<Page>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                   FORM 10-K

(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, 2001

                                       OR

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

For the transition period from _____________ to ______________.

                         Commission File Number 0-16520

                             ARISTA INVESTORS CORP.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                     13-2957684
--------------------------------            ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organisation)

  116 JOHN STREET, NEW YORK, NEW YORK                      10038
-------------------------------------------- -----------------------------------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code:  (212) 964-2150

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

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

                 Class A Common Stock, par value $0.01 per share

       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 (Section 229.405 of this chapter) 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. [X]

       The aggregate market value of the voting stock (Class A Common Stock, par
value $ .01 per share) held by non-affiliates of the registrant, based upon the
closing sale price of the stock as reported on the Over-the-Counter Bulletin
Board service on April 10, 2002 was $2,411,500.

       The aggregate number of registrant's outstanding shares on April 10, 2002
was 2,570,100 shares of Class A Common Stock, $0.01 par value (excluding 10,000
shares of treasury stock).

                      DOCUMENTS INCORPORATED BY REFERENCE:

Part III - Portions of Registrant's Proxy Statement relating to the 2002 Annual
Meeting of Stockholders.

<Page>

                                     PART I

ITEM 1.  BUSINESS.

GENERAL

       Arista Investors Corp. (the "Registrant") through its wholly-owned
subsidiary, Arista Insurance Company ("Arista"), a New York corporation
(Registrant and Arista are sometimes hereinafter individually or collectively
referred to as the "Company"), was engaged in the sale and underwriting of
statutory, super statutory and voluntary disability benefits insurance
(collectively, the "Insurance") in the State of New York from October 11, 1979
to June 30, 1998. Since July 1, 1998, the Registrant has been engaged as a third
party administrator and as a managing general agency with respect to a
substantial portion of the business administered herein. See "- TPA Agreement;
Third Party Administration Business". The Registrant is a Delaware corporation
incorporated on August 19, 1986, which succeeded to the business of its
predecessor, Arista Investors Corp., a New York corporation organized in 1978.
The Company's principal executive offices are located at 116 John Street, New
York, New York 10038. Its telephone number is (212) 964-2150.

       Arista was licensed to write accident and health insurance by the New
York State Insurance Department (the "Department") in October 1979, and sold and
underwrote the Insurance through June 30, 1998. During the year ended December
31, 1993, Arista amended its charter and became licensed to write a line of
property and casualty insurance in New York as well. To date, Arista has not
written any property and casualty insurance business. Such licenses may continue
in perpetuity unless suspended or terminated by an act of the regulator.

       In addition to the sale and underwriting of the Insurance prior to July
1, 1998, pursuant to agreements effective July 1, 1993, January 1, 1995, and
March 1, 1996, Arista also acted as a third party administrator for the
statutory disability benefits books of business of The Guardian Life Insurance
Company of America, the United States Life Insurance Company in the City of New
York and Hartford Life and Accident Insurance Company, respectively.

       The following table sets forth the third party administrative service
fees earned, together with the consolidated investment income and realized
investment gains (losses) for each of the three years of the period ended
December 31, 2001.

<Table>
<Caption>
                                                1999           2000          2001
                                                ----           ----          ----
<S>                                         <C>            <C>            <C>
Third party administrative services         $  3,505,816   $ 3,966,704    $ 3,848,094
                                            ============   ===========    ===========
Investment income                           $    152,527   $    39,275    $    19,937
                                            ============   ===========    ===========
Realized investment gains (losses)          $    (10,410)  $         0    $         0
                                            ============   ===========    ===========
</Table>

                                       2
<Page>

CESSION OF INSURANCE; COMMENCEMENT OF THIRD PARTY ADMINISTRATION BUSINESS BY THE
REGISTRANT

       THE AGREEMENTS. The Company entered into an Assumption Reinsurance
Agreement, dated September 23, 1998 (the "Treaty"), with The Guardian Life
Insurance Company of America, a New York mutual life insurance company ("The
Guardian"), and the Registrant entered into a new Administrative Services
Agreement, also dated September 23, 1998 (the "TPA Agreement"), with The
Guardian. The transactions contemplated by the Treaty and TPA Agreement were
consummated on November 12, 1998 (the "Closing Date") and deemed effective as
of July 1, 1998 (the "Effective Date"). Also, the quota share reinsurance
treaty between Arista and The Guardian, effective as of January 1, 1998 (the
"Quota Share Reinsurance Treaty"), whereby Arista ceded a 50% participation
in the Insurance by way of reinsurance, both for business in force as of
January 1, 1998 and for business written or acquired after January 1, 1998
was terminated, effective July 1, 1998. See "-The Treaty; Cession of
Insurance Business", "-TPA Agreement; Third Party Administration Business"
and "-Reinsurance Ceded."

       THE TREATY; CESSION OF INSURANCE BUSINESS. Pursuant to the Treaty, the
Company ceded to The Guardian all of Arista's liabilities under each and every
policy of the Insurance underwritten by Arista, excluding any liabilities
arising from (i) acts, errors or omissions of Arista, its directors, officers,
employees or agents prior to the Closing Date, (ii) any bad faith, willful
misconduct, fraud or gross negligence of Arista prior to the Closing Date or
(iii) any act, error or omission by Arista, its directors, officers, employees
or agents under the TPA Agreement. The assumption reinsurance provided by The
Guardian under the Treaty is subject to the same limitations, terms and
conditions as the Insurance. As of the Closing Date under the Treaty, Arista
discontinued all sales of the Insurance.

       The cession of the Insurance to The Guardian was deemed to have taken
place as of the Effective Date. Pursuant to the Treaty, Arista was required to
present to The Guardian on the Closing Date all new policies, if any, which
Arista had issued between the Effective Date and the Closing Date for acceptance
by The Guardian pursuant to the Treaty. Any new policies not accepted by The
Guardian were to be canceled in accordance with the requirements of the Workers'
Compensation Law. On the Closing Date, Arista presented to The Guardian 25,092
policies, of which approximately 99.7% accepted The Guardian's assumption.

       Pursuant to the Treaty, The Guardian did not assume any liabilities other
than the express obligations set forth in the Insurance or any costs or
liabilities arising as a result of any inaccuracies or inconsistencies in the
Insurance. Between the Effective Date and the Closing Date, Arista was obligated
to continue its operations in accordance with prior practices and in conformity
with prevailing industry standards and customs. The Guardian was responsible for
the handling, and all costs and expenses, including legal fees, relating to
litigation or other claims under the Insurance, but excluding liabilities
arising out of or relating to actions for declaratory judgments initiated within
120 days of the Closing Date. As of such date, management was not aware of any
such liabilities, known, pending or threatened.

                                       3
<Page>

       As of the six months ended June 30, 1998, the Insurance encompassed some
229,000 covered lives, and approximately 25,000 policyholders. See "-TPA
Agreement; Third Party Administration Business."

       The Registrant accounted for the cession of the Insurance and the
assumption of specified assets and liabilities as a purchase by The Guardian.
Under this method, the Registrant recognized in earnings the net gain on
disposal of a segment of its business representing the excess of (i) the cession
allowance of 18% of the last twelve months adjusted earned premium, plus the
proceeds from the assumption of the due premium receivables as of the Effective
Date by The Guardian over (ii) all unpaid claim reserves, unearned premium
reserves, plus claim expense reserves and GAAP assessment reserves assumed by
The Guardian, and the cost of disposal. The Registrant surrendered control over
all assets and liabilities transferred to The Guardian, and retained no
beneficial interest. See Financial Statements and Notes thereto.

       After the closing of the cession of the Insurance to The Guardian, the
Registrant retained Arista's insurance company license and charter, cash and
cash equivalents and other net tangible assets and an ongoing TPA operation.
See "-TPA Agreement; Third Party Administration Business."

       PURCHASE PRICE AND ASSUMPTION OF LIABILITIES. In exchange for the cession
of the Insurance, The Guardian paid Arista a cession allowance in an amount, in
cash, based on the premiums, as adjusted, earned by Arista for the 12 month
period ending on the Effective Date. Such premiums were accounted for by
utilizing the actual earned premium for the most recent 12 month period ending
on the Effective Date. The cession allowance was 18% of the adjusted earned
premium. See Financial Statements and Notes thereto.

       After the closing of the cession of the Insurance to The Guardian, The
Guardian mailed an Assumption Certificate ("Certificate") to each policyholder's
last known address, which certificate reflected the assumption by The Guardian
of all risks, duties and obligations associated with the Insurance. The Treaty
and the Certificate met all of the requirements of the Department and was
approved by the Superintendent of Insurance of the State of New York prior to
consummation of the cession of the Insurance. On the Closing Date, Arista
presented to The Guardian 25,092 policies, of which 25,010 policyholders
accepted The Guardian assumption, and 82 rejected The Guardian assumption.

       Under the Treaty, the Company made various representations and warranties
with respect to the Insurance as well as its other assets, liabilities and
activities. These representations and warranties related to, among other things,
Arista's good standing, due incorporation, compliance with applicable laws and
the reserves held by Arista in support of the Insurance. Arista and the
Registrant have agreed to indemnify The Guardian for all liabilities arising
from any breach by Arista of any covenants or failure to perform any obligations
contained in the Treaty, which indemnity provision will survive for two years
following the termination of the Treaty.

                                       4
<Page>

       TPA AGREEMENT; THIRD PARTY ADMINISTRATION BUSINESS. The Registrant is
licensed by the Department as an independent accident and health adjuster (the
"License"), and on the date that the cession of the Insurance was consummated,
the Registrant commenced servicing the Insurance pursuant to the TPA Agreement.
The License may continue in perpetuity unless otherwise suspended or terminated
by an act of the regulator. The Registrant pays an annual fee for the License.

       As a third party administrator under the TPA Agreement, the Registrant
performs various services relating to the Insurance underwritten by The
Guardian, including, but not limited to, pricing of risk, underwriting new and
renewal business, investigation, calculation and payment of claims, preparation
and transmission of bills, preparation of policy kits and forms, preparations of
commission statements, maintenance of records, responding to inquiries from
policyholders and providing updates on regulatory changes. Effective January 1,
1999, the TPA Agreement was amended to include an additional book of Insurance
acquired by The Guardian (the TPA Agreement, as amended, is hereinafter referred
to as, the "TPA Agreement"). Pursuant to the TPA Agreement, the Registrant
receives a fee based upon the premiums earned by The Guardian plus additional
fees based upon performance by the Registrant and results achieved by The
Guardian. The TPA Agreement sets three pricing parameters: (i) a basic fee of 5%
to7% of collected premium for all required functions, (ii) an audit fee of +/-1%
of the collected premium pursuant to a semi-annual audit performed by The
Guardian to determine whether the performance criteria under the TPA Agreement
have been complied with, and (iii) a limited contingency payment based upon the
developed incurred loss ratio. The TPA Agreement is effective for a period of
five years (until June 30, 2003), subject to earlier termination by The Guardian
under certain circumstances as described below.

       The Guardian has the right to terminate the TPA Agreement during its full
term upon 60 days prior written notice to the Registrant upon the occurrence of
any of the following events (each an "Event of Default"): (i) breach of the TPA
Agreement by the Registrant which is not cured within 30 days or which may cause
or has caused the revocation of The Guardian's license to do an insurance
business in any jurisdiction, (ii) the commencement of a voluntary or
involuntary reorganization, liquidation or receivership of the Registrant, (iii)
an order entered by a court of competent jurisdiction affecting more than 50% of
the Registrant's property under conservatorship, liquidation, insolvency or
similar laws, (iv) the failure of Stanley S. Mandel, the Registrant's President,
to maintain control of the day-to-day operations of the Registrant at any time
during the first five years following the Effective Date (other than by reason
of Mr. Mandel's death or disability, in which case a replacement acceptable to
The Guardian may be appointed), (v) the Registrant permits any other person to
gain operational control of its administrative servicing business or agrees to
any arrangement which would end the existence of such business, without giving
The Guardian a right of first refusal to purchase such business or (vi) the
Registrant fails to maintain a minimum stockholders' equity on its balance sheet
of not less than 3.5% of the gross premiums earned on the contracts administered
pursuant to the TPA Agreement in the prior calendar year, and such failure
continues without being cured for 10 days after receiving notice of such failure
from The Guardian. Additionally, after June 30, 2000, The Guardian may terminate
the TPA Agreement in the event The Guardian desires to perform the
administrative services.

       In performing the services under the TPA Agreement, the Registrant is
obligated to use commercially reasonable efforts to keep informed of, and comply
with, all applicable laws, rates and

                                       5
<Page>

regulations and to maintain necessary facilities, equipment and personnel to
perform its duties under the TPA Agreement. The Registrant has granted The
Guardian the right of first refusal to purchase the Registrant's administrative
servicing business in the event the Registrant permits any other person to gain
operational control of such business or agrees to any arrangement which would
end the existence of such business.

       THE GUARDIAN. The Guardian is a New York mutual life insurance company
which primarily issues individual life and group insurance coverages through its
career agency force and broker network. The Guardian manages its operations
through six profit centers: life insurance, group insurance, disability
insurance, equity products, group pensions and reinsurance. The Guardian's major
line of business is group accident and health which accounted for more than
one-half of consolidated net premiums in 2001.

OTHER THIRD PARTY ADMINISTRATION ARRANGEMENTS

       Effective October 1, 2000, the Company entered into an agreement with
Highmark Life Insurance Company of New York ("Highmark") to perform third-party
administrative services relating to disability policies underwritten by
Highmark. The Company earned a service fee based on both fixed and variable
percentages of collected or earned premiums by Highmark. The initial term of the
agreement was for the period beginning October 1, 2000 and ending September 30,
2001. The agreement was terminated effective September 30, 2001.

       Effective January 1, 1999, the Company entered into an agreement with the
Girl Scouts of U.S.A. (the "Girl Scouts") to provide third-party administrative
services for the Super Statutory Disability Benefits Insurance provided by the
Girl Scouts. The Company earns a fee of $1.75 per capita per month for providing
these services. The initial term of the agreement was January 1, 1999 through
December 31, 1999 with automatic renewals for periods of twelve months
thereafter. The agreement will remain in effect until terminated by either party
upon 60 days prior written notice.

       Effective March 1, 1996, the Company arranged to perform third-party
administrative services for Hartford Life and Accident Insurance Company's
("Hartford") Temporary Disability Insurance policies. Fees for services are
determined in accordance with a prescribed schedule based on the type of service
provided. The arrangement will remain in effect until terminated by either
party.

       Effective January 1, 1995, the Company entered into an agreement to
perform third-party administrative services for the United States Life Insurance
Company. Fees for these services were determined in accordance with a prescribed
schedule based on the type of service provided. The agreement was terminated
effective June 30, 2000.

CUSTOMERS; THIRD PARTY ADMINISTRATION

                                       6
<Page>

       Pursuant to the TPA Agreement, the Registrant provides third party
administrative services for the Insurance to The Guardian. The Guardian
represents the Registrant's largest customer in its third party administration
business, accounting for more than 90% of such business during the years ended
December 31, 1999, December 31, 2000 and December 31, 2001. The failure of the
Registrant to retain The Guardian as a customer by the failure of the Registrant
to correct any Event of Default, by The Guardian electing to administer the
Insurance and terminate the TPA Agreement as discussed above, or for any other
reason, would have a material adverse effect on the Registrant's business and
plan of operations. See "-TPA Agreement; Third Party Administration Business"
and "-The Guardian."

