UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File For Quarter Ended September 30, 2000 Number 0-9209 ------------------- ------- RIVERSIDE GROUP, INC. (Exact name of registrant as specified in its charter) Florida 59-1144172 ------------------------------------------ ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7800 Belfort Parkway, Jacksonville, Florida 32256 ------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code number 904-281-2200 ------------ Indicate by a 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- On November 10, 2000, there were 4,767,123 shares of the Registrant's common stock outstanding. RIVERSIDE GROUP, INC. INDEX

Page PART I. FINANCIAL INFORMATION Number ------ Item 1. Financial Statements Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2000 (Unaudited) and December 31, 1999 3 Condensed Consolidated Statements of Operations ~~Six~~Three ~~months~~and Nine Months ended ~~June~~September 30, 2000 and 1999 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows ~~Six~~Nine months ended ~~June~~September 30, 2000 and 1999 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 1718 Item 3. Quantitative and Qualitative Disclosures about Market Risk 2628 PART II. Item 2. Changes in Securities 2729 Item 5. Other Information 2729 Item 6. Exhibits and Reports on Form 8-K 2729 2

RIVERSIDE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)

~~June~~SEPTEMBER 30, ~~December~~DECEMBER 31, 2000 1999 ----------------- ----------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ ~~289~~131 $ 277 Accounts receivable, less allowance for doubtful 335 259 accounts of $1421 at 2000 and $3 at 1999 ~~375 259~~ Investment in Greenleaf Technologies Corp. 65,~~747~~073 1,253 Notes receivable 26 30 Prepaid expenses ~~117~~565 19 -----------~~---~~ -----------~~---~~ Total current assets 76,~~554~~130 1,838 Investment in Wickes Inc. 1415,~~564~~157 15,799 Investment in Buildscape Inc. (947) (947) Real Estate held for sale 76,~~387~~755 8,996 Property, plant and equipment, net ~~259~~213 340 Other assets (net of accumulated amortization of $5932 in 2000 and $4635 at 1999) ~~147~~109 157 -----------~~---~~ -----------~~---~~ Total assets $ 2827,~~964~~417 $ 26,183 ===========~~===~~ ===========~~===~~ LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current debt and current maturities of long-term debt $ 11,~~806~~656 $ 11,813 Accounts payable ~~477~~602 430 Accrued liabilities 1,~~058~~032 1,758 -----------~~---~~ -----------~~---~~ Total current liabilities 13,~~341~~290 14,001 Long-term debt ~~268~~335 469 Mortgage debt 11,345 11,345 Net liabilities of discontinued operations 2018 21 Other long-term liabilities 84 83 -----------~~---~~ -----------~~---~~ Total liabilities 25,~~058~~072 25,919 Commitments and contingencies ~~(see Note 5)~~ COMMON STOCKHOLDERS' EQUITY : Common stock, $.10 par value; 20,000,000 shares authorized; 477 477 4,767,123 issued and outstanding in 2000 and 1999 Additional paid in capital 16,468 16,468 Accumulated other comprehensive income 65,~~747~~073 1,253 Retained earnings (deficit) (19,~~786~~673) (17,934) -----------~~---~~ -----------~~---~~ Total common stockholders' equity 32,~~906~~345 264 -----------~~---~~ -----------~~---~~ Total liabilities and common stockholders' equity $ 2827,~~964~~417 $ 26,183 ===========~~===~~ ===========~~===~~

See Accompanying Notes to Condensed Consolidated Financial Statements. 3 RIVERSIDE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands except per share amounts)

~~Three~~THREE ~~Months~~MONTHS ~~Ended~~ENDED ~~June~~SEPT 30, ~~Six~~NINE ~~Months~~MONTHS ~~Ended~~ENDED ~~June~~SEPT 30, --------------------------- -------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- REVENUES: Sales and service revenues $ ~~344~~500 $ ~~270~~518 $ ~~748~~1,248 $ ~~751~~1,269 Net investment ~~loss~~income (9loss) (722) 17 (2749) (3619) Net realized investment gains ~~587~~477 --18 1,~~163~~640 --18 Other operating income 4443 24(5) 4790 4944 ----------- ----------- ----------- ----------- ~~966~~998 ~~287~~548 2,929 1,~~931~~312 ~~764~~ ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Cost of sales ~~164~~281 ~~140~~236 ~~288~~569 ~~218~~454 Provision for doubtful accounts 96 63120 1117 4124 Depreciation, goodwill and trademark amortization 6359 94145 ~~125~~184 ~~154~~299 Selling, general and administrative expenses ~~665~~401 12,~~732~~245 1,~~145~~546 35,~~316~~561 Interest expense ~~723~~767 ~~650~~691 12,~~334~~101 1,~~303~~994 ----------- ----------- ----------- ----------- 1,~~624~~514 23,~~679~~437 24,~~903~~417 48,~~995~~432 ----------- ----------- ----------- ----------- ~~LOSS~~EARNINGS (LOSSES) BEFORE EQUITY IN EARNINGS (LOSSES) OF RELATED PARTIES (~~658~~516) (2,~~392~~889) (~~972~~1,488) (47,~~231~~120) Equity in earnings (losses) of Wickes, Inc. ~~417~~629 1,~~178~~840 (~~880~~251) ~~(147)~~1,693 ----------- ----------- ----------- ----------- NET ~~LOSS~~EARNINGS $ (~~241~~LOSSES) $ 113 $ (1,~~214~~049) $ (1,~~852~~739) $ (45,~~378~~427) =========== =========== =========== =========== BASIC AND DILUTED ~~LOSS~~EARNINGS (LOSSES) PER COMMON SHARE: ~~Loss~~Net ~~per~~earnings ~~share~~(losses) $ (0.~~05)~~02 $ (0.2320) $ (0.3937) $ (01.8404) Weighted average number of common shares used in computing earnings (losses) per share 4,759,123 5,213,186 4,759,123 5,213,186 ~~See Accompanying Notes to Condensed Consolidated Financial Statements. 4~~

See Accompanying Notes to Condensed Consolidated Financial Statements. 4 RIVERSIDE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)

~~For~~FOR ~~the~~THE ~~Six~~NINE ~~Months~~MONTHS ~~Ending~~ENDING ~~June 30,~~ ----------------------------------------- 2000 1999 ----------- ----------- CASH FLOW FROM OPERATING ACTIVITIES Net loss $ (1,~~852~~739) $ (45,~~378~~427) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense ~~102~~151 93196 Amortization expense 2333 ~~321~~103 Amortization of bond discount -- ~~113~~173 Provision for doubtful accounts 1117 (124 Gain on sale of fixed assets 4) --- Net realized investment gains (1,~~058~~535) --(17) Equity in earnings (losses) of unconsolidated subsidiaries ~~880~~251 (~~113~~1,693) Change in other assets and liabilities: Increase in accounts receivable (~~127~~93) (8131) Decrease in notes receivable 4--- 167 Increase in other assets (~~107~~526) (~~230~~300) Increase (decrease) in accounts payable and accrued liabilities (~~654~~554) 1,~~082~~775 Increase in discontinued operations, other liabilities and current income taxes --(6) (~~111~~177) ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (23,~~778~~997) (35,~~068~~207) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments: Property, plant and equipment (1720) (~~131~~291) Investment in real estate --- --- Proceeds from sales of investments: Property, plant and equipment 4 2 Investment in real estate 12,~~599~~381 4479 Securities of Greenleaf Technologies Corp. ~~977~~1,309 --- Securities of Wickes Inc. ~~439~~468 1,186 ----------- ----------- NET CASH PROVIDED BY INVESTING ACTIVITIES 24,~~998~~142 ~~1,099~~976 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Repayment of debt (~~208~~513) (~~153~~420) Increase in borrowings --222 25,~~032~~182 ----------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (~~208~~291) 14,~~879~~762 ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12 (90146) 531 Cash and cash equivalents at beginning of period 277 509 ----------- ----------- Cash and cash equivalents at end of period $ ~~289~~131 $ ~~419~~1,040 =========== =========== ~~SUPPLEMENTAL~~Supplemental ~~SCHEDULE~~schedule OFof ~~CASH~~cash ~~FLOW~~flow ~~INFORMATION~~information: Non-cash compensation expense (Greenleaf ~~Option~~) options $ 105 $ ---

