
that it is currently subject to direct regulation by any government agency,
other than regulations applicable to businesses generally, and believes that
there are currently few laws or regulations directly applicable to Web site
service companies. The Federal Communications Commission is studying the
possible regulation of the Internet. Any such regulations adopted by the Federal
Communications Commission may adversely impact the manner in which the Company
conducts its business. It is possible that a number of additional laws and
regulations may be adopted with respect to the Internet, covering issues such as
user privacy, pricing, characteristics, and quality of
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products and services. The adoption of any such laws or regulations may decrease
the growth of the Internet, which could in turn decrease the demand for the
Company's products and services and increase the Company's cost of doing
business or cause the Company to modify its operations, or otherwise have an
adverse effect on the Company's business, financial condition and operating
results. Moreover, the applicability to the Internet of existing laws governing
issues such as property ownership, libel, and personal privacy is uncertain. The
Company cannot predict the impact, if any, that future regulation or regulatory
changes may have on its business. In addition, Web site developers such as the
Company face potential liability for the actions of customers and others using
their services, including liability for infringement of intellectual property
rights, rights of publicity, defamation, libel, fraud, misrepresentation,
unauthorized computer access, theft, tort liability and criminal activity under
the laws of the U.S., various states and foreign jurisdictions. Any imposition
of liability could have a material adverse effect on the Company.
 
     In addition, the Company's network services are transmitted to its
customers over dedicated and public telephone lines. These transmissions are
governed by regulatory policies establishing charges and terms for
communications. Changes in the regulatory environment relating to the
telecommunications and media industry could have an effect on the Company's
business, including regulatory changes which directly or indirectly affect use
or access of the Internet or increase the likelihood or scope of competition
from regional telephone companies, could have a material adverse effect on the
Company.
 
ITEM 2.  PROPERTIES
 
     The Company occupies approximately 17,000 square feet in two office
buildings in Atlanta, Georgia under leases expiring in March 2001 and October
2002. These facilities serve as the Company's headquarters and computer center.
The Company also has an office in McLean, Virginia occupying approximately 6,000
square feet under a lease expiring in June 2002, and an office in New York City
occupying approximately 3,400 square feet under a lease expiring in January
2003.
 
     The Company's Internet services are maintained in its key-card
access-secured, dual Leibert air-conditioned Network Operations Center ("NOC")
in Class A office space near the Company's principal offices. Company personnel
monitor server and network functions on a 24 hour per day, 7 days per week
basis. Back-up servers replace production servers in the event of failure or
down time. Tape back-ups are performed on a daily basis and transported to
secure off-site storage. Each server is Simple Network Management Protocol
("SNMP") managed and utilizes devices located on a separate network to notify
network personnel by pager in the event of problems that are not otherwise
detected by HomeCom's own SNMP.
 
     All power supplied to the NOC computer room is supplied by two separate
power substations through American Power Conversion Matrix UPS lines, with
back-up battery power. Telecommunications are provided to the computer room
through multiple leased T1 and T3 lines directly connected to the T3 Internet
provided by interexchange carriers. Each T1 and T3 line is provisioned on
separate local carrier fiber optics using the latest Synchronous Optical Network
("SONET") and Fiber Distributed Data Interface ("FDDI") technology.
Telecommunications lines are provided through two physically diverse entrance
facilities. The Company has acquired and installed multiple Cisco routers for
connection to the Internet, which automatically redistribute traffic load in the
event of telecommunications failure.
 
     The Company believes that the properties which it currently has under lease
are adequate to serve the Company's business operations for the foreseeable
future. The Company believes that if it were unable to renew the lease on either
of these facilities, it could find other suitable facilities with no material
adverse effect on the Company's business.
 
ITEM 3.  LEGAL PROCEEDINGS
 
     The Company is not a party to any material legal proceedings. From time to
time, the Company is involved in various routine legal proceedings incidental to
the conduct of its business.
 
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ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     None.
 
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
 
     The Company's Common Stock is traded on the Nasdaq SmallCap(TM)Market under
the symbol "HCOM." The following table shows for the periods indicated the high
and low sale prices for the Common Stock as reported by the Nasdaq SmallCap(TM)
Market.
 
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<CAPTION>
                                                               HIGH     LOW
                                                              ------   -----
<S>                                                           <C>      <C>
1997
Second quarter (since initial public offering -- May 8,
  1997).....................................................  $ 7.25   $6.00
Third quarter...............................................    6.50    2.13
Fourth quarter..............................................   15.56    2.63
1998
First quarter...............................................  $16.00   $2.00
Second quarter..............................................   18.25    1.13
Third quarter...............................................    4.94    1.63
Fourth quarter..............................................    8.88    1.38
1999
First quarter (through March 26, 1999)......................  $ 7.63   $3.50
</TABLE>
 
     The Company has not paid any cash dividends on its capital stock to date.
The Company currently anticipates that it will retain all future earnings, if
any, to fund the development and growth of its business and does not anticipate
paying any cash dividends in the foreseeable future.
 
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ITEM 6.  SELECTED FINANCIAL DATA
 
     The following selected financial data of HomeCom Communications, Inc.
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the financial statements and
related notes.
 
<TABLE>
<CAPTION>
                                    DECEMBER 2
                                  (INCORPORATION)                 YEAR ENDED DECEMBER 31,
                                  TO DECEMBER 31,   ---------------------------------------------------
                                       1994            1995         1996         1997          1998
                                  ---------------   ----------   ----------   -----------   -----------
<S>                               <C>               <C>          <C>          <C>           <C>
STATEMENT OF OPERATIONS DATA:
Net sales:
  Service sales.................    $       --      $  327,574   $2,112,878   $ 2,792,306   $ 2,941,047
  Equipment sales...............            --              --      185,977        86,322       351,363
                                    ----------      ----------   ----------   -----------   -----------
          Total net sales.......            --         327,574    2,298,855     2,878,628     3,292,410
                                    ----------      ----------   ----------   -----------   -----------
Cost of sales:
  Cost of services..............            --          59,871      715,377     2,254,200     2,372,617
  Cost of equipment sold........            --              --      128,938        68,974       228,694
                                    ----------      ----------   ----------   -----------   -----------
          Total cost of sales...            --          59,871      844,315     2,323,174     2,601,311
                                    ----------      ----------   ----------   -----------   -----------
Gross profit....................            --         267,703    1,454,540       555,454       691,099
                                    ----------      ----------   ----------   -----------   -----------
Operating expenses:
  Sales and marketing...........         1,045         124,253      962,200     1,499,397     1,392,306
  Product development...........            --          20,239       78,887       514,655       677,590
  General and administrative....        16,407         121,313      909,230     2,733,924     3,406,876
  Depreciation and
     amortization...............            --           3,722       85,068       238,537       542,269
                                    ----------      ----------   ----------   -----------   -----------
          Total operating
            expenses............        17,452         269,527    2,035,405     4,986,513     6,019,041
                                    ----------      ----------   ----------   -----------   -----------
Operating loss..................       (17,452)         (1,824)    (580,865)   (4,431,059)   (5,327,942)
Other expenses (income):
  Gain on sale of division......            --              --           --            --    (4,402,076)
  Interest expense, net.........            --           3,469       51,272       543,420       445,216
  Other expense (income), net...            --             147       (6,554)      (93,800)     (166,942)
                                    ----------      ----------   ----------   -----------   -----------
Loss before income taxes........       (17,452)         (5,440)    (625,583)   (4,881,181)   (1,204,140)
Income taxes....................            --              --           --            --            --
                                    ----------      ----------   ----------   -----------   -----------
Net loss........................       (17,452)         (5,440)    (625,583)   (4,881,181)   (1,204,140)
Preferred stock dividend........            --              --           --            --      (666,667)
                                    ----------      ----------   ----------   -----------   -----------
Loss applicable to common
  shareholders..................    $  (17,452)     $   (5,440)  $ (625,583)  $(4,881,181)  $(1,870,807)
                                    ==========      ==========   ==========   ===========   ===========
Basic and diluted loss per
  share.........................    $    (0.01)     $    (0.00)  $    (0.34)  $     (1.88)  $     (0.44)
                                    ==========      ==========   ==========   ===========   ===========
Weighted average common shares
  outstanding...................     1,850,447       1,850,447    1,862,223     2,602,515     4,287,183
                                    ==========      ==========   ==========   ===========   ===========
</TABLE>
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                           ---------------------------------------------------------
                                            1994      1995        1996          1997         1998
                                           ------   --------   -----------   ----------   ----------
<S>                                        <C>      <C>        <C>           <C>          <C>
BALANCE SHEET DATA:
Working capital (deficit)................  $8,455   $133,792   $(1,304,682)  $2,721,930   $2,265,725
Total assets.............................  10,254    247,382     1,726,522    4,664,779    4,565,490
Long-term obligations....................      --    160,792       147,833    1,652,009       88,242
Total liabilities........................      --    242,568     2,347,191    2,708,007    1,117,041
Stockholders' equity (deficit)...........  10,254      4,814      (620,669)   1,956,772    3,448,449
</TABLE>
 
                                        8
<PAGE>   11
 
     Selected quarterly financial data for the Company is as follows:
 
<TABLE>
<CAPTION>
                                                   Q1            Q2           Q3            Q4
                                               -----------   ----------   -----------   -----------
<S>                                            <C>           <C>          <C>           <C>
1998:
  Revenue....................................  $   882,427   $  897,153   $   711,295   $   801,535
  Gross profit...............................      369,702      264,299        11,011        91,020
  Net income (loss) available to common
     shareholders............................   (1,569,630)   2,623,821    (1,616,316)   (1,308,682)
  Basis and diluted earnings (loss) per
     share...................................  $     (0.51)  $     0.63   $     (0.33)  $     (0.26)
1997:
  Revenue....................................  $   909,177   $  708,397   $   713,401   $   547,653
  Gross profit (loss)........................      444,699      196,774       (58,788)      (27,231)
  Net loss available to common
     shareholders............................     (374,650)    (917,148)   (2,095,949)   (1,493,434)
  Basis and diluted loss per share...........  $     (0.19)  $    (0.35)  $     (0.71)  $     (0.51)
</TABLE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
     Except for historical information contained herein, some matters discussed
in this report constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company notes that a variety of
risk factors could cause the Company's actual results and experience to differ
materially from the anticipated results or other expectations expressed in the
Company's forward-looking statements. Reference is made in particular to the
discussion set forth in the Company's Registration Statements on Forms S-1 (File
Nos. 333-12219, 333-42599, 333-45383 and 333-56795) and S-3 (333-73123).
 