COMPETITION

       The third party administration business is competitive. Competition is
primarily based upon range and proficiency of services and fee structures. The
Registrant believes that it has few competitors, most of whom service other
coverages in addition to the Insurance. The Registrant's competitors vary in
size, many of which have longer operating histories, offer a broader range of
services other than third party administration of insurance policies and
generally have greater financial, marketing and management resources than the
Registrant. The Company relies upon the expertise of its employees and executive
officers, particularly Stanley S. Mandel, the Company's President. Such
executive officers have an average of more than twenty years experience in the
insurance industry and third party administration business. The Registrant and
Mr. Mandel entered into an employment agreement effective upon the Closing Date,
which agreement was amended effective as of October 1999. Pursuant to the
employment arrangement, Mr. Mandel was initially employed for a two-year period,
plus up to an additional three years subject to (i) the continuation of the
Registrant's third party administration arrangement with The Guardian or (ii)
the occurrence of a change-of control Event (as defined therein). The loss of
Mr. Mandel would have a material adverse effect upon the Company's business and
plan of operations. See "-TPA Agreement; Third Party Administration Business";
"-Marketing" and "-Employees."

MARKETING

       The Registrant believes that, particularly with respect to the small and
medium-sized businesses on which it focuses its marketing efforts, carriers may
rely upon third party administrators to service the insurance underwritten by
such carrier. Consequently, the Company considers the insurer to be its customer
and stresses prompt and personal service in all phases of underwriting, product
delivery and claims processing functions.

EMPLOYEES

       As of December 31, 2001, the Company had thirty-eight (38) employees.
Seven (7) of these employees are executive officers, five (5) provide claims
services as examiners, one (1) provides general and administrative services and
twenty-five (25) provide all other services. The Company believes its relations
with its employees are satisfactory.

ARISTA'S FORMER INSURANCE OPERATIONS

                                       7
<Page>

       Effective June 30, 1998, Arista ceased engaging in the sale and
underwriting of statutory, super statutory and voluntary disability benefits
insurance in the State of New York.

       Under New York State law, all eligible employees, including full-time and
part-time employees in New York State, are required to be provided with
disability insurance coverage unless excluded by statute (e.g., government,
railroad, maritime or farm workers). Statutory disability benefits insurance
presently provides for a payment to totally disabled employees in the amount of
50% of weekly salary to a maximum payment of $170 per week, for a maximum of 26
weeks beginning with the eighth day of disability due to an off-the-job accident
or sickness. On-the-job accident or sickness is covered by worker's compensation
insurance, not statutory disability benefits insurance. Arista charged a premium
for the Insurance coverage based upon a rate structure approved by the
Department. In order for an insurer to alter its rate structure, it must obtain
prior written approval from the Department. Under New York State law, an
employer may require an employee to contribute 1/2 of 1% of covered payroll up
to a maximum of $.60 per week towards the premium charge for statutory
disability benefits insurance.

       In addition to standard statutory disability benefits insurance coverage,
Arista offered certain augmented benefits which included the payment of the
disability benefit from the first day of disability as opposed to the eighth day
of disability, increased duration of benefits from 26 weeks up to 52 weeks,
benefits increased over the maximum of $170 weekly benefit and an additional
multiple if related to hospitalization (e.g., 150% of the benefit if an employee
is hospitalized). Arista also offered coverage for association groups on a
competitive basis. The underwriting of these augmented benefits and specialized
coverages did not represent a significant percentage of Arista's earned
premiums.

       Effective December 29, 1995, Arista issued a $3,000,000 surplus note (the
"Surplus Note") to Cologne Life Underwriting Management Company ("CLUMCO"). The
Surplus Note provided for interest at the rate of 10.5% per annum, and provided
for the principal to be repaid in eight equal installments in years three
through ten, together with any accrued interest. These repayments of principal
and accrued interest were only to be made out of the free and divisible surplus
of Arista, and were subject to the approval of the Department. If the principal
and interest were not repaid in full at the end of the ten years, the Surplus
Note would be renewed annually for additional one-year terms until the balance
was repaid. The Surplus Note permitted prepayment subject to the prior approval
of the Department. In addition, the Registrant issued a ten year warrant to
CLUMCO to purchase up to 150,000 shares of the Company's Class A Common Stock,
subject to certain conditions, at an exercise price of $3.50 per share.
Effective as of January 1, 1998, in connection with Arista's entering into a new
reinsurance arrangement with The Guardian, Arista terminated its reinsurance
agreement with Cologne Life Reinsurance Company ("Cologne"). As a result of such
termination and the Transaction, the Surplus Note plus accrued interest was
repaid on December 18, 1998. In addition, CLUMCO did not exercise the warrant,
and such warrant expired in October, 1998. See "Cession of Insurance;
Commencement of Third Party Administration Business by the Registrant-The
Agreements" and "-Reinsurance Ceded."

                                       8
<Page>

PROPOSED SALE OF ARISTA TO DELTA DENTAL PLAN OF INDIANA, INC.

       The Registrant entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") dated as of June 15, 2001, to sell to Delta Dental Plan
of Indiana, Inc., a not-for-profit corporation, all of the issued and
outstanding shares of capital stock of Arista (the "Transaction"). The Stock
Purchase Agreement contains certain representations, warrants and
indemnification provisions by the Registrant. The completion of the
Transaction is subject to various closing conditions, contingencies and
regulatory approvals, including, but not limited to, approval from the New
York State Insurance Department. The parties anticipate that the Transaction
will be consummated during 2002.

WCA HOLDINGS, INC.

       Previously, the Registrant and Arista entered into a Stock Purchase
Agreement dated as of October 22, 1999, to sell to WCA Holdings, Inc., a
Connecticut corporation, all of the issued and outstanding shares of capital
stock of Arista. The Stock Purchase Agreement with WCA Holdings, Inc. was
terminated in November, 2000.

CLAIMS

       The factors generally affecting gross claims incurred are a function of
the number of risks covered with either part-time or full-time workers, the wage
level of each covered employee to a maximum of $170 per week and the duration of
disability to a maximum of 26 weeks. The gross amount of claims incurred at any
point in time is also affected by the number of females covered since maternity
is treated statutorily as any other disability.

REINSURANCE CEDED

       Arista utilized reinsurance principally to reduce its net liability on
insurance business in force through risk sharing. The ceding of insurance does
not discharge the original insurer from its primary liability to the
policyholder. The ceding company is required to pay losses to the extent the
assuming company fails to meet its obligations under the reinsurance agreement.
The practice of insurers, however, subject to certain statutory limitations and
as permitted by regulatory authorities, is to account for reinsured risks to the
extent of reinsurance ceded as though they are not risks for which the original
insurer remains liable.

       Unlike other segments of the accident and health and property and
casualty industries, there was no need to facilitate a spread of risk pursuant
to any one occurrence as the maximum liability for Arista on any one life could
not exceed $4,420. The cost to Arista of obtaining reinsurance had never
exceeded approximately 1.2% of its gross premiums received.

RESERVES

                                       9
<Page>

       Insurance companies are required to maintain reserves for unearned
premiums, for unpaid losses, unpaid loss adjustment expenses and New York State
assessments for this line of business. These reserves are intended to cover the
probable ultimate cost of settling all losses incurred and unpaid, including
those incurred but not reported. Arista established these reserves based upon
its prior experience.

       Loss reserves are only estimates of what the insurer expects to pay on
claims, based on facts and circumstances then known. Although a degree of
variability is inherent in such estimates, management believed that the
liabilities for unpaid claims and related adjustment expenses were adequate. The
estimates were continually reviewed and adjusted as necessary.

       The following table compares Arista's gross liability for unpaid losses,
loss adjustment expenses ("LAE") and New York State statutory disability
benefits insurance assessments ("DBL Assessments"), at the end of each of the
last five calendar years compared to the gross amounts actually paid against
these reserves.

<Table>
<Caption>
                                                                        Year Ended December 31,
                                                                        -----------------------
                                                         1997        1998     1999        2000        2001
                                                       --------    --------  --------   ---------   ---------
     <S>                                               <C>         <C>       <C>        <C>         <C>

     Estimated gross liability for
     unpaid losses, LAE reserves,
     and DBL assessments                               $  3,392    $      0  $      0   $       0   $       0
                                                       --------    --------  --------   ---------   ---------

     Gross   amounts actually paid against reserves:

              One year later                              2,917

              Two years later                                 -

              Three years later                               -

              Four years later                                0           0         0           0           0
                                                       --------    --------  --------   ---------   ---------
     Redundancy (deficiency)                                475           0         0           0           0
     Cumulative redundancy
              (deficiency)                             $  1,514    $      0  $      0   $       0   $       0
                                                       ========    ========  ========   =========   =========
</Table>

                                       10
<Page>

INVESTMENT POLICY

       Arista must comply with the insurance laws of New York State with regard
to investments. These laws prescribe the kind, quality and concentration of
investments which may be made by insurance companies. The investment of Arista's
funds generally is subject to the direction and control of its Board of
Directors; investments are reviewed on a quarterly basis. Arista's funds were
generally invested in federal, state and municipal obligations, corporate debt,
preferred and common stocks and such other investments which are specifically
prescribed by the New York State Insurance Law.

       The following table summarizes the Company's investment results before
income taxes for the five years ended December 31, 2001:

<Table>
<Caption>
                                            1997         1998         1999      2000   2001
                                            ----         ----         ----      ----   ----

<S>                                   <C>           <C>        <C>          <C>        <C>
Net investment income                 $  513,913    $ 543,856  $   152,527  $ 39,275   $  19,937
Net realized investment
  gain (loss)                         $   (2,519)   $       0  $   (10,410) $      0   $       0
Other comprehensive
   income (loss)                      $    4,955    $  (5,698) $    27,972  $      0   $       0
Average annual yield on
  total investments(1)                      5.83%        6.02%        4.64%     6.53%       3.59%
</Table>

REGULATION

       The State of New York has statutory authorization to enforce its laws and
regulations through various administrative orders and enforcement proceedings.

       Arista and, under certain circumstances, the Registrant, are subject to
regulation by the Department. Such regulation is principally for the benefit and
protection of policyholders and not stockholders. Regulation extends to, among
other things, the setting of rates to be charged, the granting and revocation of
licenses to transact business, the licensing of general agents, the approval of
policy forms and the form and content of statutorily mandated financial
statements.

       The Company is also regulated under New York State Insurance Law, Article
15, the "Holding Companies" statute. The regulations promulgated under the
"Holding Companies" statute require prior regulatory agency approval of changes
in control of an insurer and of transactions within the holding company
structure. In 1996, the Department examined Arista for the five-year period
ended December 31, 1994. The examination was completed and a report was filed in
1999. In February, 2001, the Department commenced an examination of Arista for
the five-year period ended December 31, 1999. The examination was completed and
a report was filed on May 10, 2001.

----------
     (1) Calculated on the mean of total investments on the first day and last
         day of each quarter.

                                       11
<Page>

       The New York State Insurance law provides that no corporation or other
person may acquire control of the Registrant and thus indirect control of
Arista, unless it has given notice to Arista and obtained prior written approval
of the Superintendent of Insurance for such acquisition. Under said law, any
purchaser of ten percent or more of the outstanding Common Stock of the
Registrant would be presumed to have acquired control of Arista, unless such
presumption is rebutted.

       Arista is not aware of any current proposed changes in either federal or
state regulations with respect to the Insurance.

DIVIDENDS

       The declaration and payment of dividends by the Registrant is subject to
the discretion of its Board of Directors and is dependent upon any dividends the
Registrant may receive as the sole shareholder of Arista. Under New York State
Insurance Law, Arista may pay dividends only out of its statutory earned
surplus. Generally, the maximum amount of dividends that Arista may pay without
regulatory approval in any twelve-month period is the lesser of adjusted net
investment income or ten percent (10%) of statutory surplus.

       On February 1, 1999, the Board of Directors of Arista approved a dividend
in the amount of $167,526 based on Arista's statutory earned surplus as of its
then last filed quarterly statutory statement at September 30, 1998, to be paid
to the Registrant. The dividend was paid to the Registrant on February 2, 1999.

       In 2000 and 2001, Arista did not pay any dividends to the Registrant.

RETURN OF CAPITAL

       An amendment to Arista's Certificate of Incorporation (the "1998
Amendment") was approved and placed on file with the Department as of December
18, 1998, and filed with the Office of the County Clerk on December 31, 1998.
The 1998 Amendment decreased Arista's stated capital from $1,950,000 (comprised
of 1,300 shares with a par value of $1,500 per share) to $300,000 (comprised of
200 shares with a par value of $1,500 per share). As of February 28, 1999,
Arista's paid-in surplus was $153,000. This recapitalization enabled the Board
of Directors of Arista to ratify the return of capital in the amount of
$2,492,000 to the Registrant. On January 26, 1999, the Department approved
Arista's return of $2,492,000 of capital to the Registrant, and the transfer was
made on January 28, 1999.

       A subsequent amendment ("the 1999 Amendment") was approved and placed on
file with the Department as of May 21, 1999, and filed with the Office of the
County Clerk on May 13, 1999. The 1999 Amendment decreased Arista's stated
capital from $300,000 (comprised of 200 shares with a par value of $1,500 per
share) to $200,000 (comprised of 200 shares with a par value of $1,000 per
share). As of May 31, 1999, Arista's paid-in surplus was $253,000.

                                       12
<Page>

EXTRAORDINARY DIVIDENDS

       In March, 1999, the Department approved an extraordinary cash dividend of
$4,000,000 (the "Initial 1999 Dividend"), based on their review of Arista's
filed December 31, 1998 Annual Statement, on the condition that there had been
no event that had significantly impacted upon Arista's last reported surplus as
regards policyholders. The Initial 1999 Dividend was paid to its parent company
in two installments: $3,000,000 in March 1999 and $1,000,000 in May 1999.

       In April 1999, the Department approved another cash dividend of
$1,200,000, based on their review of Arista's filed March 31, 1999 Quarterly
Statement, on the condition that there had been no event that had significantly
impacted upon Arista's reported March 31, 1999 surplus as regards policyholders
(the "Second 1999 Dividend"). The Second 1999 Dividend was paid in May 1999.

       In June 1999, the Department approved an additional cash dividend of
$150,000, based on their review of Arista's filed March 31, 1999 Quarterly
Statement, on the condition that there had been no event that had significantly
impacted upon Arista's reported March 31, 1999 surplus as regards policyholders
(the "Third 1999 Dividend"). The Third 1999 Dividend was paid in June 1999.

THE COLLECTION GROUP

       The Collection Group, Inc., a wholly-owned subsidiary of the Registrant,
commenced operations during July 1991. The Company dissolved The Collection
Group, Inc. in January 2001.

ITEM 2.  PROPERTIES.

       The Registrant's and Arista's principal executive offices are located at
116 John Street, New York, New York 10038. The offices contain approximately
16,100 square feet. Effective on June 1, 2000, the Company entered into a new
seven year lease for its principal executive office space at an average rent
over the term of the lease of approximately $422,000 per year, exclusive of
electricity and a share of various operating expenses.

       The Company has the option to terminate the lease provided it notifies
the landlord six months prior to the termination date, and remits to the
landlord a sum equal to six months of the then existing rent plus all
unamortized capital improvement costs.

       Arista provides certain office services to Bernard Kooper Life Agency, a
life and health insurance agency owned by Bernard Kooper, the Chairman of the
Board of the Company. The Bernard Kooper Life Agency reimburses the Company for
a portion of these costs.

ITEM 3.  LEGAL PROCEEDINGS.

                                       13
<Page>

         Although the Company is involved in some routine litigation incidental
to the business of the Company, the Company is not a party to any litigation
which it considers will have a material adverse effect on its business or
operations.

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

        Nothing to report.

                                       14
<Page>

                                     PART II

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

       (a) Until March 30, 2000, the Company's Class A Common Stock was traded
on the Nasdaq SmallCap Market. As a result of the Company's net tangible assets
as of September 30, 1999, the Company no longer met the continued listing
requirements of the Nasdaq SmallCap Market. Therefore, effective March 30, 2000,
the Company's Class A Common Stock commenced trading on the Over-the-Counter
Bulletin Board ("OTCBB") service. The following table presents the high and low
closing prices for the Company's Class A Common Stock as reported by the Nasdaq
SmallCap Market during the period ending March 2000, and as reported by the
OTCBB since March 30, 2000. The table represents inter-dealer prices, which do
not include retail mark-ups and mark-downs, or any commissions to the broker
dealer, and may not necessarily represent actual transactions.