See Accompanying Notes to Condensed Consolidated Financial Statements. 5 RIVERSIDE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Financial Statement Presentation The condensed consolidated financial statements present the financial position, results of operations, and cash flows of Riverside Group, Inc. and its wholly-owned and majority-owned subsidiaries (the "Company"). The Company no longer owns a majority interest in Buildscape, Inc. ("Buildscape") and at October 21, 1999, the Company began to report its investment in Buildscape on the equity method (see Note 3. "Investment in Buildscape"). Accordingly, the Company's consolidated balance sheet as of December 31, 1999 does not include the accounts of Buildscape. The Company's condensed consolidated statements of operations and cash flows for the period ending September 30, 1999 include Buildscape on a consolidated basis. The condensed consolidated balance sheets as of September 30, 2000, the condensed consolidated statements of operations for the three and nine months ended September 30, 2000 and 1999 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2000 and 1999, have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of September 30, 2000, and for all periods presented have been made. The results for the three month period ended September 30, 2000 are not necessarily indicative of the results to be expected for the full year or for any interim period. The Company accounts for its investment in Greenleaf Technologies Corporation ("Greenleaf") securities according to the provisions of FAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." This statement requires that all applicable investments be classified as trading securities, available-for-sale, or held-to-maturity securities. Greenleaf securities have been classified as available-for-sale securities, and as such, will be reported at fair value based upon the closing price on the exchange on which they are traded on the last day of the quarter. The unrealized gains and losses are excluded from earnings, but reported within shareholders' equity in accumulated other comprehensive income (net of the effect of income taxes) until they are sold. At the time of sale, any gains or losses, calculated by the specific identification method, will be recognized as a component of operating results. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements, the related Auditor's report, and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission. 6 Comprehensive Income ____________________ Changes in the components of other comprehensive income and in accumulated other comprehensive income for the first nine months of 2000 are as follows:

Unrealized Total Gains on Comprehensive Securities Income ~~---------- ------------~~ Balance at December 31, 1999 $ 1,253 $ (1,425) Change during the first ~~six~~nine months of 2000 53,~~494~~820 32,~~642~~081 ---------- ----------- Balance at ~~June~~September 30, 2000 $ 65,~~747~~073 $ ~~2,217~~656 ========== ===========

The change in comprehensive income includes the change in unrealized gains and the net loss for the first nine months of 2000. Earnings Per Share __________________ Basic and diluted earnings per common share are calculated in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share". Earnings per share is based on the weighted average number of shares of common stock outstanding during each period (4,759,123 shares in 2000 and 5,213,186 shares in 1999). In periods where net losses are incurred, diluted weighted average common shares are not used in the calculation of diluted earnings per share as it would have an anti-dilutive effect on earnings per share. In addition, during the 3rd quarter of 2000, options to purchase 50,000 shares were not included in the diluted earnings per share since the options' exercise price were greater than the average market price. 2. INVESTMENT IN WICKES INC. As of September 30, 2000, Riverside beneficially owned 2,918,543 shares of Wickes Inc.'s ("Wickes") common stock, which constituted 35% of Wickes' outstanding voting and non-voting common stock. Summary financial information of Wickes for the third quarter of 2000 follows (in thousands):

(unaudited) (audited) ~~June~~Sept. 2423, 2000 Dec. 25, 1999 -------------- ------------- Balance Sheet Data: Current assets $ ~~261~~241,~~658~~212 $ 241,835 Total assets ~~355~~335,~~893~~065 334,636 Current liabilities 7386,~~176~~301 79,312 Long-term debt and other long-term liabilities ~~253~~217,~~451~~349 224,505 Common stockholders' equity 2931,~~266~~415 30,819

Three Months Ended ~~Six~~Nine Months Ended ------------------ ----------------- (unaudited) (unaudited) (unaudited) (unaudited) ~~June~~Sept. 2423, ~~June~~Sept. 2625, ~~June~~Sept. 2423, ~~June~~Sept. 2625, 2000 1999 2000 1999 ---- ---- ---- ---- Income Statement Data: Net sales $ ~~279~~281,~~703~~942 $ ~~288~~325,~~764~~371 $ ~~495~~777,~~479~~421 $ ~~479~~805,~~934~~305 Cost of sales ~~210~~219,~~386~~707 ~~222~~259,~~425~~916 ~~372~~609,~~467~~818 ~~367~~641,~~628~~108 Gross profit 6962,~~317~~235 6665,~~339~~455 ~~123~~167,~~012~~603 ~~112~~164,~~306~~197 Selling, general & administrative 5950,~~290~~829 5450,~~810~~524 ~~110~~144,~~746~~645 99136,~~480~~997 Other expenses 82,~~171~~315 71,~~532~~803 165,~~104~~692 144,~~714~~700 Other income (~~917~~937) (21,~~187~~337) (12,~~703~~640) (34,~~043~~380) Income~~(loss)~~ before income tax 23,~~773~~865 68,~~184~~588 (21,~~135)~~730 19,~~155~~743 Net income ~~(loss) 1~~2,~~532~~136 35,~~587~~044 ~~(1,667)~~469 ~~311~~5,355

3. INVESTMENT IN BUILDSCAPE On October 21, 1999, Imagine Investments, Inc. ("Imagine") made a $10 million investment in Buildscape, which prior to the investment was a wholly-owned subsidiary of the Company. Imagine converted $3 million of convertible debt into common stock, exchanged 520,000 shares of Riverside common stock for Buildscape common stock and purchased an additional $5 million of Buildscape Series A Preferred Stock. In connection with the transaction, Imagine was granted the right to vote the Company's common shares on all matters with the exception of a change in control. As of October 22, 1999, the Company owned 62% of the Buildscape common stock; however, because the Company's voting rights were controlled by Imagine as of October 22, 1999, the Company accounted for its investment in Buildscape on the equity method. The Company retained 3,119,067 outstanding shares of Buildscape's common stock. As a result of this transaction, the Company owned (before Buildscape employee's stock options) 47% of Buildscape on a fully converted basis. Imagine owned 38% of the common and 100% of the preferred stock of Buildscape, or 53% on a fully converted basis. On May 12, 2000, Buildscape entered into a stock purchase agreement with Imagine and the Dow Chemical Company ("Dow") pursuant to which Dow purchased Series A Preferred Stock and common stock of Buildscape from Imagine and also purchased newly issued Series B Preferred Stock directly from Buildscape. As a result of these transactions, Imagine's right to vote the Company's common shares of Buildscape was terminated. Dow purchased one tranche of Series B Preferred Stock and will purchase a second tranche upon the completion of certain milestones by Buildscape. Dow also has an option to acquire additional shares in Buildscape that will increase its ownership to 50.1%. Upon the completion of all of these transactions, Riverside's ownership in Buildscape will be reduced from 47% to 35%, on a fully converted basis. 8 Summary financial information of Buildscape for the third quarter of 2000 follows (in thousands):

