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, 1999
                                       OR

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

                          Commission File Number 0-631

                            WEBFINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)
          Delaware                                             56-2043000
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                        150 East 52nd Street, 21st Floor
                               New York, New York  10022
             (Address and zip code of principal executive offices)

                                  877-431-2942
              (Registrant's telephone number, including area code)

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

                                 TITLE OF CLASS:
                         COMMON STOCK, $.001 PAR VALUE
     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
                                Yes  [X]  No  [  ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K.                             [X]

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be filed by  Sections  12, 13, or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
                                Yes  [X]  No [  ]

     Aggregate  market  value of  Common  Stock  held by  non-affiliates  of the
Registrant  as of March 23, 2000 was  $8,057,900,  which  value,  solely for the
purposes of this  calculation,  excludes shares held by  Registrant's  officers,
directors,  and  their  affiliates.  Such  exclusion  should  not  be  deemed  a
determination by Registrant that all such  individuals are, in fact,  affiliates
of the  Registrant.  The number of shares of Common Stock issued and outstanding
as of March 23, 2000 was 4,349,996.

                      DOCUMENTS INCORPORATED BY REFERENCE:
     Definitive  proxy  statement  to be filed  pursuant  to  Regulation  14A in
connection with the 2000 Annual Meeting of Stockholders, Part III.
<PAGE>
                   WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                               TABLE OF CONTENTS

                                                PART I                  Page No.

Item 1.    Business                                                          1

Item 2.    Properties                                                        4

Item 3.    Legal Proceedings                                                 4

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

                                    PART II

Item 5.    Market for Registrant's Common Stock
           and Related Security Holder Matters                               5

Item 6.    Selected Financial Data                                           6

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

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk        9

Item 8.    Financial Statements and Supplementary Data                       9

Item 9.    Changes In and Disagreements With Accountants
           on Accounting and Financial Disclosure                            9

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant               10

Item 11.   Executive Compensation                                           10

Item 12.   Security Ownership of Certain Beneficial Owners
           and Management                                                   10

Item 13.   Certain Relationships and Related Transactions                   10

                                    PART IV

Item 14.   Exhibits, Financial Statement Schedules,
           and Report on Form 8-K                                           11

Signatures                                                                  12


<PAGE>
                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                                     PART I

Item 1. BUSINESS

OVERVIEW

     WebFinancial  Corporation (formerly Rose's Holdings,  Inc.) (the "Company")
is a Delaware corporation,  incorporated in 1997 to act as a holding company for
Rose's  Stores,  Inc.,  an  operator  of  general  merchandise  discount  stores
("Stores") and a wholly owned subsidiary of the Company.

     On  December  2,  1997,  the  Company   consummated  the  sale  to  Variety
Wholesalers,  Inc. ("Variety") of all of the outstanding capital stock of Stores
(the "Sale")  pursuant to a stock  purchase  agreement,  dated as of October 24,
1997,  between the Company and Variety  (the "Stock  Purchase  Agreement").  The
total purchase price for the Sale was $19,200,000,  including $1,920,000,  which
was placed in escrow.  The  proceeds  of the Sale,  net of certain  transaction,
closing, and other costs, were $15,331,000 (including the escrow).

     On August 31, 1998, the Company,  through  WebFinancial Holding Corporation
("Holding"),  (formerly Rose's International, Inc.) a newly formed, wholly-owned
Delaware subsidiary,  acquired 90% of the outstanding common stock of WebBank, a
Utah industrial loan corporation,  pursuant to an assignment (the  "Assignment")
from  Praxis  Investment  Advisers,  LLC,  a Nevada  limited  liability  company
("PIA"),  of a stock purchase  agreement,  dated January 20, 1998 (the "Purchase
Agreement"),  between PIA and Block Financial Corporation ("Block"), relating to
the purchase by PIA of all of the issued and outstanding  shares of common stock
of WebBank.  Pursuant to the Assignment,  the Company paid Block  $4,783,000 for
the shares of WebBank's  common stock to be purchased from Block pursuant to the
Purchase Agreement. In addition, the Company paid $288,000 in acquisition costs,
for a total purchase price of $5,071,000.

     On August 31, 1998, the Company formed Praxis Investment Advisers,  Inc., a
Delaware  corporation  ("Praxis") that together with Holding and Andrew Winokur,
the  holder  of the 10% of  Praxis  not  owned by the  Company,  entered  into a
management  agreement (the  "Management  Agreement").  The Management  Agreement
provided that Praxis may make recommendations to and consult with the management
and board of directors of WebBank about the deployment of WebBank's capital, the
development  of  its  business   lines,   its  acquisition  of  assets  and  its
distributions to its stockholders.

     On May 26, 1999, the Company formed WebFinancial  Government Lending, Inc.,
a Delaware corporation ("Lending"),  as a wholly-owned subsidiary of the Company
to concentrate on holding and servicing U.S. Department of Agriculture  ("USDA")
Loans.  On August 11,  1999,  Web Film  Finance,  Inc.,  a Delaware  corporation
("Film")  was formed as a  wholly-owned  subsidiary  of  Lending to finance  the
production  and  distribution  of a  motion  picture.  The only  motion  picture
commitment  expired on December  30,  1999,  and the  Company  has  subsequently
determined to liquidate Film.

     During the first quarter of 2000, management began winding down Praxis with
the intention of liquidating  that  subsidiary by June 30, 2000. The Company has
received  approval of the Department of Financial  Institutions  of the State of
Utah to cause  Lending  to  become  a  direct  subsidiary  of  WebBank  and that
transaction is expected to be completed in 2000.

     The principal executive offices of the Company are located at 150 East 52nd
Street, 21st Floor, New York, New York 10022.

DESCRIPTION OF BUSINESS

     The Company  through its  subsidiaries  operates in niche banking  markets.
WebBank  provides   commercial  and  consumer  specialty  finance   transactions
utilizing U.S. Government credit enhancement.  The benefits of WebBank's special
charter allow it to "export" Utah's regulatory environment (interest rates, late
charges,  and prepayment fees, etc.) to forty-eight  other states.  WebBank is a
small,  business  oriented  institution,  which is FDIC insured and examined and
regulated  by the State of Utah's  Department  of  Financial  Institutions.  The
business plan of WebBank represents a non-traditional approach to growing within
the  context  of the  regulatory  standards  of safety  and  soundness.  Prudent
business goals and  protection of WebBank's  charter are the key elements of the
Company's business strategy for WebBank. Pursuant to this strategy,  WebBank has
focused on several lines of business as described below:

        PRIVATE LABEL CREDIT CARD processing is a highly competitive product and
service that WebBank is actively  pursuing  based on its relative small size and
significant  staff  experience that allows WebBank to offer customized and rapid
service as well as Utah's favorable banking environment. Recently, WebBank began
issuing  credit  cards for part of the  recreation  vehicle  division of a large
multinational  company and expects to expand  services to other segments of that
division.

        E-COMMERCE CREDIT CARD processing  represents a variation on the private
label credit card but is in effect a new  business  line because it involves the
creation of a "Virtual  Credit Card" or an account  debiting  system peculiar to
the needs of the Internet. WebBank recently announced that it is partnering with
a California  based  E-commerce  company to provide  E-tailers with a secure and
proprietary  system for their customers to access and safely complete  purchases
of large ticket items directly through the popular "drop-ship" method.

        USDA BUSINESS AND INDUSTRY  LENDING is a commercial  loan product 70% to
90% guaranteed by the full faith and credit of the Federal  government for up to
$10  million.  The  loan  program  administered  by  the  U.  S.  Department  of
Agriculture  is to  assist  businesses  located  in rural  areas  (under  50,000
population) to promote industrial  modernization and job creation. The Company's
subsidiary, Lending, makes, acquires, sells and services USDA loans and is being
repositioned  as a direct  subsidiary  of  WebBank  to  enhance  efficiency  and
profitability.

        STRUCTURED  SETTLEMENT  LENDING  is a form of  lending  which is  highly
secure and gives  customers the  opportunity  to cash in long-term  annuities or
payment  streams that are subjects of financial  settlements to allow the owners
of such  settlements  access  to the true  current  value of their  award.  This
program is expanding and is a fee for service oriented  business with the entire
purchased cash stream sold to a third party shortly after the purchase.

        PAYDAY ADVANCE  processing is aimed at 4 or 5 of the national  companies
involved in the payday advance  business.  WebBank expects to either  securitize
and sell or sell  outright the  receivables  generated by this line of business.
Consequently,  WebBank expects that it will not retain any residual  interest in
its current or future receivables and that this will solely be a fee for service
business.

     The Company continues to evaluate its different business lines and consider
various  alternatives  to maximize the  aggregate  value of its  businesses  and
increase  stockholder  value.  Some  of  these  alternatives  include  selective
acquisitions,  divestitures or the  discontinuance of an existing business line.
Various alternatives may be implemented from time to time.

COMPETITION

     The banking and  financial  services  industry is highly  competitive.  The
increasingly  competitive  environment  is a  result  primarily  of  changes  in
regulation,  changes  in  technology  and  product  delivery  systems,  and  the
accelerating  pace of  consolidation  among financial  services  providers.  The
Company,  through its subsidiaries,  competes for loans, deposits, and customers
with other  commercial  banks,  savings and loan  associations,  securities  and
brokerage companies, mortgage companies, insurance companies, finance companies,
money  market  funds,   credit  unions,  and  other  nonbank  financial  service
providers.  Many of these  competitors  are much  larger  in  total  assets  and
capitalization, have greater access to capital markets and offer a broader range
of financial services than the Company. In addition,  recent federal legislation
may have the effect of further  increasing the pace of consolidation  within the
financial services industry.

REGULATION

     WebBank is subject to various regulatory capital requirements  administered
by the federal banking  agencies.  Failure to meet minimum capital  requirements
can initiate  certain  actions by regulators  that, if undertaken,  could have a
direct material effect on WebBank's financial statements. Under capital adequacy
guidelines and the regulatory  framework for prompt corrective  action,  WebBank
must meet specific  capital  guidelines that involved  quantitative  measures of
WebBank's assets, liabilities, and certain off-balance sheet items as calculated
under   regulatory   accounting   practices.   WebBank's   capital  amounts  and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

     Quantitative  measures established by regulation to ensure capital adequacy
require  WebBank  to  maintain  minimum  amounts  and ratios of Total and Tier I
capital (as defined in the  regulations) to  risk-weighted  assets (as defined),
and of Tier I capital (as  defined) to average  quarterly  assets (as  defined).
Management  believes,  as of December 31, 1999 and 1998 that  WebBank  meets all
capital adequacy requirements to which it is subject.

     As of December  31, 1999 and 1998,  the most recent  notification  from the
FDIC categorized  WebBank as "well capitalized" under the regulatory  framework.
To be categorized as "well capitalized"  WebBank must maintain certain Total and
Tier I capital to risk-weighted  assets and Tier I capital to average  quarterly
assets ratios.  There are no conditions or events since that  notification  that
management  believes  have changed  WebBank's  category.  See Footnote 18 to the
Consolidated Financial Statements contained elsewhere in this document.

EMPLOYMENT

     Total active  employment  of the Company at December 31, 1999,  totaled 12,
all of whom were  salaried  employees.  The Company  believes  that its employee
relations are satisfactory.

RISK FACTORS

     The  following  discusses  certain  factors  which may affect the Company's
financial  results and  operations  and should be considered  in evaluating  the
Company.