<Table>
<Caption>
          For the Period Ending December 31, 2002:
          ---------------------------------------
                                       Class A
          Quarter  Range            Common Stock
          -------  -----            ------------

          <S>      <C>              <C>
          First    High             $ 1.32
                   Low              $ 1.30
<Caption>
          For the Period Ended December 31, 2001:
          --------------------------------------
                                       Class A
          Quarter  Range            Common Stock
          -------  -----            ------------
          <S>      <C>              <C>

          First    High             $  1.75
                   Low              $ 1.219

          Second   High             $ 1.75
                   Low              $ 1.50

          Third    High             $ 1.75
                   Low              $ 1.60

          Fourth   High             $ 1.60
                   Low              $ 1.15
</Table>

          FOR THE PERIOD ENDED DECEMBER 31, 2000:

                                       15
<Page>

<Table>
<Caption>
                                        Class A
          Quarter  Range            Common Stock
          -------  -----            ------------
          <S>      <C>              <C>
          First    High             $ 1.938
                   Low              $  1.00

          Second   High             $  1.75
                   Low              $  1.50

          Third    High             $  2.75
                   Low              $  1.50

          Fourth   High             $ 2.75
                   Low              $ 1.219
</Table>

       (b) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS:

       The number of holders, including individual participants in security
position listings of registered clearing agencies, as of April 10, 2002, was
approximately 230.

<Table>
<Caption>
                                             Approximate Number of
        Title of Class                        Record Holders *
        --------------                       ---------------------
        <S>                                         <C>
        Class A Common Stock, $.01 par value        54
</Table>

* As of April 10, 2002

       (c) On May 28, 1999, the Company made a partial liquidating distribution
in the amount of $2.23 per share to stockholders of record on May 19, 1999.

       On May 4, 1999, the Class A Directors of the Board of Directors of the
Registrant exercised an option (the "Class B Stock Transaction") granted to the
Registrant pursuant to a letter agreement, dated June 14, 1996 (the "Letter
Agreement"), by Mr. Kooper. Mr. Kooper was the beneficial owners of 47,400
shares of the Registrant's Class B Common Stock, representing all of the issued
and outstanding shares of the Class B Common Stock. The Class B Stock
Transaction closed on May 18, 1999. As a result of the Class B Stock
Transaction, there are no longer any shares of the Class B Common Stock
outstanding.

       Pursuant to the Letter Agreement, the Registrant acquired 47,400 shares
of Class B Common Stock beneficially owned by Mr. Kooper in consideration for
(i) an amount equal to $146,347.50, the Fair Market Value (as defined in the
Letter Agreement) of the Registrant's Class A Common Stock and

                                       16
<Page>

(ii) the cancellation of the $500,000.00 outstanding principal amount under the
Note (as defined in the Letter Agreement). The source of such funds paid by the
Registrant to Mr. Kooper was working capital. Prior to the Transaction and
pursuant to the Registrant's Certificate of Incorporation and By-laws, Mr.
Kooper had the right to elect a majority of the Registrant's Board of Directors.
In addition, the holder of the Class B Common Stock had the right to vote as a
separate class upon any merger, reorganization, recapitalization, liquidation,
dissolution, or winding-up, sale, transferor hypothecation of all or a
substantial portion of the assets of the Company, and with regard to any
amendment to the certificate of incorporation which affects the number or par
value, or adversely alters or changes powers, preferences, voting power or
special rights of the shares of the Class B Common Stock. Notwithstanding the
Class B Stock Transaction, Mr. Kooper continues to beneficially own 525,200
shares of the Registrant's Class A Common Stock (including 30,400 shares of
Class A Common Stock owned by Mr. Kooper's wife).

       Since the closing of the cession of the Insurance to The Guardian on
November 12, 1998, the Department approved Arista's return of capital to the
Registrant in the amount of $2,492,000 and extraordinary dividends in the amount
of $5,350,000 in the aggregate based on a review of Arista's filed statutory
statements. See "-Return of Capital" and "-Extraordinary Dividends."

ITEM 6.  SELECTED FINANCIAL DATA.

       The following information should be read in conjunction with, and is
qualified in its entirety by reference to, the Consolidated Financial Statements
of the Company and the notes thereto appearing elsewhere in this Form 10-K.

       The financial statements of the Company have been prepared in accordance
with accounting principles generally accepted in the United States of America,
which differ in certain respects from those followed in financial statements
prepared for regulatory authorities. See Notes to the accompanying Consolidated
Financial Statements.

                                       17
<Page>

Item 6. Consolidated selected Fiancial Data

<Table>
<Caption>
                                                                           Years Ended December 31,
                                                      ----------------------------------------------------------------
                                                        2001          2000          1999           1998          1997
                                                      ---------    ---------     -----------   -----------   ---------
                                                                   (in thousands, except per share amounts)
<S>                                                 <C>           <C>           <C>            <C>           <C>
Statement of operations data:
  Revenue from continuing operations:
    Third party administrative services             $   3,848     $   3,967     $   3,506      $   1,483     $     351
    Investment income                                      20            39           152            544           514
    Realized and unrealized investment losses               -             -           (10)             -            (3)
    Other income                                          133            10            11             19             7
  Expenses:
    General and administrative expenses                (4,134)       (3,774)       (3,669)        (2,427)         (740)
                                                    ---------     ---------     ---------      ---------     ---------

      Income (loss) from continuing operations
        before provision for income taxes                (133)          242           (10)          (381)          129
                                                    ---------     ---------     ---------      ---------     ---------

  Provision for income taxes (benefit) of net
    operating loss carryforward                           (27)          124            27           (143)           50
                                                    ---------     ---------     ---------      ---------     ---------

      Net provision (benefit)                             (27)          124            27           (143)           50
                                                    ---------     ---------     ---------      ---------     ---------
  Net income (loss) from continuing operations           (106)          118           (37)          (238)           79
                                                    ---------     ---------     ---------      ---------     ---------
  Discontinued operations:
    Income (loss) from operations of disposed
      segments                                              -             -             -           (167)           21

    Gain on disposal of segments (net of income
      taxes of $531 in 1998)                                -             -             -            838             -
                                                    ---------     ---------     ---------      ---------     ---------
      Net income from discontinued operations               -             -             -            671            21
                                                    ---------     ---------     ---------      ---------     ---------

      Net income (loss)                             $    (106)    $     118     $     (37)     $     433     $     100
                                                    =========     =========     =========      =========     =========

  Per common share:
    Basic:
      Income (loss) from continuing operations      $    (.04)    $     .05     $    (.01)     $    (.09)    $     .03
      Income (loss) from discontinued operations    $       -     $       -     $       -      $     .26     $     .01
    Diluted:
      Income (loss) from continuing operations      $    (.04)    $     .05     $    (.01)     $    (.09)    $     .03
      Income (loss) from discontinued operations    $       -     $       -     $       -      $     .26     $     .01

  Weighted average number of common shares:

    Basic                                           2,570,100     2,570,100     2,587,875      2,617,500     2,617,500
                                                    =========     =========     =========      =========     =========

    Diluted                                         2,570,100     2,570,100     2,587,875      2,617,500     2,617,500
                                                    =========     =========     =========      =========     =========
Balance sheet data:
  Short-term investments                            $       -     $       -     $     175      $       -     $       -
  Cash and equivalents                                    472           464           206          6,331         8,297
  Receivable from third party administration              511           596         1,074          7,802             -
  Premiums receivable                                       -             -             -              -         2,979
  Total assets                                          1,687         1,902         2,460         10,638        17,033
  Payable to reinsurer                                      -             -             -              -           159
  Claims liabilities                                        -             -             -              -         3,392
  Unearned premiums                                         -             -             -              -         1,465
  Commissions payable                                       -             -             -              -           730
  Total stockholders' equity                            1,055         1,161         1,042          6,930         6,503
</Table>

                                       18

<Page>

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

       The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements of the Company and the notes thereto
appearing elsewhere in this Form 10-K. Except for the historical information
contained herein, the following discussion contains forward-looking statements
that involve risks and uncertainties. The Company's actual results could differ
materially from those projected in the forward-looking statements discussed
herein. Factors that could cause or contribute to such differences include, but
are not limited to, those discussed in this section, as well as in other
sections herein.

GENERAL

       Prior to July 1, 1998, the Company, through its wholly-owned subsidiary,
Arista Insurance Company, operated principally as an underwriter of New York
State disability insurance to some 23,000 policyholders and 229,000 covered
lives in the New York Metropolitan Area. In November 1998, effective July 1,
1998, the Company ceded its disability insurance underwriting operations to The
Guardian pursuant to the Treaty and concurrently, the Registrant entered into
the TPA Agreement under which the Company performs various functions as an
independent administrator for all disability policies ceded to The Guardian and
for other New York State statutory disability policies issued by The Guardian
and other entities (the "TPA services") and as a managing general agency with
respect to a substantial portion of the business administered herein.

       Pursuant to the terms of the cession of the insurance operations, the
Company received a fee of 18% of the last twelve months' adjusted earned
premium, plus the proceeds from the assumption of the due premium receivables at
the Effective Date over all unpaid claim reserves, unearned premium liability
reserves, claim expense reserves and GAAP assessment reserves assumed by The
Guardian. These transactions significantly changed the Company's financial
condition and results of operations in 1998 and subsequent years. Accordingly,
the Company reformatted its consolidated statement of income and comprehensive
income for 1998 to distinguish continuing operating results from its TPA
services from its discontinued underwriting operations.

RESULTS OF OPERATIONS

                                       19
<Page>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO DECEMBER 31, 2000

       Consolidated total revenues during the years ended December 31, 2001 and
2000 were $4,001,187 and $4,015,601, respectively. During the years 2001 and
2000, the Company operated solely as full-time third party administrative and
managing general agency service provider (a "Provider").

       Consolidated revenues from third party administrative service
operations for the years ended December 31, 2001 and 2000 were $3,848,094 and
$3,966,704, respectively. Revenues decreased in 2001 mainly due to a premium
rate reduction required by the New York State Insurance Department relating
to some plans administered by the Company.

       Consolidated miscellaneous income in 2001 was $133,156 as compared to
$9,622 in 2000. The increase in 2001 was due to increased sales activities
pursuant to the Company's managing general agency services.

       The consolidated net loss for the year 2001 was ($106,166) (-$0.04 per
share). The consolidated net income for the year 2000 was $118,203 ($0.05 per
share).

       Consolidated investment income in 2001 was $19,937 as compared to
$39,275, in 2000. The decrease in 2000 was due a to a lower average annual yield
on total investments.

       Consolidated general and administrative expenses for 2001 was $4,134,294
as compared to such expenses of $3,773,390 for 2000. The increase in
consolidated general and administrative expenses in 2001 was due principally to
increases in rent, legal expenses and corporate insurance. Effective October 1,
2001, officers reduced their salaries and benefits, and management decreased the
number of clerical staff in order to reduce the total general and administrative
expenses.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO DECEMBER 31, 1999

       Consolidated revenues during the years ended December 31, 2000 and 1999
were $3,966,704 and $3,505,816, respectively, from the Company's continuing
third party administrative service operations. During the years of 2000 and
1999, the Company operated solely as a Provider. Revenues increased in 2000
mainly due to the additional fees earned by the Company acting as a Provider for
an acquisition completed by its primary client in August 1999 and other
increased business. In addition, the Company entered into a third party
administration agreement effective October 1, 2000, with a new client.

       The consolidated net income for the year 2000 was $118,203 ($0.05 per
share). For the year 1999, the consolidated net loss was ($37,567) (-$0.01 per
share).

         Consolidated investment income in 2000 was $39,275 as compared to
$152,527 in 1999. The decrease in 2000 was due to the Company's distribution of
$2.23 per share in May 1999 as a partial liquidating distribution.

                                       20
<Page>

       The Company reported a net realized loss of $10,410 in 1999.

       Consolidated miscellaneous income in 2000 was $9,622 as compared to
$10,840 in 1999.

       Consolidated general and administrative expenses for 2000 was $3,773,390
as compared to such expenses of $3,669,298 for 1999. The increase in
consolidated general and administrative expenses in 2000 was due principally to
increases in rent and salaries and wages for claims department employees.

FINANCIAL CONDITION

YEAR ENDED DECEMBER 31, 2001 COMPARED TO DECEMBER 31, 2000

       Despite the reduction in assets and liabilities at December 31, 2001 as
compared to December 31, 2000, the Company's financial condition remains stable.
These reductions pertain mainly to reductions in receivables from third party
administration and from a payable to related parties.

LIQUIDITY AND CAPITAL RESOURCES

YEAR ENDED DECEMBER 31, 2001 AS COMPARED TO DECEMBER 31, 2000

       Retained earnings decreased from $1,161,829 at December 31, 2000 to
$1,055,663 at December 31, 2001 as a result of the Company's net comprehensive
loss of ($106,166).

CASH AND CASH EQUIVALENTS

YEAR ENDED DECEMBER 31, 2001 COMPARED TO DECEMBER 31, 2000

       At December 31, 2001, the Company had cash and cash equivalents
aggregating $472,940, compared to $463,573 at December 31, 2000.

INFLATION AND SEASONALITY

       The Company does not anticipate that inflation will significantly impact
its business and does not believe that its business is seasonal.

CONCENTRATION OF CUSTOMERS

                                       21
<Page>

       The Guardian represents the Registrant's largest customer in its third
party administration business, accounting for more than 90% of such business
during the years ended December 31, 1999, December 31, 2000 and
December 31, 2001.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       Market risk encompasses liquidity and price risk, both of which arise
primarily in global financial markets. The Company's operations are not exposed
to material interest rate or foreign currency exchange risks.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

       The response to this item is submitted in Part IV of this Form 10-K on
page F-1 to S-5.

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

       Not applicable.

                                       22
<Page>

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

       The information required under this item will be set forth in the
Company's Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days of the Company's 2001 year end and is incorporated
herein by reference.

ITEM 11.   EXECUTIVE COMPENSATION.

       The information required under this item will be set forth in the
Company's Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days of the Company's 2001 year end and is incorporated
herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

       The information required under this item will be set forth in the
Company's Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days of the Company's 2001 year end and is incorporated
herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

       The information required under this item will be set forth in the
Company's Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days of the Company's 2001 year end and is incorporated
herein by reference.

                                       23
<Page>

                                     PART IV

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

           (a)(1) AND (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
           SCHEDULES.

<Table>
<Caption>
                                                                         Page
                                                                         ----
             <S>                                                         <C>
             I.   Financial Statements of the Registrant                 F-1

             II.  Financial Statement Schedules

                  A.       Schedule I - Condensed Financial
                           Information of Registrant                     S-1

                  B.       Schedule II - Supplemental Segment            S-5
                           Information
</Table>

EXHIBIT NO.    (a)(3) EXHIBITS.

 3.1           --   Certificate of Incorporation of the Company (1)
 3.2           --   By-Laws of the Company (1)
 4.2           --   Form of Class A Common Stock Certificate (1)
 4.5           --   Form of Class B Common Stock Certificate (1)
10.4           --   Incentive Stock Option Plan 1985, as supplemented (1)
10.5           --   Incentive Stock Option Plan 1986 (1)
10.6           --   Non-qualified Stock Option issued to Stanley S. Mandel (1)
10.7           --   Warrant issued to Bernard Kooper (1)
10.8           --   Lease between the Company and Hacienda Intercontinental
                    Realty, N.V. (1)
10.8.1         --   Lease dated November 29, 1990 between the Company
                    and Hacienda Intercontinental Realty, N.V. (2)
10.8.2         --   Letter dated December 7, 1992 from Williamson,
                    Picket & Gross, Inc. addressed to the Company,
                    incorporated by reference to Exhibit 10.8.2 to
                    the Company's Form 10-K for the year ended
                    December 31, 1992
10.9           --   Sublease between the Company and Arista (1)
10.9.1         --   Sublease dated January 1, 1991, between the Company and
                    Arista (2)

                                       24
<Page>

EXHIBIT NO.    (a)(3) EXHIBITS.