GENERAL
 
     HomeCom Communications, Inc. specializes in Internet/intranet solutions
software applications, products and services that enable consumers and financial
institutions to interface important business information, conduct commercial
transactions and improve business productivity. HomeCom derives revenue from
software licensing, application development, hosting and transaction fees in
three areas: (i) the design, development and integration of customized software
applications, including World Wide Web site development and related network
outsourcing; (ii) the integration of HomeCom's existing software applications in
to the client's operations; and (iii) security consulting and integration
services.
 
     The Company's revenues and operating results have varied substantially from
period to period, and should not be relied upon as an indication of future
results. The Company historically has operated with no significant backlog
because its services are provided as requested by customers. As a result,
revenues in any period are substantially affected by the amount of services
requested by its customers. An unanticipated termination of a major project, a
client's decision not to pursue a new project or proceed to succeeding stages of
a current project, or the completion during a quarter of several major client
projects, could require the Company to pay underutilized employees and could
therefore have a material adverse effect on the Company's results of operations,
financial condition, and cash flows.
 
RESULTS OF OPERATIONS
 
  Year Ended December 31, 1997 as Compared to Year Ended December 31, 1998
 
     Net Sales.  Net sales increased 14.4% from $2,878,628 in 1997 to $3,292,410
in 1998. Revenues from service sales increased 5.3% from $2,792,306 in 1997 to
$2,941,047 in 1998. This increase of $148,741 is primarily attributable to an
increase in security consulting revenue of approximately $169,000. Revenues from
equipment sales increased from $86,322 in 1997 to $351,363 during 1998 due to
increased sales of security hardware and software.
 
     Cost of Sales.  Cost of sales includes salaries for programmers, technical
staff and customer support, as well as a pro-rata allocation of
telecommunications, facilities and data center costs. Cost of sales for services
 
                                        9
<PAGE>   12
 
increased from $2,254,200, or 78.3% of revenues in 1997 to $2,372,617, or 72.1%
of revenues in 1998. This increase reflects increased costs for technical
personnel hired in advance of anticipated revenue growth, offset by costs
eliminated due to the sale of HostAmerica in June 1998. The decrease in cost of
sales as a percentage of revenues is due to the mix of products and services
sold.
 
     Gross Profit.  Gross profit increased by $135,645 from $555,454 in 1997 to
$691,099 in 1998. Gross profit margins also increased from 19.3% during 1997 to
21.0% during 1998. This increase as a percentage of net sales is due to the mix
of products and services sold.
 
     Sales and Marketing.  Sales and marketing expenses include salaries,
variable commissions, and bonuses for the sales force, advertising and
promotional marketing materials, and a pro-rata allocation of
telecommunications, facilities and data center costs. Sales and marketing
expenses decreased 7.1% from $1,499,397 in 1997 to $1,392,306 in 1998. This
decrease was primarily attributable to a decrease in advertising and promotional
marketing materials. As a percentage of net sales, these expenses decreased from
52.1% in 1997 to 42.3% in 1998.
 
     Product Development.  Product development costs consist of personnel costs
required to conduct the Company's product development efforts, and a pro-rata
allocation of telecommunications, facilities and data center costs. Management
believes that continuing investment in product development is required to
compete effectively in the Company's industry. Total expenditures for product
development were $677,590, or 20.6% of net sales in 1998, of which none were
capitalized. This compares to total product development expenditures of
$683,488, or 23.7% of net sales in 1997, of which $168,833 were capitalized.
 
     General and Administrative.  General and administrative expenses include
salaries for administrative personnel, insurance and other administrative
expenses, as well as a pro-rata allocation of telecommunications, and facilities
and data center costs. General and administrative expenses increased from
$2,733,924 in 1997 to $3,406,876 in 1998. As a percentage of net sales, these
expenses increased from 95.0% in 1997 to 103.5% in 1998. These increases reflect
additional expenditures for operational and administrative support personnel
incurred to support anticipated growth, professional services for public and
investor relations, and accounting and legal support for the Company's
securities filings and divestiture activities.
 
     Depreciation and Amortization.  Depreciation and amortization includes
depreciation and amortization of computers, network equipment, office equipment,
equipment under capital leases, and goodwill increased from $238,537, or 8.3% of
net sales in 1997 to $542,269, or 16.5% in 1998, reflecting increased
expenditures on capital equipment and the amortization of goodwill associated
with the IRC acquisition.
 
     Other Income.  During 1998, the Company recorded a gain on the sale of its
HostAmerica division of $4,402,076 (see Note 9).
 
     Interest Expense.  Interest expense decreased from $543,420 in 1997 to
$445,216 during 1998, due to lower amortization of the discount associated with
the convertible debentures issued in September 1997.
 
  Year Ended December 31, 1996 as Compared to Year Ended December 31, 1997
 
     Net Sales.  Net sales increased 25.2% from $2,298,855 in 1996 to $2,878,628
in 1997. Revenues from service sales increased 32.2% from $2,112,878 in 1996 to
$2,792,306 in 1997. This increase of $679,428 is primarily attributable to
increases in hosting revenues of approximately $472,000 and security consulting
revenue of approximately $308,000. Revenues from equipment sales decreased from
$185,977 during 1996 to $86,322 during 1997, reflecting lower security hardware
and software sales.
 
     Cost of Sales.  Cost of sales for services increased from $715,377, or
31.1% of revenues in 1996 to $2,254,200, or 78.3% of revenues in 1997. This
increase reflects higher overall payroll costs associated with increasing the
Company's technical staff to a high of approximately 60 persons in July 1997 to
create available capacity for anticipated revenue growth which did not occur. As
part of an effort to control cash expenditures, the Company subsequently reduced
this staff to approximately 30 persons by December 31, 1997.
 
     Gross Profit.  Gross profit decreased by $899,086 from $1,454,540 in 1996
to $555,454 in 1997. Gross profit margins decreased from 63.3% in 1996 to 19.3%
in 1997. This decrease as a percentage of net sales
                                       10
<PAGE>   13
 
primarily reflects increased costs incurred by the Company for technical
personnel hired in advance of anticipated revenue growth which did not occur.
 
     Sales and Marketing.  Sales and marketing expenses increased 55.8% from
$962,220 in 1996 to $1,499,397 in 1997. This increase was primarily attributable
to an increase in advertising and marketing expenses. As a percentage of net
sales, these expenses increased from 41.9% in 1996 to 52.1% in 1997. During the
third quarter of 1997, the Company implemented procedures intended to
substantially reduce advertising and marketing expenses.
 
     Product Development.  Total expenditures for product development were
$683,488, or 23.7% of net sales in 1997, of which $168,833 were capitalized.
This compares to total product development expenditures of $163,069, or 7.1% of
sales, in 1996, of which $84,182 were capitalized. This increase was due to
increases in product development staff and expenditures for the Company's
Personal Internet Banker(TM) product.
 
     General and Administrative.  General and administrative expenses increased
from $909,230 in 1996 to $2,733,924 in 1997. As a percentage of net sales, these
expenses increased from 39.6% in 1996 to 95.0% in 1997. This increase as a
percentage of net sales reflects primarily increases for operational and
administrative support personnel incurred to support anticipated growth in
revenues, which did not occur. During the third quarter of 1997, the Company
implemented steps to significantly reduce its general and administrative costs.
These steps included: (i) reductions in general and administrative staff; and
(ii) reductions in public relations and other professional services.
 
     Depreciation and Amortization.  Depreciation and amortization increased
from $85,068, or 3.7% of net sales in 1996 to $238,537, or 8.3% in 1997,
reflecting increased expenditures on capital equipment.
 
     Interest Expense.  Interest expense increased from $51,272 in 1996 to
$543,420 during 1997, principally reflecting $443,889 of amortization of the
discount associated with the convertible debentures issued in September 1997.
 
RECENTLY ISSUED ACCOUNTING STANDARDS
 
     On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (FAS 133). FAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). FAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. Management of the
Company anticipates that, due to its limited use of derivative instruments, the
adoption of FAS 133 will not have a significant effect on the Company's results
of operations or its financial position.
 
                        LIQUIDITY AND CAPITAL RESOURCES
 
GENERAL
 
     The Company has substantially limited unused sources of capital. As of
December 31, 1998, the Company had net working capital of approximately $2.3
million. Management has undertaken steps to address the Company's ongoing cash
requirements including concentrating the Company's market focus, identifying
additional operational and administrative efficiencies, and actively managing
working capital. The Company also may consider raising additional capital
through additional debt and equity offerings.
 
     Because the Company expects to continue to incur substantial operating
losses, the Company will continue to use substantial sums of cash in its
operations for an indefinite period. Accordingly, the Company will be required
to obtain additional capital. No assurance can be given that the Company will be
successful in its efforts to obtain additional capital, or that capital will be
available on terms acceptable to the Company or on terms that will not
significantly dilute the interests of existing stockholders. If the Company
exhausts its
 
                                       11
<PAGE>   14
 
current sources of capital and is not able to obtain additional capital, the
Company will be required to undertake certain steps to continue its operations.
Such steps may include immediate reduction of the Company's operating costs and
other expenditures, including potential reductions of personnel and suspension
of salary increases and capital expenditures. If such measures are not
sufficient, the Company may elect to implement other cost reduction actions as
the Company may determine are necessary and in the Company's best interests,
including the possible sale of certain of the Company's business lines. Any such
actions undertaken may limit the Company's opportunities to realize continued
increases in sales and the Company may not be able to reduce its costs in
amounts sufficient to achieve break-even or profitable operations. If the
Company exhausts its sources of capital, and subsequent cost reduction measures
are not sufficient to allow the Company to achieve break-even or profitable
operations, the Company will be forced to seek protection from its creditors.
 
     Net cash used in operating activities was $4,404,190 for year ended
December 31, 1998. The Company has primarily financed its operations to date
through public and private sales of debt and equity securities and loans from
its principal stockholders and affiliates. During May 1997, the Company
completed an initial public offering of its common stock, issuing 1,000,000
shares at a price of $6.00 per share. The net proceeds to the Company from the
initial public offering were approximately $4.7 million. The Company has repaid
all outstanding principal amounts loaned to the Company by stockholders and
affiliates. During September 1997, the Company completed the issuance of an
aggregate $1.7 million principal amount of the Company's 5% convertible
debentures due September 22, 2000. Net proceeds from the sale of the debentures
was approximately $1.5 million. In December 1997, the Company issued 20,000
shares of Series A preferred stock for aggregate net proceeds of approximately
$1.8 million. During 1998, the Company's 5% convertible debentures and its
Series A preferred stock were converted into 961,460 and 711,456 shares of
common stock, respectively. In June 1998, the Company sold its HostAmerica
division to Sage Acquisition Corp., for net proceeds of approximately
$4,250,000.
 