        INTEREST RATES. The Company's earnings are impacted by changing interest
rates.  Changes  in  interest  rates  impact  the level of loans,  deposits  and
investments,  the credit profile of existing loans,  the rates received on loans
and  securities  and the rates paid on  deposits  and  borrowings.  The  Company
anticipates  that  interest  rates may  continue to increase  should the Federal
Reserve Board  continue to raise rates.  However,  significant  fluctuations  in
interest rates may have an adverse affect on the Company's  financial  condition
and results of operations.

        GOVERNMENT  REGULATION  AND  MONETARY  POLICY.  The banking  industry is
subject to extensive federal and state  supervision and regulation.  Significant
new laws or changes in existing  laws, or repeals of existing laws may cause the
Company's  results  to differ  materially.  Further,  federal  monetary  policy,
particularly as implemented  through the Federal  Reserve System,  significantly
affects  credit  conditions  for the  Company  and a  material  change  in these
conditions  could  have a material  adverse  impact on the  Company's  financial
condition and results of operations.

        COMPETITION.  The  banking  and  financial  services  businesses  in the
Company's lines of business are highly competitive. The increasingly competitive
environment  is a result of changes in  regulation,  changes in  technology  and
product  delivery  systems,  and the accelerating  pace of  consolidation  among
financial  services  providers.  The  results  of  the  Company  may  differ  if
circumstances affecting the nature or level of competition change.

        CREDIT QUALITY. A source of risk arises from the possibility that losses
will be sustained because borrowers,  guarantors and related parties may fail to
perform in  accordance  with the terms of their  loans.  The Company has adopted
underwriting and credit monitoring procedures and credit policies, including the
establishment  and review of the allowance for credit  losses,  that  management
believes are  appropriate  to minimize this risk by assessing the  likelihood of
nonperformance,  tracking loan performance and diversifying the Company's credit
portfolio.  These policies and procedures,  however,  may not prevent unexpected
losses that could have a material adverse effect on the Company's results.

        NON-BANKING  ACTIVITIES.  The Company may expand its operations into new
non-banking activities in 2000. Although the Company has experience in providing
bank-related  services,  this  expertise may not assist us in our expansion into
non-banking activities. As a result, we may be exposed to risks associated with,
among other things,  (1) a lack of market and product  knowledge or awareness of
other  industry  related  matters  and (2) an  inability  to attract  and retain
qualified employees with experience in these non-banking activities.

        YEAR 2000 COMPLIANCE.  Most of the Company's operations are dependent on
the  efficient  functioning  of the  Company's  computer  systems and  software.
Computer system failures or disruption  could have a material  adverse effect on
the Company's  financial  condition and results of  operations.  As of March 23,
2000,  WebBank  experienced  no problems  with  respect to Year 2000  technology
issues. This does not mean that some problems may not occur in the future.

        PROPOSED  LEGISLATION.  From time to time,  various types of federal and
state legislation have been proposed that could result in additional  regulation
of, and modifications of restrictions on, the business of the Company. It cannot
be predicted whether any legislation  currently being considered will be adopted
or how such  legislation or any other  legislation  that might be enacted in the
future would affect the business of the Company.

        OTHER RISKS.  From time to time,  the Company  details  other risks with
respect  to its  business  and/or  financial  results  in its  filings  with the
Commission.

Item 2. PROPERTIES

     As of March 31, 1998, the Company entered into a sub-lease for office space
with  Gateway  Industries,  Inc.  ("GWAY")  for use of such space as a corporate
office on a non-exclusive basis. This lease runs through March 31, 2001, and may
be  terminated  by either  party  with 90 days  notice.  Mr.  Lichtenstein,  the
Company's President and Chief Executive Officer, is the Chairman of the Board of
Directors and Chief Executive Officer of GWAY. Mr. Lichtenstein is also the sole
managing  member of the General  Partner of Steel  Partners II, L.P.  which owns
approximately  48% of the common stock of GWAY.  Steel Partners  Services,  Ltd.
("SPS"),  which is owned  by an  entity  controlled  by Mr.  Lichtenstein,  also
subleases  part of the office space from GWAY. In 1998,  the rent charged to the
Company was approximately $2,700 a month and in 1999, the rent was included in a
management fee charged by SPS to the Company.

     As of March 20, 2000, WebBank entered into a lease for 4,630 square feet of
office space in Salt Lake City, Utah with a monthly rent of $8,488.33. The lease
runs through March 19, 2005.

     Lending  currently  leases 500 square feet of office  space in St.  Helena,
California for $1,200 per month. This lease runs through January 31, 2001.

Item 3. LEGAL PROCEEDINGS

     In January 2000, Andrew Winokur, a former executive officer and director of
one of the Company's subsidiaries, Praxis, filed a lawsuit in the Superior Court
of the State of  California,  County of Napa  against  the  Company,  Praxis and
Holdings.  The lawsuit alleges that Praxis has breached its employment agreement
with Mr. Winokur. The lawsuit also asserts claims for interference with contract
and unjust  enrichment  based upon the  purported  wrongful  termination  of Mr.
Winokur's  employment  contract  with Praxis.  The lawsuit  seeks  damages of an
unspecified  amount  and  compliance  by  Praxis  with the  termination  pay out
provisions in Mr.  Winokur's  employment  agreement  relating to purchase of Mr.
Winokur's 10% interest in Praxis and WebBank (both 90% owned subsidiaries of the
Company)  at their fair  market  value.  The time for the  Company to answer and
assert  Counterclaims in this matter has not yet expired. The Company and Praxis
deny that Praxis  wrongfully  terminated Mr. Winokur's  employment and intend to
vigorously  defend this  matter.  The Company does not believe that this lawsuit
will have a  material  adverse  impact on its  financial  condition,  results of
operations or liquidity.

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

     None.
<PAGE>
                   WEBFINANCIAL CORPORATION AND SUBSIDIAREIES

                                     PART II

Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

     The Common  Stock was listed on the Nasdaq  National  Market  System  until
March 11, 1998, at which time the Common Stock was delisted  because the Company
had no  commercial  operations.  From March 11,  1998 until  August 22, 1999 the
Common Stock traded on the NASD OTC Bulletin  Board (symbol "RSES" which changed
to "WEFN").  Beginning  August 22, 1999 the Company's Common Stock was listed on
the NASDAQ  Small Cap  Market.  The  Company had 197 holders of record of Common
Stock on March 23, 2000. High and low prices of the Common Stock, as reported on
the NASDAQ OTC  Bulletin  Board and the NASDAQ Small Cap Market are shown in the
table below. Such prices represent  quotations  between  broker-dealers,  do not
include retail  mark-ups,  mark-downs or  commissions,  and may not  necessarily
reflect prices in actual transactions.


                                    Year Ended              Year Ended
                                 December 31, 1999       December 31, 1998
                                 -----------------       -----------------
                                 High          Low       High          Low
1st Quarter                       6.10         4.10       3 1/8        3  7/46
2nd Quarter                      45            5 1/16     3 5/8        3  5/8
3rd Quarter                       9            5 5/16     4 3/16       4
4th Quarter                       8.29         5 1/16     6            5 27/32


     The Company paid no dividends on its Common Stock in 1999 or 1998.

     The Company intends to retain any future earnings for working capital needs
and to finance  potential  future  acquisitions and presently does not intend to
pay cash dividends on its Common Stock for the foreseeable future.
<PAGE>
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

     The following  table  summarizes  certain  selected  financial  data of the
Company  and  should  be read  in  conjunction  with  the  related  Consolidated
Financial  Statements  of the Company  and  accompanying  Notes to  Consolidated
Financial Statements included elsewhere herein.

<TABLE>
<CAPTION>
      (Amounts in thousands except per share amounts.  Not covered by Independent Auditors' Report)

                                           Eleven-                                Successor    Predecessor
                                            Month                                 Restated      Restated
                               Year        Period          Year         Year     Thirty-Nine    Thirteen
                              Ended         Ended         Ended        Ended     Weeks Ended   Weeks Ended
                           December 31,  December 31,  January 31,  January 25,  January 27,    April 29,
                               1999          1998         1998(1)      1997(2)      1996(2)      1995(2)
                           -------------------------------------------------------------------------------
<S>                        <C>            <C>           <C>         <C>           <C>           <C>
Net interest income before
  provision for loan loss  $    847           676           418            -            -             -

Other operating income        1,567             -             -            -            -             -

Net income (loss) before
  minority interest          (1,744)         (774)      (25,538)         380        4,401        70,187

Loss attributable to
  minority interests            134            59             -            -            -             -
                            -------       -------       -------      -------      -------       -------
Net income (loss)          $ (1,610)         (715)      (25,538)         380        4,401        70,187
                            =======       =======       =======      =======      =======       =======
Net earnings (loss) per
  common basic share          (0.37)        (0.17)        (5.91)         .04          .51          3.74

Consolidated Balance       December 31,  December 31,   January 31,
Sheet Data:                    1999          1998          1998
                               ----          ----          ----
Cash, cash equivalents
  and marketable
  investment securities    $  8,124        10,762        15,385

Loans                        10,396         1,081            --

Total assets                 21,240        15,980        15,408

Deposits                      4,889           105            --

Stockholders' equity         13,435        14,687        15,402
----------------------------
<FN>
(1) On December 2, 1997, the Company sold all of the outstanding stock of Stores its sole operating
    entity.  The operating results of Stores prior to the consummation of the sale are shown as
    earnings or loss of discontinued business.  The loss resulting from the sale is shown as loss from
    disposal of discontinued operation.

(2) On September 5, 1993, Stores filed a voluntary petition for Relief under Chapter 11, Title 11 of
    the United States Bankruptcy Court for the Eastern District of North Carolina (the "Bankruptcy
    Court").  Stores Modified and Restated First Amended Joint Plan of Reorganization ( the "Plan")
    was approved by Order of the Bankruptcy Court on April 24, 1995.  On April 28, 1995, the Plan
    became effective.
</FN>

</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

OVERVIEW

     The  Company was  incorporated  in August  1997 as a holding  company.  The
former name of the Company, Rose's Holdings,  Inc., was changed by a vote of the
stockholders  at the annual  meeting on June 15,  1999.  In December  1997,  the
Company divested itself of Stores, then its only operating subsidiary. On August
31, 1998, the Company acquired a 90% interest in WebBank, a Utah industrial loan
corporation,  and Praxis.  Praxis,  based in St.  Helena,  California,  provided
research  and   development  in  creating   financial   products,   followed  by
implementing  practical realization of those products.  During May 1999, Lending
was  incorporated as a wholly-owned  subsidiary of the Company to concentrate on
holding and servicing U.S.  Department of Agriculture Loans. On August 11, 1999,
Film  was  formed  as a  wholly-owned  subsidiary  of  Lending  to  finance  the
production  and  distribution  of a  motion  picture.  The only  motion  picture
commitment  expired on December  30,  1999,  and the  Company  has  subsequently
determined to liquidate  Film. All expenses  related to Film were either accrued
or paid in 1999.

     During the first quarter of 2000 management  began winding down Praxis with
the  intention of  liquidating  that  subsidiary  by  June 30, 2000.  Management
doesn't  anticipate  significant  expenses  related  to  Praxis  during  2000 or
thereafter.  The Company has received  approval of the  Department  of Financial
Institutions of the State of Utah to cause Lending to become a direct subsidiary
of WebBank and that transaction is expected to be completed in 2000.