(unaudited) (audited) ~~June~~September 30, 2000 December 30, 1999 ------------------ ----------------- Balance Sheet Data: Current assets $ 62,~~860~~573 $ 2,677 Total assets 85,~~691~~072 3,587 Current liabilities 12,~~818~~052 1,592 Common stockholders' equity 63,~~873~~020 1,995

Three Months Ended ~~Six~~Nine Months Ended ------------------ ----------------- (unaudited) (unaudited) ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, 2000 1999 2000 1999 ---- ---- ---- ---- Income Statement Data: Net sales $ ~~122~~326 $ ~~114~~207 $ ~~249~~575 $ ~~179~~386 Cost of goods 91294 91191 ~~196~~490 ~~123~~314 Gross profit 3132 2316 5385 5672 Selling, general & administrative 3,~~054~~952 1,~~262~~725 49,~~948~~189 24,~~365~~142 Other expenses ~~175~~-- 8579 ~~299~~10 ~~135~~162 Other income (5466) -- (72138) -- Loss before income tax (3,~~144~~854) (1,~~324~~788) (58,~~122~~976) (24,~~444~~232) Net loss (3,~~144~~854) (1,~~324~~788) (58,~~122~~976) (24,~~444~~232)

4. INVESTMENT IN GREENLEAF As of September 30, 1998, the Company completed a transaction with Greenleaf, based in Austin, Texas, whereby the Company acquired common shares of Greenleaf in exchange for 100% of the common stock of the Company's former wholly-owned subsidiary, Gameverse, Inc. As a result of Greenleaf's dissatisfaction with the transaction, on January 28, 2000, the Company and Greenleaf executed a Settlement Agreement (the "Greenleaf Settlement"). In the Greenleaf Settlement, the Company retained 10,000,000 shares of the 14,687,585 shares that it had originally received. The Company also retained a five year option to acquire 2,000,000 additional newly issued shares of Greenleaf common stock at an exercise price of $.25 per share. In addition to the 10,000,000 retained shares, 3,000,000 of the Greenleaf shares are held in an escrow account (the "Escrow Shares"), pursuant to an Escrow Agreement acceptable to Greenleaf and the Company. The proceeds from the sale of the Escrow Shares are to be used to fund a mutually agreeable joint venture for the marketing of technology and internet-related products, to be owned in equal amounts by Greenleaf and the Company. In connection with the settlement, Riverside granted Greenleaf a stock option to purchase 5% of the issued and outstanding shares of Cybermax, Inc. 9 ("Cybermax"), a wholly-owned subsidiary of the Company. The exercise price is $1,000,000 and the expiration date of the option is September 30, 2003. In addition, the Company entered into an agreement with a subsidiary of Greenleaf, Future Com., South Florida, Inc. for use of satellite air time, related technology, hardware and software, on an as-needed basis, at fair market value. INVESTMENT SECURITIES - AVAILABLE FOR SALE In accordance with SFAS 115 and Rule 144, under the Securities Act of 1933, as amended (the "'33 Act") 4,611,786 shares of the Company's common stock in Greenleaf are classified as available for sale as of September 30, 2000. The cost basis is $0 and the estimated fair market value is $5,073,000, resulting in gross unrealized gains of $5,073,000. Sales of Greenleaf shares are limited by Rule 144 under the '33 Act to (i) the greater of the average weekly reported volume of trading in such securities during the four calendar weeks preceding the filing of Form 144 or(ii) 1% of Greenleaf's outstanding shares as of the most recent statement published by issuer. Based on the Company's intention to sell the maximum number of shares allowed in order to fund current operations and debt, such shares have been classified as available for sale and accordingly the value of such shares has been reflected as a component of comprehensive income, net of applicable tax of $0. No taxes have been reserved for since the Company has available net operating loss carryforwards and strategies which would result in no tax liability upon the sale of these securities. 5. COMMITMENTS AND CONTINGENCIES WICKES INC. As of September 23, 2000, Wickes had accrued approximately $98,000 for remediation of certain environmental and product liability matters, principally underground storage tank removal. Many of the sales and distribution facilities presently and formerly operated by Wickes contained underground petroleum storage tanks. All such tanks known to Wickes located on facilities owned or operated by Wickes have been filled or removed in accordance with applicable environmental laws in effect at the time. As a result of reviews made in connection with the sale or possible sale of certain facilities, Wickes has found petroleum contamination of soil and ground water on several of these sites and has taken, or expects to take, remedial actions with respect thereto. In addition, it is possible that similar contamination may exist on properties no longer owned or operated by Wickes, the remediation of which Wickes could, under certain circumstances, be held responsible. Since 1988, Wickes has incurred approximately $2.0 million of costs, net of insurance and regulatory recoveries, with respect to the filling or removing of underground storage tanks and related investigatory and remedial actions. Insignificant amounts of contamination have been found on excess properties sold over the past five years. In prior periods, Wickes had been identified as having used two landfills which are now Superfund clean up sites for which requests for reimbursement of a portion of the clean-up costs were submitted. These issues have been settled and Wickes has been relieved of responsibility. 10 Wickes is one of many defendants in two multi-plaintiff suits filed in August of 1996 by approximately 200 claimants for unspecified damages as a result of health problems claimed to have been caused by inhalation of silica dust, a byproduct of concrete and mortar mix, allegedly generated by a cement plant with which Wickes has no connection other than as a customer. Wickes has entered into a cost sharing agreement with its insurers, and any liability is expected to be minimal. Wickes is one of many defendants in approximately 200 actions, each seeking unspecified damages, in various Michigan state courts. These actions are aimed at manufacturers and building material retailers by individuals who claim to have suffered injuries from products containing asbestos. Each of the plaintiffs in these actions is represented by one of two law firms. Wickes is aggressively defending these actions and does not believe that these actions will have a material adverse effect on Wickes. Since 1993, Wickes has settled 30 similar actions for insignificant amounts, and another 245 of these actions have been dismissed. As of September 23, 2000 none of these suits have made it to trial. Losses in excess of the amounts accrued as of September 23, 2000 are possible but an estimate of these amounts cannot be made. Wickes is a defendant in a lawsuit resulting from a 1998 accident involving an employee truck driver that resulted in personal injuries to a third party. Plaintiffs seek compensatory damages in an unspecified amount. Recently, plaintiffs have amended their complaint to include a claim for punitive damages in an unspecified amount, for which insurance coverage may or may not be available. Wickes' assessment of the matters described in this note and other forward-looking statements in this Form 10-Q are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 ("Forward-Looking Information") and are inherently subject to uncertainty. The outcome of the matters described in this note may differ from Wickes' assessment of these matters as a result of a number of factors including, but not limited to, matters unknown to Wickes at the present time, development of losses materially different from Wickes' experience, Wickes' ability to prevail against its insurers with respect to coverage issues to date, the financial ability of those insurers and other persons from whom Wickes may be entitled to indemnity, and the unpredictability of matters in litigation. THE COMPANY AND WICKES The Company and Wickes are involved in various other legal proceedings which are incidental to the conduct of their businesses. The Company does not believe that any of these proceedings will have a material adverse effect on the Company. In onnection with the sale of Dependable Insurance Company, a former property and casualty subsidiary of the Company, the Company agreed to indemnify the purchaser for certain losses on various categories of liabilities. Terms of the indemnities provided by the Company vary with regard to time limits and 11 maximum amounts. American Financial Acquisition Corporation subordinated debentures in the amount of $2.1 million are pledged as collateral on these indemnities. Although future loss development will occur over a number of years, the Company believes, based on all information presently available, that these indemnities will not have a material adverse effect on the Company's financial position or results of operations. On December 1, 1997, the Company completed the sale of its mortgage lending operation to an unrelated third party. The Company did not realize