<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
                                   FORM 10-K
 
(MARK ONE)
 
<TABLE>
<S>        <C>
/X/                         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                               OF THE SECURITIES EXCHANGE ACT OF 1934
                            FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
                                                 OR
 
/ /                      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF
                                 THE SECURITIES EXCHANGE ACT OF 1934
</TABLE>
 
         FOR THE TRANSITION PERIOD FROM            TO
 
                         COMMISSION FILE NUMBER 1-11855
                            ------------------------
                            HAMBRECHT & QUIST GROUP
 
             (Exact name of Registrant as specified in its charter)
 
<TABLE>
<S>                                       <C>
               DELAWARE                                 94-3246636
     (State or other jurisdiction                    (I.R.S. Employer
  of incorporation or organization)               Identification Number)
</TABLE>
 
                                ONE BUSH STREET
                            SAN FRANCISCO, CA 94104
 
          (Address of principal executive offices, including zip code)
 
                                 (415) 439-3000
 
              Registrant's telephone number, including area code)
 
        Securities registered pursuant to Section 12(g) of the Act: None
 
          Securities registered pursuant to Section 12(b) of the Act:
 
<TABLE>
<CAPTION>
                                                 NAME OF EACH EXCHANGE ON
         TITLE OF EACH CLASS                         WHICH REGISTERED
--------------------------------------    --------------------------------------
<S>                                       <C>
  Common Stock, par value $0.01 per              New York Stock Exchange
                 share                               Pacific Exchange
</TABLE>
 
                           --------------------------
 
    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
 
                      Yes  /X/                      No  / /
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference to Part III of this Form 10-K or any
amendment to this Form 10-K. / /
 
    The aggregate market value of voting stock held by nonaffiliates of the
Registrant was approximately $503,892,690 as of December 22, 1997, based upon
the last sale price as reported on the New York Stock Exchange on such date.
 
    Number of shares of common stock issued and outstanding as of December 22,
1997: 24,067,731.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    Portions of the definitive Proxy Statement to be filed with the Securities
and Exchange Commission no later than 120 days after the Registrant's fiscal
year ended September 30, 1997 and to be delivered to stockholders in connection
with the Annual Meeting of Stockholders to be held February 24, 1997 and the
1997 Annual Report to Stockholders are incorporated by reference into Parts II
and III of this Form 10-K.
 
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<PAGE>
ITEM 1. BUSINESS
 
GENERAL
 
    Hambrecht & Quist Group, a Delaware corporation, was formed in June 1996 as
a holding company for all of the operations of Hambrecht & Quist. The Company is
the successor to the businesses conducted by Hambrecht & Quist Group, a
California corporation established in 1983 and renamed Hambrecht & Quist
California in August 1996 ("H&Q California"), and Hambrecht & Quist, L.P., a
California limited partnership established in 1993 ("LP"). In 1983, H&Q
California succeeded to the business of Hambrecht & Quist, a California
partnership formed in 1968. Unless the context otherwise requires, "Hambrecht &
Quist," "H&Q" and the "Company" refer to Hambrecht & Quist Group, a Delaware
corporation, and its predecessors, affiliates and subsidiaries. Hambrecht &
Quist and H&Q are registered trademarks of the Company.
 
    The Company operates primarily as a holding company and indirectly owns all
of the subsidiaries and equity interests in affiliated entities that previously
were owned by either H&Q California or LP. Hambrecht & Quist L.L.C. ("H&Q LLC"),
the Company's 100% beneficially owned subsidiary, is the Company's principal
investment banking subsidiary and securities broker-dealer.
 
    The Company's other principal operating subsidiaries or affiliated entities,
which are directly or indirectly wholly owned except as indicated, are as
follows: RvR Securities Corp. ("RvR Securities"), a registered broker-dealer
serving companies with smaller capitalizations than H&Q LLC's typical
underwriting clients; Hambrecht & Quist Capital Management Incorporated
("Capital Management"), a registered investment adviser to two publicly traded
closed-end mutual funds; Hambrecht & Quist Venture Partners, a California
limited partnership ("Venture Partners"), a venture capital fund management
partnership in which the Company has a controlling general partnership interest;
Hambrecht & Quist Guaranty Finance, LLC (together with its predecessor,
Hambrecht & Quist Guaranty Finance, L.P., "Guaranty Finance"), an 87.5%-owned
subsidiary of the Company engaged in asset-based financing; and Hambrecht &
Quist Transition Capital, LLC ("Transition Capital"), an 87.5%-owned subsidiary
of the Company formed in 1996 to provide bridge loans and mezzanine financings
to emerging growth companies.
 
    In addition, the Company's international activities are carried out in part
through Hambrecht & Quist Euromarkets, S.A., formerly Hambrecht & Quist Saint
Dominique, a broker-dealer registered in France that provides investment banking
services to European companies.
 
    The Company also maintains minority investments in H&Q Asia Pacific, Ltd.
("Asia Pacific"), which provides financial advisory and fund management services
in the Asia Pacific region, Beeson Gregory Holdings Limited, a London-based
brokerage firm and financial adviser specializing in growth companies, De Santis
Capital Management, L.P., a registered investment adviser and Tamir Fishman &
Co. Ltd., an investment bank, venture capital and financial consulting company
focused on Israeli growth companies. The Company also has a 20% interest in
Lewco Securities Corp. ("Lewco"), which acts as a clearing broker and depository
for Schroder & Co. and the Company.
 
HAMBRECHT & QUIST
 
    Hambrecht & Quist is a major bracket investment bank focused on emerging
growth companies and growth-oriented investors. The Company's core strength has
been the early identification and sponsorship of leading growth companies in its
chosen areas of focus through analysis of industry and technology trends. The
Company leverages its industry expertise by providing growth companies and
growth investors with a full range of investment banking and brokerage services,
and by investing its own capital in emerging growth companies.
 
    Hambrecht & Quist was formed in 1968 to focus on the needs of emerging
growth companies and their investors. It has grown its business by expanding the
range of services it provides to growth companies
 
                                       1
<PAGE>
and investors, by servicing the needs of larger size companies, and by
developing expertise in new industries and markets. H&Q, from its inception,
combined equity underwriting and brokerage services for emerging growth
companies with venture capital investing. From its early concentration on the
technology and healthcare industries, Hambrecht & Quist has broadened its focus
to encompass the branded consumer industry and companies providing business
information, outsourcing and healthcare services.
 
    H&Q was founded with and maintains a commitment to working closely with
entrepreneurial companies and investors interested in such companies. H&Q
believes that it has developed a strong internal culture that emphasizes a
long-term investment outlook. H&Q believes that its focus on rapidly growing
entrepreneurial companies and growth-oriented investors and its tradition of
principal investing, along with its broad internal distribution of equity
ownership, have combined to sustain this culture.
 
    H&Q organizes its research and investment banking professionals into
industry teams. Each team, often working with Hambrecht & Quist's venture
capital professionals, endeavors to develop and maintain an in-depth
understanding of the secular and cyclical trends driving that particular
industry sector. In addition, each team of professionals maintains close
relationships not only with private and public growth companies, but also with
venture capital and key institutional investors, technical experts, professional
service providers and other key industry participants. Through these
relationships, H&Q gains the opportunity to participate actively in the growth
of promising entrepreneurial companies.
 
    Hambrecht & Quist believes that its industry focus and long-term
orientation, together with the depth of its resources committed to the growth
company sector, have made H&Q a leading underwriter of public offerings of
securities for emerging growth companies in its areas of focus.
 
    For information regarding certain risks that face the Company and its
business, see "Factors Affecting the Company's Business, Operating Results and
Financial Condition."
 
RESEARCH FOCUS
 
    H&Q believes that industry specialization is crucial to meeting the demands
of its clients for sophisticated and informed investment and strategic advice.
The Company's approach is to serve its clients through an in-depth understanding
of sharply defined industry segments and the leading participants in those
segments. H&Q's research universe is presently divided into the industry groups
and industry segments set forth below. Rather than dedicating, for example, just
one senior analyst to cover all aspects of a broadly defined industry, the
Company dedicates focused research support to many segments within each of the
industries it serves. In certain instances an H&Q analyst provides coverage for
more than one industry segment.
 
                           HAMBRECHT & QUIST RESEARCH
 
[Graphic consisting of four organization charts ("Technology," "Healthcare,"
"Services" and "Branded Consumer") illustrating the division of the Company's
research effort.
 
The "Technology" organization chart reflects a division into six categories each
with specific subcategories. These categories are (with the subcategories listed
in parenthesis): "Communications" ("Internet Access," "Internetworking/LAN,"
"Mobile," "Telecommunications Equipment/WAN" and "Wireless"), "Distributed
Systems" ("Consumer Software & Digital Media," "Internet Content,"
"Distribution" and "PC Peripherals"), "Enterprise Software/Internet" ("DBMS &
Tools," "Systems Management," Enterprise Applications," "Productivity
Applications", "Desktop Software" and "Web Software"), "Technical Systems"
("Design Automation," "Embedded Control" and "Technical Software"),
"Semiconductor/Capital Equipment" ("Analog," "Digital," "Fabless" and
"Equipment") and "Special Situations" ("Imaging" and "Services").
 
The "Healthcare" organization chart reflects a division into four categories,
two of which have specific subcategories. These categories are (with the
subcategories listed in parenthesis): "Biotechnology," "Emerging
Pharmaceuticals/Drug Delivery," "Medical Devices" ("Cardiovascular,"
"Orthopedics," "Urology" and "Women's Health") and "Healthcare Services"
("Contract Research Organizations," "Health Maintenance Organizations,"
"Physician Network Management" and "Subacute").
 
The "Services" organization chart reflects a division into four categories, one
of which has specific subcategories. These categories are (with the
subcategories listed in parenthesis): "Financial Services" ("Internet" and
"Transaction Processors"), "Healthcare Information Services," "Business
Services" and "Special Situations."
 
The "Branded Consumer" organization chart reflects a division into four
categories which are "Food and Beverage," "Specialty Apparel," "Sports &
Leisure" and "Services."]
 
                                       2
<PAGE>
    In order to achieve this depth and specialization, the Company typically
recruits or trains analysts with significant industry and technical expertise,
in addition to financial analytical expertise. H&Q believes this specialized
approach enables it to generate analytical research that enhances the quality of
investment decisions in the fast-changing and technologically sophisticated
industries it covers.
 
    H&Q's research analysts cover individual publicly traded companies and
periodically publish comprehensive studies of an industry or a long-term
investment theme. In addition to written publications, the Company's analysts
play a prominent role at the Company's investor conferences by presenting
summaries of key industry trends.
 
    The Company's research analysts work closely with its investment banking and
venture capital professionals to identify promising privately held companies.
H&Q believes that early contacts with private companies are important not only
to develop its underwriting and principal transactions activities, but also to
achieve and maintain an understanding of the rapidly evolving growth industries
on which the Company focuses. The research analysts also, from time to time,
assist in screening and/or evaluating proposed principal investments for the
Company's venture capital and investment banking professionals. In addition,
H&Q's research analysts work closely with sales and trading professionals to
enhance the access of the Company's institutional investor clients to up-to-date
industry analysis.
 
    H&Q has been recognized for its success in bringing together leading growth
companies and growth investors at the annual conferences it sponsors. Each
conference focuses on a different growth industry or geographic region. In
fiscal 1997, H&Q sponsored the following investment conferences:
 
<TABLE>
<CAPTION>
         HAMBRECHT & QUIST CONFERENCE                   DATE             LOCATION
-----------------------------------------------  ------------------  ----------------
<S>                                              <C>                 <C>
plaNET.wall.street (Internet Symposium)          October 1996        New York
Healthcare Conference                            January 1997        San Francisco
plaNET.wall.street Enterprise Conference         March 1997          San Francisco
Technology Conference                            April 1997          San Francisco
Annual Private Equity CFO Conference             June 1997           San Francisco
Branded Consumer Growth Company
  Conference                                     June 1997           Napa, CA
European Growth Company Conference               June 1997           London
H&Q--Tamir Fishman Communication
  and Internet Conference                        September 1997      Tel Aviv
</TABLE>
 
    More than 800 public and private companies made presentations to investment
professionals, venture capitalists and other participants in the securities and
emerging growth company industries at the most recent sessions of the Company's
annual conferences. The Hambrecht & Quist Technology Conference, which held its
25th annual session in 1997, was the first annual investment conference focusing
exclusively on emerging growth companies in the technology sector. For 15 years,
the Company's annual Healthcare Conference has provided a forum for companies in
the healthcare industry to give presentations to growth investors, and was the
first conference of its kind. Since 1993, Hambrecht & Quist has sponsored an
annual conference focused on emerging branded consumer product companies. In
October 1995, H&Q sponsored the first major investment conference dedicated
solely to Internet-related companies, and held follow-up conferences in 1996 and
1997.
 
    To facilitate the analysis of long-term trends, the Company has developed
the H&Q Technology Index, the H&Q Growth Index and nine sector indices,
including the H&Q Branded Consumer Growth Index and the H&Q Internet Index.
These indices serve as a tool for comparing certain industry groups with one
another, with the marketplace as a whole, and with the overall economy. Many
growth companies use the H&Q indices to compare their stock price performance
with other companies, for example, in annual proxy statements.
 
                                       3
<PAGE>
INVESTMENT BANKING
 
    Hambrecht & Quist provides its corporate clients with a broad range of
services, principally involving public offerings of equity and convertible debt
securities, private placements of equity securities, and advice in merger,
acquisition and strategic partnering transactions, as well as after-market
services and support.
 
    H&Q's investment banking professionals focus their activities along the same
industry lines as the Company's research analysts. The Company believes that by
developing an in-depth understanding of the industries they serve, these
investment banking professionals enhance their ability to advise issuers with
respect to strategic and financing options.
 
    DOMESTIC UNDERWRITING
 
    H&Q is a leading underwriter of public offerings of equity securities for
emerging growth companies in its industry areas of focus. During fiscal 1997,
the Company lead managed 32 offerings and co-managed 62 offerings of equity and
convertible debt securities by 85 companies that raised an aggregate of over
$7.6 billion.
 