10.11          --   Reinsurance Agreement with NRG Reinsurance Company, as
                    amended (1)
10.11.1        --   Amendment to Reinsurance Agreement with NRG Reinsurance
                    Company, dated July 16, 1990 (2)
10.11.2        --   Reinsurance Agreement with NRG Reinsurance Company, dated
                    January 29, 1993, incorporated by reference to Exhibit
                    10.11.2 to the Company's Form 10-K for the year ended
                    December 31, 1992
10.11.3        --   Reinsurance Agreement with NRG America Life Reassurance
                    Corporation, effective  October 1, 1993, incorporated  by
                    reference to Exhibit 10.11.3 to the Company's 10-K for the
                    year ended December 31, 1993
10.12          --   Agreement for Statutory Disability Benefits General
                    Agents (1)
10.12(a)       --   Rider to Statutory Disability Benefits General Agents
                    Agreement (1)
10.14          --   Lease of Additional Space (Room  1101) between the
                    Company and Hacienda Intercontinental Realty, N.V.(1)
10.15          --   Agreement between Arista Insurance Company and American
                    International Life Assurance Company of New York (1)
10.16          --   Sublease (Room 1101) between the Company and Arista (1)
10.17          --   Lease of Additional Space (Room  1201) between the
                    Company and Hacienda Intercontinental Realty, N.V. (1)
10.18          --   Sublease (Room 1201) between the Company and Arista,
                    incorporated  by reference  to Exhibit No. 1 to the
                    Company's 10-K for the year ended December 31, 1988
10.19          --   Agreement between Arista and First International Life
                    Insurance Company,  incorporated  by reference to
                    Exhibit No. 2 to the Company's 10-K for the year ended
                    December 31, 1988
10.21          --   Statutory Disability Benefits Administration Agreement
                    Effective as of October 1, 1991, between Arista and
                    The North Atlantic Life Insurance Company, incorporated
                    by reference to Exhibit 10.21 to the Company's Form 10-K for
                    the year ended December 31, 1992
10.22          --   Employment Agreement between the Company and Bernard
                    Kooper, dated February 17, 1993, incorporated by
                    reference to Exhibit 10.22 to the Company's 10-K for the
                    year ended December 31, 1993

                                       25
<Page>

EXHIBIT NO.    (a)(3) EXHIBITS.

10.22.1        --   Amendment  No. 1 to the  Employment Agreement between
                    Arista and Bernard Kooper dated July 20, 1994 (3)
10.23          --   Employment Agreement between Arista and Stanley Mandel,
                    dated February 17, 1993, incorporated by reference to
                    Exhibit 10.23 to the Company's 10-K for the year ended
                    December 31, 1993
10.23.1        --   Amendment No. 1 to the Employment Agreement between
                    Arista and Stanley Mandel, dated July 20, 1994 (3)
10.24          --   Consulting  Agreement between Arista and  International
                    Management Consultants,  dated  May 1, 1993, incorporated
                    by  reference to Exhibit  10.24 to the Company's  10-K for
                    the year ended December 31, 1993
10.25          --   Split-Dollar Insurance Agreement between Arista Investors
                    Corp., Arlyne Kooper and Bernard Kooper, dated
                    July 20, 1994 (3)
10.26          --   Split-Dollar Insurance Agreement between Arista, Stanley
                    Mandel and Joy Mandel, dated July 20, 1994 (3)
10.28          --   Collateral Assignment, dated July 20, 1994 (Joy Mandel) (3)
10.29          --   Collateral  Assignment,  dated July 20,  1994  (Bernard
                    Kooper and Arlyne Kooper) (3)
10.30          --   Lease Agreement, dated January 9, 1995  between  the
                    Company and  Hacienda Intercontinental Realty, N.V. (3)
10.30.1        --   Letter  dated  March  12,  1996  from  the  Company
                    addressed  to  Williamson, Picket & Gross, Inc. (4)
10.30.2        --   Letter dated March 13, 1996 from Williamson,  Picket &
                    Gross,  Inc. addressed to the Company (4)
10.31          --   Assumption  Reinsurance  Treaty,  dated  April 1, 1994
                    between the Company and Aetna Life Insurance Company (3)
10.32          --   Reinsurance  Treaty,  dated  October  1, 1995,  between
                    Arista and Cologne Life Reinsurance Company (4)
10.32.1        --   Surplus Note  Agreement,  dated  December 29, 1995,  between
                    Arista and Cologne Life Underwriting Management Company  (4)
10.32.2        --   Warrant issued to Cologne Life Underwriting Management
                    Company (4)
10.33          --   Lease  (Storage  space #7)  effective  January 1, 1996
                    between the
                    Company and Hacienda Intercontinental Realty, N.V. (4)
10.34          --   Sublease  (Storage space #7) effective  January 1, 1996
                    between the Company and Arista (4)

                                       26
<Page>

10.35          --   Sublease effective June 1, 1995 between the Company and
                    Arista (4)
10.36          --   Stock Purchase  Agreement  dated as of July 13, 1995 between
                    Arista and American Travelers Life Insurance Company (4)
10.37          --   Secured  Promissory  note,  dated June 14, 1996,  issued by
                    Bernard Kooper  to  Arista  Investors  Corp.  in  the
                    aggregate  principal amount of $500,000 (5)
10.38          --   Pledge and Escrow  Agreement,  dated  June 14,  1996,  by
                    and among Bernard  Kooper,  as pledgor,  Arista  Investors
                    Corp., as pledgee and Morrison Cohen Singer & Weinstein,
                    LLP, as escrow agent (5)
10.39          --   Letter Agreement,  dated June 14, 1995,  between Bernard
                    Kooper and Arista Investors  Corp.,  granting Arista
                    Investors Corp. an option to acquire  47,400  shares of its
                    Class B common  stock,  par value $.01 per share (5)
10.40          --   Letter dated October 31, 1996,  addressed to  Williamson,
                    Picket & Gross, Inc. (6)
10.41          --   Letter  Agreement,  dated December 11, 1996,  terminating
                    sublease between the Company and Arista (Storage Space #5)
                    (6)
10.42          --   Quota  Share  Reinsurance   Treaty  between  the  Company
                    and  The Guardian  Life  Insurance  Company  of  America,
                    effective  as  of January 1, 1998 (7)
10.43          --   Employment  Agreement  between  Stanley  Mandel  and  the
                    Company, incorporated  by  reference  to Exhibit  10.43 to
                    the Company  Form 10-Q for the quarter ended
                    September 30, 1998
10.43.1        --   Amendment  No.  1  to  the  Employment  Agreement  between
                    Stanley Mandel and the Company, dated January 21, 2000(9)
10.44          --   Assumption  Reinsurance  Agreement between Arista,  the
                    Company and The Guardian,  dated September 23, 1998,
                    incorporated by reference  to Exhibit A to the  Company's
                    Definitive  Proxy  Statement  dated September 23, 1998
10.45          --   Administrative  Services  Agreement  between The  Guardian
                    and the Company,  dated  September 23, 1998,  incorporated
                    by reference to Exhibit  B  to  the  Company's  Definitive
                    Proxy  Statement  dated September  23, 1998
10.45.1        --   Amendment to the Administrative Services Agreement  between
                    The Guardian and the Company, dated as of
                    January 1, 1999 (9)

                                       27
<Page>

EXHIBIT NO.    (a)(3) EXHIBITS.

10.46          --   Employment Agreement between Peter Norton and the
                    Company (including  Employment  Agreement  Assignment, dated
                    as of February 1, 1999) (8)
10.46.1        --   Amendment No. 1 to the  Employment  Agreement  between Peter
                    Norton and the Company, effective as of July 1, 1999. (9)
10.47          --   1999  Non-Qualified  Stock Option Plan,  incorporated  by
                    reference to Exhibit A to the Company's  Definitive  Proxy
                    Statement,  dated July 12, 1999
10.48          --   1999  Restricted  Stock Plan,  incorporated by reference to
                    Exhibit B to the Company's Definitive Proxy Statement, dated
                    July 12, 1999
10.49          --   Lease Agreement, dated as of May 9, 2000, between the
                    Company and Hacienda Intercontinental Realty, N.V.,
                    incorporated by reference to Exhibit 10.49 to the Company's
                    Form 10-K for the year ended December 31, 2000
21.1           --   List of Subsidiaries
24.1           --   Powers of  Attorney, incorporated by reference to
                    Exhibit 25.1 to the  Company's   Registration  Statement  on
                    Form  S-1  (File  No. 33-20101),  dated  February 11,  1988,
                    as amended on May 6, 1988, declared  effective on
                    May 16, 1988, and amended by  Post-Effective Amendment No. 1
                    dated April 27, 1989
---------------

(1)            Filed as same numbered Exhibit to the Company's Registration
               Statement on Form S-1 (File No. 33-20101) on February 11, 1988,
               as amended on May 6, 1988, declared effective on May 16, 1988,
               and amended by Post-Effective Amendment No. 1 dated
               April 27, 1989, and incorporated herein by reference.

(2)            Filed as same  numbered  Exhibit to the Company's  Form 10-K for
               the year ended  December 31, 1990, and incorporated herein by
               reference.

(3)            Filed as same  numbered  Exhibit to the Company's  Form 10-K for
               the year ended  December 31, 1994, and incorporated herein by
               reference.

(4)            Filed as same  numbered  Exhibit to the Company's  Form 10-K for
               the year ended  December 31, 1995, and incorporated herein by
               reference.

(5)            Filed as the same numbered  Exhibit to the Company's  Form 10-Q
               for the fiscal  quarter ended June 30, 1996.

                                       28
<Page>

(6)            Filed as same numbered  Exhibit to the Company's Form 10-K for
               the year ended December 31, 1996, and incorporated herein by
               reference.

(7)            Filed as same numbered  Exhibit to the Company's Form 10-K for
               the year ended December 31, 1997, and incorporated herein by
               reference.

(8)            Filed as same numbered  Exhibit to the Company's Form 10-K for
               the year ended December 31, 1998, and incorporated herein by
               reference.

(9)            Filed as same numbered Exhibit to the Company's Form 10-K for the
               year ended December 31, 1999, and incorporated herein by
               reference.

               (b)  REPORTS ON FORM 8-K

               Nothing to report.

                                       29
<Page>

                                   SIGNATURES

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

                                         ARISTA INVESTORS CORP.

Dated: April 12, 2002           By:      /s/ Stanley S. Mandel
                                         ---------------------------------------
                                                 Stanley S. Mandel, President

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

SIGNATURE                              TITLE                         DATE
---------                              -----                         -----

/s/ Bernard Kooper              Chairman of the Board            April 12, 2002
---------------------------
Bernard Kooper

/s/ Stanley S. Mandel           President and Director           April 12, 2002
---------------------------     (principal executive officer)
Stanley S. Mandel

/s/ Susan J. Hall               Senior Vice President,           April 12, 2002
---------------------------     Treasurer and Secretary
Susan J. Hall                   (principal financial and
                                accounting officer)

/s/ Daniel Glassman             Director                         April 11, 2002
---------------------------
Daniel Glassman

/s/ Michael Krasner             Director                         April 11, 2002
---------------------------
Michael Krasner


/s/ Louis H. Saltzman           Director                         April 12, 2002
---------------------------
Louis H. Saltzman

                                       30


<Page>

                             ARISTA INVESTORS CORP.

                                    FORM 10-K
                              FINANCIAL STATEMENTS
                                  AND SCHEDULES

                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

                                      WITH
                          INDEPENDENT AUDITORS' REPORT

<Page>

ARISTA INVESTORS CORP.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                                                                   Page
<S>                                                                                                              <C>
Independent Auditors' Report                                                                                        F-2

Consolidated Financial Statements:

   Consolidated Balance Sheets                                                                                      F-3

   Consolidated Statements of Income and Comprehensive Income                                                       F-4

   Consolidated Statements of Changes in Stockholders' Equity                                                       F-5

   Consolidated Statements of Cash Flows                                                                          F-6-7

   Notes to Consolidated Financial Statements                                                                    F-8-28

Financial Statement Schedules:

   Schedule I - Condensed Financial Information of Registrant                                                     S-1-4

   Schedule II - Supplemental Segment Information                                                                   S-5
</Table>

All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the Consolidated Financial
Statements and notes thereto.

                                       F-1
<Page>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Arista Investors Corp.:

We have audited the accompanying consolidated balance sheets of Arista Investors
Corp. ("the Company") as of December 31, 2001 and 2000 and the related
consolidated statements of income and comprehensive income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2001. 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 in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Arista Investors
Corp. at December 31, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedules on
pages S-1 to S-5 of this Form 10-K are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not a required part of
the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein.

                                   /s/ Rosen Seymour Shapss Martin & Company LLP
                                   CERTIFIED PUBLIC ACCOUNTANTS

New York, New York
January 31, 2002

                                       F-2
<Page>

ARISTA INVESTORS CORP.

CONSOLIDATED BALANCE SHEETS

December 31, 2001 and 2000

<Table>
<Caption>
                                                                                      2001                   2000
                                                                                ----------------       ----------------
<S>                                                                             <C>                    <C>
ASSETS

CASH AND EQUIVALENTS (Note 2)                                                   $       472,940        $       463,573
DEFERRED ACQUISITION COSTS, net (Note 2)                                                 57,689                 96,148
RECEIVABLES FROM RELATED PARTIES (Notes 4 and 6)                                        445,962                450,739
RECEIVABLES FROM THIRD PARTY ADMINISTRATION (Notes 3
   and 6)                                                                               510,700                596,012
FURNITURE AND EQUIPMENT, at cost, net of accumulated
   depreciation of $903,908 in 2001 and $890,999 in
   2000 (Note 2)                                                                         15,025                 28,024
PREPAID AND REFUNDABLE INCOME TAXES                                                      33,564                 56,189
DEFERRED INCOME TAXES, net (Note 10)                                                     34,100                      -
OTHER ASSETS (Note 4)                                                                   117,032                210,948
                                                                                ----------------       ----------------

           Total assets                                                         $     1,687,012        $     1,901,633
                                                                                ================       ================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

   Accounts payable and accrued expenses                                        $       632,288        $       540,743
   Payable to related parties (Note 6a)                                                       -                200,000
                                                                                ----------------       ----------------

           Total liabilities                                                            632,288                740,743
                                                                                ----------------       ----------------
COMMITMENTS AND CONTINGENCIES (Notes 4 and 6)

STOCKHOLDERS' EQUITY (Notes 7 and 8):
   Class A common stock, $.01 par value; 9,950,000 shares
      authorized, 2,580,100 shares issued                                                25,801                 25,801
   Retained earnings                                                                  1,055,663              1,161,829
                                                                                ----------------       ----------------
                                                                                      1,081,464              1,187,630
   Cost of 10,000 shares Class A common
      stock held in treasury                                                            (26,740)               (26,740)
                                                                                ----------------       ----------------

           Total stockholders' equity                                                 1,054,724              1,160,890
                                                                                ----------------       ----------------

           Total liabilities and stockholders' equity                           $     1,687,012        $     1,901,633
                                                                                ================       ================
</Table>

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

                                       F-3
<Page>

ARISTA INVESTORS CORP.