     The Company  through its  subsidiaries  operates in niche banking  markets.
WebBank  provides   commercial  and  consumer  specialty  finance   transactions
utilizing U.S. Government credit enhancement in certain instances.  The benefits
of WebBank's special charter allow it to "export" Utah's regulatory  environment
(interest rates,  late charges,  and prepayment fees, etc.) to forty-eight other
states. WebBank is a small, business oriented institution, which is FDIC insured
and  examined  and  regulated  by the State of Utah's  Department  of  Financial
Institutions. The business plan of WebBank represents a non-traditional approach
to growing a highly successful profitable  institution within the context of the
regulatory  standards  of  safety  and  soundness.  Prudent  business  goals and
protection of WebBank's  charter are the key elements of the Company's  business
strategy for WebBank. Pursuant to this strategy,  WebBank has focused on several
lines of business as described elsewhere in this document.

     In 1998,  the  Company  changed  its  fiscal  year end from  January  31 to
December 31, and has presented financial results for the year ended December 31,
1999,  the eleven  month-period  ended  December  31,  1998,  and the year ended
January 31, 1998.

RESULTS OF OPERATIONS

     The year ended December 31, 1999 compared to the eleven-month  period ended
December 31, 1998 and the year ended January 31, 1998.

     Interest  income for Fiscal 1999  increased to $1,022,000  from $676,000 in
eleven month fiscal 1998 and $418,000 for the year ended January 31, 1998.  This
increase in the interest income is primarily due to growth in the loan portfolio
at WebBank and Lending.  The portfolio  grew from $0 at January 31, 1998 to $1.1
million at December 31, 1998 to $10.9 million at December 31, 1999. The majority
of the  growth  was in the  USDA  Business  &  Industry  loan  portfolio,  which
consisted predominantly of the retained, unguaranteed portions of USDA loans.

     Interest expense for the year ended December 31, 1999 increased to $179,000
from $0 in the  eleven-month  period ended  December 31, 1998 and the year ended
January 31, 1998.  Interest expense  increased  chiefly due to the growth in the
interest-bearing  time  certificates  of deposit at  WebBank.  The  certificates
principal  balance  grew from  zero at  December  31,  1998 to $4.6  million  at
December 31, 1999.  WebBank's purpose in growing the certificates was to provide
financing for the loan portfolio.

     Other operating  income increased to $1,571,000 for the year ended December
31, 1999 from zero for the eleven  month-period  ended December 31, 1998 and the
year ended  January 31, 1998.  The  majority of the increase in other  operating
income was from  premiums  earned on the sale of the  guaranteed  portion of the
USDA loans and fee income  earned on  structured  settlement  lending and payday
advance lending.

     Total operating expenses, which consists of expenses for salaries,  general
and  administrative,  professional  fees,  broker fees,  facilities  rentals and
amortization,  increased to $3,683,000 for the year ended December 31, 1999 from
$1,450,000 for the eleven-month  period ended December 31, 1998 and $347,000 for
the year ended January 31, 1998. Total operating  expenses  increased  primarily
due to expanding  business  activity and continuing  search and  negotiation for
additional suitable subsidiary associations.

     Net loss totaled  $1,610,000,  or a loss of $0.37 per share of common stock
for the year ended December 31, 1999. Net loss for the eleven-month period ended
December  31,  1998  totaled  $715,000,  or a loss of $0.17  per share of common
stock.  Net loss for the year ended January 31, 1998 totaled  $25,538,000,  or a
loss of $5.91 per share of common stock. During the year ended January 31, 1998,
the loss was attributable to the disposition of the  discontinued  business when
the Company was Stores.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash and cash equivalents  totaled $7,266,000 at December 31,
1999.  The  Company's  management  believes  that  the  Company's  cash and cash
equivalents as well as its anticipated near term cash flows are adequate to meet
its near term liquidity requirements.

     With  $7,266,000  of cash  available  the  Company  is  seeking  additional
acquisitions and/or merger transactions.  No firm commitments have been realized
and no  letters  of  intent  have  been  signed  at this  time.  There can be no
assurance  that the Company  will be able to locate or  purchase a business,  or
that such business,  if located and purchased,  will be profitable.  In order to
finance  an  acquisition,  the  Company  may be  required  to  incur  or  assume
indebtedness and/or issue securities.

NEW ACCOUNTING PRONOUNCEMENTS

The  Financial   Accounting   Standards  Board  issued  Statement  on  Financial
Accounting  Standards ("SFAS") No. 133,  "Accounting for Derivative  Instruments
and  Hedging  Activities"  in 1998.  SFAS No.  133  establishes  accounting  and
reporting  standards for derivative  instruments,  including certain  derivative
instruments   embedded  in  other   contracts   (collectively   referred  to  as
derivatives),  and for hedging activities.  It requires that an entity recognize
all  derivatives  as either assets or  liabilities in the statement of financial
position and measure  those  instruments  at fair value.  For a  derivative  not
designated as a hedging instrument,  changes in the fair value of the derivative
are recognized in earnings in the period of change. As a result of SFAS No. 137,
SFAS No. 133 will be adopted in 2001.  The Company does not believe the adoption
of SFAS No. 133 will have a material effect on the financial position or results
of operations of the Company.

On December 3, 1999, the SEC staff issued Staff Accounting  Bulletin ("SAB") No.
101,  "Revenue  Recognition  in Financial  Statements."  SAB No. 101  summarizes
certain  of  the  staff's  views  in  applying  generally  accepted   accounting
principles  to revenue  recognition  in financial  statements.  The Company will
incorporate the guidance of SAB No. 101 in the first quarter of fiscal 2001.

                           FORWARD LOOKING STATEMENTS

THE FOLLOWING  IMPORTANT  FACTORS,  AMONG OTHERS,  COULD CAUSE ACTUAL RESULTS TO
DIFFER  MATERIALLY  FROM THOSE INDICATED BY  FORWARD-LOOKING  STATEMENTS MADE IN
THIS ANNUAL  REPORT ON FORM 10-K AND  PRESENTED  ELSEWHERE  BY  MANAGEMENT.  ALL
FORWARD-LOOKING  STATEMENTS  INCLUDED IN THIS DOCUMENT ARE BASED ON  INFORMATION
AVAILABLE  TO THE  COMPANY  ON THE  DATE  HEREOF,  AND THE  COMPANY  ASSUMES  NO
OBLIGATION  TO  UPDATE  ANY  SUCH  FORWARD-LOOKING   STATEMENTS.   A  NUMBER  OF
UNCERTAINTIES  EXIST THAT COULD AFFECT THE COMPANY'S FUTURE  OPERATING  RESULTS,
INCLUDING, WITHOUT LIMITATION,  GENERAL ECONOMIC CONDITIONS, CHANGES IN INTEREST
RATES, THE COMPANY'S ABILITY TO ATTRACT  DEPOSITS,  AND THE COMPANY'S ABILITY TO
CONTROL COSTS.  BECAUSE OF THESE AND OTHER FACTORS,  PAST FINANCIAL  PERFORMANCE
SHOULD NOT BE  CONSIDERED AN  INDICATION  OF FUTURE  PERFORMANCE.  THE COMPANY'S
FUTURE  OPERATING  RESULTS  MAY VARY  SIGNIFICANTLY.  INVESTORS  SHOULD  NOT USE
HISTORICAL  TRENDS TO  ANTICIPATE  FUTURE  RESULTS  AND SHOULD BE AWARE THAT THE
TRADING PRICE OF THE COMPANY'S COMMON STOCK MAY BE SUBJECT TO WIDE  FLUCTUATIONS
IN RESPONSE TO  QUARTERLY  VARIATIONS  IN OPERATING  RESULTS AND OTHER  FACTORS,
INCLUDING THOSE DISCUSSED ABOVE.

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

MARKET RISK AND ASSET LIABILITY MANAGEMENT

     Market risk is the risk of loss from adverse  changes in market  prices and
rates.  The  Company's  market risk arises  primarily  from  interest  rate risk
inherent  in its  lending and deposit  taking  activities  and other  investment
activities.  To that end,  management actively monitors and manages its interest
rate risk exposure.

     In  connection  with the  Company's  lending  and deposit  activities,  its
profitability  may be affected by  fluctuations  in interest rates. A sudden and
substantial  increase  in  interest  rates may  adversely  impact the  Company's
earnings to the extent that the interest  rates borne by assets and  liabilities
do not change at the same speed, to the same extent,  or on the same basis.  The
Company  monitors the impact of changes in interest on its net  interest  income
using  several  tools.  One measure of the Company's  exposures to  differential
changes in interest  rates between  assets and  liabilities  is an interest rate
risk management test. This test measures the impact on net interest income of an
immediate change in interest rates in 100 basis point increments. After a review
of our  portfolio,  we believe that in the event of a  hypothetical  ten percent
increase in interest rates,  the resulting  effect on the Company's net interest
income would not be material.

     The  Company's  primary  objective  in  managing  interest  rate risk is to
minimize the adverse  impact of changes in interest  rates on the  Company's net
interest income and capital,  while  structuring  the Company's  asset-liability
structure to obtain the maximum yield-cost spread on that structure. The Company
relies primarily on its asset-liability structure to control interest rate risk.

     In connection with the Company's other  investments,  our primary objective
is to manage our  investment  portfolio  so as to preserve  principal,  maintain
proper liquidity to meet operating  needs,  and maximize yields.  The securities
held in our  investment  portfolio  are subject to interest rate risk. We employ
established  policies  and  procedures  to manage  exposure to  fluctuations  in
interest rates. We place our investments with high quality issuers and limit the
amount of credit exposure to any one issuer and do not use derivative  financial
instruments in our investment portfolio.  We maintain an investment portfolio of
various  issuers,  types,  and  maturities,  which consist  mainly of fixed rate
financial  instruments.  These  securities are classified as  available-for-sale
and,  consequently,  are  recorded  on the  balance  sheet  at fair  value  with
unrealized  gains or losses  reported as a separate  component in  stockholders'
equity.  At any time,  sharp changes in interest rates can affect the fair value
of the  investment  portfolio and its interest  earnings.  Currently,  we do not
hedge  these  interest  rate  exposures.   After  a  review  of  our  marketable
securities,  we believe that in the event of a hypothetical ten percent increase
in interest  rates,  the resulting  fluctuation  in the fair market value of our
marketable  investment  securities  would  be  insignificant  to  the  financial
statements.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See the Company's  consolidated  financial  statements  contained elsewhere
herein.


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

     None.

<PAGE>
                   WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS

     The  information  required by this item will be included under the captions
"ELECTION OF DIRECTORS"  and  "EXECUTIVE  OFFICERS" in the Company's  definitive
proxy statement to be filed with the Securities and Exchange  Commission  within
120 days after the end of the  Company's  fiscal year covered by this report and
is incorporated herein by reference.

Item 11. EXECUTIVE COMPENSATION

     The  information  required by this item will be included  under the caption
"EXECUTIVE COMPENSATION" in the Company's definitive proxy statement to be filed
with the Securities and Exchange Commission within 120 days after the end of the
Company's  fiscal  year  covered by this  report and is  incorporated  herein by
reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  information  required by this item will be included under the captions
"PRINCIPAL  STOCKHOLDERS" and "BENEFICIAL OWNERSHIP OF DIRECTORS AND MANAGEMENT"
in the Company's  definitive proxy statement to be filed with the Securities and
Exchange  Commission  within 120 days after the end of the Company's fiscal year
covered by this report and is incorporated herein by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item is will be included under the caption
"CERTAIN  RELATIONSHIPS  AND RELATED  TRANSACTIONS" in the Company's  definitive
proxy statement to be filed with the Securities and Exchange  Commission  within
120 days after the end of the  Company's  fiscal year covered by this report and
is incorporated herein by reference.

<PAGE>
                   WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                                     PART IV

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

(a)  Financial Statements

     See index to consolidated  financial statements  immediately  following the
exhibit index.