     On March 25, 1999, the Company issued 125 shares of its Series B Preferred
Stock for an aggregate purchase price of $2,500,000. Net proceeds to the Company
from the Series B preferred sale were approximately $2,280,000. The Series B
preferred stock is convertible at the option of the holder into a number of
shares of common stock equal to a share-based factor. The Series B conversion
price is the lesser of (i) the average closing bid price during any four (4)
consecutive trading days during the twenty-five (25) consecutive trading day
period ending one (1) trading day prior to the day the notice of conversion is
sent to the Company, or (ii) $5.23. The shares may be redeemed by the Company at
a price equal to 120% of the face amount of the shares.
 
     The Company spent $362,689 and $387,209 during 1998 and 1997, respectively,
for the purchase of capital equipment. These amounts were expended primarily for
computer equipment, communications equipment and software necessary for the
Company to increase its presence in the Internet and Intranet applications
marketplace. The Company's commitments as of December 31, 1998 consist primarily
of leases on its Atlanta, Vienna, Virginia and New York City facilities.
 
     Accounts receivable, net of allowance for doubtful accounts, totaled
$680,790 as of December 31, 1998. Trade receivables are monitored by the Company
through ongoing credit evaluations of its customers' financial conditions. The
allowance for doubtful accounts is considered by management to be an adequate
reserve for known and estimated bad debts of the Company. A revision in this
reserve due to actual results differing from this estimate could have a material
impact on the results of operations, financial position and liquidity of the
Company.
 
YEAR 2000
 
     Many existing computer programs were originally designed to use only two
digits to identify a year in date fields. As a result, date-sensitive software
applications may recognize a date using "00" as the year 1900 rather than the
year 2000. If not corrected, these applications could fail or produce erroneous
results when working with dates in the year 2000 and beyond. If not properly
addressed, the Year 2000 issue could have a material effect on the Company's
financial position and future operating results. The Company primarily relies on
 
                                       12
<PAGE>   15
 
industry standard operating systems and applications for its internal systems
rather than proprietary software, and based on its review of its significant
internal programs and systems, has determined that they are substantially Year
2000 compliant. In addition, the Company is seeking confirmation from its
primary telecommunications service providers that they are developing and
implementing plans to become Year 2000 compliant. Information received to date
has indicated that such respondents are in the process of implementing
remediation procedures to ensure that their computer systems, services, or
products are Year 2000 compliant by December 31, 1999. However, the Company has
not undertaken an in-depth evaluation of such providers in relation to the Year
2000 issue. In addition, the Company cannot predict whether or not all of these
vendors' programs will be successful. To the extent that these vendors fail to
resolve any Year 2000 issues on a timely basis or in a manner that is compatible
with the Company's systems, that failure could have a material adverse effect on
the Company's financial position and future operating results. The Company is
using internal resources to identify and correct its systems for Year 2000
compliance, and expects any incremental costs associated with addressing this
issue to be minimal. The Company does not believe that the costs of addressing
Year 2000 issues will be material to its financial position or future operating
results.
 
                                       13
<PAGE>   16
 
ITEM 8.  FINANCIAL STATEMENTS
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
 
Report of Independent Accountants...........................   15
 
Balance Sheets as of December 31, 1997 and 1998.............   16
 
Statements of Operations for Each of the Three Years in the
  Period Ended December 31, 1998............................   17
 
Statements of Stockholders' Equity (Deficit) for Each of the
  Three Years in the Period Ended December 31, 1998.........   18
 
Statements of Cash Flows for Each of the Three Years in the
  Period Ended December 31, 1998............................   19
 
Notes to Financial Statements...............................   21
</TABLE>
 
                                       14
<PAGE>   17
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders of
HomeCom Communications, Inc.
 
In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in stockholders' equity (deficit) and of cash flows
present fairly, in all material respects, the financial position of HomeCom
Communications, Inc. at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
 
                                          PricewaterhouseCoopers LLP
 
Atlanta, Georgia
March 29, 1999
 
                                       15
<PAGE>   18
 
                          HOMECOM COMMUNICATIONS, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 1997          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
                                        ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $ 3,187,948   $ 2,291,932
  Restricted cash...........................................           --       250,000
  Accounts receivable, net..................................      470,839       680,790
  Other current assets......................................           --         4,796
                                                              -----------   -----------
         Total current assets...............................    3,658,787     3,227,518
FURNITURE, FIXTURES AND EQUIPMENT, NET......................      627,624       797,263
SOFTWARE DEVELOPMENT COSTS, NET.............................       31,778            --
DEPOSITS....................................................       85,731        80,231
DEFERRED ACQUISITION COSTS..................................           --       109,158
DEFERRED DEBT ISSUE COSTS...................................      248,359            --
INTANGIBLE ASSETS, NET......................................           --       351,320
OTHER NON-CURRENT ASSETS....................................       12,500            --
                                                              -----------   -----------
         Total assets.......................................  $ 4,664,779   $ 4,565,490
                                                              ===========   ===========
 
                         LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable and accrued expenses.....................  $   427,886   $   424,094
  Accrued payroll liabilities...............................      264,180       300,927
  Unearned revenue..........................................      190,978       128,345
  Current portion of obligations under capital leases.......       53,813       108,427
                                                              -----------   -----------
         Total current liabilities..........................      936,857       961,793
                                                              -----------   -----------
CONVERTIBLE DEBENTURES, NET OF DISCOUNT OF $122,778 AS OF
  DECEMBER 31, 1997.........................................    1,577,222            --
OBLIGATIONS UNDER CAPITAL LEASES............................       74,787        88,242
OTHER LIABILITIES...........................................      119,141        67,006
                                                              -----------   -----------
         Total liabilities..................................    2,708,007     1,117,041
                                                              -----------   -----------
STOCKHOLDERS' EQUITY:
  Common stock, $.0001 par value, 15,000,000 shares
    authorized, 2,956,396 and 5,072,397 shares issued and
    outstanding at December 31, 1997 and 1998,
    respectively............................................          295           507
  Preferred stock, Series A, convertible, $100 par value,
    1,000,000 shares authorized, 20,000 and 0 shares issued
    and outstanding at December 31, 1997 and 1998,
    respectively; participating; $2,000,000 liquidation
    value at December 31, 1997..............................          200            --
  Additional paid-in capital................................    7,800,542    10,355,724
  Subscriptions receivable..................................     (337,501)     (196,878)
  Accumulated deficit.......................................   (5,506,764)   (6,710,904)
                                                              -----------   -----------
         Total stockholders' equity.........................    1,956,772     3,448,449
                                                              -----------   -----------
         Total liabilities and stockholders' equity.........  $ 4,664,779   $ 4,565,490
                                                              ===========   ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       16
<PAGE>   19
 
                          HOMECOM COMMUNICATIONS, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                           --------------------------------------
                                                              1996         1997          1998
                                                           ----------   -----------   -----------
<S>                                                        <C>          <C>           <C>
NET SALES:
  Service sales..........................................  $2,112,878   $ 2,792,306   $ 2,941,047
  Equipment sales........................................     185,977        86,322       351,363
                                                           ----------   -----------   -----------
          Total net sales................................   2,298,855     2,878,628     3,292,410
                                                           ----------   -----------   -----------
COST OF SALES:
  Cost of services.......................................     715,377     2,254,200     2,372,617
  Cost of equipment sold.................................     128,938        68,974       228,694
                                                           ----------   -----------   -----------
          Total cost of sales............................     844,315     2,323,174     2,601,311
                                                           ----------   -----------   -----------
GROSS PROFIT.............................................   1,454,540       555,454       691,099
                                                           ----------   -----------   -----------
OPERATING EXPENSES:
  Sales and marketing....................................     962,220     1,499,397     1,392,306
  Product development....................................      78,887       514,655       677,590
  General and administrative.............................     909,230     2,733,924     3,406,876
  Depreciation and amortization..........................      85,068       238,537       542,269
                                                           ----------   -----------   -----------
          Total operating expenses.......................   2,035,405     4,986,513     6,019,041
                                                           ----------   -----------   -----------
OPERATING LOSS...........................................    (580,865)   (4,431,059)   (5,327,942)
OTHER EXPENSES (INCOME)
  Gain on sale of division...............................          --            --    (4,402,076)
  Interest expense.......................................      51,272       543,420       445,216
  Other expense (income), net............................      (6,554)      (93,298)     (166,942)
                                                           ----------   -----------   -----------
LOSS BEFORE INCOME TAXES.................................    (625,583)   (4,881,181)   (1,204,140)
INCOME TAXES.............................................          --            --            --
                                                           ----------   -----------   -----------
NET LOSS.................................................    (625,583)   (4,881,181)   (1,204,140)
PREFERRED STOCK DIVIDEND.................................          --            --      (666,667)
                                                           ----------   -----------   -----------
LOSS APPLICABLE TO COMMON SHAREHOLDERS...................  $ (625,583)  $(4,881,181)  $(1,870,807)
                                                           ==========   ===========   ===========
BASIC AND DILUTED LOSS PER SHARE.........................  $    (0.34)  $     (1.88)  $     (0.44)
                                                           ==========   ===========   ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING............   1,862,223     2,602,515     4,287,183
                                                           ==========   ===========   ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       17
<PAGE>   20
 
                          HOMECOM COMMUNICATIONS, INC.
 
            STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
 
       FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1998
 
<TABLE>
<CAPTION>
                                                       PREFERRED STOCK        COMMON STOCK        ADDITIONAL
                                                       ----------------   ---------------------     PAID-IN
                                                       SHARES    AMOUNT    SHARES      AMOUNT       CAPITAL
                                                       -------   ------   ---------   ---------   -----------
<S>                                                    <C>       <C>      <C>         <C>         <C>
BALANCE, December 31, 1995...........................       --      --        1,000      27,706            --
Conversion from S to C corporation...................                                                 (22,892)
Issuance of stock....................................                        19,663     468,104
Net loss.............................................
Stock split and recapitalization to $0.0001 par
  value..............................................       --      --    1,902,400    (495,618)      495,618
                                                       -------   -----    ---------   ---------   -----------
BALANCE, December 31, 1996...........................       --      --    1,923,063         192       472,726
Conversion of note payable to common shares..........                        33,333           3       199,997
Issuance of common shares, net of offering costs.....                     1,000,000         100     4,672,489
Issuance of preferred shares, net of offering
  costs..............................................   20,000     200                              1,799,052
Issuance of warrants and compensatory stock
  options............................................                                                  89,611
Cancellation of subscriptions receivable under
  employment agreements..............................
Favorable conversion feature of convertible
  debentures.........................................                                                 566,667
Net loss.............................................       --      --           --          --            --
                                                       -------   -----    ---------   ---------   -----------
BALANCE, December 31, 1997...........................   20,000     200    2,956,396         295     7,800,542
Issuance of stock....................................                       443,085          45       884,086
Conversion of convertible debentures to common
  shares.............................................                       961,460          96     1,699,904
Conversion of preferred stock to common shares.......  (20,000)   (200)     711,456          71           129
Cancellation of subscriptions receivable under
  employment agreements..............................
Other................................................                                                 (28,937)
Net loss.............................................       --      --           --          --            --
                                                       -------   -----    ---------   ---------   -----------
BALANCE, December 31, 1998...........................       --   $  --    5,072,397   $     507   $10,355,724
                                                       =======   =====    =========   =========   ===========
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                                  TOTAL
                                                              SUBSCRIPTIONS   ACCUMULATED     STOCKHOLDERS'
                                                               RECEIVABLE       DEFICIT     EQUITY (DEFICIT)
                                                              -------------   -----------   -----------------
<S>                                                           <C>             <C>           <C>
BALANCE, December 31, 1995..................................                      (22,892)           4,814
Conversion from S to C corporation..........................                       22,892               --
Issuance of stock...........................................     (468,004)                             100
Net loss....................................................                     (625,583)        (625,583)
Stock split and recapitalization to $0.0001 par value.......           --              --               --
                                                                ---------     -----------      -----------
BALANCE, December 31, 1996..................................     (468,004)       (625,583)        (620,669)
Conversion of note payable to common shares.................                                       200,000
Issuance of common shares, net of offering costs............                                     4,672,589
Issuance of preferred shares, net of offering costs.........                                     1,799,252
Issuance of warrants and compensatory stock options.........                                        89,611
Cancellation of subscriptions receivable under..............                                            --
  employment agreements.....................................      130,503                          130,503
Favorable conversion feature of convertible debentures......                                       566,667
Net loss....................................................           --      (4,881,181)      (4,881,181)
                                                                ---------     -----------      -----------
BALANCE, December 31, 1997..................................     (337,501)     (5,506,764)       1,956,772
Issuance of stock...........................................                                       884,131
Conversion of convertible debentures to common shares.......                                     1,700,000
Conversion of preferred stock to common shares..............                                            --
Cancellation of subscriptions receivable under employment
  agreements................................................      140,623                          140,623
Other.......................................................                                       (28,937)
Net loss....................................................           --      (1,204,140)      (1,204,140)
                                                                ---------     -----------      -----------
BALANCE, December 31, 1998..................................    $(196,878)    $(6,710,904)     $ 3,448,449
                                                                =========     ===========      ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements
 
                                       18
<PAGE>   21
 
                          HOMECOM COMMUNICATIONS, INC.
 
                            STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                           -------------------------------------
                                                             1996         1997          1998
                                                           ---------   -----------   -----------
<S>                                                        <C>         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss...............................................  $(625,583)  $(4,881,181)  $(1,204,140)
  Adjustments to reconcile net loss to cash used in
     operating activities:
     Depreciation and amortization.......................     87,733       457,113       542,269
     Amortization of debt discount.......................         --       443,889       122,778
     Amortization of debt issue costs....................         --        22,578       283,754
     Forgiveness of subscriptions receivable.............         --       130,501       140,623
     Expense recorded for issuance of warrants...........         --            --        36,093
     Non-cash compensation expense.......................         --            --        44,933
     Gain on sale of division............................         --            --    (4,402,076)
     Provision for bad debts.............................    104,360       244,893       167,675
     Deferred rent expense...............................     73,424        45,717       (52,135)
     Change in operating assets and liabilities:
       Accounts receivable...............................   (506,289)     (227,478)     (309,248)
       Accounts payable and accrued expenses.............    316,641      (221,908)       (3,793)
       Accrued payroll liabilities.......................    284,367       (74,274)       36,747
       Unearned revenue..................................     90,691        57,808       187,367
       Other.............................................    (41,266)      (21,674)        4,964
                                                           ---------   -----------   -----------
     Net cash used in operating activities...............   (215,925)   (4,024,016)   (4,404,190)
                                                           ---------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of furniture, fixtures and equipment..........   (349,646)     (387,209)     (362,689)
  Proceeds from sale of division, net of restricted cash
     of $250,000.........................................         --            --     4,000,000
  Payment of acquisition costs...........................         --            --      (152,407)
  Software development costs.............................    (84,182)     (168,834)           --
                                                           ---------   -----------   -----------
     Net cash provided by (used in) investing
       activities........................................   (433,828)     (556,043)    3,484,904
                                                           ---------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of deferred offering costs.....................    (88,096)     (415,448)      (28,937)
  Payment of deferred debt issue costs...................         --      (220,937)      (35,395)
  Repayment of capital lease obligations.................     (4,404)      (51,010)     (144,492)
  Proceeds from issuance of common shares and exercise of
     warrants............................................         --            --       232,094
  Payment of preferred stock issue costs.................         --      (190,748)           --
  Proceeds from issuance of convertible debentures and
     warrants............................................         --     1,700,000            --
  Proceeds from issuance of preferred shares and
     warrants............................................         --     2,000,000            --
  Proceeds from notes payable to stockholders............    889,904       490,000            --
  Repayment of notes payable to stockholders.............     (5,115)   (1,335,581)           --
  Proceeds from note payable.............................     70,000            --            --
  Repayment of note payable..............................     (9,354)      (60,646)           --
  Proceeds from sale of stock, net of underwriting
     discounts and commissions...........................        100     5,520,000            --
                                                           ---------   -----------   -----------
     Net cash provided by financing activities...........    853,035     7,435,630        23,270
                                                           ---------   -----------   -----------
</TABLE>
 
                                       19
<PAGE>   22
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                           -------------------------------------
                                                             1996         1997          1998
                                                           ---------   -----------   -----------
<S>                                                        <C>         <C>           <C>
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.....    203,282     2,855,571      (896,016)
CASH AND CASH EQUIVALENTS at beginning of period.........    129,095       332,377     3,187,948
                                                           ---------   -----------   -----------
CASH AND CASH EQUIVALENTS at end of period...............  $ 332,377   $ 3,187,948   $ 2,291,932
                                                           =========   ===========   ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON
  CASH INVESTING AND FINANCING ACTIVITIES:
  Interest paid..........................................  $   6,277   $    56,365   $    16,277
                                                           =========   ===========   ===========
  Capital lease obligations incurred during year on lease
     of computer equipment...............................  $  64,667   $   119,346   $   208,065
                                                           =========   ===========   ===========
  Conversion of notes payable to affiliate to common
     stock...............................................  $      --   $   200,000   $        --
                                                           =========   ===========   ===========
  Issuance of warrants and compensatory stock options....  $      --   $    89,611   $        --
                                                           =========   ===========   ===========
</TABLE>
 
During 1998, the Company issued 351,391 shares of common stock for the net
assets of The Insurance Resource Center, Inc.
 
During 1998, $1,700,000 of convertible debentures were converted into 961,460
shares of common stock.
 
During 1998, 20,000 shares of preferred stock were converted into 711,456 shares
of common stock.
 
   The accompanying notes are an integral part of these financial statements.
 
                                       20
<PAGE>   23
 
                          HOMECOM COMMUNICATIONS, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
DESCRIPTION OF BUSINESS
 
     HomeCom Communications, Inc. (the "Company") specializes in Internet
application solutions for the financial services industry. HomeCom's integrated
Web-enabled solutions for one-stop financial services include a complete range
of products and services such as secure banking services, fee-income producing
insurance and brokerage products, and intelligent one-to-one marketing. In
addition, HomeCom offers custom Web development and hosting services, as well as
Internet security products and services.
 
BASIS OF PRESENTATION -- GOING CONCERN
 
     The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplate the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has incurred net losses from operations since its
incorporation, has an accumulated deficit at December 31, 1998, and has used
substantial cash in its operations. Management believes that future debt and
equity offerings and successful commercialization of its products and services
will generate the required capital necessary to continue as a going concern.
 
USE OF ESTIMATES
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
 
CASH AND CASH EQUIVALENTS
 
     For purposes of the statement of cash flows, management considers all
highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents.
 
RESTRICTED CASH
 
     Under the terms of the sale of the Company's HostAmerica division in June,
1998, $250,000 of the proceeds of the sale are to be held in escrow until May 1,
1999 for the purpose of indemnifying the Purchaser for representations and
warranties made by the Company under the Asset Purchase Agreement.
 
ACCOUNTS RECEIVABLE, NET
 
     Accounts receivables are shown net of the allowance for doubtful accounts.
The allowance was approximately $161,000 and $95,000 at December 31, 1997 and
1998, respectively. Write-offs were approximately $191,000 and $233,000 for the
years ended December 31, 1997 and 1998, respectively.
 
FURNITURE, FIXTURES AND EQUIPMENT, NET
 
     Furniture, fixtures and equipment are recorded at cost less accumulated
depreciation, which is computed using the straight-line method over the
estimated useful lives of the related assets (three to five years). Assets
recorded under capital leases are amortized over the shorter of their useful
lives or the term of the related leases using the straight-line method.
Maintenance and repairs are charged to expense as incurred. Upon sale,
retirement or other disposition of these assets, the cost and the related
accumulated depreciation are removed from the respective accounts and any gain
or loss on the disposition is included in income.
                                       21
<PAGE>   24
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
SOFTWARE DEVELOPMENT COSTS, NET
 
     The Company capitalizes internal software development costs in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting For Costs
of Computer Software To Be Sold, Leased, or Otherwise Marketed". The
capitalization of these costs begins when a product's technological feasibility
has been established and ends when the product is available for general release
to customers. Amortization is computed on an individual product basis and is the
greater of (a) the ratio of current gross revenues for a product to the total
current and anticipated future gross revenues for the product or (b) the
straight-line method over the estimated economic life of the product.
Amortization of capitalized software development costs totaled approximately
$3,000, $219,000, and $32,000 in 1996, 1997, and 1998, respectively. These
expenses are included in cost of sales. At December 31, 1998, capitalized
software development costs have been fully amortized.
 