CONSOLIDATED STATEMENTS OF INCOME AMD COMPREHENSIVE INCOME

Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                       2001                2000                1999
                                                                 ---------------     ---------------    ---------------
<S>                                                               <C>                 <C>                 <C>
REVENUE:

  Third party administrative services (Note 6c)                   $  3,848,094        $  3,966,704        $  3,505,816
  Net investment income (Note 12)                                       19,937              39,275             152,527
  Net realized investment losses (Note 12)                                   -                   -             (10,410)
  Other income (Note 6c)                                               133,156               9,622              10,840
                                                                 ---------------     ---------------    ---------------
        Total revenue                                                4,001,187           4,015,601           3,658,773
                                                                 ---------------     ---------------    ---------------
EXPENSES:

  General and administrative expenses                                4,134,294           3,773,390           3,669,298
                                                                 ---------------     ---------------    ---------------
        Income (loss) before income tax provision (benefit)           (133,107)            242,211             (10,525)
                                                                 ---------------     ---------------    ---------------
PROVISION (BENEFIT) FOR INCOME TAXES (Note 10)                         (26,941)            124,008              27,042
                                                                 ---------------     ---------------    ---------------
        Net income (loss)                                             (106,166)            118,203             (37,567)
                                                                 ---------------     ---------------    ---------------
OTHER COMPREHENSIVE INCOME (LOSS):

  Unrealized loss on securities during year                                  -                   -              (1,850)
  Less reclassification for amounts included
    in net income (loss)                                                     -                   -              29,822
  Income tax                                                                 -                   -              (5,484)
                                                                 ---------------     ---------------    ---------------
        Other comprehensive income (loss), net                               -                   -              22,488
                                                                 ---------------     ---------------    ---------------
TOTAL COMPREHENSIVE INCOME (LOSS)                                 $   (106,166)       $    118,203        $    (15,079)
                                                                 ===============     ===============    ===============

NET INCOME (LOSS) PER COMMON SHARE:

  Basic income (loss) per share                                   $       (.04)       $        .05        $       (.01)
                                                                 ===============     ===============    ===============
  Diluted income (loss) per share                                 $       (.04)       $        .05        $       (.01)
                                                                 ===============     ===============    ===============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES:

  Basic (Note 11)                                                    2,570,100           2,570,100           2,587,875
                                                                 ===============     ===============    ===============
  Diluted (Note 11)                                                  2,570,100           2,570,100           2,587,875
                                                                 ===============     ===============    ===============
</Table>

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

                                       F-4
<Page>

ARISTA INVESTORS CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                  Common Stock
                              ----------------------------------------------------
                                       Class A              Convertible Class B                                 Accumulated
                              -----------------------  ---------------------------    Additional                   other
                               Number of     Par value      Number      Par value      paid-in      Retained    comprehensive
                                 shares        $ .01      of shares       $ .01        capital      earnings       income
                              -----------  -----------  ------------   -----------   -----------  ------------- -------------
<S>                            <C>            <C>            <C>          <C>         <C>           <C>           <C>
Balance -January 1, 1999       2,580,100      $ 25,801       47,400       $  474      $5,989,609    $1,468,780    $(22,488)

  Net loss - 1999                      -             -            -            -               -       (37,567)          -

  Acquisition of
    Convertible
    Class B common stock
    (Note 8)                           -             -            -            -               -             -           -
  Retirement of treasury
    stock                              -             -      (47,400)        (474)       (258,286)     (387,587)          -
  Partial liquidation
    distribution                       -             -            -            -      (5,731,323)            -           -
  Transfer of unrealized
    securities loss                    -             -            -            -               -             -      22,488
                              -----------  -----------  ------------   -----------   -----------  ------------- -------------
Balance - December 31, 1999    2,580,100        25,801            -            -               -     1,043,626           -
  Net income - 2000                    -             -            -            -               -       118,203           -
                              -----------  -----------  ------------   -----------   -----------  ------------- -------------
Balance - December 31, 2000    2,580,100        25,801            -            -               -     1,161,829           -
  Net loss - 2001                      -             -            -            -               -      (106,166)          -
                              -----------  -----------  ------------   -----------   -----------  ------------- -------------
Balance - December 31, 2001    2,580,100      $ 25,801            -       $    -      $        -    $1,055,663    $      -
                              ===========  ===========  ============   ===========   ===========  ============= =============

<Caption>
                                               Class A    Convertible
                                 Secured       common       Class B
                                promissory      stock     common stock
                                   note        held in      held in
                                receivable    treasury      treasury       Total
                               ------------  -----------  -------------  -----------
<S>                             <C>            <C>          <C>          <C>
Balance -January 1, 1999        $(500,000)     $(26,740)    $      -     $6,935,436

  Net loss - 1999                       -             -            -        (37,567)

  Acquisition of
    Convertible
    Class B common stock
    (Note 8)                      500,000             -     (646,347)      (146,347)
  Retirement of treasury
    stock                               -             -      646,347              -
  Partial liquidation
    distribution                        -             -            -     (5,731,323)
  Transfer of unrealized
    securities loss                     -             -            -         22,488
                               ------------  -----------  -------------  -----------
Balance - December 31, 1999             -       (26,740)           -      1,042,687
  Net income - 2000                     -             -            -        118,203
                               ------------  -----------  -------------  -----------
Balance - December 31, 2000             -       (26,740)           -      1,160,890
  Net loss - 2001                       -             -            -       (106,166)
                               ------------  -----------  -------------  -----------
Balance - December 31, 2001      $      -      $(26,740)    $      -     $1,054,724
                               ============  ===========  =============  ===========
</Table>

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

                                       F-5
<Page>

ARISTA INVESTORS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOW

Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                       2001                2000                1999
                                                                 ---------------     ---------------    ---------------
<S>                                                               <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                               $   (106,166)       $    118,203        $    (37,567)
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Depreciation                                                        12,999              19,905              39,340
    Amortization of deferred acquisition costs                          38,459              38,460              19,230
    Loss on sale of investments                                              -                 112              10,410
    Deferred income taxes                                              (34,100)                  -             759,310
    (Increase) decrease in operating assets excluding
      effects of discontinued operations:
      Prepaid and refundable income taxes                               22,625              83,715            (139,904)
      Receivable from related parties                                    4,777             (27,820)            (81,767)
      Receivable from third party administration                        85,312             478,127          (1,066,337)
      Other assets                                                      93,916              52,038             243,438
    Increase (decrease) in operating liabilities excluding effects of
      discontinued operations:

      Accounts payable and accrued expenses                             91,545             (77,166)           (653,070)
      Payable to related parties                                      (200,000)           (600,000)         (1,056,277)
      Income taxes payable                                                   -                   -            (580,319)
                                                                 ---------------     ---------------    ---------------
        Net cash provided by (used in)
         operating activities                                            9,367              85,574          (2,543,513)
                                                                 ---------------     ---------------    ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Furniture and equipment acquired                                           -              (3,080)             (8,482)
  Proceeds from sale of held-to-maturity securities                          -             475,000           2,456,905
  Proceeds from sale of available-for-sale securities                        -                   -               1,702
  Proceeds from sale of trading securities                                   -                   -                  67
  Purchase of investments                                                    -            (300,000)                  -
  Payments and costs associated with acquired business                       -                   -            (153,838)
                                                                 ---------------     ---------------    ---------------
        Net cash provided by investing activities                            -             171,920           2,296,354
                                                                 ---------------     ---------------    ---------------
</Table>

(CONTINUED)

                                       F-6
<Page>

ARISTA INVESTORS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOW (CONTINUED)

Years Ended December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                                       2001                2000                1999
                                                                 ---------------     ---------------    ---------------
<S>                                                               <C>                 <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Acquisition of Convertible Class B common stock                 $          -        $          -        $   (146,347)
  Partial liquidation distribution                                           -                   -          (5,731,324)
                                                                 ---------------     ---------------    ---------------
        Net cash used in financing activities                                -                   -          (5,877,671)
                                                                 ---------------     ---------------    ---------------
        Net increase (decrease) in cash and equivalents                  9,367             257,494          (6,124,830)
                                                                 ---------------     ---------------    ---------------
CASH AND EQUIVALENTS:

  Beginning of year                                                    463,573             206,079           6,330,909
                                                                 ---------------     ---------------    ---------------
  End of year                                                     $    472,940        $    463,573        $    206,079
                                                                 ===============     ===============    ===============

SUPPLEMENTAL CASH FLOW DISCLOSURES: Cash paid during the year for:

    Income taxes                                                  $      6,221        $     42,221        $     82,492
                                                                 ===============     ===============    ===============
    Interest                                                      $      3,508        $     22,817        $     68,897
                                                                 ===============     ===============    ===============

SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES:
  The Company canceled a note and acquired
    Convertible Class B common stock as follows:
    Cancellation of secured promissory note from
      shareholder (Notes 4 and 8)                                 $          -        $          -        $    500,000
    Acquisition of Convertible Class B
      common stock (Note 8)                                                  -                   -            (646,347)
                                                                 ---------------     ---------------    ---------------
        Cash paid                                                 $          -        $          -        $   (146,347)
                                                                 ===============     ===============    ===============
</Table>

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

                                       F-7
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001, 2000 and 1999

1.     ORGANIZATION AND NATURE OF BUSINESS

         Arista Investors Corp. (the "Company") was incorporated in the State
of New York on September 28, 1978 and re-incorporated in the State of
Delaware in October 1986. Until July 1, 1998 the Company was principally a
holding company with respect to its wholly-owned subsidiaries, Arista
Insurance Company ("Arista"), The Collection Group, Inc. ("Collection") and
Arista Administrative Services, Inc. ("Administrative"). Effective July 1,
1998 the Company entered into an Administrative Services Agreement ("TPA
Agreement") with The Guardian Life Insurance Company of America ("The
Guardian") and commenced services as a third party administrator and as a
managing general agency of New York State statutory disability insurance
policies including superstatutory and voluntary disability benefits insurance
for The Guardian and other entities (collectively, the "Insurance") (see
Note 2).

         Commencing in December 1998 the Company operated exclusively as a third
party administrator and as a managing general agency.

         Arista was incorporated in the State of New York on May 21, 1979, and
was licensed on October 11, 1979 by the New York State Insurance Department
("NYSID"). Arista's principal line of business through November 11, 1998 was the
writing of Insurance in New York State. In November 1998 the Company completed
the assumption and transfer of Arista's insurance business to The Guardian. The
effective date of the cession was July 1, 1998. Arista discontinued writing
Insurance, effective November 12, 1998. Effective September 1, 1993 Arista
amended its charter and license and has the authority to write glass insurance
as well as disability insurance. To date, Arista has not written any glass
insurance.

         Collection was incorporated in August 1989 and commenced operations in
July 1991. Collection was dissolved in January 2001. Administrative is an
inactive company.

         The Company entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement"), as of June 15, 2001, to sell to Delta Dental Plan of
Indiana, Inc., a not-for-profit corporation, all of the issued and
outstanding shares of common stock of Arista which were held by the Company
(the "Transaction"). The Stock Purchase Agreement contains certain
representations, warranties, conditions and indemnification provisions. The
completion of the Transaction is subject to various closing conditions,
contingencies and regulatory approvals, including, but not limited to
approval from the NYSID. The parties anticipate that the Transaction will be
consummated during 2002.

         Pursuant to the Stock Purchase Agreement, the purchase price shall be
equal to the sum of (i) the value of Arista's adjusted capital and surplus as of
the closing date; plus (ii) $275,000. Arista's adjusted capital and surplus as
of December 31, 2001 was approximately $344,000.

(CONTINUED)

                                       F-8
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

         The Company is licensed by the NYSID as an independent accident and
health adjuster (the "License"), and on the date that the cession of the
Insurance was consummated, the Company commenced servicing the Insurance
pursuant to the TPA Agreement. The License may continue in perpetuity unless
otherwise suspended or terminated by an act of the regulator. The Company pays
an annual fee for the License.

         As a third party administrator under the TPA Agreement, the Company
performs various services relating to the Insurance underwritten by The
Guardian, including, but not limited to, pricing of risk, underwriting new
and renewal business, investigation, calculation and payment of claims,
preparation and transmission of bills, preparation of policy kits and forms,
preparations of commission statements, maintenance of records, responding to
inquiries from policyholders and providing updates on regulatory changes.
Effective January 1, 1999, the TPA Agreement was amended to include an
additional book of Insurance acquired by The Guardian.

         The Guardian has the right to terminate the TPA Agreement during its
full term upon 60 days prior written notice to the Company upon the occurrence
of, among other events: (i) breach of the TPA Agreement by the Company which is
not cured within 30 days or which may cause or has caused the revocation of The
Guardian's license to do an insurance business in any jurisdiction, (ii) the
failure of Stanley S. Mandel, the Company's President, to maintain control of
the day-to-day operations of the Company at any time during the first five years
following the Effective Date (other than by reason of Mr. Mandel's death or
disability, in which case a replacement acceptable to The Guardian may be
appointed, (iii) the Company permits any other person to gain operational
control of its administrative servicing business or agrees to any arrangement
which would end the existence of such business, without giving The Guardian a
right of first refusal to purchase such business or (iv) the failure of the
Company to maintain a minimum stockholders' equity on its balance sheet of not
less than 3.5% of the gross premiums earned on the contracts administered
pursuant to the TPA Agreement in the prior calendar year, and such failure
continues without being cured for 10 days after receiving notice of such failure
from The Guardian. Additionally, after June 30, 2000, The Guardian may terminate
the TPA Agreement in the event The Guardian desires to perform the
administrative services.

         Effective October 1, 2000, the Company entered into an agreement with
Highmark Life Insurance Company of New York ("Highmark") to perform third-party
administrative services relating to disability policies underwritten by
Highmark. The Company earned a service fee based on both fixed and variable
percentages of collected or earned premiums by Highmark. The initial term of the
agreement was for the period beginning October 1, 2000 and ending September 30,
2001. This agreement was terminated effective September 30, 2001.

(CONTINUED)

                                       F-9
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

         Effective January 1, 1999, the Company entered into an agreement with
the Girl Scouts of U.S.A. (the "Girl Scouts") to provide third-party
administrative services for the Super Statutory Disability Benefits Insurance
provided by the Girl Scouts. The Company earns a fee of $1.75 per capita per
month for providing these services. The initial term of the agreement was
January 1, 1999 through December 31, 1999 with automatic renewals for periods of
12 months thereafter. The agreement will remain in effect until terminated by
either party upon 60 days prior written notice.

         Effective March 1, 1996, the Company arranged to perform third-party
administrative services for Hartford Life and Accident Insurance Company's
("Hartford") Temporary Disability Insurance policies. Fees for services are
determined in accordance with a prescribed schedule based on the type of service
provided. The arrangement will remain in effect until terminated by either
party.

         Effective January 1, 1995, the Company entered into an agreement to
perform third-party administrative services for the United States Life Insurance
Company. Fees for these services were determined in accordance with a prescribed
schedule based on the type of service provided. The agreement was terminated
effective June 30, 2000.

2.     BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION

         The accompanying consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"). GAAP differs from Statutory Accounting Principles ("SAP") used
by insurance companies in reporting to state regulatory and industry agencies as
explained in Note 13.

         USE OF ESTIMATES

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

         PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries, Arista, Collection, and
Administrative. All intercompany balances and transactions have been eliminated.

(CONTINUED)

                                      F-10
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

         REVENUE RECOGNITION

         Third party administrative (TPA) fees are recognized in the period in
which policy premiums are earned. Such fees are determined in accordance with
prescribed schedules based on the services performed that meet the definition of
"earned revenue" specified in SAB No. 101 issued by the Securities and Exchange
Commission (the "SEC") in December 1999.

         Pursuant to the TPA Agreement, the Company receives a fee based upon
the premiums earned by The Guardian plus additional fees based upon performance
by the Company and results achieved by The Guardian. The TPA Agreement sets
three pricing parameters: (i) a basic fee of 5% to 7% of collected premium for
all required functions, (ii) an audit fee of +/-1% of the collected premium
pursuant to a semi-annual audit performed by The Guardian to determine whether
the performance criteria under the TPA Agreement have been complied with, and
(iii) a limited contingency payment based upon the developed incurred loss
ratio. The TPA Agreement is effective for a period of five years (until June 30,
2003), subject to earlier termination by The Guardian under certain
circumstances as described below.

         FURNITURE AND EQUIPMENT

         Furniture and equipment are carried at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets.
Depreciation expense for each of the years in the three-year period ended
December 31, 2001, was $39,340, $19,905 and $12,999, respectively.