(b)  Reports on Form 8-K filed during the fourth quarter of the period covered
by this report:

     (i) none

(c)  Exhibits

      See exhibit index immediately following the signature page.

<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.


                            WEBFINANCIAL CORPORATION

        By: /s/Warren G. Lichtenstein
            -----------------------------
               Warren G. Lichtenstein
               President, Chief Executive Officer

        By: /s/Jack L. Howard
            -----------------------------
               Jack L. Howard
               Vice President and Chief Financial Officer


POWER OF ATTORNEY

     WebFinancial  Corporation  and each of the  undersigned  do hereby  appoint
Warren G. Lichtenstein and Jack L. Howard,  and each of them singly,  its or his
true and lawful  attorney to execute on behalf of  WebFinancial  Corporation and
the undersigned any and all amendments to this Annual Report on Form 10-K and to
file the same with all  exhibits  thereto  and  other  documents  in  connection
therewith,  with the Securities and Exchange Commission;  each of such attorneys
shall have the power to act hereunder with or without the other.

Date: April 12, 2000

     Pursuant to the  requirements  of the  Securities and 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 date indicated.


By:  /s/Jack L. Howard                                           April 12, 2000
     -----------------------------------                         --------------
Jack L. Howard, Chief Financial Officer and Director             Date
(Principal Accounting Officer)


By:  /s/Warren G. Lichtenstein                                   April 12, 2000
     ------------------------------------                        --------------
Warren G. Lichtenstein, President,                               Date
Chief Executive Officer and Director
(Principal Executive Officer)


By: /s/Earle C. May                                              April 12, 2000
    -------------------------------------                        --------------
Earle C. May, Director                                           Date


By: /s/Joseph L. Mullen                                          April 12, 2000
    -------------------------------------                        --------------
Joseph L. Mullen, Director                                       Date


By: /s/James Benenson                                            April 12, 2000
    -------------------------------------                        --------------
James Benenson, Director                                         Date

<PAGE>
                   WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                                  EXHIBIT INDEX

3.1  Company's Certificate of Incorporation, as amended.

3.2  Company's Bylaws.

10.1 Purchase Agreement  incorporated by reference to exhibit 1 of the Company's
     current report on form 10-Q for the period ended August 1, 1998.

10.2 Subscription  and  Stockholders  Agreement  incorporated  by  reference  to
     exhibit 2 of the Company's current report on form 10-Q for the period ended
     August 1, 1998.

10.3 Assignment,  Transfer and Delegation Agreement incorporated by reference to
     exhibit 3 of the Company's Current Report on Form 10-Q for the period ended
     August 1, 1998.

10.4 Employment  Agreement  incorporated  by  reference  to  exhibit  4  of  the
     Company's Current Report on Form 10-Q for the period ended August 1, 1998.

10.5 Management  Agreement  incorporated  by  reference  to  exhibit  1  of  the
     Company's Current Report on Form 10-Q for the period ended August 1, 1998.

27   Financial Data Schedule.

<PAGE>
                   WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


        Management's Report on Financial Statements                        F-2

        Independent Auditors' Report                                       F-3

        Consolidated Statements of Financial Condition
          as of December 31, 1999 and December 31, 1998                    F-4

        Consolidated Statements of Operations
          for the year ended December 31,1999,
          the eleven-month period ended December 31, 1998,
          and the year ended January 31, 1998                              F-5

        Consolidated Statements of Stockholders' Equity
          for the year ended December 31, 1999,
          the eleven-month period ended December 31, 1998,
          and the year ended January 31, 1998                              F-7

        Consolidated Statements of Cash Flows
          for the year ended December 31, 1999,
          the eleven-month period ended  December  31,  1998,
          and the year ended January 31, 1998                              F-8

        Notes to Consolidated Financial Statements                         F-11

<PAGE>
                   WEBFINANCIAL CORPORATION AND SUBSIDIARIES

            MANAGEMENT'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1999

The consolidated  financial statements on the following pages have been prepared
by management in  conformity  with  generally  accepted  accounting  principles.
Management  is  responsible  for the  reliability  and fairness of the financial
statements and other financial information included herein.

To meet its responsibilities with respect to financial  information,  management
maintains and enforces  internal  accounting  policies,  procedures and controls
which are designed to provide  reasonable  assurance that assets are safeguarded
and that  transactions  are properly  recorded and executed in  accordance  with
management's  authorization.  Management believes that the Company's  accounting
controls  provide  reasonable,  but  not  absolute,  assurance  that  errors  or
irregularities which could be material to the financial statements are prevented
or would be detected  within a timely period by Company  personnel in the normal
course of  performing  their  assigned  functions.  The  concept  of  reasonable
assurance  is based on the  recognition  that the cost of  controls  should  not
exceed the expected benefits.

The  responsibility of our independent  auditors,  KPMG LLP, it to conduct their
audit in accordance with generally accepted auditing standards.  In carrying out
this responsibility, they planned and performed their audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement, whether caused by error or fraud.

The Audit  Committee of the Board of Directors met twice with management and the
independent  auditors to discuss  auditing and  financial  matters and to assure
that each is carrying out its  responsibilities.  The independent  auditors have
full and free access to the Audit Committee and meet with it by telephone,  with
and without management being present,  to discuss the results of their audit and
their opinions on the quality of financial reporting.


By: /s/Warren G. Lichtenstein/
       Warren G. Lichtenstein
       President, Chief Executive Officer
       and Chief Accounting Officer

By: /s/Jack L. Howard
       Jack L. Howard
       Vice President and Chief Financial Officer

<PAGE>
                          INDEPENDENT AUDITORS' REPORT




The Board of Directors and Shareholders
WebFinancial Corporation


We have audited the accompanying  consolidated statements of financial condition
of WebFinancial Corporation and subsidiaries (formerly Rose's Holdings, Inc.) as
of  December  31,  1999 and 1998,  and the related  consolidated  statements  of
operations, stockholders' equity, and cash flows for the year ended December 31,
1999,  the  eleven-month  period ended  December  31,  1998,  and the year ended
January 31, 1998. These consolidated financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  WebFinancial
Corporation  and  subsidiaries as of December 31, 1999 and 1998, and the results
of their  operations  and their cash flows the year ended December 31, 1999, the
eleven-month period ended December 31, 1998, and the year ended January 31, 1998
in conformity with generally accepted accounting principles.



                                   /s/KPMG LLP
Salt Lake City, Utah
March 24, 2000

<PAGE>
                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>
                                                                   December 31,  December 31,
                                                                       1999          1998
                                                                   -----------   -----------
                                     ASSETS
<S>                                                                <C>              <C>
Cash and cash equivalents ......................................   $  7,266         8,681
Cash restricted in escrow ......................................         --         2,018
Investment securities (note 5)
  Held-to-maturity (estimated fair value of $37
      at December 31, 1999).....................................         37            --
  Available-for-sale ...........................................        858         2,081
    Total investment securities ................................        895         2,081

Loans, net of deferred premium (note 6) ........................     10,868         1,081
Less allowance for loan loss (note 7) ..........................        472            --
    Loans, net .................................................     10,396         1,081

Accounts receivable ............................................         14            --
Prepaid expense ................................................         63            33
Premises and equipment,
  net of accumulated depreciation and amortization (note 11) ...        101           116
Accrued interest receivable ....................................        163            41
Goodwill, net of accumulated
  amortization of $158 in 1999 and $41 in 1998 .................      1,616         1,733
Other assets ...................................................        428           196
                                                                   --------      --------
                                                                   $ 20,942        15,980
                                                                   ========      ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
  Non interest-bearing demand ..................................   $    250           105
  Interest-bearing time certificates of deposit (note 9) .......      4,639            --
                                                                   --------      --------
    Total deposits .............................................      4,889           105

Short term borrowing (note 10) .................................      1,100            --
Accounts payable and accrued liabilities .......................        953           326
Servicing liability ............................................        108            --
Income taxes payable to subsidiary's former parent .............         --           309
                                                                   --------      --------
    Total liabilities before minority interests ................      7,050           740

    Minority interests .........................................        457           553

Stockholders' Equity:
  Preferred stock, 10,000,000 shares authorized, zero issued ...         --            --
  Common stock, 50,000,000 shares authorized;
     $.001 par value, 4,349,996 shares issued and outstanding at
     December 31, 1999 and 4,310,192 shares issued
     and outstanding at December 31, 1998 ......................          4             4
  Paid-in capital ..............................................     36,578        36,155
  Unearned compensation ........................................        (65)           --
  Accumulated deficit ..........................................    (23,082)      (21,472)
                                                                   --------      --------
    Total stockholders' equity .................................     13,435        14,687
                                                                   --------      --------
Commitments and contingencies (notes 10, 14 and 17)
                                                                   $ 20,942        15,980
                                                                   ========      ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                               Eleven-month
                                               Year ended      period ended     Year ended
                                               December 31,    December 31,     January 31,
                                                   1999            1998            1998
                                               -----------     -----------      ----------
<S>                                            <C>             <C>             <C>
Interest income:
    Interest and fees on loans ..............   $   420              30              --
    Interest on cash equivalents ............       476             631             418
    Interest on investment securities .......       130              15              --
                                                -------         -------         -------
         Total interest income ..............     1,026             676             418

Interest expense:
    Interest on deposits ....................       150              --              --
    Interest on short-term borrowing ........        29              --              --
                                                -------         -------         -------
         Total interest expense .............       179              --              --

         Net interest income before provision
                 for loan losses ............       847             676             418

Provision for loan losses (note 7) ..........       475              --              --
                                                -------         -------         -------
        Net interest income after provision
                for loan losses..............       372             676             418

Other operating income:
    Premium earned on sale of loans .........       913              --              --
    Fee income ..............................       442              --              --
    Miscellaneous income ....................       212              --              --
                                                -------         -------         -------
        Total other operating income ........     1,567              --              --

Operating expenses:
    Salaries, wages, and benefits ...........     1,485             428              --
    Selling, general and administrative......     1,265             679             347
    Professional and legal fees .............       617             242              --
    Occupancy expense .......................       199              60              --
    Amortization of goodwill ................       117              41              --
                                                -------         -------         -------
        Total operating expenses ............     3,683           1,450             347

        Operating income (loss) .............    (1,744)           (774)             71

Loss from operation of discontinued business.        --              --          (3,163)

Loss from disposal of discontinued business .        --              --         (22,446)
                                                -------         -------         -------
Loss before minority interest ...............    (1,744)        (25,538)             --

Loss attributable to minority interests .....       134              59              --
                                                -------         -------         -------
              Net loss ......................   $(1,610)           (715)        (25,538)
                                                =======         =======         =======
</TABLE>
                                  (continued)

<PAGE>
                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                               Eleven-month
                                               Year ended      period ended     Year ended
                                               December 31,    December 31,     January 31,
                                                   1999            1998            1998
                                               -----------     -----------      -----------
<S>                                            <C>             <C>              <C>
Basic and diluted net loss per common share      $ (0.37)          (0.17)          (5.91)
Weighted average number of common shares
    and common share equivalents:
    Basic and diluted                          4,312,708       4,315,966        4,320,032
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
                   WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

   Year Ended December 31, 1999, Eleven-Month Period Ended December 31, 1998
                        and Year Ended January 31, 1998
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>
                                                                                                  Total
                                        Common Stock        Paid-in     Deferred   Accumulated stockholders'
                                     Shares     Amount      capital   compensation   deficit      equity
                                   ---------------------------------------------------------------------
<S>                                <C>         <C>          <C>       <C>            <C>        <C>
Balance at January 25, 1997        4,320,032   $  35,000       1,159          --       4,781      40,940