DEFERRED ACQUISITION COSTS
 
     Costs incurred in connection with the Company's acquisition of First
Institutional Marketing, Inc. have been deferred. These costs consist of legal,
accounting, and printing costs and will be capitalized upon the closing of this
transaction.
 
DEFERRED DEBT ISSUE COSTS
 
     Costs in connection with the Company's offering of convertible debentures
were deferred and amortized over the term of the debt. As of December 31, 1998,
all of the convertible debentures had been converted into shares of common stock
and, accordingly, all of the deferred debt issue costs had been amortized.
 
INTANGIBLE ASSETS
 
     Intangible assets consist of cost in excess of net assets acquired arising
from the purchase of The Insurance Resource Center, Inc. ("IRC") which is being
amortized using the straight-line method over three years. Impairment of value,
if any, is recognized in the period in which it is determined. Management
assesses the recoverability of intangible assets at each balance sheet date
based on undiscounted projected cash flows and operating income.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The carrying amounts reported in the balance sheet for the Company's notes
payable and capital lease obligations approximate fair value.
 
REVENUE RECOGNITION
 
     The Company recognizes revenues on web page development and specialized
software application contracts using the percentage-of-completion method. Earned
revenue is based on the percentage that incurred hours to date bear to total
estimated hours after giving effect to the most recent estimates of total hours.
Earned revenue reflects the original contract price adjusted for agreed upon
claim and change order revenue, if any. If estimated total costs on any of these
contracts indicate a loss, the entire amount of the estimated loss is recognized
immediately. Revenues related to other services are recognized as the services
are performed. Revenues from equipment sales and related costs are recognized
when products are shipped to the customer. Unearned revenue, as reflected on the
accompanying balance sheet, represents the amount of billings recorded on
contracts in advance of services being performed.
 
                                       22
<PAGE>   25
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
ADVERTISING EXPENSES
 
     Advertising costs are expensed when incurred. Advertising expenses were
approximately $724,000 and $263,000 for the years ended December 31, 1997 and
1998, respectively.
 
INCOME TAXES
 
     Prior to February 9, 1996, the Company qualified as an S Corporation for
federal and state income tax purposes. Accordingly, no provision was made for
income taxes for its operations prior to February 9, 1996. Effective February 9,
1996, the Company converted from an S corporation to a C corporation for income
tax purposes and is, therefore, subject to corporate income taxes. Deferred
income tax assets and liabilities reflect differences between the bases of the
Company's assets and liabilities for financial reporting and income tax
purposes. The net deferred income tax asset of approximately $2,500,000 at
December 31, 1998 is primarily due to operating loss carryforwards generated
since February 9, 1996, and is fully offset by a valuation allowance. The effect
of a change in the valuation allowance that results from a change in
circumstances that causes a change in judgment about the realizability of the
related deferred tax asset in future years would be included in income in that
period.
 
     As a result of termination of the S Corporation in February 1996, the
accumulated deficit as of that date was transferred to additional paid-in
capital.
 
BASIC AND DILUTED EARNINGS PER SHARE
 
     Basic and diluted earnings per share ("EPS") are calculated according to
the provisions of Statement of Financial Accounting Standards No. 128, "Earnings
per Share" ("FAS 128"). Due to the net loss position of the Company for each of
the three years in the period ending December 31, 1998, the numerator and
denominator are the same for both basic and diluted EPS.
 
OTHER MATTERS
 
     Certain prior year amounts have been reclassified to conform to current
year presentation.
 
2. FURNITURE, FIXTURES AND EQUIPMENT, NET
 
     Furniture, fixtures and equipment, net, are comprised of the following as
of:
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              ---------------------
                                                                1997        1998
                                                              --------   ----------
<S>                                                           <C>        <C>
Furniture and fixtures......................................  $191,107   $  257,424
Computer equipment..........................................   579,486      861,400
Computer equipment under capital leases.....................   184,012      382,055
                                                              --------   ----------
                                                               954,605    1,500,879
Less: accumulated depreciation and amortization.............  (326,981)    (703,616)
                                                              --------   ----------
                                                              $627,624   $  797,263
                                                              ========   ==========
</TABLE>
 
                                       23
<PAGE>   26
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
3. NOTES PAYABLE
 
     Notes payable are comprised of the following as of:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 1997         1998
                                                              ----------   ----------
<S>                                                           <C>          <C>
Convertible debentures (interest accrues at 5%), payable
  September 22, 2000, non-collateralized, convertible at the
  option of the holders into shares of the Company's common
  stock, net of unamortized discount of $122,778............  $1,577,222           --
Less current maturities of notes payable....................          --           --
                                                              ----------   ----------
                                                              $1,577,222   $       --
                                                              ==========   ==========
</TABLE>
 
     These notes were converted into 961,460 shares of common stock during 1998.
 
4. SEGMENT INFORMATION
 
     During 1998, HomeCom reorganized into five separate business units,
organized on the basis of products and services. Prior to that time, the Company
operated in a single business segment. The Company has determined that its
reportable segments are those that are based on the Company's method of internal
reporting, which disaggregates its business by product and service category into
business units. HomeCom's reportable segments are: custom Web development
(FAST), Internet outsourcing services (HostAmerica), Internet security services
(HISS), software products, and InsureRate. On June 9, 1998, the Company sold
substantially all of the assets of its HostAmerica Internet outsourcing services
business unit to Sage Acquisition Corp.
 
     The table below presents information about the reported business unit
income for HomeCom Communications, Inc. for the year ended December 31, 1998:
 
<TABLE>
<CAPTION>
                                                                 SOFTWARE                RECONCILING   CONSOLIDATED
                                    FAST    HOSTAMERICA   HISS   PRODUCTS   INSURERATE      ITEMS         TOTALS
                                   ------   -----------   ----   --------   ----------   -----------   ------------
                                                                    (IN THOUSANDS)
<S>                                <C>      <C>           <C>    <C>        <C>          <C>           <C>
Revenues.........................  $1,950      $531       $782    $  29       $   0         $   0        $ 3,292
Net Income (Loss)................  $ (363)     $256       $(67)   $(443)      $(357)        $(230)       $(1,204)
</TABLE>
 
---------------
 
     Reconciling items represent adjustments that are made to the total of the
segments' operating income in order to arrive at consolidated net loss and
include the following:
 
<TABLE>
<CAPTION>
                                                              (IN THOUSANDS)
<S>                                                           <C>
Depreciation and amortization...............................     $  (587)
Interest expense, net.......................................        (278)
Gain on sale of division....................................       4,402
Corporate sales and marketing and product development
  expenses..................................................        (360)
General and administrative expenses.........................      (3,407)
                                                                 -------
                                                                 $  (230)
                                                                 =======
</TABLE>
 
     The Company evaluates the performance of its segments based on segment
revenue and identifiable segment direct expenses, consisting primarily of
salaries and wages, travel and other costs of segment operating and sales
personnel. Common expenses for general and administrative costs, facilities,
equipment, telecommunications, and depreciation and amortization expenses are
not allocated to the business segments but are included in Corporate expenses.
Corporate expenses are included as part of the Reconciling Items column in the
table above.
 
                                       24
<PAGE>   27
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     Revenues for the years ended December 31, 1997 and 1996, were as follows:
 
<TABLE>
<CAPTION>
                                                                           SOFTWARE                CONSOLIDATED
                                              FAST    HOSTAMERICA   HISS   PRODUCTS   INSURERATE      TOTALS
                                             ------   -----------   ----   --------   ----------   ------------
                                                                       (IN THOUSANDS)
<S>                                          <C>      <C>           <C>    <C>        <C>          <C>
Revenues -- 1997...........................  $1,792      $692       $375   $    20      $  --         $2,879
Revenues -- 1996...........................  $1,845      $304       $70    $    80      $  --         $2,299
</TABLE>
 
     Prior year operating income (loss) by segment is not presented as the
information is not available.
 
     Asset information by reportable segment is not reported since the Company
does not produce such information internally. All of the Company's revenues and
expenses originate in the United States. No single customer accounted for more
than 10% of the Company's revenues. Therefore, no additional disclosures about
major customers are presented.
 
5. COMMITMENTS AND CONTINGENCIES
 
     The Company leases office space and equipment under noncancelable operating
lease agreements expiring through 2002. The Company has entered into several
capital leases of computer equipment.
 
     Future minimum lease payments under capital and operating leases are as
follows as of December 31, 1998:
 
<TABLE>
<CAPTION>
                                                            CAPITAL LEASES   OPERATING LEASES
                                                            --------------   ----------------
<S>                                                         <C>              <C>
1999......................................................    $ 123,571         $  524,171
2000......................................................       69,654            534,529
2001......................................................       25,785            338,789
2002......................................................           --            234,424
2003......................................................           --                 --
                                                              ---------         ----------
Total minimum lease payments..............................      219,010         $1,631,913
                                                                                ==========
Less: amount representing interest........................      (22,341)
                                                              ---------
Present value of minimum lease payments...................      196,669
Less: current portion.....................................     (108,427)
                                                              ---------
                                                              $  88,242
                                                              =========
</TABLE>
 
     The Company leases office space in New York City, Vienna, Virginia and
Atlanta, Georgia. The total amount of the base rent payments is being charged to
expense on a straight-line method over the term of these leases. The Company has
recorded a deferred credit to reflect the excess of rent expense over cash
payments since inception of the leases.
 
     Rental expense under operating leases was approximately $227,000, $507,000
and $440,000 for the years ended December 31, 1996, 1997, and 1998,
respectively.
 
     Various legal proceedings may arise in the normal course of business.
Additionally, the Company's software and equipment are vulnerable to computer
viruses or similar disruptive problems caused by customers or other Internet
users. Computer viruses or problems caused by third parties could lead to
interruptions, delays or cessation in service to the Company's customers.
Moreover, customers of the Company could use computer files and information
stored on or transmitted to Web server computers maintained by the Company to
engage in illegal activities that may be unknown or undetectable by the Company,
including fraud and misrepresentation, and unauthorized access to computer
systems of others. Furthermore, inappropriate use of the Internet by third
parties could also jeopardize the security of customers' confidential
information that is stored in the Company's computer systems. Any such actions
could subject the Company to liability to third parties. The Company does not
have errors and omissions, product liability or
 
                                       25
<PAGE>   28
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
other insurance to protect against risks caused by computer viruses or other
misuse of software or equipment by third parties. Although the Company attempts
to limit its liability to customers for these types of risks through contractual
provisions, there can be no assurance that these provisions will be enforceable.
Management does not believe that there are currently any asserted or unasserted
claims that will have a material adverse effect on the financial position,
results of operations or cash flows of the Company.
 