         INVESTMENTS

         Pursuant to the requirements of Statement of Financial Account
Standards ("SFAS") 115, the Company determines the appropriate classification of
its investments in debt and equity securities at the time of purchase and
reevaluates such determination at each balance sheet date. Debt securities that
the Company has the positive intent and ability to hold to maturity are
classified as "held-to-maturity securities" and reported at amortized cost; debt
and equity securities that are bought and held principally for the purpose of
selling them in the near future are classified as "trading securities," and
reported at fair value, with unrealized gains and losses included in earnings;
debt and equity securities not classified as either held-to-maturity securities
or trading securities are classified as "available-for-sale securities" and
reported at fair value, with unrealized gains and losses reported as "other
comprehensive income" as a separate component of stockholders' equity.

         CONCENTRATION OF CREDIT RISK

         Financial instruments that potentially subject the Company to credit
risk consist principally of receivables from third party administration
functions and receivables from related parties. Credit risk

(CONTINUED)

                                      F-11
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

with respect to these receivables is considered minimal due to the financial
condition of the insurers and deposits held by the Company.

         DEFERRED ACQUISITION COSTS

         Deferred acquisition costs include fees paid and certain other costs in
connection with acquiring new third party administration business. These costs
have been deferred and are being charged to income over the term of the third
party administrative agreement which is four years. Amortization expense for
each of the years in the three-year period ended December 31, 2001 was $38,459,
$38,460 and $19,230, respectively.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts and related fair values of financial instruments
at December 31, 2001 and 2000 are summarized as follows:

<Table>
<Caption>
                                                             2001                                    2000
                                                -------------------------------      -----------------------------------
                                                 Carrying                                Carrying
                                                  Amount            Fair Value            Amount            Fair Value
                                                -------------  ----------------      -----------------  ----------------
<S>                                             <C>                 <C>                 <C>                 <C>
Cash and equivalents (i)                        $  472,940          $  472,940          $  463,573          $  463,573
Receivable from related parties (ii)               445,962             445,962             450,739             450,739
Receivable from third
  party administration                             510,700             510,700             596,012             596,012
</Table>

         The methods and assumptions used to estimate the fair value of
financial instruments are as follows:

         (i) The carrying amounts of cash and equivalents approximate their fair
value.

         (ii) The carrying values of receivables from related parties, and
receivables from third party administration approximate fair value because of
their short-term maturities.

         INCOME TAXES

         The Company and its subsidiaries file a consolidated federal income tax
return. Deferred income taxes reflect the future tax consequences of temporary
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year-end (see Note 10).

(CONTINUED)

                                      F-12
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

         EARNINGS (LOSS) PER SHARE

         Basic and diluted net income (loss) per common share (Class A and B)
have been computed in accordance with SFAS No. 128, "Earnings Per Share." Basic
earnings per share (basic EPS) is computed by dividing net income (loss) by the
weighted-average number of common shares outstanding during the year. Diluted
earnings per share (diluted EPS) is computed by dividing net income (loss) used
in determining basic EPS by the weighted average number of common shares
outstanding during the year, plus the incremental shares, if any, that would
have been outstanding upon the assumed exercise of dilutive stock options,
warrants and other securities.

         CASH AND EQUIVALENTS

         For purposes of the statement of cash flows, cash equivalents represent
highly liquid financial instruments with an original maturity date of three
months or less. At December 31, 2001 and 2000 cash and cash equivalents include
U.S. Treasury securities and money market accounts as follows:

<Table>
<Caption>
                                                 2001                2000
                                            ----------------    ---------------
<S>                                           <C>                 <C>
Cash in bank                                  $  413,012          $  104,502
Money market accounts                             59,928              59,071
U.S. Treasury securities                               -             300,000
                                            ----------------    ---------------
                                              $  472,940          $  463,573
                                            ================    ===============
</Table>

         REPORTING COMPREHENSIVE INCOME

         The Company recognizes other comprehensive income pursuant to SFAS No.
130. In 1999 the Company disposed of all available-for-sale securities, and
accordingly, all items of comprehensive income were reclassified to operating
income.

3.     ARISTA INSURANCE COMPANY

         CESSION OF INSURANCE BUSINESS

         In November 1998, the Company completed the assumption and transfer of
its insurance operations previously conducted by Arista pursuant to an
Assumption Reinsurance Agreement (the "Agreement") with The Guardian, effective
July 1, 1998. Under the Agreement, Arista received a cession allowance of
$3,421,486 which was calculated as 18% of Arista's adjusted earned premium for
the period July 1, 1997 to June 30, 1998. The Guardian assumed the insurance
related assets and

(CONTINUED)

                                      F-13
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

liabilities of Arista as of June 30, 1998. The cession resulted in a net gain of
$838,171, net of income taxes of $530,719. Arista discontinued writing the
Insurance effective July 1, 1998. Concurrently with the transfer of its
insurance operations to The Guardian, the Company entered into the TPA Agreement
with The Guardian effective July 1, 1998. Under the terms of the TPA Agreement,
the Company performs administrative and other services relating to the insurance
policies it previously issued, as well as other insurance policies underwritten
by The Guardian. The Company earns service fees based on both fixed and variable
percentages of premiums collected, as earned by The Guardian.

         RECAPITALIZATION

         Arista amended its Certificate of Incorporation (the "Amendment") which
was approved and placed on file with the NYSID as of December 18, 1998, and
filed with the Office of the County Clerk on December 31, 1998. The Amendment
reduced Arista's stated capital from $1,950,000 (comprised of 1,300 shares with
a par value of $1,500 per share) to $300,000 (comprised of 200 shares with a par
value of $1,500 per share) and reduced Arista's paid-in-surplus to $153,000. The
recapitalization enabled the Board of Directors of Arista to ratify the return
of capital in the amount of $2,492,000 to the Company. On January 26, 1999 the
NYSID approved Arista's return of $2,492,000 to the Company, and the transfer
was completed on January 28, 1999.

         A subsequent amendment, approved and placed on file with the NYSID as
of May 21, 1999, and filed with the Office of the County Clerk on May 13, 1999,
decreased Arista's stated capital from $300,000 (comprised of 200 shares with a
par value of $1,500 per share) to $200,000 (comprised of 200 shares with a par
value of $1,000 per share). Effective as of May 31, 1999, Arista's paid-in
surplus was adjusted to $253,000.

         EXTRAORDINARY DIVIDENDS

         In March 1999, the NYSID approved an extraordinary cash dividend of
$4,000,000 (the "March 1999 Dividend"), based on its review of Arista's December
31, 1998 Annual Statement, on the condition that there had been no event that
significantly impacted Arista's last reported surplus as regards policyholders.
The Dividend was paid to its parent company in two installments: $3,000,000 in
March 1999 and $1,000,000 in May 1999.

         In April 1999 and June 1999, the NYSID approved dividends of $1,200,000
and $150,000, respectively, based on its review of Arista's filed March 31, 1999
Quarterly Statement, on the condition that there had been no event that
significantly impacted Arista's reported March 31, 1999 surplus as regards
policyholders. The dividends of $1,200,000 and $150,000, were paid in May 1999
and June 1999, respectively.

(CONTINUED)

                                      F-14
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

         SALE OF COMMON STOCK

         As described in Note 1 above, the Company entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated as of June 15, 2001, to sell
to Delta Dental Plan of Indiana, Inc., a not-for-profit corporation, all of the
issued and outstanding shares of common stock of Arista (the "Transaction"). The
Stock Purchase Agreement contains certain representations, warranties,
conditions and indemnification provisions. The completion of the Transaction is
subject to various closing conditions, contingencies and regulatory approvals,
including, but not limited to approval from the NYSID. The parties anticipate
that the transaction will be consummated during 2002.

         Pursuant to the Stock Purchase Agreement, the purchase price shall be
equal to the sum of (i) the value of Arista's adjusted capital and surplus as of
the closing date; plus (ii) $275,000. Arista's adjusted capital and surplus as
of December 31, 2001 was approximately $344,000.

4.     TRANSACTIONS WITH RELATED PARTIES

         AGENTS

         Bernard Kooper ("Kooper"), Chairman of the Board of the Company and
Arista, and owner of 20.4% in 2001, 2000 and 1999 of the Company's outstanding
Class A and 100% of the Company's Class B common stock in 1998, is one of the
general agents marketing the Insurance. Gross premiums collected from policies
placed with The Guardian by Kooper's agency, Bernard Kooper Life Agency, Inc.
(the "Agency") aggregated $868,799, $852,930 and $993,706 for the years ended
December 31, 2001, 2000 and 1999, respectively. The Agency received
approximately $155,700, $153,800 and $177,200 in commissions based on the
premiums collected on DBL serviced by the Company for The Guardian during 2001,
2000 and 1999, respectively, for premiums on policies serviced by the Company.
Such premiums represented approximately 5.9% of the consolidated gross premiums
earned by the Guardian during the year ended December 31, 1998. The Agency, in
turn, paid approximately $110,600, $114,000 and $133,000 during 2001, 2000 and
1999, respectively, to other brokers, including approximately $10,600, $13,000
and $19,000, respectively, to brokers who are (or were) members of the Board of
Directors of Arista.

         EMPLOYMENT AGREEMENTS

         The Company and Arista had employment agreements with Kooper and
Stanley Mandel ("Mandel"), respectively, which were to terminate in February
2001 as explained in Note 6(a). The Company has entered into an employment
agreement with Mandel effective November 12, 1998, and amended October 1, 1999,
which will expire as described in Note 6(a).

(CONTINUED)

                                      F-15
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

         CONSULTING AGREEMENTS

         In July 1993 Arista entered into an agreement with a consultant for
specified services to be performed for a fee of $500 per week. The consultant
became a director of Arista in October 1994. The agreement was terminated in
January 1999. Arista paid $2,500 in 1999 under this agreement. The Company also
paid Kooper $36,000 in 2001 and $42,000 in 2000 for consulting services during
the year.

         SECURED PROMISSORY NOTE

         In June 1996 Kooper exercised a warrant granted in 1986 to acquire
365,000 shares of the Company's Class A common stock. In partial payment for the
shares, Kooper issued his secured promissory note (the "Promissory Note") to the
Company for $500,000. The Promissory Note specified interest at the one-year
London Interbank Offered Rate (LIBOR) plus 1.25% payable quarterly and was
adjusted on the first day of every October, January, April and July commencing
October 1, 1996. The principal balance outstanding and accrued but unpaid
interest was due and payable on June 14, 2001. The Promissory Note was to be
canceled if the Company exercised an option it held to obtain Kooper's 47,400
shares of Class B common stock. In May, 1999 the Company exercised the option
and acquired the 47,400 shares of Class B common stock, resulting in the
cancellation of the Promissory Note (see Note 8).

         SALARY ADVANCES

         At December 31, 2001 and 2000, salary advances to an officer and
director of the Company and Arista aggregated $50,000 and $100,000,
respectively. Such salary advances are limited to one year's compensation and
are non-interest bearing. During 1999 the Board adopted a resolution to forgive
this salary advance at the rate of $50,000 per calendar year for the calendar
years ended December 31, 1999, 2000, 2001 and 2002. For the years ended December
31, 2001 and 2000, $50,000 was forgiven in each year and charged to compensation
expense. The unamortized balances of $50,000 and $100,000 at December 31, 2001
and 2000, respectively, have been classified as "other assets" in the
accompanying balance sheets.

(CONTINUED)

                                      F-16
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

5.     LEASE COMMITMENTS

         In January 1995 the Company entered into a five-year lease for its
principal executive office space, effective June 1, 1995 through May 31, 2000.
The lease required monthly base rental payments of $16,925 plus utilities and a
proportionate share of various operating expenses. On May 9, 2000 the Company
entered into a new lease for its principal executive office space effective June
1, 2000 through May 31, 2007. This lease requires monthly base rental payments
of $33,362 through May 2002, $34,812 through May 31, 2005, and $36,263
thereafter plus utilities and a proportionate share of various operating
expenses.

         Future minimum annual lease payments for this lease for each of the
next five years and in the aggregate thereafter are as follows:

<Table>
<Caption>
    Year Ending                                Minimum
    December 31,                            Lease Payment
  ---------------                         -----------------
<S>                                         <C>
        2002                                $    410,492
        2003                                     417,744
        2004                                     417,744
        2005                                     427,898
        2006                                     435,150
     Thereafter                                  181,313
                                          -----------------
                                            $  2,290,341
                                          =================
</Table>

         Consolidated rent expense was $454,897 in 2001, $350,204 in 2000 and
$271,517 in 1999.

6.     COMMITMENTS AND CONTINGENCIES

         (a)   EMPLOYMENT AGREEMENTS

               In July 1994, Arista entered into a five-year employment
agreement with a vice president which provides for annual compensation of
$125,000 and annual reimbursement of automobile expenses of up to $9,600.
Effective with the sale and transfer of Arista's insurance business to The
Guardian on November 12, 1998, Arista assigned this employment agreement to the
Company. In addition, the Company may, but is not obligated to, pay a year-end
bonus as may be determined by the Board of Directors of the Company. In the
event of termination of the agreement by the Company, the Company must provide
severance pay in an amount ranging from 60% to 100% of annual compensation of
the vice president. The agreement also provides for a one-year covenant not to
compete predicated upon

(CONTINUED)

                                      F-17
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

the payment of $75,000 by the Company. Effective July 1, 1999 the agreement was
amended to extend the term to December 31, 2000 under the same financial
considerations. Effective October, 2001 management reduced base compensation by
15% in order to reduce total general and administrative expenses of the Company.

               Kooper and the Company had an employment contract which called
for an annual salary of $150,000 effective in February 1993 (the "Kooper
Agreement") which was to terminate in February, 2001. Similarly, Arista and
Mandel had an employment contract effective February 1993 (the "Mandel
Agreement") which called for an annual salary of $208,750 in each of the next
eight years, plus annual reimbursement of automobile expenses of $9,000 and a
nonaccountable expense allowance of $5,000, which was to terminate in February,
2001.

               The Kooper and Mandel Agreements provided that, in the event of a
consolidation, merger or sale of all or substantially all of the assets of the
Company or Arista (a "Corporate Event") the employment agreements would
terminate, and upon such termination, Kooper and Mandel would each be entitled
to receive a lump sum payout. Upon consummation of the Agreement with The
Guardian on November 12, 1998, Kooper and Mandel were entitled to receive lump
sum payouts of $861,658 and $994,619, respectively. During 1999 the Company paid
$861,658 to Kooper, and during 2001, 2000 and 1999 paid $200,000, $600,000 and
$194,619, respectively, to Mandel. At December 31, 2000 the amount due to Mandel
of $200,000 includes interest compounded monthly, at the applicable federal
short-term interest rate as provided in Section 1274(d) of the Internal Revenue
Code of 1986, as amended. Interest expense incurred on the lump sum payouts for
the years ended December 31, 2001, 2000 and 1999 was $1,301, $21,183 and
$58,380, respectively. The payouts are the maximum amounts that would not
trigger the excise tax payable in the event of an "excess parachute payment," as
such term is defined in the Internal Revenue Code of 1986, as amended.

               In addition, Arista and the Company provided split-dollar life
insurance policies in which both Kooper and Mandel participate. Under these
agreements, the Company and Arista pay the premiums on these policies for a
period of time specified in each agreement, on behalf of Kooper and Mandel. The
premium payments have been treated as loans to both Kooper and Mandel and are
collateralized by the underlying policies. Insurance loans to Kooper and Mandel
aggregated $444,390 at December 31, 2001 and 2000, and have been included in
receivables from related parties in the accompanying balance sheets.

(CONTINUED)

                                      F-18
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

               After February 16, 2001 Kooper and Mandel had the right to
receive a lump-sum retirement benefit equal to the amount of premiums paid by
Arista and the Company attributable to the cumulative increase in cash value of
the policies during the specified period of the policies. Each of Kooper's and
Mandel's employment agreements provided that, upon the occurrence of a Corporate
Event, the Company and Arista must pay to the insurance carrier such sums so as
to render as "paid up" the split-dollar life insurance policies provided to
Kooper and Mandel. Upon consummation of the Agreement with The Guardian, Arista
paid to the insurance carrier $78,133 to render Mandel's policy as "paid up." In
April 2000 the Company paid to the insurance carrier $70,518 to render Kooper's
policy as "paid-up."