Net loss                                  --          --          --          --     (25,538)    (25,538)
                                   ---------   ---------   ---------   ---------   ---------   ---------
Balance at January 31, 1998        4,320,032      35,000       1,159          --     (20,757)     15,402

Net loss                                  --          --          --          --        (715)       (715)

Shares retired                        (9,840)         --          --          --          --          --

Assignment of par value
  to common stock                         --     (34,996)     34,996          --          --          --
                                   ---------   ---------   ---------   ---------   ---------   ---------
Balance at December 31, 1998       4,310,192           4      36,155          --     (21,472)     14,687

Net loss                                  --          --          --          --      (1,610)     (1,610)

Shares redeemed and retired          (78,829)         --        (323)         --          --        (323)

Shares issued upon
  exercise of options                114,307          --         417          --          --         417

Shares issued for
  services rendered                    4,326          --          23          --          --          23

Contribution of capital                   --          --         180          --          --         180

Options granted for
  services rendered                       --          --         126         (65)         --          61
                                   ---------   ---------   ---------   ---------   ---------   ---------
Balance at December 31, 1999       4,349,996   $       4      36,578         (65)    (23,082)     13,435
                                   =========   =========   =========   =========   =========   =========
</TABLE>


See accompanying notes to consolidated financial statements.
<PAGE>
                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
<TABLE>
<CAPTION>
                                                                         Eleven-month
                                                        Year ended       period ended     Year ended
                                                        December 31,     December 31,     January 31,
                                                            1999             1998            1998
                                                        -----------      -----------      ----------
<S>                                                     <C>              <C>              <C>
Cash flows from operating activities:
Net loss from continuing operations ...................  $ (1,610)           (715)             71
Adjustments to reconcile net loss
   to net cash provided by (used in)
   operating activities:
     Minority interest ................................      (134)            (59)             --
     Depreciation and amortization ....................        65              20              --
     Premium earned on sale of loans ..................      (913)             --              --
     Gain on sale of investment securities ............       (76)             --              --
     Common stock and options granted in lieu of cash..        84              --              --
     Provision for loan losses ........................       475              --              --
     Amortization of loan premiums ....................        28               9              --
     Amortization of goodwill .........................       117              41              --
     Amortization of premiums for
        available-for-sale securities .................        --              24              --
     Amortization of servicing assets .................         8              --              --
     Amortization of deferred income on USDA loans ....       (21)             --              --
     Net change attributable to discontinued business..        --              --         (45,445)
      Change in operating assets and liabilities:
        Cash restricted in escrow .....................     2,018              --              --
        Accounts receivable ...........................       (14)             --              --
        Prepaid expense ...............................       (30)            (33)             --
        Accrued interest receivable ...................      (122)            (20)             --
        Other assets ..................................      (118)           (145)             --
        Accounts payable and accrued expenses .........       627              --              --
        Income tax due to former parent ...............      (309)             --              --
                                                         --------        --------        --------
            Net cash provided by (used in)
              operating activities ....................        75            (566)        (45,374)
                                                         --------        --------        --------
</TABLE>

                                  (continued)
<PAGE>
                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
                                                                         Eleven-month
                                                        Year ended       period ended     Year ended
                                                        December 31,     December 31,     January 31,
                                                            1999             1998            1998
                                                        ----------       -----------      ----------
<S>                                                     <C>              <C>              <C>
Cash flows from investing activities:
     Purchase of subsidiary ...........................  $     --          (2,946)             --
     Purchase of investment securities
        available-for-sale ............................        --          (1,649)             --
     Principal payments received on investment
        securities available-for-sale .................     1,042              --              --
     Proceeds from sale of
        available-for-sale securities .................       257              --              --
     Purchase of investment securities held-to-maturity       (48)             --              --
     Principal payments received on investment
        securities held-to-maturity ...................        11              --              --
     Loans originated .................................   (32,701)         (2,376)             --
     Proceeds from sale of loans ......................    23,681           2,157              --
     Principal payments received on loans .............       122              28              --
     Purchase of premises and equipment ...............       (50)            (47)             --
     Minority interest ................................        --             612              --
     Net change attributable to discontinued business .        --              --          11,127
     Funds transferred to escrow ......................        --             (98)             --
                                                         --------        --------        --------
            Net cash provided by (used in)
              investing activities ....................  $ (7,686)         (4,319)         11,127
                                                         --------        --------        --------
Cash flows from financing activities:
     Net increase in demand deposits ..................   $   145             101              --
     Proceeds from issuance of time deposits ..........     7,729              --              --
     Payments for maturing time deposits ..............    (3,090)             --              --
     Net increase in short-term borrowings ............     1,100              --              --
     Issuance of common stock for cash ................       417              --              --
     Cash paid to redeem shares .......................      (323)             --              --
     Minority interest contribution ...................        38              --              --
     Contribution of capital ..........................       180              --              --
     Net change attributable to discontinued business .        --              --          46,471
                                                         --------        --------        --------
            Net cash provided by financing activities .     6,196             101          46,471
                                                         --------        --------        --------
Net increase (decrease) in cash and cash equivalents ..    (1,415)         (4,784)         12,224

Cash and cash equivalents at beginning of period ......     8,681          13,465           1,241
                                                         --------        --------        --------
Cash and cash equivalents at end of period ............  $  7,266           8,681          13,465
                                                         ========        ========        ========
</TABLE>

                                  (continued)

<PAGE>
                            WEBFINANCIAL CORPORATION

               CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>

                                                                         Eleven-month
                                                        Year ended       period ended     Year ended
                                                        December 31,     December 31,     January 31,
                                                            1999             1998            1998
                                                        -----------      -----------      ----------
<S>                                                     <C>              <C>              <C>
Supplemental disclosure of cash flow information:
    Cash paid for interest                                $   156               3              --

Supplemental disclosure of additional non-cash
    activities:
    Retirement of net book value of assets in
      reserve for store closings ......................   $    --              --              30
    Capital lease additions ...........................        --              --             887
    Conversion of loan receivable to investment
        securities available-for-sale .................        --             216              --

</TABLE>
During 1998 the Company acquired 90 percent of the outstanding  stock of WebBank
(note 4). The  following is a summary of the effect of this  transaction  in the
Company's consolidated balance sheet:
<TABLE>
<CAPTION>
<S>                                                       <C>             <C>             <C>
Assets acquired:
    Investment securities available-for-sale ..........  $     --            (240)             --
    Commercial loans ..................................    (1,115)             --              --
    Accrued interest receivable .......................        --             (21)             --
    Property and equipment ............................        --             (89)             --
    Other assets ......................................        --             (28)             --
    Goodwill ..........................................        --          (1,774)             --

Liabilities assumed:
    Demand deposits ...................................        --               4              --
    Accounts payable and accrued expenses .............        --               8              --
    Income taxes payable to subsidiary's former parent.        --             309              --
                                                         --------        --------        --------
          Net cash used ...............................  $     --          (2,946)             --
                                                         ========        ========        ========
</TABLE>

          See accompanying notes to consolidated financial statements.

<PAGE>
                            WEBFINANCIAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 1999,  Eleven-Month  Period Ended December 31, 1998, and
Year Ended  January 31, 1998 (All  numbers  except  shares and per share data in
thousands)

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--The   consolidated  financial  statements  include  the  financial
statements of WebFinancial  Corporation  (the  "Company") and its  subsidiaries:
WebFinancial  Holdings Corporation  ("Holdings"),  WebBank  ("WebBank"),  Praxis
Investment Advisers,  Inc.  ("Praxis"),  WebFinancial  Government Lending,  Inc.
("Lending"), and Web Film Financial, Inc. ("Film"),  collectively referred to as
the Company.  WebBank is a Utah-chartered  industrial loan  corporation,  and is
subject to comprehensive regulation, examination, and supervision by the Federal
Deposit  Insurance  Corporation  ("FDIC"),  and the State of Utah  Department of
Financial  Institutions.  WebBank  provides  commercial  and consumer  specialty
finance  services.  Lending is concentrating  on U.S.  Department of Agriculture
loan  originations,  sales and  servicing.  Film was  organized  to finance  the
production and distribution of a motion picture and the Company has subsequently
decided to inactivate  Film.  All  significant  intercompany  balances have been
eliminated in consolidation.

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

CASH  AND  CASH   EQUIVALENTS--Cash   and  cash  equivalents  include  cash  and
noninterest bearing deposits in depository  institutions,  plus interest-bearing
deposits with banks and  investments in cash management  funds.  For purposes of
the  statements  of cash flows,  the Company  considers  all highly  liquid debt
instruments  with  maturities of three months or less when  purchased to be cash
equivalents. Cash equivalents are stated at cost, which approximates market.

LOSS PER  SHARE--Basic  loss per common share is calculated by dividing net loss
by the  weighted-average  number of common  shares  outstanding  for the period.
Diluted net loss per common share reflects the maximum dilutive effect of common
stock issuable upon exercise of stock options and stock warrants.

For the year ended December 31, 1999, the eleven-month period ended December 31,
1998, and the year ended January 31, 1998 potential  common shares of 2,584,585,
2,646,191, and 2,191,857,  respectively,  that could potentially dilute earnings
per share in the future were not included in the computation of diluted loss per
share because to do so would have been anti-dilutive for the periods.

INVESTMENT   SECURITIES--The   Company   classifies  its  securities  as  either
available-for-sale securities or  held-to-maturity securities.  Held-to-maturity
securities  are those  securities  which the Bank has the  ability and intent to
hold until maturity.  All other securities not included in held-to-maturity  are
classified as available-for-sale.

Held-to-maturity  securities  are recorded at amortized  cost,  adjusted for the
amortization   or  accretion  of  premiums  or   discounts.   Available-for-sale
securities  are recorded at fair value.  Unrealized  holding  gains or losses on
available-  for-sale  securities  are excluded from earnings and reported  until
realized  in  accumulated  other  comprehensive  income  (loss)  as  a  separate
component of  stockholders'  equity  until  realized.  Transfers  of  securities
between categories are recorded at fair value at the date of transfer.

A decline  in the market  value of any  available-for-sale  or  held-to-maturity
security  below cost that is deemed other than  temporary is charged to earnings
resulting  in the  establishment  of a new cost for the  security.  Premiums and
discounts are amortized or accreted over the life of the related  security as an
adjustment  to the  yield  using the  effective-interest  method.  Dividend  and
interest  income is  recognized  when  earned.  Realized  gains and  losses  for
securities  classified as available-for-sale or held-to-maturity are included in
earnings and are derived using the specific-identification method of determining
the cost of securities sold.

LOANS--Loans are reported at the principal amount outstanding,  net of premiums,
discounts,  and unearned income.  Premiums and discounts are  accreted/amortized
over the life of the related loan under the interest  method.  Unearned  income,
which includes deferred fees net of deferred direct incremental loan origination
costs,  is amortized to interest income  generally over the contractual  life of
the loan using an interest method,  adjusted for actual  prepayment  experience.
Interest income is accrued daily as earned.

ALLOWANCE FOR LOAN LOSSES--The  allowance for loan losses is established through
a provision for loan losses charged to expense.  Loan losses are charged against
the  allowance  when  management  believes that the  collectibility  of the loan
principal is unlikely.  Recoveries on loans previously  charged off are credited
to the allowance.

The allowance is an amount that  management  believes will be adequate to absorb
possible  loan losses  based on  evaluations  of  collectibility  and prior loss
experience.  The evaluation takes into  consideration such factors as changes in
the nature and volume of the  portfolio,  overall  portfolio  quality,  specific
problem loans, and current and anticipated  economic  conditions that may affect
the  borrowers'  ability  to  pay.  Management  also  obtains  appraisals  where
considered necessary.