6. CONCENTRATION OF CREDIT RISKS
 
     Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents
and accounts receivable. The Company places its cash and cash equivalents with
quality financial institutions. Concentration of credit risk with respect to
trade receivables is monitored by the Company through ongoing credit evaluations
of its customers' financial condition. The Company's sales to its five largest
customers represented approximately 26%, 15%, and 27% of total revenues for the
years ended December 31, 1996, 1997, and 1998, respectively. No customer
accounted for more than 10% of the revenues of the Company during 1996, 1997 or
1998. The five most significant customer balances represented approximately 26%
and 50% of the gross accounts receivable balance at December 31, 1997 and 1998,
respectively.
 
7. EQUITY AND CONVERTIBLE DEBT TRANSACTIONS
 
     All share and per share amounts presented below have been adjusted to
reflect the 93.07-for-one stock split effective September 11, 1996.
 
     During 1995, the Company issued warrants to its former Board of Advisors to
purchase 37,228 shares of common stock for total consideration of $4.00. The
warrants were granted at the fair market value of the common stock at the time
of issuance. These warrants were exercised in August 1996.
 
     During February 1996, the Company issued 707,332 additional shares to the
previous sole stockholder, 93,070 shares to an executive officer of the Company
pursuant to the exercise of options granted in connection with the founding of
the Company, and 893,472 shares to four private investors.
 
     In August 1996, the Company sold to certain key employees an aggregate of
102,855 shares of common stock for an aggregate consideration of $468,004,
payable through the issuance of promissory notes payable in four equal
installments, bearing interest at 8% per annum and secured by the shares of
common stock purchased therewith. Also in August 1996, the Company entered into
employment agreements with such persons which provide that, assuming continued
employment with the Company, for each of the first four years of employment, the
Company will issue a bonus to the employee in the amount necessary to repay the
annual amount due under such promissory note (plus the taxes due by the employee
as a consequence of receiving such bonus). Pursuant to the terms of the
employment agreements, the Company will continue to make these annual payments
if the employee is terminated other than "for cause," as defined in the
employment agreements. Pursuant to the terms of the subscription agreements for
such shares, if the employee's employment is terminated within such four-year
period, the Company has the right to repurchase that percentage of the shares
purchased by the employee which shall equal the percentage of the promissory
note which is not yet due, payment for such repurchase to be made by canceling
the applicable outstanding amount of the promissory note. For financial
reporting purposes, these notes receivable have been presented as a separate
component of stockholders' equity.
 
     In September 1996, the Company amended and restated its Certificate of
Incorporation (i) to reclassify its common stock from no par value stock to
stock with a par value of $0.0001 per share, (ii) to increase the authorized
shares of common stock to 15,000,000, and (iii) to authorize the issuance of
1,000,000 shares of $0.01 par value preferred stock. In addition, the Board of
Directors approved a 93.07-for-one stock split effected in the form of a stock
dividend, whereby each common stockholder of record as of September 11,
 
                                       26
<PAGE>   29
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
1996 received 92.07 additional shares of common stock for each share owned as of
the record date. As a result of the stock split and recapitalization, 1,902,400
shares were issued and $495,618 was transferred from Common Stock to Paid-in
Capital. Weighted average common shares outstanding and per share amounts for
all periods presented have been restated to reflect the stock split.
 
     In May 1997, the Company completed an initial public offering of its common
stock. The Company issued 1,000,000 shares at an initial public offering price
of $6.00 per share. The total proceeds of the offering, net of underwriting
discounts, commissions and offering expenses, were approximately $4,700,000. The
Company used a portion of the proceeds from the initial public offering to repay
outstanding principal amounts of approximately $1,300,000 loaned to the Company
by stockholders and affiliates plus accrued interest of approximately $65,000.
The Company issued 33,333 shares of common stock as payment in full of the
outstanding principal balance of a $200,000 loan from an investor.
 
     In connection with the completion with the Company's initial public
offering, the Company granted its underwriter warrants to acquire 100,000 shares
of the Company's common stock at an exercise price of $7.20 per share. The
exercise price is subject to adjustment under certain circumstances. These
warrants expire on May 12, 2002 if not earlier exercised.
 
     In September 1997, the Company issued $1,700,000 of 5% convertible
debentures due September 22, 2000. Net proceeds to the Company from the issuance
of the debentures totaled approximately $1,500,000. Outstanding principal and
interest on the debentures is payable on September 22, 2000. During 1998, the
full principal amount of the debentures was fully converted into 961,460 shares
of common stock. As of December 31, 1998, $44,596 of interest has been accrued
for the debentures, and is payable on September 22, 2000. Due to the beneficial
conversion feature of the debentures, a portion of the proceeds ($566,667) has
been allocated to additional paid-in capital. The corresponding discount on the
debentures was amortized in 1998 as a non-cash charge to interest expense.
 
     In connection with the issuance of the debentures, the Company issued to a
broker designated by the purchaser of the debentures three-year warrants to
acquire an aggregate 400,000 shares of common stock. These warrants were issued
in October 1997. Of these warrants, 50,000 were exercised in December 1998 at an
exercise price of $4.00 per share. At December 31, 1998, warrants to purchase
150,000 shares of common stock are outstanding and exercisable at a price of
$4.00 per share, and warrants to purchase the remaining 200,000 shares of common
stock are outstanding and exercisable at a price of $6.00 per share. If not
earlier exercised, the warrants expire on October 27, 2000.
 
     In December 1997, the Company issued 20,000 shares of its Series A
preferred stock for an aggregate purchase price of $2,000,000. Net proceeds to
the Company from the Series A preferred stock issuance were approximately
$1,800,000. As of December 31, 1998, the preferred stock had been fully
converted into 711,456 shares of common stock. A discount of $666,667 results
from an allocation of the proceeds to the beneficial conversion feature. This
discount is analogous to a dividend and was recognized as a return to the Series
A preferred holders over the period the preferred stock was outstanding.
 
     In connection with the issuance and sale of the Series A preferred stock,
the Company granted the Series A preferred warrants to acquire an aggregate of
75,000 shares of Common Stock, with warrants to purchase 62,500 shares of common
stock having an exercise price per share equal to $14.50625 and warrants to
purchase 12,500 shares of common stock having an exercise price per share equal
to $15.825. The Company also granted 50,000 warrants to a placement agent at an
exercise price of $15.825 per share. The Series A preferred stock warrants will
expire on December 31, 2000.
 
     At December 31, 1998, 600,000 warrants are outstanding at a weighted
average exercise price of $7.51.
 
     On April 16, 1998, the Company issued 351,391 shares of common stock to
acquire all of the outstanding capital stock of The Insurance Resource Center,
Inc.
 
                                       27
<PAGE>   30
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     On October 7, 1998, the Company issued 18,959 shares of common stock to the
former holders of HISS's capital stock as an earnout payment, which was recorded
as compensation expense.
 
8. STOCK OPTION PLANS
 
     The Company's Employee Stock Option Plan (the "Stock Option Plan") was
adopted by the Company's stockholders in September 1996. Shares of common stock
may be sold or awarded to officers, key employees and consultants. On March 3,
1999 at a Special Meeting of Stockholders, the Company's stockholders approved
an amendment to the Stock Option Plan which increased the number of shares
reserved for issuance under the Stock Option Plan to 2,000,000. Options granted
under the Stock Option Plan may be either (i) options intended to qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code or (ii)
non-qualified stock options.
 
     During 1997 and 1998, the Company granted options to purchase shares under
the Stock Option Plan. The options vest 25% per year and expire ten years after
the grant date. The exercise price of the options was at or above the fair
market value of the stock on the grant date.
 
     The Company's Non-Employee Directors' Stock Option Plan (the "Directors'
Plan") was adopted by the Company's stockholders in September 1996. Shares of
common stock may be sold or awarded to directors who are not officers or
employees of the Company ("Non-Employee Directors"). The Company has reserved
300,000 shares of common stock for issuance under the Directors' Plan.
 
     The Directors' Plan provides for the automatic granting of an option to
purchase 10,000 shares of common stock to each Non-Employee Director who is
first appointed or elected to the Board of Directors. Also, each Non-Employee
Director is automatically granted an option to purchase 5,000 shares of common
stock on the date of each annual meeting of the Company's stockholders.
Furthermore, the Directors' Plan allows the Board of Directors to make
extraordinary grants of options to Non-Employee Directors.
 
     In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"). This statement requires that companies with
stock-based compensation plans either recognize compensation expense based on
new fair value accounting method or continue to apply the provisions of
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees" ("APB 25") and disclose pro forma net income and earnings per share
assuming the fair value method had been applied.
 
     The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options. The Company has recognized no
compensation expense for options issued to employees and non-employee directors.
For the years ended December 31, 1997 and 1998, the Company recognized
approximately $5,000 and $36,000, respectively, in expense for stock issued to
non-employees.
 
     Pro forma information regarding loss per share is required by FAS 123 and
has been determined as if the Company had accounted for its employee stock
options under the fair value method of that Statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted average assumptions:
 
<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              ---------------------------
                                                               1996      1997      1998
                                                              -------   -------   -------
<S>                                                           <C>       <C>       <C>
Risk-free interest rate.....................................     6.46%     5.93%     5.11%
Volatility factors of the expected market price of the
  Company's common stock....................................       80%       90%      110%
Weighted average expected life of the options...............  4 years   5 years   5 years
</TABLE>
 
                                       28
<PAGE>   31
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     Had compensation cost for the Company's stock-based compensation plans been
determined under the provisions consistent with FAS 123, the Company's net loss
and loss per share for the years ended December 31, 1997 and 1998, would have
been the pro forma amounts listed below:
 
<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                   -------------------------------------
                                                     1996         1997          1998
                                                   ---------   -----------   -----------
<S>                                                <C>         <C>           <C>
Loss applicable to common shareholders:
  As reported....................................  $(625,583)  $(4,881,181)  $(1,870,807)
  Pro forma......................................   (676,776)   (5,012,634)   (2,351,259)
Basic and diluted loss per share:
  As reported....................................      (0.34)        (1.88)        (0.44)
  Pro forma......................................      (0.36)        (1.93)        (0.55)
</TABLE>
 
     Option activity under all of the stock option plans is summarized as
follows:
 
<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                     ----------------------------------------------------------
                                                 1997                          1998
                                     ----------------------------   ---------------------------
                                                 WEIGHTED-AVERAGE              WEIGHTED-AVERAGE
                                      SHARES      EXERCISE PRICE     SHARES     EXERCISE PRICE
                                     ---------   ----------------   --------   ----------------
<S>                                  <C>         <C>                <C>        <C>
Outstanding at beginning of year...    220,543        $6.30          421,160        $4.95
Granted............................    599,555         5.26          312,700         3.35
Exercised..........................          0           --           (4,375)        4.06
Forfeited..........................   (398,938)        5.80         (170,875)        3.34
                                     ---------                      --------
Outstanding at end of year.........    421,160         4.95          558,610         4.59
                                     =========                      ========
Options exercisable at year end....      3,090                       127,791
                                     =========                      ========
Shares available for future
  grant............................    178,840                        41,390
                                     =========                      ========
Weighted-average fair value of
  options granted during the year
  at the shares' fair value........  $    3.71                      $   2.79
                                     =========                      ========
</TABLE>
 
     The following table summarizes information about fixed options outstanding
at December 31, 1998.
 