               Mandel and the Company have entered into an employment contract
(the "New Mandel Agreement") which commenced November 12, 1998 and will expire
upon the termination of the TPA Agreement with The Guardian, but not later than
November 11, 2003. The New Mandel Agreement provides for an annual base salary
of $185,000 plus a nonaccountable expense allowance of $5,000 per annum.
Commencing with the fiscal year beginning January 1, 1999 and ending on December
31 of each fiscal year or portion of such fiscal year (the "Bonus Period") for
which Mandel is an employee he is to receive a bonus equal to eight percent of
the Company's annual earnings from third party administration operations before
income taxes and nonrecurring events for the bonus period.

               The New Mandel Agreement provides that, in the event of a
consolidation, merger, sale of substantially all of the assets of the Company,
or ownership of fifty percent or more of the voting common stock by one or more
individuals or entities, who are acting in concert or as an affiliated group of
which Mandel is not a participant (a "Change in Control") the employment
agreement may be either terminated, assigned by the Company or continued by the
Company or any successor or surviving corporation provided that notice of such
action is accompanied by a lump sum payment of $370,000.

               Effective October 1, 1999 the New Mandel Agreement was amended to
provide an annual base salary of $150,000, a $9,000 per annum expense allowance
for Company business related automobile costs and expenses, plus a
nonaccountable expense allowance of $5,000 per annum. This amendment also
provided that for each Bonus Period, Mandel's bonus was to be eight percent of
the Company's annual earnings from third party administration operations before
income taxes and nonrecurring events for the Bonus Period, but in no event less
than $35,000. Mr. Mandel received $35,000, $35,000 and $70,000 for the Bonus
Periods ended December 31, 2001, 2000 and 1999, respectively, pursuant to the
Agreement. Effective October, 2001 management reduced base compensations by 15%
in order to reduce total general and administrative expenses of the Company.

(CONTINUED)

                                      F-19
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

         (b)   RISK OF LOSS

               At December 31, 2001 accounts receivable and cash and equivalents
on deposit with financial institutions were in excess of federal deposit
insurance coverage by approximately $883,255.

         (c)   OTHER MATTERS

               (1) Effective July 1, 1998, the Company entered into the TPA
Agreement with The Guardian to perform administrative, agency and other services
relating to insurance as well as other disability policies previously
underwritten by The Guardian. The Company earns service fees based on both fixed
and variable percentages of collected or earned premiums for The Guardian. This
agreement replaced a prior agreement between Arista and The Guardian. The new
agreement will terminate June 30, 2003. However, The Guardian may terminate the
agreement in the event The Guardian desires to perform these services.

                     Effective January 1, 1999 the Company and The Guardian
amended the TPA Agreement to allow the Company to provide The Guardian with
third-party administrative services relating to the policies The Guardian
assumed from the Amalgamated Life Insurance Company.

               (2) Effective October 1, 2000, the Company entered into an
agreement with Highmark Life Insurance Company of New York ("Highmark") to
perform third-party administrative services relating to disability policies
underwritten by Highmark. The Company earned service fees based on both fixed
and variable percentages of collected or earned premiums for Highmark. The
initial term of the agreement was for the period beginning October 1, 2000 and
ending September 30, 2001. The agreement was terminated effective September 30,
2001.

               (3) Effective January 1, 1999, the Company entered into an
agreement with the Girl Scouts of the U.S.A. (the "Girl Scouts") to provide
third-party administrative services for the Super Statutory Disability Benefits
Insurance (the "DBL") provided by the Girl Scouts. The Company earns a fee of
$1.75 per capita per month for providing these services. The initial term of the
agreement was January 1, 1999 through December 31, 1999 with automatic renewals
for periods of twelve months thereafter. The agreement will remain in effect
until terminated by either party upon 60 days prior written notice.

               (4) Effective March 1, 1996, Arista arranged to perform
third-party administrative services for Hartford Life and Accident Insurance
Company's ("Hartford") Hawaii Temporary Disability Insurance ("TDI") policies.
Fees for these services are determined in accordance with a prescribed schedule
based on the type of service provided. The arrangement will remain in effect
until terminated by either party.

(CONTINUED)

                                      F-20
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

               (5) Effective January 1, 1995, Arista entered into an agreement
to perform third-party administrative services for the United States Life
Insurance Company. Fees for these services were determined in accordance with a
prescribed schedule based on the type of service provided. The agreement was
terminated effective June 30, 2000.

               (6) Effective April 1, 1995, the Company entered into an
agreement to perform third-party administrative services for the American
Bankers Insurance Company of Florida. Fees for these services are determined in
accordance with a prescribed schedule based on the type of service provided. The
agreement will remain in effect until terminated by either party upon 180 days
prior written notice. No services are currently being provided under this
agreement.

               (7) In order to reduce total general and administrative expenses,
effective October 1, 2001 management voluntarily reduced the annual compensation
by 10% for all officers without an employment contract.

7.     STOCK OPTIONS AND WARRANTS

         1999 NONQUALIFIED STOCK OPTION PLAN

         A Nonqualified Stock Option Plan (the "1999 Nonqualified Plan") was
approved by a majority of the Class A common stockholders in August 1999 and
became effective on January 1, 2000. The 1999 Nonqualified Plan provides for the
grant of options, until August 6, 2009, to purchase up to 350,000 shares of the
Company's Class A common stock by key employees and directors of the Company
upon terms and conditions determined by a committee (the "Committee") composed
of directors of the Company. The options are exercisable for a period of ten
years from the date of grant at either a price equal to 100% of the fair market
value of the Class A common stock at the time the option is granted, or an
amount to be determined in accordance with the procedures established by the
Committee. As of December 31, 2001 no options have been granted.

         1999 RESTRICTED STOCK PLAN

         A Restricted Stock Plan (the "1999 Restricted Stock Plan") was approved
by a majority of the Class A common stockholders in August 1999 and became
effective on January 1, 2000. The Restricted Stock Plan provides for the
issuance, until December 31, 2009, of up to 50,000 shares of Class A common
stock to key employees and directors of the Company upon terms and conditions
determined by the Board of Directors of the Company or a committee appointed by
the Board. All restricted stock purchased pursuant to the 1999 Restricted Stock
Plan must be authorized by the Board of Directors which will specify the terms
and provisions to be contained in the stock purchase agreement and/or the

(CONTINUED)

                                      F-21
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

escrow agreement to be executed by the purchaser. The Board of Directors will
determine the per share restricted stock price which shall not be less than the
par value of the Class A common stock of the Company on the date the restricted
stock is purchased. As of December 31, 2001 no shares have been issued.

8.   STOCKHOLDERS' EQUITY

        All shares of Class A and Class B common stock issued had equal rights
and privileges except that a holder of Class B shares had the additional right
to elect a majority of the Board, and the Class B common stock was convertible
at the option of the holder at any time into an equal number of shares of Class
A common stock. All shares of Class B common stock automatically converted into
an equal number of shares of Class A common stock if Kooper sold, transferred,
or in any manner conveyed, one or more shares of Class B common stock, or upon
his death, whichever event occurred earlier.

        In November 1987, the Company purchased 10,000 shares of Class A common
stock at a cost of $26,740, which are being held in treasury.

        In June 1996, Kooper and the Company entered into an agreement under
which the Company obtained an option to acquire the 47,400 shares of Class B
common stock held by Kooper. The option was exercisable by a vote of the
majority of Class A directors and the delivery to Kooper, at the Company's
option, of either 47,400 shares of Class A common stock or cash equal to the
fair market value of 47,400 shares of Class A common stock at the date of
exercise plus the cancellation of his secured promissory note (see Note 4) upon
payment by Kooper of all accrued but unpaid interest. The option would terminate
upon Kooper's death.

        On May 4, 1999, the Class A Directors of the Board of Directors of the
Company exercised the option to acquire the 47,400 shares of Class B common
stock, owned by Kooper. Upon the exercise of the option, Kooper received
$146,347.50, representing the fair market value of the Company's Class A common
stock less the $500,000.00 outstanding principal amount under the secured
promissory note, which was cancelled. In November 1999, the Class B common stock
acquired from Kooper was retired.

        DIVIDENDS FROM ARISTA TO THE COMPANY

        In February, 1999, Arista paid a dividend of $167,526 to the Company.

        As discussed in Note 3, on January 28, 1999,  Arista returned capital of
$2,492,000 to the Company.

(CONTINUED)

                                      F-22
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

        During  1999,  Arista's  Board  authorized  and the NYSID  approved  the
payment of extraordinary dividends totaling $5,350,000 to the Company.

        PARTIAL LIQUIDATING DISTRIBUTION TO STOCKHOLDERS

        On May 28, 1999 the Company issued a partial liquidating distribution of
$5,731,323, representing $2.23 per share to the stockholders of record on May
19, 1999.

        SECURITIES DELISTED

        As a result of the liquidating distribution to stockholders paid in May
1999, the Company's net tangible assets fell below the minimum required for
continued listing of the Company's securities on the NASDAQ SmallCap Market.
Effective March 30, 2000, the Company's securities were delisted from the NASDAQ
SmallCap Market and since March 30, 2000, the stock has been listed on the OTC
Bulletin Board service.

9.   PENSION PLAN

        Effective July 1, 1999 the Company adopted a 401(k) Deferred
Compensation Plan (the "Plan") which covers all employees who are at least 21
years of age with at least 6 months of service, who elect to participate.
Participating employees contribute a percentage of their compensation, as
defined, into the Plan, which is limited to an amount allowable under the
Internal Revenue Code. The Company makes a matching contribution equal to 50% of
the first 6% of compensation deposited as elective contributions. The Company's
contribution for the Plan years ended December 31, 2001, 2000 and 1999, was
$49,689, $48,433 and $21,872, respectively.

10.  INCOME TAXES

        The following is a reconciliation of the statutory U.S. Federal income
tax rate to the effective tax rate as reflected in the accompanying consolidated
statements of operations for continuing operations:

(CONTINUED)

                                      F-23
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

<Table>
<Caption>
                                                2001                         2000                         1999
                                     --------------------------- --------------------------- ---------------------------
                                                    Effective                    Effective                    Effective
                                        Amount       tax rate        Amount      tax rate        Amount       tax rate
                                     ------------ -------------- ------------- ------------- -------------- ------------
<S>                                   <C>               <C>        <C>                <C>       <C>               <C>
CONTINUING OPERATIONS:
  Income (loss) before income
    tax                               $ (133,107)                  $  242,211                   $  (10,525)
                                     ============                =============                =============
  Tax provision (benefit)
    at statutory rates                $  (45,256)       (34.0)%    $   82,352         34.0%     $   (3,579)       (34.0)%
  State franchise and local taxes,
    net of federal benefit                18,315         13.7%        41,656         17.1%         30,621        291.0%
                                     ------------ -------------- ------------- ------------- -------------- ------------
  Income tax provision (benefit)      $  (26,941)       (20.2)%    $  124,008         51.1%     $   27,042        257.0%
                                     ============ ============== ============= ============= ============== ============
</Table>

         The provision (benefit) for income taxes consists of the following at
December 31, 2001, 2000 and 1999:

<Table>
<Caption>
                                                                       2001                2000                1999
                                                                 --------------       ------------        -------------
<S>                                                               <C>                 <C>                 <C>
             Currently payable (benefit):
               Federal                                            $          -        $     66,071        $   (661,963)
               State and local                                           7,159              57,937             (70,305)
                                                                 --------------       ------------        -------------
                                                                         7,159             124,008            (732,268)
                                                                 --------------       ------------        -------------
             Deferred tax asset:
               January 1,                                                    -                   -            (778,578)
               December 31,                                            (34,100)                  -                   -
                                                                 --------------       ------------        -------------
                     Net change                                        (34,100)                  -             778,578
                                                                 --------------       ------------        -------------
             Deferred tax liability:
               January 1,                                                    -                   -              19,268
               December 31,                                                  -                   -                   -
                                                                 --------------       ------------        -------------
                     Net change                                              -                   -             (19,268)
                                                                 --------------       ------------        -------------
                     Net deferred tax effect                           (34,100)                  -             759,310
                                                                 --------------       ------------        -------------
             Total net income tax provision (benefit)             $    (26,941)       $    124,008        $     27,042
                                                                 ==============       ============        =============
</Table>

(CONTINUED)

                                      F-24
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

         Temporary differences between financial statement amounts and tax
amounts that gave rise to deferred tax assets and liabilities at December 31,
2001, 2000 and 1999 consisted of the following:

<Table>
<Caption>
                                                                       2001         2000           1999
                                                                    ----------    -----------  ------------
<S>                                                                 <C>           <C>              <C>
Deferred tax asset:
  Net operating loss carryforward                                   $   34,100    $      -         $     -
                                                                    ----------    -----------  ------------
    Net deferred tax asset                                          $   34,100    $      -         $     -
                                                                    ==========    ===========  ============
</Table>

11.  NET INCOME (LOSS) PER COMMON SHARE

       The following table reconciles the income (loss) and the weighted-average
shares used in the net income (loss) per common share calculation for the years
ended December 31, 2001, 2000 and 1999, respectively.

<Table>
<Caption>
                                                                   Net Income                                Per Share
                                                                     (Loss)               Shares               Amount
                                                               ------------------   ------------------  ------------------
<S>                                                               <C>                   <C>                  <C>
YEAR ENDED DECEMBER 31, 2001:
  Basic EPS                                                       $     (106,166)       2,570,100            $    (.04)
  Effects of dilutive securities:  None                                        -                -                    -
                                                               ------------------   ------------------  ------------------
  Diluted EPS                                                     $     (106,166)       2,570,100            $    (.04)
                                                               ==================   ==================  ==================
YEAR ENDED DECEMBER 31, 2000:
  Basic EPS                                                       $      118,203        2,570,100            $     .05
  Effects of dilutive securities:  None                                        -                -                    -
                                                               ------------------   ------------------  ------------------
  Diluted EPS                                                     $      118,203        2,570,100            $     .05
                                                               ==================   ==================  ==================
YEAR ENDED DECEMBER 31, 1999:
  Basic EPS                                                       $      (37,567)       2,587,875            $    (.01)
  Effects of dilutive securities:  None                                        -                -                    -
                                                               ------------------   ------------------  ------------------
  Diluted EPS                                                     $      (37,567)       2,587,875            $    (.01)
                                                               ==================   ==================  ==================
</Table>

(CONTINUED)

                                      F-25
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

12.  INVESTMENTS

        Pursuant to New York State insurance regulations, Arista maintains a
mandatory trust fund with the Bank of New York containing U.S. Treasury
securities with a carrying value of approximately $-0-and $300,000 at December
31, 2001 and 2000, respectively, and short-term investments of $334,025 and
$18,243 at December 31, 2001 and 2000, respectively. In 2002, a U.S. Treasury
security with a face value of $300,000 was purchased from the funds held in
short-term investments. These financial instruments are classified as cash
equivalents in the accompanying balance sheet (see Note 2).