    H&Q concentrates its domestic underwriting efforts in high-growth industry
sectors where the Company believes it has a relative competitive advantage due
to its investment banking relationships and its research, trading and
distribution capabilities. Within its selected industries, the Company
concentrates on emerging companies that it believes have the potential to become
industry leaders. H&Q believes that it has established a strong record
underwriting software, communications, biotechnology, computer hardware,
semiconductor, Internet, business information and outsourcing services and
healthcare services companies. The Company is also seeking to develop a strong
position as a managing underwriter of securities offerings by branded consumer
companies.
 
    As a result of the high proportion of venture capital invested in emerging
growth companies in California, H&Q's underwriting clients have to date been
concentrated in this state. Approximately 44% of the companies for which H&Q
served as manager or co-manager of a securities offering during fiscal 1997 had
principal offices located in California. See "Factors Affecting the Company's
Business, Operating Results and Financial Condition--Risks of Losses Due to
Regional Concentration of Emerging Growth Companies."
 
    H&Q's strategy is to maintain long-term relationships with its corporate
clients by serving their capital raising needs beyond their initial public
offerings of securities. H&Q also seeks to increase its base of publicly held
clients by serving as a manager or co-manager in follow-on offerings for
companies that H&Q believes have attractive investment characteristics, whether
or not H&Q participated as a manager or co-manager in the initial public
offering of securities for such companies.
 
    The following table sets forth the distribution among industries of public
equity offerings completed during fiscal 1997 in which the Company acted as
manager or co-manager. Italicized data indicates the number of transactions in
which the Company served as lead manager:
 
<TABLE>
<CAPTION>
                                                           NUMBER OF TRANSACTIONS COMPLETED
                                                               (NUMBER OF LEAD MANAGED
INDUSTRY                                                            TRANSACTIONS)
---------------------------------------------------------  --------------------------------
<S>                                                        <C>                               <C>
Technology...............................................                 49 (14)
Healthcare...............................................                 22  (7)
Services.................................................                 15  (9)
Branded Consumer.........................................                  8  (2)
                                                                                                     -
                                                                         -------
  Total:.................................................                 94 (32)
                                                                                                     -
                                                                                                     -
                                                                         -------
                                                                         -------
</TABLE>
 
                                       4
<PAGE>
    In recent years, H&Q has increased its expertise in providing offerings of
convertible debt securities. During fiscal 1997, Hambrecht & Quist completed 13
convertible debt transactions involving an aggregate of $2.0 billion in
securities. During fiscal 1997, underwriting revenues from convertible debt
securities transactions comprised less than 5% of the Company's total revenues.
The Company's convertible debt underwriting activities are small both in number
of transactions and dollars raised compared to major bracket firms overall, many
of which serve more mature industries.
 
    Hambrecht & Quist provides after-market support to its underwriting clients
through the supply of information concerning institutional holdings within the
issuer's shareholder base, as well as data concerning the market performance of
the corporate client's stock and other stocks in the issuer's industry. The
Company's Corporate Services group identifies and accesses relevant research,
company news, market trends, institutional ownership data, trading activity and
performance reporting, and arranges meetings with institutional shareholders to
assist newly public companies in developing their investor relations efforts.
 
    INTERNATIONAL ACTIVITIES
 
    H&Q is actively developing its international investment banking business
both by assisting non-U.S. companies in raising capital in the United States and
by improving access to local capital for growth companies in other countries.
While revenues from international underwriting activities have grown as a
percentage of the Company's total revenues, during fiscal 1997, these revenues
comprised less than 10% of the Company's underwriting revenues and less than 5%
of the Company's total revenues.
 
    During fiscal 1997, the Company managed or co-managed 11 offerings for
companies with primary operations outside the U.S., raising a total of
approximately $919 million. These transactions included three initial public
offerings and three follow-on public offerings for European growth companies,
and two follow-on public offerings on Nasdaq and one convertible debt
transaction for Israeli growth companies. This level of underwriting activity
for non-U.S. companies represents a decrease from the 15 equity offerings
raising a total of $1.1 billion, in which the Company served as a manager or
co-manager during fiscal 1996.
 
    Hambrecht & Quist has developed strategic relationships with local financial
institutions in Europe in order to build relationships with leading European
growth companies and with the financial communities which serve these companies.
These relationships are also intended to develop H&Q's European investment
banking presence on the EASDAQ market, which was launched in October 1996, as
well as the other emerging stock markets of Europe. EASDAQ's charter is to serve
as a Nasdaq-type stock market for emerging growth companies in Europe. H&Q is a
charter member of the European Association of Securities Dealers and a founding
investor in EASDAQ.
 
    In 1997, Hambrecht & Quist acquired from a French financial institution the
50% of Hambrecht & Quist Euromarkets, S.A. ("H&Q Euromarkets"), formerly known
as Hambrecht & Quist Saint Dominique, that Hambrecht & Quist did not already
own. H&Q Euromarkets is an underwriter and market-maker on the EASDAQ market, as
well as for le Nouveau Marche, a Paris-based stock market for emerging growth
companies that was launched in February 1996. During the fiscal year ended
September 30, 1997, H&Q Euromarkets completed one public offering on le Nouveau
Marche and six public offerings on the EASDAQ market.
 
    In the United Kingdom, H&Q holds a minority equity position in Beeson
Gregory Holdings Limited, a London-based brokerage firm and financial advisor
specializing in growth companies. In addition, the Company has a London office
with institutional sales and corporate finance functions.
 
    In Israel, H&Q holds a minority interest position in Tamir Fishman & Co.
Ltd., a Tel Aviv-based investment bank, venture capital and financial consulting
company focused on Israeli growth companies.
 
                                       5
<PAGE>
    The Company's strategy in Asian markets has been to focus initially on
venture capital investments in promising growth companies through H&Q's minority
investment in Asia Pacific. H&Q believes that this strategy will enable the
Company to develop and maintain relationships with growth companies in the
region.
 
    MERGER AND ACQUISITION ADVISORY SERVICES
 
    Hambrecht & Quist offers a broad range of merger and acquisition ("M&A")
advisory services to growth companies. The Company markets its M&A advisory
services both to H&Q's existing base of corporate clients and to other companies
that can benefit from the Company's expertise. The Company offers advisory
services with respect to purchases and sales of businesses; strategic and cross
border partnerships; divestitures and corporate restructurings; hostile takeover
defense strategies; fairness opinions in acquisition, investment and defensive
transactions; and valuations of businesses and technology assets. Since H&Q
expanded its specialized M&A practice in 1995, it has announced or completed
more than 132 transactions with an aggregate value of $16.4 billion. During
fiscal 1997, H&Q handled a record volume of M&A transactions providing M&A
services in over 53 assignments representing nearly $7 billion of completed
transactions.
 
    The Company's M&A expertise has been developed over the years and has been
supported by the close involvement of professionals from the industry groups in
both investment banking and research. The Company believes that early
identification of emerging industry and technical trends, together with focused
industry research coverage, enhances the effectiveness of its M&A professionals'
strategic and valuation advice. H&Q's M&A professionals provide industry
understanding and strategic advice as well as traditional execution skills.
 
    PRIVATE PLACEMENTS AND STRUCTURED FINANCE
 
    H&Q formalized its private placement capabilities in 1991 with the creation
of a group which focuses on acting as placement agent in private securities
transactions. H&Q assists in the placement of these securities for a fee, but
without underwriting the offered securities. Acting as placement agent generally
entails advising the issuer regarding the structure and other aspects of the
financing, assisting in the preparation of appropriate disclosure documents and
soliciting prospective qualified investors. The private placement/structured
finance group places equity and fixed income securities with institutional
investors, private capital funds, strategic corporate investors and
sophisticated, high net worth individuals. During fiscal 1997, the group
completed 17 private placement transactions, raising over $278 million for
growth companies. This group often serves corporate clients in their early
stages and, as these entrepreneurial companies grow, H&Q seeks to sustain the
relationship and provide other services. The group also assists publicly traded
corporate clients that undertake convertible debt financings or conduct private
offerings of registered and unregistered securities.
 
SALES, TRADING AND SYNDICATE
 
    H&Q provides a broad range of sales and trading services to investors and
seeks to serve as one of the top market-makers for the equity securities of
emerging growth companies for which H&Q has served as a managing or co-managing
underwriter. The Company leverages its research capability by identifying
companies that it believes have the potential to become leaders in their
respective industries and attempting to become a leading market-maker in the
shares of those companies, often taking large positions to satisfy the needs of
institutional clients for a liquid market in this group of companies.
 
    INSTITUTIONAL SALES AND TRADING
 
    At September 30, 1997, H&Q had 34 institutional sales professionals covering
growth-oriented investors in many countries, primarily in North America, Western
Europe and Japan. H&Q's focus on
 
                                       6
<PAGE>
growth industries enables its sales and trading organization to develop an
in-depth understanding of these sectors and companies and to better serve its
investor clients. The Company's institutional sales activities are conducted
from its offices in San Francisco, New York, Boston, San Diego and London.
 
    At September 30, 1997, H&Q had 49 trading professionals involved in market
making in both Nasdaq and exchange-listed securities. The most significant
portion of the Company's institutional revenues arises from trading in Nasdaq
securities. At September 30, 1997, H&Q made a market in nearly 400 Nasdaq
stocks. Additionally, at September 30, 1997, H&Q had 29 coverage traders,
servicing the trading desks of major institutions worldwide. Orders are executed
daily as principal or agent in both the listed and Nasdaq markets for equities,
convertible and non-convertible debt, including municipal bonds, options and
other derivative securities. The Company's trading activities are conducted from
its offices in San Francisco, New York and Boston. Hambrecht & Quist clears its
trading transactions through Lewco.
 
    EXECUTIVE FINANCIAL SERVICES
 
    Since its founding in 1968, H&Q has provided retail brokerage services to
individual investors and small institutions interested in emerging growth
company securities. In 1994, this business unit was renamed Executive Financial
Services ("EFS") and its strategies were realigned in an effort to grow the
business. This strategic realignment entailed: (i) increasing the focus of this
business on broadening the range and depth of services provided to executives of
growth companies; (ii) providing appropriate services to all employees of this
client base, rather than only the top executives; (iii) attracting new high net
worth investors to H&Q by providing differentiated investment ideas and services
and (iv) recruiting and retaining additional experienced and productive brokers
to serve high net worth individuals.
 
    The EFS group operates out of the Company's San Francisco, New York, Boston
and Newport Beach
offices. In addition to handling Nasdaq and exchange-listed brokerage
transactions, EFS brokers provide other services, including sales of restricted
securities, fixed income investments and consulting for options, hedging, the
selection of outside money managers, mutual funds and cash management. At
September 30, 1997, the Executive Financial Services group included 83 EFS
brokers functioning in 65 partner teams.
 
    VENTURE SERVICES
 
    H&Q provides specialized services to the general and limited partners of
venture capital and buyout funds, corporate development functions within large
corporations and certain high net worth individuals who participate actively in
venture capital investments. These services include the sale of restricted
securities, management of in-kind stock distributions by venture capital funds
to their investors, sales of shelf-registered securities, private placements and
acquisition or sale of large equity positions. The Company also provides venture
capitalists with timely information concerning the publicly traded shares
included in venture capital investment portfolios. This group was established in
1994 as a separate department within H&Q in recognition of the strategic role
played by venture capital investors in H&Q's areas of focus and in establishing
and developing a close relationship between the Company and the companies in
which venture capitalists hold equity positions. At September 30, 1997, the
Venture Services group was comprised of five employees.
 
    SYNDICATE
 
    The Company participates in public offerings of securities either by acting
as manager or co-manager of an underwriting syndicate, or by acting as a member
of an underwriting syndicate managed by other investment banks. In both cases,
the Company risks its capital through its participation in a commitment to
purchase securities from an issuer and to resell them to the public. The
Company's syndicate activities include managing the marketing and book-building
process of underwritten transactions the Company is managing, participating in
discussions leading to the offering price of securities and the supervision of
initial market-making for lead-managed deals. The Syndicate department is also
responsible for developing
 
                                       7
<PAGE>
and maintaining relationships with the syndicate departments of other investment
banks. At September 30, 1997, the Syndicate department was comprised of ten
employees.
 
VENTURE CAPITAL AND PRINCIPAL INVESTMENT ACTIVITIES
 
    From the Company's inception, venture capital investing has been an
important component of H&Q's strategy of identifying and building early
relationships with promising emerging growth companies. H&Q currently conducts a
broad range of venture capital and principal investment activities. In the late
1980s, the Company determined that its domestic venture activities would be most
effectively carried out through a strategy of making fewer and smaller venture
capital investments and more direct Company participation in these investments.
As of September 30, 1997, assets under management by the venture capital group
amounted to over $300 million.
 
    SOLE PURPOSE VENTURE CAPITAL PARTNERSHIPS AND DIRECT STRATEGIC INVESTMENTS
 
    Since 1992, the Company has made venture capital and mezzanine investments
by means of limited partnerships that are each formed for the sole purpose of
enabling the Company, its senior employees and others to invest in a specific
private company. The Company receives no management fees in connection with such
investments, but it participates in any profits of the partnerships. Certain of
the Company's professionals share in the profit participation of each
partnership based on their specific contribution to identifying, structuring and
monitoring the partnership's investment. In fiscal 1997, approximately $71.3
million was invested in such partnerships, of which $18.6 million was invested
by the Company.
 
    Since the mid-1980s, the Company has, from time to time, invested solely for
its own account in private companies that offer a strategic and financial
opportunity. The Company in recent years has also invested capital and obtained
minority, non-controlling interests in a number of complementary asset-
management organizations, including De Santis Capital Management, L.P., a
registered investment adviser.
 
    STRATEGIC AND SPECIALTY FUNDS
 
    The following listing summarizes the Company's active and specialty funds as
of September 30, 1997:
 
    ASIA PACIFIC.  Asia Pacific was established in 1985 to provide financial
advisory and fund management services to investors and entrepreneurs throughout
the Asia Pacific region. As of September 30, 1997, Asia Pacific's operations
were among the largest of venture capital firms in the region, managing 13 funds
with a combined total of approximately $630 million in committed capital.
 
    Hambrecht & Quist holds a minority interest in Asia Pacific's management
entities, with the majority interest held by Asia Pacific's management teams.
H&Q also is entitled to certain participations in the profits of existing and
future Asia Pacific funds.
 