any gain or loss from the transaction, but agreed to indemnify the purchaser against losses on the construction loan portfolio that was transferred. The Company currently has 62,500 shares of its Wickes' common stock pledged as collateral for this indemnification obligation. As the construction loan portfolio decreases, the shares held as collateral will be released. The Company believes that these indemnities will not have a material adverse effect on the Company's financial position or results of operations. LIQUIDITY AND MANAGEMENT'S PLANS The Company's $1.8 million debt to Imagine that was due to mature on August 31, 2000 has been extended to December 15, 2000 and increased for the amount of unpaid interest and refinancing costs of $221,000. The Company has entered into a Amendment to Forbearance Agreement with the agent for its 11% Noteholders that will allow the principal and interest that was due on the 11% Notes on September 30, 2000 to be paid on December 31, 2000. The terms of this agreement provide that (i) the Company will continue to sell Greenleaf common stock in a reasonable manner, (ii) the Company will apply the proceeds from such sales first to the unpaid interest and second to the principal, (iii) the interest rate will remain at 17% and the Noteholders will receive a second lien behind Imagine on the 3,119,067 shares of Buildscape common stock. The Company continues to have discussions with other present and prospective lenders regarding refinancing all or a portion of these debts. However, there can be no assurance that the Company will be able to refinance any of these debts prior to the extended due dates for these loans. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company is primarily a holding company, which derives its financial resources through asset sales, additional borrowings or other financings. As described below, the principal source of funds in the past has been borrowings and sales of shares of Wickes common stock. However, because the Company has executed the Greenleaf Settlement (see Note 4, "Investment in Greenleaf"), the Company is now able to sell shares of its Greenleaf stock to cover some of its debt obligations, subject to the limitations and restrictions described below. The Company is currently working on additional options as discussed below. The primary use of funds is interest and principal payments on the Company's debt and to fund the operations of its wholly-owned subsidiary, Cybermax. Cybermax is generating sales and the Company projects that by the end of this year, Cybermax will generate cash from operations sufficient to fund its operations. However, there can be no assurance that this will occur. The Company estimates that as of November 9, 2000, it had approximately $436,000 of accounts payable and other current liabilities (excluding interest payable), approximately $301,000 of which are past due. In March of 2000, the 12 Company and Wickes renegotiated the terms of the Company's note to Wickes, deferring all principal payments due for one year, including the delinquent principal payments for November of 1999 and February of 2000. As stated above, the two assets that the Company may sell to cover immediate cash needs are Wickes and Greenleaf common stock. However, as of September 30, 2000, all of the Company's 2,918,543 shares of Wickes common stock were pledged to secure various obligations of the Company. On the closing of the Imagine short-term loan, Imagine released 81,970 shares of Wickes common stock, thereby permitting the Company to sell such shares. Imagine has now released another 81,720 shares of Wickes common stock that the Company will sell in the market and use the proceeds to cover payables and current operating costs. The Company currently owns 9,140,000 shares of Greenleaf common stock and has a five year option to purchase two million shares at $0.25 per share. All 9,140,000 shares owned are pledged to secure the Company's 11% Notes, and any proceeds of sale are required to be applied as discussed above. The Company owns an additional three million shares of Greenleaf common stock that are held in an escrow account, pursuant to an escrow agreement between the Company and Greenleaf (see Note 4. "Investment in Greenleaf"). Through November 9, 2000, the Company sold 140,000 shares of the Greenleaf escrow shares for approximately $151,000, of which $75,500 was paid to Greenleaf. Pursuant to the escrow agreement in October 0f 2000, the Company and Greenleaf began investing the proceeds of the escrow stock sales in joint ventures. The Company has been selling shares of Wickes and Greenleaf common stock to meet the immediate cash requirements of interest due and operations. Through November 9, 2000, the Company has sold 81,970 shares of Wickes common stock and 860,000 shares of Greenleaf common stock for proceeds of approximately $476,000 and $1,385,000, respectively. Proceeds from the sale of Wickes common stock were used to pay the interest due to Wickes and to fund current operating costs. All proceeds from the sale of Greenleaf common stock, other than the escrow shares, are used to pay the 11% Noteholders as discussed in Note 6. "Long Term and Mortgage Debt ." The Company's $11.3 million of real estate indebtedness is secured by the Company's real estate and 2,016,168 shares of Wickes common stock. Additional collateral would be required in the event there is any collateral deficit, at any quarterly valuation date, which would depend upon factors including the market value of Wickes' common stock and the timing and amount of real estate sales. In June 2000, the Company sold 6.83 acres of its Florida real estate, which generated proceeds of approximately $1.6 million. The entire proceeds were used to pay the interest due on the Company's mortgage debt and a prepayment of interest. In September 2000, the Company sold 8.8 acres of its Atlanta real estate, which generated proceeds of approximately $861,000. As of November 9, 2000, the Company has made a prepayment of interest of approximately $400,000 on its mortgage debt. The Company currently has 45 acres of its Atlanta real estate under contract to sell. All sales proceeds, estimated at $7 million (after closing 13 costs), will be used to pay interest, real estate taxes and pay down principal on the current mortgage debt of $11.3 million. The Company previously had a contract to sell all remaining acres scheduled for a May closing, however, the buyer was unable to meet the terms of the sale and it was cancelled. In October 2000, the Company sold its remaining Florida property for approximately $309,000. These proceeds were used to fund the Company's current operations. The Company's assessment of the matters described in this Section and other Forward-Looking Information is inherently subject to uncertainty. The outcome of certain matters described in this Section may differ from the Company's assessment of these matters as a result of a number of factors including but not limited to: matters unknown to the Company at the present time, development of losses materially different from the Company's experience, Wickes' ability to prevail against its insurers with respect to coverage issues to date, the financial ability of those insurers and other persons from whom Wickes may be entitled to indemnity, and the unpredictability of matters in litigation. In addition, the discussion above of the Company's future operations, liquidity needs and sufficiency constitutes Forward-Looking Information and is inherently subject to uncertainty as a result of a number of risk factors including, among other things: (i) the success of, and level of cash flow generated by Cybermax, (ii) the Company's ability to achieve the level of real estate sales required to meet scheduled real estate debt principal and interest payments and to avoid the requirement that the Company provide additional collateral for this debt, (iii) the Company's ability to borrow, which may depend upon, among other things, the trading price of Wickes common stock, the value and liquidity of the Company's Greenleaf securities, and the success of Cybermax and Buildscape, (iv) the ability of the Company to raise funds through sales of Wickes and Greenleaf common stock and (v) uncertainty concerning the possible existence of indemnification claims resulting from the Company's discontinued operations. Future real estate sales depend upon a number of factors, including re-zoning permits, interest rates, general economic conditions, and conditions in the commercial real estate markets in Atlanta, Georgia. In addition to the factors described above, the Company's ability to sell Wickes and Greenleaf common stock would depend upon, among other things, the trading prices for these securities, and, in light of the relatively low trading volume for Wickes, the Company's ability to find a buyer or buyers for these securities in a private transaction or otherwise. 14 6. LONG TERM AND MORTGAGE DEBT Consolidated long-term and mortgage debt is comprised of the following as of September 30, 2000 (in thousands):