                                INVESTMENT INCOME

        Net investment  income for the years ended  December 31, 2001,  2000 and
1999 consisted of the following:

<Table>
<Caption>
                                                                       2001                2000                1999
                                                                    ----------          ----------          ----------
<S>                                                                 <C>                 <C>                 <C>
INTEREST AND DIVIDENDS:

  Bonds and long-term investments                                   $        -          $    2,638          $   60,432
  Short-term investments                                                19,937              36,637              83,889
                                                                    ----------          ----------          ----------
        Total interest and dividends                                    19,937              39,275             144,321
                                                                    ----------          ----------          ----------
INTEREST ON NOTE RECEIVABLE FROM RELATED PARTY                               -                   -               8,206
                                                                    ----------          ----------          ----------
        Total investment income                                     $   19,937          $   39,275          $  152,527
                                                                    ==========          ==========          ==========
</Table>

        Realized and unrealized  gains and losses on  investments  for the years
ended December 31, 2001, 2000 and 1999 consisted of the following:

<Table>
<Caption>
                                                                       2001                2000                1999
                                                                    ----------          ----------          ----------
<S>                                                                 <C>                 <C>                 <C>
REALIZED GAINS (LOSSES):
  Held-to-maturity investments:
    U.S. Treasury securities                                        $        -          $        -          $   19,432
                                                                    ----------          ----------          ----------
        Total realized gains                                                 -                   -              19,432
                                                                    ----------          ----------          ----------
  Available-for-sale investments:
    Redeemable preferred securities                                          -                   -             (29,822)
    Equity securities                                                        -                   -                 (20)
                                                                    ----------          ----------          ----------
        Total realized losses                                                -                   -             (29,842)
                                                                    ----------          ----------          ----------
  Net investment losses                                             $        -          $        -          $  (10,410)
                                                                    ==========          ==========          ==========
</Table>

(CONTINUED)

                                      F-26
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

13.  STATUTORY MATTERS

        The following is a reconciliation of Arista's net stockholder's equity
and net income (loss) determined on the statutory basis of accounting required
by insurance regulation to amounts of equity and net income (loss) included in
the financial statements of Arista prepared on the basis of accounting
principles generally accepted in the United States of America for the years
ended December 31, 2001, 2000 and 1999:

<Table>
<Caption>

                                                                       2001                2000                1999
                                                                    ----------          ----------          ----------
<S>                                                                 <C>                 <C>                 <C>
Capital and surplus reported for SAP purposes                       $  723,887          $  703,031          $  716,849
Add (deduct):
  Inclusion of non-admitted assets                                     151,983             151,983             167,250
  Other, net of tax                                                                              -             (10,205)
  Prior period tax over-accrual                                       (199,963)           (202,293)           (203,295)
                                                                    ----------          ----------          ----------
        Stockholder's equity reported in
         Arista's financial statements                              $  675,907          $  652,721          $  670,599
                                                                    ==========          ==========          ==========
Net income (loss) reported for SAP purposes                         $   20,856          $  (29,085)         $  477,606
Add (deduct):
  Other, net of tax                                                          -              10,207                   -
  Realized gain on investments, net of tax                                   -                   -                 192
  Income tax expense differences                                        (3,669)              1,000            (438,145)
                                                                    ----------          ----------          ----------
        Net income (loss) reported in Arista's
         financial statements                                       $   17,187          $  (17,878)         $   39,653
                                                                    ==========          ==========          ==========
</Table>

        Arista was in compliance with the NYSID minimum statutory capital and
surplus requirement at December 31, 2001, 2000 and 1999.

        Under the New York State Insurance Law, Arista may pay dividends only
out of its statutory earned surplus. In addition, the maximum amount of
dividends that may be paid in any twelve-month period without regulatory
approval is the lesser of the adjusted net investment income or 10% of its
surplus. Arista paid a dividend of $167,526 in February 1999 (see Note 8).

        In March 1999, the NYSID approved an extraordinary cash dividend of
$4,000,000, based on their review of Arista's filed December 31, 1998 Annual
Statement, on the condition that there has been no event that has significantly
impacted upon Arista's last reported surplus as regards policyholders. In March,
1999 and May, 1999 Arista paid extraordinary cash dividends of $3,000,000 and
$1,000,000, respectively, to the Company (see Note 8).

(CONTINUED)

                                      F-27
<Page>

ARISTA INVESTORS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2001, 2000 and 1999

        On April 29, 1999 and June 8, 1999 the NYSID approved extraordinary cash
dividends of $1,200,000 and $150,000, respectively, based on their review of
Arista's Quarterly Statement filed March 31, 1999, on the condition that there
has been no event that has significantly impacted upon Arista's last reported
surplus as regards policyholders. In May 1999 and June 1999 Arista paid
extraordinary cash dividends of $1,200,000 and $150,000, respectively, to the
Company (see Note 8).

14.  INDUSTRY SEGMENTS

        Effective July 1, 1998, Arista ceded its insurance segment to The
Guardian and discontinued sales of the Insurance effective November 11, 1998.
The Company concurrently entered into a TPA Agreement with The Guardian,
effective July 1, 1998. The Company also provides third party administrative
services for other insurance companies (see Note 6). Accordingly, Arista was a
provider of third party administrative services after July 1998.

15.  MAJOR CUSTOMER

        For the years ended December 31, 2001, 2000 and 1999, third party
administrative fees from The Guardian represented approximately 90%, 96% and
98%, respectively, of the Company's total revenues. Revenues and profit and loss
by segment for the years ended December 31, 2001, 2000 and 1999 were as follows:

<Table>
<Caption>
                                                                   TPA
                                                                  Service          Consolidated
                                                                  Segment              Total
                                                              ----------------   ----------------
<S>                                                            <C>                 <C>
2001
  Gross revenues                                               $   3,848,094       $   3,848,094
  Revenues from The Guardian                                   $   3,465,831       $   3,465,831
  Loss before income taxes                                     $    (133,107)      $    (133,107)

2000
  Gross revenues                                               $   3,966,704       $   3,966,704
  Revenues from The Guardian                                   $   3,823,295       $   3,823,295
  Income before income taxes                                   $     242,211       $     242,211

1999
  Gross revenues                                               $   3,505,816       $   3,505,816
  Revenues from The Guardian                                   $   3,429,398       $   3,429,398
  Loss before income taxes                                     $     (10,525)      $     (10,525)

</Table>

                                      F-28
<Page>

ARISTA INVESTORS CORP.

SCHEDULE I
CONDENSEDFINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY)
BALANCE SHEETS

<Table>
<Caption>
                                                                                                 December 31,
                                                                                     ----------------------------------
                                                                                           2001                2000
                                                                                     -----------------  ---------------
<S>                                                                                   <C>                <C>
ASSETS

Investment in subsidiaries                                                            $       755,535    $    737,244
Cash and equivalents                                                                           69,686          75,119
Receivable under TPA service agreements                                                       510,700         596,012
Due from related party                                                                        293,978         299,484
Prepaid expenses and other assets                                                             181,287         288,780
Furniture and equipment - net                                                                  15,025          28,024
Deferred tax asset                                                                          1,045,000         993,120
                                                                                     -----------------  ---------------
        Total assets                                                                  $     2,871,211    $  3,017,783
                                                                                     =================  ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Accounts payable and accrued expenses                                               $       573,821    $     469,405
  Payable to related party                                                                          -          200,000
  Due to subsidiaries, net                                                                  1,381,868        1,341,803
                                                                                     -----------------  ---------------
        Total liabilities                                                                   1,955,689        2,011,208
Stockholders' equity                                                                          915,522        1,006,575
                                                                                     -----------------  ---------------
        Total liabilities and stockholders' equity                                    $     2,871,211    $   3,017,783
                                                                                     =================  ===============
</Table>

STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                                 Years Ended December 31,
                                                                  -----------------------------------------------------
                                                                       2001                2000                1999
                                                                  ---------------   -----------------  ----------------
<S>                                                               <C>                 <C>                 <C>
Revenue:
  Third party administrative services                             $  3,938,331        $  3,966,039        $  3,496,066
  Investment income                                                      7,926              16,016              41,784
                                                                  ---------------   -----------------  ----------------
                                                                     3,946,257           3,982,055           3,537,850
Expenses:
  General and administrative expenses                                4,106,778           3,708,606           3,619,519
                                                                  ---------------   -----------------  ----------------
      Income (loss) from operations before income tax
        benefits and equity in net income (loss) of
        subsidiaries                                                  (160,521)            273,449             (81,669)
Income tax expense (benefits)                                          (49,663)            135,200              (4,449)
                                                                  ---------------   -----------------  ----------------
      Income (loss) from operations before equity
        in net income (loss) of subsidiaries                          (110,858)            138,249             (77,220)
Equity in net income (loss) of subsidiaries                             19,787             (20,046)             39,653
                                                                  ---------------   -----------------  ----------------
      Net income (loss)                                           $    (91,071)       $    118,203        $    (37,567)
                                                                  ===============   =================  ================
</Table>

The accompanying condensed financial information should be read in conjunction
with the consolidated financial statements and notes thereto of Arista Investors
Corp. as of December 31, 2001 and 2000 and for each of the three years in the
period ended December 31, 2001.

(CONTINUED)

                                      S-1
<Page>

ARISTA INVESTORS CORP.

SCHEDULE I (CONTINUED)
CONDENSEDFINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY)
STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                                 Years Ended December 31,
                                                                 ------------------------------------------------------
                                                                       2001                2000                1999
                                                                 ----------------  ------------------  ----------------
<S>                                                               <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                               $    (91,071)       $    118,203        $    (37,567)
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Depreciation                                                        12,999              19,905              39,340
    Equity in net income (loss) of subsidiaries                        (19,787)             20,046             (39,653)
    Amortization of deferred acquisition costs                          38,459              38,460              19,230
    Increase (decrease) in assets and liabilities:
      investment In subsidiary                                           1,500                   -                   -
      Receivable from third party administration                        85,312             478,127            (325,342)
      Due to subsidiaries                                               40,065             (42,547)         (2,295,004)
      Due from related party                                             5,506             115,927            (189,826)
      Prepaid expenses and other assets                                 69,048             (74,475)           (113,742)
      Deferred tax asset                                               (51,880)             91,240             (17,526)
      Accounts payable and accrued expenses                            104,416             (91,916)            689,390
      Payable to related party                                        (200,000)           (600,000)         (1,056,277)
                                                                 ----------------  ------------------  ----------------
        Net cash provided by (used in)
         operating activities                                           (5,433)             72,970          (3,326,977)
                                                                 ----------------  ------------------  ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Furniture and equipment acquired                                           -              (3,080)             (8,482)
                                                                 ----------------  ------------------  ----------------
        Net cash used in investing activities                                -              (3,080)             (8,482)
                                                                 ----------------  ------------------  ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:

  Acquisition of Convertible Class B common stock                            -                   -            (146,347)
  Dividend from subsidiary                                                   -                   -           5,517,526
  Return of capital from subsidiary                                          -                   -           2,492,000
  Partial liquidating distribution                                           -                   -          (5,731,323)
                                                                 ----------------  ------------------  ----------------
        Net cash provided by financing activities                            -                   -           2,131,856
                                                                 ----------------  ------------------  ----------------
        Increase (decrease) in cash and equivalents                     (5,433)             69,890          (1,203,603)

CASH AND EQUIVALENTS:

  Beginning of year                                                     75,119               5,229           1,208,832
                                                                 ----------------  ------------------  ----------------
  End of year                                                     $     69,686        $     75,119        $      5,229
                                                                 ================  ==================  ================
</Table>

(CONTINUED)

                                      S-2
<Page>

ARISTA INVESTORS CORP.

SCHEDULE I (CONTINUED)
CONDENSEDFINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY)
STATEMENTS OF CASH FLOWS (CONTINUED)

<Table>
<Caption>
                                                                                 Years Ended December 31,
                                                                    --------------------------------------------------
                                                                       2001                2000                1999
                                                                    --------------  -----------------  ---------------
<S>                                                                 <C>                 <C>                 <C>
SUPPLEMENTAL CASH FLOW DISCLOSURES:
  Cash paid during the year for:

    Income taxes                                                    $    3,999          $   32,479          $   23,855
                                                                    ==============  =================  ===============
    Interest                                                        $    3,508          $   22,817          $   59,082
                                                                    ==============  =================  ===============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES:
  The Company canceled a note and acquired Convertible
    Class B common stock as follows:

    Cancellation of secured promissory note receivable              $        -          $        -          $  500,000
    Acquisition of Convertible Class B  common stock                         -                   -            (646,437)
                                                                    --------------  -----------------  ---------------
        Cash paid                                                   $        -          $        -          $ (146,437)
                                                                    ==============  =================  ===============
</Table>

The accompanying condensed financial information should be read in conjunction
with the consolidated financial statements and notes thereto of Arista Investors
Corp. as of December 31, 2001 and 2000 and for each of the three years in the
period ended December 31, 2001.

(CONTINUED)

                                      S-3
<Page>

ARISTA INVESTORS CORP.

SCHEDULE I (CONTINUED)
CONDENSEDFINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001, 2000 and 1999

1.   BASIS OF PRESENTATION

        Pursuant to the rules and regulations of the Securities and Exchange
Commission, the Condensed Financial Information of the Registrant does not
include all of the information and notes normally included with financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America. It is therefore suggested that these condensed
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report as
referenced in Form 10-K, Part II, Item 8, pages F-1 to F-28.

2.   CASH DIVIDENDS FROM SUBSIDIARY

        On January 28, 1999 Arista returned capital of $2,492,000 as authorized
by Arista's Board of Directors and approved by the NYSID.

         Arista paid dividends to the Company in the amount of $167,526 in
February 1999. Also during 1999 Arista's Board authorized and the NYSID approved
the payment of extraordinary dividends totaling $5,350,000 to the Company.

3.   PARTIAL LIQUIDATING DISTRIBUTION TO STOCKHOLDERS

        On May 28, 1999 the Company issued a partial liquidating distribution of
$2.23 per share to the stockholders of record on May 19, 1999. The partial
liquidation distribution paid aggregated $5,731,323.

SEE INDEPENDENT AUDITORS' REPORT.

                                      S-4
<Page>

ARISTA INVESTORS CORP.

SCHEDULE II
SUPPLEMENTAL SEGMENT INFORMATION

Years Ended December 31, 2001 and 2000

<Table>
<Caption>
                                                      Future
                                                      Policy                       Other
                                                     Benefits,                     Policy
                                       Deferred       Losses,                    Claims and                      Net
                                        Policy      Claims and      Unearned      Benefits       Premium      Investment
              Segment                Acquisition   Loss Expenses    Premiums      Payable        Revenue        Income
             Column A                  Column B      Column C       Column D      Column E      Column F       Column G
-----------------------------------  ------------  -------------  ------------  ------------ -------------  --------------
<S>                                   <C>          <C>              <C>           <C>         <C>            <C>
               2001

Disability insurance                  $       -    $           -    $       -     $       -   $         -    $         -

Property and casualty                         -                -            -             -             -              -

Third-party administrative service            -                -            -             -     3,848,094         19,937
                                     ------------  -------------  ------------  ------------ -------------  --------------
                                      $       -    $           -    $       -    $        -   $ 3,848,094    $    19,937
                                     ============  =============  ============  ============ =============  ==============
               2000

Disability insurance                  $       -    $           -    $       -    $        -   $         -    $         -

Property and casualty                         -                -            -             -             -              -

Third-party administrative service            -                -            -             -     3,966,704         39,275
                                     ------------  -------------  ------------  ------------ -------------  --------------
                                      $       -    $           -    $       -    $        -   $ 3,966,704    $    39,275
                                     ============  =============  ============  ============ =============  ==============

<Caption>
                                        Benefits,    Amortization
                                         Claims,     of Deferred
                                       Losses and       Policy        Other
                                       Settlement    Acquisition    Operating      Premiums
              Segment                   Expenses        Costs        Expenses       Written
             Column A                   Column H       Column I      Column J      Column K
----------------------------------   -------------  -------------   -----------   -----------
<S>                                  <C>            <C>             <C>           <C>
               2001

Disability insurance                 $         -    $          -    $        -    $        -

Property and casualty                          -               -             -             -

Third-party administrative service             -               -     4,134,294             -
                                     -------------  -------------   -----------   -----------
                                     $         -    $          -    $4,134,294    $        -
                                     -------------  -------------   -----------   -----------
               2000

Disability insurance                 $         -    $          -    $        -    $        -

Property and casualty                          -               -             -             -

Third-party administrative service             -               -     3,773,390             -
                                     -------------  -------------   -----------   -----------
                                     $         -    $          -    $3,773,390    $        -
                                     -------------  -------------   -----------   -----------
</Table>

SEE INDEPENDENT AUDITORS' REPORT.

                                      S-5