    HAMBRECHT & QUIST CAPITAL MANAGEMENT.  In 1987, the Company formed Hambrecht
& Quist Capital Management Incorporated ("Capital Management") to make and
manage investments in publicly traded and privately held companies principally
engaged in the development, production or distribution of products or services
generally related to scientific advances in healthcare, agriculture and
environmental management. Capital Management manages two publicly traded
closed-end mutual funds: H&Q Healthcare Investors (NYSE:HQH) and H&Q Life
Sciences Investors (NYSE:HQL). At September 30, 1997, these funds had combined
net assets of approximately $339.7 million, of which approximately 15% was
comprised of venture capital and other investments subject to resale
restrictions. Capital Management is compensated solely on the basis of
management fees as a percentage of assets under management. Capital Management
is wholly owned by H&Q.
 
                                       8
<PAGE>
    ADOBE VENTURES, L.P.  In 1994, Hambrecht & Quist formed a limited
partnership with Adobe Systems Incorporated ("Adobe") that invests in companies,
products or technologies strategic to Adobe's interests. Adobe committed
approximately $40 million in capital. The Company receives an annual management
fee based on the amount of capital committed and participates in any profits of
the partnership. Certain of the Company's venture capital professionals share in
the profit participation.
 
    ADOBE VENTURES II, L.P.  In March 1997, Hambrecht & Quist formed a second
limited partnership with Adobe that invests in companies, products or
technologies strategic to Adobe's interests. Adobe has committed $40 million in
capital. The Company receives an annual management fee based on the amount of
capital committed and participates in any profits of the partnership. Certain of
the Company's venture capital professionals share in the profit participation.
 
    TI VENTURES L.P.  In June 1996, Hambrecht & Quist formed a limited
partnership with Texas Instruments Incorporated ("TI") for the purpose of
investing in companies that operate in the field of digital communications, with
an emphasis on applications and markets requiring integrated technology, such as
digital video. TI has committed $30 million of capital to the partnership. The
Company will receive an annual management fee based on the amount of capital
committed and will participate in any profits of the partnership. Certain of the
Company's venture capital professionals share in the profit participation.
 
    H&Q SERV*IS PARTNERS, L.P.  In February, 1997, Hambrecht & Quist formed a
limited partnership with Johnson & Johnson ("J&J") that invests in companies,
products or technologies strategic to J&J's interests. J&J committed
approximately $15,000,000 in capital and the Company has committed $2,500,000 in
capital. The Company receives an annual management fee based on the amount of
capital committed and participates in any profits of the partnership. Certain of
the Company's venture capital professionals share in the profit participation.
 
    ASSET-BASED FINANCING AND MEZZANINE INVESTMENTS
 
    HAMBRECHT & QUIST GUARANTY FINANCE.  In 1983, the Company established the
entity that became Guaranty Finance to provide equipment leasing to emerging
technology companies. Today, Guaranty Finance provides secured, asset-based
financings that include tenant improvement and real estate leases, equipment
leases, accounts receivable and inventory financing and loan guarantees for
private and public emerging technology, biotechnology and healthcare companies.
Guaranty Finance provides financing that generally would not otherwise be
commercially available to emerging growth companies because they are perceived
as too risky, or because the financing is too customized in nature, to be
attractive to conventional sources of financing. In addition to receiving
payments on loans and leases, Guaranty Finance has the opportunity to purchase
warrants for structuring and providing the funding or for guaranteeing the
repayment of funds provided by a bank or other financial institution. Guaranty
Finance's current portfolio of financings aggregated approximately $24.5 million
at September 30, 1997. H&Q California owns 87.5% of Guaranty Finance, with the
balance owned by Guaranty Finance's senior management and employees.
 
                                       9
<PAGE>
    HAMBRECHT & QUIST TRANSITION CAPITAL.  The Company formed Transition Capital
to provide bridge loans and mezzanine financings for emerging growth companies.
Transition Capital's investments consist of secured and unsecured debt with
equity participation. The term of the loans are typically less than three years,
and Transition Capital seeks to obtain financial returns through interest
income, fees and the receipt of warrants, rights to convert loans into equity,
or the right to share in profits. Transition Capital's current portfolio of
financings aggregated approximately $18.6 million at September 30, 1997. H&Q
California owns 87.5% of Transition Capital, with the balance owned by
Transition Capital's senior management and employees.
 
ACCOUNTING, ADMINISTRATION AND OPERATIONS
 
    H&Q's accounting, administration and operations personnel are responsible
for financial controls, internal and external financial reporting, compliance
with regulatory and legal requirements, office and personnel services, the
Company's management information and telecommunications systems, and the
processing of the Company's securities transactions. The Company's employees
perform most of these functions. With the exception of payroll processing, which
is performed by an outside service bureau, all data processing functions are
performed by the Company's management information systems department. The
Company believes that future growth will require implementation of new and
enhanced communications and information systems and training of its personnel to
operate such systems. Any difficulty or significant delay in the implementation
or operation of new systems or the training of personnel could adversely affect
the Company's ability to manage growth. See "Factors Affecting the Company's
Business, Operating Results and Financial Condition--Risks Associated with
Management of Growth."
 
    Lewco acts as a clearing broker and depository for the Company. A portion of
Lewco's expenses, net of certain revenues, are reimbursed by the Company based
on the level of transactions processed on behalf of the Company.
 
COMPETITION
 
    The securities business is intensely competitive. Many of the Company's
competitors have greater capital, financial and other resources than the
Company. The Company competes worldwide for growth-oriented institutional
investor clients and for United States underwritings of equity offerings by
emerging growth companies in H&Q's areas of focus. The Company competes for
venture capital and other principal investment opportunities in the United
States through wholly owned subsidiaries and internationally through entities in
which it holds minority interests.
 
    In addition to competition from domestic and foreign firms currently in the
securities business, domestic commercial banks and investment banking boutiques
have recently entered the business. In recent years, large international banks
have entered the markets served by United States investment banks, including the
markets in which the Company competes. These large international banks have
hired investment banking, research and sales and trading professionals from the
Company and its competitors in the past, and the Company expects that these and
other competitors will continue to try to recruit professionals away from the
Company. The loss of any key professional could materially and adversely affect
the Company's operating results. The Company expects competition from domestic
and international banks to increase as a result of recent and anticipated
legislative and regulatory initiatives in the United States to remove or relieve
certain restrictions on commercial banks. The securities business has also
recently been experiencing consolidation, including the acquisition of several
of the Company's competitors by large commercial banks, providing competitors of
the Company with increased financial and other resources. The Company's focus on
growth companies also subjects it to direct competition from a group of
specialty securities firms and smaller investment banking boutiques that
specialize in providing services to the emerging growth company sector. Such
competition could adversely affect the Company's operating results, as well as
its ability to attract and retain highly skilled individuals. As a result of
 
                                       10
<PAGE>
increasing competition, revenues from individual underwriting transactions have
been increasingly allocated among a greater number of co-managers, a trend which
has resulted in reduced revenues for certain transactions.
 
    The Company also faces competition from companies offering electronic
brokerage services, a rapidly developing and intensely competitive industry.
These competitors may undertake promotional activities focused on the Company's
brokerage customers, may have lower costs or provide fewer services and offer
their customers more attractive pricing or other terms than the Company offers.
The Company also anticipates competition from underwriters who attempt to effect
public offerings for emerging growth companies through new means of
distribution, including using electronic media such as the Internet. In
addition, disintermediation may result as issuers attempt to sell their
securities directly to purchasers, including sales using electronic media such
as the Internet. To the extent that issuers and purchasers of securities
transact business without the assistance of financial intermediaries such as the
Company, the Company's operating results could be adversely affected.
 
    The principal competitive factors influencing the Company's business are its
professional staff, industry expertise, client relationships and its mix of
market and product capabilities.
 
EMPLOYEES
 
    At September 30, 1997, the Company had a total of 823 employees, of whom 94
were engaged in research, 140 in investment banking, 354 in sales, trading and
syndicate, 51 in venture capital, principal investment and money management
activities and 184 in accounting, administration and operations. None of the
Company's employees are subject to a collective bargaining agreement. The
Company believes that its relations with its employees are good.
 
REGULATION
 
    H&Q's business and the securities industry in general are subject to
extensive regulation in the United States at both the federal and state level,
as well as by industry self-regulatory organizations ("SROs"). Its business also
is subject to regulation by various foreign governments and regulatory bodies.
 
    In the United States, a number of federal regulatory agencies are charged
with safeguarding the integrity of the securities and other financial markets
and with protecting the interests of customers participating in those markets.
The Securities and Exchange Commission (the "SEC") is the federal agency that is
primarily responsible for the regulation of broker-dealers and investment
advisers doing business in the United States, and the Board of Governors of the
Federal Reserve System promulgates regulations applicable to securities credit
transactions involving broker-dealers and certain other United States
institutions. Broker-dealers and investment advisers are subject to registration
and regulation by state securities regulators in those states in which they
conduct business. Industry SROs, each of which has authority over the firms that
are its members, include the National Association of Securities Dealers, Inc.
("NASD"), the NYSE and other securities exchanges.
 
    H&Q LLC is registered as a broker-dealer with the SEC and in all of the 50
states, Puerto Rico and the District of Columbia, and is a member of, and
subject to regulation by, a number of securities industry SRO's, including the
NASD, the NYSE, the American, Chicago and Pacific Exchanges, and the Options
Clearing Corporation. RvR Securities is registered as a broker-dealer with the
SEC and in 41 states, and is a member of the NASD. H&Q LLC also has a 20%
interest in Lewco, which is registered as a broker-dealer with the SEC and is a
member of the NASD, the NYSE and other securities exchanges.
 
    As a result of federal and state registration and SRO memberships, H&Q LLC,
RvR Securities and Lewco are subject to overlapping schemes of regulation which
cover all aspects of their securities business. Such regulations cover matters
including capital requirements, the use and safekeeping of customers' funds and
securities, record keeping and reporting requirements, supervisory and
organizational procedures
 
                                       11
<PAGE>
intended to assure compliance with securities laws and to prevent the improper
trading on material nonpublic information, employee-related matters, including
qualification and licensing of supervisory and sales personnel, limitations on
extensions of credit in securities transactions, clearance and settlement
procedures, requirements for the registration, underwriting, sale and
distribution of securities and rules of the SROs designed to promote high
standards of commercial honor and just and equitable principles of trade. A
particular focus of the applicable regulations concerns the relationship between
broker-dealers and their customers. As a result, many aspects of the
broker-dealer customer relationship are subject to regulation including in some
instances "suitability" determinations as to certain customer transactions,
limitations in the amounts that may be charged to customers, timing of
proprietary trading in relation to customers' trades and disclosures to
customers.
 
    Much of the Company's underwriting and market-making business involves
securities traded on Nasdaq. Nasdaq's operations have been the subject of
extensive scrutiny, in the media and by government regulators, including by the
Antitrust Division of the United States Department of Justice. This scrutiny has
included allegations of collusion among Nasdaq market-makers. In July 1996, H&Q
LLC and 23 other Nasdaq market-makers entered into a Stipulation and Order with
the Department of Justice in which they agreed not to engage in any collusive
activities relating to prices, quotes or spreads in Nasdaq-traded securities.
 
    In 1996, the SEC filed and simultaneously settled a disciplinary case
against the NASD and filed a report setting out the SEC's findings in detail.
The SEC's case concerned the NASD's enforcement oversight of Nasdaq, and the
settlement calls for a number of changes to Nasdaq's operations. In addition,
the SEC adopted new order-execution rules, including rules applicable to
dealers' handling of customer limit orders on Nasdaq. The application of these
rules was phased in during 1997. Further changes relating to the operations of
Nasdaq have been proposed and filed with the SEC. The Company is unable to
predict the outcome of any of the changes or proposed changes to Nasdaq, certain
of which could adversely affect the Company's operating results. Although the
SEC's investigation of Nasdaq trading practices has been settled with respect to
the NASD, it remains open with respect to possible enforcement action against
others, potentially including Nasdaq marker-makers such as the Company, or their
employees.
 
    H&Q LLC, Capital Management and one other subsidiary, Atlantic Investment
Advisers, Inc., are registered as investment advisers with the SEC and in
several states. As investment advisers registered with the SEC, each is subject
to the requirements of the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the SEC's regulations thereunder, as well as state
securities laws and regulations. Such requirements relate to, among other
things, limitations on the ability of investment advisers to charge
performance-based or non-refundable fees to clients, record-keeping and
reporting requirements, disclosure requirements, limitations on principal
transactions between an adviser or its affiliates and advisory clients, as well
as general anti-fraud prohibitions. The state securities law requirements
applicable to registered investment advisers are in certain cases more
comprehensive than those imposed under the federal securities laws. In addition,
Capital Management and the mutual funds it manages are subject to the
requirements of the Investment Company Act of 1940 and the SEC's regulations
thereunder.
 
    H&Q LLC and Lewco also are subject to "Risk Assessment Rules" imposed by the
SEC. These rules require, among other things, that certain broker-dealers
maintain and preserve certain information, describe risk management policies and
procedures and report on the financial condition of certain affiliates whose
financial and securities activities are reasonably likely to have a material
impact on the financial and operational condition of the broker-dealers. Certain
"Materially Associated Persons" (as defined in the Risk Assessment Rules) of the
broker-dealers and the activities conducted by such Materially Associated
Persons may not be subject to regulation by the SEC. However, the possibility
exists that, on the basis of the information it obtains from the Risk Assessment
Rules, the SEC could seek legislative or regulatory changes in order to expand
its authority over the Company's unregulated subsidiaries either directly or
through its existing authority over the Company's regulated subsidiaries.
 
                                       12
<PAGE>
    Violations of federal or state laws or regulations or rules of SROs could
subject the Company, its subsidiaries and/or its employees to disciplinary
proceedings or civil or criminal liability, including revocation of licenses,
censures, fines or temporary suspension or permanent bar from the conduct of
their business. Any such proceeding could have a material adverse effect upon
the Company's business.
 