IMPAIRED LOANS--Loans are considered impaired when, based on current information
and  events,  it is  probable  that the  Company  will be unable to collect  all
amounts due according to the contractual terms of the loan agreement,  including
scheduled interest payments.

This  assessment  for  impairment  occurs  when  and  while  such  loans  are on
nonaccrual.  When a loan with unique risk characteristics has been identified as
being  impaired,  the amount of the  impairment  will be measured by the Company
using  discounted  cash flows,  except when it is determined  that the remaining
source  of  repayment  for  the  loan is the  operation  or  liquidation  of the
underlying collateral.  In such cases, the current fair value of the collateral,
reduced by costs to sell, will be used in place of discounted cash flows.

If the measurement of the impaired loan is less than the recorded  investment in
the  loan,  including  accrued  interest,  net  deferred  loan fees or costs and
unamortized  premium or discount,  an  impairment  is  recognized by creating or
adjusting an existing allocation of the provision for loan losses.

NONACCRUAL LOANS--Accrual of interest is discontinued on a loan when the loan is
90 days past due or when management  believes,  after  considering  economic and
business  conditions  and  collection  efforts,  that the  borrower's  financial
condition is such that  collection of interest is doubtful.  Interest  income on
nonaccrual loans is credited to income only to the extent interest  payments are
received. Loans are restored to accrual of interest when delinquent payments are
received in full.  Additionally,  the Company uses the cost recovery  accounting
method to recognize interest income on impaired loans.

PREMISES  AND  EQUIPMENT--Premises  and  equipment  are  stated at cost,  net of
accumulated   depreciation  and  amortization.   Depreciation  of  premises  and
equipment is computed by the  straight-line  method over estimated  useful lives
from one to five years.  Leasehold  improvements are amortized over the terms of
the related leases or the estimated useful lives of the improvements,  whichever
is shorter.  Useful lives of leasehold  improvements  are between three and five
years.

INCOME  TAXES--Deferred  tax assets and deferred tax  liabilities are recognized
for  the  future  tax  consequences  attributable  to  differences  between  the
financial  statement  carrying  amounts of existing  assets and  liabilities and
their  respective  tax bases and  operating  loss and tax credit  carryforwards.
Deferred tax assets and deferred tax  liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and deferred tax  liabilities  of a change in tax rates is  recognized in
income in the period that includes the enactment date.

LOANS HELD FOR SALE--The  Company  originates  loans to customers under a United
States  Department of Agriculture  ("USDA") program that generally  provides for
USDA  guarantees of 70 percent to 90 percent of each loan.  The Company plans to
sell the  guaranteed  portion  of each  loan to a third  party  and  retain  the
unguaranteed  portion in its own portfolio.  Loans  held-for-sale are carried at
the  lower  of  cost or  estimated  market  value  in the  aggregate.  A sale is
recognized  when control over the loans sold is surrendered  and the proceeds of
the sale are other than beneficial interests in the loans sold. The Company will
allocate  basis of the loans  sold and the  retained  portions  based upon their
relative fair market values.  To the extent the sale of a loan involves the sale
of part of a loan with a  disproportionate  credit  risk,  the cost basis of the
loan is allocated  based upon the  relative  fair values of the portion sold and
the  portion  retained on the date such loan sale was made.  Deferred  income on
USDA loans arises on the sale of the government  guaranteed  portion of the loan
and  the  retention  of  the  unguaranteed  portion.  Such  deferred  income  is
recognized over the estimated remaining life of the retained portion.

The Company is  required  to retain a minimum of five  percent of each USDA loan
sold and to service the loan for the  investor.  Based on the specific loan sale
agreement that the Company enters into with the investor, the difference between
the yield on the loan and the  yield  paid to the  buyer is the  servicing  fee.
Loans  serviced for others  amounted to $8,289,000 and $-0- at December 31, 1999
and  1998,  respectively.  These  loans  are not  included  in the  accompanying
statements of financial  condition.  Fees earned for servicing  loans for others
are  reported as income when the  related  loan  payments  are  collected,  less
amortization of the servicing asset. Loan servicing costs are charged to expense
as incurred.

GOODWILL--The acquisition of WebBank was accounted for under purchase accounting
resulting in goodwill of $1,774 which is being amortized using the straight-line
basis over 15 years. Goodwill is reviewed for possible impairment when events or
changed  circumstances  affect the underlying basis of the asset.  Impairment is
measured by comparing the investment to undiscounted operating income.

ACCOUNTING  FOR  IMPAIRMENT  OF  LONG-LIVED   ASSETS--The  Company  reviews  its
long-lived  assets for impairment  whenever  events or changes in  circumstances
indicate  that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
Recoverability  of  assets  held and used is  measured  by a  comparison  of the
carrying amount of the asset to future  undiscounted  net cash flows expected to
be generated by the asset.  If such assets are  considered  to be impaired,  the
impairment  to be  recognized  is measured  by the amount by which the  carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of their carrying amount or fair value less cost to
sell.

COMPREHENSIVE  LOSS--The  Company  adopted  Statement  of  Financial  Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income", effective February
1,  1998.  SFAS No. 130  establishes  standards  for  reporting  and  display of
comprehensive  loss and its  components in financial  statements.  Components of
comprehensive income (loss) include net income (loss), unrealized gains (losses)
on  available-for-sale  investment  securities,   foreign  currency  translation
adjustments,  changes in the market value of futures contracts that qualify as a
hedge,  and net loss  recognized  as an  additional  pension  liability  not yet
recognized in net periodic  pension cost.  For the year ended December 31, 1999,
the eleven-month  period ended December 31, 1998, and the year ended January 31,
1998  comprehensive  loss  was  equal  to  the  net  loss  as  presented  in the
accompanying statements of operations.

STOCK-BASED COMPENSATION--The Company employs the footnote disclosure provisions
SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 encourages
entities to adopt a fair-value  based method of accounting  for stock options or
similar equity based compensation using the intrinsic-value method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25 "Accounting for
Stock Issued to  Employees"  ("APB 25").  The Company has elected to continue to
apply  the  provisions  of APB  25 and  provide  proforma  footnote  disclosures
required by SFAS No. 123.

RECLASSIFICATION--Certain  amounts as of and for the  eleven-month  period ended
December 31, 1998 and the year ended January 31, 1998 have been  reclassified to
conform with the 1999 presentation.

RECENT  ACCOUNTING  PRONOUNCEMENTS--The  Financial  Accounting  Standards  Board
issued  SFAS  No.  133,  "Accounting  for  Derivative  Instruments  and  Hedging
Activities" in 1998. SFAS No. 133 establishes accounting and reporting standards
for derivative  instruments including certain derivative instruments embedded in
other  contracts  (collectively  referred  to as  derivatives),  and for hedging
activities.  It requires  that an entity  recognize  all  derivatives  as either
assets or liabilities  in the statement of financial  position and measure those
instruments  at  fair  value.  For a  derivative  not  designated  as a  hedging
instrument,  changes  in the fair  value of the  derivative  are  recognized  in
earnings in the period of change. As a result of SFAS No. 137, SFAS No. 133 will
be adopted in 2001.  The Company  does not believe the  adoption of SFAS No. 133
will have a material  effect on the financial  position or results of operations
of the Company.

On December 3, 1999 the SEC staff issued Staff  Accounting  Bulletin ("SAB") No.
101,  "Revenue  Recognition  in Financial  Statements."  SAB No. 101  summarizes
certain  of  the  staff's  views  in  applying  generally  accepted   accounting
principles  to revenue  recognition  in financial  statements.  The Company will
incorporate the guidance of SAB No. 101 in the first quarter of fiscal 2001.

OPERATING SEGMENTS--The Company operates in one line of business, commercial and
consumer  specialty  finance  transactions.  As such,  the  Company has only one
reportable  operating segment as defined by the SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information."

2.      DISCONTINUED OPERATIONS

On August 7, 1997,  pursuant to an  agreement  and plan of merger  among  Rose's
Stores,  Inc.  ("Stores") and two newly created,  wholly-owned  subsidiaries  of
Stores,  Stores became a wholly-owned  subsidiary of the Company. As a result of
such merger,  each share of common stock,  no par value ("Stores Common Stock"),
of Stores was converted into common stock, no par value ("Common Stock"), of the
Company and each warrant, option, or other right entitling the holder thereof to
purchase or receive  shares of Stores Common Stock was converted into a warrant,
option,  or other  right (as the case may be)  entitling  the holder  thereof to
purchase  or receive  shares of Common  Stock on  identical  terms.  The powers,
rights and other  provisions  of the Common Stock were  identical to the powers,
rights and other  provisions  of the Stores Common Stock.  The  transaction  was
accounted  for as a  combination  of entities  under common  control in a manner
similar  to a pooling of  interests.  Certain  prior  period  amounts  have been
restated to reflect the effects of discontinued operations.

On December 2, 1997, the Company  consummated  the sale to Variety  Wholesalers,
Inc.  ("Variety") of all the  outstanding  capital stock of Stores pursuant to a
stock purchase agreement,  dated as of October 24, 1997, between the Company and
Variety (the "Sale").  The Sale  constituted  the  disposition by the Company of
substantially all of its assets and was approved by the holders of a majority of
the  outstanding  shares of common stock of the Company at a special  meeting of
the  stockholders  of the Company on December 2, 1997.  The total purchase price
for the Sale was  $19,200,  including  $1,920  that was  placed in  escrow.  The
proceeds of the Sale,  net of certain  transactions,  closing,  and other costs,
were $15,331. The loss resulting from the Sale was $22,446.

3.      CHANGE IN YEAR END

The Company  applied to the Internal  Revenue  Service to change its fiscal year
end to a calendar year end,  resulting in an eleven-month  reporting  period for
1998. The Internal Revenue Service granted approval of the Company's  request in
February 1999.
<PAGE>
4.      ACQUISITION AND FORMATION OF SUBSIDIARIES

On August 31, 1998, Holdings, a newly formed,  wholly-owned  Delaware subsidiary
of the Company,  consummated  the  acquisition of 90 percent of the  outstanding
common stock ("Bank Common  Stock") of WebBank,  pursuant to an assignment  (the
"Assignment")  from  Praxis  Investment  Advisers,  a Nevada  limited  liability
company  ("PIA"),  of a stock  purchase  agreement,  dated January 20, 1998 (the
"Purchase  Agreement"),  between PIA and Block Financial Corporation  ("Block"),
relating to the purchase by PIA of all of the issued and  outstanding  shares of
Bank Common Stock. Pursuant to the Assignment, the Company paid Block $4,783 for
the  shares  of Bank  Common  Stock to be  purchased  by Block  pursuant  to the
Purchase Agreement. In addition, the Company paid $288 in acquisition costs, for
a total  purchase  price of $5,071.  The  acquisition  was  accounted  for under
purchase accounting, resulting in goodwill of $1,744. On August 31, 1998, Praxis
was  formed by a cash  contribution  from the  Company  of $428 for a 90 percent
ownership of newly issued stock.

In connection  with the purchase of Bank Common Stock,  Holdings  entered into a
subscription  and  stockholders  agreement,  dated as of  August  31,  1998 (the
"Stockholders  Agreement")  with  Andrew  Winokur  ("AW"),  the  owner of the 10
percent  of the  outstanding  shares  of Bank  Common  Stock  not  purchased  by
Holdings. Pursuant to the Stockholders Agreement, Holdings agreed to purchase 90
percent,  and AW agreed to  purchase 10 percent,  of the common  stock  ("Praxis
Common Stock") of Praxis.  The Stockholders  Agreement also provides for certain
restrictions on the disposition by AW of his Bank Common Stock and Praxis Common
Stock and certain rights and obligations of Holdings and the Company to purchase
the shares of Bank Common Stock and Praxis Common Stock owned by AW.