LONG-TERM DEBT Collateralized Notes $ 9,~~805~~500 Other 2,~~269~~491 Less: current maturities (11,~~806~~656) ------------ Total Company long-term debt less current maturities $ ~~268~~335 MORTGAGE DEBT Mortgage debt, non-recourse $ 11,345 Total long-term and mortgage debt ---------- ~~Total long~~-~~term~~- ~~and mortgage debt~~ less current maturities $ 11,~~613~~680 ============

COLLATERALIZED NOTES ("THE 11% NOTES") On August 25, 1999, the Company and the 13% Note holders executed an agreement (the "11% Agreement"), whereby the Company's 13% Notes that were scheduled to mature in September 1999, were replaced with new unsubordinated promissory notes due September 30, 2000 bearing 11% interest. The 11% Notes are secured by a junior lien on the collateral securing the Company's real estate indebtedness and 10 million shares of Greenleaf common stock. On March 24, 2000, the Company and the 11% Note holders executed a modification to the 11% Agreement. This modification allows the Company to use 100% of the net sales proceeds from the sale of its Greenleaf shares to be applied against the semi-annual interest payment due March 31, 2000 in lieu of payment against the principal. In addition, the Company agreed to make a principal reduction of $550,000 on the 11% Notes on or before April 30, 2000. The Company was unable to sell a sufficient amount of the Greenleaf shares to meet the April 30 deadline, and received a notice of default from the note holders on May 8, 2000. On May 8, 2000, the Company and the 11% Note holders executed a Forbearance Agreement that precluded the 11% Note holders from taking any action to accelerate the payment of the 11% Notes, as long as the Company performed pursuant to the terms of the agreement. The terms included funding the balance of the $550,000 principal payment that was due April 30, 2000 and selling additional shares of Greenleaf common stock in subsequent months with the entire proceeds applied to reduce the outstanding principal on the 11% Notes. The Company reduced the principal balance of the notes by $195,000 in June, $145,000 in July and $160,000 in August, however, these payments fell below the requirements of the forbearance agreement. 15 The Company has entered into an Amendment to the Forbearance Agreement with the agent for the 11% Noteholders that will allow the interest and principal that was due on September 30, 2000, to be paid on December 31, 2000. The terms of this agreement provide that (i) the Company continue to sell the Greenleaf common stock in a reasonable manner, (ii) the Company will apply the proceeds from such sales first to the unpaid interest and second to the unpaid principal, (iii) the interest rate will remain at 17% and the Noteholders will receive a second lien behind Imagine on the 3,119,067 shares of Buildscape common stock. OTHER WICKES PROMISSORY NOTE In March of 2000, the Company and Wickes renegotiated the terms of the Wickes promissory note, deferring all principal payments, including the delinquent principal payments due in November of 1999 and February of 2000, for one year, after which the principal payments are due on a quarterly basis. The interest on this note will be payable on a quarterly basis. IMAGINE SHORT-TERM LOAN As of May 9, 2000, the Company had made payments of $9,553 under the Imagine short- term loan but was delinquent with respect to required payments of approximately $174,675 of interest. In connection with the Greenleaf Settlement, the Company granted Greenleaf a stock option to purchase 5% of the issued and outstanding shares of Cybermax, all of which are pledged to Imagine. The Company believes that if Greenleaf exercises this stock option, then the Imagine short-term loan will be paid in full. On August 31, 2000 the Company and Imagine extended the principal and interest payments that was due on August 31, 2000 until December 15, 2000. The $1.8 million loan balance was increased by $221,000 for unpaid interest and refinancing costs with this extension. 7. INCOME TAXES The Company's effective tax rate was 0% for the nine months ended September 30, 2000 and 1999. The Company has established a reserve for the full amount of deferred tax assets. In management's opinion, it is unlikely the deferred tax assets will be realized in the near future. 8. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities". In June 2000, the FASB issued SFAS No. 138, which amends certain provisions of SFAS 133 to clarify four areas causing difficulties in implementation. The amendment included expanding the normal purchase and sale exemption for supply contracts, permitting the offsetting of certain intercompany foreign currency derivatives and thus reducing the number of third party derivatives, permitting hedge accounting for foreign-currency denominated assets and liabilities, and redefining interest rate risk to reduce sources of ineffectiveness. The Company has appointed a team to implement SFAS 133 on a global basis for the Company. This team has been implementing an SFAS 133 complaint risk management information system, globally educating both financial and non- financial personnel, inventorying embedded derivatives and addressing various other SFAS 133 related issues. The Company will adopt SFAS 133 and the corresponding amendments under SFAS 138 on January 1, 2001. Our SFAS 133 team is currently determining the impact of SFAS 133 on our consolidated results of operations and financial position. This statement should have no impact on the Company's consolidated cash flows. 16 9. STOCK OPTIONS In the second quarter management proposed the transfer of additional shares of Greenleaf's common stock and options to certain officers and employees. These issuances are subject to the Company's Board of Directors review and approval. On April 7, 2000, the Board engaged an outside consulting firm to conduct a compensation analysis of incentive programs. The Board has not taken any further action pending review of the report. 17 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto contained elsewhere herein and in conjunction with the Consolidated Financial Statements and Notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. RESULTS OF OPERATIONS GENERAL The Company reported results of operations for the three and nine months ended September 30, 2000 and 1999, as follows (in thousands):

Three Months Ended ~~Six~~Nine Months Ended ------------------ ----------------- ~~(unaudited)~~Sept. ~~(unaudited) June~~ 30, ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, 2000 1999 2000 1999 ---- ---- ---- ---- Earnings(loss) before income taxes, and equity in related parties(1)(2) $ (~~658~~516) $ (2,~~392~~889) $ (~~972~~1,488) $ (47,~~231~~120) Income tax (benefit) expense -- -- Equity in earnings (losses) of Wickes Inc.(3) ~~417~~629 1,~~178~~840 (~~880~~251) ~~(147)~~1,693 ~~----------~~__________ ~~-----------~~_________ ~~----------~~__________ ~~----------~~_________ Net ~~loss~~earnings(losses) $ ~~(241)~~113 $ (1,~~214~~049) $ (1,~~852~~739) $ (45,~~378~~427) =========== =========== ========== ==========

(1) Includes realized investment gains of $477,000 and $18,000 for the three months ended September 30, 2000 and 1999, and $1,640,000 and $18,000 for the nine months ended September 30, 2000 and 1999, respectively. (2) The Company accounted for its investment in Buildscape under the equity method for the nine months of 2000. During the same period in 1999, the Company consolidated Buildscape's operations with those of the Company and its subsidiaries. (3) Includes goodwill amortization of $130,200 and $130,200 for the three months ended September 30, 2000 and 1999, and $390,600 and $390,600 for the nine months ended September 30, 2000 and 1999, respectively. 18 LINES OF BUSINESS The following tables sets forth certain financial data for the three and nine months ended September 30, 2000 and 1999, respectively, for the following segments: Buildscape, Cybermax, Wickes and the Parent Group. Buildscape's operations are consolidated with those of the Company and its subsidiaries through October 21, 1999. The Company accounted for its investment in Buildscape under the equity method for the first nine months of 2000. The "Parent Group" includes real estate, parent company, discontinued operations and all eliminating entries for inter-company transactions.