    In addition to being regulated in the United States, the Company's business
is subject to regulation by various foreign governments and regulatory bodies.
H&Q LLC is registered with and subject to regulation by the Ontario Securities
Commission, the Securities and Futures Authority of the United Kingdom pursuant
to the United Kingdom Financial Services Act of 1986, and the Ministry of
Finance, Tokyo, Japan. Foreign regulation governs all aspects of the investment
business, including regulatory capital, sales and trading practices, use and
safekeeping of customer funds and securities, record-keeping, margin practices
and procedures, registration standards for individuals, periodic reporting and
settlement procedures. In addition, Hambrecht & Quist Asset Management Ltd., a
subsidiary of the Company, is a member of and is subject to regulation by the
Investment Management Regulatory Organization Limited in the United Kingdom,
which regulates all aspects of its investment advisory business. The Company
recently formed and acquired an interest in H&Q Saint Dominique, a
broker-dealer, located in Paris, France. It is subject to regulation by the
Societe du Nouveau Marche, Societe de Bourse Francaise and La Commission
d'Operation de Bourse, and is an approved person of the NYSE.
 
    In connection with the Company's venture capital activities, H&Q, its
affiliates and the venture capital funds which they manage are relying on
exemptions from registration under the Advisers Act, the Investment Company Act
of 1940, as amended, state securities laws and the laws of various foreign
countries. Failure to meet the requirements of any such exemptions could have a
material adverse effect on the manner in which the Company, its affiliates and
the venture capital funds carry out their investment activities and on the
compensation received by the Company and its affiliates from the venture capital
funds.
 
    Additional legislation and regulations, including those relating to the
activities of broker-dealers and investment advisers, changes in rules
promulgated by the SEC or other United States or foreign governmental regulatory
authorities and SROs or changes in the interpretation or enforcement of existing
laws and rules may adversely affect the manner of operation and profitability of
the Company. H&Q's businesses may be materially affected not only by regulations
applicable to it as a financial market intermediary, but also by regulations of
general application. For example, the volume of H&Q's underwriting, merger and
acquisition, or venture capital activities in any year could be affected by,
among other things, existing and proposed tax legislation, antitrust policy and
other governmental regulations and policies (including the interest rate
policies of the Federal Reserve Board) and changes in interpretation or
enforcement of existing laws and rules that affect the business and financial
communities.
 
NET CAPITAL REQUIREMENTS
 
    As broker-dealers registered with the SEC and member firms of the NYSE
and/or the NASD, H&Q LLC, RvR Securities and Lewco are each subject to the
capital requirements of the SEC, the NYSE and/or the NASD. These capital
requirements specify minimum levels of capital, computed in accordance with
regulatory requirements ("net capital"), that each firm is required to maintain
and also limit the amount of leverage that each firm is able to obtain in its
respective business.
 
    H&Q LLC has elected to compute its net capital requirement under the
"alternative method" permitted by the SEC. Under this method, H&Q LLC is
required to maintain regulatory net capital, computed in accordance with the
SEC's regulations as supplemented by NYSE Rule 325, equal to the greater of $1.0
million or 2% of the amount of its securities "customer-related receivables,"
calculated in accordance with SEC's regulations.
 
    The customer-related receivables referred to in the preceding paragraph
(also referred to as "aggregate debit items") represent the money owed to a
broker-dealer by its customers and certain other
 
                                       13
<PAGE>
customer-related assets. "Net capital" is essentially defined as net worth
(assets minus liabilities, as determined under generally accepted accounting
principles), plus qualifying subordinated borrowings, less the value of all of a
broker-dealer's assets that are not readily convertible into cash (such as
goodwill, furniture, prepaid expenses, exchange seats and unsecured
receivables), and further reduced by certain percentages (commonly called
"haircuts") of the market value of a broker-dealer's positions in securities and
other financial instruments.
 
    A failure of a broker-dealer to maintain its minimum required capital would
require it to cease executing customer transactions until it came back into
capital compliance, and could cause it to lose its membership on an exchange, or
in an SRO, its registration with the SEC, or require its liquidation. Further,
the decline in a broker-dealer's net capital below certain "early warning
levels," even though above minimum capital requirements, could cause material
adverse consequences to the broker-dealer. For example, the SEC's capital
regulations prohibit payment of dividends, redemption of stock and the
prepayment of subordinated indebtedness if a broker-dealer's net capital
thereafter would be less than 5% of aggregate debit items. These regulations
also prohibit principal payments in respect of subordinated indebtedness if a
broker-dealer's net capital thereafter would be less than 5% of aggregate debit
items. Under NYSE Rule 326, a member firm is required to reduce its business if
its net capital (after giving effect to scheduled maturities of subordinated
indebtedness or other planned withdrawals of regulatory capital during the
following six months) is less than 125% of its net capital minimum dollar amount
or 4% of aggregate debit items for 15 consecutive days. NYSE Rule 326 also
prohibits the expansion of a member's business if its net capital (after giving
effect to scheduled maturities of subordinated indebtedness or other planned
withdrawals of regulatory capital during the following six months) is less than
150% of its net capital minimum dollar amount or 5% of aggregate debt items for
15 consecutive days.
 
    The SEC's capital rules also (i) require that broker-dealers notify it and
the NYSE, in writing, two business days prior to making withdrawals or other
distributions of equity capital or lending money to certain related persons, if
those withdrawals would exceed, in any 30-day period, 30% of the broker-dealer's
excess net capital and that they provide such notice within two business days
after any such withdrawal or loan that would exceed, in any 30-day period, 20%
of the broker-dealer's excess net capital, (ii) prohibit a broker-dealer from
withdrawing or otherwise distributing equity capital or making related party
loans if after such distribution or loan, the broker-dealer has net capital of
less than 120% of its net capital minimum dollar amount or 5% of aggregate debit
items and certain other circumstances, and (iii) provide that the SEC may, by
order, prohibit withdrawals of capital from a broker-dealer for a period of up
to 20 business days, if the withdrawals would exceed, in any 30-day period, 30%
of the broker-dealer's excess net capital and the SEC believes such withdrawals
would be detrimental to the financial integrity of the firm or would unduly
jeopardize the broker-dealer's ability to pay its customer claims or other
liabilities.
 
    Compliance with regulatory capital requirements could limit those operations
of H&Q LLC, RvR Securities and Lewco that require the intensive use of capital,
such as underwriting and trading activities, and financing of customer account
balances, and also could restrict the Company's ability to withdraw capital from
its affiliated broker-dealers, which in turn could limit its ability to pay
dividends, repay debt and redeem or purchase shares of its outstanding capital
stock.
 
    The Company believes that at all times H&Q LLC, RvR Securities and Lewco
have been in compliance in all material respects with the applicable minimum
capital rules of the SEC, the NYSE, and the NASD. As of September 30, 1997, H&Q
LLC was required to maintain minimum net capital, in accordance with SEC rules,
of approximately $4.9 million and had total net capital of approximately $67.0
million, or approximately $62.1 million in excess of the amount required. RvR
Securities also computes its minimum net capital requirement under the
alternative method. As of September 30, 1997, RvR Securities was required to
maintain minimum net capital of $250,000. Its total net capital on that date was
$685,514, consisting primarily of equity capital. Lewco also computes its
minimum net capital requirement under the alternative method. As of September
30, 1997, Lewco was required to maintain
 
                                       14
<PAGE>
minimum net capital of $2.4 million. Lewco's total net capital on that date was
$14.3 million. H&Q Euromarkets is also subject to the net capital requirements
of its applicable regulatory agency and as of September 30, 1997, was in
compliance with all applicable regulatory capital adequacy requirements.
 
FACTORS AFFECTING THE COMPANY'S BUSINESS, OPERATING RESULTS AND FINANCIAL
  CONDITION
 
    The statements in this Form 10-K that relate to future plans, events or
performance are forward-looking statements that involve risks and uncertainties.
Actual results might differ materially due to a variety of important factors,
including those factors discussed below. In addition, the Company cautions
readers that the following important factors, among others, have affected, and
in the future could materially affect, the Company's business, operating results
and financial condition.
 
    For information concerning risks associated with significant competition and
with potential losses from litigation and potential liability under securities
laws see "--Competition" and "Item 3--Legal Proceedings."
 
    RISK OF REDUCED REVENUES DURING PERIODS OF DECLINING PRICES OR REDUCED
     ACTIVITY IN MARKET FOR EMERGING GROWTH COMPANY SECURITIES
 
    The Company's revenues are likely to be lower during periods of declining
prices or inactivity in the market for growth company securities due to the
Company's focus on serving growth companies and their investors. The Company's
business is particularly dependent on the market for equity offerings by
companies in the technology, healthcare, business information and outsourcing
services, healthcare services and branded consumer industries. These markets
have historically experienced significant volatility not only in the number and
size of equity offerings, but also in the after-market trading volume and prices
of newly issued securities. In addition, the number of major investors and the
size of managed funds in the market for growth company securities is smaller
than in many other industrial sectors. This concentration produces higher
volatility in the number and size of corporate financing transactions conducted
by emerging growth companies as compared to companies in other industries, and
higher volatility in the volume of after-market trading of growth company
securities.
 
    The Company's revenues in large part are dependent on the number and size of
underwritten transactions by companies in the Company's targeted industries, and
the after-market trading for such companies. During certain periods, relatively
few public offerings for companies in these industries have been completed,
which materially adversely affected the Company's operating results.
Underwriting activities in H&Q's targeted industries can decline for a number of
reasons. For example, underwriting activities decreased significantly in the
period from August 1990, when hostilities commenced between Iraq
and Kuwait, until the first quarter of calendar 1991. Any historical or future
market decline has and may result in many pending securities offerings being
delayed or canceled. During periods of market decline, offerings are typically
effected at lower valuations and smaller total dollar sizes. Any future market
decline will have an adverse effect on the Company's operating results.
Underwriting and brokerage activity can also be materially adversely affected
for a growth company or industry segment by disappointments in quarterly
performance relative to analysts' expectations, or by changes in long-term
prospects.
 
    RISK OF REDUCED REVENUES DUE TO ECONOMIC, POLITICAL AND MARKET CONDITIONS
 
    Reductions in public offering and merger and acquisition activities due to
changing economic, political or market conditions could cause the Company's
revenues to decline materially. The amount and profitability of these activities
are affected by many national and international factors, including economic,
political and market conditions; the level and volatility of interest rates;
legislative and regulatory changes; currency values; inflation; and the
availability of short-term and long-term funding and capital. Any one or more of
these factors may contribute to reduced levels of securities offerings and
merger and acquisition
 
                                       15
<PAGE>
activities, which would result in lower revenues from the Company's investment
banking, trading and sales activities.
 
    RISK OF REDUCED REVENUES DUE TO DECLINING MARKET VOLUME, PRICE OR LIQUIDITY
 
    The Company's revenues may decrease in the event of a decline in market
volume, prices or liquidity. The securities business is subject to declines in
the volume of securities transactions and in market liquidity, which generally
result in lower revenues from trading activities and commissions. Lower price
levels of securities may result in a reduced volume of underwriting
transactions, which would cause a reduction in revenue from corporate finance
fees, as well as the recognition of losses from declines in the market value of
securities held in trading, investment and underwriting positions. Sudden sharp
declines in market values of securities can result in illiquid markets and the
failure of issuers and counterparties to perform their obligations, as well as
increases in customer claims. In such markets, the Company may incur losses in
its principal trading and market-making activities.
 
    RISK OF LOSSES DUE TO FRAUD OR MISTAKES OF CUSTOMERS OR EMPLOYEES
 
    The Company is exposed to the risk of significant losses as a result of
customer fraud, employee errors, misconduct and fraud (including unauthorized
transactions by traders) and failures in connection with the processing of
securities transactions. There can be no assurance that the Company's risk
management procedures and internal controls will prevent such losses from
occurring.
 
    DEPENDENCE ON CASH INFLOWS TO MUTUAL FUNDS
 
    A slow-down or reversal of cash inflows to mutual funds could lead to lower
underwriting and brokerage revenues for the Company, since mutual funds purchase
a significant portion of the securities offered to the public by emerging growth
companies. Any decline in the stock market could result in a significant decline
in net asset values of mutual funds focused on technology and other growth
industries. Declines in the market generally or declines in mutual fund net
asset values in particular could result in withdrawals of cash from such mutual
funds. To the extent that the decline in cash inflows into mutual funds and the
decline in net asset values of these funds reduce demand by fund managers for
new equity offerings by emerging growth companies, the Company's business and
results of operations could be materially adversely affected.
 
    RISK OF REDUCED REVENUES DUE TO FOCUS ON RELATIVELY FEW INDUSTRIES
 
    Because the Company focuses on relatively few industries, a general decline
in the market for securities of companies within any such industry, particularly
technology or healthcare, could lead to substantially lower revenues for the
Company. The market for securities offerings in each of the industries on which
the Company focuses may also be subject to industry-specific risks. For example,
the prospects for growth in the personal computer market affect companies in a
number of other industries, such as semiconductor-related companies and
companies in the software and networking equipment industries. Similarly,
changes in policies by the United States Food and Drug Administration or the
United States Health Care Financing Administration can produce sharp swings in
the market for the securities of biotechnology and healthcare services
companies. Technology and healthcare underwriting transactions continue to play
a large role in the Company's investment banking and research activities. This
industry concentration exposes the Company to the risk of substantial declines
in revenue in the event of downturns in underwriting activities in these
industries.
 
    RISKS OF LOSSES DUE TO REGIONAL CONCENTRATION OF EMERGING GROWTH COMPANIES
 
    As a result of the high proportion of venture capital invested in emerging
growth companies in California and Massachusetts, H&Q's underwriting clients
have to date been concentrated in these states.
 
                                       16
<PAGE>
Because many of the companies within the industries served by the Company are
located in California and Massachusetts, a natural disaster or significant
economic downturn in either of these states could substantially reduce the
Company's revenues. Approximately 44% of the companies for which H&Q served as
manager or co-manager of a public offering during fiscal 1997 had principal
offices located in California. Any adverse effect on emerging growth industries
concentrated in California, or, to a lesser extent, in other states in which
emerging growth technology, healthcare or service companies are also
concentrated could also reduce the Company's underwriting and brokerage business
relating to those companies.
 
    RISK OF REDUCED REVENUES DUE TO DECLINE IN TRADING OF GROWTH COMPANY
     SECURITIES
 
    The Company's revenues from brokerage transactions are generally
substantially lower when trading activities of securities of emerging growth
companies declines or when the stock market declines generally. H&Q derives a
significant portion of its revenues from brokerage transactions related to the
securities of growth companies. In the past, revenues from such brokerage
transactions have declined when the volume of trading on Nasdaq or NYSE
declined, or industry sectors or individual companies reported results below
investors' expectations. See "--Investment Banking" and "--Sales, Trading and
Syndicate."
 