<TABLE>
<CAPTION>
                                                                          WEIGHTED AVERAGE
                                                                        REMAINING CONTRACTUAL
EXERCISE PRICES                                               SHARES            LIFE
---------------                                               -------   ---------------------
<S>                                                           <C>       <C>
  $1.91 - 2.18..............................................   50,700        9.6
  $3.69 - 4.72..............................................  329,111        8.9
  $6.00 - 8.06..............................................  178,799        8.5
                                                              -------
                                                              558,610        8.8
                                                              =======
</TABLE>
 
9. ACQUISITIONS AND DIVESTITURES
 
     In August 1996, HomeCom acquired all of the outstanding capital stock of
HomeCom Internet Security Services, Inc. ("HISS"), a start-up company formed in
July 1996 to provide Internet and Intranet security system consulting services.
Consideration to the former holders of HISS' capital stock consisted of the
right to receive their pro rata share of four annual earnout payments to be paid
not later than March 31 of 1998, 1999, 2000 and 2001. In 1998, the Company
incurred approximately $45,000 in compensation expense in the form of issuing
18,959 shares of common stock to certain former holders of HISS' capital stock.
The maximum additional potential liability under the earnout agreement is
$134,800, payable in common stock or cash at the
 
                                       29
<PAGE>   32
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
Company's option. The Company does not expect this additional potential
liability to be paid, due to HISS net income limitations.
 
     On April 16, 1998, the Company acquired all of the outstanding capital
stock of The Insurance Resource Center, Inc. ("IRC") for total consideration of
approximately $571,000, consisting of 351,391 shares of the Company's common
stock. IRC provides Internet development and hosting services to the insurance
industry. The Company has accounted for this acquisition as a purchase
transaction. Approximately $460,000 was recorded as an intangible asset and is
being amortized over three years. At December 31, 1998, the net unamortized
balance of this intangible asset was $351,000, net of $109,000 of accumulated
amortization.
 
     On June 9, 1998, the Company sold substantially all of the assets of its
HostAmerica Internet network outsourcing services division to Sage Acquisition
Corp. ("Sage") for cash of $4,250,000 and Sage's assumption of approximately
$250,000 of unearned revenue. The Company recorded a gain on the sale of
approximately $4,402,000. The assets sold consisted of computer network
equipment and service contracts.
 
10. INCOME TAXES
 
     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows, as of:
 
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 1997          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
Temporary differences:
Allowance for uncollectibles................................  $    61,009   $    36,246
Vacation accrual............................................       11,049        33,586
Depreciation................................................        2,317         4,826
Deferred rent expense.......................................       45,274        25,462
Software development expenses...............................       55,599        35,138
                                                              -----------   -----------
                                                                  175,248       135,258
Net operating loss carryforward.............................    1,903,040     2,357,670
                                                              -----------   -----------
Deferred tax asset..........................................    2,078,288     2,492,928
Valuation allowance.........................................   (2,078,288)   (2,492,928)
                                                              -----------   -----------
Net deferred tax asset......................................  $         0   $         0
                                                              ===========   ===========
</TABLE>
 
     At December 31, 1998, the Company had net operating loss carryforwards for
income tax purposes of approximately $6,200,000 which begin to expire in 2011.
Realization of these assets is contingent on having future taxable earnings. In
addition, certain stock transactions during 1997 resulted in the Company
incurring an ownership change as defined in Internal Revenue Code Section 382.
The result of this ownership change is to substantially limit the utilization of
the Company's net operating loss carry-forwards in the future. Based on the
cumulative losses in recent years and the limitation and the use of the
company's net operating losses management believes that a full valuation
allowance should be recorded against the deferred tax asset. The income tax
benefit differs from the amounts computed by applying the Federal statutory rate
of 34% to loss before taxes principally as a result of the recording of the
valuation allowance.
 
11. SUBSEQUENT EVENTS
 
     On March 24, 1999, the Company acquired First Institutional Marketing, Inc.
and certain of its affiliates ("FIMI") of Houston, Texas for 1,252,174 shares of
common stock. FIMI offers insurance and investment products to banks,
broker/dealers, insurance agencies and retail consumers. FIMI markets its
products
 
                                       30
<PAGE>   33
                          HOMECOM COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
primarily to insurance agencies affiliated with commercial banks and
broker/dealers. The Company will account for this acquisition as a purchase
transaction.
 
     On March 25, 1999, the Company issued 125 shares of its Series B Preferred
Stock for an aggregate purchase price of $2,500,000. Net proceeds to the Company
from the Series B preferred sale were approximately $2,280,000. The Series B
preferred stock is convertible at the option of the holder into a number of
shares of common stock equal to a share-based factor. The Series B conversion
price is the lesser of (i) the average closing bid price during any four (4)
consecutive trading days during the twenty-five (25) consecutive trading day
period ending one (1) trading day prior to the day the notice of conversion is
sent to the Company, or (ii) $5.23. The shares may be redeemed by the Company at
a price equal to 120% of the face amount of the shares.
 
     In connection with the issuance and sale of the Series B preferred stock,
the Company granted the Series B preferred warrants to acquire an aggregate
225,000 shares of common stock at an exercise price of $5.70. The Company also
granted 25,000 warrants to a placement agent at an exercise price of $5.70. The
Series B preferred warrants will expire on March 24, 2004.
 
                                       31
<PAGE>   34
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
     None.
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Certain information required by this item is incorporated by reference from
the information contained in the Company's Proxy Statement for the Annual
Meeting of Shareholders expected to be filed with the Commission on or about
April 30, 1999 under the captions "Directors and Executive Officers."
 
ITEM 11.  EXECUTIVE COMPENSATION
 
     The information required by this item will be included in the Company's
Proxy Statement for the Annual Meeting of Shareholders expected to be filed with
the Commission on or about April 30, 1999 under the caption "Executive
Compensation" and is incorporated by reference herein.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The information required by this item will be included in the Company's
Proxy Statement for the Annual Meeting of Shareholders expected to be filed with
the Commission on or about April 30, 1999 under the caption "Security Ownership
of Certain Beneficial Owners and Management" and is incorporated by reference
herein.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     The information required by this item will be included in the Company's
Proxy Statement for the Annual Meeting of Shareholders expected to be filed with
the Commission on or about April 30, 1999 under the caption "Certain
Transactions" and is incorporated by reference herein.
 
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
(A)1. Financial Statements
 
     The consolidated financial statements, notes thereto and report of
independent accountants thereon, filed as part hereof, are listed in Item 8.
 
2. Financial Statement Schedules
 
     Financial Statement scheduled have been omitted as the required information
is not applicable or the required information has been incorporated in the
consolidated financial statements and related notes incorporated by reference
herein.
 
3. Exhibits
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION OF EXHIBITS
-------                          -----------------------
<C>       <C>  <S>
   3.1     --  Restated Certificate of Incorporation of the Registrant.*
   3.2     --  Restated Bylaws of the Registrant.*
   3.3     --  Certificate of Designation of Series A Convertible Preferred
               Stock.***
   4.1     --  See Exhibits 3.1 and 3.2 for provisions of the Restated
               Certificate of Incorporation and Bylaws of the Registrant
               defining rights of the holders of Common Stock of the
               Registrant.*
</TABLE>
 
                                       32
<PAGE>   35
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION OF EXHIBITS
-------                          -----------------------
<C>       <C>  <S>
   4.3     --  Form of Warrant.*
  10.1     --  HomeCom Communications, Inc. Stock Option Plan and form of
               Stock Option Certificate.*
  10.2     --  HomeCom Communications, Inc. Non-Employee Directors Stock
               Option Plan and form of Stock Option Certificate.*
  10.3     --  Employment Agreement between the Registrant and Harvey W.
               Sax, dated January 1, 1996.*
  10.4     --  Form of Employment Agreement entered into between the
               Registrant and each of its executive officers except Harvey
               W. Sax.*
  10.5     --  Lease Agreement between Property Georgia OBJLW One
               Corporation and the Registrant dated January 22, 1996.*
  10.6     --  Lease and Services Agreement between Alliance Greensboro,
               L.P. and the Registrant, dated June 25, 1996.*
  10.7     --  Business Alliance Program Agreement between Oracle
               Corporation and the Registrant, dated May 30, 1996, together
               with the Sublicense Addendum, Application Specific
               Sublicense Addendum, Full Use and Deployment Sublicense
               Addendum and License Transfer Policy, each dated May 30,
               1996.*
  10.8     --  Network Enrollment Agreement between Apple Computer, Inc.
               and the Registrant, effective May 1996.*
  10.9     --  Member Level Agreement between Microsoft Corporation and the
               Registrant, effective May 1996.*
  10.10    --  Master Agreement for Internet Services and Products between
               BBN Planet Corporation and the Registrant, dated February 1,
               1996.*
  10.11    --  Authorized Business Partners Agreement between BBN Planet
               Corporation and the Registrant, dated May 14, 1996.*
  10.12    --  Stock Purchase Agreement between the Registrant and the
               stockholders of Homecom Internet Security Services, Inc.,
               dated August 31, 1996.*
  10.13    --  Form of Promissory Notes issued by the Registrant and held
               by Mark Germain.*
  10.14    --  Form of Promissory Notes issued by the Registrant and held
               by Esther Blech and the Edward A. Blech Trust.*
  10.15    --  Marketing Associate Solution Alliance Agreement dated
               February 6, 1997 between the Registrant and Unisys
               Corporation.*
  10.16    --  Marketing Associate Agreement dated February 6, 1997 between
               the Registrant and Unisys Corporation.**
  10.17    --  Letter agreement dated January 16, 1997 between the
               Registrant, David A. Blech, Esther Blech and the Edward A.
               Blech Trust.*
  10.18    --  HomeCom Communications, Inc. Employee Stock Purchase Plan.*
  10.19    --  5% Convertible Debenture Purchase Agreement dated effective
               September 19, 1997 between the Registrant, Euro Factors
               International, Inc., Beauchamp Finance, FTS Worldwide
               Corporation and COLBO.***
  10.20    --  Form of 5% Convertible Debenture issued by the Registrant
               and held by Euro Factors International, Inc., Beauchamp
               Finance, FTS Worldwide Corporation and COLBO.***
  10.21    --  Registration Rights Agreement dated effective September 19,
               1997 between the Registrant, Euro Factors International,
               Inc., Beauchamp Finance, FTS Worldwide Corporation and
               COLBO.***
  10.22    --  Letter agreement dated September 23, 1997 between the
               Registrant, Euro Factors International, Inc., Beauchamp
               Finance, FTS Worldwide Corporation and COLBO.***
</TABLE>
 