Three Months Ended ~~Six~~Nine Months Ended ------------------------- ------------------------ ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, 2000 1999 2000 1999 ---- ---- ---- ---- (in thousands) (in thousands) SALES: Buildscape(1) $ -- $ ~~114~~207 $ -- $ ~~179~~386 Cybermax ~~344~~500 ~~143~~306 ~~748~~1,248 ~~543~~849 Wickes(2) -- -- -- -- Parent Group -- 135 -- 2934 ------------ ----------- ------------ ----------- Total $ ~~344~~500 $ ~~270~~518 $ ~~748~~1,248 $ ~~751~~1,269 ============ =========== ============ =========== COST OF SALES: Buildscape(1) $ -- $ 91191 $ -- $ ~~123~~314 Cybermax ~~164~~281 4845 ~~288~~569 91136 Wickes(2) -- -- -- -- Parent Group -- 1-- -- 4 ------------ ----------- ----------- ------------ Total $ ~~164~~281 $ ~~140~~236 $ ~~288~~569 $ ~~218~~454 ============ =========== =========== ============ OTHER OPERATING INCOME: Buildscape(1) $ -- $ -- $ -- $ -- Cybermax 91 -- 1213 1 Wickes(2) -- -- -- -- Parent Group 3542 24(5) 3577 4843 ------------ ----------- ------------ ----------- Total $ 4443 $ 24(5) $ 4790 $ 4944 ============ ============ ============ =========== INVESTMENT INCOME AND REALIZED GAINS/(LOSSES): Buildscape(1) $ -- $ -- $ -- $ -- Cybermax -- -- -- -- Wickes(2) 36-- -- 84 -- Parent Group ~~542~~455 ~~(7)~~35 1,~~052~~507 (361) ----------- ----------- ----------- ----------- Total $ ~~578~~455 $ ~~(7)~~35 $ 1,~~136~~591 $ (361) =========== =========== =========== =========== 1819 Three Months Ended ~~Six~~Nine Months Ended ------------------------- --------------------------- ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, 2000 1999 2000 1999 ---- ---- ---- ---- (in thousands) (in thousands) EXPENSES: Buildscape(1) $ -- $ 1,~~301~~725 $ -- $ 24,~~417~~142 Cybermax ~~430~~334 ~~445~~583 ~~884~~1,218 ~~998~~1,581 Wickes(2) -- -- -- -- Parent Group ~~307~~132 ~~143~~202 ~~397~~529 59261 ----------- ------------ ----------- ----------- Total $ ~~737~~466 $ 12,~~889~~510 $ 1,~~281~~747 $ 35,~~474~~984 =========== ============ =========== =========== INTEREST EXPENSE: Buildscape(1) $ -- $ 4679 $ -- $ 83162 Cybermax -- 1 -- 23 Wickes (2) ~~374~~411 ~~382~~368 ~~648~~1,059 ~~763~~1,131 Parent Group ~~349~~356 ~~221~~243 ~~686~~1,042 ~~455~~698 ----------- ------------ ----------- ----------- Total $ ~~723~~767 $ ~~650~~691 $ 12,~~334~~101 $ 1,~~303~~994 =========== ============ =========== =========== EARNINGS(LOSS) BEFORE INCOME TAXES, EQUITY IN RELATED PARTIES AND MINORITY INTEREST: Buildscape(1) $ -- $ (1,~~324~~788) $ -- $ (24,~~444~~232) Cybermax (~~241~~114) (~~351~~323) (~~412~~526) (~~547~~870) Wickes(2) (~~338~~411) (~~382~~368) (~~564~~975) (~~763~~1,131) Parent Group ~~(79)~~9 (~~335~~410) 413 (~~477~~887) ------------ ------------ ----------- ----------- Total $ (~~658~~516) $ (2,~~392~~889) $ (~~972~~1,488) $ (47,~~231~~120) ============ ============ =========== =========== IDENTIFIABLE ASSETS: Buildscape(1) $ (947) ~~713~~$ 526 $ (947) $ ~~713~~526 Cybermax ~~558~~585 ~~569~~585 ~~558~~585 ~~569~~585 Wickes(2) 1415,~~564~~157 1315,~~405~~245 1415,~~564~~157 1315,~~405~~245 Parent Group 1412,~~789~~622 10,~~043~~895 1412,~~789~~622 10,~~043~~895 ----------- ------------ ----------- ----------- Total $ 2827,~~964~~417 $ 2427,~~730~~251 $ 2827,~~964~~417 $ 2427,~~730~~251 =========== =========== =========== ===========

(1) After October 21, 1999, the Company's balance sheet and statements of operations reflect the Company's investment in Buildscape on the equity method. (2) Includes an interest allocation from Riverside on its 11% secured notes and 13% subordinated notes of $411,000 and $368,000 for the three months ended September 30, 2000 and 1999, respectively, and $1,059,000 and $1,131,000 for the nine months ended September 30, 2000 and 1999, respectively. 20 BUILDSCAPE, INC. The following table sets forth unaudited information concerning the results of Buildscape for the three and nine months ended September 30, 2000 and 1999, respectively: (in thousands)

Three Months Ended ~~Six~~Nine Months Ended ---------------------------- --------------------------- (unaudited) (unaudited) ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, 2000 1999 2000 1999 ---- ---- ---- ---- Sales $ ~~122~~326 $ ~~114~~207 $ ~~249~~575 $ ~~179~~386 Cost of sales 91294 91191 ~~196~~490 ~~123~~314 ----------- ----------- ------------ ----------- Net profit 3132 2316 5385 5672 Selling, general and administrative 3,~~054~~733 1,~~262~~648 48,~~948~~681 24,~~365~~013 Depreciation and amortization ~~165~~219 3977 ~~289~~508 52129 Interest expense 10-- 4679 10 83162 ----------- ----------- ------------ ----------- Total expenses 3,~~229~~952 1,~~347~~804 59,~~247~~199 24,~~500~~304 Other income 5466 -- 72138 -- ----------- ----------- ------------ ----------- Net loss $ (3,~~144~~854) $ (1,~~324~~788) $ (58,~~122~~976) $ (24,~~444~~232) =========== ============ ============ ==========