    SIGNIFICANT FLUCTUATIONS IN QUARTERLY OPERATING RESULTS DUE TO LEVEL OF
     BUSINESS ACTIVITY AND TIMING OF TRANSACTIONS
 
    The Company's revenues and operating results may fluctuate from quarter to
quarter and from year to year due to a combination of factors. These factors
include the number of underwriting and merger and acquisition transactions
completed by the Company's clients, access to public markets for companies in
which the Company has invested as a principal, valuations of the Company's
principal investments, the level of institutional and retail brokerage
transactions, variations in expenditures for personnel, litigation expenses, and
the expenses of establishing new business units. The Company's revenues from an
underwriting transaction are recorded only when the underwritten securities
commence trading, and revenues from a merger or acquisition transaction are
recorded only when retainer fees are received or the transaction closes.
Accordingly, the timing of the Company's recognition of revenue from a
significant transaction can materially affect the Company's quarterly operating
results. Despite the variability of professional incentive compensation, the
Company could experience losses if the Company's revenues decline more quickly
than the Company's ability to change its cost structure. There can be no
assurance that the Company will be able to sustain profitability on a quarterly
or annual basis.
 
    DEPENDENCE ON ABILITY TO RETAIN AND RECRUIT PERSONNEL
 
    The Company's business is dependent on the highly skilled, and often highly
specialized, individuals it employs. Retention of research, investment banking,
sales and trading, venture capital, money management and administrative
professionals is particularly important to the Company's prospects. Hambrecht &
Quist's strategy is to establish relationships with its prospective corporate
clients in advance of any transaction and to maintain such relationships over
the long term by providing advisory services to corporate clients in equity,
convertible debt and merger and acquisition transactions. Research professionals
contribute significantly to the Company's ability to secure a role in managing
public offerings.
 
    COMPETITION FOR PROFESSIONAL EMPLOYEES.  From time to time, Hambrecht &
Quist has experienced losses of research, investment banking and sales and
trading professionals. The level of competition for key personnel has increased
recently, particularly due to the market entry efforts of certain international
and domestic commercial banks and other investment banks targeting or increasing
their efforts in some of the same industries that H&Q serves, most notably
technology and healthcare. There can be no assurance that losses of key
personnel due to such competition or otherwise will not occur in the future. The
loss of an investment banking, research or sales and trading professional,
particularly a senior professional with a
 
                                       17
<PAGE>
broad range of contacts in an industry, could materially and adversely affect
the Company's operating results.
 
    LIMITATIONS OF EMPLOYEE RETENTION MECHANISMS.  The Company depends on many
key employees, including its managing directors, and in particular on its senior
executive officers. The loss of any key employee could materially and adversely
affect the Company. While Hambrecht & Quist generally does not have employment
agreements with its employees, it attempts to retain its employees with
incentives such as long-term deferred compensation plans, the issuance of
Company stock subject to continued employment and the grant of options to buy
Company stock that vest over a number of years of employment. These incentives,
however, may be insufficient in light of the increasing competition for
experienced professionals in the securities industry, particularly if the
Company's stock price declines or fails to appreciate sufficiently to be a
competitive source of a portion of professional compensation. See
"--Competition."
 
    INABILITY TO RECRUIT QUALIFIED PERSONNEL.  The Company expects further
growth in the number of its personnel. Competition for employees with the
qualifications desired by the Company is intense, especially with respect to
research and investment banking professionals with expertise in industries in
which underwriting or advisory activity is robust. Competition for the
recruiting and retention of employees has recently increased the Company's
compensation costs, and the Company expects that continuing competition will
cause its compensation costs to continue to increase. There can be no assurance
that the Company will be able to recruit a sufficient number of new employees
with the desired qualifications in a timely manner. The failure to recruit new
employees could materially and adversely affect the Company's operating results.
 
    RISKS ASSOCIATED WITH FEDERAL, STATE AND FOREIGN REGULATION
 
    The securities industry and the business of the Company are subject to
extensive regulation in the United States by the SEC, state securities
regulators and other governmental regulatory authorities. The business of the
Company also is regulated in the United States by industry SROs, including the
NASD, the NYSE and other exchanges. In addition, the business of the Company is
subject to regulation by governmental authorities and SROs in other countries or
territories in which the Company operates, including France, Hong Kong, Israel,
Japan, Malaysia, the Philippines, Singapore, Taiwan, Thailand and the United
Kingdom. The Company's international operations also require compliance with the
United States Foreign Corrupt Practices Act. See "Legal Proceedings" and
"--Regulation."
 
    POTENTIAL LIMITS ON OPERATIONS DUE TO NET CAPITAL REQUIREMENTS.  As a
registered broker-dealer and member of the NYSE, H&Q LLC is subject to the net
capital rules of the SEC, NYSE and NASD. The Company's other registered
broker-dealer subsidiary, RvR Securities, is also subject to the net capital
rules of the SEC and NASD. These rules, which specify minimum net capital
requirements for registered broker-dealers and NYSE and NASD members, are
designed to assure that broker-dealers maintain adequate regulatory capital in
relation to their liabilities and the size of their customer business. These
requirements have the effect of requiring that at least a substantial portion of
a broker-dealer's assets be kept in cash or highly liquid investments.
Compliance with the net capital requirements could limit those operations that
require the intensive use of capital, such as underwriting and trading
activities. These rules also could restrict the Company's ability to withdraw
capital from H&Q LLC and RvR Securities even in circumstances where H&Q LLC and
RvR Securities have more than the minimum amount of required capital. See "--Net
Capital Requirements."
 
    COMPLIANCE WITH VENTURE CAPITAL REGULATIONS.  In connection with the
Company's venture capital activities, H&Q and its affiliates, as well as the
venture capital funds that they manage, are relying on exemptions from
registration under the Advisers Act, the Investment Company Act of 1940, as
amended, state securities laws and laws of various foreign countries. Failure to
meet the requirements of any such exemptions could have a material adverse
effect on the manner in which the Company, its affiliates and the venture
capital funds they manage carry out their investment activities and on the
compensation received by the Company and its affiliates from the venture capital
funds.
 
                                       18
<PAGE>
    RISK OF PENALTIES DUE TO NONCOMPLIANCE.  Compliance with many of the
regulations applicable to the Company involves a number of risks, particularly
in areas where applicable regulations may be subject to varying interpretation.
In the event of non-compliance by H&Q LLC or RvR Securities with an applicable
regulation, governmental regulators and SROs may institute administrative or
judicial proceedings that may result in censure, fine, civil penalties
(including treble damages in the case of insider trading violations), the
issuance of cease-and-desist orders, the deregistration or suspension of the
non-compliant broker-dealer or investment adviser, the suspension or
disqualification of the broker-dealer's officers or employees or other adverse
consequences. The Company has been subject to proceedings and sanctions by such
entities in the past and expects to be subject to such proceedings in the
future. The imposition of any future penalties or orders on H&Q LLC could have a
material adverse effect on the Company's operating results and financial
condition. See "--Regulation."
 
    RISKS ASSOCIATED WITH CHANGING REGULATORY ENVIRONMENT.  The regulatory
environment in which the Company operates is subject to change. The Company may
be adversely affected as a result of new or revised legislation or regulations
imposed by the SEC, other United States or foreign governmental regulatory
authorities or SROs. The Company also may be adversely affected by changes in
the interpretation or enforcement of existing laws and rules by these
governmental authorities and SROs.
 
    NASDAQ ANTITRUST LITIGATION.  Much of the Company's underwriting and
market-making business involves securities traded on Nasdaq. Nasdaq's operations
have been the subject of extensive scrutiny in the media and by government
regulators, including by the Antitrust Division of the United States Department
of Justice. This scrutiny has included allegations of collusion among Nasdaq
market-makers. In July 1996, H&Q LLC and 23 other Nasdaq market-makers entered
into a Stipulation and Order with the Department of Justice in which they agreed
not to engage in any collusive activities relating to prices, quotes or spreads
in Nasdaq-traded securities. See "Legal Proceedings--Nasdaq Antitrust
Litigation."
 
    POTENTIAL ADVERSE EFFECTS OF CHANGES IN NASDAQ OPERATIONS.  In 1996, the SEC
filed and simultaneously settled a disciplinary case against the NASD and filed
a report setting out the SEC's findings in detail. The SEC's case concerned the
NASD's enforcement oversight of Nasdaq, and the settlement calls for a number of
changes to Nasdaq's operations. In addition, the SEC adopted new order-execution
rules, including rules applicable to dealers' handling of customer limit orders
on Nasdaq. The application of these rules was phased in during 1997. Further
changes relating to the operations of Nasdaq have been proposed and filed with
the SEC. The Company is unable to predict the outcome of any of the changes or
proposed changes to Nasdaq, certain of which could adversely affect the
Company's operating results. Although the SEC's investigation of Nasdaq trading
practices has been settled with respect to the NASD, it remains open with
respect to possible enforcement action against others, potentially including
Nasdaq marker-makers such as the Company, or their employees.
 
    RISK OF CHANGES IN OTHER BUSINESS REGULATIONS.  The Company's businesses may
be materially affected not only by regulations applicable to it as a financial
market intermediary, but also by regulations of general application. For
example, the volume of the Company's underwriting, merger and acquisition and
principal investment businesses in a given time period could be affected by,
among other things, existing and proposed tax legislation, antitrust policy and
other governmental regulations and policies (including the interest rate
policies of the Federal Reserve Board) and changes in interpretation or
enforcement of existing laws and rules that affect the business and financial
communities. The level of business and financing activity in each of the
industries on which the Company focuses can be affected not only by such
legislation or regulations of general applicability, but also by
industry-specific legislation or regulations.
 
    RISKS ASSOCIATED WITH PRINCIPAL INVESTMENT ACTIVITIES
 
    The Company uses a portion of its own capital in a variety of principal
investment activities, each of which involves risks of illiquidity, loss of
principal and revaluation of assets. At September 30, 1997, the Company's
principal investments represented $65.5 million invested in non-marketable
securities, venture
 
                                       19
<PAGE>
capital funds and investment partnerships and $36.6 million invested in
marketable securities. The Company purchases equity securities and, to a lesser
extent, debt securities, in venture capital and other high risk financings of
early-stage, pre-public or "mezzanine stage" and turnaround companies. The
Company also provides asset-based financing and purchases equity securities as
part of bridge or mezzanine financing transactions. The Company's nonmarketable
investments at September 30, 1997 were valued at $65.5 million, and the report
of the Company's independent public accountants on the Company's consolidated
financial statements includes a statement regarding the inherent uncertainty of
valuation of the Company's nonmarketable investments. The Company's investments,
like its other activities, are concentrated in a small number of industries and
companies, and the companies in which the Company has invested as principal face
rapidly changing and highly competitive environments, increasing the risks of
illiquidity and loss of principal, and creating risks associated with asset
revaluation as market conditions change. In addition, the management of
principal investments often requires substantial attention from the Company's
professionals, particularly if the entity in which the Company has invested
experiences financial difficulties, a restructuring or a sale.
 
    RISK OF LOSSES DUE TO ILLIQUIDITY OF INVESTMENTS.  The absence of a public
market for securities received in principal investments means that the Company
will not receive a return on its capital invested for an indeterminate period of
time, if at all. A public market for these securities may not develop for
several years, if ever. The timing of access to liquidity depends on the general
market for initial public offerings of securities or mergers and acquisitions as
well as the particular company's results and prospects and trends in the
relevant industry. Delayed access to liquidity could adversely affect the
Company's returns on its principal investments, which would adversely affect the
Company's operating results.
 
    RISK OF LOSS OF CAPITAL INVESTED IN PRINCIPAL TRANSACTIONS.  The Company
also risks the loss of capital it has invested as a principal. The companies in
which H&Q invests often rely on new or developing technologies or novel business
models, or concentrate on markets which have not yet developed and may never
develop sufficiently to support successful operations. Companies supported by
venture capital have a high incidence of operating losses and business failure,
which typically results in loss of capital invested. Companies to which H&Q
provides mezzanine financing often require substantial cash to support their
operations, risking loss of H&Q's principal if the company in which H&Q has
invested is unable to raise additional capital through an initial public
offering of its securities. If a business that has received asset-based
financing from H&Q fails, H&Q will be required to repossess collateral, which
may not be salable at a price equal to H&Q's initial investment. The entities in
which H&Q invests as a principal often are unable to obtain conventional
financing. The equity securities that H&Q receives will be subordinate to the
issuer's debt, may also be subordinate to other classes of equity and typically
will not provide dividend income. Debt securities purchased by H&Q may rank
subordinate to other debt of the issuer. There can be no assurance that H&Q will
not experience significant losses as a result of its principal investment
activities. A material loss of capital would adversely affect H&Q's operating
results and financial condition.
 
    VOLATILITY OF PRINCIPAL INVESTMENTS; ADJUSTMENTS TO CARRYING VALUE.  H&Q may
be required to mark up or mark down the value of its principal investments as a
result of industry- or company-specific factors over which H&Q has no control.
Publicly traded securities held as principal investments, which at September 30,
1997 aggregated $36.6 million, are subject to significant volatility, increasing
the risk of a mark-down as a result of a decline in market prices generally or
the price of the particular security. If a significant mark-down of a material
asset were to occur in the future, the Company's operating results and financial
condition would be materially and adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Overview" and Notes 2 and 7 of Notes to Consolidated Financial
Statements--September 30, 1997.
 
                                       20
<PAGE>
    RISK OF LOSSES FROM UNDERWRITING AND TRADING
 
    The Company's underwriting, securities trading and market-making activities
are conducted by the Company as principal and subject the Company's capital to
significant risks, including market, credit, counterparty and liquidity risks.
These activities often involve the purchase, sale or short sale of securities as
principal in markets that may be characterized by relative illiquidity or that
may be particularly susceptible to rapid fluctuations in liquidity. The Company
from time to time has large position concentrations in securities of, or
commitments to, a single issuer, or issuers engaged in a specific industry,
particularly as a result of the Company's underwriting activities. The Company
tends to concentrate its trading positions and underwriting activities in a more
limited number of industry sectors and portfolio companies than many other
investment banks, which might result in higher trading losses than would occur
if the Company's positions and activities were less concentrated. In addition,
the trend in all major capital markets, for competitive and other reasons,
toward larger commitments on the part of lead underwriters means that, from time
to time, an underwriter (including a co-manager) may retain significant position
concentrations in individual securities.
 
    RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH
 
    Over the past several years, the Company has experienced significant growth
in its business activities and the number of its employees. This growth has
required and will continue to require increased investment in management
personnel, financial and management systems and controls, and facilities, which,
in the absence of continued revenue growth, would cause the Company's operating
margins to decline from current levels. In addition, as is common in the
securities industry, the Company is and will continue to be highly dependent on
the effective and reliable operation of its communications and information
systems. The Company believes that it will be required to implement new and
enhanced communications and information systems and train its personnel to
operate such systems. Any difficulty or significant delay in the implementation
or operation of existing or new systems or the training of personnel could
adversely affect the Company's ability to manage growth. See "--Accounting,
Administration and Operations" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
    RISK OF SYSTEMS FAILURE
 
    The Company's business is highly dependent on communications and information
systems. Any failure or interruption of the Company's systems, or of the systems
of the Company's clearing broker, could cause delays in the Company's securities
trading activities, which could have a material adverse effect on the Company's
operating results. There can be no assurance that the Company or its clearing
broker will not suffer any such systems failure or interruption, whether caused
by an earthquake, fire, other natural disaster, power or telecommunications
failure, act of God, act of war or otherwise, or that the Company's back-up
procedures and capabilities in the event of any such failure or interruption
will be adequate. In addition, the Company utilizes software and related
technology that will be affected by the date change in the year 2000. Both the
Company and Lewco will be required to modify their software. Any failure by the
Company or Lewco to adequately address the date change could have a material
adverse effect on the Company's financial condition and operations.
 
    DEPENDENCE ON AVAILABILITY OF CAPITAL AND FUNDING
 
    A substantial portion of the Company's total assets consists of highly
liquid marketable securities and short-term receivables arising from securities
transactions. The funding needs of the Company to date have been satisfied from
internally generated funds and paid-in capital. In addition, the Company borrows
limited amounts on a collateralized basis from a bank to support the activities
of its Executive Financial Services group. There can be no assurance that
adequate financing to support the Company's businesses
 
                                       21
<PAGE>
will be available in the future on attractive terms, or at all. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview" and "--Liquidity and Capital Resources."
 
    RISK OF POTENTIAL CONFLICTS OF INTEREST
 
    Executive officers, directors and employees of the Company from time to time
invest, or receive a profit interest, in investments in private or public
companies or investment funds in which the Company, or an affiliate of the
Company, is an investor or for which the Company carries out investment banking
assignments, publishes research or acts as a market-maker. In addition, the
Company has in the past organized and may in the future organize businesses,
such as Guaranty Finance or Transition Capital, in which employees of H&Q
acquire minority interests. There is a risk that, as a result of such investment
or profits interest, a director, officer or employee may take actions which
would conflict with the best interests of Hambrecht & Quist. See "--Venture
Capital and Principal Investment Activities" and "Certain Relationships and
Related Transactions" incorporated by reference to Item 13 of this report on
Form 10-K.
 
    CONTROL OF THE COMPANY; ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS
 
    As of November 30, 1997, the Company's current executive officers and
directors beneficially owned approximately 37% of the outstanding common stock.
Accordingly, these stockholders, if they were to act as a group, may be able to
influence the election of all of the Company's directors, increase the
authorized capital and otherwise control the policies of the Company. The
Company's Board of Directors has the authority to issue up to 5,000,000 shares
of Preferred Stock and to determine the price, rights, preferences and
privileges of those shares without any further vote or action by the
stockholders. The rights of the holders of common stock will be subject to, and
may be adversely affected by, the rights of the holders of any Preferred Stock
that may be issued in the future. The issuance of shares of Preferred Stock,
while potentially providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. In addition, the Company is subject to the provisions of
Section 203 of the Delaware General Corporation Law, which will prohibit the
Company from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. The application of Section 203
also could have the effect of delaying or preventing a change of control of the
Company. Certain provisions of the Company's Certificate of Incorporation and
Bylaws, including provisions that provide for the Board of Directors to be
divided into three classes to serve for staggered three-year terms, may have the
effect of delaying or preventing a change of control of the Company, which could
adversely affect the market price of the Company's common stock.
 
    SHARES ELIGIBLE FOR FUTURE SALE
 
    Sales of a substantial number of shares of common stock in the public market
could adversely affect the prevailing market price of the common stock and could
impair the Company's future ability to raise capital through an offering of its
equity securities. As of September 30, 1997, there were 23,768,722 shares of
common stock outstanding, all of which will be freely tradeable in the public
markets, subject in certain cases to the volume and other limitations set forth
in Rule 144 promulgated under the Securities Act of 1933 ("Securities Act"). Of
such outstanding shares, holders of 18,669,064 shares were subject to lockup
restrictions imposed by all of H&Q LLC, Morgan Stanley & Co. Incorporated and
the Company (the "Underwriters") in connection with the Company's initial public
offering effected in August 1996 (the "Lockup"). Under the terms of the Lockup,
a portion of each holder's share ownership equal to the greater of up to (i)
10,000 shares or (ii) 5% of the holder's share ownership prior to the initial
public offering, were released from the Lockup on each of the six- and
twelve-month anniversaries of the initial
 
                                       22
<PAGE>
public offering. The Lockup expires as to the balance of each holder's shares on
February 9, 1998 and on such date, all remaining shares will be freely
tradeable. In addition, any shares subject to the Lockup may be released by the
Underwriters at any time with or without notice to the public.
 
ITEM 2. PROPERTIES
 
    The Company's principal executive offices in San Francisco, California
occupy approximately 159,000 square feet under leases which terminate December
31, 1998, subject to two 5-year extension options for the majority of the space.
In addition, the Company occupies approximately 23,000 square feet in a second
facility in San Francisco under a sublease which terminates on June 30, 2000 and
a successor lease which expires on December 31, 2003. The Company also leases
approximately 49,000 square feet in New York, New York, under a lease expiring
in 2007; approximately 26,000 square feet in Boston, Massachusetts, under a
lease expiring in 1998, subject to an option to extend the term; approximately
2,000 square feet in San Diego, California, under a lease expiring in 1999; and
approximately 8,800 square feet in Newport Beach, California, under a sublease
expiring on September 30, 2000. The Company believes that its present
facilities, together with its current options to extend lease terms and occupy
additional space, are adequate for its current and projected needs.
 
ITEM 3. LEGAL PROCEEDINGS
 
    OVERVIEW
 
    Many aspects of the Company's business involve substantial risks of
liability. An underwriter is exposed to substantial liability under federal and
state securities laws, other federal and state laws and court decisions,
including decisions with respect to underwriters' liability and limitations on
indemnification of underwriters by issuers. For example, a firm that acts as an
underwriter may be held liable for material misstatements or omissions of fact
in a prospectus used in connection with the securities being offered or for
statements made by its securities analysts or other personnel.
 
    In recent years, there has been an increasing incidence of litigation
involving the securities industry, including class actions that seek substantial
damages. The Company has been active in the underwriting of initial public
offerings and follow-on offerings of the securities of emerging and mid-size
growth companies, which often involve a higher degree of risk and often are more
volatile than the securities of more established companies. In comparison with
more established companies, such emerging and mid-size growth companies are also
more likely to be the subject of securities class actions, to carry directors
and officers liability insurance policies with lower limits than more
established companies, and to become insolvent. Each of these factors increases
the likelihood that an underwriter of an emerging or mid-size growth company's
securities will be required to contribute to any judgment or settlement of a
securities lawsuit.
 
    The plaintiffs' attorneys in securities class action lawsuits frequently
name as defendants in lawsuits the managing underwriters of a public offering.
H&Q LLC is named a defendant in a number of class action lawsuits relating to
public offerings in which it served as a managing underwriter. In addition, H&Q
LLC is currently directly or indirectly subject to over 15 shareholder class
action lawsuits relating to public offerings in which H&Q LLC served as a member
of the underwriting syndicate but not as a managing underwriter. Plaintiffs'
attorneys also name as defendants investment banks which provide advisory
services in merger and acquisition transactions. The Company anticipates that
additional securities class action lawsuits naming H&Q LLC as a defendant will
be filed from time to time in the future, particularly in light of the increased
number of public offerings H&Q LLC has underwritten and the increased number of
merger and acquisition transactions in which H&Q LLC provided advisory services
in recent years and the fact that the securities sold in certain of such public
offerings have experienced or may in the future experience significant declines
in market value. In such lawsuits, all members of the underwriting syndicate
typically are included as members of a defendant class and/or are required by
law, or pursuant to the terms
 
                                       23
<PAGE>
of the underwriting agreement, to bear a portion of any expenses or losses
(including amounts paid in settlement of the litigation) incurred by the
underwriters as a group in connection with the litigation, to the extent not
covered by the indemnification obligation of the issuer of the securities
underwritten. H&Q LLC has on occasion participated in settlements of these types
of lawsuits by making payments to the plaintiff class. There can be no assurance
that the Company, H&Q LLC or RvR Securities will not find it necessary to make
substantial settlement payments in the future. The Company has agreed to
indemnify H&Q LLC against any expense or liability it may incur in connection
with any such lawsuits.
 
    If the plaintiffs in any suits against the Company were to successfully
prosecute their claims, or if the Company were to settle such suits by making
significant payments to the plaintiffs, the Company's operating results and
financial condition could be materially and adversely affected. In addition, the
Company's charter documents allow indemnification of the Company's officers,
directors and agents to the maximum extent permitted under Delaware law. The
Company has entered into indemnification agreements with these persons. The
Company has been and in the future may be the subject of indemnification
assertions under these charter documents or agreements by officers, directors or
agents of the Company who are or may become defendants in litigation.
 
    In addition to these financial costs and risks, the defense of litigation
has, to a certain extent, diverted, and is expected to divert in the future, the
efforts and attention of the Company's management and staff. The amount of time
which management and other employees are required to devote in connection with
the defense of litigation could be substantial and might materially divert their
attention from other responsibilities within the Company. Securities class
action litigation in particular is highly complex, and can extend for a
protracted period of time, thereby consuming substantial time and effort of the
Company's management and substantially increasing the cost of such litigation.
Further, the laws relating to securities class actions and other litigation
against securities firms are currently in a state of flux. The eventual impact
of the Private Securities Litigation Reform Act of 1995 on securities class
action litigation is not known.
 
    The Company also has been subject to litigation in state and federal courts
relating to companies in which the Company has invested as a principal. The risk
of such litigation is magnified where H&Q has a substantial or controlling
interest in the Company, or where one or more of H&Q's employees serves on the
Company's Board of Directors. On occasion, such litigation has produced results
materially adverse to H&Q. In particular, during 1992, the Company settled
litigation relating to MiniScribe at an aggregate cost, including expenses, of
approximately $59.8 million. All of such payments relating to such MiniScribe
settlements were made prior to May 31, 1996. The Company, as a result of its
investments as a principal, or the service of the Company's employees as
directors of other entities or otherwise, is currently subject to litigation and
may be subject to additional litigation or settlement payments in the future.
 
    In the normal course of business, the Company is also a defendant in various
civil actions and arbitrations arising out of its activities as a broker-dealer
in securities, as an underwriter, as an investor, as an employer and as a result
of other business activities. H&Q has in the past made substantial payments in
connection with the resolution of disputed claims, and there can be no assurance
that substantial payments in connection with the resolution of disputed claims
will not occur in the future.
 
    An adverse resolution of any pending or future lawsuits against H&Q LLC, RvR
Securities or the Company could materially affect the Company's operating
results and financial condition.
 
    Set forth below are summaries of certain pending litigation matters to which
H&Q LLC is a party. The Company believes that the resolution of such matters and
the other pending litigation matters to which the Company is a party will not
have a material adverse effect on the Company's operating results or financial
condition.
 
    INDIVIDUAL, INC.  SECURITIES LITIGATION.  On November 13, 1996, a securities
class action lawsuit was filed in the United States District Court for the
District of Massachusetts against H&Q LLC and others by
 
                                       24
<PAGE>
purchasers of the common stock of Individual, Inc., a provider of personalized
information services (Case Number 96-12272 DPW). The complaint alleged, among
other things, that the prospectus for the company's March 1996 initial public
offering contained misstatements, or failed to make required statements,
relating to the company's relationship with its founder and then chief executive
officer, whose employment with the company terminated in August 1996. H&Q LLC
was a co-manager of the offering. The defendants include the company, certain of
its current and former directors and officers, and the underwriters. On February
28, 1997, the plaintiffs filed an Amended Consolidated Complaint. On April 15,
1997, the defendants moved to dismiss the complaint. Oral argument has occurred,
and the matter is under submission.
 
    OAK TECHNOLOGY SECURITIES LITIGATION.  The Company is a defendant in
litigation pending in state and federal courts relating to Oak Technology, Inc.,
a manufacturer of semiconductor chips. Several proposed shareholder class action
lawsuits were consolidated in an amended complaint filed on August 14, 1996 in
the state Superior Court in Santa Clara County, California (IN RE OAK TECHNOLOGY
SECURITIES LITIGATION, No. CV758510). The consolidated complaint alleges, in
general, that the Company and others violated the California securities law by
issuing false and misleading statements relating to Oak Technology's financial
situation during the period from July 27, 1995 through May 22, 1996. H&Q LLC was
the lead underwriter of the initial public offering and a follow-on offering of
Oak Technology securities in 1995, and made a market and issued research reports
with respect to Oak Technology's securities. The other defendants include Oak
Technology, certain of its officers and directors and others. On September 13,
1996, the defendants demurred to the consolidated complaint in its entirety. On
December 6, 1996, the demurrers were sustained with leave to amend. Plaintiffs
filed a second amended complaint on September 22, 1997, which names H&Q, among
others, as a defendant and asserts causes of action for violations of California
Corporations Code Section Section 25400, 25400, Civil Code Section Section 1709
and 1710, and aiding and abetting breaches of fiduciary duty and abuses of
control by certain other defendants. H&Q and other defendants demurred to this
complaint. On December 3, 1997, the demurrers were sustained as to all causes of
action except the claim under California Corporations Code Section 25400.
 