                                       33
<PAGE>   36
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION OF EXHIBITS
-------                          -----------------------
<C>       <C>  <S>
  10.23    --  Letter agreement dated September 27, 1997 between the
               Registrant, Euro Factors International, Inc., Beauchamp
               Finance, FTS Worldwide Corporation and COLBO.***
  10.24    --  Form of Warrant to purchase 200,000 shares of Common Stock
               at an exercise price of $4.00 per share issued by the
               Registrant to First Granite Securities, Inc.***
  10.25    --  Form of Warrant to purchase 200,000 shares of Common Stock
               at an exercise price of $6.00 per share issued by the
               Registrant to First Granite Securities, Inc.***
  10.26    --  Form of Securities Purchase Agreement between the
               Registrant, Sovereign Partners, L.P. and Dominion Capital
               Fund, LTD. dated as of December 23, 1997.***
  10.27    --  Form of Registration Rights Agreement between the
               Registrant, Sovereign Partners, L.P. and Dominion Capital
               Fund, LTD. dated as of December 23, 1997***
  10.28    --  Form of Warrant to purchase 18,750 shares of Common Stock
               issued by the Registrant to Sovereign Partners, L.P.***
  10.29    --  Form of Warrant to purchase 56,250 shares of Common Stock
               issued by the Registrant to Dominion Capital Fund, LTD.***
  10.30    --  Common Stock Purchase Agreement dated January 23, 1998 by
               and among InsureRate, Inc., the Registrant, Jerome R. Corsi
               and Hamilton Dorsey Alston Company.***
  10.31    --  Escrow Agreement dated as of January 23, 1998 by and among
               InsureRate, Inc., Hamilton Dorsey Alston Company, the
               Registrant, Jerome R. Corsi and SunTrust Bank, Atlanta.***
  10.32    --  Shareholders Agreement dated January 23, 1998 by and among
               Hamilton Dorsey Alston Company, the Registrant and
               InsureRate, Inc.***
  10.33    --  Web Development and Hosting Services Agreement dated January
               23, 1998, by and among InsureRate, Inc. and Hamilton Dorsey
               Alston Company.***
  10.34    --  Form of Warrant to purchase 25,000 shares of Common Stock
               for an aggregate purchase price of $92,500 by the Registrant
               to Hamilton Dorsey Alston Company.***
  10.35    --  Loan Agreement dated January 23, 1998 by and between
               InsureRate, Inc. and the Registrant.***
  10.36    --  Form of Master Note issued by the Registrant to InsureRate,
               Inc.***
  10.37    --  Form of Warrant to purchase 50,000 shares of Common Stock
               issued by the Registrant to the Malachi Group, Inc.****
  10.38    --  Letter Agreement, dated April 8, 1998 by and among the
               Company, Eurofactors International Inc., Beauchamp France,
               FTS Worldwide Corporation and COLBO.****
  10.39    --  Letter Agreement, dated April 8, 1998 by and between First
               Granite Securities, Inc. and the Company.****
  10.40    --  Letter Agreement, dated April 17, 1998 by and among
               Sovereign Partners, L.P., Dominion Capital Fund and the
               Company.****
  10.41    --  Agreement and Plan of Reorganization by and among The
               Insurance Resource Center, Inc., Tim Strong, James Higham,
               Cameron M. Harris & Company and the Company, dated as of
               April 15, 1998.+
  10.42    --  Employment Agreement by and between the Company and Tim
               Higham, dated as of April 16, 1998.+
  10.44    --  Asset Purchase Agreement by and between the Company and Sage
               Networks Acquisition Corp. dated as of June 10, 1998.++
  10.45    --  Escrow Agreement by and between the Company and Sage
               Networks Acquisition Corp. dated as of June 10, 1998.++
</TABLE>
 
                                       34
<PAGE>   37
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION OF EXHIBITS
-------                          -----------------------
<C>       <C>  <S>
  10.46    --  Transitional Services Agreement by and between the Company
               and Sage Networks Acquisition Corp. dated as of June 10,
               1998.++
  10.47    --  Co-Location Agreement by and between the Company and Sage
               Networks, Inc. dated as of June 10, 1998.++
  10.48    --  Agreement and Plan of Merger by and among HomeCom
               Communications, Inc., FIMI Securities Acquisition Corp.,
               Inc., ATF Acquisition Corp., and Daniel A. Delity, James Wm.
               Ellsworth, and David B. Frank dated as of November 6, 1998,
               together with exhibits.+++
  10.49    --  Certificate of Designations, Preferences and Rights of
               Series B Convertible Preferred Stock HomeCom Communications,
               Inc. dated as of March 24, 1999.
  10.50    --  Securities Purchase Agreement dated as of March 25, 1999 by
               and among HomeCom Communications, Inc. and CPR (USA), Inc.,
               Liberty View Funds, L.P., and Liberty View Fund, L.L.C.
  10.51    --  Registration Rights Agreement dated as of March 25, 1999 by
               and among HomeCom Communications, Inc. and CPR (USA), Inc.,
               Liberty View Funds, L.P., and Liberty View Fund, L.L.C.
  10.52    --  Transfer Agent Instructions dated as of March 25, 1999.
  10.53    --  Transfer Agent Legal Opinion dated as of March 25, 1999.
  10.54    --  Placement Agency Agreement dated as of March 25, 1999 by and
               between HomeCom Communications, Inc. and J.P. Turner &
               Company, L.L.C.
  21.1     --  List of Subsidiaries.***
  23.1     --  Consent of PricewaterhouseCoopers LLP.
  27.1     --  Financial Data Schedules (for SEC use only).
</TABLE>
 
---------------
 
   * Incorporated herein by reference to exhibit of the same number in the Form
     S-1 Registration Statement of the Registrant (Registration No. 333-12219).
  ** Incorporated herein by reference to exhibit of the same number in the Form
     10-Q/A of the Registrant filed with the Commission on December 18, 1997.
 *** Incorporated herein by reference to exhibit of the same number in the Form
     S-1 Registration Statement of the Registrant (Registration No. 333-42599).
**** Incorporated herein by reference to exhibit of the same number in the Form
     S-1 Registration Statement of the Registrant filed with the Commission on
     February 2, 1998.
   + Incorporated herein by reference to exhibit of the same number in the Form
     S-1 Registration Statement of the Registrant (Registration No. 333-45383).
  ++ Incorporated herein by reference to exhibit of the same number in Form 8-K
     of the Registrant filed with the Commission on June 25, 1998.
 +++ Incorporated herein by reference to exhibit of the same number in Form 8-K
     of the Registrant filed with the Commission on November 18, 1998.
 
(B) Reports on Form 8-K
 
     On April 28, 1998, the Company filed a report on Form 8-K under Item 5 with
respect to its renegotiation of certain terms and conditions of the Series A
Convertible Preferred Stock private placement which was consummated in December
1997, and 5% Convertible Debentures private placement which was consummated in
September 1997.
 
     On June 25, 1998, the Company filed a report on Form 8-K under Item 2 with
respect to its sale of substantially all of the assets of its HostAmerica
Internet network outsourcing services division to Sage Acquisition Corp. for
$4,500,000.
 
                                       35
<PAGE>   38
 
     On November 18, 1998, the Company filed a report on Form 8-K under Item 5
with respect to its signing a definitive agreement and plan of merger to
acquire, among other things, all of the outstanding shares of First
Institutional Marketing, Inc. and certain of its affiliates ("FIMI") for
1,252,174 shares of common stock. In addition, the Company entered into
employment agreements for an initial term of 3 years with the three principals
of FIMI, calling for them to continue in their current roles for the acquired
companies.
 
                                       36
<PAGE>   39
 
                                   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.
 
                                          HOMECOM COMMUNICATIONS, INC.
 
                                          By: /s/ Harvey W. Sax
                                            ------------------------------------
                                                       Harvey W. Sax
                                                       President and
                                                  Chief Executive Officer
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
<C>                                                    <S>                              <C>
 
                   /s/ Harvey W. Sax                   President; Chief Executive       March 26, 1999
-----------------------------------------------------    Officer; Director
                    Harvey W. Sax
 
                  /s/ Nat Stricklen                    Senior Vice President -- Sales   March 26, 1999
-----------------------------------------------------    & Marketing; Director
                    Nat Stricklen
 
                 /s/ Norman H. Smith                   Vice President -- Chief          March 26, 1999
-----------------------------------------------------    Financial Officer
                   Norman H. Smith
 
                /s/ Daniel A. Delity                   President, First Institutional   March 26, 1999
-----------------------------------------------------    Marketing, Inc.; Director
                  Daniel A. Delity
 
               /s/James Wm. Ellsworth                  Vice President, First            March 26, 1999
-----------------------------------------------------    Institutional Marketing,
                 James Wm. Ellsworth                     Inc.; Director
 
                /s/ Krishan Puri                       Executive Vice President;        March 26, 1999
-----------------------------------------------------    Director
                    Krishan Puri
 
               /s/ Gia Bokuchava, Ph.D.                Chief Technical Officer;         March 26, 1999
-----------------------------------------------------    Director
                Gia Bokuchava, Ph.D.
 
                /s/ Roger J. Nebel                     Vice President; Director         March 26, 1999
-----------------------------------------------------
                   Roger J. Nebel
 
                /s/ Claude A. Thomas                   Director                         March 26, 1999
-----------------------------------------------------
                  Claude A. Thomas
 
                  /s/ William Walker                   Director                         March 26, 1999
-----------------------------------------------------
                   William Walker
</TABLE>
 
                                       37