Revenues for the third quarter of 2000 were $326,000 compared to $207,000 for the comparable period in 1999. Revenues for the third quarter of 2000 include $281,000 of product revenue and $45,000 of fee revenue. Revenues for the third quarter of 1999 include $158,000 of product revenue and $49,000 of fee revenues. The direct costs for the third quarter of 2000 were $347,000 compared to $191,000 for comparable period in 1999. The direct costs for the third quarter of 2000 include $347,000 for product revenue and $0 for fee revenue. Revenues for the first nine months of 2000 were $575,000 compared to $386,000 for the comparable period in 1999. Revenues for the first nine months of 2000 include $511,000 of product revenue and $64,000 of fee revenue. Revenues for the first nine months of 1999 include $228,000 of product revenue and $158,000 of fee revenue. The direct costs for the first nine months of 2000 were $490,000 compared to $314,000 for the comparable period in 1999. The direct costs for the first nine months of 2000 include $488,000 for product revenue and $2,000 for fee revenue. SG&A expenses increased for the third quarter of 2000 to $3,733,000 compared to $1,648,000 during the third quarter of 1999. This increase is primarily the result of increased personnel, and higher legal, advertising, computer services, and travel expenses. SG&A expenses increased for the first nine months of 2000 to $ 8,681,000 compared to $4,013,000 during the first nine months of 1999. This increase is primarily due to increased personnel which accounted for $2.7 million of the increase. In addition, advertising, legal, computer services and travel expenses increases were significantly higher. On October 21, 1999, the Company sold to Imagine 38% of the common and 100% of the preferred stock of Buildscape. As a result, the Company accounted for its investment in Buildscape under the equity method after October 21, 1999. On May 12, 2000, Buildscape entered into a stock purchase agreement with Imagine and the Dow Chemical Company ("Dow") pursuant to which Dow purchased Series A Preferred Stock and common stock of Buildscape from Imagine and also purchased newly issued Series B Preferred Stock directly from Buildscape. Dow will purchase a second tranche of Series B Preferred Stock upon the completion of certain milestones by Buildscape. Dow also acquired an option to acquire additional shares in Buildscape that will increase its ownership to 50.1%. Upon the completion of the transactions, Riverside's ownership in Buildscape will be reduced from 47% to 35%, on a fully converted basis. Buildscape delivers products and services to construction professionals through the Internet and other emerging technologies. BuildscapePro (www.buildscapepro.com) provides access to real- time product and procurement information, including pricing, availability and delivery. This allows professional builders and contractors to better manage the flow of materials, locate subcontractors and enhance their customer service. Buildscape also operates www.buildscape.com, giving consumers access to building products and information for their home improvement needs. 21 Buildscape has experienced cumulative operating losses, and its operations are subject to certain risks and uncertainties, including, among others, risks associated with technology and regulatory trends, evolving industry standards, growth and acquisitions, actual and prospective competition by entities with greater financial and other resources, the development of the Internet market and the need for additional capital. There can be no assurances that Buildscape will be successful in becoming profitable or generating positive cash flow in the future. Buildscape is considered to be a development stage company. CYBERMAX, INC. The following table sets forth unaudited information concerning the results of Cybermax for the three and nine months ended September 30, 2000 and 1999, respectively (in thousands):

Three Months Ended ~~Six~~Nine Months Ended ----------------------------- ------------------------------ (unaudited) (unaudited) ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, ~~June~~Sept. 30, 2000 1999 2000 1999 ---- ---- ---- ---- Sales $ ~~344~~500 $ ~~143~~306 $ ~~748~~1,248 $ ~~543~~849 Cost of sales ~~164~~281 4845 ~~288~~569 91136 ----------- ----------- ----------- ----------- Net profit ~~180~~219 95261 ~~460~~679 ~~452~~713 Selling, general and administrative ~~384~~289 ~~414~~530 ~~792~~1,081 ~~943~~1,474 Depreciation and amortization 4645 3153 92137 53106 Interest expense -- 1 -- 23 ----------- ----------- ----------- ----------- Total expenses ~~430~~334 ~~446~~584 ~~884~~1,218 ~~999~~1,583 Other operating income 91 -- 1213 1-- ----------- ----------- ----------- ----------- Net loss $ (~~241~~114) $ (~~351~~323) $ (~~412~~526) $ (~~547~~870) =========== =========== =========== ===========

Revenues for the third quarter of 2000 were $500,000 compared to $306,000 for the comparable period in 1999. Revenues for the third quarter of 2000 include $400,000 of e- Commerce solution sales, $10,000 of software and equipment sales, $14,000 of multi-media solution sales and $76,000 of network services. Revenues for the third quarter of 1999 include $240,000 of e-Commerce solution sales, $15,000 of software and equipment sales and $51,000 of network services. The direct costs for the third quarter of 2000 include $183,000 for e-Commerce solution sales, $32,000 of multimedia sales, $10,000 of software and equipment sales, $55,000 network services and $1,000 of miscellaneous costs. The direct costs for the third quarter of 1999 include $9,000 of costs for software and equipment sales, $32,000 of costs for network services and $4,000 of miscellaneous costs. During the third quarter of 1999, the direct costs for the e-commerce solution sales were employees salaries which were included in the SG&A line item. In 2000, these costs were provided by an outside consulting firm and were included as a direct cost of sales. 22 Revenues for the first nine months of 2000 were $1,248,000 compared to $849,000 for the first nine months of 1999. Revenues for the first nine months of 2000 include $952,000 of e- Commerce solution sales, $96,000 of software and equipment sales, $21,000 of multimedia solutions sales and $179,000 of network services. Revenues for the first nine months of 1999 include $666,000 of e-Commerce solution sales, $160,000 of software and equipment sales and $23,000 of network services. The direct costs for the first nine months of 2000 include $320,000 for e- Commerce solution sales, $68,000 of software and equipment sales, $31,000 of multimedia sales, $133,000 of network services and $17,000 of miscellaneous costs. The direct costs for the first nine months of 1999 include $10,000 for e-Commerce solution sales, $16,000 of software and equipment sales, $110,000 of network services and $10,000 of miscellaneous costs. During the first nine months of 1999, the direct costs for the e-Commerce solution sales were employees salaries which were included in the SG&A line item. In 2000, these costs were provided by an outside consulting firm and were included as a direct cost of sales. SG&A expenses decreased for the third quarter of 2000 to $289,000, compared to $530,000 during the third quarter of 1999. The primary reason for this decrease was the reduction of personnel and legal expense which was offset slightly by increases in contractual services, software services and marketing and advertising expense. SG&A expenses decreased for the first nine months of 2000 to $1,081,000, compared to $1,474,000 during the first nine months of 1999. The primary reason for this decrease was the reduction of the personnel in 2000 and legal expenses which were offset slightly by increases in contractual services, software services and marketing and advertising expense. WICKES INC. The Company estimates that its results of operations for the third quarter of 2000 include profits of $218,000 attributable to Wickes, compared to profits of $1,472,000 for the same period in 1999. The Company estimates that its results of operations include losses of $1,226,000 attributable to Wickes, for the first nine months ended September 30, 2000 compared to profits of $821,000 for the same period in 1999. The following discussion was obtained from the Wickes Quarterly Report on Form 10-Q for the second quarter of 2000. The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto contained elsewhere herein and in conjunction with the Consolidated Financial Statements and Notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Wickes' Annual Report on Form 10- K for the year ended December 25, 1999. The following table sets forth, for the periods indicated, the percentage relationship to net sales of certain expense and income items. This information includes the results from all sales and distribution and component manufacturing facilities operated by Wickes, including those closed or sold during the period. 23

Three Months Ended ~~Six~~Nine Months Ended ----------------------------- -------------------------- ~~(unaudited)~~Sept. ~~(unaudited)~~23, ~~June~~Sept. 2425, ~~June~~Sept. ~~26 June 24~~23, ~~June~~Sept. 2625, 2000 1999 2000 1999 -------- -------- -------- --------- Net sales 100.0% 100.0% 100.0% 100.0% Gross profit 2422.81% 2320.01% 2421.86% 2320.4% Selling, general and administrative expense 2118.20% 1915.05% 2218.46% 2017.70% Depreciation, goodwill and trademark amortization 0.75% 0.64% 0.76% 0.65% Provision for doubtful accounts 0.03% 0.02% 0.12% 0.1% Other operating income (0.3)% (0.84)% (0.34)% (0.65)% Income from operations 3.26% 4.24% 2.06% 23.63%