    In federal court, several cases based on the same general facts were filed,
and have been consolidated into one action. IN RE OAK TECHNOLOGY SECURITIES
LITIGATION, No. C-96-20552-SW (Northern District of California). Defendants
moved to dismiss the action, and the motion was granted by order dated August 1,
1997. A second amended complaint was filed on September 4, 1997 and the
defendants moved to dismiss it. A hearing has been held and the matter is under
submission.
 
    NASDAQ MARKET-MAKERS ANTITRUST LITIGATION.  In December 1994, a consolidated
amended complaint was filed in the United States District Court for the Southern
District of New York against 33 broker-dealer defendants, including H&Q LLC (94
Civ. 3996 (RWS), M.D.L. No. 1023) (the "Consolidated Action"). The complaint
alleged that H&Q LLC and other participants and market-makers on Nasdaq engaged
in a conspiracy to fix the "spread" between bid and asked prices for securities
traded on Nasdaq in violation of Section 1 of the Sherman Act. The plaintiff
class was alleged to include persons throughout the United States who are
customers of the defendants or their affiliates and who purchased or sold
securities on Nasdaq during the period from May 1, 1989 through May 27, 1994.
Plaintiffs allege to have been damaged in that they paid more for securities
purchased on Nasdaq, or received less for securities sold, than they would have
but for the alleged conspiracy. The consolidated amended complaint sought
compensatory damages, treble damages, declaratory and injunctive relief,
attorneys' fees and costs. Judgment against each of the defendants was sought on
a joint and several basis. In February 1995, H&Q LLC and the other defendants
filed a motion to dismiss. In August 1995, the Court granted such motion on the
ground that plaintiffs had not specified the stocks in which collusion allegedly
occurred, but gave plaintiffs leave to amend. The plaintiffs thereafter filed a
Refiled Consolidated Complaint in August, 1995 which is identical in substance
to the dismissed pleading and lists over 1,000 securities that plaintiffs allege
were the subject of the alleged conspiracy. H&Q LLC and others thereafter filed
answers, and discovery is
 
                                       25
<PAGE>
proceeding. Plaintiffs made, and defendants opposed, a motion for class
certification. On November 26, 1996, the motion was granted.
 
    In December 1995, a class action suit alleging similar claims to the class
action pending in New York was filed in Alabama state court against the same
defendants. The Alabama case was removed to federal court and transferred to the
federal judge hearing the Consolidated Action, and the action was consolidated
with the Consolidated Action.
 
    In addition, allegations of collusion among the market-makers became the
subject of investigations by the NASD, the SEC and the Antitrust Division of the
Department of Justice ("DOJ"). On July 16, 1996, H&Q LLC and 23 other Nasdaq
market makers entered into a Stipulation and Order resolving a civil complaint
filed by the DOJ, alleging that they violated Section 1 of the Sherman Act in
connection with certain market making practices (UNITED STATES OF AMERICA V.
ALEX. BROWN & SONS, ET AL., Civ. No. 96-CV-5313). The complaint alleged that the
defendants and other market makers engaged in activities that had the effect of
artificially inflating the quoted "inside spread"--i.e., the difference between
the best buying price and the best selling price--of certain Nasdaq stocks. In
entering into the Stipulation and Order, the parties agreed that the defendants
would not agree with other market-makers to set prices, quotes or spreads in
Nasdaq securities, or harass, intimidate or refuse to trade with other
market-makers for reducing their spread in any Nasdaq security or by reason of
the quantity of a Nasdaq security they are willing to trade at its quoted price.
In addition, the defendants each agreed, pursuant to the order, to (i) designate
an antitrust compliance officer to instruct traders and others concerning the
requirements of the proposed order, (ii) create and listen to audio tapes of the
portion of a firm's trading activity on Nasdaq and (iii) allow representatives
of the DOJ, without pre-arrangement, to appear at a defendant's offices to
listen in on trader conversations the firm is taping as they are occurring. The
agreement also requires the defendants to pass on complaints of possible
violations of the proposed order or taped conversations to the DOJ, and to allow
the DOJ to bring civil or criminal contempt charges for willful violations of
the order.
 
    On April 23, 1997, the Court approved the DOJ settlement by granting the
DOJ's motion for entry of the Stipulation and Order and the termination of the
action. That approval has been appealed to the United States Court of Appeals
for the Second Circuit by the plaintiffs in the Consolidated Action, acting as
intervenors. The SEC investigation is continuing, and the Company has received
requests from the SEC for information and documents with respect to its Nasdaq
market making activities. In the Consolidated Action, the Court on April 14,
1997, granted the plaintiffs' motion to permit institutional investors to be
part of the plaintiffs' class.
 
    Six defendants other than H&Q have reached settlement agreements with the
plaintiffs in the total amount of approximately $98.9 million. These agreements
have received preliminary approval by the Court.
 
    PRISM SOLUTIONS, INC. SECURITIES LITIGATION
 
    On March 5, 1997, a purported shareholder class action lawsuit was filed in
California State Court in Santa Clara County against Prism Solutions, Inc. and
certain of its officers and directors, as well as against the underwriters of
its March 14, 1996 initial public offering, including H&Q, which was a
co-manager of the offering (ADLER, ET AL. V. PRISM SOLUTIONS, INC., ET AL.,
Santa Clara Superior Court Case No. CV 764547). The complaint alleges, among
other things, that the offering prospectus failed to disclose that Prism's on-
going growth was in jeopardy and likely to slow due to several factors,
including increasing competition, particularly from low-end competitors, and
that the underwriters each supported Prism's stock by issuing fraudulent
research reports. The defendants filed demurrers to the complaint, and on June
26, 1997, the Court sustained the demurrers, with leave to amend in certain
respects. Plaintiff subsequently filed an amended complaint that did not name
H&Q as a defendant.
 
                                       26
<PAGE>
    SS&C TECHNOLOGIES, INC. SECURITIES LITIGATION
 
    Litigation has been filed against the Company and others relating to SS&C
Technologies, Inc., which went public on May 31, 1996, in an offering that was
co-managed by H&Q. The litigation has been consolidated in an amended class
action complaint filed in the federal court in Connecticut. FEINER ET AL. V.
SS&C TECHNOLOGIES, INC., ET AL., Civil Action No. 397CV00656 (SBA). The
complaint purports to assert claims under Sections 11, 12(2) and 15 of the
Securities Act of 1933. It alleges, among other things, that the initial
offering price was unreasonable and unfair, and was based solely, primarily, or
significantly upon the ability of the underwriters to sell the stock, rather on
than the fundamentals of the issuer or market conditions or the demand for
similar securities of comparable companies.
 
    The defendants have moved to dismiss the complaint, oral argument has been
held and the matter is under submission.
 
    STORM TECHNOLOGY, INC. SECURITIES LITIGATION
 
    On March 14, 1997, a purported class action suit was filed in the California
Superior Court in Santa Clara County against Storm Technology, Inc., two of its
officers or directors, a shareholder, and H&Q related to the September 30, 1996
Storm Technology, Inc. initial public offering, which was co-managed by H&Q.
GOLDBERG V. STORM TECHNOLOGY, INC., ET AL., Santa Clara Superior Court, No.
CV764797. The suit alleges, among other things, that the prospectus and H&Q's
research reports were false and misleading, and purports to state claims under
Sections 25400, 2550, 1507 and 25401 of the California Corporations Code and
California Business and Professions Code Sections 17200, ET SEQ., as well as
Sections 11 and 12 of the Securities Act of 1933. The defendants demurred and
the demurrers were sustained, with leave to amend. An amended complaint was
filed on October 16, 1997. Defendants have demurred. A hearing on the
defendants' demurrers is scheduled for January 20, 1997. On December 12, 1997,
two class action complaints similar to the state court complaint were filed in
the United States District Court for the Northern District of California
(GOLDBERG V. STORM TECHNOLOGY, INC., ET AL., No. C97-21101, alleging violations
of the Securities Act of 1933 ("Securities Act"), and GOLDBERG V. STORM
TECHNOLOGY, INC. ET AL., No. C97-04516, alleging violations of the Securities
Exchange Act of 1934 ("Exchange Act")). The defendants have not responded to the
complaints.
 
    LUMISYS, INC. SECURITIES LITIGATION
 
    On July 9, 1997, a purported class action complaint was filed in the
California Superior Court in Santa Clara County against H&Q and others relating
to an initial public offering by Lumisys, Inc. in November 1995 that was
lead-managed by H&Q. WENGER, ET AL., V. LUMISYS, INC., ET AL., Case No.
CV767369. The complaint alleges violations of California state law on the basis
of false statements allegedly made by the defendants during the alleged class
period of November 15, 1995 through July 11, 1996. On July 10, 1997, a similar
complaint was filed in the federal district court in San Jose alleging
violations of the Exchange Act. WENGER, ET AL. V. LUMISYS, INC., ET AL., No.
C-97 20609 EAI. The defendants demurred to the complaint in the state court
case; on December 16, 1997, the Court sustained the demurrers, in most respects
with leave to amend. In the federal court case, the defendants moved to dismiss
the complaint; oral argument is scheduled to occur on January 16, 1998.
 
    ORTHOLOGIC CORP. SECURITIES LITIGATION
 
    On May 30, 1997, a Consolidated and Amended Class Action Complaint for
Violations of Federal Securities Laws and Arizona State Securities and Consumer
Laws was filed against H&Q and others on behalf of persons who purchased
OrthoLogic Corporation stock between January 18, 1996 and June 18, 1996. CHAN,
ET AL. V. ORTHOLOGIC CORPORATION, ET AL., No. CIV-96-1514-PHX-RCB, U.S.D.C., D.
Ariz. The complaint alleges violations of Sections 10(b) and 20(a) of the
Exchange Act and Rule 10b-5 thereunder, Sections 11, 12(a)(2) and 15 of the
Securities Act and various Arizona state laws. The complaint alleges
 
                                       27
<PAGE>
that statements made in the prospectus for an April 1996 OrthoLogic Corporation
secondary stock offering co-managed by H&Q and in securities analysts' research
reports were false and misleading. Motions to dismiss the complaint have been
filed by all defendants and are scheduled to be heard on January 5, 1998.
 
    SCHADE V. HAMBRECHT & QUIST GROUP
 
    On December 2, 1997, separate but similar lawsuits were filed by the same
plaintiff against H&Q and two other investment banks in California Superior
Court in Orange County. The plaintiff alleges that these investment banks have
engaged in unlawful business practices in violation of California Business &
Professions Code Section Section 17200 ET SEQ. and purports to sue on behalf of
the general public. In each case the plaintiff seeks injunctive relief and
substantial but unspecified damages. The case against H&Q is entitled EDWARD A.
SCHADE V. HAMBRECHT & QUIST GROUP, Case No. 787495. The cases allege that the
allocation of shares of initial public offerings to the personal brokerage
accounts of corporate executives has improperly influenced such corporate
executives' decisions with regard to the selection of investment banks to
provide investment banking services to their companies. None of the defendants
have responded to the complaints.
 
    In addition, H&Q and other investment banks have been requested to provide
information to the Enforcement Department of NASD Regulation, Inc. as part of an
investigation into the underwriting and distribution of certain initial public
offerings underwritten by H&Q and others. It has also been reported that the SEC
is conducting a similar inquiry.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
None.
 
                                       28
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
 
    The executive officers of the Company and their ages as of November 30,
1997, are as follows:
 
<TABLE>
<CAPTION>
NAME                            AGE                       POSITION
------------------------------  ---  --------------------------------------------------
<S>                             <C>  <C>
William R. Hambrecht*.........  62   Chairman of the Company and H&Q LLC; Director
 
Daniel H. Case III*...........  40   President and Chief Executive Officer of the
                                     Company and H&Q LLC; Director
 
William R. Timken.............  62   Vice Chairman of the Company and H&Q LLC; Director
 
Paul L. Hallingby.............  51   Executive Vice President and Director of
                                     Institutional Equity, H&Q LLC
 
Cristina M. Morgan............  45   Managing Director and Co-Director of Investment
                                     Banking, H&Q LLC
 
David M. McAuliffe............  48   Managing Director and Co-Director of Investment
                                     Banking, H&Q LLC, and Chief Administrative Officer
                                       of the Company
 
Bruce M. Lupatkin.............  41   Managing Director and Director of Research, H&Q
                                     LLC
 
Steven N. Machtinger..........  48   General Counsel and Secretary of the Company and
                                     H&Q LLC; Managing Director of H&Q LLC
 
Patrick J. Allen..............  35   Chief Financial Officer of the Company and H&Q
                                     LLC; Managing Director of H&Q LLC
</TABLE>
 
------------------------
 
*   Effective January 1, 1998, Mr. Hambrecht is retiring as Chairman and a
    director of the Company and as Chairman of H&Q LLC and, as of that date, Mr.
    Case will become Chairman of both companies and is resigning as President of
    both companies.
 
    William R. Hambrecht, Chairman of Hambrecht & Quist Group and its principal
subsidiary, H&Q LLC, announced his retirement from the Company effective January
1, 1998. He has continuously served as an officer, director or principal of
those entities or their predecessors since he and the late George Quist
co-founded Hambrecht & Quist in 1968. Mr. Hambrecht is primarily responsible for
directing the Company's venture capital investment activities. He also serves on
the Board of Directors of Adobe Systems Incorporated, a print and electronic
media software company. He holds a B.A. degree from Princeton University.
 
    Daniel H. Case III joined the Company in 1981, and was initially an
associate and then a principal in the Corporate Finance Department. He also
served as Vice President and then a partner in the Venture Capital Department,
both in San Francisco and in London. In 1983, he co-founded the business which
became Hambrecht & Quist Guaranty Finance. Mr. Case rejoined Corporate Finance
in 1986 as co-director of mergers and acquisitions, and became Managing Director
and head of Investment Banking in December 1987. In October 1989, he was elected
Executive Vice President and in October 1991, he was elected to the Board of
Directors of the Company. In April 1992, he was elected President and Co-Chief
Executive Officer. He became Chief Executive Officer in October 1994. Mr. Case
also serves as a director of Rational Software Corporation, a maker of
object-oriented software development tools, Electronic Arts Inc., a global
interactive entertainment software company, AMB Property Corporation, a real
estate company, the National Science and Technology Medal Foundation and the Bay
Area Council. He has a B.A. in Economics and Public Policy from Princeton
University and studied management at the University of Oxford as a Rhodes
Scholar.
 