Holdings,  AW, and Praxis entered into a management agreement on August 31, 1998
(the  "Management  Agreement")  under  which  Praxis  agreed to provide  certain
management  services to AW and Holdings in  connection  with the  ownership  and
operation of WebBank.  During the first quarter of 2000, the Company  intends to
liquidate Praxis and, subject to regulatory  approval,  contribute  Lending as a
subsidiary of WebBank.

Praxis and AW had also entered into an  employment  agreement  (the  "Employment
Agreement"),  providing for the employment of AW by Praxis. Under the Employment
Agreement, AW agreed to serve as president and chief executive officer of Praxis
for a term of five years  (which may be extended  for one or more years with the
written  agreement  of the  parties).  Under the  Employment  Agreement,  AW was
granted the authority to formulate the  recommendations  to WebBank on behalf of
Praxis pursuant to the Management  Agreement.  In early January 2000, AW and the
Company terminated their relationship. (See footnote 20.)

5.      INVESTMENT SECURITIES

Investment securities as of December 31, 1999, are summarized as follows:

                                          Held-to-maturity
                        ---------------------------------------------------
                                        Gross         Gross      Estimated
                         Amortized    unrealized    unrealized     market
                           cost         gains         losses       value
                        ----------    ----------    ----------   ----------
Collateralized MBS      $       37            --            --           37
                        ==========    ==========    ==========   ==========

                                         Available-for-sale
                        ---------------------------------------------------
                                        Gross         Gross      Estimated
                         Amortized    unrealized    unrealized     market
                           cost         gains         losses       value
                        ----------    ----------    ----------   ----------
Collateralized MBS      $      684            --            --          684
Interest-only strip            174            --            --          174
                        ----------    ----------    ----------   ----------
                        $      858            --            --          858
                        ==========    ==========    ==========   ==========
<PAGE>
Investment securities as of December 31, 1998, are summarized as follows:

                                         Available-for-sale
                        ---------------------------------------------------
                                        Gross         Gross      Estimated
                         Amortized    unrealized    unrealized     market
                            cost        gains         losses       value
                        ----------    ----------    ----------   ----------
Collateralized MBS      $    1,649            --            --        1,649
Interest-only strips           432            --            --          432
                        ----------    ----------    ----------   ----------
                        $    2,081            --            --        2,081
                        ==========    ==========    ==========   ==========

The  amortized  cost and  estimated  market value of  investment  securities  at
December 31, 1999, by contractual maturity, are shown below. Expected maturities
will differ from contractual  maturities because borrowers may have the right to
prepay obligations with or without penalties.

                            Held-to-maturity          Available-for-sale
                        ------------------------    -----------------------
                                      Estimated                  Estimated
                         Amortized      market      Amortized      market
                           cost         value         cost         value
                        ----------    ----------    ----------   ----------
Due beyond five years   $       37            37          858           858
                        ==========    ==========    ==========   ==========

6.      LOANS

Loans at December 31, are summarized as follows:

                                       1999        1998
                                     --------    --------
Commercial loans                     $  8,785       1,081
Installment loans                         982          --
Loans held-for-resale                   1,312          --
Deferred income on USDA loans            (211)         --
                                     --------    --------
                                     $ 10,868       1,081

Loans to eleven  customers  comprise  approximately 93 percent of total loans at
December 31, 1999.  The ability of the borrowers to repay their  obligations  is
dependent upon economic conditions within their respective regions.

7.      ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is summarized as follows:

                                       1999        1998
                                     --------    --------
Beginning balance                    $     --          --
Additions:
  Provision for loan losses               475          --
  Recoveries                               --          --
  Deduction-loan charge-offs               (3)         --
                                     --------    --------
Ending balance                       $    472          --
                                     ========    ========

The Company  considers the  allowance  for loan losses  adequate to cover losses
inherent  in loans and loan  commitments  at  December  31,  1999.  However,  no
assurance  can be given that the  Company  will not, in any  particular  period,
sustain loan losses that are sizable in relation to the amount reserved, or that
subsequent  evaluations  of the loan  portfolio,  in light of the  factors  then
prevailing,  including economic conditions and the Company's ongoing examination
process and that of its regulators,  will not require  significant  increases in
the allowance for loan losses.
<PAGE>
8.      RELATED PARTY TRANSACTIONS

As of March 31, 1998, the Company entered into a sub-lease for office space with
Gateway Industries, Inc. ("GWAY") for use of such space as a corporate office on
a  non-exclusive  basis.  This lease runs  through  March 31,  2001,  but may be
terminated  by  either  party  with 90 days  notice.  Warren  Lichtenstein,  the
Company's  President,  Chief Executive Officer, and Chief Accounting Officer, is
the  Chairman of the Board of Directors of GWAY.  Mr.  Lichtenstein  is also the
sole managing  member of the General  Partner of Steel Partners II, L.P.,  which
owns  approximately  48% of the common stock of GWAY.  Steel Partners  Services,
Ltd. ("SPS"),  which is owned by an entity controlled by Mr. Lichtenstein,  also
subleases  part of the office space from GWAY. In 1999, the rent was included in
a $267  management  fee charged by SPS to the Company.  Such  management  fee is
included in the Company's selling,  general and administrative expense. In 1998,
the rent was approximately $32 and was included in overhead reimbursement to SPS
of $148. In 1997 no rent, overhead, fee, or reimbursement was paid to SPS. As of
December  31, 1999 and 1998 the  Company  showed, in  relation  to SPS,  prepaid
expense of $40 and $20 and accounts payable of $12 and $11, respectively.

9.      TIME CERTIFICATES OF DEPOSIT

Time certificates of deposits as of December 31, are summarized as follows:

                                             Weighted
                                             average
                                               rate        1999
                                             --------    --------
Certificates of deposit
  greater than $100,000                         5.14%    $  4,609
Other certificates of deposit                   4.25           30
                                             --------    --------
                                                5.13%    $  4,639
                                             ========    ========

A summary of the  maturity of time  certificates  of deposit as of December  31,
1999 follows:


                                            Within one
                                               year
                                             --------
Greater than $100,000                        $  4,609
Other certificates of deposit                      30
                                             --------
                                             $  4,639

10.     SHORT-TERM BORROWINGS

WebBank has an unsecured  operating  line of credit from a  commercial  bank due
April 30, 2000, which allows WebBank to borrow up to $3,000. Interest is payable
monthly at the  commercial  bank's prime rate plus 100 basis points (9.5 percent
at  December  31,  1999).  The  operating  line of credit is  subject to certain
minimum  financial  covenants.  The average  borrowings on the operating line of
credit for the year ended December 31, 1999, were $244, the maximum  outstanding
at any  month-end  during the year ended  December 31, 1999 was $2,600,  and the
average rate during 1999 was 9.7%.
<PAGE>
11.     PREMISES AND EQUIPMENT

Premises and equipment at December 31, are summarized as follows:

                                               1999        1998
                                             --------    --------
Leasehold improvements                       $     49          43
Furniure and equipment                            137          93
                                             --------    --------
                                                  186         136
Less accumulated depreciation and
  amortization                                     85          20
                                             --------    --------
                                             $    101         116
                                             ========    ========

12.     STOCKHOLDERS' EQUITY

On November 4, 1998, at the annual meeting of stockholders  of the Company,  the
stockholders  approved a one-for-  two  reverse  split of its common  stock (the
"Reverse  Split").  Pursuant to the Reverse  Split,  which  became  effective on
November 20, 1998 (the "Effective Date"),  every two shares of common stock held
by  stockholders  owning of  record  500 or more  shares of common  stock on the
Effective  Date were  converted  into one share of common stock,  and all shares
held by  stockholders  owning of record fewer than 500 shares of common stock on
the Effective  Date were  converted  into the right to receive a cash payment in
the amount of  $2.0375  per share.  The net effect of the  Reverse  Split was to
reduce the number of shares of common stock outstanding as of the Effective Date
from  8,620,383  shares to 4,310,192  shares.  All  references  to the number of
common  shares and per common share  amounts  have been  restated to reflect the
Reverse Split.

In January of 1999 the Depository  Trust Company made a final  determination  of
78,829  shares to be treated as  representing  positions of holders of less than
250 shares (on a post-split  basis).  Accordingly,  the Company  deposited in an
escrow  account  with First Union  National  Bank $323 for the purpose of paying
cash to holders of less than 250 shares and the  corresponding  shares have been
shown as redeemed and retired.

A member of the  Company's  board of directors  contributed  cash of $180 to the
Company in August 1999.  No shares were issued as a result of this  transaction.
The Company recorded the contribution as an addition to paid-in-capital.

13.     STOCK OPTIONS AND WARRANTS

The Company's New Equity Compensation Plan was adopted on February 14, 1995. The
Plan  provided  for the  granting of a maximum of 350,000  shares of stock.  The
price of the  options  granted  was not less than 100 percent of the fair market
value of the shares on the date of grant.  The options vested  immediately  with
the Sale of Stores. At that time, all options were canceled 60 days later.

On April 24, 1997,  the Company  adopted a Long Term Stock  Incentive Plan which
provides for the granting to employees and directors of, and consultants to, the
Company  certain  stock-based  incentives  and  other  equity  interests  in the
Company.  A maximum of 250,000  shares were issuable under the Plan. The options
vest according to varied schedules, are exercisable when vested, and expire five
years from the date of issuance.

The Board of  Directors  of the  Company,  at its meeting on  September 2, 1998,
approved the merger of the New Equity  Compensation Plan (which had been adopted
in 1995)  into the Long Term Stock  Incentive  Plan  (which had been  adopted in
1997) and  certain  amendments  to the Long Term Stock  Incentive  Plan.  At the
annual meeting held November 4, 1998, the  shareholders  approved the merger and
certain  amendments to the new stock option plan (the "Merged  Plan".)  Approved
were the grants of certain stock-based  incentives and other equity interests to
employees,  directors,  and  consultants.  A maximum of 1,000,000  shares may be
issued  under the  Merged  Plan.  The  options  are vested  according  to varied
schedules,  exercisable  when  vested,  and  expire  five years from the date of
issuance.
<PAGE>
The following table summarizes stock option activity:

<TABLE>
<CAPTION>

                                                          Eleven-month
                               Year ended                 period ended                Year Ended
                            December 31, 1999          December 31, 1998           January 31, 1998
                        -------------------------------------------------------------------------------
                                       Weighted-                  Weighted-                   Weighted-
                           Number      average        Number      average        Number       average
                         of shares     exercise      of shares    exercise      of shares     exercise
                         (1,000's)      price        (1,000's)     price        (1,000's)      price
                        ----------    ----------    ----------   ----------    ----------    ----------
<S>                     <C>           <C>           <C>          <C>           <C>           <C>
Options outstanding at
  beginning of year            504    $     3.71            49   $     3.40           159    $     7.78

Options granted                 53          6.25           455         3.75            59          3.41

Options exercised/
  expired/canceled            (114)         3.65            --           --          (169)         7.46
                        ----------    ----------    ----------   ----------    ----------    ----------
Options outstanding at
  end of year                  442          4.08           504         3.72            49          3.40

Options exercisable at
  end of year                  369    $     4.01           268   $     3.95            36    $     4.36