Wickes' results of operations historically are affected by, among other factors, weather conditions, interest rates, lumber prices, housing starts and other external economic factors. Weather conditions during the first nine months of 2000 were relatively comparable to the prior year. However, Wickes' largest region, the Midwest, experienced wetter than normal conditions in May, June and July which tends to adversely impact sales. The second quarter and first half of 2000 showed continuing trends of higher interest rates, which many builders took as a sign to slow down production and test demand. In addition to these factors, housing starts for the third quarter of 1999 were a combined 9.4% in the Midwest and Northeast regions of the United States (11.0% and 5.9%, respectively). The Midwest and Northeast regions of the United States represented approximately 82.0% of Wickes' sales in the third quarter of 2000 versus 79% in the comparable period in 1999. When combined with the South, housing starts for the third quarter of this year were down 10.2% from the third quarter of 1999. On a year-to-date basis, actual housing starts are down 3.5% nationally from the third quarter of 1999. In addition to the affects of the foregoing, escalating fuel prices and higher interest rates also have adversely impacted Wickes' earnings. Dimensional lumber and panel products are commodities which cause Wickes' costs to fluctuate with changing market conditions, generally tracked using the Random Lengths Framing Composite Average and the Random Lengths Panel Index. Increases in commodity lumber prices ("lumber inflation") generally are passed on to the customer with certain lag effects, resulting in higher selling prices, or are fixed in the futures market for a small percentage of longer term sales contracts. In periods of decreasing commodity lumber prices ("lumber deflation"), selling prices for lumber decrease, with certain lag effects. Net income for the three months ended September 23, 2000 was $2.1 million compared with a net income of $5.0 million for the three months ended September 25, 1999. The decrease in net income for the three-month period primarily is the result of decreased sales and is the result of decreased sales 24 and gross margin generally resulting from lumber deflation; increased SG&A expenses driven by higher fuel costs; an increase in the provision for doubtful accounts; and higher interest costs. Net income for the first nine months of 2000 was $0.5 million compared with net income of $5.4 million for the first nine months of 1999. The decrease in net income for the nine-month period primarily is the result of increases in SG&A, depreciation and interest expenses, as well as a reduction in other operating income, all of which offset higher gross margin. PARENT COMPANY AND OTHER SUBSIDIARIES The following discussion relates to the operations of the Parent Company and its subsidiaries, other than Buildscape, Cybermax and Wickes (the "Parent Group"). The Parent Group's non-interest operating expenses for the third quarter of 2000 decreased to $132,000 compared to $202,000 during the same period in 1999. The 1999 expenses include approximately $104,000 of expenses incurred in connection with the replacement of the Company's 13% Notes that matured in 1999. Revenues of the Parent Company (excluding investment income) for the third quarter of 2000 and 1999 were $42,000 and $(5,000), respectively. Interest expense (excluding interest allocation to Wickes for the Parent Company's 11% and 13% Notes of $411,000 in 2000 and $368,000 in 1999) for the third quarter of 2000 and 1999, were $356,000 and $243,000 respectively. In 2000, interest consisted of $72,000 on the Parent Company's other debt and $284,000 on the Parent Company's real estate mortgage debt. In 1999, interest consisted of $14,000 on the Parent Company's other bank debt and $229,000 on the Parent Company's real estate mortgage debt. The primary reason for the increase in interest expense is due to additional debt of the Company and higher interest rates on the Company's mortgage debt. The Parent Group's non-interest operating expenses for the first nine months of 2000 increased to $529,000 compared to $261,000 during the same period in 1999. The 1999 expenses include income of approximately $100,000, which resulted from the release of a reserve established in prior years in connection with the sale of the Company's former property and casualty operations. In addition, the 1999 expenses include approximately $104,000 of expenses incurred in connection with the replacement of the Company's 13% Notes that matured in 1999. On April 14, 2000, the Company's Board of Directors authorized the Company to transfer certain options held by the Company to acquire common stock of Greenleaf to certain employees of the Company. Accordingly, in the second quarter of 2000, the Company recorded income of approximately $105,000 included in net realized investment gains, which represents the value of the shares transferred. Such approval effectively results in the awarding of options and the recognition of compensation expense of approximately $105,000, accordingly. In addition travel, audit and legal expenses were higher for the nine months of 2000 compared to the nine months of 1999. 25 Revenues of the Parent Group (excluding investment income) for the first nine months of 2000 and 1999 were $77,000 and $43,000, respectively. Interest expense (excluding interest allocation to Wickes for the Parent Company's 11% and 13% notes of $1,059,000 in 2000 and $1,131,000 in 1999) for the nine months of 2000 and 1999, were $1,042,000 and $698,000 respectively. In 2000, interest consisted of $214,000 on the Parent Company's other debt and $828,000 on the Parent Company's real estate mortgage debt. In 1999, interest consisted of $17,000 on the Parent Company's other bank debt and $681,000 on the Parent Company's real estate mortgage debt. The primary reason for the increase in interest expense is due to additional debt of the Company and higher interest rates on the Company's mortgage debt. REAL ESTATE INVESTMENTS The Company's real estate investments consist of $6,676,000 in Georgia properties, and $79,000 in other states. During the third quarter of 2000, the Company sold 8.8 acres of its Georgia property for $861,000, and recorded a gain of $153,000 on the sale. The Company had no sales of its real estate investments during the third quarter of 1999. INCOME TAXES The Company's effective tax rate was 0% for the three and nine months ended September 30, 2000 and 1999. The Company's equity in losses of Wickes has reduced the Company's GAAP basis in its investment in Wickes creating deferred tax benefits which will be realized upon sale or subsequent increase in GAAP basis of this investment. LIQUIDITY AND CAPITAL RESOURCES The Parent Company's general liquidity requirements consist primarily of funds for payment of debt and related interest and for operating expenses and overhead. Operations (exclusive of Wickes, which is prohibited from paying dividends under its debt instruments) consist primarily of asset sales and Cybermax's operations. Proceeds from real estate sales are required to be applied to real estate debt reduction and are not available to the Parent Company for other purposes. The $9,500,000 principal amount of the Company's 11% Notes due September 30, 2000, and the $1,800,000 principal amount of the Company's short-term loan from Imagine due August 31, 2000 have been extended. For further information regarding these loans see Note 5. "Commitments and Contingencies", and Note 6. "Long Term and Mortgage Debt". For a detailed discussion of the Parent Company's liquidity and management's plans related thereto, see Note 5. "Commitments and Contingencies". 26 During the first nine months of 2000, stockholders' equity increased by a net of $2,081,000. The primary reason for the increase was the change in unrealized gains on the Company's Greenleaf common stock which was approximately $3,820,000. In addition, the Company recorded gains on the sale of its Greenleaf common stock of $1,413,000. This increase was offset by losses attributable to Wickes of approximately $1,226,000. In addition, the Parent Company's and Cybermax's operations incurred losses of approximately $1,926,000. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None. 27 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS For information regarding the Company's legal proceedings, see Note 5 of Notes to Condensed Consolidated Financial Statements included elsewhere herein. ITEM 3. DEFAULTS UPON SENIOR SECURITIES For information regarding the Company's default on its 11% Notes, see Note 6 of Notes to Condensed Consolidated Financial Statements included elsewhere herein. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 27.1 Financial Data Schedule (SEC Use Only). (b) Reports on Form 8-K 28 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RIVERSIDE GROUP, INC. By /s/ J. Steven Wilson ------------------------------------ J. Steven Wilson Chairman of the Board, President and Chief Executive Officer By /s/ Catherine J. Gray ---------------------------------- Catherine J. Gray Senior Vice President and Chief Financial Officer Date: November 14, 2000 29

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