    William R. Timken joined Hambrecht & Quist in 1969 and has been employed by
the Company in senior capacities since then. Mr. Timken was appointed Vice
Chairman of the Company in 1992. He is
 
                                       29
<PAGE>
responsible for the activities of the Company's Syndicate Department. Mr. Timken
is a past member of the Board of Governors of the Pacific Stock Exchange and the
Board of Governors of the National Association of Securities Dealers, Inc. Mr.
Timken holds a B.A. degree in Economics from Colby College.
 
    Paul L. "Barney" Hallingby joined the Company in 1983 as an institutional
salesman. He was named Managing Director of the Research Department in June 1988
and was elected Executive Vice President in October 1990. In July 1992, he
became Managing Director of Sales and Trading, and in October 1994, he became
Managing Director of Institutional Equity. He holds a B.A. in Political Science
from the University of Pennsylvania and an M.B.A. in Finance from Columbia
University.
 
    Cristina M. Morgan joined the Company in 1982 as a research analyst, became
a principal in Corporate Finance in 1984 and has been a Senior Vice President of
H&Q LLC and its predecessor entity since March 1990. In 1990, Ms. Morgan was
elected Managing Director, Technology Equities in Corporate Finance, and in
1992, she was named Director of Investment Banking. Since July 1995, she has
been Co-Director of Investment Banking. Ms. Morgan holds a B.S. in Finance and
an M.B.A. in Finance from Arizona State University.
 
    David M. McAuliffe joined the Company in July 1995 as Managing Director and
Co-Director of Investment Banking. In September 1996, Mr. McAuliffe was named
Chief Administrative Officer of the Company. Prior to joining the Company, Mr.
McAuliffe served in various capacities in the Investment Banking and Merchant
Banking divisions of Kidder Peabody & Co., an investment bank, from 1974 to
1995. From April 1992 to May 1995, he served as Kidder Peabody & Co.'s Co-Head
of the Global Investment Banking Division. Mr. McAuliffe holds a B.A. in
Accounting from Boston College and an M.B.A. from Harvard Business School.
 
    Bruce M. Lupatkin joined the Company in 1984 as a research analyst and
became a Senior Vice President of H&Q LLC and its predecessor in May 1991. In
1992, Mr. Lupatkin was named Co-Director of Research. Since October 1994, Mr.
Lupatkin has served as Director of Research. Mr. Lupatkin holds a B.S. in
Chemistry from the University of Michigan and an M.B.A. in Finance from the
University of Texas.
 
    Steven N. Machtinger has served as the Company's General Counsel and
Secretary since 1988. He was named a Managing Director in 1990. Mr. Machtinger
was an attorney with the SEC from 1974 to 1983 and was General Counsel of Birr,
Wilson & Co., Inc., an investment bank, from 1983 to 1988. Mr. Machtinger holds
a B.A. in Government from Harvard College and a J.D. from the University of
California, Davis.
 
    Patrick J. Allen joined Hambrecht & Quist in May 1995 as Vice President,
Finance. Since October 1, 1996, Mr. Allen has served as the Company's Chief
Financial Officer. In October 1996, Mr. Allen was named a Managing Director of
H&Q LLC. From November 1993 to April 1995, Mr. Allen was Chief Operating Officer
of Cruttenden Roth, an investment bank. Mr. Allen was previously a Senior Vice
President with Kemper Securities, an investment bank, and held various positions
from 1988 to 1993, including Chief Financial Officer of a predecessor firm. Mr.
Allen had been an auditor with Price Waterhouse, a public accounting firm, in
Newport Beach, California from 1984 to 1988. He holds a B.S. in Business
Administration from California Polytechnic University in San Luis Obispo.
 
                                       30
<PAGE>
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    The principal market for trading of the Company's common stock is the New
York Stock Exchange. The Company's Common Stock is also listed on the Pacific
Exchange. Its stock symbol is HQ. The effective date of the Company's initial
public offering was August 9, 1996. Set forth below are the high and low sale
prices of the Company's common stock for each full quarterly period since its
initial public offering.
 
<TABLE>
<CAPTION>
                                                                HIGH SALE PRICE  LOW SALE PRICE
                                                                ---------------  ---------------
<S>                                                             <C>              <C>
FISCAL 1997
Fourth Quarter Ended 9/30/97..................................     $   35.75        $   26.00
Third Quarter Ended 6/30/97...................................     $   35.50        $   15.00
Second Quarter Ended 3/31/97..................................     $   27.00        $   16.63
First Quarter Ended 12/31/97..................................     $   27.00        $   18.50
 
FISCAL 1996
Fourth Quarter Ended 9/30/96..................................     $   19.50        $   16.25
</TABLE>
 
    According to records of the Company's transfer agent, the Company had
approximately 305 stockholders of record as of December 4, 1997. Because may
shares are held by brokers and other institutions on behalf of stockholders, the
Company is unable to estimate the total number of stockholders represented by
these record holders.
 
    The Company's policy has been to reinvest earnings to fund future growth.
Accordingly, the Company has not paid dividends and does not anticipate
declaring dividends on its common stock in the foreseeable future.
 
ITEM 6. SELECTED FINANCIAL DATA
 
    Information required by item 6 is incorporated by reference from the
information set forth under the heading "Selected Financial Data" in the
Company's 1997 Annual Report to Stockholders (the "Annual Report") filed as
Exhibit 13.01 to this Form 10-K.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS
 
    Information required by item 7 is incorporated by reference from the
information set forth under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Annual Report filed as
Exhibit 13.01 to this Form 10-K.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
    The Company is not required to include the disclosure required by item 7A.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The information required by Item 8 is set forth in Item 14 of this report.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE
 
    None.
 
                                       31
<PAGE>
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    The information regarding directors required by Item 10 is incorporated by
reference from the information set forth under the headings "Proposal No.
1--Election of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's definitive proxy statement for its annual meeting
of stockholders to be held on February 24, 1998. Information regarding executive
officers found under the caption "Executive Officers of the Registrant" in Part
I hereof is also incorporated by reference into this Item 10.
 
ITEM 11. EXECUTIVE COMPENSATION
 
    The information required by Item 11 is incorporated by reference from the
information set forth under the heading "Executive Compensation" in the
Company's definitive proxy statement for its annual meeting of stockholders to
be held on February 24, 1998.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The information required by Item 12 is incorporated by reference from the
information set forth under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the Company's definitive proxy statement
for its annual meeting of stockholders to be held on February 24, 1998.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    The information required by Item 13 is incorporated by reference from the
information set forth under the heading "Certain Relationships and Related
Transactions" in the Company's definitive proxy statement for its annual meeting
of stockholders to be held on February 24, 1998.
 
                                       32
<PAGE>
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
    (a) The following documents are incorporated by reference from the financial
statements contained in the Annual Report filed as Exhibit 13.01 to this Form
10-K:
 
       1.  Financial Statements
 
          Report of Independent Public Accountants
 
          Consolidated Financial Statements as of September 30, 1996, and 1997
           and for the years
             ended September 30, 1995, 1996 and 1997
 
          Notes to Consolidated Financial Statements
 
       2.  Financial Statement Schedules
 
           All schedules are omitted because they are not required or the
           information is shown in the financial statements or notes thereto.
 
       3.  Exhibits
 
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER      EXHIBIT TITLE
--------     ----------------------------------------------------------------------------------------------------
<C>          <S>
    3.01(1)  Registrant's Amended and Restated Certificate of Incorporation.
    3.02     Registrant's Bylaws, as amended.
    4.01(1)  Form of Specimen Certificate for Registrant's common stock
   10.01(3)  Registrant's 1996 Equity Plan, as amended and restated on March 24, 1997*.
   10.02(1)  Registrant's 1995 Restricted Stock Plan, 1995 Stock Option Plan, and Hambrecht & Quist, L.P. 1995
               Limited Partnership Unit Plan*.
   10.03(1)  Form of Registrant's 1995 Stock Option Plan Nonstatutory Stock Option Agreement*.
   10.04(1)  Registrant's Savings and Employee Stock Ownership Plan, effective as of October 1, 1994*.
   10.05(1)  Lease between The Equitable Life Assurance Society of the United States and Hambrecht & Quist L.L.C.
               (formerly Hambrecht & Quist Incorporated) dated January 27, 1988, as amended.
   10.06(1)  Assignment of Lease from Apple Computer, Inc. to Hambrecht & Quist L.L.C. dated March 27, 1996.
   10.07(1)  Lease between Hambrecht & Quist L.L.C. (formerly Hambrecht & Quist Incorporated) and Rowes Wharf
               Associates dated June 22, 1987, as amended.
   10.08(1)  Lease, Riders, and Addenda between 230 Park Avenue Associates and Hambrecht & Quist L.L.C. (formerly
               Hambrecht & Quist Incorporated) dated December 1, 1995.
   10.09(1)  Line of Credit Agreement between The Bank of California, N.A. and Registrant, dated October 29,
               1993.
   10.10(1)  Amended and Restated Line of Credit Agreement between The Bank of California, N.A., and Registrant,
               dated March 21, 1996.
   10.11(1)  Line of Credit Note between The Bank of California, N.A., and Registrant, dated March 21, 1996.
   10.12(1)  Continuing Guaranty by Registrant in favor of The Bank of California, N.A., dated March 21, 1996.
   10.13(1)  Employment Agreement between Registrant and Daniel H. Case III, dated June 17, 1996*.
   10.14(1)  Hambrecht & Quist L.L.C.'s Operating Agreement, dated March 6, 1995.
   10.15(3)  Registrant's 1996 Bonus and Deferred Sales Compensation Plan, as amended and restated on March 24,
               1997*.
</TABLE>
 
                                       33
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
 NUMBER      EXHIBIT TITLE
--------     ----------------------------------------------------------------------------------------------------
<C>          <S>
   10.16(1)  Master Agreement between Hambrecht & Quist L.L.C. (formerly Hambrecht & Quist Incorporated),
               Wertheim Schroder & Co. Incorporated, WSCI Limited Partnership and Lewco Securities Corp., dated
               December 23, 1991, as amended on December 13, 1993 by Amendment No. 1 and July 5, 1995 by
               Amendment No. 2.
   10.17(1)  Clearing and Other Services Agreement between Hambrecht & Quist L.L.C. (formerly Hambrecht & Quist
               Incorporated), Wertheim Schroder & Co. Incorporated, WSCI Limited Partnership and Lewco Securities
               Corp., dated December 23, 1991, as amended.
   10.18(1)  Letter Agreement between Registrant and H&Q Asia Pacific, Ltd., dated April 1, 1996.
   10.19(1)  Form of Registrant's Indemnification Agreement.
   10.20(1)  Lease between The Equitable Life Assurance Society of the United States and Hambrecht & Quist
               L.L.C.(formerly Hambrecht & Quist Incorporated) dated November 9, 1988, as amended.
   10.21(2)  Amendment No. 3 to Master Agreement between Hambrecht & Quist L.L.C. (formerly Hambrecht & Quist
               Incorporated), Wertheim Schroder & Co. Incorporated, WSCI Limited Partnership and Lewco Securities
               Corp., effective September 30, 1996.
   10.22(3)  Consulting Agreement between Hambrecht & Quist L.L.C. and William J. Perry, dated April 1, 1997.
   10.23     Sublease between Chevron Real Estate Management Company and Hambrecht & Quist California, dated May
               21, 1997.
   10.24     Lease between Pacific Resources Development Inc. and Hambrecht & Quist California, dated June 5,
               1997.
   10.25     Amendment Nos. 6, 7 and 8 to Lease between Hambrecht & Quist L.L.C. (formerly Hambrecht & Quist
               Incorporated) and Rowes Wharf Associates dated June 22, 1987, as amended.
   13.01     Certain information from Registrant's Annual Report to Stockholders for the year ended September 30,
               1997 which is incorporated by reference in this Form 10-K.
   21.01(2)  List of Subsidiaries of the Registrant.
   23.01     Consent of Independent Public Accountants.
   27.01     Financial Data Schedule
</TABLE>
 
------------------------
 
*   Indicates management contract or compensatory plan or arrangement.
 
(1) Incorporated by reference to the corresponding exhibit to the Registrant's
    S-1 Registration Statement in the form declared effective on August 8, 1996,
    File No. 333-6431.
 
(2) Incorporated by reference to Registrant's Form 10-K filed for the fiscal
    year ended September 30, 1996.
 
(3) Incorporated by reference to Registrant's Form 10-Q filed for the fiscal
    quarter ended March 31, 1997.
 
(b) Reports on Form 8-K
 
   None.
 
                                       34
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 23rd day of
December, 1997.
 
<TABLE>
<S>                             <C>  <C>
                                HAMBRECHT & QUIST GROUP
 
                                By:            /s/ DANIEL H. CASE III
                                     -----------------------------------------
                                                 Daniel H. Case III
                                       PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, report
has been signed by the following persons in the capacities and on the date
indicated.
 
<TABLE>
<CAPTION>
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------
 
<C>                             <S>                         <C>
   /s/ WILLIAM R. HAMBRECHT     Chairman of the Board of     December 23, 1997
------------------------------    Directors
    (William R. Hambrecht)
 
                                President, Chief Executive   December 23, 1997
    /s/ DANIEL H. CASE III        Officer and Director
------------------------------    (Principal Executive
     (Daniel H. Case III)         Officer)
 
    /s/ WILLIAM R. TIMKEN       Vice Chairman of the Board   December 23, 1997
------------------------------    of Directors
     (William R. Timken)
 
     /s/ PATRICK J. ALLEN       Chief Financial Officer      December 23, 1997
------------------------------    (Principal Financial and
      (Patrick J. Allen)          Accounting Officer)
 
    /s/ HOWARD B. HILLMAN       Director                     December 23, 1997
------------------------------
     (Howard B. Hillman)
 
     /s/ WILLIAM E. MAYER       Director                     December 23, 1997
------------------------------
      (William E. Mayer)
 
     /s/ WILLIAM J. PERRY       Director                     December 23, 1997
------------------------------
      (William J. Perry)
 
   /s/ EDMUND H. SHEA, JR.      Director                     December 23, 1997
------------------------------
    (Edmund H. Shea, Jr.)
</TABLE>
 
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