Weighted-average fair
  value of options granted
  during the year       $     2.71                  $     1.73                 $     1.46
</TABLE>





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

<TABLE>
<CAPTION>
                                 Options outstanding                     Options exercisable
                             -------------------------------------------------------------------
                               Number        Weighted-                    Number
                             outstanding      average      Weighted-    exercisable    Weighted-
        Range of                 at          remaining      average         at          average
        exercise             December 31,   contractual    exercise     December 31,   exercise
         prices                 1999       life in years    price          1999          price
       ----------            -----------    -----------   -----------   -----------   ----------
 <S>                        <C>            <C>           <C>           <C>           <C>
 $ 2.875 to 4.313                    339          3.5     $      3.65          283    $     3.65
   4.314 to 6.470                     70          3.8            4.81           70          4.81
   6.471 to 7.000                     33          4.8            6.94           16          6.88
                             -----------                                 ----------
                                     442                         4.08          369          4.01
                             -----------                                 ----------
</TABLE>
<PAGE>
The Company  accounts  for these plans under APB Opinion No. 25,  under which no
compensation  cost has been recognized.  Had  compensation  cost for these plans
been  determined  consistent  with SFAS 123, the Company's net loss and loss per
share would have been changed to the following pro forma amounts:
<TABLE>
<CAPTION>
                                                          Eleven-month
                                           Year ended     period ended     Year Ended
                                          December 31,    December 31,     January 31,
                                              1999           1998            1998
                                           ----------      ----------      ----------
<S>                      <C>               <C>             <C>             <C>
Net loss                 As reported       $   (1,610)     $     (715)     $  (25,538)
                         Pro forma             (1,654)         (1,503)        (25,609)

Basic and diluted
  loss per share         As reported             (.37)           (.17)          (5.91)
                         Pro forma               (.43)           (.28)          (5.92)
</TABLE>
The fair value of each option  grant is estimated on the date of the grant using
the  Black-Scholes  option  pricing  model with the following  weighted  average
assumptions for the year ended December 31, 1999, the eleven-month period  ended
December 31, 1998 and the year ended January 31, 1998:  risk-free interest rates
of 4.6 percent,  4.7 percent, and 5.4 percent,  respectively;  expected dividend
yields of 0 percent for all years;  expected lives of 5 years for all years; and
expected volatility of 42 percent, 46 percent, and 39 percent, respectively. The
fair value for options granted to nonemployees  for services was estimated using
the  Black-Scholes  option  pricing  model with the following  weighted  average
assumptions for the year ended December 31, 1999: risk-free interest rate of 5.8
percent,  expected  dividend yield of 0 percent,  expected lives of 5 years, and
expected  volatility of 50 percent.  No options were granted to nonemployees for
services  during the  eleven-month  period ended  December 31, 1998 and the year
ended January 31, 1998.  Compensation  of $61 was charged to expense as a result
of options issued to nonemployees in 1999.

Warrants were issued to stockholders in 1995 related to the Company's Bankruptcy
filing in 1993. The number of Company warrants  exercisable at December 31, 1999
is 4,286.  The exercise price is updated  annually in April and as of April 1999
is $12.44 per warrant.  To acquire one share of Company  stock, a warrant holder
must exercise two warrants and pay $24.88. All warrants outstanding expire April
28, 2002.

14.     EMPLOYEE BENEFIT PLAN AND INCENTIVE PROGRAM

WebBank has a 401(k)  profit  sharing plan  covering  employees who meet age and
service  requirements.  Plan  participants  are fully vested after five years of
service.  WebBank matches  employee  contributions up to five percent of covered
compensation   at  two   hundred   percent  of  the   employee's   contribution.
Contributions to the plan amounted to approximately $60, $8, and $0 for the year
ended  December 31, 1999, the  eleven-month  period ended December 31, 1998, and
the year ended January 31, 1998, respectively.

15.     INCOME TAXES

The  Company  reported  no income  tax  expense  or  benefit  for the year ended
December 31, 1999, the eleven-month period ended December 31, 1998, and the year
ended  January 31,  1998.  The  difference  between the expected tax benefit and
actual tax benefit is primarily  attributable to the effect of the net operating
losses,  offset by an increase in the  Company's  deferred  tax asset  valuation
allowance.   The  tax  effects  of  temporary  differences  that  give  rise  to
significant portions of the deferred tax assets and liabilities were as follows:
<PAGE>
                                            December 31,    December 31,
                                                1999            1998
                                             ----------      ----------
Deferred tax assets:
  Net operating loss carryforward            $   14,448          12,647
  Deferred income                                    19              19
  Accrued bonuses                                     8              14
  Accrued vacation                                   12              --
  Allowance for loan loss                           179              --
  Premises and equipment                             26              --
                                             ----------      ----------
      Total deferred tax assets                  14,692          12,680
        Less valuation allowance                (14,692)        (12,680)
                                             ----------      ----------
Net deferred tax assets                      $       --              --
                                             ==========      ==========

The net changes in the total valuation allowance for the year ended December 31,
1999, and the  eleven-month  period ended December 31, 1998, were an increase of
$2,012 and a decrease of $1,063 respectively.

At December 31, 1999,  the Company had certain net operating loss carry forwards
of  approximately  $38,200 which are scheduled to expire from 2003 through 2019.
The Company has treated such net  operating  losses in  accordance  with Section
382(l)(5) of the Internal  Revenue  Code.  As a result,  there is  approximately
$27,000 in net operating  losses incurred prior to the Effective Date as well as
$11,200 incurred subsequent to the Effective Date available as carryovers.
All net operating losses may be subject to certain limitations on utilization.

16.     DISCLOSURES ABOUT THE FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying value for short-term  financial  instruments that mature or reprice
frequently at market rates  approximates fair value. Such financial  instruments
include:  cash  and  cash  equivalents,   accrued  interest  receivable,  demand
deposits,  accounts payable and accrued  expenses,  time certificates of deposit
and short term borrowing.  The difference  between the fair market value and the
carrying value for loans and investment securities is not considered significant
to the financial statements.

17.     COMMITMENTS AND CONTINGENCIES

The Company has entered  into various  operating  leases for office  space.  The
schedule of future minimum  operating lease payments as of December 31, 1999, is
summarized as follows (in thousands):


          2000                          $    129
          2001                               111
          2002                               102
          2003                               102
          2004                               102
          Thereafter                          21
                                        --------
                                        $    567
                                        ========


The  Company's  rental  expense  for the  year  ended  December  31,  1999,  the
eleven-month period ended December 31, 1998, and the year ended January 31, 1998
amounted to approximately $199, $60, and $0 respectively.

The Company is a party to financial  instruments with off-balance sheet risk. In
the normal course of business,  these financial  instruments include commitments
to extend  credit in the form of  loans.  At  December  31,  1999 and 1998,  the
Company's undisbursed  commercial loan commitments totaled approximately $21,000
and $4,600 respectively.

WebBank has a Cash Management Account ("CMA") with the Federal Home Loan Bank of
Seattle  ("FHLB")  at an  amount  equal to five  percent  of total  assets.  CMA
advances  must be fully  collateralized  according  to the terms of the Advance,
Security,  and Deposit  Agreement that the Bank signed with the FHLB. The CMA is
reviewed on an annual basis and market  interest rates are set at the time funds
are  borrowed.  As of December 31, 1999,  no  borrowings  were drawn on this CMA
account.
<PAGE>
18.     REGULATORY REQUIREMENTS

WebBank is subject to various  regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate certain actions by regulators that, if undertaken,  could have a direct
material  effect on the Bank's  financial  statements.  Under  capital  adequacy
guidelines and the regulatory  framework for prompt corrective  action, the Bank
must meet specific capital guidelines that involve quantitative  measures of the
Bank's assets,  liabilities,  and certain  off-balance sheet items as calculated
under  regulatory   accounting   practices.   The  Bank's  capital  amounts  and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Bank to  maintain  minimum  amounts  and ratios of Total and Tier I
capital (as defined in the  regulations) to  risk-weighted  assets (as defined),
and of Tier I capital (as  defined) to average  quarterly  assets (as  defined).
Management  believes,  as of December 31, 1999,  that the Bank meets all capital
adequacy requirements to which it is subject.

As of December 31, 1999 and 1998, the most recent  notification from the Federal
Deposit Insurance  Corporation  categorized the Bank as "well capitalized" under
the regulatory framework.  To be categorized as "well capitalized" the Bank must
maintain  certain  Total and Tier I capital to  risk-weighted  assets and Tier I
capital to average  quarterly  assets ratios.  There are no conditions or events
since  that  notification  that  management  believes  have  changed  the Bank's
category.

Capital amounts and ratios are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                       Well Capitalized            Minimum capital
                                 Actual                   Requirement                Requirement
                         -------------------------------------------------------------------------------
                           Amount        Ratio         Amount       Ratio         Amount        Ratio
                         ----------    ----------    ----------   ----------    ----------    ----------
<S>                      <C>           <C>           <C>          <C>           <C>           <C>
As of
December 31, 1999:

Total Capital (Tier I +
  Tier 2) to risk
  weighted assets        $   3,466         54.33%    $      638       10.00%    $      510         8.00%

Tier I Capital to risk
  weighted assets            3,384         53.04%           383        6.00%           255         4.00%

Tier I Capital to average
  assets (Leverage Ratio)    3,384         33.09%           511        5.00%           409         4.00%

As of
December 31, 1998:

Total Capital (Tier I +
  Tier 2) to risk
  weighted assets        $   3,455        126.65%    $      272       10.00%    $      218         8.00%

Tier I Capital to risk
  weighted assets            3,455        126.65%           164        6.00%           109         4.00%

Tier I Capital to average
  assets (Leverage Ratio)    3,455         80.01%           216        5.00%           173         4.00%

</TABLE>
<PAGE>
19.     SERVICING ASSET AND LIABILITIES

In connection with certain  businesses in which the Company sells  originated or
purchased  loans with servicing  retained,  servicing  assets or liabilities are
recorded  based on the relative fair value of the  servicing  rights on the date
the loans are sold. Servicing assets and liabilities are amortized in proportion
to and over the  period of  estimated  net  servicing  income  and  expense.  At
December  31,  1999 and 1998,  servicing  assets,  which are  included  in Other
Assets,  were  $114  and 145,  respectively.  At  December  31,  1999 and  1998,
servicing liabilities,  which are netted against loans receivable, were $108 and
$0. Servicing assets are periodically evaluated for impairment based on the fair
value of those assets.

20.     SUBSEQUENT EVENTS

In January  2000,  a former  executive  officer and  director  of the  Company's
subsidiary  Praxis (the "officer")  filed a lawsuit in the Superior Court of the
State of  California,  County of Napa against the Company,  Praxis and Holdings.
The lawsuit  alleges that Praxis has breached its employment  agreement with the
officer.  The lawsuit also asserts  claims for  interference  with  contract and
unjust enrichment based upon the purported wrongful termination of the officer's
employment  contract with Praxis.  The lawsuit  seeks damages of an  unspecified
amount and compliance by Praxis with the  termination  pay out provisions in the
officer's  employment  agreement  relating  to  purchase  of the  officer's  10%
interest in Praxis and WebBank (both 90% covered subsidiaries of the Company) at
their  fair  market  value.  The time  for the  Company  to  answer  and  assert
counterclaims  in this matter has not yet  expired.  The Company and Praxis deny
that  Praxis  wrongfully  terminated  the  officer's  employment  and intends to
vigorously  defend this  matter.  The Company does not believe that this lawsuit
will have a material impact on its financial  condition,  results of operations,
or liquidity.